Private Rented Sector Licensing Schemes

Lord Bourne of Aberystwyth Excerpts

Tuesday 16th October 2018 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a vice-president of the Local Government Association.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, on 1 October, new regulations that extend the mandatory licensing requirements for houses in multiple occupation came into force. We published guidance for local authorities in June and held a series of events with them through the summer. Licensing of HMOs is self-funding, as councils can charge fees for licences to cover their costs. In addition, since April 2017, local authorities have had powers to retain income received through civil penalties and rent repayment orders.

[Lord Kennedy of Southwark]

My Lords, in April the HCLG Select Committee described the current process of application to the Secretary of State to operate a private sector licensing scheme as “not fit for purpose”. It said:

“Decision-making is too slow, lacks transparency, and is overly bureaucratic”.


When are the Government going to remove the 20% cap, return to local authorities the powers that were taken away in 2015 and allow locally elected politicians, who have a far greater understanding of local needs and are directly accountable for their decisions, to decide these matters?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will be aware that the great mass of selective licensing schemes do not involve that 20%—it is about eight of just shy of 60. The 20% is there for a reason. On one occasion, in the case of Redbridge, we turned the application down because the proper consultation process was not followed. The application has since been resubmitted and we have approved it. It is there for a good reason and that is the only case we have ever turned down.

[Lord Naseby (Con)]

Is my noble friend aware that there will be many in your Lordships’ House who remember the name of Rachman? Rogue landlords of his type have reappeared, particularly in our major cities. While my noble friend has put forward proposals that have some merit, I honestly do not think that they go anywhere near far enough to tackle these strong rogue landlords. I do not need to spell out to my noble friend what is happening on the ground. Will he have another look at how we are going to handle the modern Rachman?

[Lord Bourne of Aberystwyth]

My Lords, my noble friend is right that there is an issue, but it is partly addressed through selective licensing and through mandatory licensing, which, as I said, we extended on 1 October this year. There are other powers, such as the rogue landlords register, which, as I said previously, we hope to extend so that it is open to members of the public as well. We are taking action, but I do not want to belittle the problem that my noble friend rightly refers to.

[Lord Campbell-Savours (Lab)]

My Lords, what lessons have the Government learned from the licensing scheme operated in the London Borough of Newham?

[Lord Bourne of Aberystwyth]

My Lords, the scheme operated in the London Borough of Newham is very effective, as many of them are. We have studied it closely and give support to it. As I said, we are certainly not against selective licensing—we very much approve of it being used. It can be used under the 20% threshold by local authorities just proceeding with it. Where there is the 20% threshold, we will scrutinise the scheme to ensure that there has been a proper process and consultation. From memory, I think that Newham is below the 20% threshold, but it is a very good scheme.

[Baroness Thornhill (LD)]

My Lords, there is now clear evidence that licensing works. It gives councils better data on where these landlords and tenants are, more funding to do the job and additional powers. What we cannot accept is that the Government have chosen to take away those powers. Why deprive councils of the tools to do the job, given that, as has been said, the problem is growing and the sector is growing?

[Lord Bourne of Aberystwyth]

My Lords, first of all, there are two systems: the mandatory licensing system, which we extended on 1 October, and the selective system. Here, I want to correct myself: Newham is above the 20% threshold, and the scheme works very well. We are seeking to work with boroughs. A review on selective licensing is being conducted; its first meeting has just happened and it will report by May next year. We hope to learn lessons from that review and take it forward according to those lessons. However, I do not want to pre-empt that—the work has just started.

[Baroness Gardner of Parkes (Con)]

My Lords, I declare my interest in this matter as listed in the register. In view of the Minister’s encouraging remarks, why have so many of his Answers to my Written Questions said that he is not willing to do anything at all or allow the boroughs to do anything? I welcome the change of tone, but I hope that he will follow through on it. I also strongly support the idea of a simple system of appeal where people can sort out their problems in the way that they could under the leasehold valuation tribunal. There is no alternative to that now, except court.

[Lord Bourne of Aberystwyth]

My Lords, unless I am mistaken, my noble friend is referring to a specific issue that relates to the Short Term Accommodation Association, as in her Written Questions. The Government certainly have not changed their position on that. We are working with the Short Term Accommodation Association to seek to provide answers to any problems that exist and I am confident that it is addressing those issues.

[Lord Campbell-Savours]

My Lords, if the Newham scheme is so good and so successful, why are the Government not asking other authorities to consider it in detail and to adopt it?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord brings forward a point that no doubt the selective licensing review committee, which has just started its work, will want to address. Selective licensing schemes can look at six different areas of activity, including where there are poor conditions or challenges due to deprivation in the borough, and that is what Newham is doing. The review committee will look at and report on these matters. The Government will of course want to study that in detail and share it with Members of the House and the other place to consider the best way forward.