Phil Wilson (Sedgefield, Labour)

It is a pleasure to serve under your chairmanship, Mr. Cummings. The issues that lie beneath the surface of this subject are of great concern for many of my constituents. I believe that the need to extend selective licensing has both positive and negative connotations. Selective licensing schemes have been introduced in several areas of the country and are established where there is low take-up of housing, a high proportion of private landlords, and antisocial behaviour. There are two schemes in my constituency: one is in Dean Bank in Ferryhill and the other is located in a part of Chilton. The two villages are about a mile apart and are former coal-mining communities.

Both schemes have been established for more than a year and were made possible by the Housing Act 2004. Schemes need first to be sanctioned by the Secretary of State. The powers under the Act are primarily intended to address the impact that poor-quality private landlords and their antisocial tenants can have on the wider community. If a local authority designates an area as subject to selective licensing, all the private landlords in that area must obtain a licence, and if they fail to achieve acceptable management standards, the authority can take enforcement action.

I have said that selective licensing schemes have both negative and positive connotations—negative because the perception is that the area has antisocial behaviour problems, but positive because the local authority and community want to sort out the problems. Other constituents, in Trimdon Station, and a group in Chilton want the scheme extended to their streets, because they believe that selective licensing offers protection. I believe that the initiative does that, but it is still early days to see how successful the original schemes have been, although evidence from the agencies involved shows that progress is being made.

During the summer recess, I attended many meetings with residents, the police, environmental health officers and local government officers about problems arising from antisocial behaviour and unkempt residential properties. I met residents in Dean Bank, Chilton and Trimdon Station. Many were angry. They felt isolated and powerless to deal with the problems that confronted them in their everyday lives in their communities. There were major similarities in the situations faced by all those residents. They all lived in former colliery terraced housing, where private landlords owned many of the properties. Many of them were absentee landlords who did not seem to care who they were letting their properties to or what those people got up to. As a consequence, antisocial behaviour and a local environment that was growing dishevelled became a major problem. Once-proud communities felt threatened and not in control.

The problem in Dean Bank is in an area where selective licensing is in place and which is dominated by terraced housing. In Chilton, the problem was situated away from the selective licensing scheme area in the village and was focused on the Arthur street, Albert street and Prospect terrace area of the village. All three streets have early 20th-century terraced housing. In Trimdon Station, the problem is also focused on three streets: Station Road East, Station Road West and St. Aidan's terrace.

The history of the areas is similar. We are talking about areas of early 20th-century terraced property, with low demand. Owner-occupiers move out and housing prices stagnate, offering investment opportunities for private landlords. Problem tenants move in, standards decline and then there are empty properties and house prices go down. In a nutshell, that is the history that residents have lived in recent years.

To show some evidence of that, I asked Durham county council to provide me with statistics on the make-up of the ownership in the three areas. The statistics showed that of the 1,082 properties in question, 408, or 38 per cent., were held by private landlords. Of those, 51 per cent. lived outside County Durham or lived abroad. In some streets, such as Davy street in Dean Bank, 53 per cent. of the houses were owned by private landlords, the majority living outside County Durham. In St. Aidan's terrace in Trimdon Station, 11 of the 25 terraced properties were owned by private landlords, the majority living outside the county. In Arthur street in Chilton, 50 per cent. of terraced properties were private lets, again with the majority of landlords living outside the county.

The county council listed for me the reported problems, which included, for example, groups congregating on the streets drinking alcohol, fighting, criminal damage, rubbish accumulating in backyards, unsightly properties and poor property conditions. The problems seem to be emanating primarily from properties that are privately let.

I believe that the relative cheapness of the terraced housing in question has attracted a high proportion of private landlords to those three villages. Regionally, about 8 per cent. of the housing stock is privately rented, although nationally the figure is about 13 per cent. In the area around Sedgefield it is 5.5 per cent., but in the areas of Chilton, Dean Bank and Trimdon Station, 38 per cent. of private properties are privately let, the majority by landlords who do not live in County Durham, let alone in those villages. Antisocial behaviour is a significant problem for local residents, and is higher there than in the surrounding areas. That link needs greater attention. How can a landlord who lives in another part of the UK, or abroad, care about the community in which his property is situated? On balance, I do not think that he can.

That does not mean that all private landlords are bad—I do not believe that for a minute. However, there must be a problem at that end of the privately rented sector if it is deemed necessary to have selected licensing schemes that are mandatory for the landlord to sign, and through which fines of £5,000 can be imposed on a landlord who does not follow the rules.

Selected licensing places a duty on private landlords to act responsibly. Part 3 of the Housing Act 2004 provides that the local authority may declare a licensing scheme for privately rented accommodation in an area, as long as certain conditions are met. The area must be, or be likely to become, an area of low housing demand, and it must have a significant level of privately owned houses that are let on short-term arrangements. Furthermore, the local housing authority must be satisfied that the introduction of such a scheme, together with other measures, would lead to an improvement in the social or economic conditions in the area. Such a scheme could be used in an area that is experiencing significant or persistent problems caused by antisocial behaviour, and where the private landlords are not taking appropriate action to combat the problem, and in places where the local housing authority is satisfied that the scheme's introduction, together with other measures, would lead to a reduction or an elimination of the problem.

Before declaring a selective licensing area, the local housing authority must consider whether other courses of action that could deal with the issues effectively have been tried. It must ensure that the scheme is consistent with its housing strategy and its approach to homelessness, empty properties and antisocial behaviour. It must also consult landlords, tenants and residents associations.

In an area with a licensing scheme, most private landlords or management companies would be required to obtain a licence in order to let or manage residential property. The mandatory licence conditions would require the holder to meet the following conditions: to take reasonable steps to deal with antisocial behaviour; to provide annually a gas safety certificate to the local housing authority where applicable; to keep furnishings and electrical appliances in safe condition; to keep smoke alarms in good working order; to supply tenants with written terms of occupation; and to demand references from prospective tenants. The local authority may also set any other conditions that it deems necessary.

If the licence holder commits an offence or is in breach of the licence conditions, they can be fined a maximum of £5,000. Non-compliance would also allow the local housing authority to revoke the licence. The LHA may apply for an interim management order in respect of a licensable property that remains unlicensed. That would last for a period of 12 months, and a final management order must be applied for if the LHA still feels that it is unable to grant a licence. Individual problems at an address inside or outside a licensing area would be addressed by the use of a single interim management order. The licence would normally be valid for a maximum of five years, and may be varied by the LHA if there has been a change of circumstance.

The council will reference prospective tenants, assist the landlord in dealing with problem tenants or antisocial behaviour, provide evidence to assist with an eviction process, and facilitate a private landlords' forum to provide a platform for consultation, discussion and the sharing of good practice. As the county council reminded me, selective licensing is only one measure and other tools can be used when tackling problems with private landlords. For example, Durham county council is developing a voluntary accreditation scheme that will be made available to any private landlord who rents out property in the county. The scheme aims to assist landlords in improving their management standards and property conditions, which in turn will benefit tenants and local residents.

The council will offer benefits to accredited landlords, which will include assistance in dealing with problem tenants in the form of joint visits and the collation and production of evidence for legal action. The county council can assist landlords in referencing prospective tenants, and it is developing a system to be used county-wide, such as the traffic light system that is currently used in some areas. The council is also considering a good tenants scheme, which would enable anyone looking for private rented accommodation to apply to become recognised as a good tenant. That would help them to move forward quickly should a suitable property become available.

The council wants to co-ordinate its approach to private landlords by setting up such initiatives and using the full range of powers that the Government have laid down in legislation. It works closely with the police and uses environmental health provisions to help tidy up certain areas. Many of the initiatives that I have mentioned are voluntary, and I want to ask the Minister whether he agrees with them, and whether he will look into how such schemes could be made compulsory, to ensure that private landlords are licensed, not selectively, but before they can let properties.

There are three categories of private landlord. First, there are good landlords who take their responsibilities seriously. Secondly, there are bad landlords who, whatever someone does, are not prepared to play the game because they frankly do not care. The largest group are what have become known as amateur landlords. They are neither good nor bad, but they lack the necessary skills and sometimes have a job other than that of looking after the properties they let. A general licensing scheme would be useful. It should not involve only paying a fee; there should be some qualification or something in the provision that proves that the landlord knows their rights, duties and responsibilities.

The Rugg review highlighted the fact that 73 per cent. of landlords are either individuals or couples. It also described the private rental sector as a cottage industry. The number of properties that most landlords own is small—44 per cent. of landlords who are individuals or couples own only one property. A further 27 per cent. own two to four properties.

Social trends determine that those who own properties for rent have often inherited the property, have found difficulty in selling it before moving out or have the property as a spare following a partnership formation. However, the majority trend is the investment motive. In 1993-94, the landlords of 48 per cent. of English dwellings viewed their property either as an investment for capital growth or as rental income. By 2006, the proportion of those viewing property as an investment had grown to 70 per cent.

In recent years, there has been an increase in the proportion of landlords who are new to the business. In 2001, 53 per cent. of landlords who were individuals or couples had been letting for less than 10 years. In 2006, that figure had grown to 60 per cent. Those are the reasons why, in my view, a general licensing scheme for private landlords should be introduced.

The evidence suggests a growing trend in absentee landlords. The purchase of a property is a capital investment, which makes some purchasers not landlords but property investors and speculators. They tend to hand over their properties to a managing agent, which opens up a whole new can of worms because managing agents are not regulated at all. A general licensing scheme should not just involve receiving the licence for a fee. I believe that a potential or existing landlord should prove his or her competency in letting out property. They must show that they are honest and of good character, and that they know what is expected of them and understand the law. If the landlord is an absentee, they must demonstrate how the property and tenant will be managed in their absence.

I also fervently believe that where a substantial amount of the housing stock in a given area, such as Dean Bank, Chilton and Trimdon Station, is dominated by private landlords, those landlords have a moral responsibility not only to their properties and tenants, but to the wider community. As part of any licensing scheme, the landlord should state what positive role they intend to play in the community.

It is not good enough simply to say that property is a revenue source for an individual landlord. There might be a market in housing, but it should not be a market where standards are driven down in our engagement with our local communities. The high level of mobility common to the private rented sector means that tenants are less likely to settle for long periods or to contribute to the local community. High levels of mobility can lead to void periods between lettings, which can destroy neighbourhoods, particularly when voids last for significant periods.

More worryingly for both tenants and their neighbours, absent or irresponsible landlords who do not manage their stock can lead to continuing disrepair issues. That has an impact not only on housing conditions for tenants, but on the quality of the external environment for the local neighbourhood. Those are all characteristics of the three areas in my constituency that I mentioned.

Constituents complain to me about the antisocial behaviour of some of the tenants in private lets. That is not a specific problem of private lets, but it is prevalent in the areas that I have mentioned. On occasion, tenants have been evicted by a social landlord, or have dysfunctional family backgrounds. More often than not, they land up in privately let accommodation. If the regulation is tightened, as it is under selective licensing and tenant reference schemes, private landlords can choose not to offer the individual a tenancy. If the individual cannot find a house from either a social or private landlord, where do they go? They are homeless.

When a family or individual is a nuisance to themselves and the local community, we should build on the Prime Minister's announcement at the Labour party conference on the need for family intervention schemes, such as the Dundee families project. Under such a scheme, problems can be resolved in a safe and caring environment, so that the individual can be reintegrated in the community.

Fundamentally, there is a case for the private rented sector and those who operate in it to show some understanding of the public good. They are providing homes for people. How can we expect tenants to have respect for the property that they rent if, as is often the case, the private landlord has no respect for his property either?

The combination of a lack of social housing and house prices that are beyond the reach of many people, especially the young, has swelled the number of low-income households seeking to rent in the private sector. As demand grows, so does the problem. The present situation seems unsustainable, particularly as it is closely linked not only to perpetuating poverty and deprivation, but to the cycle of homelessness.

There are two possible options for tackling the problem: abandon the use of the private rented sector for public housing purposes, or proactively ensure its expansion so that it can effectively meet demand. The former requires a substantial increase in the social housing sector to take up the slack. That may be the ambition of the Government's housing policy, but it is, by definition, a long-term approach rather than an overnight solution. We must look at measures over the short and medium term, and possibly consider growing the private sector in a more systematic way. For example, we could consider institutional investment, possibly by housing associations.

Any growth should be on the basis of a licensing scheme that matches the needs of the tenant and the neighbourhood in a way that is not happening now. Leaving the matter to private landlords, many of whom are absent, in it for the capital return in property and amateurish in their approach, is a recipe for chaos. Those people should not be able to determine the country's housing policy. Will my hon. Friend the Minister let me know his views on the introduction of a general licensing scheme for private landlords? Can he tell me what his Department is doing to monitor selective licensing schemes, and what plans there are to extend them?

In Chilton, where there have been problems and where there is no selective licensing scheme, Ben Hewitt, a local resident who was born in Arthur street, has done a sterling job of pulling the community together to work with the police, councillors and other agencies. The Dean Bank residents association is doing the same thing, and the Trimdon Station local residents have just created a neighbourhood watch scheme. The residents in Chilton and Trimdon Station want the selective licensing scheme to be extended to their area, while the Dean Bank residents want their existing scheme to work.

The communities in my constituency are strong, and they want to live peaceful lives. I am disappointed when I see private landlords—some are good but the majority are absentee—buying up communities for profit without due respect to the local people. That is why I wanted to raise the issue today. I should like the Government to make it a statutory duty on local authorities to liaise and engage with private landlords and monitor them. I know that there is legislation in place to help local authorities, and Durham county council is doing all that it can, but there is no statutory requirement on it to do things systematically, which means that resources are limited. If such a duty was imposed, it would go some way to redressing the problems in my constituency, which, I am sure, are not particular to Sedgefield.

Ian Austin (Minister of State (the West Midlands), Regional Affairs; Dudley North, Labour)

Let me start by apologising for coming in late and missing the start of the speech of my hon. Friend Phil Wilson. I congratulate him not just on obtaining this important debate but on all the work that he has done on tackling antisocial behaviour and bad landlords in his constituency. As he said, tackling issues such as antisocial behaviour is one of the Government's top priorities, and I recognise that problems of vandalism, crime and general disorder have a huge impact on the quality of life of ordinary, decent people.

We have provided a framework of powers and approaches for the police and other agencies so that they can tackle antisocial behaviour swiftly and effectively. As my hon. Friend said, a minority of bad landlords still make their tenants' lives a misery and tarnish the reputation of the whole sector. We want to identify those people and get them out of the market if they are unwilling to improve their behaviour. In recognition of that, the Housing Act 2004 introduced a variety of measures to tackle poor management practices in the private rented sector.

The 2004 Act gives local authorities the discretionary power, subject to Government approval, to designate certain neighbourhoods as selective licensing areas. They may use such powers in areas that suffer, or are likely to suffer, from low housing demand, or from significant and persistent antisocial behaviour.

To implement such a power, local authorities must show how a selective licensing scheme fits in with their overall, strategic, authority-wide approach to dealing with problems in the private rented sector. They need to show, for example, how the scheme will fit in with existing policies on homelessness, empty homes, regeneration and antisocial behaviour. They must also conduct a full consultation with local residents, including tenants, landlords, owner-occupiers and businesses in and around the proposed designation.

Selective licensing will ensure that all landlords and managers of privately rented properties in a designated neighbourhood are identified to the local authority as "fit and proper" persons, and that satisfactory management standards are in place in the property. Landlords will also have to take appropriate steps to deal with their tenants' antisocial behaviour as a condition of a licence, and they will be required to demand references from prospective tenants. Breach of a licence condition is an offence that is subject to a fine of up to £5,000. Letting or managing a property without a licence could result in a maximum fine of £20,000.

My hon. Friend knows that the Department for Communities and Local Government has given approval to Sedgefield borough council and Easington district council to operate selective licensing schemes in their areas. Both schemes are now administered by the newly formed Durham county council. Indeed, the selective licensing scheme in the Dean Bank and Chilton West wards came into force on 7 February 2008 and, to date, 212 licences have been issued and 17 prosecutions are pending. The council has shown that its schemes fit in with the overall strategic approach on tackling problems in the local private rented sector. It is also seeing success in the level of engagement from local landlords operating in its area. Such success demonstrates what an authority committed to tackling problems with its private rented sector can achieve.

As I have mentioned, to establish selective licensing schemes in their area, local authorities are currently required to apply to the Department for approval. When the legislation was introduced, it was made clear that the ultimate aim was a general consent allowing local authorities to establish schemes without seeking approval. Such a consent would not absolve a local authority of the need to comply with the requirements that I have described.

The legislation is still relatively new, and before a general consent is issued, careful consideration is needed of how it would work in practice. I should like to stress, however, that the role of the Department is to facilitate the approval process, rather than to refuse applications for selective licensing. Officials work with local authorities to help develop the most appropriate solutions for the problems that they have identified.

When a local authority presents a scheme that has been properly developed and meets the legislative criteria, our Department aims to turn around approval within 30 working days. However, it is right that we should challenge schemes that have not been properly thought through and that do not meet the legislative criteria.

On approval, licensing schemes last a maximum of five years, and come into force three months from the date of approval. There is no reason why licensing schemes cannot continue and, in certain circumstances, be extended after their end date, if the problems that the schemes are designed to address still manifest themselves.

I expect local authorities to take a robust approach to the tools and powers available to them to tackle problems in the private rented sector. However, I am keen to ensure that local authorities see licensing as a way of developing a partnership with good landlords. If selective licensing designations are to help address the complex issues facing wards such as Dean Bank and Chilton West, it is vital that there be good working relationships between the local authority and local landlords.

The criteria for establishing selective licensing schemes reflect the experience of private rented sector markets at the time when the legislation was implemented. However, I recognise that there is a need for further consideration of the criteria for selective licensing to ensure greater flexibility for local areas in dealing with problem privately rented properties.

My hon. Friend knows that my Department commissioned the independent review, "The Private Rented Sector: its contribution and potential", from Julie Rugg and David Rhodes of the centre for housing policy at the university of York. It was published in October 2008. Its recommendations included a national register for all private landlords and a reconsideration of the criteria used for selective licensing. It proposed, for example, that landlords include their registration number on all tenancy agreements, and that it be possible to remove them from the register if they fail to comply with the required standards. A register would also enable us to identify bad landlords and get them out of the market if they are unwilling to improve their behaviour.

My hon. Friend asked what the position would be in relation to private-sector letting and managing agents. Letting and managing agents do not currently need professional credentials, but the review recommends full regulation for private-sector letting agents. At the moment, because professional credentials are not required, neither tenants nor landlords have any realistic redress when things go wrong. To tackle that problem, the Government propose the creation of an independent regulator for all letting and managing agents.

The Government published our response to the review for consultation in May and have been encouraged by the positive reaction to the proposals, having received more than 250 responses. We are now considering those responses and will publish the results of the consultation later this month.

In conclusion, selective licensing is an important tool available to local authorities to help tackle the worst problems in the private rented sector. Selective licensing will continue to make a valuable contribution to raising management standards in the private rented sector within the designated wards. Through successful implementation of the scheme, the council is sending a clear message that poor management standards will not be tolerated in the region.

I congratulate my hon. Friend on all the work that he has done in his constituency with the local authority to tackle the problems created by bad landlords. I would be grateful if he would agree to meet me and take me through the figures that he read out, so that we can consider the problems in his constituency in more detail.

Question put and agreed to.

Sitting adjourned.