Copy of Manifesto

RLA MANIFESTO

Residential Landlords Association

Established in 1998, the Residential Landlords Association (RLA) was the first body to represent landlords across the UK.

Today, the RLA has 7,700 subscribers managing 100,000 properties across England and Wales. Membership has increased by 15% over the past year.

Our members rent out properties of all descriptions in the private rented sector (PRS), and also include letting and managing agents.

To qualify for membership, landlords are required to comply in full with the RLA’s code of conduct. This sets out their obligations to adhere to ethical standards; ensure compliance with all relevant legislation; and to provide decent and safe accommodation to tenants.

The RLA strongly believes that decent and safe accommodation is best achieved by landlords who receive high quality and regular education and training, enabling them to understand and implement best practice. As such, through a dedicated helpdesk, and provision of regularly updated literature and through the organisation of pertinent training events, the RLA seeks to promote all opportunities to improve standards across the sector. The RLA is the only national landlords organisation to host a web-based forum enabling the instant exchange of best practices.

The RLA looks forward to working closely with government, opposition parties and local authorities in raising standards and securing a vibrant, safe, tenant driven private rented sector.

Overview

This manifesto sets out the key challenges facing the private rented sector, challenges which will require action by Government of whatever political persuasion, after the next election.

At its heart, it aims to provide constructive solutions to enable local authorities and government to better use finite resources to target the minority of landlords who fail to provide the service that tenants have a right to expect.

As such, the RLA’s overall aims are:

To achieve a more professional PRS, in which renting property is seen as a business, with tenants at the heart of the market as well informed consumers with adequate rights to protect them from unscrupulous landlords.

To establish a robust self-regulatory regime which enables local authorities to better use finite resources to address the actions of those landlords who fail to fulfil their obligations to their tenants and the law.

To ensure that the PRS gains the support needed from Government and elsewhere to unlock its potential to provide housing to those most in need and make a full contribution to improving communities, tackling climate change and clamping down on anti-social behaviour.

Executive Summary

The rule by which the Local Housing Allowance (LHA) can be paid directly to landlords only once a claimant becomes 8 weeks in arrears should be replaced by a policy that requires direct payment to landlords when a sum of the equivalent to one contract periods rent (e.g one month) falls into arrears for 14 days.

We call for the decision in the 2009 Budget to abolish the right for claimants to keep up to a maximum of £15 of excess LHA to be reversed.

The RLA is calling for the policy under which under 25s are only able to access LHA for a room in shared accommodation, even if they reside in a self contained property to be revoked.

Given that many households now find themselves needing all the financial support they can access, the RLA is calling for benefit processing and payment posts to be protected when cuts are made by local authorities.

The Local Housing Allowance should operate to assist tenants in paying their rent, and should not be seen as a subsidy for the private rented sector.

The RLA is opposed to any major overhaul of the system of housing allowances, subject to changes to the direct payment rule.

We support calls from organisations, such as Crisis, for LHA claimants to be given the opportunity to choose who receives their allowance, themselves or their landlord.

For accredited landlords, Tenancy Deposit Protection should be dealt with through the accreditation scheme, with appropriate financial bonding. If new contracts are awarded there needs to be a major reconsideration/overhaul of the scheme.

The adjudication scheme, which deals with complaints regarding Tenancy Deposits, is unfair. Often landlord’s cases are rejected for technical reasons without even being properly considered. Thoroughgoing reform is needed.

To prevent problems from large concentrations of students living in an area, greater efforts should be made to better educate students in HMOs on their responsibilities to the wider community; ensure the proper enforcement of existing legislation on anti-social behaviour and environmental concerns and better educate landlords to understand their responsibilities under existing regulations. The Government’s recent changes to the Use Classes Order should be reversed.

Mechanisms should be put in place to enable landlords and local authorities to share best practice on how to address, on a non-statutory basis, the perceived problems associated with the development of HMOs.

Existing rules and regulations should be better enforced, targeting those landlords who seek to evade regulation and who tarnish the reputation of the private rented sector (PRS). Responsible landlords who join accreditation schemes should be subject to self regulation rather than local authority enforcement. They should still have to comply with the same legal obligations.

Selective licensing schemes should not be extended.

The RLA believes in a system of robust self-regulation based on an industry run accreditation scheme.

To encourage landlords to improve the standard of their properties, including making them more energy efficient, we call on the Government to alter the rate of VAT on housing repair and renewal to 5% in line with changes to EU policy.

There should be a reformed Housing Health and Safety Rating System, in which landlords are provided with greater guidance on the operation of the system, explaining exactly what is required of them.

The rent a room tax allowance (currently £4250 p.a.) has not been increased since 1997. It is a way of encouraging the letting of spare bedrooms. It should be reviewed and increased in line with inflation.

Private rented accommodation should be treated as a business and taxed accordingly. This would enable landlords to claim Capital Gains Tax rollover relief for reinvestment.

Portfolio sales should not be aggregated, so stamp duty land tax is paid instead on the value of individual properties.

Tenants should be better informed about both their legal rights and responsibilities before signing a contract.

Private Rented Sector

Figures in the English Housing Survey (2010) show that the private rented sector now represents 14.2% of the entire housing market, up from 10% in 2001. That means that 3.1 million properties are currently rented in the private sector.

In the same survey, it was found that 82% of tenants in the PRS were either very or fairly satisfied with their housing, a higher number than those in social rented accommodation. Whilst in no way complacent about the challenges facing the industry, the RLA believes such figures demonstrate the efforts that landlords are making to ensure the supply of decent accommodation, as part of a vibrant, well-run sector, based on the demands of tenants themselves.

However, the next Government, of whatever party, will be faced by a difficult housing market:

Figures from the Council for Mortgage Lenders show that in January, mortgage lending reached a 10-year low.

The National Housing Federation have predicted that the total number of households waiting for new social housing will reach a record 2 million next year, part of a long term trend that has seen waiting lists for such properties increase by 55% over the past five years.

Between 2004 and 2009, the number of repossessions rose from 8,000 to 46,000.

With access to mortgages increasingly difficult, waiting lists for social housing reaching record numbers and repossessions continuing to rise, for many, the private rented sector is the only viable option for meeting their accommodation needs.

What is more, for an increasing number, renting from the private sector is now a lifestyle choice proving a more appealing option than paying for a more expensive mortgage. As the English Housing Survey noted, 62% of PRS tenants have previously resided in other private rented accommodation.

Given this, the RLA believes that the private rented sector has the potential to play an important role in stimulating both the housing market and the wider economy. For example, landlords in the PRS are continuing to support the construction industry through the employment of workers to improve and repair their stock. However, in order to fulfil its potential, the RLA are calling for the next Government to take a number of steps as set out below.

Local Housing Allowance

The Local Housing Allowance (LHA) was rolled out across the country in April 2008 following a series of pathfinder trials.

The LHA replaced the system of Housing Benefit, which was calculated based on rents. Under the allowance, payments are calculated on the basis of the size, composition and location of tenants’ households.

When the Government introduced the new system, it hailed the system as an opportunity to foster and promote financial responsibility among those for whom such skills would be most beneficial. To that extent, tenants have a choice of how to use their LHA, with the possibility of keeping any excess up to the value of £15 as disposable income. The idea is relatively simple, for a household looking for a new property to rent, they can either spend all of their LHA on the basis of seeking quality accommodation, or spend some of it, in the knowledge that they can keep up to £15 a week excess.

The RLA is clear in its view that the Local Housing Allowance should operate to assist tenants in paying their rent, and should not be seen as a subsidy for the private rented sector. As such, the RLA believe that allowances must be linked to market rents, and the systems need to be both fair and transparent for all parties.

In light of this, we welcome the publication of LHA rents as a measure to aid transparency. However, we remain concerned about the direction the allowance is heading, particularly in light of the Government’s recent consultation on the LHA and Housing Benefit.

At the outset, the RLA is opposed to any major overhaul of the system of housing allowances subject to changes to the direct payment rule (see below). Having only been rolled out nationally two years ago, we believe it sensible to allow greater time for the system to bed down and for local authorities to enjoy a period of relative stability in this area.

We remain concerned that the Government is continuing to pursue a policy of direct payments. Under this system LHA can only be paid directly to a tenant and not to a landlord, even if a tenant expresses a wish to have payments paid directly to their landlord. The exception to this rule occurs when a claimant is more than 8 weeks in arrears on their rent, unlikely to pay their rent, or is deemed incapable of managing their financial affairs.

The RLA is concerned that by failing to allow tenants to opt for a system of direct payments of their LHA to pay their rent, landlords are being expected to act as involuntary creditors as arrears mount up whilst they continue to provide housing. A recent survey of landlords on the RLA website found:

97% supported a policy of direct payments of LHA to landlords.

Just 54% of those currently letting to LHA claimants would do so again. This number falls to 42% when including all landlords who responded.

72% of those currently letting to LHA claimants have had to request direct payments as a result of tenants rents falling into 8 weeks or more arrears.

These findings echo research carried out by Crisis one year after the LHA system was introduced. In its poll of private sector landlords, Crisis found:

82% of respondents reported that LHA claimants fell behind in their rent payments, the same proportion that reported that more tenancies were being terminated as a result of rent arrears by those in receipt of the allowance.

62% reported that paying LHA to tenants as opposed to landlords made it more difficult for claimants to access private rented sector accommodation.

92% believed that claimants should have the right to choose whether to have LHA paid directly to themselves or their landlord.

80% of respondents concluded that direct payments to claimants had hindered their ability to manage their finances effectively whilst 66% reported that claimants either rarely or never liked having to pay the rents themselves.

The current policy of paying LHA directly to claimants was, the Government argued, based on the idea that it would promote financial responsibility, and empower claimants. However, as results from both Crisis and the RLA show, it is having the net effect of increasing rent arrears, making landlords increasingly hostile to accepting LHA claimants as tenants. What is more, claimants themselves are clear in their wish to be able to have their allowance paid directly to landlords, which would provide them with much greater security and piece of mind.

In view of the concerns of both landlords and claimants themselves the RLA supports calls from organisations such as Crisis for claimants to be given the opportunity to choose who should receive their allowance.. Such a policy would further the Government’s aims of promoting financial responsibility by empowering claimants to choose whatever method of payment best suits their needs.

The RLA further believes that the rule by which LHA can be paid directly to landlords, only once a claimant becomes 8 weeks in arrears should be replaced by a policy that requires direct payment to landlords when a sum of the equivalent to one contract periods rent (e.g one month) falls into arrears for 14 days.

Aside from concerns on direct payments, the RLA believes that further measures could be taken to improve the operation and fairness of the LHA:

We call on the Government to reverse its decision in the 2009 Budget to abolish the right for claimants to keep up to a maximum of £15 of LHA excess. Abolishing this rule would undermine a tenant’s ability to make a genuine choice between paying that little bit more for better quality accommodation, or a little less in order to use the excess for other purposes. Furthermore, it would end the ability of tenants to negotiate lower rents. By removing the opportunity to keep capped excess, the Government will make it more difficult to meet its legally binding target of eradicating child poverty by 2020 as set out in the Child Poverty Bill.

The rule by which under 25s are only able to access LHA for a room in shared accommodation, even if they reside in a self contained property serves only to restrict the availability of property for a group that is finding it increasingly difficult to access housing across most, if not all, sectors. The Government should revoke this policy to provide greater fairness in the system for young people.

Recent survey evidence from the BBC suggests that 25,000 jobs could be cut as a result of the financial pressures facing local authorities across England. Tony Travers, Professor of Local Government at the LSE, has suggested that such a figure could be optimistic, with his predication that job losses could total 100,000. Either way, councils will face significant pressures as budgets are squeezed to rein in the deficit and jobs are lost as a result. The RLA are deeply concerned that such cuts will squeeze local housing authorities to a point at which they do not have sufficient capacity to deal efficiently with the volume of Local Housing Allowance claims. Given that many households now find themselves needing all the financial support they can access, the RLA is calling for benefit processing and payment posts to be protected.

Tenancy Deposits

We agree that it is important to protect a tenant’s deposit in terms of financial security. We have major concerns with the current tenancy deposit scheme. It results from rushing through ill thought out legislation.

We believe that for accredited landlords Tenancy Deposit Protection should be dealt with through the accreditation scheme, with appropriate financial bonding. If new contracts are awarded there needs to be a major reconsideration and overhaul of the scheme.

Our major concern is in relation to the penalty regime. There is a mandatory penalty three times the amount of the deposit payable. There is no power for the Court to mitigate this. This is outrageous. This means that someone who wilfully ignores the scheme is punished in the same way as someone who has made a technical slip up and failed to give the correct information to the tenant. The adjudication scheme, which deals with complaints, is unfair. Often landlords’ cases are rejected for technical reasons without even being properly considered. Thoroughgoing reform is needed.

Planning and Shared houses