Unscrupulous Landlords

– in Westminster Hall at 11:00 am on 8th September 2010.

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Photo of Jon Cruddas Jon Cruddas Policy Review Coordinator 11:00 am, 8th September 2010

As the terraces empty from the previous debate, I want to make a few comments about unscrupulous landlords in the private rented sector. As a Portsmouth football club fan, I wish I had been present for the previous debate because I would have had something to say.

I apologise for my croaky voice-I am full of cold-but to set the scene, I shall read two quotes that clearly detail the Government's thinking. The first is from the Minister for Housing and Local Government, Grant Shapps who said as recently as June:

"With the vast majority of England's three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords."

The second quote is even more recent, and was placed on the website of the Department for Communities and Local Government in August:

"In the past, over-regulation drove landlords out of the rented market. We don't want to introduce any measures which would form a barrier to potential landlords considering renting out their properties."

Those two quotes are unequivocal, and we conclude that the Government do not see a need for further protection for tenants or for the regulation of unscrupulous landlords, and that they believe the current arrangements strike the right balance, not least because of the fear of red tape. That is in contrast with the previous Government's views. At their departure, they had plans for a new national register of landlords, regulation of letting and management agents, and compulsory written tenancy agreements. The current Government's status quo position is unfortunate, and Shelter today announced a new investigation into rogue landlords, which aims to raise the profile of the private rented sector as a political issue.

Let us consider one basic statistic from Shelter. Nearly 1 million people throughout the UK have fallen victim to a scam involving a landlord or a rented property in the past three years, so on average, every MP will have just under 1,500 constituents who have been the victim of landlord scams. The purpose of this short debate is to help to raise awareness, to praise Shelter's campaign, to raise some concerns, and to ask the Government some questions. We want the Government to recognise the problem of rogue landlord activity in the private rented sector, and to take action because rogue landlords cause enormous damage to the lives of often vulnerable tenants, which may spread to the wider neighbourhood, resulting in run-down properties blighting communities.

Photo of Chris Leslie Chris Leslie Labour, Nottingham East

I commend my hon. Friend for securing this debate. My constituents include 165 leaseholders of the Peverel Group, which is a massive freehold landlord with 500 estates throughout the country. At a recent tribunal, they managed to claw their way to overturning a scam whereby leaseholders, when paying their service charge, find that one third of it is an odd cash-back arrangement between the insurer and the freeholder. There are many loopholes in the law, and I hope that he will press the Minister to change his mind and to take a more proactive stance today.

Photo of Jon Cruddas Jon Cruddas Policy Review Coordinator

If my hon. Friend will bear with me, I want to raise that precise matter. I appreciate and respect his experience.

The essential points that I want to make include the following. Most private landlords are responsible and honest in how they deal with their tenants. That is beyond dispute, but those who are not bring down the reputation of the whole sector. The Government must accept that Shelter's investigation has uncovered significant problems with rogue landlords that require action. Many aspects of existing law are not properly enforced by local authorities. They often do not treat this as a matter of priority or do not have a properly resourced enforcement team available.

Let us consider some basic statistics from Shelter. There are just over 3 million private rented households, representing 14.2% of all households. In that sector, 1.3 million tenants-approximately 40%-are in receipt of housing benefit. The sector has surged in popularity in recent years, with the percentage of households renting privately increasing by 40% since 2001. If that rate of increase continues, there will be more private renters than social renters within the next five years.

Some 80% of private renters are aged under 55; almost one third are aged 25 to 34; 58% of 16 to 24-year-olds are private renters, and 59% of private renters expect to buy in future, compared with 27% of social renters. However, compared with two years ago, private renters expect to rent for longer before being in a position to buy their own home. Vulnerable households who rent their accommodation privately are more likely to live in non-decent homes compared with social tenants-the averages being 51% and 26% respectively.

MPs regularly deal with problems associated with unscrupulous landlords, and my hon. Friend Chris Leslie touched on this. They include harassing tenants or throwing them out of their homes without notice, effectively making them homeless; failing to carry out essential maintenance, leading to unhealthy or unsafe conditions; deliberately ignoring the legal requirement to protect tenants' deposits using an approved scheme, and then unfairly withholding the deposit at the end of the tenancy; and driving tenants into arrears by adding exorbitant fees or charges to their account without telling them, and then presenting them and their guarantors with a huge unpaid bill at the end of the tenancy.

What does the law say? Harassment and illegal eviction are criminal offences. Local authorities can prosecute landlords who commit such crimes, and can serve improvement notices or prohibition orders if housing conditions fall below acceptable standards. If the landlord fails to comply, they can be prosecuted. Landlords and letting agents are legally obliged to protect tenants' deposits using an approved scheme, although that can be enforced only if a tenant takes the landlord to court. Landlords are now obliged to obtain a licence from their local authority to rent out larger houses in multiple occupation, and must meet certain standards to do so. Failure to obtain a licence is a criminal offence.

Photo of Andrew Smith Andrew Smith Labour, Oxford East

I congratulate my hon. Friend on securing this debate, and I commend the Shelter campaign. Does he agree that proper regulation of multiple occupation properties and private landlords must go hand in hand because the problems overlap? Indeed, in retreating from and watering down the measures that the Labour Government were introducing, after much campaigning by many MPs on behalf of tenants in that sector, the coalition Government risk giving a green light to rogue landlords.

Photo of Jon Cruddas Jon Cruddas Policy Review Coordinator

I agree totally, and I shall conclude my comments with similar questions. My right hon. Friend will agree that rogue landlords escape the law because of three basic elements: lack of awareness by tenants, lack of enforcement, and lack of resources afforded to authorities to carry out such tasks. On lack of awareness, victims of rogue landlords frequently do not report them because they are not aware of their rights, or fear that if they come forward their landlord will find out and evict them. On lack of enforcement, the law is not enforced often enough. For example, in 2004 only 26 landlords were convicted or cautioned for unlawful eviction, and in 2008 only one person received a custodial sentence under the Protection from Eviction Act 1977.

Photo of Mike Weatherley Mike Weatherley Conservative, Hove

Does the hon. Gentleman agree that the legal process may be a little slow, not only for legal remedies for tenants, but for landlords when tenants are in arrears? Perhaps both problems should be examined.

Photo of Jon Cruddas Jon Cruddas Policy Review Coordinator

I do not dispute that there are occasionally problems on the other side, and I think we all agree on that. Such problems also need resolution, but they are completely and empirically outweighed by tenants' problems that confront us as MPs.

On lack of resources, the Government's Rogers review showed that more than 60% of councils devote a low or very low proportion of their regulatory resources to enforcing health and safety requirements or HMO licensing.

What can be done? The problem could be split between local and national Government. The Government could prioritise the private rented sector and give councils the tools that they need to force out rogue landlords. They could tighten the law to close the loopholes that rogue landlords use to exploit tenants, and they could make it easier for tenants to enforce their legal rights. Transparency and accountability could be increased, so that the public are better able to hold local politicians to account.

Local governments could prosecute rogue landlords and make use of the full range of tools and powers already at their disposal. They could be proactive in protecting tenants by carrying out regular housing condition surveys, and they could make sure that enforcement is properly resourced. They could also take advantage of the Housing Act 2004, which allows them to recoup costs by charging them to the landlord.

Today, Shelter has launched its campaign, and a new section of its website focuses specifically on action to tackle rogue landlords. It highlights the top scams that rogue landlords use against their tenants and releases the results of a survey produced jointly with the Chartered Institute of Environmental Health. It publicises the online and face-to-face advice service for people who have fallen victim to rogue landlords, and it encourages MPs to approach Shelter directly if they know of rogue landlords operating in their areas and to refer their constituents to the advice services.

I would like to refer to some of the key findings in the Shelter-CIEH survey. The results are stark: 99.2% of environmental health officers working in the private rented sector claim to have encountered landlords who persistently ignore their responsibilities; 96% of environmental health officers have encountered damp and mould; over 90% have found electrical hazards; and more than 91% have found fire safety hazards in the private rented sector. More than 60% of environmental health officers say that cases involving vulnerable people make up more than half their work load, and over half those officers believe that environmental health problems in the private rented sector are set to get worse over the next year.

Those issues cannot be separated from the wider policy context, which cannot be ignored. Many vulnerable people have been forced into the private rented sector because of the shortage of social housing. Local authorities increasingly look to the private rented sector to house homeless families, which in turn has forced up the bill for housing benefit. The Government spend millions of pounds on the private rented sector through the local housing allowance, and as a major customer in the sector, it is important that they properly monitor and question quality and standards. The recession has changed the nature of the private sector. There has been an increase in the supply of private lettings as home owners defer sales or are unable to sell and become "reluctant landlords". Meanwhile, the majority of people whose homes are repossessed will move into the private rented sector.

The National Landlords Association has warned that the coalition Government's planned changes to the local housing allowance will drive vulnerable tenants into the hands of rogue landlords. Making local housing allowance payments directly to landlords would make the market more attractive and secure for reputable landlords, while helping tenants who find it difficult to manage their finances.

As I said earlier, the Minister for Housing and Local Government has announced that Labour's plans for a new national register of landlords, the regulation of letting and managing agents, and compulsory written tenancy agreements will be scrapped in the name of protecting "good" landlords from red tape. The national register of landlords planned to allow tenants to make basic checks on prospective landlords. It aimed to make it easier for councils to identify local landlords, thereby making the enforcement of letting rules simpler. The regulation of letting and managing agents was aimed at tackling rogue landlords and driving out the worst practices, such as wrongful eviction. It aimed to raise standards and provide protection for landlords and tenants in the event of a dispute. The compulsory written tenancy agreements sought to strengthen the hand of tenants in the event of a dispute and to ensure that tenants and landlords were clear about their rights and responsibilities. In the light of Shelter's report, perhaps the Government will look again at those ideas and give them another hearing.

I know that my colleague, Stephen Gilbert wants to say a few words, so I shall conclude with some questions for the Minister. Does he recognise the problems with rogue landlords that Shelter has identified? Given the steady increase in the number of private renters, does he agree that tackling those problems should be a Government priority? Will the Government introduce measures in the decentralisation and localism Bill to ensure that local authorities can be properly held to account for their policies on tackling rogue landlords? What steps will the Government take to tackle rogue landlords who repeatedly commit the same offences?

Many MPs urged the last Government to fast forward their plans to implement the national register and to crack down on those unscrupulous landlords whom we have all come across. Those ideas appear to have been kicked into the long grass. I urge the Minister to study in detail the report launched today by Shelter and to come back and think again about what can be done to stop exploitation, harassment and negligence in the private rented sector.

Photo of Stephen Gilbert Stephen Gilbert Liberal Democrat, St Austell and Newquay 11:14 am, 8th September 2010

I commend Jon Cruddas, and I thank him for securing this debate on the important research that Shelter has published and for allowing me to say a few words. Cornwall is experiencing an acute housing crisis, and the private rented sector continues to play an important role in addressing that crisis for my constituents. However, Shelter's research should be a cause of concern to hon. Members from all parties. We all know that the majority of landlords act responsibly and treat their tenants reasonably. Nevertheless, a minority of landlords are inflicting great suffering on vulnerable people.

Across the United Kingdom, 3 million households live within the private rented sector-that is 14.2% for statistics junkies. That number has grown massively over recent years, and in my constituency, latest statistics show that in Newquay, one in five homes-20%-is in the private rented sector. That is well above the England average. We must ensure that private landlords look after people in their care. That is an important issue across the country.

During the three or four months in which I have been a Member of Parliament, my constituency postbag has shown examples of the kind of rogue landlord activity that Shelter mentions in its report. That includes illegal evictions, sometimes including violence, or cutting off water and electricity to force people to leave their homes.

Last summer, a family of four were evicted without warning, under the threat of violence and the use of knives. They were left with only a car to sleep in while one of the family's daughters was doing her GCSEs. Another couple in my constituency, who have a small baby, were living in rotting, damp, leaky conditions. They were threatened by their landlord for reporting the situation to the environmental health officers that the hon. Member for Dagenham and Rainham referred to. The situation culminated in their utilities being cut off during a cold spell last winter.

Cases such as those and the many others across the country are unacceptable. We are hugely indebted to Shelter for its research and for bringing the problem to light at a national level. However, the issue is not just about violence and evictions. Tenants can suffer if landlords refuse to carry out essential maintenance and basic repairs, thereby wilfully neglecting their responsibilities and putting the health of their tenants at risk.

The Minister for Housing and Local Government is clearly experienced and knowledgeable about housing, and he is committed to ensuring that everyone has somewhere decent to live. He has already said that he expects councils to use

"the full range of powers at their disposal to make sure tenants are properly protected."

I believe that local authorities must take a zero-tolerance approach to rogue landlords and that they must use all levers at their disposal to root them out. Enforcement powers are available to local authorities, but all too often such powers are not used. We do not necessarily need a raft of new legislation, but priority must be given to the enforcement of current legislation against rogue landlords. Councils must be proactive in protecting tenants by ensuring that they know where the problems are locally and prosecuting when necessary, and by considering the use of existing powers to introduce selective licensing.

Again, I congratulate the hon. Member for Dagenham and Rainham on securing the debate. This is a vital issue that affects millions of people across the country and I will be interested to see what plans the coalition Government have to tackle the problem.

Photo of Andrew Stunell Andrew Stunell The Parliamentary Under-Secretary for Communities and Local Government 11:19 am, 8th September 2010

I congratulate Jon Cruddas on securing the debate and other colleagues on their potent interventions. In particular, let me mention my new colleague, my hon. Friend Stephen Gilbert, and thank him for bringing to the attention of the House some of the specific and horrific examples that he described.

I think that everyone present understands the importance of the private rented sector in delivering affordable and suitable accommodation for households. As has been reported, there are 3 million private tenants in this country. In the area represented by my hon. Friend and in London, a much higher percentage-as many as one in five-are in private rented accommodation. The sector provides a lot of choice and flexibility at all levels of the housing market.

Photo of Graham Jones Graham Jones Labour, Hyndburn

The Minister makes the point that there is quality provision in the private rented sector, but I should like to point out the situation in my constituency and the east Lancashire corridor, which probably reflects that in many areas of the country. In my area, 40% of properties do not meet the decent homes standard and 11% are unfit for human habitation; and within those statistics, it is predominantly the private rented sector that features. How can he say that there is adequate provision and no need for regulation when such squalid conditions exist? Urgent action is needed on rogue private landlords. Stephen Gilbert made the good point that environmental health officers are really struggling. The sector does need regulation, because such landlords are able to evade legislation. They are able to work round-

Photo of John Robertson John Robertson Labour, Glasgow North West

Order. The hon. Gentleman should not be making a speech.

Photo of Andrew Stunell Andrew Stunell The Parliamentary Under-Secretary for Communities and Local Government

Indeed. I am getting a bit cramped for making my own speech, if I may say so, Mr Robertson. I shall just challenge Graham Jones on one point. He says that 40% of the homes in his constituency are below the decent homes standard-a figure that I fully accept. I do not know what proportion of them are in the private rented sector-he did not say-but of course a lot of homes below the decent homes standard are not in the private rented sector, and I do not want him to get away with the idea that the coalition Government believe that there should be no regulation. On the contrary, I shall outline in a moment, I hope, what we think is there and should be there and what should be done to enhance the situation that we face.

The hon. Member for Dagenham and Rainham, in introducing the debate, was, I think, criticising my right hon. Friend the Minister for Housing and Local Government for saying that the vast majority of private tenants are satisfied with the service that they receive. Well, 75% of them say that, which I think is somewhat near to being a vast majority, but I certainly recognise that there is poor practice.

Photo of Andrew Stunell Andrew Stunell The Parliamentary Under-Secretary for Communities and Local Government

I think that it would be a courtesy to the House if I continued with my speech at this point. Perhaps there will be a space at the end of the debate.

There is bad practice; a minority of landlords clearly behave in an unacceptable way; and the management of the poorest-quality stock is an issue. Those properties are often the ones that are occupied by the most vulnerable tenants, too. That causes real problems, as my hon. Friend the Member for St Austell and Newquay pointed out.

The Minister for Housing and Local Government is well aware of the position that some people face. He is also well aware of the Shelter campaign. I can tell hon. Members that he will attend a public meeting with Shelter in a couple of weeks' time, when he visits the Liberal Democrat conference, so I am sure that if he is in any doubt, he will be able to understand the position fully there.

What can we do to tackle the problem? Local authorities already have significant powers. Some hon. Members talked about illegal action that has taken place. Illegal action can be confronted by local authorities, whether by environmental health or by rent officers. Indeed, in Liverpool, there is an interesting situation in which such action is being confronted by the primary care trust, which is also involved in local health issues. It is certainly our intention to work with those who have an enforcement role, to ensure that the barriers to them using their powers effectively are lifted. Of course, those are mostly powers that are given to local authorities, which is exactly as it should be. Where landlords fail to maintain their properties, local authorities can use the housing health and safety rating system to make a risk assessment.

Photo of Graham Jones Graham Jones Labour, Hyndburn

The health and safety rating system involves very minimum standards. Does the Minister not agree that it involves appallingly low standards and does not come anywhere near meeting the decent homes standard? When environmental health officers are asked to go round and look at properties, they have no power at all to make the house reach a decent standard, as has been pointed out by the hon. Member for St Austell and Newquay.

Photo of Andrew Stunell Andrew Stunell The Parliamentary Under-Secretary for Communities and Local Government

I am not quite sure what the hon. Gentleman is asking me to do. If he thinks that there should be a legal requirement for private landlords not to let if their home is not of a decent standard, I think that that will give a number of social housing landlords problems as well. I fully accept his point that standards in some places are low and need to be brought up to standard. I was trying to illustrate the fact that local authorities have powers at their disposal to achieve that.

There is an extensive enforcement framework. Where high levels of hazard are identified-categories 1 and 2-the local authority can compel private landlords to make the necessary improvements. It can issue improvement notices and require property to be closed down. Failure to comply carries a fine of £5,000.

One of the points that the hon. Member for Dagenham and Rainham made was that there are repeat offences, and one of his questions to me was what the Government will do about repeat offenders. Repeat offenders go to the courts, and the courts will take the decision based on the facts of the case. I strongly support the hon. Gentleman in thinking that the courts should take those breaches very seriously.

Photo of Tom Blenkinsop Tom Blenkinsop Labour, Middlesbrough South and East Cleveland

Given that the legislation in place to pursue rogue landlords is not strong, and even if we take the Minister at his word that the current legislation is strong enough, is it not the case that when local authorities are being asked to make cuts of 25% to 40%, the ability to pursue those landlords will be curtailed?

Photo of Andrew Stunell Andrew Stunell The Parliamentary Under-Secretary for Communities and Local Government

The reality that we face means that there will be less public money to spend. The policy of the Department for Communities and Local Government and of the Government is to devolve the priority-setting process to local councils. If local councils share the hon. Gentleman's view that increased enforcement is an essential core activity that they must build up, they will have much more freedom to do that. They will have to set priorities, just as the Government have to set priorities.

Conditions in the private rented sector have improved. Since the early 1990s, the gap in the level of decency between owner-occupied and privately rented homes has narrowed. Indeed, on average, the private rented sector has become more energy efficient than the owner-occupied sector. I fully understand that averages disguise highs and lows, but we should not demonise one sector of the housing market without taking better account of the evidence.

Local authorities have powers in respect of management standards. Under the houses in multiple occupation regime, there are statutory requirements for HMOs of three or more storeys occupied by five or more people who form more than one household. It is a bit of a rigmarole to say that, but we know what we mean. There is also the power for local authorities to have discretionary licensing schemes in their areas, covering smaller HMOs that do not meet the mandatory licensing criteria where they have identified problems with management and property condition. Hon. Members will know that there is a selective licensing scheme to cover all privately rented property in areas that suffer from low housing demand and persistent antisocial behaviour.

As part of the previous Government's localism agenda, local authorities were granted, from April of this year, a general consent to introduce discretionary licensing schemes without reference to the Secretary of State. It is right for local decisions to be made by those who are directly accountable to local communities. We certainly have no plans to repeal that power.

Licensing schemes mean that local authorities can impose conditions on licences, such as a specified maximum number of occupants and that adequate amenities are in place. Private landlords have to be identified as "fit and proper" in terms of their suitability to manage the property. That perhaps deals with the repeat offenders point from a different direction. A breach of a licence condition is an offence. Letting or managing a property that requires a licence without one could result in a maximum fine of £20,000. Given all that, the Minister for Housing and Local Government came to the view that there was no need for more regulation at present. We do not want to introduce new burdens for landlords that will discourage them from letting homes to those who really need them.

Several comments were made about the tenancy deposit protection scheme. Of course, that is statutory. It helps to ensure good practice in deposit handling, so that when a tenant pays a deposit and is entitled to get it back, they can be assured that that will happen.

Perhaps in the last second of the debate, I can say that when it comes to raising tenants' awareness, I am entirely with the hon. Member for Dagenham and Rainham. I believe that it is of absolute importance that at national and local level, and by us as MPs, the point is made to tenants-

Sitting suspended.