Communities and Local Government CommitteeWritten evidence submitted by London Borough of Enfield

Introduction

The recent Census reported that Enfield had 119,916 households living in the borough. Of this number, 70,549 owned their own homes, 21,073 rented their home from a social rented landlord and 26,591 were renting from a private landlord. Enfield has seen a rapid growth in the number of households renting from a private landlord in recent years.

Enfield’s private rented sector plays a very important part in providing housing for those for whom social rented housing and home ownership are not an option. Data from DWP showed that in February 2012 there were over 18,000 housing benefit claimants in the private rented sector in Enfield. This number does not include the nearly 2,000 households living in temporary accommodation most of whom are housed in the private rented sector.

1. The Quality of Private Rented Housing

In Enfield, the majority of complaints from tenants within the private rented sector are about disrepair. These increased from 964 in 201011 to 1,633 in 201112.

The Housing Act 2004 introduced a comprehensive set of minimal standards for private rented accommodation through the Housing Health and Safety Ratings System. Enfield has found this legislation to be sufficient with regards to setting a reasonable standard of accommodation in the private sector and with regards to providing appropriate powers to take enforcement action against the small minority of landlords who are not prepared to keep their properties in a reasonable condition. Benefit cuts have reduced the amount of income that some landlords have available to invest in their properties. This may have contributed to an increase in the number of complaints of disrepair reported by tenants.

Steps that can be taken to ensure that all housing in the sector is of an acceptable standard

Enfield’s Enforcement Team provides a comprehensive service to deal with complaints of disrepair from vulnerable tenants where the landlord may be reluctant to assist. Enforcement officers carry out property inspections to assess disrepair and hazards that are present in the property. They also negotiate and advise landlords on the necessary repair works required. Enforcement action is taken when the landlord fails to complete repairs that are deemed to be hazardous and a health and safety risk to the occupants. Enforcement action may involve the service of a Notice under the Housing Act 2004, Housing, Health and Safety Rating System in relation to category 1 or 2 hazards, the Management of Houses in Multiple Occupation (England) Regulation 2006 in relation to shared houses and the Environmental Protection Act 1990 in relation to statutory nuisance. Works in default may be carried out by Enfield Council if Notices are not complied with and the landlord will be recharged for the works along with administrative charges. Prosecution action may be pursued if the landlord remains non-compliant. Growth in the private rented sector has increased officer caseloads and put additional pressure on these services.

Changes within Benefit Reform are likely to force certain families to move into smaller properties and possibly share accommodation. This is likely to increase the number of complaints received about overcrowding which is likely to place an additional burden on the Housing Enforcement team.

Enfield considers that existing legislation contains sufficient powers to ensure satisfactory standards are maintained within this sector. It will continue to work in partnership with private rented sector landlords to improve and maintain high standards of accommodation and professional management.

2. Levels of Rent within the Private Rented Sector

Enfield’s Housing Strategy reports that rents in the private rented sector have increased by over 4% per year since 2004 with larger properties gaining more than smaller properties.

MONTHLY RENTAL COSTS IN ENFIELD

Size (beds)

Avg Rent 20121

Avg Rent 20042

Annual Increase

1 bed

£793

£600

3.5%

2 bed

£1,049

£735

4.5%

3 bed

£1,300

£885

4.9%

4 bed and larger

£1,599

£1,090

4.9%

Despite the fact that increases in rental costs have been more modest than the increase house prices, they are still expensive when compared to incomes in the borough. A household on the median income3 would spend 40% of their gross pay to rent on a typical two bed property in Enfield. This rises to over 49% of gross income for a three bed property.

Rising private sector rents in Enfield are driven by growing demand and a shortage of supply. Two key factor driving demand for private rented sector homes are:

1.The high cost of home ownership which has made it increasingly difficult for young people to buy somewhere to live with prices rising faster than earnings. At the same time mortgage availability has also shrunk.

2.Low levels of social rented homes becoming available for letting relative to other boroughs. At 31 March 2012 there were 7,898 households on Enfield’s Housing register. During 201112 a total of 884 homes were let of which 410 were one bedroom homes, 274 were two bedroom homes and only 200 had three or more bedrooms.

There are also competing claims from across the sector which is helping to drive up rents. Government provides subsidy in the form of Homelessness Grant to local authorities to address homelessness. Enfield has received a provisional allocation of £546,897 compared with Westminster who received £8.1 million and RB Kensington and Chelsea who received £2.18 million. There is not a clear and transparent process for allocating homelessness grant with a number of inner London boroughs receiving significant sums of money giving them leverage in procuring private rented sector lets outside of their borough boundaries for a range of markets. As competition for properties increases in the context of a shortage of supply, prices are driven up. Two of these markets are Temporary Accommodation tenants and households at risk of homelessness.

Rent control

Rent control is one mechanism for restricting rents with the advantage of making rents more affordable. Disadvantages, if rents are set too low and landlords are not receiving a good return on their investment they may revert private rented properties back to owner occupation. Landlords remaining in the private rented market may also be discouraged from carrying out repairs or investing in their homes.

Interaction between housing benefit and rents

Enfield has increasing levels of deprivation in the borough. The number of households claiming housing benefit in Enfield was 28.1% in 2011, an increase of 44% over the last six years. This was more than double the increase across London which was 20% over the same six year period. Enfield had the second highest private tenant caseload in London and the 7th highest nationally.4

Inward migration of poorer households and increasing deprivation in the borough has resulted in increased demand for private rented homes.

With the introduction of housing benefit changes, Enfield is now seeing landlords withdrawing properties from this market and making decision about increasing the return on their investment by entering new markets.

The impact of rent increases for households with rent increases above the LHA cap include:

Increased rent arrears and homelessness.

Tenants economising on their housing costs by moving to a smaller homes and overcrowd themselves.

Tenants moving to cheaper locations elsewhere or poorer quality homes elsewhere.

A few impacts of increasing public subsidy on private landlords in Enfield through LHA increases are set out below:

In Enfield, generous increases in LHA from 2008 opened up the private rented housing markets further to low income households. These helped to prevent homelessness through our success in procuring private sector accommodation. In the last five years we have housed around 3,000 homeless households in the private sector and around 1,000 homeless households in temporary accommodation. Migration of poor people to the borough has also increased, encouraged by other boroughs actively promoting households at risk of homelessness to live in Enfield.

Landlords in Enfield are now reviewing their business options for renting properties as a result of recent changes in housing benefit regulations. These have acted as a disincentive for local landlords to let properties to low income households on benefit. As a result of this we have seen increased evictions of private tenants on Housing Benefit in Enfield and we are finding it difficult to acquire sufficient private lets to help households threatened with homelessness.

3. Regulation of Landlords

Enfield has an Accredited Landlords Scheme and a successful and active Accredited Landlords Forum. We have around 70 members and the membership has increased substantially since the scheme was re-launched in May 2012. Landlords undertake to meet a minimum set standard of accommodation and tenancy management in return for accreditation, access to specialist council officers for advice on matters such as housing benefit, council tax, planning, antisocial behaviour etc.

Enfield’s current scheme delivers benefits because the local authority and our local landlords see each other as equal partners, working together to drive up the standards of private sector accommodation and tenancy management in the borough. The majority of professional landlords would view compulsory accreditation as an unnecessary bureaucratic burden and would see local landlord’s relationship with local authorities change from trusted business partners to reluctant victims of enforcement. Furthermore, the compulsory accreditation of all landlords in Enfield would require a significant increase in resources to administer. Enfield believes that the compulsory registration of landlords would not be an effective way in improving standards in private rented sector.

Steps that can be taken to deal with rogue landlords

Enfield has a good working relationship with the majority of landlords within the borough. This is demonstrated by the fact that in most cases of complaints against landlords are resolved without resorting to enforcement action.

Enfield’s Housing Enforcement Team report that they successfully negotiating a resolution with the landlord in over 90% of cases. However, in less than 10% of cases we are forced to take legal action such as the service of notices, prosecution, works in default etc. Enfield believes the current legislation is sufficient to deal with these cases. Although our services are severely stretched, we have been able to tackle the worst landlords and enforce repairs where necessary. Enfield considers that the introduction of more draconian legislation would penalise the good landlords as well as the bad and the most effective way of improving standards in the private sector is to ensure robust enforcement using existing legislation.

4. Regulation of Letting Agents

Whilst the compulsory registration of all letting agents would act as a disincentive for potential new businesses and would add unnecessary bureaucracy for existing professional Letting Agents, we believe that there should be some basic protection against the poorest practices of unscrupulous letting agents.

Enfield believes that regulation of letting agents should be carried out with a “light touch”. This would assist in stopping unscrupulous letting agents exploiting both tenants and landlords. In our view, current legislation is sufficient to ensure and enforce satisfactory standards of private rented properties and tenancy management. Further regulation would discourage landlords from letting properties because of the increased bureaucratic burden and costs of repairs and improvements. This would lead to a reduction in the supply of private homes for households in housing need. In our view, the introduction of more regulation would require further resources for the already stretched Local Authorities enforcement team.

Agents’ fees and charges

In Enfield there is evidence of an increase in the number of unscrupulous letting and management agencies that are being set up to take advantage of the increasing numbers of private lets in Enfield. Some of these Letting Agents are targeting the inexperienced “buy to let” market. Although the number of rogue letting agents is still very small compared to the number of professional letting agents, Enfield has seen a rise in the number of complaints against these unscrupulous lettings agents. Some are also charging unreasonably high fees to tenants for finding accommodation or obtaining references, failing to protect money held on behalf of landlords and failing to protect deposits in the appropriate government schemes.

5. The Regulation of Houses in Multiple Occupation

Operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area

The Council currently runs a well established mandatory HMO licensing scheme, which covers certain high risk HMOs.

With a background of high demand for private rented housing and a shortage of properties in the market, the roll out of licensing of landlords in Enfield would not be beneficial with regards to increasing the supply or improving the standard of private sector housing.

Rolling out landlord licensing is likely to act as a disincentive to potential landlords to let their properties or invest in professional “buy to let” schemes. The cost of any such scheme would likely be passed to the landlord and add to their costs and the bureaucracy of landlord licensing would most likely deter those landlords who aspire to reach high standards and would discouraging professional landlords from letting. Also, landlord licensing would be costly for the local authority to administer.

6. Tenancy agreements and length and security of tenure

The Housing Act 1988 introduced Assured and Assured Shorthold Tenancies offering less security of tenure and the ability for landlords to charge market rents. Introduction of greater security of tenure in the private sector is likely to act as a disincentive to landlords to let their properties and this will lead to a further decrease in supply of private rented sector accommodation in London.

The current legislation governing Assured and Assured Shorthold Tenancies ensures a reasonable balance between the rights of landlords and tenants. A landlord can end a tenancy on legal grounds by taking Court action to recover possession of a property

7. Local authorities discharging their homelessness duty by being able to place homeless households in private sector housing.

Enfield welcomes the change in law that allows us to discharge our duty to place homeless households in the private sector.

It places less pressure on the very limited supply of council accommodation. It also allows the targeting of the use of council accommodation for those in need rather than all those owed a homelessness duty. Enfield is finding it progressively more difficult in finding suitable accommodation within the private sector because landlords are not happy to let to tenants on benefit. Enfield Council has had a successful history of securing properties in the private sector, but the current situation has now changed as the supply of suitable housing is not available.

HOMEFINDERS PLACEMENTS WITHIN ENFIELD

Year

2008–09

2009–10

2010–11

2011–12

2012–13*

Nos placed in Private Sector

565

773

752

595

201

* up to January 2013

Landlords within the borough have fed back that they are now reluctant to rent to those on Housing Benefit as they now perceive these tenants high risk, with the possibility of rent arrears arising with the introduction of changes in the benefit system.

In the past landlords had no other options, but changes within the housing market have provided a competitive market. This competition comes from:

Working households and “professionals” who would have previously brought their home but are now unable to afford the deposit.

Other local authorities, organisations and agencies ie Home Office which are able to offer higher incentives to landlords to take on tenants ie deposits to cover rent arrears and incentive payments that landlords can keep.

Enfield is experiencing a particular problem with inner London boroughs having the resources to outbid us in the housing rental market as they are in receipt of more Homeless grant. This is shown by the increase in the number of persons placed within Enfield by other local authorities, see table below.

HOUSEHOLDS PLACED IN ENFIELD BY OTHER AUTHORITIES

Year

2008

2009

2010

2011

2012

Nos placed by other LA in Enfield

665

377

496

572

633

Not only are particular Local Authorities able to offer higher incentives for Assured Shorthold Tenancies (Homefinders) but they are using our housing stock to procure leased accommodation.

As Enfield lacks the financial backing to compete with other boroughs we are unable to successfully obtain sufficient suitable accommodation. This has resulted in Enfield having to resort to using more nightly paid accommodation and paying higher rents for leased accommodation. This has given Enfield a budget pressure of £2 million for 201314.

HOUSEHOLDS IN EMERGENCY AND NIGHTLY PAID ACCOMMODATION

Date

1/4/09

1/4/10

1/4/11

1/4/12

1/1/13

Nos of households in emergency and nightly paid accommodation

607

294

201

251

454

Enfield is looking at discharging its duty by placing homeless families into cheaper areas outside the borough. We are aware and concerned of the legal and political constraints of placing people out of borough into cheaper areas.

The same problems of acquiring accommodation within Enfield are found outside the borough namely landlords are not keen in housing tenants on Housing Benefit and the need to compete with “professional” tenants within these areas.

“Suitability Orders” have also made it extremely difficult to procure suitable accommodation out of the borough. Although we accept properties must meet a minimum standard, ensuring that these are met places an additional burden on the council within a competitive market.

Enfield is concerned that there is also conflict between Suitability Orders and the current Homelessness Code of Guidance and issues arise concerning the “affordability”5 of a property, when placing someone who will be affected by the Benefit Cap. We believe the proposed introduction of a Household Benefit Cap will be in conflict with the current homelessness guidance. This could result in instances where the Council accepts a duty to a homeless household, if they are affected by the cap they may challenge the local authority on the grounds of affordability.

A good quality private rented sector plays an important role in addressing local housing need. Enfield is now finding it extremely difficult to procure sufficient suitable accommodation within the borough for households in housing need. There needs to be greater openness and transparency in how Homelessness Grant is allocated and shared out amongst local authorities. Enfield needs additional Homelessness Grant to compete in the market place and be able to procure private rented homes otherwise the use of nightly paid and bed and breakfast accommodation will rise significantly with the introduction of the Benefit Cap. This will place a considerable financial burden on Enfield.6

January 2013

1 GLA London Rents Map, www.london.gov.uk/rents/, using rent data Feb 2012 from the VOA

2 Fordham Research Limited , (2005), Enfield Housing Study, Pg 20

3 PayCheck 2010, Intelligence Unit, Greater London Authority

4 Revenues and Benefits local data, June 2010

5 Homelessnes Code of Guidance states that accommodation will be regarded as “unaffordable” if the household’s residual income/benefits after housing cost are taken into account is less than the amount they would be entitled to if they claimed Income Support

6 This has been estimated as a budget pressure of £2.16 million for Enfield Council 2013–14.

Prepared 16th July 2013