Housing and Planning Bill

· Starter Homes will be homes for sale at 80% of the market price, up to a value of £250,000 (£450,000 in London). They will be built by private developers and sold to first time buyers.

· The Bill provides a duty on local authorities to increase the supply of Starter Homes, with requirements that they are built as part of any large-scale development.

· The Prime Minister has confirmed that this will mean diverting funding from existing affordable housing obligations (called ‘Section 106’ obligations). At present local authorities can oblige developers to build low-rent homes as part of any large scheme, as the price of planning permission. In future, this subsidy must be diverted to fund Starter Homes instead.

· Shelter research recently found that the average Starter Home will be unaffordable to families on middle incomes in a majority (58%) of the country by 2020. A family on the new National Living Wage will not be able to afford a Starter Home in 98% of the country.

· Shelter supports building Starter Homes but they should not come at the expense of genuinely affordable homes, as this Bill currently proposes. Section 106 obligations currently deliver around 1/3 of all affordable homes each year. This supply is put at risk by these changes (we estimate 85,000 affordable homes that could have been built between now and 2020 will now not be as a result). Restricting local authorities’ ability to demand low-rent homes from developers - homes they feel they need in their local area - could have serious unintended consequences.

· There are alternative ways to deliver Starter Homes that do not replace the building of low-rent affordable homes. For instance, Starter Homes can be delivered through stepping up the government’s original policy for delivering them: zoning new development land specifically for Starter Homes.

4. Planning reforms: improving Compulsory Purchase Orders (CPO)

· The bill proposes measures to make Compulsory Purchase Orders more efficient. CPO is used to assemble land for infrastructure and complex developments where landowners are reluctant to sell.

· The high price of land at the root of the reason England doesn’t build enough homes. While these measures do not directly address that, they are a welcome first step to giving local authorities the powers they need. In future we need reforms to allow local authorities to CPO land at low enough price to enable them to build high quality developments with the affordable homes their community needs. This is how CPO works in countries with successful development markets, like Germany and Holland.

5. Pay to Stay

· Families in low-rent affordable homes (i.e social housing) with a household income of more than £30,000 (£40,000 in London) will see their rents increased gradually towards market levels over time.

· We are not against the principle of some social housing tenants paying slightly higher rents depending on their income, but we believe these income thresholds are too low given how unaffordable market rents are in many parts of the country. Local authorities should also be able to keep the extra money generated from these changes to invest in affordable housing.

6. Improving conditions in the Private Rented Sector (PRS)

· The decline of alternatives to private renting make the government’s private rented sector reforms even more urgent. We support the government’s existing proposals in the Bill to:

Introduce banning orders for rogue landlords (Part 2, Chapter 2)

· This will allow local authorities to ban landlords and letting agents that commit housing related offences from letting out properties for a specified period of time, and fine them up to £5,000.

· This is a very welcome step. A minority of landlords repeatedly commit housing offences – in one example, a single landlord had been prosecuted seven times. This proposal will enable local authorities to stop rogue landlords from operating.

· We support the government’s amendment to make breaching a banning order an offence, which can be punished by imprisonment or a fine, or both. We would also support moves to increase the fine levied at landlords that breach a banning order above the proposed £5,000.

· There is increased pressure on councils’ budgets and some have scaled back their efforts to tackle rogue landlords and poor conditions. Local authorities should be able to keep the proceeds of fines to help them continue with these types of enforcement activities; the Bill does not currently make it clear where the proceeds will go.

Create a rogue landlord blacklist (Part 2, Chapter 3) and share tenancy deposit data (Part 5, Clause 87)

· We welcome both the blacklist for rogue landlords and the sharing of tenancy deposit data. Under the current regulatory system, there is no simple way for local authorities to identify private landlords operating in their area. Equally, there is no straightforward way for renters to find out whether their landlord has been convicted of a housing offence.

· Despite a lack of information about landlords, we know from renters that there are many rogue landlords operating who are blighting their lives and putting their health at risk. Over 450,000 private renters say they have rented from a rogue landlord in the last year. The government’s measures will help assist local authorities to identify rogue landlords and drive up standards in their area.

· Consideration should be given to making the data more widely available to enable renters to exercise their consumer rights and make informed decisions about who to rent from.

Extend the use of rent repayment orders to cases of poor conditions (Part 2, Chapter 4)

· This would allow tenants to claw back rent payments when they have had to endure poor conditions, giving them much improved rights as consumers. Where tenants are in receipt of housing benefit, councils will be able to keep the money, incentivising them to use the orders. This will ensure both private renters and the taxpayer are able to receive some of their costs back where rent has been paid for substandard accommodation.

· In addition, we know that private renters support the extension of rent repayment orders. Two-thirds of private renters said they would report their landlord to the council to recover their rent or housing benefit if their property was in poor condition and rent repayment orders could be used against the landlord, as long as they were protected from eviction.

· We therefore support this move. The government should, however, consider removing or mitigating any potential barriers to renters exercising this right. Challenging conditions issues at tribunal is complex and expensive; making an application alone costs £155. More clarity is needed on what the process for applicants would be and what costs they would be expected to bear.

Introduce f ixed penalty notices (Part 5, Clause 86)

· Introducing fixed penalties of up to £5000 will help local authorities crack down on rogue landlords without going through the courts.

· Prosecuting rogue landlords through the courts can be time consuming; this is likely to become more problematic with the imminent closure of some courts. Lengthy court proceedings can deter local authorities from pursuing prosecutions. Having an alternative route to tackling rogue landlords will help local authorities to pursue rogue landlords and improve conditions.

· We support the government’s existing proposal to introduce fixed penalty notices. However, local authorities must be able to keep the proceeds of fines, to help them continue with enforcement activities; the Bill does not currently make it clear where the proceeds will go.

7. Speeding up repossessions of property deemed ‘abandoned’

· This will allow landlords to reclaim a property that they deem ‘abandoned’ without going through the courts. In the Bill, a property is deemed ‘abandoned’ if a certain amount of rent is unpaid (i.e. two consecutive months) or the landlord has given two warning notices without response.

· We believe this needs some further thought. As currently drafted, this policy may unintentionally allow unscrupulous landlords to more easily carry out illegal evictions. We have particular concerns about tenants who, for example, are admitted to hospital unexpectedly, and are unable to contact their landlord.

· Delays in the benefit system can also tip tenants into arrears: government data shows the average time taken to process a new housing benefit claim is 22 days. As presently drafted, this part of the Bill risks catching these tenants under the definition of an ‘abandoned’ property.

· Shelter recommends removing this part of the Bill. Alternatively, safeguards should be put in place to stop it being abused. For instance, local authorities should carry out an assessment of whether they deem a property to be ‘abandoned’ before it can be repossessed.

8. Opportunities to introduce further reforms to the private rented sector

· There is an opportunity for the government to go even further and introduce three reforms to help professionalise the sector and drive up conditions:

Introducing mandatory five-yearly electrical safety checks of rented properties.

· Household electrical faults and fires can cause serious injury or death. In 2013-14 there were 49 deaths from electrical fires in the home. Despite this, landlords are not required to carry out electrical safety checks.

· A simple change to the law would require private landlords to carry out electrical safety checks every 5 years, protecting renters from life threatening electrical hazards in the home. Private landlords are already required to carry out annual gas safety checks.

· British Gas, Electrical Safety First, the Local Government Association, London Fire Brigade, Savills, Young London and the Association of Residential Letting Agents also support the introduction of mandatory electrical safety checks.

Modernising the law requiring properties to be fit for human habitation

· Poor conditions remain endemic in the sector; one in six privately rented homes contain a "Category 1" serious health hazard. This change in the law will empower renters to challenge poor conditions themselves, rather than rely on under-resourced local authorities.

· This can be achieved by simply updating the existing law on fitness for human habitation. The law only applies to properties with rents below £80 in London and £52 elsewhere, which were set in the 1950s. In practice, this means the law can no longer be used.

Introducing mandatory client money protection for letting agents

· Letting agents are subject to very few regulations, despite handling large sums of money from both landlords and tenants. In the event a lettings agency commits fraud or goes into administration, there is no protection for landlords’ or tenants’ money.

· Mandatory client money protection is also supported by the Association of Residential Letting Agents, who have put forward an amendment. They estimate letting agents hold £2.7 billion of client funds.

· This simple measure would bring regulations for lettings agents further in line with those governing estate agents.

December 2015

Annex A: Potential impact on affordable rented housing, Housing and Planning Bill [1]