Housing: Rent Levels

Lord Ahmad of Wimbledon Excerpts

Tuesday 16th July 2013 Lords Chamber

[Baroness Turner of Camden]

To ask Her Majesty’s Government what steps they are taking to deal with the level of rents being charged by private landlords, particularly in London, and their impact on housing benefit.

[Lord Ahmad of Wimbledon]

My Lords, across England, increases in private sector rents in recent years have been modest and below inflation. Over the 12 months to May 2013 private rents increased by 1.3%; this compares with the CPI of 2.7%. We are also encouraging the supply of new homes with a £1 billion build-to-rent fund which will help to keep rent levels down.

[Baroness Turner of Camden]

I thank the Minister for that response. Is he not aware that we are facing a bit of a housing crisis at the moment, particularly in London? Younger people cannot afford the deposit to buy a place and cannot afford the rents because they are far too high. Is the Minister aware that following the last war there was also a housing crisis and that the Government then dealt with it by building lots of small houses—the famous prefabs—and also introduced a system of rent controls through the rent tribunals so that people were not pushed into poverty by trying to pay for a roof over their heads? Can we not sometimes learn something from our predecessors?

[Lord Ahmad of Wimbledon]

The Government are fully aware of the housing challenges. In London the mayor’s housing covenant contains detailed proposals for improving London’s private rental sector. The housing guarantee schemes are intended to help expand the provision of large-scale, professionally managed rented housing and to support economic growth. Of course, as was recently announced, the Government have allocated an additional £3 billion to a housebuilding programme. We are embarked on the biggest housebuilding programme of the past 20 years, and that should be appreciated and commended.

[Baroness Maddock]

My Lords, my noble friend indicated that one of the problems with high rents in the private sector is lack of supply. Did he see something interesting in the newspaper this week: that in many towns with a high student population the students occupy houses that could be lived in by families if we were to build more proper student accommodation there? Will the Government see if there is any mileage in that?

[Lord Ahmad of Wimbledon]

My noble friend raises an important point. The Government are forever looking at ways that we can help address the housing challenges in particular cities, and if there are good practices I will take them back and share them across the country.

[Baroness Hollis of Heigham]

My Lords, is the Minister aware that the highly respected Chartered Institute of Housing reported last week that, because there are so few vacant smaller properties in the social sector, four-fifths of underoccupying tenants who need to move will have to go into the private rented sector where, as my noble friend said, rents are higher and so the housing benefit bill will soar. Does the Minister accept that as a result, 660,000 families will have their lives turned upside down and at the end of it there will be no savings but instead an increase in public expenditure?

[Lord Ahmad of Wimbledon]

As I said in answer to a previous question, the Government are embarked on one of the biggest ever housebuilding programmes, both for the rental sector and for affordable housing. There are challenges ahead with the housing crisis. I am sorry that noble Lords opposite do not appreciate that. We took on one of the biggest challenges with the housing crisis and, unlike the party opposite, are addressing it head on.

[The Lord Bishop of Leicester]

My Lords, more than one-third of privately renting households are families with children, yet typical tenancies remain short-term with little assurance about when rents may rise or how long they will be able to stay in their home. Uncertainty of this kind is particularly damaging for families trying to give their children stability. Will the Government give serious consideration to Shelter’s proposal to develop and promote stable rental contracts that would offer renters a five-year tenancy agreement and tie rent increases to inflation?

[Lord Ahmad of Wimbledon]

The right reverend Prelate makes an important point. I have seen the Shelter policy. Security of tenure has increased. Recent figures from the English Housing Survey show that only 9% of tenancies are ended by the landlord. We have seen an increasing percentage of people staying in their accommodation for more than two years. That is to be appreciated. We are looking at Shelter’s proposition, which came out in its September 2012 report.

[Lord McKenzie of Luton]

My Lords, is not the reality that the Government have created a vicious cycle where those deemed to underoccupy cannot move in the social rented sector because of the lack of appropriate smaller accommodation, cannot afford the extra rent payable to stay put because of the bedroom tax and, at a time when rents are planned to rise by CPI plus 1% for the next 10 years, cannot afford to move to the private rented sector where rents are soaring while housing support, the local housing allowance, is to be restricted to a 1% uprating? Is this not bound to lead to greater homelessness, more misery for families and more cost to the taxpayer? Which genius invented these policies?

[Lord Ahmad of Wimbledon]

I suppose I should ask the noble Lord which genius created these problems. Part of the challenge for this Government is to look at the current crisis. As I indicated, we have embarked on the biggest housebuilding programme both in the private rented sector and in affordable housing. The noble Lord raised housing benefit. The Government have looked at it. It is being raised by CPI, and it will be raised by another 1%, but generally the party opposite should not look at a picture of gloom. There is a picture of optimism emerging in terms of housing for the long term. That will be seen over the next few years.

[Baroness Farrington of Ribbleton]

Will the Minister explain why, if the Government’s policy of building more houses is so good, it is not starting now?

[Lord Ahmad of Wimbledon]

It is starting now. We have already committed to build 170,000 new homes by 2015 and a further 30,000 by 2017. As recent announcements have indicated, another 10,000 homes will be on line as well. Over the next four years, 200,000 homes will be coming on line by 2018. That is putting the record straight.