Government failing to protect private renters, says watchdog

A report by the National Audit Office claims that the way private renting is regulated makes the sector unfair to renters.

It also criticises the Department for Levelling Up, Housing and Communities for failing to have a detailed plan to address the problems that renters face.

The NAO report, out this morning, says privately rented properties are less likely to comply with safety requirements than other types of housing, and are more likely to be classified as non-decent. 

An estimated 13 per cent of private rented homes - that’s some 589,000 properties - have at least one category 1 hazard, defined as a serious threat to health and safety. This compares with 10 per cent of owner-occupied homes and five per cent of social housing. 

In addition, an estimated 23 per cent of private rented homes are classified as non-decent.

The NAO also slams the DLUHC for its piecemeal approach when introducing legislative changes to protect tenants' rights. 

In recent years it has introduced changes such as a mandatory redress requirement for letting agency work, a ban on charging letting fees to tenants, and temporary restrictions on evictions during the COVID-19 pandemic. 

However, the NAO claims DLUHC does not yet have a strategy for what it wants the regulation of the sector to look like as a whole

A summary of the NAO’s report says: |DLUHC's approach is also limited by gaps in the data showing what problems are occurring and where. DLUHC has some insight into how the sector is working, such as on property conditions and tenants' finances, but it lacks data on key issues where regulatory action may be required. 

“These key issues include harassment, evictions, disrepair that is not being addressed, or on the costs to landlords of complying with obligations. 

“Without this data, DLUHC will also struggle to measure the impact of its interventions. DLUHC told the NAO that it wants to collect better data as part of the planned reforms, but it has not yet developed a plan to improve its data.”

The report is also fiercely critical of councils.

It claims that local authorities take different approaches to regulating the sector in their areas, including how they ensure landlords comply with legal obligations. For example, some authorities inspect almost none of their privately rented properties while others inspect a large proportion. 

There is also little evidence of local authorities making use of certain regulatory tools such as banning orders and penalty notices - only 10 landlords and letting agents having been banned by local authorities since new powers were introduced in 2016. 

“DLUHC has limited data on what tools and approaches are used by local authorities, and therefore cannot meaningfully analyse which are more effective at improving compliance and protecting tenants” says the report.

NAO adds that tenants face several barriers to enforcing their rights, suggesting there are limited redress options, and much reliance on tenants themselves having to assert their rights. 

“This means that tenants must negotiate with landlords directly or take action through the courts, which can be costly. This also relies on tenants having an awareness of their rights. Surveys estimate that 35 per cent of tenants say that a lack of knowledge of their rights made negotiating with their landlord difficult” claims the report. 

The report notes that there will be a government White Paper on rental reform next year.

“To support this process, the NAO recommends that DLUHC defines an overall vision and strategy for the regulation of private renting. It should review whether current dispute resolutions arrangements for private renters are appropriate and accessible for all tenants, and improve its understanding of the experiences among private renters to inform how support is targeted at those most in need.”

Gareth Davies, the head of the NAO, says: "The proportion of private renters living in properties that are unsafe or fail the standards for a decent home is concerning. The government relies on these tenants being able to enforce their own rights, but they face significant barriers to doing so.

"The Department for Levelling Up, Housing and Communities should improve the quality of its data and insight into the private rented sector, so that it can oversee the regulation of the sector more effectively. It should develop a clear strategy to meet its aim of providing a better deal for renters."