Mr Matthew Green (Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions; Ludlow, Liberal Democrat)

I beg to move amendment No. 240, in

clause 193, page 135, line 42, leave out paragraph (b) and insert—

'(b) at least three of the self-contained flats are not owner occupied.'.

Mr Derek Conway (Old Bexley & Sidcup, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 284, in

clause 193, page 135, line 42, leave out 'two-thirds' and insert 'one-third'.

Mr Matthew Green (Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions; Ludlow, Liberal Democrat)

Amendment No. 240 is a probing amendment. My understanding of the current position is that the provision applies if less than one third of the self-contained flats in a property are owner-occupied. I believe that the Conservative amendment, No. 284 is trying to amend the Bill so that the current position stands—I believe that the British Property Federation is interested in that. Amendment No. 240 is designed to elicit clarification.

In London and other cities, there might be large blocks of flats that contain a considerable number of properties that are tenanted, but they constitute less than third of the properties in the block. The term ''at least three'' was put in my probing amendment to ascertain what the Minister is trying to achieve with the two-thirds provision. In a block of flats with 100 properties, 30 would constitute less than two thirds of the properties, but that is still a lot of tenanted accommodation. Clearly the circumstances are different if there are five properties and two are tenanted.

I am not saying that my amendment offers the right way forward. I suspect that the Conservative amendment leans too far in the other direction, but I am concerned that the Minister has potentially excluded some large blocks of flats where somebody owns quite a lot of them and is renting them out. Therefore, mine is a probing amendment to find out how the Minister might deal with such a situation.

Mr John Hayes (South Holland & The Deepings, Conservative)

I intend to deal more fully with amendment standing in my name and those of my hon. Friends, which in part reflects concerns raised by the British Property Federation. It is founded on concern about the change in the Government's thinking on the one-third or two-thirds threshold, which is set out in clause 193. The amendment probes the threshold of owner-occupation of self-contained flats in a converted block of flats. The model schemes being run by a number of local authorities are based on the Government's preferred model—at least, the local authorities believe that. Those models exempt properties if at least one third of the self-contained flats are owner-occupied on long leases. However, in the Bill it is proposed, without any explanation, that that proportion be changed to two thirds. We are probing the point so that the Minister will offer the Committee an explanation.

These are difficult matters, because it is possible that as people move in and out of properties the proportion that is owner-occupied will change. Accordingly, sometimes a property will fall into the category of being necessarily licensed, whereas at another time—perhaps days or weeks later—owing to the movement of tenants, it may not need to be licensed. There is real concern about the threshold and the marginal effects of such changes on the status of the property.

There are further problems with people knowing whether they should be licensed. There are real issues about people understanding the circumstances at any given point, given that such properties can change hands reasonably quickly. There may be uncertainty for both tenants and landlords about whether they fall into the licensable category.

Those are legitimate concerns. The Government need to justify their chosen threshold. I do not hold a candle for any interest group—I listen to all of them, as I am sure the Minister does. The British Property Federation has an important point on which we need further explanation, hence our amendment.

Mr Keith Hill (Minister of State (Housing and Planning), Office of the Deputy Prime Minister; Streatham, Labour)

Clause 193 sets out which converted blocks of flats fall within the definition of a house in multiple occupation. Those are blocks where the standard conversion does not at least meet the standards laid down in the Building Regulations 1991, and in which less than two thirds of the flats are owner-occupied. The current definition of HMO in the Housing Act 1985 applies to all converted houses, regardless of the standard of the conversion or the tenure of occupancy. However, that is not appropriate, because the legislation is primarily intended to target poor-quality accommodation providing homes for some of the most vulnerable members of the community.

We have taken this opportunity to narrow the definition of HMO to include poor-quality properties that are occupied by a substantial number of shortholders and/or tenants. I have carefully considered the arguments for the inclusion of all converted blocks in the definition, regardless of the tenure of occupants, and for the exclusion of all converted blocks of self-contained flats, but I am not persuaded by either of those. For the reasons I have already mentioned, I do not consider it appropriate that HMO legislation should apply to all conversions, regardless of tenure. The Government believe that owner-occupiers are in a position to exercise their contractual rights and require minimum standards to be enforced. Indeed, if they are not happy with the management arrangements, they can apply to a leasehold valuation tribunal to appoint a manager for the block. Tenants, however, are not in the same position.

We should remember that we have declared it to be the job of the local authority to be the champion of the vulnerable tenant. Moreover, many problems that are associated with HMOs, such as poor maintenance and management, arise as a direct result of the absence of the landlord leaseholder. Many of the blocks that the legislation is aimed at are owned by individuals or companies, were converted many years ago, and are occupied by elderly or otherwise vulnerable people.

The health and safety of the occupiers of such blocks are frequently a cause of concern. Such houses are often not fitted with adequate smoke detection equipment: the Building Regulations 1991 require alarms to be mains-fitted, and thus always working. I have referred to the Entec report on fire safety, which was published in 1997. Committee members will recall that it concluded that persons living in houses converted into self-contained flats are twice as likely to die from fire than those living in comparable single-occupancy houses. The larger the house, the greater the risk of death from fire: 52 per cent. of deaths occur in HMOs of three or more storeys, but only 16.5 per cent. of HMO-dwellers live in such properties. That is a compelling reason to ensure that there is HMO legislation to protect people living in poor conversions.

However, I do not support the proposal in amendment No. 240, standing in the name of the hon. Member for Ludlow, that legislation should only apply where there are three or more tenancies. I am aware that it is a probing amendment—as is the other

amendment in the group—but it would produce some singularly strange results. For example, a house converted into four flats would only be an HMO if three quarters of them were let, but a large house converted into 15 flats would fall within the definition if only one fifth were let. I know that that was not the point of the hon. Gentleman's amendment.

There are 640,000 HMOs and they house about 1.2 million households. Of those HMOs, 120,000 have three storeys or more. As I have said, the risk of death from fire is much higher in buildings of three storeys or more. The Entec report revealed that a dweller in a self-contained flat in a poorly converted three-storey block was five and a half times more likely to die from fire than a similar dweller in a smaller block. That is why the fire safety order applies to such properties, and local authorities must have powers to license them if they are problematic.

There are two reasons for the change in the formulation. First, many of the blocks to which the legislation will apply will be poorly converted and in single ownership, and it is considered that the one-third rule may be subject to abuse—for example, sham leases might be created to avoid the requirement for the house to be licensed or subject to other HMO controls. Secondly, although the Entec fire report was largely concerned with the number of storeys in a house, it also considered that the number of occupants in a house was a relevant factor in determining the likelihood of fire.

Mr. Hayes rose—

Mr Keith Hill (Minister of State (Housing and Planning), Office of the Deputy Prime Minister; Streatham, Labour)

If I might continue my thought, although the new formulation does not directly deal with the number of occupants, it does deal with the number of units in the property: the more flats there are, the more occupants of the house there will be. The old formulation excluded many tenants from the protection of the fire safety order, as the example that I gave shows. The new formulation will ensure that blocks where a significant number—not necessarily the majority—of flats are rented out can be targeted and dealt with by the local authority.

Mr John Hayes (South Holland & The Deepings, Conservative)

Fire will preoccupy the Committee time and again. That is appropriate, particularly as the Government have recently become expert in firefighting. It is important to understand the difference between incidence of fire and death from fire. It is important that the figures for each of those categories are looked at, because both Government information and third-party information draw a clear distinction between the prevalence of fire in certain types of property and the results of that fire.

That returns us to the issues at the heart of part 1 about hazard and risk. Now is not the time to debate the subject, but it important that we go through it in some detail later in our proceedings. I have a simple question for the Minister. How will the occupancy of a block with a complex set of arrangements—some privately occupied accommodation, some rented and some rapidly changing—be monitored? What models have the Government put in place to allow that to happen effectively? I am worried that people who should be licensed will not know necessarily that they

should be licensed. As I said earlier, the status of the block may change regularly, and that could cause all sorts of problems. The Government must have calculated how such provisions will work practice.

Mr Keith Hill (Minister of State (Housing and Planning), Office of the Deputy Prime Minister; Streatham, Labour)

The hon. Gentleman, as usual, has raised a perfectly reasonable point about notification and information. As he will be aware, we shall come soon to clauses that deal with notification procedures, so I suggest, in all humility, that that might be the more appropriate time at which to deal with those arrangements. I wish merely to reassure him and the Committee that the Government are aware of the importance of notification and that we have specific statutory provisions in relation to it. We are also aware that local authorities will need to engage in notification procedures. We are aware of the burdens of the economic impact assessment and we will be working through the professional organisations to ensure that landlords are aware of the new licensing regimes. The proposals have been in the firmament for a long time and we are reasonably confident that there is a high level of awareness of the Government's intentions.

Mr Matthew Green (Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions; Ludlow, Liberal Democrat)

The Minister has not yet answered my query about the situation in which there is a large block of, let us say, 100 flats, 30 of which are tenanted—owned by one person and rented out—while the others are owner-occupied or in another form of tenure. In such circumstances, that property would be excluded from the Bill. Clearly, the property houses a substantial number of tenants in a potentially large and tall building and that could constitute a great fire risk not only for the tenants, but for the leaseholders in other parts of the building. Does the provision preclude a local authority from using its additional power elsewhere in the Bill to deal with that risk? If so, many of my worries will dissipate. Otherwise, I will be worried that the Government have left a loophole that could cause many tenants to be unprotected.

Mr Keith Hill (Minister of State (Housing and Planning), Office of the Deputy Prime Minister; Streatham, Labour)

I am tempted to ask the hon. Gentleman to give me a chance to come on to such issues. The Committee will be overjoyed to discover that I have not yet quite concluded my remarks, but I assure him that the Bill does not preclude such a form of additional licensing, should a case be available to justify it. I hope that I have been of assistance to him.

I have dealt with some of the anomalies that might arise from amendment No. 240. My most serious point is that the Government's aim is to achieve the protection of tenants living in HMOs where a substantial proportion of the flats are let on short tenancies. The amendment would not necessarily achieve that in all cases.

Amendment No. 284, in the name of the hon. Member for South Holland and The Deepings and others, is a probing amendment, so I shall not feign shock and horror at the fact that it amounts to taking away the protection that his party granted to people under the HMO model registration schemes under the Housing Act 1996, in which certain blocks of flats can be excluded from the scheme if at least one third of the flats in the block are owner-occupied. Legislation on fire safety and HMO model registration schemes

introduced by the 1996 Administration excluded blocks in which at least one third of flats were owner-occupied. We would exclude blocks that are more than one third let for the reasons that I have already given and on which I shall now expand.

Our proposals would ensure that blocks not meeting acceptable conversion standards and in which more than a third of occupiers are tenants would come within the definition of an HMO, and that the local authority could apply the necessary measures to ensure that such blocks were properly managed and maintained for the benefit of all the residents, including owner-occupiers.

The amendment would require a higher protection threshold, by taking poorly converted blocks outside the definition of an HMO, unless two thirds of their flats were let. That would reduce the scope for protection to a level lower than that of the HMO registration schemes introduced under the 1996 Act, which his own party put in place. I am sure that the hon. Member for South Holland and The Deepings would not want to take a step retrograde to the measures introduced by a Conservative Government, and that, on balance, he will support of the present Government's proposal to introduce enhanced protection for tenants.

Mr John Hayes (South Holland & The Deepings, Conservative)

As the Minister said, my amendment was a probing amendment, but it is important to clarify at which point registration kicks in. The Minister is right to say that the Committee's objective is to ensure that the most vulnerable tenants are properly protected. That has to be the abiding justification for licensing. However, I am worried about short-term tenants, who may move quickly in and out of properties. It is important that we debate the issue further under the notification aspects of the Bill, as the Minister implied we would. We must ensure that no landlord is licensed when they should not be, or—perhaps more importantly—not licensed when they should be. That is the concern of those who have said that they are worried about the marginal impact of the regulations.

However, I entirely endorse what the Minister has said. Our driving conviction is to ensure that the most vulnerable citizens are properly protected. Motivated by that conviction, and ever mindful of its significance, I am happy not to press my amendment. However, as you will no doubt remind me Mr. Conway, it is up to the hon. Member for Ludlow to make a decision on his own pale imitation.

Mr Matthew Green (Shadow Minister, Office of the Deputy Prime Minister Local Government & the Regions; Ludlow, Liberal Democrat)

Never does a day pass in which the hon. Member for South Holland and The Deepings does not have a dig at the Liberal Democrats. He must be worried about us.

The Minister has reassured me that a local authority could seek additional licensing for blocks of flats in which less than a third of the occupants are tenants. That is a reassurance for tenants in such a situation, which will occur primarily in large cities. I hope that the Minister will make it clear to local authorities whose areas are likely to contain such

properties that they can go down that route. Local authorities might not otherwise realise that there are other means of dealing with the buildings with 30 or 40 tenants that are excluded from the Bill.

The hon. Member for South Holland and The Deepings raises an interesting point about properties moving above or below the threshold. There is probably no correct answer to that problem: a threshold of some sort is inevitable. However, the Government should consider the possibility of the owner of a large block of flats attempting to get out of licensing by engaging in lots of long leases, perhaps to other members of the family.

I am somewhat reassured by the Minister's comments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 193 ordered to stand part of the Bill.

Clauses 194 and 195 ordered to stand part of the Bill.