Private Rented Sector

Damian Collins Excerpts

Wednesday 23rd January 2013 Commons Chamber

[Jack Dromey]

My hon. Friend makes a powerful point, not least because £9 billion of housing benefit is paid to landlords in the private rented sector, so we are right to expect decent-quality accommodation in return.

[Damian Collins (Folkestone and Hythe) (Con)]

Do not local authorities already have powers to enforce measures against private landlords—powers that were given to them by the Housing Act 2004, which was passed by the hon. Gentleman’s party when it was in government?

[Jack Dromey]

As I will explain later, the use of those licensing powers has been very effective in some local authorities around the country.

Labour is calling on the Government to act now to change the private rented sector so that it works for all: for tenants and for landlords. I read with interest an article—it appeared only today—by the right hon. Member for Rossendale and Darwen (Jake Berry), who is Parliamentary Private Secretary to the former Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps). It is entitled, “The private rented sector is blocking aspiration and isolating families”, and the very first sentence is:

“The private rented sector is no longer fit for the people it now serves.”

That is absolutely right. If there is a growing recognition across the House that that is the case, we welcome it.

We cannot have two nations divided between those who own their own homes and those who rent. That is why Labour is determined to find a one nation solution to the problems associated with private renting. Everyone, whether renting or buying, should have a decent home at a price that they can afford and enjoy security in that home. Thus far, the Government have taken some welcome steps in the right direction, but they have overwhelmingly failed to rise to the challenge now posed in the private rented sector.

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[Jack Dromey]

My hon. Friend is right. What we need is a decent homes standard that extends across all homes for rent, public and private, and includes energy efficiency.

A survey carried out by Shelter found that complaints against landlords increased by 27% in the past three years, rising to more than 85,000 last year. These are not minor matters: 62% of those complaints are related to serious and life-threatening hazards, such as dangerous gas and electrics, and severe damp.

[Damian Collins]

I, too, draw the attention of the House to my declaration in the Register of Members’ Financial Interests. On the point I made earlier, local authorities have the power in law to take action against rogue landlords who leave their properties in such a state, including putting the property right themselves and billing the landlord for the work. Why are more councils not doing this?

[Jack Dromey]

They can if they know who those people are and where they live. One of the values of a national register is precisely that it is a light-touch, non-bureaucratic, simple obligation that just asks landlords what their contact details are and what premises they own.

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[Damian Collins (Folkestone and Hythe) (Con)]

In the short time available to me, I want to focus on an area of the private rented sector that gives me particular cause for concern. As we have heard, many people’s experience of the private rented sector will be positive. They will have good landlords with an interest in maintaining good properties because they want to supply the market and to have competitive rents and full properties. That is what a lot of people, institutions and organisations entering the sector will want. As we all know, however, the poorer people on lower incomes or in receipt of housing benefit, who are at the bottom end of the private rented sector, tend to get the worst deal. Those are the sorts of people we see in our surgeries, and Members across the House will be familiar with the situation.

I am particularly angered by the behaviour of some landlords maintaining properties in areas where they know there is a shortage of social housing and a high demand for capacity. They will own a lot of cheap, older properties that need a lot of work done on them, and they are guaranteed an almost constant flow of tenants. Some will be enjoying payments of rent and housing benefit directly from the local authority, giving them a controlled and largely guaranteed income. They will know that in most cases tenants cannot afford to move. If the tenants are unhappy, even though they are renting in the private sector, they do not have the freedom that people with more means have in deciding to end the agreement and move somewhere else. People trapped in that situation will not have the means to move and are stuck there.

Although, as I said earlier, local authorities have the power to take action against landlords who are maintaining properties at a low level that is causing risk of harm to their tenants, those landlords know that by the time the property is inspected by the local authority and a request for change is made, to which the landlord may be resistant, months can go by before anything is done, if it is done at all. The tenants are stuck and the landlords can largely do what they want. That is a disgrace, particularly where landlords are in receipt of housing benefit.

[Jake Berry]

Is not my hon. Friend making a good argument for a massive expansion of selective licensing? Local authorities already have the power to use selective licensing in areas of low demand, and in my constituency that has been used with great success. Is that a good way of regulating landlords?

[Damian Collins]

My hon. Friend makes an important point. Of course, local authorities do already have the power to do that. As the hon. Member for Birmingham, Erdington (Jack Dromey) said, the London borough of Newham has introduced a licensing scheme across its entire area. This should not be a matter of national policy or a compulsory requirement but something that local authorities should have the discretion to enforce at their will. My concern, though, is that the enforcement of a licensing regime might put rents up, because the landlord will pass the cost on to their tenants, and might restrict the number of properties available in the market. Those concerns were also certainly raised in the consultation that Newham itself ran on the introduction of its licensing scheme.

I wonder whether there should be incentives for landlords to be more responsible in the way in which they manage and maintain their properties. Direct payments are probably a topic for debate on another day, but should not a landlord qualify for direct payments of housing benefits that give them a guaranteed income stream only if they maintain their properties at a certain level?

[Mark Pawsey]

Does my hon. Friend agree that a longer period of tenancy with greater security of income would be the exact incentive that landlords need to improve their properties?

[Damian Collins]

My hon. Friend makes an extremely important point. We should certainly consider doing that with regard to the social sector and housing benefits. I do not think that local authorities and the Government should be in the business of paying housing benefit to landlords who do not maintain their properties at a decent standard. We should not be doing that. I think that the guaranteed flow of income and the massive supply of people who are looking for accommodation give us the power to negotiate with the market and the private sector in an important way.

I would also say that private landlords who wish to rent their properties out to tenants on housing benefits should be part of an accredited scheme, run by one of the organisations that represent the housing sector, be it the National Landlords Association or another body. There should be an incentive for people to sign up voluntarily to those sorts of schemes.

The Private Sector Tenants’ Forum, which was consulted by the London borough of Newham, said that its tenants

“had some concerns—above all, that landlords should not be discouraged from letting properties and that licensing costs for landlords should not increase tenants’ rent levels. They also wondered if the regulations could be enforced effectively in practice.”

That is my one concern about the national register of landlords proposed by the Opposition. It is fine in principle but, on the ground, the local authority needs to have the resources to enforce the agreements and check the properties. I suspect that the reason why hon. Members from all parties have raised the concerns that they have about the state of properties in the private rented sector is that local authorities are not making those checks or enforcing measures against the private sector landlords. Perhaps the authority does not have the resources to do so. It would seem from what the London borough of Newham has said that it hopes that the licensing scheme will pay for some sort of enforcement, but I doubt whether that would be possible.

[Graham Jones]

Will the hon. Gentleman give way?

[Damian Collins]

I want to conclude my remarks so that other Members can speak.

We should consider some sort of incentive scheme so that private sector landlords who are in receipt of state money and benefits have to maintain their homes to a decent standard in order to qualify for those benefits. That would give us some control at the bottom end of the market and, I hope, the ability to influence positively the accommodation and standard of living of many of the poorest people in our society.

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[Damian Collins]

Does my hon. Friend agree that the landlords who are happy to flout the current law on what is considered to be a decent standard of home will not be concerned about new regulations, because they will flout those too?

[Mark Pawsey]

Absolutely. Other hon. Members have made the point that councils have the powers to deal with rogue landlords. We need councils to use them. The Department for Communities and Local Government states:

“Councils already have powers to require landlords to take action to rectify hazards in their property and where landlords resist, to make and charge for improvements, and to prohibit use of the affected parts of the property.”

The question for the House is what the Government should do to encourage local authorities to make greater use of their existing powers. I hope the Minister refers to that.

Hon. Members have mentioned letting terms. Many tenants and landlords believe their agreements should be for either six or 12 months, but as we have discussed, there is no reason why they should not be longer. A longer-term agreement is often in the interests of both tenant and landlord. Many investors in residential property are in it for the long term. I accept the point made by my hon. Friend the Member for Rossendale and Darwen (Jake Berry) on the terms of buy-to-let mortgages, but not all properties are subject to those. One piece of evidence that the Communities and Local Government Committee hopes to uncover is the proportion of accommodation in the sector that is subject to such mortgages and the proportion that is owned outright by investors.

Tenants often want the greater security of a longer period. I would like the situation that exists in commercial property whereby people promote and advertise the properties available on the basis of the length of the letting term. Some landlords will always want to let for a short term, but those properties should be identified as such.

I look forward to the Committee’s work in talking to representatives of landlords, tenants, letting agents and councils, so that it can better understand what is happening in the sector, what is working well and what is working badly, the current state of the market, the different perspectives, and how the sector can be improved. However, I subscribe to the premise that regulation is unlikely to be the solution to all our problems. I will therefore have great pleasure in supporting the amendment.