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Landlord licensing can help protect our communities

Before I became the cabinet lead for Housing Services in May 2018, I had worked in inner City housing for over 25 years and thought rather arrogantly I had seen it all. The squalor, deprivation and human misery I have seen while out with our licensing inspection officers shocked me out of this complacency.

On one of my first visits we went into a small unlicensed 3 bedroom terrace house which had families in each bedroom, the living room and the loft. The rear garden shed was also used as accommodation but was at the time empty. The property was damp, poorly decorated, dirty carpets, broken and worn furniture with dangerous electrical and gas fittings. Each family were charged from £600 to £1,000 per month for their room.  I am sure that Charles Dickens would have seen similar scenes in Victorian London.

This is despite Newham having one of the most extensive, longest running and most effective landlord licensing schemes in the country. Set up in 2013, renewed for another 5 years in 2018, the current scheme lasts until 2023.  To do this we had to persuade a somewhat sceptical Government that licensing was necessary to tackle serious anti-social behaviour and housing hazards but also to protect tenants from exploitation and criminal landlords.

There are an estimated 17,000 landlords who have to register, pay a fee and comply with the terms of the license and we estimate there are at least 47,000 households renting privately licensed accommodation in Newham.  Since February 2018 we have fined 247 landlords and prosecuted 38. Recently we have doubled the number of enforcement officers.

We have a huge private rental sector in Newham. In 2001 only 17% were privately rented; now it is nearly half of all homes. Prices of properties in Newham were traditionally low and this enabled private landlords to buy homes cheaply by London standards. However, between 2011 and 2018, rents increased in Newham by 56%, house prices by 89% – but salaries have only risen by 21%. Median monthly private rents in the third quarter of 2018 were above £1,400.  This is one of the chief reasons that 50% of families in Newham live in poverty after their housing costs are taken into account.

There are a number of myths about local authorities and private sector rental licensing.  I have been to ‘lively’ meetings with local landlords who are convinced that this is a “money making machine” for the Council and do not understand that their license fees are ring-fenced for enforcement and cannot be used to cross subsidise other council services.

We are definitely not, repeat not, “anti-landlord”, but we are anti exploitative and criminal landlords. There are many conscientious landlords who want to work with us to drive up standards.  Many landlords will privately admit that bad landlords who fail to maintain their properties drive out their tenants who live nearby.

Some residents and tenants are frustrated that we are not always able to take the immediate and direct action to tackle anti-social behaviour and disrepair that they want to see enacted. To prosecute bad landlords we need to obtain sufficient evidence of criminality (“beyond reasonable doubt” standard) which is needed to satisfy the courts. It can sometimes be a slow and complex process.

To be clear, licensing is a success story, but is far from being a panacea for all housing ills in Newham. For example, we cannot license rent levels for affordability. We have a long wish list of improvements, including ending the incredible exemption that local authorities and the National Asylum Service enjoy from being licensed (and that includes our own council). We need the government to keep to its promise to get rid of section 21 (no fault evictions) but also the abolition of immigration checks on rental agreements and no recourse to public funds.

The Covid-19 pandemic has made all of us in housing stop and think about what we can do protect our community. Despite staff working from home they have managed to prevent many illegal evictions and stop people being thrown onto the streets.

Targeting our inspections and enforcement on dealing with damp, disrepair, overcrowding, unlawful HMOs, poor energy efficiency and fuel poverty would seem an obvious initial response to Covid-19.  To be frank, we are also worried that when/if the Government allows housing courts to fully operate again then there could be a huge increase in evictions (legal and illegal).

Licensing and our Homeless prevention and assistance service will be working together to manage this. We will not hesitate to prosecute anyone who criminally evicts or harasses tenants. We will also, if appropriate, refer them also to planning enforcement, council tax fraud and HMRC.

Future plans include: completing the setting up of new Empty Homes and Energy Efficiency teams; a communications campaign planned over the summer to increase awareness of rights and responsibilities for tenants as well as legal requirements for landlords; creating post(s) within the service to support PRS tenants and advise landlords.

We are stepping up not only enforcement but also our advice and support. Hopefully, when a future Cabinet lead goes out on inspections they will find a different story.

<strong><span class="has-inline-color has-accent-color">John Gray</span></strong>
John Gray

Born North Wales.  Leeds University Politics Graduate and Post Graduate Diploma in Housing from Westminster University. Background is in social housing management (Council & Housing Associations).   

Currently on unpaid leave of absence from large UK Housing Association for political duties. Practitioner member of Chartered Institute of Housing.

A Labour Party Councillor in Newham, London since 2010 representing West Ham ward. Deputy Executive Mayor (Statutory) and Cabinet Member for Housing services since 2018.  Member of Labour Housing Group. 

Technical member IOSH, Appointed Trade Union Safety representative, Chair of UNISON Greater London Housing Associations Branch and National Executive Committee member for Housing Associations and the voluntary sector (General Seat). 

Pension trustee for 3 funds and Joint Vice Chair of the Local Authority Pension Fund Forum. Occasionally does triathlons, keen walker and social media blogger.

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The renters’ rights movement must look beyond ‘affordability’

As we enter the worst recession in 300 years, renters’ incomes will be squeezed with chances of meaningful wage-increases remote for most. As such, all concerned with safeguarding and improving renters’ quality of life should turn their attention to minimising the cost of living where possible.

Given housing costs are renters’ greatest expense, how rent is determined should be scrutinised closely with rent reduced as much as possible. In addition to benefiting renters as individuals, reductions in rent would serve to fortify aggregate demand during the recession1.

Competing definitions of affordability

In 2011, the coalition government introduced a definition of affordability which provided a rented property would be classified as ‘affordable’ if it cost no more than 80% of the local market rent.

The definition was absurd.

It is impossible to calculate whether something is affordable if the formula you use takes no account of the renter’s income and essential outgoings. In response, various well-intentioned actors, including the Labour Party came up with their own definitions² of affordability focusing on renters’ income and ability to pay.

The limitations of a focus on ‘affordability’

Any suggestion that market forces should not be the sole determinant of renters’ housing costs should be broadly welcomed. However, limiting demands around housing costs solely to those of ‘affordability’ has served to tacitly legitimate the landlord and renter relationship, a relationship that is, at its core, inherently exploitative.

The principle that landlords should profiteer from renters has become locked-in as ‘something that goes without saying’, all calls for affordability demand are that landlords’ profiteering should not be so great as to cause renters excessive hardship. Crucially, a focus on ‘affordability’ for the renter has meant the landlord’s side of the relationship has avoided scrutiny.

Scrutiny of how landlords justify the rent they charge exposes the inherent unfairness of the landlord and renter relationship

1) ‘Supply and demand’ might explain rent levels, but explanation does not equal justification!

Housing costs for renters should be based on the actual cost of supplying the home, not what the market can bear. Sometimes, because of the layout of the plumbing in certain properties, it is impossible for water companies to provide individual water bills for each household. When this is the case, the landlord of the building will receive one water bill for the entire property and then invoice each household for their portion of the bill.

It is unlawful for landlords to make a profit from the re-sale of water in such circumstances as it is recognised it would be morally abhorrent to profiteer from something so necessary to human survival when the water company has already done so.

Given shelter’s own importance to human survival and given that everyone involved in the construction of the home has already been paid for their work and materials, there is no compelling reason why re-sale of shelter should be treated differently.

2) Landlords’ costs of supplying a home, outside of initial acquisition, are negligible compared to the rent they charrge.

45% of landlords own their renters’ homes outright without a mortgage. For such landlords, the ongoing cost of supplying a property to a renter is limited to the costs incurred keeping the property in a good state of repair and fit for human habitation (£73.17 per month on average for a three bedroom home). In comparison, the average rent on a three-bedroom home in Manchester is £895.00 per month.

3) It is unfair for landlords to expect renters to cover the cost of initial acquisition of the home through their rent, unless ownership is transferred in exchange!

As an alternative to pointing to the free market price mechanism, landlords sometimes use their Mortgage CMIs as justification for the rent they charge. It is unfair for them to do so. If landlords want somebody else, i.e. renters, to cover their costs in acquiring ownership of the home, as a basic point of fairness, ownership of the home should be transferred to the ones doing the actual paying in exchange.

Currently, landlords have their cake and eat it, at the renter’s expense.

Moving beyond affordability

If challenges to housing costs focus solely on ‘affordability’ a systematic investigation of landlordism, and subsequent exploration of pathways that could lead to greatly reduced housing costs for renters, such as nationalisation of the private rented sector, become foreclosed.

It is unclear why, historically, supposedly progressive actors have been content only to ask for ‘affordability’ on behalf of renters. There may have been a lack of courage in challenging landlordism head on, or perhaps a latent ‘protestant work ethic’ type notion that it is virtuous for housing costs to be at least a bit of a burden for renters.

Whatever the historic reasons, we are now in extraordinary times, merely asking for affordability is not good enough.

<strong><span class="has-inline-color has-accent-color">Tom Lavin</span></strong>
Tom Lavin

Tom Lavin is on the organising committee of ACORN Liverpool and a Justice First Fellow working in housing law at Merseyside Law Centre. He previously worked for Shelter as a housing adviser.

1 This argument is made here in relation to rent suspensions but can equally be applied to reducing rent.

² Housing charity Shelter state a rented property should not be considered affordable if housing costs are greater than 35% of net household income: https://blog.shelter.org.uk/2015/08/what-is-affordable-housing/  Manchester City Council came up with a more convoluted formula based on the average income of residents in the city: https://secure.manchester.gov.uk/info/100007/homes_and_property/7638/manchester_housing_strategy/2