Private Rented Sector

Clive Betts Excerpts

Thursday 29th November 2018 Westminster Hall

[Mr Clive Betts (Sheffield South East) (Lab)]

I beg to move,

That this House has considered the Fourth Report of the Housing, Communities and Local Government Committee, Private rented sector, HC 440, and the Government response, Cm 9639.

It is always a pleasure to serve under your chairmanship, Mr Rosindell. The Select Committee chose to have the inquiry because of the increasing importance of the private rented sector, which has doubled in size over 15 years. Clearly, more families are living in the sector than ever before, and more people see it as their long-term form of accommodation, whether by choice or because it is the only form available to them.

The Committee heard that 82% of people were satisfied with their accommodation, although when people answer such surveys, I sometimes question whether expectations are as high as they might be. If we look at other figures, we see that while non-decent accommodation in the sector fell from 47% to 27% over 10 years, the actual number of non-decent properties has stayed the same—it is a lower percentage of a larger number. Citizens Advice also produced figures showing that 41% of tenants in the sector had waited longer than they thought reasonable for repairs to be carried out, and 800,000 properties had a category 1 hazard.

There are therefore problems, but while many properties might have some problems, other properties are clearly in a really bad state of repair, with some landlords doing little about it—indeed, they almost run a business in properties of that type.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I thank my hon. Friend for securing the debate and for his excellent speech. Does he agree that we need to give local authorities the power to tackle and crack down on rogue landlords through private sector licensing, rather than having to get permission first from central Government?

[Mr Betts]

We made a number of recommendations in our report and—my hon. Friend is right—that was one of them. We recognised that the Government had made some changes to the rules on selective licensing, in line with the recommendation on widening the criteria used to bring about selective licensing schemes in the Committee’s previous report back in 2013. They are also changing the legislation about the definition of properties included in licensing for housing in multiple occupation, which we welcome.

Nevertheless, in essence, our recommendation is that licensing ought to be a local matter, depending on local circumstances. It should be a local decision, subject to the Secretary of State’s intervention only when councils have not followed the proper procedures. As I understand it, the Government are now reviewing selective licensing. One of my questions will be about the state of that review and when it is likely to report.

In our report, we tried to focus on those landlords who are not doing the job that we would expect them to do. To divide landlords up, there are the bad ones, who are not good at getting around to doing things in a timely way—they are inefficient, or incompetent to some extent, and are sometimes accidental landlords. There are then the so-called rogue landlords, who have more systematic failings, leaving a large number of properties in an unacceptable condition. Then there are the really hardcore landlords—we ought to call them criminals, because that is what they are. The criminal landlords run a business to exploit vulnerable tenants in unsafe and unhealthy conditions. They are robbing not merely the tenants but the taxpayer, because they are getting money in and yet not providing homes that are fit to live in. We tried to concentrate on how to deal with those landlords, but our report also recognised actions the Government have taken in a number of respects. Quite reasonably, we highlighted actions that they have taken in response to our previous report on the private rented sector. We are pleased with that as a Committee.

Right at the beginning of the report, we refer to the imbalance of power between tenants and landlords, and to how that needs addressing. However, I will not go through all our recommendations. Instead, I will focus on where the Government have said they will do something—whether that is to consult, review or consider in some way—and ask the Minister where that has got to and what we can expect.

On the Deregulation Act 2015, we call for a review of the retaliatory eviction legislation and guidance on how it has worked. The Government did not seem totally enthusiastic about that at first, but they have now said that they will review the Act, looking at its effectiveness in terms of retaliatory eviction and perhaps at bringing in more formal requirements to have longer-term tenancies. The Government have gone a bit quiet on that since their announcement, so where is that review up to, and when can we expect some announcement?

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I thank my hon. Friend for securing the debate. I put on record my apologies because I am unable to stay for the duration of the debate—I am hosting an event elsewhere in this place about a related matter, which is housing rent arrears arising from universal credit.

On retaliatory evictions, the Committee recommended reform of section 21 of the Housing Act 1988. There is a growing body of evidence that section 21 should be not only reformed but abolished. In response to our report, the Government stated that, on the one hand, they recognised

“the concerns of the Committee around retaliatory eviction”,

but, on the other hand, that they did not accept our recommendation that section 21 needs to be reformed. They said:

“We believe the current legislation strikes the right balance between the interests of landlords and tenants and we have no plans to change the legislation in this way.”

Does my hon. Friend agree that, without meaningful action on section 21, those are simply empty words from the Government?

[Mr Betts]

I hope that the Minister will come back on that, because we made a clear recommendation, and it would be helpful to have her response to it. The two things go together. Our report called not for the abolition of section 21, but merely for it to be looked at again. The same is true of retaliatory evictions. The Government are looking at one thing, so will they indicate that they might be prepared to look at the other as well, as part of a joint review?

We also called for a specialist housing court. We are pleased that the Government have now announced a call for evidence on the setting up of such a court. Will the Minister explain what will be covered and the likely terms of a housing court’s jurisdiction? Will it cover section 21 notices or retaliatory eviction? Will it cover tenancy fees, which we have recently had legislation on? Will it cover the issues arising from the Homes (Fitness for Human Habitation) Bill from my hon. Friend the Member for Westminster North (Ms Buck)? Will it go so far as to look at the whole matter of leasehold, which we are discussing in another inquiry? Will the Minister explain precisely what it will cover, or whether the Government have ruled on what it will not cover? It would be helpful to have such information.

The first of two other issues we asked to be looked at was that of five-year electrical safety checks. We are pleased that the Government have announced support for that in principle, but when will we get a clear announcement and action on it? In terms of having carbon monoxide alarms not only in every room with a coal fire but every room with a gas fire, I understand that a working group inside the Department is looking at that. Where has that got to? Every day of delay might lead people to lose their life because of carbon monoxide poisoning, which is easy to stop with a very simple measure. Will the Minister give us information about that as well?

We looked at enforcement and local authority powers. That is clearly important, and we questioned the housing health and safety rating system, as we have done before.

[Stephen Timms (East Ham) (Lab)]

On enforcement, the report makes the point that half of the prosecutions in the country happen in my borough, Newham. In the Committee’s view, what problems are there with the enforcement arrangements that seemingly make it so difficult for the vast majority of local authorities to carry out such prosecutions?

[Mr Betts]

My right hon. Friend raises a good point. Newham is a trailblazer—I think 50% of the prosecutions in the country happen there. We looked at two main issues in the report: the first is resources. I am sure it is not true that Newham has too much money and does not know how to spend it on other things; I am sure it has many challenges. The second is political will: is there the political will in the council to address these issues? Clearly there was, and still is, in Newham, but in more than half the councils in the country there are no prosecutions at all.

Councils will say, “We adopt a softly, softly approach and try to persuade.” Often that goes on with landlords who are in the inefficient and incompetent but reasonable category. Officers say to them, “You need to put this right,” and they do, but it does not work with the rogues and the criminals. Tougher action is needed. At the end of the day, it is about political will. Clearly, resources are under pressure; there is pressure on care services—the Committee will look at children’s services shortly—and that does mean there is less money for important things such as private sector housing enforcement.

We looked at how easy the powers were to use. I said that the rating system is complicated. Is there a case for bringing in a simpler minimum standard? By and large, the professional officers do not want to change. Landlords and tenants gave evidence that, although the rating system may be understood by most professionals working in the service, it is understood by very few landlords and virtually no tenants. Is a system that is so complicated that no one outside the professional sphere understands it fit for purpose? The Government have done some events, where they have talked to professional officers. There is a division of opinion among them—perhaps the majority still want to keep the rating system—but at least the Government have now acknowledged that there is general support for updating the system, in terms of both the evidence base and the guidance, which is very out of date. Will the Minister tell us how far we have got with that?

One of the landlords organisations that gave evidence told us that private sector housing legislation was based on 150 different pieces of legislation. Everything the Government do—however worthwhile—is built on top of this higgledy-piggledy structure, with no real coherence. Will the Government ask the Law Commission to do an overall review? We made that recommendation in our 2013-14 report. At some point, someone must do a comprehensive review, not necessarily to change the intention of the legislation, but to pull it together as a coherent whole. The Government responded that they will have discussions with the Law Commission. Will the Minister tell us where those discussions have got to?

We raised the issue of fees and penalty notices. The Government say they are at an appropriate level, but the Committee wants them to be raised because, for some of the really bad landlords, the fines levied are a business cost that they write off against the business. Courts should give back the cost to local authorities who take a case. Local authorities’ resources are under pressure; if authorities spend a lot of money prosecuting a landlord and they get the prosecution, the court does not give them back the cost involved. That can be really discouraging. Has the Minister had discussions with her colleagues in the Ministry of Justice on that recommendation?

We recommend the creation of a benchmark system, whereby the different approaches of local authorities could be compared, including the number of prosecutions they take out. We asked the Government to work with the Local Government Association on that. They said they would have talks with the LGA. How far have those talks gone?

The Committee supported the Government’s decision to bring in banning orders. The Guardian and ITV News have publicised the fact that the banning orders are not public. That is not to say that that will not happen, but under the Housing and Planning Act 2016 they are available only to local authorities to tackle problems in the private rented sector. They cannot be made public as the legislation stands. The Prime Minister has committed to change that, but I understand that that needs primary legislation. Will the Minister say whether the Government intend to bring in primary legislation to do that?

Although a local authority may know that someone is banned in another local authority area, knowing whether a landlord is operating in an area and the properties they have is very difficult, because of the lack of information. To make public that a landlord has been banned would cause other people to come forward and say, “That landlord is banned, but he is renting a property down our road.” It would be very helpful if that could be done.

I went to a meeting of the Chartered Institute of Environmental Health in Leeds to talk about our report and the general support for it. Interestingly, Mark Baxter, an environmental officer in Scarborough Borough Council said, “If the Government change legislation, could they go further and insist that when a landlord is banned in court, they have to give the court, for the public record, a list of all the properties they own, manage or have an interest in?” That is an incredibly simple but effective way forward. Once publicity shines a spotlight on these bad landlords, they should be made to help by giving that information, and it should be an offence not to give all the information at that stage. That would be very helpful to get a proper grip on this issue.

[Mr Dhesi]

My hon. Friend is very generous to give way again. Does he agree that deposits should be capped at three weeks’ rent rather than the current six weeks proposed by the Government? That would mean an average saving of £575 for tenants across England, based on the latest English housing survey data.

[Mr Betts]

That came up in the Tenant Fees Bill, and the Committee recommended a compromise of five weeks. The Government did not accept it, but we support that recommendation, so as Chair of the Committee I cannot completely agree with my hon. Friend. If I remember correctly, the Government have held a consultation on alternatives to deposits, which is a helpful response to one of our recommendations.

We all agree that we must be as tough as we can be, and tougher still, on bad landlords. I hope the Minister will revisit our recommendation. The really bad, criminal landlords may be banned and have management orders against them, but in the end some of them will find ways around that because it is really profitable for them to do so. They have broken the law once, so they will carry on by ignoring banning orders if they can. Why do we not take the properties off them? Why have the Government resisted that recommendation? The proceeds of crime operate in other spheres. Let us get tough on the bad landlords.

[Helen Hayes]

Will my hon. Friend give way?

[Mr Betts]

My peroration was just about finished, but I will let it be interrupted.

[Helen Hayes]

I thank my hon. Friend. Allow me to add a small example to the point he makes so powerfully. My constituents were evicted from their private rented property after they complained because the bathroom ceiling collapsed over the bath 10 minutes after they had finished bathing their children. I hope the Minister agrees that, in those circumstances, it is not too much of a sanction to confiscate the property from such criminals.

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[Mr Betts]

I hope the Minister will reflect, even if she cannot commit to a change of policy today. These are bad people renting bad houses to vulnerable tenants. They are making proceeds from their crime, so let us take from them the asset that enables them to do that. I hope the Minister will think about that and respond to the points I have raised.

--- Later in debate ---

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I refer the House to my entry in the Register of Members’ Financial Interests; I am a vice-president of the Local Government Association and the owner of a small property portfolio.

I rise to do three things: first, to talk about the situation in my own borough of Harrow; secondly, to look at the detailed report that we, as a Committee, produced; and thirdly, to add a few things that I think are needed. It is pleasure to follow my hon. Friend the Member for Hertford and Stortford (Mr Prisk), with his measured approach and his experience of having been the Housing Minister. Equally, it is a pleasure to follow the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), who I have worked with on this Committee over many years—probably more than we would care to mention.

On the Committee, and certainly since I have served on it, we make sure we proceed by consensus. Individuals may hold views that are not contained in the report, but it comes from the entirety of the Committee and is produced on a cross-party basis. I warmly welcome the Minister to her place and I hope she will tell us why the Government are not taking forward some of the measures that we have recommended—again, on that all-party basis.

In my borough, the private rented sector is growing dramatically. It used to be a tradition, in outer London in particular, that as people became more prosperous and more likely to commute for longer distances, they would sell their homes and move on, then commute into central London for a job. Nowadays, they tend not to sell their homes. They move on and acquire a new home, but they keep their existing home and rent it out. One challenge that has arisen in Harrow is that large numbers of properties—typical suburban, three-bedroom semis—are now rented out to 10, 12 or in some cases 20 people, who are living in them. This brings the consequences of antisocial behaviour and overcrowding, and quite frankly the people living there are being exploited.

Most people in that position come from eastern Europe. I now have 10,000 eastern Europeans living in my constituency. They are warmly welcomed—they are here to work and want to contribute to the economy—but they are being exploited. Rents of a typical three-bedroom property are in the order of £2,000 per month. If you have 20 people sharing that £2,000, then the rent is not too bad. However, the living conditions are absolutely disgraceful. That is, I think, one of the key challenges.

The local authority has responded by setting up a selective licensing scheme in one ward, which was vigorously opposed by the private landlords concerned for the obvious reason that they thought they would not be able to continue to exploit their tenants. The challenge for the Government when legislative changes take place is, as my hon. Friend the Member for Hertford and Stortford mentioned, that although the vast majority of tenants are satisfied with their position, what do we do about the bad, criminal landlords who exploit vulnerable people and make their lives a misery.

[Mr Betts]

We have been on the Committee together for more than eight years, and I think we have all had examples of landlords behaving quite badly, not merely in letting properties but in objecting to licensing schemes. It is not just about the regulatory framework, but about the fact that their names will be known, as well as which properties they own and rent out, and Her Majesty’s Revenue and Customs gets rather interested at that point. The cost of that could actually dwarf anything else they have to do, such as paying fees for the licence.

[Bob Blackman]

I thank the Chair of the Select Committee for that intervention. That is particularly true in the Edgware ward of the London Borough of Harrow, where I asked the council a series of questions about how many registered houses in multiple occupation they had on their books. I was astonished when they told me they had 89 for the borough. I can take Members to roads in Edgware where there are 89 in the road. One problem is the local authority’s resources to deal with these issues, but, more importantly, people just ignore their responsibilities. That has to be dealt with.

I come now to the report itself. I will not deal with the recommendations that the Government have taken on board, because they are fine and we all agree with them. I am delighted that they have been taken on. I worry about some aspects that the Government are not addressing so far. When the Minister replies, will she update us? The Government response was some five months ago and I hope that things have moved on. I will go through the report, looking at the questions that I would like the Minister to answer.

In the Government’s response, the housing health and safety rating system recommendation is partly accepted, but the view is that the Government will review the position in due course. Can the Minister update us on where that review is? The Chair of the Select Committee mentioned the reality of carbon monoxide poisoning and other safety measures in homes. The hon. Member for Dulwich and West Norwood (Helen Hayes), who is no longer in her place, raised a desperate situation in her constituency. The issue is ensuring that tenants’ safety is paramount. Over the time I have served on the Select Committee, we have considered various different aspects of safety, and my concern is that building regulations and safety regulations do not seem to be being updated as they should, both to protect tenants and to point out to landlords their responsibilities. I would like to understand the Government’s position in that area.

Equally, where the Government and Law Commission are reviewing what legislation could be enacted, the Government say they are having discussions with the Law Commission. That is always helpful, but could we be updated with the results? As I have said, if we introduce legislation we must be careful that we do not put off good landlords from renting out their properties and maintaining good order at the same time as squeezing out the criminal behaviours that are clearly unacceptable.

I turn now to section 21 notices; we will have a debate on that subject next Thursday, I think, and I do not want to rehearse the discussions we will have there, because no doubt the Minister will be answering that debate too if it proceeds as expected.

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[Sarah Jones]

It is interesting that the hon. Gentleman should say that, because we are looking at developing our policies in this area and have also said that we want to scrap section 21. We need to look at how that would work and what the conditions would be. It is really important to stress, though, that we are not saying that people should have the right to remain in their home indefinitely if, for example, they are not paying their rent or are, in other ways, causing disruption or antisocial behaviour. That is absolutely not the point of what we want to do. There will always be a need for a landlord to be able to evict tenants who are not paying their rent or who, for whatever reason, should not be in the property.

We need to find the middle ground. At the moment, there is a problem, particularly in London, and I have seen it in Croydon. When we talk to renters organisations such as Generation Rent, they talk of a cycle whereby people are being evicted for no obvious reason. For example, a landlord might not be an expert landlord, as we have talked about. Someone may have inherited a property or have moved out of London. They might have a property and not really know what they are doing. They might decide to move back in or they might decide to do something else with the property. Then we have a group of people who are constantly having to move because they are being moved on through section 21 evictions, or we have people who cannot afford the rent increases, so they are also having to leave through section 21. An imbalance of power is our starting point when we are looking at policy development. I hope that that answers the hon. Gentleman’s question.

[Mr Betts]

Is my hon. Friend basically saying that the proposal will be very similar to one that I think Shelter put before the Select Committee in 2013-14, which was to introduce three-year tenancies, with the rent in that period linked to some inflation measure so that there was a clear understanding by both landlord and tenant of how it would progress in the course of the tenancy? The other issue that we raised, which brings us back to the housing court idea, is that if that tenancy proposal happens, landlords do need a way reasonably quickly to get out a tenant who is not paying their rent. Having a housing court might be one way to enable that process to happen and to make landlords more comfortable with longer-term tenancies.

[Sarah Jones]

I thank my hon. Friend: I did not see Shelter’s evidence in 2013, but, yes, that sounds a reasonable way forward. The absolute starting point, as I said at the start of my contribution, is that we know that most landlords are good landlords. We are not trying to create a system in which they cannot function and cannot evict people when they need to; we are trying to create a system that is fair. The Labour Front-Bench team were fortunate to go to Berlin recently to see, as many people have, the system of renting that people have there and to look at some of the other models. There are lots of lessons to be learned from other countries.

I should make progress. The Guardian and ITV investigation into the private rented sector, which has been talked about and has forced a U-turn from the Prime Minister, is worrying. Despite the Government estimating that there are 10,000 rogue landlords, not a single name, at the time of that investigation, had been added to the database; that was in October, which was more than six months after its launch. One wonders what the point of a rogue landlord database is if the rogue landlords have not been identified. The Mayor of London’s database has more than 1,000 entries. I hope that the Government, through the Minister, can update us on where the rogue landlord database has got to today.

The Government announced that they would give £2 million to local authorities to take action against bad landlords, but that amounts to £6,000 per council. Meanwhile, the trading standards teams expected to enforce new legislation such as the Tenant Fees Bill have seen enforcement officer numbers go down by 56% since 2009. These teams have faced funding cuts of almost £100 million since 2010. Local authorities overall have had billions of pounds taken away from their budgets. In that context, £6,000 does not feel like enough.

The Opposition recognise that the scale of the challenge means we need a more radical response—a consumer rights revolution. We have a commitment to end unfair evictions. I am proud that my local authority, Croydon Council, was the first to pass a motion calling on the Government to scrap section 21. We have committed to give renters greater security, as we have just discussed, with a three-year cap on rent rises. We want to name and shame rogue landlords and introduce tougher fines for those who fail to meet minimum standards, with those fines funding local authority enforcement work. We would properly support landlord licensing. We also want to see greater powers for Mayors across the country to control rents, if appropriate, in high-cost areas such as London.

Inspired by the system in Germany, we have committed to spend millions to kick-start renters’ unions. I spent time at the Labour party conference talking about that with London Renters Union, which has helped many renters out of situations in which they would have struggled on their own. We want root-and-branch reform of the private rented sector. It is too dysfunctional for us to tinker around the edges. The end result of insecure tenancies, unsafe homes or extortionate rents is staring us all in the face. The end of a private tenancy is the leading cause of homelessness today. There are 1.6 million people in chronic debt, and 120,000 children will wake up tomorrow without a home. That is not to mention the extra 1 million people under the age of 35 who are unable to buy their own home and are forced to rent in the private rented sector. For all of their sakes we should reform the private rented sector.

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[Mr Betts]

Everyone would agree that it has been an excellent debate on the report, and that the report has generally been welcomed. I should have referred to the fact that I am a vice-president of the Local Government Association, which should be on the formal record. As well as thanking hon. Members who have contributed to the debate, I thank members of the Select Committee. As the hon. Member for Harrow East (Bob Blackman) said, as usual we produced our report with a unanimous recommendation, having considered the evidence before us. That is how we try to work.

It is true that the majority of landlords do a good job and offer good premises to tenants, who are satisfied with their homes. Our report focused on the bad landlords who really need tougher action to be taken against them. We welcome many of the steps that the Government have taken, but we want to push them further.

We recognise that there is an issue of resources for local authorities—I think the Committee will look again at local government funding in the new year—and, of course, of available properties. The hon. Member for Hertford and Stortford (Mr Prisk) pushed the idea to the Minister of build to rent, which is absolutely right. We also need more social housing. There is also an issue of political will for enforcement at local authority level, which we referred to. We are looking forward to the LGA’s response to the Government about benchmarking.

It is a pleasure to have the Minister back in her place; we all welcome her. She answered many of the points we raised, but I have noted that we did not get an absolute response to some in the time available. We will write to her next week about them. I thank the Government. We will continue to monitor their progress on our important recommendations and their actual actions on them—not just the words, but the action we want to see in due course.

Question put and agreed to.

Resolved,

That this House has considered the Fourth Report of the Housing, Communities and Local Government Committee, Private rented sector, HC 440, and the Government response, Cm 9639.