A report by the National Audit Office (NAO) has found that the way private renting is regulated is “not effective” in ensuring the sector is consistently fair for renters or that housing is safe and secure.

It also says that the Department for Levelling Up, Housing and Communities (DLUHC) does not yet have a detailed plan to address the problems that renters face.

There are an estimated 4.4 million privately rented households in England. Privately rented properties are less likely to comply with safety requirements than other types of housing, and are more likely to be classified as non-decent.

An estimated 13% of private rented homes (589,000 properties) have at least one category 1 hazard – a serious threat to health and safety – with associated costs to the NHS estimated at £340m per year.

This compares with 10% of owner-occupied homes and 5% of social housing. In addition, an estimated 23% of private rented homes are classified as non-decent.

The report claims that DLUHC has taken “a piecemeal approach” when introducing legislative changes to protect tenants’ rights.

In recent years it has introduced changes such as a mandatory redress requirement for letting agency work, a ban on charging letting fees to tenants, and temporary restrictions on evictions during the pandemic.

However, it notes that DLUHC “does not yet have a strategy for what it wants the regulation of the sector to look like as a whole”. DLUHC told the NAO that it is “currently defining the strategic objectives of its reform programme.”

DLUHC’s approach is also “limited by gaps in the data” showing what problems are occurring and where.

While the NAO say that the department has some insight into how the sector is working, such as on property conditions and tenants’ finances, it says it “lacks data on key issues where regulatory action may be required”.

These key issues include harassment, evictions, disrepair that is not being addressed, or on the costs to landlords of complying with obligations.

Without this data, DLUHC will “also struggle to measure the impact of its interventions”, the report says. DLUHC told the NAO that it wants to collect better data as part of the planned reforms, but it has not yet developed a plan to improve its data.

Another focus of the review was how different approaches are taken by local authorities and that many don’t use the current regulatory tools available to them – with only 10 landlords and letting agents have been banned by local authorities since new powers were introduced in 2016.

Another place DLUHC has limited data is around what tools and approaches are used by local authorities. The report says that “therefore cannot meaningfully analyse which are more effective at improving compliance and protecting tenants”.

Looking at the role of the tenant, there are “limited redress options” (which usually provide a more accessible path than the legal system) for tenants when attempting to resolve disputes.

The system therefore relies heavily on “tenants enforcing their own rights”. This means that tenants must negotiate with landlords directly or take action through the courts, which can be costly.

This also relies on tenants having an awareness of their rights. Surveys estimate that 35% of tenants say that a lack of knowledge of their rights made negotiating with their landlord difficult.

Other barriers for tenant when enforcing rights include “a lack of recourse to public funds, language barriers and distrust of services,” the report states.

An estimated 35,000 households live in properties unsuitable for their disability or long-term health condition, and 7% of rented properties were overcrowded in 2019-20 (which doubled to 15% during the COVID-19 pandemic).

Some households also experience discrimination, with an estimated 25% of landlords unwilling to let to non-UK passport holders, and 52% unwilling to let to those on housing benefit.

DLUHC is planning to introduce reforms to the private rented sector, and has committed to produce a white paper in 2022.

To support this process, the NAO recommends that DLUHC defines an overall vision and strategy for the regulation of private renting.

It should review whether current dispute resolutions arrangements for private renters are appropriate and accessible for all tenants, and improve its understanding of the experiences among private renters to inform how support is targeted at those most in need.

Gareth Davies, the head of the NAO, said: “The proportion of private renters living in properties that are unsafe or fail the standards for a decent home is concerning. The government relies on these tenants being able to enforce their own rights, but they face significant barriers to doing so.

“The Department for Levelling Up, Housing and Communities should improve the quality of its data and insight into the private rented sector, so that it can oversee the regulation of the sector more effectively. It should develop a clear strategy to meet its aim of providing a better deal for renters.”

Meg Hillier MP, Chair of the Committee of Public Accounts, said: “Private tenants face a postcode lottery over the standard of their homes, and it’s often society’s most vulnerable who suffer the most.“

The department’s approach to regulation has been piecemeal and it’s been hamstrung by a worrying lack of data.

“The department needs to bring some order to the chaos and set out a clear vision for the private rental market and ensure that the growing number of tenants whose only prospect of long term housing is in the private rented sector are better supported.”

Alicia Kennedy, Director of Generation Rent, said: “This report highlights huge gaps in the government’s regulation of an industry that provides homes to 11 million people.

“We know that one in eight private renters lives in an unsafe home, yet just 10 landlords and letting agents have been banned since the powers to do this were introduced.

“As part of its reforms the government must require all landlords to register their properties.

“This would help the government and councils gather better data about the sector, improve enforcement of the law and give renters better access to redress when things go wrong, which would meet many of the NAO’s recommendations.”

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “Regulation of the private rented sector needs to ensure that homes are safe and meet all required standards.

“Too often the approach to this has been piecemeal. It has led to a proliferation of initiatives such as licensing, banning orders and a rogue landlord database with little evidence to show they are working.

“We support the NAO’s call for a more strategic approach. There is a pressing need for a better evidence base to ensure the system focuses on rooting out criminal and rogue landlords who bring the sector into disrepute.

“Too often councils focus much of their time regulating compliant landlords who are easy to find.

“The NAO is right also to call for better enforcement of the regulations already in place. This needs to include tenants better understanding their rights and responsibilities.

“To improve enforcement, we are calling for the development of a meaningful national redress scheme for the sector as part of the Government’s forthcoming White Paper on rental reform.”

Cllr David Renard, Local Government Association housing spokesperson, said: “Councils want all tenants to be able to live in safe and secure, high-quality housing and can play a key role in driving up standards in the private rented sector.

“With more powers such as the freedom to establish landlord licensing schemes, councils would be better placed to support a good quality local private rented offer in their communities.

“Where councils need to take action, some issues may be resolved without the need for inspection and enforcement is a last resort when all other options fail.

“Longer term, the key to increasing housing security is to address the unaffordability of housing. Giving councils the powers and resources to build 100,000 social homes for rent a year would go a long way towards tackling this urgent issue.”