I beg to move,
That this House
recognises the private rented sector’s growing role in meeting housing need;
notes that there are nine million people, including more than one million families with more than two million children, now renting privately;
notes with concern the lack of stability and certainty that the sector provides to those who rent privately;
further notes the increasing cost of renting and the unreasonable letting agent fees levied on tenants;
calls on the Government to bring forward legislative proposals to reform the sector by banning letting agent fees being charged to tenants and making three year tenancies the standard for those who rent their homes in the private sector;
and further calls on the Government to act on unpredictable rent rises by prohibiting excessive rent rises during longer-term tenancies.
The Opposition have called this debate because we believe that the private rented sector is simply not fit for purpose—in fact, it is more suited to the 1980s than the 21st century. The sector has grown massively in size, and is beyond recognition in terms of the demographics and character of those renting from private landlords. Some 9 million people now rent privately—more than those who rent a social home. More than a third of those who rent privately are families with children, and nearly half are over 35.
Many people who are renting privately do so not out of choice but because they cannot get on the housing ladder and are being priced out, or because they cannot secure a social home. Private renting is not a cheap alternative—far from it. In fact, it is the most expensive type of tenure. On average, people renting privately spend 41% of their income on housing, compared with 30% in the social rented sector and 19% for owner-occupiers, but that extra expense is not buying greater stability or higher standards. In fact, those who rent privately are more likely to live in a non-decent home than in any other tenure. We have one of the most short-term, insecure and unstable private rented sectors in Europe.
The hon. Lady is right to highlight the problems with the private rented sector. I presume she is aware that I tabled a private Member’s Bill on this subject last year. Does she support its contents, and can we work together to make some progress on it? Many people across the House share these concerns.
There is cross-party concern on this issue, but the question is whether the Government are willing and able to take action; I am afraid that up until now they have not been.
Is my hon. Friend aware that the issues in the private rented sector are a particular problem in London, where renters are the victims of an increasingly dysfunctional housing market and spiralling house prices and rents?
My hon. Friend pre-empts a point I was about to make. She is absolutely right that the private rented sector is particularly problematic in high-demand areas, not only in London, but in Oxford, York and other parts of the country where demand is far outstripping supply, which is one of the reasons rents are so exorbitant.
I appreciate the hon. Lady’s point, but she did not mention—inadvertently, I know—Northern Ireland, which, as I am sure she knows, particularly suffers from a lack of supply in the private rented sector.
I thank the hon. Gentleman for reminding me of that fact.
The status quo in the private rented sector is good for neither landlords nor tenants—both parties need and deserve greater stability—but the Government do not have to travel to Venezuela or Vietnam to find a more stable, just and equitable private rented sector: 10 years ago, Ireland introduced four-year tenancies, with a ceiling on rent increases linked to average market rents. As set out in the motion, our reforms would give greater stability and peace of mind to the 9 million people renting in the private rented sector.
Will the hon. Lady accept that in 13 years the last Labour Government built fewer council houses than even the Thatcher Government? One of the reasons for the housing crisis, including in the private rented sector, is that the last Labour Government did not build council houses; the coalition Government are starting to build them.
I will take our record over the Government’s record any time. We built 2 million houses in government, 500,000 of which were affordable, and I am really proud of the decent homes programme, which transformed the council housing stock in our country, which was left in a shocking state at the end of the ’90s.
I want to make a bit of progress, as I know that several hon. Members want to speak in this debate, but I will give way shortly.
I shall set out the three proposals in our motion. First, we would legislate for longer-term tenancies; secondly, we would act on unpredictable rent rises; and thirdly, we would ban letting agent fees on tenants. On the first element, our motion calls on the Government to legislate to make three-year tenancies the norm. Under our proposals, tenants would have a six-month probationary period, and as long as they respected the property and paid their rent on time, they would then have the stability of the rest of that three-year period. Of course, we would build in protections for landlords—that is obviously essential—but crucially it would provide much-needed stability for private renting tenants.
Security of tenure is crucial. Under the coalition Government, which Sir Bob Russell supports, councils are discharging their responsibilities into the private rented sector, and tenants are regularly being evicted only because they are reliant on housing benefit and because rents are so high—in my constituency, it costs £770 a week for a three-bedroom flat—and according to the Under-Secretary of State for Communities and Local Government, Kris Hopkins, who has responsibility for housing, the fact that they are on benefits is a good reason to evict them.
The housing Minister’s comments were absolutely appalling, and it is a shame he is not here so that we can debate them with him. It simply is not acceptable for a private landlord to evict somebody just because they are on benefits, which is why we are proposing to get rid of no-fault eviction.
The hon. Gentleman raises a key point—in fact, he has pre-empted the very next section of my speech. He is absolutely right that there would still be students and people working in different parts of the country who would want more flexibility. Our proposals do not exclude that; they include it. Essentially, however, our main message today is that whereas 20 years ago students and people moving around the country were the main groups renting privately, there is now an increasing number of people who are settling in the private sector—they can be individuals, couples or families with children. We think that the current set-up does not cater for that growing group of people within the private rented sector.
I absolutely follow the logic of what the hon. Lady is saying, so I put it to her that, following that logic still further, why have the official Opposition not adopted the position of Shelter and others that are looking for a five-year minimum tenancy along those lines?
We are calling for a three-year tenancy. We think that we need to change the culture of short-termism that has developed around the private rented sector. We certainly draw a lot of inspiration from the excellent work done by Shelter, and many of its proposals are a feature of our proposals.
I draw Members’ attention to my entry in the Register of Members’ Financial Interests. Does my hon. Friend agree that we need to encourage longer-term landlords, such as the former owners of the New Era estate in Hoxton, which has just been sold on? Tenants there are facing huge rent increases. Many people have lived there for over 20 years and felt that they had security, but that is no longer so certain. Does my hon. Friend thus agree that the long-term tenancies are important?
Absolutely, which is why we would legislate for long-term tenancies. We simply do not agree with the Government that a voluntary approach is appropriate. Longer-term tenancies are simply not coming about, so the people my hon. Friend talks about face great insecurity.
I worked in the real estate sector for 20 years. I accept that the hon. Lady is sincere in her desire for long-term tenancies, but the way to achieve that is to bring institutional investment into housing. The last time we regulated rents to regulated tenancies, it destroyed the sector, and investment went from residential into commercial property.
I agree with the hon. Gentleman’s first point, and Sir Michael Lyons and his housing commission are looking into that. We absolutely need institutional investment in the private rented sector— I agree on that point—but what we are suggesting, as I shall explain in more detail in my speech, is not to go back to 1970s rent control. In fact, what we are suggesting is not that different from what the Secretary of State suggested back in October, which was to have predictability in respect of rent increases. That is not to say that the market should not set the rent up-front—the agreement on rent would obviously happen between the tenant and the landlord at the start of the tenancy—but at the end of years one and two, there would be an agreement—a benchmark and a ceiling—which is what happens in countries such as Ireland, Spain and elsewhere. That actually looks pretty similar to the press release put out by the Secretary of State in October, and we do not think that that would have a negative impact on supply.
Let me make some progress; otherwise, I will be crowding out others who want to speak.
There are now 2 million children living in the private rented sector. Private tenants are nine times more likely to move than those in any other tenure. Research done by an academic, Christopher Arnold, in the black country, which, as the Minister will know, is a part of the country close to my heart, suggests that one of the main drivers of children becoming NEETs—not in education, employment or training—later in life is frequently to do with moving from house to house and from school to school during childhood. We really need greater stability for families with children.
It makes absolute sense—I hope that all Members will see this—for the default tenancy to be longer than the six to 12-month assured shorthold tenancy that is now the norm. Our proposal today is so difficult to argue against that many Government Members seem to have embraced the idea—well, apart from the Conservative party chairman. On hearing our proposals, his first reaction was, regrettably, to say that these proposals were “Venezuelan-style rent controls”. It seems that Grant Shapps had not spoken to his right hon. Friend the Secretary of State, who states clearly on his website that plans for longer-term tenancies
“will also give tenants the know-how to demand longer-term tenancies that cut costs and meet their needs”.
Was the Conservative party chairman suggesting that his right hon. Friend the Secretary of State had gone all the way to Venezuela to draw inspiration for the Government’s private rented sector proposals, or was he comparing his right hon. Friend to Hugo Chávez? Alternatively, the Secretary of State may have gone all the way to Venezuela to observe its bin collection regime, but perhaps that is an issue for another day.
I can only assume that, having examined our proposals in more depth, the Government realised that they were pretty similar to what they themselves had proposed, although we have also suggested that there should be legislation to back it up.
I think that longer-term tenancies are a great idea, but would it not be an even better idea to make that voluntary and allow the private sector to embrace it, thus keeping the supply of housing in the rented sector? Would that not be better than using legislation?
It may sound like a terrific idea when the hon. Gentleman voices it in the House, but it clearly is not working. Most of the 9 million people who are renting in the private sector—including the 2 million children who are members of the families who rent—face insecurity year in, year out, not knowing whether their children will stay in the same school, or whether they will be in the same local authority area.
I was talking about Government Members. Let me complete the hat trick. During the week in which we presented our proposals, the Minister for Skills and Enterprise, Matthew Hancock, said on the BBC’s “Daily Politics”:
“On the rents issue, we put forward that policy at our conference last year”.
Is it not interesting that there seems to be such agreement across the House on this matter? Writing in The Spectator, Jake Berry, the Government’s housing adviser, called not for three-year tenancies, but for six-year tenancies. He said that the private rented sector was not fit for purpose, and was
“blocking aspiration and isolating families”.
My hon. Friend has articulated very well what Labour Members feel about a Government who are quick to criticise our proposals without doing anything themselves. Does she share my concern about the fact that, although the Government announced last October that a model tenancy agreement would be published, we are still waiting for it nine months on?
Indeed. I have before me a press release from the Secretary of State, which contains plenty of warm words but no action.
Let me explain further the second element of our proposals, to which there has been an hysterical reaction from, in particular, the Conservative party. I must make it clear, in order to avoid any more ridiculous misinterpretation, that the Labour party is not proposing a return to 1970s rent control. We are proposing that landlords and tenants should agree and set initial rents based on market value, and should conduct rent reviews no more often than once a year.
As Ministers will know, there are different housing markets in different parts of the country. In areas of lower demand there is not a great deal of pressure on rents, but in areas of high demand, real problems are caused by excessive rent increases. We propose that there should be an upper ceiling on any rent increases. That works well in Ireland, Spain and other parts of the world.
I congratulate the Opposition on raising an issue in which every Member of Parliament has an interest. In my constituency, demand greatly outstrips supply, which is leading to housing problems and problems with the allocation of housing benefit. Does the hon. Lady share my concern, and that of many people outside the House, about the fact that rent arrears are causing financial difficulties and evictions? Is it not time for us to address this issue before it becomes too difficult to do anything?
There are problems with rent arrears, notably in the social housing sector. Many people are, for the first time in their lives, finding it difficult to pay their rent and finding themselves in arrears because of the Government’s callous bedroom tax.
Our reforms will be good for tenants, but they will also be good for landlords, and it will be essential for us to provide the right safeguards for them. The vast majority of landlords in England are small landlords with one or two properties, and they regard their extra house as a pension pot. They are interested in the increase in the value of their property over time, and in finding good tenants who pay their rent on time and treat the house like a home. We want to work with landlords to ensure that we get the balance right, but we also feel that tenants deserve extra protection and longer-term tenancies.
I am going to make a bit of progress, because many Members on both sides of the House rightly take an interest in this issue. I will stop talking about the Secretary of State, because he seems to be becoming slightly annoyed about it.
Let me finally deal with the third element of our proposals. We will ban the charging of letting agents’ fees to tenants. Too many letting agents charge extortionate fees every time there is a change of tenancy.
In a minute.
Often both landlord and tenant are charged for exactly the same service, which is otherwise known as double charging. I am afraid that it is not just a matter of a few rogue letting agents; it has become widespread bad practice throughout the industry. Mystery shopping conducted for the Labour party established that some tenants were being charged up to £450, and Shelter found that some were being charged as much as £700.
In a minute.
Those fees have included the charging of hidden sums for inventories, references, check-outs and renewals, in addition to the large amounts of money that people must find for the payment of rent up front and deposits. One in four people must borrow money in order to pay the fees and obtain a home.
In a minute, if the hon. Gentleman will be patient.
When a first-time buyer buys a property, that buyer does not pay the estate agent. The seller pays the estate agent, because the estate agent is working for the seller, in much the same way as the letting agent is working for the landlord. If first-time buyers do not pay to obtain the keys to their first homes, why should tenants have to pay £450, £700 or more in order to obtain the keys to theirs, when they are having to pay rent and a deposit?
I understand what the hon. Lady is saying about the need for transparency in regard to letting agents’ fees, but some commentators have pointed out that one of the unintended consequences of her policy would be an increase in rents. In Scotland, which has introduced the policy, rents have risen by a greater proportion than in any other regional country in the United Kingdom. What does the hon. Lady make of that?
I simply do not agree with the hon. Gentleman. According to Shelter, which conducted a survey of letting agents throughout Scotland, there is no evidence—[Interruption.] I allowed the hon. Gentleman to intervene; perhaps he will have the politeness to listen. The survey by Shelter established that, since 2012, landlords in Scotland were no more likely to increase rents than landlords elsewhere in the United Kingdom.
What the hon. Gentleman and other Government Members must ask themselves is this: is it reasonable for letting agents to charge whatever they want to charge? For that is exactly what is happening. Is it reasonable for a letting agent to charge £300, £400 or £500 for inventories, references, and all the other things that the landlord needs, because the letting agent is working for the landlord? And guess what? The landlord is paying a percentage—usually 8% or 10%—in order to pay management costs to the letting agent. It is not as if the letting agent is not getting any money out of the transaction.
We are merely suggesting that, given that the tenant does not shop around for a letting agent—the tenant shops around for a property—the tenant should not have to pay the fees. If Government Members want to set their faces against Generation Rent, let them go ahead and see what the electoral consequences are.
I think that we all share the ambition to get rid of shoddy practice, but what will Labour’s proposals do to prevent landlords from raising the rent? There is nothing there.
I have explained very clearly. I am sorry that the hon. Gentleman did not listen. We will put a ceiling on rent increases during the three-year tenancies, at the end of year one and at the end of year two. In Ireland there is a ceiling on rent increases during its four-year tenancies, and there is also a ceiling in Spain. We will consult industry representatives in order to reach agreement on what the best ceiling would be, but Ireland—[Interruption.] Members should listen. Ireland uses the average market rent, which seems perfectly reasonable, and Spain uses a measure of inflation that takes housing costs into account.
We can have a sensible debate, but all I say to the hon. Gentleman, who is a former Housing Minister, and other Government Members is, why should not families have stability and security for three or four years to plan the lives of their children? Why should they face the insecurity of their rents going up excessively and their having to change area and school? Such insecurity is having a massive impact on the aspirations and life chances of children in that situation.
My hon. Friend is right to focus on unfair letting agent fees. Is she aware of the study by citizens advice bureaux that showed that 73% of private tenants are dissatisfied with the service they receive from their agents?
I have seen that report. Citizens advice bureaux are not the only ones making that point—the Office of Fair Trading has said that there is a substantial level of complaints about the letting agent industry. I say to the Government: ensuring transparency is not enough. If I am a tenant, knowing that I am going to be ripped off by £400 or £500 will not make it any easier, or any cheaper.
I am pleased that my friend has moved on to the administration of the agencies. Is she concerned that there is some suggestion by “Panorama” and others of racial profiling of tenants by some agencies and that many agencies refuse to even accept an application from anyone who is on benefit, which completely discriminates against people who need to be rehoused urgently?
Such practice is criminal and should not be happening. At the tail end of last year, I saw reports, following some mystery shopping, that letting agents were sometimes instructed by landlords not to take on people from the black and minority ethnic communities and that letting agents were sometimes doing that themselves. That is appalling, and I am sure that there is cross-party agreement on the issue. Such practice is already criminal. This is a matter of enforcement. The law is already in place, which should stop that; but unfortunately, it seems to be happening in the capital.
Will my hon. Friend look at the condition of the private rented sector? Double the number of private rented sector properties are unfit compared with housing association properties. When tenants complain, they are often evicted and thrown out on to the streets.
Absolutely. That is why we proposed—I regret that the Government got rid of the legislation within weeks of getting into office—a national register of landlords and greater powers and flexibility for local authorities in areas where that is a particular issue. In London and other areas of high demand, it is a big issue. Those local authorities should have greater powers to introduce licensing schemes.
Order. I am not talking about anything. I think that the hon. Gentleman is referring to the hon. Lady.
The hon. Gentleman raises a valid point. According to research by Shelter, which has conducted a thorough piece of work on the issue, only one landlord in 120 that it surveyed said that they had noticed an increase in agency fees and had passed that on in full to their tenants. Therefore, to be frank, the change we are suggesting is not that big. It is pretty big news for tenants, but it will not make a massive difference to the letting agent industry. It will have to change its business model slightly, but what it has done, especially in the years of the global financial crash, is shift ever so slightly, often little by little, the costs of the tenancy on to the tenant, who does not have the power and leverage to negotiate with the letting agent. The tenant sees a property that they like. They do not choose the letting agent. They do not have leverage over the negotiations.
The landlord has that leverage, and the landlord should do the deal with the letting agent on the fees, including on the fee that the landlord pays the letting agent to manage the property.
I will not, as I have already given way to the hon. Gentleman and others want to speak.
The sad truth is that Ministers and some Government Back Benchers know that there is great concern about the instability and insecurity in the private rented sector, but they are simply unwilling to do anything about it. They have paid lip service to the concerns of generation rent, but they lack the courage of their convictions to bring about any meaningful change.
The Government have claimed that they are in favour of long-term tenancies and predictable rents. As I said, the Secretary of State has talked about inflation-linked rent rises, but four years into this Parliament, they have failed to act. I urge right hon. and hon. Members on the Government Benches to look carefully at our proposals to make three-year tenancies the norm, to put a ceiling on rent increases and to ban letting agent fees charged to tenants. It would be far better for the Government to take action now, but if they continue to ignore generation rent, the next Labour Government will not.
My hon. Friend wants to end her speech, but I wonder whether she would be surprised to know that there will be a debate this afternoon in the Scottish Parliament on a similar subject. The Scottish National party-run Government are taking the same line as the coalition Government here and are resisting the motion proposed by my colleagues in Scotland, which is very similar to that which my hon. Friend has tabled.
It is regrettable that the Scottish Government do not see the value of longer-term tenancies, predictability, stability and peace of mind for the millions of people renting in the private sector.
The Minister is an assiduous Member and a very eloquent one, but he has a tendency to lecture us on everything being our fault, despite the fact that he is the one in government. Therefore, in a spirit of co-operation and friendly advice, if he supports our proposals, he will have our support—it is a generous offer. I hope that he will have the 9 million people renting from private landlords in mind when he speaks. I also hope that he can engage with our proposals, which are reasonable and sensible. They are serious proposals for a vastly improved and more secure private rented sector. In that spirit, I commend the motion to the House.
It is a great pleasure to find myself doing combat with Emma Reynolds. I hope that you will forgive, Mr Speaker, a brief further reference to “Game of Thrones” but I now know what the hound must have felt like when he faced Brienne of Tarth. I suspect that not everyone in the
House will get that reference, but I recommend that Members look it up. It is intensely flattering to the hon. Lady. I feel sure that the Under-Secretary of State for Communities and Local Government, my hon. Friend Kris Hopkins, who is the Housing Minister, as a distinguished former soldier, would have been better equipped to fend off her attacks, but he is speaking at the Chartered Institute of Housing in Manchester. I know that he would like to be here.
The Leader of the Opposition’s motion follows a pattern that is becoming wearily familiar to hon. Members. I find myself wondering whether it is even becoming a little trying for you, Mr Speaker, although I am sure that you would never let it show. The pattern unfolds like this. The Opposition begin by identifying some real problems affecting people in the communities we all represent. Every Member knows from their constituency surgeries that irresponsible landlords and rapacious letting agents do exist. Every Member wants to deal with them. The Labour party then proceeds to slander an entire industry by claiming that the problems it has identified are an almost universal experience and that irresponsible and rapacious behaviour is typical business practice. After years of policy commissions and conference debates in which Labour Members worked themselves up into a righteous lather denouncing the horrors of capitalism, they then disinter a mouldy old policy from the 1970s, spray a bit of shiny new paint over it and present it as a solution to all the ills of the modern market economy. We have seen them follow that script in relation to energy bills.
I will give way in a moment.
Now Labour Members are trotting it out for rental housing. It is difficult to say in which area their approach is more flawed.
This is not a throwback to an old era of problems; it is going back to an old era where there was security for tenants. Leaving aside the proposal of my hon. Friend Emma Reynolds, what are the Government doing to encourage long-term landlords who provide homes that are just for letting, not for future sale, so tenants can have a long-term future and have the security that my hon. Friend is talking about?
In that old era, the amount of rental property in the country had fallen to 8%. It is now up at 18% because there has been investment in the sector; it is an environment in which people want to put their money.
Government Members recognise that there are some cowboys operating in the private rental sector. Some landlords are trigger-happy in terminating tenancies, using any excuse to turf out a responsible tenant who has just had the temerity to complain about some aspect of the property. Some letting agents and property management companies are greedy, gouging hard-pressed tenants for disproportionate fees without prior notice. That is why we are making letting agents publish all their fees in a prominent place and join an approved redress scheme, so that tenants can get a fair hearing and proper compensation. It is why we are developing a model tenancy agreement that landlords and tenants can use if they want to enter into a longer tenancy agreement.
Our approach in government, unlike that of the last Government, is to consult with the industry and with tenants before we produce things. Therefore, I am happy to tell the hon. Lady that some time this summer she will see this model tenancy agreement. That is also why we have published the well-received “How to rent” guide that will empower would-be tenants and why we are developing a code of practice to drive up standards in the industry.
I am grateful for that intervention because I entirely share the hon. Gentleman’s outrage at the suggestion that these practices are taking place. As Emma Reynolds said, there are already powers to deal with that, but it is important that they are used and enforced, and I hope very much that local authorities and police forces around the country will look closely at any evidence presented to them by “Panorama” or anyone else.
The hon. Lady will understand that obviously private owners of properties have some rights to decide who they let their property to, but I feel that it would be very strongly in the interests of all private landlords to work closely with people who are in receipt of local housing allowance and ensure that they too can access properties in the private market.
We will do nothing to undermine confidence in the long-term prospects of the rental market and drive away the institutional investors we need to expand the number of rental properties and improve their quality, but that would be the precise effect of the rent controls that the Leader of the Opposition proposes.
I hope hon. Members will forgive a brief foray into basic micro-economics, but I do think it is important in this debate. Owners of properties have a choice: they can either sell them and invest the money elsewhere, or rent them out. The more institutions we can persuade to invest in owning and renting property, the more options will be available to would-be tenants and the more likely it is that those who want longer tenancies with predictable rent reviews will be able to find landlords who are willing to offer them.
If, however, investors in rental property think that their costs may increase while their rents are capped, they will do one of two things: they will either insist on a much higher rent up front, increasing the costs tenants face, or they will decide to sell the property into today’s buoyant housing market and invest the money elsewhere. The hon. Member for Wolverhampton North East is a highly intelligent woman and a much better economist than I am. She knows that this is the reality of the rental market, so why has she come to the House today with such an obviously idiotic policy? There are reasons.
Does the Minister not recognise that this growth in the number of individual landlords investing in the way that he has just described is one of the reasons why tenants have such insecurity? What are the Government doing—he is in government now—to encourage longer-term institutional investors to invest in properties that are solely for rent long term, so that tenants can get longer-term security?
I am grateful to the hon. Lady for her intervention, as it is what I think is known as a soft ball, because this Government have of course done a great deal more than previous Governments to pull institutional investment into this sector. We have already identified in excess of £10 billion of equity that people are looking to invest in this sector. We have a £1 billion Build to Rent fund. We have £3 billion of guarantees for the private rented sector. The precise point here is that we will have some chance of pulling institutional long-term investment into higher-quality rental property if such investors have confidence that the rules of that market are not going to suddenly change and they are not going to suddenly find themselves being faced with unpredictable costs and capped rents. That is how we get institutional investment in, and it is precisely the opposite of what the Labour party is proposing.
I am not saying anything as complicated as that. I am a bearer of a fairly simple brain, and I am simply saying that if someone cannot control their costs and is faced with capped or controlled revenues, that is a very risky environment and there are lots of other places where they can put their money, and we will see rental property returning to how it was until the housing legislation was changed: falling as a contributor to our economy.
The Minister said one of the factors that will give confidence to institutional investors is longer-term tenancies. However, the other issue, which he has not touched on at all, is of course reputational damage because of the difficult end of the rental market constantly receiving lots of very bad publicity. If he wishes to attract institutional investors, would it not be sensible to do more to deal with that reputational issue?
I agree with the hon. Gentleman in that, as in any industry, this industry will want to drive out the cowboys because they undermine the industry and people’s confidence in it, but we do not do that by imposing blanket controls that apply to both good providers and those few who upset the whole thing for everybody else.
Is the Minister’s problem not that he sees this entirely from the landlord’s point of view and does not see the power relationship here? The reality for tenants in my constituency is that they are paying a fortune, often for very substandard properties, and cannot complain because they might be evicted. Is not the game given away by the Minister’s colleague the Housing Minister telling landlords “Well, if somebody’s on benefit, just evict them.”? Does the Minister support that?
I do not accept anything that the hon. Gentleman says, but then I never do. The fact is that the interests of his constituents who are tenants are best served by having more investment coming in, to produce rental property of a higher quality supplied by professional companies that they then will be able to access.
We have to ask ourselves why the hon. Member for Wolverhampton North East has come to the House with this policy today. The first reason is that her boss, the Leader of the Opposition, wants to be seen as the man who will stand up to business and impose his will on the unruly forces of the market. He is not much interested in housing, and, lucky fellow that he is, it is a very long time since he needed to find a flat to rent, so he does not much care if the policy will work; he just wants a policy that will beef up his brand as the scourge of British business, and on that at least he has definitely succeeded.
The other reason lies deep in the DNA of the Labour movement. It is addicted to compulsion and control. From Douglas Jay, who thought that the gentleman in Whitehall knows best, to Nye Bevan, who wanted to know if a bedpan dropped in a ward in Tredegar, to Ed Miliband, who wants to decide how much rent should be charged on every property in the country in three years’ time, the instinct is the same: to make people do the things they want them do in the way they want them to do it. So they ignored the fact that, without Government intervention, average tenancy lengths have increased by 6% to reach an average of more than 21 months—without Government legislation. They block their ears to the majority of young people—still a very important group of tenants—who say that they value the flexibility of existing tenancies and do not want to be bound up in a three-year agreement. They draw a veil over the awkward truth that the Royal Institution of Chartered Surveyors, which the hon. Member for Wolverhampton North East claimed was helping her to devise a benchmark for her rent controls, is doing no such thing and opposes the policy.
Last year, the Communities and Local Government Committee, chaired by the ever-wise hon. Member for Sheffield South East (Mr Betts), who is unfortunately not with us today, conducted a review into the private rented sector. It concluded that it did not
“support rent control which would serve only to reduce investment in the sector at a time when it is most needed. We agree that the most effective way to make rents more affordable would be to increase supply, particularly in those areas where demand is highest.”
Perhaps the Chair of the Select Committee is not in the House today because he did not want to face the embarrassment of disagreeing so intensely with his own party’s Front Benchers. The approach that the Committee suggests is the right one.
It is the normal courtesy so to notify. A simple nod of the head will suffice if the Minister did notify the hon. Gentleman.
I entirely apologise—I did not know that that was the practice, and I should have. I assumed that the hon. Gentleman would be here because he is the Chair of the relevant Select Committee. I will write to him straight after the debate to apologise for having referred to him without warning him.
I bring to the House’s attention my declaration in the Register of Members’ Financial Interests. Is the Minister surprised that the Opposition’s motion makes no reference to the supply of housing, an increase in which would transform the market for all sectors—privately owned, social housing and private rented?
My hon. Friend is exactly right, and he brought that insight to the Select Committee review that led it to draw such intelligent conclusions. The Select Committee’s approach is the right one. It is the core of the Government’s strategy, and I would even go so far as to call it a central plank in our long-term economic plan. I therefore urge Members to oppose the motion.
Order. Colleagues will have noted that, on account of the level interest, there is an 8-minute limit on Back-Bench speeches.
We last debated private rents on
Friend agree that the resulting higher population churn causes real damage to the strength of our local communities?
I entirely agree with my hon. Friend.
Things generally have been getting worse, but there has been one enormous change for the better: the Labour party’s commitment to regulating rents and providing security of tenure in a way not proposed for a very long time. I am delighted to welcome this development, although personally I would go rather further. However, it is the right thing to do, it is popular, certainly with Londoners, and it is an approach that works.
We had the “less than GCSE” economics lecture a few minutes ago on the merits of encouraging investment in the private sector, and how it would be damaged by regulation. That ignores all the European evidence. Germany and Switzerland have a heavily regulated private sector, including rent regulation, and they have the highest proportion of people living in the private rented sector. They live, generally speaking, in rather good quality private sector flats and houses, certainly better than the average here. People in the Netherlands, where the first rent that anyone can charge is set, are better housed than most people in Britain. We simply cannot go on with the current situation—ruinously high rents—under this Lib Dem-Tory coalition.
Last year, the average weekly rent in London was 51% of average weekly pay. It is now 55%, which is clearly ruinous for tenants.
Does my right hon. Friend share my disappointment that the CityWest Homes letting arm of Westminster Council recently advertised an ex-council flat for sale at £650,000, but in doing so mentioned that it has just been let for £500 a week? Does he think that tells us everything that has gone wrong with the central London letting market?
My hon. Friend—my good, long-term and hon. Friend—makes an excellent point, as usual.
I recently picked up a brochure advertising new apartments to rent in Bloomsbury. A two-bedroom flat costs £560 a week. That is £26,880 a year. Who can afford that sort of rent? A Russian oligarch, I am sure—even perhaps a Ukrainian oligarch—and perhaps a banker who spends their time advising tax swindlers on how to avoid paying more tax by investing in Luxembourg; and here I do not mention Mr Juncker. However, nobody who is contributing to the local community can afford £26,000 a year—no shopkeeper; no bus driver; no teacher; no research scientist at the shortly to open Francis Crick Institute; no nurse. As I said in my last speech on this issue, no new consultant surgeon at Great Ormond Street hospital or University College hospital can afford that sort of rent. As a new consultant, they get, at most, about £80,000 a year. After taking off their tax and national insurance, that leaves £40,000 a year. So somebody on £40,000 a year would have to pay £26,000 a year for a two-bedroom flat.
It is a ludicrous situation that is bad for tenants, obviously. People come into London, or go to their local hospital, relying on Great Ormond street or University college hospital to get the finest treatment and care in the land, but the people providing it cannot afford to live near those great hospitals. The situation is intolerable.
But it is not just bad for the local community and tenants; it is ludicrously bad for taxpayers, because private sector landlords are getting a public subsidy from the taxpayer of between £9 billion and £10 billion every year—that is what is paid out in housing benefit. It does not stay in the handbags and wallets of the tenants; it goes to the landlords. The last time I checked, agriculture was getting a subsidy of only £6 billion a year, but apparently it is okay for the private rented sector to get a £9 billion a year subsidy.
The Mayor of London now says that when he wants an element of “social housing” in a new development, it will count as such if it is going to be asking up to 80% of market rents. Most people cannot afford to pay that, so his programme does nothing for badly off Londoners. What we need to do is build more homes—homes that ordinary people can afford. We have the ludicrous situation where people who are homeless and the responsibility of the local authority cannot be re-housed by the local authority, because it does not have enough flats and homes, and so it places them in the private sector, where they have no security of tenure and pay ludicrously high rents, which are being met largely by the taxpayer. No economic theory can possibly justify anything as daft as that. The worst thing someone can say about something these days is that it is daft, and that situation is extremely daft.
Clearly, we need to put more effort into getting new flats and houses built. I have a madcap scheme to create more land in London by decking over all the deep railway cuttings and either building housing on them or using them as green spaces in order to justify building higher-density housing next to them. That is the only way in which we will create more land in the area, and we need revolutionary ideas such as that. In the end, however, we have to get a grip on house prices and private rents. Unless we do that, we are ruining—
May I draw the House’s attention to my entry in the Register of Members’ Financial Interests?
Let me start by saying that I strongly believe in both a bigger and better private rented sector. As with the housing market as a whole, as we heard from Frank Dobson, we need more homes in this sector and more homes to rent. That means securing substantial private investment into the sector, for the long term. As the Select Committee found, increasing supply is good not only for the market as a whole, but for tenants, as it gives them, finally, the opportunity to choose and that helps us to make sure that bad and mediocre landlords raise their game. Therefore, the argument for increasing supply is not just an economic one; it is a social argument on behalf of the existing tenants in the marketplace. That is why the Government were right in taking on and fully implementing the findings of the Montague report.
Emma Reynolds asked what the Government were doing to get institutional investors in, so I should mention the £1 billion Build to Rent fund and the up to
£11 billion in housing guarantees. They are crucial, not just because they involve large sums, but because they are long-term commitments to a sector that needs them. May I say to my former colleagues on the Front Bench that we could speed up the due diligence process on the Build to Rent fund? I have raised the issue with Ministers before, but if we are to get these homes under construction, we might speed up that process. I am sure that the Minister replying to this debate will want to set out where the Homes and Communities Agency has got to on this, because I know he shares my ambition to get those homes under way.
The Labour party is in danger of cutting off the very investment it claims it wants. The hopeless muddle—I am being polite—around the announcements from its leader’s office on rents caused many investors real alarm. There are responsible long-term institutional investors who want to invest and provide the quality of home and the longer leases that the Labour party has rightly been calling for, but by muddling rent indexation with rent controls and by part of its leadership playing to the gallery, the Labour party has left a large question mark over its housing policy. If, heaven forfend, we were to find next May that we had a Labour Government, that party and its Front-Bench team—I think they know this, given their chuntering—would need to clear up the muddle or they simply would not get the necessary investment and therefore the necessary supply.
Labour’s policy for a national register of landlords is just a gimmick. As we have seen in Scotland, such a policy would have little, if any, impact on standards, but we would see a rise in rents. The Labour Government checked what a national register would cost: it would be £300 million. Who would pay it? Would it be the landlords? No, it would be the tenants.
Does the hon. Gentleman understand how long it takes local authorities, including his, to find out who a private landlord is and how much money would be saved by knowing who the landlord was through a register?
There is a case for registers in individual local authorities but, as the Select Committee agreed, a national register applied on a rigid basis is not the answer.
On standards in the sector as a whole, there is a case for a more professional rented sector. As several hon. Members have said, a minority of landlords and letting agents provide what is, at best, a shoddy service; in some cases, they flout the law and in others they have a wanton disregard for tenants’ safety. More can be done, and I encourage the Minister to focus on houses in multiple occupation. That subsector is the source of some of the worst practices, as hon. Members may know from their constituents, and often people on the lowest incomes and students are caught in it. We have legal powers in place to deal with this, but perhaps a little elbow grease from Ministers, a little Whitehall direction, and a little support and encouragement from local councils could make a real difference. Let me highlight one aspect of this issue. We need to look not just at the urban, larger HMOs in places such as Headingley in Leeds, but at some of the smaller HMOs—the two-storey houses. I am talking about the ones where, as I have discovered in the fens, HMOs are serving seasonal workers and are very often the source of dreadful practices and wider criminality.
On the letting agents issue, which the Opposition have flagged up in their motion, I am proud that it is this Government who are giving tenants proper powers of redress. The ombudsman scheme, backed by a clear code of practice, is long overdue and it will enable us to start to drive up standards of service. Let me remind the House that when in government the Labour party spoke against and voted against those redress measures for tenants. This House needs to remind not only itself but tenants whom we serve that that is where the Labour party stood for 13 years—it refused to support additional redress for tenants—and the party should be ashamed of that record.
Labour’s proposals on banning fees are well intentioned, because we have seen some dreadful practices, but the measures do not deal with the root cause of the practice among letting agents; what they would do is help to tackle one symptom. As questioning from my hon. Friend Nick de Bois highlighted, Labour’s proposals contain nothing to prevent agents from then charging the landlords instead, which will lead to higher rents. So, by the back door, a well-intentioned piece of legislation would lead to an unintended consequence that costs tenants more. It is a very familiar story with the Labour party. What we need is a sector-wide agreement, one that sets higher standards for the quality of the homes provided, the type of leases offered and the level of customer service that tenants can expect. That is the way forward. We want a comprehensive approach and not a quick fix.
We have a great opportunity to put in place permanently a genuine and stable private rented market. For too long, this House has tended to divide blue and red on the issue of tenure. It is, “Home ownership is perfect” or “Social housing is perfect.” We need to move on and recognise that we need more homes to rent, more subsidised homes to rent and more homes to own. Unless we focus on supply and play the game in terms of ensuring that the whole market works, we will fail. A modern economy needs a dynamic, open and competitive private rented sector, and it needs tenants who can rely on what is a professional standard. It should be a market in which the customer, and not the provider, leads.
We are, as a Government, making good progress. The policy direction is right, but I say to Members on both Front Benches that there is more that can be done.
Just before I bring in the next speaker, may I say that if a Member is declaring an interest in the subject, they should say what the relevant interest is rather than saying it just in passing? I say that to help Members in the future.
We have heard today about London, but, along with Brighton, Southampton is the rented homes capital of the south. Something like half of the homes in the city are rented. There are some 25,000 private rented properties in Southampton—about a quarter of all properties in the city—50% of which are homes in multiple occupation. Mr Prisk mentioned HMOs in his contribution a moment ago, but I have to say that the first thing this Government did when they came to power in 2010 was to remove the regulations that the previous Government had put in place. Those regulations would have enabled that sector to be better regulated and organised. I hope that the hon. Gentleman supports my call for those regulations to be restored as soon as possible to ensure better regulation of the HMO sector, certainly in Southampton and across the rest of the country.
Private rented properties in Southampton are in the province of landlords with not just one or two properties, but hundreds of properties across the city. In my constituency surgeries, I regularly hear about the problems that arise from the sheer size of this sector. Families might have taken out a lease on a house, settled their kids in local schools, raised the often substantial deposit and tried to settle down only to be turfed out unexpectedly at the end of a six-month lease period. It might not necessarily be in the first six months, but later when they thought they were secure in that property. What are they going to do? Where will they go? They cannot get instant council points to rent in the public sector. Do they rip their children out of the schools and start somewhere else? Will they even get back their deposit, which they have often borrowed, to allow them to start again?
Single renters also come to see me. They are often faced with poor quality rooms in those homes in multiple occupation. They have to deal with letting agencies that sometimes just rip them off, loading charges on them so that they can squeeze out more money at that vulnerable point when the person is trying to obtain a rental. I am talking about people with very little or no recourse to protect themselves.
Just as is the case nationally, the problems in Southampton come from a minority of landlords and letting agencies. Many landlords are first class and provide a secure and decent home for tenants, and many agencies really look after the people who come to them for lets. The point is that the nature of the rented market at the moment, couched as it is in insecurity and the possibility that rip-offs and unreasonable behaviour by landlords and agencies towards their tenants will generally go unchallenged, means that there is always the fear among renters that that will happen to them. Sometimes it does quite unexpectedly, and that is often when I see them at my constituency surgery. It is fair to say that there is widespread fear of the insecurity in the private rented sector in Southampton. It does not matter that it is only a minority of landlords and letting agencies that feed that fear.
We need to reform the rented market to provide greater clarity and security for those who rent. Renters need to know what they can expect in their letting and how they can live subsequent to a letting being achieved. I understand that Southampton’s housing statistics will not change, but we need to see a change in the way that renters gain and keep their tenancies. We want proper regulation of letting agencies and deposits and three-year security if needed, with flexibility for shorter lengths. That would make an incalculable difference to those people who live in the rented sector in Southampton.
Does my hon. Friend agree that one reason why it would be incalculable is that Southampton, like Slough, has very full schools, and for many parents, the anxiety of moving a long way away from their children’s school completely destroys their sense of security and their family life?
My hon. Friend could almost have been on my shoulder during my constituency surgeries. I have heard from parents who have been forced to move homes across the city and to take two or three children to different schools. Through no fault of their own, they face disruption to their lives, and it is absolutely corrosive to family life.
Let me explain why I am so disappointed today. Last October, the Department for Communities and Local Government said that it would support longer-term tenancies with predictable rents. It said:
“Tenants will be able to request longer tenancies that provide stability for their families, avoid hidden fees when renting a home and demand a fair deal from their landlords and letting agencies.”
I had thought that that was about changing the market for the better, but what we hear today is that there is a series of proposals in the pipeline that will simply persuade good landlords to be a little better and good letting agencies to be a little kinder. The proposals will make no difference to those agencies that are beyond the pale when it comes to voluntary arrangements or to those landlords who simply do not play by the rules, so business as usual will continue.
Renters in Southampton also need to know that their homes will be of a decent standard. They do not want to be faced with massive fuel bills or leaky, draughty homes. All too often in constituency surgeries, I hear about those who sign up for a lease and then find out that their room or their home is not remotely what they thought it would be. This is yet another area where the Government started down the road of good intention and then stopped. The Energy Act 2011—the last Energy Act but one—stipulated that all properties to be rented from 2018 onwards should be above code F and G, which would ensure that they could be let only if they were reasonably warm and secure. However, such a measure requires secondary legislation, and three years after that legislation was passed, no regulations have been laid.
I have it on good authority that the DCLG is blocking the laying of those regulations. As they have to be laid by the Department of Energy and Climate Change, DCLG is saying that it would be too bureaucratic and costly to implement the legislation. Recent research has shown that landlords across the country would have to spend only about £1,500 to update their properties to meet that standard. If that information is correct, it is shocking. There needs to be a basic understanding that if someone rents a home it will be of good quality, the tenant will be secure in it and the transaction between landlord and tenant will be a fair deal. All the cards are stacked against tenants, and regulation is needed to make sure that the deal is fair. If DCLG is preventing the implementation of legislation that could make sure that homes were of a decent standard, it should get its act together and reverse the decision. I should like to hear from the Minister this afternoon that that is indeed what the Department will do.
It is a pleasure to have the chance to speak in this debate and to follow Dr Whitehead. This is an important issue nationally and in my constituency. We have a huge number of people renting, and that is reflected across the country. For the first time there are more people in the private rented sector than the social rented sector, and there are still too many problems in the private rented sector. It is incredibly expensive, in many cases exploitative and in some cases unsafe.
Some people choose to rent because it suits their lifestyle, and that is something that we should allow and support. Others have to rent because they simply cannot find the deposit for a mortgage. The rented sector is now not much easier to get into than property ownership. I have been contacted during the debate by someone whose fees to rent a new, not particularly large, property come to £3,700 cash upfront. That is not atypical. It is a significant amount of money for many people to find. Many agencies also impose exit charges. I have also been contacted by people who face having to pay a large amount of money simply to leave a property. People can find themselves trapped in inappropriate or inappropriately priced facilities.
Many people have a fantastic experience with landlords. There are many decent landlords out there who behave correctly. The challenge is those who do not, and I welcome the focus that is being placed on that problem. I was delighted to be at the launch of the Generation Rent manifesto and have a chance to speak about how important this is to me and my party and to talk about some of our party policy proposals.
I introduced a private Member’s Bill in the previous parliamentary Session, which sadly went the way of most private Member’s Bills in this place. It dealt with many of the issues that we are talking about today such as the regulation of letting agents, accreditation of landlords, an ombudsman for the private sector, longer tenancies and getting rid of above-cost fees. There are disagreements about the details of how one could introduce such measures, but I hope that we can resolve them.
The heart of the problem is often just that rents are too high. The fees and everything else are a problem, but the overall level of rents is just too high, because demand is so much greater than supply. I see this in my constituency. The solution has to be to fix the supply—to make more housing available. Unfortunately, that has not happened. Everyone knows the figures. Under the previous Government, the amount of social housing went down by 421,000. We need those houses; we have to build many more. Hardly any council houses are being built, which is a huge problem.
Under the previous Government, council tenants were taxed and the money was taken away from Cambridge and could not be used to repair council houses or build anything new. The Liberal Democrat city council has worked to build many more houses. There has been a huge increase in the number of affordable homes and social homes, and existing council houses have been improved. There is also a scheme to build 2,000 more council houses—something I am incredibly proud of. Unfortunately, Labour took control of the city council at the most recent elections and one of its first acts was to scrap a scheme to improve council houses, many of which are not wheelchair accessible and not fit for purpose. I hope that it will not also scrap our scheme to build 2,000 council houses because people want to get on with that.
Like my hon. Friend’s, my constituency has a large number of privately rented homes. Does he share my disappointment that Leeds city council is not using its new powers to borrow to buy existing housing stock, which would be a much quicker way of delivering new social homes? Surely all councils should be considering that.
I do not claim to be an expert on the situation in Leeds, but my hon. Friend makes a good point. They should be doing such things. In Cambridge we charged higher council tax for empty properties instead of giving a discount, as was previously the case. People paid less if they brought a property back into use. It is hard for people who are desperately looking for a house to know that there are empty properties around.
I will not go through everything I spoke about in my speech on Second Reading of my private Member’s Bill. I went into more detail about the need for an ombudsman and for accreditation schemes. I prefer accreditation schemes to a national register because they would be cheaper, more effective and less bureaucratic and would avoid problems with letting property on a more occasional basis. We are agreed that we need a better system, and accreditation could work.
Dr Whitehead spoke about houses in multiple occupation. There are some good examples of HMOs, but others are a serious problem and do not comply with basic health and safety regulations. They are an essential part of the housing mix in a place like Cambridge. We rely on them to house people, and they do a good job. Yet Labour councillors have proposed to cap the number of HMOs and change the definition to any house with three people from two unrelated groups. Driving younger people out of HMOs would simply slash the supply and make it even harder to house people in my constituency.
Like me, the hon. Gentleman represents a university city with a great number of HMOs. Does he share my concern that the definition of HMO—that it has to have at least five rooms and more than three storeys—means that many properties are not licensed? The standards in many of them are very poor, and that is precisely why councils such as Nottingham City council have introduced additional licensing schemes that cover a wider range of HMOs than those covered by the basic legislation.
I am happy to accept that some places should be looked at more, and I am about to talk about some of the safety issues. The question is whether the council should introduce some sort of accreditation scheme, as Cambridge has, to make sure that HMOs are safe, or ban them. I hope that the hon. Lady would not suggest capping the number of HMOs in her constituency because she knows as well as I do the problems that that would cause for people looking for somewhere to live.
We have problems with safety in the private rented sector. There are far too many unsafe properties. In particular, we have problems with electric fires. There are about 17,000 electric fires in the private rented sector and it seems bizarre that there are no requirements for them to be safety checked. We should introduce such a requirement; it is not excessive red tape, it is a simple safety measure.
We want a fair deal for tenants. One group that we also need to consider is people who rent from private landlords and pay their rent using the local housing allowance. This was touched on earlier. There have been shocking cases of people being told that they cannot rent because they are on benefits. That simply should not be tolerated. We should not let landlords exclude a large number of people who need to find housing.
We have a particular problem in Cambridge. The local housing allowance was introduced by the previous Government with broad rental market areas. One of the problems was that the rent levels for Cambridge were set by averaging places as far afield as Haverhill and Littleport, which are both much further out and have lower rents. It became impossible for anyone to find anything to rent in Cambridge on the LHA amount. My predecessor fought strongly against this when it was set up. It was highlighted by the Work and Pensions Committee, which emphasised the specific problems in Cambridge and Blackpool. Those problems were not fixed. The message that the Labour Government sent to people in Cambridge on benefits was, “You can’t afford to live in Cambridge. Go somewhere else.” They made Cambridge unaffordable and increased rents in places such as Littleport and Haverhill. It was a poor scheme and I am pleased that the Government have finally, after much effort, launched an independent review of the adequacy of LHA levels and increased the levels in Cambridge by 4%—well above inflation. That is a start.
There is agreement across the House that we should make it easier for people to have longer tenancies. The stability is worth while. Some time ago in our policy paper, we in the Liberal Democrats proposed mini-leases, with new fixed-term leases of at least three years after a probationary period.
I am sorry; I have given way twice so I am running short of time.
I hope we can go forward and find alternatives, with greater agreement between landlords and tenants, so that people can turn their houses into homes.
Another aspect that concerns me is the status of guarantors. When they rent, many people are told to find a guarantor who will apparently underwrite the cost of their rent. That is discriminatory for people who do not have somebody who has sufficient income to provide such a guarantee. I am aware of cases in Cambridge where people whose parents live in Scotland have been told, rather bizarrely, that a guarantee from somebody in Scotland is not acceptable because it may not be legally binding. I hope the Minister can clarify that that is not the case. There are a number of students from Scotland who should certainly be able to rent places in Cambridge.
Letting agent fees are a serious issue and makes people’s blood boil. I agree with Shelter and many of the 9 million people who rent that fees are out of proportion. That is why I proposed ending any permission to charge above-cost fees. They should not be allowed. I was interested in the proposal from the Opposition, and I voted for an amendment, but for reasons that I do not understand, the Labour amendment specifically excluded any controls on fees that could be charged for credit checks. I hoped to press the shadow Minister on that. It is a great flaw in the Opposition’s proposal as it means that letting agents who do not wish to comply will charge vast amounts for a credit check and shift all the money on to that.
That still seems to be a recipe for letting agents wilfully to turn people down on the basis of their credit checks, or to be very difficult in order to make money. That is the problem I have with that proposal. Letting fees should be limited and capped, but I am happy to talk further to the hon. Lady about that. I expect that 15 seconds is not quite long enough to resolve the disagreement on that.
We should get rid of letting fees. Studies in Scotland by Shelter which have been mentioned found that the increases in rent that one might expect did not take place.
Transparency, to which the Government are committed, is welcome. I support that. There is such an imbalance in power between the tenant and the landlord—
I almost apologise to the House for the fact that, in every housing debate, some of us who represent London constituencies seem to say the same thing. Like many London MPs and perhaps others, every week I have a family coming to see me, begging for a property. It is one of the most distressing experiences that we have in our role as Members, because all we can offer is sympathy. Lobbying and letters to the council elicit the standard response about the waiting times, the lack of housing supply and so on. As I mentioned, I find it really distressing and I do not know how the colleagues who run my constituency office cope with dealing with such families.
I could not agree more with my hon. Friend. It is very distressing—not only the supply, but cases where people in precarious private sector rented accommodation are threatened with almost immediate eviction or a rent hike, which frequently happens in my constituency. The council—with much pushing from me—has introduced a licensing scheme to try to overcome this. What does my hon. Friend think of that as a way of resolving some of the problems?
I congratulate my hon. Friend on achieving that advance. It is difficult in many other areas, where we do not have the co-operation of the local authority. I have started turning up at evictions now, to negotiate with estate agents and others and the bailiffs. As many hon. Members will know, that can be quite confrontational.
I have lived and worked in my constituency and represented it in different forms for nearly 40 years. When I arrived there 40 years ago, if someone wanted a house, they would go to the council and there would be council housing. There was a council housing waiting list, but it was not that long. Most of those council houses were sold off. Ironically, a letter went out from Hillingdon council two weeks ago seeking to lease back the council properties that it sold 20 years ago, to rent those out to people. It is bizarre how the cycle turns.
The other form of housing in my area was owner-occupation. There was little private rented accommodation at the time, but the level of wages was such that mortgages were available. Mortgages were also available through local authorities. The Greater London council a mortgage scheme with a relatively cheap rent. Now, unfortunately, even though my area has high levels of employment, the pay is such that people cannot afford owner-occupation. The average price of a property in my borough is £318,000, which is way out of the reach of people in my constituency on average pay—between £12,000 and £20,000. They are therefore forced into the private rented sector.
The private rented sector has expanded, but insufficiently. In my constituency, the cost of a family property in the private sector ranges from £1,200 to £1,600, and in some instances up to £2,000, a month. That is simply unaffordable. Even if people overcome the challenge of getting into the private rented sector, they are faced, as we heard earlier, with discrimination against anyone on benefits being able to rent a property. There is ghettoisation going on, organised by the landlords and the agents—“That area or that property isn’t suitable for you because you’re on benefits.”
People go through all the experiences about which I have expressed concern—having to find the money up front, the heavy charges imposed by the agents—and it forces some into penury. I have many constituents who go to payday loan agencies to borrow the money to try to get a roof over their heads.
My hon. Friend is making a characteristically passionate speech. Does he share my concern that at the very time when the impact is being felt, as he describes, we are seeing a collapse in the provision of advice services, particularly for housing? This morning’s statistics on legal aid provision show, for example, that the number of housing cases for which legal aid was provided has fallen from 126,000 to 55,000, so at the time of greatest need, people are finding less advice and assistance available to them.
I was going to come on to that, but let us deal with it now. Tenants are defenceless at present. They may well know their rights, but they are not able to exercise them. Because the law centre in my area is on a contract, it is limited in the work that it can do, and it is swamped. The citizens advice bureau is swamped continuously. There are lines of people on a
Tuesday morning queuing up to go to the CAB to book their appointment. In my constituency we have moved to an open door policy so that people can come to the office at any time. All the agencies that I am aware of are swamped.
Tenants cannot get into the system even to challenge what is going on. It is not just about getting access to a property; it is about defending themselves, once they are in that property, against abuse by landlords and threats of eviction. All this has resulted in the use of bed-and-breakfast accommodation in my constituency going up. The figure was 30 in 2012; the latest figures I have from the beginning of 2014 show that there were well over 200 families in bed and breakfast. I thought that on a cross-party basis we had committed ourselves to ensuring that no family would be in bed and breakfast.
The bed-and-breakfast establishments that I have been visiting are squalid. They are appalling. Because families are stuck in bed and breakfast for a long time, children are being brought up in squalid and often unsafe conditions.
Does my hon. Friend agree that the spiralling cost of rentals in London creates a problem for people in public sector occupations, such as firemen and teachers, being able to afford to live in London?
Suitable accommodation is non-existent. Firefighters in the Hayes station were commuting from Devon and Cornwall. It is very difficult to find anyone in public service locally who can afford a property in the area.
This means that the overcrowding in my constituency is appalling. In the 40 years that I have lived there, I have not seen it on such a scale before. People tell me it is as bad as it was after the second world war. We complain about kids being out on the streets and joining gangs, but overcrowding means that kids are forced out on to the streets, and they become incredibly vulnerable. Think about a child going home and having to do homework in the room where the other kids are having tea, or having their bedroom in the room where they have to do their homework either on their knees or on the bed. The social impact is horrendous.
I cannot give way any more. I apologise.
There is also squalor in the private rented sector. In my constituency there are landlords, the majority of whom own one or two properties, who do not maintain them. This has been made worse by the economic recession. Walk down any street in my constituency and it will be clear from the standard of the properties and their maintenance which ones are the buy-to-lets. When the tenants complain, they are evicted. They have virtually no legal redress, because they cannot get into the courts; or they turn up at the citizens advice bureau or the law centre and it is difficult to get advice because they too are swamped. There is also an element of blacklisting of certain tenants who challenge particular landlords. The environmental health standards of some properties are appalling, yet obtaining enforcement by the council is difficult. I do not blame the local authority, because with staff cuts it is difficult to provide cover for the scale of the problem faced and the enforcement required.
Houses in multiple occupation in my constituency have experienced all the health and safety risks, including fires and, unfortunately, some fatalities as well. There is a continuous churning process, with families in short-life accommodation, perhaps for 18 months or two years, being moved out. That disrupts the family, breaking down family relationships and undermining communities, and the long-term impact on children’s education and social relationships is devastating.
The solution is a statement of the blindingly obvious: build more council houses. I was critical of the previous Government. We had debates such as this, but I think that the Labour party has learned the lesson that we now need to invest in social housing on a scale that we have not done in the last 20, 30 or 40 years. We need a massive council housing programme. Councils should be encouraged compulsorily to purchase empty land. We cannot wait around any longer while we negotiate with developers. The crisis is too large. In an area of desperate housing need, we still have empty properties. Homes are standing empty. There are 700,000 empty properties in this country, 300,000 of them long-term, beyond six months. We should be encouraging councils to use their compulsory purchase powers to take over those properties, and put homeless families in them.
I support everything in the motion, but, as my right hon. Friend Frank Dobson said, it will have limited effect, at least in my area. What we need are rent controls. We are accused of Chavezism, but I am quite proud of that. I am a Bolivarian. The only thing that would work in my area is control of rents, because at least in that way we would get back some form of affordable housing. If it is not the same in other areas, let us devolve the ability and the power to local authorities to determine in their area whether they want the power to control rents and at what level they should be set. That would at least give hope to families in my community that they might have a decent roof over their heads for their children.
At the heart of this debate is a chronic under-supply of housing, because for successive decades there simply have not been enough houses built of all types of tenure. That is the challenge that we have to face. It is not about singling out private landlords, although it is in the private rented sector that the consequences of the failure to tackle under-supply are to be seen. We also need to make sure that we are building more houses to buy and for social landlords to let, and that we continue to allow the expansion of the private rented sector.
There is no doubt that there are rogue landlords out there who are exploiting tenants, but there are also many good, decent landlords. Most landlords want long-term tenants in their properties. They want people who will treat their properties as their homes and look after them. It is simply not the case that an army of small landlords is engineering this churn.
There are also a number of reluctant landlords, particularly in constituencies such as mine. We have all talked about the challenges of affordability, particularly for first-time buyers, so we have lots of people out there who are letting a room so that they can use the income to get on the housing ladder. Most of them would prefer to have their home to themselves, but it is the means for them to acquire a home. Those people need to be encouraged. They do not need a wealth of bureaucracy that stops them being good landlords. Equally, as a result of the economic challenges of recent years, we have seen a lot of turbulence in the housing market. We also see many family breakdowns, so people often sit on properties that they cannot afford to liberate to sell, for one reason or another, and they want the long-term security of long-term tenants. We should not be making it difficult for them.
I have been struck by the comments made by Members representing London where, again, the problems of under-supply are particularly acute. There are people who are taking advantage of that, and some letting agents also play the system and encourage churn in their properties: because every time they find a new tenant, they get a letting fee. I have witnessed that practice being encouraged in my constituency, although people would rather keep a tenant for as long as possible. However, when many people are entering the field, owners are always encouraged, with the promise of a higher rent, to change tenants. There is a lot to be said for educating the public about some of these bad practices so that they know how to avoid them. I take the view that educating the public is perhaps the best way in which to get higher standards generally. Regulations are usually a pretty poor tool because, as we have heard, they are often not enforced. We have heard about councils’ failure to take enforcement action against rogue landlords. The best thing we can do is ensure that all tenants know their rights and what they can expect from their landlords.
We have heard a lot in this debate about security of tenure, and rather less about the quality of some of our private rented properties, which is my concern today. The quality of one’s living accommodation can be good or bad for one’s health. We have talked about some properties being poorly maintained, but poorly maintained rented properties are not the preserve of the private rented sector. In my constituency, the worst properties are those owned by the council.
Surely the hon. Lady should be doing something about that. There is a decent home standard for socially rented properties, and they should be brought up to that standard. The private rented sector, of course, has no quality conditions laid on it.
I am not the local council, but if I were, I would be doing something about it. Let me give the hon. Gentleman some examples. A row of four terraced houses in Tilbury is subsiding. One of the tenants has been on the waiting list to be rehoused for nine years. The council is still putting people in those properties. There is a flat from which someone was rehoused because it was riddled with damp, only for a new tenant to come to me two months later about the same property because it had not been treated. The post-1940 housing stock in my constituency has poorly installed central heating and double glazing units, which have led to real problems of decay. Yes, the previous Government did introduce a decent housing initiative, but it is useless if councils do not take advantage of it. I am doing my best to tell the council what its obligations are to its tenants. Perhaps the hon. Gentleman could do the same. It might listen to him as it is a Labour council.
The real point is that some tenants suffer seriously life-threatening illnesses. Where properties are infected with damp and mould, which happens in poorly ventilated properties with cheap double-glazing, we see a rise in illnesses such as asthma. I also want to mention an illness that many hon. Members may not have heard of, aspergillus. Where tenants inhale mould in infected properties, the mould can start to invade their lungs. That condition can be terminal, and I am sorry to advise the House that in my constituency I have a number of cases of people with aspergillus, contracted from the houses in which they live. One lady who suffered from respiratory failure was not allowed home by hospital staff because they recognised that it was her living environment that was killing her—and, yes, that was a council house. We must all be vigilant and remind councils of their obligations in this regard.
I very much welcome the efforts made by Government to educate tenants about their rights, and we must do more, because it is the voice of the consumer that will make landlords of all types deliver on their obligations. We can do a lot more in this place to highlight good and bad practice, and we should name and shame the particularly bad cases. While there are powers for councils to take action against rogue landlords, the real weakness in the current system is that we cannot make them do so. I say to the Minister that we really need to look at this.
We can take action to remind private landlords of their obligations to their tenants and remind tenants of what they can expect from their landlords, but the real hole in the system is the obligations of council landlords to their tenants and how we force them to act. We need to look at toughening up the powers of the ombudsman or developing a charter so that we can tell tenants what they can expect from their council landlords. However, let us not pretend, as Labour Members do, that the problem with our housing is always rogue private landlords; it is much worse than that. Our biggest problem is a failure to invest adequately in supply, and there is a serious problem with the quality of a lot of our housing stock. We should stop playing politics and actually get some houses built.
In Hull, about 23,000 families—one in five of all local households—rent privately, and this figure has risen over the past decade. Across my constituency, families who rent privately regularly report concerns about the instability of short-term lets and the high charges imposed by under-regulated letting agents. I therefore fully support the motion.
First, I want to draw attention to the problems faced by students living in Hull who rent in the private sector. Secondly, I will highlight a particular constituency case regarding the failure of landlords who do not maintain their properties and thereby blight local communities. Students in Hull who do not live in university-owned accommodation end up relying on the private rented sector. Most student housing in Hull is provided through seven big companies that act both as landlords and letting agents. They own some of their own housing and provide it directly, but also act as letting agents for smaller landlords’ properties. In Hull, as in many other university cities, student unions have raised concerns about these kinds of letting agencies, which often mount very effective marketing campaigns targeting students. In Hull, many of their offices are situated very near to the university, so most students go straight to them.
Most of these letting agencies are not accredited. Of the seven I mentioned, just one, which is a smaller company, advertises membership of the Association of Residential Letting Agents on its website, and just one—the same one—is signed up to the property ombudsman’s code of practice for residential letting agents. The rest are not listed on their websites as being thus accredited. When my office rang to try to confirm their membership of these bodies, they were unable to comment. This shows that self-regulation is not working terribly well. I welcome the DCLG’s moves towards a redress scheme, but I would be interested to hear from the Minister what representations have been received from students and universities about its use as regards student letting agencies. What good is a redress scheme if tenants do not know about it in the first place?
Many of these agents charge students up-front, non-refundable administration fees ranging from £50 to £150 per person. Sometimes those fees are not advertised on their websites and people will be told about them only when they ask specific questions. Hull is by no means the worst for student up-front fees, but I still find it curious that it apparently costs some Hull letting agents up to three times more to administer exactly the same transaction than it costs others. The National Union of Students estimates that, nationally, over a third of students enter into some kind of debt to pay these tenancy set-up costs. One could suggest that the lack of longer-term tenancies and letting agents’ fees are interlinked, in that tenancies are so short, for students and non-students, because that can give letting agents more in fees. Many Hull students have said that they would like to enter into longer-term contracts with landlords while they are studying—that would also be far easier for the landlords to manage—but unfortunately this does not happen very often.
Under the standard assured shorthold tenancy, tenants can generally pull out of the contract if they give a month’s notice, but I have heard from students in Hull that many students’ landlords write tougher clauses into their contracts whereby there is no provision to pull out with a month’s notice and students are often liable for all their rent for the full tenancy period, even if they drop out and lose their student finance. Because of aggressive marketing by landlords, some students end up signing contracts up to seven months in advance. That can cause problems as students’ circumstances can change. When the Government finally get round to publishing their model tenancy agreement, will it apply to student housing, and what will it say about the provision for ending tenancies?
A lot has been said about substandard housing. In Hull, compared with other university cities, a high number of student properties continue to go unlet each year. One consequence of this is relatively low levels of investment in properties. A survey by Hull university student union of properties it inspects showed that nearly 40% had evidence of damp, mould or peeling paper. Those are just the properties that are signed up to the union scheme; nothing is said about the landlords who do not sign up. In the absence of proper regulation of the private rented sector, it is difficult for unions such as Hull’s to ensure good standards for all student properties.
I must give credit to Hull’s union for having brought in two additional arms of regulation. I particularly commend its excellent president, Richard Brooks, for the work he has done in this area. The union has introduced its own letting agency to compete with the others—HUU Homes—and brought in a student-run accreditation scheme for substandard houses called HullSTARS. Unlike the previous accreditation scheme, which gave only generic good or bad ratings to 10% of homes, this student-run scheme gives five-star ratings to 100% of the homes it covers and allows students individually to review each property posted. However, these local measures can go only so far. We need to deal with the problem of unaccredited landlords and letting agents.
Finally, I want to raise the case of Ms Daniels, an owner-occupier in my constituency who lives in a row of six properties owned by private landlords. Some of the properties hold seven-plus tenants, and they generate a lot of waste. Rubbish and food waste is often left outside the property when the tenants leave. This means that the street looks untidy, and it encourages fly-tipping and attracts vermin. As the properties are registered with the council as family homes, not as HMOs, the council has very little room for manoeuvre in dealing with them. Ms Daniels, in the spirit of wanting to keep the community looking as nice as possible, takes it upon herself to put out wheelie bins. She told me recently that she had a sit-in in one of the refuse collecting vans to ask the refuse collectors to take some action to remove all the rubbish. The council tells her that it can give the landlords 42 days to remove the rubbish but there is nothing further it can do. Some of these landlords own hundreds of properties but do not live in the city and do not care about them. They have no incentive to keep them clean and tidy, and they are a blight on the local area. Will the Minister see what further action we need to take to make sure that landlords keep their properties in a fit and proper state in local communities?
Order. I mentioned earlier that Members should declare interests that are relevant to the debate, so we need to know the details.
I am a landlord, Mr Deputy Speaker.
I will start with two general points on housing policy. First, the United Kingdom has three distinctive housing sectors: home ownership, social housing and the private rented sector. In many respects we have Government policies for each sector. I acknowledge that they are different, but they are often seen in isolation, rather than as part of an overall housing strategy with policies that help all three sectors and create greater consistency and overlap between them.
Secondly, we have housing policies for the whole country. I accept that we need a national framework, but I believe that we need greater flexibility so that different parts of the country can adopt slightly different policies to reflect their particular circumstances. The reality is that we have many different local housing markets, and not just in the private rented sector, but in the social housing sector and, indeed, in home ownership. Compare my constituency of Carlisle with London, for example. Even within Cumbria, the lake district market is incredibly different from that of Carlisle. Prices in London and Carlisle are so different. The social housing requirements in Carlisle are very different from those of Manchester, and the same is true of the private rented sector.
I will turn now to the private rented sector. The Communities and Local Government Committee’s report on the private rented sector states:
“The market is a developing one which we need to help edge its way towards maturity. This requires a careful balancing act which does not upset the market developing naturally.”
It is a balanced report that drew support from both sides of the House. It was endorsed by Opposition and Government Members. It recognised that the market is relatively young and effectively immature, but that it has been and is developing. It acknowledged the rapid growth there has been in the market and the creation of a large number of accidental landlords, which brings its own problems. I commend the report to the House. I am delighted that the Government’s response accepted many of its recommendations.
Does my hon. Friend and Select Committee colleague agree that when we were considering the evidence and constructing the report, we discussed in detail the suggestion that rent controls should be introduced, and our cross-party Committee agreed that they would be a disaster for that emerging market?
I completely agree with my hon. Friend that that was the Committee’s conclusion. We recommended model tenancy agreements—I am delighted that the Government will be introducing them over the summer, after a consultation—a redress scheme and transparency in letting fees.
Addressing the specific issues raised in the motion is remarkably easy. I believe that the Opposition are misguided in their approach to that market. In fact, their motion does not even mention the critical issue: the need for more housing of all types. It mentions stability and certainty, but there is actually a remarkable amount of certainty, combined with a large degree of flexibility. Leases can be for six months, which is the default position, but we often forget that they can be for any length thereafter. It could be five years, 10 years or 18 months; it depends on the relationship between the landlord and tenant and the requirements of both. Indeed, many tenants do not want a three-year tenancy. They might want six months because they are moving into an area to see whether it is the right place for them to live or because they are looking to buy a property or to rent long term.
The same applies to the landlord. The accidental landlord might not want to grant a three-year tenancy. They might want a six-month tenancy, with a view to putting the property on the market afterwards. The existing arrangements create a great deal of flexibility. It is also interesting to note that a large number of tenancies are brought to an end by the tenant, not the landlord.
As a member of the Education Committee, I often hear head teachers and governors talk about churn, mobility and turbulence in their school populations. A big factor in that churn and turbulence is undoubtedly the existence of a great many short-term, six-month tenancies in the private rented sector, but they are used as a matter of course in many neighbourhoods.
I accept that six-month tenancies are used as a matter of course, and that is a cultural issue that I will touch on in a minute.
The English housing survey notes that the average length of residence for a tenant is 3.8 years and that 66% of tenants are in a property for more than a year. We have heard a lot about rapidly rising rents, but I must confess that I am slightly perplexed. Figures from the Office for National Statistics for the period 2005 to 2014 show that the consumer prices index has risen by 13.3% and rents have risen by 9.5%—12.5% in London. Indeed, tenants who remain in a property often see their rent increase more slowly. I will give a personal example. I mentioned in my declaration of interests that I am a landlord. I have rented out a property to the same tenant for over five years, and during that time the rent has never been increased. Yet the tenancy was not for three years; it has varied from six months initially to a year and then was renewed each year. With regard to letting agents, transparency is the key, not regulation. It is quite right that landlords will look to see their costs being met in a different way. It is transparency we need, not further regulation.
Ultimately, what we want is a vibrant, flexible and competitive private rented sector with quality housing. Therefore, I remind the House of the Select Committee’s key conclusions. First, the present market is broadly working and will continue to develop. Yes, we need a cultural change on the length of tenancies. I think that having six-month tenancies is partly a habit developed by letting agents and landlords, but it has also been influenced by mortgagees, who are reluctant to see tenancies go beyond a year. Secondly, we clearly need much more housing of all types. Thirdly, to improve standards we need proper enforcement by local authorities of the existing laws. We need to allow the market to develop within the existing laws and the recent Government proposals. I believe that that, rather than further regulation and state interference, will lead to a successful private sector market.
Forty years ago, I was one of those who organised the occupation of Centre Point, which was then empty. It was a protest that caught the imagination. It dominated the headlines for several days. It was against the obscene combination of a housing crisis on the one hand, with rapidly rising homelessness and Rachmanism, and office block speculation by the likes of Harry Hyam on the other hand. We then saw some welcome changes under the 1974 Labour Government, who tackled office block speculation and introduced security of tenure. I never thought that 40 years on we would be debating the biggest housing crisis in a generation. It is a crisis that is deeply damaging. It dashes the hopes of millions of people, damages the life chances of a generation of children growing up and holds back our economy.
What we now require is the utter determination necessary to make a great generational change. That is why Labour has put housing centre stage. We have done so for three reasons. First, millions of people desperately want to rent or buy a house they can afford. The gulf between supply and demand is massive and growing. I see it in the city I am proud to represent, where we need 80,000 homes to meet demand and where 33,000 are currently on the council housing waiting list. Secondly, history tells us that there has never been sustained economic recovery—after the depression, through the war and in every recession since—without a major programme of house building, both public and private. Thirdly, there is the impact of bad housing and instability on our country and our community. At its most chronic, in the private rented sector, bad housing harms health. Instability, for example, if someone has to move home frequently—those living in the private rented sector are 11 times more likely to have to move home than owner-occupiers—is damaging, including to the life prospects of kids at school.
My hon. Friend is making a really important point. We are not talking about statistics; we are talking about the life chances of children being disrupted because the problems in the housing market are having a direct impact on their educational prospects. They are forced constantly to move schools because of the insecurity in housing tenure for their parents.
My hon. Friend is absolutely right, not least because the evidence shows that if a child under five has to move home three times, that will impact on their educational attainment at school.
The wish of people to live in a house that is also their home is deeply rooted in the sense of aspiration and ambition in our country. It enables them to put down roots, contribute to their community and plan ahead, including where they send their kids to school, which is simply not possible for millions of people in the private rented sector.
To clear up what Government Members have said, Labour’s focus is on homes of all tenure: homes to buy, including our ambitious objective of reaching 200,000 homes a year by 2020; homes to rent; a new generation of social homes; innovation in self-build, custom-build and co-operative build; and catering for an ageing society by helping people to downsize, rather than by using the obscene weapon of the bedroom tax, which will be one of this Government’s first casualties when our Government come to power next May. We also want to bring all homes up to standard, including those in the private rented sector, and to complete one of the Labour Government’s greatest achievements, the decent homes programme, which brought 1.6 million homes up to a decent standard, so transforming the lives of those who lived in them.
The private rented sector is growing rapidly: it covers 9 million renters and 2 million children. In my constituency, 48% of the ward of Stockton Green is now in the private rented sector. The sector has an important role to play to meet housing need. Most landlords are good landlords, but—I repeat, but—the evidence is absolutely clear that there are problems of security and affordability, with typically 41% of average earnings being spent on rent. There are also problems of quality—35% do not meet the decent homes standard—and too many rogue landlords and letting agents. We have all seen evidence of that in our constituencies. For instance, one of my constituents, Cathleen, lived in appalling accommodation before finally, with the help of the council, getting her landlord to carry out some basic repairs, only for the landlord to then serve her notice to quit.
The situation must change. We need a different vision of the private rented sector by 2020. It should be a sector of choice, more akin to the continental model, and one that enjoys a higher reputation, with flexibility and security in equal measure: flexibility for the students on one hand, and security for families who want to plan ahead, including where they send their kids to school, on the other.
Crucially, the sector needs to attract investment big and small. My experience of institutional investors is that they are very positive about Labour’s vision of the private rented sector that we want to create. The sector needs to work not just for tenants, but for landlords: longer-term tenancies with a reliable tenant paying the rent make for a better business model, because churn costs not just the tenant, but the landlord as well.
The sector needs to be no place for rogues. I pay tribute to Labour councils all over the country, particularly Newham council, that have vigorously pursued rogues, seeking to drive them out of the business. I remember going on a raid at 7 o’clock one morning with Sir Robin Wales: we saw accommodation the kind of which I did not believe existed in London.
The shadow Housing Minister, my hon. Friend Emma Reynolds, is absolutely right to say that we need to tackle the problems with letting agents. Most letting agents are reputable, but there are too many rogues. No letting agent should be able to charge tenants up-front fees—that should be for the landlord. My hon. Friend is right to say that we need a sector characterised by greater stability and security.
Indeed. Some Labour councils have done precisely that, by using their compulsory purchase powers to renovate homes and transform the lives of those who live in them.
The shadow Housing Minister is right about the need to bring all homes in the private rented sector up to a decent homes standard. She is also right to highlight the importance of a potential national register. I was surprised to hear Mr Prisk, whose contributions to debates on housing are usually thoughtful, pooh-pooh the notion of a register, because it would tell us who the landlords are; provide information on whether they pay their taxes, which is of benefit to Her Majesty’s Revenue and Customs; and communicate to landlords their rights, entitlements and obligations. If any landlord were found guilty of serious criminal behaviour, they could be deregistered, which would result in them not being able to operate as a landlord. A national register could make a significant contribution to what we are seeking to achieve.
I hate to recreate our old sparring moments, but I say to my former shadow Minister that the problem is that it is accreditation and standards that are needed. Registration—a set of names on a form—has not worked in Scotland, which has only got rid of less than half of 1% of agents after five years. It has not dealt with the rogues, but it has cost tenants more in rent.
A register would be a means to an end. It would not be sufficient in itself, but ultimately, this is about an effective approach to enforcement. I stress again that a register would be of benefit to good landlords because it would inform them of their rights and entitlements.
In conclusion, in my former being in the union, I used to say that, for all the problems, nothing is impossible. The scale of the housing crisis in this country is absolutely immense, but so too is the scale of our ambition. As our leader said last September, and as the shadow Housing Minister has said so often since, it requires the kind of determination that characterised the 1945 Labour Government. The 2015 Labour Government will have exactly that determination—homes for all at a price they can afford.
The positive thing about the debate so far is that Members on both sides of the House want to tackle the problem of a housing shortage and we all recognise that supply is one of the key issues in doing so. Until shorthold tenancies were introduced in the Housing Act 1988, there was almost no private rented sector in this country. In fact, rent controls contributed to the collapse in the private rented sector from more than 55% of households in 1939 to just 8% in the 1980s, and I believe the figure dropped to 7% in the early 1990s.
The hon. Gentleman makes the point that the private rented sector fell during that period, but so did the increase in the supply of social housing. The number of people on the social housing waiting list was not that significant in those days, so there was not exactly a surplus of tenants, but there was a much larger social rented sector.
I am grateful to the hon. Gentleman for making that point, but Library figures show that it has taken almost 30 years for the figure to increase to 16.5%. His point that there was no demand then but that, all of a sudden, there is now probably does not hold water.
An estimated 89% of landlords are private individuals with one or two properties, which are, in effect, their pension funds. They are, in the main, responsible and proactive people such as my hon. Friend John Stevenson, who will keep his tenant in place for as long as he pays the rent on time, as has happened for a number of years.
The hon. Gentleman has given the interesting statistic that 89% of landlords are private individuals, but they do not cover 89% of the market. Would he care to inform the House what proportion of the market the other 11% control?
The hon. Gentleman will be delighted to know that I am not someone who has all the statistics at his fingertips, but I am very happy to discuss that matter with him once I have had the opportunity to google it.
Moving swiftly on, the point I was trying to make is that a huge number of people in this country are among the 89% of landlords who are private individuals, and many of them have been encouraged to invest their family’s future and their family’s finances in what are, in effect, pensions. Those people are very important to our economy and their local communities, which we need to support. We should not attack them just because they have been able to purchase a property and give another family a home to live in. For me, those landlords often provide stability for their tenants. Landlords cannot afford to have any voids, because that might result in their losing their ability to repay their mortgage; many of them are buy-to-let landlords, whose numbers have risen—mostly under the previous Government—during the past 15 to 20 years.
The problem with three-year tenancy agreements is that many families want flexibility, and as a result the reality is that such tenancies will never be standard. There has to be a balance between flexibility and security, which Jack Dromey spoke about, but rogue landlords will provide flexibility by encouraging everybody to sign up for six months, while the 89% of landlords will provide security for three years, as do they already. For me, such agreements are not the answer, and the issue is not about regulation.
In addition, particularly for the 89% with just one or two properties, landlords whose tenants are not paying the rent or are damaging the property can get possession of the property only at the end of a tenancy. Other forms of recourse are often incredibly expensive. What that boils down to is that somebody with a buy-to-let mortgage whose tenant just refuses to pay the rent for two or three months is more than likely to have their house repossessed. In effect, they will lose their pension for their family’s future. If somebody does not pay their rent for eight or nine months of a three-year tenancy, that will lead to huge legal bills and create huge problems, which is a balancing factor.
My hon. Friend the Member for Carlisle made the point that tenancies are often ended by the tenant, rather than the landlord. Figures I have been given suggest that only 9% of tenancies in this country are ended by the landlord. Landlords have come to my
constituency surgeries very disappointed and upset because they cannot get possession of a property where somebody is just sitting in it and refusing to pay rent to go to their mortgage. Stevenage borough council informs such tenants not to let themselves be evicted because they will make themselves intentionally homeless, so the council will not house them. As a result, landlords have to take such tenants to court and go through the whole repossession process, which families often cannot afford. People who own just one or two properties therefore have a huge problem, and protections against that problem should be built into the system. I make that point because, for a huge number of people in all our communities, three-year tenancies without such protections might cause a huge problem for their family’s future and finances.
A ceiling on rent increases sounds attractive and is no doubt incredibly populist, but one little detail that I heard earlier is that rents might increase every year during the three years.
Rents would not necessarily increase. There would not be indexation; the Secretary of State has talked about that. In some areas, such as mine in Wolverhampton, rents are pretty stable. The ceiling would apply only if rents were going up. There would be a ceiling on any rent increase, but there would not necessarily be a rent increase. There would be protections, as there are now, in three-year tenancies, but I take the hon. Gentleman’s point that many landlords with irresponsible tenants really struggle to get the tenants out and that those protections need to be strengthened.
I am grateful to the hon. Lady for her clarification. However, my issue is with rogue landlords because they will push for rent increases.
The Royal Institution of Chartered Surveyors has said that
“we do not recommend that a government introduce a ceiling on rent increases.”
The Opposition will no doubt consult the RICS to discuss what flexibility to have on rent ceilings. The RICS does not want rent increases, but that is the organisation most likely to be consulted. For me, if interest rates are likely to rise because of the success of our long-term economic plan—we are now starting to see an economic recovery—landlords will want to ensure that they have some flexibility, because of potential interest rate rises and to protect their future finances. The RICS and other organisations will try to ensure that the band is as wide as possible, but if it was 10%, a rogue landlord could tell a tenant, “You’re tied into a three-year tenancy with me, and I am going to increase your rent by 10% over the next three years.” For me, the issue is about how we prevent rogue landlords from taking advantage of vulnerable people.
We must tackle rogue landlords. The only way to do so is to increase supply and to enforce regulations. Hon. Members have spoken about additional regulation and legislation, but I have discovered that 100 Acts of Parliament and 400 regulations apply to private landlords at the moment. Those are huge numbers, and I am not sure that we need any more; we just need people to get out there and enforce current regulations.
I am very proud about the over-supply provided by Stevenage borough council. For the first time in more than 25 years, it has started to build council houses as a result of this Government’s wonderful investment in the town. Under a Conservative-led coalition Government, we have 30 new council houses in a Labour area—the borough council has been Labour for many years—and I am delighted that we have been able to push for them. Thanks to the Conservative Government, we will have new council houses in Stevenage.
In my view, letting agents’ fees must be transparent. I am delighted that the Government will force letting agents to display any charges they make on tenants on online forms and, if they have any, in their shops. I am concerned that if letting agents’ fees were abolished, the charges would be passed on in a new way, as a form of tenants tax. At the end of the day, rogue landlords will ensure that they get every penny they feel entitled to, so our vulnerable constituents will again be affected, unfortunately, if they have to pay such a tenants tax. Apparently, that has happened in Scotland, where rents have begun to rise a little.
I want a vibrant rental sector, with quality housing, in which local people have faith. I am very lucky that the majority of private landlords in Stevenage are local people who are investing in our local community. Therefore, we do not have many issues, and I do not have many constituents coming to my surgery upset about private sector landlords. However, Stevenage borough council is a large public sector landlord, with more than 8,000 properties in my constituency, and I get a huge number of complaints about it.
Hon. Members have talked about decent homes funding. Again, the coalition Government have provided most of the decent homes funding given to Stevenage borough council, which was very late coming to the show in improving council houses. It is increasing rents faster than anywhere else in the whole of Hertfordshire, which I find unacceptable, and it has the biggest number of evictions and eviction notices in my constituency and in Hertfordshire. It is not therefore possible to talk about the public sector as great and the private sector as bad; this is about getting a great deal for tenants, so that they can have somewhere to live and have flexibility and security.
I very much welcome the fact that the Opposition have called this debate today. It is high time that those who form Generation Rent were given the high place on the political agenda that they have long asked for. I tabled an amendment because although the motion goes in exactly the right direction, I want a more ambitious response to the crisis and to the deep and growing unfairness and inequality faced by people in the private rented sector.
There are 9 million people in the sector, and the figure is expanding because of 30 years of housing policy failure. People on low incomes and young families—and, indeed, people on average incomes—have no chance of getting on the housing ladder, and most have only a slim chance or none of getting a council house or of getting to the top of a housing association list.
The cost of housing in my constituency is eye-watering. Prices have increased at an alarming rate, and a typical home in Brighton and Hove now costs about £350,000, if not more, which is about twice the British average. As a result, the private rented sector—about a third of homes—is about double the national average, and it is expanding. I frequently hear from constituents who are spending between 70% and 80% of their income on their rent, and many people have simply been forced out of the city altogether. Many of those constituents come to my surgeries in desperation as they struggle with housing costs and fuel poverty. Many are living in damp, leaky, poorly maintained homes.
Generation Rent spans all ages and backgrounds. It includes the single mum from Hollingdean, who told me:
“I am not sure what to do when I am qualified. I will be a nurse living in Brighton who can’t afford to live here. If we were able to get a council house this would change our lives.”
It includes the family who are worried about taking their children out of Elm Grove primary school because of an unexpected rent increase of £50 a month, which means that they can no longer afford to live in their present home. It also includes the student whose friends have warned him about the “Brighton paint job”, where landlords or agents paint over the penetrating damp before viewings, then retain the deposit at the end of the tenancy on the ground that the tenant has not properly ventilated the property.
Generation Rent also includes the young couple who felt enormous relief at finding somewhere to live, despite paying more than 70% of their income in rent, and then had to find an additional £480 in letting agents fees. To add insult to injury, on top of extremely high rents and large deposits there is the scandal of fees. These unwarranted fees reflect how the private rented sector is, in large part, out of control. Letting fees are a scandal; they are sometimes over £300, which is a huge amount to find on top of a deposit. That is why I agree that they should be banned.
I do not agree with the argument that the fees would just be passed on to landlords who would pass them back to tenants in higher rents. Agents would not be able to get away with hiking up fees to landlords in the same way as they do with tenants, as landlords are in a more powerful position. The landlord would just go to a better agent who was not trying to rip them off, because they had a property for rent, which is in very high demand, in Brighton at least. Tenants do not have that choice because of the huge demand for properties.
I do not know whether the hon. Lady saw the programme on benefits the other night. It showed families who could not afford to pay their private landlord and could not get council accommodation. They ended up living in temporary accommodation in caravans. Does she agree that that is a disgrace in this modern age?
I completely agree with the hon. Gentleman. I also want to add my support to the many other hon. Members who have talked about the scandal of agents not allowing people on benefits to rent properties. That is absolutely despicable.
We need a national register of landlords so that we can better protect tenants. That would also be good for the landlords out there who are not ripping people off. There are good landlords, and their efforts are tainted by those rogue landlords who are using the housing crisis as a way to make a fast buck. A national register would also help us to implement the minimum energy efficiency standard for private rented homes, which is essential to protect our most vulnerable citizens.
Hon. Members will be aware of early-day motion 95, which reminds the House that the Energy Act 2011 placed a duty on the Government to introduce a minimum energy efficiency standard for the private rented sector by April 2018. The regulations have been significantly delayed, which is totally unacceptable and shows the lack of priority being given to this issue. Ministers must also ensure that the regulations are made clear and enforceable by specifying band E as the minimum standard in all cases and by keeping exemptions to an absolute minimum. People looking for somewhere to rent need to know who they can trust and to be guaranteed minimum standards to ensure that properties are of high quality, safe and efficient.
It must be made easier for families and individuals to get secure longer-term five-year and 10-year tenancies. The norm of short-term contracts leaves private rented sector tenants without security in their homes, and at risk of eviction and unfair rent increases. That volatility is particularly harmful for families with children, who often have to move schools as a result. Shelter has done some excellent research in this area. Longer-term renting could work better for both renters and landlords, as the latter could reduce void periods and expensive re-letting costs. It really is high time that the Government took steps to ensure that people can get five-year stable rental contracts, if that is what they want.
One local resident told me of her heartbreak at being given one month’s notice to leave the flat she had hoped to stay in for a few years, even though being given notice in that way was technically against the law. She had spent time planting strawberries in hanging baskets on the fire escape, re-grouting the old tiles in the bathroom and hanging pictures. She wanted that place to be her home, and I think she deserves better. That is why I have tabled an amendment to today’s motion to give good tenants the choice of a five-year stable rental contract as standard. Five years as standard is what Shelter and the campaign group Generation Rent are rightly calling for, and I share their view on that.
One of the reasons why the private rented sector is expanding and rents are soaring is the decimation of our social housing stock through the right-to-buy programme. Enormous, unjustified discounts and the failure to replace the stock that was flogged off cheap have a large part to play in our current housing crisis. To begin to make a dent in our long-term housing crisis we must address the lack of affordable homes, too. One of the biggest cuts in Government funding during this Parliament has been the 60% cut in funds for social housing, which has pushed even more people into expensive, insecure places in the private rented sector.
This is a problem caused by successive Governments, who have simply not built enough houses, particularly affordable ones. A recent House of Commons Library note shows a long-term steep decline in house building in England in the past 35 years. Nearly 307,000 homes were built across all tenures in England in 1969-1970, but the number fell to just over 107,000 in 2012-13. There was a minor increase in housing association building over that period, although it amounted to less than 15,000 dwellings. What is most striking is that the steepest decline was in the building of council houses, which fell from 135,000 to 1,360 over the same period.
My amendment seeks to remedy this scandalous missed opportunity with a call to start building council homes again. Done well, council housing works. It gives affordability and security of tenure. In 1980, under the Thatcher right-to-buy legislation, council housing stock was decimated and we were left with the scandalous situation of landlords receiving huge pay-outs in housing benefit for properties that were sold off cheap at the taxpayers’ expense. I want a real central Government commitment to build council housing, so that individuals and families can stay in Brighton and Hove without being at the mercy of rip-off landlords, and so that they can put down roots and not be forced to move their children from school to school.
We need fully to lift the cap on local authority borrowing to allow councils to build new council houses. Councils are bound by prudential borrowing rules anyway, so the cap is unnecessary; it is just stifling the building of local authority homes. This measure needs to be bolstered by direct capital investment to allow for a mass programme of sustainable, warm council housing. We urgently need a commitment from the Government to replace all affordable homes lost through right-to-buy policies. Such a commitment was another candidate for inclusion in the housing Bill that was so conspicuously absent from this Government’s programme, which is in large part sleepwalking us towards the general election.
Updating our housing infrastructure and giving people a way out of the cripplingly expensive private rented sector could also be a win-win. No one is suggesting that that is a silver bullet, but if we lifted the restrictions and allowed councils to borrow to build homes, and if they started to build on the necessary scale, we could start to pull people out of housing emergency. We could stop the expensive and distressing knock-on problems that bad housing creates, while at the same time creating a major boost to the provision of skilled jobs.
Generation Rent is getting bigger and being squeezed harder. That is why I support the call for smart rent controls, which would mean that rents could not increase by more than the rate of inflation. I am also calling in my amendment for a living rent commission. Excellent work has been done by the living wage commission, albeit not under the initiative of the Government. The Government need to follow that lead and do some work to determine what a living rent would really look like. We must have an official benchmark for fair rent levels and, to get that, we need major official but independent research into what a living rent would be and how it could be achieved. A commission would look at whether there were ways to bring rent levels into line with the basic cost of living, and take into account the impact on, for example, landlords’ ability to pay their mortgages.
I am indeed suggesting that we should look at stock condition as well.
A living rent commission could learn a lot from the living wage commission. It could set out how much a living rent might be, so that landlords could opt in, just as employers have opted into paying the living wage.
More broadly, I would be interested to hear what other hon. Members thought about the need for a royal commission on housing, with a strong focus on the private rented sector. I do not advocate that lightly, and I know that royal commissions happen only rarely, but this is arguably an issue of such importance that such a move should be considered. Housing policy is central to health and well-being and to our economy. Sky-high rents are a barometer of housing policy failure, which is why we need a living rent commission.
I am sorry, but no. Other people are waiting to speak.
There is still time for Ministers to admit that they have got this badly wrong, and to act on solutions to our housing crisis that would help people trapped in the private rented sector, tackle health inequality and disadvantage, create skilled jobs and, crucially, provide stable tenancies at rents that people really can afford.
It is important to recognise the opportunities that the private rental sector offers in terms of choice for people and of benefits to the work force. To be able to move to a city for a new job with no worries about finding somewhere to live is hugely attractive and allows people to experience living in different places without the commitment of buying a property. The fact that a third of private tenants in London have lived in their property for less than a year should not be seen as a uniformly negative thing. In my constituency, we see a great deal of churn, with young renters coming and going. They like the flexibility. Moving around different areas and sharing with friends and colleagues is an interesting and formative stage for many young professionals. Not everyone considers three-year tenancies to be either desirable or the norm. For others with different needs, more supply providing more choice and more competition is surely the right way forward.
Of course there are cases of unscrupulous landlords, but there are ways of minimising the problem without wholesale state intervention in the market. The Mayor of London has introduced the London rental standard, aimed at accrediting landlords and bringing transparency to the market. Landlords with the accreditation will be more attractive to both renters and agents, and in a competitive market, the advantages of signing up to it are clear. Councils could, in some cases, do more to ensure that private landlords, to whom they pay housing benefit, do more to ensure their properties are maintained to a good standard.
Estate agent fees can be unpopular, but the agents are operating in the free market and will be paid for their service. It is unrealistic to think that the costs would not simply be passed on by increasing rents if the one-off charges were scrapped. Someone has to pay them for their professional time spent doing the admin work. In any case, estate agents are starting to reduce fees in many cases in order to be competitive. Many landlords will acknowledge the speed with which the marketing undertaken by agents can fill their properties, and similarly, agents make finding a property remarkably straightforward for the renters. Agents can fulfil a useful purpose.
The best solution to affordability of housing, whether rented or not, is to increase supply, as so many in the Chamber have said today.
In terms of fees paid, the hon. Lady surely cannot think it is right that some agents charge people £450 simply to change the name on an agreement, because one of the people sharing a flat has moved out and someone else has moved in.
To my knowledge, in many cases, agents do considerably more than that. They check the credit details for people who are going to be renting the property, and there is often quite a lot of admin work involved in the work they have to do. As I say, I think they would expect to be paid for that.
Predictably, that is a very sensible point from my hon. Friend. As I was saying, the best solution to affordability of housing, whether rented or not, is to increase supply. That is happening in London, with 100,000 purpose-built affordable homes being built—5,000 for rent for each year across the two mayoral terms. However, we must not get into a situation where private landlords are in some way viewed as a necessary evil. The Opposition’s plans to flatten the market will simply mean it is less attractive to invest in property. Controlled rents in other capital cities point to how detrimental it can be for those seeking to rent. Properties are neglected and choice is limited. Waiting lists are long, and unrealistically high deposits can be needed simply to secure somewhere to live—I am thinking of places such as New York.
Until the 1960s, the private rented sector took care of a substantial part of housing need in this country. As I mentioned earlier, it was an important part of the mobility required to seek work wherever it could be found. Yes, there were bad landlords, and names like Rachman loom large in that regard, but slum landlords such as him could have been dealt with more effectively by law enforcement.
Instead, the Labour Governments of the ’60s decided to bear down on the private rental sector in general, starting a long decline in the number of private properties available to rent. I remember well coming down from university to London in the 1970s—I am showing my age here—and finding it quite difficult to get a room. I was not in a position to go on a waiting list for a council property and I certainly could not afford to buy my own. Since then, the private rental sector has picked up again, providing a great deal more flexibility. If Labour were to win power and put some of its proposals on the sector into practice, I greatly fear that we would again see a decline in the private rented sector, and less flexibility with fewer properties available.
It is all very well to talk about controlling the private rental sector with increased regulation, but if we find there are very few properties available to be rented out, because the landlords have been disincentivised, those who need a property will suffer. How can that possibly be of benefit to anyone?
Millions of people across the country are struggling to cope in a sector that is clearly not fit for purpose, leaving tenants and responsible landlords fending for themselves in an unregulated lettings market. That experience is all too familiar to many people in Nottingham, which has a large and growing private rented sector. There are now more privately renting households in the city than there are households renting from the local authority or housing associations.
In Nottingham, the growth in private renting has been seen across all age groups, but most markedly among the young. Over the past 10 years, home ownership among 16 to 34-year-olds has fallen significantly. Back in 2001, 39% of the city’s homeowners were in that age group, but by 2011 that had declined to 27%, and those figures exclude students. People renting privately in my constituency tell me that they desperately need security so that they can build their lives in one place, become part of a community and live without the threat of eviction if they make a complaint about conditions or the management of their home.
In Nottingham, substantially fewer homes have been developed since this Government came to power, despite new affordable homes being built by our councils arm’s length management organisation, Nottingham City Homes. According to the Department for Communities and Local Government’s own figures, in the last three full years 630 homes have been built in Nottingham by a mixture of private and housing association builders. That compares with 1,520 in the preceding three years and 3,680 in the three years before that.
Demand for housing in the city is increasing, but Ministers are doing nothing to address local supply, and the banks continue to withhold finance from the smaller construction companies that know the market and could make a huge difference. The Government seem to be passively reliant on developers to bring forward planning proposals, even in inappropriate locations, when too many brownfield sites lie empty. It beggars belief that for all the talk of localism, under this Government a developer is able to ride roughshod over the views of many hundreds of local residents in Wollaton and the local authority, who all oppose plans to build new houses on local allotments.
My hon. Friend made a very compelling point about the banks not lending to small and medium-sized builders. Does she share my concern that two thirds of homes used to be built by small and medium-sized builders, but that has declined to one third? That is at the heart of a chronic problem of capacity in the industry. If we are to build on the scale at which we intend to build—200,000 homes a year—their role will be key, and that includes the banks lending to them.
My hon. Friend is exactly right. We do of course need to unlock the ability for small and medium-sized enterprises to get access to finance and to be building the houses that we want.
Many of my constituents, particularly those under the age of 35, would love to buy their own home, but they simply cannot get a foot on the property ladder. Young people who manage to buy often do so only with help from their parents, but in cities such as mine most parents simply do not have the level of savings that would be needed to help their children in that way. The Government’s failure on housing means that an entire generation in Nottingham could be locked out of home ownership entirely, left to cope with the insecurity offered by the private rented sector and facing rents that are expected to soar by an average of 39% by 2020. The Opposition are clear: if the private rented sector continues to make up an ever-increasing proportion of the market, we must ensure that it is fit for purpose, provides good quality, affordable homes and offers tenants the security they so desperately need.
In a great university city such as Nottingham, large numbers of people are graduating with phenomenal debts because of the massive increase in fees, and in many cases they have very little chance of getting what might be described as a graduate job. That adds to their problems in raising the money either to rent or buy and provide services to the people of Nottingham.
I agree entirely with my right hon. Friend. One of the things that we would like to do in our city is ensure that more graduates stay in Nottingham and do graduate-level jobs, but their ability to buy a home is really important part of that offer. Ministers should come to Nottingham and see for themselves the misery that is being caused by the status quo before attacking Labour’s plans to take action and tackle the issue head-on.
There are excellent professional landlords in Nottingham who take pride in the standard of accommodation they offer, but some do not, and it is important to stress that the management of the private rented sector is not simply a good landlord versus bad landlord issue. The sector is complex, and landlords come in many guises. In particular, there is an emerging need to target so-called “accidental” or “amateur” landlords who are new to the sector—those renting out an inherited family home, letting a property whose owners are in long-term care, or who have bought a house for a family member to live in with others. According to Rightmove, home owners letting out their property as a result of circumstance make up as much as 30% of all landlords, and many are casualties of the recession. Those landlords are often inexperienced and can be naive about the standards and management needed to provide quality, well managed accommodation. With better advice, guidance and—yes—better regulation, we can help those people become responsible landlords who provide decent accommodation for their tenants.
Nottingham city council recently completed a review of property conditions in the city’s private rented sector and assessed the effectiveness of voluntary accreditation as a way of driving up standards. I agree that there should be greater national recognition of accredited landlords and the superior management and service they provide, but our local review concluded that although accreditation is an effective tool in driving up standards, on its own it will always leave a significant part of the market unprotected.
My hon. Friend Diana Johnson spoke about the way accreditation has been used in her city, particularly for students, and that is also the case in Nottingham. For other parts of the market, however, accreditation does not seem to work as well, and it remains a challenge to get landlords to join such schemes. That is why in Nottingham we have introduced an additional licensing scheme under an article 4 direction to manage the private rented sector better, especially in parts of the city with a high concentration of homes of multiple occupation.
Nottingham is a young city with almost a third of its residents aged 18 to 29. That high rate of young people can in part be attributed to the large number of students studying at our popular universities and colleges. The city’s growing student population has been the predominant driver behind the private rented sector’s wish to convert properties into HMOs, particularly in the Dunkirk and Lenton area of my constituency, but also in Radford, the Park, Wollaton Park and Lenton Abbey, which are close to the main campuses of the university of Nottingham. Uncontrolled development of HMOs has put pressure on the number of affordable rented properties suitable for families, and HMOs in high concentration have had an enormous impact on the resilience, balance, stability and sustainability of the neighbourhoods in which they sit.
People in my constituency who have campaigned on HMO-related issues believe that article 4 directions are still enabling HMO creation to take place, but in a controlled manner that benefits tenants as well as other residents in the neighbourhood. Accreditation and licensing are not mutually exclusive—they are complementary tools to improve standards.
The Nottingham experience indicates that the private rented sector, while needing to provide a professional service, is still not professional enough in its approach to rented accommodation, especially for students and other under-35s. In Nottingham that has contributed to the issues our city faces, but Labour’s plans would seek to address such concerns by providing more certainty, more stability, and greater protection for tenants and landlords alike.
Too many tenants and potential tenants face rip-off fees from letting agents. Landlords are being charged for services provided by the agent, and tenants are charged again for the same services. Despite facing fees averaging £355 every time they move, tenants continue to report difficulties in contacting their agents, and serious delays in getting repairs and maintenance completed. It is simply not good enough.
We need better management of the private rented sector, an end to rip-off agents’ fees, action to make three-year tenancies the norm, predictable rent rises, and more homes built to tackle the crisis in supply. Labour’s proposals have the potential to transform life for individual tenants and parts of my constituency that are suffering from the worst effects of the Government’s policies. It is astonishing that Ministers continue to oppose those proposals. Have they simply forgotten the thousands of people in Nottingham who are experiencing the greatest housing crisis in a generation? Well, we have not, and we will not.
I am pleased that we are debating the private rented sector. I suspect there will be many more such debates between now and the general election, because the situation requires urgent intervention, and in many respects a change in the law.
Like some of my colleagues who have already spoken, I represent an inner-London constituency, and we are facing the most acute housing crisis that I can remember, both in my time as an MP and before that as a councillor in a neighbouring borough. When I hold a constituency advice surgery—as we all do—I am frequently there for five or six hours, and 90% of the cases are about housing. Such cases are desperately sad: it is frightening to hear about what people are going through and the trauma of families being upheaved and forced to move out of the borough from one private rented property to another and another and another, with all the disruption that causes to their children’s education, their health and family relationships, and the damage it does to the community as a whole.
The ward where I live has a population turnover of almost 30% per year, which makes any kind of community cohesion much more difficult and voluntary organisations less well populated, and affects all the social infrastructure that is so important in our societies. We must consider the desperate housing need, not just in inner-city areas but in the country overall.
Does my hon. Friend agree that one of the biggest problems is that these constant moves often involve children? It is clear from the research that a child having to shift from one school to another—sometimes two or three schools in one year—is about as damaging to their educational opportunities as can be imagined.
My right hon. Friend makes a strong point with which I absolutely concur and which I understand well. It works like this: a family is in receipt of local housing allowance, and the landlord puts the rent up way beyond what the allowance enables them to pay; they do not have enough other income—either from a low-paid job or from other benefits—to make up the difference, so they have to move. There is no possibility of their getting another private rented property in the same community, so the council is forced to do its best by hassling various agents all over the place to try to find somewhere for them to live—my council does that all the time, and Camden council does much the same thing. The family is perhaps found somewhere to live in Enfield, Barking or wherever. They are there for six months, they have the temerity to complain about the conditions, the tenancy ends, and they get moved again. The children either have to be uprooted from one school to another in another borough, or make a long journey to return to their original borough—such as Camden or Islington—and try to maintain themselves at the same school. What kind of life is it for a seven or eight-year-old child to be dragged on a bus or train for an hour every morning to get to primary school and has to change time and again? Ask the teachers how the kids suffer because of that.
My borough is doing its best to provide as much council housing as it can. My hon. Friend Emma Reynolds kindly visited our borough last week, and she will have seen the excellent quality of our new build. Indeed, it is rather better quality than the current private sector new build: larger rooms, better accommodation, and more energy efficient—very good quality stuff. It is difficult to find land to build it on and expensive to do, but the social investment is enormous, as is the return for the whole community.
The message from the Government is that we should increase council rents to 80% of market value. That would be totally unaffordable for people who live in our existing council properties, and would mean that they could not accept even if they were offered them. We must maintain the social rented model and address the problems of housing in this country, essentially by building a lot more council houses.
Some 200,000 or more new households are created every year, and the number of new properties being developed in the country is around 100,000 per year. We are all into the science of managing shortages. Councils are doing that, as is everybody else, and the only safety valve is the private rented sector. The only safety valve in that is ever-increasing rents and the huge profitability that exists within that sector. We therefore need to do two things; the first is to support local authorities to build council housing.
I do not support the sale of council houses or big discounts on their sale, particularly in areas with enormous housing shortages, not because it makes a lot of difference to residents, if they remain living in them, but because later the properties might be sold on or rented in the private rented sector. The highest rent I have come across so far—there might be more in the pipeline—for a former council flat is £660 per week. For the person living next door in an identical council flat—possibly even in better conditions, because the council tends to look after things quite well—the rent would be about £100 to £120 per week. How can anyone possibly justify that discrepancy?
I support the Opposition Front-Bench team’s proposal for the regulation of letting agents and for the enforcement of much better conditions and much longer tenancies. In areas of very high housing demand—in London and other cities such as Oxford and York and in the centres of other cities—rent rises are huge. I have no idea where the Residential Landlords Association gets its figures from, but it claims that in the 12 months to March 2014, the rent increase in London was 1.4%. I tried this figure out on people in my community, but I only got as far as “1.4” before they started laughing. They said, “That must have been last week’s increase.” I have no idea where these figures come from, but these things are very important.
We seem to be presiding over a cowboy mentality among some, although not all, letting agents who think it okay to stick some scruffy piece of paper in a window saying, “No DSS allowed here”—they are a bit out of date: the Department of Social Security was abolished a long time ago and is now the Department for Work and Pensions; perhaps they should be educated about that. However, should anyone be allowed to say, “If you’re on benefits, you’re a second-class citizen and you cannot even apply”? Also, the “Panorama” programme has exposed the racial profiling that goes on, presumably under pressure from landlords saying they do not want any Muslims, blacks, Jews—or any other group they care to identify. To his credit, the Minister correctly agreed with me that this is criminal activity, completely wrong and has to be outlawed. I hope there will be serious prosecutions where it can be proved, as a lesson to others that we will not accept race discrimination in the housing market.
I hope that the House will support the motion. I do not know whether the Government will support it—I seriously doubt it—but I hope we can have not just the regulations outlined by my hon. Friend the Member for Wolverhampton North East but even longer tenancies. I also think there is a case for rent controls, particularly in areas of very high housing demand such as London. If we do not manage the private rented sector, control rents and build more housing in London, it will become a totally divided city: a city divided between those lucky enough to get social housing through councils or housing associations, those rich enough to buy and become owner-occupiers, and the rest, who will be spending all their earnings and savings on excessive rents. It will lead to labour shortages and economic decline in our big cities. We need regulation and a determination that we, as a nation, will solve the housing crisis and give all our kids somewhere decent and safe to live.
In the short time left, I want to address a couple of points that seem to be central to the argument from Government Members: that rent controls have destroyed the private sector over the past 50 years; that rents have not risen recently; and that there is no need for any of the proposals from Opposition Members and the shadow Minister.
I shall deal first with the claim that the private rented sector was destroyed by rent controls. I remember my great granddad living in a rented property, as many people did on Grange lane in Accrington, but as in many areas and cities across the country, his house was demolished under the post-war clearance scheme, and he was moved into social housing—a bungalow. Many thousands of people were moved out of private rented accommodation; it was simply slum clearance. The properties were not fit to live in, so in the post-war period, people were moved to new builds, which, in those days, only local authorities could build. The transition of people from the private rented sector pre-war to social housing post-war, and the reduction in the percentage of people in the private rented sector, was primarily down to slum clearance and the expansive building of social housing by local authorities. It was not the post-war rent controls that destroyed the private rented sector, but the quality of the housing stock, and that still applies today. With the rise of the private rented sector, we see a deterioration in the quality of the housing stock, which leads us, in a roundabout way, to the proposals from the Opposition Front-Bench team, which I welcome.
I also want to take on the claim that rents have not risen. I think the Minister said that earlier, but when I intervened on him, he quickly reeled back from that. He made it clear that the reason rents have not risen is that they are indexed to the capital value of property. He said that people have a choice between realising their assets in property or investing elsewhere. The reason rents have not risen that much is that the value of properties has not risen. The housing market has been stagnating for some time, which caps rents, because naturally if someone has £100,000 in property, they will look for where they can get the best value, and if they can get it elsewhere, they will shift that investment. So rents are inextricably indexed to capital values, and when we see house prices rise, we will see rents rise, as we are now seeing in London. Caroline Lucas, who is no longer in her place, said that in Brighton rents and house values are twice the national average, which clearly made the point about indexation.
Neither claim is true, therefore, which is why we need to do what my Labour colleagues have proposed: to put in place rent controls, to cap rents and to provide assurance to tenants. As my hon. Friend Jack Dromey said, we cannot have young children and families being put on short-term tenancies and then being moved out. It destroys children’s education and it destroys the lives of families. We have to deal with that so longer-term tenancies are also vital.
It is claimed that the public can get redress, but they cannot. We have seen legal aid cuts to housing, and it is very difficult for people in the private rented sector to get any form of redress. Our local citizens advice bureaux have seen a reduction in staff numbers, the so-called big society is shrinking rapidly and people are finding it increasingly hard to get redress on housing issues. It is not as easy as is made out—if someone has a housing problem with a landlord, everything will be all right because they can get legal redress. Actually, I do not think that that was possible at the start of this Government, and the situation has only been made far more difficult by changes to government funding.
It is said that there is choice and that private landlords do their best. The problem with the private rented sector in many areas, including mine, is the stock condition. No matter how many landlords or what type of landlord, 20% of properties in my area have category 1 hazards and 40% have category 2 hazards. Landlords are operating in a very difficult environment and with very poor housing stock, and they are not improving that housing stock. That is an issue, and choice does not come into it when there is an endemic problem of stock condition. The problem needs to be addressed in other ways. We cannot just say there is choice out there.
Finally, I return to the housing stock in Hyndburn. Post-war and pre-war, roughly one third of the housing stock was rented, and the same is true today. All we have seen is a shift between the different rental types of social housing and the private rented sector. That reinforces the point that one third of people in my constituency will always want to rent and that two thirds will always be owner occupiers. That is likely to carry on. It is a question of how we provide the one third of accommodation that needs to be rented. It is not about saying the private rented sector is better than the social rented sector. Given the time, I shall sit down and allow the Front-Bench speakers to wind up the debate.
I draw the House’s attention to my quarter share in a residential rental property, as recorded in the Register of Members’ Financial Interests.
We have had a wide-ranging and, at times, very moving debate today on a subject that is at the centre of family life for many households in the country. The unprecedented growth in the private rented sector over recent years takes us into new territory. The politicians and policy makers—and, I think, us collectively—need to update the regulations and the expectations that we have of this sector.
The most insecure sector is the private rented sector, and many tenants in it are among the lowest paid. They are without resources and often face the biggest challenges. In many areas, rents are still rising faster than our pay packets, with some industry estimates indicating that rents have risen more than 10% since 2010. In his well-researched speech, my right hon. Friend Frank Dobson spoke with real knowledge about the ruinous hikes and much greater than 10% rises in central London. As he rightly said, this is bad for tenants, bad for communities and bad for the key workers on which this city depends.
Almost 4 million households—around 9 million people—now live in the private rented sector, and the majority are let through an agent rather than directly through the landlord. My hon. Friends the Members for Nottingham South (Lilian Greenwood) and for Kingston upon Hull North (Diana Johnson) spoke with great knowledge of the problems caused for students by the letting agents in their areas. I listened with real interest to the action of the Hull student union to counter the difficulties caused by letting agencies and substandard landlords.
As we have heard throughout the debate, the problems associated with letting agents include rip-off fees, and we have heard of Shelter’s survey, which found that 94% of agents charge additional fees on top of rents and deposits—and additional fees can total over £700. That is why, given that the landlord is the client of the letting agent, we propose to ban fees charged to tenants. The lack of safeguards, including no right to a written contract or a guaranteed code of conduct, is another problem, while there is no proper accountability. Despite 8,000 complaints to the ombudsman about letting agents in 2012—50% higher than just four years ago—there have been very few prosecutions.
Perhaps the hon. Lady could answer the question posed earlier but not answered. In banning fees to tenants, what will Labour do to try to ensure that there are no increases in rent? After all, this can often happen at the beginning of a tenancy. Is Labour going to ban those fees, or not?
There is no evidence from Scotland that that has happened. I genuinely believe that people out there who are listening to this debate, many of whom will be experiencing these fees, will not understand the hon. Gentleman’s argument today.
Short-term tenancies are now the norm. Shelter’s mystery shopping of letting agents found that 29 out of 30 of them told landlords that they would offer the property on only a six or 12-month assured shorthold tenancy. As a result, 30% of private renters worry about their landlord or letting agent ending the contract before they are ready, and two-thirds would like to have the option to stay in their tenancy longer if they wanted to.
Living in uncertainty and being forced to move on regularly is not just a nuisance and expensive; it has other costs, too. Families are unable to settle or put down roots, and, as my hon. Friends the Members for Islington North (Jeremy Corbyn) and for Hyndburn (Graham Jones) reminded us, children often have to change schools a number of times or face long journeys and they lose any friends they make. They are rootless and their education faces massive disruption. These are the families who are not on doctors’ lists and not accessing preventive health care; it is members of these families who are turning up at A and E and being diagnosed with stage four cancers.
We have heard that families in the private rented sector are nine times more likely to move than those who live in other tenures—and often forcibly through eviction, as movingly described by my hon. Friend John McDonnell. That is why Labour has set out our proposals to legislate for longer-term tenancies. As my hon. Friend Emma Reynolds rightly said, Labour’s proposals to make longer-term tenancies the norm and to set a ceiling on rent increases would give families the support and the security they need to budget.
Providing a three-year tenancy may be great for the tenant, but what about the landlord, particularly the accidental landlord, who does not want to have to give away a three-year tenancy?
I am not sure that the hon. Gentleman was in his place when my hon. Friend the Member for Wolverhampton North East answered that question during the debate. She talked about how we need to ensure that there are protections in place for the short-term landlord. Believe me, I have a quarter share in a property, so I understand what it is to be an accidental landlord.
Lack of security of tenure means that tenants in the private rented sector feel less able to complain about poor standards. A third of these homes are “non-decent”, and we heard from my hon. Friend Jack Dromey the story of Kathleen who lost her home after complaining about its poor condition. I want to talk about some of the conditions that people experience in my own borough of Newham.
Newham is an area in east London that has seen a startling change in housing tenure over the years, as similarly and ably illustrated by my hon. Friend Dr Whitehead in respect of his home town. Over the last decade, the private rented sector in Newham has doubled from 20% to 40% of the housing stock, so it now stands at double the national average for England. Labour-led Newham council understood that the unprecedented growth in the largely unregulated private rented sector and increasingly poor housing conditions—not to mention income tax and council tax evasion—meant that something needed to be done. The council listened to the community it serves and showed real leadership by implementing a licensing scheme to tackle those who refused to play by the rules, whose poorly run properties ruin neighbourhoods and blight family lives through unsanitary, squalid, overcrowded and insecure tenancies.
Let me provide just one example of what Newham’s licensing scheme has uncovered. Seven adults and two children living in a small three-bedroom house were paying £2,300 in rent each month. The kitchen window was cracked with sharp edges in places and the bathroom window could not be closed. Fixtures, fittings and appliances were in such poor condition that they presented serious health and safety, fire and electric shock risks—and they did not even have a smoke alarm. Those tenants, afraid of losing their home, felt unable to complain. I am sure that Members will agree that those are terrible conditions for a high and unpredictable rent. High rents, low wages, the shortage of housing supply and insecurity of tenure all exacerbate conditions in which exploitative practices flourish.
I do not think that we have heard anything from the Government today to suggest that they understand that this housing crisis—and it is a crisis—is a major driver of the cost of living pressure on hard-working families. We are building less than half the number of homes that we need to build in order to keep up with demand. That creates conditions in which families can be ripped off by letting agencies, and can find themselves in exploitative, insecure, short-term tenancies, experiencing unpredictable rises in their rent bills. Our families deserve so much better, and I urge Members to vote for those families today. I commend the motion to the House.
I welcome the opportunity to debate an incredibly important issue, and to do so in a largely good-natured and constructive way, as Lyn Brown has just done. She showed real passion on behalf of her constituents, as she was quite entitled to do. I shall return to that shortly, but first let me also welcome the Labour party’s new-found interest in this issue, which they have developed four years after entering into opposition and, perhaps more significantly, 17 years after entering into government. They had a 13-year window of opportunity in which to tackle all the issues raised in their motion, along with all the additional issues that have been raised by Labour Members today, but they did not take that opportunity.
This coalition Government recognise that the private rented sector is playing an increasingly important role in the housing market. It has doubled to serve more than 3.8 million households, and many of those people value the flexibility that it offers them and choose, positively, to live in it. That is especially true of young people. The phrase “Generation Rent” was used by a number of speakers, including my hon. Friend Dr Huppert. I have spoken on a platform with the excellent people who are organising the “Generation Rent” campaign, and I recognise that the position of young people will be a serious issue in the run-up to the general election. I am proud of the fact that the Government are tackling many of the problems identified by that group and by other campaigning groups such as the National Union of Students.
The status of the private rented sector is extremely important, and it is actually performing very well. As I said earlier, the supply of private rented housing has grown to serve nearly 4 million people. As many Members have pointed out, during the current Parliament rents have increased more slowly than inflation, by an average of 1% a year. Overall, the quality of accommodation in the sector, which has been mentioned several times today, has improved. It is more energy-efficient, and there are fewer non-decent homes than in the past. The satisfaction levels reported by tenants themselves are high: 83% of tenants are satisfied, according to the most recent surveys. That is a higher percentage than reported following similar surveys of the public sector. I agree with my hon. Friend Jackie Doyle-Price: I too find, as a constituency Member, that many constituents come to me—sadly—with problems relating to the public sector.
The vast majority of people in the private rented sector move of their own volition. That is an aspect of the flexibility that the sector provides people, particularly during the early stages of their lives. I went through exactly that process myself. When I graduated from Bristol university, I spent one year in a one-room bedsit. I then spent three years in an attic; I had my own kitchen but had to share a bathroom. When I could afford it, I rented a one-bedroom flat, and then, when I could afford it, I entered the housing market.
Some Opposition Members will have had rather different social experiences. Nevertheless, we recognise that there are challenges that we need to tackle. The biggest challenge of all was mentioned by several Members. As we heard from my hon. Friend Mr Prisk, the former Housing Minister, we need to expand supply in this sector and, indeed, in all other sectors. We need to build more. John McDonnell acknowledged that the Labour party needs to have a good look at its past record, although perhaps, belatedly, it is learning some lessons in this regard.
We also need to look at the professional status of landlords and ensure that there is good management practice. We need to tackle rogue landlords, while not penalising the vast majority who provide a good service for their tenants. We need to make letting agents’ fees more transparent, and we need to meet the growing demand from families for longer tenancies. Those are the challenges, and the Government are taking action to meet them all.
We want the private rented sector to grow. We want more purpose-built accommodation in the sector, and we want it to attract institutional investment. We want more large-scale, professionally managed, high-quality, well-designed accommodation. My hon. Friend the Member for Hertford and Stortford asked what had happened to the £1 billion Build to Rent scheme that he launched when he was the Housing Minister. We believe that we are still on course to deliver 10,000 new units by 2015, and 16 projects are already under way. Due diligence is being done by the Homes and Communities Agency, and we hope to make further announcements soon.
We need regulation—smart regulation—only when it is appropriate. We do not want to adopt a blanket approach that would deter investment, add to cost pressures and increase rents. We want to crack down on rogue landlords but not to add to the burdens on ordinary landlords, such as the shadow Minister, who I am sure are providing a decent service.
Local authorities have a critical role in the sector, and we expect them to use the powers that are available to them to tackle the bad practice that sadly exists. Last year, we announced that £6.7 million would be made available to local authorities that suffer particularly complex problems with rogue landlords. We have provided £125,000 to Leeds city council to tackle the problems that it has identified. I am glad that the shadow Minister who wound up for the Opposition mentioned the problems in her constituency of West Ham. I am sure that she will want to thank the Government for the fact that they have provided £1 million to Mayor Wales in her borough to deal with the problems there—far and away the biggest investment we have made out of the £6.7 million.
There is a whole suite of legislation that local authorities should be using. The basic duty is to provide accommodation that is in a fit and proper state to be let. That covers all sorts of things, including electrical safety. That is why we have provided these resources to local authorities. The powers are there. Where there are particular problems, we have given the resources to deal with them. Already once in this Parliament, in 2012, we updated the guidance—I am answering the hon. Gentleman’s question—to local authorities and we will update it again this year, so that everyone is clear what powers are available to deal with and prosecute, if necessary, rogue landlords. We have removed the cap on the £5,000 fine, so that if local authorities find that there are problems, magistrates have the freedom to ensure that they can issue the strongest possible penalties to root out bad practice in the sector.
On letting agents, we have already announced that they will be required to join an ombudsman scheme. In April, we approved three schemes. Secondary legislation is going through to ensure that all letting and property management agents belong to such a scheme. Just a couple of weeks ago, we published the “How to rent” guide to empower tenants with better information, so that they know their rights. That publication has been warmly received in the sector. We are working, genuinely, with the Royal Institution of Chartered Surveyors to update the code of practice on that area.
“Rent controls are not going to work in practice.”
I assume that she has changed her mind since that time.
I have only two minutes left, so I will finish my points.
As we all know—the evidence is there—before the Housing Act 1988, the private rented sector shrank to just 9% of households. Since then, it has doubled to 18% of households. Evidence from Britain and around the world shows that rent controls always lead to fewer properties on the market and higher rents.
We have also been working on a model tenancy agreement, which will be published soon. To answer the question asked by Diana Johnson, that will indeed address the issues that students face.
On letting agents fees, we have announced that there will be a requirement to belong to an ombudsman scheme. In the Consumer Rights Bill, which went through this House last week, we outlined provisions to deal with that. There will be transparency on fees. That will root out the practices that we all deplore and agree are wrong: double charging for credit agreements and changes to tenancy agreements. That should not be happening. We think that transparency and the fine for not belonging to the ombudsman scheme will largely root that out.
We all agree that we need to build more housing of all tenure types, but the Labour party presided over a bubble and a crash in the private rental sector and a huge contraction in the number of social houses available. The coalition has seen strong growth and the most ambitious affordable housing programme in a generation.
The motion shows Labour is playing catch-up with the Government. We have published a guide to renting, and we are about to publish a model tenancy; Labour failed to do both while in office. We have introduced an ombudsman scheme for letting agents; Labour failed to do that. We are introducing transparency over fees and a fine for non-compliance; Labour failed to do that. We are giving guidance and resources to tackle rogue landlords; Labour failed to do that.
The private rental sector is important and growing. The Government want it to provide an attractive, purpose-built investment for landlords, but also, crucially, a safe and secure home for tenants. The motion ought to be a lament about the lack of Labour action over 13 years. As with the economy, however, there is no apology and no credible remedy, and I urge colleagues to reject it.