Parliamentary inquiry into private rented housing

Summary

About time too – and you can submit evidence to it!

The Communities and Local Government Select Committee is to hold an inquiry into the private rented housing sector. And not before time. All too often it’s felt like the problems with this sector have been passed over into the ‘too difficult to deal with’ pile.

Having spent my second year at university in a dump that was eventually condemned by the local council as unfit for human habitation, I know what it feels like to live in a hell-hole (which was also around the time my mental health was imploding) and can testify to the impact of not having decent cooking facilities, decent sound insulation or anything decent to keep the room warm in the midst of a cold winter.

In some senses it was the both the breaking and the making of me – breaking in the realisation that institutions that should have been standing up for me were not, but also the making because when you’ve had sand kicked in your face like that, it makes you angry; an anger that stays with you for the rest of your life.

So if you’ve lived in – or are living in private rented housing, and have strong views on it, please submit your evidence to the Communities and Local Government Select Committee – their webpage also contains a guide on how to structure and submit your evidence. Remember that your evidence will be made public.

For me there are four issues:

1) Speed with which problems of homes unfit for human habitation can be dealt with.

  • Do local authorities have sufficient powers to clamp down on rogue landlords that let out such properties?
  • Do local authorities have the resources to enforce either existing or proposed new laws to deal with such homes?
  • How can the enforcement processes be sped up so things do not drag on through the courts or other processes, at which time people’s health is suffering?

2) Improving homes to deal with demands of new climate-change-related legislation – and of a changing climate

  • How many people ask landlords to see the Energy Performance Certificates (EPCs) that landlords are required by law to provide to prospective tenants?
  • How many tenants understand what information is contained in EPCs? How many prospective tenants do property searches by EPC ratings? What impact are EPCs having on the rental market? Are they driving up property standards?
  • What is the current timetable of the Department for Communities and Local Government to require a given minimum rating on an EPC as being the legal minimum a property needs to achieve before being rented out?
  • What are the improvements that are most essential to make homes comfortable and healthier to live in – in particular sound insulation, heating, security features etc.

3) Universities, colleges and language schools

  • The nature of this market in particular is that landlords have a lower incentive to invest in their properties – especially in areas of high demand – because of regular turnover. What responsibilities should such establishments have regarding the housing of their students? Personally I think it should be a contractual responsibility for establishments to ensure that students have access and support to find decent accommodation of more than a minimum legal requirement, & not just leave it to the students to work it out for themselves – many of whom may have left home for the first time.
  • The establishment of some sort of co-ordination between educational establishments and local councils regarding housing so as to help reduce some of the tensions that can otherwise build up between students and local long-term residents.

4) Private rented market for low income groups

  • What examples of ‘best practice’ is there for landlords providing decent low cost housing to people on low incomes? Ditto for tenants in looking after their properties and in their contractual relationships with landlords.
  • Should there be tougher laws on who can own and rent out properties – especially where there has been clear abuse by landlords?
  • What minimum standards should there be on rents covered by state benefits and how well are such standards being enforced?
  • How can people on low incomes have their voices heard so that action is taken quickly when they find themselves in difficulty on housing?
  • What needs to happen with private sector housing to help get people out of long term B&B accommodation?

There is also the issue of nationalising the worst parts of private sector rental housing. Should local councils have funds and powers to compulsorily purchase – or seize – rental properties that are demonstrably unfit for human habitation where the landlord shows no desire to make the required improvements? Over the past 30 years we have moved from a situation where your local council could be a landlord of choice, to one where you could only get a council house or housing association property if you were in need. For too long, those in need have outstripped available properties, contributing to the crises that we have today and have had in recent decades. As far as party politics is concerned, some might say Thatcher’s great sell-off caused the shortage and that Labour did very little about it in its 13 years in power. That debate aside, what we currently have is a massive imbalance between prices in the private rented sector and the social rented sector – and this is splitting society. Understandably people in the more expensive private rented sector ask why they can’t live in state-backed housing that has a significantly lower rent.

You’ve then got the growing army of people like me who live with their parents because they have nowhere else to go. In one sense, my circumstances are slightly different with my mental health problems and the nature of my work: I don’t have a steady job or a steady income. Therefore at present, renting in the private sector (prices aside) isn’t really an option for me at the moment. Also, not being in a relationship means I don’t have the option to move into a partner’s house where responsibility for rent would be shared and where health-wise I’d be supported. Having lived in shared houses for several years prior to moving back in with my parents, the one thing I never really got was support for my mental health problems. Ironically the only time I ever did was when I was living in the place that was the worst for them. It was a hell-hole but we really were all in it together and made the best of it.

I can see why politicians do stunts like this one by Grant Shapps, but that one left me feeling really angry at the time. Ditto with Prince William. Why? I think it’s a combination of empathy, mindsets and institutions. It’s very difficult to empathise with people in that situation when you’ve not really had to face it yourself. This was the shock to the system for me over a decade ago – the idea of being in this situation that I did not know how to get out of. I spent six weeks in and out of a travellers hostel before finding the place that I did – by which point my weight had crashed down to 7 stone. (Not good for a twenty year old male). Mindset? This wasn’t a “Let’s bash the Tories” because remember that both in the very early 2000s Labour had been in power for a few years – and even more by 2009. Yet still the problems of housing and homelessness persist. That’s why this inquiry is being launched! Policy-wise there has been an epic failure to deal with rental housing in the private sector – and I expect the report to pick this up in its conclusions. Institutions? I can’t help getting away from royals in palaces or politicians in big state-subsidised houses too – remember that we were to find out the greatest of abuses in the expenses scandal.

Finally…who ultimately profits from the private rented sector?

If there is such a big disparity between social rents and private rents, who pockets the difference? The landlords? The banks that lend? The financial institutions that provide banks with the capital?

Because it definitely is not the tenants, that’s for sure.

 

 

[Updated to add]

@Rattlecans reminded me that housing policy is a devolved issue in Scotland – and they’ve been able to do things differently to England and Wales. So if anyone can summarise what happens in Scotland and can provide that summary to the Commons inquiry, that would be splendid!

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10 Responses to Parliamentary inquiry into private rented housing

  1. Rattlecans (@rattlecans) says:

    I wouldn’t argue for compulsory purchase. What I’d do is close down the property until it is fit for humans to live in. I’d also have a law that says, any residential property left abandoned in state of disrepair will be seized by state. I’d gift that property to local community or co-op to be repaired and used as low-income rental property, to be owned by community.

    When I lived in US this is similar to what they did in DC. There were many beautiful town houses left abandoned, used as crack-houses. As I understood it the city council sent three letters to any identified owner. Demanding the property be repaired. If the owner failed to respond/comply or if no owner was identifiable, the property was seized. What they did there is sell those properties dirt cheap to low-income families for them to fix up and live in. Not sure if that was the beginnings of the Fannie Mae subprime loan thing though.

    I’d just gift poor property to the community to be owned, repaired and rented by low-income families here. It’d transform communities in so many ways

  2. moufflon says:

    Hello PBB, I’d take issue with your suggestion that tenants don’t benefit from the private rental sector. Many private market rent houses are let with very low returns on capital – the costs of buying housing in the private sector are astronomical. The introduction of shorthold tenancies (I think by Thatcher in the 1980s housing acts) was transformative in increasing the quantity and quality of private sector rental housing. If you don’t like the market cost of rental housing (and I agree it is crazy) – then every policy needs to be judged against 2 criteria – does it increase supply or reduce demand – anything else will ultimately make the problems worse.

    More ‘affordable’ housing – usually makes it harder for developers to increase supply, so tends to increase the market price of housing. The low cost of affordable housing (usually only available to those in serious housing need) is paid for by those who are not eligible who pay high market costs and higher taxes to pay for the affordable housing subsidies. Trying to fix rents for private landlords was a disaster before (Rachman et al), and would be a disaster again for quality and supply of private rental housing – and would then require another grotesquely inequitable method of allocating housing at below market rent to a lucky few, and excluding others completely from the chance of suitable housing.

    The solution is for politicians to be neutral about housing tenure, stop trying to decide who gets to live in decent housing and who has to suffer, and boldly make the case to their electorates for more housing – much more housing. That case will need to include quality design and transport infrastructure to gain public consent, but the policy aim should be to significantly reduce the market price of housing, thus greatly increasing the choice and quality of housing available at any particular price point – this must be a vote winner (and Incidentally reduces the housing benefit bill and stuffs property developers who have landbanked in the hope of ever increasing restrictions on supply). Mostly this requires reform of planning (the the coalition is trying in the face of much opposition), but ultimately will require us to be able to build housing cheaper as well. The cost of complying with building regs is currently hidden behind the high market cost of housing – reduce that and the cost/benefit of building regs would be more in focus. The standards of private rental housing are often significantly worse than new-build – basic standards and transparency over landlord behaviour is certainly justified.

    Finally, local authorities like Cambridge already have the power to compulsorily purchase long unoccupied property – but should be _very_ loath to use them.

    • Rattlecans (@rattlecans) says:

      Housing is shelter. It is Human Right. Check it out on UN HR Charters.

      Since when are Human Rights down to markets? Why should shelter be any different to your right to life or any of the other Human Rights be down to markets?

      These market things, what definition is there of them? My understanding is there is no definition of them in economics. It’s a vague word, yet our human rights are dependent on this vague, undefinable thing?

      • moufflon says:

        The market price is where there is an active market, and is the price where supply equals demand. If the market price is so high that many people can only afford to live in unsuitable accommodation, you won’t fix that by calling some houses ‘affordable’ and subsidising them, or forcing some landlords to accept a rent below market rent – and then have government officials deciding which of the huge number of people needing housing get favourable treatment. You will make the problem worse, as both these measures will tend over time to limit any increase in the supply of housing. The big problem is big government making it extraordinarily difficult and expensive for new housing to be built (and then for good measure allowing some really horrible housing with really rubbish transport so that people tend to think more housing is a bad idea).

  3. radegund says:

    The current housing market really isn’t a market. The supply side is so constrained. Also prices are still high in part because of the forbarence banks are giving on many mortgages, in part contributing to our zombie banks. The big thing here is to set the private sector free to build more houses at the right price in the right place. At the end of this article puffles asks the wrong question. No one is pocketing the difference, we as tax payers are shelling out the difference. So called social housing is a cost; often a cost we should bear but a cost non the less. Private landlords aren’t raking it in we as tax payers are subsidising housing.

    • Grrr8 says:

      This is correct and is a point I’ve made a gadzillion times to incredulous faces. If social housing has lower rents than private housing (on comparable properties), it means the state (i.e. you and I) are not charging a market rent on its owned assets. That forgone money is effectively coming out of the taxpayers pocket. The beneficiary is the social housing tenant.

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  7. Grrr8 says:

    You don’t answer a basic question (in fact you seem to assume it away): what is the best way to deliver better value to private rented sector tenants, additional regulation or more competition?

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