Selective Licensing of Landlords

Lord Foster of Bath Excerpts

Wednesday 3rd July 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Hyndburn (Graham Jones). He is a passionate advocate for this important issue and I am genuinely grateful to him for raising it. As I will say in a moment, this is our second time discussing these issues in a relatively short time.

As the hon. Gentleman knows, the private rented sector is an important part of our housing market. Some 3.8 million households live in the sector, which has seen a huge increase from including 9% of all households in 1988 to about 17% now. The Government actively support that growth. Our “build to rent” fund will support new high-quality, large-scale development for private rent. Notwithstanding the problems he raises, most private sector tenants are happy with their home and the services they receive: the English housing survey found that 84% were satisfied with their accommodation, compared with 77% of local authority tenants. The average tenancy has extended, and now lasts for about two years; nearly 20% of tenants have lived in the same property for more than five years. Importantly, the same survey found that 91% of tenancies were ended by the tenant, rather than the landlord. It is pleasing to note that rents are stable. The latest figures from the Office for National Statistics show that over the past year rental increases were below inflation: in England, they rose by 1.3%, while in London, the figure was higher at 2.2%, but still below inflation.

I know the hon. Gentleman and many members of his party have been keen to push for a national register of landlords. The Government have rejected that proposal, not least because it would cost some £330 million over 10 years—costs that would be passed on to tenants. He rightly raised concerns about some landlords, and I am aware that a minority of landlords fail to meet their basic responsibilities: they neglect their properties and exploit their tenants by placing them in unsafe and unsuitable living conditions. We should focus our attention on them; a point he rightly raised today. Frankly, those landlords have no place in the sector and we are determined to take firm action to crack down on them, which is why earlier today we announced that £3 million of funding would be made available to support local authorities dealing with particularly acute and intractable problems caused by rogue landlords. I am sure that we will discuss access to that funding with the hon. Gentleman.

We have been concerned in particular about beds in sheds—the extreme manifestation of rogue landlord problems. Backed by £2.6 million of Government funding, more than 500 illegally rented outbuildings and overcrowded homes have been discovered. Just this morning, a successful raid was carried out in Hillingdon, where two sheds were found to be being used as illegal accommodation, two of the occupants of which were found to be illegal immigrants and were detained by the police.

I know that many properties in the hon. Gentleman’s constituency are old, frequently in poor condition and, as he said, expensive to heat. Such homes can be less desirable than more modern buildings, and therefore more difficult to rent out, so the properties stand empty for long periods, blighting the local area. Of course, where a property is in a dangerous state of disrepair and there is a risk of harm to the occupants, the local authority should make use of the powers under the 2004 Act to take enforcement action. I discussed that with the hon. Gentleman when we met last month. In some areas, where demand is low, landlords need support to improve empty homes and bring them up to modern standards, which is why my Department gave a grant of £9.4 million to the Pennine partnership, which includes his constituency, to help refurbish and bring empty properties back into use. Hyndburn borough council received a £3.8 million share of that grant to develop the Woodnook neighbourhood, which will be complemented by a loan of £2.5 million from round 1 of the Get Britain Building fund.

[Graham Jones]

Will the Minister give way?

[Mr Foster]

I am happy to give way. I want to illustrate that we are providing support to housing of the type that the hon. Gentleman describes in his constituency.

[Graham Jones]

I want to put it on record that the meeting we had a month ago was very constructive. I acknowledge that £3.8 million has come to the Hyndburn area for some 200 properties. My wider point is that we have 3,000 empties and 4,000 to 4,500 rental properties; the empties are largely part of the rental market. There is a much bigger problem, for which selective licensing would have a broader reach with a broader brush, but I appreciate that we are dealing with 200 properties through the scheme that the Minister mentioned.

[Mr Foster]

I am grateful for that acknowledgement. There is, of course, always more that can be done. The hon. Gentleman will know that we have recently given local authorities the power to increase council tax by up to 100% for empty properties—

[Graham Jones]

rose—

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[Mr Foster]

I know what the hon. Gentleman is going to say.

We have also given local authorities the power to increase council tax for such properties by 150% after two years. Let me just say to the hon. Gentleman—[Interruption.] I will let him intervene, and I will then answer the question I know he is going to ask.

[Graham Jones]

I think the Minister knows what I will say—he is correct in saying that. I hope that I represent the hon. Member for Pendle in saying this, because it affects us both. We are in a unique position in that our areas are not in a unitary authority, so the rise in council tax cannot be put back into dealing with empty properties because it all goes to the shire authority, to be spent on other services. That is a problem that we face in local government structures, so although the measure is welcome, it is not helpful on the ground.

[Mr Foster]

May I just say—as I was going to, because I knew that that was the matter that the hon. Gentleman would raise—that the measure puts pressure on landlords to take action to get properties back into use, even if the extra money from the council tax does not go directly into the local council? It is, therefore, an important measure, in that it puts additional pressure on landlords.

The hon. Gentleman has rightly acknowledged that local authorities have a range of powers with which to tackle problems with poor housing, of which selective licensing is just one. He also rightly said that, at the moment, selective licensing can be introduced only when a local authority is able to demonstrate that a particular area suffers from low housing demand or has a significant and persistent problem with antisocial behaviour. Selective licensing is not, of course, the only solution. It is important to remember that local authorities have other options open to them. One such option, which we strongly support, is to introduce a voluntary licensing scheme for landlords, which can, and does, help to raise standards across the board. My hon. Friend the Member for Pendle (Andrew Stephenson) referred to one such successful scheme in his constituency.

The hon. Gentleman suggested that the criteria for selective licensing should be made more flexible, by way of an additional criterion enabling it to be introduced when a local authority has general concerns about the quality of housing. Given that other enforcement powers are available, I am not yet—and the hon. Gentleman should note that I stress that word—convinced that that is necessary, but I am aware that there is little information about the use or impact of landlord licensing, whether selective or voluntary.

[Graham Jones]

Although the Minister and I have always had a constructive dialogue and share a similar thought process on the matter, we diverge slightly on this point because I believe that there is a role for selective licensing.

Regarding the two schemes, the housing health and safety rating system is run from within the revenue grant of a local authority—I have stated Hyndburn’s position—and the inspectors involved in landlord licensing cannot inspect for that scheme because it is a separate stand-alone one. There is a bilateral system, with two schemes being run in parallel, and there is a case for arguing that they come together.

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[Mr Foster]

I note the hon. Gentleman’s point. I remind him that because the Government have removed much of the ring-fencing from local government funding, it is for local government itself to decide how to make use of the funding.

May I now be positive? I recognise that perhaps we do not have enough information about the impact of licensing schemes, and I have, therefore, asked my officials to gather information over the summer on how the schemes are used and on the impact they have locally, and I hope that the hon. Gentleman will be willing to contribute information that will help us in our consideration. Although there are no immediate plans to review the legislation, we are keen to ensure that local authorities are able to use it proportionately and effectively. The information gathered on how existing licensing schemes work in practice will be used to inform an update of the current guidance for local authorities on selective licensing.

I am grateful to the hon. Gentleman for raising this issue. It is important that local authorities have the right tools to manage housing in their area as effectively as possible, while not putting undue burdens on landlords who already provide a good service. I hope that the hon. Gentleman will recognise that I seek to be as helpful as possible. We need more information before any further decisions can be taken, and I hope that he will participate by providing information that will help us.

[Graham Jones]

I want to place it on record that the Minister is trying to be as helpful as he possibly can, but I would like to see the Government go further and faster, and a visit to some of the worst areas might accelerate their thinking on the issue.

[Mr Foster]

I am grateful for the invitation to visit the hon. Gentleman’s constituency, and if the opportunity arises I will certainly do so. I should say, however, that I have recently made visits around the country, not least to look at empty homes—we are determined to do as much as we can to help bring them back into use—and I have had the opportunity to see areas that are very similar to the one I suspect I would find if I visited the hon. Gentleman’s constituency. Nevertheless, if I get the opportunity I will pay such a visit.

I am grateful for the hon. Gentleman’s generous remarks. We are trying to be as helpful as we can. I know that he would like us to go further, but I cannot commit to that without having more information. However, we will certainly look at the information we gather over the summer and see where it takes us.