Clause 62 - Further sanctions relating to unlicensed HMOs
Housing Bill
4:45 pm

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

I beg to move amendment No. 286, in

clause 62, page 41, line 36, at end insert

'and

(c) section 21 of the Housing Act 1988 (c.50) shall not apply.'.

This is a probing amendment designed to raise the problem that the ''no rent payable'' sanction against unlicensed landlords in clause 62, which is sensible, could result in the eviction of tenants. The stipulation that section 21 of the Housing Act 1988 shall not apply prevents landlords from using the accelerated possession procedure to evict tenants as a result of these sanctions.

The current provisions do not reflect the reality faced by tenants on low incomes, with no security of tenure, who are unable to enforce their housing rights without risking eviction. HMOs represent a scarce housing resource and the clause could result in many existing tenants being made homeless. Those with an assured shorthold tenancy will simply face possession action by their landlord if they attempt to enforce the provision relating to not paying rent on unlicensed properties. In practice, many tenants will choose not to risk losing their homes and will simply continue to pay. Tenants on housing benefits will face the withdrawal of their benefit, leaving them unable to pay their rent unless they make huge sacrifices in relation to their limited income support or other income. There is a risk of homelessness if the landlord brings the shorthold tenancy to an end.

The Minister is probably aware that in a submission to the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, the Brent private tenants' rights group expressed its concern that

''Shorthold tenants will have no more power to refuse to pay the rent than they have power to exercise any other housing right. For housing benefit claimants, the situation is tragic, because their benefit will cease, and they will lose their homes at the earliest opportunity. Many of these tenants will be in priority need, and will have no option but to present as homeless to the local authority.''

The LGA also voiced concern. It stated:

''the idea that rent will not be payable on an unlicensed premises is of some concern to Tenancy Relations Officers (TROs) who feel that the tenant could become the target for landlord harassment and possible eviction. A rise in homelessness and the attendant resource implications . . . could be an unintended by-product of this measure.''

The Select Committee concluded:

''We are concerned that the 'no rent payable' provisions could have adverse consequences for tenants, potentially leading to their eviction. If the Government plans to retain these provisions, the final version of the Bill must include adequate safeguards so that tenants cannot be evicted because their landlord is unlicensed.''

In their response to the Select Committee, the Government made a commitment to address the concerns that were raised. They said:

''The Government accepts the principle that tenants should not be evicted because their landlord is unlicensed. However, the Government does not consider that it is appropriate that a person engaged in a criminal activity (that is, operating a property without a licence) should benefit from that activity by lawfully receiving or demanding rent. The Government accepts the need to refine the provision, especially to ensure that tenants are safeguarded against eviction for non-payment of rent, where the only reason for such failure is on account of the provision. This is a matter to which the Government is giving further consideration.''

Clearly, the results of that further consideration have

not yet made their way into the Bill. I hope that they will, because, at the moment, clause 62 does not offer tenants any greater protection from eviction than was available under clause 67 of the draft Bill.

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

Clause 62 provides further sanctions in relation to unlicensed HMOs. In particular, it is concerned with any period during which an offence is committed by a person having control of, or managing, an HMO that is required to be licensed, but is not so licensed. If an HMO is required to be licensed, but is not, and the person controlling or managing it is therefore guilty of an offence, no rent is payable by occupiers and no charge can be made in lieu of rent. Occupiers' security of tenure is not affected by the provision, and nothing in it affects the terms of occupancy other than the payment of rent.

Amendment No. 286 would remove the ability of landlords to obtain a mandatory court order for repossession of their property after giving two months' notice. The hon. Member for Ludlow has alluded to the concerns, but perhaps he has not caught up with the Government's response to them. Concerns were raised during consultation on the draft Bill about the way in which clause 62 would apply. We have taken on board comments made on the draft Bill, and the revised clause makes much clearer what the provision does. The Government's view is that persons letting properties that are required by law to be licensed, and who fail to apply for a licence, should not be able to profit from their disregard of the law by receiving rent. It is not a question of landlords being required to house tenants rent-free.

The clause does little more than clarify the common law position. The courts simply will not enforce an unlawful contract. If an HMO cannot be lawfully operated without a licence, any tenancy agreement in an unlicensed HMO will be unlawful. The clause makes it clear that occupiers of unlawfully unlicensed HMOs are not to suffer any penalty, but that criminal landlords cannot profit from their failure to obtain a licence. We do not want landlords to seek to evade their responsibilities to be licensed simply by evicting tenants.

The terms of clause 62 (4) are that

''nothing in this Part affects the validity of any tenancy or licence under which a person occupies an HMO during a period to which that subsection applies.''

Legislating to provide that a landlord cannot rely on one of the grounds for recovering possession of his property, but leaving him able to rely on all the other grounds would produce a very odd result.

The hon. Member for Ludlow mentioned section 21 of the Housing Act 1988. A landlord would not get very far if he sought to rely on that section. The tenant facing eviction only has to report the fact to the local authority, and it will be obliged to grant a licence or to make an interim management order. I am not persuaded that the correct approach is to put further procedural hurdles in the way of a criminal landlord. The objective is to ensure that landlords who are required to get a licence actually apply for one. For

those reasons, I invite the hon. Gentleman to withdraw his amendment.

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

The Minister gives some reassurance, but our debate on the clause has not dealt fully with the concerns raised. At this time of the day, I will not pursue the matter further. However, the proof will be in the testing and, unfortunately, some tenants may suffer as a result or may be bullied by their unlicensed landlord into paying rent by being told that they will lose their tenancy agreements if they do not. It will be difficult for tenants to know what their rights are and how to deal with such a situation. The Government might have the letter of the law on their side, but the difficulty lies in the spirit of the law and the means by which tenants will know what their rights are.

I suspect that the Government may need to return to the legislation in a couple of years, because this area could prove to be problematic. I understand the Government's reasons for saying that they are happy with the clause as it stands: a legal framework already surrounds the tenancy agreement, and the tenancy agreement would be invalid. The problem, however, is that not many tenants will know the details of the Housing Act and will not necessarily know that they

should not pay rent; or that the landlord may say that if they do not pay rent, they will not be granted an agreement when the building is licensed. If the agreement is invalid, it is invalid from both sides. I can therefore see people being forced to pay money. The Government may have to reconsider this issue. For the moment, however, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 62 ordered to stand part of the Bill.

Clauses 63 and 64 ordered to stand part of the Bill.