Communities and Local Government CommitteeWritten evidence submitted by the Barristers of Arden Chambers

About Arden Chambers

Arden Chambers is widely recognised as the leading social housing law barristers chambers in England and Wales.1 We were founded by Andrew Arden QC and others in order to provide a specialist practice area for housing law. We write or edit all of the major housing law works (Encyclopedia of Housing Law, Manual of Housing Law, Housing Law Reports, Journal of Housing Law, Homelessness and Allocations, Quiet Enjoyment, Leasehold Disputes).

We are consistently involved in the major cases in this area. For example, in 2012, our important cases include:

LB Camden v Stafford [2012] EWCA Civ 839 (Supreme Court appeal pending; Andrew Arden QC, Iain Colville).

Birmingham CC v Ashton [2012] EWCA Civ 1557 (Jonathan Manning, Rebecca Chan).

Birmingham CC v Lloyd [2012] EWCA Civ 969 (Jonathan Manning, Sam Madge-Wyld).

El Goure v LB Kensington & Chelsea [2012] EWCA Civ 670 (Jonathan Manning, Stephanie Smith; Supreme Court appeal pending).

Maswaku v Westminster CC [2012] EWCA Civ 669 (Jonathan Manning, Stephanie Smith, Supreme Court appeal pending).

Corby BC v Scott; West Kent HA v Haycraft [2012] EWCA Civ 276 (Jonathan Manning).

Thompson v Roberts [2012] EWHC 2160 (QB) (Clare Roberts, Ian Loveland).

Haripaul v LB Lewisham [2012] EWCA Civ 266 (Clare Roberts).

R (Southern Landlords Association) v Thurrock DC [2012] EWHC 3187 (Iain Colville).

LB Hounslow v Cumar [2012] EWCA Civ 1426 (Toby Vanhegan).

BCC v Keddie [2012] UKUT 323 (LC) (Justin Bates).

Introduction

This response addresses the seven issues identified by the Committee.

Quality of Private Rented Housing and Steps that can be taken to Ensure that all Housing in the Sector is of an Acceptable Standard

1. Our experience comes from acting both for occupiers of rented housing and for local authorities seeking to enforce existing legislation. In our view, there remains a significant number of properties in the private rented sector which are either let in a poor state or which fall into disrepair. In each case, landlords refuse to comply with their statutory obligations relating to the standard and condition of the property.2 A cursory examination of the county court disrepair cases3 will give the committee a range of cases.

2. There are two distinct routes for raising standards in the private sector. The first is a “regulatory” route, discussed in more detail below (eg landlord/agent licensing). The second is to empower tenants to be better able to vindicate their existing rights as regards their properties.

3. There is already a detailed statutory framework governing repairing obligations in the private sector, as set detailed in, inter alia, section 11, Landlord and Tenant Act 1985 and the relevant case law. These rights are, however, rendered nugatory without access to legal advice and assistance in order to enforce them. The Committee will be well aware of the cuts to legal aid made by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. If tenants cannot access legal aid lawyers then the prospects of being able to enforce their rights is much reduced.

4. The Committee is also invited to consider the problem of “retaliatory eviction” in the context of attempts by tenants to enforce their rights. This occurs when a tenant complains about the condition of his property and, rather than carry out repairs or comply with statutory notices served by the local authority, the landlord serves notice to recover possession.4 As long ago as June 2007, the Citizens Advice Bureau produced a detailed report on this problem.5 The practice has already been condemned by MPs from all parties.6 Legislative intervention to prevent landlords recovering possession in response to a complaint about disrepair would be very welcome.

Levels of Rent within the Private Rented Sector, including the Possibility of Rent Control and Interaction between Housing Benefit and Rents

Rent control

5. We anticipate that this will be a controversial issue and attract much heated comment. In our view, it is important to remember that there is already legislation governing rents for certain classes of private sector occupier. Importantly, it is not the case that rent control would be a radical or invasive step; rent control already exists, what the Committee presumably means is whether it should be extended.

6. Rent control is a reality for those tenants who occupy property pursuant to the Rent Act 1977, who pay a “fair rent”, which, ultimately, is set by the Rent Assessment Committee.7 This is, admittedly, a diminishing group of occupiers, but it serves to make the point (as in para.5, above) that rent control already exists.

7. Further, tenants who occupy assured tenancies governed by the Housing Act 1988, who are similarly entitled to apply to the Rent Assessment Committee if their rent is in excess of the market rent. In practice, this is a little-used power.

8. In our view, it is also right to say that certain categories of welfare benefits recipients are also subject to de facto rent control:

(i)Local Housing Allowance (housing benefit in the private sector) is already capped so that it is calculated only with reference to the lowest 30% of rents charged in any area.8

(ii)Housing benefit for those under 35 is calculated on the basis that they need only rent a room in a shared house.9

(iii)The “benefit cap” which—until all benefits claimants are “migrated” to Universal Credit, works by reducing housing benefit.10

9. In our view, these provisions make rent control inevitable. The Committee will be well aware of recent research from Crisis which found that only 1.5% of privately rented properties were affordable for the under 35s.11 That figure will only be increased by forcing down rent levels.

10. The case for rent control is also strong in the non-benefit sector. Given the continued increase in rents in the private sector12 and the increasing level of rent arrears in the private sector13 which, in turn, is leading to an increase in possession claims being issued14 increased homelessness,15 there is a pressing case, both for the protection of individuals and in order to make wider savings, for rent control to be extended to bring down the rental levels in the private sector.

11. Rent control is not, of course, a panacea. The reality is that there is a pressing need for more housing—of all tenures16—throughout England and Wales and, in particular, in those areas where rents are highest (eg London and the South East). Rents are high because demand outstrips supply. Unless and until that is remedied, there will be no long-term solution.

Housing benefit and rents

12. We have seen no evidence that the housing benefit cuts have had any impact on reducing rents in the private sector.

Other factors

13. The Committee is respectfully invited to consider not just rent control, but also the wider issues of fees and charges imposed on tenants or would-be tenants by landlords and agents. Research from Shelter17 indicates that one in four people renting in the private sector in England felt that they had been “ripped off” by letting agents charging fees for, among other things:

Criminal Record Bureau checks;

credit checks;

unparticularised administration charges;

inventory fees;

unnecessary document copying;

new tenant fees; and/or

renewal fees.

14. Such fees are unlawful in Scotland (see the Rent (Scotland) Act 1984). There is no analogous protection in England. The Accommodation Agencies Act 1953 operates on the principle that tenants are not to be made to pay for looking for accommodation, but such fees are not within the remit of the 1953 Act.

15. Given that Parliament has already decided—in the 1953 Act—that tenants should not be made to pay for seeking accommodation, the Committee is invited to consider recommending amendments to the 1953 Act so as to outlaw these charges as to ensure that the principle in the 1953 Act is given continued force today.

Regulation of Landlords, and Steps that can be taken to Deal with Rogue Landlords

16. We support the principle of landlord licensing. In outline, landlords and agents would be required to obtain a licence from the local authority where the property is located, confirming both that they are a fit and proper person to act as a landlord/agent and that the properties they are offering for rent are of a suitable standard. This route could also be used to help drive up standards of property in the private rented sector.

17. This sort of regime is already under discussion in Wales. In Proposals for a Better Private Rented Sector in Wales, the Welsh Assembly Government proposed a scheme requiring all landlords to be accredited with the local authority for the area where the property is located. Those who fail to register with the scheme could face criminal prosecution and, if convicted, a fine of up to £20,000. The court would also be empowered to disqualify the landlord from letting property for up to five years. Letting agents would also be required to register with a similar scheme. Failure to do so would be punishable on conviction by a fine of up to £50,000 and disqualification from acting as an agent for up to five years. Such serious penalties would—hopefully—drive rogue landlords out of the sector and, in turn, reward good landlords.

18. There is also an ancillary benefit to such a licensing regime. There is a growing problem with fraudulent lettings, whereby a putative landlord/agent advertises a property for rent (usually, but not exclusively, via the internet); a prospective tenant then contacts the putative letting agent/landlord. A viewing may or may not take place. A tenancy agreement is signed and—importantly—a deposit paid, invariably in cash. When the tenant arrives on the agreed move-in date, he discovers that he has been the victim of a fraud because:

(a)there is already a tenant in occupation under a lawful tenancy agreement;

(b)the agent/landlord had no authority to deal with the property; and, in either event; and/or

(c)it is impossible to get the deposit back as the fraudulent agent/landlord has vanished.18

19. A freely-available data-base of registered landlords and agents would help to prevent this sort of fraud. A register of landlords and agents freely available and searchable would allow a prospective tenant to establish relatively easily whether the person he was dealing with is lawfully entitled to let the property or, at least, a person with an established presence in the area of activity.

The regulation of Houses in Multiple Occupation (HMOs), including the operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area

20. We have some concerns about the operation of Rent Repayment Orders. Part 2, Housing Act 2004, makes provision for licensing of houses in multiple occupation. It is an offence to control or manage an unlicensed HMO (section 61). Where a person has been convicted of such an offence, a tenant may apply to a Residential Property Tribunal for a “rent repayment order”, requiring the repayment of the rent, including any part of the rent that has been paid by housing benefit (see generally, sections 72, 73). The amount to be repaid is such amount as the RPT considers reasonable in all the circumstances (section 74). Similar provisions exist for repayment orders in favour of local authorities where the rent was paid by way of housing benefit.

21. It has proved harder than expected for occupiers to obtain such orders. First, the occupier is restricted in that he can only recover monies paid in the 12 months immediately proceedings his application to the RPT.19 This means that there is an incentive for landlords to delay criminal proceedings, so as to reduce the total amount that they could be ordered to repay.20

22. Further, the need for an occupier to wait for the local authority to act is a significant flaw in the legislation that is crying out for amendment.

Tenancy Agreements and Length and Security of Tenure

23. The Law Commission has produced a thorough and considered report on these issues (Renting Homes, May 2006). It proposes a significant simplification in the various forms of tenure and, importantly, model tenancy agreements which would apply in the event that the parties failed to agree a written form of tenancy.

24. We urge the Committee to endorse Renting Homes and to take up the recommendations made in the report. In particular, model (or “default”) tenancy agreements are to be welcomed. Much money and time would be saved.

25. It is noticeable that the Welsh Government is giving active consideration to the reforms proposed by the Law Commission in Renting Homes and is bringing forward proposals to update those reforms in conjunction with the Law Commission for Wales.

26. This will mean that England will be the only jurisdiction within the United Kingdom which has retained the same model for tenancy agreements since the Housing Act 1988, and creates a cross-border curiosity.

How local authorities are discharging their homelessness duty by being able to place homeless households in private sector housing

27. It seems to us that this is too early to ask this question. The Localism Act 2011 has made a significant change to homelessness law in both England and Wales, coming into force in England on 9 November 2012. There is, as yet, no commencement date for Wales.

28. Section 148, 2011 Act, allows a local housing authority to discharge its duty by offering the applicant a suitable property21 let on an assured shorthold tenancy from a private landlord. Unlike the current position, where an applicant can refuse an assured shorthold without losing his or her entitlement, refusal of this offer will now bring the duty to an end.

29. It is simply too early to know how this reform is working in practice. As far as we are aware, there has not yet been any judicial decision in a case where an authority used this new power.

30. Unless and until that time, we recommend that the Committee resolve to keep this matter under review and revisit the question in, say, two years time.

January 2013

1 See, e.g. the current edition of Chambers & Partners: where we are described as "outstanding in its field" and "a long-term leader in the field of social housing." We are “well known for their work representing both landlords and tenants, and have a particular focus on representing local authorities”.

2 E.g., s.8, Landlord and Tenant Act 1985 (implied covenant as to fitness for occupation), s.11, 1985 Act (implied repairing obligations).

3 Reported in Legal Action magazine (Legal Action Group, published monthly).

4 Generally under s.21, Housing Act 1988.

5 The Tenant’s Dilemma, CAB, June 2007.

6 See EDM 727 of the 2007/8 Parliament.

7 In practice, a rent far below the market rent, as the RAC excludes “scarcity” when setting the rent.

8 The Rent Officers (Housing Benefit Functions) Amendment Order 2010 S.I. 2010/2836.

9 Housing Benefit (Amendment) Regulations 2011 S.I. 2011 No.1736.

10 Benefit Cap (Housing Benefit) Regulations 2012 S.I. 2012/2994.

11 No Room Available, Crisis, December 2012.

12 See, e.g. http://www.bbc.co.uk/news/business-19288208 and http://www.insidehousing.co.uk/tenancies/private-sector-rents-rose-by-05-in-april/6521884.article

13 http://www.insidehousing.co.uk/tenancies/private-sector-rents-rose-by-05-in-april/6521884.article

14 142,083 private landlord possession claims were issued in 2011, up from 134,961 in 2010: see Table 1301 https://www.gov.uk/government/statistical-data-sets/-tables-on-repossession-activity

15 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/8107/22109391.pdf

16 Local authorities, housing associations and the private sector.

17 http://england.shelter.org.uk/news/september_2012/1_in_4_ripped_off_by_letting_agents

18 See, e.g. http://www.islingtontribune.com/news/2010/oct/fake-landlord-scam-dupes-homeseekers

19 See s74(8)(b), 2004 Act.

20 Eg A landlord could plead not guilty, with a view to drawing proceedings out by a month or two, and, hence make that rental money “safe” from any repayment order.

21 As defined in the Homelessness (Suitability of Accommodation) (England) Order 2012.

Prepared 16th July 2013