How rogue landlords take advantage of the social housing shortage, and what local authorities can do about it.
Published February 2023
Taking advantage of the housing gap
Rising numbers of homeless applicants and a lack of social housing have driven local authorities into a corner. Many authorities do not have anywhere near the housing stock they need to deal with homelessness in their area.
The private rented sector offers some relief, providing local authorities with additional properties they can use to discharge housing duties. Competition between local authorities to secure more private housing has encouraged a rapacious and often dubious landlord market keen to call the shots.
In their desperation to discharge homelessness duties, some local authorities find themselves doing business with landlords who are unscrupulous or even criminal.
How we got here: homelessness duties and the Localism Act
The Localism Act 2011 is a massive and sprawling piece of legislation, covering everything from planning through to procurement of public services, council tax, local governance, and even tax matters. Unless you work in these areas you have probably never even heard of it.
One of its effects was to amend homelessness legislation in a way that is having an increasing and unforeseen impact on housing.
Previously, homeless households who were owed a main housing duty could accept or reject a local authority's offer of private-sector accommodation. The Localism Act took away that choice. A local authority can discharge its duty by making an offer of private rented accommodation that the applicant cannot refuse.
A shift in homelessness provision
A raft of new private housing providers took advantage of this change. The pendulum has swung to where we are today, with private landlords housing most of the homeless applicants in some areas of the country. Local authorities are desperate for properties they can rehouse families into, and the private rented sector offers a ready market of both decent and decidedly non-decent operators.
Giving local authorities the opportunity to take advantage of the private rented sector to house homeless applicants made sense on one level. The right to buy was increasingly killing off social housing. Private rents, although higher than in the social sector, were still nowhere near what they are today. Many of the private rental offers made to homeless people were affordable, even if the tenancy did not offer the same security as a local authority tenancy would.
Few people considered at the time how much this would change the way local authorities depend on the private sector to relieve homelessness.
Financial incentives for private landlords
A private landlord can acquire a rental property with a buy-to-let mortgage, and sign it over to the council to let and manage without having to get involved day to day. Meanwhile, councils have had to learn how to attract private landlords and talk the language of the entrepreneur to bring new properties on board if they want to discharge their housing duties.
Many councils started offering finder’s fees: a financial inducement to encourage an owner to hand over their properties. This started a bidding war as homelessness continued to rise and councils competed to sign up properties, often in areas far away from their own. The era of the out-of-borough placement was upon us.
Once a homeless household is in a private rental property, some landlords raise rents knowing the council will top up the difference to avoid having to rehouse the family again.
Involvement of rogue landlords
All this activity attracted the rogue and criminal element among landlords and letting agents drawn to increasingly competitive finders' fees, some running into several thousands of pounds. Local authorities are so desperate to secure accommodation that attempts by enforcement officers to highlight an offender are dismissed as inconvenient truths by the teams who need to sign up their properties. Some even give problem landlords extra money to renovate their properties.
Any council officer working in housing enforcement can tell you their own tales of landlords and agents that they are investigating, even prosecuting, who are being courted and signed up by procurement teams in their own council.
This approach can affect broader local authority policy if enforcement is discouraged because of its adverse effect on local private landlords. Local council members sometimes take a public stance saying “we prefer to work with our landlords”, a view not always shared by those in private rented sector enforcement.
In one case I was involved with, a landlord well known to enforcement was given £10,000 to bring his property up to scratch. No one was interested in the fact that he also owed the same council £30,000 in unpaid council tax.
Research into private rented sector enforcement
Recent research into this problem identifies issues with private rented sector enforcement generally. A December 2022 House of Commons library research briefing reported “widespread concern about low and inconsistent levels of enforcement between local authorities”.
Research by Sheffield Hallam University, commissioned by DLUHC, identified barriers to local authority enforcement including:
lack of knowledge of the private rented stock preventing informed, strategic decision making
limited enforcement capacity, restricting some local authorities to just ‘fire-fighting’
lack of political or corporate commitment to improving housing conditions - making it difficult to robustly enforce standards
issues relating to the legal framework, such as the range and complexity of laws relevant to enforcement work
How local authorities can avoid rogue landlords
Some of these problems could be avoided if all landlords were vetted. Ideally, local authorities would visit all the properties on offer to ensure they meet a decent standard, but a lack of resources means there aren’t enough staff to do this work. Rogue landlords can get their money from the council and if there are any problems, they are unlikely to find an enforcement officer on their doorstep.
Safer Renting’s tips to help procurement officers identify rogue operators in the private rented sector:
Find out if the person you are dealing with is actually the property owner. Land registry checks can be done online and take 30 seconds.
Ask agents for a copy of the management contract to make sure all is above board. Check they have a contract with the property owner and not an intermediate landlord.
Circulate the details of new providers and addresses by email to Licensing, Environmental health, tenancy relations (if you still have them), council tax and planning enforcement to see if they have any concerns or involvement.
These steps take minimal time, and apart from £3 for land registry, cost nothing. They help to weed out the abusers who are monetising homelessness and holding local authorities to ransom.
About Safer Renting
Safer Renting works with ten London Boroughs to provide a Tenancy Relations Officer service to help them tackle rogue and criminal landlords. It provides specialist advice, support, and advocacy for vulnerable tenants. Find out more on the Cambridge House website.