Crisis submission to Housing and Planning Bill Public Bill Committee 5 November 2015

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1 Crisis submission to Housing and Planning Bill Public Bill Committee 5 November The Housing and Planning Bill makes a number of significant changes to the Private Rented Sector (PRS) and to the supply of affordable housing. Crisis is concerned that the Bill will have the overall effect of restricting the supply of affordable housing to rent. Independent research carried out for Crisis and the Joseph Rowntree Foundation, The Homelessness Monitor, is clear that the longstanding lack of affordable housing and levels of new house building that do not keep up with demand are contributing to increased levels of homelessness There is a broad consensus that net annual requirement for new homes in England is 240, ,000 2, during the last Government the number of homes built averaged 112,000 homes per annum The number of new affordable homes for rent in England fell from 43,000 homes in 2010/11 to 31,000 in 2013/14 4, whilst lettings to new tenants by councils and housing associations fell from 231,000 in 2010/11 to 218,000 in 2013/ Crisis strongly welcomes proposals in the Housing and Planning Bill to tackle rogue landlords, including the introduction of banning orders and a rogue landlord database, the expansion of Rent Repayment Orders, equipping local authorities with information on landlords and their properties via the tenancy deposit schemes, and the introduction of fixed penalty notices. We believe that these could help drive up standards and protect vulnerable tenants. 5. However, we are concerned that the proposals to introduce a new PRS evictions process for cases of perceived abandonment will lead to increased homelessness. 6. The private rented sector accounts for 19% of households in England and for the first time in post war history more people rent their homes from a private landlord than the council or a housing association. Due to the declining number of social rented homes (which this Bill has the potential to further deplete), a high number of people on low incomes, people in receipt of Housing Benefit and people who have experienced homelessness live in the private rented sector. The loss of a home in the private rented sector is the leading cause of homelessness, accounting for 29% of all homelessness cases 6. 1 Crisis (2015), The Homelessness Monitor 2 Chartered Institute of Housing (2015) UK Housing Review 2015, p.28 3 Chartered Institute of Housing (2015) UK Housing Review 2015, p Table Chartered Institute of Housing (2015) UK Housing Review 2015, Table DCLG (2015), English Housing Survey

2 7. A lack of suitable supply and availability of accommodation in the PRS has resulted in more and more homeless people getting stuck in temporary and hostel accommodation, unable to move into settled accommodation and rebuild their lives. Homeless Link s most recent review of the support for single homeless people in England, found that 62% of accommodation projects surveyed said that local pressures on the housing market or limited supply of suitable rental properties were the main barriers to move-on for their clients. On average, accommodation projects reported that 25% of people currently staying in their services were ready to move on but had not yet moved Despite, the increasing reliance on private renting, the sector is unfit for the purpose of accommodating those people in the most need. Conditions in the private rented sector are worse than any other tenure. Almost a third (30%) of privately rented homes do not meet the government s decent homes standard. This compares to only 15% in the social rented sector, and 19% of owner occupied home 8. In addition 16% of private rented homes contain a Category 1 hazard, which is defined as posing a serious danger to the health and safety of the tenant. 9. Last year Crisis and Shelter published research following a three-year longitudinal qualitative study of people housed in the private rented sector after experiencing homelessness 9. The study highlights the effects of poor housing conditions on health and wellbeing of tenants living in the private rented sector. All the participants in the study experienced a problem with conditions at some point in the 19 months that they were interviewed. 10. Crisis has many years expertise in supporting people on low incomes to access the PRS. Between 2010 and 2014 Crisis managed the Department for Communities and Local Government (DCLG)-funded Private Rented Sector Access Development Programme. This 11.4m funding programme supported 153 schemes across 144 local authority areas in England. These schemes created 8,128 tenancies, of which 90% were sustained for at least six months. On the back of this, Crisis secured a further 2m from DCLG to run the Private Renting Programme, match funding schemes existing schemes that had achieved at least 75% of their target. This funding programme runs from April 2014 March Overall, we are disappointed that the bill does not make use of this opportunity to supply housing for those on the lowest incomes or take steps to tackle homelessness. All forms of homelessness have risen. Last year 112,330 people in England made a homelessness application, a 26% rise since 2009/ In 2014 Government street counts estimated around 2,744 people slept rough on any one night across England, a rise of 55% on We believe this bill is a missed opportunity to tackle homelessness and would like to see proposals brought forward to amend the homelessness legislation to ensure all 7 Homeless Link (2015), Support for single homeless people in England: Annual Review Department for Communities and Local Government (2015), English Housing Survey headline report Smith, M., Albanese, F and Truder, J.A Roof Over My Head: The Final Report of the Sustain Project, Sustain: A longitudinal study of housing outcomes and wellbeing in private rented accommodation, Shelter and Crisis, 2014, p. 19 Big Lottery Funded 10 DCLG (2015) Table 770 Statutory Homelessness 11 DCLG (2014) Total Strretcounts and Estimates Autumn 2013

3 homeless people get the help they need. Under the law, most single homeless people, not usually considered to be in priority need for housing, can be turned away by their councils when they seek help. Crisis believes there must be action by central and local government to tackle this, including through protecting the vital Homelessness Prevention Grant funding. Starter Homes (clauses 1-7) 13. The Bill will enable the Government to require councils to prioritise the provision of Starter Homes above the supply of other affordable tenures, including social rented housing. This would have a significant impact on the already limited supply of housing available to meet the needs of low income groups, including people who have experience of homelessness. Crisis is concerned that Starter Homes will replace social home provision under Section 106 planning agreements. 14. Starter Homes will be sold at a discount (clause 2 (6)), of at least 20% of market value and capped at 450,000 in Greater London and 250,000 outside of London, to first time buyers under the age of 40. Research by Shelter has shown that in most parts of the country lower income households will not be able to afford Starter Homes, and specifically: a. Starter Homes will be inaccessible to households on or below the National Living Wage in all but 2% of council areas. b. Outside of the North of England, Starter Homes will be unaffordable to the majority of households on wages below the median By requiring councils to prioritise Starter Home provision for higher earners, the Bill will reduce the scope to meet the full range of housing requirements identified through their local planning processes. This would have a significant impact on the already limited supply of housing available to meet the needs of low income groups, including people experiencing homelessness. 16. It is essential that local authorities retain the flexibility to ensure the full range of housing requirements, including social housing, can be met through the planning system. The delivery of Starter Homes should not be prioritised above housing that is genuinely affordable to lower income groups. 17. We would be supportive of amendments that ensure Starter Homes must be additional to requirements to build affordable rented homes and not instead of. Banning orders (clauses 12-20) and database of rogue landlords and letting agents (clauses 22-31) 18. Crisis is supportive of proposals in the Bill that would for the first time prevent a landlord or letting agency who has committed a banning order offence, to be laid in regulation, from renting out and managing properties for a specified period of time (6 months or longer). 12 Shelter, August 2015 Starter Homes: will they be affordable?

4 19. Crisis would be supportive of amendments that would enable local authorities to share information about banned landlords/ letting agents. This will help local authorities to better target enforcement work. Currently if a landlord has been prosecuted (which itself doesn t stop them from renting out properties) and moves their business to another area, it is very difficult for that local authority to identify them and target poor practice. 20. Crisis would be supportive of amendments that would require banned landlords/ letting agents to undertake accredited training before they are allowed to let and manage a property again. This would help improve skills and professionalism in the sector. 21. Crisis would be supportive of amendments that would give judges the power to issue a banning order when they prosecute a landlords. This would help reduce costs/ burdens to local authorities, who will have already invested considerable resources in bringing a prosecution. Rent Repayment Orders (clauses 32-46) 22. Since 2004, occupiers of a property or the relevant local authority have been able to recover rent or housing benefit paid to an unlicensed landlord using a Rent Repayment Order (RRO). 23. Crisis is strongly supportive of proposals contained in the Bill that extend RROs to the following offences: violence for securing entry (Criminal Law Act 1977); eviction or harassment of occupiers (Protection from Eviction Act 1977); failure to comply with an improvement notice (Housing Act 2004); a landlord who breaches a banning order. 24. Currently very few claims are made for RROs, largely because prosecutions are very low and tenants find it difficult to apply to the First Tier Tribunal to do so. Crisis would be supportive of amendments that would give judges the power to issue a RRO when they prosecute a landlord. This would help reduce costs/ burdens to local authorities and tenants, who would have to make a claim to the First Tier Tribunal for a RRO following a successful prosecution. Abandonment (clauses 49-55) 25. Crisis strongly opposes the proposals to speed up the eviction process in situations where the landlord thinks the property has been abandoned and recommends these be removed from the bill. These proposals will undermine the protections for tenants and set a dangerous legal precedence to move evictions out of the court system and lead to a rise in homelessness. 26. The Bill creates a new fast track eviction process for landlords to reclaim possession of a property which has been abandoned. In order to use this new eviction process the tenants must be in eight weeks rent arrears and the landlord must send two letters to the tenants. The first of these can be issued before the tenant has been in arrears for eight weeks. Once two warning notices have been issued and no response has been received to confirm the property has not been abandoned the landlord can evict the tenant.

5 27. Taking the courts out of this process leaves a tenant with no opportunity to challenge possession proceedings and they could be illegally asked to leave their home with very little notice, leading to an increased risk of homelessness. 28. Cases of illegal evictions are very rarely investigated and very few landlords are prosecuted. This is largely because tenancy relations teams, who would have traditionally carried out this function, have faced significant cuts and many councils no longer has a team at all. Police forces often think that illegal eviction is a civil matter and it is rare that they would investigate an offence unless violence has been used. In 2011 only 13 successful prosecutions occurred for unlawful eviction Whilst the Bill makes provision for a tenant to challenge the landlord in a county court if they have had good reason not to respond to the warning letter, this can only take place once a tenant has already been evicted. Cuts to legal aid however, have severely limited a tenant s ability to take this type of recourse. We are also concerned that tenants who had good reason not to respond, such as being unwell, will not be in a position to go through a difficult and expensive court process. 30. There is not robust evidence to suggest that abandonment is significant or widespread problem. Landlord associations have estimated that 1% of calls made to their helplines relate to abandonment. There are approximately 1.4 million landlords. From this figure the government has extrapolated that there are only 1,750 tenancies abandoned every year, which amounts to only 0.04% of private renting households We are concerned that this new eviction route will adversely affect vulnerable tenants, who may not receive or not open the warning letters. This could include being hospitalised, caring for someone else or a short spell in prison. It may mean they are difficult to contact and could have fallen behind with rent payments. 32. We are also concerned that landlords will seek to use these new fast track eviction process to evict those in receipt of housing benefit, who may fall into rent arrears due to delays in payment to housing benefit. Recipients of housing benefit are frequently affected by delays in their payments and administrative errors on the part of local authorities. Furthermore new Universal Credit claimants will be particularly vulnerable to accruing rent arrears when they first make a claim, given that they will have to wait at least six weeks for their first payment. 33. There is already legal provision for cases of abandonment, in the form of the legal rule of implied surrender (mutual surrender of the tenancy). This is where a tenant behaves in a way that would make a landlord believe they wanted to end a tenancy such as emptying the property of all of its possessions or handing back the keys. The landlord can accept this and change the locks. Importantly it is the action of the tenant which creates the implied surrender, not the action of the landlord and they are then able to repossess the property immediately and they will not be breaking the law. 13 Shelter FOI, Housing and Planning Bill 2015/16 Impact Assessment, NB. There are 4.4 million households living in the PRS (DCLG, (2015) English Housing Survey ,)

6 34. In addition to legal rule of implied surrender, outside the fixed term of their tenancy, the landlord only has to give a two month notice period, and does not have to prove that the tenant is at fault. If a tenant has genuinely abandoned a property then there will be no need for a landlord to go to court to seek a possession notice as the tenant will no longer be in the property. Legislating for a new evictions process will create unnecessary regulation in the private rented sector and leave tenants more vulnerable to illegal eviction. Implementing the Right to Buy on a voluntary basis (clauses 56-61) and the sale of high value council homes (clauses 62-72) 35. The Bill will enable Government to compensate Housing Associations (HAs) through the sale of high value Council homes for the sale of homes to tenants as part of the voluntary right to buy (RTB) programme agreed between the Government and Housing Associations. There is still considerable lack of clarity about the detailed operation of the new policies. 36. Clarification of the operation of the voluntary scheme is needed to allow for a full analysis of its implications along with the definition of high value council homes. 37. We are concerned that HAs will be under no obligation to replace homes sold under RTB, and any replacement homes may be provided as shared ownership or low cost sale rather than rent. It seems likely therefore that, even if the policy were to achieve 1-1 replacement of homes over time, it will lead to a reduction in the overall stock of social/affordable homes to rent. 38. Clarification is also needed on what the voluntary deal means for Housing Associations who voted no or did not vote. It is unclear if they will be forced to sell their houses. 39. It has been estimated that 20-40% of Council homes sold under right to buy have become private rental properties, often meeting the needs of lower income households who are on housing benefit, but at a higher rent than if they were council stock 15. It has been estimated that the additional cost to housing benefit - as a consequence in one local authority area is 3.2 million per annum 16. The extension of RTB could therefore result in greater costs to the housing benefit bill in the future. 40. The Chartered Institute of Housing estimates that if 145,000 HA tenants exercise RTB over 5 years (29,000 pa), 10 billion would be generated in receipts, with the Government needing to fund a further 10 billion in discounts. 17 The intention is that the Government would fund this discount from the selling off of high value council properties. Crisis believes that the sale of high value council homes to fund this substantial discount is not an appropriate use of scare public resources at a time of a crisis in the supply of affordable and social housing for rent. We would be supportive of amendments that remove clause Sheffield Hallam University (CRESC), October 2015, The Impact of Existing RTB and the implications of the Proposed Extensions of RTB to Housing Associations 16 As above 17 CIH, October 2015 Selling off the stock

7 41. Enforced sale of high value council homes, combined with the 1% rent reduction (in the Welfare Reform and Work Bill), will undermine existing council building and regeneration programmes, disrupting the recently emerging supply pipeline of new council housing. In some areas, high value council homes are already being sold by councils to fund existing building programmes. However these funds will now be clawed back by Government. We believe this policy runs counter to the principles of localism. It will undermine the emerging programme of new council house building 18 and councils efforts to meet local housing needs. 42. The Government has yet to define what constitutes high value councils homes. The Conservative Party manifesto defined it as the most expensive third of properties by size and region. 43. Crisis is supportive of amendment 1 and new clause 1 which would require any high value council homes sold in London to be replace by 2 affordable units. High income social tenants: mandatory rents 44. The Bill introduces a new mandatory requirement to charge high income ( 40,000 inside London and 30,000 outside London) council and housing association tenants a market rent. Councils will be able to retain a portion of the increased rental income to cover their administrative costs but will be required to pay any additional income to the Exchequer. However housing associations can retain the full amount received and invest any excess in new housing. The Government is currently consulting on the detailed implementation of the policy. 45. Whilst Crisis does not object in principle to the idea of high earners in the social rented sector making a higher rental contribution than lower income social tenants, we have grave concerns with the detail of these proposals. 46. Our primary concern is the impact of Clause 76(2) of the Bill. This grants socials landlords the power to require tenants to declare their income, and where they fail to do so, to be charged market rate rent. This has the potential to cause significant hardship for those unable to supply the required proof, particularly for tenants who are vulnerable and could potentially result in homelessness. 47. It may particularly impact on tenants who do not receive communications asking for information on their income, perhaps because they are away from home due to illness or caring for a relative. People who are very vulnerable, including those with serious mental health problems or learning disabilities, may not open or fully understand letters sent to them. This could result in them being expected to pay market rents despite being on very low incomes. 48. We would be supportive of amendments that remove this clause. 49. We would also be supportive of amendments that would ensure that specific groups of tenants are exempt from the automatic switch to a market rent while income is verified, including: 18 Shelter, September 2015, The forced council home sell-off p.4

8 a. Tenants for whom the landlord receives direct payment of Housing Benefit b. Tenants known by the landlord to be vulnerable - grounds for this would be specified in guidance (and subject to consultation) - or whose first language is not English. 50. A further concern is the Government s intention to require Councils to pay any surplus income to the Treasury, as set out in Clause 79 of the Act. If the scheme is capable of generating surplus income this should be invested in building of affordable homes. 51. Crisis would be supportive of amendments that would enable councils to retain the full income generated from increased rents to fund new housing provision just as housing associations will be able to. The surplus generated should be ring-fenced for the provision of new affordable homes.

9 About Crisis 52. Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. Our innovative education, employment, housing and well-being services address individual needs and help people to transform their lives. 53. As well as delivering services, we are determined campaigners, working to prevent people from becoming homeless and advocating solutions informed by research and our direct experience. Crisis has ambitious plans for the future and we are committed to help more people in more places across the UK. We know we won t end homelessness overnight or on our own but we take a lead, collaborate with others and, together, make change happen. Company Number: Charity Numbers: England and Wales , Scotland SC For further information, please contact: Helena Brice Public Affairs Officer Helena.brice@crisis.org.uk