Private Rented Sector
Debate between Frank Dobson and Simon Danczuk
Frank Dobson
I agree entirely with my hon. Friend. I think I invented the phrase “social cleansing” and sometimes I refer to it as the lowland clearances, which might be of interest to our colleagues in Scotland.
A headline in The Sunday Times stated: “Buy-to-let returns top 10 % a year: Investors piling into the market as yields soar”. The supply is not soaring, but the yields are and it is time we shifted the balance in favour of the tenants, with greater security, and longer tenancies. I believe that we cannot afford to avoid introducing rent controls. In fact, I would go further and say that there should be a progressive reduction in the level of some of the rents and that, in future, rent increases should be tied to wage levels.
We of course have the problem of the massive increase in house prices, which is a major factor in the rise in rents. One of the biggest factors is foreign buyers. Some of them buy property in London to live in, but they are a small minority, because most of them now buy residential property simply as an investment that they leave empty. To read another Evening Standard headline, “Super-rich from overseas flock to buy homes in London”. They do not intend to use them as homes; they are simply an investment that is better than putting their money in gold. They cause double damage to people in London: they drive up prices; and they take a lot of housing out of supply, because the places that they buy and do not occupy could be occupied by other people.
We cannot stop EU citizens buying residential property in this country, but we can stop other people doing so. The Government have established a precedent, because they have said that a private landlord must not let to a tenant who is not lawfully in the United Kingdom. I believe that we should change the law so that people cannot sell residential property to somebody who is not entitled to be in the United Kingdom. That would have a dampening effect on these massive rises in house prices.
As the Government are now scrambling around in contemplating sanctions against Russia, may I suggest that, as a pilot scheme, we quickly pass a law to prevent Russian oligarchs from buying houses and flats in this country unless they are entitled to live here, because all that happens is that landlords, estate agents and property companies are making money? They have contributed little or nothing to making London a better place to live. In the southern tip of my constituency, which includes Covent Garden, people—with their children or their parents—battled for years in the 1970s to prevent the wholesale destruction of Covent Garden and to preserve it as the great success that it has become, but they can no longer find anywhere in Covent Garden to live, because properties are bought up by other people, whether British bankers or foreign owners.
We also have the problem of Crossrail, which has cost £16 billion, most of which has come from the taxpayer. With a fanfare of trumpets, the people now running Crossrail have announced that some firm of valuers is predicting, again to quote the Evening Standard, that “Crossrail ‘will boost property prices by up to 25 per cent’”. It has cost billions of pounds of taxpayers’ money, but someone else will benefit from the increase in property values.
In all I have said, I have been very careful to avoid mentioning any socialists, and I will now mention a very unsocialist person. He said:
“Do you think it would be very unfair if the owners of all this automatically created land value due to the…enterprise of the community…had been made to pay a proportion…of the unearned increment which they secured, back to…the community?”
That was Winston Churchill at the great Free Trade hall in the great city of Manchester in 1909. He was right then, and he is right now. My view is that if there is to be a massive increase in property values as a result of Crossrail—I have always supported Crossrail—the public should get some of it back.
I will quote somebody else:
“Both ground rents, and the ordinary rent…are a species of revenue, which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry.”
He went on to suggest that rents are
“the species of revenue which can best bear to have a peculiar tax imposed upon them.”
That is what Adam Smith said in the “The Wealth of Nations”. If the Tories claim to be Churchillites or say that they support the Adam Smith Institute, it is about time that they adjusted some of their policies in line with what those distinguished people advocated.
It seems to me that there will be no prospect of ordinary folk continuing to afford somewhere decent to live in London until we introduce rent controls and reductions, introduce a tax on gratuitous increases in values accruing to landlords, and do something to stop the stinking rich foreigners buying up residential property in this country. When people talk about immigration, they say that there will be all sorts of burdens on the infrastructure. The suggestion seems to be that there will be such a burden only when poor people come here. The fact is that the people who are recruited by the City from abroad also want somewhere to live. They impose as great a burden on our housing stock as anyone else. I therefore think that we need a much more radical approach. That no doubt betrays me, yet again, as being not old Labour, but heritage Labour.
Simon Danczuk (Rochdale) (Lab)
I genuinely enjoyed the speech by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane). I also enjoyed knocking on doors in his constituency a few weeks ago in the pouring rain. I am pleased to have helped him get into this place.
I am speaking in this debate because I am a member of the Communities and Local Government Committee, which conducted the inquiry, and because this issue is thoroughly important to my constituency as many of my constituents live in the private rented sector. This inquiry is one of the most interesting and important inquiries we have conducted because it relates to a large proportion of the British population. I enjoyed the inquiry and found it particularly informative. I will canter through three issues: simplifying the legislation, empowering local government and thinking about the long term.
The Chairman of the Committee mentioned the importance of regulating the private rented sector, as did others. He also mentioned that tenants, landlords, local authorities and everybody else who is involved in the sector find the legislation complicated. It adds to the costs, causes confusion and creates a lot of hassle for those who want to rent a house. I hope that the Government will review the legislation to make it clearer and simpler.
As the private rented sector is so large nowadays, there is an opportunity for the Government to conduct a public information campaign on how it relates to tenants and potential tenants. There are also issues with letting agents, as the hon. Member for Harrow East (Bob Blackman) and other Members pointed out. It is important that there is a breakdown of the fees that tenants are paying. There is a view that there should be a national licensing scheme, but although I agree that national guidelines could be useful, I think that is done better by local authorities. Local government needs the ability and flexibility to decide its own licensing schemes that are particular to the local housing area.
On localism, local authorities should be given more powers to tackle rogue landlords, but we should bear it in mind that there are also rogue tenants, as has been pointed out. There are 1.2 million landlords, many of whom could be described as accidental. The vast majority are good, but there are a few rogue landlords who treat people badly and prey on vulnerable people, particularly the old, students and immigrants. That needs addressing by giving local authorities greater powers to impose penalty charges and the chance to recoup costs.
Frank Dobson
Does my hon. Friend agree that we need to address the problem of people who cause a massive nuisance to their neighbours, because the present laws and practices are quite pathetic?
Simon Danczuk
I completely agree with my right hon. Friend, and there is an issue about rogue tenants, which is the point I am making. On unscrupulous landlords, my right hon. Friend mentioned the subsidy through housing benefit, and those rogue landlords are often receiving public money, using it badly, and treating their tenants badly. There is a need for greater powers for local authorities.
On the longer term prospects, I have two quick points. First, as the hon. Member for Harrow East said, there is a real issue of people wanting longer term tenancies. The Government can do something to help and assist that, perhaps by looking more closely at Germany in creating longer term tenancies, particularly for families and those who want to stay in a location for a lot longer than they currently do. Finally, in the long term more broadly we need to start building more homes. Whether this Government or the next get that under way—whichever party is in office—that is the key to this complex problem.