Local Authorities: Essential Services

Lord Best Excerpts

Thursday 24th January 2019 Lords Chamber

[Lord Best (CB)]

My Lords, I am grateful to the noble Lord, Lord Scriven, for initiating this debate and for his excellent opening speech. I declare my interests as a vice-president of the Local Government Association, of the Town and Country Planning Association and of the Chartered Trading Standards Institute.

My contribution concerns the essential housing services provided by local authorities and the related planning and development services. Our helpful Library briefing for this debate notes that these services have been subject to the largest reductions in expenditure over the period 2010-11 to 2016-17, as set out in the National Audit Office report last year. Spending on housing and related services is down by roughly 50% over that period, and yet, on the housing side, the requirement for local authority input to the provision of decent, truly affordable accommodation has grown significantly. This shows up, not least, in the rise in the number of those assessed as homeless and entitled to temporary accommodation, which is up by over 33% over this six-year period.

I commend the Government’s actions in several respects in supporting local government housing services. The rough sleepers strategy to help the street homeless contains important building blocks for tackling the desperate situation we see all around us, and resources for initiatives like Housing First are very welcome. The Government’s commitment to halving homelessness by 2022, and ending it by 2027, will require more central government support—particularly for the preventive work heralded by the Homelessness Reduction Act, which I had the pleasure of taking through your Lordships’ House in 2017.

In time, prevention pays dividends, as we have seen in Wales, and will be more than helpful to council budgets in reducing the wasteful costs of temporary accommodation. However, serious investment is going to be needed in the short term to stop more people becoming homeless. I note the impact on housing provision of underresourced planning departments, and of drastically diminished support for trading standards officers and environmental health officers, who are expected to enforce key aspects of housing legislation. But I want to concentrate today on the present and future role of councils in directly providing new homes for their local communities.

The excellent announcement last October that local authorities will be able to borrow on their housing revenue accounts, freely within prudential constraints, opens up some exciting possibilities. As we all know, there is a desperate shortage of accommodation to rent at so-called social rents, and the continuing impact of right to buy on council housing means an ever-decreasing stock of these homes. It clearly makes little sense for a council landlord to sell properties to the occupiers at big discounts, only for the council to be forced by the need to fulfil their housing obligations into reacquiring the same homes for vastly more than they received when they sold them. Ealing Council, for example, reports spending £107 million to buy back 516 right-to-buy council properties, for which it had received only £16 million when it sold them. Just as silly is for councils to find themselves renting back the council homes they sold, at three times the previous council rent, in order to house their homeless families. In London, some 40% of properties sold under the right to buy are now in the hands of private landlords.

I have argued, unsuccessfully, for amendments to several housing Bills both to give councils discretion over the levels of discount they give to tenant purchasers and also to allow all of the sales proceeds to be retained by councils rather having than a big chunk go to HM Treasury. But while current generous right-to-buy arrangements continue as now, in many areas building new homes to solve affordable housing problems will be like trying to fill the bath with the plug out. These are battles yet to be won.

But, with the caps and ceilings removed from their borrowing capacity, should local authorities now embark upon ambitious programmes of new council house building? Some councils are geared up for expansion and are ready, willing and able to go. However, even for the authorities that have neither transferred responsibility of their stock to another body nor delegated housing functions to an arm’s-length management organisation, their capacity to become a significant developer of new homes is likely to be very limited. After so many years of undertaking little or no council house building, naturally most councils do not have a skilled professional staff to take on programmes of new building. I fear the only way to get back into this business relatively quickly would be for authorities to lure the necessary people out of the housing associations to become council employees—no doubt at higher salaries. This sounds inflationary and unhelpful.

Meanwhile, the housing associations that wish to expand face constraints of their own. If they are to produce genuinely affordable accommodation, their much-depleted levels of grant need to be higher, but they also need to have enough borrowing capacity. I suspect, post Brexit, a housing downturn is quite likely. That will mean many housing associations that have been expecting to sell quite a large number of the homes they build—in order to achieve profits that can cross-subsidise their affordable homes—will be switching their market sales properties into market lettings. This will mean that, without getting their money back from sales, they must increase their long-term borrowing correspondingly. But since there are limits on how much each housing association can borrow from the banks and institutional lenders, this is going to put a brake on their development plans.

Here is where I would hope the perfect partnerships could emerge, particularly where an authority owns some suitable land. Rather than the council teaming up with one of the volume house builders—I know how tempting that is for cash-strapped local authorities keen to receive lots of new homes bonuses from social development—is there any reason why councils cannot use their new-found borrowing capacity to onlend to the housing associations that are already geared up to do a lot more without the lending constraints imposed by the private lenders?

There is no doubt that times have been tough for local authorities keen to deliver essential housing services for their local populations, and recent announcements of extra government support are very welcome. Some local authorities will now be borrowing more to build a new generation of council housing. Many other authorities, I strongly suggest, could now be forging powerful, positive partnerships with housing associations in their areas. It would be great if the always-helpful Minister could confirm that councils can use their all-important new borrowing opportunities to enable their partner housing associations to achieve, with them, thousands of truly affordable, high-quality new homes for their local communities.

Housebuilding: Target

Lord Best Excerpts

Thursday 20th December 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

The noble Lord makes an important point about the mix that there used to be in council houses and I am sure that that point will have been heard by housing associations, builders and local authorities. It is also important that we consider some of the earlier designs of council housing, which were probably much more commensurate to happy living than some of the more recent designs, but I remind noble Lords that design is now a factor in the National Planning Policy Framework, so that should carry us forward in that respect.

[Lord Best (CB)]

My Lords—

[Baroness Grender (LD)]

My Lords, does the Minister accept that there is a direct connection between the lack of affordable housing or social housing and homelessness, as described by Crisis recently? Twelve months ago, in Oral Questions on 19 December, the Minister described the resource that was being allocated, but we have now seen 12 months of an increase in homelessness, in contrast with Scotland, for example. What does the Minister hope to tell us in 12 months’ time and why is it going wrong at the moment?

Housing: Serviced Plots

Lord Best Excerpts

Wednesday 12th December 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord has put his finger on a difficulty, which is access to the mortgage market. We are well aware of the difficulty and we are working with building societies and with a couple of banks—Virgin Money does good work in this area and the Co-operative is also interested. We are certainly very open to encouraging access to finance via the co-operative movement and the Co-operative Bank. The noble Lord is right that it is an important area and one where we need to focus our attention.

[Lord Best (CB)]

My Lords, we need this alternative stream of new homes because otherwise we are totally reliant on a handful of very large volume housebuilders which consistently let us down in terms of quantity, quality, affordability and design. This is a really important new stream of extra housing, but we are awaiting guidance from the Government for local authorities on their planning obligations. This is a little overdue. Will the Minister tell us when we might expect to see it published?

[Lord Bourne of Aberystwyth]

My Lords, I first thank the noble Lord. He was the noble Lord, as so often, who piloted the very important legislation I referred to through this House. We expect the guidance he is referring to early in the new year.

Homes (Fitness for Human Habitation) Bill

Lord Best Excerpts

2nd reading (Hansard): House of Lords
Friday 23rd November 2018 Lords Chamber

Moved by

[Lord Best]

That the Bill be now read a second time.

[Lord Best (CB)]

My Lords I begin by declaring my interests as in the register and, in particular, as a part-owner, with my wife, of rented property. I am also currently chair of a working group for the Ministry of Housing, Communities and Local Government, which advises the Minister for Housing and Homelessness on regulation of estate agents and letting and managing agents.

It is a great honour to be piloting this important Private Member’s Bill through Your Lordships’ House. Its promoter in the other place has been the heroic Karen Buck, MP for Westminster North. She has been the most dedicated and committed campaigner, not just for this Bill, but for her many constituents with serious housing problems. Her desire to see the provisions of the Bill on the statute book comes from valiantly seeking to resolve hundreds, possibly thousands, of awful real-life cases of housing misery. I salute her for all her work and for successfully taking the Bill through the other place. I also pay tribute to Giles Peaker and Justin Bates, two lawyers with extensive and highly relevant experience, who have worked tirelessly to draft and perfect the Bill. I commend the Government for having the good sense to give the Bill their full support.

The Bill comes to us with backing from all quarters including, prominently, those bodies representing both landlords—the National Landlords Association and the Residential Landlords Association—and tenants, such as Shelter, Generation Rent and others. As Alan Ward, chair of the Residential Landlords Association, has written:

“The Bill seeks to achieve what we all want: better enforcement of existing laws and regulations against ... the criminals who bring the sector into disrepute”.


It seeks to improve housing conditions for those living in circumstances that can well be described as unfit for human habitation. The public at large may think that slums are a thing of the past and that, if any still exist, there are plenty of laws and regulations to force recalcitrant landlords to bring them up to minimum standards. Sadly, neither of these assumptions is correct. There are around 1 million households forced to live in so-called non-decent properties. The English Housing Survey of last year recorded 750,000 properties which present a,

“serious and immediate risk to a person’s health and safety”,

with 225,000 in the social housing sector. Yet the law is woefully inadequate in compelling the owners of these properties to bring them up to standard.

Karen Buck has quoted many examples from her own constituency. One tenant living with her partner and two children writes that her son has been,

“in a coma at St. Mary’s hospital due to a virus caused by excessive cold. The mould and damp in the house”,

says this tenant,

“turns our clothing, toothbrushes and cups black. I cannot begin to explain how many hospital visits we have had”.

Another tenant complains about her,

“freezing cold, smelly, damp, mouldy flat”.

and says,

“the cold aches my bones and muscles. The damp and mould affects my asthma. As a type 1 diabetic and asthmatic I am constantly ill living in this flat”.

She concludes:

“I guess the way they are progressing, it will be done the day I am being removed from this flat in a coffin”.—[Official Report, Commons, 26/10/18; col. 536.]


These cases demonstrate not only the hardship caused by bad housing conditions but the cost of this to the NHS and wider society.

The Bill addresses the need for a serious overhaul of current legislation in England. Separate measures apply in Scotland and Northern Ireland and, for the most part, in Wales too. It addresses the current legislative inadequacies in three key ways. First, it makes it clear that it is not lawful to let substandard property. Currently, there is indeed a requirement in law, in the Landlord and Tenant Act 1985, which consolidated much earlier legislation, for privately rented homes to be “fit for human habitation” at the beginning of a tenancy and to be maintained at this level. But this requirement has ceased to have effect because it covers properties only with rents below a limit set many decades ago—a rent limit of £52 per annum, or £80 per annum in London. The Bill would remove this wildly outdated constraint, obliging landlords to ensure that all properties are fit for human habitation, with no exceptions, based on a rent limit.

With the offence of letting an unfit property restored once more, tenants would have the chance to take an offending landlord to court. This constitutes a significant change in the landlord/tenant relationship. Currently, tenants cannot take direct legal action themselves and are entirely reliant on their local authority to serve environmental health enforcement notices on the landlord and to enforce these. With local authorities short of funds, few have found it possible to take such action on any scale: in 2016-17, half of all councils served no such notices, or only one. The position changes radically with this Bill affording tenants the right to take action themselves and, on their own behalf, enforce their right to a safe and healthy home.

Secondly, the Bill addresses the problem of defining what “fit for human habitation” means. It does not add any new regulations or requirements on landlords but simply draws together all the existing obligations in this regard: the nine criteria used in the 1985 Act and the key health and safety features covering the core hazards used in the current housing, health and safety rating system—HHSRS—brought in by the Housing Act 2004. The Bill, therefore, consolidates and clarifies what constitutes an unfit property.

It is true that the HHSRS has itself been criticised as too complex and open to varied local interpretation. However, the Government have undertaken to review and revise it next year and the Bill’s definition of fitness will take on board, without further legislative action, any changes made to the HHSRS.

Thirdly, for the first time, the Bill gives the same rights to tenants of local authorities to insist on the fitness of their property as tenants of private landlords. At present the local authority, as the enforcement body, cannot take action against itself, which leaves council tenants powerless in this respect. The Bill enables these tenants to compel their local authority to carry out the works needed for the property to meet proper standards.

Moreover, thanks to an amendment to the Bill in the other place, its provisions cover health and safety hazards in shared areas and communal spaces in blocks of flats. As we all know from the ghastly tragedy of Grenfell Tower, there are apartment blocks where tenants are exposed to serious dangers. The residents of Grenfell Tower raised their concerns about the safety of the building on many occasions, but their voices were not heard and they had no means of forcing their landlord to take action. This Bill gives council tenants, like private sector tenants, the power to take their case straight to the courts.

The vast majority of landlords and tenants will be unaffected by the measures in the Bill but it will redress the obvious imbalance in a market where acute shortages currently favour the provider at the expense of the consumer. The Bill empowers all tenants by replacing a now defunct legal obligation on the landlord with a real, enforceable obligation. It defines what the legal obligation covers for homes to be fit for human habitation and extends that obligation to council landlords as well as private ones. In every respect, this is a valuable and commendable legislative measure.

Will the Bill mean an end to the problems faced by tenants in the private rented sector? No—it is limited in scope and there remains much to do. Now that Westminster and Whitehall have begun to catch up with the phenomenal change in the scale of private renting and the effects of this on millions of households in this country, there is a new willingness to bring forward a range of legislative changes.

The Government have started with action against rogue landlords: fining and banning the criminals; laws against retaliatory evictions; the enforcement of electrical safety measures; an extension of licensing for houses in multiple occupation; the ban on tenant fees, which we are currently debating in your Lordships’ House; the regulation of property agents; an exploration of longer tenancies and the possibility of new housing courts; the creation of an ombudsman for complaints against landlords; and more.

Sadly, these changes do not include restoring full legal aid to enable tenants fighting cases about unfit property to claim damages. Nor have the Government yet agreed to reverse the reductions, in real terms, to housing benefit. The current caps and cuts mean that many tenants face real poverty because they have to cover a rental shortfall from their meagre income from other benefits. But these are matters for other government departments and another time.

Meanwhile, this Private Member’s Bill—a great example of cross-party co-operation in the cause of social justice—takes pride of place amid the other new measures to upgrade the private rented sector. It is a particularly valuable piece of the whole because it gets to the heart of the matter. It addresses the key issue of whether the product on offer— the house or flat for rent—is fit for purpose and, if not, it empowers the tenant to get that sorted.

I close by underlining the deep appreciation of all of us with an interest in housing matters for the dedication, compassion and commitment of this Bill’s parent, Karen Buck. I hope noble Lords will give it a very fair wind. I beg to move.

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[Lord Best]

My Lords, I give deep thanks to everyone who has participated. Every Member of this House who spoke welcomed this Bill and paid tribute to its author, Karen Buck. I thank noble Lords for both things. I will make myself popular by not referring to all noble Lords and their excellent contributions this afternoon.

It is quite encouraging how many of the issues we have all expressed concern about over quite a period are coalescing. The buses are all coming down the road, with quite a few backing up to join in the queue. I had not realised that there was a selective licensing review—among the several reviews going on at the moment—looking at the things that may be improved for the future. There is an awful lot of good stuff coming down the line: security of tenure, the housing courts, electrical safety and the Housing Ombudsman.

I thank the Minister very much for that. I have been in the House some years and I think he is the most diligent Minister in writing to all of us about issues of concern and keeping us abreast of things. I much appreciate noble Lords drawing attention to the fact that amendments to this Bill will not be welcome. We need to press forward and get it done. We are under pressure of time and a swift passage is what it is all about. Nobody thinks that this Bill solves all the problems of the private rented sector, but this is a really central piece of that big jigsaw. This is about the condition of the home in which people are going to live. It is perhaps the most fundamental of all the reforms that are going on now, welcome as all of them are. For that, I pay very special tribute to Karen Buck and those who have advised her. Karen Buck was twice described this afternoon as indefatigable and I have described her and do again as a heroine in these issues.

I thank noble Lords for their contributions. I ask the House to give the Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

Tenant Fees Bill

Lord Best Excerpts

Monday 5th November 2018 Grand Committee

[Lord Best (CB)]

My Lords, I declare my interests as set out in the register, in particular that with my wife I am the owner of rental property managed by letting agents. I thoroughly commended the Bill at Second Reading because it is an excellent piece of work. If we can improve it, that will be all to the good, but even if we leave it as it is I am sure it will be an extremely useful legislative measure.

Three separate issues are at stake in the amendments we have before us. Two directly concern holding deposits and one is about putting material into regulations rather than into guidance. On holding deposits, there is the question of when one would lose one’s holding deposit. I have come across circumstances in which it is quite difficult to determine exactly what is fair and reasonable. When four people are sharing a property, they will all contribute to the rather large holding deposit. If one turns out to have given misinformation about their circumstances, that will enable the agent to say quite properly that all four will be rejected as a group. Will they lose the contribution that each has made to the single large deposit that has been placed, especially if they had no idea that one of the sharers was in that circumstance? Difficult decisions will have to be taken, on which firm guidance will be needed.

The second point concerns the period that can be covered by a holding deposit being three days instead of seven. Again, a blanket figure of one week somewhat needs finessing in the guidance that will follow. A week in the north-east for a single person occupying small premises might be £50, while for four sharers in Fulham a week might be £1,000. Very different sums of money are involved in different parts of the country. The point about finessing elements of the Bill in later guidance is well made by all.

That brings me to whether guidance that ultimately is not in the Bill or in secondary legislation is strong enough. It may be that having regulations that follow through a statutory instrument would be a better way of dealing with the tricky issue of holding deposits, along with other measures that will come before us as we work our way through the Bill. I should like the Minister to explain the down sides to using regulation in the form of a statutory instrument to cover the issue rather than guidance, which, I suspect, could be open to dispute and disagreement. I fully understand that one clear disadvantage of going down the route of using regulations is that if we are to have secondary legislation, it needs to follow the enactment of the Bill before we can get going on the practicalities. That would put back the moment when the very good things in the Bill would begin, so I see that there might be a delay. However, that might be a price worth paying if the Bill is improved in this way. Could the Minister let us know what kind of delay we are talking about and whether there are other down sides to the use of secondary legislation and regulations in place of guidance, which, as I say, may be subject to a good deal of dispute?

[Baroness Gardner of Parkes (Con)]

My Lords, I declare an interest as a landlord. I think one’s week rent is fairly good and clear as a deposit. For some years I have found that some tenants deliberately withhold their final rent so that you do not have a fair amount money at hand to cover whatever damage they have done to the property. Often, the work that has to be done takes every bit of the deposit and more, although sometimes of course it does not—some tenants keep the place beautifully, pay their rent properly and are the tenants everyone wants. However, until tenants are in occupation, you just do not know whether they are good or bad, and I do not think that this provision in the Bill should cut the period to three days. That will leave landlords in a real quandary when people do not pay their last month’s rent—they usually pay monthly rent. It would be a worry if people did not make the last payment. I agree with everything else that other people have said.

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[The Earl of Lytton]

My Lords, I am very pleased that these amendments have been tabled. They enable me to make one or two comments. On Amendment 2 on transferable deposits, moved by the noble Lord, Lord Kennedy, what he has set down might make for an awkward arrangement requiring quite a raft of safeguards so that landlord one can transfer a tenant’s deposit out of their account into the account of landlord two, which, as I see it, is what happens.

I am a practising chartered surveyor. Those involved in residential property management have to accord with all sorts of professional regulations, including rules on holding clients’ money. Tenants’ deposits would certainly come in that category. They have to be very punctilious about what they do and very transparent about the process. I know that not every agent or, for that matter, landlord holding a deposit is a member of the Royal Institution of Chartered Surveyors. It might be different if they were, but that will never be likely. I am saying that there are two parallel sets of requirements. It will be interesting to know what discussions or information had been obtained from others such as ARLA on this sort of transfer, how it would be documented and how we would ensure it was seamless.

The noble Lord, Lord Kennedy, raises a valid point. For tenants to have to wait for a deposit to come back to them and to pay another deposit at the same time—in other words, a double overhead—is awkward, but other things lurk here. The noble Lord, Lord Shipley, mentioned one, but there is the other question of whether any unpaid services and outgoings lurk there. Sometimes these do not come through for some particular period. Noble Lords will know from dealing with utility companies and this sort of thing, including some of the cut-price ones, which seem extremely difficult to deal with at times—no names mentioned here, though—that it can be quite difficult to make sure that you have closure on the amount of money for which a tenant might be responsible. There is an issue relating to the period to which the amount might apply. That might depend on the circumstances, such as whether it was a furnished or unfurnished letting, or fully equipped as well as being furnished. Obviously, the amount of damage that can be done and what might become apparent would not necessarily be known until right at the end of the lease. While I am pleased to confirm from my experience that the majority of tenants have been absolutely excellent people, the odd ones are feckless, overload electrical systems and do other damage that is not immediately apparent.

I wish there was a better way of dealing with this. I can see where the noble Lord, Lord Kennedy, is coming from. It is a valuable thing to raise because of the rigidity it creates within the tenant cohort. We should be doing things to make sure that there are not those rigidities because that, in effect, is a barrier to them renting property in the first place. However, I see a number of technical difficulties with the amendment. I hope that the Minister will comment on some of them.

[Lord Best]

I support the amendment on transferable deposits. It is an absolutely commendable concept. How can people possibly find a second fat deposit when they have not had the first one back? This proposal would be a really helpful move, and I hope the Minister will take it very seriously and look at it in some depth.

On the question of a six-week, five-week, four-week or eight-week period, I was impressed by the Citizens Advice survey, which indicated that only a very small percentage of tenants—2%, I think—did not pay their last month’s rent, the deposit being absorbed or used for that purpose. However, I asked Citizens Advice about its survey and discovered that it was exclusively of tenants. I suspect that the percentage might have been different if it had been a survey of landlords or agents. This is bad news for landlords but I am told by agents that, naughty as it is, a lot of students will not pay the last four weeks’ rent because they fear that there will be a big dispute about their deposit at the end. Especially if the student has come from overseas and is returning, they will have no trouble over the deposit because they will instead have withheld their last month’s rent. I suspect that landlords would always be very hostile to the idea of a limit of just four weeks’ rent when students behave like that.

[Baroness Gardner of Parkes]

My Lords, the question of how much deposit you can pay back immediately to a tenant is a difficult one. Very often a lot of people are required to check exactly what damage has been done, particularly in cases of very heavy damage. I have mentioned before the block where we have a right to manage. A person owing a large service charge has recently had herself certified under the Mental Health Act. Someone has now been appointed to take over and the four flats in her name are being handed over. One flat in the basement was being used illegally as a brothel and the people who vacated it smashed the whole place to pieces—the windows, the walls and pretty well everything else, as far as I understand.

The legitimate tenant is perfectly entitled to think that they should have as much of their deposit back as possible, but where someone does what they did in that flat—as yet, we have not seen the other three that have been recovered from illegal lettings—it is quite worrying if you do not have any deposit to go towards repairing the damage. Therefore, the situation is more complicated than people realise.

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[Baroness Gardner of Parkes]

My Lords, as the Minister knows, I am very concerned that people are letting their flats for short lets, which is strictly prohibited under the terms of their tenancy. Is there anywhere in the Bill that this matter could be rectified, perhaps by placing an obligation on the tenant to inform people that it is not a legal letting or by the new tenant themselves confirming that what they are taking on is not a legal letting? There is a big loophole in the law here.

[Lord Best]

I would like to offer a word of support for the intent behind this proposed new clause. Perhaps the best organisations to get the message out to tenants and prospective tenants are the new websites—or not so new anymore—such as Zoopla and Rightmove. So many people looking for somewhere to rent now do so online. Those agencies have the power to reach nearly everybody with the important information contained in this provision.

[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who participated in the discussion on Amendment 3. I will seek to deal with the points made. The first and entirely reasonable point raised was from the noble Lord, Lord Kennedy, and was echoed by other noble Lords. I am committed to ensuring that tenants, landlords and agents understand their rights and responsibilities under the legislation. As the noble Lord, Lord Shipley, rightly said, it is not just a question of the law being passed; it needs to be the case that people understand the rights and obligations that follow therefrom.

That is why my officials have been working hard with key stakeholder groups to produce comprehensive consumer guidance to support implementation. However, I do not agree that it is necessary to mandate that in the Bill, as we have discussed and as we will look at again. I have shared draft versions of the guidance for tenants, landlords and agents with noble Lords, and I hope they found them informative and detailed. Once again, I state that we are happy to engage on that if it is helpful to noble Lords. I hope noble Lords agree that the guidance provides important information on the points suggested by the amendment, including the date on which the provisions will come into force, information about what is prohibited and permitted, and information about where tenants can access help and advice.

We intend to share this guidance with tenants and tenant groups in advance of the legislation coming into force and as soon as possible after Royal Assent. We will seek to ensure that tenants, landlords and agents are aware of this guidance, including through online publication and promotion through our media channels, and by using smaller groups, as the noble Earl mentioned. I am grateful to the noble Lord, Lord Best, for mentioning Zoopla and Rightmove; Purplebricks is another one. Those and others are groups we can engage with to make sure that we get the relevant message across. We will also encourage landlords and agents to make tenants aware of the guidance, using our existing relationships with stakeholder groups to do so.

The noble Baroness, Lady Gardner of Parkes, asked about seeking to enforce the provisions of tenancies through this legislation. That is not something we are seeking to do here. It is a contractual matter and short-term tenancy agreements are, I think, beyond the scope of the Bill. However, I do know of the noble Baroness’s concern and, as she is aware, I engage with the short-term tenancy association on a frequent basis to see how we can carry things forward.

I think that deals with the points made by noble Lords and will, I hope, allay concerns ahead of Report. On that basis, I respectfully ask the noble Lord if he will withdraw the amendment.

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[Lord Young of Cookham]

I hope the noble Lord will accept that, unlike other occasions when new responsibilities have been imposed on local authorities, in this case we are actually offering to help them with some pump-priming finance before the revenue stream comes on board. I hope he will accept that this is a welcome step forward from other initiatives taken by Governments of all complexions, where local authorities have been asked to do things with no resources at all and no opportunity of self-funding downstream. I can only repeat what I read out a few moments ago: the Government estimate that local authorities will incur a new burden in respect of enforcement of £500,000. I will make detailed inquiries to see if we can shed more light on exactly where that sum came from and will write to the noble Lord, with copies to other Members who have shown an interest. I will do that before Report.

[Lord Best]

Will the proceeds of the financial penalties be hypothecated for more enforcement? Trading standards officers work very hard in very difficult circumstances, after all the cuts they have had to face. The danger is that the fines come in but go into the big pot of local government finance and are used—poor old local authorities have many other calls on their time and money.

[Lord Young of Cookham]

I am happy to give the noble Lord the assurance that he seeks that the money will be reimbursed to the relevant section of the local authority that enforces this legislation and other related legislation dealing with rogue landlords.

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[Lord Deben]

I wonder if I can help the noble Lord. I know he always worries when I get up and say that I am going to be helpful, but on this occasion I might be. I remind the Committee that I am chairman of the organisation that represents independent financial advisers and those who deal with wealth management. Therefore, I understand a lot about the parallel circumstances referred to by the noble Baroness, Lady Hayter, when she pointed out the protection accorded to bank accounts and the different sorts of protection in the financial services industry. What I really want to say is that I hope my noble friend will think very carefully about this because we have seen the huge difficulty that people now have—even the most excellent of firms—in getting proper protection from the insurance industry.

The noble Baroness made an important point about being proportionate as to what the real risks are. I want to make a point about the dangers of not being proportionate. This is an industry of great importance and I am absolutely excited by the Bill because it does a whole lot of things that need to be done. However, we have to be very careful about importing into it those things that will result in unexpected and unwanted additional results.

I am not sure that civil servants are always as expert in these detailed aspects of insurance as those who deal with them daily. All the advice is that there really is no need to protect any more than the kind of protection that ARLA and RICS already provide. You do not really need that advice: the fact is that they have run the system very effectively up to now. I remind my noble friend that the party he represents is always very much in favour of free enterprise and people getting together to organise things on their own. Would it therefore not be a good idea for us to be very careful about not taking that advice?

We know that the 40% that do not belong to these organisations are, by nature, either not very careful or painfully close to the edge of the law. There is a real range. But I remind the Committee of the last speaker, who rightly said that we do not want to enfranchise the 40% by disfranchising the 60%. That does not seem a sensible answer. I hope my noble friend will take the advice of those who have had to deal with these things in other areas: that it is extremely dangerous if you get yourself into a position in which you lay too heavy a weight of insurance when it is not necessary. I have a long history of defending the consumer, but I do not see how consumers are better protected by excluding from the market the two organisations that have so far dominated it—if that is the right word.

The last thing I want to say is this: I have often spent time trying to encourage ARLA to become a more professional body. One of the successes of recent years has been precisely that, and we ought to be encouraged by what ARLA has done. It would therefore be a great pity if, on this occasion, we ignored its experience, which has come about through its own change from its history to today, or indeed the 150 years’ experience of RICS.

[Lord Best]

I want to offer my support to the noble Baroness, Lady Hayter, who has done so well in getting us to this point with CMP. It is so disappointing for those of us who have supported her efforts to hear of this last-minute significant hitch. The reason that a number of us were very supportive of CMP being introduced was not because of the 60% but because of the 40%. It was not just to make sure that the 40% had some insurance so that landlords’ and tenants’ money was properly protected. It was rather more sinister than that: it was to drive out that part of the 40% that just would not be able to get insurance, because when their accounts were viewed by those providing insurance, they would be told, “I’m sorry, we’re not insuring you”. This was, and I hope still will be, a way of weeding out the fly-by-night agents who set up shop and who we do not need in this business.

--- Later in debate ---

The noble Baroness referred to condensation. Such was the frequency with which I was asked about condensation professionally that, at one stage, I had a complete piece on my website about the causes of, and how to deal with, condensation. About two years ago, an architect asked me to look inside a property because she needed to speak to the tenant about a condensation issue. I was able to have some input, because the tenant had not been informed that the windows were fitted with trickle vents, which were all closed. The tenant had decided that the extractor fans for both the kitchen and bathroom were noisy, and had turned them off at the isolator switch. Because the tenant did not like the cost of operating the dryer part of the washer-dryer, clothing was dried on a concertina rack in the living room of this flat. Noble Lords will not be surprised when I say that this produced some extremely unhealthy conditions, of which some, but not all, might have been expected to be in the landlord’s initial briefing. I think that limiting fair condition to only two items does not go far enough, just as I think that the Bill, as drafted, is probably a little too wide. How would you define whether the obligation was reasonable and whether the discharging of a liability was a proper one to be included in the lease? There is a happy medium somewhere. I commend that thought to the Minister.

[Lord Best]

I think we are all aware that if there is the possibility of a loophole being discovered, somebody out there will discover it. The absolute, 100% intention must be to block it.

The noble Baroness, Lady Grender, suggested two alternative routes. One is for the costs that legitimately fall to the tenant, not the landlord or the agent, to be picked up in the tenancy deposit scheme so that you do not get so much back at the end. I wonder whether the tenancy deposit scheme is tightly defined enough and whether it is possible to take from the deposit sums relating to, for example, the cleaning of the common areas where No. 9 of the 10 flats has been up to no good or where someone has parked the car in the wrong place and so on. I am not sure whether such things can be taken out of the deposit; that is a technical question.

The other alternative suggested by the noble Baroness is that the landlord will be so fed up that they will not renew the tenancy or will evict the tenant. That is a bit harsh. It would be better to find a way to come to an accommodation with the tenant rather than take extreme measures. I will need to hear from the Minister the series of ways in which all the possible loopholes and abuses can be blocked because that must be the Bill’s intention.

[Lord Kennedy of Southwark]

My Lords, Amendment 23, moved by the noble Baroness, Lady Grender, has my full support. It would remove default fees from the Bill. I share the concerns expressed here today that this provision could be used as a vehicle for unscrupulous landlords and letting agents to recoup lost income resulting from the ban. We cannot allow this loophole to go unchallenged. I also agree with the comments of the noble Lord, Lord Best; if something can be got around, someone will usually be smart enough to work it out and get around it. We should always be aware of that; it is very important to stop that.

In the Bill, the Government seek to limit default charges and fees to costs that are “reasonably incurred”, which must be evidenced in writing. However, this will prevent landlords and agents including unfair terms in tenancy agreements and trying to charge unreasonable amounts. Of course, we will come back to this issue of what is reasonable; we have come back to the issue of guidance many times. In responding to the debate, can the noble Lord explain how he believes that tenants will be protected from this unfair practice? How does the legislation, as it is framed now, protect people from ingenious people looking to get round almost anything? How can we be confident that the Bill is watertight?

Amendment 24, in the names of the noble Baronesses, Lady Grender and Lady Thornhill, and my Amendment 25 seek to make provision for default fees to be more transparent if they remain in the Bill and, as drafted in my amendment, to be detailed in regulations setting out what is a permitted payment in this regard. This would provide a clearer, legal definition of default fees. That would prevent abuse, protect tenants, ensure that tenants understand what they could be charged for and increase confidence in challenging illegal, prohibited fees. In contrast to guidance, regulations would act as a deterrent and give tenants a statutory basis from which to challenge prohibited fees. The late payment of rent and lost keys are the most commonly cited examples; in each scenario, the purpose of the fee would be clear to the tenant, which would limit the opportunity for exploitation.

I take on board the points made by the noble Earl, Lord Lytton. If we were all reasonable people, we would not need legislation at all; unfortunately, there are good and bad tenants and there are good and bad landlords. Often, we have to legislate for the worst excesses in all cases, and that is partly what we are trying to do here. However, I accept that the noble Earl has made some fair points—I am not suggesting that that is not the case. I look forward to hearing what the noble Lord, Lord Bourne, has to say on these matters.

Affordable Housing

Lord Best Excerpts

Thursday 25th October 2018 Lords Chamber

[Lord Best (CB)]

My Lords, I thank the noble lord, Lord Shipley, for initiating this debate and for addressing so ably the many points that the rest of us will not have time to cover today. I declare my interests as on the register, especially my chairing of two commissions. One is the Smith Institute/Nationwide Foundation Affordable Housing Commission, which was launched in this House last week with an extensive programme to seek solutions to the problems of housing shortages and affordability.

At our launch we unveiled the results of a YouGov survey of public opinion. This discovered that two out of three people think there is a national affordable housing crisis. Seven in 10 renters said they would need to win the lottery to buy their own home, and nearly half of the people questioned have faced financial difficulties in the last year because so much of their income has to go on paying the mortgage or the rent. So, thanks to the new Affordable Housing Commission, we now know that the great British public are right behind us in recognising that the housing difficulties faced by nearly everyone under the age of 40 represent a real crisis.

I also chair the Centre for Social Justice Housing Commission, which will publish an important report this weekend; I can give a sneak preview today. The report spells out the huge costs of failing to build new homes for those on the lowest incomes. The collective failure of successive Governments has pushed more families into the private rented sector where they struggle with higher rents. This also means the taxpayer has to pick up a frighteningly escalating housing benefit bill for the growing numbers who simply cannot afford these higher rents. The CSJ is spot on here.

In the couple of minutes I have left, I would like to congratulate the Prime Minister on her exciting, surprise announcement that local authorities will have new freedoms to borrow to build a new generation of council housing. In the year I first came into the world of social housing—1968—councils built half of the 387,000 homes constructed in the UK. In recent years their output has dried up and housing associations, great as they are, have put back less than a third of the lost council output.

In the days of the coalition Government, the noble lord, Lord Shipley, and I took an LGA delegation to discuss this issue with the Chief Secretary to the Treasury. We heard how impossible it was for the Government to lift the embargo on local authorities borrowing to build new homes. This would lead, according to Treasury thinking, to a massive increase in the national debt, frightening off international investment in this country. We pointed out that prudential borrowing for housing—that is, borrowing only what can be repaid from rental income—would not frighten the horses and was recognised internationally as outside the definitions of public spending and national debt. We got nowhere.

Thank you, Prime Minister, for overruling the Treasury at last and opening the door to—according to calculations by the consultancy Savills—at least 15,000 extra homes each year. If local authorities give prominence to rentals that are truly affordable to those with low or no earnings, in mixed-tenure, high-quality developments, then this will indeed be an historic step forward.

Tenant Fees Bill

Lord Best Excerpts

2nd reading (Hansard): House of Lords
Wednesday 10th October 2018 Lords Chamber

[Lord Best (CB)]

My Lords, I am very pleased to follow the noble Baroness, Lady Hayter, who has done such great work in this field. I declare my interests in lettings and letting agents: my wife and I own rental property, managed by a reputable firm of letting agents; for eight years, until last year, I chaired the council of the Property Ombudsman, which handles complaints about property agents; I am a vice-president of the Chartered Trading Standards Institute, which has enforcement powers for property agents, and of the Local Government Association. I co-chair the Home Office’s right to rent consultative panel and have recently been very pleased to accept an invitation from the Minister for Housing and Homelessness, as mentioned by the Minister today, to chair a working group to advise government on the regulation of property agents. In these various capacities, I greatly welcome this Bill and a number of other welcome measures where legislation is needed to catch up with the phenomenon of the extraordinary growth of the private rented sector.

At later stages, we will no doubt consider some of the Bill’s finer points of detail—as highlighted by Shelter, Citizens Advice, Generation Rent, the LGA and others—and there may be some modest amendments to the Bill which we can pursue, but in this Second Reading debate I will stick to the big picture and the reasons why this legislation is definitely good news. In the light of some criticism of the Bill in the other place, I want to address two broad questions: first, what exactly is the market failure here? We pay fees for many services and we shop around for the best deal, so what is so different about letting agents charging fees to tenants? Secondly, will a ban on fees overcome the alleged market failure, or could it have unfortunate side-effects?

A spin-off from the astonishing growth of the PRS, which now numbers some 2.3 million landlords, is the growth in the lettings industry. Many firms provide an excellent service to both landlords and tenants, but the rapid expansion of the sector has also meant a proliferation of unregulated new letting agents, often with no qualifications or training. In order to secure a share of the market, agents need to attract local landlords, and a way to do this is by undercutting the fees charged to landlords by rival firms. This may sound like healthy competition and good news for landlords. However, it has changed the basis on which private sector lettings are handled. In order to make their profits, despite cutting fees to landlords, many agents have charged the tenant instead. The trouble is that, unlike landlords, tenants cannot shop around for another agent; they must go through the agent chosen by the landlord if they want to have the house or flat, and then they must pay any extra fees which that agent demands.

We will all have our stories of tenants with no option but to pay rip-off fees to agents alongside big deposits and many weeks’ rent in advance. This can lead to tenants borrowing the money needed, incurring expensive credit card debts or, worse, having to go to loan sharks. In securing references, credit checks and right-to-rent checks, a letting agent is acting for the landlord. The agent cannot simultaneously act for the tenant. My intern showed me the list of agent fees for her flat: each of the three sharers had to pay £275 up front to the agent: a total tenant letting fee of £825 for the agent on top of the fees charged by that agent to the landlord. When she moved out and her sister took her place after a few months, the agent required £250 for early termination from her and another £275 from her sister: total fees of £525 for the most minimal input by the agent and not a day’s rent lost, but the tenants—the consumers in these circumstances—cannot exercise any choice in the matter.

The problem here goes deeper. If the agent’s profits depend on charging fees to incoming tenants, the agent is incentivised to bring in new tenants as often as possible, rather than to encourage the landlord to grant longer tenancies or to renew tenancies. This creates insecurity and disruption to the lives of tenants, who are forced to keep moving around and paying more fees when short, fixed-term tenancies end, and the ending of tenancies is now the most common precursor to homelessness. Yet, while high turnover may be good for agents, it is most unlikely to be in the best interests of landlords. Every changeover costs them money in lost rent, redecorating and so on. Banning the charging of tenant fees, as envisaged by this Bill would, therefore, be helpful for landlords as well as for tenants by removing this trigger for some agents to act against the interests of their landlord clients.

I turn to my second question: could a ban have downsides or untoward consequences? It is said that, if agents can no longer extract fees from tenants, they will have to charge more to landlords, and landlords in turn will then instruct agents to raise rents. I have several responses to that. First, rents are set by the market, not the whim of landlords or agents. The experience in Scotland when a ban on fees was imposed was for rents to rise by no more than in the rest of the UK. Secondly, not all landlords use agents to manage their properties; perhaps only 40% pay for a full management service, so a ban would by no means affect all landlords, and the market for rents is made by the whole sector. Thirdly, some reputable agents charge tenants only nominal fees so they will be able to absorb the loss of these without noticeably increasing their charges to landlords. Fourthly, some landlords will gain financially from greater stability in their lettings once there is no incentive for agents to move tenants on, so they will be better off even if management fees rise. Finally, if rents rise—by £2 per week, for example, according to one guesstimate—it could still be better for tenants since they would be spared the up-front charges that they must currently find, often by borrowing on expensive terms. One other effect of the ban is certainly likely to emerge: a number of the here-today-gone-tomorrow letting agents that have appeared on our high streets are likely to go out of business. Those that make their money mostly from tenant fees will not survive. Frankly, that is no bad thing.

I conclude that the Bill’s provisions are very necessary to correct an inherent market failure and that the dangers of untoward, unintended consequences are negligible. When we move to the details of the Bill there may be more to say about enforcement of the legislation, although I know the Ministry of Housing, Communities and Local Government has worked very hard to close loopholes and prevent avoidance and evasion of the new measures. At this stage, I warmly welcome the intent and the content of the Bill. I applaud the noble Baroness, Lady Grender, for first raising the matter in your Lordships’ House, and I congratulate the Secretary of State and his housing Ministers on bringing it forward.

Housing: Local Plans

Lord Best Excerpts

Thursday 13th September 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, indeed, I wish my noble friend Lord Porter a speedy recovery, and he is well on the way to that. In his absence it is good to have the noble Baroness putting forward his views. In the meantime, we engage very regularly, as she will know, with the Local Government Association. Many good ideas come from it, and my noble friend Lord Porter does a very good job in putting forward the arguments for local government.

[Lord Best (CB)]

My Lords, did the Minister see the double-spread story in the Times last Saturday, headed:

“Help to Buy boom could leave a generation in negative equity”?


It shows how the scheme has helped housebuilders to double their profits while the number of the affordable homes they have produced has been halved from the local plans. I too applaud the revised National Planning Policy Framework, but can the Minister confirm that the contention by builders that they may not make a profit of at least 20% will no longer be used as the test for whether they can renege on their obligations to provide affordable homes?

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for all he does in this area, which is considerable, and for his comments about the National Planning Policy Framework. On his question about the Help to Buy scheme, we should remember that more than 420,000 people have been helped to buy their own homes through the scheme. Yes, of course, we hold to account local housebuilders across the country for ensuring that they are delivering. We are constantly looking at the case for ensuring that, where there is a shortfall in delivery and they are at fault, we do something about it—so we expect them to step up to the plate. However, Help to Buy provides assistance for an awful lot of people who want to own their own homes and are unable to do so, and we should be thankful for that.

Homelessness

Lord Best Excerpts

Wednesday 12th September 2018 Grand Committee

[Lord Best (CB)]

I am grateful to the noble Baroness, Lady Smith of Newnham, for initiating this important debate. I declare my interests as a vice-president of the Local Government Association and a member of an advisory board of the charity Crisis, which does great work to end homelessness.

Homelessness is not only the source of profound misery for those who suffer its consequences but a huge burden on society as a whole. A freedom of information request last month by Inside Housing magazine revealed that around £1 billion was spent last year just on the cost of providing temporary accommodation, mostly in low-grade bed-and-breakfast hotels and poor-quality private rented flats. But direct expenditure on temporary accommodation is a relatively small part of the total spending that homelessness triggers: for health and social care, for example, since ill-health and homelessness go hand in hand, and for the criminal justice system, since those leaving prison with nowhere to go are very likely to reoffend.

I welcome the range of measures that the Government are taking to address this social evil, including their new rough sleeping strategy, their decision to drop potentially disastrous plans for funding specialist supported housing, their overarching objective of increasing the supply of new homes and the renewed interest in social rented housing provision. It is good to see progress, too, in supporting the use of Housing First, which gets people who are long-term homeless and have complex needs off the streets and into a decent home where real help can be offered.

The best approach to homelessness is to prevent it in the first place. I had the privilege of taking the Homelessness Reduction Act 2017 through your Lordships’ House. In the medium to longer term, the preventive measures introduced by the Act will reduce homelessness and save money, for sure. But will the resources currently available be insufficient to get hard-pressed local authorities up and running on this agenda? A comment on this from the Minister would be very welcome.

The real interdepartmental problem, as noted by other noble Lords, is the undermining of the Ministry of Housing, Communities and Local Government’s good intentions by the Department for Work and Pensions. The latter’s cuts to help with housing costs are now a direct cause of the growth in homelessness—in particular, its freezing of rental support, or local housing allowances, while rents are rising leads to not only debt arrears and evictions but, on a much wider scale, to landlords ending tenancies for all those who depend on housing benefit help, replacing such tenants with those who can pay the full market rent. I heard on Monday from the National Landlords Association that 91% of the landlords it surveyed in London will not let to anyone on housing benefit, and the NLA’s prediction is that that number is set to get worse. Since there is a chronic shortage of social housing, this simply leaves the poorest with nowhere to go. Sadly, a new report from the Chartered Institute of Housing shows that the Government’s targeted affordability funding, which I had hoped would bridge the rental gap, covers only a few areas and in these places covers only 10% to 30% of the shortfall between the housing benefit and the market rent.

In conclusion, I endorse the plea from the noble Baroness, Lady Smith, for multiagency interdepartmental action on homelessness. I urge the Government, in particular the MHCLG, to engage with the DWP since it is fuelling the rise in homelessness.

Affordable Housing: Social Homes for Rent

Lord Best Excerpts

Tuesday 3rd July 2018 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, inherent in the noble Lord’s question is the importance of right to buy—and, indeed, refreshed right to buy and enhanced right to buy—which I acknowledge. I agree with him about the importance of permitting local authorities to use those receipts to build more. That has been happening at a greater rate, but I acknowledge that he is right to say that more could be done.

[Lord Best (CB)]

My Lords—

[Lord Hunt of Kings Heath (Lab)]

My Lords, following on from my noble friend’s question—

[Lord Taylor of Holbeach (Con)]

My Lords, the noble Lord, Lord Best.

[Lord Best]

Thank you, I am most grateful. I congratulate the Government on moving towards more genuinely affordable low rents. We are seeing a swing in the pendulum; I hope that it is just the start of a swing that goes a lot further than it has done so far, but we are now heading in the right direction. Can the Minister impress on his Treasury colleagues that it really is important that rents are low enough for people genuinely to afford because otherwise the Treasury is paying more in housing benefit, people’s work incentives are much worse, and we end up with homelessness? We can see already that housing associations and councils have to turn people away because those on the lowest incomes cannot afford the so-called “affordable rents”. It would be to the benefit of the Treasury if the Minister could argue the case for more grant aid in support of real social rents.

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord has done a massive amount in this area. I acknowledge that a lot of my life is spent arguing with the Treasury about various issues, as he can imagine, but I would impress on him that when rent controls were in place, we had a far less vibrant rental market than we do now. We would not want to go back to that sort of control.