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Background. Initiated by CLGTerms of ref set by CLGAcknowledges that PRS is increasing in size and diversitySeeks to influence policy to elevate PRS from the current ?third option' Maximise potential of PRS . Contribution of the PRS . PRS = 13% of housing stockBoom in BTL? 46% of BTL advances from existing landlords re-mortgaging their existing portfolioProportion of small Landlords has grownLandlords by default, credit crunch, etc.
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1. Proposals For The Private Rented Sector“The Rugg Review” Liz Adamson
Senior Environmental Health Officer
Private Sector Housing Solutions
2. Background Initiated by CLG
Terms of ref set by CLG
Acknowledges that PRS is increasing in size and diversity
Seeks to influence policy to elevate PRS from the current ‘third option’
Maximise potential of PRS
3. Contribution of the PRS PRS = 13% of housing stock
Boom in BTL?
46% of BTL advances from existing landlords re-mortgaging their existing portfolio
Proportion of small Landlords has grown
Landlords by default, credit crunch, etc
4. Occupation within the PRS Stability
21% of private tenants have lived in their property for 5+ years
‘Churn’
40% of private tenants have lived at their current address for <12months
5. Submarkets of PRS Young Professionals
Students
Housing Benefit Market
Slum rentals
Tied housing
High income renters
Immigrants
Assylum seekers
Temporary Accommodation
Regulated tenancies
6. Potential of PRS Delivering a new & Affordable property supply
Demand for housing increasing – home building projects decreasing.
Unclear if PRS actually brings new housing into uses existing housing stock
New build in the PRS tends to be in sub markets where high density build is appropriate i.e. studio flats for your professionals or private halls of residence
Affordability – PRS meets intermediate housing needs for those that can’t afford to buy & aren’t in a priority group for social housing.
7. Potential of PRS…….cont Securing Institutional Investment in the PRS
Encourage more professional landlords
Policies should help good landlords of all sizes to grow.
Large landlord’s will generally expand via portfolio acquisition - small landlords may need some assistance i.e. changes to stamp duty & capital gains tax.
Small scale landlords are in a good financial situation – low LTV mortgages or mortgage free
8. Potential of PRS…….cont Making Management of Rental Market more Professional
Majority of landlords operate professionally – 75% of private tenants are either ‘very’ or ‘fairly’ satisfied with their landlord
25% - not satisfied – some landlords do not consider letting an activity that requires regulation
Managing agents are unregulated and have varying standards
Accreditation = market advantage i.e. student accreditation-
9. Potential of PRS…….cont Improving Property Quality
PRS lags behind social housing and owner occupation.
50% do not meet the decent homes standard
improve standards via accreditation schemes & regulating managing agents
Suggestion to only permit managing agents to use homes that meet the decent homes standard . 43% OF HOMES WHERE l.l USED A ma WERE NON -DECENT43% OF HOMES WHERE l.l USED A ma WERE NON -DECENT
10. Potential of PRS…….cont Providing Sustainable tenancies
Is the existing tenancy framework adequate?
PRS = short-term insecure housing?
Stability vs Churn
Why do tenancies in PRS end against the wishes of the tenants – rent arrears, poor standards making tenancy unsustainable & anti –social behaviour – policy should then focus on these issues rather than change the framework
11. Potential of PRS…….cont Managing problem private renting
Review looked at
Student housing
change of planning use for student housing
‘Slum’ landlordism
Selective licensing?
Migrant working overcrowding
Over occupation to reduce housing costs
12. Recommendations Policy Direction of Travel
A sound evidence base
Poor understanding of how PRS operates at national & local policy making levels. Call for more co-ordinated and relevant data collection on PRS
Better understanding of managing rented housing
MA’s should be subject to mandatory regulation & RSL’s encouraged to sell their rental management skills
Assist the letting business to grow
Changes to stamp duty & capital gains tax to encourage growth
BTL mortgages subject to a business plan and tenancy protection in the event of defaulting on mortgage payments.
13. Recommendations………….cont Equalising the rental choice
Single procurement agency for public agencies requiring PRS properties
Social lettings agency offering full property management services – reduces risk of rent arrears & ASB
Mandatory assistance with deposits and rent in advance for those on HB
Tenancy frameworks
Unclear if eviction from PRS is a cause of homelessness or if existing tenancy frameworks are problematic.
Issues of inadequate policing, difficulties with HB, poor support for vulnerable tenants are addressed directly or indirectly elsewhere.
14. Recommendations………….cont Light touch licensing and effective redress
Landlord applies for a Permit to rent with a penalty points system for misdemeanours.
Permit obtained regardless of current property management standards
Permit revoked if too many points accrued & landlords banned from letting property – a real sanction for bad landlords
Licences administered by national autonomous agency specific to PRS
Would not impose excessive regulation
Useful database of local landlords
Could reward good behaviour if linked to tax incentives – and punish bad.
New Complaints and redress procedure – funded vis permit income
15. Conclusions Better co-ordination between Government depts.
New NI’S to assist LA’s to make links between the contribution of the PRS and other targets.
Some proposal to be put forward in the Housing Reform Green Paper
Overall looking to professionalise the sector via a change in culture of renting from an investment to a business activity – a long term objective
16. Finally Document can be viewed at:
http://www.york.ac.uk/chp
The Private Rented Sector: its contribution & potential