Consolidation of Housing Regulations

Adrian Sanders Excerpts

Wednesday 28th November 2012 Commons Chamber

[Mr Adrian Sanders (Torbay) (LD)]

I beg to move,

That leave be given to bring in a Bill to consolidate Regulations relating to tenancies in the social and private housing sectors; and for connected purposes.

I would like to draw the House’s attention to my declaration in the Register of Members’ Financial Interests.

The Bill would revamp the current framework for the private rented sector, seek to solve some systemic imbalances, make both tenants and landlords more aware of their rights and responsibilities, and provide a more robust foundation to encourage investment in new housing.

It is clear that, for a number of reasons, we face a housing crisis in the UK that will only get worse in the coming years. At root is the problem of supply. Household formation has been fast outstripping house building for many years. In addition, there is a massive problem with affordability. The inequalities of wealth and income that grew in the 1980s remain and in many cases are worse today. Housing costs in particular have risen phenomenally and a decade of harmful speculation in property prices sadly shows few signs of transforming into a more stable market, such as that in Germany. This is accompanied by inter-generational inequality, so people on low incomes and younger people have far less opportunity to own their own home.

As well as the distortions to the housing market that that set of circumstances creates, it is of direct financial cost to the Treasury. As we all know, the increase in the housing benefit bill has been relentless—it has increased by 50% since 2005. This diverts resources that otherwise could be spent on preventing the inequality in the first place. Demand is already increasing steeply and, if not managed properly, this will create yet more challenges for policy makers to fix retrospectively.

There will undoubtedly be many new landlords in the coming years, but they will act in a culture of uncertainty. As Sir Adrian Montague’s recent report highlighted, the sector has not yet encouraged significant extra institutional investment, despite clear potential. The introduction of universal credit produces uncertainty for landlords. The reduction of direct payments to landlords may well lead to private landlords no longer offering their properties to those in work and receiving universal credit.

Many landlords and tenants are, remarkably, unaware of their rights and responsibilities. There remains a section of landlords who are remiss or even criminal in their duties towards their tenants. We must not forget, either, that there are also some bad tenants, who willingly fail to uphold their responsibilities.

New builds are covered by a relatively comprehensive range of regulations, including for fire safety and energy conservation, but a consolidation of regulations would go some way to encouraging the improvement of older rented properties—the quarter of rented homes that do not currently meet the decent homes standard.

What, then, is the argument for simplification? The Law Commission’s 2006 report, “Renting Homes”, provided a blueprint for simplification consisting of deregulation, consolidation and rationalisation. This Bill will focus on the second of those, which the report defines as

“bringing together different regulations into a more manageable form and restating the law more clearly. By improving transparency and understanding, it should reduce compliance costs”.

At present, landlords are subject to regulation from the following sources: the Gas Safety (Installation and Use) Regulations 1998, the Furniture and Furnishings (Fire) (Safety) Regulations 1988, as amended in 1993, the Electrical Equipment (Safety) Regulations 1994, the Plugs and Sockets etc. (Safety) Regulations 1994, part P of the building regulations, selective licensing under the Housing Act 2004, the various provisions of the Landlord and Tenant Acts 1985 and 1987, the Taxation of Income from Land (Non-residents) Regulations 1995, the Protection from Eviction Act 1977, the Data Protection Act, energy performance certificate regulations, tenancy deposit regulations and equalities legislation. I could go on.

This range of rules creates confusion. Although the Department for Communities and Local Government and others have produced guides synthesizing this information, these are no substitute for a single piece of legislation. The confusion is not only for landlords and tenants, but for legislators and those discussing the future of the sector. Providing for all regulations to be approved by a single Department or agency would also add clarity.

Despite these difficulties, the majority of landlords comply with legislation and, indeed, go beyond it, because they know it makes financial sense to do so. The problem arises when unscrupulous landlords let properties, and it is exacerbated when tenants are vulnerable or on very low incomes. A consolidated regulatory regime would also benefit from a one-stop shop for complaints and redress. At the moment, tenancy deposit protection agencies, local authorities, the courts and a host of other agencies are able to intervene. In practice, far too many tenants are not able to get landlords to fulfil their responsibilities promptly and, indeed, many landlords are unhappy that there is not a better process for redress when tenants fall into arrears. We need a single ombudsman-type body to adjudicate and mediate when things go wrong between landlords and tenants, and ideally at an early stage, so that tenancies do not fall through and the inevitable costs to all involved are avoided.

We want to avoid situations—I am sure we have all heard of them in our surgeries—whereby families are evicted with one or two weeks’ notice, do not know their rights and do not have recourse to a speedy solution. As the “Renting Homes” reports states:

“Many landlord-tenant disputes currently arise from ignorance. Our recommended scheme, with its emphasis on written model contracts, drafted in plain language, enables both landlords and occupiers to discover easily their respective rights and responsibilities. This will reduce the need to seek legal advice and facilitate the resolution of problems and disputes. All parties gain from this approach which leads to significantly reduced compliance costs.”

Another aspect is the regularity of inspection or demonstration of compliance with regulatory duties for landlords. Landlords are required to perform an annual gas safety inspection, and there is no reason why this could not be converted, at very little extra cost, into a more robust assessment of other areas of the safety of the property, such as the presence of a working smoke alarm, or any of the other risk factors that local authorities will search for under the housing health and safety rating system. Such a check could be performed less frequently, at no danger to the tenant or property, than on the current annual basis—perhaps every two or three years.

A comprehensive rebundling of regulation would provide an opportunity to consider broader tenancy reform, as “Renting Homes” suggested, taking a more consumer protection-oriented approach. However, some aspects of regulation still need strengthening. The requirement to have a working smoke alarm, already present for houses in multiple occupation and new build, could save dozens of lives and prevent thousands of injuries a year if extended to all rented homes. Taking regulation in the round could allow such extra elements to be introduced without the massive regulatory cost that would arise from introducing piecemeal changes. Most importantly, providing a standardised and transparent approach to renting would give investors the confidence to pledge resources to the build-to-let sector.

The Montague report effectively covers some of the problems, including the pitfalls of the planning system, the need to release more public sector land, and the need for new business models for investment. Most importantly, Montague states in his fifth and final recommendation that

“the market would benefit from a clearer understanding of what tenants should have the right to expect.”

A clearer framework for how the sector operates would undoubtedly reassure many investors, who are bound to be wary in the current financial climate. Sadly, it is clear that poor standards are also present in the social sector, so there is plenty of scope for the Government to take a broad approach to reforming the rented sector overall.

Other jurisdictions are taking this action. The Welsh Government, for example, set out a comprehensive review of housing regulation in their recent “Homes for Wales” white paper. They propose a national accreditation scheme, which the deregulating zeal of the UK Government would clearly preclude, but also endorse flexible tenancy reform, which this Bill seeks to emulate. There are other, more subtle ways of improving housing quality by bringing in related industries such as insurance and banking, as the Rugg review outlined. As the review concluded, we would benefit from light-touch licensing with effective redress.

This Bill would allow for better regulation of the private rented sector, better enforcement of that regulation, a better deal for landlords and tenants, and a better incentive to invest in building the new homes that so many of our constituents desperately need.

Question put and agreed to.

Ordered,

That Mr Adrian Sanders, Annette Brooke, Paul Farrelly, Dan Rogerson, Andrew George, Mr David Ward, Caroline Lucas and Mark Durkan present the Bill.

Mr Adrian Sanders accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 January 2013 and to be printed (Bill 98).