Communities and Local Government CommitteeWritten evidence submitted by Thanet District Council

1.0 Introduction

Thanet is a Kent coastal district and includes the three main towns of Margate, Ramsgate and Broadstairs. Despite being in the south east region it is considered a deprived area with some wards in the top 3% of most deprived areas in the country.

The reasons behind the decline of these wards are complex. Thanet was a popular holiday destination but has struggled to restructure its economy following the decline of this industry which has led to serious socio-economic challenges.

Despite a wide range of studies, actions and interventions in recent years, the area’s ranking in deprivation compared to other areas of the country has declined significantly since 2004 and one of the driving factors in this decline is the quality and type of housing.

The latest census information suggests that around 21.96% of the housing in the district is privately rented and in some wards this figure reaches 70%. The rented sector plays a significant part in providing accommodation to residents but in truth much of the sector is poorly managed and maintained.

This has led to the private rented sector not being a tenure of choice but a stepping stone to public sector housing which is considered to be more secure.

Thanet District Council believes it is well placed to provide a response to the select committees inquiry based on experience of dealing with the issues arising from a poor private rented sector.

2.0 Regulation and Licensing of Privately Rented Accommodation

Everyone has a basic need for shelter and we should expect shelter to be safe. The evidence linking housing and health is well documented and landlords have an important role to play in safeguarding the well-being of their tenants. Dwellings which are poorly managed and not maintained can have a negative impact on the health, safety and well-being of occupiers, and as such regulation of this sector is necessary.

Poor quality accommodation often requires the intervention of the local housing authority (LHA), and other enforcing authorities (HSE, Trading Standards, Fire and Rescue Service) to ensure the property meets a minimum standard and although many landlords will comply with a request to make improvements others will either ignore such requests or make a poor attempt at meeting the requirements.

The Housing Act 2004 introduced the Housing Health and Safety Rating System (HHSRS) in 2006. It has the scope to deal with most foreseeable health and safety risks in the home environment. Based on the principles of risk assessment, it is a much more proportionate response to housing conditions than the previous housing fitness standard and disrepair provisions.

The wider range of available enforcement actions allows LHAs to respond more appropriately to any given situation. Therefore, it is argued that the existing provisions under Part 1 of the Housing Act 2004 relating to the enforcement of housing conditions are very much in the public interest. Any watering down of these powers would put public health at risk and provide more scope for rogue landlords to let inadequate and unsafe housing.

There are improvements that can be made to the emergency powers provided for by means of Emergency Prohibition Orders and the taking of Emergency Remedial Action. Despite vague advice given to the contrary by certain bodies, there remains a requirement in law to give a landlord at least 24 hours’ notice of their intention to inspect premises under the HHSRS. While this general requirement can be onerous for LHAs, it is a compromise that is made in the interests of landlords more generally. However, when a clear and imminent risk has been identified, LHAs should be able to visit properties in an emergency situation and take the action needed without concerning themselves about failing to give the requisite 24 hours’ notice to the landlord. Experience has shown that the current provisions often leave vulnerable persons in unsafe conditions for more time than is necessary.

2.1 Houses in Multiple Occupation

The new definition of a house in multiple occupation (HMO) makes it difficult to identify an HMO in some circumstances. It is recognised that certain self-contained flat conversions can sometimes present less risk than others. However, experience has shown that it is not always easy to recognise whilst on site, whether a building is an HMO to which section 257 of the Housing Act 2004 applies or not. Establishing conversion standards and occupancy details (they being the prerequisites for identifying section 257 HMOs) is not always quick and easy.

This is significant as it determines whether such a building is subject to the HMO Management Regulations or not. For example, there could be two nearly identical converted buildings next door to each other. One converted in the 1980s, one in the 1990s, both in similar condition with all flats privately rented. The older conversion is an HMO, the other is not. Disrepair in the communal areas (such as broken handrails, lights and fire alarms) of a 1980’s HMO can be dealt with swiftly and quickly under the Regulations by threatening to prosecute if the landlord fails to act in the first instance.

However, as the Regulations do not apply to the newer conversion, an HHSRS assessment must be made. As such, an officer has to make contact with an occupier of a flat near the top of the building (where the risks are usually highest), and persuade them to allow an inspection of their flat to take place. This is not always an easy task. Then, if the flat is leasehold, the officer has to establish who the leaseholder is so they can be given the requisite 24 hours’ notice. Then, after explaining to the leaseholder that their flat needs to be inspected so the council can deal with the problems in the common parts, the officer has to return and undertake the HHSRS inspection once formal notice has been given. Upon completion of a fully notified HHSRS, the council could serve an Improvement Notice requiring repairs to be made. Repairs required by such a notice cannot demand that they be started until a period of 28 days has expired.

We have similar problems, in two very similar buildings, and the risk is the same, but the bureaucracy associated with the non-HMO is overly onerous. This is time consuming and exposes occupiers to risk for longer periods. It is argued that all converted buildings should be deemed HMOs, or failing that, alternative provisions made such that similar regulations are made in respect of the converted buildings not covered by the HMO management regulations.

The national mandatory HMO licensing scheme has had a significant impact on resident safety. It is argued that the scheme applies correctly to the highest risk HMOs, there being a very real need to improve conditions in this type of accommodation. The council’s experience has shown that most HMOs subject to a licensing application have had to undergo improvements to ensure basic and minimum safety standards. Without HMO licensing, many residents would still be living in unsafe and overcrowded conditions. Historically, identifying the responsible landlord has been very difficult and onerous for LHAs. Having a named licence holder has greatly streamlined and enhanced enforcement when it has been necessary.

The mandatory scheme has been backed up by the two discretionary schemes, namely additional HMO licensing and selective licensing. The council wholeheartedly supports these powers as they allow LHAs to make local decisions in the interests of local people. Every district and every area within each one is different, and innovative solutions are needed to tackle difficult housing conditions and unsustainable communities where they exist. But these conditions are not ubiquitous, and communities that don’t need attention, should not be subject to unnecessary burden. It is strongly believed that these powers support community regeneration in those areas that are in desperate need of intervention.

3.0 The need for Regulation of Lettings Agents

Experience gained within the Thanet area supports the need for the regulation of letting agents. Although professional bodies exist that promote standards, agents are not required to be members and failure to meet these standards carries no significant sanction. Often the failure of the agent to act responsibly has a negative effect on the tenant and results in the use of local authority resource/support in trying to obtain a remedy. Examples of this are as follows;

Failure to ensure the properties they market meet basic standards and are in a fit condition to be let ie are connected to services including gas, electricity, water.

Failure to meet existing legal responsibilities with regard to the production of energy performance certificates, and gas safety certificates, and for recommended electrical condition inspections.

Failure to actively manage properties under their control ie carry out regular visits/inspections, remedying tenant complaints, monitoring and checking the quality of repairs etc.

Failure to act responsibly in ensuring properties are let correctly eg letting more than one property to an individual who then sublets each property to multiple tenants to create unlicensed houses in multiple occupation that fail to meet appropriate standards for this use. Often this action exploits the immigrant population in particular.

Failure to provide services through a contractual arrangement that clearly identifies the responsibilities of the landlord, and the agent. This commonly results in a lack of clarity and misunderstandings between the agent and the landlord.

Failure to ensure that the landlord is made aware of complaints by the tenant.

Failure to take any action with regard to the management of freeholds where they are responsible in properties in which there is a freeholder and leaseholder arrangement.

Excessive and unreasonable fees with regard to the carrying out of reference checks, tenancy deposit arrangements, production of tenancy agreements etc.

Any regulation needs to be effective without being overly bureaucratic. Options include placing letting agents on a similar basis to estate agents with control by the OFT and ability to ban agents who act improperly, compulsory registration with an official redress scheme such as the Property Ombudsman Scheme, independent accreditation schemes, professional body accreditation schemes, or more formal registration/licensing arrangements.

4.0 Tenancy Issues

The common form of tenancy agreement regularly used by landlords today is the Assured Shorthold Tenancy. Largely, landlords will let their properties for an initial fixed period of only six months and then allow the tenancy to continue as a rolling periodic tenancy on the expiry of the fixed term. This tends to have a negative affect on tenants as they are discouraged from taking on private rented accommodation due to the lack of security, and belief that they may have to find a new home after as little as six months.

It is acknowledged that six month tenancies can be beneficial when a landlord has a problem tenant. Landlords also suggest that the uncertainty associated with section 8 notices has led many to use section 21 notices only.

The current lack of security affects the Council’s housing register. Private rented tenants often apply to join the housing register believing this will be a safeguard; however, in reality the lack of social housing and high demand means the likelihood of being offered a property is very slim.

From the council’s experience, many housing register applicants refuse to seek alternative private rented accommodation when things go wrong. This often results in them being placed in emergency accommodation, at a cost to the council, in an attempt to obtain social housing through the homelessness route.

The council would like to make the following recommendations to alleviate the pressure placed on the housing register:

An increase in the initial term of a shorthold tenancy, making it a fixed term of twelve months. It is hoped this would provide more security for the tenant and decrease the number of people on the housing register.

A mandatory requirement that landlords either renew tenancy agreements at the end of the fixed period or follow the procedures required to end a tenancy, rather than tenancies becoming rolling periodic tenancies.

Ensure that despite the length of the tenancy there are still appropriate sanctions in place to allow a landlord to end the tenancy if necessary. We would not want to see a negative impact where issues such as ASB or overcrowding are apparent, as it is often more difficult for a landlord to regain possession under these grounds.

Improvements in property management arrangements, including the quality of the tenancy agreements.

There are accreditation schemes currently in place that landlords can access, which support the education of landlords, and so should be both promoted and encouraged to those landlords that are yet to sign up to a scheme. Regularly updated, informative literature would also be hugely beneficial. Although there are a number of information booklets available, having all the information, easily accessible and in one place may result in a greater number of landlords accessing it or being provided with all the relevant information.

Improved regulation of the private rented sector would help the more vulnerable members of society where some unscrupulous landlords do not comply with their responsibilities or follow the correct procedure to regain possession. These landlords often let their properties to more vulnerable persons who have little knowledge of their rights.

Case Study

Using the private rented sector to discharge homelessness duty

Thanet District Council is aiming to introduce a better than minimum standard for properties to complement other projects, such as: landlord accreditation, tenant referencing and the bond scheme. A policy is being written and will provide a positive tool in discouraging homelessness and limiting the number of households that expect to be placed into council housing. The council have spent an estimated £250,000 this year alone, on temporary accommodation; it is inevitable that this cost will be greatly reduced as a result of the scheme because the number of households needing temporary accommodation will decrease, as well as the length of time households remain in temporary accommodation. Once in place it is envisaged it will also reduce the number of households on the housing register and speed up the processes for housing the homeless, all of which can only be welcomed and beneficial to all parties involved.

The council will need to actively engage with the private rented sector to ensure that it is able to utilise this power and ensure that these properties are properly managed. Thanet has a large supply of cheap private rented accommodation and there is a very real concern that other local authorities, particularly the London boroughs, will use this power to discharge their housing duties by making offers of accommodation in the Thanet area. Thanet is already recognised at a national level as being an area where extremely vulnerable persons are “placed” from other areas, and there is concern that this will further increase the deprivation in the area and have a negative impact on the regeneration work the Council has already put in place. This is evident as in, Arfon v LB Waltham Forest, July 2012, where the local authority has stated that they will be using properties in Margate to meet their statutory housing duties.

5.0 Rental Market

In localities with a high level of housing benefit claims, ascertaining what the actual market rent can be difficult due to the lack of rental evidence based on working people. An option then is to use adjacent localities that can provide working rental evidence.

The problem with this method is when calculating an average housing benefit figure it will be influenced by better localities, therefore creating a higher artificial rent that influences the market in areas where there is no evidence.

The rents are never allowed to decrease to an income led figure due to the housing benefit levels keeping the rents artificially high. Landlords are aware that dropping their rents is not necessarily needed to attract a tenant, because the tenant is not concerned about the rent as long as it is all paid for by housing benefit. There is no onus on the tenant to negotiate a lower rent as they will not be financially better off, unless they intend to work in the future. One agent did make the claim that “working people can’t afford the rents”.

Capital values are potentially kept higher as investors have the housing benefit levels to calculate income. The capital values could drop without the artificial high created by housing benefit.

Re-introducing rent control for housing benefit tenants to encourage landlords to provide better quality accommodation for the incentive of increased rent levels should be considered. This may reduce the need for enforcement action that takes time, as poor accommodation would only achieve minimum housing benefit.

6.0 Landlord Registration

One of the key difficulties for enforcement officers is the inability to trace landlords, especially freeholders. Rogue landlords are very skilled at avoiding official contact. The council is therefore of the opinion that a simple straight forward registration scheme should be implemented. Landlords should be obliged to register with LHAs if they have property in their area. Having a designated address for official communications would have huge benefits for a range of enforcement bodies. The registration should be free and simple, very much like the food registration scheme for food businesses. LHAs are well placed to do this at minimal cost, and if it is an offence not to register, LHAs can enforce the scheme quite easily.

7.0 Issues and recommendations

Summary of issues and recommendations relating to the private rented sector

landlords are regulated by different enforcement authorities which can often be confusing for the landlord and tenants;

currently most LHA activity is re-active in that we respond to a complaint, visit to assess the conditions and then take enforcement action in the form of a legal notice. This can only deal with the problem that has been identified and through experience rarely leads to the landlord implementing changes in other properties in their portfolio or maintaining the property once our intervention has come to an end. This is evidenced by the need to re-visit some addresses often on an annual basis;

in order to instigate mass improvement there needs to be a method of influencing the rental market. Better education of tenants in what to look for when taking on a property could lead to tenant preferences driving improvements in standards of private rented accommodation but this needs to be combined with other measures that influence the market such as accreditation, licensing, property registration and local authority use of the rented sector;

landlords should be encouraged to become a member of an association/scheme/professional body which would educate, inform and support them;

regulation of the management of properties should cover all privately rented accommodation. Many of the problems experienced in the private rented sector stem from the poor management of the property by either the landlord or the management agent on the landlords behalf;

regulation of letting/managing agents - placing letting agents on a similar basis to estate agents with control by the OFT and ability to ban agents who act improperly, compulsory registration with an official redress scheme such as the Property Ombudsman Scheme, independent accreditation schemes, professional body accreditation schemes, or more formal registration/licensing arrangements;

re-introducing rent control for housing benefit tenants to encourage landlords to provide better quality accommodation for the incentive of increased rent levels should be considered. This may reduce the need for enforcement action that takes time, as poor accommodation would only achieve minimum housing benefit;

increase AST’s to 12 months and provide better regulation to prevent illegal eviction; and

introduction of a simple landlord registration scheme, at no cost to landlords.

8.0 Conclusion

Thanet District Council is extremely active in engaging with the private rented sector and has a number of initiatives in place to deal with emerging issues and is well placed to provide feedback. A list of initiative is provided below for reference and more information can be provided upon request. Thanet is particularly concerned by the recent consultation paper released by the Department for Business Innovation and Skills and the Better Regulation Delivery Office relating to extending the range of regulations covered by Primary Authorities. This document suggests that landlords can enter into a primary authority agreement relating to property conditions outside of the LHA area where the property exists. This would make regeneration in local areas very difficult and we are concerned that CLG may not have been properly consulted on this possible legislation.

January 2013

Prepared 16th July 2013