ACCESS TO PRIVATE RENTED HOUSING FOR THE UNDER 35's
Report of the All Party Parliamentary Group for the Private Rented Sector

The most recent English Housing Survey has reported that the private rented sector (PRS) now comprises 18% of all households in England. Against this background of a growing PRS, the All Party Parliamentary Group (APPG) for the Private Rented Sector has conducted an investigation into under 35's access to private rented housing.

The APPG's report, 'Access to Private Rented Housing for the Under 35s', was published on 13 October 2014. It was researched by the Public Affairs Company on behalf of its client, the Residential Landlords Association, and was funded by the Residential Landlords Association.

An extract from the Report is reproduced here.

2.0 Summary & Recommendations

2.1 Over half of all tenants in the private rented sector are under the age of 35, a demonstration of the importance that the sector has to play in meeting the housing needs of this group

2.2 Given the quantity of under 35s in the sector, and the types of accommodation that they live in, it is clear that a number of recent policy developments will have had a notable impact on some or all of this group. In particular:

  • In 2010, the then Housing Minister, Grant Shapps MP, announced that local authorities would be free to choose whether or not to adopt ‘Article 4 Directions’ for all or part of their areas which enable those local authorities that choose to use them to make landlords apply for planning permission where they intend to turn a house into a House of Multiple Occupation – a shared house comprised of 3 or more unrelated persons.
  • In the Spending Review of 2010, the Government announced that the age limit at which tenants could claim housing benefit only for a room in a shared house (known as the Shared Accommodation Rate) would increase from 25 to 35. This came into effect on 1st January 2012.
  • The Group heard during the course of the inquiry of concerns that local authorities are now charging council tax on bedsit accommodation.
  • The Rent a Room Scheme that allows someone to earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in their own home has remained frozen since 1997.

2.3  ARTICLE 4 DIRECTIONS

2.3.1 The Group is not convinced about the need to revoke Article 4 Directions. They should continue to be a tool for local authorities to use to respond to local the needs of all residents and in the process be accountable to their local electorate accordingly.

2.3.2 The Government should work with local authorities, through the Local Government Association, to review what impact Article 4 Directions are having on the ability of those requiring it to access shared housing.

2.3.3 We would endorse the argument for so called “flipping” to be allowed. At present, where a property is allowed to be an HMO under an Article 4 Direction, if a landlord then decides later to let it to a family, which they are able to do without planning permission, but after that wanted to revert back to it being a HMO, they would need planning permission. Flipping would mean once a landlord had received permission for a building to be used as a HMO it would be in force indefinitely enabling them to flip the use of the property from HMO to family use and back to HMO again, if they so wish. This would avoid the situation faced in some areas whereby HMOs remain empty because landlords do not want to have to go through the planning application process if they decide to let the property to a family.

2.3.4 The Group was interested to hear of initiatives such as the ‘Leave Leeds Tidy’ campaign bringing together residents, students, the university and the local authority to ensure students leave their streets and surrounding areas in a fit state when they leave for term breaks. We call on such partnerships to be replicated as a way of properly integrating students into their local communities and addressing some of the concerns those residents have about high concentrations of such tenants.

2.3.5 Where students and other occupants of shared housing cause repeated trouble and fail to respond to warnings about their behaviour, Universities, students unions, landlords and the local police should ensure that robust action is taken against such tenants, with a much swifter process to evict them where need be.

2.4 SHARED ACCOMMODATION RATE

2.4.1 We recommend that the Government launches a full review of the operation of the Shared Accommodation Rate. We argue that such a review should cover:

  • Whether there is sufficient shared housing to cope with the increased demand for such accommodation that the SAR changes have led to.

  • Whether the level at which the SAR is set is sufficient to secure the accommodation that claimants require.

  • The exact details of the circumstances under which housing benefit claimants under the age of 35 are exempt from it, such as those with mental health difficulties.
  • What can be done to ensure that SAR claimants who are parents without custody of their child(ren) are nevertheless able to house them when they visit.

2.4.2 We would further call on the Government to undertake research into the impact that permitting direct payments of housing benefits to landlords might have on landlords' willingness to let to those tenatns claiming housing benefits. Whilst the Government has maintained a stance of arguing that payments directly to tenants promote financial responsibility, it is clear from the evidence we received that many landlords are simply not willing to let to those on the SAR due to the risks involved in receiving rent. Greater assurances are needed for the landlord community that payments will be received on time.

2.5 RENT A ROOM ALLOWANCE

2.5.1 The Group therefore calls on the Government to increase the rent-a-room allowance to the levels suggested by spareroom.co.uk with a level in London higher than that outside.

2.6 COUNCIL TAX

2.6.1 In light of concerns raised with us, the Group would welcome clarification from Ministers as to the exact position in respect of local authorities being able to charge Council Tax on bedsit accommodation and how extensive it might be.

2.6.2 Should the position be as we have been told, we would recommend that Ministers give this serious consideration to ensure that simply charging Council Tax on an already existing room in a shared house isn’t being used as a way of generating New Homes Bonus.

2.6.3  We would also recommend that the Government give consideration either to banning the practice of Council Tax being applied to bedsit rooms or introduce a more realistic Council Tax band for such accommodation.

2.7 VAT RULES

2.7.1 Whilst we appreciate the complexities around VAT rules, it appears to be an anomaly that VAT cannot be reclaimed on properties converted to rent given the pressing need to increase the supply of such properties. We would therefore call on the Government to undertake a study into the potential impact of allowing VAT to be reclaimed where existing properties are converted for housing use, either owner occupied or to rent.

2.8 BETTER INFORMED TENANTS

2.8.1 Mindful of Government amendments to the Consumer Rights Bill to secure transparency in the fees that letting agents charge tenants and landlords, we believe that this should go further. We call on the Government that as part of wider efforts to empower tenants that it be made a requirement of landlords to let prospective tenants aware of all the likely costs associated with renting a property including the Council Tax band as well as estimated utility costs. This should be coupled with information on how best tenants can shop around for gas, electricity and water suppliers to secure the best deal possible on their bills, thereby driving the overall cost of renting down as much as possible.

2.9 COMMUNITY CONTRIBUTIONS

2.9.1 It is the Group’s views that local authorities should be given greater powers to secure community contributions from developers of large scale PRS developments as appropriate to local needs.

2.9.2 We also call on the Government to give serious consideration to enabling local authorities to charge landlords Business Rates as a further contribution to the community. Such a move would need to be contained within wider reforms to the taxation system which would recognise the business of renting a property as a trading activity and not as an investment, as is currently the case. As part of this, in re- distributing revenue from the rates, we would call on the Government to consider how it could compensate accordingly those local authorities that might be missing out on substantial sums of council tax due to high numbers of students.

2.9.3 The availability of car parking in areas with a high density of shared housing remains a concern for many owner occupied residents who can find it difficult to find parking spaces, especially during term time. Whilst we should avoid draconian measures, if we are to build the case for more homes to rent it is important that residents in areas where they are needed are supportive of such moves and that new developments do not build further resentment. We therefore call on the Government to give serious consideration to expecting developers of large scale private rented housing schemes to be expected to provide the necessary cark parking to accompany such developments. Where the only parking available however is on street, the Government should work with local authorities to explore ways of limiting the number of cars per property.

 
The full report can be downloaded here: