Press release

LANDLORDS CALL FOR MORE DELIVERY AND LESS DOGMA AS GOV’T PUBLISHES YET ANOTHER HOUSING REPORT

Date

3rd February 2010

Description

LANDLORDS CALL FOR MORE DELIVERY AND LESS DOGMA AS GOV’T PUBLISHES YET ANOTHER HOUSING REPORT

The government risks alienating the UK’s one million plus private landlords with pre-election showboating policies that overshadow the desperate need to encourage investment in the sector, according to the British Property Federation (BPF).

An announcement to clean up the rental market by regulating letting agents and to look into what barriers are stopping big investment coming into rental development has been broadly welcomed by the BPF, however other elements of today’s report have been criticised.

The Federation, which by number of homes is the biggest landlord body in the UK, was reacting to a Government announcement today, which sets out its response to a consultation exercise on its Rugg Review of the Private Rented Sector, which was held in the summer of 2009.

The review made a number of recommendations, which include:

•A nationwide registration scheme for all private landlords in England.
•Licensing of all residential letting and managing agents.
•Raising the annual rental limit on assured shorthold tenancies – the most common form of tenancy in the private rented sector from £25,000 p.a. to £100,000 p.a.
•Several measures to encourage local authorities to provide a more seamless service to landlords and tenants.

At pre-Budget time the Government also announced it would issue a consultation document on investment in the sector, which is also out today. This is expected to help usher in more investment from the likes of pension funds and other institutions.

This week’s announcements follow hot on the heels of two announcements last week which will place restrictions on shared accommodation - requiring the owners of all new shared houses, where the house is occupied by three or more unrelated people, to apply for planning permission. A consultation exercise was also launched last week, which would allow local authorities to introduce landlord licensing schemes in certain circumstances, without first having to apply to the secretary of state at CLG, which is the current case.

Ian Fletcher, director of policy at the BPF, said:

“After some highly questionable announcements on private rented sector policy last week, it is reassuring to see at least some support for this important sector. One valuable legacy of the Rugg Review is improved evidence which shows the private rented sector has been the driver of housing growth over the past decade, housing one million more households. We welcome Government recognition that the sector needs to continue to grow and its support for continued investment if housing need is to be met.

“The Rugg Review contained a number of good recommendations, but the events of the last week have setback landlords’ confidence in its implementation and shown that good advice is not always followed. For example, if three nurses in London want to share a house it is frankly crazy to make them apply for planning permission to be allowed to share, but that is what the Government is changing the law to do.

There is a growing mood of hostility towards registration amongst landlords. We will defend landlords’ interests robustly on any legislative proposals because past experience has shown that policy theory often ends up being indiscriminate in practice. It is important that any new measures target the rogues whilst being fair to good landlords. Decent landlords are up for raising standards, but do not believe the current proposal for landlord registration is true to the Rugg Review vision of a simple and well-enforced scheme.”

Notes to editors:

The Government announced the Review of the Private Rented Sector in January 2008, to be conducted by Julie Rugg and David Rhodes, two academics at the University of York. The Review recommendations were published in October 2008 and a Government consultation exercise issued in May 2009.

2. The Government plans to allow restrictions on the location of shared accommodation, by passing an order just before the general election.

This will amend the use classes order of the Town and Country Planning Act, so that a house that becomes shared by three or more unrelated people will require planning permission.

The order is being driven through by the Secretary of State for Communities and Local Government, John Denham MP, because so called ‘studentification’ affects his constituency.

This is despite the fact that the Government commissioned review of the private rented sector rejected the need for such intervention; the Rugg Review found that just 59 council wards (0.7%) out of 8,000 had more than 10% of houses run by students.

In a recent consultation exercise the proposal was also rejected by the:
Local Government Association (LGA)
Local Authority Co-ordinators of Regulatory Services (LACORS)
National Union of Students (NUS)
British Property Federation (BPF)
Residential Landlords Association (RLA)
National Landlords Association (NLA)
No mention was made of this in the consultation exercise summary.
Some of the consequences include:

For less well-off students – Accommodation costs tend to be the most significant cost for many students going to university. This policy will restrict the supply of cheaper student accommodation, and drive up costs. With various other pressures on student budgets it will be the less well-off students who are hit, dissuaded from going to university because of the cost.

For those struggling to get a roof over their heads – Shared accommodation tends to be the access point for many people trying to get a home. Again, it will be the worst off who suffer as Government restricts access to affordable accommodation for the near 2 million people on council waiting lists.

For key workers – In our major cities shared accommodation is a vital source of housing supply for key workers. In London, for example, 20% of households are accommodated in the private rented sector. Restricting supply will have a devastating effect on key worker accommodation in the capital.

For hard-pressed planning departments – The Government’s impact assessment estimates that the policy will lead to an additional 12,000 planning applications. This at a time when the Government is trying to reduce the number of simple household applications going through local authority planning departments.

3.At present, local authorities wanting to introduce local landlord licensing schemes have to apply to the secretary of state at CLG. This provides a useful check and balance on councils, ensuring they are adhering to the restrictions on such schemes, which can cost landlords in excess of £1000 in license fees. The consultation proposes to allow councils to introduce such schemes without referral to CLG. Local landlords only recourse then against dubious schemes would be judicial review which is very costly and not likely to be something most local landlord bodies could afford.

4. At the 2009 Pre-Budget the following announcement was made:
“The Government will issue a consultation document early in 2010 to consider the contribution the private rented sector could make to addressing demand and increasing housing supply, and any barriers to investment.”

DEPARTMENT FOR COMMUNITIES AND LOCAL GOVERNMENT


Housing: Private rented sector


The Minister for Housing and Planning (Rt. Hon. John Healey): I am today publishing a policy statement, “The Private Rented Sector: Professionalism and Quality: consultation responses and next steps”. This sets out a summary of responses to our consultation document, “The Private Rented Sector: Professionalism and Quality – the Government response to the Rugg Review”, published on 13 May and reported to the House by my Rt. Hon. Friend for Derby South, the then Minister for Housing [Hansard column 50 WS]. The document that I am publishing today sets out Government’s plans following the responses to that consultation. Copies have been placed in the Library of the House.

The Government wants to see a private rented sector which offers high-quality accommodation, and in which tenants can make choices based on clear information about their options, their rights, and their responsibilities. We also want to ensure tenants know where to turn if things go wrong. At the same time, Government wants to increase professionalism in the private rented sector – supporting good landlords and agents, whilst driving out the worst practices of the sector that fail tenants and damage its reputation.

Alongside our longer-term plans for legislation to improve standards , today’s document sets out our proposals to provide better help and support to tenants now. This includes a commitment to set up, by the Summer of this year, a dedicated helpline for private sector tenants working with voluntary sector agencies, and an online consumer feedback website working with Consumer Focus.

Our consultation document, published in May 2008, set out a range of proposals to support a higher-quality, more professional sector, whilst minimising the regulatory burden on good landlords and agents. The proposals included a national register of landlords for England; full regulation for private sector letting and managing agents; and encouragement to local authorities to create ‘local lettings agencies’.

Consultation responses were strongly supportive of the proposals, although there were some concerns about specific details, and about implementation. Alongside the formal consultation, Government worked with a wide range of organisations on the development of detailed policy to underpin the proposals.

Our statement today reflects those consultation responses and the contribution of these work groups. It confirms the issues on which our intentions are now firm, as well as the detailed issues on which there is further work to do with interested stakeholders. In particular the statement includes commitments to:

Establish a national register of landlords, to protect tenants and support local authority enforcement activity. We will carry out further detailed work with stakeholders to assess whether the register could also be used (either from the outset, or in the future) to apply registration conditions on persistently poor landlords.
Introduce full regulation of letting and managing agents. We will carry out further detailed work with stakeholders on the exact form of regulation, and whether it is led by an independent regulator, or by industry bodies.
Require all tenancies to take the form of a written agreement.
Increase the limit for Assured Shorthold Tenancies from £25,000 a year to £100,000. This will reduce the number of tenants (up to 150,000 at present) who do not currently have the protection of an Assured Shorthold Tenancy, and associated protections – such as the requirement to protect a tenant’s deposit.

We remain committed to legislating at the earliest opportunity on these commitments to increase the protection and practical help available to tenants in the private rented sector.

These measures are complemented by the Government consultation, published by the Treasury – "Investing in the UK Private Rented Sector" - also published today, which considers whether there are any substantive barriers to investment in the sector by individuals and institutions. Taken together, steps to raise quality and identify any barriers to investment should reinforce each other and create a better private rented sector that can become the tenure of choice for a wider range of people.