Improving standards in London’s PRS

As part of Future of London’s research programme on how the public sector can engage private landlords in energy efficiency, this post considers the spatial shifts in London’s private rented sector (PRS), and the effect of its rapid growth on housing standards.

The private rented sector in London has increased significantly during the last 10-15 years. Between 2001 and 2011, the London-wide proportion of private renting grew from 17.3% to 26.4%, while levels of both social renting and owner occupation decreased.

Trend in household tenures, London 1961-2011

Tenure chart

Source: The 2013 London Strategic Housing Market Assessment, Mayor of London

 

The spatial distribution of London’s PRS is not evenly spread, nor is its recent rapid growth. The following maps show how the PRS is spreading out from the centre in all directions.

Proportion of London households in PRS, 2001 and 2011

PRS tenure share

Source: Future of London, with ONS data

 

Looking in more detail at how PRS has changed in the last 10 years by borough, it’s clear that there has been significant growth in the east. The London boroughs of Tower Hamlets, Hackney and Enfield have experienced a doubling of their PRS in the last 10 years, while the London Borough of Barking and Dagenham’s PRS has grown by more than one and a half times.

Change in proportion of households in PRS, %, 2001-2011

Source: Future of London, with ONS data

Source: Future of London, with ONS data

 

Newham and Tower Hamlets in particular have increased so rapidly as to have the fourth and fifth highest proportions of private renting in London in 2011.

London boroughs with highest proportion of households in PRS

Top 5 in 2001Proportion of households in PRS (%)Top 5 in 2011Proportion of households in PRS (%)
Westminster36.2Westminster39.7
Kensington and Chelsea30.3City of London35.9
City of London28.9Kensington and Chelsea35.8
Camden27.7Newham34.1
Wandsworth25.0Tower Hamlets32.6

At ward level, there can be even more extreme concentrations of private renting. In the west of inner London, for example, more than half of all households rent privately in eight wards.

These concentrations of private renting aren’t an issue in and of themselves. But lack of resource and a light-touch regulatory landscape make it difficult for boroughs to manage their private housing stock.

PRS standards can be poor; nationally, a third fall below Decent Homes standards, and the highest rate of Category 1 hazards is found in this sector. With excess cold being one of the most common major hazards enforcement teams discover on inspection of properties, it is unsurprising that over 700,000 private rented households are in fuel poverty.

These low standards are partly due to the physical characteristics of the PRS. In inner London where most renters reside, converted terrace flats are the most common property type; these properties are older, difficult to access, and often include the additional legislative burden of being in conservation areas. These compounding factors hinder the ‘deep’ retrofit that London’s domestic building stock requires.

The prevalence of individual landlords in the sector mean that it is often up to authorities to tackle these problems. In London particularly, property ownership is a safe investment, and many are attracted to its decent levels of capital appreciation in addition to rental yields. But levels of accreditation remain low – only around four percent of the estimated 360,000 landlords in London are on the London Landlords Accreditation Scheme (LLAS). Many of the unaccredited are unaware of the requirements of their role; a few are likely to be criminal operators with no regard for the safety of their tenants.

In order to raise standards in the PRS, including improving energy performance, these ‘unknown’ landlords need to be reached and educated about their responsibilities. The GLA’s London Rental Standard will go some way to achieving this through better promotion of accreditation and standards. Meanwhile, the Energy Act regulations add the notion of deadlines for improvements, though they too have their limitations.

As enforcers of this agenda, London boroughs need to use the tools available to them to reach out to their own landlord communities. Above all, they need to balance the need to provide housing of an acceptable standard with maintaining a quantum of supply, which is so widely outstripped by demand in the current housing market. Increasing the provision of purpose-built private rental housing will go some way to addressing this imbalance, but in the meantime, all authorities need to think about the tools available to them that will help to raise standards without depleting supply.