Housing and Planning Bill

Written evidence submitted by the Residential Landlords Association (HPB 07)

1.0 About the Residential Landlords Association

1.1 The Residential Landlords Association represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 20,000 members, and an additional 20,000 registered guests who engage regularly with the Association, the RLA is the leading voice of private landlords. Combined, they manage over a quarter of a million properties.

1.2 The RLA provides support and advice to members, and seeks to raise standards in the PRS through our code of conduct, training and accreditation and the provision of guidance and updates on legislation affecting the sector. Many of the RLA’s resources are available free to non-member landlords and tenants.

1.3 The Association campaigns to improve the PRS for both landlords and tenants, engaging with policymakers at all levels of Government, to support the aim of a private rented sector that is first choice, not second best.

2.0 Executive Summary

2.1 The RLA welcomes the provisions in the Bill as they relate to the private rented sector. We do feel that changes are needed around Banning Orders and the proposed database of criminal landlords to help incentivise improvments by landlords and to ensure proper mechanisms for appeal are in place.

2.2 We believe that the proposed fines that the Bill allows, replacing prosecutions, should be re-invested in housing activity.

2.3 To support the identification of landlords it should be compulsory for local authorities to ask on council tax registration forms for tenants to provide details of either their landlord or managing agent to support enforcement activity against criminal landlords.

2.4 We believe also that the Bill provides an important opportunity to:

· Encourage longer, rent stablising, tenancies.

· Modernise tenancy deposit schemes.

· Respond to a recent court judgement to ensure that landlords cannot be held liable for repairs in common areas of blocks of flats where they have no legal control over the land and have no notice of the repair being needed.

· Address anomalies arising from the retaliatory evicition provisions within the Deregulation Act.

3.0 Background

3.1 Part 2 of the Bill outlines a series of legislative changes to tackle the problem of criminal landlords and letting agents. These include new banning orders; a database of criminal landlords and letting agents and measures to empower the First Tier Tribunal to make Rent Repayment Orders to deter criminal landlords.

3.2 Part 3 of the Bill provides a legal framework within which a landlord can recover possession of a property where it has been abandoned, without the need for a court order.

3.3 Part 5 includes additions to the criteria for determining if a landlord applying for a licence is a fit and proper person, including that they have the right to remain in the UK and should not be insolvent or bankrupt. It takes into account also breaches of immigration legislation.

3.4 Clause 86 and schedule 4 mean that local authorities will have the right to impose a financial penalty, rather than prosecution, for certain offences.

3.5 Clause 87 allows local housing authorities to obtain specified information held by tenancy deposit scheme administrators to assist in in the enforcement of regulations affecting the private rented sector as outlined in the Housing Act 2004.

3.6 Clause 88 gives the Secretary of State the power to make regulations about the ways in which local authorities can use data collected for the purposes of council tax or housing benefits to help enforce regulations within parts 1 to 4 of the Housing Act 2004.

4.0 Banning Orders and Database of Criminal Landlords

4.1 The RLA welcomes the principle of banning orders and the database of criminal landlords. The Association has long argued that those landlords who wilfully breach their legal obligations should face the consequences.

4.2 That said, we remain concerned that local authorities will not make full use of banning orders given the relatively low current level of enforcement. There is also a degree of inconsistency between increased financial penalties and banning orders as the issuing of a financial penalty cannot lead to a banning order. Therefore, banning orders will only be effective if serious offenders are prosecuted rather than being continually issued with financial penalties and if local authorities follow serious prosecutions with applications for banning orders.

4.3 We are also concerned that a database will only be effective if the data is actually included and some local authorities already operate informal databases and widening this is a reasonable action provided the costs are kept in proportion. It would be helpful for the government to give more information as to who will operate this database and some indication of how it will operate should be placed on the face of the Bill.

4.4 For those landlords who find themselves subject to an Order or included on the criminal landlord database through a mistake that was unintentional, and where there are signs of real remorse, we believe that there should be a formal route for the landlord to be released from an Order and from being listed on the database. This should happen where they are prepared to undergo an intensive period of re-education. This could mirror the system used for driving offences whereby a driver is often given the opportunity of either paying a fine and receiving points on their licence or attending a re-education session. The wording of a possible amendment to achieve this is set out in appendix A.

4.5 We are pleased that, as outlined in clause 16, Banning Orders would not be permanent, but cover a certain specified time period. We believe that same principle should apply to the proposed database of criminal landlords.

4.6 We understand the reasoning in making banned landlords subject to management orders in respect of their property. However, the take up of management orders to date has been very low and local authorities are reluctant to enter into them. We see no reason why this marked reluctance will change under the banning order regime and we are concerned that the property of banned landlords will be lost to the market, so reducing supply. We propose that Schedule 3 of the Bill is re-drafted so that banned landlords have their properties made subject to selective licensing under the Housing Act 2004 with a presumption that the banned landlord cannot be a licence holder.

4.7 This would allow such landlords to re-let their property provided they presented a suitable alternative person, ideally a letting agent, to be the holder of the licence. Conditions could then be applied to the licence to ensure that the banned landlord had no involvement in the day to day operation of the property. Management orders could be retained as an option where no suitable person is put forward as a licence holder. This would mean that the operation of the property of banned landlords would stay within the private sector at the banned landlord’s immediate cost but with oversight through the licensing regime rather than local authorities being forced to bear that cost and workload and having to recover it from the landlord at a later date.

5.0 Retaining Fines for Enforcement Activity

5.1 Clause 86 and Schedule 4 combined enable financial penalties to be used as an alternative to prosecutions under the Housing Act 2004 in certain circumstances. We are concerned however that financial penalties are not used to target very minor offending which would not normally warrant prosecution or to deal with serious cases where the larger fines and consequent power to use a banning order would be more appropriate. Accordingly, we are calling for a limit on financial penalties to ensure that repeat offenders are prosecuted in the Courts rather than being continually issued with penalties.

5.2 One of the key causes of anger for the majority of good landlords providing decent accommodation is a sense that they, through paying licensing fees and other initiatives end up subsidising enforcement activity against the criminal landlords. In order to ensure that the polluter pays principle is applied to this clause, the RLA is calling for all fines received under this new power to be re-invested into housing activity and they should be ring-fenced for that purpose. If they are not, much of the value in giving local authorities the ability to retain funds for themselves is lost. We note that regulations can be made on this point but would prefer that such a limit is included on the face of the Bill.

5.3 In the consultation "Tackling Rogue Landlords" which gave rise to this part of the Bill the government asked what limits should be applied to prevent over-enthusiastic enforcement activity by local authorioties in relation to minimal offences. We proposed at that time and now call for a requirement that local authorities only be permitted to levy financial penalties if they have a clear written enforcement policy as to when they will take no action, when they will use financial penalties, and when they will prosecute and how the appropriate financial penalty will be calculated.

6.0 Use of Council Tax Data to assist enforcement activity

6.1 Ultimately, what is missing from the private rented sector is not further regulation but action to enforce existing laws. One of the main reasons for a lack of proper enforcement is that there is no clear and systematic way of identifying the landlord of a property and how they can be contacted. It is vital that such information is readily available if the enforcement of existing regulations affecting the sector and the taxation of landlords are to have any effect.

6.2 Whilst some have suggested that a national register of landlords is the answer, this would inevitably become just a register of good landlords imposing extra costs and bureaucracy on them whilst leaving the criminals continuing to operate under the radar.

6.3 Tenants are already legally entitled to information about who their landlord is. We are therefore calling on the Government to include, in full, the provisions of Dame Angela Watkinson MP’s Local Government Finance (Tenure Information) Bill. Doing so would make it compulsory for local authorities to ask tenants to provide this information when they complete council tax registration forms. Where not known, details of a property’s managing agent could be provided instead.

6.4 Collecting the information in this way would greatly assist local authorities to enforce all regulations pertaining to the private rented sector. It could also support HMRC’s work to clamp down on the minority of landlords who fail to fully declare their income. We understand that information obtained through licensing is already being used by HMRC to support enforcement activity in this way.

6.5 Local authorities would also have an up to date picture about the size of the private rental market in their area enabling better, evidence based policy to be developed. It could also be used as an invaluable tool to communicate with landlords.

6.6 This proposal would make it much more difficult for criminal landlords to avoid being identified since it would be the tenant disclosing where their properties are and who the landlord is.

6.7 If either the landlord or managing agent is not identified by a tenant because they are not known, the tenanted address could be checked against the land registry database and the property owner identified. This would provide local authorities with the intelligence to target their finite enforcement resources on these properties.

6.8 Ministers have argued that local authorities already have the power to collect such information on council tax forms to help enforce regulations affecting the sector. Crucially this is not compulsory.

6.9 The result is that DCLG know of only a handful of councils that actually use this power. Instead, local authorities are frequently using licensing which costs the good landlords who inevitably are the only ones to identify themselves under such schemes. It brings enforcing bodies no closer to finding the criminals who remain hidden.

6.10 We are of the view that the provisions of Dame Angela’s Bill would be best applied universally across all local authorities for it to have any teeth and to ensure that all tenants and the Government enjoy the benefits that it would bring. It would also support the proposed banning orders and register of criminal landlords. Both these measures would require a systematic way of finding landlords in the first place.

7.0 Encouraging Longer, Rent Stabilising Tenancies

7.1 The RLA recognises that private sector rents in some areas, especially in London, are too high. The question is how to address this.

7.2 We believe that reforms are needed to encourage a culture of long termism within the private

rented sector which would play a significant part in stabilising rents for tenants.

7.3 Too often letting agents base their business models on short term tenancies, charging fees (and

thereby increasing rents) when they are renewed.

7.4 The evidence shows that where tenants stay in their properties for longer periods, landlords are

reluctant to increase rents, at least beyond inflation. As the most recent English Housing Survey notes: "In general, those who had lived in their home for longer paid less rent. Private renters that were in their current home for less than a year paid an average weekly rent of £198 compared with £158 for residents of 5-9 years and £127 for residents of 20 or more years."

7.5 Landlords often want to offer longer tenancies. As the English Housing Survey notes, the

average length of residence for tenants in private rented properties is now 3.5 years and of those tenants in the sector who had moved house in the last 3 years, just 8.3% of such tenancies were ended by a landlord or letting agent.

7.6 Many landlords are prevented from voluntarily providing for tenancies longer than a year by

mortgage lenders and the owners of blocks of flats.

7.7 Data compiled for the RLA, based on a survey of over 1,500 landlords found that 25% were not

allowed to agree tenancies longer than a year by their mortgage lenders or insurers. Of this group, 43% would offer tenancies of longer than a year if they were allowed.

7.8 The Treasury is in a unique position to improve this situation. A number of the main mortgage

lenders remain part-owned by the State. This puts the Government in a powerful position to call on them to amend their limits. There is no good reason for a limit of one year on a tenancy as mortgage lenders still have considerable powers to evict tenants in the case of mortgage default.

7.9 We suggest that mortgage lenders be asked to change their lending terms so that they will not object to tenancies of more than a yearlong at any one time.

7.10 In relation to flats, we recognise that resolving this is a more difficult issue as amending existing leases is complex and expensive. Therefore, we consider that the best option is statutory intervention to state that clauses limiting leases to fewer than three years are of no effect and replacing them with a suitable alternative which will be implied by statute.

7.11 We believe that a simple provision within the Housing and Planning Bill, to amend the Commonhold and Leasehold Reform Act 2002 would achieve this. The wording of a potential amendment can be found in appendix B.

8.0 Modernising Tenancy Deposit Schemes

8.1 Under the law, landlords are legally responsible for ensuring deposits provided for a rental

property are kept safe for the duration of the tenancy in an official tenancy deposit scheme. They are duty bound also to provide the tenant with details of where the deposit has been saved. This is known as the prescribed information.

8.2 At present the prescribed information must be issued to a tenant in paper form. In houses of multiple occupation this can lead to a substantial volume of paper.

8.3 The RLA is calling for an amendment to the Housing and Planning Bill to enable legal information on the location of deposit money (once secured in an official scheme) to be provided electronically to tenants if they prefer.

8.4 This already applies to some other paperwork, including the Government’s ‘How to Rent’ guide and Energy Performance Certificates, but should be applied across the board to include gas safety certificates and tenancy agreements.

8.5 A recent survey of landlords by the RLA found that:

· 91% would prefer to send the prescribed information to a tenant by email.

· 92% felt their tenants would prefer such information to be send by email.

· 95% felt that serving information electronically would make the administration of letting out a property more efficient.

8.6 Where someone other than the tenant of a property contributes to, or pays in full, the deposit for a home they are required to be given the prescribed information as well as the tenant. This person is known as a ‘relevant person’ under legislation. There is little need for this condition as the arrangement between the tenant and a ‘relevant person’ is private and one that the landlord is not required to know about, despite being required to provide them with information. The provision can be easily forgotten about or the information not provided to the landlord; creating a trap for landlords.

8.7 The RLA is calling for the Government to look at whether the relevant person’s concept is needed within a tenancy deposit scheme. The RLA believes that this is confusing and is not required since it does not add anything.

8.8 Currently there is a trap within tenancy deposit protection which limits the power of a scheme to adjudicate where a landlord is seeking to go to Court. This allows a permanent trap which means a landlord can defer adjudication of the deposit indefinitely by asserting a desire to go to Court but never actually getting there.

8.9 There is also a delaying process which requires a statutory declaration to be sworn before a solicitor where the landlord or tenant is absent or refuses to communicate. This allows landlords and tenants to delay the process and incurs costs for the other party.

8.9 The RLA is calling for an amendment to the scheme rules in Schedule 10, Housing Act 2004, to allow for adjudication to proceed where a landlord or tenant is artificially delaying the process and the other party wants to proceed along the lines of legislation in Scotland and Northern Ireland.

9.0 Landlord Liabilities in Blocks of Flats

9.1 In the recent Court of Appeal case of Edwards v Kumarasamy it was decided that landlords are liable in blocks of flats for repairs to common areas despite knowing nothing about the need and having no control over the land. Aside from being highly unfair, such a decision will inevitably heighten still further the risks of renting such properties out, with increased insurance premiums as a result.

9.2 The Welsh Government has taken action to address the situation within its Renting Homes Bill. We are calling on the Department for Communities and Local Government to do likewise.

9.3 The RLA is calling for an amendment to the Housing and Planning Bill which would make clear that landlords cannot be held liable for repairs in common areas of blocks of flats where they have no legal control over the land. A draft of such an amendment can be found in appendix C.

10.0 Addressing Anomalies around Retaliatory Evictions

10.1 The RLA is concerned about the potential, under reforms within the Deregulation Act 2014, for a landlord to lose their Section 21 rights, even where they were not informed of a potential defect in a property by the tenant.

10.2 As an example, under the Act a tenant is expected to write to their landlord with details of a problem which the landlord then has 14 days to respond to.

10.3 If the landlord’s response is deemed unsatisfactory and a tenant complains to the local authority, the authority would then inspect the property. At this stage it is possible, under the law, that the council could serve an Improvement Notice which would suspend a landlord’s Section 21 rights based on a problem that might not have been highlighted in the original complaint from the tenant and of which the landlord might not have been made aware. We believe this to be fundamentally unfair and contrary to case law on the issue.

10.4 Given the uncertainties that this creates, we would ask that the Government includes within the Housing and Planning Bill measures to make it clear that under no circumstances can a landlord lose their Section 21 repossession rights based on a problem in the property of which they had not been notified, in writing, by the tenant beforehand.

10.5 To protect vulnerable tenants who might not be in a position to provide written notification, we would suggest that a letter sent by an advocate such as a GP or support worker on behalf of the tenant to the landlord would also have the same effect. This would need to be based solely on the specific concern raised by the tenant. Should, in the course of preparing a letter, the advocate find some other problem with a property about which the landlord had not been made aware, we believe the landlord should be given the opportunity to address the issue before any formal proceedings took place.

10.6 Amendments to achieve these can be found in appendix D.

Appendix A – Education and Banning Order

In clause 16, page 10, line 3 add at the end of subsection (2): "unless an exception has been made for a course under subsection (5)."

In clause 16, page 10, line 9 add at the end:

(5) The Secretary of State may make regulations specifying by syllabus, type, or provider a course or courses regarding the duties and best practice of a landlord in the private rental sector which a landlord might attend when made subject to a banning order or an application for a banning order.

(6) Where regulations under subsection (5) have been made the Tribunal must consider in the making of a banning order:

(i) The length of the order and whether the length should be reduced on the attendance by the landlord of a course of the type referred to in subsection (5);

(ii) Any exceptions or conditions that might be levied on the landlord in relation to such a course;

(iii) Any other considerations that might be prescribed by the Secretary of State in regulations made under subsection (5).

Appendix B – Longer Tenancies Amendment

In the Commonhold and Leasehold Reform Act 2002, insert after s166

Sub-Letting

166A Limitations on sub-letting in long leases

(1) Any provision of a long lease that purports to prohibit sub-letting or parting with possession (whether absolutely or conditionally) under a sub-tenancy for a term of less than three years shall be rendered void and shall be replaced by the implied term set out in subsection 2 below.

(2) It shall be an implied term of any long lease that the landlord will not unreasonably withheld or delay consent to a sub-letting by the tenant provided that the sub-tenancy so created:

(a) is an assured shorthold tenancy for a term not exceeding three years;

(b) is let at the best rent which can be reasonably obtained without taking a fine;

     (c) contains provisions requiring any sub-tenant not to breach the terms of the long lease

(3) The landlord may impose such other reasonable terms as are necessary for good estate management.

(4) The Secretary of State may change the implied terms specified in subsection 2 above by order and that order may be made by statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament.

(5) The landlord may seek a fee for provision of the consent set out in subsection 2 above provided that the fee is reasonable in all the circumstances.

(6) The Secretary of State may by order specify an amount above which the fee referred to in subsection 5 above will always be considered unreasonable and that order may be made by statutory instrument which is subject to annulment in pursuance of a resolution of either House of Parliament.

(7) The tenant may make an application to the First Tier Tribunal on the basis that an additional term imposed by the landlord pursuant to subsection 3 is unreasonable or does not contribute to good estate management or that a fee imposed by the landlord for consent pursuant to subsection 5 is unreasonable in all the circumstances.

(8) In this section-

"landlord" and "tenant" have the same meanings as in Chapter 1 of this Part,

"long lease" has the meaning given by sections 76 and 77 of this Act.

Appendix C – Landlord responsibilities in blocks of flats amendment

(1) In section 11 of the Landlord & Tenant Act 1985 add after subsection 2:

"(2A) The landlord’s obligations under subsections (1) and (1A) do not arise until the landlord becomes aware that works or repairs are necessary."

Appendix D – Reforms to Retaliatory Eviction provisions in the Deregulation Act 2014

Housing Act 1988 amendments

"(1) In Section 21A of the Housing Act 1988 insert at at the end:

(6) A landlord shall not be treated as being in breach of a prescribed requirement in sub-section (2) above where they have used reasonable endeavours to comply with such a requirement but has been unable to do so as a result of access to the relevant property being refused."

"(2) In section 21C of the Housing Act 1988 delete sub-section (3)."

Deregulation Act amendments

In section 33 of the Deregulation Act 2015 in subsection (2)(d) insert after "…in relation to the dwelling

house": "about the same, or substantially the same, subject matter as the initial complaint to the landlord"

November 2015

Prepared 10th November 2015