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STEWARDSHIP AND RESPONSIBILITY: A Policy Framework for Private Housing in Scotland
CHAPTER ONE: INTRODUCTION
OUR REMIT
1. The establishment of a Housing Improvement Task Force was announced by the then Social Justice Minister, Jackie Baillie in December 2000 and we started our work in March 2001. We were asked to undertake a comprehensive review of housing policy as it relates to the condition of private sector housing in Scotland. In particular our remit was to consider policy options concerning:
- the forms of financial assistance available for private owners
- the powers available to local authorities to compel private owners to invest in their property
- the scope for providing better information as part of the house purchase process - taking account of proposals for sellers' surveys and sellers' packs
- the arrangements in place for the management of flatted blocks in private ownership
- the need for stronger regulation of the private rented sector, for example, by extending the existing licensing arrangements which had been recently introduced for Houses in Multiple Occupation (HMOs).
2. This remit reflects a recognition that in the 35 years since the last review of the sector (Cullingworth, 1967), the private sector has changed substantially. Owner-occupation has become the largest tenure in Scotland; the private rented sector has declined further; inner city slum clearance programmes have finished; rehabilitation and repair schemes have had a significant impact on standards of older houses in urban and rural areas; mixed tenure estates have evolved from previously mono-tenure council estates; and there has been a reduction in the public funding to support private owners. Such changes have brought benefits but at the same time, new problems have emerged whilst some old problems have persisted.
3. We undertook our work in two stages. The first stage from March 2001 to early 2002 focused on understanding and agreeing the key problems we should address. Our conclusions are set out in our first report ' Issues in Improving Quality in Private Housing' published for consultation in March 2002.
SUMMARY OF THE KEY ISSUES FROM THE FIRST REPORT
4. The key issues identified by the our first report are summarised as follows:
Poor property condition
5. While much of the private housing sector is in good condition, poor maintenance is a common problem. Only a relatively small number of houses (1%-2%) fail the Tolerable Standard but about a quarter of the sector suffer disrepair to the fabric of the house; 8% still have lead in their water supply and 13% have very poor energy efficiency. Conditions are relatively worse in the private rented sector and in remote rural areas compared to urban areas. Disrepair is most evident in older properties, flats and in houses in the private rented sector.
The causes of disrepair
6. Disrepair has multiple and complex causes but the single, most common feature linking houses in disrepair is age. Poor housing conditions are more likely to be found in older housing, especially that built before 1919, in housing in the private rented sector and in flats (with common repairing obligations) rather than houses. There is also evidence that funding and undertaking repair work is a problem for some households. A significant number of low income or disadvantaged owner occupiers face particular problems in ensuring their homes are maintained to a satisfactory standard.
Title condition problems
7. While the communal repair and maintenance obligations in modern title deeds are generally well constructed, many other properties have title deeds that constrain effective communal repairs and maintenance work. Title conditions can be imprecisely drafted or silent on key issues such as how decisions are to be made or how costs are to be shared. The net effect is that an owner or minority of owners can prevent essential repairs or maintenance being carried out. There is also very limited experience of the adoption of sinking funds to pay for future maintenance or repairs.
Private landlords' repairing obligations
8. The civil law relating to private landlords' repairing obligations provides few effective remedies for tenants when repairs are not carried out. Available remedies are difficult to access, especially given the relatively short nature of most contemporary tenancies.
Local authority powers to address disrepair problems
9. Powers available to local authorities to tackle housing problems are designed primarily to deal with concentrations of sub-standard houses. The disrepair powers that are available are limited, inflexible and, with their link to grant entitlement, create a disincentive on the part of owners to take the initiative and organise for repair works to be carried out.
Owners' priorities for expenditure on maintenance and repairs
10. While most owners can afford to maintain their homes, they often face a choice between investing in the fabric of their home or investing in upgrading internal facilities and fittings. Without a proper appreciation of the maintenance needs of their home, they may decide to invest in replacing items such as kitchen and bathroom fittings to the detriment of essential maintenance requirements. There are also low income owners who face financial constraints in funding repairs, and owners in general are reluctant to draw on the free equity in their homes to fund necessary works.
The limitations of market incentives to encourage property upkeep
11. There are few market incentives to help owners keep their house in good condition. In an active local market, property prices can rise independent of property condition. In a low demand area, static or declining prices can act as a strong disincentive to invest in property maintenance. Too often, purchasers bid without good knowledge of a property's condition while sellers are not obliged to disclose condition defects. In the private rented sector, market forces can ensure good conditions in the upper end of the sector but not in the remainder.
THE KEY THEMES
12. Taking account of these key issues and the specific topics highlighted in our remit, we have identified a number of key themes that have shaped our overall approach to developing policies for improving private sector housing conditions.
The owner's primary responsibility for repair and maintenance
13. The core theme that underpins all our policy work is our view that there is a need for greater awareness and acceptance by owners of their responsibility for repair and maintenance of their property. The responsibility for the upkeep of houses in the private sector lies first and foremost with their owners and whilst few would argue with this general proposition, in reality, as noted in our first report, many owners see repair and maintenance as a relatively low priority for investment. To achieve the scale of change we are looking for requires an environment to be created to bring about, over time, a "culture change" in attitude and behaviour by owners, that will produce a more positive and more proactive approach to looking after their homes.
14. As a consequence of adopting this perspective, we have identified and organised our work round a number of other key themes:
- Influencing the operation of the housing market
- Improving co-operation between owners
- Reshaping assistance to owners
- Modernising the operation of the private rented sector
- Modernising the role of local authorities
Influencing the operation of the housing market
15. The process of attitude change on the part of owners needs to be reinforced by changes in the operation of the housing market. The best place to deliver effective changes in a market driven housing system is at the point at which houses are bought and sold. Changes made at this point should be designed to provide prospective house purchasers with better information and understanding of the condition of the house they are looking at and what a reasonable offer price should be, while taking into account their knowledge of how much they will need to budget for to deal with immediate repairs and future maintenance. We believe that beneficial changes to the buying and selling process that provide prospective buyers with better information of property condition is both desirable and achievable.
Improving co-operation between owners
16. In many disrepair situations, owners need to co-operate to ensure the necessary work is undertaken. This is particularly true in Scotland with its relatively high proportion of owners who live in flats. Our first report found a problem with owners co-operating effectively when communal repairs and maintenance were required. Part of the reason for this arises from owners' attitudes but we consider changes need to be made to the civil law framework to better facilitate owners' ability to carry out communal repairs and maintenance. It is also our view that changes should be made to housing legislation and policy to support owners and in some cases require work to be carried out.
Reshaping assistance to owners
17. In considering to what extent, and in what ways, owners should benefit from financial assistance for repair or maintenance work, we have to take account of a number of factors. We reiterate that the primary responsibility for the upkeep of their property lies with owners. We note the many calls made on public resources and recognise that it is most unlikely there will be a return to the very generous subsidy arrangements that prevailed from the 1970s to mid 1990s. Any scheme of assistance has to reflect this reality. We believe that targeted grant aid can be appropriate when this is the best and most effective solution but there is also a role for advice, practical support and various forms of loans.
Modernising the operation of the private rented sector
18. We believe that private landlords, like other owners, should bear the primary responsibility for ensuring adequate repair and maintenance of their properties. However, the private rented sector is distinct in a number of significant respects from the owner-occupied sector. As noted in our first report, its condition is relatively worse than any other tenure and it caters for a very diverse range of tenants. Most importantly, the nature of the landlord-tenant relationship and the underlying legislative framework require the sector to be considered separately.
19. Private landlords need to increase their expenditure on repairs and maintenance and there needs to be a marked improvement in conditions in the sector. We consider ways of facilitating and requiring these objectives through a reassessment of the statutory responsibility of private landlords to let and maintain their properties to a minimum repair standard; improving opportunities for tenants to seek help with repair problems; and more effective methods of regulating property and management standards across the sector.
Modernising the role of local authorities
20. While the primary responsibility for the upkeep of their property lies with owners, local authorities have a key role in facilitating, encouraging and, where necessary, requiring owners to carry out necessary repair and maintenance works. However, our first report concluded that current local authority powers and responsibilities are outdated and poorly designed to deal with contemporary housing disrepair problems.
21. We consider that the role and powers of local authorities need to be modernised in a number of ways. Authorities need to see their primary role more as supportive to, than substitutive for, private owners' responsibilities - but authorities also need to retain a public interest responsibility and be willing and able to intervene effectively to secure improved standards. They also need to be more aware of problems of inequality and exclusion that are reinforced by the market and by established practices that need to be challenged. There is a need for effective mechanisms to support the large number of low-income households now living in owner-occupation.
22. Local authorities also need better and more relevant tools for tackling today's problems. The current area-based powers need to be modernised. They are cumbersome, inflexible procedurally and too limited in the scope of problems they address. Powers to deal specifically with disrepair and lack of maintenance are inadequate to the task and also need modernisation. Accompanying this enhanced role and powers is the need for a reassessment of the minimum acceptable standard of housing, the Tolerable Standard, and for consideration of the strategic role and benefit of developing a higher aspirational housing quality standard.
OUR APPROACH
23. In preparing this report we were aware that we were unlikely to do justice to the scale of the task or the level of interest in its outcome without the benefit of a substantial input from the many organisations and individuals with expertise in the field. In recognition of this, we have sought to work in as open and as accessible way as possible.
24. In particular, we have ensured that all the papers including background reports and discussion documents have been published for comment on a dedicated website ( www.scotland.gov.uk/hitf). This material remains available for those with an interest in how our thinking has developed, the alternative approaches we have considered and the conclusions we have come to during our deliberations.
25. To widen participation in our discussions we have worked through a series of sub groups, each looking at specific aspects of our remit and involving additional co-opted members to ensure that we took advantage of the great breadth of expertise that exists in the private, voluntary and public sectors. Each sub group produced a report for consideration by the Task Force and this report draws heavily from those. Each sub group report has been published as a supporting document. The membership of each of these sub groups, together with details of the membership of the Task Force are set out in Annex A to this report.
26. Each sub group has consulted widely. Details of consultation responses including those in response to our first report have been published on our website. This material includes a "tracker" detailing how the points raised have been responded to. In addition to soliciting written responses, we commissioned Communities Scotland to run four full-day workshops on particular aspects of our remit. These workshops, held in May 2002 focused on a range of possible policy options, and provided an invaluable test-bed for many of the approaches that we considered. They also allowed an opportunity to further widen participation in our work. A report of these workshops has been published as a supporting document with this report. Where appropriate, we have also sought to involve particular interest groups in detailed discussions. In examining the issues around house buying and selling in particular, Task Force members met on several occasions with representatives of the relevant professional bodies including The Royal Institution of Chartered Surveyors (RICS), The Council of Mortgage Lenders (CML) and The Law Society of Scotland to develop and test possible policy options.
27. As well as these efforts to ensure an open and participatory process, we have recognised the importance of evidence-led policy making. During stage one, the principal source of data on the condition of the housing stock was the results of the 1996 Scottish House Condition Survey. We have previously acknowledged the weaknesses of these data, and in particular the fact that it is now nearly seven years old. Where appropriate we have sought to supplement this by commissioning new research and using specialist consultants to review existing data sources. During stage one we published five new research reports including the largest study of the house buying and selling process in Scotland for over a decade. We have continued this approach in stage two. Published with this report are the results of four new research studies examining modern practices in the drafting of deeds of conditions for flatted developments, the options for tax and benefit reforms to encourage investment in repair and maintenance in the owner-occupied sector and (as a separate report) in the private rented sector and the options for developing a cross-tenure Scottish Housing Quality Standard.
EQUALITIES ISSUES
28. Poor quality housing is a problem for every household and community that it affects and many homeowners and tenants face problems in dealing with these issues irrespective of their background. There is no doubt, however, that the problems faced by some households are compounded by additional disadvantages that they face. The Task Force's first report concluded that minority ethnic communities, older people, younger households and those with disabilities in particular, are more likely to face problems with the condition of their homes or live in houses that do not meet their particular needs. They also face additional barriers in resolving these problems.
29. In coming to our recommendations we have sought to take a "mainstreamed" approach to addressing the needs of these "equalities groups". That is, we have looked to ensure that the impact of the issues we are seeking to address and the solutions we are proposing on these groups, forms an integral part of our considerations and decision making. To assist in achieving this, all the recommendations that we have made here were subject to an "equalities proofing" process designed to ensure that the particular interests of these groups have been properly taken into account. The results of this process have been published with this report as a supporting document (4Eighty, 2003).
30. This approach is reflected in the structure of this report. Where we believe particular issues or recommendations will have specific impacts on equalities groups or particular communities, we have addressed these directly at the appropriate point in the text. Where particular sensitivities in implementation are likely to arise we have sought to ensure that these are identified.
31. Implicit in our approach is an expectation that implementation of our recommendations, at all levels, will be sensitive to the needs of equalities groups and that public authorities will ensure that their actions are consistent with their obligations under the Race Relations Act 1976 and the Disability Discrimination Act 1995. In particular we consider it important that proper and effective monitoring mechanisms are put in place at local and national level to assess the impact of our recommendations on equalities groups.
32. Part of this process must be an effort, through the Scottish House Condition Survey, the preparation of Local Housing Context statements by Communities Scotland and the drafting of Local Housing Strategies to improve the quality of information available on the housing conditions of equalities groups. Where appropriate, policies and programmes should be the subject of impact assessments to ensure transparency in addressing these issues. Staff developing strategies and delivering services should be properly trained and equipped to understand and meet the needs of equalities groups and information should be provided and made available in accessible forms and formats. Where we have made recommendations for further consultation or the preparation of guidance, effective mechanisms should be put in place to ensure that equality issues and the views and interests of equalities groups are properly represented and accounted for.
33. The equalities proofing exercise did not suggest that we have missed any significant issues. Nor was there any indication that our recommendations will adversely or inappropriately impact on the interests of equalities groups. It is clear, however, that in a number of areas our recommendations will have specific impacts on equalities groups, and we would hope that the Scottish Executive will pay particular attention to seeking views on these impacts during any consultation process that is launched around this report.
THE STRUCTURE OF THIS REPORT
34. The remainder of our report is structured as follows:
Chapter Two - Quality standards for private housing in the 21st century
This chapter discusses and makes recommendations for a modernised Tolerable Standard as the base line for statutory intervention to remove or improve unfit housing. The section also sets out our approach to developing a new cross-tenure housing quality measure to provide a focus for strategic planning to raise housing standards and makes further recommendations for a new statutory minimum standard for all privately rented housing.
Chapter Three - Improving the operation of the housing market
This chapter sets out our approach and recommendations for the introduction of a single survey approach to house buying and other proposals for improving the information available to house buyers, as well as reducing delays and increasing transparency in the buying and selling process.
Chapter Four - Facilitating common repairs and maintenance
This chapter takes account of the Title (Conditions) Bill going through the Parliament and of the draft Tenements (Scotland) Bill developed by the Scottish Law Commission and makes recommendations to strengthen the legal framework for the management of common and shared repair and maintenance obligations and other practical proposals for assisting owners to work together to maintain their homes.
Chapter Five - Public sector intervention and support at the local level
This chapter considers and makes recommendations for changes to the strategic planning framework in respect of housing quality and the arrangements for providing support and assistance to owners and landlords. Proposals for the modernisation of the role, powers and duties on local authorities are also made to ensure a comprehensive approach to addressing disrepair in individual dwellings, on an area basis and in tackling problems in the private rented sector.
Chapter Six - Improving standards in the private rented sector
This chapter considers and makes recommendations for supporting tenants in enforcing their landlord's obligations to comply with the statutory Repairing Standard and the arrangements we propose to improve standards through the accreditation and regulation of the sector.
Chapter Seven - Concluding remarks
In this final chapter we set out our view of how the Scottish Executive and others should respond to this report with the aim of achieving the improvements and changes that are required.
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