Property Agents: Registration

Baroness Pinnock Excerpts

Wednesday 18th October 2017 Lords Chamber

[Lord Kennedy of Southwark (Lab)]

So here is another announcement on housing from the Government, who are going to seek evidence on addressing unfair and unreasonable abuses in service charges affecting leaseholders and private rented sector tenants. What is frustrating is that in the Government’s own Statement, they refer to the problems that we are all aware of and which need to be urgently addressed. After they collect their evidence, we need to see some real action from the Government.

The call for evidence lasts for six weeks, which gets us to the beginning of December, when the Government will want to reflect on the evidence received. Can the noble Lord tell the House when he expects concrete action that benefits leaseholders and tenants living in the private rented sector—the second biggest housing tenure—as a result of today’s announcement? The Government have form here. On page 61, the housing White Paper, issued in February 2017, refers at paragraphs 4.31 and 4.32 to,

“A fairer deal for renters and leaseholders”.


On page 62, under a section entitled, “Leaseholders”, paragraphs 4.36, 4.37 and 4.38 refer to the issues, stating:

“We will … consult on a range of measures to tackle all unfair and unreasonable abuses of leasehold”.


What have the Government been doing for the last eight months? They are just reannouncing what they announced in the White Paper.

I recall the debates on client money protection during the passage of the Housing and Planning Act. Following those debates, a working group was set up, co-chaired by my noble friend Lady Hayter of Kentish Town and the noble Lord, Lord Palmer of Childs Hill. Their consultation closed in October 2016 and their report was published on 27 March this year. The very next day, the noble Lord, Lord Bourne of Aberystwyth, announced at the Dispatch Box that the Government were going ahead with a mandatory scheme of client money protection—since then, absolutely nothing.

Then we have the ban on lettings agents’ fees, such as inventory fees, tenancy review fees and agents’ admin fees. The ban was announced by the Chancellor of the Exchequer in the Autumn Statement 2016. Then it appeared in the housing White Paper, published in February 2017, in paragraph 4.32 on page 61. Then it appeared as a pledge in the Conservative Party general election manifesto, and was again announced in the Queen’s Speech on 19 June. But since then, absolutely nothing.

Then, we have mandatory electrical safety checks in the private rented sector, on which there were a series of debates during the passing of the Housing and Planning Act. A review took place, concluding in December 2016, and the report from the review group, which was sent to the Minister earlier this year, was crystal clear: it recommended five-yearly mandatory electrical safety checks in the private rented sector. The checks are again referred to in the housing White Paper, where, on page 62, paragraph 4.34, the Government state that they will set out their next steps shortly. That was eight months ago and since then, absolutely nothing.

Despite reviews, announcements, pledges and commitments, no meaningful progress has been made on any of these three measures. This Conservative Government could certainly not be accused of acting in haste when it comes to bringing in measures to provide private sector tenants with further protections from rogue letting agents, rogue landlords and rip-off fees, much-needed safety measures, and measures to protect leaseholders from unfair and unreasonable abuses. I am very disappointed with the Government’s inaction and, although I like and respect the noble Lord very much, he is just reannouncing a previously announced pledge, when what is needed is action to deal with a range of serious problems in the private rented sector and leasehold sector, which has just stalled in the department.

As I said earlier, the Government have form here. When they are under pressure, they announce reviews and consultations, and kick matters into the long grass to avoid facing up to the issues that need to be addressed. The noble Lord and the Government are failing leaseholders and they are failing private sector tenants. Serious issues need to be addressed, and they have to do much better and sort them out.

[Baroness Pinnock (LD)]

The noble Lord, Lord Kennedy, has accurately listed the failings of the Government in attempting to reform the housing sector, particularly for private sector tenants and leaseholders. It is very sad to see the Minister come here with good intentions which are then not carried out by the Government. As today’s Statement demonstrates, there is a long-overdue need for serious protection for tenants. Indeed, some of the poorest families in this country rely on private sector rents for their homes. Those same people are being fleeced by others who have no regard for the welfare of their tenants. That, of course, is not representative of the entire market but there is a growing number of those sorts of landlords and management companies.

Having said that, I welcome the consultation, which has been a long time coming. I want to address two issues. First, the Statement refers to leaseholds. We all know that there has been a growing trend in property development for new builds to be sold as leasehold and for the buyer, for whatever reason—there has been quite a lot of publicity about this—to find out, often too late and to his or her considerable cost, that they have signed not a freehold purchase but a leasehold purchase. I urge the Government to move quickly to fulfil the commitment they have already made to prevent this unjustifiable burden falling on the house buyer.

The service charge is another element which affects private sector home buyers. In my area a new development has an open grass area that has not been reverted to the local authority to maintain but to a management company. The home owners in that development have had huge difficulties getting any maintenance of the shared open areas. I have first-hand knowledge of that, albeit in a small way. These people can fight their corner but, for many private sector tenants, service charges cause considerable anxiety. These people may often be on short-term tenancies and can find those tenancies ended without any redress if they raise questions about the service charges imposed on them.

I assume that the Minister will have read the consultation and therefore will be able to reassure the House that evidence will be sought on transparency over service charges and on accountability and redress, and that action will follow. If I was a private tenant, I would want to know that those three elements will be addressed. I would go further: there needs to be a right in law for a tenant to withdraw payment for a charge that is proven to be unacceptable or unjustifiable without the threat of eviction or the tenancy being brought to an end in any way. I have not read the consultation but perhaps the Minister will be able to help us on that.

Lastly, the rogue landlords register, which has been agreed, is secret and is held by councils. Councils know who these rogue landlords are. If we are truly protecting tenants, we ought to follow up on the pleas from this side of the House that that register be made open and transparent so that tenants can see before they sign an agreement whether or not their landlord is on that list. I look forward to reading the document and to the Minister’s response.

[Lord Bourne of Aberystwyth]

My Lords, I will respond to the comments from the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock. First, I was somewhat disappointed in the noble Lord, who is not generally as unfair as he was today. In fact, there was not a single question in his opening statement. There were some points, which I will certainly respond to, but the accusation that we are not doing anything is, frankly, amazing and far from the truth. I will deal with some of the particulars.

First, on banning letting fees—which, it is quite true, the noble Baroness, Lady Grender, raised some time ago—very shortly we will come forward with the draft Bill to deal with this issue. On leasehold reform—long leases and ground rent charges—consultation ended only at the end of September, to be entirely fair. We are looking at that consultation and will come forward with a response shortly, and we certainly intend to act after that response. Again, there is no doubt about that. But we cannot be attacked for consultation. It seemed to me that in the noble Lord’s statement there was a suggestion that we should not be consulting on these matters. It is important that we consult. As we have only just ended the consultation, it is somewhat unreasonable to expect a response in less than a month.

On protection of client money, the noble Lord referred, quite rightly, to the notable work of the noble Baroness, Lady Hayter, and the noble Lord, Lord Palmer of Childs Hill. We have accepted that and we are carrying it forward. It is important that we are doing that. We will consult with the sector, and I am happy to meet with the noble Baroness and others to discuss that. However, of course we are carrying that forward—we have given an undertaking on it.

I will deal with some of the other issues before I come to the Statement itself, which the noble Lord did not focus on. We are looking at a housing court and are taking that forward; the Ministry of Justice is considering that issue. We are looking at a landlord ombudsman to deal with unfair practices, and we are committed to that. Social tenants are of course already subject to the housing ombudsman, and redress is already provided for with regard to letting agents. As I say, we cannot be accused of not carrying things forward. I can understand noble Lords wanting to proceed at a greater pace than perhaps has been done but we have consulted fully and are taking these things forward.

On the part of the Statement which relates to service charges in the letting sector for both leasehold and tenanted arrangements, I thank the noble Baroness, Lady Pinnock, for her welcome of it. All the major parties here have been parts of government; if this has been so urgent for so long, one is entitled to ask why something was not done earlier. We are now carrying this forward and I hope that everybody will participate in this so that we can achieve something that is remarkable in being consensual and which takes us forward. There is much to be done, this is welcomed by all of the main letting association bodies, and, clearly, there is a need to act to provide the sort of principles that the noble Baroness was talking about with regard to transparency and redress. These are important and they will be provided for, and the questions are geared in that direction, as she will see. The consultation opens today and ends on 29 November, so it is open for six weeks, and I encourage anybody who is concerned in the sector to contribute to it. Another reason why it has taken some time to address the earlier consultations is that we had over 6,000 responses on leasehold reform and over 4,700 on letting agent fees. It is important that we go through all the points that were made to come up with a reasoned response.