Unscrupulous Landlords

Jon Cruddas Excerpts

Wednesday 8th September 2010 Westminster Hall

[Jon Cruddas (Dagenham and Rainham) (Lab)]

As the terraces empty from the previous debate, I want to make a few comments about unscrupulous landlords in the private rented sector. As a Portsmouth football club fan, I wish I had been present for the previous debate because I would have had something to say.

I apologise for my croaky voice—I am full of cold—but to set the scene, I shall read two quotes that clearly detail the Government’s thinking. The first is from the Minister for Housing and Local Government, the right hon. Member for Welwyn Hatfield (Grant Shapps) who said as recently as June:

“With the vast majority of England’s three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.”

The second quote is even more recent, and was placed on the website of the Department for Communities and Local Government in August:

“In the past, over-regulation drove landlords out of the rented market. We don’t want to introduce any measures which would form a barrier to potential landlords considering renting out their properties.”

Those two quotes are unequivocal, and we conclude that the Government do not see a need for further protection for tenants or for the regulation of unscrupulous landlords, and that they believe the current arrangements strike the right balance, not least because of the fear of red tape. That is in contrast with the previous Government’s views. At their departure, they had plans for a new national register of landlords, regulation of letting and management agents, and compulsory written tenancy agreements. The current Government’s status quo position is unfortunate, and Shelter today announced a new investigation into rogue landlords, which aims to raise the profile of the private rented sector as a political issue.

Let us consider one basic statistic from Shelter. Nearly 1 million people throughout the UK have fallen victim to a scam involving a landlord or a rented property in the past three years, so on average, every MP will have just under 1,500 constituents who have been the victim of landlord scams. The purpose of this short debate is to help to raise awareness, to praise Shelter’s campaign, to raise some concerns, and to ask the Government some questions. We want the Government to recognise the problem of rogue landlord activity in the private rented sector, and to take action because rogue landlords cause enormous damage to the lives of often vulnerable tenants, which may spread to the wider neighbourhood, resulting in run-down properties blighting communities.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I commend my hon. Friend for securing this debate. My constituents include 165 leaseholders of the Peverel Group, which is a massive freehold landlord with 500 estates throughout the country. At a recent tribunal, they managed to claw their way to overturning a scam whereby leaseholders, when paying their service charge, find that one third of it is an odd cash-back arrangement between the insurer and the freeholder. There are many loopholes in the law, and I hope that he will press the Minister to change his mind and to take a more proactive stance today.

--- Later in debate ---

[Jon Cruddas]

If my hon. Friend will bear with me, I want to raise that precise matter. I appreciate and respect his experience.

The essential points that I want to make include the following. Most private landlords are responsible and honest in how they deal with their tenants. That is beyond dispute, but those who are not bring down the reputation of the whole sector. The Government must accept that Shelter’s investigation has uncovered significant problems with rogue landlords that require action. Many aspects of existing law are not properly enforced by local authorities. They often do not treat this as a matter of priority or do not have a properly resourced enforcement team available.

Let us consider some basic statistics from Shelter. There are just over 3 million private rented households, representing 14.2% of all households. In that sector, 1.3 million tenants—approximately 40%—are in receipt of housing benefit. The sector has surged in popularity in recent years, with the percentage of households renting privately increasing by 40% since 2001. If that rate of increase continues, there will be more private renters than social renters within the next five years.

Some 80% of private renters are aged under 55; almost one third are aged 25 to 34; 58% of 16 to 24-year-olds are private renters, and 59% of private renters expect to buy in future, compared with 27% of social renters. However, compared with two years ago, private renters expect to rent for longer before being in a position to buy their own home. Vulnerable households who rent their accommodation privately are more likely to live in non-decent homes compared with social tenants—the averages being 51% and 26% respectively.

MPs regularly deal with problems associated with unscrupulous landlords, and my hon. Friend the Member for Nottingham East (Chris Leslie) touched on this. They include harassing tenants or throwing them out of their homes without notice, effectively making them homeless; failing to carry out essential maintenance, leading to unhealthy or unsafe conditions; deliberately ignoring the legal requirement to protect tenants’ deposits using an approved scheme, and then unfairly withholding the deposit at the end of the tenancy; and driving tenants into arrears by adding exorbitant fees or charges to their account without telling them, and then presenting them and their guarantors with a huge unpaid bill at the end of the tenancy.

What does the law say? Harassment and illegal eviction are criminal offences. Local authorities can prosecute landlords who commit such crimes, and can serve improvement notices or prohibition orders if housing conditions fall below acceptable standards. If the landlord fails to comply, they can be prosecuted. Landlords and letting agents are legally obliged to protect tenants’ deposits using an approved scheme, although that can be enforced only if a tenant takes the landlord to court. Landlords are now obliged to obtain a licence from their local authority to rent out larger houses in multiple occupation, and must meet certain standards to do so. Failure to obtain a licence is a criminal offence.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my hon. Friend on securing this debate, and I commend the Shelter campaign. Does he agree that proper regulation of multiple occupation properties and private landlords must go hand in hand because the problems overlap? Indeed, in retreating from and watering down the measures that the Labour Government were introducing, after much campaigning by many MPs on behalf of tenants in that sector, the coalition Government risk giving a green light to rogue landlords.

[Jon Cruddas]

I agree totally, and I shall conclude my comments with similar questions. My right hon. Friend will agree that rogue landlords escape the law because of three basic elements: lack of awareness by tenants, lack of enforcement, and lack of resources afforded to authorities to carry out such tasks. On lack of awareness, victims of rogue landlords frequently do not report them because they are not aware of their rights, or fear that if they come forward their landlord will find out and evict them. On lack of enforcement, the law is not enforced often enough. For example, in 2004 only 26 landlords were convicted or cautioned for unlawful eviction, and in 2008 only one person received a custodial sentence under the Protection from Eviction Act 1977.

[Mike Weatherley (Hove) (Con)]

Does the hon. Gentleman agree that the legal process may be a little slow, not only for legal remedies for tenants, but for landlords when tenants are in arrears? Perhaps both problems should be examined.

[Jon Cruddas]

I do not dispute that there are occasionally problems on the other side, and I think we all agree on that. Such problems also need resolution, but they are completely and empirically outweighed by tenants’ problems that confront us as MPs.

On lack of resources, the Government’s Rogers review showed that more than 60% of councils devote a low or very low proportion of their regulatory resources to enforcing health and safety requirements or HMO licensing.

What can be done? The problem could be split between local and national Government. The Government could prioritise the private rented sector and give councils the tools that they need to force out rogue landlords. They could tighten the law to close the loopholes that rogue landlords use to exploit tenants, and they could make it easier for tenants to enforce their legal rights. Transparency and accountability could be increased, so that the public are better able to hold local politicians to account.

Local governments could prosecute rogue landlords and make use of the full range of tools and powers already at their disposal. They could be proactive in protecting tenants by carrying out regular housing condition surveys, and they could make sure that enforcement is properly resourced. They could also take advantage of the Housing Act 2004, which allows them to recoup costs by charging them to the landlord.

Today, Shelter has launched its campaign, and a new section of its website focuses specifically on action to tackle rogue landlords. It highlights the top scams that rogue landlords use against their tenants and releases the results of a survey produced jointly with the Chartered Institute of Environmental Health. It publicises the online and face-to-face advice service for people who have fallen victim to rogue landlords, and it encourages MPs to approach Shelter directly if they know of rogue landlords operating in their areas and to refer their constituents to the advice services.

I would like to refer to some of the key findings in the Shelter-CIEH survey. The results are stark: 99.2% of environmental health officers working in the private rented sector claim to have encountered landlords who persistently ignore their responsibilities; 96% of environmental health officers have encountered damp and mould; over 90% have found electrical hazards; and more than 91% have found fire safety hazards in the private rented sector. More than 60% of environmental health officers say that cases involving vulnerable people make up more than half their work load, and over half those officers believe that environmental health problems in the private rented sector are set to get worse over the next year.

Those issues cannot be separated from the wider policy context, which cannot be ignored. Many vulnerable people have been forced into the private rented sector because of the shortage of social housing. Local authorities increasingly look to the private rented sector to house homeless families, which in turn has forced up the bill for housing benefit. The Government spend millions of pounds on the private rented sector through the local housing allowance, and as a major customer in the sector, it is important that they properly monitor and question quality and standards. The recession has changed the nature of the private sector. There has been an increase in the supply of private lettings as home owners defer sales or are unable to sell and become “reluctant landlords”. Meanwhile, the majority of people whose homes are repossessed will move into the private rented sector.

The National Landlords Association has warned that the coalition Government’s planned changes to the local housing allowance will drive vulnerable tenants into the hands of rogue landlords. Making local housing allowance payments directly to landlords would make the market more attractive and secure for reputable landlords, while helping tenants who find it difficult to manage their finances.

As I said earlier, the Minister for Housing and Local Government has announced that Labour’s plans for a new national register of landlords, the regulation of letting and managing agents, and compulsory written tenancy agreements will be scrapped in the name of protecting “good” landlords from red tape. The national register of landlords planned to allow tenants to make basic checks on prospective landlords. It aimed to make it easier for councils to identify local landlords, thereby making the enforcement of letting rules simpler. The regulation of letting and managing agents was aimed at tackling rogue landlords and driving out the worst practices, such as wrongful eviction. It aimed to raise standards and provide protection for landlords and tenants in the event of a dispute. The compulsory written tenancy agreements sought to strengthen the hand of tenants in the event of a dispute and to ensure that tenants and landlords were clear about their rights and responsibilities. In the light of Shelter’s report, perhaps the Government will look again at those ideas and give them another hearing.

I know that my colleague, the hon. Member for St Austell and Newquay (Stephen Gilbert) wants to say a few words, so I shall conclude with some questions for the Minister. Does he recognise the problems with rogue landlords that Shelter has identified? Given the steady increase in the number of private renters, does he agree that tackling those problems should be a Government priority? Will the Government introduce measures in the decentralisation and localism Bill to ensure that local authorities can be properly held to account for their policies on tackling rogue landlords? What steps will the Government take to tackle rogue landlords who repeatedly commit the same offences?

Many MPs urged the last Government to fast forward their plans to implement the national register and to crack down on those unscrupulous landlords whom we have all come across. Those ideas appear to have been kicked into the long grass. I urge the Minister to study in detail the report launched today by Shelter and to come back and think again about what can be done to stop exploitation, harassment and negligence in the private rented sector.