Regulation of the Private Rented Sector

– in the House of Commons at 11:30 am on 26th February 2013.

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Motion for leave to bring in a Bill (Standing Order No. 23)

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North 12:34 pm, 26th February 2013

I beg to move,

That leave be given to bring in a Bill to provide for the regulation of letting agents;
to protect tenants’ deposits;
to require the enforcement of environmental and energy-efficiency standards in private-sector rented accommodation;
to amend the law on secure tenancies;
to provide for fair rent to be applicable to all rented accommodation;
to require landlords not to discriminate against people in receipt of state benefits;
to require local authorities to establish a private rented sector office;
and for connected purposes.

Parliament has a responsibility to look seriously at the issues facing people who live in the private rented sector. For a long time, the sector has been ignored. Tenant protection was removed in the 1980s by the Housing Act 1988 and, at that time, the private rented sector was quite small. Indeed, in 2001, only 7% of people lived in the private rented sector. By 2011, this had risen to 17%, and by 2025 it will be 22 % of the population. In inner-city areas such as the one I represent, a third of people now live in private rented accommodation.

Private rented accommodation is very expensive, but when I questioned the Prime Minister on this subject he told me that the problem was that housing benefit costs in London had risen to £6 billion. The reason they have risen is because of the number of people placed in private rented accommodation by local authorities, which are fulfilling their statutory housing duties and have no control over rent levels. In return, the Government have now capped housing benefits at a very low level—given the effective rents charged—and the universal cap will cause even greater problems when it is introduced. Members who represent central London constituencies are already witnessing a massive depopulation of our communities as private sector tenants placed there by the local authority are having their benefit limited and they cannot afford to pay the difference between their benefits and the rent charged. Constituents come to me who have a difference of £100 and more between their benefit level and the rent level, which can be stupendous.

It is high time that Parliament looked at the situation facing people in the private rented sector and introduced thorough and comprehensive regulation. That is why I have introduced the Bill. To prepare for the Bill I have organised two public meetings in my constituency and invited private sector tenants to come along and tell me of their experiences. To put it mildly, those experiences are difficult to comprehend at times because of the sheer nastiness of some landlords towards some tenants. I am not saying that every private sector landlord is a bad person, or that they all go into the business with evil intent, but the lack of regulation means that many people suffer appalling treatment at the hands of this market. That is why we have to look at it.

Letting agencies are unregulated. They charge a search fee, which in some cases can run into several hundred pounds, but the search consists of no more than checking through a computer database to see whether they have any properties for that person. It is an unregulated area and it needs to be thoroughly regulated so that all those purporting to operate in the private rented sector can be registered and we know who they are. Deposits are often not returned, and if the landlord or letting agency is legally challenged they say that it was in fact rent in advance and therefore not liable to be returned. Excessively difficult questions are put concerning very minor changes that may have been made to a flat by someone living there.

If someone living in private rented accommodation complains to the local authority about the poor standards, the lack of repair, the lack of insulation or the sheer refusal of the landlord to engage with the tenant, they may be rapidly evicted. They then have no real redress in law to prevent that eviction, because the majority of private rented sector tenants are on assured shorthold tenancies lasting only six months. There is a real problem.

A group of tenants currently based in Hackney, although I expect similar groups to spread across London, have made an excellent submission to the Communities and Local Government Committee inquiry into the private rented sector. Their proposals include secure five-year tenancies, a requirement for landlords to provide a valid reason for ending a tenancy, a public register of all landlords paid for from the Land Registry, a requirement for decent homes standards to apply to all rented accommodation—not just council and housing association homes, but the private rented sector as well—and full vetting of private landlords before they let homes, including criminal record checks, tax records and previous warning letters from councils. It is time we went ahead with these proposals.

My Bill envisages tenant protection and five-year tenancies with a break clause for the tenant so that they can leave ahead of that time if they need to move away, have a job somewhere else or no longer wish to live in that area. Also, the Bill provides for the enforcement of all environmental standards, crucially including energy efficiency standards because the private rented sector tends to cost more and not just in rent levels, which are often horrendous—roughly three to four times what the local authority charges for similar properties in the same area. In addition, the Bill would protect tenants by ensuring that repairs are done and that if the landlord refuses to do them, that does not become a basis for eviction.

My Bill provides for non-discrimination. If someone walked along any high street anywhere in London, and probably anywhere in the country, and looked into a letting agency, they would see a sign saying, “No benefits here.” In other words, anyone in receipt of a state benefit is not allowed to apply for a private rented flat from that agent. That seems blatant discrimination against a very large number of people and ought to be outlawed. The crucial point for me is that we should return to rent regulation by a process of fair rents set by local rent tribunals. That would bring about a sense of fairness in the system, not the excessive and ludicrous profit-taking by a number of often very small landlords.

In order to implement the Bill, I would require the Secretary of State to consult within six months of the Bill becoming law on a formula for fair rents. Every local authority would be required to set up a local authority office to monitor all law that relates to the private rented sector, to ensure the return of deposits and to ensure that repairs are carried out in a decent and timely manner and that people can live in security and decency.

There are some good landlords in this country who have nothing to fear from this regulation. Indeed, some groups of landlords have been in touch with me to say that they would welcome such legislation because it would provide a sense of fairness. But there are many very bad landlords and many people who make ludicrously excessive profits from private sector rentals. I have come across a case in my constituency where someone who was able to buy a council flat under right to buy some years ago at a very heavy discount is now letting the flat at £600 per week. That is enough for that person to live on, from a flat that they were able to buy. This could be replicated all over the country in different situations.

The previous Housing Minister once told me that he thought rent regulation was a very bad idea because it would damage the property market and that was the fundamental driver of economic success in this country, but other countries manage to regulate the private rented sector. Germany, for example, has full regulation, with virtually permanent tenancies and a very good standard of accommodation to go with it. New York, which last time I looked was pretty much a free market capitalist economy in every other way, has a degree of rent regulation.

We need to provide security, decency and reliable landlords for those people who are unable to buy and unable to access local authority or housing association accommodation. The time is well past for us to legislate to look after a quarter of our population who are living in the private rented sector. I hope the House will support the Bill and give me leave to introduce it.

Question put and agreed to.

Ordered,

That Jeremy Corbyn, Mark Durkan, Sir Bob Russell, Mr Elfyn Llwyd, Caroline Lucas, John Healey, John McDonnell, Katy Clark, Grahame M. Morris, Paul Goggins, Mr David Lammy and Mr David Ward present the Bill.

Jeremy Corbyn accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 26 April and to be printed (Bill 140).