Selective Licensing of Landlords

Graham P Jones Excerpts

Wednesday 3rd July 2013 Westminster Hall

[Graham Jones (Hyndburn) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, for what I believe is the first time. During this short debate, I want to make the case to the Minister that the Government should introduce measures to amend selective licensing of private landlords in order to allow local authorities to tackle poor-quality rented housing. They should do so by amending the Housing Act 2004 to create a third reason to bring forward a licensing scheme, adding to that of low demand and/or antisocial behaviour. I am talking about changes that will allow local authorities to add new licence conditions if they so choose.

At the moment, there is a huge problem, which is recognised by hon. Members on both sides of the House. Chronically poor housing persists, and in some areas, such as Haslingden and Hyndburn—my constituency—in huge concentrations. Local authorities are not fully able to enforce the housing standards enshrined in the 2004 Act—notably, the housing health and safety rating system. In itself, that is an inadequate standard that does little to tackle anything but the absolute worst of conditions.

Most local authorities faced with concentrations of poor housing do not have the resources to inspect, report, prosecute and enforce housing standards. Amending the 2004 Act would allow councils to fund, by means of selective licensing schemes, enforcement of decency standards as applicable to the area and as deemed appropriate by the local authority. That would bring the private rented sector into the 21st century. The Local Government Association has come out in support of that approach, and a large number of local authorities support the extension of the selective licensing system to cover qualitative standards in the rental market. That approach would, by the very nature of a selective licensing scheme, focus on areas of particularly poor housing and, crucially, it would meet the original aim of the Act—to improve housing standards.

In Haslingden and Hyndburn, low demand has led to considerable speculative property buying, resulting in a bloated private rented sector. Those areas typically contain old housing stock. They are areas of existing low demand and low value.

[Mr Jim Cunningham (Coventry South) (Lab)]

I totally support what my hon. Friend is saying about a licensing scheme and expanding the abilities of local authorities to help, but does he agree with me that something should happen in addition to that, particularly in relation to poor housing? The Government should consider a return to what we used to call improvement grants, which were abolished by the previous Conservative Government. Also, given that rents are going through the roof, that should be examined.

[Graham Jones]

Those are obviously two further issues, on top of the issue that is being discussed today. I certainly would call for a review to consider those two aspects of housing market renewal or housing regeneration. Obviously, on the grants issue, all Governments must now face up to the economic reality of Government expenditure. In the future, that issue may be a consideration, but I would like to focus today on the selective licensing aspect as a part-way answer to that shortfall in funding, which my authority certainly used to receive.

According to the Hyndburn stock condition survey, 78% of the stock in Haslingden and Hyndburn is pre-1919, compared with the national average of 45%. Entire streets are almost exclusively owned by landlords, to the extent that people are conscious of what I will describe as “landlorded” areas, where renting but more particularly buying is avoided. In my constituency, 15% of the stock is privately rented—that is the old figure; the percentage is rising, as it is nationally—compared with the national figure of 11%. However, when we zoom in on the poorer areas, we find much higher concentrations of privately rented properties in particularly poor condition, which are often owned by a small number of individuals. According to the last Hyndburn borough council stock survey, 26.6% of private rented properties had category 1 hazards. That is the highest rate of any form of tenure. If we zoom in on the Spring Hill and Scaitcliffe areas, the rate rises to 52.4%. If we looked at specific neighbourhoods or streets, it would be considerably higher still.

Despite the existence of legal powers and the duty on councils to enforce the housing health and safety rating system, there is still a high number of non-decent and dangerous homes. Hyndburn council has had the deepest budgetary cuts. It was surpassed in percentage terms only by Great Yarmouth and neighbouring Burnley. The figure was 16.9%, making it particularly difficult to employ staff to do such work. The reality across the UK is that councils do not have the resources to enforce and prosecute when it comes to the housing health and safety rating system. Extending the scope of selective licensing would in part resolve that.

[Andrew Stephenson (Pendle) (Con)]

I congratulate the hon. Gentleman on securing this debate on a very important topic. As he will know, my constituency faces similar housing challenges to his. There are well over 1,000 empty properties and similar problems with rogue landlords. I know that he is very keen on selective licensing, but does he not agree with me that voluntary landlord accreditation schemes, such as the one operated by Pendle borough council, can deliver the same kind of results as he hopes to achieve through the extension of the selective licensing regime?

[Graham Jones]

In part, I share the hon. Gentleman’s ambition for voluntary accreditation schemes. In Hyndburn—in the wider constituency—there are 2,500 to 3,000 empty properties. I find that the accreditation schemes go some of the way and encourage those who wish to participate and to provide a tenanted property of a decent standard, but the rogues or poor landlords or long-distance landlords do not want to be accredited and do not participate in such schemes, and they are the people who are the target of any action to try to improve a neighbourhood, a particular property or the conditions for an individual or a family. Accreditation schemes have a role to play and can offer advantages, such as discounts in the licensing scheme; accreditations are often a passport to a reduced licence fee. There we have a reason to have an accreditation scheme, and such a scheme does encourage higher standards. But when it comes to minimum standards, we have to go further. One sits above the other, I believe.

The work load of the council in dealing with private landlords and the sector is disproportionately large because of the size of the rented sector in the constituency of the hon. Member for Pendle (Andrew Stephenson) and in Haslingden and Hyndburn. Adding simple standards to a licence would be no great burden to the scheme, either financially or in terms of time spent on inspections, with the licence fee funding the extended enforcement activities of environmental health officers and landlord accreditation officers within the scheme.

I shall now deal with the effect that poor-quality homes have on the housing market, which is an important and neglected aspect of this matter. Poor-quality housing is one of the most visible social problems where it is prevalent, and unfortunately in many areas there are large concentrations of extremely poor privately rented properties. As well as the individual tragedy for the young family or particularly the young children in those properties being forced to live in unacceptable conditions, poor landlords cause wider degeneration issues. Streets and neighbourhoods quickly go into decline. While the south of the country and other high-demand areas are suffering a housing crisis of under-supply and high rents, low-demand areas are suffering an altogether different housing crisis—a crisis of substandard accommodation and unwanted properties to let, which are often abandoned. It is the mark of a civilised society that landlords provide tenants, and crucially their children, with basic elements to a property, such as double-glazed windows, a decent heating system, good insulation, safe electrics, and a reasonably modern kitchen and bathroom, which we would all expect in a property in which we lived.

People do not wish to live in sub-standard housing. Tackling low-demand and anti-social behaviour is important in itself, but it is not enough. Low-demand areas turn quickly into streets full of voids, as in my constituency and the constituencies of the hon. Member for Pendle and other hon. Members. Streets are effectively abandoned, which brings down the whole neighbourhood for a generation. The old ways of regeneration through Government grants have gone, for the time being. We must accept the economic times in which we live, and such a licensing scheme is an answer to that reality—a change for the future.

Standards should be another basis for selective licensing, because they fit with the original purpose of the powers, as defined in the 2004 Act. Poor housing standards are hugely damaging to the housing market in an area. They result in people living in areas they no longer wish to be in, lead to negative equity for innocent owner-occupier neighbours, and explain in part why one in 13 properties stands empty in my constituency. There needs to be recognition that undesirable, poor-quality private sector housing is a cause, as well as a symptom, of low demand and weak markets. Making such a change would complement the original aims of selective licensing. The Minister might be able to point to many examples where that is not the case, but I would make a powerful case—one that I am sure he would accept—that in too many areas poor standards are a reality and local authorities should be allowed to license landlords and bring housing up to a reasonable standard. I hope that he will not respond by simply restating that local authorities already have such legal powers; he must recognise that there are problems in the private rented sector that are not being resolved in the existing framework.

These are austere times, when Government programmes for deprived neighbourhoods have all but run dry. Driving up conditions through selective licensing could rebalance housing markets and provide prospective residents and tenants with greater confidence. Cash-strapped town halls need new, more value-driven solutions to the problems of poor housing; a modified 2004 Act might just provide them. Selective licensing was brought in to deal specifically with the problems of declining neighbourhoods, and now it must be extended to meet that ambition.

In conclusion, the private rented sector cannot be seen in isolation from the wider housing market and owner-occupation. Aspiration cannot be removed from whole neighbourhoods. Tenanted families should have the right to a property we ourselves would call a home: double-glazed windows; a decent heating system; good insulation; safe electrics; and a modern kitchen and bathroom. If we make a very small change in the law, we could begin to tackle endemic poor standards in the private rented sector, which would, importantly, give the young children of the future the hope of a better life—a decent life—away from squalor and, more crucially, begin seriously to tackle low demand and regenerate some of England and Wales’s most deprived areas.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Hyndburn (Graham Jones). He is a passionate advocate for this important issue and I am genuinely grateful to him for raising it. As I will say in a moment, this is our second time discussing these issues in a relatively short time.

As the hon. Gentleman knows, the private rented sector is an important part of our housing market. Some 3.8 million households live in the sector, which has seen a huge increase from including 9% of all households in 1988 to about 17% now. The Government actively support that growth. Our “build to rent” fund will support new high-quality, large-scale development for private rent. Notwithstanding the problems he raises, most private sector tenants are happy with their home and the services they receive: the English housing survey found that 84% were satisfied with their accommodation, compared with 77% of local authority tenants. The average tenancy has extended, and now lasts for about two years; nearly 20% of tenants have lived in the same property for more than five years. Importantly, the same survey found that 91% of tenancies were ended by the tenant, rather than the landlord. It is pleasing to note that rents are stable. The latest figures from the Office for National Statistics show that over the past year rental increases were below inflation: in England, they rose by 1.3%, while in London, the figure was higher at 2.2%, but still below inflation.

I know the hon. Gentleman and many members of his party have been keen to push for a national register of landlords. The Government have rejected that proposal, not least because it would cost some £330 million over 10 years—costs that would be passed on to tenants. He rightly raised concerns about some landlords, and I am aware that a minority of landlords fail to meet their basic responsibilities: they neglect their properties and exploit their tenants by placing them in unsafe and unsuitable living conditions. We should focus our attention on them; a point he rightly raised today. Frankly, those landlords have no place in the sector and we are determined to take firm action to crack down on them, which is why earlier today we announced that £3 million of funding would be made available to support local authorities dealing with particularly acute and intractable problems caused by rogue landlords. I am sure that we will discuss access to that funding with the hon. Gentleman.

We have been concerned in particular about beds in sheds—the extreme manifestation of rogue landlord problems. Backed by £2.6 million of Government funding, more than 500 illegally rented outbuildings and overcrowded homes have been discovered. Just this morning, a successful raid was carried out in Hillingdon, where two sheds were found to be being used as illegal accommodation, two of the occupants of which were found to be illegal immigrants and were detained by the police.

I know that many properties in the hon. Gentleman’s constituency are old, frequently in poor condition and, as he said, expensive to heat. Such homes can be less desirable than more modern buildings, and therefore more difficult to rent out, so the properties stand empty for long periods, blighting the local area. Of course, where a property is in a dangerous state of disrepair and there is a risk of harm to the occupants, the local authority should make use of the powers under the 2004 Act to take enforcement action. I discussed that with the hon. Gentleman when we met last month. In some areas, where demand is low, landlords need support to improve empty homes and bring them up to modern standards, which is why my Department gave a grant of £9.4 million to the Pennine partnership, which includes his constituency, to help refurbish and bring empty properties back into use. Hyndburn borough council received a £3.8 million share of that grant to develop the Woodnook neighbourhood, which will be complemented by a loan of £2.5 million from round 1 of the Get Britain Building fund.

[Graham Jones]

Will the Minister give way?

[Mr Foster]

I am happy to give way. I want to illustrate that we are providing support to housing of the type that the hon. Gentleman describes in his constituency.

[Graham Jones]

I want to put it on record that the meeting we had a month ago was very constructive. I acknowledge that £3.8 million has come to the Hyndburn area for some 200 properties. My wider point is that we have 3,000 empties and 4,000 to 4,500 rental properties; the empties are largely part of the rental market. There is a much bigger problem, for which selective licensing would have a broader reach with a broader brush, but I appreciate that we are dealing with 200 properties through the scheme that the Minister mentioned.

[Mr Foster]

I am grateful for that acknowledgement. There is, of course, always more that can be done. The hon. Gentleman will know that we have recently given local authorities the power to increase council tax by up to 100% for empty properties—

[Graham Jones]

rose—

[Mr Foster]

I know what the hon. Gentleman is going to say.

We have also given local authorities the power to increase council tax for such properties by 150% after two years. Let me just say to the hon. Gentleman—[Interruption.] I will let him intervene, and I will then answer the question I know he is going to ask.

[Graham Jones]

I think the Minister knows what I will say—he is correct in saying that. I hope that I represent the hon. Member for Pendle in saying this, because it affects us both. We are in a unique position in that our areas are not in a unitary authority, so the rise in council tax cannot be put back into dealing with empty properties because it all goes to the shire authority, to be spent on other services. That is a problem that we face in local government structures, so although the measure is welcome, it is not helpful on the ground.

[Mr Foster]

May I just say—as I was going to, because I knew that that was the matter that the hon. Gentleman would raise—that the measure puts pressure on landlords to take action to get properties back into use, even if the extra money from the council tax does not go directly into the local council? It is, therefore, an important measure, in that it puts additional pressure on landlords.

The hon. Gentleman has rightly acknowledged that local authorities have a range of powers with which to tackle problems with poor housing, of which selective licensing is just one. He also rightly said that, at the moment, selective licensing can be introduced only when a local authority is able to demonstrate that a particular area suffers from low housing demand or has a significant and persistent problem with antisocial behaviour. Selective licensing is not, of course, the only solution. It is important to remember that local authorities have other options open to them. One such option, which we strongly support, is to introduce a voluntary licensing scheme for landlords, which can, and does, help to raise standards across the board. My hon. Friend the Member for Pendle (Andrew Stephenson) referred to one such successful scheme in his constituency.

The hon. Gentleman suggested that the criteria for selective licensing should be made more flexible, by way of an additional criterion enabling it to be introduced when a local authority has general concerns about the quality of housing. Given that other enforcement powers are available, I am not yet—and the hon. Gentleman should note that I stress that word—convinced that that is necessary, but I am aware that there is little information about the use or impact of landlord licensing, whether selective or voluntary.

[Graham Jones]

Although the Minister and I have always had a constructive dialogue and share a similar thought process on the matter, we diverge slightly on this point because I believe that there is a role for selective licensing.

Regarding the two schemes, the housing health and safety rating system is run from within the revenue grant of a local authority—I have stated Hyndburn’s position—and the inspectors involved in landlord licensing cannot inspect for that scheme because it is a separate stand-alone one. There is a bilateral system, with two schemes being run in parallel, and there is a case for arguing that they come together.

[Mr Foster]

I note the hon. Gentleman’s point. I remind him that because the Government have removed much of the ring-fencing from local government funding, it is for local government itself to decide how to make use of the funding.

May I now be positive? I recognise that perhaps we do not have enough information about the impact of licensing schemes, and I have, therefore, asked my officials to gather information over the summer on how the schemes are used and on the impact they have locally, and I hope that the hon. Gentleman will be willing to contribute information that will help us in our consideration. Although there are no immediate plans to review the legislation, we are keen to ensure that local authorities are able to use it proportionately and effectively. The information gathered on how existing licensing schemes work in practice will be used to inform an update of the current guidance for local authorities on selective licensing.

I am grateful to the hon. Gentleman for raising this issue. It is important that local authorities have the right tools to manage housing in their area as effectively as possible, while not putting undue burdens on landlords who already provide a good service. I hope that the hon. Gentleman will recognise that I seek to be as helpful as possible. We need more information before any further decisions can be taken, and I hope that he will participate by providing information that will help us.

[Graham Jones]

I want to place it on record that the Minister is trying to be as helpful as he possibly can, but I would like to see the Government go further and faster, and a visit to some of the worst areas might accelerate their thinking on the issue.

[Mr Foster]

I am grateful for the invitation to visit the hon. Gentleman’s constituency, and if the opportunity arises I will certainly do so. I should say, however, that I have recently made visits around the country, not least to look at empty homes—we are determined to do as much as we can to help bring them back into use—and I have had the opportunity to see areas that are very similar to the one I suspect I would find if I visited the hon. Gentleman’s constituency. Nevertheless, if I get the opportunity I will pay such a visit.

I am grateful for the hon. Gentleman’s generous remarks. We are trying to be as helpful as we can. I know that he would like us to go further, but I cannot commit to that without having more information. However, we will certainly look at the information we gather over the summer and see where it takes us.