Report on the Communities and Local Government Select Committee report

Samir Jeraj takes a look at the recent report on the PRS.

In the last two weeks private rented housing (or PRS to use the jargon) has been on the mind of every policy wonk in the UK.

The reason being publication of a report on private rented housing by the Communities and Local Government Select Committee.

Select Committees are one of mainstays of parliamentary democracy in the UK. They are committees of MPs tasked with scrutinising the performance of a particular government department and investigating issues in that area.

They call witnesses, hear learned testimony and make recommendations. These do not have the power of law, but have to be taken seriously by the government of the day.

So, it was with excitement that those of us involved in private rented housing looked on as the report was released.

Lettings agents regulation and fees

The headline recommendation was tackle ‘cowboy lettings agents’ and bring them into line with the regulations governing estate agents.

This would mean the Office of Fair Trading could look at business practices, and client money protection and professional indemnity insurance would be mandatory.

The report examined how various lettings agents had ripped off tenants and landlords, and where they were charging unreasonable and opaque fees to tenants.

They recommend a Code of Conduct is established and have reserved the right to return to whether to follow the Scottish example of making tenant fees illegal.

Enforcement

The committee wants to increase the power of local government to tackle problems in private rented housing.

They highlight the role of councils in setting local standards through accreditation, licensing and enforcement – and call for the regulations on councils to be relaxed in these area.

This would also hopefully mean that the costs of these schemes would be reduced.

They would also like Councils to be able to recoup housing benefit payments from landlords where they have been letting out property below legal standards.

Tenants would also be able to reclaim any money they had spent on making a property habitable if their landlord is convicted.

It remains to be seen whether councils have the resources to fund this type of work, and the report did not recommend that councils should have a statutory duty to deal with illegal eviction.

HMOs get their own small section, where the report recommends the government review mandatory licensing.

Again, it falls short of calling for a national landlords register in favour of a flexible (i.e. patchwork) system of local schemes.

Tenure

The report touched on improving security of tenure.

What was recommended was that government work with landlords tenants etc to establish standard lettings and tenancy agreements accompanied by a fact sheet on the rights and obligations of each.

The committee upheld the use of section 21 notices and instead wants a ‘culture-change’ towards longer tenancies (including getting mortgage lenders to stop restricting tenancy length as part of the lending agreement).

It also recommended that government look at a way of speeding up eviction for arrears as a way of encouraging longer tenancies.

This could be very problematic for tenants on housing benefit who fall into arrears through no fault of their own (e.g. where the local council is late in paying).

Safety Standards

The committee recommended that all rental properties be required to have a smoke alarm and (where applicable) a carbon monoxide alarm.

It also recommends that government work with the electrical industry to establish a safety certificate for rented housing.

Rent Affordability

The recommendations shied away from any original thinking on this topic.

Instead it broadly endorsed the medium to long term goal of increasing supply. However, there is still a major and growing issue with the affordability of rents – especially in the South East.

In the media several commentators have started to talk about the use of rent-control – but that’s a blog post for another time.

The report does, however, say that the Local Housing Allowance should be the subject of a government review to improve flexibility of rates and boundaries.

Broader housing policy

There is a call in the report for simplifying the legislation on private rented housing.

No doubt if this goes ahead it will be the topic of some future debate on the blog! Finally, the report deals with some of the broader housing issues facing the UK.

The committee notes the current spiral of rent and housing benefit inflation, and the lack of sufficient finance for building new homes.

So what happens next?

The Government, probably Housing Minister Mark Prisk MP, will formally respond to the recommendations.

His initial response could be described as luke-warm, cautioning against any new regulation, but also saying councils can access £3m of funding for enforcement.

Unfortunately there is a long history of government inaction on private renting.

Soon after publication of the Select Committee report one commentator speculated this is yet another report that will be added to the pile rather than acted on.