Written evidence submitted by Southwark Council [RRS 260]

The following evidence has been prepared by Southwark Council, an inner-London borough extending from the river Thames into south-east London.

While local authority and housing association properties are the most substantial housing tenure in the borough[1], the private rented sector (PRS) makes up a large and rapidly growing proportion of tenure. As of 2021, 29.4%[2] of Southwark residents live in private rented properties, a significant increase from 12.5% in the 2009. This current figure higher than the London average of 27% per cent and English average of 19%[3].

As a council, we are embarking on an ambitious programme to deliver a new generation of council homes. We have built or started construction on 2,500 new council homes since 2014, and aim to start at least 1,000 more by 2026, including much-needed family-sized homes. However, increasing demand means there is still a growing and important role for the PRS in the borough.

We have therefore also been taking measures to help ensure that our PRS is delivering the good-quality homes our residents deserve. We have introduced additional licensing for HMOs not covered by Government mandatory licensing, as well as selective licensing in five of our council wards. We have also introduced a Southwark Gold Standard, which rewards landlords and managing agents who demonstrate good practice to their PRS tenants.

However, more needs to be done nationally to provide safe and secure homes for private tenants. While, as we will outline below, many of the reforms outlined in the White Paper are welcome, Government must ensure that these are workable in practice and fully funded to allow for proper enforcement. It is also clear that, particularly in Southwark, the cost of renting has not kept pace with welfare provision and that this must be addressed before we can achieve a fair and secure PRS.

We have responded to each of the Committee’s questions in turn below. Our Cabinet Members for the Community Safety, Dora Dixon-Fyle and Council Homes and Homelessness, Cllr Darren Merrill, would be delighted to provide further information, or to give evidence to the committee as part of this inquiry.

1. Will the Government’s White Paper proposals result in a fairer private rented sector (PRS)?

1. We are supportive of many of the plans outlined in the White Paper to bolster the rights of tenants, particularly the enshrining of a ban on section 21 evictions in law which is something we as a council have long called for.
2. Plans for a new property portal are also welcome, to assist local authorities in tackling rogue landlords. We currently spend vast amounts of time checking landlord compliance, to ensure that we are aware of any rogue landlords in the borough and can act against them where necessary.
3. However, further details are required as it is unclear how the portal will sit with existing licensing schemes and other enforcement policies. Where local authorities have comprehensive licensing schemes covering the entire PRS, the proposed portal could create duplication, and we are concerned that landlords will not appreciate having to licence their properties and then also sign up to the portal.
4. In conjunction with the above, local authorities currently struggle with the process of implementing wider selective licensing schemes to better regulate their PRS. We believe that consideration should therefore be given to devolve this power to local authorities or Mayor of London. The latter would provide a more a more consistent and cohesive licensing policy London-wide.
5. While the White Paper’s reforms are welcome, in order to truly create a fairer PRS, the welfare system must reflect the cost of renting, particularly in areas like Southwark with high private rental costs.
6. Currently, Local Housing Allowance (LHA) fails to cover the cost of renting privately in Southwark, particularly for family-sized accommodation. The difference between LHA rates and monthly rents in Southwark is significant, at over £300 for a 2-bedroom flat and over £400 for a 3-bedroom flat[4].
7. Therefore, we would ask that alongside the reforms outlined in the White Paper, changes are made to the welfare system, namely that LHA is increased to reflect median rental costs.
8. We are also somewhat concerned about the impact that reforms could have on the supply of PRS accommodation. The success of proposed reforms relies on landlord buy-in and perception, and diminished supply as a result of landlords leaving the sector would lead rents to grow and place further pressure on renters, public funds and local government housing assistance more generally.
9. It is therefore imperative that there is strong dialogue between the Government, landlords and local authorities as reforms are implemented, and that where possible a phased approach is taken.

2. What do the proposals in the White Paper and other recent reforms indicate about the role the Government envisages the PRS playing in providing housing nationally?

1. The White Paper and recent reforms reflect the growing role that the PRS plays in national housing provision, and that regulation to date has not kept pace with this.
2. In 2020-21, the PRS accounted for 4.4 million or 19% of households in England. In London, and in particular Southwark, the PRS accounts for an even greater percentage of housing tenure- 27% and 29% respectively[5].
3. In recent years, the PRS has grown to absorb housing need that is not addressed by permanent housing solutions nationally through home purchase or social housing.
4. As a council, we have seen a growth in our reliance on the PRS to help or relieve homelessness, particularly during the pandemic where homelessness was prevented with a PRS offer in 681 cases in 2020/21. While this figure was somewhat of an outlier, we are seeing a year-on-year upward trend as homelessness was prevented with a PRS offer in 391 cases in Southwark in 2021/22 compared to 343 cases in 2019/20.
5. We have also seen a growth in the numbers we are supporting in temporary accommodation, up from 2864 households in 2019/20 to 3559 households in 2021/2. This reflects both the difficulty of accessing secure PRS accommodation in the borough and our increased reliance on the PRS.

3. Have the Government’s announcements already led to any changes in behavior in the PRS?

1. We understand that one of the main reasons for the threat of homelessness from PRS accommodation over the last year in Southwark, has been property sale.
2. We have seen an increase in the number of residents approaching our services due to the threat of eviction from the PRS. This has grown by 46% between 2019-2020, when we had 489 such approaches and 2021-2022 where we had 713 approaches. These figures also do not consider tenancies which have been maintained through dialogue between landlords and tenants.
3. It is currently not clear if this trend will continue or be impacted by announcements, however reforms must ensure that PRS stock does not diminish due to the resultant pressures outlined in 1h.

4. Do the proposals for reforming tenancies, including the abolition of Section 21, strike the right balance between protecting tenants from unfair eviction and allowing landlords to take possession of their properties in reasonable circumstances?

1. We have long called for the abolition of Section 21 evictions, which cause insecurity for private renters as well as putting additional strain on our overstretched housing resources and are pleased to see it included in the White Paper.
2. With regards to plans to strengthen grounds for possession where the tenant has arrears, we are concerned that many people renting privately have fallen into arrears during the last 3 years- particularly given the strains of the pandemic- and will continue to do so with rent and energy bills rapidly increasing.
3. We administer two budgets to help private renters manage rent shortfalls and arrears and have seen their usage increase significantly over the past two years, from 116 uses in 2019/20 to 260 and 238 uses in 2020/21 and 2021/22 respectively.
4. We understand that in November 2020, 34.1% of all households in the borough were in receipt of state support for housing costs which, given the disparity between market rent level and entitlement towards housing costs as outlined in 1f, means that many struggle to manage their rent. Any developments in possession action around this area must therefore be carefully considered, particularly in light for the cost-of-living crisis.

5. How easily will tenants be able to challenge unfair rent increases under the proposals?

1. The ability of tenants to challenge unfair rent increases is dependent on how well the First-tier Tribunal is resourced and its effectiveness and accessibility for renters. While the White Paper promises that ‘tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal’, further detail of how this will be achieved is needed.
2. Tenants can already refer rent increases to the Tribunal and so this itself is not a significant development. Therefore, we feel that the introduction of a longer notice period for rent increases would be of benefit for tenants to consider their financial position or seek to challenge this.
3. Landlords should also be encouraged through the property portal to make more regular, smaller increases of rent to avoid increases that would pose a problem to tenants and risk tenancy failure.
4. For renters in receipt of housing-related benefits, affordability will remain a critical issue in the PRS and, as outlined in question 1f, wider reform to address the gap between market rent and benefit entitlements is required.

6. Does the PRS need its own ombudsman? If so, what powers should it have?

1. We support the creation of a new PRS ombudsman as PRS tenants do not have a forum for resolving disputes except for in the courts. The ombudsman would provide that and reduce the number of cases that end up in court.
2. However, there must be a coordinated approach to ensure all landlords take up membership. As the White Paper indicates that enforcement for non-compliance will lie with councils, we would ask that this- as with other new enforcement responsibilities the White Paper places on councils- is fully funded. It must also be made clear what form enforcement will take.
3. In addition, there will need to be clear operating guidelines introduced to ensure that access to court is not frustrated with pre-action through an ombudsman case.

7. Will the proposals result in more disputes ending up in the courts? If so, will the proposals for speeding up the courts service suffice?

1. We would expect that the introduction of a PRS ombudsman will see a reduction in disputes ending up in the courts, and that the increased digitisation of the Courts and Tribunal Services and better prioritisation of cases will generally see a more effective process through the courts.
2. We welcome measures to speed up court proceedings, as appeals and rent repayment orders place a significant burden on the First-tier Tribunal.
3. Something which we currently see clogging the First-tier Tribunal is appeals against the fine for Civil Penalty Notices (CPNs). Therefore, a measure which should be added to the Government’s plans to speed up court services is a national fine matrix for CPNs, which we believe would greatly reduce the number of appeals. Currently many appeals are against local authorities’ own matrixes. A national matrix would mean that appeals would only be in relation to whether an offence was committed or not.

8. What impact, if any, will the reforms have on the supply of students' homes in the general PRS?

1. With the proposed removal of fixed term contracts in favour of periodic tenancies, student accommodation supply may be reduced, given landlords may struggle to ensure they have vacant possession for a new intake of students.
2. The current exemption for purpose-built student accommodation may need to be widened to ensure this supply of accommodation is not reduced.
3. Close consultation with the sector and student advisory organisations is therefore imperative going forward.

9. What impact, if any, will the reforms have on the supply of homes in the PRS?

1. As outlined, these reforms are far reaching and require development of services across multiple central government departments and close partnership with local authorities and landlord bodies.
2. Without consistent development across these areas, there is risk that landlords will cease to operate in the PRS or build in higher rent levels, which will further restrict access to the PRS for those on low income and increase the costs of homeless prevention and relief activity of local authorities

10. What should be included in the new decent homes standard and how easily could it be enforced?

1. While we support a decent homes standard being extended to the PRS, we have concerns about the additional burden placed on councils as the enforcement agency.
2. An issue for landlords and enforcement practitioners alike is the complexity and number of different standards to comply with. The Housing Health and Safety Rating System (HHSRS) is already complex for tenants and landlords to understand and requires a lot of maintenance to keep it up to date. In addition, the introduction of a new fitness standard under 'The Homes (Fitness for Human Habitation) Act 2018' further complicates the standards that landlords need to adhere to.
3. Therefore, instead of introducing a new decent homes standard, we would recommend updating the HHSRS to be more like a fitness standard and to include a decent homes standard for enforcement under the Housing Act 2004.
4. The White Paper mentions strengthened fines for serious offences, however fines for Housing Act offences are already unlimited and we have wide ranging powers in this area. We do however feel that fines for serious offences could be better dealt with through a strengthened sentencing policy.
5. We would also suggest introducing restrictions on lettings unless standards are met prior to any tenancy. This would improve standards in the sector and reduce time and administrative burdens on local authorities.

11. How enforceable are the proposals to make it illegal for landlords to have blanket bans on letting to people on benefits or with children? What other groups, if any, should be protected from blanket bans?

1. The detection and enforcement of blanket bans will require significant work through landlord and letting agent education. The Government would also need to ensure that local authority enforcement is adequately resourced and supported to ensure this is effective.
2. The blanket ban on letting to people with children is likely to be more difficult to enforce, as there may be valid reasons- including size, location or facilities- why a landlord’s property is not suitable to be lived in by children but may be suitable for other groups. As such, introducing a blanket ban subject to suitability may be more appropriate and enforceable.

12. Overall, what additional pressures will the proposals place on local councils, and how many of these will require new burdens funding?

1. There are several measures in the White Paper which require enforcement from councils, and which will require new burdens funding from central government to ensure that enforcement can be carried out effectively. A key issue facing local authorities currently with regards to enforcement is a lack of resources and skilled staff to effectively use existing powers.
2. These are: enforcing the decent homes standard; taking enforcement against landlords who fail to join the ombudsman; and enforcing against landlords who have blanket bans on letting to people on benefits or with children.
3. In addition, if rents rise in the PRS or we see a reduction in stock, we can envisage this having an impact on our Housing Solutions team. There may be a resultant increase in the level of incentives required by this team to secure PRS accommodation to comply with our legal duty prevent or relieve homelessness.
4. We welcome the promise in the White Paper of increased investigative powers for councils to strengthen enforcement powers. We have found that past housing and PRS related legislation didn’t include investigative powers, making enforcement more difficult. If the legislation is destined for local weights and measures authorities, then the best way of doing that is to make the powers in Schedule 5 of the Consumer Rights Act 2015 applicable to investigation under the new legislation.
5. We have also found that housing and PRS legislation is often non-specific as to who should enforce it at a local level. Specifying the enforcement burden and providing accompanying funding is the most effective way to ensure that the enforcement of new legislation is prioritized.
6. Finally, consideration should be given to making it easier and quicker to access rented properties for the purposes of inspecting against any new PRS legislation. At present, in the absence of any consent from tenants or landlords, a magistrates warrant of entry is required to gain entry to these with reasonable cause to believe an offence is occurring. These can take several weeks to be granted from the time of application, slowing the process down significantly.

August 2022