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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 50-iii
House of COMMONS
TAKEN BEFORE the
Communities and Local Government Committee
Private Rented Sector
Wednesday 15 May 2013
CLLR Tony Ball, Harry Cotterell and Cllr Sarah Hayward
Evidence heard in Public Questions 635 – 679
USE OF THE TRANSCRIPT
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Taken before the Communities and Local Government Committee
on Wednesday 15 May 2013
Mr Clive Betts (Chair)
Mrs Mary Glindon
Examination of Witnesses
Witnesses: Councillor Tony Ball, District Councils’ Network, Mr Harry Cotterell, President, Country Land and Business Association, and Councillor Sarah Hayward, Leader, London Borough of Camden, gave evidence.
Q635 Chair: Thank you all for coming. Welcome to our eighth evidence session for the inquiry into the private rented sector. Just a formality to begin with, as Members of the Committee, we ought to declare our interests, which are recorded anyway. I have a flat that I rent out.
Simon Danczuk: My wife has an interest in a small rented property.
Chair: Thank you. Those are our interests recorded. For the sake of our records as well, just at the beginning, could you all just say who you are and the organisation you represent?
Cllr Ball: Good afternoon, everybody. I am Councillor Tony Ball; I am leader of Basildon Borough Council, but I am here representing the District Councils’ Network, which is an organisation made up of 201 district councils in England.
Cllr Hayward: I am Sarah Hayward; I am the Leader of Camden Council.
Harry Cotterell: Harry Cotterell. I am President of the CLA, which is a trade association of 34,000 rural land and property owners who provide a significant quantity of rented accommodation in the rural areas.
Q636 Chair: Thank you all very much for coming this afternoon to give evidence to us. First of all, the private rented sector is growing significantly. It is the one growing area of housing tenure in the country. What is driving the growth, as far as you are concerned?
Harry Cotterell: In the rural areas, I think it is fair to say that it is not growing, although we would very much like it to grow. The difficulty is two major barriers: taxation-the tax system is very unfavourable to residential landlords, both on the income side but also on the capital side, as well-and secondly planning. We know the NPPF has only recently come into play and we hope that that will deliver significant gains in the rented housing sector, but broadly speaking my members are up to try to increase the supply. That will be the message that I am bringing here today.
Cllr Hayward: In Camden, the sector is growing. We have gone up by 10% of our housing stock between censuses, from 2001 to 2011. In Central London, it is a multitude of factors. Latterly, the lack of availability of mortgages has increased demand massively because people cannot get on the housing market in Central London, which means there are added incentives. Therefore rent inflation has been dramatic in Central London, which means there have been added incentives for people who have property to start thinking about letting it out. There are huge numbers of other factors as well. We have one of the largest student populations in the country, which means there is a readymade demand of people wanting to live there, which means competition between people who are there for a year, two or three, versus families who have a long history with the area. The two markets do not necessarily marry up, but it fuels demand, it fuels growth and it fuels rent increases.
Cllr Ball: According to the Census the private rented sector has increased by 88% in the last 10 years, across England and Wales, from 1.9 million to 3.8 million. The sector is growing, maybe not in rural areas but across England and Wales it certainly is. I would agree with Councillor Hayward: it is the availability of finance and getting a deposit together for firsttime buyers, and the access to perhaps what we would understand as social affordable housing that is driving the private rented sector.
Q637 Chair: The obvious question then is: if the economic circumstances change, do you expect that growth to stop or, indeed, to be reversed so the sector starts to decrease in size again?
Cllr Ball: Sorry, what was the first part of the question?
Q638 Chair: If the economic circumstances change and the economy starts to grow again, given these economic factors that have been highlighted as resulting in the sector increasing over the last few years, do you then believe that the sector will stop growing or even start to shrink in size?
Cllr Ball: There could be an issue, a personal view perhaps, that if the private housing market does pick up then obviously it would be an attractive option for private sector landlords to get some capital back if they are not getting the rental values they were expecting.
Cllr Hayward: In Camden, there is always going to be a demand from students, young professionals and what have you, as well as families who live here. It is always going to be a highdemand area, with access to jobs. It is just a popular place to live, Central London. Since 200708, we have seen particular dynamics in the private rented sector that have been caused by the global economic circumstances and have fuelled some sharp practices as well, which we were discussing just before outside, in terms of signingon fees for letting agencies and what have you, which was alien to me. I bought in 2007 at the height of the housing boom. As a renter that was alien to me and is now common practice.
Chair: We will come on to discuss those practices.
Cllr Hayward: The 20year story in Camden is growth in the private rented sector, both in rents and size.
Q639 Chair: Even before the recession?
Cllr Hayward: Yes.
Harry Cotterell: Shortage of supply is a bigger issue in the rural areas than the economic situation. We have too many threebedroom detached and semidetached houses in rural areas and not enough more targeted units for the social makeup of households nowadays, and I think that is a bigger issue than the economy itself.
Q640 Chair: Just on the rural area, before I move on to another colleague, you probably have more protected tenancies than may be around elsewhere, but also you talk about letting at below market rents in some cases, which your members do. Why would anyone do that?
Harry Cotterell: Our members are in this for the long term. Quite often, they have owned the properties for a long time and intend to own them for generations, in cases. When you have a good tenant in place, you will keep them in; the term becomes longer. The assured shorthold is a good vehicle to rent property on, because it means that both sides have plenty of opportunities to stop engaging with each other and, therefore, consequently you have certainty. As the term extends, the rent will always fall below market value for a new let and that is just the way the rented market goes. That is the first issue.
The second one is quite a lot of people in rural areas are reasonable. Landlords in rural areas do have an element of public spiritedness to elderly people, people who have worked for them, people who have retired, widows and those kinds of people who are socially disadvantaged, who are rented to at a significant discount. It is fair to say that the majority of rural landlords live within the areas where they own property and, consequently, they are renting to their neighbours and they like a decent cohesive neighbourhood.
Chair: That makes it different from some other parts of the country probably.
Q641 James Morris: Can I just ask about licensing of landlords? Do you think the idea of having a licensing system is an effective way of improving standards in the private rented sector?
Cllr Ball: Absolutely, the District Councils’ Network very much supports some kind of licensing/accreditation. We do believe that it is in the interests of good landlords that they would want to see some kind of kudos. Perhaps some Members of the Committee may be aware that, within local authorities, we have a food rating system, which is publicly on the doors, and restaurants that have five stars for their hygiene system welcome that and they use that as a tool to get customers in. You can put the analogy with licensed taxi drivers, with licensed public houses and music and dance, for the protection of the public. Absolutely from that point of view, accreditation/licensing has to be good for both.
Cllr Hayward: I agree with Councillor Ball; it definitely has a strong part to play in terms of improving quality and security, both for landlords and tenants.
Harry Cotterell: The problems that licensing would be intended to address are much less prevalent in rural areas, so I would say I do not think it would make a huge amount of difference in the majority of cases. The concerns about licensing are that it is bound to be a huge scheme, if it is done nationally, because there are an enormous number of landlords. We probably have 20,000 in our own membership alone.
Q642 James Morris: I just wanted to move on to that point. To you councillors, do you think it should be a national scheme or should you be given discretion to develop local schemes of licensing?
Cllr Ball: My personal view is that as much discretion to react to local factors has to be good, because it is not a "one size fits all"; the issues are not the same up and down the country. As evidence, it is different in rural areas than it is in urban areas. A structure and perhaps a commitment-this is about protection of the public-we can all go forward with that ethos and let local authorities build on that. I think it would be good.
Cllr Hayward: At the risk of lots of agreement breaking out, I would endorse what Councillor Ball said. I would just like to make one point. The housing market is so dramatically different in different areas of the country, I do think there needs to be some local discretion, but it is helpful for both tenants-particularly mobile tenants-and landlords if there are some national standards that people have to comply with that they can recognise when they move from region to region, so there are some common principles around accreditation schemes to help people understand what they are getting for their money.
James Morris: You have an accreditation scheme already in Camden.
Cllr Hayward: We do yes, which we pioneered.
Q643 James Morris: What is the difference between the scheme that you currently have and a broader voluntary accreditation scheme? What is the difference between the two?
Cllr Hayward: We pioneered an accreditation scheme that other boroughs buy into, and we have just received some money from the Mayor to expand it even further for landlords. It is not the same as licensing, because it is not compulsory. I do not know whether the Committee has made that distinction between licensing and accreditation. I do think there is a place for some compulsory licensing of landlords, but it cannot just be a register of landlords; it needs to have some teeth behind it, some regulatory powers to improve standards and protections for tenants and landlords. An accreditation scheme gets us a good way there, but we could do with stronger teeth on a national basis.
Q644 Chair: How many landlords are members of your accreditation scheme? How many have you got and how many join up?
Cllr Hayward: 11,000 in London.
Chair: You have 11,000 joined up to your scheme.
Cllr Hayward: Yes.
Q645 Chair: How many more are out there who are not joined up to your scheme?
Cllr Hayward: Nationally?
Chair: No, within Camden.
Cllr Hayward: We now operate the scheme so people can join from across London, so they are not just Camden landlords. There are about 0.5 million across London, so it is quite small beer.
Q646 Chair: Within Camden, do you know what percentage have not joined?
Cllr Hayward: No, sorry. We can try to get you that figure afterwards.
Q647 Chair: If you would, but presumably it is the bad ones who have not joined.
Cllr Hayward: Yes, I think that is the problem with an accreditation scheme as opposed to a licensing scheme. If you do not want yourself to be regulated, you have to question why.
Cllr Ball: I absolutely agree that, at the moment, we have accreditation schemes that are voluntary but, as you said, it is only the good landlords who are joining. It is also about getting information to the tenant that they have rights. Of course, a landlord will not necessarily make tenants aware of what their obligations are.
Q648 Simon Danczuk: We have heard a number of times that local authorities have the powers they need to deal with criminal landlords, rogue landlords, but then we hear that local authorities are unable or unwilling to use those powers. Is that a fair comment?
Cllr Ball: I think it is, because local authorities at the moment are in the position of reacting. They cannot be proactive so, in the main, once they get information or complaints, they react to that. They then have to make a judgment as to the amount of resource it is going to take to then take it through courts or whatever, to magistrates. The view is that, in the main, the small fines or whatever that are dished out or the penalties imposed in the main do not cover the cost or the action that is required, so a judgment is made and, in a lot of cases, it is not worth it.
Cllr Hayward: We do actively take prosecutions. We recently had a case that got quite a lot of coverage of an organisation presenting themselves as a hotel, but effectively an HMO, where there were cockroaches up the walls; the rooms were not a proper size; there were toilets in the single rooms. The owner was raking in tens of thousands of pounds in housing benefit, because there were 70odd rooms in the "hotel". They were absolutely appalling conditions. He was an incredibly charismatic person and his tenants liked him. I equated it to almost a Stockholm syndrome, and that was a very extreme case, but often we find the market is so competitive in Camden, if people get a good deal on rent or a little bit below market rent, they are scared to come forward with the evidence, because they are worried about being priced out, or the improvement works having to be done and being charged more or not being able to find other tenancies. The problem is not with us bringing prosecutions; it is with tenants coming forward with the evidence to help us take those prosecutions and deal with bad practice.
Q649 Simon Danczuk: Is there anything we should recommend as a Committee that will help local authorities act more promptly or encourage local authorities? Do we need to simplify the regulations and enforcement rules around this sort of thing?
Cllr Hayward: A licensing scheme with clear expectations and clear teeth behind it would probably be the way to do it, and then all local authorities, all tenants and all landlords would understand the parameters by which they were operating and what was expected of them.
Cllr Ball: I absolutely agree with that. It is the ambiguity around making judgments. If there are clear rules that have been breached and that magistrates are aware of as well, it would make the local authority’s job much easier.
Q650 Simon Danczuk: We talk about accidental landlords, people who have become landlords they did not really have any intention to become. What sort of information is provided to help educate and inform landlords and tenants about their rights and responsibilities? Is there anything that local authorities are particularly doing to get the message out there in a softer sort of way?
Cllr Ball: I do not have any particular evidence from across the network. I can only speak from Basildon’s point of view that, if we become aware, we make the private sector landlord forum available to anyone who does come into that situation. Of course, letting agents is another issue that perhaps we might be able to go on to a bit later. The letting agents that we are aware of are aware of this voluntary scheme, but it is an issue where there is no training for somebody to become a landlord if, perhaps, they inherit a property and it is the way to get some revenue.
Cllr Hayward: We have focused on bad practice, perhaps rightly so. It is important to note that not all landlords are bad; we have some incredibly good landlords who are very good to their tenants and work very cooperatively within the housing market in Camden. Our accreditation scheme offers training to landlords to help them, and we have information on our website, both for landlords and for tenants. We also fund an independent advisory service for private tenants in Camden, and have done for a very long time. Now, I would say the problem with stuff like that is that you need to know you have rights to know to go looking for the information. I would certainly say, when I moved to Camden straight after university, I was not sure of my rights and I was not sure where to go to go and find out about them. It is the knownunknowns or unknownunknowns scenario, or it can be for some tenants.
Q651 Simon Danczuk: Sarah, you raised concerns in the submission about overseas landlords. Is there anything that we can do to make them more accountable, do you think?
Cllr Hayward: It used to be the case that, under companies law, we could go after managing agents and that has been changed. Taking prosecutions against people based overseas is obviously incredibly difficult and can be incredibly expensive. For a local authority balancing up value for money that is a real risk to us, so a change in legislation back to us being able to go after managing agents in the UK, as well as overseas landlords, would be a real help in that.
Q652 Mrs Glindon: Do you welcome the Government’s proposal to require letting agents to belong to an approved redress scheme and what issues would you think that the Government should consider before any implementation of such a scheme?
Cllr Hayward: I might start on that one, if you do not mind, because I could wax lyrical about this for ages. Again, we have very different issues in Camden. We have seen an incredible increase in really sharp practices from letting agents over the last few years: things like double charging, so charging both the landlord and the tenant for searches; signingon fees for tenants; holding of deposits when people have moved out for a really long period of time. Again, it is not universal-there are still some good letting agencies out there-but it is becoming more and more prevalent, and hundreds and hundreds of pounds are at stake. Often tenants will find themselves in a situation where they have had to move out of a property for whatever reason and are struggling to fund a deposit for the next property because the landlord is holding on to it. There should be an approved register for letting agents, but the Government should also outlaw things like double charging and signingon fees.
Cllr Ball: I do not think there should be too much of a difference between a private landlord and letting agents when it comes to licensing. Certainly where there is the issue of an absentee landlord, then they rely upon their letting agent to manage that property. If it is difficult for a local authority to get hold of that absentee landlord, then the responsibility should fall upon the letting agent, in our view. Again, the good letting agents would welcome this as something to put on their CVs.
Q653 Mrs Glindon: Councillor Hayward, you have already touched on the fees that tenants have to pay. Should agents’ fees to tenants be made illegal, as they have been in Scotland?
Cllr Hayward: Yes, I think so. The tenant needs a house. People need somewhere to live. The landlord should factor in the costs of letting the property in their overall charges. Yes, fees to tenants should absolutely be outlawed and certainly signingon fees for agents. It is absolutely scandalous and often people get nothing.
Cllr Ball: I do not have a view from the District Councils’ Network on that, but I think we are generally supportive of what Councillor Hayward was saying.
Harry Cotterell: It is generally not a significant issue in rural areas, but the one thing I would say from a landlord’s perspective is that, if there is cost in letting a property, it has to be paid somehow. That is pretty obvious, but someone has to pay at some stage.
Q654 Mrs Glindon: Councillor Ball, the District Councils’ Network suggests that the localauthorityrun accreditation schemes be developed as a way of regulating letting agents. Could you maybe just elaborate on how those schemes might work?
Cllr Ball: Again, I think that we need some national guidelines around training and management practices, from a national level, which would go across the country. Then, the opportunity for local factors to be put into that from a local authority point of view would only help. It is around managing the expectation, particularly in management of the property and its condition, private sector decent homes and also letting the tenants be aware of their rights and what they should expect as well.
Q655 John Pugh: Can I ask the councillors first about the business of shortterm tenancies? You tend to think that people want longer tenancies-you can understand some of the motives behind that-but a lot of shortterm tenancies just get rolled over time and time again. Where is the evidence that people want a different system or more people want longterm tenancies?
Cllr Hayward: It depends on where you are in your life stage, does it not? If you are at university for three years and perhaps want to try three different locations in London, including a halls of residence, you might want a shortterm tenancy. If you have kids and cannot afford to get on the housing ladder, you want a bit more security of tenure and to know that you are not going to have to hike your kids out of school and halfway across town.
Q656 John Pugh: Do you get representations about that?
Cllr Hayward: Yes, we do.
Cllr Ball: There does not seem to be anything between, at the moment, secured social tenancies and sixmonth assured tenancies. Absolutely, we need some churn and the ability for people to move about, but we also have families in this accommodation who have children at school. They want some certainty where possible. Again, perhaps going back to the first question, the view is that some tenants are concerned about raising issues, if they have them, with their landlord, because of the security of their tenure.
Q657 John Pugh: Have you done any number crunching on this? You must know what addresses children give at primary schools: you can track whether these changes over the course of their school career. Do you have any hard data?
Cllr Hayward: We are seeing quite a lot of turbulence, as a result of the housing benefit changes, in our private rented sector at the moment. People are moving from the south of the borough where it is more expensive to the north and northwest of the borough.
Q658 John Pugh: We are not talking specifically about that issue now; we are talking about historical fact. You are suggesting that, as more families have gone into the rented market, their education is being disrupted. Now the school clearly will know whether that is the case, will they not, because at one stage they will get one address from the parents and, at another stage, they will get more information saying that the address has changed? I was just wondering whether you, in the local authority role, have any hard evidence and facts about this churn.
Cllr Hayward: We have the current evidence, which has spurred a particular level of turbulence in the private rented sector. It is causing churn in the private rented sector above and beyond what was there before. Any councillor in Camden will tell you anecdotally that they have had a family in their surgery who is about to be turfed out.
Q659 John Pugh: I accept the anecdotal evidence. What I really asked you is whether you have done any number crunching on change of address at primary school, for example.
Cllr Hayward: Not that I am aware of, but we could probably do it.
John Pugh: It would be helpful.
Cllr Ball: What we can do, perhaps through the District Councils’ Network, is work with the County Councils Network or the education authorities for us, and we will see if we can get some numbers.
Q660 John Pugh: Mr Cotterell, you have this ingenious scheme for tax relief to encourage people to offer longer tenancies.
Harry Cotterell: I am not sure it would be longer tenancies. It is committing the property to being in the rental market. That is the key.
Q661 John Pugh: Can you tell us more about that?
Harry Cotterell: Yes, on two fronts. Firstly, it is inheritance tax at the moment. This is easily illustrated by a landlord who happens to have three properties that are all in the rental market: if he dies he will probably have to sell one of them to pay inheritance tax. That will almost certainly be bought by someone who is going to live in it, so an owneroccupier; it is out of the rental market and supply diminishes again. If there was an inheritance tax relief for rented property, provided that the property remained in the rental market on transfer, then that would keep three properties in the rental market. You could always bring in some way that, if it went out of the rental market but was subsequently sold, then the tax was held over, so it was not actually a tax, but the delay of a tax to bring about a certain use of a property.
Q662 John Pugh: Do you think the net effect would be to encourage landlords to let their properties for longer periods of time?
Harry Cotterell: Landlords in rural areas, if they have a good tenant and the relationship is good, will do their best to keep hold. In rural areas the return is poorer for a residential landlord than the return in an urban area. We are probably only seeing 2% on rental yield in a good environment, so consequently you really do not want voids. You want the property let full time.
Q663 John Pugh: A rural landlord will look for a pattern of a longterm tenancy with maybe slightly less return than they would get in an urban environment.
Harry Cotterell: Yes.
Q664 John Pugh: When we went to Germany, we found that to be very much the pattern, even in the urban environment. Tenancies are indefinite and rent increases are determined by reference to a local rent index. Can you see that system working in the UK?
Harry Cotterell: Any control on rent is going to impact on supply, because it is going to make landlords less inclined to rent. The alternative is always to stop renting and to sell and move on. Invariably in the rural areas, there is no such thing as a buytolet sector. Properties that are sold are invariably occupied by the new owner, as opposed to let, so consequently supply comes under pressure. You need to have as much freedom as you possibly can, both in terms of contract and in terms of setting the rent, to enable the sector to thrive.
Q665 John Pugh: What about the councillors? Do you think that indefinite tenancies are a good idea or setting rents by a local rent index and those sorts of controls?
Cllr Hayward: I think Councillor Ball is right: there needs to be something between sixmonth or year tenancies and lifetime tenancies offered by the social sector.
John Pugh: Not indefinite then?
Cllr Hayward: There is a clear demand and rationale for some shortterm or shorterterm tenancies in the private rented sector. We have a mobile labour market in Central London. People want to move in and out, and there is a place for that market. There is also a place for families to be able to have stability, where they cannot buy and cannot get into a social rented sector for all sorts of reasons, so there is room for a mixed economy. We should look at things like whether something as extreme as a rent cap is the right thing to do or whether we look at something like a living rent, where you look at the rental market in an area and try to encourage good practice compared to wages and the wider economic conditions. That would be something that would be very definitely worth looking at.
Q666 John Pugh: So some properly modulated mechanism rather than a crude rent cap, you would favour.
Cllr Hayward: Yes. Outside of the realities of the economy, a crude rent cap is quite attractive to me. When we talk about accidental landlords or people who have dabbled in the buytolet market with one or two properties, who have quite high mortgage costs, there are some obvious pitfalls to a rent cap in places like Central London, in terms of those people who own those properties, which would need to be worked through if you went for it, so a living rent model might be better.
Cllr Ball: On the length of tenancy, certainly there is a view among our members that something like five years would be something to explore to begin with. On rent capping, I absolutely recognise that it is very difficult to implement because the market will dictate to a certain extent. Again, it is different. In Cumbria, for instance, private rent is below social rent. That is absolutely not the case in mine or Councillor Hayward’s areas. To have a blanket rent cap I just think would be impossible, but some kinds of controls to assist would help.
Q667 Chair: In relation to longerterm tenancies, some landlords have said to us, and they are probably landlords who generally have fairly good records, "We would not mind letting on a longerterm basis and we understand the issue that tenants want more security. For us, if we get a longterm let that is good, that means we do not have any vacancies, which is good for our income stream as well. Our only problem is if a tenant does, at some point, stop paying the rent for whatever reason, then we suffer a major problem, because it takes ages to get them out and the lender will not lend to us, because they are concerned about that situation as well." Should there be an easier way, if a tenant is refusing to pay the rent, to get them out of the property to enable that situation to be properly regularised, where longerterm tenancies could come in without that risk to the landlords?
Cllr Ball: Absolutely, I do understand that. As well as protecting the public, what we do want are more supply and more private landlords. We do not want to put impediments in the way. Again from my own personal experience, and without abdicating responsibility, it is difficult to get possession from the courts. There is no doubt about that. Whether it is councils or private landlords, the courts will give some time or opportunity for the tenants, the refuseniks, to perhaps pay. If they have no intention of doing so, it just postpones what the private landlord can do.
Cllr Hayward: I would be reluctant to do anything that made it easier to evict tenants. The genuine refuseniks are very few and far between, and it is because people have got into trouble for some reason or another. They have been made redundant; the local authority housing cap has changed or what have you. There are a multitude of reasons why people fall behind with their rent. The incentive for landlords should be on helping them deal with their debt and paying problems, before you look to get them out. If the landlord is so inclined, it is quite easy to intimidate a tenant out of a property, but obviously that goes back to bad landlords.
Q668 Simon Danczuk: Sarah and Tony, you have both suggested making the payment of housing benefit conditional upon landlords meeting certain standards. How would that work in practice?
Cllr Hayward: This comes back to licensing or registration schemes, does it not? Someone can independently verify that housing meets the decent homes standards. To be honest, I find it scandalous that my taxpayers’ money is spent on people living in sometimes really very terrible conditions.
Cllr Ball: Absolutely. Should we not, as the taxpayer, expect our money to be spent wisely and on housing in decent conditions for the people we are paying benefit for?
Q669 Simon Danczuk: How do we make it work practically, especially if the housing benefit is paid to the tenant and not to the landlord? I am just thinking of the practicalities of it. Is there an expectation on the tenant withholding their rent from the landlord?
Cllr Hayward: Again, we are coming back to licensing or accreditation. The landlord could have some form of certification that says that they meet the decent homes standard, potentially, for the tenant to be able to claim housing benefit. That would be one way of operating it. Obviously the way that housing benefit is administered has changed recently.
Q670 Simon Danczuk: It would be down to the local authority to visit every privately rented property to assess it, in terms of its decent homes standard. Is that what you are proposing?
Cllr Hayward: If you have a licensing scheme, would landlords not be expected to meet certain criteria to be able to be licensed landlords anyway? You could make decent homes standards a condition of getting the licence, which means, before they even applied for it, the landlord would have to satisfy themselves they had a reasonable chance of getting the licence.
Cllr Ball: Remember, we do license homes of multiple occupancy and inspect those. We do not inspect every single one but, again, the expectation is there and, if there are issues, then we have the powers to act on HMOs.
Cllr Hayward: Tenants could come to us and say, "We’re receiving housing benefit and my landlord is not doing vital works to the house." We know that the wider social problems of poor housing impact on people’s health and other outcomes. It is well worth doing.
Harry Cotterell: Can I make a point on this? One of the big concerns, particularly in rural areas, is to maintain availability of housing to people who are on housing benefit. The difficulty is that, if you are a landlord and you are confronted by two different systems-one for people who are not on housing benefit and others who are-you are automatically going to go for the nonhousingbenefit tenant if it is going to be easier for you, going forward. I think it would be a great pity to make landlords less likely to house, in an open market situation, a housing benefit tenant, because there is a chance that later on they are going to have to justify the housing benefit payment.
An example of that is the housing health and safety rating system. Loads and loads of rural houses will never get above an energy performance certificate rating of E. They are stuck in F and G, because they have three walls and a roof of their own. They are traditional housing; they are traditional build. They do not have cavity walls and are impossible to insulate. You will always fail on the excessively cold condition in the housing health and safety rating system. Consequently it would make one in rural areas very disinclined to rent to a housing benefit claimant, if that had come into play.
Cllr Hayward: If you made it a condition of a national licensing scheme, it would be irrespective of whether the tenant was in receipt of housing benefit or not. For all tenants, you could then guarantee decent homes standard because, at the point of applying for the licence, the landlord would have to meet decent homes standards. You could drive up standards in the private rented sector for everybody.
Q671 Simon Danczuk: Good. Sarah, I know you mentioned earlier that you appear to be quite keen on the idea of rent capping. Why are you interfering in the free market?
Cllr Hayward: We recently did a piece of work in Camden looking in depth at some of the inequalities issues in the borough, and housing is top. There is a market failure in Camden. Supply does not meet demand. Increasingly, people in middleincome bands are pushed out of Camden. You have to be very poor or very rich to live there. The wider economy demands a more diverse range of skills, both in Camden and the wider Central London area. Rents are being pushed up by a range of factors, including properties being left empty. Some intervention to enable a wider crosssection of people to be able to live in Camden and actively participate in the Central London economy would be a good thing.
Q672 Simon Danczuk: Your interference in the free market will, will it not, discourage investors from providing the flats and apartments that are required to meet supply. Investors will not want to invest in a sector where the rents are capped, will they?
Cllr Hayward: It depends how you do it. The private rented sector does not just exist for investors’ profit. It also exists to meet a housing demand. We all agree with the principle of people being able to access housing in this country.
Q673 Simon Danczuk: To increase the supply, which is what you want, the money is not going to come from anywhere else. You need private investors to put money into building privately rented accommodation. If you put a cap on rents, then they will not invest in it, because they will not get a return, so you are reducing the supply. That is the argument.
Cllr Hayward: It depends on how you administer the cap and what sort of cap you put in place. Going back to the issue of length of tenancies, you could have variable rates, if you are talking about a living rent, to cater to different elements of the market. We already interfere in the housing market in all sorts of ways. Things like CORGI certificates interfere in the market, if you want to take it to its logical conclusion, but we do that. We need to think bravely and differently about how to deal with supply issues that exist all over the South East, not just Central London.
Q674 Simon Danczuk: While we are on it, have you as an authority placed people outside the local area, in terms of finding them accommodation? If you have, where have you tended to place them?
Cllr Hayward: We have placed people outside the local authority area. London Councils published some statistics for the Leaders’ Committee yesterday. We have placed less than almost any other authority in London which, given we have the fourthhighest rents, I am quite proud of.
Q675 Simon Danczuk: What are those numbers?
Cllr Hayward: We have placed 34 families outside Camden in the last 12 months, compared to Westminster, which has placed 355 outside Westminster in the last 12 months. Those stats were published on the London Councils website yesterday. We have only placed in London so far; I do not think we have placed anyone outside London so far. A handful of families have left London voluntarily to meet other needs; we have not forced anyone to leave London.
Harry Cotterell: I wanted to come in on rent capping. I am afraid, if you introduce any form of rent capping, you will kill the private rented sector in a very short time.
Q676 Simon Danczuk: Why do you think that?
Harry Cotterell: The returns are too low already.
Q677 Simon Danczuk: Let me just finish with Sarah. You have done a lot in terms of preventing homelessness and using the private rented sector to support that. Could you just describe that to us briefly and tell us how that has been more helpful than using social housing perhaps?
Cllr Hayward: One of the key things is we have a waiting list of 26,000 families in Camden, so our supply of social housing simply is not there to deal with homelessness. We have worked in the private rented sector, through both temporary hostelstyle accommodation and family accommodation, to help families avoid homelessness, preferably, who are at threat of homelessness, but also to take people out of homelessness. We have provided quite a lot of evidence on it. We have a very good reputation and a very good record on preventing homelessness, of which we are proud. I do think it will get more difficult with the housing benefit caps because of the market rents in the area.
Q678 Chair: Just to pick up the issue of regulation, clearly there is some division of opinion. What might be best is, Camden, if you are so much in favour of regulation and licensing, and the district councils are as well, you have powers now for selective licensing that you have not used. How many district councils have used selective licensing, which is there on the statute book to be used now?
Cllr Hayward: The evidence base required for the selective licensing schemes, such as it exists, is quite onerous on local councils. It is around preventing quite extreme antisocial behaviour, rather than a broader licensing scheme that we can enforce on everyone.
Q679 Chair: You are asking for different criteria for the licensing scheme. You are saying that the actual licensing scheme that could be introduced would be the one you wanted, but it is the fact that you cannot introduce it because of the criteria at present.
Cllr Hayward: Yes. The criteria need to be broader. For any licensing scheme to really work, it probably needs to cover everybody or a majority of people, so you get the good practice buying into the scheme, as well as using it as a stick with which to beat the bad landlords.
Cllr Ball: That is a very good point. Perhaps the lack of evidence on district councils using the licensing that you suggested shows that it is obviously not working or it is not seen as an effective tool, and that we need a broader licensing regime.
Harry Cotterell: On that and the mandatory licensing scheme in Scotland, the Shelter report says it is not working. It is not disincentivising criminal landlords. It is too broad and too cumbersome. I can provide you with the details if you want.
Chair: That is helpful. Is there anything else you would like to add? Thank you very much indeed, all of you, for coming and giving evidence this afternoon. It has been very helpful for the Committee.