Communities and Local Government CommitteeWritten evidence submitted by Decent and Safe Homes Project

Executive Summary

1. DASH is a regional, not-for-profit, umbrella organisation, focussed on the efficient distribution of knowledge and best practice across the private rented sector in the East Midlands. DASH welcomes this opportunity to contribute to the work of the select committee and would make a number of recommendations to it. These include that:

Local Authorities and private sector landlords should work in partnership to improve the poor quality of accommodation that exists in some areas.

The scope of selective licensing should be widened to embrace more of the private rented sector.

Landlords should be required to pass a more searching “fit and proper person” test in order to obtain a license and/or accreditation.

The interplay between rent levels and housing benefit should be thoroughly reviewed, to ensure that decent homes are affordable to claimants (and the low paid) renting in the private sector.

Rent levels in the private rented sector should be tied to quality of accommodation.

Direct payment of rent to landlords should be an option that is available where appropriate, but should be conditional on standards being adhered to.

Lettings and management agents should also be subject to licensing, minimum standards and robust enforcement measures. Local Lettings Agencies should continue to be promoted.

Tenants should be protected from retaliatory evictions.

2. DASH stakeholders have mixed views about the feasibility of full statutory regulation of the private rented sector. However, there is a clear consensus that both property and housing management standards need to improved and that clear, consistent operating framework is needed to enable this to happen.


3. DASH was originally conceived as a regional facility to support the implementation of the Housing Act 2004. However, in recent years, its remit has since expanded greatly. Now, DASH’s regional scope has enabled:

the establishment of the East Midlands Landlord Accreditation Scheme (EMLAS) soon to be incorporated into the DASH brand (DASH Accreditation);

provision of a Local Lettings Agency for Derbyshire.;

organisation of conferences and forums for local authorities and landlords across the East Midlands; and

organisation of regional landlord shows and training sessions for landlords.

4. DASH has a network of over 40 stakeholders across the region. These stakeholders have been consulted on the contents of this submission. In structuring this submission, we have used the topic headings suggested on the relevant page of the parliamentary web site.

Submission to the Enquiry

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

5. DASH stakeholders are of the view that, across the East Midlands, the quality of private rented housing available is varied. Some stakeholders report good quality, especially where Home Repair Grant budgets have been available, to bring properties up to the decent homes standard. Many properties would not have been able to reach this standard without this financial help.

6. By contrast, in other areas, the properties available tend to be of poorer quality. In particular, tenants on benefits or low incomes tend to be concentrated in certain neighbourhoods, where the quality of private rented housing is poor (eg streets of Victorian terraces, deprived wards in the main conurbations)

7. High demand for private rented housing leads to lack of choice. This affects tenants on benefits or low incomes disproportionately, as they tend to be able to access only the lower end of the market. Formerly homeless tenants who responded to a recent research project in the East Midlands:

Regarded private rented sector properties as being of a lower standard than in the Social Housing Sector.

Experienced problems with damp, heating and other utilities.

Thought private rented sector landlords provided services that were not as good as councils and housing associations.

Perceived tenancies to be short term and insecure, which was a particular problem for families.

Did not trust lettings agencies and thought they tried to squeeze as much extra money out of tenants as possible.

Were worried about falling prey to “rogue” landlords.

Had concerns about privacy and safety.

8. DASH stakeholders have pointed out how many landlords are failing to meet even basic standards, such as gas safety. To help improve quality, DASH members are of the view that:

There should be minimum standards for private rented sector landlords, which should be promoted and enforced by Local Authorities. Standards should not just be about property condition, but also about tenancy and housing management.

Local schemes should, at minimum, entail the setting up and maintenance of a list of landlords, with the option of extending this listing to become a formal register. This would be compatible with the accreditation schemes already in operation in the region.

Property inspection should be a pro-active feature of any standards framework, not solely complaints/problem driven.

Local Authorities and other agencies should share information on landlords letting substandard properties or otherwise providing a poor service.

9. DASH stakeholders have also pointed out that payment of Housing Benefit direct to landlords should be conditional upon standards being met. This would give Local Authorities significant leverage on standards in the private rented sector. Further leverage would result if both building control and planning enforcement time limits could be extended.

10. DASH stakeholders are positive about selective licensing, which enables local authorities to extend the benefits of licensing beyond HMOs. These discretionary schemes empower local authorities to introduce licensing for all privately rented properties in a given area. DASH stakeholders particularly welcome the “fit and proper person” tests applied to landlords under such schemes, although they felt these should be tightened. Further evidence is needed in order to assess the success of licensing across the country in tackling its primary objectives.

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

11. The vast majority of the homeless people helped to access accommodation by our stakeholders are on housing benefit. This means that the private rented sector “market” in housing homeless people and others on benefits is directly influence by housing benefit rates. Typically, landlords wishing to help house homeless people will examine Local Housing Allowances (LHAs) and decide whether rent charged at those rates will provide a sufficient return on investment. Sometimes, they will also estimate whether likely tenants will be able to afford to “top up” their rental payments from other benefits.

12. DASH stakeholders have varied views on the adequacy of LHAs in the region. Many Local Authorities and other agencies aiming to house homeless people in the private rented sector hold detailed discussions with local landlords, to see if schemes can be made to “stack-up” financially assuming rents at LHA levels. The success of this approach varies according to local circumstances. However, it is clear that:

Recent restrictions in LHA levels for the under-35s are making it extremely difficult for landlords to provide (or homelessness agencies to source) adequate housing for benefit claimants in that age group.

Existing (and in particular planned) cuts to benefits in general (emanating from the government’s “welfare reform” programme) make it very difficult for tenants to top up their rental payments beyond LHA levels.

Upward pressure on rents generally, caused (for example) by the demand created by prospective first time buyers not being able to afford home ownership, means that there are fewer and fewer properties available at LHA rent levels, as landlords naturally cater to the more profitable segment of the market.

13. DASH stakeholders have expressed the view that rent levels should be tied to quality of accommodation. It should not be possible for landlords to set high rents for poor quality or poorly managed properties.

14. It is a consistent theme across the East Midlands that, although LHAs are based on local data and are meant to reflect actual rents in the lower quartiles, few properties for rent at those levels are in practice available. It seems that the current methodology for calculating LHAs has not led to rents affordable by people on benefits and that either rent controls and/or a more flexible benefits regime are needed.

15. DASH would urge the select committee to examine the rents and benefits regime that operates for Social Housing. Here, target rents are governed by an agreed formula and LHA restrictions are not applied to benefit claims. It seems to use that this achieves a balance between rent control and provision of housing benefit which is helpful and could (in some of its principles at least) be extended to the private rented sector.

16. DASH stakeholders are aware that landlords and agents often see payment of Housing Benefit via tenants as a significant disincentive towards letting to claimants. Where local direct payment arrangements are available, these can be extremely helpful. Many DASH stakeholders believe direct payment of rent direct should be used to lever up quality standards. Landlords with court orders against them and other landlords letting substandard properties should not be able to receive rent direct.

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

17. Although the desire for higher standards is unanimous amongst DASH stakeholders, there are mixed views amongst across the East Midlands about the need for greater statutory regulation of the private rented sector. Many stakeholders reacted positively to the previous government’s “Rugg” review, which they saw as promoting:

Professionalisation of housing management.

Improvement of the quality of properties.

Provision of sustainable tenancies.

Maximisation of the private rented sector’s contribution to homelessness prevention.

Light-touch licensing of landlords.

18. In the absence of the Rugg review being taken forward by central government, most of our Local Authority stakeholders have taken their own steps to address at least some of the above. For example, landlord accreditation schemes have been introduced in some areas. However, schemes that are by nature voluntary will always be patchy in terms of implementation and take up.

19. Some stakeholders are of the view that formal (or over) regulation risks dis-engagement by landlords. At the top of the market, landlords might merely let desirable property to those who could afford it, regardless of the Local Authority policies or strategies. At the bottom end, some of the very landlords towards which regulatory measures would be most directed might seek to operate “under the radar”. In the current climate, they might remain confident of a supply of tenants who would put up with poor accommodation and services.

20. However, there is widespread support in principle for improvements in the private rented sector. So, the approaches taken have tended to be pragmatic and localised. In many ways, this is a strength, as it allows for practical, business-like engagement with landlords. However, the approach tends to be highly reliant on a few committed individuals, teams or voluntary sector organisations that have the knowledge and skills to work across agencies and departments.

21. In the absence of a nationally agreed regulatory approach, concerns include:

Inconsistent approaches to landlord accreditation and registration, area by area.

Variations in approaches to maintaining landlord listings.

More or less pro-active inspection of properties, some triggered by accreditation, some by engagement with access schemes and some by complaints.

Patchy implementation of landlord forums, ranging from the very comprehensive and regular to the almost non-existent.

22. There is some support in the East Midlands for a national “regulatory presence” to oversee the private rented sector. This could include, say, a national register of landlords. This would bring hidden/hard to reach and amateur landlords within a framework of standards.

23. If development of localised practice continues to be the norm, good practice and resources will have to be shared as widely as possible, on the sub-regional and regional levels. We would urge he select committee to consider both the case for national regulation and how consistent good practice in “local regulation” of the private rented sector can be promoted.

Regulation of letting agents, including agents’ fees and charges

24. As letting agents are often the only individuals that tenants in private rented sector come into contact with, any future regulation of landlords should be extended to include their agent representatives. A national register that includes a requirement to complete a fit and proper person test should cover agents as well.

25. DASH stakeholders are of the view that agency fees and charges are often excessive, acting to prohibit access to rented accommodation for certain groups, for example homeless singles and families. Limits on (and greater transparency in) administration fees charged by agents would be welcomed. At the very least, DASH believes:

A Client Money Protection Scheme should be mandatory for all agents.

Membership an ombudsman scheme should be mandatory for all agents.

There should always be transparency in agents’ fees and charges.

Greater industry intelligence sharing on rogue agents is needed.

Robust enforcement arrangements, including realistic and proportional penalties imposed by the courts, are essential.

26. The above should be brought together into a set of minimum standards for lettings and management agents.

Regulation of houses in multiple occupation (HMOs), including the operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area

27. DASH stakeholders stated that the:

Comprehensive use of selective licensing would ensure all HMOs are registered and standards could be enforced consistently.

The fit and proper person criteria are currently too limited and need to become more robust.

Local authorities should consider planning control of new small HMOs.

28. The concern here is that the benefit changes are likely to lead to more HMOs coming into existence, as the only form of accommodation affordable to low income groups. If these go unlicensed, there is a risk that the quality of accommodation occupied by benefit claimants and the low paid will fall even farther.

Tenancy agreements and length and security of tenure

29. Some DASH stakeholders report that many tenants perceive that Assured Shorthold Tenancies (ASTs) are short-term and insecure. They view the private rented sector as a poor alternative to social housing. Many feel:

That landlords can choose to sell the property from “under their feet” and evict the them at any time.

That the six-monthly cycle on which ASTs work means they are an inherently short term option.

That landlords can visit the property whenever they liked, leading to lack of privacy and a feeling of being “checked up on”.

That unreasonable restrictions are imposed (no additional occupants, no pets, no smoking etc.)

That the landlord can raise the rent, often above LHA levels, if and when they please.

That the landlord could get away with providing a poor service on repairs etc.

30. By contrast, many housing professionals see the AST framework as adequate, providing all its legal nuances are fully understood by all parties. It is perhaps a valid criticism of the AST framework that knowledge of a fairly complex legal area is required in order to feel safe and secure in a tenancy.

31. Promotion of better understanding of the legalities, together with dissemination of good practice beyond the legal minimum appear, then, to be central to improving this aspect of the private rented sector.

32. One particular area of concern is “retaliatory evictions”. These happen when landlords require a tenant to vacate a property in response to a complaint concerning the condition of the building. DASH believes that tenants need to be protected in these circumstances.

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

33. DASH welcomes the increased amount of joint working taking place across the East Midlands, between Local Authorities and the private rented sector, in meeting the housing needs of homeless people. We are aware of the following good practice initiatives aimed at promoting joint working between Local Authorities and landlords:

Rent Deposit and Guarantee Schemes—which work by offering landlords either a cash deposit or a guarantee of the deposit, on behalf of clients who could not otherwise afford it. Some schemes offer rent in advance of receipt of Housing Benefit and can potentially include an element of rent guarantee.

Local Lettings Agencies—these aim to provide quality accommodation at affordable rates to meet local housing need, minimise fees for those on low incomes and support landlords to sustain tenancies.

Support for tenants—landlords and agents are positive about the impact of the various kinds of support that can be provided by Local Authorities, aimed at making tenancies sustainable. In particular, they welcome support for formerly homeless tenants around money, the responsibilities of tenants, avoidance of nuisance and Anti-Social Behaviour.

34. Specific good practice examples include:

In Mansfield, the District Council offers the Multi-Agency Rented Solutions scheme (MARS), a private rented sector bond guarantee scheme, established to improve customer choice and access to the private rented sector and to assist the council to meet its statutory duty towards people who were homeless or at risk of homelessness

In Leicester, the City Council’s Housing Options Service has developed a Private Sector Lettings Shared House Guarantee Scheme. The key points of the scheme are a guarantee that covers a sum equivalent to one month’s rent, landlords to provide gas safety and other key certificates, all bedrooms to be of an adequate size, no administration fees and no landlords to reside within the property

In Lincolnshire, West Lindsey District Council, City of Lincoln Council and North Kesteven District Council have combined to pilot a local lettings agency, which operates across the whole Housing Market Area

In Derbyshire, a Local Lettings Agency was established in 2010. It is run as a partnership between DASH, local housing providers and four Derbyshire Local Authorities (Amber Valley Borough Council, Derby City Council, Erewash Borough Council and South Derbyshire District Council).

The East Midlands Landlord Accreditation Scheme (EMLAS) was established in November 2008. The scheme enables landlords and agents to get the recognition they deserve for providing quality properties and skilled management.

January 2013

Prepared 16th July 2013