New Clause 29

Housing and Regeneration Bill – in a Public Bill Committee at 9:00 am on 24th January 2008.

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Mandatory licensing of houses in multiple occupation

‘In section 55 of the Housing Act 2004, for subsection (2), substitute the following:

“(2) This Part applies to the following HMOs in the case of each local housing authority:

(a) any HMO which comprises three storeys or more or which is occupied by four or more persons who live in two or more households;

(b) any other HMO which falls within any prescribed description of HMO, and

(c) if an area is for the time being designated by the authority under section 56 as subject to additional licensing, any HMO in that area which falls within any description of HMO specified in the designation.”’.—[Dr. Blackman-Woods.]

Brought up, and read the First time.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods PPS (Rt Hon Des Browne, Secretary of State), Ministry of Defence

I beg to move, That the clause be read a Second time.

With the new clause, we are using the opportunity provided by this aspect of the Bill to press the Government to extend mandatory licensing beyond what is outlined in the Housing Act 2004. There is clear evidence from Shelter and within the House from the all-party group on balanced and sustainable communities that the current threshold leaves thousands of vulnerable tenants in very difficult circumstances and at risk, because they fall outside the scope of the mandatory licensing system.

We also know that many local authorities, which can have an additional licensing or selective licensing scheme for housing, refuse to do so even when there is a strong local need, such as in my city of Durham. In Durham, there is an extensive private rented sector because of the student population and because Durham is a centre for the county. There is a real need in the area for an extended licensing scheme, but that has not been undertaken by the people in the local authority, for reasons best known to themselves.

Good landlords have assured me that they have nothing to fear from an extension of mandatory licensing, so the new clause pushes the Government to introduce mandatory licensing for all houses in multiple occupation with more than four occupants or with three storeys or more. Currently, licensing is mandatory for dwellings with five or more occupants and three storeys or more.

The previous Minister for Local Government, now the Minister for the Environment, gave assurances at an Adjournment debate last June that this situation would be considered seriously. I know that the Government announced a review of the private rented sector yesterday, but I want to press the Minister on this. The Government should seriously consider making changes to the mandatory licensing scheme so that tenants are better protected and there is better management across the whole private rented sector.

Photo of Lyn Brown Lyn Brown PPS (Rt Hon John Denham, Secretary of State), Department for Innovation, Universities and Skills

I support the new clause in the hope that we might broaden the coverage of the current licensing scheme. Even Government figures estimate that the scheme covers only 120,000 houses in multiple occupation—only 19 per cent. of the 638,000 estimated HMOs in England. The mandatory scheme for larger houses places an onus on landlords to register properties, and gives councils a chance, at least, of regulating the circumstances in their areas.

There are two principal reasons why I support the new clause. First, the mandatory scheme covers only homes with three storeys or more. In my constituency, most houses have two storeys and there is very little accommodation with three storeys. My hon. Friend the Member for City of Durham talked about the students who occupy such homes in her area, but in my area we are talking about migrant workers who have come to build the new city at Stratford and the Olympic site. My constituents and I are in a borough with the largest building site in Europe. Understandably, for such a large-scale property development and project, the migrant workers will be with us only temporarily. They tend to secure accommodation close to the site where they work, in small houses with many people to a room. As construction efforts ratchet up, more workers  are required on site, and that has led to overcrowding as workers share accommodation to keep costs down. Constituents have told me that hot-bedding is rife. That is when a bed is shared by many people on different shifts.

Photo of Margaret Moran Margaret Moran Labour, Luton South

May I emphasise the point that my hon. Friend is making? In the 1950s and 1960s, in Luton, hot-bedding was the norm when Irish construction workers came over to build Luton, and subsequently. That has not happened for generations, but is now happening again in areas such as mine that are part of the new Milton Keynes/south midlands growth area. We are starting to experience exactly the same problems.

Photo of Lyn Brown Lyn Brown PPS (Rt Hon John Denham, Secretary of State), Department for Innovation, Universities and Skills

I thank my hon. Friend. Hot-bedding might be acceptable on a nuclear submarine, but it does not make for sustainable communities. The pressure on accommodation is so great that lock-up garages and garden sheds have been illegally converted into accommodation. On 2 January, the Newham Recorder, a fantastic local campaigning newspaper, reported the death of an individual who had been living in a lock-up garage on the Romford road. It seems that a heater in the garage caught fire while he was asleep. The conflagration was so intense that it has not yet been possible to identify his body, but he clearly was sleeping and had furniture in a lock-up garage.

Migrant workers are being charged a huge amount for the privilege of hot-bedding and, we think, sleeping in lock-up garages. They are in poor-quality accommodation and seriously overcrowded houses. Last night, at a meeting in my constituency, a constituent told me of a two-bedroom house in Plaistow in which more than 14 men live. The problem is not small; it is widespread. Given that the homes are too small for the number of people staying in them, mere living is being exported outside the confines of the house. Living happens in the street and the garden. It is insanitary.

I have lost sight of the number of complaints that I have received from constituents about this issue, which is leading to home occupier flight. While the population temporarily rockets, long-term residents find the associated pressures too great. I am repeatedly told by neighbours and friends in the community that they have had enough. They are putting their homes up for sale, but the problem is that when they do so they sell to people who then rent the house out, so the situation gets worse and worse. The exceptionally high occupancy levels cause real stress, and the current licensing scheme does little to protect those in smaller houses in multiple occupation. More than 80 per cent. of such homes are not covered by the mandatory licensing scheme, and the majority of those in my constituency fall outside the mandatory threshold.

The new clause would increase the number of properties that came within the scope of the regulations. As I stated earlier, very few of the houses in multiple occupation in West Ham are three or more storeys high, so the current legislation ignores large swathes of the sector. Those smaller properties are much more likely to be owned by smaller-scale and more informal landlords,  and to have a greater impact on the area in quieter more residential neighbourhoods; under the new clause, instead of a property being required to have three or more storeys and a significant number of residents, either criterion would qualify it to be an HMO eligible for regulation.

I recognise that we cannot overburden the sector with unnecessary regulation and local authorities with additional properties to inspect and regulate. However, as I have outlined, the problems caused by HMOs are significant enough to justify the new clause. I urge the Minister to accept it, and to place an onerous financial burden on landlords caught flouting the law. The last thing that is needed is for the Minister to accept the provisions but for a derisory penalty to be imposed on landlords, given the amount of money that they rake in by overcrowding homes and burdening communities.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government) 9:15 am, 24th January 2008

I pay tribute to the passionate and tenacious manner in which my hon. Friends have raised the issue. They have raised it with me on many occasions, and I pay tribute to their campaigning skills on affordable housing, overcrowding and problems of houses in multiple occupation.

I shall give the Committee the context. The Labour party manifestos of 1997 and 2001 made a commitment to introduce the mandatory licensing of HMOs to raise standards in such housing, which, as we have heard, is often poor quality and badly managed. Consultation on those pledges indicated widespread support for that approach. However, the Government were keen to avoid the excessive regulatory burdens to which my hon. Friend has alluded and therefore wanted licensing of HMOs to be a properly targeted measure. It was decided that mandatory licensing should apply to those properties with the highest risk, which often provide the greatest management challenges.

Photo of Lyn Brown Lyn Brown PPS (Rt Hon John Denham, Secretary of State), Department for Innovation, Universities and Skills

Does my hon. Friend accept that the greatest risk is not necessarily a question of the size of the building; it may be a question of the area in which it sits and the local circumstances?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

My hon. Friend has raised a good point, and I shall come on to that.

A 1997 report commissioned from the consultants Entec entitled “Fire Risk in HMOs” concluded that the fire risk in HMOs is greatest for occupants in properties of three or more storeys, and that the level of occupancy also influences risk. Given that the legislation is designed to catch those properties that pose the greatest risk to occupiers, if the largest HMOs pose the greatest risk, drawing the line at three storeys and five persons, which is the current position, was and is right, notwithstanding the concerns expressed by my hon. Friend the Member for West Ham. However, the “prescribed description” of a mandatory HMO is contained within an order, so if further evidence suggests otherwise—the evidence that my hon. Friend the Member for West Ham has provided is top notch—it can be easily changed, which is why the measure was not included within the Housing Act 2004. It was important to explain why the definition is as it currently is, and why it is based on the risk to occupants.

Now I will turn to some related issues that are not directly connected to the risk to the occupants of HMOs, but that will resonate with my hon. Friends the Members for City of Durham and for West Ham, who tabled the new clause. My hon. Friend the Member for City of Durham has concerns about balanced communities—I know that, because she is a near neighbour of mine in the north-east and a tenacious campaigner for affordable housing. At her invitation, I attended a seminar in her area on affordable housing, and I pay tribute to her work. That work is sometimes in conflict with the local authority, which does not seem to prioritise housing as my hon. Friend does—I think that she has the measure of her constituency absolutely right.

My hon. Friend has a beautiful city as her constituency, and she has a beautiful and extremely prestigious university in her constituency. Most student housing that is owned and managed by the educational establishment providing courses in higher or further education to students is exempt from mandatory licensing, due to three nationally approved codes of management practice for that particular sub-sector.

On student accommodation that is not owned and managed by educational establishments, my hon. Friend will no doubt be aware of, and will no doubt contribute to, the measure that we are about to consult on, namely the changes to the use classes order in relation to HMOs. We need that consultation to allow the Government to consider whether local authorities need to have more planning control over the future establishment of HMOs and their density. A small working group is also being set up to examine how the relevant agencies can better work together on the concentration of that particular sub-sector—the so-called “studentification” of an area—via a non-legislative route. I hope that my hon. Friend will contribute to that consultation and feed in her concerns through that process to me, which I am sure that she will do.

Notwithstanding the contribution that students make to the economy of a town or city—I certainly want to see a university of Hartlepool, and I think that a university is important for generating prosperity in an area—there can be management issues in relation to properties predominantly housing student tenants, such as smaller HMOs, perhaps in targeted, specific areas. That is why the Housing Act 2004 gave local authorities the power to designate areas subject to additional licensing, where proper local consultation has been carried out and consent has been given by the Secretary of State. Additional licensing allows licensing to be focused on particular circumstances and in particular areas where there are problems for members of the wider local community caused by the poor management of privately rented property.

The provision for the introduction of additional licensing schemes will also apply in the instances that my hon. Friend the Member for West Ham outlined today—she also outlined them on Second Reading and in an Adjournment debate last year about housing in West Ham to which we both contributed. Indeed, many hon. Members have encountered problems involving smaller houses, which were perhaps initially designed for families but have now been let by landlords to multiple individuals. As a result—my hon. Friend put this far more eloquently than I could—those houses  are often overcrowded, causing health and social problems to the detriment of their occupants. They are also a nuisance for the wider area, causing issues such as excessive car parking, which sometimes occurs in student areas, and waste collection problems. My hon. Friend will recall that I wrote to her on 14 January outlining how the proposed changes and new regime might work in her constituency, and I am keen to work with her to follow that up.

If additional licensing is introduced in a local authority area and a landlord refuses to obtain a licence for a property, the local authority could prosecute the landlord, and the courts could award a fine of up to £20,000. I think that that addresses the point made by my hon. Friend the Member for West Ham that the level of punishment needs to be commensurate with the level of rents that the landlord may be fleecing from the tenant. Similarly, if a landlord breaches the conditions of a licence, such as the level of occupancy, for example, the courts could fine the landlord up to £5,000 for committing a criminal offence. I imagine that my hon. Friend agrees that the penalty will have a real bite on non-compliance.

Photo of Grant Shapps Grant Shapps Shadow Minister (Communities and Local Government) (Housing and Planning), Co-Chair, Conservative Party

I support the direction of the new clause, inasmuch as I know from my experience of representing a university town—Hertfordshire university is in Hatfield—that many of the problems mentioned by hon. Members are very real. Will the Minister accept that many local authorities do not have the resources to do the kind of checking or to make the sort of investigations that would lead to the severe fines and penalties that he outlines? Is that not one of the problems with the existing legislation, let alone with further amendments to it?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I suggest that local authorities need to target resources according to the particular concerns of the residents and pressure from elected members and hon. Members. The approach that my hon. Friends have taken is, I know, close to hand because of the media interest. Indeed, because of the tremendous campaigning work that my hon. Friend the Member for City of Durham has done, I know that she is pushing a reluctant local authority, and I pay tribute to her for what she has achieved. That is the way to deal with possible burdens.

In addition, the Housing Act 2004 offers local authorities the power to serve overcrowding notices on non-licensable HMOs, such as houses that do not fall under mandatory selective or additional licensing schemes, should there be a risk to the safety and welfare of occupants. We will talk about overcrowding later, but the overcrowding notice must specify the maximum number of persons for which a room is suitable for use as sleeping accommodation, or that a room is unsuitable to be used as sleeping accommodation.

Local authorities can develop their own overcrowding standards on room sizes for privately rented HMOs, and houses that do not comply with the standard can be served with an overcrowding notice. If the landlord or manager of the property breaches the notice conditions, an offence is committed, and they can be fined up to £2,500.

Photo of Lyn Brown Lyn Brown PPS (Rt Hon John Denham, Secretary of State), Department for Innovation, Universities and Skills

Will the Minister accept that it is difficult for councils to identify those homes that are currently massively overcrowded, as they do not need to be licensed? There are many streets in my area where people live in temporary accommodation or houses in multiple occupation, because of the way in which the housing market is going. That is the result of, first, the pressures caused by property in east London being cheaper than property elsewhere in London, which makes it an attractive buy for people who want to get their first foot on the housing ladder in London, and, secondly, the building work taking place in Stratford. Because of those concerns, it would be so much easier if all HMOs needed a licence. It is harder for the council to identify those houses that are not expected to have or do not need a licence.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

My hon. Friend has brought me nicely on to my next point, which has also been alluded to by my hon. Friend the Member for City of Durham, namely the review of the private rented sector that my right hon. Friend the Minister for Housing announced yesterday—she may have referred to it when giving evidence in December. I do not expect it to act as a magic wand—the review will not solve all the problems overnight—but it will be important to collect the evidence, as it will allow us to move forward on future legislative proposals. In a moment, I shall mention certain things that are in the terms of reference of the private sector review that will help with my hon. Friends’ concerns. I urge them to contribute to the review, and I will ensure that they can speak to those who are carrying it out.

Photo of Margaret Moran Margaret Moran Labour, Luton South

I want to reinforce the point. Is the Minister aware that my constituency is another low-cost area? People come from London, because it is cheaper to rent in Luton. My hon. Friend the Member for West Ham has mentioned people living in sheds and garages, which are not caught by existing legislation because no one perceived that people would convert such buildings—indeed, some of those places are not converted, and people are living in outbuildings. Unscrupulous landlords are exploiting poor migrant workers and others, which is not caught by the existing legislation. Will the Minister ensure that that is covered by the review?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government) 9:30 am, 24th January 2008

On the broader point, that is why I welcome my hon. Friend’s support for a massive increase in the supply of housing, particularly social housing. We need to address the imbalance between housing demand and supply, which is what the Bill tries to do.

Let me mention several of the issues that the private rented sector review will look into, because I think that that will address the points raised by my hon. Friends. One issue that the review will consider is very interesting, given that my hon. Friends who tabled the new clause represent two distinct areas, with different characteristics and different problems—West Ham is not the same as Durham. The review will look at the composition and regional characteristics of the private rented sector, who lives in it and who the providers are. I want to collect the evidence that my hon. Friends have provided to contribute to the review.

Another issue, which picks up the point raised by my hon. Friends about migrant workers being exploited, is what impact demographic and social change might have on future demand and supply pressures in the sector and how key players should respond. The review will also consider future regulation and examine what more could or should be done, given the recent regulatory changes, to ensure that we have a professionally managed quality sector to meet demand pressures. Finally, there is the issue of tenant and landlord views and experiences of the sector. What are their priorities for change, and how can those priorities contribute to policy development?

I urge my hon. Friends to contribute to the review to ensure that it is as robust as possible, and I shall invite them to talk to Julie Rugg and David Rhodes from the centre for housing policy at York university, who will be carrying out the review. It is important that we have my hon. Friends’ experiences, anecdotes and evidence, and the people leading the review could go to West Ham and Durham to find out what is going on in the private rented sector to ensure that they are as informed as they can be, so that any future legislative changes are made with the greatest authority.

Photo of Robert Syms Robert Syms Conservative, Poole

The Minister will be aware that high levels of students cause problems in certain areas as a result of what is called studentification. I have listened carefully to him, and I assume that the review of the private rented sector will pick up some of the problems in areas where high levels of students have an impact on the housing market.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I hope that the hon. Gentleman will forgive me if I did not make myself clear—or perhaps he came in slightly later—but I have mentioned the problems of studentification. As I have said, we are about to consult on the use classes order. The problem has certainly been raised with me; I have responsibility for it; and I am keen to look into it.

I hope that I have covered in depth some of the issues that my hon. Friends have rightly raised. With the greatest respect, however, I must tell them that the new clause does not achieve anything that cannot be achieved via existing statutory provisions for regulating the private sector, such as additional licensing and overcrowding notices. However, there are certain concerns, which we will need to tackle when we are looking further afield as part of the private sector review. Given what I have said and the fact that I am extraordinarily sympathetic to my hon. Friends and want to help them as much as possible, I hope that I will be invited back to the beautiful city of Durham and to West Ham—I want to go on tour. In the light of what I have said and of my sympathy for my hon. Friends and their great campaigning work, I hope that they will consider withdrawing the new clause.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods PPS (Rt Hon Des Browne, Secretary of State), Ministry of Defence

I thank the Minister for his generous comments and for the sympathetic way in which he has approached the issues. As my hon. Friends the Members for West Ham and for Luton, South have demonstrated, we need to re-examine the issue, regardless of the circumstances that lead to areas having a lot of private rented housing. We also need to consider extending not only mandatory licensing, but use class orders as they affect HMOs, as the Minister has said.

The Minister has given us a lot of information about the private rented sector review, and he has generously stated that we can be involved. I shall be happy to welcome him back to Durham to talk to local landlords, students and others. We shall certainly present the evidence that he has requested. Because of the review that was announced yesterday, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Having, as the Americans say, gotten up hours ago, I have now woken up, and it has dawned on me that this afternoon’s business is likely to involve a certain amount of interruption. I suspect that there will be several votes in the House that will inevitably entail the suspension of the Committee, so that we shall lose time. I know that it is Thursday afternoon and that some hon. Members have a long distance to go back to their constituencies, but I am in the hands of the Committee. Ordinarily, as hon. Members know, we do not sit for more than three hours without a break, but given that there will be breaks for votes, if the Committee wishes to have injury time and to sit for longer, which is, again, a matter for the usual channels, I see no reason why we should not sit until the rise of the House.