Consumer Rights Bill

Debate between Baroness Bakewell of Hardington Mandeville and Earl Cathcart

Monday 24th November 2014 Lords Chamber

[Earl Cathcart (Con)]

My Lords, I will confine my remarks to Amendment 50E:

“Protection of tenants against retaliatory eviction”.

As a landlord in the private rented sector, I am firmly against any landlord who engages in such practices as retaliatory eviction. In my 30 years or so of being a landlord, I have never had to resort to issuing—or come close to issuing—a Section 21 notice.

I have three points to make. First, the definition of a retaliatory eviction in this amendment is too broad. It would create massive uncertainty about what is and what is not an unreasonable eviction. A much clearer definition is needed that makes it abundantly clear that it does not include failure to pay rent or committing frequent anti-social behaviour, to give just two examples.

Secondly, we are being asked to agree to this amendment without knowing the extent of the problem. Responding to a Question, my honourable friend Brandon Lewis, the Housing Minister, said that the Government did not hold data on the extent of the problem, and nor did anybody else. That was true until Shelter conducted a YouGov poll that found that just 1% of private sector tenants had been evicted or served with a notice to evict in the last year because they complained to their council about a problem with their home that was not their responsibility. Only 7% of tenancies are ended by landlords, mostly because they need to take possession in order to sell or to move into the property themselves or to undertake refurbishment—or because the tenants are not paying their rent or are committing frequent anti-social behaviour.

My third point is that there are already existing laws in place that give tenants all the protection that they need. In June, the Competition and Markets Authority issued guidance on the relationship between landlords and tenants. This guidance states that, under the terms of the Unfair Trading Regulations 2008, derived from the Consumer Protection Act, it is a breach of these in the case of,

“any commercial practice that, in the context of the particular circumstances, intimidates or exploits consumers such as to restrict (or be likely to restrict) their ability to make free or informed choices in relation to a product, and which cause or are likely to cause the average consumer to take a different transactional decision. These are known as aggressive practices”.

In the examples of what constitutes aggressive practices, the guidance includes,

“threatening the tenant with eviction to dissuade them from exercising rights they have under the tenancy agreement or in law, for example where they wish to make a complaint to a local authority about the condition of the property, or seek damages for disrepair”.

Likewise, evicting a tenant as a punishment for a complaint is unfair practice, as the Competition and Markets Authority recognises. In either case, a Section 21 notice should not be enforced by the courts.

What is needed is not more law, but better information for tenants to understand their rights. Simply put, there is already ample protection for tenants, as I have tried to explain. In too many cases, they do not know that it exists.

[Baroness Bakewell of Hardington Mandeville]

My Lords, I will speak in support of Amendment 44D. Like others before me, I have recently been engaged in trying to find alternative accommodation in London. I spent mornings going around the letting agencies looking for suitable properties. The difference in the range of fees and expectations of me were enormous, but it was only by asking that I found out what fees the agents would be charging and at which stage. Rarely was this information volunteered.

Once I had found a property that I thought would suit, I was told I would need to put down a holding deposit. Not having previously been involved in renting a flat, this was a new experience for me. Obviously those of us who hail from the country are not used to your London ways. I did some research and found that, unless I put down this deposit, I would be unlikely to secure the flat while the necessary references and checks on me were taking place. I was assured that on completion date the holding deposit would be deducted from the rental deposit required, but I did blanch somewhat at being asked for six weeks’ rent upfront in addition to the first month’s rent. However, this is how things are done and so I will be complying. I move at the beginning of December.

Water Bill

Debate between Baroness Bakewell of Hardington Mandeville and Earl Cathcart

Tuesday 11th February 2014 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I speak to Amendments 161B and 161C in this group. Although welcoming the introduction of Flood Re and accepting that it is essentially a scheme for domestic premises, I remain concerned about the exclusion of small businesses, especially in very rural areas. I refer specifically to those which are mixed hereditaments. The key question appears to be: what happens to mixed hereditaments in terms of qualifying for inclusion in Flood Re?

There are two scenarios for mixed hereditaments. The first is where the business element is deemed by the valuation to be de minimis. This means it forms such a small part of the overall hereditament that it appears only in a domestic list for council tax. The second is where the business element is more significant, and is therefore liable to both council tax and business rates. If the property does not appear in the waiting list for business rates as well as for council tax, the liable party may qualify for business rate relief. This could be small business rate relief, where it is their only business premises.

I understand that, currently, if the rateable value is less than £6,000 the relief received would be 100%. Rateable values between £6,000 and £12,000 receive relief on a sliding scale. This enhanced small business rate relief scheme has been extended until 31 March 2015, and not beyond that at the moment. The standard scheme allows a relief of 50%. In a rural settlement it might be the case that a village shop or post office is part of a mixed hereditament. In this case it would qualify for rural rate relief. Also, in a rural settlement, a pub with living accommodation above could qualify for rural rate relief on the pub element.

I am extremely concerned about excluding mixed hereditaments from access to Flood Re. This could have a dramatic impact, not just on the business owner but on those residents who use the business. If that business cannot get flood insurance it may remain unviable and may be forced to close prematurely if flooded. Where, for example, this is the last shop or post office in the village this could have a significant impact on the villagers.

[Earl Cathcart (Con)]

My Lords, I congratulate my noble friends Lord Moynihan and Lady Parminter on tabling Amendment 155, as it has given us a good chance to debate flood insurance for businesses, whether in Flood Re or in another mutual set up specifically. We are all under pressure to include small businesses under the Flood Re scheme. That is quite understandable. If I had a business in a flood risk area, I would want to insure it under the Flood Re scheme. I know that the Association of British Insurers and the Government looked at whether businesses could be included within the Flood Re scheme, but found that it threw up more problems than it solved. This is best illustrated with an example.

I am a free range egg producer on my farm in Norfolk, and when it came to buying insurance for the business, I was presented with a long shopping list of types of cover relevant to my business: property; business interruption; loss of profits; contractors “all risks”; terrorism and malicious attack; livestock, including theft, worrying, death after straying, accidental or malicious death; deterioration of stock, in my case probably due to bad feed or electrical failure; perils and fatal injury; livestock in transit; disease, in my case probably something like bird flu or salmonella; goods in transit; motor, for lorries, trucks, vans or cars; employers’ liability; public liability; product liability or environmental liability; legal and professional expenses.

The list goes on, but I hope that gives your Lordships a flavour of the range of commercial insurance on offer. I, of course, had to cherry pick the cover that was most relevant to me. For instance, I did not buy livestock or goods in transit cover, because this is the responsibility of third parties with whom I have a contract. Also, I have no vehicles in that business, so motor insurance was not an issue. However, salmonella is an issue for my business, but because the insurance is so costly I chose not buy it. I hope that I got that one right. I have to choose not only the type of cover that I think is appropriate to my business but how much cover to buy for each category, the cost and the level of excess necessary to reduce that cost. The excess across my shopping list varies from £100 to £20,000.

Although there are hundreds of egg producers up and down the country with identical businesses to mine, I very much doubt that there is another that has commercial insurance exactly the same as mine. They will all be different, and that is the problem: all businesses, whether a corner shop, a pub, a guest house, a property investment company, a hotel or guest house, a manufacturing company or an engineering firm, will buy commercial insurance to suit their particular circumstances. The whole point of a mutual, whether Flood Re or one geared specifically to small businesses, is that the conditions are common to all. The price, the excess, the cover and the conditions must be standardised. This can be done for homeowner insurance—it is pretty bog-standard—but sadly, as I have tried to illustrate, not for commercial insurance. You just cannot standardise it. If it were standardised, virtually all commercial members of that mutual would end up with a policy that did not give them the cover that they wanted.

It would be good if everything could be included in Flood Re, whether owner-occupied houses, rented homes or small businesses, but the line must be drawn somewhere. It has been agreed that those with homeowner insurance, buildings and contents, will be included and that commercial insurance will not be. If I had a property in a flood-risk zone that was deemed to have commercial insurance with it and was therefore excluded from the mutual, I would ask my broker to split my insurance cover into two separate policies: one for the bog-standard homeowner cover, buildings and contents, to ensure inclusion within the Flood Re scheme, and the other to include all elements that made my cover commercial, such as owner’s liability or public liability cover. That might be a way forward for many of those finding themselves excluded from the Flood Re scheme because of the commercial element of their policy.

Flood Re will help up to 500,000 homeowners who cannot currently buy flood cover, but I am sure that with a little bit of inventiveness, many, although I am afraid not all, small businesses, including buy-to-let and leasehold properties, can buy their insurance in such a way as to be included in the scheme.