Housing: Rented Sector

Baroness Royall of Blaisdon Excerpts

Thursday 12th July 2012 Lords Chamber

[Baroness Royall of Blaisdon]

My Lords, I declare an interest as the owner of one flat that is rented but also as the mother of three members of the very angry brigade. I, too, am grateful to my noble friend Lady Rendell for initiating our debate today with her customary passion and insight. The debate is important for individuals and families but also for our urban and rural communities, and our society as a whole. My noble friend raised fundamentally disturbing issues affecting thousands of people up and down the country. A house or flat is not just a matter of bricks and mortar; it is a home. It provides shelter, sanctuary and safety, and has a profound effect on physical and mental well-being. It is a place that should give an individual and families security, and a nest from which to thrive.

As we have heard, exorbitant house prices and a scarcity of good-quality social housing have forced many families to rely on the private rented sector, where many fall prey to unscrupulous landlords and are compelled to reside in abysmal living conditions that fail to meet even the Government’s decent home standard—based on the statutory minimum standard for housing. The fact that this basic standard is all too often not met is a national disgrace. Shelter warns that even satisfactory-quality homes are too expensive for many, particularly now in the era of the double-dip recession. I recently met a family with two children living in an ex-council flat in Paddington for which the private landlord charged £2,100 a month. That cannot be a fair rent. They relied on the help of housing benefit but of course it was the landlord who derived the greatest benefit. Just over two in five homes in the private rented sector in England, or 44%, fail to meet even the decent home standard. This represents a major housing issue, which is undoubtedly contributing to the deterioration of quality of life for many families and individuals in this country.

Poor living conditions create a plethora of social problems that affect all members of society and strike at the cohesiveness of the family unit. Substandard accommodation leads to an increased risk of ill-health and chronic health conditions, and can lead to poor school performance, particularly for those struggling on the lowest incomes. These are the people least able to escape from poor living conditions as they have fewer, and in most cases absolutely no alternative, housing options. Earlier this year, I met a woman who had been moved into privately rented rooms which she had to hoover three times a day because of the cockroaches that covered the floors and other surfaces.

It is reported that the private rented sector is home to approximately 1 million families with children—twice the number of a decade ago. Save the Children warns us that almost 2 million children in the UK are growing up in cold, damp, temporary or overcrowded housing. That is the latest official estimate from the DCLG. Bad housing has potentially irreversible effects on children’s health, well-being and educational achievement, restricting their life chances indefinitely. A child’s future health and life prospects are built upon the foundations of the quality of care it receives as a young child and the quality of the housing in which it lives. The problems faced by families will undoubtedly increase because of rising levels of families and individuals forced to rent in the private rented sector and declining owner- occupation. Of particular concern is the fact that the private rented sector remains subject to inadequate regulation.

In order to strengthen the rights of tenants, Shelter has called on the Government to make a number of crucial changes to housing policy, including working more closely with local authorities to prioritise the prosecution of rogue landlords, and strengthening the law to permit the banning of people from being landlords if they have unspent convictions relating to previous landlord offences. Indeed, should not unscrupulous landlords who force families to live in squalid conditions be permanently banned? Save the Children reminds us of the 2008 Rugg review by the Centre for Housing Policy at the University of York, which proposed PRS regulation, including a national register of landlords, mandatory licensing for letting agents and written tenancy agreements.

It is imperative that the quality of private rented sector housing is better regulated, particularly as the significance of the sector continues to rise. Home ownership levels fell from approximately 70% of households in 2001 to 65.2% by 2010, while private renting grew from 10.1% to 17.4%, and social renting decreased from 20% to 17.5%. The exponential rise of the private rented sector, combined with the poor regulation of landlords and the substandard condition of many properties, has created abysmal living conditions for many families and individuals.

I draw noble Lords’ attention to what I regard as very good practice in the Labour council of Newham, led by the excellent Sir Robin Wales. On the basis of a successful pilot of a neighbourhood improvement zone, Newham is now expanding a licensing scheme to include all private landlords in the borough. This is the first ever borough-wide licensing scheme and will give an unprecedented ability to drive up standards across the borough. The licence carries conditions which the landlord or managing agent must abide by, mostly around the management of the property. The system is financially fair to landlords. A scaled fee structure is being introduced so that compliant—that is to say, good—landlords do not have to carry the costs of licensing “rogue” landlords. The licensing scheme will allow the council to identify and engage the non co-operative landlords, which simply is not possible with voluntary schemes. It will enforce on a “worse first” basis, focusing activity on non-compliant landlords. Landlords who abide by the conditions of the licence will be able to get on with their business without intervention.

That is exactly the sort of scheme that, as a Labour Government, I hope we would introduce across the whole of this country. We would all agree that the need for security of housing tenure is pivotal to a stable home environment. Private tenants are typically provided with negligible security, due in part to the prevalent assured shorthold tenancy, which is widely used by landlords. Many examples have been given this afternoon of families having to move on many occasions because of the whims or greed of private landlords, who refuse to make the appropriate repairs to their properties. Such instability is a nightmare for families and can contribute to both insecurity and chaotic lifestyles. How can children thrive academically who have to move four or five times within a couple of years? How can they thrive in a stable condition in schools if they have to move time after time?

The Localism Act opened up the prospect of reducing security of tenure for social housing, yet security of tenure in the private rented sector is very weak; it is essentially six months. Dreading eviction, families often do not feel that they are able to report instances of disrepair or problems with damp, for example. In the event that they do complain, these requests are frequently ignored, and there is very little recourse for these families.

Recent changes to the housing benefit system—now setting the limit at the 30th percentile—is causing those reliant on benefit to be restricted to the cheaper end of the market. These are the very properties that typically do not meet even the minimum decent homes standard. The underoccupation rules for social housing will force some families out of existing accommodation and into the private rented sector, adding yet greater pressure. Research by Shelter and other housing organisations indicates that a large proportion of private rented properties bar housing benefit claimants from private tenancies. That is especially a problem in London.

The policy mooted by the Prime Minister, that housing benefit should be denied to young people under 25, shows a profound lack of understanding of the lives of real people. Many young people who receive housing benefit are on low wages. They are working and trying to contribute to the economy, but they simply do not have enough money to pay the rent. My noble friend referred to food banks; sometimes it is precisely these young people who now have to resort to food banks. Just last week, I heard of a food bank in Salisbury that focuses on people who are in work but receive such low wages that they cannot afford to buy the food that is necessary to provide for their families.

We hear whispers that a government-commissioned review of the private rented sector by Sir Adrian Montague is likely to recommend sweeping changes to planning and funding rules. It will favour the private rented sector over building new affordable homes, which will further exacerbate the limited opportunities for home ownership. It is also suggested that this may extend to recommendations to the Government to offer loans, in place of grants, to support large-scale new build private rented sector schemes. This could have devastating consequences for the nurturing and development of the affordable housing sector. I would be grateful if the Minister could give me an assurance that the Government are not abandoning an affordable housing strategy, nor seeking to replace social housing with wide-scale private rented housing, and a promise that they will not be distorting housing policy towards private rented housing at the expense of the protection of social housing.

The degree of housing need in our country, driven by longer life expectancy and an increasing tendency for people to live in single households, must be addressed. At least 240,000 new homes need to be delivered per year to meet the formation of new households. In 2008, a National Housing and Planning Advice Unit assessment showed that a minimum of 240,000 homes would be needed annually to keep pace with demand. Just 102,730 new homes were built in 2010, which represents more than 15,000 fewer homes than the previous year. It is certainly fewer than were built in the last year of the Labour Government. Government initiatives are simply not delivering.

Labour made some significant progress when it was in government; our decent homes programme made a significant difference to the quality of council housing. We also planned to improve regulation of the private rented sector, but these plans have since been abandoned by the coalition. However, I readily admit that in government we did not do enough to provide housing for people. Housing must and will be a priority for the next Labour Government, and I assure my noble friend Lord Sawyer that we are indeed working on that issue now.

The quality of living standards for families and individuals must be addressed, as must the plight of those living in substandard accommodation. Poor housing and living conditions create a plethora of social problems that will touch and be detrimental to all parts of society. Sadly, poor housing and anti-social behaviour are often linked. This affects individuals and families, but also the wider community. The growing housing crisis will not abate without action. Steps need to be taken now to address that crisis, including the dismal and sometimes desperate problems suffered by those who live in expensive—and too often substandard—private rented accommodation. It could be said that all noble Lords who have spoken this afternoon belong to the ageing angry brigade, and we look forward to the response from the Minister.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, I, too, thank the noble Baroness, Lady Rendell, very much for having initiated this debate. I am sure that she did not sound like somebody from the angry brigade, but she spoke very forcefully and with her usual cogence. I thank her for that and I thank other noble Lords who have taken part. As one might have expected with this debate, it has wandered widely around the subject of housing but, as noble Lords have said, you cannot really think about a house without people or about those people without their conditions. It is perfectly understandable that that is how it should have developed.

We have had some particularly moving examples of bad practice and things going wrong. I do not think any of us would sit here and pretend that everything in the private rented sector was glorious. It is not possible to believe that. I have read the recent report by Shelter with great interest. The key points in it are about the difficulties that some families have in managing within the private rented sector—the insecurity of short tenancies and a general feeling of difficulty over the renewals of rent—have been touched on by noble Lords today.

For a number of reasons that have been raised, many more people are now accessing the private rented sector. There is increased pressure on affordable housing. There are those who could possibly afford a mortgage, but who cannot raise enough for a deposit on a house. That slows down home ownership. Those people enter the private rented market as well and are increasing the need for it.

Many people can not only afford private renting but find it a useful short-term or long-term way of living because of its flexibility. I recognise that those are probably not the people we are talking about this afternoon. We are talking about those on low or medium incomes, many of whom access housing through assured shorthold tenancies. These give initial terms of six months and in general these terms are renewable after the six months expire. At the outset, tenants and landlords can offer initial fixed periods. Shorthold tenancies play an important role in the housing market. There is sufficient flexibility in them, but I would not say that everything was perfect.

The constraints of renting are understood and some of them have been mentioned. However, only 8.2% of tenancies are stopped by tenants by mutual agreement. While it is true that families with children are having to rent, this has not in most cases meant constant upheaval and disruption. However, I accept that there are times when it does, and the 8.2% refers to the people who are giving up tenancies.

We have not heard a lot about the English Housing Survey report today, though the noble Lord, Lord Morris, did mention it. We can all extrapolate and take out the little bits which interest us most, but that is what surveys are about and is one of the advantages of having them. The report shows that most tenants are reasonably satisfied with their accommodation. Where they are not there are regulatory ways by which problems can be dealt with. I will briefly go through some of these.

For example, where there are concerns about the level of rent, people have access even in affordable short-term tenancies to rent assessment committees. People should not therefore feel pressured about increases in rent as there is a perfectly reasonable route to have the rent reassessed. Once it is fixed by the committee, that is the legal maximum that people can be charged. A number of noble Lords referred to the standard of property. If a tenant feels that the landlord is not maintaining it and is failing to carry out repairs, the local authority has powers to deal with that. It can deal with it not only under its own enforcement powers but under the health and safety rating system which could result in the landlord being required to carry out repairs if he will not do them voluntarily.

We have heard quite a bit today about rogue landlords. We recognise that in some places they are a significant problem. Rogue landlords include those who are doing the beds-in-sheds renting that we believe to be completely unacceptable. The Government have been working with local authorities, Shelter and other organisations to deal with the problem, which we recognise. As I think was mentioned, we are shortly going to publish guidance for all local authorities to provide them with advice on how to take action against these rogue landlords, including prosecuting them. Local authorities can deal with rogue landlords, and we have to be really clear about that. They have legal powers to do so, and that will be in the guidance. My department has provided more than £1 million to nine local authorities where beds in sheds is a particular problem to help increase their enforcement activities. Action can therefore be taken.

The private rented sector is a major source of housing and will continue to be so and to have an essential role in the housing market as this Government continue to work to increase the supply of affordable housing, which I confirm we are doing, and to find ways of making land available for development of all kinds. Making land available includes getting every government department to identify its surplus land and make it available for the housing initiatives that are coming up and are in the housing strategy to ensure that there is extra housing. We will not take lessons from the previous Government about the amount of housing that has been provided. One of the reasons why we have less housing than we should have is because there was not quite enough built previously. Of course, houses finished in 2010 were started previously. We are working very hard indeed on increasing the amount of property, and at the moment there is provision for more than 170,000 homes between now and 2015.

I shall develop what the Government are doing at the moment because it has been suggested that we are not doing very much. There is the new homes bonus, which will encourage and help pay for affordable housing and more private housing. We are also marketing new build-to-rent pilot sites through the Homes and Communities Agency. There are the First Buy and NewBuy policies to help with mortgages, and there are mortgage incentives with the banks to help with deposits. We are also putting in place an independent review of barriers to investment in private homes to rent. There is a lot going on. The housing strategy that was published last year goes into much more detail than I can, but if noble Lords go through it, they will realise that the Government expect that with either the public sector, the New Homes Bonus, the private sector or with institutions, we will provide or start to provide the housing that is necessary.

We are working with the industry to build up standards and, as I have already said, we are encouraging local authorities to make full use of the robust powers they already have to tackle dangerous and poorly maintained homes. I was asked about the decent homes standard. We continue to support it to ensure that those properties that fall outside the decent homes bracket are brought up to standard.

It was also mentioned that we have commissioned a report by Sir Adrian Montague on encouraging institutional investment. It is due to be published very shortly and either will or will not include the points raised by the noble Baroness, Lady Royall. However, it will be an influential report that will help us to get institutional investment into housing.

With the limited availability of mortgage finance, there must be an important role for new homes that are built to rent. More homes mean better conditions and less pressure on people to have to live in unsatisfactory and overpriced housing. The point was made today that one of the reasons we have high rents and inadequate housing is the shortage of housing in terms of the size of the population. There are several reasons why demand for housing is increasing, not least of which is the larger number of single-occupant homes while the population is increasing. We also need better homes for older people. There is a lot of demand on housing supply but, along with everybody else here, I accept that that housing supply must be of a decent standard.

I am very sympathetic to the issues that have been raised today. A number of points were made. The noble Baroness, Lady Rendell, mentioned tenants’ deposits and of course they are protected. There is now a requirement for all landlords to ensure that deposits are put into two schemes and that they are returned at the end of a tenancy.

Those on housing benefit account for around 30% of rented housing. While I understand the concern about the cap having come down, housing benefit will be available to most of that 30%. It is mostly in London, if at all, that that has to be reassessed. The right reverend Prelate the Bishop of Chester raised the point that most people on housing benefit are in work. I cannot dispute that but, again, housing benefit is available up to the cap.

I thank the right reverend Prelate for acknowledging that the housing strategy is in place. I should add that the housing associations that he mentioned access money and have their own ways of doing so. However, we are also trying to open up institutional investment again to try to increase the number of properties.

The noble Lord, Lord Morris, referred to the difficulties of young people, particularly those aged 18 to 20. Yes, I absolutely accept that many young people now have to live with their parents for a lot longer than they might like to have done. I had my children living with me for quite a long time, and I am glad to say that they have now moved on. In most families, children do not now find it easy to move out. I hope that I have covered most of the points that have been raised.

[Baroness Royall of Blaisdon]

May I make one comment? I am sure that the noble Baroness is delighted that her children have now flown the nest but I am equally sure that, when her children lived at home, they had a bedroom each. The problem for so many families is that those of their children who have to live with them are probably sofa-surfing because they have their other children living in the house. The tensions that are placed on these families can be immense. That is why we on this side of the House are extremely concerned about the proposals to cap housing benefit for those aged under 25. The tensions that could be exacerbated in those families could break them.

[Baroness Hanham]

I thank the noble Baroness for that contribution. Before I finish, I want to state that the Government are investing £4.5 billion in funding new affordable homes over the next spending review period—not an insignificant sum—and that the private sector funding contributed by providers to deliver these properties is some £15 billion. So there is huge monetary investment in housing, which I am sure noble Lords will recognise.

Again, I thank the noble Baroness for her debate and I thank all those who have taken part. If there are any points that I have not answered satisfactorily, I will write to noble Lords.