Housing: Private Rented Sector

Lord Ahmad of Wimbledon Excerpts

Tuesday 14th October 2014 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I draw attention to my interest declared in the register.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)]

My Lords, the Government are avoiding the excessive red tape which would push up rents and reduce supply. We have recently published a model tenancy agreement to encourage longer, family-friendly tenancies. Our £1 billion Build to Rent fund will deliver up to 10,000 new homes for private rent, and our housing guarantee schemes will attract long-term investors into the market to increase choice, quality and stability for renters. In responding to the Question, I, too, refer the House to my entry in the register of interests.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply. We know that the demographics of those renting privately has been changing, with more families and children in the sector. However, for many, it is not through choice: they are priced out of the private market and cannot secure a social home. We know that it is the most expensive type of tenure and that tenants are nine times more likely to move than in other sectors. Of course, this is especially disruptive to the education of children. While we note from the model tenancy agreement that the Government say that they now see the benefit of longer-term tenancies and some predictability on rent increases, why will they not legislate to give tenants the right to such tenancies? What would the Minister say to a family who want to stay put to have the peace of mind that children can continue at the same school but have been refused a longer-term tenancy on the lines of the Government’s model?

[Lord Ahmad of Wimbledon]

My Lords, first, on the final point, I totally agree with the noble Lord on the need for long-term tenancies to ensure the education of children. As a father of three, that is something to which I can relate personally. However, I take issue with the suggestion about the private rented sector in terms of cost. If we just examine some of the facts, private sector rents have actually fallen in real terms every single year through this Government in England, including in London. If you account for inflation, for example in London they have risen by 1.1%. Average rents are down in real terms: inflation was 1.6% for the year to March, while rents grew by just 1%.

On the issue of length of tenancies, while I hear the point made by the noble Lord that the length of tenancies could be increased through legislation, practice has shown that tenancy lengths have increased by 6%, to about 3.8 years for an average tenancy, and 80% of private renters who have moved in the last three years ended their tenancy because they wished to move to another property.

[Lord Morris of Handsworth (Lab)]

My Lords, will the Minister tell the House to what extent the bedroom tax contributes to families being made homeless?

[Lord Ahmad of Wimbledon]

Issues around the spare room subsidy are well documented. The important principle behind that particular policy which should not be forgotten was to ensure that more rooms and more housing could be made available to those who needed it. While that policy has caused some concern in certain areas, currently we are demonstrably seeing that the rooms that are being freed up are being utilised. We are seeing more rooms being made available to address the acute need and demand for housing.

[Lord Shipley (LD)]

My Lords, the Minister referred to the success of Build to Rent, in that it will have built some 10,000 homes by 2015. Do the Government have any plans to extend Build to Rent? Have they given any thought to the creation of a housing investment bank, which could lend money and create more housing units in the private rented sector, thus giving greater foundations to those who are renting by enabling them to stay in their homes at rents that they can afford?

[Lord Ahmad of Wimbledon]

My noble friend raises an important point about expanding the rented sector. He is correct that our £1 billion Build to Rent fund will provide development phase finance to large-scale private rented sector developments, building up to 10,000 new homes. Eight round 1 projects are now in contract, worth £124 million and delivering more than 1,600 new homes for private rent. He also asked about other schemes and I have heard the suggestion that he put forward. The Government are currently supporting the housing guarantee schemes, which are now open for business and supporting up to £10 million-worth of investment in large-scale private rented projects and in additional affordable housing. For example, the delivery partner in our private rented housing debt guarantees has received a lot of strong interest. A £500 million European Investment Bank loan facility for affordable housing debt guarantees, which was announced on 7 January this year, has attracted eight borrowers. So there are a variety of schemes that the Government are supporting and promoting to ensure that we address this very important need.

[The Lord Bishop of Rochester]

My Lords, I am grateful to the Minister for his assurance that the Government are aware of the needs of families in relation to the length of tenure for tenancies. Is the Minister also cognisant of the needs of retired persons, where length and stability of tenancy are important not only for their well-being in old age but also for their contribution to the communities where they are living in a sustainable way?

--- Later in debate ---

[Lord Ahmad of Wimbledon]

The right reverend Prelate again raises an important point at the other end of the age spectrum, and the Government are very much cognisant of ensuring stability for residents and that their needs are met. One thing on which we are clear is our approach to the private rented sector, through landlords, through providing greater protection and a greater sense of professionalism for both landlords and agents. We are also helping provide an increased level of guidance to tackle any perceived rogue landlords and making more help available to tenants in this particular sector.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I think some Members of your Lordships’ House were a little surprised by the figures that the Minister produced in relation to average rent increases, particularly in London. Will he tell the House where those statistics have come from and who produced them?

[Lord Ahmad of Wimbledon]

Our statistics come from a variety of sources, but I will write to the noble Baroness on that—

[Noble Lords]

Oh!

[Lord Ahmad of Wimbledon]

Noble Lords may laugh, but I have the figures in front of me which I quoted. The noble Baroness raises an important point about the verification of sources and I shall, of course, inform the House accordingly.

[Lord Forsyth of Drumlean (Con)]

My Lords, is my noble friend satisfied with the asymmetric treatment of tax relief on mortgage interest for buy-to-let landlords, which has the effect of forcing up prices and thus giving them an advantage over private buyers and ultimately pushing up rents?

[Lord Ahmad of Wimbledon]

The Government have shown, through the various schemes which have been launched recently, our commitment to ensure that more people can engage with the property ladder. For example, a recent scheme that my noble friend may be aware of is that of rent to buy. Some £400 million is being made available to allow people to rent now and buy later. As he knows, we have also introduced the Help to Buy scheme, which is helping 53,000 new households. He made the important point that perhaps some people would be gaining more perceived benefits. He may well be satisfied with the point I would put to him: that through our initiatives the Government are demonstrably ensuring that the ability to purchase your first home is being made more widely available.