Decency in the Private Rented Sector

The Decent Homes Standard was a minimum  standard for social housing - how do we ensure similar minimum standards in the PRS?

The Decent Homes Standard was a minimum property standard for social housing – how do we now ensure similar minimum standards are upheld in the PRS?

The Story

While studying at University I, like many students, found myself in some abominable privately-rented ‘student’ accommodation. Faulty electrics, condemned boilers, and generally poor maintenance standards were common. One notable property not only had an ants nest under the fridge – each morning you would walk down to a kitchen carpeted by the latest exodus from that regimented realm – but had a dead hamster in one room, a fact that only became disturbingly apparent when, a few days after moving in during the Summer months, the room in question filled with a buzzing blight-blizzard of bulbous bottle fly.

(I’m not sure they were bottle fly, mind – I’ve favoured alliteration here over a more thorough, retrospective entomology.)

So it came as no surprise to me last week when the Chartered Institute of Housing’s (CIH) UK Housing Review 2014 reported that 33% of privately-rented homes would have failed the government’s Decent Home Standard in 2012.

Decent Homes Standard

Introduced by the government in 2000, the Decent Home Standard was a technical standard for properties within the public sector – i.e. Council housing and housing associations. The 2006-updated A Decent Home: Definition & Guidance for Implementation document summarises the standard:

a)    It meets the current statutory minimum standard for housing

Properties failed when contained one or more hazards assessed as ‘serious’ (Category 1) under the Housing Health & Safety Rating System, or HHSRS.

b)    It is in a reasonable state of repair

A property failed if it had one or more key, or two or more other, building components that were both old and in such a state as to require replacing or major repair. This mutual-inclusivity is important – a component cannot fail this criterion based on age alone.

c)    It has reasonably modern facilities and services

Properties failed if they lacked three of more of the following:

–       Kitchen: 20 years old (or less) with adequate space and layout

–       Bathroom: 30 years old (or less) with appropriately located bathroom and WC

–       Adequate external noise insulation

–       Adequate size and layout of common entrance areas for blocks and flats

It was very unlikely for a property to lack the last two requirements; therefore, as a property needed to lack three of the above criteria, most properties could technically ‘fail’ as regards kitchens and bathrooms in some way and still be regarded as ‘decent’. Further, a dwelling would not fail where it was impossible to make the required improvements to components for physical or planning reasons.

d)    It provides a reasonable degree of thermal comfort

A property required programmable oil or gas heating – or a number of acceptable alternatives, including gas warm air systems and electric storage heaters – to two or more habitable rooms, and a level of appropriate insulation depending on the installation.

There is much myth surrounding the Decent Homes Standard, particularly among tenants of social housing: the standard did not demand properties have double-glazing, brand-new kitchens, an efficient boiler, etc. Essentially, the standard just required a property be wind-and-water tight, and have at least some of the habitable rooms heated. A property with an 80-year old kitchen and bathroom, single-glazing, and gas warm air serving just the lounge and one bedroom could pass as ‘decent’.

Setting the Standard

Of course, this is the ‘decent’ homes standard, not the ‘luxury’ homes standard. The criteria might arguably be low compared to those held by owner-occupier, but as a minimum standard – which the Decent Homes Standard was always stressed as; there was plenty of room for landlords to hold themselves to higher standards – it served as an important trigger to ensuring public sector shelter met a basic level of acceptability. While the Decent Homes Programme designed to encourage public sector landlords to improve their stock in line with the criteria above may have finished in 2010, this level of decency was now in the public conscious; it would be a brave – or foolish – landlord that would decide to purposely let their stock, existing or new build, fall below this minimum threshold.

The Standard had become…well, standard. At least, it had in social housing.

The Private Rented Sector

Private Rented Sector landlords were not beholden to the Decent Homes Standard, and according to the CIH, 33% of private rented sector properties would have failed the Decent Homes Standard in 2012. To put that into perspective, a third of PRS properties either have antiquated and dangerous facilities, or building components in desperate state of disrepair, or no heating, or, perhaps worst of all, an existing Category 1 hazard, which is to say the property has a serious hazard that poses an immediate health and safety risk to the occupant. Or all of the above.

We cannot retrospectively apply the Decent Homes Standard to PRS properties in 2012, in the same way that building regulations are not retrospective in their application; the standard was designed to target social housing. However, the private rented sector is growing: increasing house prices and associated costs make home-ownership increasingly unattainable while available social housing numbers continue to suffer due to caps on council borrowing (limiting new-build) and a reinvigorated Right-To-Buy scheme decimating existing stock, leaving people with little choice but to rent, and rent for many years, before any alternative becomes viable. For the first time in a generation more people are renting from private landlords than local councils or housing associations – the percentage renting from private landlords has risen from 11.9% in 1980 to 18% today, the highest in more than 30 years.

With up to four million households now renting privately, we cannot ignore the state of substandard PRS stock. Aside from poor physical conditions, those landlords who do keep their properties in a decent state are being undercut by those that don’t, and this weakens the whole market. Failure to address the lack of decency – literally – within the sector now will only allow the problem to grow, and mean housing available to us all is of an unacceptable standard.

Raising the Standard

One way to improve the state of PRS properties might be to resurrect the Decent Homes Programme as a targeted scheme for the private sector in much the same way as the original programme was a targeted scheme for the public sector.

The problem here is that, unlike councils and housing associations targeted by the original Decent Homes Programme, the government don’t know who all the PRS landlords are. There is no central register, no regulatory framework, and no merit-based assessment associated with being a PRS landlord. It is estimated that, of those we do know about, nearly 60% own only four properties. These are not large companies in the public eye – and the accountability that often goes with that exposure – but small scale operators. Decent Homes: Reloaded might fire well-meaning bullets, but would have no meaningful targets to aim for.

The first step to remedying the situation would therefore be to identify all PRS landlords, but they must also be held accountable – as Shelter notes in its briefing A Licence to Rent?, without a robust regulatory framework poor landlord practice would not improve.

“A register alone would not be very meaningful” – A Licence to Rent? , Shelter

Rather than simply creating a register, we would need to ensure all those on the register were qualified to be landlords and that their properties met required standards – we could do worse than insisting that the Decent Homes Standard was the minimum to be achieved, as it was for social landlords.

Of course all landlords of houses in multiple occupation – or HMOs – are required to have a licence already; what I am proposing is that is that all PRS landlords requiring licensing. This approach is advocated by Shelter and has already been taken up on a local scale by certain local authorities, such as Newham Council: it is now against the law to rent out a property – any property, not just HMO – in Newham without a licence. And this hasn’t just been a paper exercise. In January, Inside Housing reported that Newham Council was seeking to prosecute 134 private landlords in addition to having visited 1,997 unlicensed properties, sent out 5,078 warning letters and issued 82 cautions for first-time offences over the last year.

Standard Bearer

Currently, the Housing Act 2004 only allows councils to introduce selective licensing where there is ‘significant’ anti-social behaviour (ASB) in the area – perhaps it was for this reason that in January this year Emma Reynolds, shadow housing minister, warned councils attempting to bring in borough-wide schemes under current legislation risked High Court challenges.

There are further objections to PRS licensing: without emphasis on the state of the property rather than the current focus on reducing ASB and improving ‘management standards’ the exercise might arguably reduce to merely an additional ‘property tax’. With now-necessary maintenance costs required to bring properties up to a decent standard, the cynic argues the landlord will simply pass the cost of this licence and associated repairs to the consumer. The risk implied is that renters will be priced out of the PRS, forcing them into even worse accommodation; private landlords would have updated their properties only to find there was no-one to live in them.

But with a robust enough system there would be no ‘worse’ accommodation to be forced into, as all PRS landlords would be operating under the same (Decent Homes) standard. As a uniform standard became commonplace rent prices would surely, eventually, stabilise, at least with regards to property standards (fluctuations based on location would still remain). While there would be variations, PRS landlords would be obliged to ensure their properties were at least wind-and-water tight, had adequate heating, and didn’t pose an immediate health and safety risk to occupants.

You can’t drive without a licence. You can’t be a doctor without a licence. Why should you be able to rent property to others – when we all know what an impact housing has on our health, educational prospects, etc. – without a licence?

Licensing private rented sector landlords isn’t just a way of regulating the sector and ensuring properties are of a minimum standard; it’s the decent thing to do.

References

A Decent Home: Definition and Guidance for Implementation, Department for Communities and Local Government (CLG), 2006

A Licence to Rent? – How regulating the private rented sector can mean a better deal for tenants, landlords and taxpayers, Shelter, 2014

Housing Health and Safety Rating System, CLG, 2006

Selective Licensing of Privately Rented Housing (England & Wales), House of Commons, 2014

Costs Soar for First Time Buyers, CIH, Online: http://www.cih.org/news-article/display/vpathDCR/templatedata/cih/news-article/data/Costs_soar_for_first_time_buyers, Available: April 2014

More People Now Rent Privately than from Councils or Housing Associations, The Independent, http://www.independent.co.uk/news/uk/politics/more-people-now-rent-privately-than-from-councils-or-housing-associations-9155544.html, Available: April 2014

Newham to prosecute 134 PRS landlords, Inside Housing, http://www.insidehousing.co.uk/newham-to-prosecute-134-prs-landlords/7001532.article, Available: April 2014

Private Rented Property Licensing, Newham Council, https://www.newham.gov.uk/Pages/Services/Private-rented-property-licensing.aspx, Available: April 2014

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