Private Rented Sector

Debate between Christopher Pincher and Jake Berry

Wednesday 23rd January 2013 Commons Chamber

[Jake Berry]

The hon. Gentleman clearly identifies one of the huge failings of the housing market renewal programmes. We could have another whole debate on that, but we will not have time to cover many of the issues today.

[Christopher Pincher (Tamworth) (Con)]

On the point about houses being boarded up, it is interesting that my hon. Friend is talking about leading the industry, rather than regulating it. If we make the mistake of over-regulating, will that not have the perverse effect of more houses being boarded up, reducing choice and supply for people who want long-term tenancies?

[Jake Berry]

I agree absolutely. If we want the private rented sector to remain vibrant and to become the tenure of choice for many people, we have to make it attractive for landlords and for tenants. That is why I commend the Government’s £200 million build to rent fund, which will change the face of landlords and see us move much more towards institutional investors who are interested in longer-term settlements, rather than the accidental landlord who in many cases is new to the sector, plans to sell the house and is looking for a short tenancy while he tries to do so.

The cost of vacancies is huge. Holding a vacant property is not what professional landlords want to do, so as Jones Lang LaSalle pointed out in their recent report, landlords can benefit from a longer tenure, as well as tenants benefiting. If it is good for tenants and for landlords, why is it not happening? My personal view of the solution to the problems of the assured shorthold tenancy failing families is that we should look towards a six-year term with rent reviews, which would give landlords certainty of funding and would give tenants certainty. It would fit quite well with the number of years that young people spend in school.

Those rent reviews could be retail prices index-related. They could just go back to market rent. Landlords would know when their rent roll was going to increase and they could factor that into the rent when they granted the lease. Also, tenants would be able to look forward to rent increases and budget for them now, rather than the landlord putting the rent up after a year to some unrealistic fee, forcing them to move. In addition, those longer-term leases would require realistic break clauses. The great benefit of the assured shorthold tenancy in its current form is that it does not trap tenants in properties. It also does not trap landlords into letting properties for longer than they want to. Any new longer-term tenancy would need realistic rolling break clauses for both the landlord and the tenant.

We do not need to change the law to do this. We need to change people’s hearts and minds to do it. The biggest block is the funding restrictions from banks. Most buy-to-let landlords, if not all of them, in their facility agreements, which I have negotiated on behalf of landlords, will often have a preclusion from granting a tenancy over a year or two years. This is the exact opposite of the commercial property sector, where banks will consent to longer leases because those give them certainty of rent roll and increase the value of the property. Private sector houses with a longer-term lease would have more value, not less.

There is a role—I hope the Minister will continue to lead on it—for the Government to press banks to enable landlords to grant longer tenancies. It is already happening in the Olympic park and we need to do better work to ensure that it is available to more families in my constituency.