Shelter fires warnings over fixed terms in guide to tenancy strategies

July 31, 2012

Housing charity Shelter has published a guide for local housing authorities on developing tenancy strategies, warning that fixed terms could end up costing more than permanent tenancies.

Under the Localism Act 2011, LHAs must publish their tenancy strategy by January 2012. The Act also gives social landlords the power to let properties on shorter fixed term agreements, with a minimum of five years and two years in exceptional cases.

In the report and a briefing paper for councillors, Shelter recommended that local authorities should continue to grant and support permanent tenancies.

The charity said its experience suggested that shorter tenancies could “destabilise communities, create uncertain living situations for families, generate work disincentives, and end up costing the council and other social landlords more than permanent tenancies – all without creating additional social homes for the community”.

It added: “Longer tenancies are particularly vital where there are dependent children or vulnerable people in the household who will be particularly affected by insecurity or being forced to move house.”

Shelter called on LHAs to take a “rigorous” approach in consulting with other stakeholders such as tenants and local people in housing need.

“Liaison with other local authorities in your region on their tenancy strategy plans will also be beneficial in terms of promoting strategy planning across the wider region and preventing a tenancy ‘postcode lottery’ from occurring,” it said.

The charity also argued that a Department for Communities and Local Government assumption that only 1 in 20 households would refuse to vacate their homes at the end of the fixed term represented a “gross under-estimate” and that proceedings would be necessary in far more cases.

Shelter estimated that, including the standard court fee of £175, the minimum total cost of possession proceedings to be £662 per case. It also estimated that the full cost of an eviction from a local authority property (including possession action) to be £1,119.

The charity also warned that:

Authorities would need to consider how much it would cost to meet the requirement to provide reasonable advice and assistance to tenants when the tenancy ends.
Shorter tenancies discouraged tenants from significantly investing in the upkeep of their home, which in turn could increase maintenance costs for landlords. Social landlords would also have to invest in decorating and the upkeep of the property more frequently.
The shorter the tenancy, the higher the rate of tenancy turnover. This will increase the number of vacancies at any given time.
Relatively few homes would be freed up by the use of fixed terms, “as most social tenants will not have had their financial position significantly improve through the duration of the tenancy”. Home ownership will be a remote prospect for most people.
While making the best use of stock is important, building more housing is “the only way to generate vacant homes on any meaningful scale”.
Fixed term tenancies have the potential to undermine community cohesion, and make tenant involvement and empowerment more necessary but harder to achieve.
Local authorities should make sure they conduct an equalities impact assessment if they intend to recommend fixed-term tenancies “as it is entirely possible that this will disproportionately affect people who fall into the equalities categories”.
Where local authorities opt to grant fixed-term tenancies, they should minimise the potential problems by ensuring that the tenancies offered are as long and stable as possible.
The presumption of renewal of tenancy should be written into tenancy strategies rather than left to the variances of landlord policy. “This would shift the onus onto landlords to justify refusing to extend the tenancy, rather than requiring tenants to undergo a complicated reapplication process.” This would also prevent fixed-term tenancies converting at the end by default into insecure periodic tenancies, running month by month.

Campbell Robb, Shelter’s Chief Executive said: “We recognise that local authorities have difficult choices to make with limited housing available, and hope this guide will help them to fully consider the potential impacts of different tenancies when making these choices, based on the global evidence available.

“In our experience we know that families need homes, not just a roof over their heads. Councils and housing associations must look out for families’ best interests when making decisions about how long they know they have a home for - something that can affect the stability and sense of pride in neighbourhoods as a whole.”

A copy of Shelter’s report, Local decisions on tenure reform, can be viewed here.

Philip Hoult