DLUHC consultation responses say costs should be considered alongside financial pressures of other requirements due to be introduced by the government
More than half of registered providers who responded to a consultation on new regulatory requirements to inform tenants of their rights do not fully agree with the government’s estimate of the resulting costs to landlords.
The Department for Levelling Up, Housing and Communities (DLUHC) has published findings from its consultation on plans to require registered providers to provide information to tenants about their rights, along with details of the providers complaints process.
The findings of the consultation, which was launched in September 2023 and concluded in November, were published on Friday.
The purpose was to gather feedback to help the Regulator of Social Housing formulate a set of standards for communicating information to tenants.
These standards include providing tenants with information about their rights and how to make complaints.
Out of the 122 consultation responses that the government received, 71 registered providers did not agree fully with the government’s calculation of the likely costs of providing tenants with information about their rights and making complaints.
Of those who did not agree, eight respondents partially agreed, 30 respondents disagreed, and 33 respondents did not express a clear view either way.
A total of 51 RPs agreed with the likely costs of meeting the new requirements.
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In total, the government estimated a net impact to private registered providers (PRPs) of £3.6m per year over a 10-year appraisal period. The net impact on local authority registered providers is estimated to be £1.8 million per year over the same appraisal period.
DLUHC’s report on the consultation stated that many respondents, including some of those who agreed with the government’s assessment of the likely associated costs, highlighted the challenge for providers to comply with these requirements given the wider financial pressures the sector is facing.
Some respondents suggested that the government should not limit its cost assessment to the direct costs of meeting the new requirements but also consider other financial pressures, including the costs of other requirements due to be introduced by the government.
In the consultation document, the government stated that it had considered “a wide range of costs associated with meeting these requirements”.
Of the 30 registered providers that did not agree with the likely costs of complying with the new requirements calculated by the government, several argued that some or all of the costs had been underestimated.
Some respondents expected the cost of legal advice to be greater than the £26.19/hour used in the government’s estimates.
Additionally, one respondent disagreed with the £22.35/hour average staff wage cost that had been applied to calculate preparation costs, on the basis that more senior or specialised staff would be involved in the process of meeting the requirements.
Some respondents also noted the difficulty in accurately predicting wage increases, which are not always in line with inflation.
The government’s cost predictions took into account the 234 large PRPs that have more than 1,000 social dwellings, as well as the 1,162 small PRPs that have 1,000 social dwellings or fewer in the sector.
Additionally, there are currently 163 large LARPs and 86 small LARPs in operation across the sector.
The government consultation arranged the cost impacts of providing information on tenant rights’ and making complaints into the following categories: familiarisation and preparation, legal and postal costs.
Large providers in the survey indicated they would need 354 hours per annum to familiarise their staff with new requirements, while smaller providers predicted a burden of 28 hours annually.
Based on an average hourly wage cost of £22.26, the government calculated annual familiarisation costs of £1.84m for larger PRPs and £711,000 for smaller PRPs across the 10-year appraisal period.
The estimated annual cost to local authorities was £1.34m, a combined annual impact of £3.89m on the whole sector.
The government consultation document noted that familiarisation costs do not tend to recur beyond the first year of a new policy’s implementation.
Preparation costs related to compiling and sending new types of information to tenants.
The combined average annual impact on the whole sector for preparation costs across the appraisal period was calculated to be £991,000, based on the average 27.5 hours of staff time it would take to prepare information in year one, and the average of 20.5 hours it would require in years two to ten.
The estimate provided for legal costs across the whole sector was an average of £308,000 per year.
The legal costs relate to the cost of a lawyer analysing relevant and applicable legal rights that a provider is required to provide information to their tenants on.
Approximately 53% of respondents in the survey sample indicated they would send information to tenants by post, which would carry an average annual cost of £1.03m.
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