Written evidence submitted by TAROE Trusty [RSH 026]
This document contains TAROE Trust’s formal written submission in response to the terms of reference of the inquiry.
TAROE Trust is a registered charity formed in 2013 out of the former national tenant representative organisation, Tenants and Resident Organisations of England (TAROE) whose origins date back to the 1970s. Its key focus is working to influence housing policy and occasion positive change in the interests of tenants and residents living within the regulated housing sector.
The scope of the inquiry fits firmly within the key focus of the charity and its objects, which are summarised as follows:
RESPONSES TO TERMS OF REFERENCE OF INQUIRY
How widespread and serious are the concerns about the quality of social housing?
There are widespread concerns about the quality of social housing and the ability of landlords within the sector. In addition to the housing quality is the failure of some landlords to take those concerns seriously when they are raised by tenants, and their inability to address them in a timely and appropriate manner.
The consequences of such service and property failures include the negative impact on the health and wellbeing of tenants, as well as dissatisfaction with services and frustration caused by service failures.
Landlords have a responsibility to give those renting and leasing a good quality of accommodation and invest in their assets.
It is difficult to ascertain statistically how widespread the concerns about housing and service quality are as there is an absence of comprehensive and publicly available metrics on such matters that are prepared in accordance with methodologically sound and consistent data collection approaches. The commitment for the development and implementation of new Tenant Satisfaction Measures (TSMs) by the Regulator of Social Housing (RSH) should go some way to addressing this data gap to quantify the scale of the concerns that exist.
Anecdotal concerns that are brought to the attention of TAROE Trust by tenants living within the sector suggests that at the very least, there are pockets of recalcitrant landlords that are failing to adequately invest in and maintain the quality of the properties they own and are not sufficiently responsive to tenants’ requests for remedial action. Moreover, our anecdotal work appears to indicate that the seriousness of investment failures appears to be increasing. Performance data relating to the number of cases being referred to the Housing Ombudsman Service and numbers of adverse findings by the service would appear to support this position.
One particular theme of concern consistently raised by Tenants is the poor quality of communication by landlords in the sector. This can take different forms, such as:
The real change that is required is to bring about culture change at every level of an organisation to ensure landlords properly listen and act on genuine communications and at every level of the organisation.
What is the impact on social housing providers’ resources, and therefore their ability to maintain and improve their housing stock, of the need to remediate building safety risks and retrofit their homes to make them more energy efficient?
TAROE Trust recognises that there is a significant shortage of truly affordable rented accommodation across the sector, and there is a need for an increase in housing completion outputs across all tenures.
However, the existing financial models dominant for funding new housing supply across the sector involves landlords either using reserves, surpluses from revenue inflow, and borrowing against the value of their existing property portfolio, and then also using revenue inflows to service such debt and related interest.
The consequence of this approach is that rental levels for Tenants are inflated, rendering rents less affordable than they could be, and meaning that existing tenants (often and almost by definition due to the current rationing and allocation practices meaning that properties are allocated to those considered to be in greatest housing need) are resourcing new build rather than investment in existing Tenants’ homes. Indeed, successive rent settlements for the sector have permitted inflation busting rent increases on the basis that such rent increases will in turn increase sector capacity for increased new housing outputs. Such outputs often involve a spread of different tenures (e,g. properties for rents at social rent and affordable rent; shared ownership; and housing for sale). This often results in an overall erosion of social rent properties, aggravating and reducing the availability of truly affordable housing.
The consequences of these funding models is that funds are diverted away from investment in existing assets, reducing affordability whilst also creating a false economy as revenue otherwise required for investment in existing housing is used to fund new supply. It means that Tenants’ rents otherwise available for investment in the quality of their own properties (including communal areas) is diverted elsewhere.
TAROE Trust’s position has been outlined in its Manifesto for Change, which calls for an increase in capital subsidies to fund new supply, which would allow receipts from existing properties to be allocated to maintain housing quality.
Is the current regime for regulating social housing fit for purpose?
The current regime and its regulatory standards have the potential to be fit for purpose. However, the existing legislative constraints placed upon the scope and remit of the RSH means that this potential cannot be realised.
Effective regulation requires a regulator that can take a holistic approach to regulation, understanding and regulating on the basis of both economic and consumer-side issues. Unfortunately, the RSH has effectively been forced to operate “with one arm tied behind its back” with the constraints applied preventing proactive consumer regulation.
The RSH has performed an excellent role over the past decade (including earlier incarnations of the regulator) in terms of economic regulation, preventing any significant landlord failures, maintaining landlord viability and maintaining lender confidence and the sector’s concomitant favourable lending rates. In turn, this has maintained overall output from the sector of new housing developments.
Arguably however, this economic focus has, to an extent, been to the detriment of investment in existing stock and maintenance of high service standards (see for example high-profile apology issued in 2018 by L&Q). It is these failures that can result in the poor housing conditions that have been the subject of recent television and press exposures throughout 2021. Such consumer failures make the regulator appear impotent and erode trust and confidence in their efficacy amongst Tenants and the reputation of the sector as a whole.
We believe that a number of the proposals contained in the Social Housing White Paper (SHWP) will go some way to ameliorating the shortcomings of the existing regulatory regime. In particular, the removal of the ‘serious detriment’ requirement for regulatory intervention in consumer-side issues, and the ability of the RSH to proactively regulate the Registered Providers. The failure to allocate Parliamentary time to date for the introduction of legislation to bring into law the proposals contained in the SHWP is a serious failure. It sends out a message to Tenants living in the regulated sector that their needs are not a priority, it further erodes trust and confidence in bodies invested with authority and means that Tenants must continue to experience poor housing conditions and services without recourse to an effective regulatory body.
We should stress that many, perhaps the majority, of Registered Providers are committed to delivering high quality homes and services to Tenants. It is important to note that some ‘high profile’ Registered Providers are the ones being reported in the press for ‘well below Decent Homes standard’ stock which portrays to the world that there is a ‘don’t care’ attitude to existing Tenants in our sector, a sector which has ‘care’ at the centre of its delivery which is the factor that makes it different than the Private Rented Sector. We understand that the caps for fines and the regulatory powers available to the RSH will be strengthened as a result of the changes proposed by the SHWP. This is also important, backed up with regulatory action, to send a clear message to those recalcitrant landlords that fail to act in the interests of Tenants.
It should be stressed that the proposals within the SHWP must represent only the start of the process of regulatory improvements required. Consumer standards will need to be reviewed and updated, but this is contingent on the legislative framework being established to enable this to happen. It will also be important that the RSH has the resources available to them to enable them to regulate effectively.
How clearly defined are the roles of the Regulator of Social Housing and the Housing Ombudsman?
The roles of both respective bodies are clear. However, there are weaknesses relating to the existing scope of the RSH that needs to be addressed, as outlined in the previous section.
Does the current regime allow tenants to effectively resolve issues?
It is understood that this question relates to redress.
There have been significant improvements in the role and approach of the Housing Ombudsman Service (HOS) in recent years. All changes (e.g. Code of Conduct; early resolution procedures; performance data publication; thematic reports; naming of individual landlord poor performance; increased awareness of their role) is positive and welcomed. Removal of the ‘democratic filter’ within the Building Safety Bill will further improve this position.
For the HOS, whilst processing time to resolution have been improving, and it is accepted that some cases are complex, overall resolution timescales remain long and an issue of concern amongst Tenants.
The current role of the RSH relates more to systemic issues and failures. There have been large gaps between redress from individual complaints dealt with by the HOS and the high threshold before intervention from the RSH is permissible. Changes required as outlined in Question 3 above should in part improve this position. Ultimately, the regulatory regime needs to be a critical part of a wholesale culture change in the sector that involves placing Tenants at the heart of service design, decision-making and delivery. This approach should reduce the incidence of issues arising, allow issues arising to be addressed more effectively, and where such issues are not addressed, enable the regulator to step-in at early stage as required.
Do the regulator and ombudsman have sufficient powers to take action against providers?
There are proposals to further strengthen the powers of the RSH within the SHWP (e.g. removal on the cap for fines). These changes will go some way to improving the powers available to the RSH.
In cases of serious regulatory issues where there are systemic failures, there should be the ability for the RSH, in addition to their current powers relating to Board members and powers of appointment, to remove senior executives from areas of responsibility where their action / inaction has seriously affected the health and wellbeing of those living within the landlord’s properties. These individuals should not be permitted to work in similar positions within the sector once they have been removed to safeguard landlord reputation and Tenant trust and confidence.
Will the reforms proposed in the social housing White Paper improve the regime and what progress has been made on implementing those reforms?
As outlined in response to Question 4, the proposals contained in the SHWP should significantly improve the regulatory environment for the sector. However, only very limited progress can be made in the absence of the statutory framework needed to underpin these proposals. The delays in moving these proposals are unacceptable.
TAROE Trust is a member of the SHWP Expert Challenge Panel and is aware of where progress has been made on a number of areas where this could occur without the need for new legislation (e.g. first phase of the review of the Decent Homes Standards; drafting of Tenant Satisfaction Measures by the RSH). However, these are peripheral to the substantive reforms required from primary legislation.
What changes, if any, should the Government make to the Decent Homes Standard?
The Decent Homes Standard effectively dates back to the late 1990s, with a small review undertaken in 2005. A wholesale review is required to this standard to bring it up to modern standards and Tenant expectations.
TAROE Trust has been participating in the DLUHC Review of the Decent Homes Standard (Phase 1) at which the case for updating of the standards has been made.
In summary terms only, based on direct engagement with Tenants, changes to the standard need to incorporate the following:
Overall, the key factors that Tenants have identified as contributing to a “decent” home include the following:
Should the Decent Homes Standard be amended to include energy efficiency and other means of mitigating climate change, and if so how?
Yes, but the sector should not be used as a “guinea pig” for the rest of the nation. Moreover, Tenants’ rents should not be used to fund such retrofitting and other energy efficiency measures where owner occupiers are able to receive grants to take the same actions. The preference is therefore for central Government funding to be made available so that the burden is spread more equitably across all taxpayers and such measures are not undertaken at the expense of other investment in Tenants’ properties.
Further details on the type of energy efficient related works that may be undertaken and how these are implemented is beyond the scope of expertise of TAROE Trust.
Should all providers of social housing, not just councils, be required to register with the regulator?
It is TAROE Trust’s understanding that all local authorities with retained social housing stock are compulsorily required to register with the RSH (s.114A of the Housing and Regeneration Act 2008), but that in addition to these, the majority of registered landlords are not Councils but are already Private Registered Providers (many of which transferred from the Housing Corporation as RSLs and are generally registered housing associations).
Whilst new entrance to the sector is voluntary, it is compulsory for any body seeking to receive funding from Homes England or the Greater London Authority.
Moreover, all existing and new entrants must comply with all regulatory standards. This position appears acceptable.
Not only should ALL providers of social housing be required to be registered with the RSH, any organisation that provides services to the sector and receives payment through services charges should also be required to register.
What challenges does the diversification of social housing providers pose for the regulatory system?
There has been significant diversification of the sector in recent years. There is not sufficient space to explore these trends in detail in this limited response. Changes include:
The implications for these changes include:
There are particular concerns around the activities in the specialised supported housing and exempt accommodation sub-sectors that require further investigation, and for which there are weaknesses in the regulatory framework for dealing with such cases effectively. Some aspects of this are likely to be addressed within the SHWP.
Another significant issue is the need for the regulatory framework to be flexible and accommodating of change amongst regulated bodies without reliance on legislative change. Continual recourse to the Parliamentary process to adapt the framework to accommodate emerging issues is not timely or efficient and has the potential for influence by persons with limited knowledge of the sector or a vested interest in slowing down change.
There have been recent positive changes in the sector that need to be acknowledged. The increase in mutual models for instance offer positive examples of increased Tenant empowerment.
There are also opportunities following the recent Supreme Court decision of
Lehtimaki and others v Cooper that offer potential empowerment of and accountability to shareholders / company members of Registered Providers for issues such as executive pay and environmental, social and governance issues.