NAO report: regulation of private rented sector “not effective” shock!

“The Department is not proactive in supporting local authorities to regulate effectively.”

“The private rented sector in England has grown to house more than 4.4 million households, and there is evidence that a concerning proportion live in unsafe or insecure conditions with limited ability to exercise their rights.”

National Audit Office, Regulation of private renting

The language of the NAO is always diplomatic and understated. Yet the findings of its report on regulation of the private rented sector are clear.

• An estimated 13% of private rented properties have Category 1 hazards which are a serious risk to the health of inhabitants (589,000 properties). This compares with 10% of owner-occupied homes) and 5% social housing.
• An estimated 23% of them are ‘non-decent’, rising to 29% for renters receiving housing support.
• Regulations which are supposed to protect tenants are not adequately implemented.
• The government pays out £9.1 billion a year in local housing allowance. With a larger council housing stock it would save a fortune because rents in the private rented sector are very high in comparison to council rents.

The duty to inspect privately rented properties falls on local authorities which do not have the resources to inspect the greatly increased sector. The shortage of available council housing and house prices outstripping earnings has facilitate a huge increase in the private sector which now has an estimated 4.4 million properties.

It falls on Environmental Health Officers to carry out inspections but there are too few staff for the swollen PRS. So the NAO records that “We found a wide range of approaches and levels of regulatory activity. For example, some authorities inspect almost no properties while others inspect a large proportion of their market…” In all probability there will not be many that inspect “a large proportion”. The NAO could only find 65 out of 308 “that had chosen to license more than the minimum requirement since 2010”. The minimum requirement relates to Houses in Multiple Occupation.

In fact government has resisted allowing councils to license the private sector. A council has to seek permission from government if it wishes to license more than 20% of the estimated stock. Many have been refused.

In the social rented sector, all housing providers must be part of an ombudsman scheme. Tenants can raise complaints against their landlords – 7,881 complaints were dealt with in 2019-20. In 2018, the Department introduced mandatory redress arrangements for letting agency work. However, private landlords are not required to be members of a redress scheme. The redress scheme administrators interviewed by the NAO indicated that voluntary membership among landlords is very low, and there are no formal data on overall membership levels.

There is no requirement for private rented properties to be inspected before they are let.

Mandatory licensing has long been the demand of campaigners. That would be an important step towards improving conditions in the sector. However, there would have to be a significant increase in resources to local authorities for them to have sufficient staff to inspect on the scale necessary to cover all properties.

The weakness of the current regulations is reflected in the fact that since regulations were introduced in 201r such as penalty notices and banning orders only 10 landlords and letting agencies have been banned.

The attitude of the Department is reflected in the fact that, according to the NAO, it Department has “segmented the landlord population, categorising them as either ‘good practice’, ‘meeting legal requirements’, ‘mixed compliance’ or ‘lower compliance and awareness”, yet it hasn’t given this information to local authorities!

Surveys estimate that 35% of tenants say a lack of knowledge of their rights made negotiating with their landlord difficult, and that 22% of private renters who considered making a complaint to their landlord or letting agent had not done so.

Despite having made a commitment more than 2 years ago to end section 21 (no fault evictions) the government has delayed it even further, talking of consulting ‘stakeholders’ who have already been consulted.

You can read the NAO report here.