Communities and Local Government CommitteeWritten evidence submitted by Housing for the 99%

Summary

1. Housing for the 99% campaigns for access to genuinely affordable, good quality, safe and secure housing for all. The private rented sector (PRS) is not currently fit to provide this, and reform is urgently needed.

2. Properly enforced regulation is needed to improve standards, improve security of tenure, protect tenants and prevent profiteering which is pushing housing costs beyond the reach of the majority of the population. Voluntary schemes are inadequate, have a track record of failure, and exacerbate housing inequalities.

3. The private rented sector cannot be considered in isolation from the wider housing system. The majority of private tenants live in the PRS not through choice but because of lack of any other option. In particular, increasing the supply of publicly owned social housing available at genuinely affordable rents would much better meet the needs of those on low incomes, and provide better value for public money.

About Housing for the 99%

4. “Housing for the 99%” was the demand of private tenants in London who, frustrated with high costs, poor quality and acute insecurity in the private rented sector and concerned at the increasing numbers of people who are unable to access good quality, safe and secure housing, called a meeting in May 2012 to bring together groups and individuals to take action for better housing. At this meeting, tenants, representatives of a number of groups working on housing and related issues, and other individuals formulated a series of demands reflecting their analysis of the some of main problems with the current housing system.

5. Since then, Housing for the 99% has become a forum for housing campaigning, particularly in London, and uses a blog, events and social media to campaign and share information on housing issues, particularly in the private rented housing sector.

6. Housing for the 99% welcomes this inquiry, and requests that the committee take into account the following information and recommendations:

The quality of private rented housing

7. The private rented sector currently represents the poorer quality housing than either the social rented or owner occupied sectors. The English Housing Survey shows that:

properties in the private rented sector has the lowest proportion of three standard insulation measures: cavity wall insulation, good loft insulation, and full double glazing, and are most likely to fall into the lowest energy efficiency bands, F and G.

Over a third (37%) of privately rented homes are “indecent”: (classified as not meeting the Decent Homes standard)—almost double that of social rented homes.

Almost one in five (19%) private rented homes fail the Housing Health and Safety Rating System (a risk assessment tool used to assess potential risks to the health and safety of occupants)—compared to just 9% of social sector dwellings.

All types of damp problems are more common in private rented homes than other types of housing.1

8. Housing is a fundamental human need and right, and regulation to ensure it is of a basic decent standard is long overdue. When compared to regulation and oversight of other basic human needs such as food safety, the lack of regulation of PRS landlords is astonishing.

9. Particularly given the enormous public subsidy given to private landlords through Local Housing Allowance (LHA—Housing Benefit provided to claimants living in the private rented sector), it is vital that the goods/services provided are of a good standard.

10. Housing for the 99% believes that regulation or mandatory licensing/accreditation with stringent standards are the only means to ensure the housing in the sector is of an acceptable standard. As outlined above, poor standards are endemic in the PRS, and regulation is required to ensure that properties meet basic health and safety, Decent Homes and energy efficiency standards.

11. We are concerned that voluntary accreditation schemes are ineffective as, with current market conditions, landlords do not feel the need to engage in them, particularly if their properties are in poor condition. The fact that they are voluntary also introduces a trade-off for those setting standards for accreditation, with these standards likely to be set lower so as to encourage more landlords to participate. As a result, any improvements in conditions are minimal and likely to be limited to properties at the higher end of the market, rather than cheaper properties where the most acute problems of low quality are experienced and those on low incomes are housed. Only compulsory schemes will ensure that properties with the poorest conditions are improved.

12. There is no evidence that voluntary regulation schemes or self-regulation have worked. When Newham trialled their licensing scheme on a voluntary basis last year, just two percent of landlords signed up, and nationally, only 6% of landlords have voluntarily joined a relevant professional body or organisation.2 Voluntary accreditation will not make not a difference where demand far out weighs supply, as is the case in an increasing number of areas. The supply of affordable homes is so low that whether a landlord has accreditation makes no difference to desperate tenants faced with high rents and little choice of good quality properties.

Levels of rent within the private rented sector

13. Levels of rent in the private rented sector are increasingly unaffordable, and access to decent quality properties restricted to those on the highest incomes. For example, recent analysis has found that over half (55%) of local authorities in England have a median private rent for a two bedroom home which costs more than 35% of median take home pay in that area, a level considered likely to be unaffordable in previous studies.3 In London, a family would need a net household income over £41,100 a year (around £51,900 gross in wages) to affordably rent a two bedroom home at the median London rent (£1,200 per month).4

14. Recent research suggests that rent increases in the private rented sector are not driven by increased costs—in a survey carried out for Shelter, only 4% of landlords said they had increased rents because increased mortgage costs. By contrast, one in five had put up rents because their letting agent had encouraged them to.5

15. Given that access to adequate housing is a fundamental human need and right, Housing for the 99% considers that rent control is needed to prevent market rates being pushed further beyond the levels affordable to those on low or average incomes, and in some areas, to reduce rents.

16. Rent controls are used in many countries, including France, Germany, Sweden and the US, and still exist in the UK for properties where the tenancies predate the deregulation which took place in 1988. Such controls are necessary to prevent profiteering from housing, which is a basic human right and need, and the supply of which is by its nature limited. There are a number of ways in which rent controls can be implemented, including limits on the frequency and/or size of increases within and/or between tenancies, caps on maximum rent based on floor space and/or other qualities, and/or requiring landlords to provide justification for any increases.

17. However, we consider that rent control provides only part of the solution to the issue of lack of affordability and increasing public subsidy. (Despite the cuts to LHA rates, costs are not expected to fall in real terms, only in comparison to a scenario without these reforms.)6 We note that there are estimates that the scale of public subsidy for the PRS could be as much as £400m annually, and suggest that such sums could be more productively invested in new, high quality publicly owned social housing stock let at genuinely affordable rents which would help to deal with the problem of under-supply (which is contributing to increasing rents), provide better value for public money and deliver more appropriate housing for those on low incomes who are poorly served by the PRS. We note that only 8% of private tenants say that they would continue to live in the sector if they had a choice.7

Regulation of landlords

18. While some campaigns have focused on a small minority of “rogue” landlords whose behaviour may be illegal, the figures provided above demonstrate that many private tenants have reason to complain about the standard of their homes and that greater protection and improved standards are needed.

19. There are currently few requirements of landlords, or ways for tenants’ complaints to be addressed. It is increasingly recognised that many tenant complaints, particularly about housing quality, are not reported for of fear of retaliatory eviction. This is a particular problem for tenants from low income groups,8 and results in increased housing inequalities. Whilst landlords are able to evict their tenants without reasonable cause and tenants have no form of redress when they have problems with their landlord, tenants effectively have no housing rights. Private landlords should be required to become a member of the Housing Ombudsman Service, as Registered Social Landlords (RSLs) are.

20. As the English Housing Survey notes, “In the private sector, those in poverty were more likely to live in a home with poor energy efficiency or that failed the Decent Homes standard than other households. These disparities were not evident in the social sector.”9 We consider that these problems will be best tackled by increasing social housing provision for this group, mandatory registration and/or licensing (as practiced in Scotland and the London Borough of Newham) and removing the ability of landlords to carry out retaliatory evictions for those who remain in the PRS.

Regulation of letting agents

21. It is currently possible for anyone to set up a lettings agency without appropriate qualifications, knowledge or understanding of the rental process. In addition, it is not compulsory for agents to conform to any code of conduct, provide safeguards or register with a government-approved redress system. Given the current market pressures in many areas, this leaves private tenants at real risk of exploitation.

22. We note that the Scottish Government has recently issue clarification that all letting agents’ fees for tenants are illegal, and believe that the same protection should exist for tenants in other parts of the UK. There is no relationship between fees charged and services provided by the letting agent. It is standard practice for letting agents to charge hundreds of pounds of “administrative fees” which are far beyond the actual cost of the service provided, for instance a reference check.

Security of tenure

23. Security of tenure is a major problem for private tenants. Standard Assured Shorthold Tenancies (ASTs) give landlords the right to evict tenants from their home, without any reason, with two months notice from six months into their contract. Whether or not the landlord chooses to exercise this right, the lack of security affects tenants’ ability to put down roots and commit to being part of their community. This problem is not just restricted to families with children, for whom it is particularly important, but all private tenants. A YouGov poll found that 30% of private tenants were worried about their tenancy being ended before they were ready to move out.10 A recent report found that the realities of renting combined with no functional route in to long term sustainable housing was having an adverse impact of the lives of young people who are forced to compromise their life and career ambitions.11

24. It is vital for security of tenure for private tenants to be improved before any other regulation to improve standards or address spiralling rents can be effective, since otherwise it will be possible for landlords to avoid them by evicting tenants who try to ensure compliance. Insecurity of tenure also increases the risk of homelessness for private tenants. Regulation to prevent retaliatory eviction has been in operation in most developed countries, including Australia, New Zealand and the US, for decades. Similar legislation is urgently needed in the UK.

Placing homeless households in private sector housing

25. Housing for the 99% considers that this policy is a negative development both for the households affected and for the public purse since, as highlighted above, compared to social housing, the private rented sector provides poor standards and security of tenure, at a higher cost.

26. Expanding the supply of good quality publicly-owned social housing is likely to provide better outcomes for both homeless households and society as a whole (since there are financial and wider economic costs to the public purse and wider economy resulting from poor housing). It would also reduce demand for homes in the private rented sector (PRS).

27. In addition, housing those who receive support for their housing costs in the PRS is a gross waste of public money when this money could be channelled into investment in publicly owned housing at genuinely affordable rents. Such a change in policy could have major in wide-ranging benefits, including reducing the Housing Benefit bill, improving living standards and health and educational outcomes for low income groups, reducing the poverty trap faced by such households, and help increase the supply of appropriate housing.

28. This applies to all low income households who receive assistance with their housing costs, but particularly applies to homeless households since they are least likely to feel able to raise problems or request repairs of their landlord,12 and have the least resources to deal with their tenancy being ended, as is possible within six months under a normal AST. Brent Private Tenants Rights Group have estimated that 27% of households become homeless due to their PRS tenancy being ended, not due to rent arrears.13

29. The difficulties facing LHA claimants in finding accommodation in the PRS should not be underestimated. A recent survey found that just 1.5% of private rented properties were accessible, affordable and available to single LHA claimants under the age of 35.14

January 2013