Private rented sector Contents

Introduction

1.Five years ago, our predecessor Committee undertook a wide-ranging inquiry into the private rented sector and they made a wide range of recommendations. In particular, they called on the Government to review and simplify the legislation covering the sector; give local authorities the tools they needed to enforce the law and raise standards; better regulate letting agents; promote a cultural shift towards longer tenancies; and renew its effort to boost housing supply.1 The Government took forward many of our predecessors’ suggestions. But much has changed since 2013, and we felt that now was the right time to carry out a new inquiry into the private rented sector.

Box 1: Recommendations from our predecessor Committee’s 2013 Report which were subsequently taken forward by the Government

  • A reformed approach to selective licensing and the mandatory licensing of houses in multiple occupation; the Government extended the criteria for selective licensing schemes in 2015 and committed to extending mandatory HMO licensing.2
  • The introduction of a key fact sheet for landlords and tenants, setting out each party’s key rights and obligations, and where to seek further advice and information; the Government acted to require landlords to provide certain prescribed information to tenants when creating a new tenancy or renewal after October 2015.3
  • To empower councils to impose a penalty charge without recourse to court action where minor housing condition breaches were not remedied; provisions were included in the Housing and Planning Act 2016 for civil penalties of up to £30,000 as an alternative to prosecution for certain housing offences.4
  • Where landlords are convicted of letting property below legal standards, local authorities be given the power to recoup from the landlord an amount equivalent to that paid out to the tenant in housing benefit; the Government has since extended the scope of Rent Repayment Orders to cover breaches of improvement notices and illegal eviction.5
  • A new regulatory model for letting agents; the Government has since committed to introduce regulation for agents and extend the requirement to be a member of a redress scheme to all landlords.6
  • A requirement for all private rented properties to be fitted with a working smoke alarm and, wherever a relevant heating appliance is installed, an audible, wired-up EN50291-compliant carbon monoxide alarm; Since October 2015, all landlords have been required to install a smoke alarm on every storey of a property used as rental accommodation, and a carbon monoxide alarm in any room used as living accommodation with a burning appliance for solid fuel.7

2.The Government has been increasingly active in the sector in recent years. In its written evidence, the Government highlighted the “suite of legislation” it has introduced, designed to “strengthen consumer protection for tenants and tackle rogue landlords.”8 This included new laws requiring letting and managing agents in England to belong to a redress scheme; providing protections for tenants against retaliatory eviction; and the Housing and Planning Act 2016, which increased civil penalties, extended rent repayment orders and introduced banning orders for the most serious criminal landlords. The Government has also published several consultations in recent months which are likely to affect the private rented sector, including proposals for a single Housing Ombudsman service, the regulation of letting agents, and reforms to HMO licensing. In addition, the Government recently published the Draft Tenant Fees Bill, which will ban letting agent fees charged to tenants at the start of a tenancy. We have undertaken pre-legislative scrutiny of the Draft Tenant Fees Bill alongside this inquiry, and our conclusions and recommendations have been published separately to this Report.9

3.The private rented sector has continued to expand since our last inquiry. The English Housing Survey 2016–17 reported that it had doubled in size over the past 15 years, and there are now 4.7 million households in private rented accommodation, representing 20% of all households.10 In urban centres, particularly London, the proportion is considerably higher. The number of under-35s living in the sector has increased sharply over the past 10 years; in 2016–17, 46% of 25–34 year olds lived in private rented accommodation, up from 27% 10 years previously.11 The number of families in the sector has also grown, with 945,000 more households with children living in the private rented sector than in 2005–06.12

4.Private renting has also become an increasingly long-term prospect for tenants. The English Housing Survey 2016–17 found that while 60% of tenants expected to be able to buy a property at some point in the future, just 26% expected to do so within the next 24 months and 41% thought it would take them more than five years.13 In 2016–17, a quarter of households in private rented accommodation had lived in the sector for between five and nine years, while a similar proportion had been there for over a decade.14

5.Given the rise in the number of households living in the sector, and the trend towards private renting being a longer-term prospect for many people, we were concerned that standards were not improving at the lower end of the market. The English Housing Survey estimated that 800,000 private rented homes have at least one Category One hazard, such as excess cold, mould or exposed wiring, while 41% of tenants reported that they had waited an unreasonably long time for repairs that their landlord was legally required to undertake.15 Furthermore, we were troubled that many local authorities appeared not to be fulfilling their statutory duties to uphold and enforce standards in the sector, leaving many tenants without the protection and support to which they were legally entitled. One Freedom of Information request found that six out of ten councils had not prosecuted a single landlord in 2016, with 80% prosecuting fewer than five.16 These figures seemed shockingly low, given the evident scale of the problem in parts of the sector.

6.We were keen to find out what the main obstacles were to effective intervention in the sector. Our call for evidence therefore focused on whether local authorities had the powers and resources they needed to enforce standards in the private rented sector and deal with criminal landlords. Linked to this, we wanted to know whether selective landlord licensing schemes were an effective tool for improving the quality of housing in the sector, whether schemes should be extended and how they might be improved. While acknowledging that there are landlords that have had challenging tenants, we wanted this inquiry to focus on the difficulties that tenants face, particularly at the lower end of the market. In particular, we were keen to find out what might discourage a tenant from complaining about the conditions in their home. Finally, we sought examples of the innovative ways in which local authorities intervened to promote affordable, private rented accommodation in their areas.

7.Over the course of the inquiry, we took public evidence from a range of stakeholders, including academics, tenants’ and landlords’ representatives, local authorities—both those that had implemented selective licensing schemes, and those that had decided against it—professional bodies, and the Government. We received formal written evidence from 83 individuals and organisations, as well as 115 representations through our Online Forum from tenants telling us directly about their experiences in private rented accommodation.17 We are grateful to all of those who gave oral evidence and made written submissions, and especially to our Specialist Adviser, Professor Christine Whitehead. We are also grateful to the London Borough of Newham for hosting our visit in January and showing us, at first-hand, the excellent work of their housing enforcement team.

8.This report has four chapters. The first considers the quality of accommodation in the private rented sector, the balance of power that exists between tenants and landlords, and what more might be done to support tenants in resolving disputes over repairs and maintenance. The second chapter looks at the legislative framework that underpins local authority enforcement activity and considers whether it is fit for purpose or requires more fundamental reform. In particular, we reflect on the adequacy of the Housing Health and Safety Rating System (HHSRS), and consider how the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill could be most effective once it becomes law. Our third chapter examines local authority enforcement processes in the sector and considers why enforcement actions appear to be so low, and what could be done about this. We also reflect on whether selective licensing schemes are effective and the process by which they are implemented. Finally, the report looks at some of the more innovative approaches local authorities have taken to intervening in the sector, to improve the supply of high-quality, affordable private rented accommodation.


1 1st Report - The Private Rented Sector, 2013-14, Communities and Local Government Committee

2 1st Report - The Private Rented Sector, 2013-14, CLG Committee, paras 49 and 58; Housing Minister letter to local authorities, 11 March 2015; and Houses in multiple occupation and residential property licensing reforms, Ministry for Housing, Communities and Local Government, December 2017

3 1st Report - The Private Rented Sector, 2013-14, CLG Committee, para 25; and How to rent: the checklist for renting in England, Ministry for Housing, Communities and Local Government, January 2018

4 1st Report - The Private Rented Sector, 2013-14, CLG Committee, para 33; and Housing and Planning Act 2016, legislation.gov.uk

5 1st Report - The Private Rented Sector, 2013-14, CLG Committee, para 37; and Housing and Planning Act 2016, legislation.gov.uk

6 1st Report - The Private Rented Sector, 2013-14, CLG Committee, para 78; and Protecting consumers in the letting and managing agent market: call for evidence, Ministry for Housing, Communities and Local Government, October 2017

8 DCLG (PRS0068), para 3

9 3rd Report - Pre-legislative Scrutiny of the Draft Tenant Fees Bill, 2017–19, Housing, Communities and Local Government Committee

10 Ministry of Housing, Communities and Local Government, English Housing Survey 2016–17: Headline Report, January 2018.

11 ibid.

12 Department for Communities and Local Government, English Housing Survey 2015–16: Headline Report, March 2017.

13 Ministry of Housing, Communities and Local Government, English Housing Survey 2016–17: Headline Report, January 2018, para 1.39

14 Ibid, para 1.59

15 17% of private rented dwellings had at least one Category One hazard: Department for Communities and Local Government, English Housing Survey 2015–16: Headline Report, March 2017, para 4.15; and Citizens Advice, It’s broke; let’s fix it, July 2017

17 Private Rented Sector Inquiry: Online Forum, Communities and Local Government Committee, January to February 2018




Published: 19 April 2018