Housing licensing: 2) Policy options

In part 1 of this series, we examined Enfield Council’s flawed statistical analysis, which attempted to link the borough’s private rented sector with anti-social behaviour. In this post we look at a range of policy options the council should have explored and how, in less than a year, they went from ruling out licensing to being its advocates.

Policy aim
If the council had just said “we want to raise housing standards and make sure that both landlords and tenants are doing things properly” nobody would have complained (except for the fees and admin burden). No reasonable person can argue that housing standards should be lowered.

It is unethical for a landlord to be demanding good money to rent out a single room or a property which is unsafe. Every tenant should have a right to live in a home that is free of carbon monoxide, is not a fire trap and has hot running water.

Why did Enfield Council try and justify a dubious link between anti-social behaviour (ASB) and the private rented sector? How would licensing landlords and their properties even address ASB?  The answers are not obvious but relate to what the law allows the council to do.

Legal basis
The Housing Act 2004 gives local authorities powers to implement additional licensing and also selective licensing.

Although there is more to it than my simple interpretation here, additional licensing allows councils to broaden the definition of houses in multiple occupation (HMOs) and selective licensing can apply to any rented property in the private sector. Enfield is proposing to do both.

Until recently, designation under the two schemes required the permission of a “national authority”. Under the Labour administration the Department for Communities and Local Government consulted on giving a general consent on housing licensing to councils. In March 2010 the housing minister made a general order (without passing any further legislation), allowing councils to implement both additional and selective licensing by granting them automatic approval by the Secretary of State . [I wasn’t able to find the order on a gov.uk site but DCLG pointed me to that document after a Twitter exchange. Guidance notes are here .]

Since the general order didn’t require any legislation to be passed by Parliament, the order could be revoked by the current housing minister, as confirmed when I asked DCLG today.

Legal loophole
Section 80 of the Housing Act 2004 defines the conditions to be met so that a local housing authority can designate an area for selective licensing:

(2) The authority must consider that—

        (a) the first or second set of general conditions mentioned in subsection (3) or (6), or
        (b) any conditions specified in an order under subsection (7) as an additional set of conditions,

are satisfied in relation to the area.

Subsection 3 states that an area is, or is likely to become one of low housing demand and that, combined with other measures, selective licensing will improve social and economic conditions.

Subsection 6 is about anti-social behaviour and some or all private sector landlords failing to take action to combat the problem.

Subsection 7 is about extra conditions set by central government.

This is where legislative drafting is problematic. The word “or” in the quoted subsection is a legal loophole. If it had been “and”, the council would have had to prove both low housing demand and an ASB problem.

Enfield does not have low housing demand. The Land Registry’s latest House Price Index report, released in March 2014 [pdf, see page 11], shows that Enfield’s average house prices rose 8.6% in the year to 28 February 2014. Although this is below the 13.8% for London as a whole, such a significant rise is still indicative of high housing demand, relative to supply. The trend is for house prices to rise well above the level of general inflation, so indications are that it is not going to become an area of low housing demand.

Looking at the GLA rents map, the borough has median rents of £104 per week for a room in shared accommodation. This is by no means the most expensive in London but £450 a month is not cheap.

That’s why the council have used anti-social behaviour as a hook for their policy. But that’s only a recent development, as we shall see.

The “do nothing” option
All policies should consider the “do nothing” option. This should analyse what would happen without any intervention. A situation might improve by itself, get worse or stay the same. When we get a cold, we might initially let it run its course. If it resolves, great.  If it gets worse or lingers we might go and see a doctor. We do nothing because we want more information before coming to a decision about whether to do something.

It should be the same with policy. Indeed it is exactly what Enfield Council did, as explained in its submission to the House of Commons Communities and Local Government Committee in January 2013:

In Enfield, the majority of complaints from tenants within the private rented sector are about disrepair. These increased from 964 in 2010-11 to 1,633 in 2011-12.

The Housing Act 2004 introduced a comprehensive set of minimal standards for private rented accommodation through the Housing Health and Safety Ratings System. Enfield has found this legislation to be sufficient with regards to setting a reasonable standard of accommodation in the private sector and with regards to providing appropriate powers to take enforcement action against the small minority of landlords who are not prepared to keep their properties in a reasonable condition. Benefit cuts have reduced the amount of income that some landlords have available to invest in their properties. This may have contributed to an increase in the number of complaints of disrepair reported by tenants.

Using figures in the same paper, around 6% of private sector properties had complaints made in 2011-12, an increase from 4% in the previous year. [It is not clear if these were unique complaints. If anyone has updated figures, please comment below.] It’s not clear how many of these were genuine complaints, or how quickly they were resolved but it doesn’t seem to be particularly low or high level but heir discussion recognises that it’s a “small minority of landlords”.

The considered and concise paper acknowledges the high levels of housing demand. It makes only a passing reference to anti-social behaviour (in terms of council advisory services) and then rules out landlord licensing:

Furthermore, the compulsory accreditation of all landlords in Enfield would require a significant increase in resources to administer. Enfield believes that the compulsory registration of landlords would not be an effective way in improving standards in private rented sector.

Although the paper does not specifically mention selective licensing, it does rule out additional licensing of HMOs:

With a background of high demand for private rented housing and a shortage of properties in the market, the roll out of licensing of landlords in Enfield would not be beneficial with regards to increasing the supply or improving the standard of private sector housing.

Rolling out landlord licensing is likely to act as a disincentive to potential landlords to let their properties or invest in professional “buy to let” schemes. The cost of any such scheme would likely be passed to the landlord and add to their costs and the bureaucracy of landlord licensing would most likely deter those landlords who aspire to reach high standards and would discouraging professional landlords from letting. Also, landlord licensing would be costly for the local authority to administer.

This leaves a very obvious question. What happened between January 2013 and autumn 2013? Why did Enfield Council go from explicitly opposing housing licensing to commissioning reports on anti-social behaviour and running focus groups?

Do something – licensing “lite”
Enfield’s proposal involves licensing the landlord (with a fit and proper person test) and also the premises.

At its consultation forums, Enfield’s housing team claimed that poor tenancy management was a major reason for ASB. What support and certification is there to improve it? There is already a free accreditation scheme in the borough, the Responsible Landlord Scheme, although this is not widely advertised. That could explain why it had just 70 members in January 2013, as revealed in the submission to the Commons CLG select committee. Enfield could have piggybacked onto the existing London Landlord Accreditation Scheme (LLAS), which is free except for an £80 course. Enfield even supports the LLAS with a £2,500 annual grant [pdf, see page 22].

Enfield could have used such a scheme to gather information on the borough’s private landlords before making a case for other forms of licensing.

Going all out – additional and selective licensing
Enfield Council have decided to go for a borough-wide additional and selective licensing scheme. They haven’t run a pilot, haven’t restricted the area (which is why it’s called “selective”, although the law allows them to cover the whole borough) and haven’t tried just landlord licensing first. They have drawn up long terms and conditions. They want to inspect properties. They want contracts in place. They want money set aside in contingency pots. There is too much to be said about what’s wrong with the proposals in this blog post, so I will be coming back to it soon.

Overview & Scrutiny Committee
Enfield Council’s Overview & Scrutiny Committee will be considering the Cabinet’s decision to implement additional and selective housing licensing on Wednesday 30 April 2014.

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You can also look at other posts in my Enfield Council series.

Image attribution: Christine Matthews

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