Housing and Planning Act 2016 (Database of Rogue Landlords and Property Agents) Regulations 2018

Lord Thurlow Excerpts

Tuesday 17th April 2018 Lords Chamber

This is not about impatience on these Benches or on this side of the House; it is about tenants who today, two years after the Government changed their mind on banning lettings fees, are still waiting. This means that they are still being charged arbitrary amounts by agencies, as evidenced in the Government’s own research; they are still in danger of tipping into homelessness by moving to a lower rent with a high up-front fee; and they are still waiting for mandatory electrical checks. What is now the fast-track solution to the open register so that they can empower themselves and see for themselves whether or not to trust a landlord? The delay impacts on people who rent on a daily basis. So how are we going to move this forward at pace, given that it should have happened two years ago?

[Lord Thurlow (CB)]

I thank the noble Lord, Lord Kennedy of Southwark, for bringing forward this regret Motion, in effect completing the unfinished business of this part of the Housing and Planning Act 2016. Although they are not toothless, I feel that the proposals as they stand are somewhat pointless. There is no direct access to the rogues’ register for the public or for potential victims, and I see victims as an important part of this—those whom the register is really designed to protect.

I should declare my interests. I am the landlord of two residential flats. I am myself a tenant and I have, for 35 years, practised as a chartered surveyor in a firm that both rented out and managed properties. I feel very much in the cross-hairs of this debate, but I am pleased to report that to the best of my knowledge my firm did not deal with residential property. That said, I feel reasonably well qualified to comment.

Thinking about this regret Motion caused me to seek out reasons why one would not want to support it. I thank the House of Lords Library for its helpful and timely response to my question. I followed up its extensive leads and could find no good reasons to object to the Motion. I found not a soul arguing against transparency and openness of this data. The Act of Parliament is clearly not doing the job as intended.

There is a perceived misconception, I believe, about tenants. I am referring not to the privileged rich but to the average social or private residential tenant. There is an assumption that supply and demand applies in the usual way, but it just does not. Availability and quality do not balance the price of accommodation. There is a gross imbalance of supply, in favour of the landlord, as I am sure most of us know. Stories abound of instant queues for viewings of rented accommodation as soon as it becomes available. There is tender pricing and rental gazumping. All the cards are with the landlord and the landlord’s agent. Who is going to check with the local authority register at seven o’clock in the evening, out of hours? The potential tenant has time pressure to perform. The local authority is underresourced. Will it have an out-of-hours service? That is extremely unlikely, bearing in mind the fragile state of finances. If the bidder does not bid straightaway and make a very determined application to rent the flat concerned, the likelihood is that it will not be available in a day or two’s time.

Having managed to secure agreement on the terms, the next day the bidder might apply to the local authority. If they are lucky enough to get a quick response and discover that they are dealing with a rogue landlord, what do they do? Rightly, they withdraw. However, the next time they try to rent a property that happens to be with the same firm of agents, or conceivably with the same landlord—many are owners of very large numbers of residential properties, particularly in urban areas—they will find that they are blackballed because they are trouble-makers. No one has to say why they turn down a residential tenant. References are notoriously spurious. So perhaps there is more to it than just trying to encourage applicants to make contact with their local authority. I think that that simply makes the applicant’s predicament worse.

What about landlords? I have mentioned that some control a large number of properties, and the same applies to agents. I have also mentioned the all-powerful blacklist. We should bear in mind too that, although there are organisations such as the Residential Landlords Association, the RICS and others that try to set standards of behaviour and probity in the industry, there are no barriers to entry for those wishing to become a residential letting agent. Any one of us could start tomorrow. All you need is a telephone and, preferably, a suit. It is easily done. There is no policing and no comeback unless one breaks the law. Of course, good landlords have nothing to fear. If this measure really had teeth and really worked, and the register was transparent, they might even win more market share.

What are the solutions? The noble Lord, Lord Kennedy of Southwark, referred to the helpful letter from the Minister of 6 April, but this is unfinished business—it is not clear. What is needed is unequivocal access to the list by individuals. That is supported by ARLA, the Residential Landlords Association, the Mayor of London and the London Landlord Database, but direct government action is needed—unequivocal, impartial and expeditious transparency. We heard about expeditiousness from the noble Baroness, Lady Grender.

In conclusion, I have heard that the prosecution procedure can be long and arduous, and it is expensive for local authorities, which have limited budgets. I have heard that more escape prosecution than not—that for every prosecution, 20 more avoid it. Why? Luck, lies and leniency were the reasons given, and those come from a former practitioner in that space. At the end of the day, if people do get convicted, they receive a 12-month ban or a fine. To deter rogue landlords and agents, much longer bans and bigger fines are needed, as well as much longer exposure on the rogue landlords and agents list. I support the Motion.

[Lord Beecham (Lab)]

My Lords, I refer to my interests as a Newcastle City councillor and as a vice-president of the Local Government Association.

I have just checked the definition of a rogue landlord, which was given by the noble Baroness, Lady Williams, during a debate on the Housing and Planning Bill. The definition she gave was:

“renting out unsafe and substandard accommodation”.—[Official Report, 9/2/16; col. 2136.]

Up to a point, that seems to be reasonable, but that definition would not, for example, extend to the mistreatment or abuse of a tenant by a landlord. I wonder whether the term “rogue landlord” is sufficiently descriptive of the kind of problems that many people face as tenants of properties that might be not just in poor disrepair but where other aspects are making their life a misery.

I have encountered aspects of this recently in the ward I represent in Newcastle. I have twice had to call on the local authority to contact the landlord owners of properties where a large accumulation of rubbish was left undisposed by the owners for some considerable time—these were rented properties. In one property—it was a tenanted property and therefore, I suppose, in a sense the tenant must also bear some responsibility—there was a significant problem of rats for the very elderly lady living in the rented property next door owned by the same landlord I have mentioned, who lived across the street. This lady paid Rentokil £900 to dispose of the vermin in the adjoining property. That is an extraordinary situation, and I am not sure that those conditions would necessarily invoke any of the sanctions that are sought to be imposed on the “rogue landlord”. This is not an offence in that sense. Therefore, we need to look at what the terminology purports to cover.

I want to take the matter a little further. There is a process under which authorities can have a great deal more influence on what happens in the private rented sector, through what are known as selective licensing schemes. But these are difficult to prepare. In my own ward, having asked for action to be taken, I am told that apparently it takes between two and three years to convince the department that a scheme is necessary. In some areas—I believe Newham is one and I think there are one or two other authorities—the concept has been extended across the whole local authority. That seems to me much the best approach in dealing with this issue. I hope that the Government will look again at the practice and authorise and then encourage local authorities to apply for schemes across the whole area if it deems that to be the right approach. At the moment, as I said, it is a cumbersome and difficult process.

If we are to tackle the variety of problems caused by bad landlords—whether they are rogue in the sense that the noble Baroness defined it or in a broader sense because of failure to look after their property and tenants in a proper manner—the matter should not be confined in the way that is implied by the definition that was given to this House during the passage of the Bill. I hope that, in replying to the debate, the Minister will give an indication that the Government will look again at selective licensing and will facilitate and encourage it where local authorities deem it appropriate to deal with all manner of problems caused by the inadequacy, or worse, of some landlords who seem intent only on extracting the maximum amount of money for the minimum provision.

Neighbourhood Planning Bill

Lord Thurlow Excerpts

2nd reading (Hansard): House of Lords
Tuesday 17th January 2017 Lords Chamber

[Lord Thurlow (CB)]

My Lords, I will address Part 1 of the Bill. Before doing so, I declare my landholdings in the register of interests. The objectives appear to be to build more houses and to streamline the process, and no one could disagree with that—I certainly do not, and I support it in principle—but there are two points that I want to address.

The first concerns resourcing for planning officers—I mean the professional teams of officers, not the councillors involved with planning. I worked on the fringe of planning for many years myself, usually on the side of the big developers, which were well-resourced, and not on the side of the planners. I saw the impact of the work they did, and among many local planning authorities I saw teams that by nature were on the defensive. They were bruised by years of experience of attempted resistance to opportunistic planning applicants and well-funded developers—who frequently, of course, were not housebuilders, but in their environment that does not matter. Those developers were developing large industrial estates, logistics parks and shopping centres. Perhaps developments involving blight, such as very tall or visually intrusive buildings, become a problem for them, sometimes against a local atmosphere of media outcry, with petitions and public objection. These hard workers have no fan club. Their environment is a negative one. It is difficult to be motivated unless you are very well led or very well paid.

The local planning officer’s job is to ensure fairness: that applications fall legitimately within the guidelines and the laws that define their options. The problems for some of the smaller teams are simply that they are underfunded and, critically, short-staffed. They are perhaps particularly short of experienced staff. Churn in that department—the turnover of the staff—is a real problem. The young planner arriving in a new job is given a thick file which records the history of several years of a fight between a developer and the planning office, and is expected to become familiar with it and to prepare to negotiate with them. They are working with their hands tied behind their back. They are trying to do the right thing against the odds, potentially against the background of appeals, and even judicial review. A cash-strapped council would not wish to entertain that lightly.

Developers, particular housebuilders in our case today, are likely to be the opposite. Driven by the profit motive and economies of scale, and dealing in geographies that probably span many different planning areas, they are probably well funded. They are certainly advised—we have heard about some of this today—by experienced professional staff, articulate advocates who are knowledgeable about the loopholes and weaknesses in the planning system and the legislation. This a pretty unequal struggle. Local planning officers need all the help they can get, and that is extremely relevant in the context of the Bill.

Pre-commencement planning conditions are referred to in the Bill, and have already been referred to this afternoon. They are to be effectively removed apart from the appropriate protections, which I heartily support. However, this removes an important layer of protection for our society and the communities they serve. Some of these preconditions are spurious but many are very important, and it is one of the few tools the planner may have.

Why is there no obligation, when we are trying to build all these houses, to first consider building on brownfield land? Why not relax the planning requirements for building houses there? As we drive into lovely green farmland for our new developments, into the green belt, there seems to be no requirement to do this. What a waste, when frequently brownfield land lies on the edge of urban areas, close to hospitals, schools, shopping and the public transport network. The main reason is the cost of development, such as cleaning up the sites, and of course for developers building in urban areas is more expensive than building on green fields. I am not sure that that is a good enough reason. The Government have allocated funds to various housebuilding initiatives, which are growing all the time. Why not start with brownfield land? I liked the suggestion we heard this afternoon that vacant public sector land in other areas could be included in this.

I conclude by asking the Government to consider the impact the Bill will have on the planning departments and local authority planning teams. In many instances they are a demotivated group of people, fighting a losing a battle, and there is a risk that both their hands will be tied behind their backs as a product of the relaxation of planning requirements in the Bill. I ask the Government to explore the resourcing issues I mentioned; give them the staff they need at a time when councils are being forced to cut costs—they need all the support they can get. Further work is required on Part 1 of the Bill.

Renters’ Rights Bill [HL]

Lord Thurlow Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 18th November 2016 Lords Chamber

[Baroness Gardner of Parkes]

I am raising the point because, as I have discussed in the past—not during the last Bill, but previously—the inventory cost has to be borne by someone. If the inventory cost is paid only once, by the person who has the benefit of it, it is not then built into the rent in the way it would be if the landlord paid it, when it would be included in the rent, and every time there was a rent increase, there would be an increase in the inventory cost. It would already have been paid and would be a one-off and out of the way. I am very half-hearted about these suggested changes here.

People are overlooking the situation where, particularly in London, landlords are giving up ordinary residential lettings. There is quite a desperate shortage of lettings for ordinary people wishing to rent, because landlords can make so much more money out of Airbnb, which is totally uncontrolled. I opposed the practice when it came up last year during passage of the Deregulation Act, but no one else did. Now, sure enough, Berlin is bringing in controls. New York, Vancouver—all these places—are finding themselves in the same position. The Mayor of London has acknowledged the problem. It is only capital cities that have ever had that limitation on short lets. Whether it is in the tenancy agreement or not, people are totally ignoring that and simply letting them, because they can earn as much in four months as an ordinary landlord would in the whole year. It is much more complicated

Again, we have talked about references. The Government expect you now to know that your tenant, whoever they are, is entitled to be in the country. As for the days when people could employ someone who was not legitimately here, all that changed, if your Lordships remember, with the situation that came up with the noble Baroness, Lady Scotland. This is much more complicated than people appreciate. This amendment sounds very good and sweeping but the whole thing has not been thought through in enough detail. There might be limits on what you could charge, but as I have said before, I remember letting a property in the days when the Wilson Government just froze rents. They were frozen for about two years, and then they absolutely escalated when the freeze was lifted.

You cannot really find a very easy answer to this, but I am very much in favour of an answer. I thoroughly approve of the idea that you should have access to a register of rogue landlords and all that, but it is unrealistic to imagine that this list of things which the noble Baroness has set out in detail will suddenly become inexpensive or vanish or something. Where is it going to vanish to? This is what I would like to know. I am convinced it will just be built into rents. The noble Viscount, Lord Hailsham, spoke about this recently, as a landlord or someone who had been one way back in history. He said that people had to realise that people who were landlords were doing it as a business, which is true. It is most unfortunate that the supply of housing, both social and ordinary commercial, has vanished, because people need homes and they need them desperately. We all hope that that housing Act will produce more homes for people at affordable prices but the press on it has not been very encouraging. I wait to hear what is said about it.

[Lord Thurlow (CB)]

My Lords, I thank the noble Baroness, Lady Grender, for tabling the Bill. I declare my property holdings as set out in the register of interests. As personal background, I have spent over 35 years working in the property market as a chartered surveyor, most of it on the commercial side, specifically in development letting, investment and funding. There is a close relationship between commercial and residential when dealt with in bulk.

Who is principally affected by the clauses of the Bill? It is the lowest earners—the most vulnerable, in that sense. It is no coincidence that Shelter has briefed on this, and I think it is tragic that that was necessary. It is students in higher education who have to go to their place of education. It is students who become jobseekers and have to move again. It is a transient group. It is immigrant labour that goes to wherever the work is; there is no shortage of that, apparently. And it is my daughter; in fact, this week both my daughters have applied to rent residential accommodation, and they are learning all about the bumps in the road that we are discussing.

This is the era of social mobility. The world has moved on and the working population is much more mobile. People may move several times, particularly in the early steps of their working lives. They are unlikely to buy, we know that; they rent, and the housing provision must respond. I am afraid the evidence suggests that dishonest or at the very least questionable practices are rife. I thoroughly endorse the list of the noble Baroness, Lady Grender, and in fact I think the list is considerably longer than we were given. Only regulation would prevent this.

The problem is that, as we have just heard, it is difficult to identify what might be fair and what is spurious. The list is growing. In fact, I have with me the small print from one of my daughters’ contracts with a national firm of estate agents. The small print, which is smaller than I can read with these new glasses of mine, identifies seven different specific items, several of which I as a practitioner in the marketplace think are spurious. It is shocking, with non-refundable payments and refundable payments that, as we know, are sometimes not refunded. The people affected by this have very little recourse—they do not have the wherewithal or the experience, and they are dealing with an institution. Every time they move, we have heard, they pay again: £1,500, a month’s gross salary for many people. For the dishonest agents, if I may be so bold, it is low-hanging fruit. It is an important revenue source. I am sorry to say that, but I am afraid it is probably true. Rents are not going to rise because these costs are transferred to landlords; that is not how economics works. Rent rises because of supply and demand. If there are not enough flats to go around, the rent goes up, and if there is a surplus, the rent comes down.

I am not one-sided on this. The list of fees is not all bad, as we have also heard. Landlords need deposits and references. However, the clever instrument in the Bill is that the Secretary of State is given the right to approve those fees that are considered fair. An adequate supply of housing would stifle spiralling costs, and competition for tenants would trim the fees. However, the shortage of government support for new rental development, particularly in the social housing sector, means that the private sector fills the gap. There is a new product in the parlance of property, the private rented sector. It does not sound very new but it is new in that context, and it refers specifically to the bulk development of residential property that is exclusively built to rent. It is designed to rent, not for sale. It is not for sale after two or three rental periods; it is designed for long-term renting. Services are engineered into the architecture.

This is a new product which some other countries already enjoy and have done for a long time, but our market has never embraced it in the private sector. There are tens of billions of pounds now looking at this market in the UK. It is happening. Sites have been acquired, developments are being processed and planning is being obtained. They are being built in bulk and they will deliver tens of thousands, at least, of new residential units.

I have spoken to Legal & General, a well-known and respected investment manager. It has allocated more than £100 million for this sector. It will finance and own it itself and wants to completely re-engineer the whole rental model. It wants it to be tenant-friendly, and thinks it can be done to provide it with a worthwhile return. It is possible, and the Government should applaud it.

Existing legislation is just not fit for purpose. It is creaking and, with the scale of new development on the horizon, must be updated. There is design of the highest standards, with the quality services I referred to and everything there for the tenant, but who will find the tenants? The letting agent, unless the organisation owning the property is big enough to run that in-house. It is tragic that this product, for want of a better description, could be brought to its knees in reputational terms by spurious fees and up-front costs frustrating the mobility of labour. The scale of this new prospect deserves our attention, and the Bill is a vital step in preparing for it.

To conclude, the Government have a choice: ignore it and play to the unscrupulous—I fear it is as simple as that—or support this initiative, update the law, give it teeth, stamp out unacceptable practices and protect the most vulnerable. Any Bill improving the lot of those in need is to be welcomed; this is one.

[Lord Kennedy of Southwark (Lab)]

My Lords, I should first declare that I am a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association. I fully support Amendment 1, moved by the noble Baroness, Lady Grender. It replaces what is presently in the Bill with a more detailed provision to further protect tenants and, we hope, avoid a rogue letting agent getting around the Bill. I am particularly pleased to see the reference to deposits in subsection (3). As the noble Lord, Lord Thurlow, said, the amendment also gives flexibility on what should or should not be treated as a premium by giving the Secretary of State power to make regulations to set that out. Importantly, it also allows the Secretary of State to set by regulation the maximum amounts that tenants may be asked to pay; a welcome flexibility here.

I also endorse the general comments made by the noble Baroness, Lady Grender. As she said, housing is an issue that we have debated many times and will continue to do so: the cost of housing, up-front costs, fees, the lack of social housing, the cost of rent in the private sector, et cetera. The noble Lords, Lord Shipley, Lord Best and Lord Thurlow, all made contributions that I endorse. The noble Baroness, Lady Gardner of Parkes, expressed some concerns and reservations about the clause and the amendment in particular. I do not agree with her: these fees and charges can be abused and tenants taken advantage of; the amendment seeks to address that. I particularly endorse the comments of the noble Lord, Lord Thurlow, who spoke about the effect that supply and demand has on the housing market. As he also said, at present, the legislation is not fit for purpose. I fully endorse the amendment and hope that we get a positive response from the Minister.