Private Landlords and Letting and Managing Agents (Regulation) Bill

Debate between Alan Meale and David Nuttall

Friday 25th October 2013 Commons Chamber

[Sir Alan Meale]

The hon. Gentleman will find that the concluding part of my speech considers precisely that issue. Having said that, lawyers—soliciting is the oldest profession in the world—make a lot of money out of everything they can. We should always be guided by such traits in the open market.

Unfortunately, the Government have recently stated that they do not intend to introduce regulation in this sector, pointing to the use of myriad ineffective consumer protection laws which, as I will show, have proved wholly inadequate at protecting either tenants or landlords. I feel obliged to say that the Government have recently moved slightly in that direction, after tabling an amendment to the Enterprise and Regulatory Reform Act 2013 that requires agents to sign up to a redress scheme. The amendment was tabled following pressure from the Labour Front Bench and the other place, particularly Baroness Hayter. Nevertheless I welcome that U-turn, which as I said at the time must be the first step and not the last word on the matter. Redress will allow tenants to seek help only after the fact, and will not prevent the unscrupulous actions of lettings and management agents in the first place.

There is much evidence of bad practice in this area. A report by Citizens Advice found that 73% of tenants are dissatisfied with the service provided by their letting agent, and reported that significant numbers of people have difficulty contacting agents and suffer delays in getting repairs to their property. Furthermore, a report by Which?, “Renting roulette”, shows that, shockingly, letting agencies are ranked second from bottom across 50 separate consumer markets. Indeed, there are many cases of agencies, even large and well-established businesses, running into difficulty because there is no client money protection, with the money of landlords and tenants being lost. Scandalously, in some instances that has not prevented the owners of companies which have gone out of business while holding their clients’ money from resuming their activities soon after the collapse, expressing a “no blame, no shame” culture. No safeguards are currently in place to protect tenants, landlords or reputable agents from being undercut by their unscrupulous counterparts.

To understand the scale of the problem on the high street we should consider the figures. It is estimated that in England alone there are more than 4,000 managing and letting agents who are entirely unregulated. It is still possible to set up a letting or management agency with no qualifications whatsoever. There is no need for them to conform to any requirements as to their conduct, or to provide mandatory safeguards for their customers, as no such formula or regulations exist. In other words, letting agents operate in the property market’s “wild west”, as the Royal Institution of Chartered Surveyors recently described it.

The problem is not only one of useless agents, as there are real problems across the industry, with rip-off and opaque fees charged by unscrupulous letting and management agents. A recent national survey found that 94% of agents imposed additional charges on top of the tenancy deposit and rent, or rent in advance.

[Mr David Nuttall (Bury North) (Con)]

The hon. Gentleman has referred once or twice to the fact that the sector contains 4,000 agents who are unregulated, but are they not covered by the general law? Many regulations will cover agents, regardless of whether they are members of a professional scheme.

[Sir Alan Meale]

I understand where the hon. Gentleman is coming from, but that is not the experience of people who have to deal with these matters, particularly local authorities, which say it is sometimes impossible even to get in touch with the landlords. They will not meet people or provide access; they will not do repairs when requested to do them; and they have to be given orders to the effect that local authorities will carry out repairs “unless”. I am not talking about making all this subject to a state scheme or anything like that. The Bill is about providing protection and lifting up the private rented sector to a level that will provide all our constituents with the opportunity to live decently.

I mentioned the 94% of landlords who imposed additional charges on tenants, and huge variations in the amount of costs have been found. By way of explanation, let me provide some facts. The charges levied for checking references ranged from £10 to £275, while charges for renewing a tenancy ranged from £12 to £220. In some cases, charges for a tenancy amounted to more than £600. According to Which?, some tenants are being charged up to £90 to renew a tenancy and up to £120 simply to check out the property. That is an incredible cost for people to pay; by and large, these people do not have much money. There is no reason for them to have to pay these charges. It should be easy to find out that information in today’s modern society; such large charges are really beyond the pale.

[Mr Nuttall]

Clause 3 deals with the transparency of fees, but there is no enforcement mechanism in it to have these fees reduced.

[Sir Alan Meale]

If the hon. Gentleman will let me get on with my speech, I will be able to answer that question. I still have quite a way to go.

Far too many Members have heard time and again in their surgeries that there is a problem with rogue landlords and poor standards. It is true that the majority of private landlords are responsible people who treat their tenants very well, but it is also true that there are too many rogue landlords who undermine responsible behaviour and prey on vulnerable tenants. This is a small but dangerous minority of rogue landlords who, frankly, make people’s lives an absolute misery. They are condemning their tenants—who are, after all, our constituents, and we were elected to come here and serve them—to live in run-down, unsafe and often greatly overcrowded properties. What is more, they regularly intimidate those who speak out, and regularly threaten them with eviction.

Needless to say, despite an increase in the number of prosecutions against rogue landlords, the problem is getting considerably worse. We recently saw press coverage of a health care assistant who was paying £350 a week for the pleasure of living in a shed in Newham. Then there is the case of the 11 young models described in this week’s Evening Standard having to pay £400 a week each to stay in a small Victorian house. One of them even had to share a bed with a stranger because another bed could not be fitted into the property. There should be no place for such rogue landlords; indeed, the time has come to drive them out.

Unfortunately, the problem is not just one of criminal landlords, because a large number of amateur landlords can cause similar problems. They may have purchased a cheap property, inherited a property or secured one by other means. They may often be well-meaning people, but they are unaware of their rights and responsibilities in letting out a property as a home for another person. A recently published case illustrates the severity of this particular problem. A young mother of two, just 33 years of age, had realised her dream of moving to a private rented home in Cornwall. Six days later, she was found dead by her young daughter. She had been electrocuted because of a faulty heater—a very serious situation. Faulty wiring was responsible; that wiring had not been checked for 32 years! An amateur landlord should protect their tenants rather than put them in such a situation.

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[Mr Nuttall]

Does not that case demonstrate the problem with this place simply making rules and regulations? Regulations are already in place to prevent that sort of thing from happening.

[Sir Alan Meale]

The object is to protect people from falling into situations like that, rather than to say that there are already regulations that might or could possibly deal with them. We want proper regulations to lift up the whole sector so that people do not have to live in those circumstances.

Sadly, the death of this poor young lady is no surprise because 35% of our private rented sector homes in England are currently classified as non-decent. The reality is, furthermore, that nearly 15% of private rented homes lack minimal heat in the winter. Imagine, Mr Speaker, being unable to heat your home even for minimal warmth, especially if you were a mother with young children. I know where the hon. Member for Bury North (Mr Nuttall) is coming from when he says that current law is available to deal with these matters, but the problem is that it is not working. These things are not being dealt with: they happen day after day, week after week, month after month and year after year—and nobody seems able to do anything about them.

Let me remind the Minister that poor housing has wider costs, too, not only to the renter, but to the taxpayer. Indeed, it has recently been established that the annual costs of poor housing alone to our national health service have increased by £2.5 billion.

We must be clear, then, that rogue landlords undermine the good reputation of the majority of landlords and that there is no place for them in modern Britain. It is important that the majority of well-meaning landlords are made aware of their rights and their responsibilities. That is why my Bill proposes three specific measures.

First, the Bill proposes a mandatory national register of private landlords. This should be a light-touch register requiring all private landlords to sign up. It would be contrast with a licence-based approach and it would as a rule reveal that the vast majority of landlords were able to offer a good service to their tenants. The Minister will be pleased to know that such a national register would not cost any public money whatsoever and would be self-funded by a small annual fee from landlords.

The register would assist and improve private renting in two particular ways. It would assist local authorities in managing the housing market in their areas and offer greater transparency and information that would enable them to target enforcement action in the places most in need of it. Another advantage is that the register would enable the Government and local authorities to communicate with the majority of well-meaning amateur landlords. As I have said, many of those landlords are not aware of their rights and responsibilities and would welcome such communication. Indeed, many have said that they would welcome this new information, welcome some kind of mechanism to advise them and welcome greater liaison with the local authorities in their area.

Secondly, I propose mandatory written tenancy agreements for all new tenancies and renewals. This proposal would help to professionalise the market and allow both tenant and landlord to know exactly where they stand on their rights and responsibilities.

Finally, the Bill is designed to grant local authorities greater freedom to introduce local licensing schemes where they deem that they might improve the housing market and, of course, reduce the particular problem of antisocial behaviour in their areas. Such changes would assist more councils—such as leading local authorities like Newham, Oxford, Blackpool and now Liverpool, which are already using such powers granted to them by the last Government—to tackle some of the appalling abuse caused by some of the worst landlords in England.

The intention of the Bill and the need for it are very clear indeed. The private rented sector has, and will continue to have, an important role to play in meeting housing need, but it should not be based on the current terms. With 9 million people, including over 1 million families with children, privately renting, it is clear that the needs of people in this sector have significantly changed. So far, however, the market has not been responsive to such changes, so the Government must act to ensure that renting works for all.

I say that because, despite evidence and reports from Citizens Advice, the Resolution Foundation, Which?, the Office of Fair Trading and others, and despite calls for action and support for change from millions of tenants and landlords and the industry itself, including the Association of Residential Letting Agents and the Royal Institution of Chartered Surveyors, the Government have so far unfortunately been unmoved. That is why now is the time for action. That is why I call on Members to support my private Member’s Bill to tackle the scandal of rip-off fees, to regulate unscrupulous letting agents and management agents, to tackle rogue landlords and to help professionalise the private rented sector so that it works for all. Let us do that so our constituents and their children living in this sector in future will be protected and allowed to live a decent life. After all, we were elected to this place for one purpose only: to represent our constituents’ need and wish to lead a decent life and to have shelter—shelter for their children, and shelter for themselves while they are working or when they have reached old age.

We are talking about not a majority, but a small minority of people who have taken command of an industry and are abusing it terribly. However, we currently have no way of controlling those people. As I have said, I am not trying to extend the state sector; I am merely saying to these rogue landlords, “There is no place for you in a modern British society.” Our job here is to protect ordinary men and women and their children, and that is what we will do if we pass this Bill.