House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Eighth Report

1 INTRODUCTION

1. Rented housing is a vitally important part of Britain's housing stock, accounting for 30 per cent of all homes.[1] Yet recent Government policy has favoured the interests of owner occupiers at the expense of those of tenants. Since the introduction of Right to Buy in 1980, successive Governments have made it their aim to enable as many as possible to own their own home. This is an aim with which we have no quarrel. But there will always be a proportion of people for whom home ownership is not, or is not yet, achievable or appropriate; or who simply do not want to own their own home. These people will continue to rely on the rented sector. Government has a responsibility to ensure that they, too, have "the opportunity of a decent home, at a price they can afford, within a sustainable community."[2]

2. The rental sector is divided between social rented (housing association and local authority) and private rented. Figure 1 below shows trends in the level of total rented housing stock since 1976. Both trends in numbers and the reasons behind those trends differ between the social and private rented sectors, but as the chart shows, total numbers have declined over that period.

Figure 1—Rented homes in England. 1976-2006 (000s)

Source: CLG (Live Table 104)

3. The Housing Minister consistently referred during the period of our inquiry to the need to build more homes of all kinds. During our evidence session on the Housing Green Paper, for example, she told us "we need more new homes for social rent, we need more new homes for low-cost home ownership/shared ownership, and then we need more market homes."[3] We agree. As we noted in our earlier Report Affordability and the Supply of Housing, housing markets are highly complex with significant variations locally and regionally that render uniform national solutions inappropriate.[4] Nevertheless, just as in the inquiry which led to that Report, we have throughout our inquiry continually returned to the same fixed point: the supply of homes is insufficient. If the recommendations we make here have a common theme, it is that all the actors—central government, local government, housing associations, and the private sector—need to redouble their efforts to increase supply.

THE SOCIAL RENTED SECTOR

4. The role of social rented housing has been, and remains, to provide good quality housing at below market rents for those otherwise unable to afford decent housing. In July 2006, shortly after the commencement of our own inquiry, the then Secretary of State for Communities and Local Government asked Professor John Hills of the Centre for Analysis of Social Exclusion at the London School of Economics to carry out an independent assessment of social housing. In his report, Ends and means: the future roles of social housing in England,[5] and during evidence to us, Professor Hills clearly set out why a secure and decent home is important to support people to get on with their lives and in building up their livelihoods.[6] But the decline in size of the social rented sector, and the diversification of ownership and management from wholly council-owned and managed stock to the development of housing associations, arms-length management organisations (ALMOs) and housing co-operatives, has resulted in fundamental changes to the way in which social housing fulfils that role.

5. The most significant change has been the decline in the stock of social rented homes owned by local authorities. The programme of sales through Right to Buy has been the main reason for this decline,[7]which has resulted in over 1.8 million homes being transferred to the private sector.[8]In 1981, 32 per cent of households in England lived in a total of 5.5 million social rented homes. That figure has fallen to 3.8 million social rented homes today, 19 per cent of all households.[9]

6. The housing stock which has remained in the social rented sector has not necessarily remained under the control or within the ownership of local authorities, once the dominant provider of social housing. Ownership of over 842,000 homes has been transferred from local authorities to housing associations through large scale voluntary transfers (LSVTs) since 1997,[10]and housing associations now account for nearly half of all social housing.[11] Of the social housing stock which has remained in council ownership, nearly a third (828,000 homes) is now managed by arms-length management organisations (ALMOs).[12]

7. Changes in the ownership and management of social housing have been accompanied by a declining rate of house building in the social rented sector. Local authorities built 173,000 houses in 1970: they built just 487 in 2001, with housing associations adding only a further 22,000 to that total.[13]The recent increase in the number of new social rented homes built compared to 2003 hides an increase in the number and proportion of new social rented housing being built as flats. Figures from CLG indicate that almost 70 per cent of all new homes built by or for housing associations (which are the predominant builders of affordable homes) are flats, and nearly all of these only have one or two bedrooms.[14] A major reason for this change is the market demand for flatted developments in city centres:[15] between 2000 and 2006 new build flats increased from 20 per cent of all completions to 47 per cent.[16] With new social housing increasingly being provided by developers through planning obligations, social housing has followed the market. But the greatest unmet need for social housing is at the other end of the range, family houses.

8. Providers of social housing now see increasing demand for their resources, particularly family homes within London. The consequences are not confined to individuals, or families, being unable to find a decent permanent home within a reasonable timescale. Scarcity results in a lack of mobility within the stock, which in turn leads to overcrowding and inhibits opportunities for employment. The scarcity of social housing, together with policies designed to ensure that it is allocated to those in greatest need, also concentrates problems of deprivation in neighbourhoods with a high density of social rented housing.[17]

9. Existing social rented housing also needs to be improved. Despite Decent Homes, an extensive and largely successful programme of repairs and upgrading begun in 2001, challenges remain in reducing levels of energy use, carbon emissions and fuel poverty in the social rented stock. The more diverse nature of social rented housing providers described above has opened further opportunities for improvements to the management of social rented homes, including greater tenant participation, and to the provision of employment-related support to tenants. Meanwhile the introduction in the Housing and Regeneration Bill of a new regulator of social housing, Oftenant, and a new agency to direct the supply of housing, the Homes and Communities Agency, will provide the Government with a new set of tools to tackle the issues it faces in the social rented sector.

THE PRIVATE RENTED SECTOR

10. Important though it is to maintain and increase the supply of private rented housing, the main issue in the private sector has been less about numbers, than about quality. As the graph on page 7 shows, there has been slow but steady growth in the quantity of private rented stock in the last 20 years, though recent growth has been stronger as a result of the surge in buy-to-let purchases. Following the introduction of Assured Shorthold Tenancies (AST) in 1989, the percentage of households in private rented accommodation rose from 9½ per cent to 12 per cent by 2006 (1.9 million households to 2.6 million)[18] and is forecast to grow further over the next decade.[19] But substantial numbers of people in the private rented sector remain in poorly managed and poorly maintained homes.

11. The private rented sector can be a sector of choice for many, particularly people who are fairly mobile and do not want to be bothered with the burden of property ownership and maintenance (e.g. students, young people at the start of their careers, those who have recently experienced relationship breakdown, and some elderly people). But some 47 per cent of households who rent privately (roughly 1.2 million) can neither access social housing nor afford to buy in their area, leaving them with little choice other than to rent from a private landlord.[20] Many households rely on private sector rented housing subsidised by housing benefit; and, with the shortage in the availability of social rented housing, councils have had little alternative but to add to their number by using the private rented sector to accommodate homeless families.

12. The quality of some accommodation in the private rented sector, particularly that occupied by the low-income and vulnerable families referred to above, emerged during our inquiry as a serious concern. Although many private rented properties are in good condition and well managed, the sector has the highest proportion of properties failing to meet the decent homes standard[21]and there are major concerns about poor management and safety, particularly in Houses in Multiple Occupation (HMOs). These problems affect not just tenants, but the neighbourhoods in which the properties concerned are concentrated.

13. The Housing Act 2004 introduced a range of measures to raise standards and address some of the problems caused by poor landlords, including an improved health and safety system, mandatory licensing for larger HMOs and tenancy deposit schemes. The fact that concerns about quality and management persist suggests that those measures have not been successful. Demands continue to be made for a strengthening of the regulatory approach to the private rented sector.[22]

Conduct of the inquiry

14. This is the background against which we have conducted our inquiry. We published our terms of reference and invited written evidence in June 2006 (see Annex A). We received 68 submissions from a total of 62 organisations and, between December 2006 and May 2007, held seven oral evidence sessions. We also undertook several visits—within London, to Manchester, and to the Netherlands—to talk to residents, housing practitioners and local decision-makers directly. We would like to thank our specialist advisers, Professor Christine Whitehead, Professor Steve Hilditch and Professor Steve Wilcox, for their guidance and assistance, and all those who contributed to our inquiry either formally or informally. We would like to pay special thanks to the residents of temporary housing in Westminster who invited us into their homes to discuss their personal experiences during our visit there.[23]

15. There has been a enormous level of debate on housing-related issues during this inquiry. Professor Hills's report, referred to above, and the evidence he gave to the Committee has been informative. At the end of 2006, Professor Cave was asked to conduct a review of the regulation of social housing, which progressed to the Housing and Regeneration Bill which is now before Parliament.[24]The Government also published a Housing Green Paper and a White Paper on further reforms to the planning system. A review of the housebuilding industry by John Callcutt, the former Chief Executive of English Partnerships, was published in November 2007, and most recently a review of the private rented sector by the Centre for Housing Policy at York University has been announced.[25] In addition, the National Housing and Planning Advice Unit has been established and published research on housing demand and the effect of buy-to-let.

1 CLG Live Table 104 (2006 provisional results) Back

2 Ev 171 (CLG). Note: "Ev" references refer to page numbers in the first volume of written evidence, published on 22 November 2006 as HC47-II of Session 2006-07, unless indicated otherwise. Back

3 Oral evidence taken before the Communities and Local Government Committee on the Housing Green Paper, 9 October 2007, HC (2006-07) 1038-i, Q 16. Back

4 ODPM: Housing, Planning, Local Government and the Regions Committee, Third Report of Session 2005-06, Affordability and the supply of housing, HC 703-I, paras 20-21. Back

5 John Hills (2007), Ends and means: the future roles of social housing in England, Centre for Analysis of Social Exclusion (CASE). Back

6 Q 390 Back

7 Ev 74 (GLA), Ev 95 (CRC), Ev 118 (Shelter), Ev 174 (CLG). Back

8 CLG Live Table 648 Back

9 Ev 174 (CLG) Back

10 HC Deb, 18 Dec 2007, col 1306W. Back

11 Ev 109 (NHF) Back

12 Ev 176 (CLG) Back