Localism Bill

Lord Shipley Excerpts

Wednesday 7th September 2011 Lords Chamber

Moved by

[Lord Shipley]

84: After Clause 172, insert the following new Clause—
“Leases to which section 11 of the Landlord and Tenant Act 1985 applies: general rule
In section 13(1) Landlord and Tenant Act 1985 (leases to which the provisions about repairing obligations in section 11 of that Act apply) after subsection (1) insert—“(1A) Section 11 also applies to any lease of a dwelling house granted on or after the day on which section 173 of the Localism Act 2011 came into force, for a term of less than 21 years.(1B) Section 11 also applies to a right of occupation given by contract or any enactment and not amounting to a lease as if the right were a lease; and “lease” and cognate expressions shall be construed accordingly.””

[Lord Shipley]

My Lords, in moving Amendment 84 I shall also speak to Amendments 86 to 90. These all relate to the standards of accommodation and repairing obligations. Amendment 84 will ensure that all tenants and other occupiers of housing with short terms have the benefit of repairing obligations. The Landlord and Tenant Act 1985 provides that the implied repairing obligations set out in its Section 11 only apply to leases of less than seven years. This Bill proposes to apply that Section 11 to secure and assured fixed-term tenancies of more than seven years to take account of the fact that the new, flexible tenancies may be granted for longer than seven years. The proposed new clause in my Amendment 84 gives all the tenants of all short leases of less than 21 years the benefit of implied repairing obligations, so this amendment is important.

Amendment 86 relates to the same Act, which currently provides that those who have previously held a lease for more than seven years and who have not previously had the benefit of the repairing obligations by landlords will still not gain the benefit of such obligations if they renew their lease with one of less than seven years. There seems to be no justification for excluding any short leases from the repairing obligations, which should surely apply to new short leases, irrespective of what length the previous lease was. This amendment would achieve that result.

Amendment 87 would make landlords responsible for repairing furniture, fixtures, fittings and appliances in furnished lettings. Section 11 of the Landlord and Tenant Act 1985 implies repairing obligations into all leases of less than seven years in those granted since 24 October 1961. They are required to,

“repair the structure and exterior of the dwelling-house”,

and,

“to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation”.

However, it makes no provision in relation to any furniture, fixtures, fittings or appliances provided by landlords in respect of furnished dwellings, such as beds, sofas, cookers, fridges and so on.

Although most people would expect landlords to be responsible for the furniture and fittings that they have supplied in furnished dwellings, few tenancy agreements—even those of social landlords—impose any specific repairing obligations in this respect. Most furnished lettings are granted by private landlords whose tenancy agreements often make no reference to repairing obligations at all. However, where there is any such reference it is usually only one to the terms implied by Section 11 of the Landlord and Tenant Act 1985. In the absence of any specific term in the tenancy agreement covering furniture and so on, there is no obligation upon a landlord to repair or keep in working order the furniture or fittings that she or he has supplied. It is sometimes possible to argue for an implied term to make the landlord liable to repair in this situation, but this leaves the position uncertain and unnecessarily complicated in this regard.

The proposed amendment would ensure that the legal responsibility for furniture, fittings, fixtures and appliances in furnished tenancies falls where it should lie: namely, upon landlords. Given that furnished tenancies are usually short term, it is completely unrealistic to expect tenants to carry out such repairs themselves. These repairing obligations should fall on the landlord, not the tenant. This amendment would ensure that this was the case.

Amendment 88 would ensure that all tenants can live in housing that does not injure the occupier’s health. Again, it refers to the same Landlord and Tenant Act and the same obligations. The courts have decided that the obligation to repair arises only where there is disrepair—namely, where there has been deterioration from some former condition. As such, the obligation to repair does not usually cover design defects. However, sometimes unhealthy housing conditions arise not from disrepair but from design defects. The most common example is condensation dampness which occurs as a result of the construction of a dwelling house; namely, through inadequate insulation, ventilation and/or heating, and not because of any disrepair to the structure or the installations supplied. The point is extremely important because currently tenants living in unhealthy conditions which arise as a result of design defects are unable to take any civil action to ensure that these conditions are rectified. While it may be possible for tenants to take action in the magistrates’ courts under the Environmental Protection Act 1990, no public funding is available to take such cases. Local authorities can also bring proceedings under the 1990 Act but, of course, are unable to bring proceedings against themselves.

Amendment 88 would enable tenants to take civil proceedings in order to make their landlords rectify design defects which render the premises injurious to the health of the occupiers. It seems only right in the 21st century that tenants of residential accommodation should expect to live in accommodation that does not injure their health and should be able to take steps to rectify the defects giving rise to these conditions whatever the cause. In relation to the installations in a dwelling house, tenants are already able to take civil action to rectify design defects which result in the specified installations not being in proper working order. They should also be able to take action when the defects affect, or will affect, their health.

The public spending implications of this are not great because the decent homes standard has improved the public housing stock. The main benefit of this amendment would be private tenants of rogue landlords, where the worst of the housing stock now rests. Indeed, giving such tenants a private remedy could reduce public spending because it would take some of the pressure off hard-pressed local authorities, which have the job of enforcing the housing standards in the Housing Act 2004, and could also provide savings to the National Health Service. The current necessity to draw a distinction between disrepair and design defects, as opposed to simply concentrating on the effects on the occupier, makes the law in relation to repairs unnecessarily complicated and results in the need for expert evidence on the cause of the problems. Removal of the distinction would greatly simplify the law in relation to disrepair. This proposal would therefore benefit not just those tenants who are presently living in unhealthy housing conditions but the civil justice system as well.

Amendment 89 would make landlords responsible for the repair of installations for ventilation, particularly extractor fans. The Landlord and Tenant Act 1985, as currently enacted, makes no provision in relation to installations for ventilation, save in respect of windows. Lack of ventilation is a common cause of condensation dampness in dwelling houses and is often prejudicial to health. Over the years many properties have been fitted with extractor fans in order to combat this problem. However, there is presently no obligation on landlords to keep such installations in repair or proper working order unless this is expressly provided for in the tenancy agreement. Few tenancy agreements, even those of social landlords, make specific reference to extractor fans, with the result that tenants have no remedies when extractor fans break down or do not work properly. Given that extractor fans are usually fitted by landlords, the responsibility for repairing them should fall on the landlord, not the tenant. This amendment would ensure that this was the case.

Finally, Amendment 90 seeks to ensure that all tenants and other occupiers of housing can live in housing that is fit for its purpose. In 1996, the Law Commission recommended that, subject to certain exceptions, an implied term of fitness should be imposed on all tenancies of less than seven years. This proposed new clause goes a little further in that it would apply the term not only to tenancies but to licences. It seems only right that any occupant of residential accommodation should be able to expect accommodation that is free from damp and has natural lighting, ventilation, a water supply and other basic facilities for sanitation and the cooking of food. At present, the other main repairing obligation in Section 11 of the 1985 Act is confined to matters of disrepair. Therefore, if a property is unfit in the respects mentioned above because, for example, of design defects, the occupier has no remedy. That cannot be right. A house with no damp-proof course could be rendered so damp as to cause the tenant pneumonia but there would be nothing in the tenancy agreement to compel a landlord to install one. On the other hand, if there was a damp-proof course in place that had failed through disrepair the tenant would have a contractual remedy. That is an absurd anomaly.

Public spending implications again are not great because a decent home standard has improved the public housing stock. Again, the main benefit of this amendment will be private tenants of rogue landlords, where the worst of the housing stock now rests. Indeed, giving such tenants a private remedy could reduce public spending because it would take some of the pressure from local authorities who have the job of enforcing housing standards in the Housing Act 2004.

In the recess, my noble friend the Minister replied to me following Committee stage. I should like to pursue a sentence in the letter that I received because it caused me some concern. I am sure that that was unintended but we need to clarify the record. In terms of repairing obligations on landlords, the letter states that,

“where there is no evidence to the contrary I am not prepared to increase burdens on landlords with the attendant risks for growth in the sector”.

It is inevitable that the private rented sector will grow but I am puzzled by what I would regard as the basic standards of accommodation, with basic attention to repair and maintenance of properties and enabling people who are tenants to live in accommodation that is fit for purpose. I do not see that as a risk for the sector. People have a right to expect a basic standard of accommodation and I hope very much that my noble friend will put my mind at rest and confirm that there should be applied a basic standard that needs to be delivered through amendments to the law. At present, too many private sector rented accommodation units are falling through the legislation that currently exists because it has not been modernised—well, in the past 25 years—to a standard that would reflect current modern needs.

[Lord Beecham]

My Lords, Newcastle is once again united. We are even more united now than we were under the previous Administration. I congratulate the noble Lord, Lord Shipley, on tabling these amendments and equally congratulate those who have briefed him so thoroughly with the material that he has brought to your Lordships’ House today. He has highlighted an important area of the national housing debate which has been subordinated in recent times to the simple question of household numbers, housebuilding and the long queue of people denied access to accommodation, including first-time buyers and their problems. Much of the emphasis has been simply around numbers and the owner-occupied sector.

The real problems addressed by the noble Lord’s amendments are to be found essentially in the private rented sector, which has received insufficient attention for many years under Governments of both parties, with the result that, as the noble Lord pointed out, far too many people are living in unsatisfactory accommodation. We are living in a letters’ market, as it were. Demand for rented accommodation is going up all the time and obviously property numbers are not going up to match. Reputable organisations are anticipating additional problems when changes in housing benefit come in, and already there is some indication that private landlords are reluctant to let to housing benefit tenants. There is huge pressure within this sector. As the noble Lord pointed out, that sector has much the highest rate of disrepair and the least degree of modernisation through to decent home standards. Therefore, there is a huge need for concentration on these problems. The very basic matters to which the noble Lord referred must be an essential part of the responsibility of any landlord.

There will be a slight irony if the Government resist the amendment. If the exterior of a property was at issue, Town and Country Planning Acts would apply. Owners can be made to tidy up the outside of their property, and even paint it, whatever the length of tenure or even if it is owner-occupied; but when it comes to the inside, as the noble Lord pointed out, these powers do not exist for far too many properties. Therefore, there is nothing wrong in principle with imposing obligations on owners—in this case, renting owners—because they are applicable to all owners as far as concerns the property exterior. One might have thought that, from the point of view of safety and health, the interior is more important. It is perfectly logical that legislation should be amended in the way proposed by the noble Lord.

I will sound a cautionary note. The noble Lord referred to the availability of civil proceedings once the measures pass into law. Again, I remind noble Lords that access to the courts by this group of potential litigants is likely to be affected by the pending changes to legal aid. If current proposals go through, only under exceptional circumstances will legal aid be available to assist tenants in enforcing repair obligations of this kind. Perhaps that should be borne in mind in future debates. I hope that the noble Lord and his colleagues will join Members on all sides of your Lordships' House in investigating those steps very thoroughly, because these matters are not divisible. If we are looking at the housing situation holistically, we must look not only at obligations but also at methods of enforcement. The noble Lord touched on them. We must be sure that those methods remain available to the people who will need them.

I hope that the Minister will respond sympathetically to the suggestions contained in the amendments. I represent an area that has a significant private rented accommodation sector. There are a number of very poor landlords and a licensing scheme that is beginning to have some impact. I hope that that experience, which is reflected in many places, will be improved by the Government giving fair wind to the noble Lord's proposals.

[Lord Taylor of Holbeach]

Well, my Lords, the noble Lord, Lord Kennedy, and I know that when the Toons are on the run we are in a bit of trouble. However, I welcome the chance to address my noble friend’s amendments, because the debate draws attention to the very important issue of the quality of our housing stock, in particular the rented sector. My noble friend's amendments are all interrelated. They argue a case that unfortunately the Government cannot accept. We believe that the current division of responsibilities and obligations between landlord and tenant is the right one. Having said that, we are not complacent on the issue.

The main focus of my noble friend's amendments is to allow tenants to take action through the civil courts against a landlord who fails to provide safe accommodation. His proposals draw attention to concerns about the condition of some of the housing offered for private rent. There is some evidence that the stock is improving, but we are all keen to see more improvements. However, a mechanism already exists by which tenants can be safeguarded. It has not been mentioned by any noble Lord contributing to the debate. The Housing Act 2004 introduced the housing health and safety rating system—HHSRS, as it is commonly known. The HHSRS applies to all private sector housing regardless of tenure. It provides a framework within which a local authority can inspect a home and assess it against 29 hazards. I shall not list them—I do not actually have them to hand—but they include exactly the sort of situation which my noble friend is talking about: damp and mould, dangerous fumes, hazards of falls and matters concerning the facilities for domestic and personal hygiene. It therefore largely covers the types of hazards which are of concern to my noble friend. Where a local authority discovers such a hazard in someone’s home, depending on its severity, it has a range of powers at its disposal. It can make a hazard safe and charge the landlord or require the landlord to make repairs. Where a landlord does not comply, he can receive a heavy fine and a criminal conviction can follow. All this can be triggered simply by a tenant complaining to the local authority, in contrast to the legislation which my noble friend seeks to amend which is dependent on the tenant taking the landlord to court. The noble Lord, Lord Beecham, referred to the cost, time and difficulty of any legal process. Given that these safeguards already exist as a result of the measure introduced by the previous Government, I ask my noble friend to withdraw his amendment.

[Lord Shipley]

My Lords, I am glad that the Minister is not complacent, but I think that this issue is not being taken seriously enough by the Government and that there will be increasing problems in coming months and years because of the rise in demand for private rented stock. With the law so inadequately defined in so many respects around things such as extractor fans, furniture, fittings, damp courses and so on, one of the consequences will be that conditions in the private rented sector are going to worsen. For that reason, I continue to believe it to be absolutely right that the Government have the responsibility to do something about it.

All these amendments are directed in part by a lack of clarity in the law. I entirely understand what the Minister is saying about the recourse people currently have to potential remedies, particularly through local councils, but the difficulty is that there are problems in the interpretation of the law—for example, between design defects and defects that occur because repairs need to be undertaken to an existing fitting. These are material considerations for a Government who are concerned, for example, about standards of public health. I shall withdraw the amendment, but I hope we can engage in further discussion about some of the issues that have been raised.

One of the problems that we have at the moment, being on Report on a matter that was not debated in Committee, is that we have not had the benefit of that further discussion. It has occurred here and in other amendments, and it may yet occur in one or two further amendments. That is a defect in our procedures because we have not had the time to do justice to some of the housing amendments. That having been said, and in the expectation that we can engage in further discussion on these matters, I beg leave to withdraw the amendment.

Amendment 84 withdrawn.

--- Later in debate ---

Moved by

[Lord Shipley]

91: After Clause 172, insert the following new Clause—
“Standards for private sector lettings and management agents
The Secretary of State may by regulations set the standards that private sector lettings agents and management agents must adhere to.”

[Lord Shipley]

My Lords, I shall also speak to Amendment 92. Amendment 91 would insert a new clause to give power to the Secretary of State to lay down in regulations the standards that private sector letting agents and management agents must adhere to. This would enable the Secretary of State, at a later date, to lay down statutory guidance to regulate private letting agents. A similar provision was passed recently in Scottish legislation. As there are currently no regulations governing the conduct of letting agents, such a clause would act as a starting point for a debate on what sort of regulation would be effective.

Both tenant and landlord organisations have long reported problems with private sector letting agencies, including the charging of exorbitant fees, failure to enforce basic health and safety standards in properties and inadequate client money protection provisions. The situation is such that the largest professional body for letting agents in the UK, the Association of Residential Letting Agents, which has been at the forefront of self-regulation, is strongly in favour of statutory regulation to tackle problems in the industry. This amendment is also supported by the British Property Federation, the National Landlords Association and housing charities.

The amendment would allow the Secretary of State, following further consideration and consultation, to specify new standards for the regulation of letting agents. It does not require guidance to be drafted immediately but ensures that the possibility is open, and will act as a starting point for a debate on how best to regulate the sector. There would of course have to be wide consultation on the scope and nature of any regulations, but the Bill is likely to be the best legislative opportunity to make progress on this issue for a significant period.

Around 60 per cent of private landlords use one of the estimated 8,000 letting agents or managing agents in England. However, half these agents do not belong to any of the professional trade bodies. Research has shown that tenant satisfaction levels are lower—reportedly 71 per cent—where the property is managed by an agent than where it is managed by a landlord directly, reported to be 81 per cent. In an online survey of 1,289 tenants who visited the Citizens Advice website over a three-month period, it was found that 73 per cent were dissatisfied with the service provided by their letting agent. Less than one-third of agents willingly provided full written details of their charges to CAB workers when asked. There are particular concerns in relation to letting and management agents having a lack of expertise and firms not having professional indemnity insurance or client money protection.

The current voluntary approach has significant drawbacks, with the worst agents being the least likely to submit to a voluntary scheme. Voluntary regulation, covering only an estimated half of all agents, is unfair, as it creates extra hurdles for the more reputable agents while not doing so for those who are most likely to be responsible for problems. The Association of Residential Letting Agents believes that the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market is through statutory provision via this amendment.

There is currently no mandatory licensing scheme for letting agents or landlords in the UK despite 95 per cent of consumers believing that there should be. The Association of Residential Letting Agents introduced a licensing scheme for its members in May 2009 which ensures the highest standards of service for those who use members of the scheme. Its introduction was supported by a wide variety of organisations including Trading Standards, Shelter and the National Landlords Association. The scheme delivers higher standards of service for tenants by ensuring that licensed members abide by the relevant codes of practice and rules of conduct, hold recognised qualifications and are covered by professional indemnity insurance, a recognised client money protection scheme and an independent redress scheme. The licensing scheme has many other facets to improve service, such as ensuring that all members undertake at least 12 hours of continuing professional development each year.

I do not regard this amendment as contentious. It seems eminently sensible because it is simply providing a means whereby statutory legislation can be introduced by giving the power to the Secretary of State to do so at some future date.

Finally, Amendment 92 relates to a slightly different issue but it extends the courts’ discretion to postpone or suspend the execution of possession orders in cases where there is no specific statutory power to do so. The problem is that Section 89 of the Housing Act 1980 severely restricted the power of the courts to suspend the effect of possession orders in cases where the courts had no specific statutory power to do so but had, to that point, relied on their general powers. The effect of this was that no possession order could ordinarily be suspended for longer than two weeks; in cases of exceptional hardship the court could suspend further, but only up to six weeks. The effect of this has been that an evicted tenant and his or her family are only permitted two, or at most six, weeks to find alternative accommodation whatever the circumstances of the family as regards, for example, size, medical or location needs or education.

Even if those restrictions were realistic in 1980, they are now out of date, in view of the continued pressure on the availability of affordable housing, the recent reductions in the provision of housing benefit and the increase in the types of tenancy to which Section 89 applies since it was enacted. To find alternative accommodation within the timescale provided by the 1980 Act is virtually impossible, and has been for some time, yet the courts have no power to order more. This amendment would simply enable a court to exercise greater flexibility in considering the suspension of possession orders and to allow the appropriate length in the circumstances of the case, balancing the hardship to the tenant caused by the eviction against the landlord’s need for the property. I beg to move.

[Lord Whitty]

My Lords, I support Amendment 92. Those of us who are looking at the housing market recognise that the role of the private rented sector is likely to increase and that there are serious problems with both quality and delivery within that sector. I am sorry I had to be out of the Chamber when Amendment 85, on the accreditation of private landlords, was debated. However, the vast majority of tenants and potential tenants will come across the property via an agent, and, as the noble Lord says, their actual arrangements for rent, repair and general customer service will be with the agent, not directly with the individual landlord. In those circumstances, the role of lettings agencies and management agencies is vital. Therefore, it is important that this Bill provides for some ability to set standards for them. As the noble Lord, Lord Shipley, said, it is very important that the professional trade bodies in that area—the National Landlords Association and the British Property Federation—support a degree of statutory intervention on this front for the very clear reason that good landlords, effective landlords and landlords concerned with service for tenants can get undercut by bodies that do not observe decent standards.

The amendment is permissive on the Minister and clearly will be subject to some assessment of need. However, as the noble Lord says, if we do not provide for some ability to issue regulations in this area, then a whole sector of housing provision will remain unregulated, with the better agents in that area being undermined by the worse. I hope that the Minister can at least give a positive response to this amendment.

--- Later in debate ---

[Lord Taylor of Holbeach]

My Lords, my namesake reads the situation pretty well and makes a very thoughtful contribution, as he always does on housing matters, rural housing in particular. It has been a very useful debate. In principle we have discovered the difficulties of an imperfect world where not everybody behaves as they should. I am delighted that the noble Lord, Lord McKenzie, did not get hissed at when he declared his interest as a landlord because it is important that landlords are recognised as having an important part to play. Many of the amendments introduced by my noble friend are directed at encouraging landlords to maintain high standards. The question is whether regulation is the way to deal with this problem, particularly given the need not only to deal with the current situation but to plan and develop this sector for the future, because we all know that it is an area which will need considerable investment.

Amendment 91 makes proposals for the regulation of letting and management agencies. The noble Lord, Lord Whitty, said he was going to speak to Amendment 92 but he meant Amendment 91 because that is what he spoke to. Around two-thirds of landlords let and manage their property through an agent so it is important that they can rely on a good service. We are aware of poor practice within the letting and management agent sector but regulation already exists in this area. Between a third and a half of all agents belong to voluntary schemes which set standards and offer redress when things go wrong, including client money protection. Unfortunately, far too few consumers of the agency system—both landlords and tenants—are aware of the risks of using an unregulated agent. I am delighted that the Government have been able to endorse the Safe Agent Fully Endorsed scheme—SAFE—recently launched by the industry which highlights a key risk around clients’ money. We want to explore these voluntary approaches further before a move to statutory regulation but we do not rule this out in the longer term. However, we cannot support the introduction of enabling powers where we have no plans for their use.

Amendment 92 in this group would extend the court’s discretion to postpone awarding possession of dwellings. We do not think this is necessary. We estimate that, even using an accelerated procedure available under the legislation, gaining possession through the courts takes at least six months. That is more than enough time for a tenant to find alternative accommodation and it already places a significant burden on landlords, particularly in cases where rent arrears are accumulating.

On Amendment 93, my noble friend Lord Palmer joined my noble friend Lord Shipley in presenting the argument for local authorities’ tenancy relations services. We agree that both landlords and tenants in the private sector should have access to advice and support, but local authorities already provide such advice through their housing options services. This advice is supplemented by existing powers to deal with poor practices by landlords. We therefore see no need to legislate further. New legislation would have the effect of restricting local authorities in their existing work and quite possibly add burdens simply in order to reinforce what is already there.

All the amendments pursue a proper ambition: to raise the standard in the industry. In the case of letting and management agents, we acknowledge that some bad practice exists. I have considerable sympathy with those who have been caught out by bad practice, but for the reasons that I have set out we do not think that regulation now is the right answer. Therefore, I ask my noble friends not to press their amendments.

[Lord Shipley]

I thank my noble friend the Minister for his response. In respect of Amendment 93 and tenancy relations services, the situation is getting more difficult. There are reductions in spending on tenancy relations. The Minister is right that the amendments are part of a general picture of trying to maintain standards. Where do people who have problems in the private rented sector go? If tenancy relations services are closed down or reduced in scale, and if the CAB has increasing problems in delivering the standards and levels of support that it would like to deliver, it makes it difficult to see how people will get the support they need. That means then that the Government’s objective of ensuring fit accommodation is also more difficult to achieve.

I have noted what the Minister said about Amendment 92. We will look further at that and may raise the issue again. As he rightly identified, it is an issue for the courts.

The intention of Amendment 91 was to enable the Government to do something about it. However, if we are going to explore making the voluntary approaches better, and if we have not ruled out introducing statutory powers, I am content for the moment to work with that, but we are likely to find an increasing need to move down the statutory regulatory route. With those provisos, I beg leave to withdraw the amendment.

Amendment 91 withdrawn.