Private Landlords and Letting and Managing Agents (Regulation) Bill Debate
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Main Page: Andy Sawford (Labour (Co-op) - Corby)Private Landlords and Letting and Managing Agents (Regulation) Bill
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Andy Sawford (Corby) (Lab/Co-op)
I am surprised that the hon. Gentleman cites the Residential Landlords Association as being against the measures. It clearly told the Communities and Local Government Committee in its written evidence, and supported it in its oral evidence—I was at the session—that it is very much in favour of compulsory control of letting agents. It said that it is concerned
“that the local authority landlord and letting accreditation schemes are extremely light-touch in terms of consumer protection”.
It praised the Welsh legislative proposals to regulate letting agents and landlords and urged the Committee to propose that to the Government. I am therefore very surprised at what the hon. Gentleman says.
Philip Davies
I can only suggest that the shadow Minister speaks to the association and clears up any misunderstanding. I can do no better than to quote its exact words, which I repeat so that there is no doubt:
“We remain unconvinced by calls for a national registration scheme since those landlords that genuinely cause the problems will not make themselves known under any system.”
That is a perfectly clear statement by the Residential Landlords Association. If he thinks that its view is different, then perhaps he should take that up with it to clarify its position. I do not speak for it and am not trying to do so; I am merely quoting what it has said.
The Select Committee’s recent report also dealt with the issue of alternatives to the current licensing regime. It referred to a case in Leeds, saying:
“Leeds City Council decided against further discretionary licensing and has introduced a neighbourhood approach which was ‘seen as more flexible than licensing’…This approach targeted ‘neighbourhoods on a street by street basis addressing the area as a whole and dealing with standards in the private rented sector’”.
That more flexible approach has a lot to commend it. You will know Leeds city council well, Mr Deputy Speaker. It is not my local authority, but I believe it is Labour-run, and that is what it believes works for it. The Committee’s report says that Blackpool council has developed a similar area-based approach.
When the previous Government consulted on this suggestion and reported back in early 2010, the main concerns were listed in the consultation document that contained all the responses. Those concerns were valid then and are still valid now. The first main concern was that a better understanding was needed of likely costs. In particular, it was thought that linking other services to the register would increase costs, and it was suggested that they should be deferred until the register was up and running smoothly. Given that the Bill makes no mention of what the costs would be, that uncertainty will still be a factor that people are concerned about.
The second main concern was the objective of the register; there was a lack of common understanding of its purpose. It was not clear whether it was a comprehensive list of private rented properties and landlords or an attempt to enforce better behaviour. The same doubts still apply today. What on earth is the point of the register and what use is it to anybody?
The other concern was enforcement. It was said that more detailed consideration was needed of how enforcement and policing of the register would work in practice, and linked to this there would need to be clear central guidance on the criteria and process for striking a landlord off the register.
The Bill does not seem to address the concern about how enforcement and policing of the register would work in practice. That takes us back to square one, without any progress having been made on the position under the previous Labour Government in early 2010.
Clause 1(3) does not make it clear whether private residential landlords are individuals or individuals representing a company. I am sure the hon. Member for Mansfield would not want his Bill to encourage people to set up a company, rather than be individual landlords, in order to get around any regulations. I do not know whether he has a view on landlords of commercial properties. Would this be a register for private landlords with residential properties, but not for those with commercial properties? That would be a strange state of affairs.
I am anxious that other Members may wish to contribute and I do not want to take up all the time myself. Even though so many parts of the Bill need to be queried, I feel I should leave some of the other concerns to other Members.
I think that foreign landlords who own properties in the UK are good for the UK. I like to see inward investment in the UK, which we should always encourage. I am not entirely sure how the Bill would affect foreign landlords or how they would be made accountable to it. Has the hon. Gentleman given any thought to the effect it would have on foreign landlords? The flat I rent in London has a foreign landlord, as far as I can recall from the tenancy agreement, and I am sure that such a situation is quite widespread in London.
Foreign landlords have capital that they can invest in any part of the world. They are not tied in any way to the United Kingdom. Many of them may not even live here and for all I know some may well never have visited the United Kingdom, but they have made an investment here. In such a scenario, more red tape, more regulation and less return for an investment may lead to foreign landlords going to other parts of the world where they feel they can get a better return on their investment. That is what capital does. It would be a shame if we were to turn investment from the UK as a result of Bills such as this. I do not see any upside to it and have lots of doubts about it.
Philip Davies
My hon. Friend makes a good point that I was hoping to come on to. How would somebody come off the register? How would a landlord pay? Does the hon. Member for Mansfield envisage a landlord paying his money out on a pro rata basis? Would it be based on the number of houses? Would it be the rental income that determined the fee? There are all sorts of different scenarios that would cause particular issues for people and that may be grotesquely unfair in individual cases.
As my hon. Friend the Member for Bury North says, failure to register would be not just a civil offence, but a criminal offence: a person who is not on the register will have committed a criminal offence. Do we really want to use criminal law in that way? I would venture that it is not an appropriate use of the criminal law. There is much uncertainty about how the provision would be enforced and how people would know about it.
What about people who become landlords by accident when they inherit a property in which there is an existing tenant? Where would such a person stand? If their parent has died I am sure the hon. Member for Mansfield would accept that they would have an awful lot more on their mind than whether they were part of a registration scheme that they do not even know exists, because they have never been a landlord before. Is it really the hon. Gentleman’s intention that a person whose parent has just died and who is trying to deal with their affairs and organise a funeral should be found guilty of a criminal offence because they have not registered as a landlord on his register? I do not doubt the hon. Gentleman’s intentions or his sincerity, but I think the Bill is not only unworkable, but potentially unjust. To make such people criminals would be completely wrong.
Andy Sawford
I understand the hon. Gentleman’s point about the circumstances in which someone might find themselves if they ended up owning a property that used to belong to a deceased relative—most likely a parent—but it would only be at such a time as they felt able to turn their attention to letting out that property that they would then need to consider the appropriate steps they should take in order to be a responsible landlord. It is only then that they would be in a position to think about what to do with the property, not in the immediate aftermath of losing a family member. It is a scare suggestion to say that the measure would force them to take immediate steps.
Philip Davies
I think the shadow Minister and I are talking at cross-purposes. I am not referring to a person who decides to immediately rent out a house in which a deceased parent used to live. I totally accept the hon. Gentleman’s point about that. It is self-evident. I am referring to a person whose parent was a landlord of another property that the child inherits on their death and in which a tenant is already in place. If the landlord of the property is the person who must be registered, I do not know how people who have just died would get off the register. They can’t say, “I’ve just died,” to get themselves off it. How on earth could their child be expected to know that they had to register when they have never been involved in renting out properties before? They would find themselves, at an instant, the landlord of a property without knowing the circumstances involved. That is the sort of situation to which I am referring, which I think the hon. Gentleman would accept is slightly different from his suggestion.
Andy Sawford
I thank the hon. Gentleman for his clarification. I understand that he is making a slightly different point. Of course, many responsibilities fall to someone on losing a loved one and they can be very important, including thinking about the obligations they owe to people living in a rented property that they have inherited. The well-being of the tenants has to be their concern, even in a very difficult situation.
Philip Davies
Of course. The shadow Minister states the blindingly obvious. Who is to say, however, whether that person would have any ill will towards the people renting the property? Presumably, they would just carry on with the arrangements already in place, but without registering on a national register of landlords.
This is the difference between Government Members and the Opposition: they think that not registering on a state-sponsored register makes someone a bad landlord, but I do not accept that premise. I think that what makes someone a good landlord is whether they are treating their tenant well, irrespective of whether they are on a register. It is how they look after their tenant that determines whether they are a good landlord. Someone who is not on a register might be a very good landlord, but, equally, someone who is on the register might be a very bad landlord. The hon. Gentleman seems to be under the impression that being on the register would determine whether someone is a good landlord, but I am afraid I do not share that view. The hon. Gentleman seems to support a Bill that would criminalise people who had no idea about the obligation being thrust on them by the socialists opposite. We have to be careful about introducing legislation left, right and centre—in this case, left—and we must remind ourselves that laws have consequences. A criminal sanction is serious. We do not want decent people falling foul of the law by accident and receiving a criminal conviction. As I mentioned earlier, four-fifths of private landlords are part-time landlords, with just one or a small number of properties from which they earn less than a quarter of their income. We should tread carefully.
The Minister will outline the Government’s position, but my understanding, which he will either make clear or refute, is that they have concerns about the Bill. I am therefore delighted to find myself agreeing wholeheartedly —this is a red letter day for me—with the Government. I state with confidence that the Government are opposed to the Bill, because their website is clear about why they have chosen not to introduce further legislation:
“The private rented sector is already governed by a well-established legal framework and we will not introduce any further regulations. This will ensure the sector is free to grow in response to market conditions.”
The website goes on to state:
“In the past over-regulation drove landlords out of the rental market. We don't want to introduce any measures which would form a barrier to potential landlords considering renting out their properties. Over regulation would reduce the number of properties to rent and wouldn't help tenants or landlords.”
I could not have put it better myself. I find myself in total agreement with the Government website.
I am conscious that I am in danger of taking up more than my fair share of time. It would be unfair of me to dominate proceedings and I hope that Members do not think that I am doing so.
A report by Professor Michael Ball for the Property Ombudsman, entitled “Regulating Residential Letting Agents: the issues and the options” and published in October 2012, looked at the issue of the number of letting agents and the number that belong to a professional body. This is relevant to the Bill. The report states:
“The extent to which agents belong to the various professional bodies is unknown because there are no reliable figures on the size of the lettings industry. A government report in 2009 estimated that there were roughly 8,000 lettings agents…In the same year, the Office of Fair Trading offered a larger estimate of at least 15,000 letting agency businesses in the UK as a whole...In terms of the individual offices of member firms, The Property Ombudsman reported 9,523 registered lettings offices in September, 2012; as compared to 11,853 for sales…A recent survey found that 85% of agents belong to a professional body, which may indicate that the number of agents outside of the current voluntary schemes though significant is not overwhelmingly large compared to those participating.”
That information can only lead us to two conclusions.
First, the Government and their related authorities have absolutely no idea how many letting agency businesses there are. If we are to have a regulatory and registration system, a starting point might be to know how many there are. The gap between the Office of Fair Trading’s estimate, 15,000, and the Government’s estimate, 8,000, is a big one. How on earth are we going to enforce this great regime if we do not even know how many there are or where they are? At a stroke, the information presented by Professor Michael Ball makes the Bill unworkable.
Secondly, the survey found that 85% of agents—the ones that are known about—belonged to a professional body, indicating that there is not an issue in this sector that needs to be dealt with. They are already aligned to a professional body that insists on many of the standards that the hon. Member for Mansfield wants them to follow.
Andy Sawford (Corby) (Lab/Co-op)
This has been an interesting debate, and I pay tribute to my hon. Friend the Member for Mansfield (Sir Alan Meale). He has introduced an incredibly important Bill which could help his constituents and mine, and those people around the country living in private rented accommodation who currently face problems. That will be welcomed by responsible landlords and letting agents across England.
The hon. Member for Shipley (Philip Davies) made—at some length—a point about current regulation, and I want to emphasise the conclusions reached by the Communities and Local Government Committee, which recently conducted an inquiry into the private rented sector. At that time I was a member of the Committee, and I believe we carried out a thorough inquiry and listened to a wide range of views. The Committee concluded that there must be better, simpler regulation. The hon. Gentleman is right to say there is a great deal of regulation in this area, but I reach a different conclusion: I believe that that is the problem, and a reason for trying to ensure simpler, better regulation.
The Committee stated:
“The Government should have a wide-ranging look at the legislation covering the sector and put in place a much simpler, more straightforward regulatory framework. Once it does this, it should launch a campaign to publicise this new framework, to ensure that all tenants and landlords are fully aware of their rights and responsibilities.”
I look forward to hearing what the Minister has to say about that, and I hope that he—like me—will welcome the Bill. I believe that it does much of that job for the Government, and meets the hopes of the Committee.
As we know, because my hon. Friend the Member for Mansfield powerfully set out the case, this country faces the biggest housing crisis in a generation. We have a rapidly growing private rented sector—we have heard some of the figures, and the Minister promises we will hear more—and too many people lack security and have to pay ever increasing rents that are now at a record high. Most worryingly for those of us who meet constituents and hear about their problems, or who go out and about talking to local residents on their doorsteps, in many cases people have to suffer poor-quality accommodation.
As a result of the growing housing crisis, more and more people are locked out of home ownership and living in the private rented sector, which is now bigger than the social sector. Last year, the private rented sector overtook the social rented sector for the first time in nearly half a century. Private renting is not just an issue for young professionals, as is sometimes thought, and there are now 3.6 million households in the private rented sector, including more than 1 million families with children. At a time when home ownership is falling, people are faced with record rents, and nearly 5 million people are on local authority waiting lists. Young people are waiting until their 30s before they can buy their own home. The Government should, of course, be building more homes—that is the real solution—but they should also be supporting renters and families.
The Bill sets out a series of measures that I believe will tackle the issues faced by private renters. It seeks to regulate residential lettings and managing agents, protecting tenants, landlords and the reputations of many responsible agents. It would end the confusing, inconsistent fees and charges regime, making fees easier to understand upfront and comparable across agents. It seeks to introduce a national register of landlords, to empower local authorities to improve standards and deal with rogue landlords, and to make written tenancy agreements mandatory. I will speak first briefly about the character of the private rented sector and landlords, and the role of letting agents, and I will then set out why I believe the measures in the Bill are to be welcomed and should be supported by the House.
The private rented sector is now a mainstream tenancy. Around 9 million people in England now rent privately, and nearly a third of all private rented sector households are families with children. Many of the new generation of renters are not there through choice, but because we as a country are simply not building enough homes. The gap between supply and need is ever-widening, and an increasing number of people are unable to buy a home or to access social housing.
The English housing survey suggests that about two thirds of all newly forming households enter the private rented sector because they have no other option. It has been predicted that, if the economy remains weak, 27% of low to middle-income families will be living in the private rented sector by 2025. Many young people are losing hope of ever being able to buy a home. By 2020, 1 million young people could be completely locked out of home ownership.
The private rented sector falls broadly—certainly as viewed in the Bill—into letting agents and individual landlords. There are now more than 4,000 managing and letting agents that are entirely unregulated. They do not even belong to voluntary bodies that encourage a responsible approach to letting and management practice. The hon. Member for Shipley spoke to us at length about the various national bodies that work with letting agents and operate in this sector. I have heard from those organisations—I have met them directly, and also heard them giving evidence to the Communities and Local Government Committee—but as with all self-regulation in all sectors and industries, there are problems.
Mr Nuttall
Does the shadow Minister not think that the Consumer Protection from Unfair Trading Regulations 2008 apply to this sector, which he claims is unregulated?
Andy Sawford
As I understand it, there are 70 laws that apply in some way to this sector, providing some form of protection. As I said at the outset, however, I fully agree with my hon. Friend the Member for Mansfield that we need to simplify existing regulation and provide better regulation. We should not be confused by the proliferation of regulation over time and think that it automatically provides protection. All the evidence from my surgeries and that presented to the Select Committee suggests that it simply does not provide protection.
As I say, there are now 4,000 managing and lettings agents that are entirely unregulated, and they do not even belong to voluntary bodies, so they are not encouraged to adopt the responsible approach to letting and management practice that, of course, characterises many letting agents. Although not all landlords use letting agents, nearly 1.4 million landlords and 3.6 million private rented sector households in England—huge numbers of tenants and landlords—are currently unprotected.
It is a peculiarity of current policy that although estate agents, who hold very little money on behalf of their clients, are regulated, letting agents, who hold significant sums on behalf of landlords and tenants, are not. There are very low satisfaction levels and very few safeguards in the sector. Citizens Advice found that 73% of the tenants it surveyed were dissatisfied with the service provided by their letting agents and reported that a significant number of people have difficulties contacting agents and saw serious delays in getting repairs. Although it is good to hear about the near nirvana that exists in Shipley, I have to say that that is not the experience across the country, and it is certainly not the experience of my constituents or, indeed, those of my hon. Friend the Member for Hammersmith (Mr Slaughter).
The report “Renting roulette” by Which? saw letting agents ranked second from bottom across 50 consumer markets. There are cases of agencies, even large and well-established businesses, running into difficulties because they have no client money protection, with both landlords’ and tenants’ money being lost. In some instances, this has not prevented owners of companies that have gone out of business while holding their clients’ money from subsequently resuming their activities—often as phoenix companies, as the Select Committee heard.
Few safeguards are in place to protect tenants, landlords or reputable agents from being undercut by unscrupulous counterparts. That is why I agree with some of the conclusions reached by the Office of Fair Trading that this market is not working properly. It is still possible to set up a letting or management agency with no qualifications whatever. There is no need to conform to requirements as to conduct or to provide mandatory safeguards for the consumer, and the Government have only recently moved—it is a welcome move, under pressure from the Labour party—to oblige letting agents to register with a redress scheme, whereby awards can be made against agents for quantifiable financial loss to clients.
Let me now deal with the issue of rip-off fees and variable charges, which have rightly been highlighted and which I hope the Bill will do something to address. A survey of letting agents found that 94% imposed charges on tenants in addition to the tenancy deposit and rent, or rent in advance. It also found a huge variation in the size of the charges. The charge for checking references ranged from £10 to £275. The charge for renewing a tenancy ranged from £12 to £220. In some cases, additional charges for a tenancy amounted to more than £600.
According to a survey conducted by Which? in October last year, the average holding deposit was one week’s rent amounting to £400, the average administration fee was between £120 and £420, and the average deposit administration fee was up to £29. The deposit could be anything between one month’s and six weeks’ rent. On average, one month’s rent was payable in advance. Credit reference checks were charged at between £43 and £90, and check-in fees were up to £60. That is a huge variation. How can it be justifiable for one letting agent to charge £220 to check references, when another can do it for £10? Surely that should not be presented as a separate fee. Other countries, even including Scotland, provide much clearer protections and stronger regulation to deal with such variable and unfair fees.
Some tenants are being charged up to £29 to renew a tenancy, and up to £120 just to check out of a property. It is clearly an absolute rip-off, and not to support the welcome and important measures in the Bill would be to allow that rip-off to continue. I cannot support the laissez-faire attitude that has been advocated by the hon. Member for Shipley. Indeed, it seems to me not just to be laissez-faire, but to represent a lack of care for all the people who are being grossly ripped off all over the country.
There are three principal areas of concern when it comes to rip-off fees and charges levied by unscrupulous letting agencies. As I have said, there is a substantial disparity between the fees charged by different agents for similar services, with no apparent difference in the quality of the services received. I have challenged organisations, even those that seek to extol good practice in the sector, to justify the charging of such variable fees by their members, and they have been unable to provide any such justification. That is why an increasing number of them now support measures such as those contained in the Bill.
For middle-income households moving into the private rented sector, fees and charges often constitute a significant up-front cost. At a time when the country is experiencing a huge cost-of-living crisis, caused in Downing street—living standards have fallen in 39 of the 40 months for which the Prime Minister has been in office—it is a huge ask, and often very difficult, for families to meet such costs. Too often, the charges are hidden in the small print. People are exploited by unfair fees that they were unaware that they would face. Letting agents should be required to publish information about their fees, properly and fairly, up front and very clearly, so that tenants know what they are getting into, and landlords know what they will be asked to pay to the letting agency.
Let me now say something about individual landlords, and those who hold a number of properties directly rather than through letting agencies. Of course there are many responsible landlords, and many of them are members of the organisations that have been mentioned today. I have interacted with those organisations, and I know that they seek to do a good job in ensuring that standards are met. They are aware that trying to ensure that tenants in the private rented sector are treated fairly is not only morally right, but good business. It must be acknowledged, however, that there are also many rogue landlords out there, and that they undermine responsible landlords by preying on vulnerable tenants. The reputation of the many responsible landlords and the good service that they provide are undermined by a large number of landlords who fail to offer good standards to their tenants, and by a small number of criminal landlords who deliberately prey on the vulnerable and exploit the current lack of proper, fair, effective regulation.
Shelter found that more than 85,000 complaints were made against landlords in 2011-12. Clearly none of them were made in Shipley, but I am sure that many were made in every other constituency in the country. Some 62% of them related to serious and life-threatening hazards, such as dangerous gas and electrics and severe damp, and of course while the measures would impose some burdens on individuals who might, for example, find themselves to be accidental landlords, we have to balance our consideration for the circumstances in which people find themselves as landlords against those very serious complaints from around the country, many thousands of them relating to serious and life-threatening hazards.
Philip Davies
Is the hon. Gentleman suggesting that having a register of everybody will in itself mean there will be no rogue landlords? Is it his view that wherever there is a register for an industry there are no rogue practitioners?
Andy Sawford
Sadly, I feel there will still be rogue practitioners in the industry, but we will take a great step forward today in protecting people if we support these measures; we will increasingly marginalise those rogue landlords. We will make those practices ever more unacceptable and I hope we can go further towards ensuring there are prosecutions and enforcement against rogue landlords.
Jacob Rees-Mogg
Further to that point, in respect of criminal landlords, would it not be better to enforce the existing law, rather than thinking that passing a new law is the solution?
Andy Sawford
I welcome the hon. Gentleman’s urging of the Government to enforce the existing law properly. I would also urge him to take up with them the loss of 5,000 police officers and the huge loss of resources our Crown Prosecution Service is facing, which mean that many cases, even those taken up by the police, are not referred to it. I would also urge him to look at the consequences of the massive and unfair cuts to local authorities, particularly those with the highest number of people who are being treated unfairly by landlords in the private rented sector. Their cut has been disproportionately large, and that affects their ability to seek to intervene where landlords are behaving unfairly locally. Local authorities have some responsibility for trading standards, too, which are being decimated, as local authorities find they can only sustain statutory responsibilities. If the hon. Gentleman wants to support me, I will gladly work with him and perhaps we can form a cross-party campaign. I am sure my hon. Friend the Member for Mansfield will lead us on that, and we can seek more resources for enforcement within the current framework. I would love the hon. Gentleman to support additional enforcement and regulation.
Jacob Rees-Mogg
I look forward to this fabulous nirvana of red-blue alliance, but may I suggest that if the bleak picture the hon. Gentleman paints is accurate, giving more responsibilities to the people who are so appallingly funded, etcetera, etcetera, will make it even harder for them to carry out their duties? According to his own argument, he would want them to have less to do so that they could do it within the resources they already have.
Andy Sawford
As I said at the outset of my remarks, and as my hon. Friend the Member for Mansfield has acknowledged, there is, of course, substantial regulation. The issue is that there is too much confusing regulation and we need better, simpler regulation. I hope the hon. Gentleman and I can agree on that.
Both the Association of Residential Letting Agents and the National Landlords Association agree that rogue and criminal landlords undermine the reputation of the many responsible landlords and they want action taken. I am pleased to say that action is being taken by good Labour local authorities around the country such as Newham, Oxford, Blackpool and now Liverpool, which are using the powers granted to them by the Labour Government to tackle appalling abuse by some of the worst landlords in England.
On the problem of poor standards, the private rented sector has more non-decent homes as a proportion of its total stock than any other housing tenure. In 2011 a full 35% of all privately rented homes were estimated to be non-decent. On issues of repair, damp and heating, nearly 10% of all private rented homes fall below the minimum standard of repairs and more than 15% of private rented homes lack minimal heat in the winter. Private rented sector homes have the worst damp problems of any homes in England.
Poor housing has wider costs, including to the taxpayer. It has been estimated that the annual costs of poor housing to health could be up to £2.5 billion. There are also estimated costs of £1.8 billion to the criminal justice system, and the lost earnings that result from the current group of young people is estimated at £14.8 billion, as a consequence of the impact of poor housing on their educational attainment and opportunities to get on in the world of work.
Let me say why the proposals are to be welcomed and why I hope that the House will support them. Clause 1 would introduce a simple and light-touch—those are important terms—national register of landlords. That will assist in the improvement of private renting in two ways. First, it will help local authorities to manage the housing market in their area. Greater transparency and information will enable local authorities to target enforcement action on areas that most need it.
I was out and about on the Kingswood estate in my constituency last Saturday morning. I went into a particular square and found the standard of housing, and the evidence of antisocial behaviour, incredibly disappointing. I took the matter up straight away, as I am sure any hon. Member would seek to do, with the local councillors. They sympathised and said that they had sought to address the problems, but—this is one of the sad consequences of the right to buy—all the houses in the square were now privately rented. It was very difficult for them to find out who the landlords were and contact them. Unfortunately, the tenants in those houses, many of whom were migrant workers, were being exploited. The local authority felt powerless, and so did I, as a Member of Parliament. That is why I think it is incredibly important to help local authorities by ensuring greater transparency, and arming them with information, so that they can target enforcement action.
Secondly, the light-touch register will enable the Government and local authorities to communicate with the majority of well-meaning landlords, including amateur or accidental landlords, as they are sometimes called, who want to know that they are doing the right thing, and want to know what support or advice is available to them. That way, the local authority can keep in touch with them. That could be about such simple things as measures to prevent crime or fire, which are, in some cases—because, frankly, it is a saving to the taxpayer in the end—provided for free. Landlords might welcome that information or advice.
The proposals for the register envisage no hurdles to entry other than the need to supply a few basic pieces of information, and I think that is absolutely right; it is to be welcomed that the measure is deliberately simple and not burdensome. It is a deliberate contrast with a licence-based approach, and it reinforces the view that, as the Rugg review found, the vast majority of landlords are well intentioned and offer a good service to tenants. An important point that has been touched on is that there is rightly concern about the cost.
Stephen Williams
The hon. Gentleman mentions the Rugg review, which I believe was commissioned by the shadow Home Secretary when she was Housing Minister, and which reported to the right hon. Member for Wentworth and Dearne (John Healey). It rejected a national register of landlords, and that was a recommendation that the last Government accepted.
Andy Sawford
Of course, measures were being taken forward to address some of the problems, both following the Rugg review and in 2010, but the 2010 election intervened. I am pleased that my hon. Friend the Member for Mansfield has included such measures in a private Member’s Bill and shown leadership from the Opposition Benches. I want to bring my remarks to a conclusion—
Andy Sawford
If the hon. Gentleman will forgive me, I will bring my remarks to a conclusion, as I want to hear from him. The other measures—on more extensive regulation for letting and management agencies in clause 2; on the transparency of the fees of private sector letting agents and managing agents in clause 3; on the very important requirement for written tenancy agreements in clause 4; on the designation of selective licensing schemes in clause 5; on consultation, which is also very important, in clause 6; and the thoughtful clauses on financial provisions, orders and regulations, offences and interpretation—have been well thought through. Of course, as always, they would benefit from further consideration and exploration in Committee.
I urge all hon. Members to see the intention behind the Bill, which addresses, rightly, a huge problem in many constituencies around the country. I hope that we can make real progress with the Bill today. I end by congratulating my hon. Friend the Member for Mansfield on bringing this private Member’s Bill forward.
Mr Andy Slaughter (Hammersmith) (Lab)
It is a great pleasure to serve under your chairmanship for the first time, Madam Deputy Speaker. I hope to do so many more times and I congratulate you on your election.
I congratulate my hon. Friend the Member for Mansfield (Sir Alan Meale) on an excellent speech and an excellent Bill. I would like to extend the same courtesy to the shadow Minister, my hon. Friend the Member for Corby (Andy Sawford). It is a pleasure to see him in his place. It is the first time I have heard him speak from the Front Bench and I hope to do so many more times, because he made a good speech that explained why this is a good Bill.
I am a rare contributor on Friday mornings, so I have not had the pleasure of hearing the regulars, as it were. With all due respect, the phrase “Never mind the quality, feel the width” comes to mind. I was not greatly persuaded by the hon. Member for Shipley (Philip Davies). I am sorry he has had to leave us and host his luncheon party, but I felt that he simply took the anti-regulation speech off the shelf without any consideration of the Bill. He confessed, either because of the late publication of the Bill or because he did not have the time, that he had not looked at it in detail. If he had done so he would have seen that it is not a great addition to regulatory burden or an impediment imposed on the private rented sector, but a necessary and modest proposal. It would be effective in an area where more effective regulation is needed.
With all due respect to the hon. Member for North East Somerset (Jacob Rees-Mogg), I am not persuaded by his Hobbesian vision of a private sector market where, to avoid Rachmanism, private tenants should sign away their rights and the only way for them to have any sort of protection would be by allowing landlords to evict them on a whim, which is effectively what shorthold tenancies do, without giving any reason. If private tenants insisted on some form of protection or regulation, they would stand in fear of the type of behaviour that Rachman and his ilk got up to in the 1950s—which led to the major expansion of social housing to counter such behaviour.
I look forward to hearing what the Under-Secretary of State for Communities and Local Government, the hon. Member for Bristol West (Stephen Williams) has to say. It is a great pleasure to see him on the Front Bench—it is long overdue. He has been given a brief to which he is well suited and I am interested to hear how he will deal with this matter. During a longueur in the speech of the hon. Member for Shipley, I could not help but do a quick Google of the Minister’s views. I came across a video—I advise other hon. Members to watch it—that he made for Shelter. I do not want to embarrass him, but I think it is entirely to his credit. He talks about his own experience of growing up in the private rented sector—his experience of eviction and poor living conditions. He made the video in the context of the “Bristol Rotten Homes” campaign, which was
“calling on the new Mayor of Bristol to take action on poor housing conditions in the private rented sector.”
Shelter stated that
“1 in 5 homes in Bristol are rented out by a private landlord yet over a quarter of these homes do not meet the Decent Homes Standard. That means many renters in Bristol are being forced to live in unsafe and indecent conditions.”
The Minister visited the Bristol Rotten Homes shop, which was a spoof letting agent that was promoting the campaign and providing housing and debt advice.
Going by that, I suspect that the Minister’s experiences and views are rather closer to mine and those of my hon. Friend the Member for Mansfield than to the brief that he has been given to read out today. This will be the first test of whether he can stand at the Dispatch Box and read out something with which he disagrees entirely, but I am sure that it will not be the last, as long as the coalition lasts.
If anybody wants to know why further regulation and scrutiny of the private lettings market are needed, they need only watch the BBC programme on racial discrimination in lettings policy that was aired last week. I am sure that some Members saw that programme, but I will describe what happened for those who did not. Having been tipped off, the BBC reporters obtained a flat and purported to let it out through 10 letting agencies in north-west London. They asked each letting agent not to let Afro-Caribbean people view the property or have access to it. Every single letting agent agreed to do that without demur and with enthusiasm. That is not only clearly unlawful, but disreputable.
I would have thought that that behaviour would surprise hon. Members on both sides of the House, given that it is almost 50 years since such discrimination was outlawed. Clause 2 would attack such disgraceful behaviour, but there are more punitive criminal sanctions for it, which I hope will be sought. The fact that such behaviour is, on the evidence of the programme, endemic across private letting agencies should at least give us pause for thought.
I know that the Conservative party—although not the Liberal Democrat party any longer—believes that qualifications in the teaching profession should not be required for a job in a state school. However, in most areas of life where people are at risk or where people seek to gain a benefit, regulation is appropriate. One would not expect lawyers to be unqualified. One would not expect to be able simply to set up and run a business in any professional walk of life without any regard to qualifications. That is not possible for estate agents. I really do not know why it should be possible for private letting agencies.
It is true that the private rented sector declined substantially for most of the last century. It is also true that it has increased massively over the past 10 years. Although I support and believe in a strong private rented sector, most of the reasons for that expansion are not good ones. One reason is the decline of the social housing sector, which is due to fewer properties being built and to properties being sold or demolished. That sector generally provides decent, affordable homes for people on low and middle incomes. Another reason is that owner-occupation, particularly in London but in other parts of the country as well, has become unaffordable in a way that it was not 20 or 30 years ago.
The average rent levels in my constituency are £245 a week for a studio flat, £467 a week for a two-bedroom flat and £770 a week for a three-bedroom house. Those rents are four to five times as much as one would pay in the social housing sector, and yet it is the private rented sector that is expanding and the social housing sector that is contracting. Those prices are unaffordable to most people, even those on several times the average income.
There are also far worse problems with housing conditions in the private rented sector than in any other housing sector, and we know that people are being forced into that sector because there is no alternative. I am afraid I did not recognise the rather rosy view that the hon. Member for North East Somerset took of a free market in which the purchaser has as much discretion and power as the vendor. That is not the private rented market that operates in London. By the Government’s own criteria, some 35% of properties in the private rented sector are described as non-decent.
Conservative Members have made the point that we do not need regulation because there are other ways of obtaining redress. My hon. Friend the Member for Corby answered that point by saying that the cuts in Government spending have removed most of those avenues of redress. The most obvious one to me, although he did not mention it, is legal aid, which is no longer available for most areas of housing law. Many cases such as some that I have litigated—as often for the landlord as for the tenant, so I am not speaking with any vested interest—will not come to court now, simply because a tenant who is living in poor conditions, being discriminated against, not having their repairs done or subject to oppressive behaviour by their landlord can get no advice on their rights. If the state takes away the ability to self-help, it has a greater role to play in enforcing standards in the private rented sector.
Andy Sawford
My hon. Friend makes an important point about legal aid changes. Does he also find that his constituency is affected by cuts to citizens advice bureau services, welfare rights advice services and other such organisations that can help local people who are concerned about their rights? Mine certainly is.
Mr Slaughter
Of the four main advice agencies in my constituency, two have shut down in the past three years, one of which was a specialist housing advice agency. The others have had their work curtailed by budget cuts. They have either stopped taking new customers or, as in the case of the citizens advice bureau, become so overloaded that they can no longer provide the service that they would wish to provide. That is a real problem.
Conservative Members made the point that the Bill would have an impact on individual private landlords. I have great sympathy with small landlords, who provide opportunities for people and expand the market. Many of them, if not most, are very good, but that does not excuse them from providing proper services and decent conditions for their tenants. If the conditions that the Bill suggests imposing on them were onerous, Conservative Members might have a point, but they are not. One cannot excuse landlords on the basis that they are amateurs or have come into the property market by mistake or happenstance. That is not a reason for failing to ensure that they provide their tenants with decent living conditions. That responsibility must fall on them.
I am afraid that some of the worst landlords I have to deal with are private landlords who acquire a number of properties and deliberately run them to a poor standard. They usually get their referrals through local authorities. I have seen some utterly appalling housing conditions in the past two or three years, of a type that I had not seen for the previous 20 or 30 years. Often, the landlords benefit from a large amount of public money through housing benefit. The state has a legitimate interest in ensuring that it gets value for money.
I believe in a strong private rented sector, but a more professional one in which there is more investment by pension funds and larger organisations that have the capacity and management skills needed to provide longer-term tenancies and fairer rents. Such organisations could perhaps also manage with a lower turnover of people and with finance received over a longer period. As we have seen from the endorsements to proposals in the Bill by some of the more respectable landlord organisations, that would encourage a virtuous spiral in the private rented sector, rather than what we have at the moment, which is a free-for-all and downward spiral. It is a sellers’ market—particularly in London, but I am sure elsewhere too—and on that basis tenants have little choice and people are living in the sorts of conditions described by my hon. Friend the Member for Mansfield. It is appalling.
About one third of those in private rented accommodation are families with children. If one reads the Evening Standard or listens to the media, one would think we are talking simply about “generation rent” and young professionals who are waiting to get on the housing ladder and who are forced into private rented accommodation while they wait. That may be right—they are certainly an important group and more should be done to enable people to get into home ownership—but increasingly we are going back to those Rachmanesque days in which vulnerable people are forced to live in those conditions. Part of that involves the relationship between social housing and the private rented sector and it is now possible—this is an intended, rather than an unintended consequence of the Government’s attack on social rent—for a local authority permanently to discharge its obligation towards homeless families to the private rented sector. That means that vulnerable people are put into the hands of what are often very poor private landlords.
Even before one gets to that stage, because of the shortage of social housing many families are in temporary private rented accommodation for up to 10 years. I will give one example from my surgery from the past two weeks. A family of six who had been in overcrowded, private rented temporary accommodation for 10 years, were finally—very unusually in Hammersmith—made an offer of a permanent two-bedroom flat. That was clearly inadequate for six people, so they had to refuse it and therefore lose their right to housing. In the end—there is still an obligation—the family were told, “Yes, we will find you a property with four bedrooms in the private rented sector for £500 a week”. That four-bedroom property turned out to be a two-bedroom council flat that had been purchased and converted by the technique of putting a piece of plywood over the bath and making the bathroom into a bedroom, making the store cupboard into a bathroom, the kitchen into a bedroom, and putting the kitchen in the lounge. It was effectively a two-bedroom property for a family of six. That is anecdotal, but it is typical of the type of problems I see in my surgery every week. I have had hundreds, if not thousands, of such cases.
As local authorities have a shortage of social accommodation to let—in my local authority there is a deliberate policy of demolishing and selling off social housing—they are forced more and more to rely on substandard private rented accommodation. Owing to the benefit cap, the only type of accommodation likely to be available in London will be of very low quality; alternatively, it will be a long way outside London.
We have a responsibility to private tenants, particularly if they are vulnerable, such as the elderly or those with disabilities, and that responsibility is not being discharged. I will not go through the Bill clause by clause as other Members have done, but if the hon. Member for North East Somerset looks at it again, he will see that when the rhetoric is put aside, the measures proposed are straightforward and pragmatic. Greater regulation is undoubtedly needed in the sector.
Greater transparency is needed, too. I do not recognise this picture of the all-knowing tenant going into the letting agency and quizzing the agent carefully on the fee and charging issues. It is perfectly clear that many agencies—not just the rogue ones; I am afraid that this is almost the norm so far as letting agencies are concerned—are not transparent. I have heard complaints about some of the blue-chip letting agencies—I shall not name them here—that let out some of the most expensive properties in London and take every possible opportunity to extort money from their tenants.
That applies right through the tenancy from the time that the tenant first signs up to the time of leaving it. First asked for money as a deposit or for rent in advance, the tenant will then be asked to pay administration fees, holding fees, fees for renewal and finally fees on leaving. The tenant is over a barrel and not in a position to escape. If a tenant is in need of housing and there is only one agency that will accept him or offer something within his price range, there is little choice. In those circumstances, it is all very well saying “caveat emptor”; a wide choice does not apply. The landlord has the whip hand on every occasion. If measures can be brought in, not necessarily to regulate but to make the fees transparent, and if we can have greater scrutiny of the worst type of landlords such as those exposed by the BBC, that would be worth while.
Written tenancy agreements are standard agreements these days. It is possible to provide one’s own, but 99% of landlords will take out an assured shorthold tenancy agreement. Everybody will know what that is. Of course disputes can arise over written contracts—that can be taken as a given—but difficulties and confusion are far more likely if the terms of a tenancy are not clear. If it is an oral tenancy, we can bet our lives that the terms are not going to be clear.
We know that local authorities are under pressure, and nobody wants to put more pressure on them at this time. I think the scheme in the Bill is effectively the beginning of self-regulation. It asks good landlords to identify themselves and allows bad landlords and bad letting agents to be identified so that they can be dealt with in a way that prevents them from abusing their tenants any longer, as some of them have done for week after week.
I shall end my comments there. I do not want to delay the Bill’s Second Reading, but I suspect that other Members may well have that in mind. My hon. Friend the Member for Mansfield has done us a great service in bringing this Bill forward and in identifying what has often been a neglected area of public policy. Frankly, it has been neglected not just recently, but over 30 years or more. People are suffering silently. It is naive of the hon. Member for Shipley to say, “I do not get these people flooding into my surgery”, because people often do not know their rights. They may be transient tenants, migrant labourers or families who simply do not know what to do. They are prey all the time to poor landlord practices and are exploited by letting agencies on the way there. If we can do something, even through these modest proposals, to address that, it should be viewed as an obligation. I await the Minister’s speech to see whether my speech has persuaded him to throw his brief away and say what we know he probably feels.
Stephen Williams
I thank the hon. Gentleman for that. We have heard that there are many estimates, and indeed ranges of estimates, available to Departments from various providers and people who survey the housing market, but the firm figure that is often quoted is that 3.8 million households are in the sector.
The hon. Gentleman referred to selective licensing, a power that is already available to local authorities. When Bristol city council was controlled by Liberal Democrats, it initiated selective licensing in Easton in my constituency, so I know that authorities are making use of that power. He said that it was being strangled by red tape; I am not sure what the evidence base is for that, because he did not expand on that point, but back in the summer, when my predecessor, my right hon. Friend the Member for Bath (Mr Foster), was in office, he initiated a survey of all housing authorities. We are still gathering in the responses, but thus far we have had 194. Given that there are about 300 housing authorities, obviously quite a lot have not yet responded, or did not feel that there was an issue with selective licensing that merited a response. From the 194 that did respond, we know that 16 selective licensing schemes have been introduced in different parts of the country. Obviously, there are still data to be crunched, and I am sure that we will be able to say more about that in due course.
The hon. Gentleman also mentioned the issue of rogue landlords—as did other speakers, perhaps to counter what he said—as if there was nothing that local authorities could do about the minority of private sector landlords who can be described in that way. Of course, local authorities already have powers that they can use; certainly, as regards health and safety, there are powers to do with the safety and sanitary condition of houses, flats and bedsits in the private rented market. I think that somebody—possibly the hon. Member for Hammersmith or the shadow Minister—mentioned that local authorities face budgetary pressures. I certainly acknowledge that, but the Department has made available a £3 million fund for district, unitary or metropolitan authorities that feel that they have particular issues with tackling poor standards in private sector accommodation. They can bid for resources to deal with those issues.
Andy Sawford
That £3 million seems a very small amount, but we should welcome it. Will the Minister tell us how much of it has been allocated to date, when allocations will be made, and how Corby borough council might bid for some of it?
Stephen Williams
On the last point, I imagine that the Department has invited all housing authorities to bid for money from the fund, and has published the criteria. Hopefully Corby council knows what it needs to do. On take-up, if the hon. Gentleman puts his question in a written form, I am sure that I can give him a full answer, but I am afraid that I cannot give him an oral answer at this moment.
As I listened to the hon. Member for Mansfield and others, I thought: what problem is his Bill seeking to address? Obviously, there are problems in the sector. I looked at some tenant satisfaction statistics from the English housing survey, from which we get our most recent, comprehensive data. There are some interesting comparisons between the private rented and local authority sectors.
In the private sector, the English housing survey found that 83.6% of tenants were fairly or very satisfied with their landlord, compared to 76.6% who had the local authority as their landlord. Some 9.7% of private sector tenants were dissatisfied, compared with almost 17% of people in local authority housing. That might back up the point made by the hon. Member for Shipley that his constituency surgeries quite often see complaints about a sector that is already heavily regulated and has democratic accountability—that is, local authorities. Although there are clearly problems in the private rented sector, they are smaller than in the sector that is under the direct control of housing authorities.
Stephen Williams
Those are not my figures. As I said, they are from English housing survey data, which are available for all of us to look at. I have acknowledged several times that there are problems in the sector. The hon. Member for Hammersmith mentioned the Shelter pop-up shop. When that was in Bristol, people cited extreme cases of exposed electrical wiring, poor plumbing and awful sanitation. Local authorities already have powers to deal with those transgressions. That is what we want to see them tackling, and the £3 million fund that the Department has opened should help them.
On the tenant satisfaction data, repairs are often an issue about which people come to see us as constituency MPs. The housing survey data show that 72% of tenants in the private sector are satisfied that their landlord deals with repairs in a satisfactory way, compared with 66% in local authorities. I am not in any way trying to diminish the fact that there may well be problems in the private rented sector; I am trying to put those into context. Even in a regulated environment, and even in an environment where each of the three main parties in the Chamber controls housing authorities and councillors have oversight of what they are doing, there is a certain amount of tenant dissatisfaction. No matter what the regulation, we can never make that dissatisfaction go away.
Andy Sawford
The Minister has clearly studied the English housing survey in some detail. It is interesting to hear his take on that survey, but it would be helpful and relevant to get his take on the trends that that survey shows. It clearly shows a rise in the number of people in private rented accommodation and a trend in dissatisfaction with private rented accommodation.
Stephen Williams
I will look at the survey in even more detail to deal with the points that the shadow Minister raises, but he is right. The private sector is growing, and that is something that we wish to encourage. That is why we have the policies in place to get people investing in the private sector in order to provide extra accommodation, which is needed in general, but is needed also to provide the flexibility that many of our constituents would want.
Let me turn to the Bill and its four clauses, the first of which establishes a mandatory national register of private landlords. When the shadow Minister was speaking, he allowed me to intervene once about the Rugg review. I tried to put it to him that that review was commissioned by the Labour Government. One issue that it considered was whether there should be a national register of landlords. It rejected that and the then Labour Government, as represented either by the present shadow Home Secretary, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), or by the right hon. Member for Wentworth and Dearne (John Healey), both of whom were Housing Ministers in the period of the Rugg review, accepted that recommendation. The hon. Member for Corby said to me, but would not allow me to intervene in response, that the general election got in the way of implementation. The Rugg review was in 2008. A lot of things happened between 2008 and May 2010, but clearly a decision was made by predecessors in my Department not to introduce a mandatory national register of private landlords.
The range of benefits that a register might provide was not clear, but one was that tenants would be able to find out who their landlord was. Under the Landlord and Tenant Act 1985, a tenant can ask the collector of the rent, which in many cases may well be a letting agent, to disclose the identity of the ultimate landlord. That information has to be provided within 21 days and failure to do so is an offence. If as constituency Members we find that people do not know who their landlord is, or the local authority does not know and may want to encourage the tenant to find out, perhaps we should publicise that provision, which has been on the statute book for quite a long time.
It is unclear what a national register would achieve. We certainly believe that it would create an unnecessary burden on all landlords, whereas what has been acknowledged in the debate is that there is a small minority of potentially rogue landlords whom we should be concerned about, rather than the vast majority who provide a good service to their tenants. None the less, many private landlords are already in industry accreditation schemes.
One concern is that the introduction of any new compulsory burden of regulation involves a cost. The hon. Member for Mansfield said that there would be no compliance costs, but I would be surprised if a national register of anything was introduced without some compliance costs. People in the private rented sector are looking to make a profit and like any private enterprise or individual in business they will pass costs visited on them on to their customers, who in this case are tenants.