Private Rented Sector

Lucy Powell Excerpts

Wednesday 23rd January 2013 Commons Chamber

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I very much welcome this debate. The important issues that are being raised are extremely relevant to my constituency, which has large numbers of people living in the private rented sector. It also has a growing number of residents living in managed blocks, particularly in the city centre. I have held public meetings and conducted resident surveys on these important issues, and I already have a considerable case load relating to them. There are many shocking cases of bad practice by letting and managing agents in Manchester Central. In raising them in the House today, I want to shine a bright light on some practices that can only be described as unscrupulous and murky, and that have left many of my residents significantly out of pocket and with little protection.

To redress the balance between tenants and owners with letting agents and rogue landlords, and between owners and residents in managed blocks and their managing agents, we need to give urgent consideration to the following measures: the regulation of letting agents and managing agents, which has already been discussed; the establishment of a national register of landlords, with local authorities including Manchester city council given the powers to improve standards; the reduction of barriers to residents getting the right to manage their own blocks; and giving organisations such as leasehold valuation tribunals—known as LVTs—real teeth, so that their decisions cannot simply be ignored.

I will explain more about those points in a moment, but first I would like to give the House my view on why I think the private rented sector needs further regulation. I believe that a huge market distortion is costing the taxpayer a great deal of money. We have all come across examples of letting agents charging fees and of people having to pay onerous deposits, which they rarely get back. Less publicised is the recent practice of asking potential tenants to provide a guarantor. That involves a legally binding arrangement whereby if someone fails to pay their rent, somebody else has to pay it for them. In addition, potential tenants have to go through credit checks, and we are now seeing a two-tier system in the rental market, in which people who do not pass the credit check and cannot provide a guarantor are consigned to living in very poor properties and paying hugely inflated rents. Those rents could buy a luxury home in a more desirable part of town, if those people were able to arrange that. I do not believe that those rents accurately reflect the risk involved to the landlords. Many of those tenants are also in receipt of housing benefit, so those extortionate rents are often being funded by the taxpayer. That is why the situation needs to be looked at urgently.

The subject of managing agents is a big issue in my constituency, and it will become a growing issue in many city centres as more and more people start to live in managed blocks. The stories surrounding some, but not all, of the managing agents operating in my constituency are truly shocking. Time and again, I have come across the following problems: high charges, along with poor service and maintenance; charges being put up erroneously without warning; retrospective payment demands for work or services that were not agreed to or were poorly carried out; and long-term service contracts being awarded to associate companies of the managing agents.

One example of that involves residents living in the Riverside block in Hulme, whose management fee has doubled since 2006 and is due to go up a further 10% in April. They are powerless to prevent that. When residents and owners try to come together to exercise their right to manage, they often face high barriers. In some of the bigger blocks, it is not always possible to find and mobilise the required ratio of owners, because of the high number of absentee landlords. Even when the majority of owners can be mobilised, and the right to manage has been won, the legal barriers are considerable. When the residents and owners of No. 1 Deansgate in the city centre won the right to manage last year, the managing agent and freeholder were told that they had no right of appeal, yet, with the help of the legal firm that they hired, they were able to get an appeal agreed by the higher tribunal. The residents and owners will continue to fight for their right to manage, but the legal process has already cost them thousands of pounds and is likely to cost them £10,000 more.

The challenges do not end when the right to manage has been won. Owners in the Little Alex block in Moss Side manage their block, but the freeholder takes out the buildings insurance with an associated company, in what can only be described as a dubious arrangement. The insurance includes a number of elements that the owners do not want. The leasehold valuation tribunal has determined in favour of the residents, yet the freeholder is continuing to charge them, and it seems the LVT has no teeth whatever. That is why we need further regulation—

[Mr Speaker]

Order. I am extremely grateful to the hon. Lady. I call George Hollingbery.