Private Landlords and Letting and Managing Agents (Regulation) Bill Debate
Full Debate: Read Full DebateJacob Rees-Mogg
Main Page: Jacob Rees-Mogg (Conservative - North East Somerset)Private Landlords and Letting and Managing Agents (Regulation) Bill
Jacob Rees-Mogg Excerpts
Philip Davies
I am glad that the hon. Gentleman has highlighted another area where we have worked together: raising money for the part of North Yorkshire where that sad event took place. The point I was making was not a matter of opinion, however; it was a matter of fact. The vast majority of complaints I get in my constituency about landlords are about social housing providers, not private sector providers. I was offering that up not as an opinion but as a fact. We should perhaps focus on what social housing providers are doing incorrectly.
There is one respect in which I have a lot of sympathy with the hon. Member for Mansfield, and that is on his point about antisocial behaviour; he is on to something there. Again, this is from personal experience—from speaking to people in my constituency, including those who come to see me at my surgery. Getting antisocial behaviour dealt with by a social housing provider may well be a far-too-long—incredibly long—and tortuous process, but I have evidence to suggest that social housing providers take the issue seriously, as do the local police. In my constituency, there has been some terrible antisocial behaviour by tenants in the private rented sector, but the problem is that as long as a tenant pays the rent and keeps the house in a decent manner, the landlord, who may live in another part of the country, or a different country, is not really that bothered about the tenant’s antisocial behaviour in the local community. There is an issue about landlords’ responsibility for dealing with their tenants’ antisocial behaviour, and for helping the local community by being inclined to help have tenants evicted, if there is evidence to suggest that they are causing a menace.
Jacob Rees-Mogg
(North East Somerset): I am grateful to my honourable and almost dirigiste Friend for giving way. I wonder whether it occurs to him that it is easier for private landlords to remove antisocial tenants, because under assured shorthold tenancies it is relatively easy to remove people. It is therefore swifter in the private than in the public sector.
Philip Davies
I absolutely agree, as ever, with my hon. Friend. If private sector landlords are minded to evict a tenant, it is easier for them to do so; he is right. Perhaps he has put his finger on what would help social housing providers to evict problem tenants quicker: less regulation, rather than more regulation. The situation that I am referring to—I do not know whether the hon. Member for Mansfield has this in mind—is one where the private landlord has no interest in evicting the person causing the problem, because that person is paying the rent on time and is not causing havoc in the house. The landlord is quite happy; why would they go through the hassle of trying to find a new tenant to replace someone from whom they are getting a steady income?
Jacob Rees-Mogg
The vision is of an antisocial tenant who causes a nightmare for his neighbours, but the one thing he does properly is pay his rent and look after the house. That is not likely to be true in most cases. People who are antisocial in their behaviour are antisocial generally, not just to their neighbours, so in most cases the landlord is likely to have a strong incentive to act. To legislate for the exception is a mistake that my hon. Friend normally guards against.
Philip Davies
My hon. Friend is right; I do not disagree with anything that he said. The point I was making is that the hon. Member for Mansfield is on to something, and there is a potential issue here. I say that only because the issue has arisen, and been raised with me, in my constituency; that is why I am aware that this can be a problem.
Philip Davies
The hon. Gentleman has shown the true face of the Labour party. He cannot understand that a requirement on somebody is more legislation and more regulation. He seems to think that requiring someone to do something that they are not currently required to do does not mean more regulation and legislation. Of course it does. I am not aware that anybody has said they think that written agreements are a bad thing. The hon. Gentleman falls into the typical socialist trap of thinking that just because he believes that something is a good idea, we must impose it on everybody, regardless of whether they think that it a good idea and want it. In effect, he thinks that he knows best what everybody should do, and that he should impose his view of the world on absolutely everybody. He is clearly a socialist, so of course he believes that. I am not a socialist, so I do not.
Jacob Rees-Mogg
Is it not the case that if we enforce written agreements, we give more jobs to lawyers—we have enough lawyers in this country already—and increase the expense for the people participating in an agreement, who may be great friends and may feel that they do not need reams of legal protection?
Philip Davies
I have great sympathy for my hon. Friend’s view. I agree. I am not sure whether the hon. Member for Hammersmith (Mr Slaughter) wishes at this point to declare his profession in the legal world or otherwise. He is welcome to do so.
Philip Davies
You are right, Mr Speaker. I certainly would not have mentioned early-day motions if they were not relevant to the Bill, as I hope you appreciate. The hon. Member for Mansfield misunderstood my point. I was commending him for signing so many early-day motions. It is a sign of how active he is as a Member of Parliament and I am grateful for the support that he has given me in the past.
The point that I was coming on to, which I hope Mr Speaker will agree is relevant, is that one early-day motion that appeared to escape the hon. Gentleman’s notice was No. 233, which was entitled “Regulation of the private rented sector”. It was tabled by the hon. Member for Edmonton (Mr Love) and had a great deal of support from the usual suspects, like the hon. Member for Islington North. It stated that the House
“notes with concern the Government’s decision to abandon plans for a national register of landlords and further regulation of the private rented sector; recognises that the private rented sector plays a significant role in supporting the housing market in the UK; believes that rogue landlords and letting agents continue to pose a threat to consumers in the private rented sector; further notes the statistic from the Office of Fair Trading that the number of complaints against rogue landlords and letting agents is on the rise; and calls on the Government to bring forward proposals immediately to create a national register of landlords and to propose further regulation of landlords and letting agents in the private rented sector.”
In relation to the views of the hon. Member for Mansfield, it seems to me that that early-day motion was very much on the money, but it was not among those that he signed. Perhaps he can tell us whether he just did not notice that one—so many are tabled that we cannot notice all of them, and I certainly miss them from time to time, as I am sure we all do—or whether his interest in the subject has been sparked more recently, whereas early-day motion 233 was tabled earlier in this Parliament. It was interesting to note that he had not signed it, given that it seems highly relevant to what he is trying to impose on us today.
Clause 1 would establish a mandatory national register of private landlords. That raises a number of questions about the purpose of such a register. What would it be used for? Who would use it? What would be achieved by such a register? Who would administer it? In subsection (2), a duty is
“placed on all private sector residential landlords to sign up to the Register, and to pay an annual registration fee and provide all the information prescribed in regulations by the Secretary of State as required in the Register.”
I have many concerns about that. The payment of an annual registration fee, which appears to be dictated by whoever is appointed or by the Secretary of State himself, seems to open up landlords to an unlimited cost.
What control will there be over the registration fee? The hon. Gentleman made it clear in his speech that he did not see such a fee resulting in any cost to the taxpayer, which must mean that he expects the whole cost to be covered by the landlord, presumably through their registration fee. However, as we all know, with any kind of bureaucracy we always end up with a narrow focus. I think the hon. Gentleman himself referred to envisaging a light touch, but such measures seldom end up as light touch. They always end up with some empire building and more and more costs being added. At the end of the day, the landlord will pick up the tab. If the Bill were to be enacted, not only would they be picking up a tab, they would be picking up an unlimited tab, because the fees will be out of their control.
Jacob Rees-Mogg
I am grateful to my hon. Friend for giving way once again. He has been prodigiously generous. Does it occur to him, as it does to me, that this is another socialist tax?
Philip Davies
My hon. Friend is right. He pre-empts what I was going to say; I was going to make that very point. This is absolutely a tax on private landlords. The hon. Gentleman said that there would be no cost to the taxpayer, but that will not necessarily be the case. If a landlord is expected to pay a fee—in many cases, my cynicism leads me to suspect, perhaps an ever-increasing fee—the likely scenario is that that fee would be passed on to the tenant through higher rents. That will be how the landlord recoups the money to pay for it.
Obviously, many rents are paid by the taxpayer through housing benefit. I have no doubt that the hon. Gentleman intends that there will be no cost to the taxpayer as a result of this Bill, but he cannot guarantee that, and I would argue the exact opposite. The likely scenario is that this will lead to an increase in costs to the taxpayer through higher housing benefit payments.
Philip Davies
I hear what the hon. Gentleman says, but I am simply not persuaded. There will be a cost to somebody, and it seems inevitable that some of that will be passed on to the tenant—and the taxpayer pays for an awful lot of tenancies. I have no doubt that were the hon. Gentleman the relevant Housing Minister at the time, the fee would be small, but heaven knows what the fee might end up being if the hon. Member for Islington North got his hands on the levers of power. I have every faith in the hon. Member for Mansfield as an individual, but he cannot guarantee who will be holding the post in the future and what the consequence of that may be.
Jacob Rees-Mogg
It occurs to me that the fee must mean a reduction in the tax take, even if it is not added to the rent, because the fee, in the normal course of events, would be tax deductable. Assuming that the landlord is making a profit on his letting, that would come out of the tax payable to HMRC.
Philip Davies
As ever on these occasions my hon. Friend makes an excellent point. Therefore, we can determine quite clearly that whatever is envisaged there will be a cost one way or the other to the Exchequer.
Who will monitor the register? How will it be monitored? How will it be determined when someone becomes a new private landlord and who will ensure that that particular landlord signs up? I am not entirely sure that I can envisage how that will happen in practice. How will existing landlords be made aware that they have to sign up? How will the process of registration of all these private landlords be carried out? What about private landlords who are foreign nationals, and who own a property in the UK but do not live here? How will we go about getting them on the register? How will they be made aware that they have got to be registered? How will they be made to sign up and pay their registration fee? I simply do not understand how having a register will help the landlord. I do not understand how it will help the private sector tenant either. What incentive will there be for landlords to sign up? If we have a mass refusal of landlords to sign up, what will be done to get them to sign up? We can argue whether the concept is desirable, but it seems filled with practical issues.
If we are to go down this route, surely the hon. Gentleman would accept that there has to some kind of incentive for the landlord to sign up. There has to be some benefit for them in signing up, and the best way to ensure that is to make signing up a free choice, not to mandate people to do it. The only effect it will have on landlords is to ensure that they have the additional task of renewing their registration every year and that they pay for it out of their own pockets. As my hon. Friend so wisely suggested, this is no more than a tax. It is a tax for letting out one’s house for others to live in. I am not sure whether that qualifies it to be called a bedroom tax, but given that most people who live in these houses will be occupying a bedroom, and given that the cost is likely to be passed on to them, we can safely say that this is the Labour party’s attempt to impose a bedroom tax on the public. It introduced the spare room subsidy when it was in government, and it now seems to be trying to introduce a new tax on people.
The Bill will drive up not only rents but property prices, which are extortionate everywhere, but particularly in London. As rents go up to compensate for the cost of the register, property prices will be driven up even further.
Philip Davies
Of course. The shadow Minister states the blindingly obvious. Who is to say, however, whether that person would have any ill will towards the people renting the property? Presumably, they would just carry on with the arrangements already in place, but without registering on a national register of landlords.
This is the difference between Government Members and the Opposition: they think that not registering on a state-sponsored register makes someone a bad landlord, but I do not accept that premise. I think that what makes someone a good landlord is whether they are treating their tenant well, irrespective of whether they are on a register. It is how they look after their tenant that determines whether they are a good landlord. Someone who is not on a register might be a very good landlord, but, equally, someone who is on the register might be a very bad landlord. The hon. Gentleman seems to be under the impression that being on the register would determine whether someone is a good landlord, but I am afraid I do not share that view. The hon. Gentleman seems to support a Bill that would criminalise people who had no idea about the obligation being thrust on them by the socialists opposite. We have to be careful about introducing legislation left, right and centre—in this case, left—and we must remind ourselves that laws have consequences. A criminal sanction is serious. We do not want decent people falling foul of the law by accident and receiving a criminal conviction. As I mentioned earlier, four-fifths of private landlords are part-time landlords, with just one or a small number of properties from which they earn less than a quarter of their income. We should tread carefully.
The Minister will outline the Government’s position, but my understanding, which he will either make clear or refute, is that they have concerns about the Bill. I am therefore delighted to find myself agreeing wholeheartedly —this is a red letter day for me—with the Government. I state with confidence that the Government are opposed to the Bill, because their website is clear about why they have chosen not to introduce further legislation:
“The private rented sector is already governed by a well-established legal framework and we will not introduce any further regulations. This will ensure the sector is free to grow in response to market conditions.”
The website goes on to state:
“In the past over-regulation drove landlords out of the rental market. We don't want to introduce any measures which would form a barrier to potential landlords considering renting out their properties. Over regulation would reduce the number of properties to rent and wouldn't help tenants or landlords.”
I could not have put it better myself. I find myself in total agreement with the Government website.
I am conscious that I am in danger of taking up more than my fair share of time. It would be unfair of me to dominate proceedings and I hope that Members do not think that I am doing so.
A report by Professor Michael Ball for the Property Ombudsman, entitled “Regulating Residential Letting Agents: the issues and the options” and published in October 2012, looked at the issue of the number of letting agents and the number that belong to a professional body. This is relevant to the Bill. The report states:
“The extent to which agents belong to the various professional bodies is unknown because there are no reliable figures on the size of the lettings industry. A government report in 2009 estimated that there were roughly 8,000 lettings agents…In the same year, the Office of Fair Trading offered a larger estimate of at least 15,000 letting agency businesses in the UK as a whole...In terms of the individual offices of member firms, The Property Ombudsman reported 9,523 registered lettings offices in September, 2012; as compared to 11,853 for sales…A recent survey found that 85% of agents belong to a professional body, which may indicate that the number of agents outside of the current voluntary schemes though significant is not overwhelmingly large compared to those participating.”
That information can only lead us to two conclusions.
First, the Government and their related authorities have absolutely no idea how many letting agency businesses there are. If we are to have a regulatory and registration system, a starting point might be to know how many there are. The gap between the Office of Fair Trading’s estimate, 15,000, and the Government’s estimate, 8,000, is a big one. How on earth are we going to enforce this great regime if we do not even know how many there are or where they are? At a stroke, the information presented by Professor Michael Ball makes the Bill unworkable.
Secondly, the survey found that 85% of agents—the ones that are known about—belonged to a professional body, indicating that there is not an issue in this sector that needs to be dealt with. They are already aligned to a professional body that insists on many of the standards that the hon. Member for Mansfield wants them to follow.
Jacob Rees-Mogg
Does my hon. Friend agree that a voluntary association is much better than a compulsory one, because it acts as a kitemark? If everybody has to do it we cannot distinguish between those who are good and have volunteered to register, and those who simply have do it as a matter of compulsion.
Philip Davies
My hon. Friend makes a powerful point. I suspect that both of us would have no issue with people having their own standards of excellence that they could advertise, and the Government and the hon. Member for Mansfield saying, “If you want to be with a good landlord, you should look for those who advertise with this particular crest, kitemark or standard.” By definition, that would encourage more and more landlords—they would lose out on tenants if they did not join—to reach that standard. I agree that that is a far better way of driving up standards than forcing people to sign up to something that they might not follow.
Philip Davies
My hon. Friend makes a good point. That just goes to show that an awful lot of good work is being done in this sector. Perhaps a good starting point for us would be to encourage more of that good work and to make people more aware of the schemes that are in place. I confess that before I looked at the Bill, I was not aware of some of the schemes that are in place to help my constituents, should they have a problem. If nothing else, I am extremely grateful to the hon. Member for Mansfield for forcing me to look at this area to see what is in place. I hope that as a result I will be able to offer my constituents a better service and make them aware of the situation. On that basis alone, we should be grateful to him for drawing our attention to what is already happening, sometimes without any fanfare or advertisement.
As I said earlier, if I am wrong I hope the hon. Gentleman will correct me, but it seems that the Bill would not apply to landlords who sub-let a room in their property. That poses the question why they would be exempt when nobody else would be. What do he and the Labour party think about such landlords? Do they believe they tend to be good or bad landlords? Is there any evidence either way?
I will come to a conclusion, because I am anxious that I may be taking up time that other Members wish to use, and I am sure others have better points to make than me. As with so much proposed legislation, the Bill is full of more bureaucracy and more interference by politicians, and it provides more evidence of the need to be seen to be doing something, which is the prevailing culture in politics at the moment. I always say that if a politician is faced with a problem, their solution will always incorporate two ingredients, the first of which is being seen to be doing something. I long for the day when a Minister will stand up and say, “That’s got nothing to do with us, it’s for people to sort out for themselves”, but so far I have been disappointed.
Jacob Rees-Mogg
Has my hon. Friend noticed that at his suggestion that a Minister might conceivably say that something was not his business, the Minister fled, so frightening was that thought to those who sit on the Treasury Bench?
Philip Davies
Maybe the Minister has taken my advice and decided that it has nothing to do with him, so he will not stay for the remainder of the debate. Maybe it is another red letter day for me, but I doubt it.
The second part of a politician’s solution when faced with a problem is to do something that does not seem to cause offence to anybody. The Bill falls in that category—it would make it look as though we were doing something, and it would not really offend any of our constituents. It is a naked attempt to please people. At Prayers, I am always struck by the fact that we pray that we will not do things through a desire for power or a desire to please, which tend to be the two traps that politicians most often fall into. I fear that the Bill shows a desire to please. It is full of good intentions but would not be very good in practice.
If we carry on at this rate, none of us will be able to breathe without breaking some regulation or law in the near future. Many points in the Bill could be dealt with by the free market and a voluntary scheme, as my hon. Friend the Member for North East Somerset suggested. Where people rent is a consumer choice issue, after all, and it is best left in that sphere.
As I said at the beginning, by force of accident I am both a landlord and a tenant, and I use a managing agent. As a customer I am quite capable of going to a reputable one, and I think I can be trusted to do that. There is plenty of evidence that there is already an abundance of remedies and laws to protect tenants from rogue landlords and landlords from rogue managing agents. I do not doubt that rogue landlords and managing agents exist—they clearly do, and that is not in dispute. What is in dispute is whether the Bill will help or hinder people, and I think it will do the latter.
Many practical issues could affect the workings of the Bill’s provisions. Some I have mentioned relate to what happens when a landlord changes their name or dies, when a landlord resides in the property that is being rented out, when a couple get divorced or when a property is bought as part of a self-invested personal pension. What about the fact that some properties and landlords are already part of a licensing scheme? Would we, as my hon. Friend the Member for Bury North suggested, force them out of a scheme that is working well to make them part of the one in the Bill, or would we allow them to stay part of their voluntary scheme? There are all sorts of practical problems with the Bill, which would make people criminals who should not be. As we know, ignorance of the law is no defence, so that is the inevitable consequence.
As a friend of mine who is a property litigation partner at Seddons law firm in London and dealt with landlords and tenants daily said to me, there is so much legislation in this area of law that creating more runs the serious risk of putting people off becoming landlords or even carrying on as landlords. The most likely consequence is the unintended one that with fewer landlords, there would probably be fewer properties for tenants to rent, which would end up helping nobody, least of all those looking for somewhere to live. It seems to me that there is too much legislation in this area, not too little, and that the Bill would unnecessarily add to that legislative mountain.
Andy Sawford
Sadly, I feel there will still be rogue practitioners in the industry, but we will take a great step forward today in protecting people if we support these measures; we will increasingly marginalise those rogue landlords. We will make those practices ever more unacceptable and I hope we can go further towards ensuring there are prosecutions and enforcement against rogue landlords.
Jacob Rees-Mogg
Further to that point, in respect of criminal landlords, would it not be better to enforce the existing law, rather than thinking that passing a new law is the solution?
Andy Sawford
I welcome the hon. Gentleman’s urging of the Government to enforce the existing law properly. I would also urge him to take up with them the loss of 5,000 police officers and the huge loss of resources our Crown Prosecution Service is facing, which mean that many cases, even those taken up by the police, are not referred to it. I would also urge him to look at the consequences of the massive and unfair cuts to local authorities, particularly those with the highest number of people who are being treated unfairly by landlords in the private rented sector. Their cut has been disproportionately large, and that affects their ability to seek to intervene where landlords are behaving unfairly locally. Local authorities have some responsibility for trading standards, too, which are being decimated, as local authorities find they can only sustain statutory responsibilities. If the hon. Gentleman wants to support me, I will gladly work with him and perhaps we can form a cross-party campaign. I am sure my hon. Friend the Member for Mansfield will lead us on that, and we can seek more resources for enforcement within the current framework. I would love the hon. Gentleman to support additional enforcement and regulation.
Jacob Rees-Mogg
I look forward to this fabulous nirvana of red-blue alliance, but may I suggest that if the bleak picture the hon. Gentleman paints is accurate, giving more responsibilities to the people who are so appallingly funded, etcetera, etcetera, will make it even harder for them to carry out their duties? According to his own argument, he would want them to have less to do so that they could do it within the resources they already have.
Jacob Rees-Mogg (North East Somerset) (Con)
May I begin, as my hon. Friend the Member for Shipley (Philip Davies) did, by drawing Members’ attention to my declaration in the Register of Members’ Financial Interests? It is beginning to seem as though Government Members have forgotten the 1884 Reform Bill, which removed the property qualification for Members of this House. We probably would still qualify under the old rules, which is always a good thing.
I congratulate the hon. Member for Mansfield (Sir Alan Meale) on introducing the Bill. The subject is interesting and important and shows the ideological divide between the Opposition and the Government. I congratulate both the Minister and the shadow Minister on their new roles.
The shadow Minister, the hon. Member for Corby (Andy Sawford), made an excellent and interesting speech, if I may say so, and I was delighted that he said we wanted better and simpler regulation, which should be the motto of any Government. If only they would put it into practice when they govern. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bristol West (Stephen Williams), who is a neighbour of mine, is a most civilised interlocutor in the west country and I am delighted to see him at the Dispatch Box. There is such a thing—though I hope this will not be quoted against me in future—as a good Liberal, and I am glad that the Minister fits that category.
I am fundamentally opposed to the Bill, which moves in entirely the wrong direction. I want to go back to first principles: the Bill is an attack on the rights of property and on the free market, and it introduces a new tax on landlords and regulation in a market that is working reasonably well—a very important market to which Government intervention has been very damaging, as the figures show.
My hon. Friend the Member for Shipley pointed out that at the time of the first world war 90% of housing was in the private rented sector, and that this percentage fell until assured short-term tenancies were brought in, at which point the market revived. There were also slum clearances, the development of social housing, and the enormously welcome right to buy, particularly encouraged by previous Conservative Governments, which extended home ownership to millions—an enormously beneficial development. Of course all those things happened. At the same time, what bore down on the private rented sector was the excessive regulation, particularly the control of rents in an inflationary era, with the result that people simply left the market when their properties became vacant. The stock available for private renting diminished and would have gone down further had it not been for the assured shortholds.
Assured shortholds revitalised a market in a free-market manner that has brought supply back, so in Great Britain—I say Great Britain very carefully, rather than the United Kingdom or England, both of which were referred to earlier—the figures went from 1.9 million in 1988 to 4.6 million in 2011. That revitalisation is important because the private rented sector is the most flexible element of the housing market when it works properly. If we are to have an economy where people are free to move, and free to go around the country to find employment or to better their opportunities, there needs to be a supply of housing that is easy for them to find, easy for them to move into, and fundamentally flexible.
It is striking that the highest percentage of people in the private rented sector is in London. The reason it is in London is that, excluding Somerset, London is the most dynamic part of the UK economy. It attracts an enormous number of international visitors and makes it possible for them to come, but it also attracts an enormous number of our fellow countrymen, who find London an attractive place in which to live and work. The Dick Whittington view of London—that the streets are paved with gold—has historically drawn people to the metropolis, and that requires flexible private rented capacity.
Why is that better, more flexible, than social housing? The reason is that social housing is limited in its number. If people move around the country—if someone moves from Somerset to London and gives up their social housing in Somerset—they have permanently given up something that they may never again be able to get back into. Social housing is, therefore, an enormous encourager of the status quo. It encourages people to stay where they started, where they got on to the housing ladder.
The same is true of controlled rents. Once people are in a property with a controlled rent, or one that is heavily regulated, they know that if they give it up they will never be in so beneficial a situation again. They have, therefore, less incentive to move to find employment or to increase their prosperity, and, given the way in which the law is devised, that is also often the case for any dependent children—or certainly one child—because they may be able to take on a low-priced tenancy, which discourages economic activity.
The flexibility of the private rented sector allows people to move and it allows economic activity to go where it is best needed; it allows people to move where the jobs are. That has been essential to the way in which the economy has gone since the late 1980s, and the private rented sector has been transformed by the huge number of accidental or amateur landlords that have been discussed. That is a very good thing. The idea that people can buy a property, let it out, involve themselves in the capitalist system, and effectively develop a pension for themselves by contributing to the private rented sector, is good both for the landlords and for the tenants. I happen to think that those accidental landlords are likely to be particularly good ones because their properties are the main source of their potential future income, so they have a deeper interest in the properties that they are letting out than almost anyone else is likely to have.
If I were to rent a property, I can think of nothing finer than to rent it from my hon. Friend the Member for Shipley, who, I imagine, would be a first-class landlord, and attentive if ever there was a problem with the bath overflowing, a dripping tap or the gas going off. I would have a service that was second to none. That applies to thousands, tens, probably hundreds of thousands, of individual landlords throughout the country, to whom their one property is their real nest egg. We heard from my hon. Friends the large number, as a percentage of the total property available, of people in exactly that category.
That interest that such people have means that, by and large, they are likely to be good landlords. The shadow Minister referred to being a good landlord being both morally right and good business sense, and I agree entirely. It was a fine point to make. It was almost a high point of his speech, marginally beaten by the idea that Governments should regulate less but more effectively.
The reason that it is both morally right and good business sense, and that it should be left to the market, is that if a landlord, a group of landlords or a letting agency have a good reputation, that is something they can advertise. They can have kitemarks. We have already discussed the associations that exist that will be able to say that a landlord comes up to certain standards and is signed up to the property ombudsman, so tenants know that if they go to a certain letting agent or landlord they will be likely to live in a better quality of property. That helps the landlord, because they would probably be able to get a better price, which makes good business sense. It makes good moral sense, because we all want people to live in high-quality accommodation. It is also good for the prospective tenant, who will be assured that not only is a quality property available, but that it will be managed in a reasonable way and with a form of appeal to the property ombudsman.
That is the laissez-faire approach. I approve of laissez-faire; it is a good economic approach. The governmental approach is that everything should be centrally controlled; that it should be uniform, die-cast and stamped down upon landlords and tenants, so that they fit and can all be regulated in exactly the same way. Although that may remove a small number of extreme cases—though I happen to doubt that—it has every chance of lowering the standard of the good landlords, because they no longer have any competitive advantage in saying that they have independently decided that they will offer such a degree of excellence, that they will have that verified and that they will go to the ombudsman. They are now in a situation where there is no competitive advantage for them to raise their standards. It is, therefore, a classic socialist example of attempting to level down standards rather than allowing the market to provide the best standards.
Why do I doubt that that will have a great effect on the lowest-quality landlord? It is because I think that the lowest-quality landlord tends to be borderline criminal anyway, and one thing that introducing a level 3 fine will not do is make a hardened criminal quail and quake in his boots. A life sentence might make him quail and quake in his boots, but a level 3 fine is not sufficient punishment to really make a difference to his criminal activities.
There is a further point that we should be concerned about. In the days of the greatest rent control there was the greatest incentive for landlords to be rotten, and I will explain why. In the current situation, with assured shorthold tenancies, if landlords require their asset back for other purposes, they can remove their tenant and sell their property at the full market price, so they have no reason to allow the property to run down or to behave aggressively. Under rent controls, that was simply not true. Rent controls put a substantial discount on the capital value of a rental property, so if a landlord was of criminal intent, or even just aggressive, they had a clear incentive to make their tenant’s life so unpleasant that they would be forced to leave. That is exactly what Rachmanism was about: forcing tenants out because the increase in capital value was so great that the landlord made money from it. With assured shorthold tenancies, however, there is no incentive for landlords to be really wicked. There is a perverse effect, because when one bucks the market the situation deteriorates for those one is aiming to protect most of all.
There is a further point. Many landlords who might have a property covered by a protected rent would not dream of behaving badly or aggressively towards their tenant and would want to continue running the property properly for as long as possible, but there might come a point when they have to sell. At that point the highest price in the market is likely to be from the rogue landlord, because they can make more money by rogue practices and by forcing out tenants in the protected rented sector.
Therefore, anyone calling for more regulation in the private rented sector will encourage low standards. They do it for the most noble reasons, and I do not attack their motives at all. Indeed, I apologise to the hon. Member for Hammersmith (Mr Slaughter) for the crack I made earlier about lawyers, because I did not realise at the time that he is a lawyer. It was not intended in any sense as a personal attack. The danger is that they will create something worse for the people they are trying to protect. That is why the market is likely to work better than regulation.
I go further from that point. What are the Bills that my hon. Friend the Member for Shipley talked about, and the support from the Labour Front Bench and the early-day motions all about? They are about hammering landlords. There will be people thinking about going into the private rented sector who might be uncertain about the result of the general election. I, of course, am certain that the Conservatives will have a majority of about 200 as we sweep through great swathes of the nation as our popularity rises with the success of our marvellous and glorious policies, but some people—it is extraordinary—are less positive and optimistic. They are doomsayers. They fear that the red peril might get in and that landlords will be in the front row before the firing squad to be shot down by these bullets of socialism. That, 18 month before a general election, would put people off entering the private rented sector.
This Bill, the other Bills and early-day motions associated with it and the policy that the Opposition have developed are already threatening the private rented sector, because there is a developing fear that some type of regulation will be introduced and that it will be unduly onerous and, worst of all, it will end up seeking to limit rents. The Leader of the Opposition has already called for price controls in one area. How long will it be before we hear calls for price controls in other areas? We know the deleterious consequences that follow price controls and that would hit the private rented sector.
I also said at the beginning that the Bill is an attack on the rights of property. That is an important point. The House has always defended the rights of property—the rights of individuals to own and enjoy their property and use it in a sensible and lawful manner—rather than unreasonably restricting people’s lawful use of their property. It is an incredibly important part of our constitutional settlement that the state should not interfere with property unnecessarily and that people will be able to get full value for their property without facing onerous Government regulations depriving them of that benefit.
The Bill is an attempt to reduce, limit and regulate people’s lawful enjoyment of their own property. I deeply regret that. If people decide to rent out a property, they do so under a free contract; nobody is forcing the tenant to take a particular property. There is choice. As long as there is choice, the legal enjoyment of property ought to remain sacrosanct within our national political settlement. That ties in with the liberty that people enjoy in contracts. There is no harm in a Government’s setting certain minimum contractual standards; that has been practised for a long time. However, when two free people decide that they should make an arrangement, the state ought to intervene as a later rather than an earlier resort.
In the market as it exists, landlords and tenants are both in a position of strength. Obviously, the landlord has the property, but it is only one property of many; there is not a monopolistic supplier of private rented properties. The buyer—the tenant—has many properties to choose from. He may go to a variety of letting agents and use a variety of landlords. That is an extremely sensible competitive system. It allows landlords to set their prices at the market rate and tenants to negotiate and have the freedom to decide which property they should or should not take.
The same applies to letting agents. We have heard a lot about the variable charges that they apply, but that is the market. All sorts of industries apply different rates—plumbers, electricians and supermarkets apply different rates. It is up to the consumer to decide which rate he is going to pay. Thank heavens we do not live in a society in which the state directs everybody—“You can only go to that agent rather than that agent.”
We cannot always protect people from themselves, and nor should we try. If people do not ask the letting agent, “What are your charges?”—a perfectly basic question—how can we turn up and say, “Well, you didn’t ask so you’ve been overcharged.” Letting agents will set their prices competitively because there are many of them—so many of them that the Government cannot count them. Primary school children learn how to count, but Her Majesty’s Government, with their civil service and all the resources at their command, cannot count the number of letting agents, which indicates that there is a competitive market and the ability to go from one to another and check the prices.
I happen to have greater confidence in the electorate than the socialists tend to have. I believe that my electors and constituents in North East Somerset are intelligent enough to check out prices for themselves. I campaigned in Corby during the by-election; I apologise to the hon. Member for Corby. I found that the hon. Gentleman’s electors were also first-class, intelligent, capable people, easily able to see whether one price was higher than another. Although they elected him, they do not need his help to compare prices every time they go to Tesco’s or Sainsbury’s. It is remarkably simple for people to get a comparison, and that is also part of the competitive landscape.
If someone asks for the full gamut of charges, they may well see that the agent charges £10 for one part of the process but £200 later for the inventory check. Inevitably, there is some degree of competitive pricing—low at one stage and high at another—so that the charges overall balance out. However, in many cases, the bulk of the charges impact on the landlord rather than the tenant. The charges for letting are absorbed by the landlord because he has taken the agent on as his agent rather than the agent for the prospective tenant. It is important to remember that the agent is for the seller of the good, not for the purchaser of the good. We do not need to protect people from themselves quite so much.
I want to respond to a point made by the hon. Member for Hammersmith about the legal agreements and the need for them to be written. He explained that if one of them ever got to court, it became enormously expensive. That is a perfectly valid point, but it assumes that there are not many thousands of other verbal agreements that never come to court and have an absolutely minimal cost. Again, it is about letting people decide freely for themselves.
May I say what a great pleasure it is to welcome my hon. Friend the Member for Epping Forest (Mrs Laing) to the Chair for the first time when I am speaking? It was an honour to be one of her nominators and a real pleasure to see her elected and now sitting there with such elegance and kindliness in allowing me to speak. It is rather gratifying not to have needed to catch your eye, Madam Deputy Speaker, because I was already in full flow. It is a pleasure to welcome you to the Chair.
To recapitulate, I was talking about the point made by the hon. Member for Hammersmith about legal arrangements needing to be written because otherwise it was more expensive, which I was countering by saying that there were thousands of verbal agreements that never went to court, even if the one that did proved somewhat complex. Let me turn to the detail of the Bill. “Detail” may be the wrong word, because it is vague; it leaves an enormous amount for Ministers to decide at a later date. I am very suspicious of this. In the 18th century, there was a great debate in this House—in a predecessor Chamber, of course, but this House none the less, in a spiritual sense—on the resolution that
“the influence of the Crown has increased, is increasing, and should be diminished”.
Bills like this give more power to the Crown because of what they allow Ministers to do by regulation. This Bill has only three pages—that includes all the paraphernalia that is necessary to a Bill, so only about two pages of actual law—but it opens up the opportunity for Ministers to take very widespread powers.
First, there is annual registration. I am not in favour of that when it is unnecessary. There used to be a dog licence, and it was not too onerous. It cost 37.5p, a price that was finally changed. It is one tax that was reduced before it was abolished, as it went down to 37p when the halfpenny was abolished. Registration is not, of itself, offensive. Nevertheless, the Bill says that landlords must
“provide all the information prescribed in regulations by the Secretary of State as required in the Register.”
Who knows what information that could be? Who knows how far the Secretary of State might go in his regulatory demands, how much power we might be giving not to this wise and good Government, as represented by my hon. Friend the Minister, but to a rapacious socialist Government who would put down regulation after regulation and impost upon impost?
Moreover, as my hon. Friend the Member for Shipley said, the fee that could be charged is not determined and so could be set at any level. We would find that law-abiding landlords who had their one property to let out went from profit to loss as they found that the impositions placed on them were so great that they could not afford to continue. What this does—it is fascinating how socialism often does this—is to corporatise the private rented sector, because those who would be able to cope with it would be the larger companies and letting organisations. That perhaps explains why some of the bureaucratic elements involved in letting properties are quite keen on this regulation—it plays into the hands of big players against the individual with one property to let.
I return to the example given by my hon. Friend the Member for Shipley of the person who inherits and becomes, completely inadvertently, the landlord of a property that was already let out by, say, his parents. Will these elderly parents not worry about the burden they may be leaving for their beneficiaries in dealing with this complex legal system, the charges that are being imposed, and a potentially unending list of regulations that could prescribe anything?
The Bill does not limit the information required, which could include prices. I learned when covering emerging markets that registering prices is only a very short step from price control. One country I used to look at made a great thing of freeing up the price of noodles—a deregulatory measure. However, the price of noodles still had to be registered with the Government, and if someone put the price up the Government refused to accept their registration. Therefore, although they had claimed to have deregulated and not to be regulating the price, by the power of registration they were able to regulate it.
I am deeply concerned that the Bill has within it a rather large Trojan horse, with the hon. Member for Mansfield leading as Odysseus in its innards, although there is perhaps more to fear from his honourable colleagues about what might ensue from it. It is a very unsatisfactory way of legislating. Legislation ought to be precise, limited and clear, and we ought not to give too much power to Governments.
Although I have doubts about a Labour Government in general, it is not particularly the Opposition Front Benchers I worry about, but the unforeseen circumstances of a really bad Government who might go way beyond the norms of our constitutional settlement and abuse powers such as those suggested by this Bill. That is why it is so important that this House should always circumscribe what it writes into law. Not all Governments will be good—we know that—but some will deliberately abuse the powers they have in their hands.
The Bill suggests penalties for not registering. I am against more penalties. There are far too many crimes already in this country that people can commit without really wishing to do any wrong. We have had a marvellous fall in crime, which is hugely to be welcomed. I am sure it is all down to the Government’s policies and that it has nothing to do with longer-term consequences, demographics or anything of that kind. It has all happened in the past three years and that is a great triumph. However, I do not want to see crime going back up purely because this House legislates to criminalise things. That would add cost to the operation of the state as a whole, increase burdens on the taxpayer and make the lives of British subjects more onerous. Surely this House should always be aiming to make the lives of the British people better, easier and happier, without constant intrusion and regulation spewing forth.
Similarly, I am nervous about the proposal to regulate private sector letting agents. As I have said, it seems to me that there are so many of them that there is genuine and deep competition, and competition is a much better curer of ills than state regulation. A lot of this is informal. Even in this House, every so often an e-mail comes around saying, “I have a property to let,” or “A friend of mine has a property to let. Are you interested? It’s in the Division bell area.” Do we really want to turn someone harmlessly working in a parliamentary office into a criminal because they have not registered as a letting agent for the purpose of sending one e-mail? Is that the degree of law that we wish to implement when there is already a perfectly workable system, with kitemarks, that is competitive and allows for up to 17,000 letting agents in the country at large?
I have already spoken about written tenancy agreements. I completely understand the desire of lawyers to have everything written down and buttoned up. If we look at what lawyers have done to us and at the legislation this House has passed, we will see that when we first started passing legislation it could be done on a few sheets of paper. It was clear, distinct and easily justiciable. We now pass so many volumes of legislation that practically all the legislation up to 1945 is in fewer volumes than each year of legislation since 1945. We have an incredible desire to write everything down in quintuplicate, in flowery language that is not understood by most people—half the time it is not understood by most lawyers—and that leads to endless litigation and complication. People in Somerset agreeing to let a property one to another over a pint of cider in the Crown—that fine establishment in West Harptree—are doing something that saves them cost and effort and that keeps things out of the hands of lawyers.
I am against the written requirement for tenancy agreements, I am against the need to register everybody who is at any point involved in letting a private sector property, and I am against the onerous and unending requirement of registration being put on landlords. I am for trusting the people to have the good sense to make arrangements for themselves that work, and for knowing what their best interests are and being able to operate in a competitive market. I am for the rights of property and I am for the liberty of people to decide what is best for them and their families. I am against the socialist view that it always has to be done by the state. The over-management and excessive intrusion of the state have done so much damage to this country in recent years. We need to reverse that. We need to roll back regulation and allow freedom once again to flourish. I shall therefore oppose the Bill.