Viscount Younger of Leckie
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Viscount Younger of Leckie Excerpts
Lord Stunell (LD)
My Lords, I apologise to the Committee for missing the first two or three minutes of the introduction to the amendment by the noble Lord, Lord Beecham.
We need to recognise that the Gypsy community suffers multiple disadvantages, and not just in housing. It suffers some of the worst health outcomes in the country, as well as the worst rates of infant mortality and the poorest educational outcomes of any community in the country, and it has the least access to finance of any community in the country. If you do not have a settled existence, and particularly if you are constantly moved on from road verges, it is difficult to open a bank account or to enter the legitimate financial scene.
We also need to recognise that something like 75% or 80% of Gypsies have accommodation that is suitable; it is not a question of the whole community roaming around and looking for somewhere to stay. It is a marginal problem but it is very important and serious, and it is one where we ought to sustain the push with legislation to make sure that local communities face up to their responsibilities.
It is also interesting that many in the Gypsy community are strongly religious. For instance, I remember that when I was a Minister there was a huge row about an unauthorised encampment of Gypsies and fears about hundreds of caravans turning up, but it turned out that they were coming to a Pentecostal Christian event organised for Gypsies. That was counterintuitive, but maybe counterintuitive is what we need to be here. It is the last group in Britain that it is legitimate to slag off in the golf club bar, on the street corner or, indeed, at the parish council in a way that nobody would if those involved were Pakistani, Afro-Caribbean or Chinese people, because, apart from anything else, they would know that it was illegal to do so. They would know that it is something we do not do in Britain but you can still say these things about Gypsies. Unfortunately and sadly, that is the case, and I do not think we should give anybody an excuse to default on their duty.
However, I want to put this issue in a more positive light. We need to give those who want to take their duty seriously some legislative backbone in saying to their communities, “I know this is a tough one. I know it’s difficult, but you can see that the law requires us to do it”. I believe it would be a serious mistake to go backwards on this provision and I hope the Minister will take account of the views that have been expressed.
Viscount Younger of Leckie (Con)
My Lords, in debating this clause, I am conscious of the absence of the late Lord Avebury, which was mentioned by the noble Baroness, Lady Whitaker. I was saddened, as were others, on hearing of his death. I know that he was a committed and forceful advocate for the rights of the Gypsy and Traveller community, and I hope that together we can do justice to his memory.
I thank all noble Lords for their amendments. I understand their reasoning, which seeks to ensure that local authorities have an explicit duty to assess the accommodation needs of Gypsies, Travellers and Travelling showpeople. I emphasise that this clause does not remove that duty.
I turn first to Amendment 82H, tabled by the right reverend Prelate the Bishop of St Albans. The Government’s intention is to ensure that the assessment of accommodation needs is seen to be fair to all. We know that some feel that a specific mention of Gypsies and Travellers in legislation relating to such assessments somehow accords them more favourable treatment. We want to combat that impression which, as my noble friend Lord Lansley mentioned, only adds to misunderstanding between the Traveller and settled communities, not to remove the duty to assess the needs of Gypsies and Travellers. Their needs will be assessed, but in a way that is seen to be fair to all.
The aim therefore is to simplify legislation to ensure that the housing and accommodation needs of all the residents and those who resort to an area are considered without specific reference to particular ethnic groups. The clause makes it clear that the needs of those persons who reside in or resort to an area with respect to the provision of caravan sites and moorings for houseboats are considered as part of the review of housing needs. This would include all those who are assessed at present and potentially those who simply choose to live in a caravan, irrespective of their cultural traditions or whether they have ever had a nomadic habit of life. We recognise that for many, but for Travelling showpeople in particular, this assessment needs to include consideration of not only residential accommodation but also space for the storage of equipment—I am speaking particularly about Amendments 82GD and 82GE. That is why we have published draft guidance that makes this explicit.
The definition in Planning Policy for Traveller Sites relates to the provision of sites and is relevant for those seeking planning permission for Traveller sites. The definition is based on proof of nomadism and ensures that planning provision relates to specific land use requirements. The duty in the Housing Act is about assessing the housing and accommodation needs of all in the community and those who resort to it, including those with or without an existing nomadic way of life and those who wish to resort to caravan and houseboat dwelling. We would not wish to align the housing definition with the planning definition as it would limit the scope of the assessment to those who proved an existing nomadic lifestyle. I hope that this reassures the right reverend Prelate the Bishop of St Albans, who raised these points.
Noble Lords and others have rightly raised concerns about human rights, and we are ever mindful of our obligations under both domestic and international law regarding the treatment of protected groups. Therefore, before proposing this clause Ministers gave very careful consideration to their public sector equality duties and the need to ensure that local authorities understand their duty to assess the needs of those living in houseboats and caravans. This includes those with protected characteristics such as Romany Gypsies and Irish Travellers, for whom it is recognised that caravan-dwelling is a cultural part of their identity. We have therefore published draft guidance explaining how the needs of such groups should be considered under this revised legislation. We want local authorities to assess the needs of everyone in their communities, and our clause emphasises that Gypsies, Travellers and Travelling showpeople are not separate members of our communities. I hope Lord Avebury would have agreed with me that they should be treated fairly.
The noble Lord, Lord Beecham, asked whether my honourable friend the Housing Minister in the other place had responded to a letter from the London Assembly Group. I can reassure him that the Minister responded and explained that the changes in the Bill would not impact on how local authorities assess their needs. Local plans need to be found sound before they are adopted. This means that they should be positively prepared, based on a strategy that seeks to meet objectively assessed development and infrastructure requirements.
The noble Lord, Lord Beecham, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Bakewell, asked whether any change led to more unauthorised encampments. I can reassure them that the change in legislation is about local housing authorities assessing accommodation needs. It for local planning authorities to ensure that their local plans address the needs of all types of housing and the needs of different groups in the community.
The right reverend Prelate the Bishop of St Albans raised concerns about local authorities ignoring needs. If a public authority does not comply with the general duty under Section 149 of the Equality Act 2010—the public sector equality duty—its actions or failure to act can be challenged by judicial review. He also asked what consultation was undertaken on the draft guidance. Officials in the department and my noble friend the Minister, who is in her place on the Front Bench, have engaged with the Gypsy and Traveller communities through liaison groups, which meet every few months. The guidance is published in draft, so we are continuing to engage with representatives from the Travelling communities. I hope that reassures noble Lords on that point.
Lord Kennedy of Southwark (Lab)
Will the Minister say a bit more about whether he sees this as a watering-down of the provisions? Clause 115(2) seeks to remove Sections 225 and 226 of the Housing Act, which state that a “housing authority must”—it is a very clear duty. This clause would replace that with a “duty to consider”. My noble friend Lady Whitaker said that this would allow authorities to shirk their responsibilities and, as my noble friend Lady Young said, take the line of least resistance. How are we to avoid that?
Before I conclude, many noble Lords have mentioned Lord Avebury. He was a very good man and we all miss him very much. I know which side of the debate he would be on if he were in his place today. It is worth noting that just a couple of days ago, on 15 March, it was the anniversary of his famous by-election win in Orpington.
Viscount Younger of Leckie
I understand the thinking behind the noble Lord’s question, but I might put it another way. He used the word “watering-down”, but it could also be said that it might lead to local authorities underestimating the accommodation needs of Gypsies and Travellers. Again, as I hope I have made clear, that is absolutely not the case: the proposed changes to primary legislation make it clear that the needs of all those, including Gypsies and Travellers, who reside in or resort to a district are considered in the same way as before in respect of the provision of caravans, sites and moorings.
Lord Kennedy of Southwark
If so, why is the change needed? Will the Minister tell us why things are not being left as they are?
Viscount Younger of Leckie
My Lords, I made it clear at the beginning that this is to do with simplifying the legislation.
Lord Beecham
My Lords, by the standards of Committee stage on the Bill, this has been a relatively short debate, and I will not prolong it too much. But I find myself slightly puzzled at the position that we end up in.
First, I thank those who participated. Most have supported the amendments. One of the most telling phrases was that of the right reverend Prelate, who said that the provisions in the Bill failed to capture the nuances of the needs of Gypsies and Travellers. I think that that is right. I particularly welcomed the participation of my noble friend Lady Whitaker, who is a tireless campaigner for the groups that are the subject of this amendment.
I was, however, slightly puzzled by the contribution of the noble Lord, Lord Lansley. I very much welcomed the rare degree of agreement between us, which we did occasionally experience in his ministerial past, but the notion that somehow it was the system that created the problem in his constituency where, as he put it, a particular group took possession of land and developed it, strikes me as a little odd. This is not the Wild West. Presumably they did not just walk on to somebody else’s land and erect fencing around it. They must have acquired the land and they must, presumably, have got planning permission for building on it. The implication was that they had developed it and sold it and moved on. The noble Lord is shaking his head. Perhaps I have misunderstood him.
Lord Kennedy of Southwark
I agree entirely. It is not good for the Minister or indeed for all Members of your Lordships’ House; there are many Members who have been here all the time for these debates.
Amendment 83 in my name and that of my noble friend Lord Beecham is quite simple in its intention and, hopefully, will cause the Government no problems at all. That said, I often think that my amendments will help the Government and improve the legislation and should be of no concern at all, but so far I have not been able to persuade them of that fact. Still, we carry on in the hope that on Report the issues and concerns that we have raised will be responded to, because, although we do not like the Bill, we fully understand our role as a revising Chamber in seeking to improve the Bill before it becomes an Act of Parliament.
The amendment seeks to add, in an additional clause, that those with an entry on the database of rogue landlords and letting agents cannot be granted an HMO licence. A house in multiple occupation is a property rented by at least three people who are not from one family but who share facilities such as the bathroom and the kitchen. A licence is required if the property is rented out to five or more people who are from more than one family, the property is at least three storeys high and tenants share facilities such as the toilet, the bathroom or the kitchen. It is important that people identified as rogue landlords should be specifically unable to rent out properties as houses in multiple occupation and should be prevented from obtaining a licence to rent out such properties. My amendment is clear, straightforward and simple. I look forward to the Government’s response, and I beg to move.
Viscount Younger of Leckie
My Lords, Amendment 83, tabled by the noble Lords, Lord Kennedy and Lord Beecham, would require a local authority to have regard to the fact that a landlord had been included in the database of rogue landlords and property agents when considering an application from that landlord for a licence to operate a house in multiple occupation or selective licensing. A local authority is already required to have regard to a range of factors when deciding whether to grant a licence under the Housing Act 2004. These include whether the applicant has committed any offence involving fraud or other dishonesty, or violence or drugs, or certain serious sexual offences; practised unlawful discrimination; or contravened any provision of the law relating to housing, or of landlord and tenant law. These factors would be likely to include all the offences leading to inclusion in the database. The database will be a key source of information for local authorities when taking decisions on whether to grant a licence.
These safeguards are very important as it is essential that a local authority can be confident that a licence is granted to a landlord or agent only if they can demonstrate that they are a fit and proper person to operate a house in multiple occupation or a property subject to selective licensing, and will not pose a risk to the health and safety of their tenants, many of whom may be vulnerable. Clause 116 includes two further safeguards by providing that a local authority will also be required to have regard to whether the landlord has leave to remain in the UK, is an undischarged bankrupt or is insolvent.
The aim of Amendment 83 is to ensure that local authorities fully consider the past behaviour of landlords and agents who are applying for a licence. The Government are extremely sympathetic to this aim. To do this, local authorities need access to information about the previous activities of a landlord and to share that information across local authority boundaries. The database will be an important step forward in sharing information about convictions recorded against residential landlords and property agents. It is extremely unlikely that a local authority would be unaware of a matter leading to an entry on the database of rogue landlords and property agents when deciding if an applicant was a fit and proper person. I trust that with this explanation, the noble Lord will agree to withdraw the amendment.
Lord Kennedy of Southwark
My Lords, I thank the Minister for that explanation, which was very helpful. I will happily withdraw the amendment.
Lord Beecham
My Lords, I suspect that this will be another very brief discussion. Schedule 9 amends the Housing Act 2004 to provide that any financial penalty should be an alternative to prosecuting a rogue landlord for an offence. The Explanatory Notes give no justification for this change, and, given what we know about some of the appalling conditions that rogue landlords create or tolerate, I see no reason why they should be immune from a criminal prosecution.
It is perfectly legitimate that a financial penalty should be imposed, but it is a matter of good sense to ensure that totally unacceptable behaviour is treated as a crime, in the hope of deterring others from committing the same offence and behaving disgracefully towards their tenants, rather than their simply being able to pay a financial penalty without any publicity. The deterrent effect of prosecution ought to be invoked.
Indeed, even leaving aside deterrence, conduct of the kind that we regularly read about is simply appalling, and society’s rejection of such an approach by landlords should be made clear by retaining the possibility of prosecuting them. In the absence of any explanation of why the change should be made, I hope that the House will express a view and the Government will reconsider this strange provision. I beg to move.
Viscount Younger of Leckie
My Lords, Amendment 84, tabled by the noble Lords, Lord Kennedy and Lord Beecham, would make a change to Clause 117 so that a local housing authority could impose a civil penalty in addition to, rather than as an alternative to, prosecuting a landlord. The Bill as drafted provides local housing authorities with a choice on whether they want to go down the civil penalty route or the prosecution route, depending on the seriousness of the offence. We have looked at this carefully and come to the conclusion that it would be disproportionate to use both regimes in relation to the same conduct.
Local authorities will benefit from other measures proposed in the Bill. For instance, they can apply for a rent repayment order where the rent has been paid from housing benefit or universal credit where certain housing offences have been committed, as set out in Part 2 of the Bill. This is in addition to the powers already available through the Housing Act 2004 whereby magistrates can impose unlimited fines on conviction for the most serious housing offences. I hope that after this brief explanation the noble Lord will agree to withdraw the amendment.
Lord Campbell-Savours (Lab)
The Minister referred to reasonable fines. What scale of fines are we talking about here?
Viscount Younger of Leckie
I do not have details of the fines, but I shall be more than happy to write to the noble Lord with them.
Baroness Gardner of Parkes (Con)
Could the Minister comment on whether this would cover the instances that I have spoken about of invisible rogue landlords who give their tenants no rent books, nor anything of any sort? Would a criminal offence not have a bit more impact on them, and encourage them to be fair to the people living in their properties?
Viscount Younger of Leckie
I was answering the points raised by noble Lords, and the main point is that we think it disproportionate to use both regimes. I hope that that answers the noble Baroness’s question. I am now able to answer the question asked by the noble Lord, Lord Campbell-Savours, about fines. The answer is: up to £30,000.
Lord Campbell-Savours
The Minister says that it is up to £30,000. There has been an interesting series of programmes recently, I think on BBC on weekday mornings, in which a team has been going out and looking at properties, particularly in east London, where invariably ethnic minority landlords are exploiting illegal entrants to the United Kingdom, or indeed other people from within the ethnic minority. I have made a point of watching some of these programmes and have begun to realise that these landlords are dancing round local authority officials. The local authority officials seem almost unwilling to exercise real responsibility to bring these people to court. When we talk about up to £30,000, we may end up with little fines of a few hundred pounds for what appear to me to be major offences. Huge breaches are going on in London in properties that come under Sections 64 to 67 of the 2004 Act.
The law seems quite clear. You would imagine that the law would work, but the reality is that it is not working. These people are not being pursued. My noble friend used the phrase “in addition” and I think that it is important that those words are introduced. These rogue landlords need to know that they will not only be taken to court—where they can hire smart-backsided lawyers who can manage to get the fines reduced to whatever level they think is acceptable by simply acting in the interests of their clients—but will be pursued by the authorities, which, I understand, have the right to use that money to do up the property.
The Government are taking a very weak-handed view in dealing with this matter. HMO properties in London are at the bottom end of the market in terms of the treatment of tenants by landlords. The law needs to be tightened up in this area. I hope that when we get to Report we can table amendments that everyone will support to bring home the lesson to the Government that this area is not being dealt with in a good enough way.
Viscount Younger of Leckie
I wanted to expand on my previous answer to say that prosecution fines are unlimited civil penalties of, as I mentioned, up to a figure of £30,000. It may give the noble Lord some reassurance to say that we have the power to provide guidance to local authorities on what to use and when in terms of fines. We intend to consult local authorities on the guidance on this matter.
Lord Campbell-Savours
Perhaps I can pursue this a little further. How many people have actually been charged, nationally and in London, over the last 12 months, say? Does the brief tell us the number of people who have been through the courts or do the lawyers manage somehow to deflect the legal actions? If the Minister does not have the reply, perhaps he can indicate to the Box that the information might be made available to us during discussion of a subsequent amendment.
Viscount Younger of Leckie
I can certainly offer a reply to the noble Lord. I hope that with the explanation that I have given, and in answering the questions, the noble Lord will agree to withdraw his amendment.
Lord Beecham
My Lords, I confess that I am not at all satisfied with the Minister’s reply. We are seeing a change in the law to put a financial penalty as an alternative to prosecution. As my noble friend rightly said, we are talking about some appalling examples, which would make the likes of Rachman blush, if he were still around, of abuse of tenants and appalling housing conditions. What is effectively being said in the legislation is: you can buy out of the consequences of that appalling behaviour by an unspecified fine—unspecified in the Bill; I appreciate that there is scope.
The behaviour is worse, in many respects, than many of the offences that are routinely dealt with in the courts in terms of the impact on citizens. It is simply not good enough to allow rogue landlords to escape with a financial penalty but without the stigma of being convicted of a criminal offence. I urge the noble Lord to consult again his ministerial colleagues, because I agree with my noble friend that we should seek on Report to reverse the current position. It will not take long, but my goodness it is important. In those circumstances, I beg leave to withdraw the amendment.
Lord Campbell-Savours
Is there not great irony in the fact that, to get around this problem, we need more bedrooms? In London, the flats with the most bedrooms—the three-bedroom flats—are the very high-value flats that are going to be sold off under this Bill. It shows what a mockery this Bill makes of housing problems.
Viscount Younger of Leckie
My Lords, I thank my noble friend Lady Gardner of Parkes for her amendments, which seek to address overcrowding and unlawful subletting in flats in residential blocks. For reasons that I shall come to shortly, however, I do not think that they are necessary, since both local authorities and managers of residential blocks have sufficient powers to tackle overcrowding and associated problems. The noble Earl, Lord Lytton, and my noble friend Lord Swinfen, alluded to this. I will explain further.
I will respond first to Amendment 84A. Part X of the Housing Act 1985 already deals with statutory overcrowding, which it defines by reference to a room standard and a space standard. If either of these is contravened, an occupier or landlord may be guilty of an offence. Statutory overcrowding results if two or more people of the opposite sex aged over 10—I have a figure of 10, not 12—and not being part of a couple have to share a room. This is defined as the room standard. Statutory overcrowding also results if the permitted number of persons who can sleep in a dwelling is exceeded. This is the space standard, which is calculated by reference to the number of rooms available as sleeping accommodation and their floor-spaces.
Local housing authorities can use their existing powers to gain entry to a dwelling in order to measure rooms to work out the permitted number. They also have powers to require information about the number of people sleeping in a dwelling and to inspect, report and prepare proposals on overcrowding generally in all or part of a district.
On the point made by the noble Lord, Lord Campbell-Savours, where a local authority considers that a property is overcrowded to the extent that it is hazardous to the health and safety of the occupiers, it may—and must, in the case of a category 1 hazard—serve a prohibition order under Part 1 of the Housing Act 2004 on the dwelling. This prohibits the use of all or part of a dwelling for residential purposes, limiting the number of persons who can occupy it. Whether the overcrowding is actionable will be determined by applying the housing health and safety rating system, which provides a numerical score of the severity of the potential hazard. Those scoring highest are category 1 hazards, and the authority is required to take action. Hazards with lower scores are category 2 hazards and the authority may take action. In any case, if the local authority serves a prohibition order limiting the number of persons who can occupy a dwelling, it is a criminal offence to contravene the order by permitting more persons than specified in the order to occupy it. A local authority can recover from the landlord its expenses in preparing and serving a prohibition notice.
On the interesting point raised by the noble Earl, Lord Lytton, about how one would find out about such overcrowding, it is subject to intelligence from local residents and the immediate area. It is fair to say that it works; no doubt on occasions it is hit and miss, but that is where we stand at the moment.
In deciding whether a dwelling is overcrowded, a local authority must apply an objective test and not its own perceptions or those of others. My noble friend’s amendment would enable local authorities to set standards in individual cases in addition to the national standards and existing hazard rating systems. This would cause confusion and uncertainty.
While I appreciate that flats that appear to be overcrowded can cause problems for other residents of the block, local authorities and managers of the blocks have powers to address them. For example, a local authority can serve a noise abatement notice if noise is coming from a flat, and the landlord or manager of the block can take action against the long leaseholder for such a nuisance if there is a condition or covenant relating to it in the lease. I am pleased to report that Kensington and Chelsea, where, I understand, my noble friend Lady Gardner is a leaseholder, was this year awarded £91,000 from a £5.3 million fund to tackle rogue landlords. This funding will work alongside the measures in Parts 2 and 5 of this Bill to ensure that local authorities have the resources and incentives to tackle rogue landlords.
Lord Campbell-Savours
Can the Minister put it on record that, when people buy their leases and turn them into a share of the freehold, they have the opportunity at that point to redraft the lease documents? That is the point at which they could input the restrictions required to cover many of the issues raised by the noble Baroness, Lady Parkes.
Viscount Younger of Leckie
I note the noble Lord’s point but point out that the lease is a matter between the leaseholder and the landlord.
I hope, however, that my responses have reassured my noble friend that landlords of residential blocks and local authorities can take action to tackle overcrowding and problems associated with flats. With these assurances, I ask my noble friend to withdraw her amendment.
Baroness Gardner of Parkes
My Lords, I thank those who have contributed to this debate, but I do not think that anyone has any idea what goes on under the surface. In the particular block that I am speaking about, the head lease should have been made available to all leaseholders in the block. However, a loophole in the law allows someone to set up a sister company with the same directors and, after two years, to sell it to any outsider. This is what happened—the head lease was sold over our heads to an outsider. The outsider then has to decide whether or not they are going to be a good landlord. The tenants and residents tend to believe that the intention is to make the place so uninhabitable that we will all happily sell our bit of it, because it is a post-war block built in the 1950s, when building materials were scarce. It is not a glamour block, but next door three tiny houses have been demolished and a fabulous block has been built. It is nothing to do with the man who owns ours, but it is a private enterprise venture, and the cheapest apartment was £6 million. So the site must be hugely valuable. To the people living in the place it is no more valuable than when we bought it for, by comparison, pretty well nothing, but it changed our thinking completely: it is why we have gone for the right to manage, so that we can upgrade the conditions and protect the block.
I do not know whether that answers the point that the noble Lord, Lord Campbell-Savours, made. Would he like to respond on that?
Lord Berkeley (Lab)
My Lords, I will speak to Amendment 84D, which has been put in this group. I have no problem with that. In my research for what I shall say, I also discovered quite a lot of involvement of the noble Lord, Lord Young, from a long time ago, which I shall come to in a few minutes.
The purpose of the amendment is to bring the tenants of the Duchy of Cornwall in line with other tenants of other landlords and their rights to buy. First, it repeals Section 33(2)(c) of the Leasehold Reform Act 1967. Secondly, it repeals Section 94(11)(c) of the Leasehold Reform, Housing and Urban Development Act 1993, concerning Crown land. I could read out the relevant clauses, but I expect noble Lords can understand what they are all about and if they want to read them, they can.
The amendment is also part of a Private Member’s Bill that I put in for the ballot last May. It did not come very high, so I thought it would be useful to raise the subject today, because it is relevant. The purpose is to examine the exemptions and immunities from certain Acts of Parliament which do not extend to the Duchy of Cornwall. Individuals who hold leases from the Duchy do not, unlike other persons who hold leases from private estates, have the right to enfranchisement. The purpose of the amendment is to give them the same rights as if they were leaseholders in England and Wales.
The first thing to discuss is whether the Duchy is a private estate or not. There has been an awful lot of debate about this. The Government, in many Written Answers over the years, have said that it is a private estate. On 9 June 2009, Bridget Prentice MP said:
“In general terms, the Duchies of Cornwall and Lancaster are private estates in that they belong to the heir apparent and the monarch respectively in their private capacities”.—[Official Report, Commons, 9/6/09; col. 528W.]
In a Written Answer to Andrew George MP, on the same date, Harriet Harman said:
“The Duchy of Cornwall is a private estate that funds the public, charitable and private activities of the Prince Of Wales, the Duchess of Cornwall, Prince William and Prince Harry”.—[Official Report, Commons, 9/6/09; col. 528W.]
There seems to be little debate about that. In a case brought by Michael Bruton on the Helford river, which I think is still being debated in a tribunal, having been to the European Court of Justice and back, the argument was that the Duchy of Cornwall did not have to do an environmental impact assessment on an SSSI over installing cages in which to grow oysters because it was a private estate. Michael Bruton argued that it was a public estate and the case has still not been resolved. While all this is going on, a large number of tenants are not able to buy their own houses, in contrast to those who are tenants of somebody else.
I will now give some examples from the island of St Mary’s in the Isles of Scilly, which I think apply elsewhere. They go back to the origins of the 1967 Leasehold Reform Act, which said that the Crown was exempt from this particular clause, but a voluntary undertaking was given to Parliament through a Written Answer by Mr Fred Willey, who was Secretary of State for Land and Resources, in 1967. My noble friend probably remembers that. The Answer does not mention the Duchy of Cornwall but refers to Crown leases. It stated that the Crown authorities will agree to enfranchisement,
“except that enfranchisement will be refused where the house is of special architectural or historic interest … or adjoins such houses and is important in safeguarding them and their surroundings”.—[Official Report, Commons, 31/6/1967; col. 42W.]
In 1992, during of the passage of what became the 1993 Act, a further Written Statement was made to Parliament, by Sir George Young, as the noble Lord then was, which was materially different from the 1967 Answer. He stated that, regardless of the exemption under the Act, the Crown authorities would agree, subject to specified conditions and exceptions, to the enfranchisement under the same qualifications and terms which applied by virtue of the 1967 Act and the 1993 Act to lessees held from other landlords. The relevant exception affecting the Isles of Scilly states that,
“where the property or area in which it is situated has a long, historic, or particular association with the Crown … the areas referred to in paragraph 3(iii) include the Off Islands within the Isles … the Garrison on St Mary’s and parts of central Dartmoor”.—[Official Report, Commons, 2/11/1992; col. 19WS.]
This indicated that the 1967 test had been materially changed. There appears to have been no consultation about this and no debate in Parliament. Perhaps other noble Lords who were in the House of Commons at the time can correct me on this. It is not even very clear whether Members of Parliament voting on the Bill were aware that there had been a material variation to the Crown undertaking. It is not clear whether it was drawn to the attention of the noble Lord, Lord Young—maybe he will have views or maybe he cannot remember it. For the Crown to claim that it was entitled to refuse enfranchisement, the Crown no longer had to show that the property was of special architectural or historic merit. It now became clear that if it was in an area which had a long historic or particular association with the Crown, that was good enough.
There is an awful lot more in this story, which I will not bore the Committee with now except to say that the situation is rather confused. We can sit or stand here to debate this and say, “It doesn’t really matter because there are many other things going on to do with the Crown and the Duchy which need careful discussion”, but we have to remember that people who have bought a lease are affected by this: if the lease has come from one particular landlord, they cannot buy it, whereas if it has come from another landlord, they can. That is very unfair.
As I think I have demonstrated—there are many other documents that we can use to demonstrate it—the Duchy in this case is a private landlord, so the argument that its tenants should have an exemption from the right to buy seems to me very unfair. We know that leaseholds are a diminishing asset—that is the whole point of them—but just because somebody owns a house on the Isles of Scilly, in Cornwall or somewhere else of no particular architectural merit, why should they be exempt? The only safe way is to remove this exemption, which is why I tabled this amendment.
Lord Beecham
I thank the noble Viscount for giving way. I entirely endorse the amendments in the name of the noble Lord, Lord Young, and my noble friend Lord Berkeley. I sympathise with the amendments in the name of the noble Baroness, Lady Gardner, who is temporarily not in her place, although I have some difficulties with the wording. Amendment 84E would insert a clause about sinking funds which states:
“The buyer of a leasehold … is required to make periodic deposits”.
She refers again to the buyer of a leasehold in proposed new subsection (4), but of course the leaseholder need not have purchased—
Lord Beecham
I am so sorry, I thought it was in this group. Has it been degrouped?
Viscount Younger of Leckie
Perhaps I could clarify for the noble Lord that we are speaking to Amendments 84BA, 84D and 84G.
Lord Beecham
I apologise to the Committee. The group that I have includes the noble Baroness’s amendments. But if the groups were changed only this morning, perhaps I should withdraw my apology and confirm merely that I support the amendments of the noble Lord, Lord Young, and my noble friend Lord Berkeley.
Viscount Younger of Leckie
I thank the noble Lord, Lord Berkeley, and my noble friend Lord Young for their amendments. I welcome the consideration of issues around the operation of leasehold, which I know are of interest to many in the House.
Amendment 84BA seeks a right for a leaseholder to obtain an order restricting a landlord’s ability to recover the costs of appearing before a court or tribunal as an administration charge. My noble friend Lord Young has raised an important issue, which others have also expressed concern about today, including the noble Earl, Lord Lytton, and the noble Lord, Lord Campbell-Savours. As the Committee will be aware, legislation already allows tribunals and courts to make this type of order where a landlord is seeking recovery of costs through a service charge. I should like to consider this further and I hope, with that assurance, that my noble friend will agree to withdraw his amendment.
I will now address changes proposed in Amendment 84D, tabled by the noble Lord, Lord Berkeley. I listened carefully to what the noble Lord said. As noble Lords will know, the Crown is not bound by legislation except where that is specifically provided for. The underlying exceptions to the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993 apply to Crown land, which for the purposes of those Acts is defined as including the Crown Estate, the Duchy of Lancaster, the Duchy of Cornwall and the interests of any government department. There are no plans to change the exemptions set out in statute.
However, the Crown authorities covered by this exemption have committed, through a voluntary undertaking renegotiated in 2001, that the Crown would, as landlord and subject to specified exemptions described in the undertaking, agree to the enfranchisement or extension of residential long leases under the same qualifications and terms which apply by virtue of the 1967 Act and the 1993 Act. These specified exemptions include property that stands on land held inalienably by the Crown, and where there are security considerations. They also include where properties, or the areas in which they are situated, have a long historic or particular association with the Crown.
Lord Campbell-Savours
Going by my own experience, if a statutory requirement was placed on the management company to forward correspondence requesting that information to the people who own the leases, particularly if they were abroad—in other words, if the responsibility was on the management company—following a request from the residents association, we would indeed get the names.
Viscount Younger of Leckie
That is a possibility, and I will bring that into the considerations that we will undertake prior to Report. I thank the noble Lord for his point. I hope that my noble friend will agree to withdraw his amendment and the noble Lord, Lord Berkeley, will not press his later.
Lord Berkeley
I am very grateful to the Minister for his answer, but in the exception mentioned—when properties are of special architectural or historic interest or adjoin such houses and it is important to safeguard them and their surroundings—the definition of whether a lease could be given up is very wide. Many of the buildings which I believe are the subject of this debate are in fact 1960s houses. They are probably very nice houses but they are not in the same category as the Garrison or the off islands or anything like that. It seems that there is no appeal in this process. The Duchy’s decision is final and that is that—you like it or lump it. Can nothing be done about it?
Viscount Younger of Leckie
I would not put it in quite that way. There are no plans to make changes, but the noble Lord will know that we are talking about properties that are considered to have a long historical association with the Crown. I will investigate further and if I can furnish the noble Lord with more information, I will certainly do so in the form of a letter.
Lord Young of Cookham
My Lords, I am grateful to everybody who took part in this debate. In response to the noble Lord, Lord Berkeley, let me say that, indeed, I do not remember the background to a Written Parliamentary Question that I answered in 1992. My general impression was that the Duchy agreed voluntarily to abide by what was in the legislation. That was the background, which I think was broadly confirmed in the exchange, although there might be some minor amendments more recently. I am grateful to my noble friend for his benign response to my two amendments: the teams of Young and Younger seem to be on the same wavelength here. Against the background of the assurances that he has given, I am more than happy to beg leave to withdraw Amendment 84BA.
Lord Foster of Bath (LD)
My Lords, I support the amendment in the names of the noble Baroness, Lady Hayter, the noble Lord, Lord Kennedy, and my noble friend Lord Palmer. I hope that noble Lords will not read anything into my very brief appearance here on the Front Bench.
We have heard a little about some of the figures. Back in 2012, Reading University carried out a survey that showed that some £23 billion a year was paid in rent and that in a year some £6 billion to £10 billion was held by agents after being collected by them on behalf of landlords. However, as my noble friend Lord Palmer points out, a more recent survey shows that, at any one time, some £2.7 billion is held by letting agents. The amendment is about the protection of that money.
It is worth reflecting on what eminent people have said about this issue. In July 2013, the Property Ombudsman felt moved to say something about client money protection under the heading:
“Client Money Protection Is a Necessity for the UK Lettings Market”.
He said:
“'We need an even playing field for lettings. All agents are required to hold client money in a separate Clients Account but there is no current requirement to have those funds insured against unlawful use or fraud, which is why”,
client money protection,
“is crucial for landlords and tenants”.
He went on to say that client money protection,
“is not a duplication of any deposit scheme or professional indemnity cover. It goes beyond that and provides landlords with the peace of mind they need to know that the rent collected by an agent is protected”.
As we know, many good agents and trade bodies, such as the Association of Residential Letting Agents and the UK Association of Letting Agents, recognise the importance of this and provide necessary protection for their members. Sadly, however, some do not.
Back in 2013, the Property Ombudsman surveyed some 8,000 lettings branches and discovered that, while 80% had client money protection, 20% did not. The ombudsman concluded:
“My personal viewpoint would be to question why a letting agent would not support CMP. In the absence of any regulation … agents themselves need to take proactive steps to show landlords and tenants that they have taken out the necessary cover to protect rental income”.
However, it is very difficult indeed for the vast majority of agents—those who provide client money protection—to persuade the others to do so. It is also difficult for them to run the necessary publicity campaign to warn landlords or would-be landlords and the public of the need to choose an agent who provides that protection.
Of course, agents are helped to some extent by the new transparency rules, which are being enforced by local authorities; I have no doubt that the Minister will refer to that in his response. These require the publication of the breakdown of the fees that agents charge to tenants and landlords, the redress scheme that they belong to and a statement of whether they are a member of a client money protection scheme. I recognise that there are many such schemes—again, no doubt, the Minister will refer to schemes such as SAFEagent and CM Protect. However, as the noble Baroness, Lady Hayter, points out, there is no evidence to suggest—and the vast majority of agents agree with her—that those schemes alone will provide the level of protection that is needed.
Earlier in our deliberations on this legislation, during our discussion of zero-carbon homes, the Government said that by opposing the introduction of tighter energy efficiency standards they were protecting housebuilding businesses; they said that they were stopping the overregulation of housebuilders. I was able to point out at the time that the housebuilders themselves supported the introduction of the regulation. We have a similar case here. It is instructive to learn what Mr Brandon Lewis said in response to such an amendment when this matter was discussed in another place. He said:
“We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation. Requiring agents to pay to belong to a client money protection scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not. Introducing a mandatory client money protection scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation”.
That is slightly odd, coming from a Minister who is imposing a large number of regulations in the Bill. However, it is much more bizarre that in this case, just as with zero-carbon homes, the industry itself is pressing the Government to introduce regulation.
It was the Association of Residential Letting Agents that drafted the amendment before us today to protect money received from clients and held by agents, such as rent due to landlords. The Government claim that the only reason for rejecting the amendment is that it would overburden the industry, but given that the industry wants it imposed on itself, I hope that the Government will drop their opposition. I hope that when the Minster responds he will reflect on the other thing that Mr Brandon Lewis said during his response to a similar amendment in another place. He went on to say, rather indicating that even he is a bit worried about the situation:
“However, in May 2016 we will review the impact of the transparency measures that were put in place only recently. At that stage, I will take due consideration of whether any further action is needed”.—[Official Report, Commons, Housing and Planning Bill Committee, 10/12/15; col. 719.]
We see yet again another example of the Government being prepared to consider something after we have finished our deliberations on this legislation. I urge the Minister to reflect on the fact that the agents themselves want to see an amendment such as this in place. I hope that the Minister will support, if not the precise wording of the amendment, something along these lines.
Viscount Younger of Leckie
My Lords, it gives me considerable pleasure to be responding to the noble Baroness, Lady Hayter, who will probably remember only too well that not so long ago we debated a number of Bills with some vigour. This amendment would introduce provisions under which cover for money received or held by lettings agents in the course of business, generally known as client money protection, would be mandatory. I hope that at the end of my remarks I can offer a little light at the end of the respective tunnels for particular Lords, if I may put it that way.
I am aware of some support within the housing sector for this measure. That has been reflected in interventions from the noble Lords, Lord Palmer and Lord Foster. But I am concerned that requiring lettings agents to belong to a client money protection scheme will introduce burdens and costs into the sector that could have implications for rent levels. Instead, this Government’s approach is to encourage lettings agents to adopt client money protection without the need for regulations. I shall explain.
We have already legislated through the Consumer Rights Act 2015 to require lettings agents to be transparent about whether they offer client money protection. Transparency raises consumer awareness and encourages landlords and tenants to shop around and choose an agent based on the level of service that it provides. I recognise the importance of client money protection. This is why in our guide on how to rent we champion the SAFEagent scheme—a kitemark scheme, in effect. This helps landlords and tenants easily to identify agents that offer this protection by the display of the SAFEagent mark. I accept that participation is voluntary but estimate that at least two-thirds of agents already offer client money protection. At the moment, to introduce mandatory client money protection would be a step too far and overburden a market that is perfectly capable of self-regulation. The balance of regulation for lettings agents is now about right. We need to allow time for the transparency measures to which the noble Lord, Lord Foster, alluded to bed in.
We shall review the impact of the transparency measures later this year. I reassure all noble Lords, and in particular the noble Lord, Lord Foster, that this review will be taken seriously and that we intend to work closely with our industry partners and representative groups to develop this review. I hope that this explanation reassures noble Lords and that the noble Baroness will withdraw her amendment.
Lord Palmer of Childs Hill
What is the Government’s logic? The Minster has said how good money protection schemes are, how everyone feels reassured by them and how many people—landlords and others, lettings agents in particular—subscribe to them. So, as the Minister said, they are good. If it is good to be voluntary, why is it not even better to be compulsory? The compulsory element sweeps up the bad landlords. The Minister is talking about the good landlords who use lettings agents. The idea of compulsion would be to deal with those who are not at the moment helping protect tenants and landlords. The logic in not making a successful voluntary scheme compulsory is lacking.
Viscount Younger of Leckie
I appreciate that the noble Lord feels strongly about this, but as explained earlier, at the moment we feel that we have got the balance right. I have explained that the review will aid us further by providing greater intelligence. Further regulation could deter lettings agents and make it difficult to encourage landlords to invest in properties. This is what this Bill is about—freeing up the market to ensure that the supply of housing for rent helps to meet the country’s urgent housing needs and demand.
Lord Foster of Bath
The Minister is suggesting that the introduction of measures proposed in this amendment would increase costs on letting agents. That is true. I have looked at the costs of such insurance schemes as are currently available. We know that the Minister says three-quarters of lettings agents have already entered such schemes. I believe that it is almost 80%. Will the Minister share with the House, either from figures in his brief or by writing subsequently, the Government’s estimate of the cost of the introduction of the scheme, not to the 80% that have taken it up but to 100%, and of its impact on rent levels?
Viscount Younger of Leckie
Yes, indeed. I shall make two points arising from the noble Lord’s question. We believe that the balance is right also because we want to encourage a market whereby customers or people who wish to rent have the opportunity to shop around and to go to those agents where there is a kitemark scheme and reassurance in terms of their level of service. We believe that the market will weed out those without that. To answer the question on the money involved, agents typically pay an annual levy of around £300 to join a scheme. The noble Lord probably has these figures himself. This forms part of a central pot of money that can be used to pay successful claims by landlords and tenants.
Baroness Hayter of Kentish Town
My Lords, I thank the Government Front Bench for allowing us to take this amendment at this stage and apologise to the noble Lord, Lord Bates, and my noble friend Lord Rosser. The reason is that between 2 pm and 3 pm this afternoon I am completing my house purchase and I will have the keys at 3 pm. That is utterly relevant to this debate because the money was certainly in my solicitor’s account at 2 pm. I am hoping that by 3 pm it will be in the account of the seller and I am completely confident that that money in the solicitor’s account is safe.
It will not go through estate agents—estate agents hold very little in client accounts. You pay almost nothing to the estate agent. The seller will have to give them a percentage of the sale, but it is very small. But the amount that tenants pay to lettings agents is enormous. So under an earlier Act, client money protection is essential for estate agents, who hardly handle any client money, but not obligatory for lettings agents who handle an enormous amount. The noble Viscount, Lord Younger, again says that tenants can shop around. They cannot. In London, you are lucky to find anywhere to live. The idea that as a tenant you would shop around for your lettings agent, let alone the property, is, I am afraid, unrealistic.
I thank the noble Lord, Lord Palmer of Childs Hill, for his intervention. I have to confess that when I went on holiday I had not realised that my money was protected, but there it is. We make it essential for holiday firms and estate agents, but somehow for lettings agents this £300 to safeguard tenants’ and landlords’ money is a step too far.
I hope that the Minister was not saying that he wants even more lettings agents coming in—lettings agents who would not protect their clients’ money. I think that that is what he is saying. He is saying that he wants more people to come in as lettings agents, but without requiring them to protect their clients’ money. That sounds to me like a charter for more rogue “set up today, take the clients’ money tomorrow” lettings agents.
Despite the Minister’s firm response, I hope that the Government will think about this again. We will clearly bring it back on Report. I am not threatening anything but I think he knows how much support it will have. Instead of having to go down that route, I ask the Minister whether he will be willing to meet me, the noble Lord, Lord Palmer, and perhaps some other noble Lords to talk about this, as I do not feel that the Government are taking the right position here. For the record, I saw a very healthy nod from the Minister there. So I thank him for that and apologise to the Committee for having to get my new key at 3 pm. For the moment, I beg leave to withdraw the amendment.