MPs accuse Government of making regulatory system for private rented sector “even more overly complex and difficult to navigate for tenants, landlords and local authorities”

The dozens of legislative powers used by local authorities to regulate the private rented sector are “complex and spread across multiple enforcement bodies, creating a fragmented and disempowered regulatory system”, the Public Accounts Committee has said.

In a report, Regulation of private renting, published today (13 April 2022), the committee accused the Department for Levelling Up, Housing and Communities (DLUHC) of being insufficiently proactive at providing support to local authorities.

“The Department does not have a good enough understanding of what regulatory approaches work at a local level to help local authorities ensure that landlords comply with their obligations,” the committee said.

Effective regulation is also impeded by the Department's lack of knowledge of what local authorities are facing and the absence of an early warning system to identify where local regulation is failing private renters, the committee added.

The MPs said the DLUHC could learn lessons from other areas of consumer protection, such as Trading Standards services, where a national team provides intelligence and support to local regulators.

The report recommended that the Department take a "more proactive approach to supporting local regulators and sharing good practice" to tackle this issue. "To do so, it should learn from other consumer protection systems that provide central intelligence and support to local regulators."

A further issue mentioned in the report was that local authorities do not have the capacity or capability to ensure appropriate protection for private renters.

According to the report, it is a 'postcode lottery' when it comes to local authority enforcement, with 21% of all privately rented homes in Yorkshire estimated to be severely unsafe. Comparatively, only 9% of homes in London are considered severely unsafe.

In addition, just ten landlords and letting agents have been banned by local authorities since 2016, and some councils inspect as little as 0.1% of their privately rented properties, the committee noted.

The National Residential Landlords Association had told the committee that a lack of resources and capacity was behind local authorities' limited use of enforcement powers.

The committee recommended that the Department conduct “a realistic assessment” of the resources needed for local authorities to regulate effectively, "with consideration given to the size, types and quality of private rented properties and the demographics of renters".

It said the Department should write to it within the next six months with an update on the assessment's outcome.

The MPs also claimed that local authorities were constrained by the DLUHC’s approach to licensing landlords.  

The committee said that the time and resource needed to apply for approval of a Selective Licensing Scheme (SLS), and the requirement for schemes to last only five years, presented further barriers to local authorities.

“The Department says it offers a dialogue with local authorities to help them apply for licensing schemes, but local authorities say there is poor communication and limited feedback. Given regulation is managed and delivered locally, it is not clear why the Department restricts the use of larger schemes or on what basis it rejects them,” the MPs said.

In light of this, the committee recommended that as part of its planned reforms, the DLUHC should assess whether current arrangements for licensing schemes are working, and whether alternative arrangements may be more efficient and effective.

Elsewhere in the report, the committee suggested it was “too difficult for renters to realise their legal right to a safe and secure home”.

The report said tenants faced increasing rents, a rising number of low-earners and families were renting long-term, and there was a prevalence of “no-fault” evictions leaving households at risk of homelessness. “When trying to enforce their legal right to a safe and secure home private renters face an inaccessible, arduous and resource-intensive court process and the risk of retaliatory eviction.”

There was also evidence of unlawful discrimination in the sector, with 25% of landlords unwilling to let to non-British passport holders and 52% unwilling to let to tenants who receive Housing Benefit, MPs said.

The committee said the DLUHC has only made piecemeal legislative changes in recent years, "and in doing so has made the regulatory system even more overly complex and difficult to navigate for tenants, landlords and local authorities”.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said: “Unsafe conditions, overcrowding, harassment, discrimination and dodgy evictions are still a huge issue in the private rented sector.

“And yet the sector is a growing provider of homes and rents keep rising meaning that safe, suitable housing is too often out of reach for renters. Renters with a problem are faced with a complex and costly redress system which is not fit for purpose and many tenants give up at the first hurdle.

“We need to see a change in balance. We expect DLUHC to produce the promised White Paper in a timely and effective fashion, and start to turn around its record on addressing the desperate housing crisis in this country.”

A Government White Paper is set to be published this year.

Adam Carey