Communities and Local Government CommitteeWritten evidence submitted by Nottingham Action Group on HMOs

1.0 Executive Summary. The Nottingham Action Group on HMOs (NAG) presents a summary of the characteristics of and problems associated with the private rented sector (PRS) in Nottingham, with particular emphasis on houses in multiple occupation (HMOs). It seeks to provide information pertinent to the matters specifically highlighted by the Committee, and also makes a number of suggestions for actions to help mitigate against the issues surrounding HMOs.

2.0 The NAG is a community-based organisation whose members and officers are all volunteers. Its membership consists of a network of individuals, many of whom are also members of residents’ associations in a variety of different neighbourhoods, predominantly within the City of Nottingham, where significant numbers of HMOs (most of which are privately rented) have impacted disproportionately on the environmental and amenity value, and on the balance of the neighbourhoods concerned. However, although the NAG is primarily concerned with all matters to do with HMOs, including legislation, we wish to preface our submission with the observation that the issues connected to HMOs, though often more extreme in their manifestation, have much in common with those experienced in the remainder of Nottingham’s PRS.

3.0 The Characteristics of and Problems Associated with HMOs have been reported on extensively nationally over the last decade or so. Therefore, we feel it is sufficient for us to say that there is a clear communality between the national experience and that in Nottingham where:

3.1 HMOs are characterised by: occupancy levels much higher than those of other similar dwellings; very short-term tenancies and hence high turnover of occupants; lack of internal management structures; occupants from more restricted demographic and socio-economic mixes than typically encountered in other types of dwellings (eg students, so-called “young professionals”, benefit claimants, migrant workers, asylum seekers); and a tendency towards concentrations in specific geographical areas (as opposed to housing types), the latter magnifying the problems associated with this sub-set of the PRS and thus we believe strengthening the case behind the recommendations we make with respect to the need for regulation, licensing and planning intervention.

3.2 HMO-associated problems experienced in our city are closely allied to the characteristics outlined above and include:

3.3 Issues linked to community imbalance (demographic, social, economic, type of home-tenure); transience of tenants; inadequate management by landlords and agents, which together result in loss of social capital, fracturing of community cohesion, downgrading or loss of community facilities such as schools, and creation of neighbourhoods where retail activity is seasonal and limited to takeaways, pubs, clubs and letting agents.

3.4 Whilst these matters are closely related to the concentration of HMOs, this “clumping” is itself a by-product of low levels of regulation in the PRS. The absence of regulation allows the development of concentrations of HMOs, in turn making it harder to manage the problems associated with them, ie

3.5 Environmental issues such as inadequate internal and external waste management regimes leading to litter, rubbish and vermin infestation; gardens and curtilages left overgrown and unkempt with frontages, often used as parking lots; parking problems exacerbated in many instances by conversion of garages into additional bed/study rooms; degradation of the streetscape with flyposting by landlords, agents and other businesses as well as by tenants, and prominent advertising material (often large banners) exhibited in the windows of, or on the outside of HMOs.

3.6 Behavioural issues such as anti-social behaviour associated with day and night noise nuisance, all-night parties, urination and defecation on streets and neighbouring frontages, use of language and behaviour by tenants and landlords alike that can be offensive or even threatening. Although not especially connected to the PRS, it is our experience that as this type of accommodation becomes dominant, erstwhile unacceptable behaviour of owners and occupiers becomes acceptable, ie the norm.

4.0 Quality of Provision. In Nottingham, dwellings converted into HMOs represent a cross-section of the housing market from: large Victorian and Edwardian mansions, and traditional terraced properties with little or no curtilage, to modern three- and four-bedroom properties with good sized front and back gardens. Equally, the spread in quality of provision is notable for its lack of uniformity with distinct variations in the “professionalism” exhibited by those responsible for the management and maintenance of the properties. It is clear that some landlords and agents see ownership and responsibilities (to tenants and neighbourhood) for good quality management and maintenance as being an important part of their function. Others, sadly the majority, take the view that the PRS, and HMOs in particular, are a “cash cow” enabling them to secure maximum return on their investment with minimum outlay on maintenance and management, and with little concern for the quality of what they are providing for their tenants, or the impact on neighbours.

4.1 The resulting scenario is at odds with the concept of the neighbourhood as a “settled place of residence” for the occupants of the homes within it. The neighbourhood becomes primarily an area where issues are driven by the investment decisions of absentee landlords. Our experience is that this has a corrosive effect on neighbourhood stability, leading to disproportionate numbers of problems, the resolution of which is left predominantly to the local authority and the police, with significant cost to taxpayers.

4.2 Clearly, the quality of provision impacts very directly on the health and welfare of the tenants. A badly managed and/or maintained HMO can give rise to the tenants experiencing relationship difficulties as well as physical problems. This is aggravated by tenants’ inexperience, the lack of the internal cohesion needed to manage even simple matters such as waste management disposal, and their transience. When coupled to short-term leases and, in the case of some groups of tenants, low comprehension of the English language and a suspicion of people in “authority”, there is the risk of damage to health and even a threat to life itself.

4.3 However, the quality of provision also has a wider impact on the neighbourhoods around HMOs. One badly-managed and badly-maintained HMO can and does create problems for the immediate neighbourhood. However, there is a tendency for HMOs to form clusters. When this happens (as is more often than usual the case), the result of poor management and maintenance is the creation of neighbourhood blight, ie areas where the degraded visual appearance, problems with crime (often crime perpetrated on the tenants), and (albeit often low-level) anti-social behaviour, come together to generate the impression of neighbourhoods which are no-go areas for non-HMO residents: places where families do not want to live and to invest in, whether as owner-occupiers or as tenants.

4.4 Recommendations. The Housing Act 2004 set a baseline for provision. Nottingham City Council, in conjunction with Unipol,1 landlords and other stakeholders has developed an accreditation scheme for student landlords and agents and is currently developing a scheme for the rest of the PRS. We strongly support this as one of the ways of raising the standard of provision and eliminating “rogue” landlords, and we recommend that local authorities be required to establish accreditation schemes which include training for landlords in the essential aspects of their business.

5.0 Rents and Affordability. HMOs tend to utilise the potential of almost every room in a property to be a “habitable/rentable” space. As a result, the occupancy rates of HMOs are very much higher than those in other forms of accommodation: eight occupants in what had hitherto been a three- or four-bed “planning Use Class” C3 (family) home is not unusual. Thus even “modest” room rentals result in a total yield substantially higher than if the property were rented out to a family. (Note that the average rent for student HMO accommodation in Nottingham is around £68.00 per person per week.) The outcome has been an overheated housing market where property prices have been inflated to a level well above that of comparable properties in areas without (or with minimal) demand for HMO-type accommodation, and in rents (per square metre of lettable space and therefore gross rents) which are well in excess of what it is affordable for other social groups wishing or needing to rent (eg families, young couples, singles and the elderly).

5.1 Recommendations: Although in the past profiteering and shrinkage of the PRS have been held to be the result of attempts to regulate PRS rents, we feel that, in the light of the trend for ever increasing rents and reducing affordability, along with reduced ability to obtain mortgages for potential first-time buyers, that regulation of rents is a necessity if in future people from all social and economic groups are to be given what is the fundamental right to have a decent roof over one’s head. If this means that some landlords disappear from the marketplace, if it results in an improved quality of offer, and if by some chance it also results in properties coming on to the market at prices that are attractive to people wishing to buy a home for themselves, then we suggest that this is a benefit of regulation that should be welcomed.

6.0 Regulation of HMOs through Planning Controls. The changes in planning legislation introduced in April 2010 recognised the inherent difference in land use between a small HMO (Use Class C4) and that of dwellings in the remainder of that class (including “family” homes, Use Class C3) This has made it possible for Local Planning Authorities (LPAs) to regulate the number of HMOs (eg conversion from C3 to C4) and, perhaps more importantly, to prevent that over-concentration of HMOs in specific localities which is so damaging to the stability and balance of neighbourhoods. The change in legislation later that year, making conversion to an HMO “permitted development”, resulted in Nottingham City Council having to either retain the status quo, or introduce an Article 4 Direction to remove this development right. Having taken the latter course, the Council cannot now charge fees when an application is made for conversion to an HMO. This is an inherently unsafe situation where neighbours’ rights to try and influence the future shape of their neighbourhood by challenging a planning proposal come with a penalty (payment, through the Council Tax, for the processing of an application), whilst the applicant, often a business with a substantial portfolio of properties, is not required to contribute at all to the costs incurred in processing that application.

6.1 There are also difficulties associated with the requirement that a material change of use needs to be shown to take place if a C3 dwelling is converted into a small HMO (Use Class C4) or indeed into a larger, sui generis, HMO (with more than six occupants).

6.2 Taken together, these matters seriously curtail the ability of the planning system to regulate the number and concentration of HMOs and, hence, to mitigate against some (if not all) of the problems associated with this aspect of the PRS.

6.3 Recommendations: We recommend the following actions:

6.3.1Initially, when an Article 4 Direction in respect of conversion to HMOs is in place, the LPA should be permitted to charge the fees associated with other planning applications;

6.3.2In the medium-term the amendment to the 2010 planning legislation is repealed, thus removing the need for LPAs to introduce Article 4 Directions if they wish to control HMO development.

6.3.3The need to show a “material change of use” is removed from the legislation.

6.4 Regulation of Landlords. As things stand all that is needed to become a landlord is a property to let. There is no requirement for a landlord to register as such, or to provide any proof of ability to act in this capacity. Indeed property rental and ownership seems to exist in a “private world” far from the norm that people would expect in other customer-provider relationships such as retail, financial, and other services. An example of this anomaly is that whereas occupants and other road users can see the licence details of a taxi, this is not the case when it comes to the details of a landlord or persons managing a property.

6.5 Recommendations: We recommend that a national register of landlords be established to which there is full public access. We also recommend that a confidential procedure should be set up nationally (information about which should be displayed by all landlords and agents) to enable tenants to become aware of their rights, responsibilities, and, most importantly, through which they will be able to register any complaints or difficulties encountered with specific landlords and/or properties. Landlords who have had complaints made about them on more than a specified number of times (to be agreed upon by stakeholders such as local authorities, housing charities like Shelter and indeed landlords representative bodies) should be removed from the register and be required to undertake retraining/further training before being permitted to rejoin the national register.

7.0 Regulation of Letting Agents. Anyone can go into business as a letting agent. Indeed, the last few years have seen a consistent increase in the number of such businesses in Nottingham, especially focused on the student-HMO market. A worrying number of these can be described as “rogue letting agents”. Some have been prosecuted and fined under the terms of the Housing Act 2004.

7.1 Recommendations. We strongly recommend that in order to operate, all agencies advertising properties to let in the PRS must be licensed and, in order to obtain that licence, must be able to demonstrate a proper knowledge and understanding of housing and planning legislation as it appertains to the properties they are advertising, and of their responsibilities to tenants and other residents as well as to their landlord clients. As many letting agents also manage properties, it is doubly important that they are shown to be competent to do their work.

8.0 HMO Licensing. The Housing Act 2004 introduced mandatory licensing for some HMOs, ie those with three or more storeys and five or more occupants. Whilst very welcome, in Nottingham the number of HMOs which fall outside the mandatory requirement is well in excess of those which fall within it. The Act also made it possible for local authorities to extend licensing regimes to cover other HMOs. The changes introduced to the Housing Act 2004 in January 2010 mean that councils no longer need to seek permission from the Secretary of State to do so. However, the requirements are still onerous and likely to act as a barrier to a local authority exercising this ability.

8.1 Recommendations. It seems to be the case that the PRS will play an increasingly major role in housing provision in this country. The age of first-time buyers continues to increase and, taken alongside changes in Housing Benefit, it is reasonable to suppose that the requirement for shared housing will also increase.

8.2 These considerations along with the comments we have made about the present situation with respect to licensing of HMOs, leads us to make two suggestions:

8.2.1That there should be a further easing in the procedures and burden of proof needed before local authorities can bring in discretionary licensing schemes;

8.2.2That the aim should be to bring in universal licensing of all HMOs in the first instance, followed by that of all other types of property in the PRS at a later stage.

9.0 Tenancy. In the above section we referred to the role of the PRS in housing provision in this country and touched on some of the factors driving this.

9.1 Impact of Length of Tenancies. HMO tenancies in particular are very short-term which has an impact on the quality of provision. (Many HMO tenants are prepared to “put up with” poor quality accommodation for the six months or so they hold the tenancy.) As has been noted above, the high turnover of tenants (and short-term nature of tenancies), coupled to concentration of HMOs within specific neighbourhoods, has a detrimental impact on almost all aspects of a neighbourhood, on the lives of the people living within it, as well as on the availability of and choice of housing provision.

9.2 Recommendation: In the light of increasing dependence on the PRS, it would appear to be sensible to ensure that there is a commensurate increase in the security of tenure throughout the PRS.

10.0 Other Matters. Although not directly included in the issues the Committee wishes to have information on, the NAG draws attention to two other potentially useful matters.

10.1 The first is the fact that a disproportionate number of HMOs are in fact second homes for students. In Nottingham the percentage of HMOs is well above the national average. Also, Nottingham has an acknowledged shortage of good quality family homes. Many student HMOs in particular have come about as a result of conversion from precisely the sort of family housing that Nottingham needs, and without any ability on the part of the local authority and long-term residents to have say in that process.

10.2 The second is that there continues to be difficulty in persuading governments (not just the present administration) to let local people and local authorities to be the judges of what is “best” for their neighbourhoods and to allow them to put in place the powers they need to manage HMOs and their spread and concentration.

10.3 Our contention is that if local representatives and their officers, in response to the needs of local people, recognise the need for local powers, then government should not require them to jump through hoops before the powers are realised.

11.0 We hope this submission is helpful to the Committee in its consideration of issues relating to the PRS. We will be glad to provide the Committee with any additional information it may require, or if it wishes to hear further from us.

January 2013

1 Unipol, a constituted charity, with particular expertise in the HMO market and student accommodation in general, aims to improve housing standards.

Prepared 16th July 2013