Housing: Rented Sector — Motion to Take Note

Part of the debate – in the House of Lords at 3:52 pm on 12th July 2012.

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Photo of Lord Greaves Lord Greaves Liberal Democrat 3:52 pm, 12th July 2012

My Lords, it is always a pleasure to follow the noble Lord, Lord Morris of Handsworth, and I, too, thank the noble Baroness, Lady Rendell, for sponsoring this debate.

I want to talk, rather more narrowly, about the particular problems in the part of the world where I live, but I associate myself generally and, in most cases, specifically with the remarks of my noble friend Lady Scott of Needham Market who provided a more general overview.

We are talking about problems faced by families in the rented housing sector. I want to talk about that sector in the area I know best, which is east-or Pennine-Lancashire, the borough of Pendle, the town of Colne, and the ward of Waterside, which leads me on to declaring my interest as a councillor for that ward. I specifically want to talk about that part of Colne and similar parts of Nelson, such as Southfield, which are typical of many areas throughout the north of England and other parts of the country.

We are talking about areas of cheap terraced housing-houses in my ward that are now selling for, depending on location and condition, anything between £30,000 and £65,000, and which at the height of the housing boom might have cost between £50,000 and £75,000. Ten years ago they were selling for between £20,000 and £50,000, and in 1970 you could pick up quite a decent two up, two down, well looked-after modernised terraced house for £1,000. This is cheap housing, and it is no wonder that it has been attractive to buy-to-let landlords in more recent times. The rents in such areas now might be around £400 a month-£80 a week, or of that order-which local people think is outrageous, and everyone else thinks is quite cheap.

These are traditional areas of owner-occupied terraced housing. They were built perhaps 100 to 140 years ago for the people who worked in the mills. They were bought through a form of rental purchase, through deductions from people's weekly wages. When you had paid enough through rental purchase, you got the deeds, so there is a tradition of working class owner-occupation in those areas.

In the 1960s and 1970s there was a massive programme of improvement of those houses. In 1970, in the ward I was elected for then, which was a bit smaller than the present ward, 70% of the houses had outside lavatories, and most of those were the famous tippler toilets, or long drops, or waste water closets. I have explained to noble Lords in the past exactly how they worked, and I will not do so today, but WCs they were not. The houses had no bathrooms, and some of the worst had one cold water tap, and perhaps a little plastic geyser to heat water. That was all.

Since then there has been a huge programme of improvement, through a programme of standard and improvement grants in the 1960s, 1970s, and into the 1980s, which were provided by local authorities but for which up to 90% of the subsidy was provided by central government. A huge amount of public investment went into those privately owned houses, together with area improvement schemes such as general improvement areas and housing action areas, and the associated environmental improvements. It is not an exaggeration to say that large numbers of those areas were rescued from the bulldozer by such schemes. More recently we had the Labour Government's housing market renewal scheme, which again provided investment, although in a different way, into some of those areas.

Forty years ago, the private rented sector in these areas was limited, but it existed. They were mainly slum landlords. I say that without any qualification. You could get a house 40 years ago for a rent of 50 pence a week, but what you got was not very nice. The improvement schemes I have talked about by and large drove out those private landlords. Some of their houses were the worst in the area and were knocked down and cleared. Large numbers were purchased by the local authority, either voluntarily or by compulsory purchase schemes, and were often either improved by housing associations or have been subsequently transferred to housing associations, and are now providing perfectly decent accommodation.

Since the end of the 1980s, the private rented sector has made a reappearance. One noble Lord said that 1991 was the low point of private rented accommodation in this country. In the whole of Waterside ward, which I represent, in the census 10 years ago there were 17.6% privately rented, and in the ward in Nelson that I am talking about, Southfield, there were 16.9%. It is significantly more than that now. I suspect it is about 25% in both of those areas. In critical areas, where it is causing real problems, it is now up to 30%, 40% or 50%.

The causes are well known: the deregulation of rent, for instance. My noble friend said that rent control had, in the past, resulted in poor conditions. There is no doubt that that was the case, and it was one reason why rent controls were abolished. However, the deregulation of rent has allowed people to move in on a market basis. The second factor is the relaxation of security of tenure.

The third is the large amount of finance available for buy-to-let schemes. Let us not think that buy-to-let purchases are no longer taking place. People who do not live in areas such as Pendle look at these prices and think that the houses are incredibly cheap. They work out how much rent they can get and still make quite a substantial profit from a buy-to-let purchase. Many are absentee landlords. I have to laugh at some of them. From time to time, I get an absentee landlord from, typically, London or the south coast ringing me up. They say, "We're ringing you because we understand you are our councillor". I say, "No, I'm not. You live in London". They say, "Yes, but I own a house in a particular street in your ward. I had these tenants who weren't nice people and they wrecked the house. Then they just moved out and I'm left with a real problem. I can't let the house because of the condition it's in. What are you going to do about it?". My answer is, "If you will donate your house to the local authority, I will do something about it. Apart from that, it's your responsibility. You bought the house and you know what the street is like". They reply, "Oh no. I've never been there". They probably bought it at an auction without seeing it. They "manage it" through a local letting agency and that is the extent of their personal involvement with it. I say to them, "I consider that you are an anti-social person and you deserve an ASBO". They do not like that and they put the phone down.

That is the difficulty that we have. We have had people living in Johannesburg, Jerusalem and all over the world-it is quite astonishing-but, in particular, they live in London or on the south coast for some reason, and they have been causing real problems with these houses.

The laws and rules that govern private rented accommodation, as with so much else in this country, have been designed for London, the south-east and the big cities. They have not been designed for areas such as ours, where the problems and consequences are quite different, and they have been a disaster. Of course we have good local landlords who own a house in the same street or who let out a house where elderly relatives have moved on or whatever, and we have lots of good tenants. However, the situation with private landlord accommodation in areas of cheap terraced housing where the market is not buoyant, where it is difficult to sell houses and the vacancy rate is high, is entirely different from the situation in London, in particular, where the main problem is a shortage of housing.

What are the consequences? Despite what I have been saying, people buying to let have kept prices higher than they would otherwise have been. Noble Lords may think that the prices I have quoted are ridiculously low for housing but they are higher than they would have been. Ours is a low-wage area and, like many others, it is struggling to keep going in the present economic circumstances. That, together with other factors, such as the impossibility of getting a mortgage, has pushed down the potential for young couples to buy these houses.

I have talked about absentee landlords letting through agents and having no personal, hands-on involvement in the management of the houses. A lot of these properties have a high turnover of tenants. People move in, live there for a year and move on to the next town or to another part of the town to a similar property. This has huge consequences for the area and for local schools, for example, where pupils do not stay for very long and move away, often missing schooling in between. This results in some problem tenants.

I do not suggest that all people living in private rented accommodation cause problems. Clearly, they do not. My daughter lived in a house in my ward last year. It was a very nice little house and she is a very nice tenant. However, you need only one problem family to cause real problems in a street. While they are being moved on, persuaded to move on or whatever, those problems are there. It results in other people in the street saying that they have had enough and moving out, whether they are owner-occupiers or tenants, and in the deterioration of some properties. If you then get two or three of them together, and particularly if the empty properties get vandalised, the problems in those streets are huge and the only way they can be solved is by the active intervention of the local authority. That costs a lot of money and a lot of resources-and there is not a lot of that around at the moment. Councillors, the council, other agencies, residents and, indeed, the residents' groups that exist in many of these areas are waging a defensive battle. It is damage limitation against what is, in these areas, a lose-lose situation.

There have been lots of initiatives over the years. Housing market renewal came and provided hope on the horizon, but that has all gone away. We now have an empty homes initiative from the present Government, although we do not know whether it will work. Local authorities grasp whatever is offered to them, but one problem is that there is no consistency. I keep saying that local authorities are presented with one lot of schemes and solutions, which then goes away and they have to grasp the next one. It is about always running to keep up.

A few years ago, the Housing Act 2004, I think, introduced the concept of selective licensing of private sector landlords. We looked very hard at this, in both the areas I am talking about, but in the end the council felt it could not go ahead with it. That was partly because it did not stack up financially and the council would have had to substantially subsidise it and partly because it was no way to tackle the problem of empty houses. Poor landlords could simply opt out of the scheme by leaving properties empty, which was obviously a lot worse than having tenants in.

Following the Rugg report, the previous Government talked about a national landlord registration scheme. It is interesting that the Welsh Government have-only last week I think-issued a consultation paper suggesting one in Wales. That would go some way towards tackling the problem, because it would at least provide people with facts and information and provide councils with a way of relating directly to landlords. Voluntary accreditation schemes do not work because the people who join them are the good landlords. They are worth while for them but do not tackle the ones we really want to tackle.

I do not know what all the answers are. I am absolutely certain that solutions developed for areas such as London where the housing market is grossly overheated have very little relevance to us. We need the flexibility to tackle things in different ways in different parts of the country according to the circumstances of the housing market in those areas.