Agenda for Scrutiny panel on the private rented sector on Friday, 9th January, 2015, 11.00am
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Agenda and draft minutes
Venue: Council Chamber, Hove Town Hall. View directions
1.1 Councillor Chaun Wilson declared that she works for a housing association and there were no other declarations of Interest. There were no declarations of Party Whip.
2.1The chair welcomed everyone to first public meeting of this panel. He explained that scrutiny panels were set up to carry out short, sharply focussed pieces of work on a particular issue. The terms of reference for this panel was to look at the private rented sector in Brighton & Hove, in order to:
· Understand the current private sector housing market in the city and how it has changed since 2011
· Consider the best ways of managing private sector housing and improving standards in this sector
· Determine whether the relevant actions identified for private rented housing in the Draft Housing Strategy 2015 tie up to the evidence gathered by the panel. Where possible the panel will suggest how these actions could be practically implemented.
2.2It was important to look at the changes to the private rented sector since 2011 as this was when the last Census data had been collected and a scrutiny panel looked into the issue of lettings agents.
The witnesses will include:
Cllr Bill Randall - Chair of Housing Committee
Geoff Raw - Executive Director, Environment Development & Housing, BHCC
Martin Reid – Head of Private Sector Housing, BHCC
Councillor Bill Randall (BR), Chair of Housing Committee
3.1 BR told the panel that this sector represented much more that housing for students. It had seen significant growth between 2001-2011 (45% in his own ward) and now represented 35% of the city’s total housing stock in 2011. This tenure was important because it provided flexible housing and the majority was in good condition. The University of Sussex ‘Rate Your Landlord’ scheme figures supplied to the panel had found that 25% were rated by students as ‘very good’, 50% as ‘middling’ and 25% ‘bad’.
3.2 A significant share of private rented housing was in seafront wards and evidence from Public Health showed a reduced life expectancy of those living in old-fashioned bedsits rather than Houses in Multiple Occupation (HMOs) who tended to be older people. An example of the high density in this form of housing was 600 people per hectare living in Lansdowne Road. These homes tend to be in poor condition and 35% of the whole private rented sector did not meet the Decent Homes standard. This tenure also had a very high carbon footprint.
3.3 Neighbourhoods had been changed by the growth of the private rented sector, as increasingly people could not afford owner occupation they turned to renting. More people were also moving out of the city.
3.4 While the council had a positive relationship with many private sector landlords, BR believed that lettings agents did deservedly get a bad press. There was a need for a national registration scheme and controls on the charges the agencies levied. He did recognise that there were decent agencies such as Bonett’s Lettings Agents, but was concerned that anyone could set themselves up as a lettings agent.
3.5 Student housing was an increasingly important as the universities were worth £1bn to the city’s economy. The city also had the 4th highest business start-up rate and top if it was per capita. However these benefits were not being distributed to enable the average income households to buy or rent in the city.
3.6 When asked by Professor Darren Smith (DS) whether there had been any changes to the bedsit phenomena in the last five years, BR told the panel that he suspected this type of housing had not increased. The focus had been on student housing, but there was a need to look at bedsit accommodation again as it housed a lot of people.
3.7 Consultation was going to start on extending the Houses in Multiple Occupation (HMO) scheme to seven new wards including Central Hove and Brunswick & Adelaide. This decision had been informed by the mapping work done by the Fire Service.
3.8 Martin Reid told the panel that their research on HMOs found that in East Brighton there were fewer bedsits than thought and more than expected in Central Brighton.
Q: There is a very long waiting list for social housing in the city. This means that vulnerable people who are non-priority are increasingly ending up in the private rented sector. How can the council offer assurance to these people?
3.9 BR explained that Environmental Health Officers can work on enforcing improved housing conditions, but tenants can be worried about retaliation action from their landlords. The only mandatory money available to councils was Disabled Facilities Grants, which at around £1m per year here was not very much given the size of this sector. If a lift needed to be installed into a property it could take a significant chunk of this allocation. The top-up money which had been available in this area has been removed. The funds for owner occupiers and landlords to improve the energy efficiency of their homes has not worked as well as intended. The registration of HMOs had led to thermal improvements of the homes in that scheme.
3.10 There were no other grants available to improve conditions in the private rented sector. BR was concerned that many landlords were making a lot of money and were not putting money back into those communities.
Q: Figures from Shelter show that there has been an increase of 5m people in poverty; from 2.2m in 2003 to 2014. A programme last night about the super-rich highlighted that more housing developments are being built by the very rich developers for the very rich to buy. If local authorities can only build a limited number of homes per year, what can they do to alleviate the problem?
3.11 BR told the panel that a guest on the Today programme had asserted that no-one could live in London if they were earning less than £1m. In Brighton & Hove 40% of new homes were bought by people from outside the city. Where possible the council needed to provide housing in partnership. A programme was being developed to provide 220 new build homes which would act as a base to do more. The council needed to use the Housing Revenue Account (HRA) to build homes as it reduced the management and maintenance costs.
3.12 There was a need to look at other ways to increase supply such as the debate about building on the fringe of the city, which he felt should be done through a city wide community land trust. If this was done through a co-op, then the council can nominate people in need to this housing and help the sons and daughters of those living in Brighton & Hove.
Q: Was the sector becoming gentrified and if so, was this displacing existing people?
3.13 BR said there had been a huge hike in rents which put these homes out of the reach of many in the city. Employers in E. Brighton were now not tending to advertise jobs in East Brighton because of this. There was a need to join up these elements of the economy. For example, Tony Mernagh (CE of the Brighton & Hove Business Forum) would ask employers ‘where is the workforce?’ and ‘where will they live?’ So this gentrification could be restraining the economy of the city.
Q: For research purposes, I have registered with a range of websites for private sector lettings. An average of 10 new lettings are posted a day, but today only three of them were less than £2,000 per month rent. These are not affordable rent levels. A concern is about the hidden vulnerable, such as those with mental health issues, who are seeking housing in the sector and may meet with a lack of understanding from landlords. How can such people access support?
3.14 BR thought there was a reluctance on the part of landlords to give tenancies to people on benefits or with mental health problems. It could be a recommendation of the panel to give landlords more advice about housing vulnerable people as 16% of households in the city include someone with disabilities. The council could help by providing land and also buying off plan to get deals to house people in need.
3.15 Student housing played an important part and some large schemes were in the pipeline, which could mainly be afforded by better off PhD students. He thought that the University of Sussex should develop campuses across the region as there was only a finite amount of land in this city, like the University of Brighton campus in Eastbourne.
3.16 These issues were being debated by the City Management Board. There was a feeling of the need to use all brownfield sites, but were opposed to increasing the density on existing council estates.
Q: In light of increasing fuel poverty (12.2% in fuel poverty and 9.1m projected to be affected by this by 2016) is it an issue that a lot of the housing in the city was built before 1918? New builds are required to meet certain standards and so inhabitants have lower fuel bills. How can the council work with landlords to tackle the homes built before 1918?
3.17 BR gave an example of a project undertaken in Love Walk, Southwark which externally cladded pre-1919 homes. However this scheme did have planning problems. It was addressing the problem that if you insulate inside very small rooms, you are further reducing the space available. The key problem was insufficient government incentives to carry out such work. Health and well-being was affected by living in cold buildings. Some Health Authorities, such as Devon & Cornwall, had spent money on insulating homes to help children with asthma in order to reduce the pressure these cases placed on the health service. It was positive to see improved working between Housing, Adult Social Care and Public Health and the case could be developed for more spending on the private rented sector to tackle health issues.
Geoff Raw (GR), Executive Director of Environment, Development & Housing, BHCC
3.18 GR explained that the private rented sector was a significant share of our stock and likely to grow as owner occupation became more difficult when people were unable to raise mortgages. Brighton & Hove was in a very positive economic position with a 10% increase in private sector jobs which was leading to an increased demand for accommodation. This demand was increasingly coming from single people and smaller households. He imagined their needs could be met by a growing private rented sector, but at the moment this sector was not providing this supply. It was very difficult to find accommodation in the private rented sector for larger households.
3.19 The average income in the city was £25,000, although 50% earned less than this. The average rental was £843 for a one bedroom flat which would need an income of £44,000 to be ‘affordable’. Whereas the rent for a three bed house could be around £1,550 pcm which would need an income of £82,000 to be affordable. So housing was either taking a much bigger share of household income or people were deciding to move out of the city which in turn would impact on the travel to work area.
3.20 The universities were having a significant impact on the city, both as an employer and the demands of student housing which was expected to grow by 12,000. Only 6,000 additional homes can be identified, leaving another 6,000 student households to look for housing in the private rented sector. Students often shared with each other and able to pay a premium rent, so may be able to afford higher rents than families. This has led to landlords offering housing to students rather families. The Greater Brighton Economic Board (GBEB) had commissioned some work to look at the state of the economy, the housing market and travel to work areas. This found that the by 2020 the Greater Brighton area will grow by 800,000.
Q: What can the council do to help this situation?
3.21 Councils have a duty to co-operate and plan together. There is a market failure here and intervention was justified, because local authorities are able to bring together land and development opportunities such as Circus Street, or King Alfred where the council would be working with Standard Life to create new housing. The GBEB provided a great opportunity for co-operation to enable more sites to come forward for development. There was a need to work with other investors such as Registered Social Landlords and private investors to bring on new developments. While this was difficult, the local authority could play a vital role. Help was also needed from central government and the council was talking to the Department for Communities and Local Government (DCLG) about finding ways to work better on this issue. Planning was not the fundamental problem, but how to fund the developments. A carrot and stick approach was needed with landlords being encouraged to invest, rather than punishing them.
3.22 There were opportunities for neighbourhood planning to look at the big changes in the area, including the significant demographic changes in the last five years like the increase in students in the Lewes Road corridor. This needed to be placed in a community context, e.g. the Local Action Teams (LATs), as well as the political context. Local authorities could make a difference but they needed to be bold. It would take between three to five years to fix these problems.
Q: (i) What mechanisms are there to force private developers to develop a certain % of their homes for key workers? ii) Is there anything the council can do to encourage employers to look for workers who live in Brighton & Hove e.g. tackle a skills gap? iii) What support do university students get when seeking accommodation in the private rented sector?
3.23 GR explained that the Housing Corporation used to have key worker funding which did not exist now but planning obligations meant that 40% of developments were expected to be affordable housing. However this was interpreted very flexibly and so RSLs tended to deliver this through shared ownership rather than rented housing, because it was more viable. Even when planning policies were in place, the economics of housing development are the primary consideration. So it is key to secure this kind of investment in the city.
3.24 Where Brighton & Hove City Council (BHCC) owns the land it could influence RSLs to encourage them to offer a different kind of tenancies. Only 500 households were offered new lettings from BHCC each year, so they were only the most vulnerable households on the list. However the council could choose to let some of these homes to key workers. This could be done by either changing our allocations policy or investment model, but this would be a political choice.
3.25 Other means to produce long term rentals for key workers could include joint ventures and establishing trusts. This is because if the council raises debt to develop then it needs to know that these properties would not be liable to Right to Buy. Universities and schools could also enter into similar arrangements to develop accommodation they need.
3.26 BR told the panel that Hyde Housing were building three schemes, which included homes for outright sale and shared ownership, but none of the properties were for rent. The shortage of affordable homes was shown by the decision to extend the taxi driver living limit as so many drivers now live outside the city.
3.27 GR explained that employers wanted a good fit between the employees they choose and the skills needed. There were sectors of the economy, e.g. tourism, which attracted relatively low wages. The jobs market needed to be flexible and adapt if there was a skills gap. We needed to give those who grow up in the city a chance, not just in terms of housing them but offering them training and education to give them a higher level of skills to meet the employment gaps. In Brighton & Hove there was a surplus of over educated people who were tending to take the jobs away. With 50% of the population now entering higher education, there was a need to direct these people to the newer kinds of jobs in the market. The council also needed strong policies to deal with under occupation, especially when those tenants in larger homes were struggling to pay the rent. There was also the opportunity to encourage under-occupiers in the private rented sector.
Martin Reid, Head of Private Sector Housing, BHCC
3.28 Martin Reid (MR) explained that the Draft Housing Strategy 2015 set five overarching themes for the whole city covering the growth of the private rented sector, the shortage of affordable family homes and increasing demand for student accommodation. The majority of private landlords were good and the booming housing market was good for the sector. Some seaside homes in neighbouring areas were worsening in conditions as the sector reduced in those locations.
3.29 There were issues of regulation and investment in the private rented sector, which was growing at the expense of owner occupation (especially accessible owner occupation). 2011 figures showed that owner occupation decreased while the private rented sector increased. Landlords were competing more successfully than first time buyers to purchase properties. For example in Lewes Road, buy to let landlords were completing with first time buyers and increasing numbers of purchases off plan are by these landlords.
3.30 The challenges were to both create a new supply of housing and a supply of housing for rent partly to offset this loss of family homes for owner occupation.
3.31 A big gap in the Housing Strategy was how to tackle the poorer housing conditions and carbon emissions in the private rented sector. Problems arose because of the age of the stock (in wards such as Central Hove, Regency and Brunswick & Adelaide) and also that the council has lost its ability to invest in the renewal of private rented stock using opportunities such as the Green Deal. Management standards in this tenure was also an issue in the five wards where the HMO licensing scheme had been introduced and was one of the reasons why the council was consulting on extending the scheme to another seven wards.
3.32 LB Newham, and other authorities, had gone further by introducing a selective licensing scheme for all private sector landlords in a specified area. However this needed a high level of evidence and consultation. BHCC had not reached this yet, but members would need to be confident about introducing such a scheme before planning to do so.
3.33 The Montague Review which looked at housing supply found that there was significant insecurity in this tenure, especially if you have children and this tenure was providing 30% of the supply of housing. If institutional investment into the private rented sector could be encouraged which was looking at a 30 year return on its investment, then this could lead to a more stable sector which more closely resembled European models. So one needed to look at how local authorities could encourage longer term lettings.
3.34 Public Health were concerned that with a more transient population how one could identify vulnerable people in the private rented sector and tackle issues such as fuel poverty. They were trying to find ways such as GP referrals to find ways to target these people in need for help. A very high level of homeless acceptances (30%) were from the private rented sector, even though BHCC was carrying out very high levels of preventative work.
3.35 Another issue was community resilience in the areas where there were high concentrations of students. For example LATs had identified concerns about rubbish and the transient nature of the population.
3.36 Social Care colleagues had expressed concern over their ability to retain key workers in the city, even though they were on the living wage. This meant that travel to work areas were being stretched by the reduction in owner occupation. If this was accompanied by reducing family support it could increase the vulnerability of households in the city. They were looking to increase long term investment in the sector as well as reduce the turnover of tenancies, reduce the number of retaliatory evictions and increase well-being.
Q: How deliverable is it to increase the supply of private rented housing? How can one provide more affordable rents when there are so few enforcement tools relating to rent levels?
3.37 MR explained that there were no enforcement powers in relation to rent levels, so it could only be done by increasing the supply of accommodation. More work needed to be done across the Greater Brighton area to look at how to increase this supply.
3.38 BR told the panel that a growing number of groups were campaigning for rent stabilisation in the city, for rents to be set for 5-10 years. Initially these rents could be set by the market and then the only increase come from inflation, with a cap set on these rents. The Montague review and a related event found that investors would also welcome this stability. For example in Halifax the situation was reversed where the private rented sector was cheaper than council housing.
3.39 PMC observed that Germany has seen this stabilisation and has a strong economy. There was a need for a degree of regulation and intervention to temper the market. One would not want to discourage potential investors in the sector, but the tools were needed to ensure affordable rents which would help us retain our place in the economy.
CW was concerned that the city was in danger of creating split communities with both gentrification and ghettos.
Alistair Hill (AH), Public Health Consultant, BHCC
3.40 AH explained that public health were concerned by the wider determinants of health such as education and housing, such as the direct and indirect effects of issues such as overcrowding, indoor pollution, mould and damp. Poor housing had an impact on a range of issues such as respiratory conditions, cardiovascular disease, mental health and levels of accidents which then increase the use of unplanned health care.
3.41 In the city there were approximately 135 excess winter deaths annually, which was average for the UK but UK rates were high compared to other European countries. Indirect effects of housing could also include poorer child development in overcrowded conditions and greater concerns related to community safety in denser areas. Wider impacts on society include increased time off sick from work and education, and cost to health and social care. Vulnerable groups such as children and older people were most likely to be affected by these unequal conditions.
3.42 The private rented sector was very diverse and had a younger than average population. It was quite difficult to unpick impact of housing effects from health data but was an important issue for public health. There were a lot of people in this sector who had high levels of need, including people who have been homeless (eviction from this sector being the biggest reason for homelessness). The high levels of non-decency in the private rented sector and lack of security of tenure also have implications for health. Approximately 12% of older people were living in the city’s private rented housing, which was higher than average.
3.43 Tenure was not routinely collected when gathering health service data, however local research conducted by Public Health had found that people living in the private rented sector were less likely to report that they can heat their home adequately, feel they belonged to the area, more likely to feel lonely and have a higher risk of being depressed. Overall data has shown that physical health can be better in those living in the private rented sector, but this is related to the young average age of people in the sector.
3.44 It was vital to see the closer working of health and housing related services and there was a good local track record in this area. There were strong links between Public Health and the Planning and Private Sector Housing teams, such as the energy efficiency work and adaptations. This close working was also being done on a strategic level to develop the Housing Strategy. They were also carrying out specific work under the Warm Homes Healthy People Fund which provided public health money to intervene to help people heat their home and obtain financial help with their fuel bills.
3.45 In relation to increasing GP referrals to housing there was an opportunity to broaden this work under the Better Care Initiatives to identify those most at risk to reduce the risk of hospital admissions. Public Health and Housing were collaborating with GPs and the Clinical Commissioning Group (CCG) on a pilot as part of the Better Care approach to carry out health planning in the round to tackle fuel poverty and other housing issues. Casework support would be offered to individuals at risk in relation to budgeting, tackling food poverty and income maximisation. There was a need to ensure that people in the private rented sector took up this scheme. While this was a finite pilot, if it could be shown to be an effective project that had impact then there could be increased collaboration with the NHS.
Q: Are there examples of best practice elsewhere?
3.46 AH told the panel that there had been a big push in Liverpool. Officers including Environmental Health Officers visited all private rented homes and as a result millions of pounds had been invested in the sector. In Oldham there had been targeted joint work with the council, RSLs and the NHS to look at improving the energy efficiency of RSL stock for older people. The challenge in the private rented sector was how to target those in need and demonstrate that the initiative had had an impact.
Q: If the private rented sector is the single largest reason for homelessness, then should there be a push to do more work with landlords to prevent homelessness and reduce the associated costs?
3.47 AH explained that the Housing Strategy documents showed that the most cited reason for homelessness was eviction from the private sector. MR explained that the service was increasing its level of work it did with landlords to support them and their vulnerable tenants. The panel could find out more about the effect of this from the Strategic Housing Partnership and the Southern Landlords Association. One of the benefits of HMO licensing was that it reduced the number of retaliatory evictions. It enabled the local authority to pro-actively tackle issues rather than reactive.
3.48 AH thought there was potential to increase the joint working across the health service, social care and housing in tackling this issue. Maintaining good health and wellbeing and referring to appropriate housing services can help to stop them losing their home again. This in turn would improve their health and reduce the need for health and social care.
Q: Given the cumulative impact of this issue should Public Health be added to the list of internal consultees about Planning? The history of Planning shows how the slums of the East End had such an impact on health. Was there a need to future proof buildings that are developed in order to help people’s health?
3.49 AH told the panel that BHCC was now a public health organisation and this should run through all the strands of its work. An example was the Health Impact Assessments for large developments which were included in the City Plan process. These included looking at mitigating the negative impacts of developments, but could look at positive ways for new developments to improve health.
3.50 PMC gave a small example of the Planning Advisory Note on food growth which recognised the health benefits of growing one’s own food. So would like to see Public Health and the Planning Service working much closer together.
3.51 AH explained that housing tenure was not routinely collected in health data sets, for example to enable one to look at whether there are higher hospital admissions in older people living in the private rented sector. Collecting more data on the take up of a service by tenure could be a really useful addition.
Rob Fraser (RF), Policy and Major Projects Manager, BHCC
3.52 RF told the panel that Planning was a blunt instrument and needed to be viewed in the context of a general trend of deregulation. Planning was largely tenure blind. There was a shortfall between the objectively assessed need for housing in the city and the ability to develop the capacity in the city. While it was calculated that between 20,000 to 24,000 homes were needed in the next few years in the city, there was only the capacity to provide around 13,200. This would lead to a shortfall of nearly 50% in homes needed. Therefore the options were either to look to build at higher density in the city centre or outside the city through co-operation with adjoining authorities.
3.53 RF said that he shared the panel’s concern about the affordability gap but believed that this would be not be solved by only building more homes. People also needed high enough wages so they could pay their rent. Consequently the City Plan also protected sites for employment uses. Planning because it was tenure blind could only become involved when there was also a change of use, such as that of a family home being turned into an HMO.
3.54 The council did not currently have a policy to identify key workers for preferential treatment and thought that this could only be done through its allocations policy.
Q: Does this 50% shortfall take into account the growing need for student accommodation?
3.55 RF explained that student accommodation was only taken into account if a new development was to free up homes for owner occupied general housing. We were not near this situation and could not see us getting to a position where there was an excess of student housing leading to students moving from rented shared housing into purpose built accommodation.
Q: In Planning is there a trend of more people extending their homes to fit their family in?
3.56 RF said that there was no data to show that there was an increase in households trying to squeeze more out of their existing accommodation. There were a lot of historical buildings in the city and the typical cycle was that they went from single use to flats then HMOs then fall into disrepair and are turned back into single homes and then back into HMOs. In some areas such as Brunswick this cycle has happened a number of times. RF offered to ask colleagues if they had any data on the issue of numbers of applications for homes to be extended.
Q: in light of deregulation are there any examples of local authorities which have made a conscious decision to directly intervene in the market to make developers build affordable rents?
3.57 RF told the panel that ‘affordable’ in Planning terms was a very crude definition. If a development scheme had sufficient shared ownership or 80% market rent homes in the project, then it would be meeting ... view the full minutes text for item 3.
Any Other Business
There was no A.O.B.