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Housing: Rented Sector — Motion to Take Note

Part of the debate – in the House of Lords at 3:06 pm on 12th July 2012.

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Photo of Baroness Rendell of Babergh Baroness Rendell of Babergh Labour 3:06 pm, 12th July 2012

My Lords, in introducing this debate on private renting, I declare an interest as a vice-president of Shelter, the housing and homelessness charity. The renting of one's home, the place in which one spends most of one's time, is a big and in many ways dismal subject. The private rented sector in England has grown by almost 1.5 million households in the last decade. High demand has pushed rents up by 66%, while wages have increased by only 35%. In some parts of London, agents report annual increases of 16%. This is at a time when home ownership and social housing have been in steady decline, for the United Kingdom can no longer be called, as it was 30 years ago, a property-owning democracy.

The public-no longer so much the man on the omnibus as the couple in the Prius-generally think of private tenants as young professionals or students, yet of the almost 3.5 million households now renting privately, more than 1 million are families with children. Many of these people are now in the direst straits, a condition that looks likely to get worse. There are 4 million people on council housing waiting lists, many with no option but to rent, possibly for the rest of their lives.

Ideally, private renting could be a beneficial system for both landlord and tenant, but with people planning to augment their incomes by buying or building property specifically to let, and a rising generation locked out of home ownership by rocketing house prices and crippling deposits on house purchase, the situation is far from that. Unless things change, an extra 1.5 million 18 to 30 year-olds will be forced into renting in eight years' time and a further 500,000 will be forced to stay with their parents into their 30s. Going back to live with one's parents, once looked on as to be avoided from the moment one leaves to take up further education or an independent existence, is becoming some young people's only option.

Those back in the parental home are the lucky ones, according to the Joseph Rowntree Foundation, in that while finding their solution to the housing problem, they can put money aside for a deposit on a future home of their own. Currently, 24% of people between 20 and 45 have moved back to the parental home due to the state of the housing market. But what of young people who are homeless due to a breakdown in their relationships with family? They face grave difficulties in securing and living in affordable decent housing. Even if they are fortunate enough to be in work, they may well receive only the minimum wage and be forced to live in transient accommodation with no real place to call home, or no home at all.

If properties to rent were well maintained and offered at reasonable rents, matters would look very different. As it is, the scale of problems in the private rented sector raises serious questions about the suitability of private renting in general. This is particularly so for families who have few other options open to them or none. The students and young professionals I mentioned earlier can, if unwillingly, move to find different accommodation. This is often not a choice that is open to a couple or a single parent with, say, three children. Shelter is concerned about the state of the private rented sector. The sector is blighted by a large number of amateur landlords failing to offer good standards to their tenants and a small number of rogue landlords who deliberately prey on the vulnerable.

While local authorities are aware of some 1,477 serial rogue landlords, in the past year only 270 were prosecuted, so many bad landlords are not receiving a clear message that bad practice will be prosecuted. A fairly recent development has been the conversion of sheds in back gardens to house one, two or more tenants. Converted sheds and garages, as well as breezeblock constructions to let, have become an increasingly mainstream, if illegal, part of the London property market. They are becoming known as sheds with beds.

Forty per cent of private rented homes are classified as non-decent. Shelter has found that 12% of private rented households experienced housing problems last year, including harassment by landlords, unsafe conditions and landlords failing to carry out repairs. No formal licence or training is required of private landlords in England, but the Housing Act 2004 allows councils to take action where they consider housing conditions are dangerous to health and safety. For instance, landlords must arrange an annual gas safety check by an authorised gas safety engineer and protect tenants' deposits from being unfairly withheld at the end of a tenancy, while the Protection from Eviction Act 1977 and the Protection from Harassment Act 1997 make harassment and illegal eviction criminal offences.

However, some tenants fear negative reactions from landlords, including retaliatory eviction, where a landlord will evict a tenant in response to a request for repairs. The fear of losing their home presents a major barrier for tenants bringing complaints about conditions or practice. Many private tenants have little power to change the practice of their landlord. While landlords value reliable tenants who pay their rent-that is, after all, what their business is about-tenants face significant financial and social costs in moving, particularly in a tight market with rising rents. They may not easily be able to find another home in the area, which is a particular concern for the numerous households with children attending a local school. It is easy to see why tenants put up with poor conditions if the fear of eviction is real.

A case study is that of Sam and his partner, who rented a house that turned out to be riddled with damp. Their small son, who had been free of asthma, had the illness return soon after they moved in and their daughter also suffered from illnesses related to the damp. A huge gas bill resulted from attempts to keep the property warm. Sam asked for repairs to be made but the consequence was that the family was asked to leave, a week before Christmas, while the agent kept more than £100 that Sam had prepaid on the electricity meter. The family is now living in temporary accommodation, having been accepted as homeless by the council.

Another example is that of Lisa, a working mother from Brighton with a 12 year-old son. Lisa has moved five times in five years due to landlords selling up and rent increases. Her current home, a flat costing £750 a month, has had problems with cockroaches, rats and gas leaks. Each time the landlord is served a notice, he does a quick job and the problem comes back. A couple, also in Brighton, have three children aged from three to 11 and pay more than £1,500 a month for their three-bedroom home, which is in a poor state of repair. Their household income is £2,000 a month, so after rent and bills life is a struggle. Shelter regularly comes across cases where tenants have promptly received an eviction notice after making a complaint to their landlord about conditions or the need for repairs. Tenants often do not risk complaining because they are anxious about bad reactions from landlords.

However, complaints about the most serious health and safety hazards have increased by 25% in the past two years. Local authority officers believe that the complaints stem from amateur landlords not understanding their responsibilities and that a small minority of rogue landlords are exploiting their tenants without fear of punishment. Widespread problems with amateur landlords and exploitation by a small minority of rogues are a major concern for professional landlords, whose good reputation is undermined by this poor practice. Local councillors and officials should also be concerned about the volume of problems they face and the financial consequences of not addressing them.

Another fallacious belief, commonly held, is that everyone living in rented property is doing so on housing benefit and is therefore out of work. On the contrary, as the Smith Institute discovered, 95% of the £1 billion rise in housing benefit is paid to people in work. Just one in eight of the people drawing the benefit are unemployed. A relatively new fear will come to tenants when the housing benefit cap may make the difference between being able to pay a rental of £700 and being forced to move out to a less expensive area. A £50 reduction in benefit may not seem much, but to many it can be the last straw that breaks the camel's back.

Once the benefit cap is introduced in 2013, a migration of poor tenants is expected by Westminster City Council to poorer areas, which are becoming known as benefit ghettos. As a result of these changes, a reduction of 20% is expected in the number of school pupils across the borough. However, it is difficult to see what action can be taken over this, especially if these people are professional landlords complying with their responsibilities and offering good quality homes and management services.

Amateur landlords-and, even more, rogue landlords-are a different story. Around two-thirds of local authorities now offer landlord accreditation as a way of educating well intentioned landlords, helping them to improve their business and giving them a market advantage and access to incentives. Rogue landlords are those who show no willingness to improve their approach to letting and who knowingly let dangerous, poor quality accommodation or carry out illegal management practice. Local authorities should make it clear that they will get tough on those who breach their responsibilities and offer substandard accommodation. Shelter wants to see local authorities taking tough action against rogue landlords immediately, but many of the problems that local authorities face come from tenants who may not come to them complaining about standards or their landlords' practice. Local authorities dealt with more than 86,000 complaints from private tenants in 2010-11, yet wider research finds that over 350,000 experienced housing problems in the same year.

It was good to see that the Government have recently promised to take firmer action on rogue landlords, the Housing Minister Grant Shapps pledging to set up a dedicated rogue landlord task force, invest £1.8 million to deal with sheds with beds, remove limits to the fines imposed on rogue landlords and send out guidance on rogue landlord enforcement to all local authorities in England. This is a step in the right direction, but more remains to be done. Shelter has stressed that one of the biggest challenges is getting senior local politicians and officials to see enforcement on rogue landlords as a priority. The Government will have to think hard about how they effectively communicate their proposals to local leaders.

Will the Minister agree that the Government need to set up a fund to support local authorities who take enforcement action against rogue landlords, such as criminal prosecution? ARLA, the Association of Residential Letting Agents, has produced a five-point action plan to support the private rented sector. It advises the introduction of government regulation of letting and sales agents. It suggests that investment in the private rented sector should be encouraged by treating rented property as an entrepreneurial business activity for capital gains purposes and reintroducing rollover relief for landlords looking to reinvest in the private rented sector. It recommends building more homes to increase the supply of properties for rent and stresses the need for the removal of VAT on purchases of material and labour for capital expenditure. It recommends the introduction of capital allowances for improvement to property and an increase in the scope of the landlord's energy saving allowance to include the installation of central heating systems and extending the scheme past 2015.

Estate and letting agents are currently unregulated, meaning that anyone can set up an agency without the appropriate qualifications or knowledge. ARLA believes that full mandatory government regulation of sales and letting agents is the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market.

Will the Minister consider the need for the Government to develop a comprehensive regulatory regime to ensure that consumers are protected across the United Kingdom? With government figures estimating that approximately 750,000 homes in the private rented sector are below standard, which roughly equates to 25% of properties in the sector, it is clear that this situation must not be allowed to continue.