The horror of renting from one of London’s rogue landlords

Ali has only lived here for a few months and found the place via a “friend of a friend.” He has no contract or tenancy agreement. He pays £240 a month – “always cash, by a man that just comes to the door, no receipts.”

The two-storey Victorian terrace house is licensed by the London borough of Newham for renting to a single family of up to six people. There are currently five men, all strangers to each other, living here. There were eight or nine, but some have moved out already. The property has three bedrooms, plus the living room which was being used as a bedroom. The Newham housing officers point out the mould and damp, the wires hanging from the hall ceiling where a fire alarm should be. There are no beds, just mattresses on the floor.

This, I am told by one constable, “is pretty good” – a consensus view among the officers in attendance.

I have joined Newham’s joint housing and police team on a dawn raid of properties suspected of being owned by rogue landlords – operations happen early in the hope of talking to tenants before they head to work. In 2013, the London council introduced a borough-wide licensing scheme for private rental sector (PRS) properties. It has revolutionised the council’s approach to tackling abuses, enabling them to better identify and prosecute landlords operating outside of the law.

But while the scheme has many fans – the Metropolitan Police, the London Fire Brigade, the Mayor of London, local MPs and residents – it is not without its critics. To some, including the Prime Minister’s Chief of Staff and former housing minister Gavin Barwell, such schemes are a “tax on landlords”, heavy-handed regulation that risks putting off landlords to the detriment of tenants. Which seems a logical argument to make. That is, until you realise just how vulnerable some tenants are and just how far bargaining power has shifted to landlords.

The private rental sector is growing and standards need improving

Over the last two decades, the PRS in England has experienced huge growth – adding an additional 2.5 million renters since 2000. In the 1990s one in ten households were renting in the private sector, last year it was 1 in 5 (it’s estimated to rise to one in four by 2021). For those aged 24-35 it’s closer to one in two.¹ And in Newham, almost half of the borough’s properties are private rentals, and one in four of those are HMOs (house in multiple occupation).

Conditions in the PRS had been improving, but progress has stalled since 2013 – almost 30% of properties still do not meet the government’s basic ‘Decent Homes Standard’.² Research by housing charity Shelter found that 61% of PRS tenants had experienced damp, mould, leaking roofs or windows, electrical hazards, animal infestations or gas leaks in the preceding 12 months.³ Which is all the more disturbing when you consider that a third of households in the PRS have children living in them.

Anne, a no-nonsense Newham housing officer whose polite, concerned tone evokes trust in the tenants she speaks to, has seen it all. “Rats, cockroaches, awful overcrowding, children living in HMOs…families living in outbuildings.”

As we wait for her colleague to finish a tenant interview, Anne recounts a recent raid: “We opened a food cupboard…there was a rat the size of a pint glass. We called him Roland. The tenant said ‘yer, he comes in and out’.” She shows me a photo of Roland on her phone, as well as the rat droppings littering the property. I’m shown photos of the swarm of cockroaches in the fridge. These are the conditions too many tenants endure.

Action must not depend on vulnerable tenants

Why do tenants suffer in silence? Part of the reason lies in the fact that, as demand has increased, so too have rents. Between January 2011 and October 2017, rents increased 15.3% (11.4% if you exclude London).⁴

In contrast, real, median wages have fallen around 5% since 2008.⁵ Add to that cuts to Local Housing Allowance – the benefit received by many low-income families to help cover private rental costs – and it doesn’t take a genius to see landlords have the upper hand. As a Shelter report puts it:⁶

“Renters are acutely aware that they are easily replaceable…The lack of bargaining power is most acutely reflected in the practice of retaliatory eviction, where renters are evicted for complaining about poor conditions in their home.”

It’s a point Russell Moffatt, head of Newham’s housing team, makes: if you’re scared you won’t be able to find another property you can afford to rent, that the alternative might be homelessness because your landlord could respond with eviction, are you going to risk saying something?

That is particularly the case if you don’t speak great English, if you’re suffering from a mental health problem, or, as I am told is not uncommon, you also work for your landlord.

Enforcement powers are no use if you don’t know who to use them against

Critics of comprehensive licensing will point out that local authorities have both the duties and powers to tackle rogue landlords, but that’s only partly true (and doesn’t help tenants in areas with lacklustre or cash-strapped councils).

The Housing Health and Safety Rating System (HHSRS), introduced by the Housing Act 2004, enables local authority environmental health officers to inspect properties they suspect of being ‘hazardous’. There are ten hazard bands and only if the property is risk assessed as falling within one of the top three, constituting a ‘category one hazard’, are local authorities duty-bound to act. Anything less than a hazard one and action is discretionary. Only tenants whose complaint has been assessed as a category one violation are protected from retaliatory eviction. And even then, only for six months.

Last year, in the Housing and Planning Act 2016, the Government boosted the enforcement powers available to councils, introducing rent repayment orders and financial penalties of up to £30,000. These are designed to hit rogue landlords where it most hurts – their wallets. Analysis by the Independent newspaper estimates that £2.5 billion in housing benefit is paid to rogue landlords each year.⁷ It’s a lucrative business.

The Newham housing officers estimate that Ali’s landlord makes in excess of £1,500 a month from that single property, and if the experience of other properties is anything to go by, it’s unlikely the correct tax is being paid (particularly when the arrangement is cash in hand). Just looking at the property tells you little is being spent by way of maintenance.

Being able to claw back rent and dole out hefty fines is welcome, but it’s not enough. That’s where banning orders come in, also a provision in the 2016 Act, which would enable local authorities to ban landlords who commit serious infringements from letting properties indefinitely. But while the repayment orders and fines came into force in April, banning orders, originally expected last month, appear to be in limbo. The Department for Communities and Local Government (DCLG) say they now expect them to come into force in April next year, along with a national register of rogue landlords. Depending on where the bar is set, banning orders could be far more disruptive than fines.

To ban a landlord, however, you still have to know who the landlords are, which, according to Shelter, is a problem: most local authorities lack even “basic information on landlords and private rented stock in their area.”⁸ Instead they rely on tenants to raise the alarm. Which brings us back full circle to a system that relies on vulnerable people to act against the unscrupulous landlord they are reliant on for their shelter – and why licensing can make such a difference.

Newham has the information via a central hub to identify rogue landlords – a combination of data from licensed properties, and multiple sources of information and intelligence from council and partner sources. Think overflowing rubbish bins, social service visits, school records, council tax non-payments. And Newham has the power to ban landlords, by refusing to license or re-license them.

Anne tells me about a landlord who was banned when full-borough licensing was introduced. “He used to go around to night shelters and collect tenants – so they could have drink problems, drug problems, mental health problems.”

“As long as they were eligible for housing benefit,” Russell adds.

The landlord had been prosecuted at least twelve times before licensing was introduced. Within twelve months of the launch of Newham’s licensing scheme in 2013 he had left, no longer preying on the borough’s most vulnerable.

But there’s a twist. Rather than selling his properties he leased them to a local housing association, and the lease runs out the day after Newham’s five year licensing scheme runs out…which, if not renewed, is at the end of this year.

Licensing is a small price to pay to protect the most vulnerable

Full licensing is already mandated for large HMOs – properties of three or more storeys rented to at least five people who form more than one household (i.e. not a single family), and who share facilities such as a bathroom or kitchen. Councils can use their discretion to mandate licensing of smaller HMOs in their area, and, until 2015, could introduce “selective” schemes to cover non-HMO properties – which is what Newham did.

In 2015, however, the government introduced regulations that require local authorities to seek permission from the Secretary of State for schemes which cover more than 20% of their geographical area or more than 20% of their privately rented homes.⁹

Newham therefore has to apply to DCLG to continue their scheme, which they did in July. Despite the department’s own guidance stating they aim to make a decision within eight weeks, the London borough only received a decision yesterday, more than four months later. A spokesman for the department told me: “We had to request further detailed information from the council to support their application”, but Newham say they fulfilled the last request over a month ago.

The Secretary of State has not granted permission for Newham to continue its full-cover scheme – the postcode E20, the location of London’s Olympic village, is excluded on the grounds that its not deprived enough. The decision to exclude one, small area feels tokenistic – a fig leaf that allows the government to maintain its deregulatory credentials – but the outcome is nonetheless a relief for the team fighting landlord abuses.

In making decisions on selective licensing schemes, the government should remember that, by definition, rogue landlords are dishonest – as the property I visited shows, they are unlikely to obtain the correct license. If every property needs a license, there’s no confusion about the rules, and housing officers can focus on houses which intel suggests are either incorrectly licensed or rented but not licensed at all.

There are also substantial knock-on benefits from licensing, as Newham has demonstrated. Through the work of the joint housing and police team criminal activity has been identified, including trafficking and prostitution; over £3 million in unpaid council tax has been recovered from landlords; illegal immigration has been detected; and data has been shared with HMRC to pursue unpaid tax on rental income. Newham police have made around 750 arrests during licensing operations.

So yes, full PRS licensing does mean work for landlords in registering their property and a small cost (Newham propose to charge £400 for a five-year lease). We can recognise that the majority of landlords fulfil their duties – 82% of private renters say they are happy with their accommodation¹⁰ – while also recognising that the abuses of some warrant better regulation. No one is suggesting all HMO landlords are bad, yet we still mandate licensing, and a quick look at local authority schemes suggests fees of around £1,000 are not unusual.¹¹ The trick is to ensure schemes are designed to be light-touch for compliant landlords.

At a debate in parliament this month, housing minister Alok Sharma confirmed the government will be undertaking a review of selective licensing.¹² With so many more people living in private rental accommodation, and with the balance of power having shifted so far in the landlord’s favour, government must remember its primary duty – to stand for those who can’t stand for themselves.