Written evidence submitted by the Department for Levelling Up, Housing and Communities [RSH 050]
Government’s approach to improving social housing
The Grenfell Tower tragedy raised critical questions for everyone involved in social housing. In recent months, media reports have highlighted poor social housing conditions; these conditions are completely unacceptable.
The ambitious Social Housing White Paper package will improve social housing, ensuring social housing landlords treat residents well and consistently deliver good-quality housing and services. These important reforms will improve the quality of social homes, ensure complaints are dealt with fairly and promptly, and empower residents. The White Paper will also give the Regulator of Social Housing (‘the Regulator’) greater powers in legislation to take action when things go wrong. The measures set out in the White Paper are the result of listening to thousands of social housing residents about the changes that they want to see. The Government remains committed to implementing the Social Housing White Paper in full.
The quality of homes was a key issue raised by residents and we set out in the White Paper wide-ranging reforms which will ensure landlords consistently deliver good-quality homes and services. Our work with the Regulator to create a strong, proactive consumer regulatory regime and strengthening the formal standards against which landlords are regulated, including the Decent Homes Standard, will hold landlords to account on the decency of their homes. When things go wrong in social housing, the Housing Ombudsman can investigate and determine individual complaints from residents against their landlord which are unresolved locally.
At the heart of the White Paper was our commitment to introduce a new regime of proactive consumer regulation of social landlords, including regular inspections of the largest landlords. Legislation is required to establish this, removing the ‘serious detriment’ test and creating stronger enforcement powers to allow the Regulator to take action and hold landlords to account when there is a systemic breach of the standards. Transparency and safety of tenants will be explicitly added to the Regulator’s objectives, with a series of underpinning reforms to ensure landlords prioritise these important issues - including a new requirement for landlords to identify and make public a nominated person responsible for compliance with their health and safety requirements, new powers for the Regulator to require landlords to develop Performance Improvement Plans, and the creation of a new access to information scheme for tenants of housing associations, for which the Housing Ombudsman will act as the appeals body. Our commitment to increasing transparency is already being strengthened through the Housing Ombudsman’s publication of investigation reports on individual cases and performance data on landlords. These changes will reset the regulatory remit, creating parity between economic and consumer regulation, and sending a clear signal to landlords that tenants must be at the heart of the services they provide. We are committed to legislating as soon as practicable.
The Government has made good progress on implementing the White Paper in the first year since publication. We have taken important steps to improve safety and decency, setting out how we will require smoke alarms to be fitted in all social homes and that carbon monoxide alarms will be fitted in all rented homes with gas boilers or fires; reviewing the Decent Homes Standard; and preparing a consultation on electrical safety with input from residents, landlords and experts.
We have delivered a national campaign to help residents know how to raise a complaint with their landlord or the Housing Ombudsman, and launched an anti-social behaviour information package which sets out the help and support available for tenants who are experiencing anti-social behaviour.
As arms-length bodies of the department, the Housing Ombudsman and Regulator of Social Housing are driving implementation of several aspects of the White Paper. Increased powers for the Housing Ombudsman as a result of the Social Housing White Paper to report on systemic issues and thematic concerns have resulted in reports on key issues such as on damp and mould. The new powers have enabled the Ombudsman to publish a Complaints Handling Code and issue Complaint Handling Failure Orders which make clear what is expected of landlords and to take action where there are failures. The Regulator has established a new consumer regulation unit to develop and deliver the White Paper reforms relating to regulation and have recently launched their consultation on new Tenant Satisfaction Measures, which will be a fundamental part of the new regulatory regime and an important tool to allow tenants to hold their landlords to account.
Resident engagement is at the core of the White Paper implementation: the Minister for Rough Sleeping and Housing visited social housing providers and their residents over the summer and residents’ groups have been involved in working groups for implementing White Paper commitments. The Housing Ombudsman has set up a Resident Panel who provide direct feedback and advice on its service development, while the Regulator has delivered a series of events for tenants to introduce high levels plans for the future of regulation and hear feedback. We will continue to prioritise listening to residents as we implement the Social Housing White Paper so that they can continue to shape policy.
This is a complex, multi-year programme which will require legislative, regulatory as well as culture change. We want to make sure we get it right, including considering how we can measure the impact of the programme. We encourage landlords to play their part and respond positively to the changes we are making in order to deliver the best possible service for their residents.
The rest of the Department’s written evidence provides further detail on specific areas of the Select Committee Inquiry’s call for evidence questions.
Wider pressures on social housing providers
We are aware that building safety, net zero, and implementing the Social Housing White Paper present significant pressures on providers of social housing. We are keen to continue talking to social housing providers about these challenges.
The 2019 Conservative Manifesto committed to a £3.8bn Social Housing Decarbonisation Fund (SHDF) over a 10-year period to improve the energy performance of social rented homes, on the pathway to Net Zero 2050. The SHDF will upgrade a significant amount of the social housing stock currently below EPC C up to that standard, delivering warm, energy-efficient homes, reducing carbon emissions and fuel bills, tackling fuel poverty, and supporting green jobs. Currently the total committed funding for the SHDF and associated demonstrator is just over £1bn, representing a very significant investment that will drive the decarbonisation agenda across social housing.
The Government has committed up to £400 million to fund in full the removal and replacement of unsafe ACM cladding systems on residential buildings over 18 metres that are owned by registered providers of social housing. Remediation is now underway or has finished on all of these buildings. Through the Building Safety Fund, the Government has also committed to meet the cost of removing other types of unsafe cladding on social sector buildings over 18 metres where a registered provider’s financial viability would otherwise be threatened or a proportion of remediation costs which would otherwise fall to leaseholders to pay through their service charges.
Decent Homes Standard
The number of social homes that have been classified as non-decent reduced from 20% in 2010 to 13% in 2020. The social sector has a lower proportion of homes that do not meet the Standard (13%) than the private rented (21%) and owner-occupied (16%) sectors.1
We committed in the Social Housing White Paper to review the Decent Homes Standard, to consider whether it needs to be updated to make sure it is delivering what is needed for safety and decency today. This includes considering how improvements to communal space around homes could make places more liveable, safe and comfortable. We will also consider how the standard can work to support better energy efficiency and the decarbonisation of social homes. As a first step, the Decent Homes review has considered the case for change. We have heard from residents, experts, landlords and sector representatives. If the evidence demonstrates that we need to revise the Standard, we will consider the case for new criteria as a second stage of the review.
Regulating the social housing sector
The Regulator of Social Housing’s objectives are set in legislation. In meeting these objectives, the Regulator is required to perform its duties in a way that minimises interference and is proportionate, consistent, transparent and accountable. Our Call for Evidence on regulation considered potential changes to both consumer and economic regulation of social housing landlords, with the responses informing the proposals set out in the Social Housing White Paper.
Local authorities must register with the Regulator if they provide social housing. It is voluntary for private providers of social housing to register with the Regulator. Private providers (including Housing Associations) are not public bodies, and the Government does not require them to register. Placing such a requirement on them would likely lead to their reclassification as public bodies, bringing over £85bn of debt onto the public sector books. Most private providers of social housing do choose to register with the Regulator, given the substantial benefits of registering, including access to favourable rates of borrowing and access to Government grant for new supply.
The Regulator currently can only regulate reactively against the consumer standards, and only take action where there is evidence of a breach of its standards, indicating organisational failure, and the ‘serious detriment’ test is met. Where that test is met, the Regulator has a range of powers that it can and does use with providers who have breached the regulatory standards, as we have seen in tackling the poor housing conditions in the case of London Borough of Croydon. The Regulator publishes an annual Consumer Regulation Review which sets out the key issues and lessons for landlords that have arisen from their casework.
The Social Housing White Paper sets out a series of measures to reform regulation and create parity between economic and consumer regulation. Transforming consumer regulation will be a key driver in ensuring landlords are providing the good quality homes and services that tenants deserve, that tenants know how their landlord is performing, and that tenants are treated with respect by their landlord. The Regulator has already created a new consumer regulation Directorate and is driving forward delivery of the new Tenant Satisfaction Measures, which will be introduced as both a regulatory tool for the new consumer regulation regime and as a key transparency measure, enabling tenants to understand how their landlord is performing.
Legislation will remove the ‘serious detriment’ test, enabling the Regulator to introduce proactive inspections of the largest landlords. Safety and transparency will be made explicit in the Regulator’s objectives, and landlords will be required to make public a nominated person responsible for compliance with the consumer standards and with health and safety requirements. This will complement the changes being made by the Building Safety Bill, which takes forward the government’s reforms to the building safety system, including the creation of a new national Building Safety Regulator to lead a more stringent regulatory regime for high-rise buildings and strengthen wider oversight across the built environment.
We will legislate to give the Regulator more enforcement powers, to ensure they can respond effectively to the evolving sector. This includes new powers to require Performance Improvement Plans from providers, to arrange emergency remedial work in certain circumstances, and removing the cap on fines that can be charged.
We know that regulation is a key driver of landlord behaviour, which is why under the new regime all Boards of Housing Associations and Local Authority Councillors will need to ensure they are meeting the revised consumer standards; the Regulator will seek assurance they are doing so.
Once legislation has passed, the Regulator will be responsible for taking forward implementation of the new regulatory framework, on which it will consult with the key stakeholders, including tenants and landlords. We are committed to bringing forward legislation as soon as practicable and are not waiting to take action where we do not need to wait for legislation, with work underway on the Tenant Satisfaction Measures and the new Access to Information Scheme.
The Regulator ensures registered providers are financially viable and well governed. The Housing Association sector has a no loss on default record and insolvencies in the sector are rare, with effective economic regulation a fundamental contributor to that success. Maintaining strong financial viability and effective governance is essential to protecting tenants’ homes and ensuring that landlords are able to meet the standards set around quality of homes and services.
The Social Housing White Paper recognised multiple challenges on economic regulation, including increasing sector diversification, providers taking on more risk through increasing exposure to commercial development in order to support delivery of more affordable housing, new business models, and the emergence of for-profit providers. The Regulator actively monitors the sector and takes a risk-based approach to its work. Its Sector Risk Profile is an annual snapshot that provides information to landlords around key risks to their compliance with the regulatory standards, both in terms of economic viability and service delivery to tenants.
The White Paper set out how the Regulator’s powers will be changed to ensure it has the right tools to deliver economic regulation effectively with an evolving sector. We will tighten the definition of ‘non-profit’ and require landlords to notify the Regulator of any change in control of a landlord. We will also introduce a ‘look-through’ power so the Regulator can follow money paid outside the regulated sector to ensure the correct designation of providers.
The Housing Ombudsman Service
The Housing Ombudsman resolves disputes involving the tenants and leaseholders of social landlords and their voluntary members (private landlords and letting agents who are committed to good service for their tenants). There are currently 2,316 member landlords representing 4.7 million households.
Demand on the Ombudsman service has surged to unprecedented levels during 2021-22 - casework volumes across their process are now 140% higher compared to the same period in 2020-21. These are early indications that Social Housing White Paper reforms are taking effect by increasing resident awareness of their right to complain and delivering faster resolution of complaints by landlords in line with the Ombudsman’s Complaint Handling Code. Future policy changes to improve access to complaints and the impact of building safety are likely to sustain higher volumes of casework. The increase also reinforces the changing role and importance of complaint handling, which should be an integral part of a positive resident-landlord relationship and service development.
The Social Housing White Paper committed to expand the Housing Ombudsman service to enable it to reduce the time it takes to make decisions and to increase its powers to take action against landlords where needed. The Ombudsman’s functions and powers are set out in its Scheme, which was revised as part of the White Paper programme to give it more powers. A revised Housing Ombudsman Scheme, approved by the Secretary of State, has given the Ombudsman increased powers in several areas including: setting up a complaint handling code; issuing ‘failure orders’ where landlords do not comply with membership obligations; and conducting investigations into issues which go beyond an individual complaint or landlord.
The changes to the Scheme were subject to consultation with landlords and residents and have meant that the Housing Ombudsman is better able to help individual residents when things go wrong with their landlords. The White Paper committed to keeping the Housing Ombudsman’s powers, and compliance with them, under review and to consider ways to strengthen them.
Through the Building Safety Bill we are taking through legislation to make the process of making a complaint to the Ombudsman simpler and faster by removing the democratic filter.
How the Regulator of Social Housing and the Housing Ombudsman Service work together
The Regulator of Social Housing and the Housing Ombudsman work together to deliver regulation and redress respectively for social housing landlords, and tenant and residents. Regulation and redress fulfil different but complementary functions, and ensure the sector meets expected levels of service delivery to tenants at both the organisational and individual level.
The Housing Ombudsman is responsible for redress, acting as an alternative to the courts in resolving individual tenant complaints against their landlord. The Ombudsman will investigate and determine if there has been maladministration by the landlord, and order appropriate remedies. The Ombudsman also promotes effective complaint handling at a local level and encourages landlords to learn from complaints to improve their services. The Regulator is responsible for regulating at an organisational level, focusing on taking action where there is systemic failure in a registered landlord. The Regulator will consider landlord performance against the regulatory standards and does not have a role in resolving individual tenant complaints. The Ombudsman will refer cases to the Regulator where there may be evidence of potential systemic failure at the organisational level and the Regulator will consider Housing Ombudsman information on complaints received and landlords’ responses to its enquiries. As noted above, the Regulator can currently only take action on issues relating to consumer standards where it finds evidence that there has been a breach of the standards that indicates organisational failure and could cause serious detriment to tenants or potential tenants; we will be removing the serious detriment test through our legislation.
A memorandum of understanding agreed by the Ombudsman and the Regulator was updated in September 2020. It sets out the functions of each organisation and the arrangements for cooperation and communication between the two bodies.
We have committed in the Social Housing White Paper to legislate to require the Regulator and Ombudsman to prepare and regularly review their Memorandum of Understanding and make the Ombudsman and Regulator statutory consultees regarding changes to the regulatory standards or the Housing Ombudsman Scheme. This will be brought forward in the Social Housing Regulation Bill.