Reference of Excessive Rents to Rent Assessment Committee

Clause 22 – in the House of Commons at 8:30 pm on 9th November 1988.

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Lords amendment: No. 18, in page 16, line 9, leave out "if?.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen 8:45 pm, 9th November 1988

I beg to move, That this House doth agree with the Lords in the said amendment.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

With this it will be convenient to take Lords amendment No. 19.

Photo of Ian McCartney Ian McCartney , Makerfield

I had intended to wait for the Minister's explanation and then point out how inadequate it was. Little did I know how inadequate it was to be, especially as there was considerable discussion about this point in another place. Indeed, one of the main protagonists in that debate is here today. The amendment deals with the referral of excessive rents to the rent assessment committee—the RAC—which was established to get rid of the rent officer and the local rent committees. Despite the inadequacy of the Minister's comments, it is important to take account of the intention behind the amendment and to explain why the Opposition regard it as insufficient to allay our fears about what will really happen in the market place.

The landlord's power to determine the type of tenancy is especially significant in areas of housing stress. In many respects, the landlord's power to determine whether it is an assured tenancy or an assured shorthold tenancy will to a large extent determine the protection for the tenant or potential tenant. It is significant that, in using that power, the landlord can negotiate rents higher than those set by the rent assessment committee. I shall return to that in a moment.

As the Minister was not prepared to explain the Government's position, it is incumbent on me to set out what the Government's position was when the matter was debated in another place. In that debate, the Earl of Caithness said: As noble Lords will by now be well aware, we on this side of the House start from the proposition that the rent for an assured tenancy should be first and foremost a matter for free negotiation and agreement between landlord and the tenant. That, in our view, is a necessary and entirely proper feature of the free market principle which we are seeking to apply to private rented housing.Thus under the new regime the landlord and tenant will be free to negotiate not only the initial rent for the tenancy but also—if they wish—a contractual procedure for reviewing that rent at subsequent intervals. In cases where they do agree on such a procedure, that procedure will be binding on both parties with no provision for it to be overridden by statute. The primacy of contract is absolutely fundamental to our thinking in this respect."—[Official Report, House of Lords, 3 November 1988; vol. 501, c. 399] The principle behind this is the free market, but in areas of housing stress how can landlord and tenant be free on a balanced basis to negotiate rent levels and terms of tenancy? In reality, that will never be the position. The tenant or potential tenant will always be in a take-it-or-leave-it situation and significantly under pressure when it comes to determining the level of rent.

In terms of legal status, this is a unique attempt to write into legislation in this country the ability of a landlord or other person to make an agreement which removes the contractual rights, legal obligations and right to seek legal redress from the terms of a contract. No such principle exists in any other part of English law. Indeed, employment law is quite the opposite—no employer can force an employee to agree to the removal of his rights. Yet the noble Lord said that, once a tenant had come to an arrangement with a landlord, no matter that it be under pressure, the tenant's ability at a later date to seek redress through the RAC would be ultra vires.

I know of cases where landlords have put considerable pressure on tenants to vary their rent arrangements. In Wigan, that often happens with homes in multi-occupation. Young women living on their own are especially vulnerable. The landlord says that he wants an extra £5 or £7 a week, and if the tenant is not prepared to pay, the landlord will subdivide the tenancy and bring in another person to share that accommodation. I know of one recent case of a young woman having the only room that she rented split into two. The landlord attempted to put in another woman to share that accommodation because the tenant said that she could not afford to pay more than the rent that had originally been agreed.

Tenants are harassed by landlords who want to change the tenancy arrangements. We must therefore seriously consider the amendments and determine whether they are adequate to protect the rights of tenants and ensure that they are in the same bargaining position as the landlord. Unless there is equality of bargaining, there can be no equality or freedom for a tenant when negotiating with a landlord.

Many prospective tenants face the problem of key money. They might telephone the landlord after seeing an advertisement, be asked to go to see him immediately and then be asked to make an offer on the level of rent that they are prepared to pay and what they are prepared to pay as a deposit and key money. People in desperate circumstances have no choice but to accept whatever the landlord wants. In doing so, they give away their rights to further consideration of the tenancy arrangement. It is important to decide whether the amendment is adequate to deal with that. I do not think that it is.

The Minister of State said in another place: We believe that the statutory rent-fixing procedure we have designed will ensure adequate protection for tenants in those situations where it is needed. But we are quite determined that the law should not at any stage get in the way of people who are perfectly capable of sorting matters out between themselves. How is that to be defined in an area of housing stress? It is a throw-away phrase. The noble Lord continued:

Where the rent assessment committee determines a rent, that will be the rent payable under the tenancy unless the landlord and tenant agree on a different figure. The tenant cannot be compelled to pay more than the rent assessment committee's determined rent. I repeat … there is no X factor."—[Official Report, House of Lords, 3 November 1988; Vol. 501, c. 400.] In reality, there is an X factor in the market place. It is necessary for people to have roofs over their heads. The landlord makes it clear that either the tenant agrees to a new arrangement or he will not continue the tenancy. With a shorthold assured tenancy, at the end of six months the tenant is on the road with his backpack. He can only hope that the local authority will put him in bed-and-breakfast accommodation.

The throw-away phrases during the debate in another place are meaningless in the battle to help tenants secure their rights in the market place, where the landlord has the ability to determine the rent level. Although the noble Lord's statement was inadequate, at least he attempted to answer the questions put by the Opposition. However, he did not say why the Government had failed to do anything about clause 22(3). Why do not the amendments contain a redefinition of the clause, which states: (3) Where an application is made to a rent assessment committee under subsection (1) above with respect to the rent under an assured shorthold tenancy, the committee shall not make such a determination as is referred to in that subsection unless they consider—(a) that there is a sufficient number of similar dwelling-houses in the locality let on assured tenancies (whether shorthold or not)"? Who determines what is sufficient in London, in Wigan, in Manchester, in Halifax, in Cardiff—

Photo of Ian McCartney Ian McCartney , Makerfield

I apologise to my hon. Friend for not mentioning Sheffield.

On the one hand, the Minister appears to be giving the tenant the right of redress, but on the other the phraseology he uses in the clause gives the tenant no right of redress whatever if the RAC says that there are not sufficient houses of a similar tenancy to enable it to determine the tenant's application. The tenant will have to pay up or get on his bike and get out.

Clause 22(3)(b) states: ?(b) that the rent payable under the assured shorthold tenancy in question is significantly higher than the rent which the landlord might reasonably be expected to be able to obtain under the tenancy, having regard to the level of rents payable under the tenancies referred to in paragraph (a) above. What is the meaning of "significantly higher"? If we are to believe the Minister of State, once the RAC makes a determination, that is the rent. That means that there is an X factor. What is "significantly higher"—£1, £2, £3; 10, 20, 30 or 40 per cent? Is it to be significantly higher than the minimum level of housing benefit set by the local DHSS office?

Who determines that? If a person is homeless in Cardiff or Wigan, he is 100 per cent. homeless. Is it determined in this Bill that in Cardiff a person may be lucky and get the rent assessment committee to assist him, but, unfortunately, in Wigan a person cannot and the answer is to move to Cardiff? That is the sort of double meaning in the legislation.

The legislation gives the illusion that tenants can call their landlords to account and can secure their rights. The ability to negotiate in the market place and to determine both whether the rent level is fair and other tenancy conditions is an illusion. It is an illusion that a tenant can seek redress.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

The national mobility scheme, is designed to help people move from one local authority to another. If a person gets on his bike and moves south, obviously becoming part of the homeless sector, he is not allowed to go on to the local authority housing list because he does not have his families, with him. Until he can get his family down south, he cannot go on a waiting list. That happens in authorities which are part of the national mobility scheme, and it is escalating the homeless problem. Can my hon. Friend explain that or will the Minister do so when he replies? Many of my constituents have moved south for a job, which has meant separation from their families with all the hardship, stress and strain that that brings to family life.

9 pm

Photo of Ian McCartney Ian McCartney , Makerfield

I thank my hon. Friend for that point. Coincidentally, I was the member of the Back Bench Opposition team in Committee who was given the dubious pleasure of moving this amendment, which was new clause 36. I do not want to go over old ground, but it may be helpful to the Minister if I give him the short reply given to me by his predecessor. It may assist him to give me an adequate response.

The gist of my argument was that, in the changeover, the national mobility scheme should remain and that arrangements made between inner and outer London boroughs should remain, irrespective of the terms of the tenancy and whether it was in the public or private sector. It was the only occasion when I paid tribute to the Government, and it was for setting up a mobility scheme some years ago. Despite that, the then Minister, who is not present now, said: I have listened carefully to the hon. Member for Makerfield (Mr. McCartney). I understand that the new clause is based on proposals put to the joint committee of the London area mobility scheme, on which the boroughs participating in that committee have not yet reached agreement. So irrespective of its merits or otherwise it is premature, and therefore I resist it.I am not inclined to accept the principle behind the new clause. It is preferable that participation in mobility schemes should remain voluntary.?—[Official Report, Standing Committee G, 15 March 1988; c. 1642.] The market forces apply. That was the short shrift that I got. It is ironic that that was the last time that the Minister spoke from the Dispatch Box, so I suppose that there is some justice in that.

I hope that the Minister can give us some brief indication of the reasoning behind the Government's proposed amendments and why the Government have not included some redefinition of clause 22(3) so that tenants with assured shorthold or assured tenancies can use it for rent levels and other tenancy conditions. Previously, the Minister failed to give a commitment to meet the young homeless in London and elsewhere. I hope that he will not treat this request with the same disdain but that he will get on his hind legs and come to the Dispatch Box. We are awaiting his clarification of the debate in the House of Lords and of this debate.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

The speech by the hon. Member for Makerfield (Mr. McCartney) was less than worthy of him. I know him well: he is an hon. Member representing the north-west, like myself. Until I heard his speech, I thought highly of him. I always thought that he was an intelligent man, yet he asked why the then Minister for Housing and Planning did not state the Government's position. He was a member of the Committee for a long time, and he would have been present on Report when the Committee proceedings were made clear. If he was not, I should like to know why.

On Report, an undertaking was given by my hon. Friend the Minister of State, Foreign and Commonwealth Affairs—my hon. Friend the Member for Bristol, West (Mr. Waldegrave), who was then Minister for Housing and Planning—that he would concede that the proviso served no useful purpose.

Photo of John Battle John Battle , Leeds West

The then Minister made promises of concessions in Committee that have not materialised.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

The hon. Member for Leeds, West (Mr. Battle) should consider what he is saying in his interventions. My hon. Friend the then Minister for Housing and Planning was responding to appeals from Labour Members. The hon. Member for Makerfield has not done his homework. He has not even looked at the record of the Report stage or the proceedings that he attended for several months.

Photo of Ian McCartney Ian McCartney , Makerfield

I used to think that, as an hon. Member representing the north-west, the Minister was an honourable gentlemen. The Minister is making a patchwork of personal attacks on myself and other Members——

Photo of Ian McCartney Ian McCartney , Makerfield

That is the word I wanted. My hon. Friend the Member for Brent, South (Mr. Boateng) attended a better school than me. I had the benefit of a Scottish education.

The Minister owes the House an explanation of clause 22(3). The then Minister for Housing and Planning said that he would consider the amendment, but if my recollection is correct it did not concern only the specific point made in the House of Lords, which watered down the promise given. Will the Minister please give us an answer?

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I shall be happy to give the hon. Gentleman an answer to the specific point that he made about clause 22(1) and 22(3), if he will allow me. The hon. Gentleman knows full well why we conceded this point.

The hon. Member for Makerfield referred to debates in the other place and to the rent regime covering full assured tenancies. We are dealing with shorthold tenancies, under which there is a right to apply at any time, to a rent assessment committee for a rent determination. The rent assessment committee will consider whether the rent payable is above market level, and if it is, it will determine a market rent, which will override the contractual rent. I am sure that I am enlightening the hon. Member for Makerfield—I will give him the benefit of doubt—but this point must have arisen several times in Committee.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

It is important to assess the correct level for a rent, but will the Minister consider a method of ensuring that landlords carry out repairs to make a property habitable? When assessing what is fair and reasonable, that must be taken into consideration.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I am sorry that I gave way to the hon. Gentleman, because his comments have nothing to do with the clause. If we were to go down that road, we would have to discuss—we may have time to do so later: for example. on Friday—whether local authorities, not just the private sector, should be made to keep up to date with the repairs for which they are responsible.

The House will know that subsection (3) will still apply—the hon. Member for Makerfield was right—thus the rent assessment committee will be empowered to make a determination of rent only if it considers, first, that there is a sufficient number of similar properties in the locality let on assured tenancies and, secondly, that the rent payable in the case before it is significantly above the rent levels prevailing under those other tenancies.

Photo of Mr Keith Bradley Mr Keith Bradley , Manchester, Withington

As a Member representing a north-west constituency, the Minister should understand the position in Manchester. I shall give a practical example of how people accept shorthold tenancies. The Minister should understand the position well because I explained it in Committee. If he had read Hansard, he would have recognised what happens.

People desperate for accommodation race to get the Manchester Evening News and then race to the telephone to try to get an appointment for accommodation. They race to the accommodation and, if they are lucky, they are

?(6A) If, in proceedings to enforce a liability arising by virtue of subsection (3) above, it appears to the court—(a) that, prior to the event which gave rise to the liability, the conduct of the former residential occupier or any person living with him in the premises concerned was such that it is reasonable to mitigate the damages for which the landlord in default would otherwise be liable, or(b) that, before the proceedings were begun, the landlord in default offered to reinstate the former residential occupier in the premises in question and either it was unreasonable of the former residential occupier to refuse that offer or, if he had obtained alternative accommodation before the offer was made, it would have been unreasonable of him to refuse that offer if he had not obtained that accommodation,the court may reduce the amount of damages which would otherwise be payable to such amount as it thinks appropriate. Amendment (a) thereto, in line 6, leave out ?is reasonable? and insert

?would be wholly unjust not?. Amendment (b) thereto, in line 10, after ?offered?, insert ?in writing?.

in a queue of fewer than 20. If they are very lucky, they are at the front of the queue. The landlord offers accommodation on his terms. The applicants cannot determine whether the provisions in the clause about other properties or levels of rent in the area are appropriate and, in desperation, they accept the accommodation. The Minister has said that tenants can go to a rent assessment committee at any stage. If, because of the provisions of the clause, a tenant cannot go to a rent assessment committee to get his rent lowered and cannot afford the rent to which in his desperation he agreed, is evicted by the landlord, will he be considered to be intentionally homeless? I hope that the Minister will reply.

Hon. Members:


Photo of Mr Clive Soley Mr Clive Soley , Hammersmith

The Minister does not answer. The problem may be that he is unable to do so. It would help if he could answer the question.

Photo of Mr David Trippier Mr David Trippier , Rossendale and Darwen

I made that point clear. I shall write to the hon. Member for Manchester, Withington (Mr. Bradley). I would have to examine his precise example.

Question put and agreed to.

Lords amendment No. 19 agreed to.