Clive Betts
Main Page: Clive Betts (Labour - Sheffield South East)
Mr Clive Betts (Sheffield South East) (Lab)
It is a pleasure to speak about the report on the private rented sector by the Communities and Local Government Committee—its first report of the 2013-14 Session. The report was produced through the Committee taking formal evidence in a number of sittings. Some of those featured more informal discussions and some involved landlords and tenants together, which was interesting. There was a visit to Leeds to look at how the council was operating with regard to the private rented sector, and a visit to Germany to look at the sector in a very different sphere of housing circumstances. On behalf of the Committee, I particularly thank Christine Whitehead, who was the Committee’s special adviser for the inquiry, and Kevin Maddison, the lead specialist from the Committee staff working on the inquiry.
We chose the subject of the private rented sector not because of any particular initiative that the Government were proposing at the time but because of the sector’s increasing importance to our constituents. According to the latest figures for 2012-13, 18% of households now live in the private rented sector. That growth did not suddenly happen following the banking crisis of 2008; it had been taking place before that over a period of time. Indeed, it has been the only growing housing sector since 2002, when owner-occupation started to fall as a percentage of households. That is an interesting fact.
The Committee saw the growth of the private rented sector not as a short-term issue but as something that is likely to continue in the longer term. We also observed that it is changing in that it is home to a wider range of households, particularly families with children who might, in other times, have chosen to be in a different sector but are now looking for a different housing experience, and particularly for more security. When people with children change their home, that often means changing schools, and that creates substantial disruption to family life.
When we went to Germany, we saw a very different situation that we are probably not likely to get to any time soon. People literally have tenancies for life; many of us could not quite get our heads around that. Someone with a tenancy in Germany has it for life and can pass it on so that their family members can succeed to it. We learned that there were good standards in the private rented sector that we ought to seek to emulate in this country. Tenants and landlords had an awareness and understanding of rights and responsibilities that is perhaps not always shared in this country. There was an equilibrium between demand and supply to which we aspire but recognise realistically that it will take some to achieve. Those factors create a very different market indeed.
We identified five main areas to concentrate on in our report: awareness of rights and responsibilities; the standards of properties and of how they are managed; effective regulation of letting agents, which we received an awful lot of evidence about; new tenancy models looking for longer-term agreements and greater security; and, in passing—because we had already done a report on this the previous year—increasing the housing supply.
When it came to taking evidence, the then housing Minister—the hon. Member for Hertford and Stortford (Mr Prisk), who is in his place—was, as usual, very open to ideas and he welcomed, both in his initial statement in the House and in the Government’s response, many of our recommendations, as indeed did the then shadow housing Minister, my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). May I place on record the Committee’s thanks to the hon. Member for Hertford and Stortford for the courteous, assiduous and highly knowledgeable way in which he always approached us and our deliberations?
There was a great deal of consensus right from the beginning. The Government have subsequently produced their “Review of property conditions in the private rented sector”, which includes many of the Committee’s ideas. Indeed, having initially dismissed our recommendations for mandatory carbon monoxide and smoke alarms in private rented homes and for five-yearly checks of the electrical installations, the Government are now consulting on them. Of course, consulting does not necessarily mean agreeing, but at least it is a step in the right direction, which we should recognise and welcome.
There are two areas on which we have not reached agreement and to which we need to pay more attention. The first is the flexibility of local authority powers to raise standards and to deal with rogue landlords in particular—I will say more about that in due course—and the second is the regulation of letting agents, on which the Government have not gone as far as the Committee wanted them to. I will explore that as well.
On raising awareness, in Germany it struck me and, I think, other Committee members that tenants and landlords seemed to understand the rules and their responsibilities. That is not always the case in this country. Our report notes that there is a bewildering array of legislation and regulation relating to the private rented sector. Different Acts of Parliament are cross-referenced in new Acts and it is very difficult for any professional, let alone any lay person, to get their head around the situation. A professional landlord might understand some of it, but small landlords and tenants probably do not.
We therefore called for a review of the potential consolidation of legislation, but the Government rejected that, which is disappointing because I think it would have helped to simplify things. We were not asking for more regulation; we were asking for simpler regulation. There is a difference. The Government could have scrapped some regulations if they had gone about it in a different way and that may have earned some brownie points for Ministers past and present.
John Stevenson
The hon. Gentleman’s opening comments are very much in tune with the views of the Committee. Does he agree that we recognised that the rented market is a relatively immature market and that, while we encouraged positive changes, one of the reasons why we were a little cautious in our approach was that we also recognised that we had to allow the market to develop and mature in its own way?
Mr Betts
The hon. Gentleman is absolutely right and I thank him for putting that clearly on the record. That is exactly what the Committee agreed. Some of the changes will be incremental and there will be opportunities for either this or a future Government to come back and look at the totality of regulation and legislation, which I think would be helpful for everyone involved.
On raising awareness, the Government have accepted some of the recommendations. The Committee called for easy-to-read fact sheets and model tenancy agreements. The Government have already produced a draft tenants charter and we look forward to their model tenancy agreement. That is entirely in line with what the Committee recommended, which was to try to make things easier, particularly for people who do not easily understand legislation and regulations, and to have something that is easy to operate. We felt that that would really help not only tenants, but many landlords, particularly non-professional, occasional landlords who have a few properties and would welcome such an approach.
We asked for a review of the housing health and safety rating system. Again, it is valued by many professionals, but it is very difficult to understand for many landlords, let alone for tenants. I do not think that the Government are prepared to go so far as a wholesale review, but we note that they are now trying to produce guidance for tenants and to update the methodology. There are problems in relation to local authorities wanting to act against a property if the tenant is elderly, but not if they are young, and landlords can get confused about an authority requiring them to do work simply because they have changed tenants. It is certainly worth looking at that complication in the new guidance and new methodology.
Mr Jim Cunningham (Coventry South) (Lab)
Years ago, we had what was called a rents officer, which would surely be one of the better ways of enforcement whether in relation to private landlords or higher rents in general. Rents are now escalating because the supply of housing is very low. Did my hon. Friend and his Committee consider that?
Mr Betts
We did, but I will come on to rents later, if I may, because that is a separate issue. We did refer to that matter, but the main point of our report concentrated on standards, which is what I am trying to address now.
As we all know, the reality is that some of the worst standards in housing are in the private rented sector. That does not mean that every such property is bad and we should not give all private landlords a bad name, but as well as some of the worst properties, the sector has some of the most vulnerable occupiers, and that juxtaposition should really worry us. Some landlords simply want to sit and do nothing, while others blatantly break the law and think that they can get away with it, and we particularly want to bear down on them. There was general agreement about how to bear down on the really bad landlords without putting extra burdens on the good ones, and about how, at a time of financial constraint for local authorities, to enable them to take action against such private landlords and ensure that they can use their resources and recover their costs.
Graham Jones (Hyndburn) (Lab)
I would add long-distance landlords to the list of problem landlords. I had a letter from a lady in west Sussex complaining about the condition of properties and various other things in the area of Church in Accrington. Many landlords in that area do not live there and have never visited it, and their properties are not in a particularly good condition. That is not necessarily for nasty or unpleasant reasons, but because landlords generally live too far away, and because they are amateur about making such an investment, rather than professional in housing management. Will my hon. Friend add long-distance landlords to his list?
Mr Betts
I do not want to say that every landlord who lives at a distance is a bad one—that would be wrong—but living further away can clearly make it more difficult for tenants to contact landlords and get instant responses about problems, particularly if landlords do not use a reputable agent to help them manage the property on the spot. We will come on to agents a little later. The issue is about local authorities having the powers to act against not merely individual properties, but areas with collections of properties in poor condition, which is probably the sort of area to which my hon. Friend refers.
Mr Mark Prisk (Hertford and Stortford) (Con)
I am grateful to the hon. Gentleman for his very generous remarks earlier. Houses in multiple occupation are a subset of the private rented sector on which there needs to be a real concentration. I certainly attempted to do that as a Minister, and I am sure that my successor is also seeking to do so. Does the Chairman of the Select Committee agree that we should often focus on HMOs in relation to the worst behaviour?
Mr Betts
Absolutely. The Committee was very supportive of the legislation on HMOs, particularly local authorities’ use of article 4 powers to try to restrict the growth in their numbers in areas where there were so many that they had begun to dominate, as well as of the Government’s position. There is cross-party consensus on that issue.
Mr Prisk
My experience as a Minister was that there was a lot of reluctance among local authorities to use article 4. I am not suggesting that I encouraged them to do so unreasonably, but a bit of elbow pushing was required to get them to do the job. I think that the Select Committee’s support will be very helpful. Does the hon. Gentleman agree?
Mr Betts
Yes, certainly. One of the messages right the way through the report is that there is good practice among local authorities. As with many things that we consider, it is a challenge to ensure that the good practice is spread to all authorities and that that knowledge is available. It should not be just the Select Committee, the Government and the Opposition telling councils what to do; they should be able to look at the good work that is being done by colleagues in other councils and replicate it.
Jake Berry (Rossendale and Darwen) (Con)
On property conditions, the hon. Gentleman will be aware that under the Housing Act 2004, local authorities have a statutory duty to deal with certain hazards in a property. Did the report look in any detail at expanding the number of hazards that are covered by that statutory duty? If so, does he have any thoughts about the cost implications for local authorities of doing so?
Mr Betts
No, we did not look at extending the properties that are covered by that responsibility of local authorities. We did look at the powers that are available to local authorities in respect of the approach to the licensing and registration of landlords in their area, and I will come on to discuss that.
Jake Berry
The licensing of landlords in areas of low demand is a separate issue. The powers that are available to local authorities in respect of houses that are not in a fit state of repair are already quite extensive. For example, they can put an order on a property that spans all residential use. That power is not widely used and I wonder whether the report says anything about why that is.
Graham Jones
I think that my neighbour, the hon. Member for Rossendale and Darwen (Jake Berry), was referring to the housing health and safety rating system and its implementation by local authorities in respect of category 1 and category 2 hazards. Does my hon. Friend agree that if significant cuts are made to local government, it does not help environmental and housing enforcement teams in local authorities to enforce the housing standards, even if they have a statutory ability to do so?
Mr Betts
The Committee received evidence of concerns in some local authorities that the squeeze on their resources was affecting their abilities in respect of the private rented sector. We tried to look at how authorities could deal with the challenges that they face most effectively with the resources that they have. One thing that we looked at was licensing.
On balance, the Committee did not come down in favour of a national licensing scheme. That is essentially because, over a number of reports, we have tended to be localist and to believe that local authorities should be allowed to make such choices for themselves. We went to Leeds, which has a very good accreditation scheme, under which there is good training and advice for landlords, which the landlords really appreciate. However, we were told by landlords and tenants that the problem is that it is the good landlords that join such schemes. They said, “It’s those landlords down the road you want to get hold of and they’re not going to volunteer.”
The selective licensing approach tends to be cumbersome, time-consuming and bureaucratic, and the criteria are very restricted. The Committee therefore asked whether we could relax the criteria and make them more flexible so that local authorities could engage in selective licensing if they wanted to. We also asked whether, in a more general sense, a local authority could have an accreditation scheme that was mandatory, so that it would include all landlords, including those who do not want to join.
Unfortunately, on both issues, the Government’s response was not as helpful as we would have liked. They said no to mandatory accreditation schemes and no to a review of the flexibility of selective licensing. The Government’s recent consultation document does include changes to selective licensing, but they are talking about tightening the criteria, rather than making them more flexible. That seems to be a retrograde step. All our evidence suggested that that was too cumbersome and does not work, and authorities that want to make it work find it difficult to make it happen.
We are apparently consulting on a landlord-specific, rather than property-specific, licensing or accreditation scheme, which the consultation document refers to as a suggestion from the Communities and Local Government Committee, although it was not. It has clearly come from somewhere, however, and it may not be unwelcome if it gives local authorities another set of powers and another way to deal with rogue landlords who are causing problems. If those landlords who persistently cause problems with individual properties have to become part of a mandatory registration scheme, that could be perhaps not a complete response to the Committee’s request, but at least a helpful step in the right direction, as we suggested.
Mr Andrew Love (Edmonton) (Lab/Co-op)
All the evidence from London suggests that the problem is not low demand as the criteria state, but high demand. Surely all that evidence leads us to believe that we need greater flexibility in licensing, otherwise we will not get to the heart of the problem.
Mr Betts
Precisely, and the Committee’s view was very simple. These arrangements are—or at least should be—for local authorities to determine. Local authorities know their own areas and there is a big difference between one local authority and another. Even within London and within local authorities themselves there are big differences, so we hope the Government will recognise the value of giving a local authority a range of powers to tailor requirements to the needs of a particular area.
Jeremy Corbyn
My hon. Friend must be aware that in areas of high housing demand such as London, the six-month shorthold tenancy means that any tenant who has the temerity to complain about conditions to the environmental health service, or anybody else, rapidly finds their tenancy terminated. They then become homeless or have to move some distance away. There must be proper protection for people who legitimately exercise their right to complain.
Mr Betts
Yes, and the Government are consulting on retaliatory evictions as part of their consultation document, which is to be welcomed. One other issue that the Committee report dealt with that we must consider is how to encourage longer term tenancies. Families in particular want greater security. They may not want to be in the private rented sector, but if they are there and have a property they like, they probably want to be there for five years rather than six months. Considering how we can change the culture—that is what it is, as much as anything else—to get landlords and tenants to understand that there are possibilities within the framework of the existing assured shorthold tenancy for a tenancy longer than six months or a year, is a step forward. We must also consider how to get letting agents to recognise that they should be advising on that—letting agents often have a vested interest in regular reviews of tenants and tenancies because they make a profit and receive a fee every time they do it.
We must also deal with the fact that many lenders prevent landlords from having a tenancy of more than a year. Nationwide is now, I think, prepared to accept a three-year tenancy, which is a good step forward, and the Government are trying to bring lenders together to try to make that change happen. I entirely accept the point made by my hon. Friend the Member for Islington North about retaliatory evictions when tenants complain. However, if landlords are to accept a tenancy period of three or even five years, they must have a way of getting the tenant out, rather than waiting until the end of the tenancy period. Shelter has accepted this and the Government have established a working party on it. That is being looked at as a quid pro quo. Shelter accepts that; it is not only landlords associations that have been pressing for it.
Graham Jones
My hon. Friend made the point that landlord licensing is seen as a panacea, and the sound point that licensing applies to landlords and not properties. It is thought that that panacea will deal with rogue landlords, but, as my hon. Friend the Member for Edmonton (Mr Love) has suggested, there is the question of property and stock conditions in both high and low-demand areas. Is there not a case for extending landlord licensing to include stock condition and other criteria to deal with those problems?
Mr Betts
The Committee called for more flexibility in licensing—perhaps that covers my hon. Friend’s point.
The Committee recognises the need for more powers and action in one or two other areas to improve standards. We call for the possibility of fixed penalty notices, so that local authorities can deal with less serious offences at relatively low cost. The Government are consulting on the range of measures that should be available. We also say that, when a landlord lets a property in an unfit condition and is prosecuted, it should be possible to claw back any housing benefit paid or any rent paid by an individual. We are pleased that the Government are consulting on that proposal.
One additional matter that the Committee did not get into—we might have a look at it in the autumn—is what happens when landlords are taken to court. That goes back to the fact that authorities are strapped for cash, as many are, and have limited resources. If a landlord is found guilty, the court should award the authority the full cost of the action. Sheffield, my local authority, advised me the other day that it has brought five successful prosecutions of landlords in recent months. On each occasion, it has not been given its costs back—it got back roughly 50% of its costs in total. That is not acceptable. We ought to put pressure on the courts—perhaps the Minister’s colleagues in the Ministry of Justice could do this—to recognise that, when effective action costs money and the landlord is found to be responsible for and guilty of an offence, the costs should be returned to the authorities.
Finally, there are two other points. On letting agents—
Madam Deputy Speaker (Dawn Primarolo)
Order. I am sorry to stop the hon. Gentleman mid-flow, but he has been speaking for quite a long time, and lots of other hon. Members want to speak. I hope his two points are brief ones.
Mr Betts
Yes. On letting agents, the Committee is pleased to see a lot of demand for regulation. We are pleased that the Government are introducing a redress scheme, but are disappointed that the code of practice backing it up will not be mandatory. There ought to be more Government action on the lack of transparency in relation to fees charged by letting agents. They should not leave it to the current legislation, which needs tightening.
Finally, on rents—this point has already been made—the Committee are not in favour of rent control. We believe that introducing rent controls is a blunt instrument that is more likely to curtail investment in the sector. Things should probably be done on local housing allowances, which could sometimes artificially inflate rents. There was evidence from Blackpool on that.
To summarise, the Committee is pleased with many of the Government’s responses. We have concerns on the points I have made and are looking forward to Government action. The Committee will monitor that and look to the Government’s proposals to stimulate extra building in the private rented sector and other sectors to deal with the real problem in housing: the shortage of supply.