Communities and Local Government CommitteeWritten evidence submitted by Digs

Who we are

Digs is a grass roots advocacy and support group for private renters in Hackney. We launched in October 2012 in response to worsening conditions for the 29,500 households who now rent privately in the borough (representing 29% of the borough’s total population; an increase of 86% since 2001, according to 2011 Census data).

Run entirely by volunteers, most of whom have full-time work commitments, we meet in local cafes in the evenings to support members experiencing difficulties with their private landlords. Members come to us facing retaliatory evictions, unexpected rent increases, bullying and harassment from their landlords and poor quality housing. Some have rented in the private sector for decades and are worn down from having to change home often; younger members are new to the sector and are exposed to the increasingly unscrupulous practices of lettings agents. All have experienced some degree of damage to either their working lives, relationships, family lives, neighbourhood ties or, in some cases, physical and mental health as a result of living in the private rented sector.

As private renters, we have found support from our local authority in dealing with these problems woefully inadequate. Whether this is due to lack of will or lack of resources is unclear, but currently we provide legal information and mediation services to landlords and tenants; effectively, we are doing the council’s job for them. We have received plenty of public encouragement from several Hackney councillors and our MP, but when we invited a representative from Hackney’s private tenants department to attend our launch to speak to renters about their rights and what help they could get, we were told that nobody would be available.

None of the problems we campaign against are specific to Hackney, or even to London. Campaign groups for private renters are rapidly being established across the UK in response to worsening conditions in the private rented sector. However, renters in areas of high demand such as London are seeing the worst effects of an unregulated market and we have been encouraged by the rise of private renters’ groups in other London boroughs. We have campaigned alongside these groups but the views expressed here are our own.

Private Renting in 2013: A Summary

Problems in the PRS should not be viewed as “new and emerging”. 25 years after the abolition of fair rent rules and the introduction of the six month AST, which allows landlords to evict for any reason or none, we are simply seeing the natural consequences of this deregulation.

Because of a combination of depressed incomes, market forces and the policy context, private tenants are more vulnerable than ever to exploitation and in an even weaker position to enforce their rights.

Lack of Control Over Lives

The 2007 Hills Report found that only 8 percent of those living in the PRS would continue to do so if they had the choice. People are forced into private renting because there is no longer a functioning pathway for young people and non-priority families into sustainable, long-term housing. Traditionally this would have been through either home ownership or social housing; both are now out of reach for the vast majority.

Young people in particular are being forced to live in compromised ways, often having to share with strangers, with no “light at the end of the tunnel” as home ownership is now out of reach. This has a stifling effect on their ambitions for their lives and careers, as well as a worrying effect on their social relationships, lifestyles and health. Some of our members report being afraid of their housemates.

The threat of retaliatory eviction leaves renters powerless to challenge disrepair, rent increases or harassment from landlords.

Short term tenancy agreements create short term lives. Some of our members have lived in more than ten different homes in the last five years. They do not choose to move this often. Moving frequently affects their health, their ability to commit to jobs and relationships, and creates fragmented neighbourhoods.

No Accountability or Transparency

Local authorities lack the resources needed to enforce any existing laws.

No register of private landlords: landlords do not even need to declare criminal convictions, while tenants must provide several references.

Lettings agents can charge extortionate fees with no real accountability.

Voluntary accreditation schemes lack teeth (for example, the London Landlord Accreditation Scheme has a database of landlords who have been convicted, served with injunctions or received warning letters but councils are not currently passing on the information).

Landlords are under no obligation to register their properties and are not pursued by the Inland Revenue for tax on their rental income.

Lack of reliable, relevant research on the sector.

Changes Needed

Secure, five year tenancies.

Require landlords to provide a valid reason for ending a tenancy (for example, deliberate damage or non-payment of rent). Evictions rules that apply to older, pre-1989 tenancies should be extended to ASTs; these would still protect the landlord from “rogue” tenants while introducing protection to the tenant from “rogue” landlords.

Mandatory licensing, with proper enforcement, making it easier and more cost effective for councils to pursue landlords.

A public register of landlords using paid-for information from Land Registry.

Force local authorities to keep proper records of complaints, injunctions and convictions, and to make this information public.

Follow Scotland in ending lettings agents fees.

A non-profit making, publicly accountable lettings agency at either borough or city level.

The Decent Homes Standard used in social housing should be applied to the PRS, with proper enforcement. Where repairs are needed, public money should not be used: landlords are running lucrative business and should therefore shoulder the cost.

Better tenancy relations services from local authorities: mediation, harassment protection, proper intervention in cases of misconduct.

Better education of the police so they don’t help landlords during illegal evictions.

A PRS ombudsman or tribunal facility should be created.

Rent control orders on properties, rather than individual tenancy agreements, as part of a licensing scheme.

Proper vetting of landlords before they let homes, including criminal record checks, tax records and previous warning letters from councils.

Credit unions to enable tenants to use “Escrow” rent strikes in cases of disrepair.

Landlords could be required to pay a deposit themselves, also to be held in a third party protection scheme. This could be claimed by the tenant at the end of the tenancy if they have experienced harassment from the landlord, or if the landlord has refused to carry out repairs.

The name of the property owner (available from the Land Registry for £3) and their Unique Tax Reference number (UTR) should be included in the tenancy agreement.

Further Information

Please note:

1. Many of the themes identified in the original call for submissions are too closely linked to be discussed separately. For example, disrepair and retaliatory evictions are effectively the same problem, as is the regulation of both landlords and their agents, who act in the same interest. For this reason, we have not answered each question separately but given our explanations under broad headings.

2. Any examination of the PRS must be done with the understanding that the private, unregulated nature of the PRS makes valid statistical research into the sector difficult. The DCLG’s own annual survey of private landlords has only been running since 2009, is based on no more than 650 landlords and fails to take into account that most landlords—particularly those at the least scrupulous end of the spectrum—will not participate in government surveys. While there is not even a register of private landlords (as discussed in the methodology section of the DCLG’s Private Landlords Survey), it remains impossible to record accurate levels of tenancy “churn” or to survey landlord behaviour. Similarly, most renters who began renting after the changes in 1988 (anyone currently under the age of around 40) have grown up unaware of tenants having any rights at all, so are unlikely to recognise a retaliatory eviction or even know that councils can intervene in the case of a privately rented household. This lack of awareness is changing, but the obstacles to meaningful research must be addressed. The first step would be to introduce a mandatory register of private landlords and their properties.

Themes

1. The quality of private rented housing, and how it relates to retaliatory evictions

GLA research found in 2011 that a third of homes in London’s private rented sector would fail to meet the Decent Homes Standard,1 used to measure quality in social housing, if it were applied to the PRS.

This is because tenants are unable to complain; retaliatory evictions are common in Hackney and inextricably linked to the problem of disrepair. Private landlords in London know that demand is so high that they can let a property whatever state of repair it is in; if renters ask for repairs to be carried out, they can be replaced easily and quickly by renters who will not make such demands. The Citizens Advice Bureau produced an excellent report on retaliatory evictions in 20072 and some campaign work was done, but lost momentum with the change of government in 2010.

Collecting hard evidence on disrepair is difficult as properties are not required to be surveyed to ensure they are safe before they are rented out. Moreover, councils do not keep records of retaliatory evictions and many tenants do not even know the practice has a name. Some have come to accept it as “just how it is” and consider serious disrepair an inevitable cost of affordable rent. Those who experience retaliatory evictions have to spend their spare time and energy finding a new home quickly, rather than finding an organisation interested in recording the reason for their eviction.

Many of our members have found themselves unable to challenge disrepair. One sent her landlord a polite email reminding him that a chest of drawers had been broken for more than a year and that it needed replacing. She offered to replace it herself and to take the cost (around £70) from the next month’s rent, asking simply for his consent. Her landlord promptly served a valid Section 21 notice, saying that as a tenant she was “too much hassle”. When she explained the situation to the private renting department at the local authority, an officer replied with a one line email saying “It’s not against the law to dislike someone”. Four months on, this member is still sofa surfing at a friend’s house, having been unable to find another affordable home to rent.

Another member asked us to accompany her to a meeting with her landlord, who was refusing to fix a broken boiler in winter, leaving her without heating or hot water for several weeks. The property was also infested with cockroaches, and the local authority’s environmental health department had been either unable or unwilling to intervene. The landlord used a lettings agent, but the business relationship between landlords and agents means that the agent cannot act against the landlord’s wishes or they will lose their client. At the meeting, the landlord spoke only to the tenant’s boyfriend, saying in front of our representative as well as the lettings agent that he would not speak to the tenant “because she is a woman”. The tenant had spent months meticulously recording every instance of disrepair and every unreturned phone call and email. She was almost at her wits’ end, and only after months of effort could she get the landlord to agree to a meeting. Most tenants do not have the time or resources to go to these lengths, particularly when pressing for repairs is most likely to result in a perfectly legal eviction.

Many cases of disrepair, such as leaking roofs, unreliable boilers and damp, do not become evident until after the tenant moves in. Even when disrepair is evident before a tenant signs an agreement, high demand means tenants are in no position to choose. Landlords know that even basic legal requirements like gas and electricity safety certificates, and deposit protection certificates, mean nothing when there is a desperate shortage of accommodation and no real accountability to any public authority.

Australia, New Zealand and the US have had laws preventing retaliatory eviction for 40 years. In Europe, long term tenancies and strong tenants’ rights prevent retaliatory evictions. The UK is alone in allowing retaliatory evictions and we believe that the shocking levels of disrepair seen in the PRS are a direct result of tenant’s powerlessness to complain.

Even when renters make improvements themselves, they still risk losing their home. One of our members spent a year and a considerable amount of her own money turning a back yard full of builders’ rubble and nettles into a garden. When, after months of hard physical work, she asked her landlord for a skip to take away the rubble and showed him the flower beds and lawn she had created, he laughed, said “You’ve increased the value of this place; I can charge more rent!” and served her with a Section 21 notice. She had to move out a week before Christmas.

2. Levels of rent within the private rented sector

A 2012 study by Rentonomy using Valuation Office Agency records found that private renters in Hackney are now spending between 40% and 50% of their gross monthly income on rent.3 This leaves even high earning renters unable to save, and many of our members—including those in full-time work—have reported using credit cards and payday loans to cover their rent.

The same study showed that only in a few distant suburbs of London are median rents below 35% of gross median salaries. Any claim that living in Hackney is a luxury lifestyle choice and not a necessity must be countered with a look at travel costs to central London, where most jobs are located: a monthly travelcard for zones 1–9 currently costs £303.40, or £3,160 a year. Most of our members have work and social ties keeping them in the area, particularly those who have lived here for more than five years, and some have children attending local schools.

There is a widespread misunderstanding that the role of Rent Assessment Committees (RACs) is to maintain fair rents. In fact, “fair rent” rules only apply to tenancies begun before 1989; nearly 25 years ago. The only remit of RACs is to measure market rents, which are manipulated by lettings agents who have an interest in pushing rents up.

Nearly all of our members have faced large rent increases within the last three years. In some cases the increases have been as high as 40%, and renters are powerless to negotiate once they are already living in their home. Many of our members who have found themselves facing a rent increase have been forced to leave their home, and those who have sought mediation or help from the local authority have all been specifically advised not to use RACs as in nearly all cases, disputes sent to RACs result in higher rents.

Nationally, seven out of eight people receiving housing benefit are in paid work but need housing benefit to cover high rents. Landlords have long been able to exploit the system by raising rents ever higher, knowing that local authorities will be forced to make up the difference between what people can afford and the price landlords demand. We agree that this should stop, but by capping rents rather than benefits; otherwise, renters themselves will be punished for their landlords’ greed, homelessness will rise and cities like London, which have long benefited from mixed communities, will become economically segregated—with all the social problems that follow.

Many of our members, both working and unemployed, are now facing homelessness as a result of benefit shortfalls and can only expect council help with rehousing if they are considered a “priority” (if they have children or a disability). A 2012 survey by Hackney Citizens Advice Bureau found that only 143 of 1,585 advertised properties were affordable under the new housing benefit levels and of those, only 1% were owned by landlords willing to let to people on housing benefit. Some landlords are bound by restrictions placed by their banks or insurance companies on letting to people on benefits. But in our experience, other landlords (particularly those who do not declare their properties as lettings in order to avoid tax, a group that accounts for many of our members’ landlords) are simply acting on prejudice, social snobbery and most importantly, a sense of power.

A five-year minimum tenancy agreement with planned rent increases linked only to inflation has proved a successful model in France and Germany. It gives stability to renters, their families and their communities. In the UK, it would allow tenants to defend their existing rights; something they are currently unable to do.

Alternatively, Rent Control Orders could bind the property, rather than the individual tenancy agreement. This would take rent levels out of the framework of landlord-tenant law (which is bipartite or agreement-based) and into the realm of regulation, making it an add-on to a licensing system.

3. Regulation of landlords, and steps that can be taken to deal with rogue landlords

We believe that the term “rogue landlord” is misleading, as it implies that only landlords who break the law are a problem. In fact, many of our members have found that the most common difficulties arise from landlords who act within the law. Many report bullying and harassment from landlords who for various reasons have been unable to grasp the concept of a rented property as the tenant’s home. This ranges from unannounced visits, to sexist and racist remarks, to clear physical aggression. Shared houses are the only affordable option for most Hackney renters, and it is common for landlords to exploit the natural divisions that arise from sharing with strangers to victimise particular tenants and force some to pay much higher rent than others. While harassment is a criminal offence, landlords’ legal ability to evict for any reason at all negates the power of renters to challenge any kind of behaviour from landlords, criminal or otherwise.

We believe that compulsory licensing, with sufficient resources for its enforcement, is the best way for local authorities to tackle bad behaviour from landlords. We applaud the decision of our neighbouring borough, Newham, to introduce mandatory landlord licensing, but know that without adequate resources to police over 30,000 rented households, the move will be no more than an exercise on paper.

Tenancy relations officers working in other London boroughs tell us that local authorities are unwilling or unable to pursue landlords through criminal courts as the resources needed—and the punishments given—do not make it a worthwhile exercise for either tenants or councils (one landlord in a neighbouring London borough was fined just £400 for repeatedly letting himself into his tenant’s bedroom and going through her underwear drawer; one in Wales who had failed to install safe electrical wiring in her property, causing her tenant to die of electrocution while running a bath, escaped with just a £5,000 fine and no further penalty). Besides, even a landlord with a criminal conviction faces no barrier to continuing to rent out property: fines are small and local authorities have no mechanism to prevent known criminals from letting homes.

Mandatory licensing, on the other hand, would allow councils to tackle bad landlords through civil, rather than criminal courts, making the financial penalties a sufficient deterrent for landlords and barring them from managing their rental property, forcing them to hand the management responsibilities to an accountable party.

Various “voluntary regulation” schemes are in place at London and at national level. These amount to the purchase of a certificate for a small fee, with no real checks made. Even lettings industry insiders have admitted that certificate schemes such as the one run by ARLA have failed to remove a landlord’s accreditation once a criminal conviction has been revealed. When Newham trialled a voluntary licensing scheme, around two percent of private landlords signed up to it.

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

We believe that councils have been forced into this move as a direct result of the insecurity of the PRS. The Assured Shorthold Tenancy (AST), by far the most common tenancy now offered in the PRS, lasts for a maximum of 12 months (usually with a “break clause” after six), after which the landlord is free to increase the rent by any amount, or evict without giving any reason. As we have outlined above, high demand for housing allows landlords to exercise these powers frequently, making large numbers of people unintentionally homeless every month. Nearly all of our members have experienced this at least once in their renting lives, though many would not recognise the terminology. There simply isn’t sufficient social housing stock to offer council accommodation to all who find themselves in this position: in Hackney, around 100 social homes become available each year while the number of people finding that their AST has ended through no fault of their own far exceeds this.

Reports from our members tell us that the insecurity, spiralling cost, power imbalances and bad conditions that characterise the PRS make coping with an AST a struggle even for renters who are relatively healthy and affluent. For vulnerable people, it is impossible.

5. Live-in landlords

For renters with live-in landlords, life is becoming increasingly difficult. Most live-in landlords are “reluctant landlords” in that the only way they themselves could afford a mortgage was to buy a home with an extra bedroom, then charge a high rent on it (often far more than half the monthly mortgage repayment). As a result they resent having another person living in their home, and their tenants are in a particularly precarious position as they do not share many of the rights held by those with assured shorthold tenancies.

One member’s health began to suffer when her landlady’s controlling behaviour extended to criticising what she wore, not allowing friends or family to visit and not allowing her to use the kitchen to prepare meals.

Another member, an NHS radiographer earning £30,000 per year, currently pays £700 per month for a small room in her landlady’s home. Her landlady does not allow her to use the central heating or the shower in the mornings because she says the sounds it makes wakes her up too early, so our member must shower at the hospital where she works, and she cannot use the kitchen to cook an evening meal until after her landlady has finished hers. She would like to find something better, but says she “cannot face trailing round and moving again”. The member moved into this place after “sofa-surfing” for three months while looking for an affordable room after a 30% rent increase saw her having to leave her previous rented home. She registered for a First Steps shared ownership scheme but even on a salary of £30,000 there were no affordable options for her. At 35, she says she can’t envisage ever having a home of her own, despite working full-time in a stable profession.

January 2013