Thursday, 10 February 2011

The Private Rented Sector

This week I went to see Ed Miliband about the ongoing problems of constituents such as Miss Pemberton whose privately rented property is a disgrace. Ed Miliband has stated that housing is key issue for Labour

A landlord licensing scheme that may help is being held up by private landlords who have applied for a judicial review.

Private landlords create a sea of human misery in certain areas. Miss Pemberton's Accrington house was featured on BBC News all day last Saturday.

Despite £billions for Council Housing the last Labour government didn’t meet peoples housing needs especially in private rented sector.

The Landlord Licencing legislation introduced in 2005 is a start. As we the housing market renewal funding received from government to deal with low demand areas. A target to for PRS homes to meet the decent homes standard has fallen by the way side. The dubious 70% target by 2010 has little effect on constituencies like Hyndburn.

49.2% of privately rented properties in Hyndburn do not meet the decent homes standard with people living in squalid terraced houses that they have little chance of seeing any improvement of. That percentage rises substantially for the newer decent homes plus standard.

Too little has been done to rein in the over priced poor quality housing offer from the PRS. Shocking new figures show that at the same time that landlords are benefiting significantly from housing benefit tenants they are avoiding £millions in unpaid tax. Panorama recently estimated that the PRS was costing the Treasury £3.5bn in extra housing benefit payments.

The National Property Project run by HMRC - has revealed that there have been 18,405 interventions for underpayment of tax settled to date totalling £49.7 million. This figure is projected to reach £61 million once all inquiries from this project are concluded.

The new government is committed to deregulation and rolling back protection for tenants and reducing the powers of local authorities to intervene in these areas on behalf of both tenants and owner occupiers who have to suffer the consequences of a poorly regulated private rented sector.

The Conservative led government have watered down powers for empty management dwelling orders. Relaxed regulations on licensing of houses divided into multiple flats (HMO's). Scrapped the National Register of Landlords. Removed legal aid for decent tenants.

A recent survey of Environmental health Officers revealed that 9 out of 10 environmental health officers working with tenants have encountered landlords engaging in harassment or illegal eviction. That 78% had dealt with landlords who persistently refuse to maintain their property in a safe condition.

That more than 90% had encountered cases of severe damp, mould, electrical or fire safety hazard in properties they investigated in the last year. That 1 in 4 landlords say that their tenants' deposits aren’t protected.

Almost 1 million Britons have been the victim of a scam involving a private tenancy or landlord in the last three years

The Tories have promised to bring back very soon direct payment to landlords – undermining tenants rights in slum properties at a time when their legal aid has been taken away, when they are being harassed at record levels and when Citizens Advice in Hyndburn, like elsewhere is facing 50% cuts and a reduction in housing advice service.

An estimated half of all the private rented sector households are in receipt of housing benefit (52% - Housing Needs Assessment 2008), with the stock condition survey 2009 estimated 63% of the private rented sector are in receipt of some type of benefit reflecting low income households, these figures are significantly higher than the national average figures.

Council services that afford protection such as Environmental Health Services are also being cut and proposed changes to Law of Property Act will almost stop local councils claiming repossession in worst cases.

People in land lorded areas have been hit with a sledgehammer by this government. Council cuts pale into insignificance to housing market renewal cuts which will see areas like Woodnook in Hyndburn have lost almost £9million a year to deal with low demand and regenerating neighbourhoods.

The government has offered exit money, a final payment of just £2.7million in Hyndburn's case but this some is unringfenced and could be spent on parks or flowers in affluent areas.

It's not just tenants rights or regeneration in low demand areas. It also about landlords responsibilities.

There is an estimated 3,500 – 4,000 private rented households in the borough of Hyndburn (between 10 – 11% of stock), with high proportions in the Housing Market renewal, low demand areas of East and West Accrington, but also huge clusters  in non HMR araes such as Spring Hill, Church, Clayton and in pockets of other areas like parts of Rishton, Oswaldtwsitle, Haslingden (where there are a further 500+) and the Great Harwood area as well as.

In some areas PRS makes up over 50% of properties. All the private rented stock in the borough is owned by an estimated 1000 – 1200 landlords.

Not only do 49.2% of the private rented sector has properties that are not upto decent home standard, 
26.6% of the private rented sector has properties with Category 1 hazards such as excessive cold, mold and damp and dangerous electrical and fire hazards. An estimated 75% of the private rented sector with at least one category 2 hazard. Older stock and converted flats are the most common with excess cold being the most common hazard.

The average cost to rectify category 1 hazards in the private rented sector is an estimated £7,300 (remedial costs), £9,400 (urgent repairs) and a total of £10.4 million across the sector in Hyndburn.

Stock condition amongst PRS is very poor with over 20% being in disrepair. A recent report of stock condition of all housing in Hyndburn revealed £479million of needed repairs as of today.

Fuel poverty amongst tenants and low energy rating are commonplace leading to damp poor conditions internally. The privately rented stock has the lowest average SAP rating in Hyndburn.

Fuel poverty statistics for Hyndburn are shocking show significant PRS without cavity wall insulation largely due to the fact they are terraced but lacking even 100mm of loft insulation roll. Government grants for insulation show that just 1.5% were taken up by PRS despite being free.

Too many people face a welfare trap which impacts not only on them but n the local economy of high priced housing of a poor quality. By this barometer, most of the PRS in Hyndburn is poor. Poor landlords providing a poor service.

Average rents in Hyndburn are £97.45 compared with the non for profit social good £61 of former council homes now managed by Hyndburn homes. If the definition of a 'poor landlord' is someone who sells a poor, overpriced product then most landlords in Hyndburn would qualify.

The long terms answer is not more regulation (Though it has short term advantages). Nor is it to ignore the advantages the PRS brings. At the very highest end of the market choice and flexibility. Elasticity of supply. My issue is that the market segment is not what dominates the rental sector and it is the bottom end of the market which requires a more focused, concerted effort.

The time has now come not to build more council houses or for the council to become a landlord again but it is time however for the Council to lead on the refurbishment of our victorian terraced heritage providing low cost affordable not for profit homes via rent and shared equity.