[Mr. Clive Betts in the Chair] — Private Landlords (Local Regulation)

– in Westminster Hall at 12:00 am on 21 October 2009.

Alert me about debates like this

Motion made, and Question proposed, That the sitting be now adjourned.-(Mr. Ian Austin.)

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley 9:30, 21 October 2009

Private landlords have been a feature of big cities for as long as big cities have existed in this country and other countries. People such as Peter Rachman are part of the vocabulary and folk memory of urban working-class communities. Virtually all working-class people from the inner cities have tales to tell of bad landlords and of what has happened to their families. However, what happened in the mid-1990s in Manchester and other northern cities-it was primarily northern cities-was a particularly malevolent variation on the theme of bad landlords exploiting poorer communities.

During the recession of the early and mid-1990s, the price of houses dropped, and that was particularly true for terraced houses in small towns and larger cities. Many drug dealers then used their excess disposable income to invest-if that is the right word-in terraced housing. Many of them had a business plan, which went something like this. They would buy one property in a row of terraced houses in what had previously been a decent and often long-established neighbourhood. They would then put in friends or tenants of a particularly rowdy and antisocial nature. Sometimes, those tenants would form shebeens, although they were often just deliberately and knowingly antisocial, and that drove other people out of those streets. As the value of houses dropped in the recession, more poor tenants came into the area. Eventually, these landlords ended up owning most of the street, and their income would be paid out of the benefits system. They did not look after the houses or the area-there were lots of complaints to local councillors and MPs-so there was a real possibility that the public purse would again have to pay for those houses when compulsory purchases came along.

When I was first elected to the House in 1997, this blight was affecting north Manchester-my hon. Friend Tony Lloyd is also here, and he will know that the same was true in east Manchester. At the time, I believed that we required the regulation of private landlords, but before I get on to selective licensing and regulation, let me make an aside. To understand the problems of urban regeneration and of supporting private housing, council housing and registered social landlords, we have to understand some of the drivers that have led people to leave long-established areas. If the Government do not understand such crucial factors, they could waste money trying to regenerate areas.

Having been elected, I was keen to pursue proposals to register every private landlord. Private landlords had the ability to make people's lives absolutely miserable and to destroy whole neighbourhoods, and the evidence showed that they had done that in certain areas. If we insisted on licensing people who sold alcohol-I can think of many other licenses as well-I could see no reason why we should not license people who rented property to others to make them responsible for the way in which they did that.

Interestingly, in the past 12 months, Rugg and Rhodes have proposed a similar solution to the problem of private landlords in their report "The private rented sector: its contribution and potential". They have proposed light-touch regulation that encompasses the whole private rented sector, and having experienced selective licensing schemes, the problems associated with them and the resources required to maintain them-I will come to those later-I think that improving the system introduced in the Housing Act 2004 is probably a better way forward than regulating the whole private housing sector.

I was bound to say at some stage in my contribution that although there are bad private landlords, there are, of course, also good ones, and I want to focus on improving the regulation of private landlords to deal with the problems that have been created.

Photo of Bob Spink Bob Spink Independent, Castle Point

There are good landlords in Castle Point, but the problems in the private sector there are quite different. Landlords are reluctant to take on people on housing benefit as tenants, and Julie Rugg found that there were problems in that segment of the housing market. The issue of housing benefit and tenants is very complex and will need careful handling. Will the hon. Gentleman ask the Minister to set out what the Government will do to resolve the problems that he has eloquently annunciated and the problem of private landlords who refuse housing benefit tenants, as in Castle Point?

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley

The hon. Gentleman makes an interesting point. When I started trying to persuade the Government to regulate private landlords, although I did not use quite those words, the then Housing Minister wrote to me to say that the Government were not prepared to regulate private housing, because that would damage the private rented sector in London and the south-east and lead to homelessness. I found that answer unsatisfactory. Although I would not deny that those are the facts-and the hon. Gentleman makes the point about his constituency-I did not see why the Government should not deal with the problems of many northern cities and smaller ex-industrial towns because the south-east had a different economy and different problems.

I carried on trying to persuade the Government. When Lord Falconer of Thoroton became the Housing Minister, I showed him around some particularly difficult areas in my constituency. That led to the provisions in the 2004 Act. Interestingly, it took seven years, from when the Labour Government were first asked for it-although the problem had existed since the early 1990s-to get legislation saying that someone should be a fit and proper person to be a private landlord, and to give tenants in the relevant areas certain rights. It was another two years before, in April 2006, certain provisions came into force and could be used for selective licensing. In fact, a further two years later, in late 2008, because of complications and difficulties that I shall come to, only seven authorities in the United Kingdom had taken up the scheme. I do not believe that was because the schemes are bad. It is because of the mechanisms to implement the scheme.

The Housing Act 2004 was welcomed across the board, because it was sensitively and well thought out. The one group of people to oppose it was the Residential Landlords Association, which said that

"selective licensing officially identifies an area where there is low demand for property, usually with problem families and a history of anti-social behaviour, where nobody wants to live.

And few areas will recover from that level of official negativity from their own local authority. It's as close to being formally declared a ghetto as you're likely to be.

No control is proposed for other types of occupier in mixed residential areas-such as tenants of housing associations, social housing, third party housing or owner-occupiers. So to single out private landlords shows grossly unfair double standards."

That opposition completely misunderstood the Government's response, which was a recognition of the fact that certain areas were being dragged down by private landlords who put antisocial tenants in them at a cost to the public purse, and that there was no remedy available to the local authority to deal with it. Selective licensing schemes were the only mechanism or tool given to them.

Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party

My hon. Friend is making very thoughtful comments. The real issue in the areas that he and the private landlords' representatives talked about is not even the cost to the public purse, but the cost to the good residents whose lives are made intolerable by the behaviour of a small minority of bad tenants, and the landlords who fail to deal with that. The stabilising of an area for the many good residents is fundamental, and the approach that my hon. Friend describes is vital to the re-establishment of people's ambition to live and settle in those areas.

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley

My hon. Friend's observation is accurate, but the annoying thing is that although the real destruction and cost, which are difficult to quantify, are inflicted on people, that happens at a cost to the taxpayer, which must be wrong.

When the 2004 Act came into force the Government did not publish the statutory guidelines, so Manchester, which was one of the first authorities to try to implement the scheme, had to consult using Cabinet Office guidelines. They are fine; there is nothing wrong with Cabinet Office guidelines on consultation, but no guidelines were provided by the relevant Department-I cannot remember what it would have been at that time, because the name changes so often. Manchester city council consulted, and the very first area was in the constituency of my hon. Friend the Member for Manchester, Central. There was also consultation in two wards in my constituency. Statistics from the responses to the consultation included the fact that 71 per cent. of people wanted intervention and 90 per cent. wanted landlords to intervene when their tenants were bad, which is one of the responsibilities that the registration scheme gives landlords.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The hon. Gentleman makes a good point, but my concern is that even when landlords wish to get rid of a useless tenant it takes months to do so, which makes things more difficult for the landlords.

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley

The hon. Gentleman makes a fair point, and the burden of most of what I am saying will be the time that the process takes: setting up and implementing selective licensing schemes, finding private landlords-whether they are good, bad or indifferent-getting them registered and monitoring the schemes. It is a complicated proposal.

There are 10,708 properties in the area in my constituency that has a selective licensing scheme, the Harpurhey and Lightbowne area, and it is estimated that 16 per cent. of them are owned and let by private landlords. At the start of the scheme it was possible to make contact with only 84 per cent. of those landlords, and at that point 68 per cent. were easily given licences, but it is difficult to find out where properties are let to tenants by a private landlord if that landlord does not want to tell anyone. Often it is necessary to rely on the information given by local residents associations when there are problems. In the area I mentioned, the excellent Trinity residents association works closely with the council and the registration and enforcement teams, to deal with particular properties. I am not bringing case work here-I am too long in the tooth to want to bring case work before hon. Members-but they find properties where the tenants have caused a nuisance and the council goes through the lengthy procedures to try to get the landlords to conform and deal with the tenants, or, if they will not do so, to fine them. Extensive fines are available to the council if it is proved that the landlord is not complying with the legislation.

I want to finish by talking about the time factor. I have, I hope, a reputation as a localist. The schemes that have been set up are working. There are five and a half posts in Manchester in which people are employed to carry out the schemes, and they are improving the life of local residents, albeit slowly. It took nine years to arrive at the schemes, and it takes a long time to set them up. The Department says that it takes six weeks, but the evidence from Manchester city council is that from consulting and trying to initiate a scheme it takes the Department twice as long as that-13 weeks-to respond. My real question to the Minister is what the Department knows that is not known in Manchester, Sheffield, Salford, Burnley or wherever else the schemes are working. What is it adding to the process? Now that the schemes are up and running, and working well, why are they not completely delegated to the local authority? That would speed up the process and would be very helpful. However, there is some dispute; I put that point to the Minister for Housing, my right hon. Friend John Healey, and he acknowledged the fact.

I put a second point to my right hon. Friend at a meeting last week. It is simply this. The officials at Manchester City council say that the legislation makes it clear that selective licensing areas are to come to an end after five years. My right hon. Friend said he would consider delegating such decisions to local authorities, particularly those that had experience of the scheme and showed that it was working well and could be extended.

Many who participate in the residents associations of Manchester are deeply concerned that the selective licensing areas are to last only two or two and a half years more, and that private landlords are still trying to evade them. It takes time to do the interviews and to identify people, and the belief among residents is that some of the worst landlords are trying to hold out until the scheme finishes once the five years are up.

My right hon. Friend the Minister for Housing said that the scheme could be extended. I would be most grateful if my hon. Friend the Minister would confirm that today. It would put the minds of many of my constituents, and those of my hon. Friend the Member for Manchester, Central, at ease if that was so. The worst thing they fear, given the effort they have put into identifying the bad landlords, is that they will be laughing down their sleeves and saying, "Well, you might have stopped me being a nuisance now, but we can soon go back to how we were before." Without selective licensing areas there is no legal means of compelling landlords to manage their properties satisfactorily or to take action against nuisance tenants. That is the crux of the matter.

I hope that I have explained properly that, because it is intense, the selective licensing scheme works better than a national scheme, but it needs to be delegated to local authorities. The case is made that, where problems continue, the areas should be allowed to continue with the selective licensing scheme until those problems are solved-not just for the five-year period-and it is no longer necessary. That is the answer to the Residential Landlords Association. The scheme is not stigmatising areas; it is trying to improve them. I look forward to my hon. Friend's reply.

Photo of Bob Spink Bob Spink Independent, Castle Point 9:53, 21 October 2009

I am delighted to follow Graham Stringer-I think I should call him my hon. Friend. In bringing this important subject to the House and dealing with it as he has, he shows that he is in touch with the needs of his constituents, and has been for many years. He shows how caring he is as an assiduous constituency Member.

Helping people on housing benefit to get decent homes so that they can move on and become more self-reliant-it is possible for some; for others, it is not-is also a problem in my constituency in Essex, although the market there is quite different from that in Manchester, as the hon. Gentleman said. Over recent years, there have been specific problems. The private rented sector is growing. On one hand, people cannot sell their houses: there has been a bottleneck for a number of years, which is now starting to work its way through, and house sales are starting to increase in my constituency and in others. At the same time, people are having difficulty finding mortgages. They have to be earning enormous sums to afford mortgages on the loan-to-value rates being demanded by the various mortgage companies. As a result, more people are renting, and there is a greater supply of rented property. The problem is one that the Government need to consider carefully.

There are a number of matters to consider. First, I congratulate the Government on their action over the last year to bring forward more social housing. My constituency needs at least another 200 social housing units, but where they are to come from I do not know. The private sector is reluctant to let to those on housing benefit. That is a great shame, as it pushes such people into specific areas where, as in Manchester, problems start to arise of antisocial behaviour, bad neighbours and suchlike. I have such areas in my constituency, particularly on Canvey island, and I deal with them weekly with the help of the council and the police. Indeed, I am visiting people in one of those areas on Friday.

I thank the Government for trying to bring forward more social housing, but I want them to go even further. I want councils to be more able to build social housing and let it themselves. Coming from this side of the Chamber, that comment may seem strange, but I have been consistent on the subject in my time as a Member.

One problem with rented private accommodation is safety. The Electrical Safety Council recently issued a warning about the risk of electrical wiring systems. My early-day motion 2105, which is on periodic electrical testing and inspection, calls on the Government to make inspection "compulsory for rented accommodation", particularly in private rented accommodation.

I am not a regulator. We have to get the balance right. We do not want to turn people away from becoming private landlords, or to make the hurdles that they have to jump higher. Nevertheless, the landlords themselves have a part to play. If they maintained the houses that they rent in good condition and did the necessary work quickly and properly, I would not be making this call, but unfortunately they do not. I therefore call on private landlords to accept their responsibility to ensure that their properties are maintained in a safe condition. The responsibility must first lie with them, but if they do not accept it the Government will have to move to ensure that private rented accommodation is safe.

You will be aware, Mr. Betts, that I was not intending to speak this morning, but I was tempted to my feet to make a couple of points. I imagine that most MPs received an e-mail from David Knight of Channel 4 yesterday, inviting them to take part in a documentary. We are being asked to live on a council estate in social housing for seven or eight days. It seems a long time, and my constituents may not want me to be away from the tiller for that long. Channel 4 seems to think that it would be a good way to engage the public, and to gain an insight into tenants' lives-how they deal with the problems of poverty and antisocial behaviour, a lack of mobility, unemployment and disability, and how they face the fact that they may become trapped in an environment where they are afraid.

People on one of the estates on Canvey island have come to me year after year. I had to deal with the same problem tenants in 2006 and in 2007, and I wrote to the council again in 2008, asking for them to be moved away. They are still there. We know what they are doing, and how they do it, but the police cannot act without evidence. We have asked for CCTV, but tenants are wary of being named because they will be targeted and will come under even more pressure from the bad tenants, who never seem to be moved on.

Channel 4 may be on to something really important. Perhaps it can do a great service for those who are trapped in the revolving door of poverty, antisocial behaviour and poor housing. Highlighting the problem will be a good thing. I am sure that all Members here and their families have themselves lived through difficult times. Over many years, we, as Members of Parliament, have experienced the difficulties of our constituents, so we do not need to learn what is happening; we know what is happening. We need to find solutions, and I look to the Minister to provide some.

Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party 10:00, 21 October 2009

I congratulate my hon. Friend Graham Stringer on securing this timely and important debate. I do not want simply to run over all the many points that he has made. He has set out a very clear picture of life not just in Manchester but in large parts of the north of England and the industrial midlands. My hon. Friend the Minister will recognise many of the things that have been said, and I think that you, Mr. Betts, will understand from your own constituency the descriptions that my hon. Friend the Member for Manchester, Blackley has put forward.

The reality of my constituency is as good a place to start as any. East Manchester, to which my hon. Friend referred, was probably the first area where the selective licensing process was brought into operation, and it is not hard to trace the reason. East Manchester went into very serious decline with the collapse of industry in the Thatcher years. We saw the decimation of the industrial base in that part of the city, and a dramatic change in the composition and social demography of the area.

The housing stock in the area was overwhelmingly classic northern English terraced properties. Some were owner-occupied, and a considerable number were owned by housing associations, which, at the time, played a disastrous role in the decline of the area. They had grand schemes to grow their stock without any real sense of how to provide for that stock. That led to a huge number of voids among housing association stock. The private landlords, who were already there in significant numbers, increased in that period. Some of them were perfectly good landlords who wanted to maintain both their properties and decent relationships between their tenants and the wider community.

To say that there is a link between poverty, certain types of housing, housing benefit and bad behaviour is simply not true. The overwhelming majority of people in east Manchester lived, and wanted to live, perfectly decent lives. The pressure for change came from not the Government at the time or the local authority, but the type of residents' groups to which my hon. Friend referred. Those are the people who said to me, "We need something to deal with the small minority of rogue tenants." Although the numbers of such tenants were small, they could do enormous damage to the community in those areas. That narrow and specific focus was the driver for the type of legislation that was brought in.

My hon. Friend was absolutely right to say that bringing in such legislation was a long, slow, painful process-from 1997 to the passing of legislation in 2004 and its implementation in 2006. It took far too long. The ambition was not complicated; it was fairly straightforward and obvious. The sad thing is-I am glad that the Minister does not suffer from this-that if the focus and the way of viewing the world is only ever through the lens of the south-eastern housing market, it will always get things wrong for places such as Manchester, the west midlands and Burnley. In that sense we must recognise that policies must be different for different parts of the country. There may be parts of London that have similar features to the north, so within those terms, my hon. Friend's request that we recognise the need for the process to be selective is very important.

Let me deal with the east Manchester of today. In 1997, it was an area people wanted to leave. They used to tell me, "We want to get out. We do not want to live here any more." Those who had the money or the opportunity to leave for other reasons, such as different types of tenancy becoming available, would get out. People who were left in the area were those who, for different reasons, were hanging on grimly. Sometimes they owned properties that had collapsed in value, due to the collapse of the local housing market. They were very good people who felt, quite rightly, embittered by what had happened. They felt that the public process-the public authorities, the council and the Government-had not helped them.

Therefore, east Manchester in 1997 was an area that people wanted to abandon. The long-term future for the whole community was touch and go, but then this Government came to power and invested huge sums of public money in the regeneration process. The area is now totally transformed and is unrecognisable compared with what was once there. That is a tremendous success because people now want to come into the area-it is a very different kind of area. However, there are still some features that mean we require the maintenance of the legislation.

On Sunday, I was talking to a number of people in east Manchester. One owner-occupier told me that he had lived in the area since the 1970s. He had wanted to get out in the mid-1990s but was now very happy with the area, although there were still problems. Huge numbers of terraced houses still exist in the area, as do private landlords. There are many good private landlords-that is always worth repeating-but the bad private landlords, or possibly even worse, the indifferent private landlords are the problem. They may live 200 miles away and see ownership of the property only as a form of cash generation, and have no sense of responsibility. Such landlords are often the root of the problem, and they still exist.

There is still a huge turnover of people in different types of tenancy in that part of my constituency. The underlying reality is that from time to time, tenants are moved in-sometimes they are owner-occupiers-who do not respect the rights of their neighbours, and we need a proper and sufficient legal process to deal with them.

My conclusion is the same as that of my hon. Friend. We need two things from the Minister. One is a commitment to look at the operation of the legislation as is. Although it works, it is cumbersome and complicated and it can be refined and made much simpler. As Bob Spink said a few moments ago, when we deal with the difficult neighbour-whether they are tenants of a social landlord, in council or housing association stock, or a private tenant or an owner-occupier-we need legal structures that allow rapid and effective intervention. Preferably that will be by giving the offender sufficient and clear warning in the first place that action will be taken. The action should be sufficient to ensure that, where appropriate, the tenant will be moved on.

The licensing scheme is part of that process, but it is not the only thing. We have other legislation to deal with such issues. The Government rightly brought in antisocial behaviour orders and different sorts of legal mechanics. The licensing of private landlords, which reminds the landlord of their own duties, is very important. Such measures were never about double standards. Controls exist to make the social landlord operate-although not always-in a responsible way. To bring the private landlord into that frame of reference is a sensible and reasonable thing, so we need to look at the operation of the relevant legislation to make it less cumbersome and more efficient, and its operation a lot quicker.

The second thing that my hon. Friend the Member for Manchester, Blackley is right to ask for is some certainty about the continuation of the legal process. We need that certainty. My area is emerging every day, every week and every month from the terrible situation that it was in 10 or 12 years ago. If it is to continue to emerge from that situation, we will need that type of legislative control for some time to come. When the five years are up, the legal process will not be finished and my area will not necessarily be totally stabilised, so local people will still need to know that those legal powers exist. We need certainty about the ability to go beyond the period of five years.

Of course, in the end the most important thing is that this type of control should be delivered locally. There is no logic whatever in Whitehall, despite all its great benefits and so on, being the driver of the process. Sometimes, even the town hall can be a long way away from the communities that my hon. Friend and I represent, although we have a good and competent council that reflects on the needs of local communities. We must ensure that the power to maintain the process is kept at local level, both in terms of implementation and timing-let us unfetter it to ensure that it is effective.

Photo of Sarah Teather Sarah Teather Shadow Minister (Communities and Local Government) (Housing and Planning) 10:11, 21 October 2009

I want to begin by congratulating Graham Stringer on securing this debate. I am surprised that it is not better attended, because issues relating to the management of private sector housing are important to every right hon. and hon. Member in the House. I think that it would be a struggle to find a Member of Parliament who had not discovered that a considerable part of their casework involved dealing with the types of issues that the hon. Member for Manchester, Blackley and his neighbour, Tony Lloyd, raised during their contributions to the debate.

The hon. Member for Manchester, Blackley spoke specifically about the issues of bad landlords and the impact that those issues can have on entire communities, rather than just on particular individuals who are struggling with badly maintained property, which was a point that the hon. Member for Manchester, Central picked up. I must admit that I have encountered similar issues in my own constituency, usually with an overcrowded house in multiple occupation whereby the house ends up with lots of rubbish in the front garden and there is lots of noise. Such problems almost always seem to be associated with overcrowding issues.

Bob Spink spoke about the problems that he has seen in his own constituency relating to people on benefits trying to gain access to decent quality private rented sector housing, which is a point to which I want to return later in my contribution. In his opening remarks, the hon. Member for Manchester, Blackley said that of course it is not the case that not all landlords are bad landlords, and that much of the quality of housing in the private rented sector is very good. It is worth beginning with that point. MPs always end up with their views on this issue being skewed, because what always comes through their doors are complaints about the private rented sector. We see people who have problems with badly maintained property, and we have to deal with the issue of problem neighbours, but most people do not come to see their MP about problems with their landlord because they do not have problems with their landlord. It is worth placing on the record the point that both the Rugg review and the Government's response to that review highlighted the fact that something like two thirds of people in the private rented sector are quite satisfied with their property.

It is also worth placing on the record the importance of the private rented sector, particularly at the moment, as people are struggling to gain access to mortgages. It is inevitable that the private rented sector will play a bigger part at present and I think that it is healthy for the housing market overall that it does so. It is not a good thing to have a model that is focused wholly on affordable housing to rent in the social sector and on home ownership. There should be a better balance that includes the private rented sector. Indeed, when we talk about mixed communities and developments that are sustainable, we often focus on affordable housing for rent, low-cost home ownership and privately owned property, whereas private rented property should play an important role in those communities and developments.

Similarly, the hon. Member for Castle Point made a point, based on his experience in his constituency, about the difficulty of gaining access to affordable housing for rent. He said that the private rented sector ought to play a bigger part in providing housing for people who languish on waiting lists. In my constituency, they often languish on such lists for at least a decade. The hon. Members for Manchester, Blackley and for Manchester, Central both spoke about local selective licensing issues in their constituencies. They made very powerful points, as they said that there is no need for Whitehall to try to run those schemes. They can work very effectively on a local level, because they are designed to meet particular local needs. Both hon. Members made very powerful points about why those schemes have to be time-limited and I hope that the Minister will give them good news in that respect. Such time-limited schemes appear to be a very sensible way to try to deal with the type of local problems to which both hon. Gentlemen referred.

The Government have recently proposed a national registration scheme, which is the type of scheme for which the hon. Member for Manchester, Blackley has been campaigning. It is perfectly sensible that someone should know who their landlord is, or at least they should be able to find out who their landlord is. I do not see any reason why a landlord should not have to register their home address. Some of the frustrations that people experience in trying to deal with casework, either as a councillor, a Member of Parliament or as someone in a citizens advice bureau, when they are trying to deal with individuals who have difficulties with properties in a poor state of repair, stem from the problem of establishing direct contact with a landlord, who might be working through a managing agent.

There has been a wider debate about the extent to which the private rented sector should be regulated. In principle, I am quite sympathetic to some of the proposals in the Rugg review about a points-based system. However, I am quite anxious about how local councils are able to police such a system when they are already struggling to police issues related to HMOs through their enforcement processes. Local authorities around the country simply do not have the resources to police such a points-based system.

The registration scheme that was mentioned by the hon. Members for Manchester, Blackley and for Manchester, Central is, of course, different from the proposed national registration scheme, because the council in Manchester is right behind the scheme in the city, has signed up to it and wants to run it in the particular way in which it has been set up. That is very different from having a national registration scheme that is imposed everywhere as a one-size-fits-all solution. Inevitably, such a national scheme would run into difficulties if a local council did not experience the type of problems to which the two hon. Members referred, or if the scheme was badly designed or, as I have said, local councils simply did not have the resources to deal with such problems.

One point that was raised in the Rugg review was whether or not we should regulate agents and set criteria for the quality standard to which landlords must sign up before they sign up with an agent. By doing so, some of the burdens of regulation could be removed from local authorities. In their response to the Rugg review, however, the Government did not respond to that point, so I hope that the Minister will refer to it in his speech.

Having said that, regulation is not the only way to drive up standards in the private rented sector, and I want to make a few other points, both about issues that I was disappointed that the Government did not consider in their response to the Rugg review and about some recommendations in the review that they have implemented. First, on tax changes, it is not sensible that landlords should be able to realise the benefit of improving their property only when they sell it. It is much more sensible for them to be able to realise that benefit by offsetting the money that they have spent on such improvements against their income tax, rather than having to wait until they sell their property. The Government have sidestepped that issue and said that the Treasury will keep it "under review". I wonder what that means-perhaps the Minister could tell me.. Does it mean that the issue is under active review or that it is stuck on a shelf to be considered in 10 years' time?

The second thing that would clearly make a significant difference to the quality of housing in the private rented sector would be making it cheaper to undertake major repairs. A cut in the VAT rate for renovation and rebuilding would make a significant difference and enable landlords to improve the quality of their property. One thing that the Government have done, through the Homes and Communities Agency, is begin a process of trying to see how we can increase the amount of private investment in the private rented sector. Proposals to increase that type of investment are very sensible, if long overdue. Many of experts in the field have been arguing for a number of technical changes to real estate investment trusts, which might make a difference to the amount of private investment coming into the sector. In particular, they have argued for changes to the amount of money that needs to be redistributed to shareholders. Do the Government have any response to that?

Thirdly, the hon. Member for Castle Point raised the issue of access for constituents on benefits. It is an enormous problem that I suspect all hon. Members have met. The main reason why most landlords do not particularly want to take tenants on housing benefit or a local housing allowance is not quality; it is that they are terrified that if the tenants' income fluctuates, their ability to pay rent will stop, perhaps for an extended period, while the local authority decides what to do with the tenant's application. Having benefits suspended can take an awfully long time to fix, during which time rent is not paid.

Some local authorities have introduced schemes to deal with issues of access arising from the need to give deposits and pay rent in advance, but usually those schemes focus only on people whose need is an absolute priority or who are classed as statutorily homeless, so the vast majority of people who are on a very low income and languishing on housing waiting lists have no chance of accessing them. A number of schemes are out there to address such problems. The most interesting one is a fast track scheme in the south-east that is a mixture of underwriting and advice. The scheme pre-approves would-be tenants for local housing allowance. Hon. Members will realise that tenants cannot obtain approval for local housing allowance unless they have a contract in place, and cannot obtain a contract unless their landlord understands how much local housing allowance the tenant will obtain. In partnership with the local authority, the scheme works out the tenant's level of housing allowance by going through their income and then, through the underwriting scheme, by paying a small fee-a tiny portion of what a deposit would be, let alone a deposit and rent in advance-the tenant can guarantee that the landlord's rent will be paid, regardless of whether the local authority suspends their benefits or they default on paying rent.

The scheme addresses a lot of problems with access to the private rented sector. Most importantly, it has an impact not just on the individual, who can then access property, but on landlords with higher-quality properties who were previously unwilling to take people on benefits and are now willing to do so. The race to the bottom that tends to occur in the private rented sector is halted in areas where the scheme operates. Because people on benefits get access to properties higher up the ladder, the landlords at the bottom with very poor-quality properties are left without anybody to rent them to, which creates an incentive to improve the quality of the properties. It is an interesting scheme. As we are discussing local management, I encourage local authorities to consider it and decide whether they want to be involved in the scheme or whether they could work with local businesses to introduce similar schemes in their area. Local regulation of the private rented sector is not simply a matter of licensing; it is also about improving quality in the local area. Local councils have a role to play, but Government could do a great deal with the tax and financial changes that I have suggested.

Photo of Bob Neill Bob Neill Shadow Minister (Communities and Local Government), Deputy Chair, Conservative Party 10:23, 21 October 2009

I join other hon. Members in congratulating Graham Stringer on securing this important, valuable and timely debate. All of us, representing as we do constituents in different parts of the country, have had experience of some of the difficulties that can arise in the sector.

It is important to recognise-I am glad that it has already been said-that the majority of private landlords are responsible, do a good job and contribute valuably to the mix of housing tenure in this country. It is important at the outset of such discussions to put the issues into that context, otherwise historical images can sometimes unfairly skew the reporting.

That said, it is of course necessary to ensure that standards are maintained. It is important, therefore, that whatever system exists is both proportionate and targeted. It is also right, as hon. Members have done, to put the debate into the context of some of the broader issues that arise in our more stressed communities. I note the point raised by Bob Spink about the difficulties that can arise with behaviour on some estates. That does not apply simply to the tenants of private landlords; many of us across the board encounter that issue, and it is important that it is tackled.

I take the point made by the hon. Members for Castle Point and for Brent, East (Sarah Teather) about the difficulties of access to accommodation for people on benefits. It will chime with the experience of many hon. Members here. It certainly strikes me that there is some perversity in a system in which constituents of mine who qualify for benefits, on the face of it, have difficulty just getting into the system so that their deposit can be made available and they can enjoy a degree of security to assure their responsible private landlords that they will be able to pay. They have to contend with a pretty rigid bureaucracy. Although it is not directly the Minister's responsibility, I know that he will take that point back to his colleagues.

I find it strange that, for example, more than one individual in my constituency has come along whose circumstances have undergone virtually no change, as far as one can see, but who has had, in the course of a year, about three contradictory calculations of their benefit entitlements. When they try to pursue the matter, they are referred not to the local office in Bromley, where they could have day-to-day contact, but to the rather distant one in Stratford, which is the other side of the river and a long way away. They are told to ring a helpline, which generally gives them a recorded message, and they do not get a response. It is a frustration for vulnerable people. I think that Members from all parties would want to ensure simply that things work better within the available parameters.

To return to the licensing system, there are some interesting questions about the way forward. I note the point raised by the hon. Member for Manchester, Blackley about the need to deal with specific areas and the philosophy behind the initial intention, and I know that Tony Lloyd supports it. Our view is that any approach should be proportionate and sensibly targeted. I do not have an issue with that. I had a pleasant trip to Manchester, for obvious purposes, not too long ago, but I am conscious that despite the changes visible in the centre of Manchester areas of difficulty remain, as in London.

Against that background, I want to ask the Minister about the Rugg review, to which reference has been made. I notice that the review's consultation had a couple of questions relating to selective licensing against criteria beyond those that exist at the moment; for example, in areas with low energy efficiency or health and safety ratings. That is fair enough, but my experience is that a lot of stakeholders have said, "It's difficult to answer that fully when we don't have the best available evidence base."

In particular, what has happened to the report commissioned by the Building Research Establishment? The Department for Communities and Local Government said that it would be published back in April. The purpose of the report was specifically to evaluate the various forms of licensing, but we have seen nothing of that. It seems strange to move on to the Rugg review without first having published the BRE report to provide an evidence base. That was the whole point, and it is the best starting point. Has the Minister seen the report? Why has it not been published, and when will it be published?

As far as one can see from the statistics available, there is a patchy pattern to how local councils are using their current power. As the hon. Member for Brent, East said, it might be a question of resources, or there may be a number of underlying reasons, but it gives further grounds for wanting the best evidence base from the BRE report. The length of time taken seems to have varied. Given that we all agree that the approach should be both targeted and proportionate, it is striking that according to the figures that I have seen-this comes from the DCLG's 2008 regulatory simplification plan-just 107 licence applications have been refused so far in England, but the system has cost landlords alone £87 million, and on top of that there must be costs to the local councils. We ought to be sure that we are getting the best possible value and that the system is as targeted and proportionate as we would all like. Will the Minister examine whether it is working as efficiently and cost-effectively as possible?

I accept that we should look for ways to improve access to funding for the private housing market. I endorse the comments of the hon. Member for Brent, East on real estate investment trusts. What is the Government's view on that point?

I believe that we are at a stage where we can sensibly review these matters. Will the Minister assure us that whatever the Government's proposals, they will maintain the principles of proportionality and targeting to ensure that help is given where it is appropriate? The interventions must not bear disproportionately on the private rented sector, because it provides flexibility and is likely to produce more flexibility in the future.

My experience and that of many hon. Members is that people require different kinds of tenure at different stages of their housing journey. As a student and a young lawyer, I lived in private rented accommodation before getting my foot on the housing ladder. That is a pattern that many people recognise. We support the bridging of the gap by encouraging intermediate forms of tenure that get people into a housing purchase mode more easily. However, there is still a valuable and important role for the private rented sector.

The role played by the private rented sector varies from place to place, and a one-size-fits-all model is not appropriate. My constituency is in a London suburb, where there are two types of private rented accommodation. The old terraced accommodation in the centre of Bromley would be recognised by other hon. Members who have spoken. However, there is also private rented property at the opposite end of the scale. People who come to the UK to work in the City of London on contracts of only two or three years often want to live in the traditional suburbs. A one-size-fits-all model is therefore not appropriate.

I hope that the Minister will deal with my points in his response.

Photo of Ian Austin Ian Austin Minister of State (Regional Affairs) (West Midlands), The Parliamentary Under-Secretary of State for Communities and Local Government 10:32, 21 October 2009

It is a pleasure, as always, to serve under your chairmanship, Mr. Betts. Given your expertise on this issue, I am pleased that you are sitting up there and not down here asking me difficult questions.

I congratulate my hon. Friend Graham Stringer on securing this debate. Anybody who listened to his speech will recognise his expertise on these matters. He should be congratulated for the determination with which he has fought to tackle poor housing throughout his political life and for the impact his campaigning had on the Housing Act 2004.

I am grateful for the contributions of other hon. Members. My hon. Friends the Members for Manchester, Blackley and for Manchester, Central (Tony Lloyd) set out in stark detail the impact that bad landlords have had in Manchester. The situation they describe is unacceptable. We should not tolerate bad landlords exploiting the poorest people in Britain. They make the lives of their tenants and others in the community a misery, while lining their own pockets with housing benefit. I have no hesitation in saying that we should be determined to drive such people out of the market.

The hon. Members for Castle Point (Bob Spink) and for Bromley and Chislehurst (Robert Neill) raised the problems that their constituents who receive housing benefit have in finding accommodation in the private rented sector. As the hon. Member for Bromley and Chislehurst said, that is the responsibility of the Department for Work and Pensions, which has been improving the administration of the system to make payments more reliable. In the past, delays have led to landlords not wanting to let to tenants in receipt of housing benefit. Landlords can choose whom they let to, and that is a business decision. Many landlords specialise in letting to people in receipt of housing benefit, although some are prevented from doing so by their mortgage conditions. I am happy to meet the hon. Member for Castle Point to discuss the matter in more detail.

With her customary eloquence and expertise, Sarah Teather discussed the contribution that the private rented sector makes to the economy. I welcome her remarks on the Rugg review. Decisions on VAT are a little above my pay grade, but I will pass on her comments. I will write to her about real estate investment trusts. The hon. Member for Bromley and Chislehurst asked about the BRE report, which will be published shortly along with further guidance on licensing of houses in multiple occupation.

This has been a great opportunity to debate the need for local regulation of private landlords. It is timely, as we are considering the responses to our consultation on the proposals we put forward earlier this year, following the Rugg review, on improving standards and professionalism across the sector. This is also an opportunity to look at the role of local authorities in licensing privately rented properties and exercising enforcement powers.

There are almost 3 million private tenants in this country. The private rented sector is vital in providing choice and flexibility at all levels of the housing market. We want to encourage a system that retains the flexibility for those living in the sector and that embraces greater professionalism without creating unnecessary burdens on landlords. We want a professional, high-quality private rented sector that is aware of its responsibilities to tenants and the wider community, while retaining the freedoms and flexibilities it needs to grow.

Achieving the right level of regulation is crucial if the sector is to operate effectively and successfully. The system of assured and assured shorthold tenancies in the Housing Act 1988 was designed to achieve a fair balance between the rights of landlords and tenants. However, problems in the sector remained, particularly in relation to the management of the poorest quality stock, which is often occupied by the most vulnerable tenants. That led to the changes in the 2004 Act for which my hon. Friend the Member for Manchester, Blackley campaigned.

The problems with the poorest-quality stock can have a significant and devastating impact on the quality of life for those who live in poor neighbourhoods. Through the 2004 Act, our strategy was to improve health and safety and to tackle the main abuses in the system. It introduced a range of initiatives to improve management standards and the condition of privately rented accommodation. In bringing forward the legislation, we took a measured view on the appropriate amount of regulation for the sector and empowered local authorities to act to secure decent standards on a statutory and voluntary basis.

The 2004 Act introduced the mandatory licensing of larger, higher-risk HMOs. Landlords who manage properties of three or more storeys that are occupied by five or more people who form more than one household require a licence from the local authority. We targeted those properties because HMOs-particularly larger ones-are often in poor condition and represent a high risk to the safety and welfare of the occupants. The 2004 Act provides for two forms of discretionary licensing: additional HMO licensing and selective licensing of all privately rented property in a designated area.

Where local authorities have identified problems with management and property condition, they have the discretion to introduce additional HMO licensing schemes to cover smaller HMOs, which do not meet the mandatory HMO licensing criteria. Local authorities may also introduce selective licensing schemes to cover all privately rented property in areas that suffer from or are likely to suffer from low housing demand or that suffer from significant and persistent anti-social behaviour-precisely the problems identified by my hon. Friends the Members for Manchester, Blackley and for Manchester, Central in their contributions.

So far, approval has been given to two local authorities to operate additional licensing schemes and to 11 local authorities to operate selective licensing schemes. Those schemes mean that local authorities can impose conditions on licences, such as requirements for licensed properties to be occupied by a specified maximum number of occupants, and ensure that adequate amenities are in place. In addition, private landlords will need to be identified as being fit and proper in terms of their suitability to manage the property. A breach of a licence condition is an offence subject to a fine of up to £5,000 and, if a licence has not been obtained, managing or letting a property that requires one could result in a maximum fine of £20,000.

My hon. Friends have clearly worked closely not just with my predecessors and the Minister for Housing, John Healey, but with Manchester city council in implementing the licensing provisions in Manchester and in obtaining the approval of the Department for Communities and Local Government to operate selective schemes in Harpurhey, Bradford and Gorton wards. My hon. Friends have successfully demonstrated that their schemes fit with the overall strategic approach on tackling problems in the local private rented sector, and I congratulate them and the city council on their work.

On the question of where the balance of decision making should lie in relation to central and local government, I want greater flexibility across the range of services that our Department oversees, and greater freedoms and flexibility at local level. My hon. Friends will know-they been intimately involved with discussions on this-that Manchester, as well as other local authorities in the region, has further proposals to extend licensing to other areas. My Department is working closely with the Association of Greater Manchester Authorities to develop a protocol framed within existing legislation in order to ensure an efficient and effective approval process for future licensing schemes.

There were two specific questions about that, one of which was why should we not completely delegate those powers to local authorities. The nature of consent regimes means that they are constantly under review and we would therefore not rule that out. While the regime is relatively new, it is important that the Department is able to check that the proposals comply with the criteria set out in the legislation. My hon. Friend the Member for Manchester, Blackley also asked whether I would confirm that licences could be extended if necessary. As he said, approval schemes last a maximum of five years, but I can confirm that licensing schemes can be extended and that they continue in force after their initial date if problems are still manifesting themselves. I hope that he will be satisfied with that assurance.

Photo of Graham Stringer Graham Stringer Labour, Manchester, Blackley

I am extremely grateful to the Minister for that response-indeed, that is what the Minister for Housing told me-but the advice I am getting from officers in Manchester city council is that such an extension is not possible without changes in primary legislation. Will my hon. Friend expand a little on the basis on which the time period could be extended? Again, I thank him for the commitment he has given.

Photo of Ian Austin Ian Austin Minister of State (Regional Affairs) (West Midlands), The Parliamentary Under-Secretary of State for Communities and Local Government

I do not want to be prescriptive. We want to work with my hon. Friend and his colleagues at Manchester city council to enable them to tackle the problems in those areas. Although we must ensure that licensing schemes are operating in line with the criteria set out in the legislation, we want to learn from what is happening on the ground, what he sees happening locally and the experience of local authorities, such as Manchester city council. My right hon. Friend the Minister for Housing and I look forward to continued discussions with my hon. Friend, Manchester city council and other local authorities on the issue.

Photo of Tony Lloyd Tony Lloyd Chair, Parliamentary Labour Party

The fundamental point is that if the advice my hon. Friend the Member for Manchester, Blackley has received from our local authority is right and there is a need for change in primary legislation, we must have certainty about the direction of travel, as we are obviously now some way into these licensing schemes. I do not expect the Minister to give an answer this morning, but will he consider whether we need legislation? Perhaps he will write to those who have taken part in the debate to confirm that point. Clearly, if primary legislation is needed, we should all look for a vehicle through which that change could be made.

Photo of Ian Austin Ian Austin Minister of State (Regional Affairs) (West Midlands), The Parliamentary Under-Secretary of State for Communities and Local Government

Of course, I am happy to write to Members and set out the matter in more detail. The advice I have been given indicates that schemes could be extended. I will consider the matter and come back to Members with more information.

The hon. Member for Castle Point raised issues about safety in the private rented sector. The Housing Act 2004 introduced the housing health and safety rating system-HHSRS-under which local authorities can make a risk assessment of the likely impact of property condition on occupants of privately rented accommodation. If hazards are identified, the local authority has a duty to take the most appropriate action in relation to the hazard. In the most severe cases, it can issue prohibition orders, the effect of which would be to close all or part of a property. Private landlords who fail to comply with such notices can be subject to a fine of £5,000.

Although I expect local authorities to take a robust approach to the tools and powers available to them to tackle management standards in the private rented sector, we are keen to ensure that they see the provisions of the 2004 Act as a way of developing partnerships with good landlords. Doing so will enable them to play a full part in meeting housing need through raising both the physical standard of the property and the management standards. That is particularly necessary because we are concerned about the most vulnerable tenants.

The hon. Member for Brent, East raised the issue of deposit schemes, which is one of the other key measures in the 2004 Act. The requirements are for landlords to protect their tenants' deposits in a Government-authorised scheme. Those arrangements are designed to safeguard the interests of both landlords and tenants, and to ensure good practice in deposit handling, so that when a tenant pays a deposit and is entitled to get it back, he or she can be assured that that will happen.

As I have mentioned, through the 2004 Act, the Government have acted to tackle the areas of greatest risk within the sector. Although the measures in that Act started to drive improvements, a range of bodies, including the Law Commission, Shelter and the citizens advice bureaux, continued to express concerns linked to proposals for further change. Against that background of progress on the ground and ideas for further improvement, we decided to commission an independent review of the private rented sector from Julie Rugg and David Rhodes of the university of York. As has been said, that review was published in October 2008 and highlighted the positive aspects of the sector: most landlords are good and the vast majority of tenancies begin and end with no issues arising for either party.

However, the review also identified weaknesses. Although most landlords are well-intentioned and deliver a good service, some simply do not view themselves as landlords. A minority are ill-intentioned, often deliberately exploit the most vulnerable and allow antisocial behaviour to become rife, as has been said in the debate. The review also found that local authorities are not always able to focus their resources to enable them to use the extensive enforcement powers in the 2004 Act against the worst landlords.

The Government's response to the review for consultation, which we published in May, sets out our ideas for major changes to further improve the private rented sector. We have been very encouraged by the positive reaction to the proposals, having received more than 250 responses. We are now considering those responses and will publish the results of the consultation in November.

Let me go through the main measures that make up our proposals. First, we propose to introduce a national register of every private landlord in the country to increase protection for both vulnerable tenants and good landlords. Landlords would need to include their registration number on all tenancy agreements, and they could be removed from the register if they failed to comply with the required standards. A register would enable us to identify bad landlords and to get them out of the market if they were unwilling to improve their behaviour.

Secondly, we propose full regulation for private sector letting agents. Letting and managing agents have a vital role in the private rented sector but do not currently need market expertise or professional credentials, while tenants and landlords have no realistic redress when things go wrong. To tackle those problems, the Government propose to set up an independent regulator to oversee all letting and managing agents.

The third proposal is for improved complaint and redress procedures for tenants. For the first time, the Government will look to set up a mechanism whereby tenants are able to register official complaints about substandard landlords. If those complaints are upheld, landlords might be removed from the national register. Fourthly, we propose that there should be greater local authority support for good landlords, as well as action against poor-performing landlords.

Our proposals will provide greater support for landlords and letting and managing agents, alongside better consumer protection for tenants. Local authority enforcement activity will be enhanced and more focused, and local authorities will be encouraged to create local lettings agencies to better facilitate tenancies in the private rented sector for those in housing need, including housing benefit recipients. Local authorities will also be encouraged to ensure that their staff receive training to help them to resolve issues between tenants and landlords and to sustain successful tenancies for some of the most vulnerable members of the community.

Alongside our proposals for a national register of all landlords, we want there to be improvements in professionalism, and encouragement for those who aspire to higher standards. The most obvious way of doing that is through access to accreditation schemes. For several years, many local authorities have run successful schemes for their landlords, offering training and sharing good practice and experience through forums, as well as having a clear quality kitemark for potential tenants. I know that Manchester city council operates such a scheme, which gives tenants assurances about the standard of service that they can expect and gives landlords who belong to the scheme a market advantage.

In conclusion, we are confident that the package of measures I have described will be key to securing the improvements in quality and professionalism that we seek. They represent a sensible balance between providing support for good landlords and providing the tools that local authorities need to deal with poor landlords. Support for the sector is ever more important in the current financial climate, which has underlined the vital role that the sector plays in providing for the housing needs of a wide range of households. We are grateful to all those who have responded to the review, and to all hon. Members who have taken part in today's debate, for their constructive input to the ongoing process to drive up standards in the private sector. We will continue to develop our proposals and take them forward in the next few months.