Why good landlords are saying yes to licensing
September 26, 2012
The Private Rented Sector is on an upward trajectory across the country. Nowhere is this more apparent than in the London Borough of Newham where 1 in 3 properties are now privately rented.
There’s absolutely no doubt of the importance of the sector – not only because of its size but because the private rented sector (PRS) has the potential to provide people with flexible, affordable and good quality homes at a time when home ownership is increasingly out of reach for many.
Newham, one of the most deprived boroughs in the UK, has an estimated 4,000 landlords. Many of them run good businesses and take seriously their responsibilities to their tenants and to the community. As a local authority we want to do everything we can to help and support decent landlords. They play a vital role in providing good quality accommodation for our residents. That’s why I hope that the majority of landlords will be supportive of the licensing scheme we want to introduce.
The scheme, which will be the first in the country to apply to a whole local authority area, comes into force on the 1st January 2013 and means all landlords will need a license for each property they let in the borough. We’ve piloted and evaluated the approach in our Neighbourhood Improvement Zone.
Unfortunately what we’re witnessing in Newham is a sector that is becoming ever more fast-moving and chaotic. The huge rise of the private rented sector here has led to a situation where standards are slipping and poor management practices are becoming more common.
Some of the practices we’re seeing now are completely unacceptable – people living in illegally constructed sheds, walk-in freezers and garages; rubbish pouring out of front gardens and properties overrun with vermin. This behaviour has a real human cost with vulnerable people who have little buying power forced to live in squalid conditions that do not befit one of the wealthiest cities on the planet.
That’s not what I want for my borough or our residents. Everyone deserves a high quality housing offer, providing stable accommodation for their families. Importantly, poor management standards are also bad for neighbourhoods and the housing market as a whole. I want to drive up standards and make our borough a pleasant, clean and safe place to live and invest in.
One of our main concerns with the drop in management standards is the high levels of anti-social behaviour. Managing a property takes hard work and engagement. When landlords and agents don’t bother, anti-social behaviour can flourish and properties are left to rot. Overcrowding and poor living conditions inevitably cause problems as large numbers of people struggle to live with too little space and poor facilities.
For instance, police alerted Newham housing officers to one property that was being used by prostitutes and crack addicts. The place was a complete state, neighbours were kept up at night by the noise and council officers found drug paraphernalia littered around the house. Obviously there’s a role for the police in cases like these and tenants must be held to account for their actions. But no good landlord would be happy with their property being used in this way. Yet we spent weeks tracking the landlord down, only to be told that a letting agent was managing the property. Needless to say the agent also denied any responsibility for the property.
Good landlords don’t want to own a house next door to a property where this sort of behaviour takes place. It isn’t good enough and as a local authority we simply have to intervene to protect local people and businesses. In Newham we are doing everything we can to use our powers against these unscrupulous landlords and agents but time and time again we come up against a brick wall. We know that only by driving these poor behaviours out of the borough can we create a place where property investment is a sure fire win. That’s why we are introducing borough-wide PRS licensing. Under the scheme all landlords will have to license their property in order to operate in the borough and we’re also keen to license letting agents.
The scheme will enforce the management standards everyone wants to see. Our scheme sends out a clear message to unscrupulous landlords and agents that we won’t tolerate poor management practices. But equally the message to responsible landlords is that we’re on your side, we’re creating a level playing field where landlords who put in the time and effort are no longer undercut by the rogues.
The council has consulted extensively with residents, stakeholders, private sector tenants, landlords and lettings agencies and 74% of residents and 76% of private tenants, who responded, support the scheme.
Whilst it’s fair to say not all landlords we consulted agreed, responsible landlords will see that they have nothing to fear. If you apply for your licence early, you’ll only pay £150 for a licence that lasts five years, just £30 a year or 58p a week.
We’re working to make it as unbureaucratic as possible and the licensing process will make it easier for us to focus our resources on those who haven’t signed up. Our pilot scheme has been a great success in tackling the rogue elements of the sector.
An important part of the scheme is for the council to offer support to landlords who want it. We’ll work with them to find tenants through our Bond scheme, where the council will act as a guarantor. Landlords can receive support from the council for any tenancy disputes they may have and also for dealing with anti-social tenants. We’ll also be offering a service for “reluctant landlords”.
I’m well aware that some of our landlords fall into the sector by accident and might lack the knowledge and skills to properly manage their property. We want to do more to help these people by creating a support package to enable them to carry out their duties. This could be advice and training on how to run a property with signposting to good value repairs and maintenance companies, or we could offer to take over the management of the property.
The point of licensing is not to introduce further regulations to the sector, nor to burden landlords with onerous bureaucracy. But we have to help professionalise the sector. We’ve had a voluntary accreditation scheme here for a decade but very few landlords have signed up. My goal is for a private rented sector that works for everyone – landlords can make a good return in a well-supported and professional sector; tenants have stable and good quality accommodation but are also aware of their responsibilities; and the borough becomes a more attractive place to live and invest in.
So, if you’re a good landlord looking for an investment opportunity in an area where the Council will help make it easy for you, take a look at Newham. If you’re a cowboy, you’ve been warned!