DTLR Consultation Paper on Selective Licensing of Private Landlords

							Appendix 2

DTLR Consultation Paper on Selective Licensing of Private Landlords

Response by Newcastle City Council

Introduction

Newcastle City Council’s response to the Government’s consultation paper is in four parts:

1.        General view of the proposals
2.        Newcastle distinctive perspective
3.        Comments on specific points
4.        Replies to the key issues listed in Annex I.


1.        General view of the proposals

1.1       We welcome these proposals in principle as an addition to the powers available to
          local authorities to intervene in the private rented sector (PRS).

1.2       We recognise that licensing on its own cannot solve complex problems in mixed
          tenure areas, or areas of predominantly PRS accommodation. Licensing must be
          part of an approach where a range of strategies link up to address an area’s needs
          and concerns. As well as contributing to an area’s regeneration, licensing should be
          a clear part of the authority’s overall housing strategy. This will mean seeing the
          licensed PRS contribute to delivering the range of accommodation to meet all needs,
          including those of the most vulnerable residents.

1.3       Seeing the proposals as a major innovation, even given the restrictions built around
          them, we are disappointed that they are unlikely to become law before 2004 at the
          earliest. There is a large body of evidence showing how rapidly areas can decline,
          and then how difficult it becomes to improve them. Areas in decline can negatively
          impact upon adjoining areas showing early signs of possible decline. Introducing the
          powers sooner could contribute to reversing decline in areas earlier and the knock-on
          effect of this would be significant.

1.4       Another benefit of earlier introduction would be a longer time for pilot schemes to
          demonstrate their effectiveness and for any Human Rights Act implications to be
          explored. Pilots could be monitored and evaluated against areas using alternative
          approaches and so help good practice to develop sooner. These pilots could also
          show up ways of tackling any unwanted consequences of selective licensing such as
          the displacement of problem tenants; or the loss of both good or poor landlords
          through buying property in an unlicensed area; or, if it simply failed to benefit the
          chosen area, the possible reasons.

1.5       We accept that introducing licensing for the whole PRS would have massive resource
          implications. However, many of the problems in low demand areas described in the
          paper such as anti-social behaviour, poor management and landlords being
          uninterested in neighbourhood concerns, happen equally in popular areas. We would
          stress that licensing should be available for any suitable area of private renting, not
          just areas of low demand. Thus we would want to see it capable of being rolled out
          without the very restrictive approach of this only being considered ‘… in special
          circumstances...if compelling reasons were advanced (para.7).’

1.6       Our final general comment is that we understand the primary need to tackle
          management issues and we welcome how the proposals draw management in a
          broad way covering matters going beyond a landlords legal obligations and into areas


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          of good practice. However, we believe the licensing criteria should also include
          property conditions. Although this could add to the scheme’s cost we would welcome
          further consultation on ways to ensure compliance with criteria covering conditions
          without necessarily inspecting every property covered by the scheme. We make
          some suggestions about how this could be done at para 3.2.

2.        Newcastle’s distinctive perspective

2.1       In Newcastle we have built up experience of working with private landlords in local
          projects. These have been in specific neighbourhoods facing, to varying degrees,
          the types of problems the paper highlights.

2.2       One of the main benefits of each project has been providing landlords with a form of
          reference checking. In areas where funding allows a package of potential benefits,
          such as enhanced grants or a rent deposit scheme, landlords are more likely to use
          this service. There is more limited take up in other areas where co-operation is down
          to goodwill on the part of local landlords. We believe this shows the benefits of
          making reference checking a requirement of a licensing scheme.

2.3       Our projects have also shown that neighbourhood problems have a cross-tenure
          dimension. Put under pressure to improve their behaviour, anti-social tenants in
          these areas can move easily between tenures and landlords. One of the main
          challenges facing local authorities with low demand areas is working through
          partnerships to link up the range of landlords and other agencies to stop this frequent
          moving from defeating the aims of tackling anti-social behaviour and wider
          neighbourhood decline.

2.4       A final point from our local perspective concerns our property types, and also our
          desire to see the benefits of licensing available in areas of Newcastle with high
          demand from student households. In these areas we experience problems similar to
          other university cities like Birmingham. As currently defined we have few HMOs in
          our low demand areas; however we would want to explore using the intended
          discretionary HMO licensing powers focused on shared student houses. Approval for
          such ‘combined licensing’ schemes should be available without the restrictions the
          paper proposes since some of the problems in high demand student areas have been
          caused by flight from the now low-demand areas. We need ways of tackling the
          problems in both types of area. We would therefore support calls for the different
          types of licensing schemes to be brought together and simplified. This would mean
          many of the difficulties over the distinction between HMO and non-HMO properties
          would be removed.

3.        Comments on specific points

3.1       Consent to scheme (paras 7, 23 and elsewhere)

          We believe that local authorities should have the power to establish schemes and
          rather than require the consent of the Secretary of State, the Secretary of State’s
          power should only be to refuse consent if the local authority has clearly not followed
          the statutory guidance. Through its local knowledge the local authority should be
          trusted to make a decision that benefits both the area intended to be covered by the
          scheme, and also the wider area including the sub-region.

3.2       Management standards and fitness (paras 45-46)

          At para 1.6 we gave our view that a selective licensing scheme should include
          property as well as management standards. As the external appearance of
          properties is important to an area’s popularity and success, we would want to see the
          property standards include elements such as outside paintwork, fencing and front


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          gardens. These are important features that are hard to control using normal
          enforcement powers. As resources may not permit inspection of every licensed
          property, alternative approaches to ensuring properties are to a required standard
          could include:

               comprehensive self assessment;
               the licensee providing a qualified surveyor’s report to confirm good repair, as
                recommended by the City of Manchester;
               spot checks; and
               a complaints mechanism for tenants linked directly to the licensing schemes
                monitoring system.

3.3       Reference checks and tenant’s anti-social behaviour (paras 47 & 48)

          Based on our local experience we support the inclusion of compulsory reference
          checking as a licensing criterion. We think it is very important that, through licensing
          fitting within the wider crime and anti-social behaviour reduction strategy, landlords
          should be encouraged but also supported to respond to their tenant’s criminal or anti-
          social behaviour. We believe these particular proposals could be strengthened to
          ensure landlords, or their associations, are required to join local multi-agency
          partnerships working to reduce crime. This could be helped by local authorities
          removing any barriers to using anti-social behaviour orders against private tenants,
          and introducing innovations for a licensed area similar to those piloted on their own
          estates such as Acceptable Behaviour Contracts.

3.4       Alternative management and compulsory sale (para 66)

          We strongly support the introduction of new powers to enable local authorities to
          intervene in these ways where necessary.

3.5       Payment of housing benefit (paras 67 & 68)

3.5.1     We accept that withdrawing direct payment, or payment altogether, would be a
          powerful tool where a landlord did not comply with licensing criteria or effected an
          unlicensed, i.e. illegal, letting. We agree that tenants must not be exposed to
          disproportionate risk or disadvantage through this.

3.5.2     We would hope that steps could be taken to try to avoid tenants taking a tenancy
          from an unlicensed landlord. One way such a letting might be avoided would be by a
          requirement that for all prospective lettings in a licensed area an application is made
          for a pre-tenancy determination. If it came to light that the intended letting would be
          illegal, the prospective tenant would be advised no housing benefit would be payable
          and so hopefully would not follow up by entering into the tenancy agreement. This
          preliminary step would reduce the chances of a tenant unwittingly entering into an
          illegal letting. Of course, this would not stop the working tenant.

3.6       Resources (Annex II, para 34)

          We believe the partial regulatory impact assessment understates the likely cost
          implications of introducing a scheme. The quoted figure of £30,000 is a conservative
          estimate and does not recognise that ongoing costs would be likely, not just the costs
          incurred in the year of establishing the scheme.

4.        Replies to the key issues listed in Annex I

          1.        Yes but all areas face the problems that licensing would address. Some
                    areas beginning to face decline would benefit if decline was arrested rather
                    than allowed to continue.


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          2.        Yes but not in isolation.

          3.        Yes

          4.        Yes

          5.        No

          6.        Yes and we agree that they must be part of a wider strategy tackling decline,
                    deprivation and regeneration.

          7.        We believe licensing would benefit the whole PRS. We recognise that low
                    demand areas have special problems and that schemes could be piloted there
                    before being rolled out. We also believe that the decision-making should rest
                    with the local authority, the Secretary of State having the power to veto a
                    scheme only if the local authority clearly has failed to follow the statutory
                    guidance.

          8.        Yes but minimum standards should also include the condition of the property
                    as mentioned at para 3.2. With reference to electrical safety, this should be
                    confirmed by testing in accordance with IEE Regulations and certified by a
                    NICEIC or ECA-approved electrician.

          9.        Yes.

          10.       Yes but with support by being part of or linked to a local crime reduction
                    partnership or other multi-agency partnership tackling crime and anti-social
                    behaviour. On a wider level we agree with the City of Salford that licensed
                    areas should feature robust neighbourhood management so that anti-social
                    behaviour is tackled cross-tenure and evicted tenants cannot move with
                    impunity between sectors.

          11.       Yes.

          12.       Yes but with a redefinition of HMO to cover shared households.

          13.       Yes and we support the proposal from the City of Salford to include suitable
                    private landlords on the appeals panel. This would reinforce ownership of the
                    scheme among good partner landlords.

          14.       Yes but more thought needs to be given to provisional licenses and the impact
                    on tenants if these were to be withdrawn. We would also like to see a
                    mechanism to enable the condition of the property to be re-visited during the
                    period of the licence through, for example, inspection or the provision of a
                    surveyor’s report. We would also like any problems arising through this
                    confirmation of mid-term condition to be capable of triggering re-examination
                    of a landlord’s other licensed properties.

          15.       Yes provided the position of tenants is protected as far as it can be.

          16.       Yes provided the position of tenants is protected as far as it can be.




          Contact officer: Peter Brown, Housing Policy & Strategy Unit.


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