Clive Betts: As rentals rise, there are vital questions to ask

While much of the committee’s work inevitably takes place in London, it is important that we occasionally break out of the “Westminster bubble” and visit other parts of the country. On this inquiry I have noticed a divide between London and the South East and the rest of England, making the need to get out of London even more vital.

This morning we were due to meet with landlords and tenants, before seeing some private rented housing in the Cross Green area of the city. In the afternoon, we are taking oral evidence in Leeds Town Hall, from local authorities from Leeds, Bradford and York, the National Union of Students, a group representing property owners, and an organisation concerned about the impact houses of multiple occupation have on communities.

Our inquiry was launched in October 2012 against a backdrop of substantial growth in the private rented sector. Presently, around 17 per cent of households rent privately, compared to only 10 per cent a decade ago. At the same time, owner occupation as a percentage of total tenure has fallen.

There are many factors contributing to these developments, but the fact that they predate the recent financial crisis is suggestive of longer-term structural change. The increase in private renting could well be here to stay. The committee is still collecting evidence and has not yet reached any conclusions. But the inquiry has thrown up a number of issues that we shall have to consider. Most obviously, are we building enough homes to deal with growth in the sector?

Last year, the committee conducted an inquiry into the financing of new housing supply. Among our findings was a need for greater investment in private rented housing, in particular from sources that have traditionally ignored it such as large institutions and pension funds. This could make a huge difference to the number of houses we build.

Smaller landlords must also be incentivised to grow their portfolios, perhaps through a simplification of the tax and regulatory structures governing the sector.

A focus on building more homes is needed, but we must not overlook issues relating to the existing stock.

While housing decency standards have improved over the last decade, the private rented sector still has the highest incidence of non-decency. Although the vast majority of landlords are decent and law abiding, a small minority leave tenants in cramped, damp and dangerous accommodation. This is not only completely unacceptable, it damages the reputation of all landlords.

Do local authorities have the necessary powers to deal with these rogue landlords and raise standards across the sector more generally?

We must also consider the role of letting agents, who many think have been unregulated for far too long. Pointing out that anyone can currently become a letting agent,, the Royal Institution of Chartered Surveyors has described the lettings sector as the property industry’s “Wild West”.

The Government is looking to address this by proposing that letting agents be required to be part of a redress scheme. Will this be sufficient, however? And what will it do to improve standards? We must also look at the fees charged by agents, and whether anything should be done to make them more transparent.

As well as being more likely to rent, people are also increasingly viewing private renting as a long-term option. This makes security of tenure all the more important. Some people rent because they value the flexibility: for them, short term contracts are ideal. For others, however, particularly those with children in school, moving house can be incredibly disruptive.

People should not have to constantly look over their shoulders for fear that they could, at any time, be asked to move. Landlords and letting agents tell us the current tenancy arrangements provide sufficient flexibility, yet six-month contracts remain the norm. In other European countries, indefinite tenancies, with inflation-linked rent increases, are commonplace. Should we be encouraging the adoption of similar arrangements in England? Or will attempts to reform the structure of tenancies jeopardise much-needed investment in the sector?

If we are to produce credible answers to these questions, the committee must hear from people actually living in the private rented sector who are experiencing it first-hand. We must also speak to local authorities, and those people providing the housing, about the steps they are taking to raise standards and make life better for tenants.

Today’s visit to Leeds will assist the committee greatly by allowing us to do just this. It will help to ensure that our conclusions, and our recommendations to the Government, are not only evidence-based, but embedded in first-hand experience.