Sector John East Director: Community Infrastructure London Borough - PowerPoint PPT Presentation

Improving the Private Rented Sector John East – Director: Community Infrastructure London Borough of Newham CIH London Branch AGM 21st January 2014

Olympic Park C O N T E X T

Slide 4 CONNECTIVITY

• Royals and Stratford to Tottenham Court Road: 10 mins • To Heathrow Airport: 40 mins

Slide 6 HOUSE PRICES

Deprivation

YOUNG & DIVERSE • Multi-cultural (70% ethnic diversity) • Over 200 languages and dialects spoken • Youngest population in London (42% under 24) Slide 8 Slide 8

Housing Tenure in Newham % Housing % Housing stock 2011 stock 2001 PRS - Homes in Multiple Occupation 35% 20% PRS – Single Occupation LBN Properties (tenanted) 25% 18% Owner Occupier Properties 43% 33% Registered Social Landlords 14% 12% Slide 9

Private Rented Sector Shift 2009 2001 Distribution of Private Rent 2001 Distribution of Private Rent 2009 (UK Census of Population) (Newham Household Survey 2009) Slide 10 Slide 10

Newham – Private Rented Sector • Newham population increased from 243,000 to 303,000 between 2001-2011 (Census). • The PRS is a huge business with an estimated £450 million/yr + turnover in Newham, over a third from HB. • Newham now has the largest private rented sector in London - 40,000 + properties - 40% of the housing stock in the borough and growing. • Massive churn in the PRS 25% of households move after 12 months or less. Slide 11

So what….. 2 tenants were renting a commercial walk in freezer in a basement. Slide 12

So what….. Cellar used by a tenant paying £50 per week. Slide 13

So what….. Building site occupied by 11 tenants. No roof, no windows to the first and second floors, floors surfaces were missing and live wires exposed. Slide 14

So what….. Dumped rubbish and furniture commonly associated with PRS out of control. Slide 15

Housing market changes led to major re-think • A shift up stream required to tackle landlord and tenant behaviour, rather than simple fixing properties once broken. • Politicians wanted a larger harder hitting intervention. • Holistic approach – tackle criminal landlords and tenants (immigration, ASB, fraud, prostitution, etc). • Use of proactive disruptive enforcement approach – private rented property licensing seen as the answer. Slide 16

Overview of private rented property licensing • Originated from the Housing Act 2004 • Mandatory HMO licensing applying to large shared houses/flats since 2006. • Additional and selective licensing property powers are discretionary and may only be adopted subject to certain conditions. • May be all or part of LA area. • The conditions for adopting discretionary property licensing relate to anti social behaviour, housing demand in the locality and property management. • Exemptions to licensing include landlords regulated by the HCA. • Licensing is concerned with management not conditions. Slide 17

Regulation and Enforcement tools • Applying 3 licensing designations all private landlords within an area must hold a licence to rent property or be subject to prosecution under Section 95 & 72. • Reasonable charges may be made to cover the cost of licensing administration. • Licence duration up to 5 years – “Fit and Proper”. • Rent Repayment Orders – 12 months rent can be recovered. • Management Orders – take control away from the landlord. • Ultimate sanction – CPO or Enforced Sale of property Slide 18

Initial Pilot – Little Ilford (2010) • Housing Act 2004 - lacked framework for strategic ‘area renewal’ interventions so new approach needed. • First (and only in London) designation of Selective Property Licensing in Neighbourhood Improvement Zone 2010/12 – 560 homes. • Pilot for new approach to neighbourhood renewal - no additional funding. • Multi agency approach involving local authority services + other agencies. Slide 19

Next step need for a big impact (2011) • Resilience in Newham – Housing - The ability of individuals and communities to overcome and flourish in difficult circumstances. • New allocations policy - preference for working households for access to social housing. • Use of the PRS for new homeless households. • Development of PRS vehicle under LBN control (of which more later…) • Borough wide private rented property licensing .

Making the case Percentage proportion of Residential Housing Stock with ONE or MORE incidents Tenure of ASB PRS (HMOs) 35.63% PRS 12.70% LBN Owned 9.08% RSL Owned 9.21% Owner Occupier 7.50%

Slide 22 Slide 22

Delivery Evidence gathering – risk. 1. Consultation – risk 2. Decision – little risk! 3. Media and Communications campaign – 7 months national 4. campaign License Fee – early bird discount at £150 (£30 p.a.) for 5 years. 5. Thereafter for those that didn’t sign up: £500 p.a. Getting the majority of landlords licensed – Over 32,000 6. Applications from 19,700 landlords (January 2014). 7. Focus enforcement on the criminal element (next 5 years ) - up to 10,000 properties without applications. Slide 23

Success – Private Rented Property Licensing – What are we trying to achieve? • Positive change to residents perceptions of their neighbourhoods • Improve the quality and safety of private rented accommodation • Increase the security of private tenants and reduce transience • See a significant reduction in ASB and enviro crime across the borough • Cultural change leading to better landlords with better business practices = thriving PRS • Drive out the criminal landlords who are blighting the profession. • Provide Newham with a strategic influence on the future of the PRS Slide 24

What have we achieved in 12 months? Application Processing and Income • 32,000 applications covering 90% of PRS • 30,000 licences issued • 19,700 landlords registered, 15,000 in 2013 • Identified 7,000 new private rented properties in addition to the 2011 Census figure of 35,700. • Collected over £6 million in licence fees to fund the initiative over 5 years up to 2017 with no additional costs to Newham residents. • Awarded over £1million grant by the DCLG for work on rogue landlords in December 2013 up to 2015. Slide 25

Enforcement First Year - What about the Rogues? • In 2013, 5,600 warning letters were sent and over 1,800 joint operational visits made with the Met Police and UKBA forcing 4,500 “reluctant” landlords to licence. • 120 new licence applications a week • 150 landlords have, or are being, prosecuted for failure to licence in 2013. • No appeals or legal challenges to date

Enforcement First Year - What about the Rogues? (2) • 230 arrests (immigration, GBH, fraud, theft and harassment offences) • 18 landlords with 120 properties have been refused licences in 2013 and are no longer able to manage properties in Newham. • 331 landlords “of concern” have been granted 12 month licences only. • 94 landlords have accepted formal cautions to avoid prosecution and paid over £75,000 to the Council in costs + accepted a 1 year licence at £500 per annum

What about the tenants ? • All tenants in licensed properties are now protected by the Newham Licensing Scheme through: • Limiting numbers and preventing overcrowding in homes. • Improving standards of management with specific obligations around rubbish disposal, pest control etc. • Improved safety obligations for the landlord • Imposing steps on landlords to deal with ASB from occupiers and visitors. • Ensuring deposits are protected, references checked and proper tenancies granted. • Identifying the landlord responsible for the property with contact details for emergencies • Property licensing provides private tenants in Newham with more rights and protection than anywhere else in the country

Case Study 2013 • Night Op November 2013 • 3 large HMOs High Street North E6 • Private Hsg + HMRC + UKBA +Police +Licensing +Food +Fire Brigade • 6 arrests • 3 property licensing offences + 25 conditions offences • 2 Food safety cases • 2 tax offences/cases • 3 planning offences • 3 Council tax breaches • 3 Fire notices

Other Benefits • Tackling Council Tax fraud - Initial 130 landlords identified through the licensing process as serial Ctax avoiders and forced to licence their HMOs and pay £264k. Another 5000 HMO cases have been identified - could produce £5 million income to the Council. • Rent Repayment Orders( RRO) - 12 months of H Benefit rent payments can be recovered from landlords who have failed to licence. c1000 potential HB cases identified - could produce at least £4 million. • Fraud cases involving business empires of 93 landlords (sham companies/money laundering/ property flipping/illegal developments etc) have been identified and are now subject to investigation by agencies inside and outside the Council. • 250 Unlicensed Right to Buy Landlords identified by end of 2013. Should raise £93,000 for leasehold services as part of the lease registration process.