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The Supply of Rented Housing
Evidence submitted to the Inquiry by the Select Committee for Communities & Local Government
[Report published 2008]

1. The National HMO Lobby is a network of forty-five community groups in thirty towns throughout the UK, campaigning on housing issues since 2000. Its concern is specifically with HMOs (houses in multiple occupation), and especially with addressing the problems these can pose for local communities. To this end, while its members campaign locally, the Lobby itself campaigns nationally. We have made representations on the Housing Green Paper Quality & Choice (DETR, 2000), Modernising the Private Rented Sector (Shelter Commission, 2001), Selective Licensing of Private Landlords (DTLR, 2001), Use Classes Order (DTLR, 2002), Draft Housing Bill (Commons Select Committee, 2003), Planning Policy Statement 1, Creating Sustainable Communities (Minister for Planning, 2004), the Housing Act itself (representations, 2004), The Implementation of HMO Licensing (ODPM, 2005), Householder Consents (ODPM, 2005), Affordability & the Supply of Housing (Commons Select Committee, 2005) and so on. We have held meetings with successive Housing Ministers (Nick Raynsford 2001, Lord Falconer 2002, Keith Hill 2004), and our lobbying was instrumental in initiating Universities UK’s report on Studentification (2006). [For information on the Lobby and its lobbying, visit our website.]

2. The National HMO Lobby wishes to respond to two queries in particular in the Inquiry into the Supply of Rented Housing by the Select Committee for Communities & Local Government, namely The role and effectiveness of private rented housing in meeting housing needs and The role and effectiveness of the planning system ... in the provision of rented housing and securing mixed tenure housing developments. In particular, the Lobby wishes to sound a note of caution regarding the role of private renting in housing supply. In many cases, this type of tenure is actually detrimental to housing supply; it can also be damaging to the sustainability of communities; and amendment of the planning system is essential to address these negative effects.

3. First of all, much private renting is actually used as second homes. When there is a housing shortage, the existing stock should be used as justly as possible. To our mind it seems little short of criminal that there are people who are homeless, families who are overcrowded, households anxious to establish their own homes – when others enjoy the luxury of not only a secure home, but also an additional second home which they can also enjoy at their whim. Second homes take a variety of forms. Best-known of course is the town-dweller who buys a country cottage as an occasional weekend or holiday retreat. But a recent report has drawn attention to student second homes also, where parents buy a house in a university town for use by their children in term-time [reverse holiday-homes]. “Around 83,000 homes were bought on behalf of students by last year, a 26% increase since 2000, according to the study by finance firm Direct Line. The number of houses occupied by students was predicted to reach 100,000 by the year 2010. The so-called university effect helped increase the number of ‘second properties’ to 2.6 million, up from 2.3 million five years ago. Around 1.6 million of the second properties were buy-to-let, while others included holiday homes and work bases” (Press Association, 7 August 2006). In Leeds, there are currently 500 homeless families and 5000 overcrowded (according to Shelter), while the Council estimates that over 5000 homes have been converted to student HMOs. In many cases, both types of second home are bought directly by the users. But the burgeoning buy-to-let market, not to mention the professional private rented sector, has taken advantage of both of these sources of demand. Of course, much of the private rented sector serves a genuine temporary need, for those moving from the family home to their own home, or from one place of work to another. Private renting also serves those who can’t afford to buy. But to some degree, this is a vicious circle - would-be owners are outbid by property investors. This is especially invidious when investment properties are let as second homes, to holidaymakers or to students. (For these markets, there are perfectly viable alternatives, in the form of purpose-built development, hotels or halls.) The numbers of houses from existing stock lost to second homes through private renting runs into the millions. This is one respect in which private renting is detrimental.

4. Secondly, the impact of private renting can often be damaging to the sustainability of communities. The Department for Communities’ website provides working definitions of ‘sustainable community’, based on eight elements - Active, inclusive & safe, Well run, Environmentally sensitive, Well-designed and built, Well-connected, Thriving, Well-served, and Fair for everyone. The Lobby endorses all these, all are necessary to sustaining a community. However, neither separately nor indeed collectively are they sufficient. Above all, a community rests on its population base, and it is that population which makes the community harmonious, or the environment green, or the neighbourhood attractive, and so on. What this means is that a sustainable community is absolutely dependent on a population base which is both willing and able to do these things. Lacking this base, no amount of external intervention will achieve any of the necessary elements. Now, a transient or a seasonal population lacks either the ability or the will (or both) to sustain a community. Seasonality and/or transience mean part-time residents – who inevitably lack the commitment and/or the capacity to work for the community’s sustainability. (Indeed, their very presence erodes community itself.) But seasonality and transience are precisely what is inflicted on communities by privately rented second homes. In small proportions, the impact may be modest. But such private renting is often attracted to honey-pot locations – either attractive rural or coastal locations (for holiday-homes) or university towns (for student-houses). The upshot is that concentrations of private renting arise, with deeply damaging effects on communities. In the case of university towns, this phenomenon has been labelled ‘studentification’ by Universities UK itself (for instance, in their report Studentification, 2006). In this second aspect, then, private renting can be detrimental.

5. One measure would contribute at least part of an answer to these issues concerning both permanent homes and sustainable communities. The measure centres on the role of HMOs. On the one hand, a significant proportion of second homes (no longer available as permanent homes) are student houses. Virtually all of these are shared houses, and therefore fall within the definition of HMO newly provided by the Housing Act 2004. On the other hand, a significant factor in transience (undermining sustainable communities) is the private rented sector. Turnover of occupants is highest in this housing sector (the average tenancy is eighteen months), and it is highest of all in HMOs. They have their uses for short-term accommodation, but very few would care to reside for long in a HMO. The new Housing Act provides for licensing of HMOs (mandatory licensing of larger and less safe HMOs, potential additional licensing of others), but these controls are in the interest of the welfare of the tenants. They are concerned with quality, not quantity. But it is quantities which need to be managed, if houses are not to be lost as permanent homes, and if sustainable communities are not to be lost to transience. Proliferation of HMOs is a matter of planning (not housing) control. But no controls are available in English planning legislation. The relevant Statutory Instrument is the Use Classes Order (specifically the Town & Country Planning (Use Classes) Order 1987 [SI 1987 764]). But HMOs are not identified there as a distinct usage, and so there is no planning control of HMOs. As part of an answer to achieving decent homes and sustainable communities, the National HMO Lobby proposes revision of the Use Classes Order, such that (a) a common definition of HMO is adopted in both housing and planning legislation, and (b) change of use to HMO becomes subject to planning permission. (Both these steps have been taken in Northern Ireland’s Planning [Use Classes] Order [Northern Ireland] 2004 [Statutory Rule 2004 458].) Such revision would enable local authorities to control proliferations of privately rented HMOs, to ameliorate the detrimental use of private renting, and thereby preserve part of the housing supply.

Dr Richard Tyler, Co-ordinator, National HMO Lobby, October 2006

The CLG Committee's Report was published on 21 May 2008. The Report is encouraging, as it endorses much of what the National HMO Lobby has been arguing for the past eight years. "Other factors have a significant effect on the market, and they are not fully understood by the Government. The growth in student accommodation, and its concentration in certain areas of university towns, is one such factor." And it is gratifying to see the National HMO Lobby quoted in para 180. The Report supports (critically) the government initiative on student housing and HMOs (Rec 41). It advocates support for HMO licensing (Rec 42). And it proposes easing the process of applying for additional HMO licensing (Rec 43). Also, the Report argues very strongly for mixed communities. Recommendation 3 says: "The creation of mixed communities to reduce social polarisation should pervade all spatial and housing policy; local authorities must be allowed the necessary freedoms to pursue this aim." (In fact, the Report is here referring to mix of social renting with owner-occupation, etc; but the principle applies elsewhere.) What is missing is acknowledgement that concentrations of HMOs are another form of polarisation. And also an ignorance that private renting is largely at the expense of (not additional to) housing available for owner-occupation. The Report sees more of all forms of tenure as essential - when they can be in direct competition.

The government's response was published on 18 September 2008..

National HMO Lobby
email: hmolobby@hotmail.com website: www.hmolobby.org.uk