The private rented sector as permanent housing for low income households – housing policy and the local authority role

1. The private rented sector as permanent housing for low income households – housing policy and the local authority role Bryony Stevens Senior Lecturer – University of the West of England

2. Work in progress.. • Small scale internally funded research project. • Very much reporting on work in progress today. • Original idea developed when Coalition first elected – anticipated removal of security of tenure in social housing. • Led to thinking about likelihood of greater role for private rented sector as permanent housing for lower income households who in different policy context might have accessed social housing.

3. The original question • The initial idea was to explore the reality of living long term in the PRS for lower income households. • Focussing on the experience from the tenant's point of view –what is their experience of security of tenure, housing management, property conditions and neighbourhoods? • What do they think of policy that encourages PRS as long term housing? Inspired by thinking about the lack of collective ‘voice’ for PRS tenants in comparison to social sector. • Decided to focus research on a specific housing market area – because PRS varies considerably and local markets have their own dynamics, based on nature of stock, demand from different groups, etc.

4. Policy developments • Subsequent policy developments have moved in the expected direction. • ‘Flexible’ tenure, ‘affordable’ rents, greater emphasis on private sector housing for the long term. Social housing a short term ‘safety-net’. Housing benefit cuts.

5. The current focus • Secured UWE internal funding (time) and developed a partnership with Exeter City Council (ECC) to carry out the research taking Exeter as a case study. • ECC has strong interest in working with PRS – one of first authorities to develop a ‘social lettings agency’ – model recommended by Rugg Review. • Exeter has large PRS with strong demand from students and professionals as well as lower income households. • Before going on to conduct in depth interviews with tenants the initial task has been to explore the nature of policy towards the PRS and the role of local authorities in both implementing and developing policy. • This aspect of the research is the focus of today’s presentation.

6. The PRS is growing • In England the private rented sector in ascendency as a proportion of the national housing stock, a tenure of choice for households and a focus for housing policy both implicitly and explicitly.

7. PRS and the Housingsystem • The PRS now makes up around 16% of housing stock in England with an increase of 1million to this tenure since 2005. (DCLG Feb 2011). • If current trends continue the PRS could overtake the social rented sector by 2013 (Pattison et al; 2010: 5). • Whilst home ownership remains an aspiration for many, surveys suggest that there is a growing realization, amongst younger people especially, that renting may be a permanent housing solution (Blackwell and Park, 2011). • Recent growth in demand for PRS interpreted as largely due to both new household formation and housing market issues e.g. lack of availability of alternative tenures for new households who cannot access mortgages or affordable housing (Pattison et al; 2010).

8. Social housing policyand the PRS • Coalition policy implicitly and explicitly encouraging movement from the social to the private rented sector • Implicitly - Recent policies (Localism Act, HCA funding) diminish the distinctiveness of the social sector from the PRS. Less security and higher rents in ‘social’ sector. • Implicitly - AH providers to encourage tenants to move on to the private sector at the end of their fixed term tenancies. This likely to mean a move into private rented accommodation, given barriers to owner occupation. • Explicitly - Local Authorities to discharge their statutory duty towards homeless applicants by placing them in private rented accommodation, regardless of the wishes of the applicant.

9. Housing and welfare policies and the PRS • Two other key themes/areas of policy impacting on the PRS. • Government seeking to encourage more institutional investment in the PRS - to professionalize and boost contribution of PRS to new housing supply. Announced review into the barriers to such investment (HM Government 2011). • Welfare policy significantly impacting on housing - housing benefit cuts to limit the amount low income tenants, and tenants in particular circumstances can pay. • Raises questions about the boundaries of housing policy and the different tactics employed in measures relating to the social or private rented sectors.

10. Different policytactics • Policies relating to the social housing sector directly targeted at social housing providers, consulted upon throughout the social sector, and implemented through the relevant quangos – TSA, HCA. • Policies intended to impact on private landlords and the level of subsidy provided to them through housing benefit are being implemented through welfare benefit policy targeted at individual tenants. • This raises questions about the lack of any collective ‘voice’ of private sector tenants within the housing policy process – in contrast to the highly orchestrated and Government supported tenant involvement processes within the social sector.

11. Contradictorypolicy discourses • Like previous governments, Coalition emphasize the importance of the PRS within the housing system as short term, flexible accommodation for young mobile households. • Make clear their intention to minimize ‘red tape’ and avoid additional regulation of the sector. • But the PRS also seen as suitable permanent accommodation for homeless households, and those leaving the ‘safety net’ of the social housing sector. • Regulation is not to be increased, but rental income is to be controlled through housing benefit regulations specially tailored to impact on tenants in particular circumstances.

12. Contradictorypolicy discourses "So today I make a promise to good landlords across the country: the Government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.” "I will not let the private sector be a poor quality alternative to the high quality social rented sector.”

13. The accepted wisdomabout deregulation • These contradictory discourses can be linked to tension between government’s desire to increase private sector housing solutions for those least well off, whilst also bowing to a kind of accepted wisdom about regulation of the PRS. • It is often argued that regulation caused the long term decline of the PRS post 1914 andthat deregulation, with the change to the assured tenancy regime and use of ASTs, is responsible for the growth in supply of the PRS in recent years. • The problem with this for policy analysis is that it confuses deregulation with lack of policy intervention – policy may take various forms besides regulation including non-intervention, exhortation, taxation, subsidy etc (Doling,1997:40)

14. Intervention in the PRSand market conditions • Although it brought about a less regulated private rented sector, from the point of view of landlords and tenants, an overhaul of the legal framework governing security of tenure can hardly be characterized as a lack of state intervention. • Furthermore, as others have argued, (Kemp, 2010; 131, Crook et al 1995) other housing market factors coincidedwith the liberalized legal framework to encourage private renting. • E.g. housing market slump 1990s, deregulation of mortgage markets/securitization leading to growth in buy-to-let products, house price inflation in early 2000s making rented property attractive capital investment.

15. Local authorities and policy intervention • Simplistic debates about regulation also lack considerationof the role of local government in policy implementation and development. • In fact forms of policy intervention at local level are many and varied and belie the notion that policy towards the PRS is characterized by lack of state intervention. • The research seeks to explore the interrelationship between local government strategies, local housing markets and local landlord organization to better understand the policy and market tensions which help to frame the experience of households in the PRS. • The initial findings presented here are drawn from interviews with key officers in the case study authority.

16. LA both implement anddevelop policy • Three key areas of statutory local government housing activity relating to PRS • Enforcement of Housing Act 2004 regulations relating to property conditions in the PRS and HMO licensing; • Accessing the PRS as part of housing needs/homelessness responsibilities; • Enabling/strategic housing activity, relating to the development of new housing stock, in the case study authority considerable activity around procurement of private rented property for a social lettings agency and private sector leasing scheme. • The extent to which these different roles reflect tensions and contradictions in policy at national level was explored in interviews.

17. Findings fromthe case study LA • LAs develop their own policies towards the PRS – in case study authority social lettings agency, use of S106 to create PRS lettings. Plans to use social lettings agency for duty to homeless households. • How policy is implemented and developed is shapedby the political complexion of the Council – in the case study strong commitment to social housing, commitment to seek high property standards from private landlords. • Also responding to the particular nature of the local housing market. The significance of local market variations a recurring theme in previous research on the PRS (Ruggand Rhodes 2003:941). • In the case study authority the market is strongly shaped by the effects of a large student population. Impacts on rent levels, effectiveness of HMO licensing, availability of PRS for lower income groups and LA schemes.

18. Findings fromthe case study LA • Whilst acknowledging potential tensions between their roles – e.g. between accessing more PRS properties to meet housing need and yet ensure high property standards – officers work innovatively to make priorities coincide. • A good example of this is use of loans/grants for property improvements being made available as an incentive to recruit landlords to the social lettings agency. Hence creating access and better standards. • Officers welcome the opportunity to discharge homelessness duty to PRS. But see LA involvement in recruiting landlords/managing properties as vital. • All acknowledge that adequate supply of suitable, lower rent PRS is not available in the local market to play the role envisaged by current central government policy.

19. To conclude... • In light of current policy developments it is important that research addresses the reality of private renting as a long term housing solution. • In so doing we need a better understanding of both national and local level policy towards the PRS and its effects. • The findings so far suggest we may be moving towards a situation where: • The role of LAs in attempting to secure, improve and manage the local PRS becomes of increasing significance in meeting housing need. • Increasingly integrated initiatives across LA departments/statutory roles are required. • Local markets shape housing outcomes of lower income households to a considerable extent and in areas of high demand (and poor LA intervention) they may find themselves increasingly disadvantaged.

20. Bibliography • Blackwell, A. and Park. A (2011) The Reality of Generation Rent, Halifax • Crook, A.D.H. , Hughes, J and Kemp, P.A. (1995) The Supply of Privately Rented Homes: Today and Tomorrow, York: Joseph Rowntree Trust • DCLG (Feb 2011) Survey of English Housing 2009-10 headline report • Doling, J (1997) Comparative Housing Policy, London: Macmillan • HM Government (2011) Laying the Foundations A Housing Strategy for England Kemp, P. A. (2010) ‘The transformation of private renting’ in Malpass, P and Rolands, R. (Eds) Housing, Markets and Policy, London: Routledge. • Pattison et al (2010) , Tenure trends in the UK housing system, BSHF • Rugg, J and Rhodes, D (2003) ‘Between a rock and a hard place’: the failure to agree on regulation for the private rented sector in England, Housing Studies 18:6, 937-946