Minister Questioned on Private Rented Standards & Tenant Fees Ban

In her opening statement to the Committee, Ms Wheeler outlined action the Government is already taking in the private rented sector (PRS), such as introducing banning orders, consulting on electrical safety checks and strengthening redress, extending mandatory HMO licensing and supporting Karen Buck MP’s Fitness for Human Habitation Bill.

Below is a run-through of some of the issues raised by the Committee during the questioning. In the almost 2 hour session we learn that:

• A review of selective licensing will be launched after the Easter recess.
• A new How to Let guide aimed at landlords will be launched around Easter.
• There may be a review of the Housing Health & Safety Rating System (HHSRS) later this year following the ongoing independent review of building regulations and fire safety.
• The Minister is consulting with the judiciary over the need for a specialist housing court

NLA CEO Richard Lambert recently met with the Minister to discuss policy priorities for the PRS.

Standards and Regulation

The Committee questioned the Minister on her Ministry’s view on standards in the PRS and its regulatory framework. She pointed out that the proportion of ‘non-decent homes’ within the private rented sector had declined from 47 per cent in 2006 to 27 per cent in 2016. Ms Wheeler said that the Housing Health & Safety Rating System (HHSRS) had worked ‘really well’, and properties with identifiable hazards had declined from 31 per cent in 2008 to 17 per cent in 2015. A decline in standards had not been seen.
The Minister was determined to continue to drive up standards, but there remained an ‘unacceptably high’ number of people who lived in non-decent accommodation. Ms Wheeler said she appreciated concerns around ‘piecemeal legislation’, but added that existing legislation had ‘delivered results’ and increased property standards. It was important to work with good landlords, and ensure that tenants understood their rights.The way forward was to provide better support so that existing legislation was explained and used effectively, rather than undertaking a complete overhaul of the regulatory regime. A new How to Let guide will be published around Easter time to ensure that landlords understand their responsibilities and duties, with the Minister expressing concern that a large number of ‘accidental’ landlords ‘don’t know what they’re doing’. When pressed on the supposed complexity of the HHSRS, the Minister said that a review of HHSRS would be undertaken following the publication of Dame Judith Hackitt’s independent review of building regulations and fire safety. She did not wish to pre-empt the review.

Review of Selective Licensing

The Minister confirmed to the Committee that her department has committed to a review of selective licensing, The review would be launched after the Easter recess, and would examine the ‘effectiveness of selective licensing’, she explained, and the findings would determine whether any changes needed to be made. Ms Wheeler said that selective licensing was an interesting new tool for targeting issues in specific areas, and, where it worked well, she wanted to see that good practice spread to areas with similar issues. However, she felt it was the wrong time to change the overall process and that decisions on large schemes should rest with central government. Where correct evidence was presented she was willing to grant licences, but there needed to be ‘high threshold’. The Minister resisted a call for requiring landlords to declare their property to a local authority, arguing that while some councils had a voluntary register it would be ‘hugely bureaucratic’ to implement a mandatory national register. Conservative MP Bob Blackman raised concerns about landlords not paying tax on rental income, and asked whether that issue would be included in the review. The Minister replied that HMRC are leading on this issue and a consultation is currently underway. You can find out more about HMRC’s consultation here (closes 2nd March 2018).

Tenant Redress & Rebalancing the Relationship

Labour MP Helen Hayes asked the Minister whether the ‘power imbalance’ between tenants and landlords made it difficult for tenants to pursue complaints, for fear of retaliatory eviction or rent increase. Ms Wheeler responded that the Government was committed to rebalancing the relationship between tenants and landlords through a range of measures. These included ensuring that all landlords were subject to redress schemes, and the Government was exploring whether a ‘single housing ombudsman’ would simplify access to redress for tenants. A consultation on mandatory landlord redress was ongoing (closes 16th April) and more information can be found here. The aim of any action will be to close the gaps which had been identified in the present ombudsman schemes, whilst addressing any confusion amongst landlords and tenants. The consultation is seeking views on the power of redress, the potential for the expulsion of members, and the referral cases to enforcement agencies and regulators. Following the consultation, the next steps would be set out. The Minister also confirmed that she was continuing to consult with the judiciary on the need for a specialist housing court to improve access to justice for landlords and tenants.

Draft Tenant Fees Bill

Along with the inquiry into PRS standards, the Committee is undertaking pre-legislative scrutiny of the Government’s Draft Bill to ban letting fees to tenants. Members of the Committee raised concerns with a number of aspects of the Bill as it stands. On ‘default fees’ Conservative MP and former Housing Minister Mark Prisk asked why the Bill had not included definitions of ‘default fees’ so as to provide certainty. The Minister replied that she did not feel that it was practical to impose a definition. There would not be a specific list of default fee charges, but the Draft Bill set out that landlords and agents had to be clear with the tenant on the issue of default fees at the time of the contract signing. Guidance would include an outline of the level of fees which was considered ‘appropriate’. Mr Prisk also asked whether Trading Standards had adequate powers to enforce the Bill, or whether change was needed in their remit. Ms Wheeler responded that Trading Standards had the powers and capabilities to cope with the enforcement of civil penalties. She felt that the non-statutory guidance was strong enough and clear enough to ensure cases were handled at an earlier stage. Labour MP and Committee Chair Clive Betts asked whether tenants stood to lose the whole holding deposit if they failed a reference check. The Minister said that she did not think this would be the case. If the tenant provided false or misleading information, the landlord could retain the holding deposit, but guidance would be provided on the amount that could be withheld. If an applicant acted honestly and provided correct information, but still failed the check, their deposit should not be retained. Mr Betts also argued that the six-week security deposit was seen as too high by stakeholders including Shelter and Citizens Advice, who suggest four-week deposits. Ms Wheeler said that evidence was mixed, and the current average security deposit was five weeks. She called for a six-week deposit to counteract against tenants ‘walking away during the last month’ of their tenancy. She intended to be even-handed towards good landlords as well as good tenants. She said she had made up her mind on this issue. This is an issue the NLA has been campaigning on since the initial consultation on a fees ban, and in our recent meeting with Ms Wheeler.

Additional Evidence

Following the evidence session, the Ministry of Housing, Communities & Local Government provided follow-up written evidence to address some of the points raised. From that evidence, we can see the Government’s current position a number of issues surrounding the ban on fees:

• A landlord or letting agent does not have to refund the holding deposit if the tenant provides false or misleading information.
• A landlord does not have grounds for retaining a holding deposit if the tenant provides correct information but nevertheless fails a reference check.
• If a tenant fails a ‘right to rent’ check then the landlord does not have to return the holding deposit (provided that before taking the holding deposit the landlord did not know and could not reasonably have been expected to know that the tenant was a person disqualified from renting by immigration status).