Private Rented Housing

Part of Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 7:15 pm on 9th May 1988.

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Photo of Mr Chris Smith Mr Chris Smith , Islington South and Finsbury 7:15 pm, 9th May 1988

The hon. Gentleman ignores the basic point at the heart of the debate. A subsidy is being provided by the taxpayer through tax relief available under BES. We do not believe that that is a particularly sensible or sensitive way in which to target public subsidy.

If the hon. Gentleman wants to find out about market rent levels, he should come and see what happens in my constituency. Only this morning, at my advice surgery, I saw a family with no recourse to local authority accommodation who are desperately looking for somewhere to rent. They have no capital and cannot afford to buy. The cheapest property for rent in the private market that they can find in the borough of Islington costs £200 a week.

If the Government say, "Ah, but housing benefit will take care of their problems if their income is low," they have clearly forgotten that the higher rent limit on housing benefit for the borough of Islington is £61 a week. Clearly, that puts such accommodation out of the reach of anyone in any of the categories mentioned by Conservative Members as those likely to be helped by the scheme. It puts accommodation to be provided at market levels under this scheme completely beyond the reach of ordinary people. The rents will be high and, as a result, ordinary people will not be helped by the provision of accommodation under the scheme.

Not only will rents be high, but there will be little security of tenure. "Assured tenancies" is an Orwellian phrase to describe tenancies that will be anything but assured. There are 12 different grounds for possession in schedule 2 to the Housing Bill. For example, ground 7 enables possession to be regained by a landlord simply because work is to be carried out on the accommodation. That will be the easiest, simplest, and, I predict, the commonest ground on which possession will be sought. Also, the prospect of sale to another landlord offers little ground for security under the provisions of that schedule to the Housing Bill.

If a BES company is looking for a mechanism to maximise its profit, maximise the capital gain available to shareholders, which will be tax-free at the end of a five-year period, and a way to get rid of the tenants involved, all it needs to do, at the same time as it sets up the BES-funded company, is to set up a non-BES-funded company with the same directors. It can sell the property from the first to the second at the end of five years and put the capital gain that will be made to the benefit of the first.

It will be easy for landlords to get rid of awkward tenants. They have requirements and needs and, on the whole, they tend to be treated badly by private landlords. The Financial Secretary was asked by my hon. Friend the Member for Dunfermline, East (Mr. Brown) whether he would agree that redevelopment is one of the grounds on which repossession can take place and that it would be to the financial benefit of the company to sell after five years. His answer, which I heard clearly, was yes. If he now wishes to say that he has had second thoughts, I should be delighted to give way to him. If not, that is clearly the position—that it is to the financial benefit of the company to sell after five years.

Not only will rents be high and tenancies anything but secure: it will be a relatively unregulated sector. Who will police the operation of the assured tenancies offered under the scheme? Who will police the companies involved? It will not be the Department of the Environment or the local authority. The only body that will be able to do that is the Inland Revenue, and that is hardly geared up to examining whether a social form of landlordism or a bad form of landlordism is being offered.

The tenancies will be at high rents and there will be little or no security for tenants. The letting will effectively be unregulated. It will be bad, high-cost housing and the scheme will do nothing for tenants. It will do everything for those who want to avoid paying tax. It will do nothing to solve our housing crisis, but it will do everything to create splendid new tax shelter opportunities. I strongly urge my right hon. and hon. Friends to vote against clause 49.