Mark Savill takes a look at the recent National Audit Office Report.
A report into the regulation of the PRS has been produced by the National Audit Office recently.
The report examines the extent to which the regulation of private renting in England supports the Department’s aim to ensure the sector is fair for renters and landlords.
The Report addresses some of the key problems that both landlords and tenants face within the industry. Similar to the report into the consultation smoke and carbon Regulations, we will be discussing the most significant findings of the report as this will most likely shape the rental reform bill, likely published in early 2022.
The points below refer to the points in the report, for those who wish to see the full analysis and data.
Compared to other types of housing, Privately rented properties are the least likely to comply with minimum safety standards.
An estimated 13% of private rented properties have at least one category one hazard (categorised under the HHSRS system), which is around 589,000 properties. This amounts to around £340 million a year for the NHS to deal with the costs of these hazards. This is compared to just 5% of all social housing and 10% of owner-occupied homes.
Point 10 & 11:
The Department of Housing’s approach and strategy to reforms has often been ‘piecemeal’ and has been limited by gaps.
The national audit office have admitted that while attempts have been made to reform the private rented sector, such as with licensing and the tenants’ fees act, these approaches have often been fragmented.
The best example of this would be the government’s approach to energy efficiency stating that all new domestic tenancies must reach an energy efficiency rating of C from 2025. While the strategy of improving the efficiency of properties is a sound one, especially with the impending climate disaster, the strategy currently is disjointed.
Grant schemes such as the Green Homes Grant which launched in March 2021 are often limited in funding and means that landlords will have to pay for the improvements out of their own profit.
For example, heat pumps, which the Government have been promoting, will cost between £6000 and £8000 while a ground source system will cost between £10,000 and £18,000 depending on the amount of heat required. The Government’s grant system for heat pumps only provides funding to cover £5,000 (figures found here) . This makes this sort of energy efficiency improvement unattainable to many landlords as they are simply priced out.
The report into regulations has cited that the department does not have any reliable data on key issues within the sector which may need reform such as: evictions, harassment and disrepair.
Without knowing the full impacts of previous regulations, it is worrying for landlords and tenants concerning what regulations may be brought in, especially since previous approaches have been unsuccessful.
Point 13 & 14:
There is considerable variation in the approaches and regulatory activity of local authorities.
This is something that has been reported on by the NRLA. Local authority enforcement is effectively a lottery between the apathetic and those who are actively checking the conditions of properties.
The report found that only 65 out of 308 have chosen to license more properties than the minimum requirement since 2010.
In addition, there is also low use of regulatory tools such as banning orders and penalty notices – only 10 landlords and letting agents have been banned by local authorities since new powers were introduced in 2016 according to Government figures.
There are limited redress options for tenants if things go wrong
Redress schemes such as dispute resolution and mediation services have been introduced slowly into the sector. Only recently has there been a pilot mediation service introduced by the Government. This was brought in to help with the backlog of possession notices caused by the eviction ban during the pandemic. Landlords are encouraged but not required to be members of a redress scheme, and therefore membership is low.
This makes it tough for tenants with limited knowledge to seek redress if they have been wronged.
Comparatively, social housing landlords must be part of an ombudsman scheme. Tenants in social housing have actively responded to the redress scheme and it is useful: 7,881 complaints were made in 2019-20.
Overall, redress schemes are something that must be considered in the regulation of the private rented sector. Redress schemes and mediation services will allow fewer cases to go to court and will ease pressure so that the courts can be used for more pressing cases.
Tenants face a number of barriers in enforcing their rights, such as costs and lack of awareness of their rights
The current regulatory system, exacerbated by local authorities lack of enforcement, has meant that it is often the tenant who has to enforce their own rights or make a landlord’s wrongdoing known to the local authorities.
The limited redress schemes opportunities, coupled with cuts in legal aid that have occurred in the past two decades has led to tenants being left, more or less, on their own to fend any wrongdoings against them.
The Survey reported that around 35% of tenants have a lack of knowledge of their rights which made negotiating with their landlord difficult and that 22% of private renters who considered making a complaint to their landlord or letting agent had not done so due to this.
In addition to this, the court system is expensive, especially with the cuts of legal aid, meaning that fewer cases are being heard.
The findings overall paint a pretty gloomy picture of the current sector.
One of the greatest worries as a landlord right now is the upcoming renter’s reform bill and how this will affect the market.
The fact that the National Audit Office has revealed that no concrete data or analysis has been made regarding previous strategies and policies is concerning and doesn’t provide offer much reassurance that the latest regulations will be any different to previous attempts to reform the market.
However, the fact that Department of Housing understands that previous policies were failures can be seen as somewhat of a positive and at least they understand that landlord are frustrated with the current situation.
However, with the minimum safety standards being the lowest amongst other housing sectors, it would not be surprising if local authority enforcement was changed in order for tenants to have a clear pathway to making complaints.
This may be one of the key areas where we see genuine reform in the sector.
You will find the report here.