OPPORTUNITY KNOCKS FOR THE PRIVATE RENTED SECTOR JOHN

‘OPPORTUNITY KNOCKS’ FOR THE PRIVATE RENTED SECTOR JOHN MASON HEAD OF POLICY & COMMUNICATION

Content • Housing stock, breakdown and conditions • Landlord & Tenant Demographics • Landlord Obligations (HHSRS/HMO) • CERT potential • Energy Performance Certificates • Financial Incentives

Housing Stock • Recent Home Conditions Surveys show the breakdown of Private Rented properties in the UK as follows: - TOTAL UK PRS 2, 410, 400 (11% of total UK housing stock) ENGLAND 2, 099, 000 SCOTLAND 168, 000 WALES 80, 900 N IRELAND 62, 500 87% UK PRS 3. 5% UK PRS 2. 5% UK PRS

Housing Breakdown • Breakdown of the English private rented housing stock by type of property. TOTAL 2, 099, 000 DETACHED 190, 000 SEMI-DETACHED 435, 000 TERRACED 757, 000 BUNGALOW 116, 000 FLAT 556, 000 9% PRS 20% PRS 37% PRS 6% PRS 28% PRS • Flats account for around 30% of the total PRS housing stock. • Terraced houses account for 37% of the total PRS housing stock.

Housing Conditions • Highest rates of poor condition properties. • Highest concentration of of older dwellings • Over 45% built before 1919 (pre cavity) • Over 40% properties failed to meet the decent homes standard • Higher costs involved to bring up to the decent homes standard • In 2004 less than 6% of stock had full insulation measures installed and under 20% of properties with cavity walls were insulated. • BREHOMES estimates average heat loss to be 60% higher than that of a social landlord.

Non Decent Homes • 2004 EHCS Annual Report estimated nearly half a million homes failed thermal comfort standards with almost one million non-decent. • PRS homes are on average more likely to be non-decent than any other tenure group with around 40% properties failing to meet the decent homes standard. • Around 30% of tenants are considered vulnerable. • 2005 EHCS Annual Report estimated 342, 000 vulnerable tenants live in non decent homes.

Landlord Demographics • Two-thirds of PRS properties are owned by private individuals with the remainder split between companies and other organisations. • EHCS PLS 2003 states that the Buy-to-Let boom resulted in 88% of new landlords being private individuals. • EHCS PLS states that 65% of these new landlords own one property with 19% owning 2 – 4. • Properties belonging to these ‘new’ landlords account for a third of all PRS non decent homes. • The lack of a robust ‘landlords’ register makes it difficult for scheme managers/installers to discuss possible grants/incentives.

Tenant Demographics • High proportion of short hold tenancies result in a high level of churn. • PG tenants have little interest in the benefits of insulating their landlords homes. • Tenants on 6 month contracts view repairs/improvements as inconvenient. • Sitting/long term tenants unlikely to update property with almost 70% of dwellings let for more than 10 years are non-decent.

Landlord Obligation • The Housing Health and Safety Rating System (HHSRS) replaces the housing fitness standard with a risk assessment procedure introduced on 6 th April 2006. • The system does not apply to Northern Ireland or Scotland. • Landlords can be served an improvement notice on hazards such as damp, mould growth and excessive cold. • The installation of adequate insulation measures can remove these hazards. • Assessment based on risk to the potential occupant most vunerable to the hazard (e. g. the elderly/very young). • Tenants can use this system to force their landlord to carry out appropriate measures to reduce damp and excessive cold. • Local Authorities can demand a HHSRS inspection if the landlord refuses a grant from a fuel poverty scheme or EEC.

Landlord Obligation • Houses in Multiple Occupation (HMO). • HMO licensing introduced to raise standards of property often in poor physical condition. • Housing authority has to ensure no serious hazard in licensed HMOs within 5 years of application. • This could result in a HHSRS inspection being carried out on the property. • Potential for insulation measures to be carried out.

CERT Potential • Carbon Emission Reduction Target (CERT) replaces EEC 2 from April 2008 to March 2011 • Target to double activity from that carried out under EEC 2 • Continued Priority Group requirement • Potential for insulation measures in the PRS – which has not got it’s fair share of grant funding to date!

Energy Performance Certificates • Due to encompass all property on the market by end 2007. • Rate the energy efficiency of the property scale A-G. • Lower rated homes have lower fuel bills. • May be introduced for all rental property October 08. • Compulsory rent reduction for poor ratings? • HMO license refused for not meeting minimum rating? • Incentive for insulation measures to be introduced.

Financial Incentives • Improved energy efficiency reduces fuel bills. • Reduced dampness decreases expenditure on maintenance. • Low energy costs add value when letting property. • Lower fuel bills = more disposable income for rent. • Warm, dry homes mean fewer complaints. • Tenants in receipt of benefits qualify for free or subsidised insulation. • Landlords Energy Saving Allowance (LESA) allows tax relief of up to £ 1, 500 for the insulation measures. • Landlord can claim for all properties in portfolio. (10 properties insulated = £ 15, 000 tax relief)

Quote “ Few people choose to live in cold damp homes that they cannot afford to heat well enough to protect their health. Yet for millions of British households this is the reality of poor quality housing, inefficient heating systems and inadequate building standards stretching back over generations. ” Dr Noel DL Olsen 2001 British Medical Journal Editorial