Communities and Local Government CommitteeWritten evidence submitted by Housing Voice

1.1 Housing Voice was established as a campaign alliance in 2011 to raise the issue of the supply of affordable housing up the political agenda and to make recommendations for policies that will help address the shortage of homes available to households on low to middle incomes. Housing Voice is chaired by Lord Whitty. It is politically non aligned and has been supported financially by UNISON, which represents 1.3 million workers across the public services, including significant numbers who work in local authority housing roles and for housing associations

1.2 During 2012 Housing Voice carried out an inquiry into the Affordable Housing Crisis. The inquiry was supported by Citizens Advice, TUC, Child Poverty Action Group, CDS co-operatives, NUS, National Housing Federation and others. The inquiry held hearings in London, Exeter, Birmingham and Manchester, received more than 60 written or oral submissions. Over 3,000 members of the public took part in an accompanying survey of members of the public, which was facilitated through Citizens Advice.

1.3 This submission highlights those findings, conclusions and recommendations which Housing Voice hope will be relevant and helpful to the current CLG Select Committee inquiry. Sources, references and details of those who gave evidence to the Housing Voice inquiry are available on request, or from our full report, which is available on our website http://www.housingvoice.co.uk/

2 The quality of private rented housing, and steps that can be taken to ensure that all housing in the sector is of an acceptable standard

2.1 Housing Voice was alarmed by evidence demonstrating that the private rented sector has the highest proportion of homes that fail to meet the decent homes standard.

2.2 We heard evidence to suggest that the sector is very diverse. At one end of the scale we heard anecdotal evidence about some appalling conditions, with, for example, one MP telling us about an ex-council one family home which now belonged to a private landlord who had converted it into flats which now housed four separate families.

2.3 We also heard from landlords and developers who extolled the virtues of the sector, in terms of the flexibility that it offered, design and location virtues of some developments (particularly those at the top end) as well as the challenges faced by many landlords, most of whom had few properties and modest returns on their investment.

2.4 Important features of the growing importance of the sector were that:

the increasing significance of the sector had not come about as a consequence of a deliberate policy decision—it was a symptom of the collapse of the owner occupier market and neglect of the social rented sector

although the private rented sector was where people (including increasing numbers of families) increasingly found themselves, this was not out of choice. The majority still want to be owner occupiers. Because of high rents, falling incomes and the need for larger deposits, many of those in the private rented sector were likely to remain there for some time.

2.5 Our inquiry concluded that regulation was needed to ensure that homes in the sector were brought up to and maintained at acceptable standards.

2.6 In the immediate, short term this could be achieved by encouraging local authorities to introduce landlord accreditation, licensing or registration schemes for their areas. Initially such schemes should be targeted at the areas of poorest housing and introduced as soon as practically possible. A regular “MOT” style certificate showing that a property is free of serious hazards and meets a new, minimum decent homes standard would be a major step forward and ensure more homes are fit for purpose. In the view of Housing Voice, Local government is best placed to be the primary regulator of the private rented sector, including property letting and management gents, bringing together the skills of environmental health officers, tenancy relations officers and housing advice workers.

2.7 For the medium term Housing Voice has recommended a new statutory system for private rented sector regulation. This would aim to provide increased swifter protection for tenants, including mechanisms to deal with landlord-tenant disputes, repair claims and possession hearings. It would also guarantee minimum standards for tenants including increased security of tenure, with 24 months becoming the norm, safeguards against extortionate rents, with local authorities able to refer excessive rents to a Rent Assessment Committee; regulation of residential property letting and management agents as well as encouraging the establishment of not-for-profit lettings agencies

3 Levels of rent within the private rented sector—including the possibility of rent control and the interaction between housing benefit and rents

3.1 Housing Voice received evidence demonstrating that high housing costs had led to a significant erosion in the housing choices available to households on low to middle incomes in many parts of the country. Whilst this was most extreme in London and the South East, we received evidence from all regions that we visited to support the proposition that many are struggling with housing costs across the country.

3.2 A poll carried out for Housing Voice by YouGov demonstrated that those in social categories C2, D and E pay on average 37% of their income on housing costs. Those in the private rented sector are typically paying 43% on housing, compared with 35% for those paying a mortgage. A Citizens Advice survey undertaken as part of the inquiry suggested more than a third of people are spending more than half of their income on housing costs.

3.3 We also received data showing that housing costs are rising faster than earnings—and that it is the private rented sector in which housing costs are rising fastest.

AVERAGE HOUSE PRICES, RENTS AND EARNINGS IN ENGLAND 1990–2010

House price

Private rents/year

Average earnings

1990

54,919

2,080

12,522

1995

50,930

3,640

15,898

2000

81,628

4,557

19,367

2005

157,387

6,708

24,062

2010

162,971

7,618

27,186

Increase %

297

366

217

Sources:
http://www.parliament.uk/documents/commons/lib/research/rp98/rp98–069.pdf
http://www.ons.gov.uk/ons/dcp171778_265371.pdf
ONS annual survey of hours and earnings (NES and ASHE)
http://www.communities.gov.uk/documents/statistics/pdf/2084179.pdf

3.4 The Housing Voice inquiry heard that the increase in housing benefit is inextricably linked to the switch from capital to revenue expenditure by government from the 1970 onwards. As Right to Buy was introduced and a decision taken to let housing benefit take the strain, the Housing Benefit bill has risen—from £1.1 billion in 1970 to £23.3 billion 201213. As such we note the current perverse situation whereby between 201112 and 201415 investment in new homes via the government’s affordable housing programme will cost £ 4.5 billion. Over the same period £93 billion will be spent not on building new homes, but on housing benefit, about 30% of which will go to private landlords. We noted that the average weekly housing benefit payment is £75.47, £84.67 and £107.35 for council, RSL and private sectors respectively.

3.5 We also noted that the number of Housing Benefit claims from people in work has doubled in recent months to 903,000 and since May 2010–90% of the growth in claims arises from people in work.

3.6 As set out above, Housing Voice recommended that safeguards against extortionate rents should be included as part of a framework for private rented sector regulation, under which local authorities should be able to refer excessive rents to a Rent Assessment Committee.

3.7 Housing Voice also recommended that the government establish a national commission on affordable housing, to ensure housing supply matches demand over the longer term. This should, amongst other tasks, carry out analysis of the options for shifting public spending on housing from revenue (Housing Benefit) to capital (new supply of affordable homes).

January 2013

Prepared 16th July 2013