Lord Jenkin of Roding
Main Page: Lord Jenkin of Roding (Conservative - Life peer)Enterprise and Regulatory Reform Bill
Lord Jenkin of Roding Excerpts
Baroness Brinton
My Lords, I spoke on this in Grand Committee and I do not want to repeat either the points I made then or the many comments that have been made by noble Lords this afternoon. I want to make two or three additional points.
I have noticed in my home town of Watford a proliferation of letting agents, a constant change in their brand and marketing or moving address. Certainly, for the tenant, there is no clarity in the difference between an estate agent and a letting agent. The Government have argued that accepting this amendment complicates the landscape in this area. I think the exact opposite is true. I have two examples of tenants suffering problems with letting agents and one of landlords.
A typical prospective tenant might be a single mum who has found her way back into work. I happen to have a friend who was in this situation last year. The letting agency decided that it was going to demand of all single mothers with children, regardless of whether they had work and were able to show they had continuous employment, four months’ rent and, in addition, a guarantee from a male whose work they also wanted guaranteed. These are most extraordinary conditions.
One of the major problems is that many people who are desperately seeking rented accommodation would not know where to go. If you are struggling to find accommodation in your home town, to be able to go to Citizens Advice means that in reality you will lose the property. Certainly, in the south-east, lower cost rented property is at an absolute premium. This sort of behaviour, when there is no ombudsman and no code of conduct, is very difficult to police. I only know about this because of a personal contact.
More familiar to your Lordships’ House will be the example of students in a university town trying to find accommodation. If they have been lucky enough to have a year in halls, they often end up trying to find accommodation elsewhere. One of my children’s universities used to say: “Please find your accommodation through the university accommodation syndicate. If you go outside, we cannot guarantee that you will not be ripped off by letting agents. In particular, many letting agents have a reputation for finding every reason under the sun not to return your deposit”. The fact that you have to warn students of this before they have even entered into a contract tells me that there is something wrong with the letting agency business.
Many landlords pay extra money for their agent to manage the day-to-day business, perhaps if they are away. I have had, again, anecdotal evidence from two landlords who have been away from their town—which is why they pay the extra percentage charge—and discovered the letting agent ringing them to ask them to clean the house between lets and to arrange for the plumber to call and all the other things that they had thought were included in the extra percentage charge that they were paying. The noble Baroness, Lady Hayter, referred to the Liberal Democrat paper that was passed by conference, Decent Homes for All, and my honourable friend Annette Brooke MP has also been fighting with EDMs and other comments in another place on this important issue. My party certainly believes that we need to regulate the letting area.
I will add one final point. The coalition agreement, rightly, seeks to reduce red tape. Not accepting this amendment allows the continuation of a red tape for a consumer and a tenant, simply because, at the moment, a tenant has to understand the difference between being with an estate agent and a letting agent and to understand that if they are with an unlicensed letting agent, instead of going to the ombudsman and taking redress through the code of practice, they may have to go Citizens Advice, a small claims court or trading standards. My 19 year-old son in his first foray at university would not have known where to start with that. If we can do what his university rightly tries to do in guiding the students and say, “You need to be assured that the people you are dealing with actually follow a code of conduct and there is an ombudsman to whom you can turn”, then we would have a much simpler system, which is free of red tape.
I am very grateful to the Minister for the meetings that have been held over the past few days and hope that we will be able to hear some progress when he informs the House of any further consideration.
Lord Jenkin of Roding
My Lords, I hope that the noble Lord, Lord Campbell-Savours, will forgive me if I do not follow him in his very interesting description of what may happen in auctions, but I look forward to hearing the reply from my noble friend on the Front Bench.
Coming back to the amendment that was moved by the noble Baroness, Lady Hayter of Kentish Town, I will just raise one or two points. Members of my family have been both lessors and tenants in the present market and, apart from one case, have on the whole had good experiences. I was approached by the Association of Residential Letting Agents, ARLA, and have been quite impressed by what it has told me. Its primary function, as it puts it, is to professionalise the profession and to make sure that it has high standards and that those who enter the profession understand what the standards should be. It operates a voluntary scheme of registration and its anxiety is that a number of letting agents do not register for whatever reason, one of which may be that they do not want to comply with the standards.
Can my noble friend refer to one particular point when he replies? The noble Baroness, Lady Hayter, reminded us that, in opposition, my honourable friend Mark Prisk moved very similar amendments to legislation before the House produced by the then Government. In the debate in Grand Committee on 16 January—I apologise, again, that I was not able to be there—after referring to the speech that I have read from my noble friend Lord Deben, who gave the clear impression that he supported the amendment of the noble Baroness, Lady Hayter, my noble friend Lord Younger said:
“I note and respect the intervention of my noble friend Lord Deben in this respect as well. I know that the Housing Minister is aware of these concerns but I will raise them with him for further consideration. It is clear from the speech from the noble Baroness, Lady Hayter, that he—Mark Prisk, my honourable friend in another place—is aware of the issues that she has mentioned”.—[Official Report, 16/1/13; col. GC 250]
At this stage, all I need to ask is whether my noble friend Lord Younger approached Mark Prisk and what his response was. What was his reaction when reminded that he had in fact moved a very similar amendment himself when in opposition?
One is tempted to say, “Let us return this clause, with this amendment, to another place so that my honourable friend Mark Prisk may have an opportunity to say why he has changed his mind”. I am not sure that that would necessarily be the right thing to do but I will be impressed and influenced by the answer that my noble friend on the Front Bench gives me to this point. I find it difficult to accept that you can hold one very clear opinion in opposition and then find yourself responsible in the same field and hold a completely different one. It is often, as my noble friend Lord Deben said quite firmly in Committee, because it is a departmental attitude, which in this case may stem from the Treasury. As a former Treasury Minister, all I can say is that I understand that does in fact happen from time to time. However, whatever the reason, it does not seem to be a very satisfactory position and I look forward to hearing my noble friend on the Front Bench explain it.
Baroness Gardner of Parkes
I will start at the back and deal first with Amendment 82, in the name of the noble Lord, Lord Campbell-Savours. You might think that auctions are bad here but you should see them in Australia. I bought my flat at auction out there and what they do is start the auction and when they reach a certain point they stop and say, “We’ll have a break”. In the break, they get hold of the vendor and say, “Why don’t you come down on your reserve?”, and get hold of the purchaser and say, “Why don’t you go up on what you are going to buy?”. They might do that two or three times within the auction. Fortunately I had someone helping me, who made clear to the auctioneer that if they went on and broke more than once, we were out. We got the property and I have had it a very long time.
There are good and bad things about auction. I accept the point the noble Lord made about deceiving people about how cheaply they are going to get something, but of course it is unpredictable and properties sometimes really do not sell, while in other cases they do. At least with an auction all the documentation about the property is provided in advance of the auction so people are not kept in the dark the way they are with lettings and by managers. People launch into a property they are going to rent, or buy leasehold, and they find that there are all sorts of hidden clauses that no one ever drew their attention to and that no real documentation is available. It is quite different; each system might have its faults but they are different faults and it is hard to know whether you will ever get them right.
However, I have a certain sympathy with the point the noble Lord, Lord Campbell-Savours, made. If you have gone a long way it is very difficult—you have gone to the trouble, you think the place is going to be within your range but it is not. It is really very hard to resolve that one. Do people wake up to the fact that it is just a selling technique, which happens all the time, or are people genuinely taken in by these deliberate ploys? It is complicated but he has got a very interesting point that requires further investigation.
I strongly support the amendment of the noble Baroness, Lady Hayter. Talking about letting agents, I was quite stunned to see on television people letting these sheds in some parts of London. They had no windows or anything in them; a family of 10 living there and sometimes no running water or electric light. It was just unbelievable. The people who were renting them produced leaflets from the agent who was offering them to let. When the BBC—I think it was the BBC although it could have been another broadcaster—went to say to these people, “How could you be letting this when it has no planning permission and does not conform with any health standards of any sort?”, the answer was, “Oh, no, we were never letting it”. Yet they had proof in front of them of the printed leaflet about it being available to let from that particular agent. That is the absolute bottom of the scale but between that and the really desirable letting agent, there are all sorts of gradients.
Lord Jenkin of Roding
Before my noble friend goes on to discuss auctions, will he give some indication of how long it will take for the Government to study the substantial report to which he referred, and how long he thinks it will take for the DCLG Select Committee at the other end to produce its report? I understand both his arguments—there is a substantial report from the OFT and there is also that Select Committee report—but we really do not want to have to wait for ever.
Viscount Younger of Leckie
My noble friend makes a very good point. I can reassure him that the Select Committee report is due out very soon. It is likely to be in May; it may even be as early as April. That is not a guarantee, but I hope that it gives a helpful indication as to what the timing might be.
None the less, I recognise that the issue of a lack of redress is a serious one, and I know that my honourable friend in the other place, the Housing Minister Mark Prisk, considers this a serious issue, too, and is giving it the most serious consideration. We will reflect very carefully on this and other recent debates, and I am sure that the Housing Minister will keep in touch with Peers who have spoken today.
I shall turn as fast as I can to Amendment 82. I thank the noble Lord, Lord Campbell-Savours, for having brought this issue to my attention and to that of the House. I have considered carefully the amendment and the arguments for introducing it. The Government are of course concerned to hear that buyers may be experiencing difficulties when trying to purchase a property at auction, especially if it involves first-time buyers. I am pleased to say that there is already legislation in place designed to address just this sort of unfair practice. Therefore, new legislation will not change the position regarding consumer protection in such matters. I will explain why.
Under the Consumer Protection from Unfair Trading Regulations 2008, auctioneers, like traders in all sectors of the economy, are required in their dealings with consumers to treat them fairly and not mislead them. Under the CPRs, there are also a number of business practices that are considered unfair in all circumstances and are prohibited. When marketing a property, it is prohibited to use bait tactics such as luring bidders to auctions using pricing techniques, which the noble Lord raised as an example. OFT guidance on the CPRs published last September, of which the industry should be fully aware, gives the specific example of guide prices not being distorted to attract potential buyers.
Where traders treat consumers unfairly, they may face criminal or civil enforcement action. Enforcement of the CPRs is by the OFT and local authority trading standards services. We are, of course, in the process of better equipping trading standards to take greater responsibility for consumer law enforcement, and will be transferring central government funding for national leadership and co-ordination of enforcement activity from the OFT to the National Trading Standards Board. In addition, the new Competition and Markets Authority will have consumer enforcement powers to address business practices that distort competition or impact on consumer choice in otherwise competitive markets.
Furthermore, I understand that the industry encourages fair practice in this area and offers guidance and training. For example, the Royal Institution of Chartered Surveyors provides best practice guidance for auctioneers selling real estate. Such guidance addresses price guides and states that these guides must not be misleading, advising that a price guide that is clearly below the figure that the seller will accept is misleading. As best practice it also says that auctioneers should clearly indicate in the catalogue that price guides may be subject to amendment during the period leading up to the day and time of the auction sale.
In the light of the consumer protection legislation already in place, and as we have not seen any evidence on which a change of legislation could be justified, we do not feel the necessity to change legislation in this area. The noble Lord may wish to write to the OFT, providing evidence of the experiences and findings in this matter that are causing him concern. I hope that he is reassured by my answer and that he will therefore not press his amendment. I note that this is a new issue that was not raised in Committee and I acknowledge his apology. However, I believe that he raised some interesting points that we will keep in our sights. I also ask the noble Baroness, Lady Hayter, to withdraw her amendment.