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Review of the Private Rented Sector: Volume 1: Key Findings and Policy Implications

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6. Homeless Households and the Private Rented Sector

Introduction

6.1 This chapter sets out analysis conducted as part of the review on the existing use of the private rented sector to house homelessness households and the extent to which greater use could be made to provide settled accommodation. The Scottish Government consulted in 2008 on proposals to enable local authorities to discharge their duty to unintentionally homeless persons in priority need via a Short Assured Tenancy ( SAT) providing certain conditions were met 39. The review has examined the potential of the PRS to provide sustainable settled accommodation for homeless households and has also examined case studies and examples of schemes developed by local authorities to facilitate access to the PRS for homeless households (see GPRP:71-110).

Levels of homelessness and the existing role of the PRS

Achieving the 2012 target will alter the demographic of households to whom local authorities owe a duty of settled accommodation

6.2 Local authorities are currently working towards delivery of the target to abolish priority need by 2012. Achieving the target will mean all unintentionally homeless households will be treated equally and those currently assessed as 'non-priority' will be entitled to settled accommodation. This will mean providing settled accommodation for greater numbers of homeless households, including demographic groups - for example young, single people - who, generally speaking, have a current entitlement only to temporary accommodation.

6.3 The number of homelessness applications to local authorities, which had remained steady in the mid-to-late 1990s, increased rapidly from 2000-01 to peak in 2005-06 before falling slightly. The numbers of households found to be homeless broadly mirrored this trend and the proportion found to be in priority need increased steadily from 2000-01 (Chart 6.1). These trends have been driven by legislative changes and policy development - notably a new duty on local authorities to provide temporary accommodation to all those assessed as homeless from 30 September 2002 and the expectation that higher proportions of applicants will be assessed as priority need as local authorities progress to 2012.

Chart 6.1 Homelessness assessments and priority cases, 1992-93 to 2007-08

Chart 6.1 Homelessness assessments and priority cases, 1992-93 to 2007-08

Source: HL1 returns to SG Housing Statistics, 2007-08

6.4 The percentage of people who apply to local authorities as homeless differs considerably by local authority area. Chart 6.2 shows that five local authority areas have over 3% of households applying as homeless (17,700 applications in these 5 areas), with one of these local authority areas having over 5% (2,200 applications in West Dunbartonshire). On the other hand, there are a few local authority areas with less than 1.5% of households applying as homeless, with one of these areas at less than 1% (just 300 applications in East Renfrewshire in 2007-08).

Chart 6.2 Percentage of households applying as homeless

Chart 6.2 Percentage of households applying as homeless

Source: HL1 returns to SG Housing Statistics, 2007-08

The PRS already plays a role in housing homeless households

6.5 The private rented sector is already used to accommodate homeless households. Many local authorities source temporary accommodation from the PRS, particularly through leasing schemes. The sector is also used to achieve more settled housing outcomes, notably where households placed in temporary accommodation in the PRS choose to remain in the tenancy in the longer term, or where a tenant is assisted to find accommodation in the PRS through, for example, a rent deposit guarantee scheme. In 2007-08, private rented accommodation was offered to 1,573 homeless households of whom 99% took up the offer, mainly single person households and single parents. This represents nearly 3% of all applicants in 2007-08, and 7% of those assessed as homeless who were offered accommodation of any type.

6.6 As levels of homelessness and the size of the PRS within each local authority vary, the extent to which the PRS is used to house homeless people varies accordingly. Chart 6.3 shows the percentage of people assessed as homeless who were offered private rented accommodation as a result of their application. The chart shows that usage of the PRS varies considerably among local authority areas, with Edinburgh using the PRS in over 20% of cases, other areas, such as Aberdeen City, barely using the PRS at all (less than 1%). The Scottish average (highlighted below) was 7.0%.

Chart 6.3 Percentage of households assessed as homeless who were offered private rented accommodation, 2007-08

Chart 6.3 Percentage of households assessed as homeless who were offered private rented accommodation, 2007-08

Source: HL1 returns to SG Housing Statistics, 2007-08

6.7 Chart 6.4 shows the housing outcomes achieved by those applying as homeless, broken down by different family types. This chart shows that the vast majority of homeless people who are offered accommodation are offered a social rented tenancy; however, single parents and other households with children are more likely to be offered social rented accommodation than single people and other households without children. Again single parents and households with children are more likely to be offered accommodation in the private rented sector than other families.

Chart 6.4 Tenancies offered to homeless households, by household type

Chart 6.4 Tenancies offered to homeless households, by household type

Source: HL1 returns to SG Housing Statistics, 2007-08

The PRS is a suitable housing option for some homeless households

6.8 In broad demographic terms, Charts 6.5 and 6.6 below show that, while there are some differences between the groups, both homeless people and people living in the private rented sector tend to be young in age and in smaller family types. This suggests that the private rented sector may be a good option for many people who apply as homeless, particularly those groups who are currently not in priority need. The sector will not be suitable for all homeless households, but can potentially offer an alternative choice to social rented accommodation, particularly for those seeking specific property types or locations.

Chart 6.5 Comparison of homeless applicant households and PRS households by age

Chart 6.5 Comparison of homeless applicant households and PRS households by age

Source: HL1 returns to SG Housing Statistics, 2007-08, Scottish Household Survey

Chart 6.6 Comparison of homeless applicant households and PRS households by household type

Chart 6.6 Comparison of homeless applicant households and PRS households by household type

Source: HL1 returns to SG Housing Statistics, Scottish Household Survey

6.9 It is important to note that tenancy breakdown within the sector can be seen as a contributor to homelessness. In Scotland 13% of homelessness presentations come from the PRS; 14% from social renting and 7% from owner occupation. The remaining 66% are from institutions, tied accommodation or staying with friends 40.

The potential for the PRS to assist with meeting the 2012 target by providing settled accommodation varies across Scotland

6.10 As mentioned above, the private rented sector is potentially an important source of accommodation for those who are applying as homeless to local authorities. This will be particularly true as councils move towards the 2012 target. The point has been made that the sector offers additional choice for households, but the housing aspirations of households must also be borne in mind when considering whether the sector has the capacity to respond, i.e. not all homeless households wish to live in the private rented sector.

6.11 Taking this into account, the model which the Scottish Government has developed to assist in assessing the capacity of local authorities to meet the 2012 commitment looks at both the need for settled accommodation for all unintentionally homeless applicants and the amount of accommodation likely to become available from the various housing sectors that can assist in meeting that need.

6.12 Because of the relatively low use of the private rented sector to house homeless households at present, it is not clear what the overall proportion of private lets which might be secured for homeless households by councils might be, nor the proportion of homeless households for whom a private let would be the most suitable outcome. At present, it is assumed that:

1. A private rented let would be suitable for no more than 20% of priority homeless households who need permanent accommodation; and

2. No more than 10% of all PRS lets would be available for homeless applicants.

6.13 It is thought that these assumptions are suitably cautious and they will be modified as better evidence is obtained on the sustainability of PRS outcomes.

6.14 Chart 6.7 shows, for each local authority, the projected need for settled accommodation for homeless households in 2013-14, and the number of lets likely to be available for homeless households in the social and private rented sectors 41. For the social sector, it is assumed that no more than 60% of social lets will be available for homeless households. The projected private rented lets available are based on the assumptions set out above. As can be seen from the chart, on the basis of these broad assumptions the PRS looks to have the potential to provide a valuable contribution to meeting housing need in a number of areas with significant pressure on the available social lets.

Chart 6.7 Results of Modelling based on noted assumptions

Chart 6.7 Results of Modelling based on noted assumptions

6.15 It should be noted that these projections are not a prediction of what will actually happen by 2012. The projections are intended to give some idea of the general scale of the issue and indicate the potential for the private rented sector to support the 2012 commitment based on the assumptions outlined earlier 42. Individual local authorities may indeed have identified other ways to address the 2012 commitment which are not included in this modelling process.

Conclusions

6.16 The private rented sector already plays an important role in accommodating homeless households, offering choice and flexibility of property type and location. The evidence shows that the demographics of homeless applications are similar to the characteristics of the private rented sector, suggesting that the sector can offer appropriate and suitable housing outcomes for many households as a result. The evidence also shows that the sector has the potential to make a greater contribution to meeting housing need, and so reduce pressure on social housing stock, as councils progress towards 2012 43.

6.17 The Scottish Government wants to work to prevent homelessness and sustain tenancies. As discussed in Chapter 4, evidence from the landlords and tenants surveys points to several key reasons for tenancies breaking down in the private rented sector and the Scottish Government will consider ways of addressing those issues. The Scottish Government will also be publishing new guidance for local authorities on the prevention of homelessness. This will promote factors such as tenancy sustainment which can help reduce the incidences of homelessness.

6.18 The requirement under section 11 of the Homelessness (Scotland) Act from 1 April 2009 for private landlords to inform local authorities when they take court action to evict a tenant promotes the importance of communication between landlords and local authorities and increases the ability of local authorities to prevent homelessness from arising in such circumstances.

Maximising the potential of the private rented sector

Local authorities seek greater flexibility in using the private rented sector to meet the needs of homeless households

6.19 Local authorities can discharge their duties to unintentionally homeless priority need households in the private rented sector through securing an assured tenancy. However, as shown in Chapter 4, the vast majority of tenancies in the PRS are short assured tenancies. These do not currently constitute a discharge of duty. Local authorities have consistently sought legislative change to enable them to discharge duty in the PRS via a short assured tenancy 44. The Scottish Government consulted in 2008 on proposed circumstances in which this flexibility should be granted. These included proposals on informed consent, affordability, tenancy length and housing support.

6.20 Analysis of the consultation responses suggests that there is a large degree of support in principle for the proposals set out in the consultation. There was consistent recognition across all respondents that the private rented sector can and should play a greater role in becoming a sustainable housing solution for homeless households and that the proposals offered an additional choice for service users as well as an important additional means in achieving the 2012 target.

6.21 Despite broad support for proposals, almost all consultees highlighted concerns over some of the practicalities of implementing the proposals and/or raised concerns over certain aspects of what would become the prescribed circumstances. In general, there were mixed views on issues surrounding informed consent and on the length of the tenancy deemed appropriate for discharge of duty in the PRS. Virtually all respondents highlighted issues relating to the affordability of private rented accommodation for homeless households in the context of the current economic climate, the welfare reform agenda and the local context. Despite raising these issues, the large majority of local authorities in particular supported the proposals and made useful suggestions for ways in which the requirements of affordability, housing support and informed consent could be strengthened so the proposals can be implemented in the most appropriate way in local contexts.

The majority of PRS landlords are reluctant to house homeless households generally, due to fears about rent arrears and anti-social behaviour, but a significant minority are willing to consider it and evidence from case studies shows that it can be a successful option for both tenant and landlord

6.22 The review found that most landlords would not consider letting accommodation to homeless households. However, a substantial minority of landlords were willing to consider doing so, on the basis that particular safeguards - rent guarantees and management support - would be available.

6.23 A third of landlord respondents (32%) said they would probably or definitely consider letting their accommodation to homeless single people if the rent was guaranteed. Slightly more landlords (38%) said that they would probably or definitely consider letting their accommodation if both the rent was guaranteed and the council managed the property; and slightly more landlords would be willing to house families rather than single people (41% with both rent guarantees and council management) ( LS:55).

6.24 Landlords more likely to be amenable to housing homeless households were those with larger portfolios. Landlords least likely to house homeless households included landlords with one property, those in rural Scotland and part-time landlords who were not principally motivated by investment reasons.

6.25 Further context was gained from focus groups with landlords, which suggested that landlords are not unsympathetic to the needs of vulnerable and homeless people ( LS:78). One fundamental constraint appeared to be the perceived risk of anti-social behaviour and the negative impact of this on other tenants and friends of the landlord who live in the same neighbourhood. Landlords recognised that problem tenants were very much in a minority, but they did not trust statutory agencies to help them resolve a problem when it occurred and were therefore not willing to take the risk.

6.26 The review examined the practice of local authorities in engaging with the PRS and specifically looked at the options open to increase the supply of properties for homeless households ( GPRP:71-110). This research shows similar trends to that of the Landlords Survey and demonstrates that local areas where supply options have been successfully developed required a programme of long-term engagement and the building of trust between statutory agencies and landlords. In order to become involved, landlords needed to be able to trust that support would be available if required (including the fast-track administration of LHA to assist with rental problems) and that statutory services were suitably co-ordinated to assist with anti-social behaviour and other problems (support to individuals and co-ordination of police and council services).

6.27 As discussed in Chapter 3, a further issue raised by landlords was the reform of Local Housing Allowance and the loss of 'rent direct' ( LS:79). Direct payment of rent to tenants was found to be a key disincentive for landlords. While landlords understood the rationale for most tenants to be allowed to manage their own money and pay their own rent, landlords cited recent difficulties collecting rent and dealing with rent arrears. Even landlords happy to house housing benefit tenants in the past were now reluctant. Landlords were also highly critical of their local authority's competence in handling the administration of housing benefit and LHA, including a lack of communication from councils in response to the problems that the withdrawal of 'rent direct' were causing. Several landlords reported that they had had to evict tenants as arrears mounted due to inaction on the part of the councils concerned. One of the key changes that landlords wanted to see was a reversal of the UK Government's decision on direct payment of rent.

There is a range of supply options for housing homeless households in the private rented sector

6.28 Given the basis of trust and positive engagement, there are many examples of successful joint working between local authorities and landlords to house homeless households in both temporary and settled accommodation.

6.29 Temporary accommodation is often provided by leasing properties from private landlords. This can be done on an ad hoc basis, either directly by a local authority or by an RSL which makes the property available to the local authority. Alternatively, there can be a Private Sector Leasing ( PSL) scheme, run directly by the council, by a voluntary sector body on a not-for-profit basis, or by a commercial organisation ( GPRP:75). Some PSL schemes may extend the tenancy to provide a tenant with accommodation for two years or more. PSL schemes have attractions for landlords, who are guaranteed continuous rent and are freed from managing the property, and for local authorities, because, among other things, less social housing is required to provide temporary accommodation, they are largely financed by housing benefit, and they are popular with some households. DWP is currently reviewing its rules for the payment of housing benefit for temporary accommodation and local authorities should take this into account when considering options.

6.30 There are various ways in which local authorities can enable households that have low incomes or are at risk of homelessness to obtain settled accommodation in the PRS ( GRPR:74). At the most basic level, a household can be advised how to access information about vacant tenancies, but the best known model is the Rent Deposit Scheme, which offers private landlords some sort of financial guarantee in case a tenant does not pay rent or causes damage ( GPRP:83). The benefits for landlords include free access to possible tenants, access to mediation to prevent tenancies from breaking down, and assistance with housing benefit claims by trained staff. The households gain from obtaining good quality affordable housing in an area they want, receiving advice on their rights and responsibilities and help with housing benefit, and being supported in the tenancy.

6.31 Accommodation finder schemes ( GPRP:86) take a variety of forms, but basically bring together landlords willing to rent to people on a low income or housing benefit with households wanting private sector accommodation. Other services are usually provided to sustain the tenancy.

6.32 Some local authorities go further by providing a social letting or property management service for landlords who are willing to house people who are homeless or at risk of homelessness ( GPRP:91). Landlords are attracted by a good, reasonably priced management service and perhaps additional incentives. Benefits to local authorities include having a pool of available properties, with rent levels lower than leasing schemes, which makes them affordable to working or training households. Many tenants are likely to obtain extended tenancies. A service can also establish its own standards of physical conditions and tenancy management.

6.33 The use of all of these methods demonstrates that when a suitable household is placed in a suitable house with the required support for the tenant (which in many cases will be none) and sometimes for the landlord, the PRS can be a sustainable option for a homeless household. A local authority may well choose to use more than one of these methods, in order to provide the best solutions to a range of housing needs in its area.

Conclusions

6.34 The Scottish Government views greater use of the private rented sector as an important tool in working towards the 2012 target. Enabling local authorities to source settled accommodation from the sector has the potential to offer greater choice of housing options to homeless households and reduce pressure on social stock. The Scottish Government will use the findings of this review and the consultation exercise to bring forward proposed new Regulations under section 32A of the Housing (Scotland) Act 1987 setting out the circumstances in which local authorities can discharge duty via a short assured tenancy.

6.35 The Scottish Government will also publish statutory guidance for local authorities to accompany the proposed new Regulations under section 32A. This will include guidance on the circumstances in which it is appropriate to use this route to discharge homeless duty, and will cover issues like support for tenants and affordability.

6.36 The Scottish Government recommends that local authorities use the Good Practice Resource Pack when formulating their approaches to helping households that are homeless or threatened with homelessness to access the private rented sector. In particular, and in addition to the points noted above about support for tenants, councils may want to consider how best to support landlords in the issues identified by them, including concerns about housing benefit and anti-social behaviour.

6.37 As discussed in Chapter 3, the Scottish Government is concerned about the impact that reserved housing benefit policy is having on devolved housing policy. The evidence collected as part of this review shows that landlords are universally critical of the administration of housing benefit. We are particularly concerned that at a time when the Scottish Government is trying to encourage private landlords to let to low income and homeless households, it is UK Government rules governing housing benefit that are seen as one of the biggest barriers, with direct payment of rent cited as a key disincentive for landlords. As discussed, the Scottish Government believes that the DWP should review its safeguarding policy, and the circumstances in which monies can continue to be paid to the landlord, to ensure greater clarity among councils about the application of this policy.

6.38 The Scottish Government wants to encourage innovation and local partnership working to facilitate access to the private rented sector for homeless households and has awarded grant funding totalling £82,672 to 8 projects operated by voluntary sector organisations to develop new approaches in this area.