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Department for Communities and Local Government — Private Rented Sector

Estimates 2013-14 — Ministry of Defence – in the House of Commons at 4:29 pm on 4th March 2014.

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[Relevant documents: First Report from the Communities and Local Government Committee, on the Private Rented Sector, HC 50, and the Government response, Cm 8730.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2014, for expenditure by the Department for Communities and Local Government:

(1) further resources, not exceeding £10,776,378,000 be authorised for use for current purposes as set out in HC 1006,

(2) the resources authorised for use for capital purposes be reduced by £697,027,000 as so set out, and

(3) the sum authorised for issue out of the Consolidated Fund be reduced by £179,382,000 as so set out.—(Claire Perry.)

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee 4:46 pm, 4th March 2014

It is a pleasure to speak about the report on the private rented sector by the Communities and Local Government Committee—its first report of the 2013-14 Session. The report was produced through the Committee taking formal evidence in a number of sittings. Some of those featured more informal discussions and some involved landlords and tenants together, which was interesting. There was a visit to Leeds to look at how the council was operating with regard to the private rented sector, and a visit to Germany to look at the sector in a very different sphere of housing circumstances. On behalf of the Committee, I particularly thank Christine Whitehead, who was the Committee’s special adviser for the inquiry, and Kevin Maddison, the lead specialist from the Committee staff working on the inquiry.

We chose the subject of the private rented sector not because of any particular initiative that the Government were proposing at the time but because of the sector’s increasing importance to our constituents. According to the latest figures for 2012-13, 18% of households now live in the private rented sector. That growth did not suddenly happen following the banking crisis of 2008; it had been taking place before that over a period of time. Indeed, it has been the only growing housing sector since 2002, when owner-occupation started to fall as a percentage of households. That is an interesting fact.

The Committee saw the growth of the private rented sector not as a short-term issue but as something that is likely to continue in the longer term. We also observed that it is changing in that it is home to a wider range of households, particularly families with children who might, in other times, have chosen to be in a different sector but are now looking for a different housing experience, and particularly for more security. When people with children change their home, that often means changing schools, and that creates substantial disruption to family life.

When we went to Germany, we saw a very different situation that we are probably not likely to get to any time soon. People literally have tenancies for life; many of us could not quite get our heads around that. Someone with a tenancy in Germany has it for life and can pass it on so that their family members can succeed to it. We learned that there were good standards in the private rented sector that we ought to seek to emulate in this country. Tenants and landlords had an awareness and understanding of rights and responsibilities that is perhaps not always shared in this country. There was an equilibrium between demand and supply to which we aspire but recognise realistically that it will take some to achieve. Those factors create a very different market indeed.

We identified five main areas to concentrate on in our report: awareness of rights and responsibilities; the standards of properties and of how they are managed; effective regulation of letting agents, which we received an awful lot of evidence about; new tenancy models looking for longer-term agreements and greater security; and, in passing—because we had already done a report on this the previous year—increasing the housing supply.

When it came to taking evidence, the then housing MinisterMr Prisk, who is in his place—was, as usual, very open to ideas and he welcomed, both in his initial statement in the House and in the Government’s response, many of our recommendations, as indeed did the then shadow housing Minister, my hon. Friend Jack Dromey. May I place on record the Committee’s thanks to the hon. Member for Hertford and Stortford for the courteous, assiduous and highly knowledgeable way in which he always approached us and our deliberations?

There was a great deal of consensus right from the beginning. The Government have subsequently produced their “Review of property conditions in the private rented sector”, which includes many of the Committee’s ideas. Indeed, having initially dismissed our recommendations for mandatory carbon monoxide and smoke alarms in private rented homes and for five-yearly checks of the electrical installations, the Government are now consulting on them. Of course, consulting does not necessarily mean agreeing, but at least it is a step in the right direction, which we should recognise and welcome.

There are two areas on which we have not reached agreement and to which we need to pay more attention. The first is the flexibility of local authority powers to raise standards and to deal with rogue landlords in particular—I will say more about that in due course—and the second is the regulation of letting agents, on which the Government have not gone as far as the Committee wanted them to. I will explore that as well.

On raising awareness, in Germany it struck me and, I think, other Committee members that tenants and landlords seemed to understand the rules and their responsibilities. That is not always the case in this country. Our report notes that there is a bewildering array of legislation and regulation relating to the private rented sector. Different Acts of Parliament are cross-referenced in new Acts and it is very difficult for any professional, let alone any lay person, to get their head around the situation. A professional landlord might understand some of it, but small landlords and tenants probably do not.

We therefore called for a review on the potential consolidation of legislation, but the Government rejected that, which is disappointing because I think it would have helped to simplify things. We were not asking for more regulation; we were asking for simpler regulation. There is a difference. The Government could have scrapped some regulations if they had gone about it in a different way and that may have earned some brownie points for Ministers past and present.

Photo of John Stevenson John Stevenson Conservative, Carlisle

The hon. Gentleman’s opening comments are very much in tune with the views of the Committee. Does he agree that we recognised that the rented market is a relatively immature market and that, while we encouraged positive changes, one of the reasons why we were a little cautious in our approach was that we also recognised that we had to allow the market to develop and mature in its own way?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

The hon. Gentleman is absolutely right and I thank him for putting that clearly on the record. That is exactly what the Committee agreed. Some of the changes will be incremental and there will be opportunities for either this or a future Government to come back and look at the totality of regulation and legislation, which I think would be helpful for everyone involved.

On raising awareness, the Government have accepted some of the recommendations. The Committee called for easy-to-read fact sheets and model tenancy agreements. The Government have already produced a draft tenants charter and we look forward to their model tenancy agreement. That is entirely in line with what the Committee recommended, which was to try to make things easier, particularly for people who do not easily understand legislation and regulations, and to have something that is easy to operate. We felt that that would really help not only tenants, but many landlords, particularly non-professional, occasional landlords who have a few properties and would welcome such an approach.

We asked for a review of the housing health and safety rating system. Again, it is valued by many professionals, but it is very difficult to understand for many landlords, let alone for tenants. I do not think that the Government are prepared to go so far as a wholesale review, but we note that they are now trying to produce guidance for tenants and to update the methodology. There are problems in relation to local authorities wanting to act against a property if the tenant is elderly, but not if they are young, and landlords can get confused about an authority requiring them to do work simply because they have changed tenants. It is certainly worth looking at that complication in the new guidance and new methodology.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

Years ago, we had what was called a rents officer, which would surely be one of the better ways of enforcement whether in relation to private landlords or higher rents in general. Rents are now escalating because the supply of housing is very low. Did my hon. Friend and his Committee consider that?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

We did, but I will come on to rents later, if I may, because that is a separate issue. We did refer to that matter, but the main point of our report concentrated on standards, which is what I am trying to address now.

As we all know, the reality is that some of the worst standards in housing are in the private rented sector. That does not mean that every such property is bad and we should not give all private landlords a bad name, but as well as some of the worst properties, the sector has some of the most vulnerable occupiers, and that juxtaposition should really worry us. Some landlords simply want to sit and do nothing, while others blatantly break the law and think that they can get away with it, and we particularly want to bear down on them. There was general agreement about how to bear down on the really bad landlords without putting extra burdens on the good ones, and about how, at a time of financial constraint for local authorities, to enable them to take action against such private landlords and ensure that they can use their resources and recover their costs.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

I would add long-distance landlords to the list of problem landlords. I had a letter from a lady in west Sussex complaining about the condition of properties and various other things in the area of Church in Accrington. Many landlords in that area do not live there and have never visited it, and their properties are not in a particularly good condition. That is not necessarily for nasty or unpleasant reasons, but because landlords generally live too far away, and because they are amateur about making such an investment, rather than professional in housing management. Will my hon. Friend add long-distance landlords to his list?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

I do not want to say that every landlord who lives at a distance is a bad one—that would be wrong—but living further away can clearly make it more difficult for tenants to contact landlords and get instant responses about problems, particularly if they do not use a reputable agent to help them manage the property on the spot. We will come on to agents a little later. The issue is about local authorities having the powers to act against not merely individual properties, but areas with collections of properties in poor condition, which is probably the sort of area to which my hon. Friend refers.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

I am grateful to the hon. Gentleman for his very generous remarks earlier. Houses in multiple occupation are a subset of the private rented sector on which there needs to be a real concentration. I certainly attempted to do that as a Minister, and I am sure that my successor is also seeking to do so. Does the Chairman of the Select Committee agree that we should often focus on HMOs in relation to the worst behaviour?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

Absolutely. The Committee was very supportive of the legislation on HMOs, particularly local authorities’ use of article 4 powers to try to restrict the growth in their numbers in areas where there were so many that they had begun to dominate, as well as of the Government’s position. There is cross-party consensus on that issue.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

My experience as a Minister was that there was a lot of reluctance among local authorities to use article 4. I am not suggesting that I encouraged them to do so unreasonably, but a bit of elbow pushing was required to get them to do the job. I think that the Select Committee’s support will be very helpful. Does the hon. Gentleman agree?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

Yes, certainly. One of the messages right the way through the report is that there is good practice among local authorities. As with many things that we consider, it is a challenge to ensure that the good practice is spread to all authorities and that that knowledge is available. It should not be just the Select Committee, the Government and the Opposition telling councils what to do; they should be able to look at the good work that is being done by colleagues in other councils and replicate it.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

On property conditions, the hon. Gentleman will be aware that under the Housing Act 2004, local authorities have a statutory duty to deal with certain hazards in a property. Did the report look in any detail at expanding the number of hazards that are covered by that statutory duty? If so, does he have any thoughts about the cost implications for local authorities of doing so?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

No, we did not look at extending the properties that are covered by that responsibility of local authorities. We did look at the powers that are available to local authorities in respect of the approach to the licensing and registration of landlords in their area, and I will come on to discuss that.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

The licensing of landlords in areas of low demand is a separate issue. The powers that are available to local authorities in respect of houses that are not in a fit state of repair are already quite extensive. For example, they can put an order on a property that spans all residential use. That power is not widely used and I wonder whether the report says anything about why that is.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

I think that my neighbour, Jake Berry, was referring to the housing health and safety rating system and its implementation by local authorities in respect of category 1 and category 2 hazards. Does my hon. Friend agree that if significant cuts are made to local government, it does not help environmental and housing enforcement teams in local authorities to enforce the housing standards, even if they have a statutory ability to do so?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

The Committee received evidence of concerns in some local authorities that the squeeze on their resources was affecting their abilities in respect of the private rented sector. We tried to look at how authorities could deal with the challenges that they face most effectively with the resources that they have. One thing that we looked at was licensing.

On balance, the Committee did not come down in favour of a national licensing scheme. That is essentially because, over a number of reports, we have tended to be localist and to believe that local authorities should be allowed to make such choices for themselves. We went to Leeds, which has a very good accreditation scheme, under which there is good training and advice for landlords, which the landlords really appreciate. However, we were told by landlords and tenants that the problem is that it is the good landlords that join such schemes. They said, “It’s those landlords down the road you want to get hold of and they’re not going to volunteer.”

The selective licensing approach tends to be cumbersome, time-consuming and bureaucratic, and the criteria are very restricted. The Committee therefore asked whether we could relax the criteria and make them more flexible so that local authorities could engage in selective licensing if they wanted to. We also asked whether, in a more general sense, a local authority could have an accreditation scheme that was mandatory, so that it would include all landlords, including those who do not want to join.

Unfortunately, on both issues, the Government’s response was not as helpful as we would have liked. They said no to mandatory accreditation schemes and no to a review of the flexibility of selective licensing. The Government’s recent consultation document does include changes to selective licensing, but they are talking about tightening the criteria, rather than making them more flexible. That seems to be a retrograde step. All our evidence suggested that that was too cumbersome and does not work, and authorities that want to make it work find it difficult to make it happen.

We are apparently consulting on a landlord-specific, rather than property-specific, licensing or accreditation scheme, which the consultation document refers to as a suggestion from the Communities and Local Government Committee, although it was not. It has clearly come from somewhere, however, and it may not be unwelcome if it gives local authorities another set of powers and another way to deal with rogue landlords who are causing problems. If those landlords who persistently cause problems with individual properties have to become part of a mandatory registration scheme, that could be perhaps not a complete response to the Committee’s request, but at least a helpful step in the right direction, as we suggested.

Photo of Andrew Love Andrew Love Labour, Edmonton

All the evidence from London suggests that the problem is not low demand as the criteria state, but high demand. Surely all that evidence leads us to believe that we need greater flexibility in licensing, otherwise we will not get to the heart of the problem.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

Precisely, and the Committee’s view was very simple. These arrangements are—or at least should be—for local authorities to determine. Local authorities know their own areas and there is a big difference between one local authority and another. Even within London and within local authorities themselves there are big differences, so we hope the Government will recognise the value of giving a local authority a range of powers to tailor requirements to the needs of a particular area.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

My hon. Friend must be aware that in areas of high housing demand such as London, the six-month shorthold tenancy means that any tenant who has the temerity to complain about conditions to the environmental health service, or anybody else, rapidly finds their tenancy terminated. They then become homeless or have to move some distance away. There must be proper protection for people who legitimately exercise their right to complain.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

Yes, and the Government are consulting on retaliatory evictions as part of their consultation document, which is to be welcomed. One other issue that the Committee report dealt with that we must consider is how to encourage longer term tenancies. Families in particular want greater security. They may not want to be in the private rented sector, but if they are there and have a property they like, they probably want to be there for five years rather than six months. Considering how we can change the culture—that is what it is, as much as anything else—to get landlords and tenants to understand that there are possibilities within the framework of the existing assured shorthold tenancy for a tenancy longer than six months or a year, is a step forward. We must also consider how to get letting agents to recognise that they should be advising on that—letting agents often have a vested interest in regular reviews of tenants and tenancies because they make a profit and receive a fee every time they do it.

We must also deal with the fact that many lenders prevent landlords from having a tenancy of more than a year. Nationwide is now, I think, prepared to accept a three-year tenancy, which is a good step forward, and the Government are trying to bring lenders together to try to make that change happen. I entirely accept the point made by my hon. Friend the Member for Islington North about retaliatory evictions when tenants complain. However, if landlords are to accept a tenancy period of three or even five years, they must have a way of getting the tenant out, rather than waiting until the end of the tenancy period. Shelter has accepted this and the Government have established a working party on it. That is being looked at as a quid pro quo. Shelter accepts that; it is not only landlords associations that have been pressing for it.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

I will let my hon. Friend intervene one more time, and then I must try to bring my remarks to a conclusion.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

My hon. Friend made the point that landlord licensing is seen as a panacea, and the sound point that licensing applies to landlords and not properties. It is thought that that panacea will deal with rogue landlords, but, as my hon. Friend Mr Love has suggested, there is the question of property and stock conditions in both high and low-demand areas. Is there not a case for extending landlord licensing to include stock condition and other criteria to deal with those problems?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

The Committee called for more flexibility in licensing—perhaps that covers my hon. Friend’s point.

The Committee recognises the need for more powers and action in one or two other areas to improve standards. We call for the possibility of fixed-penalty notices, so that local authorities can deal with less serious offences at relatively low cost. The Government are consulting on the range of measures that should be available. We also say that, when a landlord lets a property in an unfit condition and is prosecuted, it should be possible to claw back any housing benefit paid or any rent paid by an individual. We are pleased that the Government are consulting on that proposal.

One additional matter that the Committee did not get into—we might have a look at it in the autumn—is what happens when landlords are taken to court. That goes back to the fact that authorities are strapped for cash, as many are, and have limited resources. If a landlord is found guilty, the court should award the authority the full cost of the action. Sheffield, my local authority, advised me the other day that it has brought five successful prosecutions of landlords in recent months. On each occasion, it has not been given its costs back—it got back roughly 50% of its costs in total. That is not acceptable. We ought to put pressure on the courts—perhaps the Minister’s colleagues in the Ministry of Justice could do this—to recognise that, when effective action costs money and the landlord is found to be responsible for and guilty of an offence, the costs should be returned to the authorities.

Finally, there are two other points. On letting agents—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I am sorry to stop the hon. Gentleman mid-flow, but he has been speaking for quite a long time, and lots of other hon. Members want to speak. I hope his two points are brief ones.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee, Chair, Housing, Communities and Local Government Committee

Yes. On letting agents, the Committee is pleased to see a lot of demand for regulation. We are pleased that the Government are introducing a redress scheme, but are disappointed that the code of practice backing it up will not be mandatory. There ought to be more Government action on the lack of transparency in relation to fees charged by letting agents. They should not leave it to the current legislation, which needs tightening.

Finally, on rents—this point has already been made—the Committee are not in favour of rent control. We believe that introducing rent controls is a blunt instrument that is more likely to curtail investment in the sector. Things should probably be done on local housing allowances, which could sometimes artificially inflate rents. There was evidence from Blackpool on that.

To summarise, the Committee is pleased with many of the Government’s responses. We have concerns on the points I have made and are looking forward to Government action. The Committee will monitor that and look to the Government’s proposals to stimulate extra building in the private rented sector and other sectors to deal with the real problem in housing: the shortage of supply.

Photo of Bob Neill Bob Neill Parliamentary Assembly of the Council of Europe (Substitute Member), Vice-Chair, Conservative Party 5:13 pm, 4th March 2014

It is a pleasure to follow Mr Betts, the Chairman of the Communities and Local Government Committee. I have much sympathy with many of his points, but I welcome his generous and well deserved tribute to my hon. Friend Mr Prisk. I am delighted to see him in the Chamber. He did a great deal in the sector in his time as a Minister and his work is appreciated on both sides of the House.

I declare an interest—it is in the register—as owner of a single property that I let out. That puts me in the same position as many private landlords, the vast majority of whom have a small property portfolio—it is generally fewer than 10 properties. I am also interested in the debate as a London MP. The private sector is particularly important in London, where housing costs are acute. I will then deal with the last point made by the Committee Chairman, which is on recommendation 30 of the report, on rents and affordability. I welcome the Select Committee’s view that rent control is not the answer, and I also welcome its view that what is really important is increasing supply. That is certainly critical to us in London.

The Government have taken commendable steps. The establishment of the Build to Rent fund, along with the raising of that fund to £1 billion, is a tribute to the work of my hon. Friend the Member for Hertford and Stortford, and to the continuing work of his successor, the current Minister. The £10 billion in loan guarantees for the building of homes specifically for private rent is another important step. So the Government are doing a great deal, but we should be prepared to think outside the box and think about other, more imaginative ways of leveraging private as well as public money into the private rented sector.

We all know that it is important for us to produce not just good-quality homes—and the quality of private rental stock is variable—but homes that will give people a degree of stability. An interesting comment was made in the pre-Budget submission by the London Chamber of Commerce and Industry, which pointed out that a lack of affordable housing for rent in the private rented sector, and the difficulty experienced by many people—including many young professionals in London—in moving into market housing are increasingly presenting a potential bar to London’s economic competitiveness. It quoted a designer in London—very sensibly, I think; after all, the creative industries are an important part of the economy—who said:

“When my employees see their rents shoot up, they come to me for a pay rise that I can’t afford to give them. This means I am always at risk of losing my most talented and experienced staff.”

I think that many London business people will recognise his problem.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I, too, represent a London constituency. Rent levels in the private sector are rising astronomically all the time, out of all proportion to the value of the properties involved. Does the hon. Gentleman not think that the solution must be a rent regulation scheme of some kind, possibly beginning in London? Would that not stabilise the situation, and enable us to retain the diversity and population of our city?

Photo of Bob Neill Bob Neill Parliamentary Assembly of the Council of Europe (Substitute Member), Vice-Chair, Conservative Party

Although I agree with the hon. Gentleman about rents rising in London, I do not agree with his conclusion. I do not believe that trying to manipulate the market in the way that he suggests can be a long-term solution to the problem.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

My hon. Friend has rightly drawn attention to the role of individual landlords, but the key element of the Government’s present strategy is encouraging institutional investors, not dissimilar to those in Germany.

Does he agree that that is the best way in which we could increase supply, choice, quality and indeed the longevity of terms in the manner he has described?

Photo of Bob Neill Bob Neill Parliamentary Assembly of the Council of Europe (Substitute Member), Vice-Chair, Conservative Party

My hon. Friend is entirely right. That is the main point that I wanted to make in my speech. It is precisely because there have not been funding models to attract institutional investment that money has not been invested for long enough periods to underwrite the longer-term, more stable tenancy arrangements that we would all like to see. I think that what has been done so far is an important step forward, but it is ironic that under Governments of both political persuasions we have lagged somewhat behind other countries when it comes to leveraging institutional money into the private rented sector. REITs—real estate investment trusts—have never taken off in this country as they have in many others, and I think that that is a shame. Some adjustments to the fiscal treatment of those vehicles would be helpful.

Photo of Andrew Love Andrew Love Labour, Edmonton

The biggest barrier to institutional investment in the private rented sector is the image of the private rented sector. Does the hon. Gentleman agree that we need to address that problem before the sector can attract any institutional investment?

Photo of Bob Neill Bob Neill Parliamentary Assembly of the Council of Europe (Substitute Member), Vice-Chair, Conservative Party

I think that this is a classic case of “It is not an either/or scenario”. We certainly need to take steps to improve the image of the sector, which I believe is often unfairly castigated. A good deal of action is suggested in the report, and I would probably agree with the hon. Gentleman on some helpful steps that we could take. However, I think that we must do that in parallel with creating mechanisms that will bring in the institutional money. The two go hand in glove: they are two sides of the same strategy that we should be adopting.

I want to say a little about what we could do to improve institutional investment in the private rented sector. There are obstacles, and this brings us back to the point made by Jeremy Corbyn. In some cases land for private sale may be worth more than land for long-term rental. There are issues with speculative costing and valuation methods. We also need to look at whether there is some scope for using the private rented sector to create an income stream that could generate a source of cross-subsidy for affordable housing units, particularly in regeneration schemes, as rents rise. The current models we have tend to put the subsidy at the beginning of the system, in effect through the planning gain being taken out with the consequence that the landowner takes a lesser price on the sale or the market housing will be inflated a little to pay for the subsidy that comes via section 106 or the planning gain.

That does not help in respect of the longer term funding streams we would like to see, however, and I hope the Minister will think about the following. I recently had the opportunity to talk with representatives of the New Economics Foundation. They have been doing some very interesting work in this field, and I commend the work in particular of Alicia Weston who has been doing some very interesting research. They have come up with a model that merits further consideration. It is a model for a defined income scheme that is designed to bring forward more rented housing. It allows private rental incomes to subsidise the rents of affordable units on a rolling basis and therefore gives the ability to have a long-term income flow. Indeed, it almost gives a bond that can be available to back up the investment.

The housing that is created stays in the rented sector for the life of the scheme. One cannot guarantee beyond that, but that would none the less give valuable supply increases. A new form of contract would be required, which would be perfectly doable within current English law, between the local authority and the housing association, so that rather than setting a specified level of affordable housing on the site, the allowable income from the site is what is set. That income is made up of a combination of market and affordable rents and their levels are allowed to flex in order to make up the defined income. Provided there is the income, which is guaranteed and is therefore a quasi-bond, there is the stream to cross-subsidise. Under those circumstances, if market rents were to rise, as they have in London recently, the excess income would cross-subsidise more affordable housing. Conversely, if there is a revenue shortfall some affordable units can be switched to market rent, but the integrity of the income stream is preserved, and therefore the integrity of the investment model. That will give local authorities a semi-guaranteed stream that is not guaranteed by the public purse, but which creates something almost as good as a bond. I hope the Minister will look seriously at that. There are some practical issues that we will need to deal with, but pilot schemes are being considered around the country and I hope the Department will give schemes such as this one a fair wind.

There is an advantage for housing associations there, too, because that more stable income stream is worth more to them and the increase in value will allow them to subsidise more housing or to unlock further sites and land for rented housing, either using a mix of the private rented sector or just affordable. This also encourages housing associations into the private rented sector, co-operating with institutional money, which might be an interesting approach to pursue.

If applied sensibly, this scheme could lead to increased institutional investment in the private rented sector. I hope the Minister will look at that and encourage it. That can be done in respect of the whole scheme or simply the section 106 element. There is a degree of flexibility. I do not pretend it is a silver bullet, but we do need to think outside the box in leveraging in institutional money. There are a number of possible routes, and I think this particular one may be very timely.

Overall, a healthy private rented sector is an important part of the housing mix, especially in large cities such as London, where the nature of the population frequently means that for a period of their lives people may well want the flexibility of living in the private sector before moving on to house purchase. They are likely to be earning incomes that mean they would never qualify for social rented housing, but they cannot at the moment access the market readily. Finding models that produce adequate housing supply for people in that situation is crucial for the health of London, my city, and of all the major conurbations in this country. So I hope the Minister will think about that as a model that is worth pursuing and that this report will generally find favour with the House. I also commend the Government’s response to it, which is a constructive one.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

On a point of order, Madam Deputy Speaker. In my previous intervention I failed to draw the House’s attention to my declaration of interest, so I just want to set the record straight.

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Thank you, Mr Berry. That is clearly now on the record and is therefore in order.

We now come to Mr Mike Kane’s maiden speech, to which the normal conventions of the House apply.

Photo of Mike Kane Mike Kane Labour, Wythenshawe and Sale East 5:25 pm, 4th March 2014

It was one of my predecessors, Alf Morris, who recruited me to public life. He said in his maiden speech that

“it was Aristotle who held it to be the essence of probability that some improbable things will happen.”—[Hansard, 12 November 1964; Vol. 701, c. 1280.]

And here I find myself, as only the fourth elected Member for the Wythenshawe and, now, Wythenshawe and Sale East constituency.

I must from the outset acknowledge the role played by the Prime Minister in my success. In a rather heated exchange at Prime Minister’s questions before the by-election, he and the Leader of the Opposition clashed over my candidature in the election. I want to place on record my thanks to the Prime Minister for the ensuing publicity in Manchester, helping Labour to secure one of the highest ever shares of the vote in the history of the constituency.

I want to thank the electors of Wythenshawe and Sale East for returning me here and many Members on both sides of this House for the welcome I have received since coming here. It will be a privilege to sit on these Benches as a Labour MP, following in the footsteps of Keir Hardie, who created the party 114 years ago and is a hero of mine. It filled me with immense pride to welcome the leader of the Labour party, my right hon. Friend Edward Miliband, to the constituency twice in recent weeks.

I wish to pay tribute to my predecessors. In November 1950, the first MP for Wythenshawe, Eveline Hill, a Conservative, won the ballot for a private Member’s Bill and introduced the Deserted Wives Bill, which would have given security of tenure to women who had been deserted by their husbands after the war. Without enough votes, the Bill fell. In 1952, she, along with two female colleagues, wrote to The Times urging Conservative associations to adopt more women to help secure more progressive legislation—60 years later it would seem that the advice still applies.

I mentioned Aristotle at the top of my speech, and it is often an Aristotelian confluence of events that brings any of us to this place—in my case, they were events that no one from any part of this House would have wished for. Paul Goggins was an extraordinarily dedicated public servant, and was loved and respected by all in this Chamber. He was a friend to many in this place, including to me and my wife Sandra. Justice and peace were his driving passions, and his ministerial work in the Home Office and Northern Ireland reflected that. His work with the victims of contaminated blood products and asbestos-related diseases was an extension of Alf Morris’s work in helping people who were chronically sick and disabled. As I walk these corridors, I am being constantly told that I have big shoes to fill, and it is true—I do. However, I know that in one area at least, our shared and abiding passion for Manchester City football club, I will not let him down.

Paul believed in the Augustinian notion of the world as it is and the world as it should be. He believed that we should strive on all sides, despite the tensions we face in this place and in this country, to create a better world. Such tensions currently include: the bedroom tax—or spare room subsidy; welfare reform; how to create a stronger economy; and the worrying situations we face in Syria and Ukraine. We cannot create that better world together without those tensions, and where better to do that from than the House of Commons, which has been the world’s leading instrument of revolutionary but peaceful societal change.

I am proud to have been born in the constituency, to have lived in the constituency all my life and to have taught in the constituency. Now I am proud to represent the constituency. If we are to ensure that Wythenshawe and Sale East is to continue as a thriving place in which to live and work, supporting our transport infrastructure will be critical. The country’s first municipal airport, Manchester, lies within the boundaries of the constituency. Granted a licence in 1929, it was established in 1933 by the Manchester city council by just one vote—56 to 55. Now it is one of the biggest drivers of the economy in northern England.

Light rail is critical to the constituency. There is a long-established line through Sale and a route in development through Wythenshawe to Manchester airport. Heavy rail is also critical, with the establishment and growth of the rail hub at Manchester airport. Unfortunately, we still have no railway station on the Stockport to Chester line that passes through the constituency. We look forward to welcoming High Speed 2 and its station in Wythenshawe at some stage in the future.

Speaking of HS2, Edward Watkin, who was a Member of this place in the 19th century and a resident in Northenden in my constituency, oversaw the construction of the great central main line, a purpose-built high-speed railway line of its day; and also oversaw a failed attempt to dig a channel tunnel under the English channel to connect his railway empire to the French rail network. That vision was realised only l00 years later, but as Disraeli said 200 years ago:

“What Manchester does today the rest of the world does tomorrow.”

More unusual routes through the constituency include the trans-Pennine trail, a cycling and walking route along the banks of the River Mersey, an off-road intercontinental route from Hull to Liverpool in the UK, and a route from Galway to Istanbul across the rest of the continent. The Bridgewater canal is also highly significant. Built by the Duke of Bridgewater in 1761, it brought coal to power the industrial revolution in Manchester, which changed the world.

To create that better world that we all want to see, we must continue to champion the people whom we represent, to listen to their stories and to help them build their own power through strong relationships and action. Eveline Hill believed in a better world in which deserted wives would have greater rights and in which there would be more representation and diversity in this Chamber.

Alf Morris believed in a better world for people who were chronically sick and disabled. He successfully introduced a ground-breaking private Member’s Bill in 1970, recognising their rights to lead a life of dignity and worth. Likewise, Paul Goggins believed in that better world for people with HIV and hepatitis C infection from contaminated blood products and for asbestos victims.

As the son of Irish immigrants, I am proud to serve in this legislature. My parents strived for a better world. I remember at the age of 10 being rehoused in an affordable three-bedroom council house. I saw how that lifted their spirits. I envision a world where all people can have a home, regardless of their status, that lifts their spirits and does not sap their energy; where people can access the job of their choosing and be treated with respect and dignity in the workplace; where more people are paid a living wage and are free from the tyranny of the loan sharks and where people have access to fair credit.

The primary purpose of our leadership in this place must be to create more leaders, not followers. St Paul in his letter to the Ephesians implores us all to lead a life worthy of our calling. I hope to do so.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East 5:34 pm, 4th March 2014

It is an honour and a privilege to follow Mike Kane. I think that I speak on behalf of the whole House when I say that his speech, which was his first from the Opposition Benches, was both witty and excellent. I am sure that those on the Government Benches join me in wishing him many happy years—on the Opposition Benches.

I am pleased to have the opportunity to participate in the debate, which has been led so well by Mr Betts, who is an excellent Chair of the Communities and Local Government Committee. He guided the production of last year’s report and, indeed, our reply to the Government’s response. I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

There are some 9 million people in the private rented sector. As we have heard, that sector is now larger than the social rented sector and, in many years, it will catch up with the so-called owner-occupier sector. Those who talk about owner-occupation should remember that most people who buy a house do not actually own it. They have borrowed the money to buy the house, but it will be 25 or 30 years until they can say that they own the property in which they live.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

I do not want to distract my hon. Friend from his speech, but may I bring to the House’s attention recommendation 37 of the report, which deals with data quality? It cannot be found in any of the English housing statistics the proportion of homes that are leasehold, which is something that gives rise to a whole set of problems. Martin Boyd of the Leasehold Knowledge Partnership estimates that the number is 5 million, but those homes do not get much attention, so perhaps the Select Committee will examine what more needs to be done in that area.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

I thank my hon. Friend for that intervention, and the Committee will have to examine that matter further.

In the borough that I have the privilege of representing, there are twice as many privately rented homes as there are properties owned by registered social landlords. That dwarfing of the social rented sector gives rise to a series of problems. In London, and especially the outer London suburbs, owners no longer sell properties, but vacate them and rent them out privately. The properties are often rented as houses in multiple occupation, but without them being registered as such, which creates the problem that many single individuals are renting properties collectively. Such people are often young men from eastern Europe who live together in one big house. There are many properties in which beds are rented out for eight hours a day, meaning that three individuals will occupy one bed in a room in sequence when they are not fulfilling their jobs and roles in society.

The HMOs in this country that are registered are few and far between, so I want the Government to put in place much more stringent registration requirements for HMOs. There are only 89 registered HMOs in my borough, but I could take Members to a single ward in Harrow in which there are more than 89, but they are unregistered, and therefore unlicensed and unregulated. As the report shows, we clearly need to deal with the problem of standards, and the Government need to take more action on the registration and regulation of HMOs.

That takes me on to the problem of beds in sheds, because the fact is that unscrupulous individuals are using relatively high rents and high demand for housing—throughout the country, but especially in London—to force people to live in substandard accommodation. I made a long speech about the private rented sector in the pre-Christmas recess debate. I will not repeat some of the points I made about the condition of properties and the problems in the sector, but I commend what Slough council did to draw up a heat map of its borough to ascertain the number of properties in which it was likely that there were bed in sheds. My own borough, Harrow, was not given Government money for the purpose but has just done a heat map of the area. We discovered 329 properties with buildings outlying or adjacent to the main house that are occupied. I am told that, as a result of the exercise, the police have also found a number of cannabis farms, which are another threat, not only because the domestic properties in question are no longer available to rent, but because cannabis farms lead to illegal trade. Clearly we need much stronger government intervention and much stronger Government support for local authorities to ascertain all the unscrupulous landlords who are not registered with anyone, but who are cramming people into substandard accommodation and ripping them off in the rent they charge.

During the debate, we have heard about the problems caused by the lack of stock, but we should be clear: it is a scandal that the last Labour Government presided over the lowest level of housing development since the 1920s. The reality is that planning permission was granted for relatively few properties and, sure enough, few properties have been completed in the past three years because of the lack of investment and the failure of the Labour Government to make it happen. I commend my the

Under-Secretary of State for Communities and Local Government, my hon. Friend Kris Hopkins, and his predecessors for taking action to encourage new housing development, which will lead directly to improvements not only in the private rented sector but in all sectors of the housing market.

During the stages of producing our report, the Committee looked at evidence from a wide variety of sources. One of the concerns expressed was about the regulation of managing agents, and I want to draw out the absolute scandal of the charges that unscrupulous managing agents levy not only on landlords but on applicants for rental properties. Frequently those charges are excessive, going beyond reasonable costs, and are levied multiple times, as the agents charge both the landlord and potential tenants. For example, we heard evidence of hundreds of pounds being charged for credit checks that, broadly speaking, would cost between £8 and £10 to conduct. That is a scandal. There is a need for clarification and more regulation in that regard.

In certain areas, the bureaucracy involved in registering is also a problem. The borough of Newham has introduced a policy of registering every single private rented property and requires landlords to fill out the same complicated form for every single property they rent out. The Select Committee has not yet had a proper answer from the Government about whether that is actually a requirement. I would welcome the Minister stating his view, not necessarily at the Dispatch Box tonight but in the future, that people do not need to do that. If the landlord in question is a large-scale, reputable landlord, the simple fact of registering their ownership of a property in the borough should be sufficient, but there is no reason why a small-scale landlord—one with, say, fewer than 10 properties—should not fill in the necessary forms and register properly, because it will need to be checked and verified that they are acting in a particular way.

I remind colleagues that for most landlords in the private rented sector, the yield on capital employed is in the order of 3% or 4%. Most people who rent out property privately are not necessarily doing it for the income—the review—they gain, but for capital growth. At present, interest rates are historically low.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I am interested in what the hon. Gentleman says. Where a former council property, which has often been bought with a very large discount historically, is let out at five or six times the rent charged by the appropriate local authority, that bears no relationship whatever to the capital employed and, frankly, is just plain greed.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

Clearly there are issues around where there is greed and where there is not. I am coming to a particular issue that is of importance to the sector.

Given that the yield is relatively low—an average of 3% to 4% is true across London and may be true across the rest of the country as well—and given that that money can be borrowed at perhaps 3% or 3.5%, a single half of a percentage point increase in the Bank base rate would lead to an increase of almost 20% increase in the amount of money people are paying their lenders for their mortgages. Think of the effect of that on rents. Given that the yield is only 3%, imagine if there were a 20% or 25% increase in what landlords must pay in interest rates for their mortgages. The effect of that would be enormous on the price of rents. It would have a knock-on effect on the housing benefit bill because, in many cases, housing benefit is paid to those in low-paid jobs, particularly in areas of London. That will be a clear concern in the coming weeks and months.

One of the things that I would stress—it is important that we send out this message—is that it vital that we have a Government who continue to bear down on interest rates and maintain reducing the deficit as key. That is one of the reasons why we cannot let the Opposition have any say in Government or on housing policy.

The final issue that I want to raise briefly is the key issue of the length of tenancy that applies. One of the key issues from our report was that we should have longer tenancies and more settled arrangements for families with children in schools who are building up a community of interest, rather than potentially having families being evicted after a six-month shorthold tenancy. However, that must go hand in glove with the ability of landlords to be able to evict tenants who do not pay their rent or who badly misbehave. That has to be one of the things where we will need intervention. We need the Government to take action to promote longer tenancies, and we need more responsibility from landlords and from tenants. We then need applicable rates where rents will rise with inflation so the position is more flexible for everyone in the housing market. We need lenders to recognise that longer tenancies are to their benefit, and to the benefit of their borrowers and of the people who reside in the properties.

Landlords will always say that a good tenant is worth keeping and worth keeping happy. A good tenant will say that they are happy in a property, that they want to stay and that they want a long-term relationship with the landlord. Bad tenants who do not pay their rent or who misbehave or cause antisocial behaviour clearly need to be evicted, and quickly, at the lowest possible cost to the landlord. If we can get some answers from the Minister tonight on those issues, that will be of great help to the sector and the rest of the market.

Finally, we have to be clear that this is a market. If we intervene in a market, it can have untold consequences and possibly consequences that one was not anticipating. This is one of the areas where we have to proceed carefully because we do not want to distort a market and cause further problems. With certain targeted interventions comes the potential for improving the market and for improving the lot of tenants and landlords combined.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North 5:49 pm, 4th March 2014

I join Bob Blackman in congratulating my hon. Friend Mike Kane on his maiden speech, which I thoroughly enjoyed—it certainly made me laugh. I wish him well as he tries to follow in the steps of St Paul. I do not mean Paul Goggins, although for many of us he was a bit of a saint, but St Paul of the Bible, who took on many people in government before his premature demise.

I worry that I am treading on old ground when I say that we are currently in the midst of the biggest housing emergency in a generation, but it is worth repeating that we continue to build less than half the number of homes we need to keep up with demand, if only to hammer home the severity and scale of the problem. All the while, private landlords, many of whom leave much to be desired in the caring and service department, continue to hike rents, often at the expense of the taxpayer, who has to foot the bill for many people forced by the failures of Government to claim housing benefit.

I am therefore pleased to welcome the Communities and Local Government Committee’s report and its conclusions, which cover: simplifying the law; promoting rights and responsibilities; proper enforcement powers for local authorities; better regulation; a crackdown on unfair charges; longer and more secure tenancies; and a renewed effort to boost housing supply in order to increase choice, quality and affordability.

Sadly, I cannot say the same for the Secretary of State’s response. He writes of burdensome red tape hampering private landlords, proportionate regulation that will let them off the hook and measures that will give tenants the know-how to demand longer-term tenancies, stable rents and better quality accommodation, to avoid hidden fees when renting a home and to demand better standards, but all without any real requirement on landlords to agree. He also writes of the

“small number of rogue landlords” who need to be dealt with, and optional model tenancy agreements that no one needs to adopt. It is not exactly a charter for the sector—certainly not for tenants. I welcome the funds to encourage more people to build new properties for rent and the compulsory redress scheme, although it is not clear how vulnerable tenants will take on the might of landlords.

However, none of that will deliver the house building revolution we need. A great concern is that the housing crisis is not a problem that exists in isolation—quite the opposite. A failure to build is but one link in a chain reaction that is having damaging effects for many people. With housing costs increasing, real wages falling and energy bills rocketing, not to mention the other bills that we must all factor into the cost of living, the chronic shortfall in building is driving that crisis.

Hard-working people across the country are being left unable to afford the homes they need. The average home now costs eight times the average wage. It took just three years for an average family to save for a deposit on a home in 1997, but today it will take the same family 22 years, if they are able to do so. But the number of affordable homes built over the past year dropped by more than a quarter.

As I sit on the bus each evening going to my Battersea flat, I am amazed by the number of apartments being built along Battersea Park road, each a tiny box costing several hundred thousand pounds. On behalf of the people of north-east England, I envy London the thousands of jobs and—in this apprenticeship week—the hundreds of apprenticeships that have been generated on those sites. It is just a shame that the vast majority of Londoners will never be able to buy and live in those apartments and will have to rely on the private rented sector instead. I could advise those people to move north, even to my constituency, where they will be able to secure a family home for a fraction of the cost of some of the box-sized apartments in London. The cost of living and quality of life is better, too. But why would I advise them to move to a region starved of housing investment, despite the efforts of our local authorities, and where unemployment continues to rise in most parts?

I would offer a solution. The Government could work to restore the north-east by encouraging some of the multi-million pound investment in housing and industry we see in the south-east to move north. Do that and build on the region’s successes, which include being a huge exporter of manufactured goods, including petrochemicals, steel, cars and a whole range of other goods. If houses could be delivered across the north-east at just a fraction of the rate in the south, we could have our own boom time.

What is most alarming about the shift away from home ownership is the simultaneous shortage of affordable and social housing. That extends far beyond the scarcity of one-bedroom properties that is blighting the socially rented sector as a result of this Government’s malicious bedroom tax and reaches past the confines of London, where rents are increasing by as much as 10% a year. Across England, 5 million people are on local authority waiting lists for social housing. As a result, the private rented sector plays and will continue to play an important role in meeting our housing needs. However, all too often private renting is unaffordable, unstable and subject to poor conditions and bad management.

The recent English housing survey for 2012-13 has shown that, for the first time, the private rented sector has grown larger than the social housing sector, with 4 million households compared with 3.7 million. The trend towards growth in the private rented sector is self-reinforcing, driven by the combination of factors that confront aspiring buyers looking to get on the housing ladder. People want to buy, but cannot do so as little affordable housing is available. They cannot even save a deposit while renting because of the shortage of low-cost social housing. To make matters worse, that all comes at a time when real wages have fallen at a rate of 2.2% a year since 2010—the longest such period in half a century.

One of my primary concerns is that so many homes in the private rented sector continue to fail to meet the decent homes standard. Although the number of houses in all sectors failing to meet the required standard has fallen in recent years, one in five households—almost 5 million properties across the country—are still substandard. In the private rented sector, however, a third of all properties fail to live up to the expected benchmark, the highest proportion of non-decent homes in any sector.

Some in the private rented sector would have us believe that they have been cleaning up their act, as the proportion of private rented sector homes classed as non-decent has fallen from 47% in 2006 to 33% in 2012. That is all very well, but that statistic conceals the fact that the absolute number of non-decent dwellings did not decrease over the period. Private landlords could take a lesson from the social rented sector, just 15% of whose properties miss the decent homes standard—although that, of course, is 15% too many.

Proportionally, roughly three times as many homes in the private rented sector failed to meet the decent homes standard as a consequence of disrepair or poor thermal comfort—two key indicators of housing quality—compared with the social rented sector. Private landlords could learn much from my own Stockton-on-Tees borough council’s work on insulating hard-to-heat private properties; Tristar Homes is doing the same in the social sector.

There is a broad consensus that the reputation of responsible landlords in the private sector is being undermined by a minority of criminal landlords who deliberately prey on the vulnerable, but there are problems that we cannot overlook and sweep under the carpet. There are the “couldn’t care less” landlords, the absent landlords and the anonymous landlords who are happy to take the rent but do nothing for their tenants. Some let properties to anyone prepared to pay, and in some areas create misery for neighbours and the wider community.

Just a week ago, a distressed woman was in tears in my surgery after years of trouble from one set of aggressive and noisy tenants after another, placed next door to her by a landlord who takes no responsibility whatever. The situation is all too common. We know that when standards reach unacceptable levels, regulatory and enforcement tools are available to local authorities. However, using those tools is often a last resort, partly because of regulatory red tape, meaning that poor standards can persist for too long.

Yet of the 4 million households in the private rented sector, 25% received housing benefit in 2012-13 to help with the rent, up from 19% in 2008-09, as wage values drop, low paid part-time jobs replace well paid full-time ones and people are forced to fall back on the state. That means that the Government are, in effect, increasing subsidies for low quality homes. That would rightly be considered a scandal at any time—even more so when the money could be used to boost house building in the social rented sector and benefit some of the millions of people in need of high quality affordable homes.

Over the past three decades, in excess of 1 million council properties have been sold through the right-to-buy policy and its variants. About a third of the ex-council homes sold in the 1980s are now owned by private landlords charging rents more often than not staggeringly higher than rents in the social sector. In the social rented sector, the average household rent in 2012-13 was £89 a week, while the equivalent figure for the private rented sector stood at £163, a difference of £74 a week. In some local authority areas in the north-east, as many as 72% of those in the private rented sector are entitled to rent support through housing benefit. With 80,000 households renting private accommodation entitled to housing benefit across the north-east region, private companies are benefiting massively from the welfare system. For example, Stockton Flats has taken more than £1.7 million from councils throughout the north-east, the north-west and north Yorkshire, including £775,000 from Stockton-on-Tees and £260,000 from Redcar and Cleveland. Similarly, Castledene Property Management has benefited hugely from Durham and Newcastle councils.

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons, Speaker of the House of Commons, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission

Order. There is no formal time limit on Back-Bench speeches, but I am cautiously optimistic that the hon. Gentleman is approaching his concluding comments, a point that I make in the light that other hon. Members—four to be precise—wish to speak. I know that the hon. Gentleman is considerate of his colleagues and is approaching his conclusion—not his end, but his conclusion.

Photo of Alex Cunningham Alex Cunningham Labour, Stockton North

I am grateful, Mr Speaker. I have a few paragraphs to go.

The companies that act as private landlords are reaping the rewards of the housing crisis that is afflicting so many people in Britain, and driving growth in the buy-to-let market while stifling the building of the affordable and social homes that so many hard-working people want and need.

I will cut short my comments, Mr Speaker. I will simply say that the report from the Communities and Local Government Committee offered the Government robust recommendations, and I am saddened that the Secretary of State is not giving them much credit.

Photo of Stephen Gilbert Stephen Gilbert Liberal Democrat, St Austell and Newquay 6:01 pm, 4th March 2014

I extend a warm welcome from the Liberal Democrat Benches to Mike Kane and congratulate him on his maiden speech. When I made mine years ago, it was terrifying. The hon. Gentleman acquitted himself admirably, as I am sure he will continue to do over the next 12 months. He said a lot about Aristotle, who said:

“It is the mark of an educated mind to be able to entertain a thought without accepting it.”

I think you will agree, Mr Speaker, that that is what we often do in this place when we listen to one another speaking across the divide.

It is clear that over the last 30 years, housing in this country has changed dramatically. The country has moved away from the high level of social tenancies that used to dominate the landscape. Now, more than 8.5 million people live in private rented accommodation. Many of the people I speak to most weekends at my advice surgeries dream of owning their own home. That dream has been handed down through generations, and it helps to create a stable family life and a meaningful existence. We cannot build a big society if we do not have roots in the society and the community in which we live. People who are subject to the transient churn of the private rented sector all too often fail to grip the community around them and engage positively with it.

People’s dreams of owning their own home are becoming harder to realise. The average age of a first-time buyer is rising, and is now 37, the size of deposit required to buy a home is ever higher, and bank lending has become more stringent in recent years. When ever-increasing house prices, due to shortage of supply and high demand, are factored in, a significant part of society may never be able to own the home to which they aspire, or will struggle for decades to do so. For them, the private rented sector is the only realistic option.

Photo of Chloe Smith Chloe Smith Conservative, Norwich North

I am sure my hon. Friend will explain how the issue affects his rural constituency. Will he acknowledge that it is a problem not only in the large urban stretches of London, but in smaller cities such as Norwich?

Photo of Stephen Gilbert Stephen Gilbert Liberal Democrat, St Austell and Newquay

My hon. Friend is exactly right. The problem is not restricted to one part of our country, but is a national housing crisis. I consider myself to be a fairly astute observer of politics from time to time—perhaps on high days and holidays—but I fail to understand why the issue is not higher up the political agenda. The House is reasonably well attended today, but election after election passes without housing achieving the penetration of public consciousness that it deserves. A generation is frozen out of the housing market, millions of people are on waiting lists for social housing, and, as Alex Cunningham said, millions more are living in inappropriate conditions in the private rented sector. There will be a moment at which housing bursts through, and when that happens I suspect that whichever party is best able to capitalise on the public anger will be rewarded at the ballot box.

The private rented sector sees a huge turnover and is inherently unstable. In my view—I share the analysis of my hon. Friend Bob Blackman—that is partly because of the nature of the short-term tenancy arrangements within the sector. Often agreements will be for six months, or 12 months if you are lucky. Almost inevitably, there will be annual rent increases that are above inflation or above the retail prices index or the consumer prices index. As the hon. Member for Stockton North said, there is a failure by landlords to invest. This often creates a churn in the private rented sector that is undesirable for the people who are in it and for landlords, as well as for our wider communities.

We should not make the mistake of thinking that all the people who are renting are students or young people. In fact, half of all private renters are over 35 and a third are families. Moving is not always desirable for people who are trying to create deep links with local schools and other links with local communities, and it is our job as Members of this House to recognise that. The housing charity Shelter, which does excellent work across the piece but particularly on this issue, says that two thirds of renters in England want the option to stay in their properties for longer periods, and eight out of 10 want to know that they are not subject to the annual unpredictability of rent rises. This shows that the private rented sector is not fluid because of consumer choice; it is not what the individuals who are renting want to happen. They are victims of the market who are concerned about punitive rent increases and the motives of their landlords.

I fully endorse the suggestion by my hon. Friend the Member for Harrow East that the Government need to bring forward measures on longer-term tenancies that will benefit property owners and renters. The Government should make overcoming the inherent short-termism that is built into the system a priority.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras 6:07 pm, 4th March 2014

I commend the speech by my new hon. Friend Mike Kane, who represents the great city of Manchester. He is one of the few people who could survive a headline saying “New MP for Sale” without being investigated by the Committee on Standards in Public Life. I congratulate him on the wit and intellect that he used in his maiden speech, and on the tributes that he paid to his predecessors. One characteristic of both Alf Morris and Paul Goggins was that they commanded rather a lot of respect and affection on both sides of the House. That is a trick that most of us have not pulled off over the years, I have to say, and I hope he manages it. I pay tribute to some of the work that got him here, including his work on promoting a living wage and on trying to undermine and replace the loan sharks who batten on a lot of poorer people. I am sure that he is very welcome in the House.

I welcome the report by the Select Committee and commend the hard work that it has put in, but I am afraid that I do not think it goes anything like far enough in dealing with the problems of the private rented sector in London. Londoners are being priced out of London, and young Londoners are suffering most. Whether they are seeking to buy or to rent somewhere to live, all the options are being taken out of the reach of ordinary people. Over the years, housing policy in London has been a failure, and there is now a housing crisis the like of which I cannot remember in all the time that I have been involved in local politics.

When I first became an MP, I knew that a nurse at Great Ormond Street or University College hospital would not be able to afford to live in the area. Over the years I realised that, increasingly, junior doctors would not be able to afford to live in the area surrounding those two great hospitals. It has now reached the stage where a new specialist consultant can no longer afford to live in the area, which is a ludicrous and damaging situation.

Younger people who are starting careers and who want to start a family and to find a place to live are being pushed out by house prices and rents that have been rising out of hand. The badly off have been hammered and the situation in London is such that—these are official figures—the average weekly rent now exceeds 50% of the average weekly pay. It is not just the badly off who are being driven out; it is people on middling incomes and young professionals who are hoping to start a career. They certainly cannot afford to buy and increasingly they cannot afford to rent.

In the past few years, private rents have gone utterly mad. It is not just me who is saying that. A recent headline in the Evening Standard stated: “Half Londoners fear they’ll be forced to leave neighbourhood: Housing costs in London ‘driving us out’”. A few days later the paper had a similar headline: “Rents rise 8 times faster than wages”. These are unsustainable increases.

The fact is that the private rental market is failing. It receives a £9 billion subsidy from the taxpayer—£9 billion of housing benefit goes to the private sector. It does not reside in the pockets and handbags of the tenants; it goes to the landlords.

The situation now is such that rents are going up, but the supply is going down. Another headline from the Evening Standard read: “‘Generation Rent’”—that is how young professional people are being referred to —“suffers in overheated market as housing supply slumps.” The idea that high, unregulated rents are bringing resources into the private sector is simply not true. Some argue that some sort of regulation or control might harm the supply, but it could not harm it any more than the free market is managing to do at the moment.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I thank my right hon. Friend and parliamentary neighbour for giving way and I agree with everything he has said. Does he accept that what is happening in our constituencies is, in effect, a form of social cleansing of those on housing benefit, who cannot afford to pay the gap between the benefit level and their rent and are thus forced to leave, which is damaging to all our communities, families and schools and to everything about London life?

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

I agree entirely with my hon. Friend. I think I invented the phrase “social cleansing” and sometimes I refer to it as the lowland clearances, which might be of interest to our colleagues in Scotland.

A headline in The Sunday Times stated: “Buy-to-let returns top 10 % a year: Investors piling into the market as yields soar”. The supply is not soaring, but the yields are and it is time we shifted the balance in favour of the tenants, with greater security, and longer tenancies. I believe that we cannot afford to avoid introducing rent controls. In fact, I would go further and say that there should be a progressive reduction in the level of some of the rents and that, in future, rent increases should be tied to wage levels.

We of course have the problem of the massive increase in house prices, which is a major factor in the rise in rents. One of the biggest factors is foreign buyers. Some of them buy property in London to live in, but they are a small minority, because most of them now buy residential property simply as an investment that they leave empty. To read another Evening Standard headline, “Super-rich from overseas flock to buy homes in London”. They do not intend to use them as homes; they are simply an investment that is better than putting their money in gold. They cause a double damage or blow to people in London: they drive up prices; and they take a lot of housing out of supply, because the places that they buy and do not occupy could otherwise be occupied by other people.

We cannot stop EU citizens buying residential property in this country, but we can stop other people doing so. The Government have established a precedent, because they have said that a private landlord must not let to a tenant who is not lawfully in the United Kingdom. I believe that we should change the law so that people cannot sell residential property to somebody who is not entitled to be in the United Kingdom. That would have a dampening effect on these massive rises in house prices.

As the Government are now scrambling around in contemplating sanctions against Russia, may I suggest that, as a pilot scheme, we quickly pass a law to prevent Russian oligarchs from buying houses and flats in this country unless they are entitled to live here, because all that happens is that landlords, estate agents and property companies are making money? They have contributed little or nothing to making London a better place to live. In the southern tip of my constituency, which includes Covent Garden, people—with their children or their parents—battled for years in the 1970s to prevent the wholesale destruction of Covent Garden and to preserve it as the great success that it has become, but they can no longer find anywhere in Covent Garden to live, because properties are bought up by other people, whether British bankers or foreign owners.

We also have the problem of Crossrail, which has cost £16 billion, most of which has come from the taxpayer. With a fanfare of trumpets, the people now running Crossrail have announced that some firm of valuers is predicting, again to quote the Evening Standard, that “Crossrail ‘will boost property prices by up to 25 per cent’”. It has cost billions of pounds of taxpayers’ money, but someone else will benefit from the increase in property values.

In all I have said, I have been very careful to avoid mentioning any socialists, and I will now mention a very unsocialist person. He said:

“Do you think it would be very unfair if the owners of all this automatically created land value due to the…enterprise of the community…had been made to pay a proportion…of the unearned increment which they secured, back to…the community?”

That was Winston Churchill at the great Free Trade hall in the great city of Manchester in 1909. He was right then, and he is right now. My view is that if there is to be a massive increase in property values as a result of Crossrail—I have always supported Crossrail—the public should get some of it back.

I will quote somebody else:

“Both ground rents, and the ordinary rent…are a species of revenue, which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry.”

He went on to suggest that rents are

“the species of revenue which can best bear to have a peculiar tax imposed upon them.”

That is what Adam Smith said in the “The Wealth of Nations”. If the Tories claim to be Churchillites or say that they support the Adam Smith Institute, it is about time that they adjusted some of their policies in line with what those distinguished people advocated.

It seems to me that there will be no prospect of ordinary folk continuing to afford somewhere decent to live in London until we introduce rent controls and reductions, introduce a tax on gratuitous increases in values accruing to landlords, and do something to stop the stinking rich foreigners buying up residential property in this country. When people talk about immigration, they say that there will be all sorts of burdens on the infrastructure. The suggestion seems to be that there will be such a burden only when poor people come here. The fact is that the people who are recruited by the City from abroad also want somewhere to live. They impose as great a burden on our housing stock as anyone else. I therefore think that we need a much more radical approach. That no doubt betrays me, yet again, as being not old Labour, but heritage Labour.

S

The solution, of course, is what has been advocated by Henry George, Churchill, and many others, and which currently goes under the name of Land Value Taxation. Read more about it here: http://www.landvaluetax.org/

Submitted by Stewart Goldwater

Photo of Simon Danczuk Simon Danczuk Labour, Rochdale 6:22 pm, 4th March 2014

I genuinely enjoyed the speech by my hon. Friend Mike Kane. I also enjoyed knocking on doors in his constituency a few weeks ago in the pouring rain. I am pleased to have helped him get into this place.

I am speaking in this debate because I am a member of the Communities and Local Government Committee, which conducted the inquiry, and because this issue is thoroughly important to my constituency as many of my constituents live in the private rented sector. This inquiry is one of the most interesting and important inquiries we have conducted because it relates to a large proportion of the British population. I enjoyed the inquiry and found it particularly informative. I will canter through three issues: simplifying the legislation, empowering local government and thinking about the long term.

The Chairman of the Committee mentioned the importance of regulating the private rented sector, as did others. He also mentioned that tenants, landlords, local authorities and everybody else who is involved in the sector find the legislation complicated. It adds to the costs, causes confusion and creates a lot of hassle for those who want to rent a house. I hope that the Government will review the legislation to make it clearer and simpler.

As the private rented sector is so large nowadays, there is an opportunity for the Government to conduct a public information campaign on how it relates to tenants and potential tenants. There are also issues with letting agents, as Bob Blackman and other Members pointed out. It is important that there is a breakdown of the fees that tenants are paying. There is a view that there should be a national licensing scheme, but although I agree that national guidelines could be useful, I think that is done better by local authorities. Local government needs the ability and flexibility to decide its own licensing schemes that are particular to the local housing area.

On localism, local authorities should be given more powers to tackle rogue landlords, but we should bear it in mind that there are also rogue tenants, as has been pointed out. There are 1.2 million landlords, many of whom could be described as accidental. The vast majority are good, but there are a few rogue landlords who treat people badly and prey on vulnerable people, particularly the old, students and immigrants. That needs addressing by giving local authorities greater powers to impose penalty charges and the chance to recoup costs.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

Does my hon. Friend agree that we need to address the problem of people who cause a massive nuisance to their neighbours, because the present laws and practices are quite pathetic?

Photo of Simon Danczuk Simon Danczuk Labour, Rochdale

I completely agree with my right hon. Friend, and there is an issue about rogue tenants, which is the point I am making. On unscrupulous landlords, my right hon. Friend mentioned the subsidy through housing benefit, and those rogue landlords are often receiving public money, using it badly, and treating their tenants badly. There is a need for greater powers for local authorities.

On the longer term prospects, I have two quick points. First, as Bob Blackman said, there is a real issue of people wanting longer term tenancies. The Government can do something to help and assist that, perhaps by looking more closely at Germany in creating longer term tenancies, particularly for families and those who want to stay in a location for a lot longer than they currently do. Finally, in the long term more broadly we need to start building more homes. Whether this Government or the next get that under way—whichever party is in office—that is the key to this complex problem.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North 6:27 pm, 4th March 2014

Thank you, Mr Speaker. I was being distracted by my neighbour, my right hon. Friend Frank Dobson, and expressing concern about his reading list.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

That is the problem you get with difficult neighbours.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

I was expressing concern about my Friend’s reading list—Adam Smith and Winston Churchill —but he assured me, and he is quite right, that there was a radical tinge to Churchill who also introduced wages boards. There was also a radical tinge to Adam Smith, although he was grossly misrepresented by the far right of the Conservative party many decades later. We will not debate that.

I congratulate my Friend Mike Kane on his election and membership of this House, and on an absolutely superb opening speech. I have never heard anybody start with Aristotle. I hope he carries on in that philosophical mode. It was absolutely brilliant.

I will be brief, you will be pleased to hear, Mr Speaker, because those on the Front Benches wish to wind up the debate. Like my Friend the Member for Holborn and St Pancras, who has the neighbouring constituency, I represent inner London where the housing crisis is acute beyond belief. I hold regular advice bureaux, as all Members do, and my walk-in advice bureau on the third Friday of the month frequently lasts for anything from six to eight hours. The vast majority of the people who come have housing issues, and they are devastated by the situation they are in. They are often people who have been placed in the private rented sector by the local authority, which must house them because they are in desperate housing need and the family is in danger of homelessness, or has medical needs and so on. I do not blame the local authority for that. People’s rent goes up, their housing benefit is capped, they cannot afford to meet the gap, and the only alternative for them is to be moved out of the area to a distant place. At the moment, my borough does not place people outside London, but I suspect it is only a matter of time before all London boroughs decant people outside London because they simply cannot find the private rented accommodation to house them. Schools are disrupted when families are moved out and the community is weakened. The flats are then rented to somebody at an even higher rent.

I am pleased that the Communities and Local Government Committee has decided to concentrate on the private rented sector. I agree with much in the report, including the regulation of letting agents, better conditions in the private rented sector, the guaranteed return of deposits, and the protection of tenants against unfair eviction because they have the temerity to complain to local environmental health services.

I would like those measures to be introduced, but we must address the elephant in the room—the rents levels in the private rented sector. In answer to a question from me yesterday, the Minister asserted that private rented sector rents in London are going up by 1.4% per year. I tested that out on a few people last night in my constituency. The answers ranged from, “Which planet is he living on?” to “Did he mean 1.4% per week?” There is a total disconnect between the figures the Department works on and the reality of life for people in the private rented sector.

Government Members say, “We cannot interfere with the market,” but we are already doing so. As my Friend the Member for Holborn and St Pancras has pointed out, the public are putting £9 billion a year into the hands of private landlords. That is market interference. I support housing benefit, but it has an effect. No rent regulation is associated with housing benefit, and there is no control on rent levels. That must be addressed. I recognise that, in most of the UK, private rents are not excessively high. In many parts of the country, they are lower than council rents. When I talk to colleagues about supporting my ideas on the regulation of private rents, they say, “It’s not an issue in my area.” I fully understand that, but in London and on the fringes of London, and in one or two other cities, it is a massive issue. A third of my constituents live in the private rented sector. They ask me, “How much longer can I afford to stay in your constituency?” Some of those people are not poor—their salaries are quite good. They are young professionals who want to live in an inner-city area of London but can no longer afford to do so.

There is a knock-on effect on the London labour market. I have been to the Royal Mail sorting offices in my constituency, the local hospital—on many occasions—the fire station, the police station, social services, the council departments and other places, and have asked people where they live. If they are under 40, the chances are that they live at home with their parents. They do not want to—the parents often do not want them there either—but are stuck in that situation. If they have managed to buy a place, it is a very long way away from London, and they spend an awful lot of time and money on commuting, which has an environmental effect. A few years down the line, where will the nurses, the teachers and the firefighters come from if we do not address housing for people who need houses and places in London?

To my local authority’s great credit, it is building council houses. It hopes to complete about 2,000 with the housing associations on affordable or social rent models. That is making a good difference to a lot of people’s lives. It is a great pleasure meeting families who have lived in grossly overcrowded, poor-quality accommodation when they get a decent, permanent, reliable and secure council flat. That has changed their lives, and has changed the attitudes of the young people involved. However, we are not doing enough of it; instead, we are letting the market rip, and allowing all the problems that go with that to arise.

I have introduced a Bill under the ten-minute rule procedure, the Regulation of the Private Rented Sector Bill. I think that the majority of Members would find most of it unexceptionable. It deals with the need to regulate letting agents. We could start with Criminal Records Bureau checks—in some cases, that would be quite helpful—and then move on to full regulation of the way in which agents charge, the extent of their transparency, and so on. Not all letting agents are bad, just as not all private landlords are bad, but there are some pretty seriously rogue elements.

Agencies discriminate blatantly not only on grounds of ethnicity and race—as “Panorama” discovered—but against people on benefits. They say “We will not allow anyone who collects benefit to rent a flat through this agency.” Why do they do that? It is an interesting question, because someone who pays part or all of his or her rent by means of housing benefit will actually be a very reliable tenant. The answer can only be that the agencies do not want the attention of HMRC to be focused on the levels of income they are receiving.

We need regulation to deal with that, we need transparency in regard to how deposit schemes work and how tenants get their deposits back, and we need serious attention to be paid to the longevity of tenancies. Six months for assured shorthold tenancies is far too short; at least five years strikes me as a reasonable basis, although obviously there should be an appropriate form of get-out clause for people who, for instance, get a job in another part of the country. That can be worked out.

Other countries manage to regulate rents. Germany has a very regulated and a much bigger private rented sector, and, in general, private rented properties are owned by much larger landlords—co-operatives, insurance companies or others. When the Minister without Portfolio, Grant Shapps, told me that regulation of the private rented sector would bring about the economic ruin of Britain, I asked him whether that was a parallel with the economic ruin that Germany was facing as a result of its regulation of the sector. I am still awaiting his answer; I do not know when he will be able to give it to me.

My Bill proposes that local authorities should play a key role, because they understand the communities they represent. Newham council, Oxford city council and a number of other authorities have introduced registration schemes, and have sought to introduce some degree of regulation of the private rented sector. Of course, as Mr Betts, the Chair of the Select Committee, pointed out, the problem is that it is the good landlords who tend to register voluntarily, and it is the rogues whom we want to be registered. Nevertheless, that is a good initiative and a good step forward. Moreover, if local authorities introduced their own private letting offices, they could use them for their own purposes when they have to house families in the private sector because they do not have enough council houses to deal with the demand.

The Bill also proposes that a combination of the Mayor and London boroughs should be given the opportunity to introduce a rent registration and rent regulation regime across London, which would have some bearing on the affordability of properties. That would give access to housing to a range of people who are currently excluded from it, and would thus create more stable, more harmonious communities.

I welcome the work that the Select Committee has done, and I welcome the fact that we are beginning to have a serious debate about the private rented sector. It should be remembered that more than a third of the communities in many parts of London are already living in the sector, and that, according to all the predictions, it will grow a great deal. I very much hope that this will become a big issue at the next election. I hope that parties including my own will understand the need for regulation and the need to limit the excessive rents that have been charged, so that we can bring about some sense of harmony and decency in this sector of the housing market throughout the country.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government) 6:39 pm, 4th March 2014

I begin by congratulating my hon. Friend Mike Kane on making an excellent maiden speech, and I can see he is going to be a real champion for his area. I, too, remember campaigning for him, and not only in the rain, but in the wind and rain, and it was very much worth it to have him here. I am sure his warm and moving comments about his predecessor are greatly appreciated on both sides of the House.

We have had a very well-informed debate, and I congratulate my hon. Friend Mr Betts and his Select Committee on producing such an excellent report and on highlighting the key issues relating to the private rented sector. It is a pity that the Government’s response to the Committee’s report did not rise to meet the sensible challenges it set out. Indeed it is still a mystery to me why one of the first actions of this Government when coming to office was to put an end to the planned regulation of the sector of my right hon. Friend John Healey. As a result, four years on, all we have is a consultation and we have lost a valuable opportunity to identify and address key issues facing the sector.

Both the Government’s response to the Committee’s report and the subsequent consultation paper on property conditions in the private rented sector show huge complacency. Yes, the Government are consulting in some areas, but they are not addressing the main issues that the Select Committee report highlights, such as affordability, poor standards in some cases, lack of security of tenure, lack of regulation for letting agents, illegal evictions and lack of protection for the tenant. It is important that they do address these issues, however, because, as lots of Members have said today, increasing numbers of people now rely on the private rented sector for their housing. We think the figure is now about 4 million households, which is the highest ever.

It is now more important than ever to address some of the long-standing and growing issues that are affecting ever more people. In its report, the Select Committee identifies as the first major issue the need for a simpler regulatory framework. There is a case to be made for consolidation of the legislation relating to the private sector, which is currently dispersed and complicated, and such action would make it simpler for tenants and landlords to understand their respective rights and responsibilities. Clarity will also make things more accessible for both tenants and landlords and may help to reduce some of the problems that arise, and consolidation would also make things easier for local authorities. What is absolutely vital, however, is that councils are able to put existing, and any subsequent, legislation and guidance in place locally in an effective way, and I am pleased that my hon. Friend the Member for Rochdale

(Simon Danczuk) pointed in his speech to the importance of enabling a localist approach and of getting good local policies in place.

The Committee is right to highlight the need to raise standards in the sector. Too often unscrupulous letting agents are ripping people off; people and families that are renting are subject to a lack of stability through short-term tenancies and unpredictable rent increases; and too many homes are of a poor standard. Some 33% of all privately rented homes are estimated to be non-decent with one in 10 homes in the sector suffering from damp and mould.

The Committee’s report highlights the considerable concerns of many in the sector and identifies some real problems, but the report also offers potential solutions to these issues, recommending empowering local authorities to tackle problems and penalise landlords who fail to maintain the necessary standards. The report recommends that local authorities should be able to retain the money recouped to fund further work to raise standards.

However, despite the report’s extensive recommendations, the Government have taken a step back and simply published what they describe as a “discussion paper” which they make clear

“does not recommend any policy or legal changes” at all to address the issues that have been raised about the sector.

While the Government’s consultation on standards in the sector is welcome, it comes almost four years into the Parliament and as a direct result of pressure from the Select Committee, campaigning organisations and the work of many of my colleagues on this side of the House. It does not make up for up for their failure to tackle this growing problem sooner.

The same applies to the Government’s attitude towards the licensing of landlords. At the moment, local authorities do not even know how many landlords are in their area or how to contact them. We want to help local authorities identify those bad landlords whose housing is not up to scratch and who break the law. That is why we have proposed a national register of landlords, but we have been clear that our aim is to empower and enable local councils to have tools to achieve that locally. The Select Committee’s report recommends giving local authorities the flexibility to license in their local area and to require landlords to be part of a regulatory scheme. The report proposes lots of different ways of doing that, but the important point is that local authorities need the powers. We want to ensure that if a local authority knows that poor standards are a significant problem in its area, it has the proper powers to deal with them.

Labour-run Newham council became the first council in the country to introduce a borough-wide mandatory licensing scheme for all landlords in June 2012, and it is seeking to prosecute 134 landlords for breaches under the initiative. Despite its success, many local authorities have told us there is too much bureaucracy and red tape in their way if they want to step in and introduce licensing schemes. Similarly, the Local Government Association believes:

“Councils should have greater local discretion on the qualifying criteria and the amount of evidence provided for local licensing schemes”.

Yet the Government appear insistent in continuing their lack of action on this matter, stating in their response to the Select Committee report that there are already tools available to local councils and ignoring the Select Committee’s valuable recommendations. Indeed, they are ignoring a great deal of the evidence from local authorities and others on this issue that was presented in detail to the Committee.

The same is true when it comes to the issue of houses in multiple occupation. As was suggested by the former housing Minister, Mr Prisk, this is a particularly thorny issue. The report considers HMOs in some detail, with paragraph 63 on page 26 considering article 4 directions. I know that the Committee received some evidence that article 4 directions could be used to limit the number of HMOs in a particular area, but I am not sure that article 4s are the right approach or the right tool for this purpose. Many local authorities tell us that they are a clumsy way of trying to control HMOs and that there should be an easier way for councils to regulate HMOs in their area. So we want to make it easier for local authorities to address local problems more simply and directly.

Similarly, we also want to make is easier for local authorities to deal with letting agents. According to estimates, some 4,000 managing and letting agents are entirely unregulated, in that they do not even belong to voluntary bodies that encourage a responsible approach to letting and management practice. It is a peculiarity of current policy that while estate agents, who hold very little money on behalf of their clients, are regulated, letting agents, who hold significant sums on behalf of landlords and tenants, are not. Good letting agents have a worthwhile role in providing professional input and support, but too often tenants and landlords alike are ripped off by unscrupulous letting agents. We have said we will regulate letting and management agents, and bring an end to rip-off fees. The Government’s moves to require letting agents to be part of an approved redress scheme are welcome, but their action comes only after prominent campaigning by Labour and, in particular, by my colleague in the other place Baroness Hayter. We think that without her efforts the Government would not move on this issue.

Another major issue identified in the Committee’s report is that of tenancies and rents. The report clearly says of the sector:

“No longer can it be seen as a tenure mainly for those looking for short-term, flexible forms of housing”.

We want to encourage the Government to take stronger action on introducing longer-term tenancies.

My hon. Friend Alex Cunningham raised a number of points related to addressing affordability and supply issues right across the country. My right hon. Friend Frank Dobson and my hon. Friend Jeremy Corbyn drew our attention to the particular issues of affordability and supply in London. The Select Committee did not focus in this report on supply issues, but it did in an earlier report on the financing of housing supply.

In conclusion, the Government need to look seriously at raising the supply of housing in the private rented sector. In doing so, they must ensure that we get not only additional supply but supply that is of good quality and at a reasonable rent. I look forward to hearing what the Minister has to say about how he will achieve that.

Photo of Kris Hopkins Kris Hopkins The Parliamentary Under-Secretary of State for Communities and Local Government 6:50 pm, 4th March 2014

I am grateful to Mr Betts and to the Communities and Local Government Committee for securing this debate. I welcome this opportunity for the Government to set out what they are doing in relation to private rented supply. I agree with Roberta Blackman-Woods that this has been an extremely interesting debate. The content was thoughtful and the tone, right across the House, was completely appropriate. I know that members of the Committee have spent a long time deliberating on the issue.

We are pleased that the Select Committee produced this thoughtful and well-balanced report following its inquiry, and we agree with a considerable number of the recommendations. I am aware that there was a slight hint from some Members that we did not appreciate the work of the Committee, but let me say that I did appreciate the content of the report. I know that the Committee spent a long time taking evidence, and thinking about the report before reaching its conclusion.

The Government recognise that the private rented sector is playing an increasingly important role in the housing market. There are now just short of 4 million households out there, accommodating some 8.5 million individuals. Moreover, there is, increasingly, a diverse range of people living in the sector.

Overall, the sector is performing well. As the hon. Member for Sheffield South East said, it is the one part of the market that grew even in the darkest times of the recession. Supply is now beginning to respond to the growth in demand. I recognise that many of the actions that I will talk about later on specifically relate to the Government’s intervention in increasing that supply.

Rents are increasing more slowly than inflation. Let me say to the hon. Member for Islington North that I live on this planet, and that I cited a figure of 1.6%, not 1.4%. I recognise that the figures across London are higher, but overall, the Office for National Statistics is confident that the figure is 1.6%. Across the whole of England, the figure is 1%, which is significantly below inflation at this moment in time.

Overall, the quality of private rented sector accommodation is improving and satisfaction levels are high. In fact, 83% of the people who live in the PRS say that the accommodation is good. The vast majority of people—some 80%—move from their own choice; some 10% move by agreement with their landlord and some 9% by the landlord’s activities or actions.

We recognise that there are challenges that we need to address. For example, a lack of supply has led to a problem of affordability and a limited choice as a consequence, especially in hot spots around parts of London. The lack of professional landlords and the need to improve management practices in some parts of the sector are important. Legislation is in place—there is the Housing Act 2004—and we are taking action in certain areas. There is a need to change the balance. At the moment, some 78% of landlords are individuals who own one place, which they rent. We need to change that balance in favour of larger-scale providers.

Tackling rogue landlords is an extremely important part of our work. I recognise the enormous amount that local councils do, and the Government have allocated £6.5 million to addressing beds in sheds and poor-quality provision by enabling individuals to carry out not only raids and inspections but, importantly, prosecutions. There is growing demand for longer tenancies, especially among people with families, and we want to support them.

The Government want a bigger and better PRS, which is why we want to make private renting more positive. Although we have heard negative comments in the debate, private renting is an extremely important part of the housing sector. As we heard, the PRS is now bigger than the social sector, so it is important that politicians, practitioners and professionals challenge the behaviour of the small minority of individuals who, owing to the poor-quality provision that their tenants receive, undermine not only the sector, but other people’s businesses.

Through the schemes that we have introduced, we are trying to bring new entrants into the sector and to attract more institutional investment. We want to drive forward more larger-scale, professionally managed, high-quality and well-designed accommodation. We want to stimulate the construction of more housing. We want to empower and inform tenants by driving up standards and promoting choice. We want to increase the effectiveness of existing regulation, but when supplementary regulation is needed, we should act judiciously so that we neither deter investment nor add costs, thus putting pressure on rents. While we want to crack down on rogue landlords, we do not want to put extra burdens on ordinary landlords who are providing a decent service.

The Government have put forward the £1 billion Build to Rent fund. Round 1 was over-subscribed, and three contracts have been signed, while further ones are going through due diligence. Round 2, on which an announcement will be made soon, was significantly over-subscribed, with 126 applications worth £2.8 billion being received for a fund of only £721 million. Our guarantee scheme, which is worth £3.5 billion, will also secure new building in the sector. We want to introduce a redress scheme, a tenants charter and a model tenancy, as well as to crack down on the landlords I have mentioned.

I want to talk about Members’ contributions, and I must start with that of Mike Kane. It is a convention in the House that one is gracious and welcoming to a new Member, regardless of our politics, and despite the fact that he is from Lancashire, I intend to comply with that protocol. He made a great speech. When I made my maiden speech only a few years ago, I was absolutely terrified, but he made a thoughtful speech and it was completely appropriate that he paid tribute to one of our former colleagues, Paul Goggins, who is greatly missed by Members on both sides of the House. I wish the hon. Gentleman a successful time representing the people of Wythenshawe and Sale East.

We heard thoughtful contributions from Members on both sides of the House, and the hon. Member for Sheffield South East covered many points. I want to maintain a positive relationship with the Communities and Local Government Committee. I served on the Northern Ireland Affairs Committee, so I know the immense work that a Committee does during its deliberations. The vast majority of the time, regardless of party, members of a Committee come together to discuss the issues thoughtfully, which is completely appropriate.

This Government are absolutely committed to making sure that the private rented sector grows bigger and better—

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chairman of Ways and Means, Chair, Panel of Chairs 7:00 pm, 4th March 2014

Order. This is where Lancashire overrules Yorkshire.

Debate interrupted, and Question deferred (Standing Order No. 54(4)).

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chairman of Ways and Means, Chair, Panel of Chairs

Under the Standing Order, I am now required to put the Questions necessary to dispose of proceedings on the estimates set down for consideration this day.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

On a point of order, Mr Deputy Speaker. On the Serious Fraud Office supplementary estimate, which comes later, with the Justice Committee report, the agreed redactions and the Tchenguiz interests featuring in the Office of Fair Trading report on abuses of leaseholders, overvaluations of freeholds and the sale of managers’ flats, could the Question on motion No. 21 be put separately for approval?