Response to Sheffield Council’s proposal for selective licensing

Introduction

  1. The National Landlords Association (NLA) exists to protect and promote the interests of private residential landlords.
  2. The NLA represents more than 72,000 individual landlords from around the United Kingdom. We provide a comprehensive range of benefits and services to our members and strive to raise standards within the private rented sector.
  3. We seek a fair legislative and regulatory environment for the private rented sector, while aiming to ensure that landlords are aware of their statutory rights and responsibilities.
  4. We thank Sheffield Council for providing us with the opportunity to comment on the selective licensing proposal.

Executive summary

  1. Having considered the evidence presented, and having undertaken our own evaluation of the circumstances faced by the residents of Sheffield, our position can be summarised by the following brief points:
    • Landlords have very limited authority when dealing with matters related to antisocial behaviour, especially if it happens outside the curtilage of the property.
    • The council fails to provide evidence of a direct link between recorded housing crime and the private rented sector.
    • The scheme will lead to a further displacement of problem tenants in Sheffield.
    • Selective licensing will have the effect of stigmatising the designated area.
    • The documentation provided fails to indicate that sufficient funding will be available to support the introduction of licensing. Can the council guarantee that every house will be inspected as outlined in law?
    • The council fails to say how it will prevent malicious claims of antisocial behaviour being made, which could result in tenants losing their tenancies. Can this be provided?
    • The document says that Sheffield Council will use all its legal powers. However, if it were to use the powers it already has, it would have solved the issues and would not require selective licensing. The issues of property standards can be solved with the use of existing powers, which leads to a question regarding why those powers have not been used.
    • The council has not published its strategy for dealing with chaotic and antisocial tenants. This should run in conjunction with the current proposal.
    • The council fails to say how the proposal will tackle rent-to-rent and subletting, or even Airbnb.
  2. We contend that the flaws in the process and proposals, as outlined above, must be rectified before this application is progressed. Furthermore, once the necessary data has been identified and provided, this consultation exercise should be repeated (if permissible) to ensure engagement with all relevant stakeholders.

General feedback on proposals

  1. Licensing is a powerful tool. If used correctly by Sheffield Council, it could resolve specific issues. We have supported many local authorities in the introduction of licensing schemes which benefit landlords, tenants and the community. In this case, the council’s lack of evidence does not support its arguments for the introduction of licensing.
  2. We believe that any regulation of the private rented sector must be balanced. Additional regulatory burdens should focus on increasing the professionalism of landlords, improving the quality of private rented stock and driving out the criminals who act as landlords and blight the sector. These should be the shared objectives of all the parties involved, to facilitate the best possible outcomes for landlords and tenants alike. Good practice should be recognised and encouraged, in addition to the required focus on enforcement activity. This is not the case here.
  3. In addition, the proposal does not take into account rent-to-rent, or those who exploit people (both tenants and landlords). Criminals will always play the system. For instance, there is no provision for landlords who have legally rented out a property that has later been illegally sublet. The council is not allocating resources to tackle the problems that criminals cause. Often, landlords are victims, just as much as tenants. What support will the council provide for landlords to whom this has happened?
  4. Newham reorganised the council services to deliver their licensing scheme. A joined-up coordinated approach within the council will be required. Additional costs in relation to adult social care, along with children’s services and housing, will be incurred if the council’s goal is achieved: yet there is no evidence from the council that this will be done. Can this be provided?
  5. The issue of overcrowding is difficult for a landlord to manage if it is the tenant who has overfilled the property. A landlord will tell a tenant how many people are permitted to live in the property,  and that the tenant is not to sublet it or allow additional people to live there. Beyond that, how is the landlord to manage this matter without interfering with the tenant’s welfare? Equally, how will the council assist landlords when this problem arises? It is impractical for landlords to monitor the everyday activities or sleeping arrangements of tenants. Where overcrowding does take place, the people involved know what they are doing, and that they are criminals and not landlords. The council already has the powers to deal with this. It also raises concerns for the NLA as this is not currently being undertaken by the council.
  6. The proposal fails to address the link between homelessness and the effect that licensing will have on tenants in Sheffield. This impact on tenancies due to a selective licensing scheme is absent from the document.
  7. Landlords are usually not experienced in the management of antisocial behaviour and do not have the professional capacity to resolve tenants’ mental health issues or drug and alcohol dependency. If there are allegations about a tenant causing problems (e.g. antisocial behaviour) and a landlord ends the tenancy, the landlord will have dispatched their obligations under the selective licensing scheme, even if the tenant has any of the above issues. This moves the problems around Sheffield, but does not actually help the tenant, who could become lost in the system. There is no obligation within selective licensing for the landlord to resolve an allegation of antisocial behaviour. Rather, a landlord has a tenancy agreement with a tenant and this is the only thing that the landlord can legally enforce.
  1. Sheffield Council has many existing powers. Section 57(4) of the Housing Act 2004 implies that a local authority must not make a designation “unless (a) they have considered whether there are any other courses of action available to them […] that might provide an effective method [for Sheffield Council to deal] with the problem or problems in question”. The council already has powers that can be used to rectify the problems and, hence, the ability to tackle many of the issues that it wishes to overcome in all parts of Sheffield. These include:
    • Criminal behaviour orders
    • Crime prevention injunctions
    • Interim management orders
    • Empty dwelling management orders
    • Improvement notices (for homes that do not meet the decent homes standard)
    • Litter abatement notices (section 92 of the environmental protection act 1990)
    • Fixed penalty notices or confiscation of equipment (sections 8 and 10 of the noise act 1996)
    • Directions regarding the disposal of waste (e.g. Section 46 of the environmental protection act 1990)
    • Notices to remove rubbish from land (sections 2–4 of the Prevention of Damage by Pests Act 1949).
  2. The council has failed to prosecute landlords/criminals who are breaking the law: it either does not have the problems it claims to have or it has failed to tackle the issues by failing to use its existing powers. It would be better if the council were to use the powers that it already has to solve issues that it claims to exist before undertaking licensing.
  3. At the commencement of a tenancy, the landlord outlines the tenant’s obligations in relation to noise (and other matters, such as waste disposal, compliance with relevant laws and having consideration for their neighbours). The landlord can manage a tenant only to the extent of their mutually agreed contract for living in the rented property – not for a tenant’s activities in the street outside the property or neighbouring streets. In the case of a noise complaint, the council would have to inform the landlord that the tenant was being excessively noisy. The landlord, then, has the right either to warn the tenant or end the tenancy. If the allegation is false or disingenuous, how is the landlord to know? If the same allegation is made on more than one occasion, the landlord may end the tenancy based on an unproven allegation or because the council says that there is a problem. This does not solve the problem but rather moves it around the city. The same applies to household refuse and antisocial behaviour issues. The tenant could be labelled as guilty without having faced a trial. Under the reference condition of selective licensing, a guilty judgement can be made without an accusation being tested by a court.
  1. The ending of a tenancy will be a way for a landlord to resolve an allegation of antisocial behaviour even if it is malicious. This will not resolve the issue of high tenancy turnover – it will exacerbate it.
  2. The introduction of licensing is likely to increase the costs for tenants without solving the problems that the council is trying to target. It will likely move the issues around the city and displace them to new landlords. The issues would be better resolved by a more erudite approach to deal with nuisance and a separate policy to tackle criminals acting as landlords.
  3. Often, when tenants are nearing the end of their contract/tenancy and are in the process of moving out, they will dispose of excess household waste by a variety of methods. This includes putting waste out on the street for the council to collect. This is made worse when the council does not allow landlords access to municipal waste collection points. Local authorities with a large number of private rented sector properties need to consider a strategy for the collection of excess waste at the end of tenancies. We would be willing to work with the council to help develop such a strategy. An example is the Leeds Rental Standard, which works with landlords and landlord associations to resolve issues.
  4. One of the arguments that the council has put forward is that selective licensing is being introduced due to the size of the PRS. Can the council clarify the following; a) is it the council’s policy to reduce the PRS in these areas; and b) where does the council wish to see PRS grow in the city?

Negative impacts of discretionary licensing

  1. One of the dangers of the proposed selective licensing scheme is that the costs will be passed on to tenants. This would increase costs both for those who rent in Sheffield and the council. The increased costs to Sheffield residents would particularly hit those most vulnerable and least able to tolerate a marginal increase in their cost of living. Also, the council has failed to explain that, as well as the council’s costs for the licence, landlords will likely cover their increased costs by raising rent prices. The failure to explain this shows a lack of understanding of how the private rented sector works. This could mean that landlords will look for tenants from other councils, as they are offering incentives (e.g. Haringey is offering £4,000 plus the Central London Local Housing Allowance rate).
  2. The council costs are also higher than neighbouring local authorities: the council should look at other councils to see how it can reduce its costs for the license and council. Savings for the council will allow for the delivery of a more efficient scheme and drive out the criminals who operate.
  3. Areas that have been subject to the introduction of selective licensing have seen lenders withdraw mortgage products, thereby reducing the options available to landlords who are reliant on finance. Downstream, this increases overheads for landlords and tenants. The lenders that withdraw mortgage availability from a landlord will appear on that landlord’s credit history. Other mortgage lenders will put a higher cost on the landlord, which will ultimately reach the tenant.
  4. Defining areas of Sheffield’s problem zones in the consultation will not encourage lending or investment into those areas. The stigmatisation will be reflected in property values within them. Sheffield Council, by proposing to introduce licensing, is implying that there are social problems that could deter investment in those areas. The council does not acknowledge the impact that the stigmatisation of discretionary licensing will likely have. It will likely increase all car and house insurance premiums, not just those in the private rented sector, and the council has not told Sheffield residents about this. We assert that failure to provide such information indicates a substandard and, ultimately, superficial consultation exercise.
  5. One of the council’s reasons appears to be a contradiction: it wishes to increase the rents that landlords will receive in the area, while at the same time it expects them to sell their properties. One of the council’s aims in the consultation document is to reduce the number of privately rented properties. Why would landlords sell their properties when the council is trying to make them more profitable for landlords?
  6. The social housing sector has made many efforts to remove problem tenants (see table below). How does the council expect landlords to solve these tenants’ issues when the social sector has failed? Many of the tenants who have been removed from the social sector are now living in the private rented sector without any support. This selective licensing policy will have a greater impact on the people who are evicted from social housing, as they will not be able to access the PRS as they will fail the reference check (mandatory condition).

Mortgage and landlord possession statistics 20161

Year (calendar)

Landlord type

Claims issued

Private*

Social

 

2016

54,583

(39.7%)

82,789

(60.3%)

137,372

(100%)

*includes all accelerated claims

Current law

  1. Currently, a landlord must comply with over 100 pieces of legislation, and the laws with which the private rented sector must comply can be easily misunderstood. A landlord is expected to give the tenant a “quiet enjoyment” of the property. Failure to do so could result in a harassment case being brought against the landlord. The law within which landlords must operate is not always fully compatible with the aims of the council. For example, a landlord keeping a record of a tenant could be interpreted as harassment.
  2. Licensing is introduced to tackle specific issues. Many of these are related to tenants, which the council has identified. The challenge for local authorities is to work with all the people involved and not simply to blame one group – e.g. landlords. We are willing to work in partnership with the council to develop tenant information packs, assured shorthold tenancies and the accreditation of landlords, along with targeting the worst properties in a given area.
  3. We would also argue that a problem which is restricted to poorly managed and/or poorly maintained properties would not be appropriately tackled by a licensing scheme – it is not proportionate. In many situations, the council should consider enforcement notices and management orders. The use of such orders would deliver immediate results. Why, instead,  does the council wish to address it over a period of five years and through a licensing scheme? A targeted, street-by-street approach, working on specific issues in a coordinated manner with other relevant agencies, such as community groups, tenants and landlords, would have a much greater impact.
  4. We would also like to see the council develop a strategy that includes action against any tenants who are persistent offenders. These measures represent a targeted approach to specific issues, rather than a blanket licensing scheme that would adversely affect all professional landlords and tenants alike, while leaving criminals able to operate covertly. Many of the problems are caused by mental health or drink and drug issues. Landlords cannot resolve these issues and will require additional resources from the council.
  1. In relation to the reduction of antisocial behaviour and the authority that landlords have to tackle such activity within their properties, it should be pointed out that landlords and agents can only enforce a contract – they cannot manage behaviour (NB: House of Commons briefing note SN/SP 264, paragraph 1.1). In most circumstances, the only remedy available to landlords who are confronted with serious antisocial behaviour in one of their properties will be to seek vacant possession. In many instances, they will need to serve a section 21 notice, rather than a section 8 notice, identifying the grounds for possession. The former is simpler and cheaper and repossession (at present) is more certain. No reason needs be given for serving a section 21 notice and, in this case, the perpetrator tenant can hypothetically approach the local authority for assistance to be rehoused (NB: Homelessness Guidelines cl 8.2). Crucially, no affected party needs to offer evidence against an antisocial householder, thereby reducing the risk of intimidation, harassment and, ultimately, unsuccessful possession claims. The issue of antisocial behaviour will, thus, not appear as a factor in the repossession. However, when providing evidence to support a licensing application, the document should clarify the position of all the relevant issues under landlord and tenant law.
  2. We would like clarification on the council’s policy in relation to helping a landlord when a section 21 notice is served, the property is overcrowded or the tenant is causing antisocial behaviour, as per what the council says in the consultation. What steps will the council take to support the landlord? It would be useful if the council were to put in place a guidance document before the introduction of the scheme, to outline its position regarding how it will help landlords remove tenants who are manifesting antisocial behaviour.
  3. We would like to know what consideration the council has given to homelessness, where these tenants cannot access the private rented sector.
  4. The council fails to say what additional services will be provided for mental health. This will have an impact on adult social care budgets for the county council – and this budget is already under pressure. How much money has been allocated from the county to meet this?

1 www.gov.uk/government/statistics/mortgage-and-landlord-possession-statistics-october-to-december-2016