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April 2002 |
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A STEP IN THE RIGHT DIRECTION |  Back to contents | |
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As numbers of those accepted by local authorities as statutorily homeless continue to rise, and with growing concern about the availability of social housing to meet this trend, local authorities are having to work increasingly with the private housing sector to meet local need. Although many local authorities are ideologically opposed to this and have valid concerns about its condition and suitability, they are increasingly finding that the use of the private sector meets wider governmental policy and local strategic objectives. This includes at least some ability to meet growing housing need at the same time as offering the potential for self-regulation, freeing up time to concentrate on housing enforcement elsewhere. However, there remains little systematic information about the extent to which local authorities are working with the private rented sector with many authorities having to do so for lack of alternative accommodation in the social sector.1 This article considers the changing role, function and potential of the private rented sector (PRS) before turning to the practicalities and opportunities of establishing a landlord accreditation scheme. Who lets, who rents, and why? Landlords let for a variety of reasons, but it is suggested that general confidence in letting has increased since the 1980s.2 Much of this increased confidence derives from the deregulated tenancies introduced under the Housing Act 1996 - assured shorthold tenancies (AST). The Government believed that such tenancies would increase the supply side of the sector, making it a more attractive opportunity for landlords, thus unleashing an untapped housing supply for rent. Indeed it did, and ASTs now account for around two-fifths of private lettings.2 The private rented sector is able to cater well for those able to afford market rents, and those who require flexibility in housing location. But there is a flip side to the coin - those who are not able to afford market rents. Increasingly, those on low income that are not able to access social housing have nowhere to turn but the private rented sector, which can be both expensive and insecure. It has been suggested that the sector has acted primarily as temporary accommodation for the young and/or mobile, who are not able to access social housing.3 Those in receipt of housing benefit are more likely to occupy poor condition dwellings let by investment orientated landlords.4 Assessed at 1998/1999 prices, the housing benefit bill for 1978 to 1979 was £2.3bn. By 1998/1999 it had risen to £11.1bn.5 Clearly, the new ASTs had substantial impact on government expenditure as expenditure shifted from bricks and mortar subsidy to personal subsidy during the period. For housing expenditure in 1979, 84 per cent was bricks and mortar subsidy with 16 per cent personal subsidy, and by 1998/1999, 27 per cent bricks and mortar subsidy with 73 per cent personal subsidy.5 Housing benefit expenditure is still expected to rise, even though unemployment is decreasing. Serious questions need to be raised about the economic efficiency of such expenditure, particularly when most homeless households would prefer social housing than the private rented sector.1 Government research into the private rented sector 2,6 shows that 50 per cent of private sector tenants receive housing benefit, illustrating the considerable demand from lower income households, but around 40 per cent of landlords do not wish to let to people on housing benefit. Many on low income are forced into the sector through lack of choice, leaving them trapped into high rents and low security with few opportunities to access other tenures, trapped in a cycle of poverty.6 One key criticism is that despite high levels of housing benefit paid, the private rented sector remains in poor condition relative to other tenures and housing benefit is paid regardless of condition. Most privately rented housing is pre-1919 stock - one of the reasons for its generally poor condition - and the English House Condition Survey continues to report poor conditions in the sector which is increasingly occupied by ethnic minorities and low income groups.7 Around 20 per cent of private rented housing is unfit, compared with 6 per cent owner-occupation, 7 per cent local authority and 5 per cent of registered social landlord housing stock.5 Research continues to show that there is not a consistent relationship within deregulated tenancies between dwelling condition and rent charged. Although some landlords had a more responsible attitude toward proactive maintenance, this did not include investment orientated landlords4 so tenants may be unwilling - or unable - to pay more for better accommodation. This leaves landlords with little financial incentive to improve condition.
Recent research published by the Department of the Environment, Transport and the Regions (2001) found a vast range of different landlord accreditation schemes (defined as schemes whereby landlords submit their properties for assessment against a range of condition and management criteria) being developed and implemented by local authorities (see table 1).8 Some local authorities see such schemes, which vary in consistency of conditions, facilities, management and tenancy considerations, as a way to influence standards in the private rented sector. Others, however, view them only as a possibility for more responsible landlords. A key finding of this and related research is that landlords are more inclined to join such a scheme where there is a surplus of accommodation, than in areas of high demand.9 Local authorities are faced with trying to house an increasing number of those accepted as statutorily homeless in decent accommodation with a general decrease in social housing stock. But they also have other responsibilities relating to the private rented sector which landlord accreditation schemes may also help to address. Accreditation schemes can also help fulfil a local authority's multiple aims in wider strategic housing objectives, normally related to increasing supply and improving the quality of stock, including: promoting standards in the private rented sector; bringing vacant properties back to use; addressing anti-poverty strategies; encouraging wider regeneration; and finding viable options for homeless households. Many authorities have made innovative use of wider government initiatives to help finance local strategies.1 Despite the many anomalies of the private rented sector, there is cross-party governmental consensus on the role of the private rented sector, although those involved day-to-day in trying to regulate the sector may hold an understandably different perspective. Research continues to recognise problems in the sector, especially conditions and management, and how these might be tackled.10 There remains a lack of consensus on how to tackle the private rented sector, but the general trend is to focus enforcement attention on the bottom end of the sector, offering assistance to where it currently works well.5 There is agreement that the private rented sector is performing below its potential in both quality and quantity - hardly surprising considering some of the fundamental dilemmas in terms of affordability for tenants, and expectation of return from landlord. The social housing sector simply does not operate in this way. Many local authorities have found landlord accreditation schemes a more acceptable and viable option than using bed and breakfast hotels for temporary accommodation. While local authorities have tried many schemes in working with the private rented sector - including private sector leasing, housing association leasing, housing associations as managing agents and discharge of duty - direct provision has tended to prove more cost effective. This is because the landlord bears the cost of management, voids, arrears and dilapidation - with most of the cost as housing benefit from central government.6 A workable landlord accreditation scheme
If landlord accreditation schemes are to stand any chance of success, the landlord's objectives need to be met. Incentives are therefore crucial, particularly as landlords will wish to see a market advantage in joining a scheme. However, the DETR has reported that only 45 per cent of authorities were monitoring the success of their schemes and that, generally, numbers of accredited properties remained small.8 This raises some questions about the viability of schemes, particularly where the outcomes, including security for tenants and financial and resource cost to local authorities, are considered. The constant battle to house a growing list of households may lead to standards being cut, as any willing landlord may be seen as preferable to a bed and breakfast alternative. Equally, there may be pressure to let to a tenant before inspection by the environmental health department when standards are not legally acceptable.
In order to overcome potential problems before they emerge, it is essential that the interested parties - including local authority officers (housing allocations and advice, environmental health and so on) as well as potential landlords and tenants meet to determine the aims and objectives of such a scheme. An important issue is who would ultimately be held liable on accident where a local authority placed a tenant in accommodation that it later emerged were defective. In particular, concerns about rent payment need to be met. Local authorities already have considerable expertise and existing administrative systems that can be developed to help administer the deposit and rent promptly to make belonging to the scheme an attractive option to the landlord. It is apparent that landlord accreditation schemes are only likely to attract the better landlords, but there is still a huge way to go on promoting standards and security elsewhere in the private rented sector. The establishment of landlord accreditation schemes requires considerable local authority resource, with no guarantee of increasing privately rented supply. But costs to local authorities are decreasing as lessons are being learned and schemes are slowly becoming more accountable and more attractive to landlords and authorities alike. Accreditation may be one step closer toward licensing the private rented sector, although there is clearly a long way to go. There remain many different perspectives behind the theory and practicalities of establishing an accreditation scheme, but at the very least it may help promote conditions and self-regulation more widely - and more acceptably - to landlords, tenants and local authorities alike. Further information about private sector housing, its purpose, condition and necessary remedy can be found in Jill Stewart (2001) Environmental Health and Housing, London: Clay's Library of Health and the Environment Volume 1: Spon Press. ISBN 0-415-25129-X References
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Meeting
local need 
Landlord
accreditation schemes administered by local authorities attempt
to secure a supply of decent quality privately rented properties
for those in housing need. They are also seen to establish a competitive
market position for members and encourage others to improve by setting
and monitoring standards.5,9 Setting
up an accreditation scheme requires considerable strategic development
and implementation, but authorities already have many organisational
systems, personnel, knowledge and information in place to champion
them. Successful schemes involve landlords from an early stage -
utilising a landlords forum - and are likely to take some twelve
months to develop and a further six months to launch (see tables
2 and 3).8 
There
has been concern as to the cost of such schemes, and it has even
been suggested that poor scheme management can lead to housing benefit
fraud. There is also the very real problems of locating decent accommodation
on an adequate scale in respect of the local authority resources
put into setting up such a scheme.