I beg to move,
That this House
recognises the private rented sector’s growing role in meeting housing need;
notes that there are 8.5 million people, including more than one million families with children, now renting privately;
recognises there are major implications of the growth in this tenure for families and communities in Britain today;
notes with concern the lack of protection afforded to tenants and landlords by the unregulated lettings market and the confusing, inconsistent fees and charges charged by letting and management agents;
further notes the lack of stability, security and affordability for families and other renters;
further notes the increasing number of complaints about rogue landlords and the poor standards in the sector compared with other tenures;
calls on the Government to regulate residential lettings and management agents and to end the confusing, inconsistent charges regime, making fees easily understandable, upfront and comparable across agents;
further calls on the Government to promote longer term tenancies where tenants want them;
and finally calls on the Government to introduce a national register of landlords and empower local authorities to improve standards and deal with rogue landlords.
The question for debate today is simple: how do we ensure that the private rented sector provides enough homes that are sufficiently stable and secure, affordable and of a decent standard? Nearly 8.5 million people, including more than 1 million families with children, now rent privately. Labour believes that the private rented sector has an important role to play in meeting housing need. As a result of the biggest housing crisis in a generation, more and more people are being locked out of home ownership and are looking to find their homes in the private rented sector.
The housing crisis gets worse by the day. House building is down; new starts are down 9% in the past year alone to fewer than 100,000. Homelessness is up, having risen by more than a third since the general election. People struggle to get mortgages and rents are ever rising in the private rented sector.
Most people dream of owning their own homes and we want them to realise their dream—as we did in government, when more than 1 million more families were able to buy their own homes. However, more people are finding themselves in the private rented sector, and for longer periods than at any time in years gone by.
We want a strong and thriving private rented sector that works for all those people, but the evidence shows that too many tenants are being ripped off by unscrupulous letting agents, lack security in their homes, face ever-increasing and unpredictable rents, and are plagued by rogue landlords and poor standards. We need a private rented sector that protects tenants and landlords from being ripped off by unscrupulous letting agents who do not protect their money and are not clear about the fees that they charge.
Last year, I conducted a secret shopper survey of letting agency fees in Leicester West. One agency charged a £125 application fee, a
£150 tenancy fee and another £100—I do not know what for—on top of a month’s rent in advance. Does my hon. Friend agree that such huge, unclear and unfair fees must be tackled?
My hon. Friend is to be commended on her initiative. On a wider scale, Which? undertook that same kind of mystery shopping initiative, and it demonstrated an enormous variation in charges. For example, the charges for checking a reference vary between £10 and £275. As I will argue later, the opaqueness and the scale of the fees charged is wrong, and that must change.
We need a sector where 1 million families with children have the certainty that the rent will not rise at any time and that their children will not be forced to move school. We need a sector where there is no place for rogues who prey on vulnerable tenants and where every home is a decent home.
There are many areas in my constituency where I am afraid that private rented housing is not fit. A recent poll by The Guardian suggested that 84% of people wanted landlords to be required to make rented homes decent. How can we ensure that the right of people to live in decent homes with secure, value-for-money tenancies does not risk landlords exiting the market?
I will come to that precise point later.
The sad facts are these: 37% of homes in the private rented sector do not meet decent homes standards, and we have a business model that does not work for tenants or for landlords. In no way do we want to promote flight from the private rented sector; on the contrary, we want to transform the private rented sector so that we move in future to a sector of choice that works for landlords and for tenants.
A third of my constituents live in private rented accommodation. Because of a combination of rapidly rising rents and the new benefit cap, many poorer people are being forced out of my area and out of central London. Does my hon. Friend agree that it is high time that we not only regulated the letting agents and the landlords but dealt with the need for fair rents in this sector?
Again, I will come to that point later.
We must move progressively towards more affordable and predictable rents, while recognising that moving to longer-term tenancies is better for the landlord, who has a secure income stream, and better for the tenants, because the evidence is that they pay considerably less.
Because of benefit caps, including housing benefit caps, almost 1,500 families in my constituency are being forced out of properties in Hammersmith and Fulham. In talking about displacement into the private sector, will my hon. Friend also address the condition of these properties? If the Government are going ahead with their misguided plan to force people out of social housing and out of London in this way, they at least have a duty to see that the condition of the properties they are moving into makes them fit for habitation.
My hon. Friend makes a powerful point, not least because £9 billion of housing benefit is paid to landlords in the private rented sector, so we are right to expect decent-quality accommodation in return.
As I will explain later, the use of those licensing powers has been very effective in some local authorities around the country.
Labour is calling on the Government to act now to change the private rented sector so that it works for all: for tenants and for landlords. I read with interest an article—it appeared only today—by Jake Berry, who is Parliamentary Private Secretary to the former Housing Minister, Grant Shapps. It is entitled, “The private rented sector is blocking aspiration and isolating families”, and the very first sentence is:
“The private rented sector is no longer fit for the people it now serves.”
That is absolutely right. If there is a growing recognition across the House that that is the case, we welcome it.
We cannot have two nations divided between those who own their own homes and those who rent. That is why Labour is determined to find a one nation solution to the problems associated with private renting. Everyone, whether renting or buying, should have a decent home at a price that they can afford and enjoy security in that home. Thus far, the Government have taken some welcome steps in the right direction, but they have overwhelmingly failed to rise to the challenge now posed in the private rented sector.
I draw attention to my entry in the Register of Members’ Financial Interests. Does my hon. Friend agree that one of the biggest mistakes of the many that the Government made in their first few months was to cancel the register of landlords? The desire to change policy and improve the quality of private rented housing is now much more difficult, because we do not know where all those private landlords are.
A national register of landlords will not in itself solve the problems we face, but it could make a significant contribution. I will address that in greater detail later.
Never has action been more badly needed than now. Millions of families up and down the country are living through the biggest squeeze on living standards in a generation.
I thank the hon. Gentleman for referencing my article, which is on The Spectator’s “Coffee House” and for promoting me to the position of right hon. Gentleman. I agree that we need to increase security of tenure for those in private rented houses. What specific changes referenced in my article would he make to the Housing Act 1988 to ensure further security for PRS tenants?
I would like to make some progress.
On the problems facing both landlords and tenants, a landlord from Yorkshire who wrote to me about his letting agent told me that the agent planned to charge his tenants—a young couple—£400 just to renew their tenancy agreement, and planned to charge him £100. That is £500 for a 15-minute job. The landlord said that the tenants could not afford to renew and he was in danger of losing the tenancy. As he put it, this is an example
“of the rip off charges that these agencies charge and the further pressure that this then puts on the housing market in these tough economic times.”
This is not just about the fees that letting agents charge; many of them are entirely unregulated and provide no protections to their customers, whether they be tenants or landlords. More than 4,000 managing and letting agents are entirely unregulated. It is possible to set up a letting agency with no qualifications whatsoever. There are no requirements on their conduct or safeguards for the consumer and, unlike estate agents, there is no need to register with a redress scheme whereby awards can be made against agents for financial loss to clients. In other words, letting agents operate in the property market’s “wild west”, as the Royal Institute of Chartered Surveyors puts it so well.
The RICS are not the only chartered surveyors who back the regulation of letting and management agents. The Minister for Housing tabled an amendment to a Bill in 2007 on behalf of the then Conservative Opposition, to regulate what he called
“an industry that now handles over £12 billion of people’s money annually and yet, ironically, it is an industry that is without…redress”.
He argued that, as a Conservative, he was
“instinctively cautious about arguing for more regulation. However, as a chartered surveyor and a constituency Member of Parliament, I know that we need to put lettings on the same regulatory footing as sales.”––[Official Report, Consumers, Estate Agents and Redress Public Bill Committee,
I agree with him. Does he agree with himself, or does he agree with his predecessor, the right hon. Member for Welwyn Hatfield, who scrapped such proposals? Surely multiple identities are not a prerequisite for the position of Housing Minister.
I welcome the hon. Member’s support, which I presume will read across into supporting the Opposition motion before the House today.
Regulating letting agents would protect tenants and landlords, and raise the reputation of an industry that Which? recently ranked second from bottom across 50 consumer markets. The Opposition hope that the Government will support the proposals and back our motion today, not least because the proposals have the support of the entire sector—the Association of Residential Letting Agents, the National Landlords Association and the British Property Federation. We also hope that the Government will recognise that the private rented sector simply does not provide the 1 million families with children, and other tenants in the sector, with the stability and security they need.
Is my right hon. Friend aware of a recent study by Crisis which shows that instability is a growing problem because of the Government’s cuts to housing benefit? It showed that three quarters of people are finding it much more difficult to find affordable accommodation, and there is a particular problem in Corby and east Northamptonshire—and across the country—for under-35-year-olds on the shared accommodation rate.
My hon. Friend is absolutely right and there will be an increasingly serious impact on many people in our constituencies as a result of the Government’s benefit and welfare changes.
I will make a bit more progress and then I will gladly give way to both hon. Members.
On security and stability, the private rented sector gives a legal minimum of just six months before the landlord can evict a family, and they can raise the rent by any amount with two months’ notice. We recognise that there are tenants who value the flexibility offered by that form of tenure, and we believe that such flexibility should remain for those who want it. However, the greater number of families with children who find themselves living in the private rented sector, either through choice or circumstance, must be able to enjoy longer-term tenancies so that they can plan where they send their children to school.
In 2011, families with children in the private rented sector were 11 times more likely to have to move than if they owned their own home. There are real costs of such insecurity and instability to children and young people because insecurity holds them back at school. Evidence shows a troubling gap in attainment between children from families who move home at short notice and those who do not. There are real costs to tenants who pay fees when moving home, from administration costs to deposits, often running into thousands of pounds. There are costs to the communities concerned where the bonds that tie us together are weakening.
However, this is not just about tenants, families and communities; the system does not work for landlords either. A report by Jones Lang LaSalle, a respected estate agent services and investment management company, has shown that landlords’ returns and business models are enhanced by longer-term tenancies linked to index rents. The case for longer-term tenancies and predictable rents is clear: it offers landlords secure returns, and tenants who need it—particularly the million-plus families with children—the security they deserve.
The three great stresses are death, divorce and moving house. If children and young families are moving every six months, what type of stress does my hon. Friend think that is putting on those families and communities?
My hon. Friend is right. The disturbing evidence of the impact on educational attainment is associated with disturbing evidence that bad and overcrowded housing—sadly, 37% of the private sector is precisely that—has a serious impact on the GCSE results of children and therefore their lifelong earnings potential.
On the length of tenancies, does the hon. Gentleman agree that there is nothing to stop landlords and tenants agreeing longer terms? There is an institutional problem. People assume that the terms need to be six months or a year, but if we can make more people aware of the legislation, landlords and tenants should be able to agree longer terms.
I agree that there is an institutional barrier, but there is an absurdly short-termist culture in the private rented sector. In fairness, landlords face problems, including, for example, buy-to-let mortgages that insist that tenancies cannot be longer than a year. The question is how we achieve the security and predictability of affordable rents that I have described.
I should take this opportunity to draw Members’ attention to my declaration of interests—I should have done so in my previous intervention. What change in the law does the hon. Gentleman propose? I accept there is a problem with the banks, which I will address in my speech, but what change in the Housing Act 1988 does he propose?
No doubt the hon. Gentleman eagerly read all the Opposition’s proposals in the policy document we published in December. We have said that we will consider—including through a dialogue with the entire sector—a combination of incentives, including, for example, tax incentives. Landlords are vociferous about the impact of—dare I say it—direct payment. On the other hand, we will consider whether we need a change by way of statute. However, our direction of travel is absolutely clear. Those 1.1 million families must have the ability to count on longer-term tenancies, which they need and want. I hope the next stage is for the Government to engage with the Opposition on how we can achieve that necessary change.
I thank the hon. Gentleman for clarifying his position. Does he therefore agree that no change in the law whatever is required, and that we instead need a change in the culture of letting? Does he also agree that it would be more responsible to talk about working with landlords to try to change that culture rather than about burdening them with new regulation?
We are working with landlords. For example, the first thing the Opposition did was work with landlords, letting agents, the British Property Federation and a range of others on the regulation of letting agents. As one, they supported the Labour party proposal for regulation. We are moving forward in dialogue, but we must send an unmistakable message on the destination we must reach. It is then a question of how best we reach it. I hope hon. Members on both sides of the House agree on the destination.
I will make further progress if I can.
If it is true that the majority of private landlords are responsible and treat their tenants well, it is also true that too many rogue landlords undermine responsible landlords and prey on vulnerable tenants. The small but dangerous minority of rogue landlords make people’s lives a misery. They condemn their tenants to living in run-down, unsafe or overcrowded properties, and they intimidate those who speak out and threaten them with evictions.
Despite an increase in the number of prosecutions against such landlords, the problem is getting worse. We could consider, for example, the health care assistant paying £350 a month for the pleasure of living in a shed in Newham; those found living in a walk-in freezer in Newham; or the landlord in Welwyn Hatfield who subjected his tenants to unsafe and potentially lethal living conditions, blocking the fire escapes and removing smoke detectors, and blackmailing his tenants to take the blame for the conditions in the house.
I am grateful to my hon. Friend for citing two examples from Newham. In Newham, the private rented sector’s annual turnover is estimated to be approximately £300 million, and yet we had 12 men sharing a flat whose only source of water was a single sink for washing, cleaning and cooking; two people sleeping in a commercial freezer; and, worst of all, 38 people, including 16 children, living in one family-sized home. All were paying rent to a landlord who was profiting from the fact that these people felt they had nowhere else to go.
My hon. Friend is exactly right. The evidence is that in excess of 40% of people in Newham might soon be living in the private rented sector. I commend Newham council and the admirable leadership by its mayor, Sir Robin Wales, for introducing a licensing scheme, initially in Little Ilford and then borough-wide, and, as a consequence of effective local enforcement action and the licensing arrangements, uncovering, exposing and tackling problems of appalling abuse.
I thank my hon. Friend for kindly giving way; he is being very generous with his time. He is rightly highlighting some of the terrible conditions in the private rented sector in which some of our constituents live. He will know that the private rented sector has some of the most energy inefficient properties. and that people who rent spend the most on their electricity and gas bills, paying for heat that escapes out of their properties rather than keeping them warm. Does he therefore share my disappointment that the Government did not take the opportunity, in the Energy Act 2011, to introduce a minimum efficiency standard in the private rented sector? Instead, from 2018, they are insisting that landlords must introduce a green deal package, but that will not necessarily lift the property above an F or G rating.
My hon. Friend is right. What we need is a decent homes standard that extends across all homes for rent, public and private, and includes energy efficiency.
A survey carried out by Shelter found that complaints against landlords increased by 27% in the past three years, rising to more than 85,000 last year. These are not minor matters: 62% of those complaints are related to serious and life-threatening hazards, such as dangerous gas and electrics, and severe damp.
I, too, draw the attention of the House to my declaration in the Register of Members’ Financial Interests. On the point I made earlier, local authorities have the power in law to take action against rogue landlords who leave their properties in such a state, including putting the property right themselves and billing the landlord for the work. Why are more councils not doing this?
They can if they know who those people are and where they live. One of the values of a national register is precisely that it is a light-touch, non-bureaucratic, simple obligation that just asks landlords what their contact details are and what premises they own.
During the course of my casework I have come across a seriously unscrupulous agent called Lancashire Lettings Agency. It has an appalling record that is well known to Lancashire county council’s trading standards and various other agencies. The Lancashire Lettings Agency continues to operate in this era of well-intentioned voluntary arrangements. It has a history of charging people £200 to do a credit check, and my hon. Friend will not be surprised to learn that people fail that credit check and lose their £200. Does he agree that it is time for action to better protect the often desperate people who are searching for a home from these kinds of agencies, and that only action will make a difference?
My hon. Friend is exactly right. That is why the Association of Residential Letting Agents, which represents letting agents, has been one of the most vociferous advocates of letting agent regulation, supported by the National Landlords Association, the Residential Landlords Association and the British Property Federation. There is a universal agreement in the sector that the time has come to regulate letting agents, so that in the future we do not have the practices of the past that she has detailed so graphically.
I am anxious for as many speakers as possible to contribute to the debate, so I want to start bringing my remarks to a conclusion.
There can be no place in future for rogue landlords. The time has come to drive them out, but the problem is not simply criminal landlords. There are also a large number of amateur landlords, who—through having inherited a property, for example—are often accidental landlords. Often well-meaning, many are unaware of their rights and responsibilities when letting out a property as a home for another. A recently publicised case illustrated the severity of the issue. It involved a young mother of two, just 33 years of age, who had made her dream move to a private rented home in Cornwall. Six days later she was found dead by her young daughter, electrocuted because of a faulty heater. The electricity had not been inspected since 1981, when the house was rewired.
Sadly, this is no surprise because, as I have said, 37% of homes in the private rented sector do not meet the decent homes standard—a greater proportion of the total stock than in any other sector. Nearly 15% of private rented homes lack minimal heat in the winter. Imagine, Mr Deputy Speaker, being unable to heat your home in this weather for even minimal warmth.
I am moving to a conclusion.
Poor housing has wider costs, including to the taxpayer. The annual cost of poor housing to our national health service is up to £2.5 billion. Labour wants a strong private rented sector—vibrant and diverse, helping to meet the nation’s housing need—but the nation does not need a sector in which landlords and tenants are hit with rip-off fees and charges by unscrupulous letting agents. The nation does not need a sector in which families do not have access to longer-term tenancies and predictable rents, leaving them feeling insecure and unable to plan their lives. The nation does not need a sector in which there are rogue landlords preying on vulnerable tenants and, in the worst cases, risking their lives. We cannot have two nations, divided between those who own their own homes and those who rent.
We therefore call on the Government to regulate letting and management agents to ensure that tenants, landlords and the reputations of reputable agents are protected—regulation that, I stress again, is supported by the entire sector and industry. We call on the Government to end the confusing, inconsistent and opaque fees and charges imposed by letting agents and ensure transparency and comparability. We call on the Government to introduce a light-touch national register of landlords and to grant local authorities greater powers to root out and strike off rogue landlords who are found to have broken the rules, in particular by way of criminal behaviour, so assisting more councils, including leading Labour local authorities such as Newham, as we have heard, Oxford, Blackpool and now Liverpool, which are already using the powers granted to them by the last Labour Government, to tackle some of the most appalling abuse by some of the worst landlords in England.
We call on the Government to take action to ensure that families and tenants who want longer-term tenancies are able to enjoy them, providing flexibility for those who want it and security for those who need it—a very different model of the private rented sector for the future; a sector of choice in the 21st century, like in many continental European countries. We call on the Government to back our motion today. I commend the motion to the House.
Order. Members can resume their seats. Before I call the Minister to move the amendment, I want to explain the time limits. I shall be listening very carefully to see how long the Minister takes to move his amendment, and then I shall have a better idea of what the time limit will be. However, those who wish to speak should not be thinking about more than a five-minute contribution at the beginning.
I beg to move an amendment, to leave out from “recognises” to the end of the Question and add:
“the importance of a vibrant private rented sector in providing a diverse range of quality accommodation to those who do not want or currently cannot buy their own home;
supports action to be taken against the small minority of rogue landlords, without burdening the whole sector with unnecessary costs;
warns that excessive red tape would force up rents, reduce choice for tenants and undermine future investment;
believes that the Government should work with councils to promote their wide range of existing legal powers;
welcomes the Government’s action against ‘beds in sheds’ criminal landlords and steps to tackle social housing fraud;
and supports the Government’s new £200 million ‘build to rent’ fund and the £10 billion in debt guarantees for investment in the long-term rental market.”.
I very much welcome this debate, and I note your opening remarks about needing to be brief, Mr Deputy Speaker. I shall do my best to ensure that all Back Benchers can participate with their own contributions. This is an important debate because, as Jack Dromey rightly said, it is about a part of the housing market that is of growing importance and concern to Members across the House. We have tabled an amendment to the motion, because we believe it is flawed. However, some of the aspirations behind the debate are shared across the House, so I would like to try to take a constructive approach to what I hope will be a positive debate.
The Minister and the shadow Minister will both be aware that this subject is about to come under investigation by the Select Committee, which will take evidence from many of the bodies to which the shadow Minister referred and will be coming forward with recommendations within the next two to three months. Does the Minister agree that this debate would be more appropriately held after we have heard that evidence and come forward with some proposals?
I hope the Opposition have listened to my hon. Friend’s eminently wise advice about timing, but we are where we are. I will certainly want to look at what the Select Committee has to say.
As a Government, we recognise the growing importance of the private rented sector in meeting our constituents’ housing needs. Indeed, as we have heard, some 8 million people now rent privately. Home ownership, of course, remains a goal for most families, and we strongly support that ambition. Let us be clear, however, that home ownership is not for everybody. Many younger people need the flexibility that the rented sector offers. Even those who want to buy will rent while they are saving for their deposit, so a bigger private rented sector is very much here to say.
It is a mixed picture. I appreciate that in the hon. Gentleman’s part of north London the pressures might be different from those in the rest of the country. If we look at the official Valuation Office Agency numbers, we find that the figures are recorded as static. It is, as I say, a varied picture across the country, and we need to be alert to that important point.
I recognise that we have had a dysfunctional housing market, whether it be owner occupied or rented, for 15 or 20 years. Indeed, we saw the rate of house building drop substantially under the last Administration. This is something that has crossed Governments of both political persuasions; it then shows itself when some people are unable to transfer from one part of the market to the other. I take the point, but we need to recognise that this is a long-term challenge.
I said we wanted this to be a bigger sector, but we also want it to be a better sector, providing tenants with a good choice of decent, reasonably priced accommodation. It is true that the majority of privately rented homes fit that bill today, but it is not true of all of them. As constituency Members of Parliament, I am sure that we will all have come across individual, sometimes appalling, cases involving unfair charges, poor quality accommodation or, frankly, just shoddy service. I think we can agree on the need to improve the sector; the question is how.
As a Government, we believe that many of the current problems are a consequence of years of under-supply. Over the last 15 years, that gap between supply and demand has grown, especially after the crash of 2008. In some areas, as I said to Grahame M. Morris, rates will have risen because there are not enough homes to meet the demand. The quality of accommodation, let alone the service, will have suffered when landlords who face little competition rent out their properties. Expanding the supply of rented homes lies at the heart of our strategy. That is why we have taken the radical step of establishing a debt guarantee scheme of up to £10 billion specifically to encourage institutional investment in the sector. Alongside that, we are putting in place a £200 million build to rent fund to kick-start innovative projects.
The new investment will not only boost supply but bring a different type of institutional landlord into the marketplace. This will bring much greater choice for tenants with regard to the type of property and facilities and indeed the terms of the tenancy. These institutional landlords will also bring a longer-term perspective, often of 25 or 30 years. That brings the opportunity for greater stability for tenants, and it also means that we as policy makers need to ensure that what we set is clear and consistent over that time frame.
My hon. Friend rightly mentioned longer time scales. Will he inquire whether it would be possible—not today, but in future—for the Ministry of Justice and his Department to examine cases dealt with by the Leasehold Valuation Tribunal involving Mr Joseph Gurvitz, the Peverel company and the Tchenguiz family businesses, and to establish what lessons can be learned from them?
I will look into those cases very carefully—I am aware of them—but I think that it would be wiser for me to take no further steps. My hon. Friend has made his point, however, and it is a good one.
We recognise that competitive pressures alone will not eradicate bad practice among landlords or, indeed, among letting and management agents. Private tenants include many of society’s most vulnerable groups, people who may not be able to negotiate and who may not even be aware of their rights. There will always be an important role for regulation in the protection of tenants: sensible, well-balanced regulation to ensure that homes are safe to live in, tenants’ deposits are protected, and tenants are not misled when signing a lease. For that matter—to be fair, the hon. Member for Birmingham, Erdington made this point himself—regulation is also needed to protect landlords from rogue agents, or from tenants who routinely do not pay their rent.
I am grateful to the Minister. He is making a great deal of sense, but there is a third category of people who often need protection: neighbours.
In many instances, landlords are in cahoots with appalling tenants, and use the antisocial behaviour of those tenants to drive other people out of, in particular, terraced houses, so that they can buy up the whole terrace. Does the Minister agree that, although the Housing Act 2004 and the licences that resulted from it were an advantage, local authorities need to be able to take immediate and direct action in such instances?
If the hon. Gentleman will give me some of the details of an individual case, I will double-check, but I am fairly sure that the necessary powers are already available to local authorities. However, he is right to raise the issue of antisocial behaviour. I shall not be referring to it specifically in my speech, but I believe that it causes genuine misery to decent tenants.
I have mentioned the need for regulation, but it must be said that much of it is already in place. Let me give some examples. The Consumer Protection from Unfair Trading Regulations 2008 give tenants specific protection from letting agents who mislead or engage in aggressive business practices. Tower Hamlets took advantage of those regulations recently. The Unfair Terms in Consumer Contracts Regulations 1999 protect tenants from unfair conditions, such as unfair restrictions on ways in which they can use a property. If a landlord unfairly withholds a tenant’s deposit, the tenant can already seek redress through a Government-sponsored tenancy deposit protection scheme which covers about 2.5 million tenancies. The worst abuses—harassment and illegal evictions—are already criminal offences.
We have seen that trading standards can and will prosecute letting agents. There is a good example in West Bromwich, where a letting agent, Mr Dhuga, was taken to court by Sandwell council’s trading standards team, He had been falsely claiming that his business was a member of the Property Ombudsman scheme, and a member of this and that. Sandwell won, and as a result Mr Dhuga will have to pay more than £6,000 in fines and costs. I congratulate Sandwell on bringing the prosecution and on publicising the case in order to deter others.
However, more can be done. Last year, for example, we became aware of a number of landlords in parts of London with tenants in outbuildings, or “beds in sheds”. The hon. Member for Birmingham, Erdington gave an example in Newham. These are complex situations. Often, alongside the housing issue are illegal immigration, tax evasion and other criminal activities. We recognised that to root out those rogue landlords, the enforcement agencies needed to work differently and much more closely together. My predecessor developed a new, collaborative approach that can tackle complex problems on the ground. We then provided an additional £1.8 million to help local teams, particularly those in nine areas; even on one of the early raids 39 people were found to be in appalling conditions, and that has put a stop to it. Of course, the “beds in sheds” case is slightly unusual, but it has shown that we can, and should, make much better use of existing law to tackle the minority of rogue agents and landlords.
The Opposition’s motion contains a number of ideas that were recently trailed in a speech by the Leader of the Opposition. Some of the ideas are more statements of hope than detailed policies. I was hoping, perhaps naively, that we were going to get the detail from the hon. Member for Birmingham, Erdington. We did not get that, but we should none the less explore what the Labour party is proposing. First, the hon. Gentleman has said that he wants the introduction of a national register of landlords, which he says will help local authorities to root out rogue landlords. However, he has not said what form of additional powers local authorities would have, what would happen to the existing voluntary schemes or what the costs would be.
What is clear is that for the majority of law-abiding landlords, such a register— whether or not it includes Hilary Benn, who registered his interest for this debate—would mean that those who are doing the right thing and are already accredited will have a new, additional burden placed on them. When Labour, in office, last proposed a register it said that the register would cost £300 million, and that was without the extra powers that the hon. Gentleman seems to allude to. We must also bear in mind the fact that higher costs for landlords mean higher rents for tenants. In addition, many of the worst landlords—the rogues he rightly highlights—would continue to operate, under the radar. If they do not sign on, what guarantee is there that local authorities would be able to take action? Let me cite an example and then if he wants to intervene, I will be happy to let him do so.
As we have seen in Scotland, after five years—
Just a moment. As we have seen in Scotland, after five years just 0.5% of licensed landlords have either had their licence revoked or have been refused. What makes the Labour party think its scheme will be any better?
The Minister is citing the impact study produced at the time we made those proposals, but he fails to talk about the benefits that would accrue to the sector, which the study asserted would be up to £1 billion.
On the nature of the sector, the overwhelming majority of landlords are small landlords, and it would take them a matter of minutes to register who they are and the properties they own. Such a register would enable Government and local government to communicate with landlords about changes to the law or entitlements. Crucially, it would enable tenants to check that their landlord was registered and it would help local enforcement. With a licensing scheme or environmental health enforcement, if action is taken against a landlord who is found guilty of serious criminal behaviour, that landlord would no longer be registered, and rightly so.
We heard some details there, the most interesting of which was the admission that there would be a new cost of at least £300 million—all hon. Members will note that. Instead of having a national register that has the danger of being both toothless and highly expensive, we believe that enforcement can be closely focused and robustly applied using existing laws. We have heard about how local authorities have a number of powers to tackle these landlords, and I will give the hon. Gentleman a couple of examples.
In Southwark, 12 people were crammed into a flat above a café that had no fire protection and where the cooker was at the top of the only staircase out. Southwark council has used its powers, issued an emergency prohibition order, stopped the use of the flat as residential accommodation and brought in social services. In a similar case in Epsom and Ewell, someone was getting six tenants into an unsafe property, where he did not have the appropriate arrangements. He got a £20,000 fine and rightly so. I say to the hon. Gentleman that a national register sounds easy and simple, but he baulked at the thought last time around when in government—or his colleagues did. If we are really going to crack down on the rogues, we need to use the laws we have before trying to pass new legislation.
For the Minister to decide at the Dispatch Box that every home owner and letting agent should now have to have double-glazing would be very unwise, as I am sure the hon. Gentleman understands. We want to ensure that a national register is identified as costly and, to be blunt, probably highly ineffective because the rogues will flout it, much as they do the current law. Enforcement is the key.
I want to move on to the second issue, because I want to ensure that we deal with the crucial question of agents.
That second issue is the question of fees. The hon. Member for Birmingham, Erdington has told us that he wants to end confusing or inconsistent fees and charges that can be levied by some letting and management agents. I agree. I have seen clear evidence of bad practices in the letting sector, especially in the Which? report, which identifies that there are practices that need to be ended.
Our goal is that landlords and tenants should understand in advance the fees and charges that agents will levy. They will then be in a position to make informed decisions about whether to use their services. Frankly, that is not the case at present, and the hon. Gentleman is right to highlight that. There is widespread agreement that we need to drive up standards across the lettings sector and drive out the rogues. In practice, that means that we should be making better use of the existing consumer protection legislation, which already outlaws many of the practices that affront our constituents.
Good self-regulation is expanding across the sector. A clear majority of letting agents are now part of a self-regulatory scheme and more than 8,000 are now part of the Property Ombudsman, or TPO, scheme, ensuring that both landlords and tenants have access to redress when things go wrong. We are determined to extend that further, but the Government recognise that this is a complex area that needs careful consideration. Indeed, that was the discussion I had with the then Minister, Ian McCartney, in the debate to which the hon. Gentleman referred. I can tell the House that the Office of Fair Trading will shortly report on the lettings sector and I and my colleague, the Under-Secretary of State for Communities and Local Government, Mr Foster, will be keen not only to read but to consider its recommendations and see what more can be done.
Understandably, the hon. Member for Birmingham, Erdington talked about the need to give families who rent greater security and
“remove the barriers that stand in the way of longer term tenancies”.
We did not quite get the admission that that might involve compulsion of landlords. I think he started to veer that way, but saw sense at the end as the practicalities are very challenging.
I think it is right to strike a careful balance. We can all understand that families with children will want greater stability, especially if the youngsters are at school, but we also know that many people prefer shorter tenancies and do not want to commit for the long term. We need to be careful not to reduce the flexibility of the framework, given the wide and diverse range of renters in the market today. The latest evidence shows that most tenants in the sector stay for at least a year, not the six months that the hon. Gentleman mentioned. Indeed, in 2010-11 more than 40% of private tenants had been in their home for more than two years, and 20% for more than five years.
It is worth correcting the record by stating that only 9% of tenancies are terminated by the landlord. In the large majority of cases, it is the tenant who terminates the tenancy. That is not surprising if we stop and think about it for a moment, as for many tenants the key advantage of renting is that flexibility. Only a couple of weeks ago, I went to south Newham, to Canning Town, to meet young workers who rent at the new Fizzy Living scheme. Lyn Brown, who represents that constituency, was here a moment ago but has now left. Those workers made it very clear to me that a six-month deal is exactly what they are looking for and that they do not want greater rigidity and inflexibility. We must recognise that the people who rent now are a far more diverse range than they were five, 10 or 15 years ago and that the flexibility in the system must reflect that reality.
No, I will not, because I have been on my feet for long enough and other Members wish to contribute.
One of the features we would expect from the reforms I mentioned earlier is that institutional investors would positively welcome longer-term tenancies that gave them a steady income stream, as the hon. Member for Birmingham, Erdington said. We are therefore working to enable the market to develop a fuller range of lease terms that match what tenants and landlords want. The key point is flexibility, not prescriptive regulation.
No, I am going to conclude. I am sorry, but I am aware that many Members wish to speak.
The private rented sector represents an increasingly important part of the housing market. The Government want a bigger and better rental market, and that means taking radical steps to attract new investment, and so give tenants greater choice. It means having an effective regulatory framework for the long term, and cracking down on rogue landlords and letting agents—the minority—while promoting best practice among the majority. Good progress has been made, but there is much more to do. I welcome the debate and commend the Government amendment to the House.
Order. There will be a five-minute time limit on speeches to begin with, but that may be revisited so that we can get as many Members in as possible.
Thank you, Mr Deputy Speaker, for giving me the opportunity to speak on such an important issue. Week after week in my constituency surgeries, and in my postbag, housing has been the No. 1 issue that constituents bring to me. That is why, last October, I launched a campaign aimed at improving the availability of affordable housing in Newcastle. It is also why, when Live theatre, a theatre in the constituency of my right hon. Friend Mr Brown, asked me to write a short play on the issues that my constituents face, I focused on housing. By the way, Live theatre is an excellent example of Newcastle’s long-standing support for the arts, now threatened by the Government’s unprecedented and unfair cuts.
In the last month, housing has been displaced as the No. 1 issue, and I am sure hon. Members will be interested to know why. Is it because the Government have succeeded in building more houses, or in encouraging the private sector to do so? No. It is because of their unprecedented attack on the most vulnerable in society, and those working the hardest to improve their lot—the disabled, those on the minimum wage, and those dependent on tax credits. The Government have changed my casework load so that benefits are now the No. 1 issue that constituents bring to me. It is not that housing is less important; it is just that the Government are so busy undermining the resources of so many people that many more are forced to raise the benefits issue with me.
Everyone needs a safe and affordable roof over their head. My hon. Friend Jack Dromey has described the impact that rogue landlords are having on far too many families up and down the country. In Newcastle, 4,430 households are actively applying for housing. In the first six months of last year, 500 landlords started the process of removing tenants from their home. In that year, only 377 new homes were built. If we want to know why, we must look to the Government’s 60% cut to the budget for new and affordable homes.
Newcastle will get £3 million from the new homes bonus, which is funded by top-slicing, through which we will lose £6.5 million, so we would be better off without the new homes bonus. As a result of the failure to build the homes we need, the housing shortage is growing, and the Government are responsible for pushing private rents up to a record high.
I thank the hon. Gentleman for that intervention, as it gives me the opportunity to highlight an effect of the buying of council houses under the right to buy, which had many positive impacts for some families but had a devastating impact on the availability of social housing in my constituency and in constituencies up and down the country. The Government are only making that worse by reducing the funding available for building new homes, and by creating an economic environment in which construction companies and developers are afraid to invest in building new homes. The Government have been widely condemned for that record.
I believe that private sector landlords perform a useful and desirable service, and we propose to introduce legislation to support them. As the proportion of families in private rented homes increases we should examine the behaviour of private rented landlords and the service that they offer. For example, in Newcastle, the average weekly rent for council housing is £67, and for housing association housing, it is £79. However, for private rented housing, it is £120. In Newcastle, private rented homes are to be found in some of the most deprived wards. Newcastle has 14,000 private rented households—12.7% of the housing market—but 37% of them fail the decent homes standards, and 13.1% do not have central heating, against 3.9% generally.
Labour’s motion calls on the Government to take real action to protect renters—more than 1 million families and rising, and others who live in the private rented sector. I should like to end by quoting from correspondence sent to me by a constituent when she knew that I was speaking in this debate. She said:
“I currently work part-time due to lack of employment prospects and I just cannot afford to rent in Newcastle and still pay all the bills and transport costs. My pay is just not high enough so at 27 I am stuck living with parents, as is my sister. I am not alone in this and I fear for my generation, for whom the only solution to this problem seems to be to hope to find a partner to share the bills with.”
That is why I support the motion.
The recent census figures clearly identified the fact that we have a 69% increase in the number of people renting in the private rented sector, often for a sustained period, if not for life. Some people do that through choice, others through necessity. What we need to concentrate on—and I welcome the fact that the Opposition have instigated their second debate on housing since 2010—is how we can extend tenure for people in the private rented sector. As the face of tenancy has changed, it is now time to change tenure.
Assured shorthold tenancy was introduced in 1988, and it was a huge step forward from the restrictive Rent Act tenancies that not only cut rent but often resulted in landlords unintentionally granting lifetime tenure. The effect was to stop landlords investing in property, but as a result of the Housing Act 1988 the private rented sector has grown as an asset class in which people feel confident to invest, and which crucially provides homes to people who desperately need them.
We have heard that 1 million families with children live in the private rented sector. Anyone who wants their son or daughter to go to a local primary school cannot make those plans if all they have is six months’ secure tenure. Those of us who have a mortgage often fix our mortgage interest for three, four or five years because, living in uncertain times, we want certainty. We should not continue to deny that certainty to people in the private rented sector.
The assured shorthold tenancy, which was once the hallmark of a mobile and vibrant private rented sector, is starting to block the aspirations of families, and has damaged their ability to become involved in their local community. It puts a block on their involvement in the big society.
The assured shorthold tenancy must become more family-friendly, and we can do this without changing any law, by reading across lessons from the commercial property sector. Long leases with rent reviews and rolling break clauses have been in vogue in the commercial property sector for more than 200 years. Where we have an increasing number of families renting in the private sector, we need to read across some of the benefits seen in those longer tenancies.
Landlords hate vacant properties—they are expensive and they attract squatters; landlords have to redecorate them; they get no rent for them; and their bank starts agitating and asking, “How are you going to pay the mortgage this month?”
I accept the hon. Gentleman’s general point, but does he accept—mine is a neighbouring constituency to his, so he will understand this—that landlords are happy to board up flats in regeneration areas or areas in which they think they will benefit, and simply abandon them?
The hon. Gentleman clearly identifies one of the huge failings of the housing market renewal programmes. We could have another whole debate on that, but we will not have time to cover many of the issues today.
On the point about houses being boarded up, it is interesting that my hon. Friend is talking about leading the industry, rather than regulating it. If we make the mistake of over-regulating, will that not have the perverse effect of more houses being boarded up, reducing choice and supply for people who want long-term tenancies?
I agree absolutely. If we want the private rented sector to remain vibrant and to become the tenure of choice for many people, we have to make it attractive for landlords and for tenants. That is why I commend the Government’s £200 million build to rent fund, which will change the face of landlords and see us move much more towards institutional investors who are interested in longer-term settlements, rather than the accidental landlord who in many cases is new to the sector, plans to sell the house and is looking for a short tenancy while he tries to do so.
The cost of vacancies is huge. Holding a vacant property is not what professional landlords want to do, so as Jones Lang LaSalle pointed out in their recent report, landlords can benefit from a longer tenure, as well as tenants benefiting. If it is good for tenants and for landlords, why is it not happening? My personal view of the solution to the problems of the assured shorthold tenancy failing families is that we should look towards a six-year term with rent reviews, which would give landlords certainty of funding and would give tenants certainty. It would fit quite well with the number of years that young people spend in school.
Those rent reviews could be retail prices index-related. They could just go back to market rent. Landlords would know when their rent roll was going to increase and they could factor that into the rent when they granted the lease. Also, tenants would be able to look forward to rent increases and budget for them now, rather than the landlord putting the rent up after a year to some unrealistic fee, forcing them to move. In addition, those longer-term leases would require realistic break clauses. The great benefit of the assured shorthold tenancy in its current form is that it does not trap tenants in properties. It also does not trap landlords into letting properties for longer than they want to. Any new longer-term tenancy would need realistic rolling break clauses for both the landlord and the tenant.
We do not need to change the law to do this. We need to change people’s hearts and minds to do it. The biggest block is the funding restrictions from banks. Most buy-to-let landlords, if not all of them, in their facility agreements, which I have negotiated on behalf of landlords, will often have a preclusion from granting a tenancy over a year or two years. This is the exact opposite of the commercial property sector, where banks will consent to longer leases because those give them certainty of rent roll and increase the value of the property. Private sector houses with a longer-term lease would have more value, not less.
There is a role—I hope the Minister will continue to lead on it—for the Government to press banks to enable landlords to grant longer tenancies. It is already happening in the Olympic park and we need to do better work to ensure that it is available to more families in my constituency.
I very much welcome this debate. The important issues that are being raised are extremely relevant to my constituency, which has large numbers of people living in the private rented sector. It also has a growing number of residents living in managed blocks, particularly in the city centre. I have held public meetings and conducted resident surveys on these important issues, and I already have a considerable case load relating to them. There are many shocking cases of bad practice by letting and managing agents in Manchester Central. In raising them in the House today, I want to shine a bright light on some practices that can only be described as unscrupulous and murky, and that have left many of my residents significantly out of pocket and with little protection.
To redress the balance between tenants and owners with letting agents and rogue landlords, and between owners and residents in managed blocks and their managing agents, we need to give urgent consideration to the following measures: the regulation of letting agents and managing agents, which has already been discussed; the establishment of a national register of landlords, with local authorities including Manchester city council given the powers to improve standards; the reduction of barriers to residents getting the right to manage their own blocks; and giving organisations such as leasehold valuation tribunals—known as LVTs—real teeth, so that their decisions cannot simply be ignored.
I will explain more about those points in a moment, but first I would like to give the House my own view on why I think the private rented sector needs further regulation. I believe that a huge market distortion is costing the taxpayer a great deal of money. We have all come across examples of letting agents charging fees and of people having to pay onerous deposits, which they rarely get back. Less publicised is the recent practice of asking potential tenants to provide a guarantor. That involves a legally binding arrangement whereby if someone fails to pay their rent, somebody else has to pay it for them. In addition, potential tenants have to go through credit checks, and we are now seeing a two-tier system in the rental market, in which people who do not pass the credit check and cannot provide a guarantor are consigned to living in very poor properties and paying hugely inflated rents. Those rents could buy a luxury home in a more desirable part of town, if those people were able to arrange that. I do not believe that those rents accurately reflect the risk involved to the landlords. Many of those tenants are also in receipt of housing benefit, so those extortionate rents are often being funded by the taxpayer. That is why the situation needs to be looked at urgently.
The subject of managing agents is a big issue in my constituency, and it will become a growing issue in many city centres as more and more people start to live in managed blocks. The stories surrounding some, but not all, of the managing agents operating in my constituency are truly shocking. Time and again, I have come across the following problems: high charges, along with poor service and maintenance; charges being put up erroneously without warning; retrospective payment demands for work or services that were not agreed to or were poorly carried out; and long-term service contracts being awarded to associate companies of the managing agents.
One example of that involves residents living in a riverside block in Hulme, whose management fee has doubled since 2006 and is due to go up a further 10% in April. They are powerless to prevent that. When residents and owners try to come together to exercise their right to manage, they often face high barriers. In some of the bigger blocks, it is not always possible to find and mobilise the required ratio of owners, because of the high number of absentee landlords. Even when the majority of owners can be mobilised, and the right to manage has been won, the legal barriers are considerable. When the residents and owners of No. 1 Deansgate in the city centre won the right to manage last year, the managing agent and freeholder were told that they had no right of appeal, yet, with the help of the legal firm that they hired, they were able to get an appeal agreed by the higher tribunal. The residents and owners will continue to fight for their right to manage, but the legal process has already cost them thousands of pounds and is likely to cost them £10,000 more.
The challenges do not end when the right to manage has been won. Owners in the Little Alex block in Moss Side manage their block, but the freeholder takes out the buildings insurance with an associated company, in what can only be described as a dubious arrangement. The insurance includes a number of elements that the owners do not want. The leasehold valuation tribunal has determined in favour of the residents, yet the freeholder is continuing to charge them, and it seems the LVT has no teeth whatever. That is why we need further regulation—
Order. I am extremely grateful to the hon. Lady. I call George Hollingbery.
In the interests of allowing as many colleagues as possible to contribute to the debate, I hope to keep my remarks very brief—five minutes is simply not long enough to develop a substantial argument. We know that the private letting market is extremely important in this country. Indeed, it is of rising importance. The Communities and Local Government Committee published in May 2012 our report “Financing of new housing supply”, for which we took a great deal of evidence on the barriers to investment in the private letting market, particularly from institutional investors. That evidence was very important.
Straightforwardly, regulation, and certainly uncertainty about it, can lead to difficulties in encouraging meaningful institutional investment in new supply. That is particularly important, because I believe firmly, as I think do shadow Front Benchers and Government Front Benchers, that large institutional investment in private rented housing is a really interesting way forward for providing better and higher-standard accommodation with long lets to more people across the country. We should therefore do whatever we can to try to make that happen.
Raising finance is difficult at the moment. I want to quote from a report produced for the Joseph Rowntree Foundation by Professor Michael Ball of Reading university in November 2010:
“Regulations and the threat of more regulation put off investors. This is generally due to the costs of compliance. Rogues ignore rules, so it has to be demonstrated that the total costs of compliance by all landlords are outweighed by improvement in the quality offer by the few. The paradox may arise where regulations deter good quality investors and the resultant accommodation shortages generate substantial financial incentives for those prepared to flout the rules.”
We need to be careful to understand that a well-meaning regulation can easily put off potential institutional investors, because their investment might lead to much better regulated and longer-term private rents in the sector. I want the House to be aware that there is plenty of academic evidence available showing that regulation can be a barrier to raising finance simply because of the uncertainty it generates for long-term investors.
The Government have already invested considerable sums in that area. We have already talked about the £200 million fund to provide equity finance for builders and developers for this interesting nascent market. Of course, the £10 billion debt guarantee scheme should allow more of those long-term investments to be made. The Housing Minister told The Spectator last week:
“What we need to do is attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.”
That must be right. The Select Committee agreed and its report’s first recommendation was for a more flexible approach:
“We encourage local authorities to consider taking a flexible approach to affordable housing requirements in planning obligations on a case-by-case basis, where this will help to stimulate build-to-let investment and will not be to the detriment of the wider housing needs of the area.”
Ultimately, if we need to provide more purpose-built private housing for rent, what we need, ironically, is less regulation, not more. That will produce housing owned by large-scale investors who will have a vested interest in the long-term viability of their property portfolios and who are much more likely to operate in an ethical and transparent way. I refer hon. Members to Grainger in my constituency, which is putting together exactly that sort of investment and development. I believe that is the way forward. I believe that well-meaning regulation could be dangerous in that regard. I absolutely understand the desire to regulate letting agents more. That is essential, makes good sense and we should do more of it, but we need to be very careful when we impose regulation on the wider marketplace.
I draw attention to my entry in the Register of Members’ Financial Interests. It is a little disappointing that Conservative Ministers and the Secretary of State have now left this crucial debate.
I wish to speak in favour of the motion and address standards, value for money, the security offered by the private rented sector and the effect that that is having on our local housing market in Haslingden and Hyndburn. The private rented sector is very large in Hyndburn and the statistics provided by my local authority on standards are of great concern. Across the borough, 49.2% of privately rented homes do not meet the decent homes standard and 29.6% have category 1 hazards. In some wards, 35% of properties are rented out and in some streets and neighbourhoods the figure is about 90%.
It is interesting to note that the local authority has the figures on the number of homes that are not up to the required standard. What, therefore, is it doing with the 100-plus regulation powers that it already has to put that right?
That question is easy to answer. My local authority is the third worst hit in terms of revenue grant and it is doing everything it possibly can. If the Government take resources away, they have to accept that it becomes difficult for local authorities to meet their obligations. That is the position in which the local authority finds itself.
I return to the scale of the problem. In the ward of Spring Hill, 71.6 % of houses do not meet the decent homes standard; in contrast, only 17.2% of social housing in the ward does not. In Central ward, 73.6% of houses do not meet the decent homes standard, compared with 32.1% in the social rented sector. That is a damning indictment of the state of the private rented sector in my constituency and the behaviour of some who let those properties. I should say briefly that the housing health and safety rating system is not fit for purpose and is due for an upgrade.
What do Haslingden and Hyndburn constituents get for the privilege of renting a home? Last year, national TV crews came to Hyndburn to see the sorry state of the sector. One house that TV crews visited in my neighbourhood had asbestos, single wooden windows, damp, mould and electrical sockets hanging off the wall with live electrics exposed at a low level. A young mother and a toddler were housed there as there was nowhere else better. The house had innumerable category 1 and 2 hazards, as is common throughout the constituency.
As my hon. Friend Jack Dromey said, the Government should tackle the dangers of electrical safety, not just by regulating electrical safety certificates but by the mandatory installation of residual-current devices in every rented property.
Nationally, the last English housing survey revealed that the number of people who agreed with the statement “the landlord does not bother with repairs” was twice as high in the private rented sector as in the social rented sector. In Haslingden and Hyndburn, the figure is far higher. At another property in my neighbourhood, I saw a questionable gas fire, which was checked by a gas fitter. It was condemned immediately and removed. For 12 months, the landlord had been asked to look into it. Shockingly, the property was rented by a parent with a two-year-old and four-year-old.
Such stories reflect the chronic state of the private rented sector in Haslingden and Hyndburn. There is a huge problem, not just with rogue landlords, but absent and long-distance ones. Crucially, there are also amateur landlords who know nothing about property maintenance and are simply looking for a quick profit. I ask the Minister to consider this point. Landlords need guidance, and a national register would assist landlords, tenants, neighbours and the local authority to work together.
Recently, a woman suffering from exactly the problems that the Leader of the Opposition has recently identified came into my surgery. She is a single mother with three children. She had been forced to rent a three-bedroom former council house now owned privately through the right to buy. She had been the victim of domestic abuse and her partner had abandoned her and her three children. Her rent is £600 a month, while the rent at the Hyndburn Homes property next door is just £300. The average price of a Hyndburn Homes property is about £64 a week, yet a private rented property costs £108 a week—68% higher.
Then there is the scandal of top-up, which has not been mentioned, whereby landlords raise rents way above housing benefit levels and push families and young, innocent children into the worst poverty imaginable. The lady I mentioned received £425 in housing benefit, so the Department for Work and Pensions was paying £125 more than on the property next door, but that still left her with a £175 shortfall per month that she had to find from the other benefits that she received. Her children were going hungry and she had to be clothed with clothes from the charity shop just to keep a roof over their heads. Moreover, the house was in a terrible state of repair because it had been bought under the right to buy, and the landlord had shown no interest in making good.
When I contacted schools in my local area, they confirmed a rise in the number of poorly clothed and hungry children turning up for school in the morning. My surgery is filled with people desperate for decent housing, all of whom are housed in the private rented sector, while the local authority has a very long waiting list for housing association houses. A recent survey highlighted that Hyndburn has the second highest number in England of people living on the breadline.
I would like to speak for much longer, but time is running out and I will have to conclude my remarks.
Order. Before I take the forthcoming point of order, I am afraid that in the interests of trying to accommodate the level of interest I am going to reduce the time limit for Back-Bench speeches, with immediate effect, from five minutes to four minutes. In that way, I hope to be able to get everybody in if people are helpful.
On a point of order, Mr Speaker. I apologise for delaying the House’s business. In my speech, I omitted to alert the House to the details of my entry in the Register of Members’ Financial Interests. I apologise to the House for doing so and now alert it appropriately.
I am grateful to the hon. Gentleman for his point of order, and the House will be too.
In the short time available to me, I want to focus on an area of the private rented sector that gives me particular cause for concern. As we have heard, many people’s experience of the private rented sector will be positive. They will have good landlords with an interest in maintaining good properties because they want to supply the market and to have competitive rents and full properties. That is what a lot of people, institutions and organisations entering the sector will want. As we all know, however, the poorer people on lower incomes or in receipt of housing benefit, who are at the bottom end of the private rented sector, tend to get the worst deal. Those are the sorts of people we see in our surgeries, and Members across the House will be familiar with the situation.
I am particularly angered by the behaviour of some landlords maintaining properties in areas where they know there is a shortage of social housing and a high demand for capacity. They will own a lot of cheap, older properties that need a lot of work done on them, and they are guaranteed an almost constant flow of tenants. Some will be enjoying payments of rent and housing benefit directly from the local authority, giving them a controlled and largely guaranteed income. They will know that in most cases tenants cannot afford to move. If the tenants are unhappy, even though they are renting in the private sector, they do not have the freedom that people with more means have in deciding to end the agreement and move somewhere else. People trapped in that situation will not have the means to move and are stuck there.
Although, as I said earlier, local authorities have the power to take action against landlords who are maintaining properties at a low level that is causing risk of harm to their tenants, those landlords know that by the time the property is inspected by the local authority and a request for change is made, to which the landlord may be resistant, months can go by before anything is done, if it is done at all. The tenants are stuck and the landlords can largely do what they want. That is a disgrace, particularly where landlords are in receipt of housing benefit.
Is not my hon. Friend making a good argument for a massive expansion of selective licensing? Local authorities already have the power to use selective licensing in areas of low demand, and in my constituency that has been used with great success. Is that a good way of regulating landlords?
My hon. Friend makes an important point. Of course, local authorities do already have the power to do that. As Jack Dromey said, the London borough of Newham has introduced a licensing scheme across its entire area. This should not be a matter of national policy or a compulsory requirement but something that local authorities should have the discretion to enforce at their will. My concern, though, is that the enforcement of a licensing regime might put rents up, because the landlord will pass the cost on to their tenants, and might restrict the number of properties available in the market. Those concerns were also certainly raised in the consultation that Newham itself ran on the introduction of its licensing scheme.
I wonder whether there should be incentives for landlords to be more responsible in the way in which they manage and maintain their properties. Direct payments are probably a topic for debate on another day, but should not a landlord qualify for direct payments of housing benefits that give them a guaranteed income stream only if they maintain their properties at a certain level?
My hon. Friend makes an extremely important point. We should certainly consider doing that with regard to the social sector and housing benefits. I do not think that local authorities and the Government should be in the business of paying housing benefit to landlords who do not maintain their properties at a decent standard. We should not be doing that. I think that the guaranteed flow of income and the massive supply of people who are looking for accommodation give us the power to negotiate with the market and the private sector in an important way.
I would also say that private landlords who wish to rent their properties out to tenants on housing benefits should be part of an accredited scheme, run by one of the organisations that represent the housing sector, be it the National Landlords Association or another body. There should be an incentive for people to sign up voluntarily to those sorts of schemes.
The Private Sector Tenants’ Forum, which was consulted by the London borough of Newham, said that its tenants
“had some concerns—above all, that landlords should not be discouraged from letting properties and that licensing costs for landlords should not increase tenants’ rent levels. They also wondered if the regulations could be enforced effectively in practice.”
That is my one concern about the national register of landlords proposed by the Opposition. It is fine in principle but, on the ground, the local authority needs to have the resources to enforce the agreements and check the properties. I suspect that the reason why hon. Members from all parties have raised the concerns that they have about the state of properties in the private rented sector is that local authorities are not making those checks or enforcing measures against the private sector landlords. Perhaps the authority does not have the resources to do so. It would seem from what the London borough of Newham has said that it hopes that the licensing scheme will pay for some sort of enforcement, but I doubt whether that would be possible.
I want to conclude my remarks so that other Members can speak.
We should consider some sort of incentive scheme so that private sector landlords who are in receipt of state money and benefits have to maintain their homes to a decent standard in order to qualify for those benefits. That would give us some control at the bottom end of the market and, I hope, the ability to influence positively the accommodation and standard of living of many of the poorest people in our society.
The private rented sector plays an increasingly important role both in Nottingham and across the country. More families are being forced into the private rented sector even though they would like to buy their own home. They just cannot get a foot on the housing ladder. Many other families would like the quality, stability, security and affordability offered by social landlords, including housing associations.
Our city has a well-respected arm’s length management organisation, Nottingham City Homes, but the properties are simply not available. At present, 10,000 households—more than in other city authorities in the east midlands—are waiting for an NCH property, and far too few new affordable homes are being built.
Of course, many people choose the flexibility that private renting can offer, and with a student population of more than 50,000—about one in eight city residents— Nottingham’s private rented sector is vital to the success of our city. Although both universities provide halls of residence on campus and there has been an expansion of purpose-built student accommodation, many students want or need to live in the private rented sector. The rapid expansion of the city’s student population, which has increased by 36% in 10 years, has presented challenges locally.
I have spoken about the issues arising from high concentrations of homes in multiple occupation in Nottingham. Some long-term residents began to feel that their local neighbourhoods were changed beyond recognition, but I cannot talk about that right now because of the time.
The Labour Government recognised those issues and took action to help, giving local authorities the power to control the development of HMOs and working towards the introduction of a national register of landlords. Thanks to the determined efforts of local councillors, local residents and groups such as the Nottingham action group on HMOs, those provisions were applied effectively in the city.
The incoming coalition Government took away those powers and scrapped plans for a national register of landlords. I want to explain, albeit briefly, why that was the wrong decision and why action is needed now to protect tenants. I will focus on the needs and experiences of my student constituents, but many of the issues apply equally to Nottingham’s other private rented sector tenants.
In many cases, those renting flats and houses have positive experiences and responsible and professional landlords. In a minority of cases, however, the picture is very different and one of poor landlords and unscrupulous letting agents who cause misery not only for their tenants, but often for their neighbours too as properties and gardens on the street are neglected and fall into disrepair.
The university of Nottingham student union’s accommodation and community officer, Sian Green, recently submitted evidence to the Communities and Local Government Committee’s consultation on the private rented sector. Her evidence on the quality of private rented housing is clear:
“It is the experience of our students that there is no consistent quality when it comes to Private Rented Housing. For as many students who will find good quality, well-maintained housing, there are as many, if not more, that will struggle with poor property standards. In addition to this, where there is a poor standard of property, students will also struggle to get their landlords or letting agents to respond to requests for repairs or concerns about problems with their accommodation.”
She also notes that casework at the student union’s student advice centre has increased by 151% in the last year.
Just last week I heard concerns from Ben, a constituent of mine, as he gave an all-too-familiar story about grime and dirt in the house, damp affecting health, a leaking roof, vermin, a broken fire alarm and intimidation by his landlord—I wish I could say more about it. Unfortunately, Ben is right and not only are there real problems for students, but the Government have failed to act. That is precisely why Nottingham student union and the National Union of Students are in line with our position on seeking better accreditation and a proper register of landlords, as called for in the motion.
It is a pleasure to speak in this important debate. As I said in an intervention, I find it difficult to understand why the Opposition have initiated a debate on this topic at this time, just as the Communities and Local Government Committee is about to start its inquiry. Would it not make more sense to hold such a debate immediately after the Committee produces its report?
The private rented sector plays a significant role in housing provision, and for many people renting privately has become a preferred choice as they look for the flexibility that the sector provides. After owner occupation and social renting, the private sector has become an accepted and effective third form of occupying a home. As Shelter points out, more than 1 million families with children are now renting privately, and many are renting by choice.
In any discussion of the private rented sector it is important to acknowledge how the Conservative Government rescued it. Between 1915 and 1979 owner occupation of social housing increased dramatically, while private rented accommodation fell from 75% of all properties in 1918 to as low as 8% by the 1980s. Only the Housing Act 1988, which introduced radical change under the then Prime Minister Margaret Thatcher, ended the slide of the private rented sector and abolished rent controls.
My hon. Friend is entirely right. Until 1988, anybody who owned or had inherited private rented accommodation under the fair rent regime was anxious to sell immediately on taking vacant possession because the returns available in that sector simply did not justify investment in it.
Some serious issues face the private rented sector, including an appropriate concern about rogue landlords—the House has heard accounts of tenants living in substandard accommodation. There are various claims about the extent of rogue landlords, and I hope that when the Communities and Local Government Committee takes evidence it will be able to identify the true extent of the problem. Tenants should feel confident when they enter into an agreement that their landlord will stick to his responsibilities. The question before the House is whether regulation is the best route to deal with rogue landlords, and indeed rogue letting agents. The Association of Residential Letting Agents states:
“With the majority of letting agents operating legitimate, professional practices, one could argue that it is the responsibility of consumers”— and, in this case, landlords, who in the main are professional people—
“to make an informed decision about which agents they use”.
I agree on that point. I am not convinced the Government should get involved.
Interestingly, in June 2010, the Department for Communities and Local Government stated, as my hon. Friend has, that:
“In the past over-regulation drove landlords out of the rental market.”
Over-regulation would reduce the number of properties to rent and would not help tenants or landlords.
Does my hon. Friend agree that the landlords who are happy to flout the current law on what is considered to be a decent standard of home will not be concerned about new regulations, because they will flout those too?
Absolutely. Other hon. Members have made the point that councils have the powers to deal with rogue landlords. We need councils to use them. The Department for Communities and Local Government states:
“Councils already have powers to require landlords to take action to rectify hazards in their property and where landlords resist, to make and charge for improvements, and to prohibit use of the affected parts of the property.”
The question for the House is what the Government should do to encourage local authorities to make greater use of their existing powers. I hope the Minister refers to that.
Hon. Members have mentioned letting terms. Many tenants and landlords believe their agreements should be for either six or 12 months, but as we have discussed, there is no reason why they should not be longer. A longer-term agreement is often in the interests of both tenant and landlord. Many investors in residential property are in it for the long term. I accept the point made by my hon. Friend Jake Berry on the terms of buy-to-let mortgages, but not all properties are subject to those. One piece of evidence that the Communities and Local Government Committee hopes to uncover is the proportion of accommodation in the sector that is subject to such mortgages and the proportion that is owned outright by investors.
Tenants often want the greater security of a longer period. I would like the situation that exists in commercial property whereby people promote and advertise the properties available on the basis of the length of the letting term. Some landlords will always want to let for a short term, but those properties should be identified as such.
I look forward to the Committee’s work in talking to representatives of landlords, tenants, letting agents and councils, so that it can better understand what is happening in the sector, what is working well and what is working badly, the current state of the market, the different perspectives, and how the sector can be improved. However, I subscribe to the premise that regulation is unlikely to be the solution to all our problems. I will therefore have great pleasure in supporting the amendment.
Two boroughs cover my constituency—Stockport and Tameside. There are currently 7,500 people on the waiting list for Stockport Homes and around 8,000 on the list for Tameside New Charter Housing Trust. Social rented housing in the two local authorities is therefore in acute short supply. Last week, I learned from a case I was dealing with that only one property suitable for a family with children was available to bid for in the whole of Tameside.
The only option for such families is to consider renting in the private sector. At the outset, I should say that there are some very good private landlords—they invest in their properties, repairs are done quickly and the properties are well managed through responsible agents. I do not wish to tar all landlords with the same brush, but my experience is that many landlords do not fall into that category.
I shall give examples. One of the first pieces of casework I took up back in 2005 concerned some pretty basic housing repairs. I visited my constituent in Denton. He lived in an ex-council semi-detached property built in the 1940s. The home next door was still in the public sector and had just undergone a complete re-fit—new roof, new windows, new doors, bathroom, kitchen and central heating—under the Labour Government’s decent homes standard. Sadly, the house I was looking at was not a complete mirror image. It had the original 1940s metal window frames. It was damp. It had a 1960s kitchen that was falling to pieces. There was mould and the house was cold and draughty. Worse, the landlord was based in the Irish Republic and did not want to do any repairs. To add salt to the wound, the rent on the property was almost £100 a month more than the rent on the property next door. I thought then, and I believe now, that if it is right to have the decent homes standard in the public sector, it is right to have a decent homes standard for all homes.
I want to fast forward from seven and a half years ago to just two weeks ago, and talk briefly about the experience of my cousin Alison, who has given me permission to talk about her experience. She has fallen on hard times. She is a proud, clever and talented individual, and a brilliant mother of two young boys. After a bad bout of mental illness caused by her near death while giving birth and the subsequent break-up of her marriage, she is trying to move back to Tameside where she grew up.
Alison has been bidding without success for New Charter Housing Trust properties, so my wife and I went with her to a number of letting agents in Denton two Saturdays ago. Out came the property portfolio—some lovely houses—and then the discussion about her circumstances. She will probably need to rely on some housing benefit for a brief period while she settles in, sorts out her health needs and hopefully regains employment. With those two words, “Housing benefit”, the portfolios closed for a large number of those properties, even ex-council houses. To put it politely, what was left were shabby, crumbling, damp, draughty terraces with no money invested in them, and which are not fit for habitation.
Alison is what the Prime Minister would class as a striver—benefits are a stop-gap. This is a mum of two who, before her illness, worked every hour God sent and who even after her illness worked some hours in her local Sure Start centre in Wythenshawe and paid her mortgage. Sadly, her experience is what it is like in the real world. Thankfully, she has found some suitable housing, but it was no easy task.
On this side of the House, we want to ensure that the letting and management market better serves tenants and landlords. That is why I will be supporting our motion tonight.
I am grateful to the Opposition for securing this important debate, and for the measured way their Front-Bench team have introduced it. They have pointed to a serious and old problem. Fundamentally, it consists of a shortage of the right sort of decent, affordable property, with rogue landlords exploiting the situation, and an insecurity of tenure existing in places where it should not. I used the phrase “old problem” advisedly, because if anybody knows anything about the Communities and Local Government Select Committee in the previous Parliament, they will know that, under Phyllis Starkey, who was then the Member for Milton Keynes, South-West, it concentrated fervently on housing issues. The Committee was not uncritical of Government policy and initiatives, whether talking about decent homes, empty homes, HMO regulation or pathfinders. It was rarely the case that initiatives were judged by the Committee to be an unqualified success.
We must all acknowledge the reality that all recent Governments have been slow to respond to clear demographic trends: immigration; the break-up or fracture of households, which is another pressure on households that we do not often talk about; the slow build rate, which I think the Labour party would own up to and which was not as good as Labour would have liked it to be; and the effective and deliberate termination of the role of councils in the running and provision of houses. The former Member for Sedgefield, Tony Blair, was repeatedly reminded of that deficiency at Prime Minister’s questions.
Essentially, we are left in a situation where most parties are reconciled to the idea that the housing market itself must provide—the state has, as it were, tactically withdrawn. This is simply about how to regulate, or, alternatively, how to stimulate the market. This Government like to stimulate, and fear to regulate. In fact, I think there is a rule that before introducing one regulation, they have to get rid of two. That is a nice slogan, but ultimately a slightly mad policy. If the Government do not stop regulating and the rule is applied consistently over time, the logical consequence will be that there will be only one regulation left, and then the rule itself will be become inapplicable.
The amendment warns us of “excessive red tape”. To say that excessive red tape is a bad thing is something of a tautology. I do not know whether anybody actually backs excessive red tape, although it is possible that there are some red tape fetishists out there—“Fifty Shades of Red” or whatever. However, the amendment is making a legitimate point about exercising caution. Landlords are a various bunch. Some MPs are landlords and have MPs as tenants. Some landlords are quite orthodox business men. Some people turn their pension into a flat. Some landlords are institutions, such as the Oxford colleges, the Church of England and so on; and some, as we have all acknowledged, are frankly rogues.
In preparing for this debate, I reminded myself that two of my daughters are accidental landlords, one failing to sell her house in Cardiff when moving north and another failing to sell her flat in London when moving to Cheshire—she is now both a landlord and a tenant. There is therefore an issue about how we regulate such a mixed bag and a legitimate fear that in doing so we might create something that is more costly than we intend or that actually reduces the number of landlords we have—that is, the supply. Therefore, we talk about landlords and how we regulate them, but it depends on who they are and what the local market looks like.
In my constituency, the landlords are pretty good—they have formed themselves into almost a self-policing body—but we have rogue landlords, particularly in the HMO sector. But there are some landlords—one major landlord in my area—
Order. I am afraid that the hon. Gentleman’s time is up. I am saddened by that, as I think the House will be too.
In moving the amendment, the Minister referred to a dysfunctional housing market in some areas for 15 to 20 years. When I was seeking re-election as a councillor in 1987, my election leaflet called for regulation of the private sector in the housing market, because in my first term of office, from 1983 to 1987, we came across a range of antisocial behaviours that emanated mainly from tenants in private rented houses in central Gateshead.
In other parts of Tyneside we saw scenarios building up where properties were bought for cash at auction and immediately let to tenants who the landlords knew would cause trouble in the neighbourhood, bringing down the value of surrounding properties, which would then be brought up for cash at auction, and so on. What was behind that? It was the fact that money could be laundered by buying up houses and then getting a legitimate income stream by letting to tenants who would be in receipt of housing benefit.
I will not. I am going to make progress.
Ill-gotten gains were being used to buy up properties in order to secure a long-term income stream, paid for by the taxpayer. For some of those private landlords, there is no doubt that the whole idea behind the ploy was that the surrounding properties would also fall prey, and so on, leading to a spiral of decline.
Of the three sorts of rented properties that we normally talk about, the private rented sector is now in receipt of the greatest amount of housing benefit, with £9.2 billion going into that sector. When so much hard-earned public money—£9.2 billion of hard-gotten taxpayers’ money—now goes into the private rented sector, why would we not want to regulate the recipients of it? There are, I am afraid, many rogue landlords all around the country, but housing markets in different parts of the country are very different. By regulating letting agents and management agents, we will be able to protect tenants, reputable landlords and the reputations of trustworthy agents. A national register of landlords would allow local authorities to strike off rogue landlords and stop them receiving public money in the shape of housing benefit for properties that are not well managed, but often cold, damp and dangerous for the tenants.
Frankly, it is a national scandal that public money is going into the pockets of rogue landlords, subsiding them through housing benefit. Although the Government might disagree, I ask them to reconsider, given that regulation of the private rented sector is a two-way stream, with safeguards for landlords and tenants, bringing the support of the law and local regulatory authorities to the aid of both, in what can sometimes be, frankly, murky legal territory.
I note that one Government Member suggested perhaps withholding benefits from landlords who do not maintain their properties, but how would that work in practice without a register? Quite often, the same landlords will have properties in many different locations, and if they are adopting such practices in one place, we can virtually guarantee that the same thing is happening in many others. There are many things in this market that need to be cleaned up, but we should absolutely be doing so, because it is being subsidised by the public purse.
I declare my interest in this topic, as reported in the Register of Members’ Financial Interests.
I support the need to take action against letting agents, and I support action taken against rogue landlords, as I support action against any rogue operating in any sector—whether it be builders, window salesmen, car salesmen or any rogue at all. The answer, however, is not further to regulate the whole sector because of what Shelter calls
“the small but dangerous minority of rogue landlords who are making people’s lives a misery”,
but to enforce what is already in place.
There are currently more than 100 pieces of legislation and regulation, containing about 400 individual measures affecting the private rented sector. Figures from Shelter show that only 487 landlords in England were prosecuted last year from a cohort of about 1.2 million. That is low. What is needed is support for local authorities better to enforce existing regulation to root out more effectively the criminal landlords who blight the lives of tenants.
Is it not an example of how regulation will not work that the tenancy deposit scheme can be avoided by rogue landlords simply by taking a rent deposit rather than a breakage deposit? Is that not evidence that regulation will always be avoided by criminals?
That is exactly right. In some cases, landlords do not take deposits at all, as I shall explain later.
What is the point of having more legislation and regulation when local authorities are not enforcing what is already in place? Let me point out that a recent English Housing Survey found that 85% of private tenants were either very or fairly satisfied with their landlords, which compares with 81% for social housing tenants.
As an MP, I meet my local landlords association and associations nearby, so I can say that if a stable rental contract that gave renters a five-year term came into force, we would go back to the bad old days of the ’70s and ’80s when landlords advertising their properties would plainly put on the adverts “No DSS”. [Interruption]. It is true. I wonder whether the Opposition Members who proposed this motion ever went out to speak to landlords. If they did, they would find that landlords who rent particularly to the local housing allowance sector often cannot get a bond, let alone four weeks’ rent up front. They have to wait for the local housing allowance payment to come to the tenant before they get paid, and unless they go and collect the rent on the day the tenants are paid, they often find their rents are short.
My hon. Friend is absolutely right. As I pointed out earlier, we will see landlords refusing to rent to various groups within the sector.
Last week, I spoke to one of my local landlords who has more than 450 homes that he rents out in West Yorkshire. He told me—a story I hear time and again at this time of year—that 40% of his local housing allowance tenants paid short in December and a further 20% did not pay the rent at all, and not because the rents were above the local housing allowance threshold. In one story he told me, the door was answered by the tenant’s young daughter, who was keen to show him the vast array of computers and designer presents she had received for Christmas. He was then told by the tenant, however, that there was not enough money to pay last month’s rent, and he was asked if she could pay it back over the course of this year.
This is not a rogue landlord, but one who maintains all his properties to a high standard—he is actually a very good landlord. What on earth are these landlords going to do when universal credit is introduced later in the year, and the ability to get local housing allowance paid direct when the tenant is in arrears is removed? That is not an issue for today, but I can see those “No DSS” signs coming back as we speak. This will not tackle the problem of rogue landlords, but, sadly, will probably increase their number.
Many vulnerable tenants do not need five-year leases. If we want to do something to help them, let us introduce a support package of budgetary controls and training as part of the wider picture. One of the reasons—and I do mean “one” of the reasons—for the amount of churn in the sector that relies on local housing allowance is the fact that those people simply do not pay their rent, or find themselves in a financial mess.
The motion does not address the real issues, including the issue of rogue landlords. If anything, the measures that it proposes would increase the number of such landlords and push more tenants into their hands. The answer is to help, and force, local authorities to enact and enforce the 100-plus pieces of legislation that already exist, as well as helping vulnerable tenants with such matters as budgetary control.
I believe that we have a shortage of housing and that rents are too high. Being a simple soul, it seems to me that the answers to those problems are fairly clear: we need to build more housing, and we need to reduce rents. Let me say to any Government Members who think we do not need to reduce rents that in my constituency that the average weekly rent of a two-bedroom flat in the private sector is £440 and the average household income is £635 a week, and let me tell those who are unable to do the calculation that the rent paid by such households constitutes 70% of their income. We cannot allow that to go on, especially as rents are continuing to rise. One of the benefits of introducing the regulation and reduction of exorbitant rents is that it would save a lot of money for the taxpayer, who is currently finding £9 billion for private sector landlords to pocket. People who receive housing benefit do not keep the money in their handbags and wallets; it goes to the landlords.
We also need to build more housing. People ask where the money will come from. Well, the money saved on housing benefit for private landlords could be used to build more homes, but my own view is that, because the ridiculous process of pouring quantitative easing into the banks has benefited no one except the banks themselves and has not stimulated the economy, the money ought to be invested in housing. I am told that the Bank of England and other banks around the world would find it unacceptable if it did not go to a bank, and it therefore seems to me that the obvious answer is to establish a housing bank to finance housing. I hope that our Front Benchers will seriously consider that proposition.
The situation in my constituency is the worst that I can remember—and I have been battling away in the constituency for more than 40 years, first as a human being, then as a councillor and then as an MP. I have tried to look after people and ensure that they obtained decent housing that they could afford. That housing is not available now, and although the proposals in the motion would certainly ease the pain, I do not think that they would cure the problem. We need a much more extreme approach.
Let me give an example from my constituency. A woman came to my advice surgery. She lives in what was a council flat that was bought under the right to buy and then bought to let. She lives there with her nine-year-old daughter, who is doing well at primary school, and her 19-year-old son, who is doing well in a serious apprenticeship. She is paying £485 a week in rent to live in what was a council flat. Instead of increasing her housing benefit in order to help her to stay there and give her some security for her family, the Government have reduced it by £160. People in my constituency are being priced out of the places where they have grown up, where they live, and where they provide vital services for the rest of us.
May I, at the outset, draw attention to my interest, as declared in the register?
This debate has covered a number of issues on which I would like to have contributed my thoughts. In particular, I would like to have spoken about how to support and encourage the further expansion of the private rented sector while raising standards and tackling poor conditions; how to safeguard tenants from excessively high rents and exploitation; how to avoid private rented housing being forced into inappropriate roles that it is not well placed to fulfil; and the case for regulating letting agents. All those points were discussed well by my hon. Friend Jack Dromey, but there is no time for me to comment on them and so I shall focus on just two issues, which have been touched on in the debate and which merit a little further consideration.
The first issue is the case for longer-term tenancies, which has been articulated by hon. Members on both sides of the House. Such tenancies are entirely compatible with the growing confidence in the private rented sector. I well understand how in the 1990s landlords who were nervous about the prospect of regulation favoured the idea of shorthold tenancies as the preferred option. In fact—this is an important message—when the Housing Act 1988 was passed the shorthold tenancy was not the default tenancy; the assured tenancy was the default. That was changed in the 1990s by the then Government. One measure that could send a clear message about our interest, across the House, in encouraging more longer-term tenancies without imposing an unreasonable regulation would be to return to the 1988 Act formulation, making the assured tenancy the default and leaving the shorthold tenancy as an option. I can see no objection to that. I tried to intervene when the Minister was discussing this issue, and I hope that now he has heard the case put to him in more detail than I could have in an intervention he will give it serious consideration, because this message could command support across the House. It would make a real change and would encourage more longer-term tenancies.
The second issue I wish to touch on is the case for more institutional investment. Again, we all agree on that, but I would like to add a caveat. The studies undertaken by the academics who have done the best work in this field—I think in particular of Christine Whitehead at Cambridge university and Kathleen Scanlon at the London School of Economics—show that in European countries with well-developed private rented sectors institutional landlords are not the majority. In Germany, which is often cited as the best example, 60% of private landlords are small landlords. In France, 95% of private lettings are done by one or two people only, and not by institutions. So although it is sensible to encourage more institutional investment, we should not be blind to the fact that the norm across Europe is that the small landlord plays a rather important role, and we should not put all our eggs into the basket of institutional investment. There is a real merit in institutional investment—there is the natural common interest of the landlord having a long-term view and welcoming longer-term tenancies because that guarantees rent continuity. Those are all good reasons for encouraging institutional investment, but we should not treat it as the panacea. We must have a more diverse private rented sector which continues to attract investment by smaller landlords.
May I draw the House’s attention to my entry in the Register of Members’ Financial Interests?
At the turn of the 20th century, the image of private sector housing tattooed into our collective memories was of the slums brought to life in “Oliver Twist”:
“rooms so small, so filthy, so confined, that the air would seem too tainted even for the dirt and squalor…dirt-besmeared walls and decaying foundations”.
That was Dickens’ portrait of Jacob’s Island in Bermondsey, and just a few years ago I spoke to two pensioners in Bermondsey about those conditions. We did something about that situation. The Addison Act of 1919 changed those circumstances. Slums were cleared and, for the first time, the Government took an active role in providing housing at low rents to working people.
In the decades after the second world war, my father was able to arrive in this country and get a mortgage for £6,000 on a house in Dongola road in Tottenham, whereas my aunt got a brand new flat in a new housing development called the Broadwater Farm estate. By the 1980s, the explosion of cheap credit meant mortgages were affordable and many now had the opportunity to buy their house for the first time. That was not perfection by any means, but at least there was a choice. For those who wanted affordable accommodation with a lengthy and secure tenure, council houses were available; for those who wanted their own home, mortgages were available and house prices were reasonable; and for those who wanted the flexibility, there was an affordable private rented sector.
The situation did not last. Right to buy was not accompanied by funds to replace and the Housing Act 1988 created assured shorthold tenancies that allowed landlords the power to raise rent by however much they wanted or evict tenants with only two months’ notice. People were crowded out of renting socially and they have now been priced out of home ownership. In place of those options, the private rented sector has boomed. From a low of just 1.7 million at the start of the 1990s, the number of households in the private rented sector has more than doubled, but most are there through circumstance, not choice. They enter the sector holding none of the cards. The result is that people are conned, exploited and, frankly, ripped off.
As the sector booms, it is time to talk about how tenants can share in the proceeds of that growth rather than being the victims of it. Right now the system is rigged against the very people it is supposed to serve. Every new tenant enters a sector where demand soars but supply remains stagnant. The consequence is an explosion in rents, even during a recession. Ten years ago, private rents averaged a fifth of weekly earnings; today they are creeping towards a third. Those living in the capital are finding that rent alone claims more than half of their pay, and that is taking its toll. As Shelter has pointed out, 7.8 million people are struggling to pay their rent each month.
What do we need to do? Clearly, we need some solutions. The state should not be subsidising slum landlords who force their tenants to live in Dickensian squalor. As recommended by the Rugg review in 2008, we need a compulsory register of landlords, such as that being pioneered in Newham, which would at least create the minimum means by which the worst landlords would no longer be able to operate. That is why we need a new statutory code of practice for letting agents that ends the practice of extortionate fees. There need to be tax incentives for responsible landlords and we need to encourage longer tenancies with the option to index any rent increases to inflation, to ensure both tenant and landlord can plan financially.
I am delighted that we are having this debate, and very sad that it is so short, meaning that so many colleagues can speak only for a short time.
This is an enormous issue. As I pointed out in my intervention on my hon. Friend Jack Dromey, a third of my constituents now live in private rented accommodation. I keep a tally at my advice bureau every week of the highest rent I have come across in comparison with the rent that would have been paid if the house had remained a council property. Last week, I came across the following example. Flat A was a council tenancy, had been fully refurbished to the decent homes standard and was £100 a week. The tenancy was secure, the family was happy—so was everybody—and the children were doing well. The flat next door was £440 a week and repairs were not done. The ex-council tenant lives in Southend or wherever else and can apparently live comfortably off the income from one flat bought under right to buy. What is going on in the rented housing sector is disgusting and obscene.
Unfortunately, I will not give way to anyone as it will prevent others from speaking. We need an understanding of the urgency of regulation of the private rented sector to ensure that those people who go into it as tenants can be assured of getting their deposit back, which they often do not, of not being charged excessive search fees by the agencies, of not being harassed out of the property, and of its being maintained. Local authorities have some powers in that regard but we need far more powers for them to intervene and ensure that conditions are decent.
The experience in my constituency and that of my neighbour, my right hon. Friend Frank Dobson, is that there is a large amount of funny money going into London. People are buying up large quantities of property, mainly in west London, and that has a knock-on effect on the whole private sector across London, leading to excessive rent rises. My constituents cannot afford to remain living in the area where their children go to school, or where they work, and they cannot afford to stay there if members of their family are unemployed but have caring duties relating to the wider family, so there is enormous population turnover. Having short-term tenancies with very high rents corrodes community and family life, and is fundamentally very damaging for all of us in the long run.
The local authority faces huge housing demands; it has 13,000 families on the priority list, and the council cannot possibly house them in its housing stock of 30,000 homes, so it has to house them in the private sector. On some occasions, there is a rent deposit scheme, but that is quite rare. On most occasions, the council is forced to house people in the private sector, wherever it can find homes. Very few people are rehoused in the borough; the local authority’s responsibilities are discharged all across London. Some London boroughs discharge those responsibilities to places well outside London.
Unless we build more council houses, regulate the private sector and guarantee that all our children will have somewhere decent, safe and warm to live, study and grow up, we pay the price—in ill health, in under-achievement in schools, in family break-up, and in crime. It is up to us to do something about that. We should start with regulation, because there will always be some private sector involvement, but we should then move on, particularly through investment in council housing, which will help us to solve this problem.
This is a much-edited speech, I am afraid.
Not everyone is getting the sort of home that they need. They are routinely pushed into conditions that no one in the Chamber would accept for themselves or a member of their family. Demand for housing continues to outstrip supply, and even in a relatively small local authority area such as Stockton-on-Tees, more and more families are being pushed into the private sector. I am proud that Stockton-on-Tees borough council has taken the initiative in implementing a number of measures to deal with problems and make the private rented sector work more fairly.
We are unique in Stockton-on-Tees in benefiting from a landlord’s toolkit, which provides a range of measures to help raise standards in the sector. It is there to support landlords and tenants, and provide enforcement where it is needed, in order to improve and maintain property, management standards and behaviour. The council now licenses houses in multiple occupation and uses the housing health and safety rating system to assess properties when a complaint about living conditions is received from a tenant. There has also been the introduction of a landlord accreditation scheme, a landlord liaison scheme and tenant referencing. There are also landlord forums, training and newsletters. These measures are helping to improve life for private sector tenants on the ground.
Our council is also doing its bit to help increase housing supply. It works with registered providers and a social enterprise to bring outmoded properties back into use. That provides apprenticeships and training opportunities for young people, as well as quality, well-managed housing for tenants, many of whom are, or were until recently, homeless. Our area has also benefited from a willingness on the part of the council to identify and bring to account rogue landlords who wilfully neglect their responsibility. When a property fails to perform its most basic function—keeping its inhabitants warm, safe and dry—there are inevitable implications for public health.
I urge the Minister to take a close look at what Stockton-on-Tees borough council is doing, encourage other parts of the country to follow its lead in developing innovative policies to deal with private rented sector problems as they emerge, and think about ways to promote good practice and ideas that could aid councils in tackling the problems that we know are rife in the private rented sector.
There are thousands of good landlords all over the country, many of whom operate in my constituency. They provide a good service at a reasonable price, respond to tenant need, and do not, for the most part, act unreasonably. However, there is also the other type of landlord. One term for them is absent landlords; I can think of some other terms, but I do not think that I should use them in the House. They buy up properties such as those in Port Clarence in my constituency for a few thousand pounds—one went for £12,000 recently—and let them out to whoever will come along with the necessary cash, or benefits, more likely. Some do not care about maintenance, and some, I have been told, have not even visited the area, so they are hardly likely to engage to improve their properties and the lives of the people who live in them. Others fail to manage tenants properly, which results in tenants causing absolute havoc in their neighbourhood with antisocial behaviour.
The Government should encourage local authorities to use the powers given to them by the Labour Government to tackle some of the appalling abuse that we see all too often, I hope that they will step away from any notion that would reduce those powers. They can build on what the Labour Government did in the past by taking up the suggestions in the motion, and I hope that those suggestions will be supported.
I should like to declare an interest—not a financial one as a lobbyist for private landlords but as secretary of the all-party group for housing in the north. In that regard, I was rather disappointed that the Minister and his colleagues could not attend an excellent event held in the Commons last night. I should like to use the little time that I have to take up some of the points that were made then.
There is a chronic shortage of decent, affordable housing in the UK. In the past two years, the number of housing starts has fallen. Indeed, it has been lower in every quarter since Labour left office, as indeed has been the number of housing completions. Last night, an excellent report was published. There is at least one good thing to come out of Sheffield Hallam—the university, and the centre for regional economic and social research, which produced a terrific report on the economic impact of housing organisations in the north. It has quantified the benefits of the social housing sector. My hon. Friends the Members for Hyndburn (Graham Jones), for Islington North (Jeremy Corbyn), and for Nottingham South (Lilian Greenwood) have highlighted the difference in costs between the social rented sector and the private rented sector.
That has been brought home to me forcefully by the case of a constituent who was worried about losing her home in April because of a loss of housing benefit as a result of what has been referred to as the bedroom tax. She had an income from jobseeker’s allowance of £72 a week, but she had to find an extra £9.60. The alternative suggested to her was to move out of her two-bedroom housing association property, which she had occupied for a number of years, into a one-bedroom private sector property—in my area, such properties just do not exist. Bizarrely, the cost of the one-bedroom private sector rental—at least the allowance paid by the local authority—was more than the rental of the two-bedroom housing association property.
I am trying to make a point about opportunity cost and how we might address the problem of a shortage of affordable housing to rent by investing in the social rented sector through housing association homes and council housing. There is a virtuous circle: in the four regions that make up the north, those organisations directly employ 41,000 people, and support 75,000 jobs—more than the automotive and call centre sectors put together. They make a huge contribution to the north-east economy: here is an engine for economic growth that offers a real opportunity for the Government not only to address the housing shortage and the housing crisis but to create employment and economic activity.
Building new social housing should be a priority. Demand has increased year on year, as has the need for investment in our communities and local economies. That would offer a huge opportunity to provide apprenticeships offering practical skills to young people. If the Government will not do anything to help “generation rent”, I sincerely hope and believe that the Opposition and the next Labour Government will.
We have had a well-informed and excellent debate this afternoon, with contributions from 17 hon. Members. We have heard about issues ranging from the rent differential between the private rented sector and the social housing sector to the impact on the housing benefit bill; about poor, sometimes shocking standards in the private rented sector; and we have heard descriptions of the activities of rogue landlords and the exploitative activities of some of these fly-by-night management and letting agencies.
Members have cited the inadequate supply of council housing, and we also heard about the innovative action that some local authorities are taking to address the problems that we heard about this afternoon. Some Members on both sides of the House talked about the need for family-friendly tenancies and the need for institutional investment. We heard about the European model of the private rented sector and how that might have some application in this country. Some Members spoke about the need for more regulation; others spoke about the need for less regulation. Everybody on both sides of the Chamber agreed that there is a desperate need to raise standards.
Different solutions would, I guess, be proposed from one side of the Chamber or the other, but it is clear to me that there is a consensus across the Chamber that we are living through the worst housing crisis in a generation. The English housing survey suggests that two thirds of all newly formed households now enter the private rented sector. Projections for the next 10 to 15 years suggest that more than a million young people will be permanently locked out of home ownership, and more than a quarter of low to middle-income families will be living in private rented accommodation that they can ill afford.
A recent YouGov survey suggests that 1.4 million people are falling behind on their rent or mortgage payments, 44% are struggling to pay their rent or mortgage, more than a million have had to resort to payday loans, 2.8 million have used an unauthorised overdraft, and 10% of those have to do so every month. To cap it all, families struggling to make ends meet are having their tax credits slashed and their housing benefits squeezed.
The dysfunctional mortgage market is making matters worse. Home ownership is now beyond large numbers of people who would previously have aspired to own their own home. This is contributing to the surge in the number of private tenancies, which is the highest it has been for 50 years or more. Most of those people are paying considerably more than they would if they were buying their accommodation with a mortgage. It is not surprising, therefore, that private rented sector rents have risen twice as fast as wages in the past 10 years. That explains that phenomenon.
Many are living in substandard housing, as we heard during the debate. That is why we need a one nation housing strategy for the private rented sector—a one nation housing strategy that recognises this shift in tenure patterns, a one nation housing strategy that does not leave millions of our fellow citizens subject to insecurity and exploitation, and a one nation housing strategy that tackles the unscrupulous landlords who make so many people’s lives a misery. Of course many landlords are perfectly reputable, but there are a significant minority of rogue landlords who should be driven out of the market. The motion before the House tonight would go some way to achieving that goal.
With 37% of the private rented sector falling below the decent homes standard, the time for action is now. With 4,000 unregulated lettings agencies up and down the country, a laissez-faire approach is unacceptable. A citizens advice bureau survey found that 73% of tenants are dissatisfied with their lettings agency. I therefore do not agree with the Housing Minister when he suggested that self-regulation was the way forward. Meanwhile, rent levels in the private rented sector are soaring and the housing benefit bill is ballooning. Recent research by the House of Commons Library has shown that more than £9 billion or 40% of the £22.7 billion spent on housing benefit each year goes to private landlords. Council housing accounts for £5.6 billion and housing associations £7.9 billion.
“Housing benefit will underpin market rents—we have made that absolutely clear. If people cannot afford to pay that market rent, housing benefit will take the strain.”—[Hansard, 30 January 1991; Vol. 184, c. 940.]
Housing benefit certainly has taken the strain in the intervening years, but at what cost? I am sure that the right hon. Gentleman did not mean to create a Mary Shelley monster when he made that public policy pronouncement. Is it now fair to penalise the victims of that policy failure by imposing restrictions on tenants? It is hardly their fault that private sector rents have gone through the roof.
We need a one nation housing strategy, not some kind of abstract housing policy that has unintended consequences. We need a one nation housing strategy to right a social wrong that is leaving millions of our citizens in a precarious situation, including more than 1 million families with children. The introduction of a national register of private landlords would be a good start, and empowering local councils to drive up standards would be welcomed by tenants and landlords alike.
Good landlords have nothing to fear and everything to gain from the proposals in our motion. Promoting long-term tenancies and predictable rents would provide reassurance for tenants and certainty for landlords. It would involve a simple step that would have a significant impact. Tenants would be shielded from irresponsible operators, and decent landlords and agents would avoid being tarred with the same brush as the unscrupulous minority. By introducing consistency in fees and charges across the sector, we would ensure that everybody knew where they stood from the outset. As my hon. Friend Jack Dromey said, we simply cannot have two nations—those who own their homes and those who rent. That is why I urge Members to oppose the amendment and to support our motion.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
I was initially surprised to hear that the Opposition were planning a debate on housing. After all, their housing record during 13 years in government has not given them much to boast about. That said, however, when I saw the issues raised in the motion, I had to acknowledge that they would be of interest to Members on both sides of the House and, more importantly, to many of our constituents. After all, the private rented sector is of growing importance and provides accommodation for around 17% of all households in England—that figure has nearly doubled in the past 20 years—and they represent 3.6 million households.
The majority of the private rented sector is operating well and the vast majority of tenants are satisfied, but, as we have heard in the debate, there are some real problems that must be addressed. They include problems involving rogue landlords, poor quality accommodation and exploitative letting agents charging exorbitant fees. We have also heard concerns about the length of tenancies and the need to increase supply. We need to find solutions to those problems, and today’s debate has been extremely helpful in considering ways forward. I welcome the helpful and constructive tone of the debate. In fact, we could say that it has been a one nation debate.
I apologise that I shall not have time to mention all Members who have spoken. The hon. Members for Denton and Reddish (Andrew Gwynne) and for Stockton North (Alex Cunningham) both made it clear that there are many very good landlords and letting agents. They also pointed out, however, as did right hon. and hon. Members on both sides of the House, that there are too many who are not. Lucy Powell raised concerns about the right to manage and about leasehold valuation tribunals. Those are really leasehold issues, and she will be delighted to know that my hon. Friend the Minister for Housing has today written to a number of people in the industry to address those very issues. Graham Jones talked about the need to review the housing health and safety rating system, and we would be interested to hear from him on that. If he would like to come and talk to me afterwards, I will discuss double glazing with him as well. The hon. Member for Denton and Reddish also mentioned a particularly expensive level of rent, and I am sure that he will draw his constituents’ attention to the opportunities to use the rent assessment committee.
My hon. Friends raised a number of equally important points. My hon. Friend George Hollingbery talked about the barriers to investment in the private rented sector and drew attention to concerns about the impact of new regulation. My hon. Friend Mark Pawsey, who is an active member of the Communities and Local Government Committee, reminded us of the Committee’s work in that area. Like him, we all look forward to the outcome of that work.
My hon. Friend John Pugh talked about red tape fetishism and, becoming rather distracted by planning to write his new book, “Fifty Shades of Red”, ran out of time, but his concern about regulation reminds us that not all regulation is bad. It was therefore wrong for the Opposition’s motion to describe the lettings sector as “unregulated”. As my hon. Friend Craig Whittaker pointed out, there is a large amount of regulation in this area. Surely the key should be to find ways to make better use of existing powers and regulation before seeking to introduce new regulation, a point that was drawn to our attention firmly by Sir Adrian Montague in his review of the private rented sector.
As I have said, there are areas of concern, such as rogue landlords, which many right hon. and hon. Members mentioned. I remind the House that local authorities have a large number of wide-ranging powers that can be used to bring tough and effective enforcement against bad landlords. We reminded councils of those powers recently in our publication, “Dealing with rogue landlords”. Some councils are doing exemplary work, with enforcement teams, proactive inspections, the development of clear and proper compliant reporting procedures and landlord accreditation schemes, such as the excellent one in Portsmouth. Of course, under the Housing Act 2004, in certain circumstances councils can also introduce their own licensing schemes, as has been mentioned. Really good examples include Sunderland, Leeds, Hartlepool, Blackburn, Bolton, Burnley, Sedgefield and many others.
Another thing that has not been mentioned so far in the debate is the need to send a clear signal to rogue landlords that poor practice will not be tolerated. That is why the caps on the level of fines for offences under the 2004 Act will shortly be lifted. We believe that the Opposition’s proposal for a national register of landlords, in the way they have described it, would be too prescriptive, expensive and over-centralised. It is worth reminding ourselves that Labour’s own impact assessment stated that a full licensing scheme would be onerous, difficult to enforce and would cost £300 million. Surely we should be looking at local solutions to local problems and developing the regulations that already exist.
Concerns were also expressed about letting agents. Although it is true that there are already many pieces of legislation that provide protection for tenants, that is an area where we could be looking further. Chris Williamson will know that the Office of Fair Trading is looking at that as we speak, and the Government will be listening to the recommendations not only from the OFT, but from the Select Committee.
This has been a useful debate on an important topic. The Government want a bigger, better private rented sector—
Question accordingly agreed to.
The Deputy Speaker declared the main Question, as amended, to be agreed to (
That this House recognises the importance of a vibrant private rented sector in providing a diverse range of quality accommodation to those who do not want or currently cannot buy their own home; supports action to be taken against the small minority of rogue landlords, without burdening the whole sector with unnecessary costs; warns that excessive red tape would force up rents, reduce choice for tenants and undermine future investment; believes that the Government should work with councils to promote their wide range of existing legal powers; welcomes the Government’s action against “beds in sheds” criminal landlords and steps to tackle social housing fraud; and supports the Government’s new £200 million “build to rent” fund and the £10 billion in debt guarantees for investment in the long-term rental market.