Private rented sector Contents

Conclusions and recommendations

Quality of accommodation and the balance of power

1.Statistics show that most housing in the private rented sector is of an adequate standard and tenants are broadly satisfied with their homes. However, there continues to be a significant minority of private rented accommodation that is shockingly inadequate. While the proportion of inadequate properties has fallen by almost half over the last 10 years, the absolute number has risen, with 80,000 more non-decent private rented homes than in 2006. Further, we heard that 27% of private rented homes failed to meet the Decent Homes Standard in 2016, the highest proportion of any tenure and more than double the rate found in the social rented sector. With poor conditions likely to disproportionately affect the most vulnerable, including families with children, the Government should not be complacent about improving standards in the sector. (Paragraph 16)

2.There is a clear power imbalance in the private rented sector, with tenants often unwilling to complain to landlords about the conditions in their homes for fear of retaliation. In our view, consumer rights are meaningless without the guarantee that tenants will be able to use them in practice without fear of retaliation. Tenants need further protection from retaliatory eviction and rent increases, and other forms of harassment, so that they are fully empowered to pursue complaints about repairs and maintenance in their homes when they need to. (Paragraph 25)

3.We recommend that the Government seek to rebalance the tenant-landlord relationship by providing additional protections from retaliatory eviction and rent increases. The Government should conduct a review of how the protections within the Deregulation Act 2015 are being used in practice and whether they need to be enhanced. We believe the Act should be strengthened to protect tenants from a no-fault Section 21 eviction for longer than the current six-month period. Protections should also be extended to prohibit retaliatory rent increases for a period after making a complaint. We heard concerns that there were several scenarios where tenants might be left without protection under the Act; the Government should ensure tenants are fully protected as soon as they make a complaint to their landlord, letting agent or local authority, not from the point an improvement notice is issued. (Paragraph 28)

4.We agree with the Government that a specialist housing court would provide a more accessible route to redress for tenants, and we see relevance for it in the context of the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill and the Draft Tenant Fees Bill. We urge the Government to issue more detailed proposals as soon as possible. (Paragraph 35)

5.We also support the Government’s proposals to make it mandatory for landlords to join a redress scheme, as well as its proposals for a single Housing Ombudsman We recommend that the Ombudsman be given sufficient powers and resources to provide tenants with the support they need when challenging inadequate standards in their homes, and to require the payment of compensation to tenants when appropriate. However, new routes of redress will need to guard against the potential for retaliatory action from unscrupulous landlords, which we have highlighted above. (Paragraph 36)

6.We note that it is a legal requirement for tenants to be provided with clear information at the start of their tenancies about what their rights are and how they can be exercised in practice. This information will need to be updated by the Government, and tenants informed, as legislation is passed and new rights and routes for redress are made available. The Government should consider new ways of informing tenants and landlords of their rights and responsibilities, in particular through social media. (Paragraph 39)

7.We believe that lockdown properties are an abuse of both the planning and benefits system and show the private rented sector at its very worst. It is a model of housing that must be eradicated before it spreads any further. However, we heard that the tools to do this appear to be available already. We believe that the Local Government Association has an important role to play in encouraging local authorities to use their existing powers and work collaboratively to tackle this problem. (Paragraph 47)

8.In addition, we recommend that the Government consider introducing a new Local Housing Allowance (LHA) rate for studio accommodation, to reduce the perverse incentive for landlords to break up larger properties into much smaller ones to enable them to benefit from the higher LHA rates payable for one-bedroom properties compared to the shared accommodation rate. (Paragraph 48)

Legislative powers

9.The Government’s recent legislative activity is well-intentioned, but we are concerned that it builds on an outdated and complex foundation. The Coalition Government rejected our predecessor Committee’s recommendation for a much simpler set of regulations for landlords and tenants. However, the volume of new legislation that the Government has introduced in the sector has added to this complexity and, as such, we feel that our predecessors’ recommendation is even more relevant today. We therefore recommend that the Law Commission undertake a review of the legislation relating to the private rented sector and provides guidance as to whether a new approach to regulation in the sector would bring more clarity for tenants, landlords and local authorities. (Paragraph 58)

10.We support the finding of the All-Party Parliamentary Carbon Monoxide Group (APPCOG) that legislation should be amended to make it explicit and mandatory for landlords to install carbon monoxide alarms in the rooms of private rented properties containing any fuel-burning appliance. We also call on the Government to implement the recommendations of the Electrical Safety Standards Working Group as soon as practicable, including the introduction of mandatory five-yearly checks on electrical installations in private rented accommodation. (Paragraph 61)

11.We acknowledge that the Housing Health and Safety Rating System (HHSRS) is supported by many environmental health professionals, but the evidence we received indicated that the system is unnecessarily complicated and fails to give tenants, landlords and agents a clear understanding of the minimum standards that are expected in a private rented property. The Government must immediately update the baseline assumptions within the operating guidance for the HHSRS, which are now twelve years out-of-date. We have already called on the Law Commission to review private rented sector legislation, including the Housing Act 2004, and believe that this should include a review of the HHSRS itself. Ultimately, it is our strongly held view that the Government should introduce a more straightforward set of quality standards for the sector, so that it is clear to everyone—not just to highly qualified professionals—whether a property meets minimum standards. These standards should be higher than those in the HHSRS, reflecting an improvement in housing quality since the system was introduced. (Paragraph 70)

12.We offer our support for Karen Buck MP’s Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill. However, while the Bill is a very positive step-forward, there is a risk that these new rights will be underutilised by more vulnerable tenants at the lower end of the market. To try to mitigate this, we recommend that:

Enforcement

13.We recognise that enforcement activity undertaken by local authorities is often informal in nature and not fully reflected in prosecution statistics. Nevertheless, the evidence is clear that enforcement levels—formal or otherwise—are far too low in the vast majority of local authorities. This strongly suggests that vulnerable tenants are being left without the protection to which they are legally entitled. The Government has introduced a range of new powers for local authorities to intervene in the private rented sector to address low standards. However, these powers are meaningless if local authorities do not, or cannot, enforce them in practice. (Paragraph 84)

14.We have received evidence that civil penalties are not strong enough to deter landlords who are prepared to commit the most serious offences, and fines issued through the courts are often insufficient to make prosecutions worthwhile. We believe local authorities should have the power to levy more substantial fines, which might stand a chance of breaking the business models of the worst offenders. Further, local authorities should have the power to confiscate properties from those landlords committing the most egregious offences and whose business model relies on the exploitation of vulnerable tenants. Coupled with the banning orders which came into force in April, this would act as a more powerful deterrent than the existing provisions. (Paragraph 92)

15.We believe that courts should require offenders to pay costs that reflect the actual costs to local authorities of enforcement action. There should be no financial disincentive for local authorities to fulfil their statutory duties and pursue prosecutions against criminal landlords. (Paragraph 93)

16.Additional funding should also be made available by the Government through a new fund to support local authorities that primarily undertake informal enforcement activities and are unable to benefit from funding through civil penalties. (Paragraph 94)

17.It is clear that local authorities have fewer resources to enforce standards in the private rented sector than they did in 2010. However, this does not fully explain the variation in enforcement levels that exist between different local authorities. It is clearly the case that some local authorities have placed a higher priority on addressing low standards in the private rented sector than others have done. We believe this disparity in effective action can only be resolved through political leadership. (Paragraph 99)

18.We call on local authorities to reflect on whether their Environmental Health, Trading Standards and other relevant departments are suitably aligned to promote enforcement activity, and whether effective mechanisms exist to work collaboratively with neighbouring authorities. Local authorities should also make full use of their existing powers to obtain information about the tenure of a property on Council Tax returns, which should then be used by enforcement teams to identify private rented properties in their areas. (Paragraph 100)

19.We believe that a national benchmarking scheme should be introduced—funded and administered by the Government and implemented through the Local Government Association—to support local authorities with their enforcement activity. Local authorities should publish data on the number of complaints they receive and how these are resolved, whether through informal routes or more formal enforcement mechanisms, while local residents should be able to compare enforcement levels in their areas with similar authorities across the country. (Paragraph 102)

20.It is also apparent that there is greater scope for local authorities to work together and share best practice, and to make more efficient use of limited resources. To support this, and to provide greater transparency for residents, local authorities should publish their enforcement strategies for the private rented sector online. (Paragraph 103)

21.We have received mixed evidence on the value of selective licensing schemes, which reflects the different circumstances that exist in different parts of the country. Our predecessor Committee called on the Government to bring forward proposals for a reformed approach to selective licensing, which would give councils greater freedom over when licensing schemes can be introduced and more flexibility over how they are implemented. We support the changes the Government has introduced since then, including the extension to HMO licensing and the broader criteria that were introduced for selective licensing. The Government has said that it intends to review the current selective licensing framework before the summer, and this will be an opportunity for further improvements to the selective licensing system. (Paragraph 117)

22.We believe that the current process of application to the Secretary of State is not fit for purpose. Decision-making is too slow, lacks transparency, and is overly bureaucratic and unduly expensive. In our view, decisions to implement such schemes should be made locally, where there is greater understanding of local needs and politicians are directly accountable to the electorate for their decisions. We recommend that the Government therefore remove the 20% cap above which local authorities must seek permission from the Secretary of State to implement selective licensing schemes because it is contrary to the spirit of localism. However, we believe that the Secretary of State should retain a power to require local authorities to reconsider a decision to implement a licensing scheme that does not meet the strict criteria already set out by the Government, and should monitor the effectiveness of schemes once they have been implemented. (Paragraph 118)

Innovative approaches in the private rented sector

23.We support the innovative approaches adopted by many local authorities to increase the supply of high-quality, affordable private rented accommodation in their areas. We note that the Government announced funding of £20 million in the Autumn Budget 2017 to develop private rented sector access, including a rental deposit scheme, and we urge it to roll-out such innovative schemes and proposals. The Local Government Association has an important role to play in supporting local authorities to share best practice in these areas. (Paragraph 125)





Published: 19 April 2018