Private Rented Sector

Ian Mearns Excerpts

Wednesday 23rd January 2013 Commons Chamber

[Mr Prisk]

For the Minister to decide at the Dispatch Box that every home owner and letting agent should now have to have double-glazing would be very unwise, as I am sure the hon. Gentleman understands. We want to ensure that a national register is identified as costly and, to be blunt, probably highly ineffective because the rogues will flout it, much as they do the current law. Enforcement is the key.

[Ian Mearns (Gateshead) (Lab)]

Will the Minister give way?

[Mr Prisk]

I want to move on to the second issue, because I want to ensure that we deal with the crucial question of agents.

That second issue is the question of fees. The hon. Member for Birmingham, Erdington has told us that he wants to end confusing or inconsistent fees and charges that can be levied by some letting and management agents. I agree. I have seen clear evidence of bad practices in the letting sector, especially in the Which? report, which identifies that there are practices that need to be ended.

Our goal is that landlords and tenants should understand in advance the fees and charges that agents will levy. They will then be in a position to make informed decisions about whether to use their services. Frankly, that is not the case at present, and the hon. Gentleman is right to highlight that. There is widespread agreement that we need to drive up standards across the lettings sector and drive out the rogues. In practice, that means that we should be making better use of the existing consumer protection legislation, which already outlaws many of the practices that affront our constituents.

Good self-regulation is expanding across the sector. A clear majority of letting agents are now part of a self-regulatory scheme and more than 8,000 are now part of the Property Ombudsman, or TPO, scheme, ensuring that both landlords and tenants have access to redress when things go wrong. We are determined to extend that further, but the Government recognise that this is a complex area that needs careful consideration. Indeed, that was the discussion I had with the then Minister, Ian McCartney, in the debate to which the hon. Gentleman referred. I can tell the House that the Office of Fair Trading will shortly report on the lettings sector and I and my colleague, the Under-Secretary of State for Communities and Local Government, the right hon. Member for Bath (Mr Foster), will be keen not only to read but to consider its recommendations and see what more can be done.

Understandably, the hon. Member for Birmingham, Erdington talked about the need to give families who rent greater security and

“remove the barriers that stand in the way of longer term tenancies”.

We did not quite get the admission that that might involve compulsion of landlords. I think he started to veer that way, but saw sense at the end as the practicalities are very challenging.

I think it is right to strike a careful balance. We can all understand that families with children will want greater stability, especially if the youngsters are at school, but we also know that many people prefer shorter tenancies and do not want to commit for the long term. We need to be careful not to reduce the flexibility of the framework, given the wide and diverse range of renters in the market today. The latest evidence shows that most tenants in the sector stay for at least a year, not the six months that the hon. Gentleman mentioned. Indeed, in 2010-11 more than 40% of private tenants had been in their home for more than two years, and 20% for more than five years.

It is worth correcting the record by stating that only 9% of tenancies are terminated by the landlord. In the large majority of cases, it is the tenant who terminates the tenancy. That is not surprising if we stop and think about it for a moment, as for many tenants the key advantage of renting is that flexibility. Only a couple of weeks ago, I went to south Newham, to Canning Town, to meet young workers who rent at the new Fizzy Living scheme. The hon. Member for West Ham (Lyn Brown), who represents that constituency, was here a moment ago but has now left. Those workers made it very clear to me that a six-month deal is exactly what they are looking for and that they do not want greater rigidity and inflexibility. We must recognise that the people who rent now are a far more diverse range than they were five, 10 or 15 years ago and that the flexibility in the system must reflect that reality.

--- Later in debate ---

[Ian Mearns (Gateshead) (Lab)]

In moving the amendment, the Minister referred to a dysfunctional housing market in some areas for 15 to 20 years. When I was seeking re-election as a councillor in 1987, my election leaflet called for regulation of the private sector in the housing market, because in my first term of office, from 1983 to 1987, we came across a range of antisocial behaviours that emanated mainly from tenants in private rented houses in central Gateshead.

In other parts of Tyneside we saw scenarios building up where properties were bought for cash at auction and immediately let to tenants who the landlords knew would cause trouble in the neighbourhood, bringing down the value of surrounding properties, which would then be brought up for cash at auction, and so on. What was behind that? It was the fact that money could be laundered by buying up houses and then getting a legitimate income stream by letting to tenants who would be in receipt of housing benefit.

[Jake Berry]

Will the hon. Gentleman give way?

[Ian Mearns]

I will not. I am going to make progress.

Ill-gotten gains were being used to buy up properties in order to secure a long-term income stream, paid for by the taxpayer. For some of those private landlords, there is no doubt that the whole idea behind the ploy was that the surrounding properties would also fall prey, and so on, leading to a spiral of decline.

Of the three sorts of rented properties that we normally talk about, the private rented sector is now in receipt of the greatest amount of housing benefit, with £9.2 billion going into that sector. When so much hard-earned public money—£9.2 billion of hard-gotten taxpayers’ money—now goes into the private rented sector, why would we not want to regulate the recipients of it? There are, I am afraid, many rogue landlords all around the country, but housing markets in different parts of the country are very different. By regulating letting agents and management agents, we will be able to protect tenants, reputable landlords and the reputations of trustworthy agents. A national register of landlords would allow local authorities to strike off rogue landlords and stop them receiving public money in the shape of housing benefit for properties that are not well managed, but often cold, damp and dangerous for the tenants.

Frankly, it is a national scandal that public money is going into the pockets of rogue landlords, subsidising them through housing benefit. Although the Government might disagree, I ask them to reconsider, given that regulation of the private rented sector is a two-way stream, with safeguards for landlords and tenants, bringing the support of the law and local regulatory authorities to the aid of both, in what can sometimes be, frankly, murky legal territory.

I note that one Government Member suggested perhaps withholding benefits from landlords who do not maintain their properties, but how would that work in practice without a register? Quite often, the same landlords will have properties in many different locations, and if they are adopting such practices in one place, we can virtually guarantee that the same thing is happening in many others. There are many things in this market that need to be cleaned up, but we should absolutely be doing so, because it is being subsidised by the public purse.