Private rented sector – good in parts

By Dr Stephen Battersby and Rev Paul Nicolson

The housing market suffers from the lack of ethical foundation in the model of the free market followed by UK governments since the 1980s; hence the richest citizens, particularly landowners, become excessively asset and income rich and the poorest citizens are forced to call on food banks. In an inflated and overvalued housing market home owners have equity that can be used for paying health and care costs but renters do not, which is inequitable and further increases the social gradient in health.

The Pro-Housing Alliance recommendations are:

  1. It will take too long to increase the supply of housing of all tenures needed by UK citizens; therefore the market should be brought under control quickly.
  2. Rents should be capped. Market rents have led to increased Housing Benefit costs.
  3. Landlords should be required either to be members of an accreditation scheme that is acceptable to the local authority and includes a requirement for training or they should be licensed to let properties.
  4. Where there is a breach of the repairing obligation under the Landlord and Tenant Act 1985 no rent should be payable. Where the local authority takes action under Part 1 of the Housing Act 2004 because of  the existence of a Category 1 hazard, then 1) No possession can be granted and 2) No rent should be payable until the hazard is remedied.
  5. There should be a high tax for leaving a property empty or land unused. We would prefer the introduction of Land value tax and the abolition of the council tax and stamp duty; TAP is supporting Caroline Lucas’s private members bill.  Where a property has been empty for 12 months there should be a duty on the local authority to make an Empty Dwelling Management Order.

Back ground

The Private Rented Sector is made up of too many landlords who are both inexperienced and unprofessional, and who own a small number of properties; the number has been increased by buy-to-let and recent slack lending criteria.

Prices and rents are being increased by an influx of overseas investors who are either fleeing their own dodgy economies, investing tax free money or are from economies with GDP in credit; the Chinese for example. Many are left empty.

As a consequence of the housing benefit caps some families are moving into long term temporary accommodation or overcrowded accommodation to make the rent fit the cap; this is known to damage both the health of the family and the health of the children, particularly when the property is badly repaired and poorly heated. Others are moving a long distance from their work making the commuting unaffordable. Teenagers are refusing to move away from their friends with all the dangers of homelessness.  A substantial proportion of those in receipt of housing benefit are in work – 93% of the increase in HB claimants between January 2010 and December 2011 came from those in work – so the tax payer is subsidizing low pay from employers and high rents for landlords.

Local authorities can now discharge their homelessness duty by direct referral to the PRS without the applicant’s agreement. No property should be used until it has been inspected by a competent surveyor who certifies that there are no serious threats to health and safety.

The sector, includes the worst conditions and the least secure tenures, comprises 23% in London compared to 10% nationally. Generally housing costs in London are about 50% higher than national and childcare costs much higher than elsewhere.

Lower quartile weekly rents in the private rented sector vary by borough from £700 to £231 and are much higher in London than any other UK region. By October 2013 over 159,000 London households will face a reduction in the LHA they receive and almost 10,000 households will be forced to relocate.

A survey of London private sector landlords showed that 60% of landlords would not reduce rents for households with lower Local Housing Allowances. This means that the most vulnerable households will be at the mercy of the most unscrupulous landlords. This 60% will be able to let to people who might previously have been first time buyers, and may on the face of it at least, be the more responsible landlords. Everywhere we look in Z2K the coalition is increasing the incidence of debts among the poorest citizens.

The private rented sector is poorly regulated. Local authorities have not used their powers or met their duties on conditions as well as they might. With the cuts to local government that is only going to make regulation of the PRS on conditions worse. See the report for MPs Karen Buck and Alison Seabeck here.

There are almost 900,000 homes in the PRS that have Category 1 hazards  – that is the most serious risks to health and safety (and almost 1.5 million are non-decent).  Because so many of the properties that have come in to the PRS and have contributed to the increase in the size of the sector are newer, it looks proportionately as if the poorer quality part of the PRS has reduced, numerically there is little change.

The important point missing is that on exported costs. Poor housing costs the NHS at least £600 million a year (BRE, Real Cost of Poor Housing) so that given that the worst conditions are in the PRS, then it is probable that the PRS costs the NHS disproportionately more than any other sector. The costs to the NHS also are probably only about 40% of the full costs to society of poor housing. So the poor conditions in the PRS cost us all.