Housing and Planning Bill (Seventeenth sitting)

Marcus Jones Excerpts

Thursday 10th December 2015 Public Bill Committees

[Dr Blackman-Woods]

I beg to move, That the clause be read a Second time.

I will be extremely brief. New clause 13 seeks greater clarity on how the use of commonhold and leasehold tenancies are mentioned and dealt with in practice by the Department. I would be grateful to hear the Minister’s comments on how the current situation can be improved.

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

New clause 13 seeks to replace long residential leasehold with commonhold. As hon. Members know, leasehold is a long-established way of owning property, supported by a framework of rights and protections that aims to deliver the appropriate balance between providing leaseholders with the rights and protections that they need and recognising the legitimate interest of landlords.

Commonhold is subject to a different statutory framework of rights and protections. It has its benefits, but there are important differences between commonhold and leasehold. That is partly why commonhold is and was intended to be a voluntary alternative to long leasehold ownership—a choice. There are no plans to abolish residential leasehold.

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[Teresa Pearce]

I completely accept what the hon. Gentleman says.

Insecurity in housing affects not only individuals—tenants or landlords—but our whole society. There is a small school in my area that is in a fairly settled part of my constituency, and yet staff there told me that they had a whole class of pupils—30 pupils—that had churned in and out since September. It really affects the way that teachers can make progress with a class when there are new children coming in and out all the time, and the staff put that churn down to the private rented sector.

There is also a doctors’ surgery in my constituency that has 14,000 patients, and every year 4,000 of those patients move on and move to a different practice. A third of patients coming and going makes it nigh-on impossible for the doctors to deal with long-term health issues. They cannot run campaigns on diabetes, obesity or smoking with any success, because a third of their patients are constantly churning in and out. Many of the patients are living in bad conditions with mould and damp, and suffering from asthma, which puts more pressure on GP services.

Also, more secure tenancies and housing will allow families to become more settled, which I believe would help the local economy. Many employers, small and large, that I go to see tell me that they have a problem with recruitment, and it is because of the insecurity in the housing sector.

New clause 22 is designed to encourage longer-term tenancies and to make them much more common, so that both landlords and tenants have more stability. It is important to note that that should not penalise responsible landlords who may need to evict tenants, perhaps because their own financial position has changed or perhaps because they are unhappy with the way the tenant is treating the property. These are legitimate circumstances in which landlords should still be able to evict tenants by providing proper notice.

Measures to increase long-term tenancies are supported not only by me personally but across the industry. In particular, I will highlight some of the written evidence that the Residential Landlords Association gave to the Committee. The RLA wrote:

“We believe that reforms are needed to encourage a culture of long termism within the private rented sector which would play a significant part in stabilising rents for tenants.”

It also wrote:

“Too often letting agents base their business models on short term tenancies, charging fees (and thereby increasing rents) when they are renewed.”

It continued:

“The evidence shows that where tenants stay in their properties for longer periods, landlords are reluctant to increase rents, at least beyond inflation…Landlords often want to offer longer tenancies…Many landlords are prevented from voluntarily providing for tenancies longer than a year by mortgage lenders and the owners of blocks of flats”,

including the freehold owners of blocks of flats. Those were the words of the RLA.

I raised this issue in the most recent Department for Communities and Local Government oral questions with the Minister, and I hope that I might hear more today about what conversations are being had with mortgage providers. I know that the Nationwide now does not have a clause in buy-to-let mortgages whereby it will not allow lettings for longer than a year. However, other lenders have not been as enlightened, so I would be interested to know whether Ministers have had any discussions with the Treasury regarding this issue.

Finally, it is worth noting that many other countries already have longer-term tenancies. I accept that in some other countries in Europe there is not the same attitude towards home ownership that we have in this country, and that renting is a much more normal way of life there. However, in countries such as Germany, Switzerland and Belgium, long-term contracts and more flexibility give tenants the chance to plan for the future. In Germany, leases are usually signed for an unlimited period of time, and in France, where one in five people rent, longer leases are always available.

I am sure that Members from all parties have been contacted in the past by tenants who are struggling because they cannot find stable housing. I think we all agree that we want stability in housing, and longer-term tenancies could be a way of securing that stability. So we hope that we find some common ground with the Minister, and I am very interested to hear the Government thinking regarding longer tenancies becoming more of a norm than they are at the moment.

[Mr Jones]

Let me make it clear that this Government are committed to building a bigger and better private rented sector, which provides security and stability. We have taken action to support the supply and quality of private rented accommodation by resisting unnecessary and unhelpful regulation, while cracking down on the worst practices of some rogue landlords. Our model tenancy agreement, which was introduced in September 2014, promotes longer tenancies for landlords and tenants who vote to sign up to them.

However, there is no one-size-fits-all approach to tenancy length. Many landlords are looking to rent out a property for the longer term, but there will be some for whom letting a property is a short-term plan and who need the property back at some point, perhaps even for their own family to live in. Although I understand the spirit in which the amendment has been tabled, I think it would be counter-productive and would overburden the market with restrictive red tape, stifling investment and the supply of rented housing at a time when we most need to encourage it. That would not help tenants or landlords.

[Peter Dowd]

I can accept the assertion that the Minister is making, but actually, all the evidence from continental Europe points in the opposite direction. Investment is not stifled—quite the opposite. Secure tenancies often give the security to people investing in them, so the evidence continentally does not indicate that.

[Mr Jones]

The hon. Gentleman gives me a very good opportunity to segue into explaining that before assured shorthold tenancies were introduced by the Housing Act 1988, the private rental market was in severe decline. Lifetime tenancies and regulated rents meant that being a landlord was simply not commercially viable for many property owners. Since 1988, however, the private rented sector has grown steadily, increasing from just over 9% of the market in 1988 to 19% today. Landlords, and in many cases tenants, welcome the flexibility of the current assured shorthold tenancy regime, which does not lock the parties into long-term commitments and promotes mobility. Without the certainty that landlords can seek repossession when required, many, I am sure, would be reluctant to let their properties. I believe that the current framework strikes the right balance between the rights of landlords and tenants. With those points in mind, I hope that the hon. Lady will withdraw her amendment.

[Teresa Pearce]

I am interested in what the Minister said, but he has not responded to the point about the artificial barriers to some landlords, who want the choice to have either a short let or a longer let, but who are restricted by the freeholder—often the local authority—or the mortgage lender. Perhaps he would like to answer that or write to me about it at some future point.

[Mr Jones]

I will certainly undertake to write to the hon. Lady on that, but I also say that in reality, figures show that the length of time that somebody takes a tenancy from a landlord is, on average, three and a half years.

[Teresa Pearce]

That is not the case in my constituency, I assure him; that is very rare.

I believe that longer tenancies are a very good idea. It is interesting that in the heated debate we had this morning, tenancies of two to five years were meant to be the right thing for social tenants, but for private rented tenants, there is resistance to it. However, given that the Minister is going to write to me regarding the particular issue I am concerned about, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 24

Local Authorities and Development Control Services

“(1) A local planning authority may set a charging regime in relation to their development control services to allow for the cost of providing the development control service to be recouped.

(2) Such a charging regime will be subject to statutory consultation.”—(Helen Hayes.)

Brought up, and read the First time.

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[Teresa Pearce]

I completely agree with my hon. Friend. We are talking about people who are receiving taxpayers’ money, taking it as income and not paying tax on it. We should do whatever we can to tackle those people, because they are exactly the same group of people who will not be carrying out electrical safety checks on the properties they rent out and who are cramming people into bedrooms that are too small. They are exactly the rogue landlords that this Bill seeks to ban, so we should also be ensuring that they are not profiting from this.

This is a probing new clause to raise the issue for consideration by the Committee. I look forward to the Minister’s response, and I hope that something can be done to ensure that every citizen of this country who gets income pays the right amount of tax on that income.

[Mr Jones]

The new clause would place an additional requirement on each local authority to collect information about housing benefit paid to landlords and to disclose that information to Her Majesty’s Revenue and Customs on a quarterly basis. Local authorities are already accountable to the Department for Work and Pensions for their housing benefit expenditure as part of the subsidy scheme, which is subject to an annual audit. For claimants in social housing, housing benefit is often paid directly to the landlord, although that is starting to change with the roll-out of universal credit, which pays benefits directly to the claimant in most cases. For claimants in the private rented sector, housing benefit is not, for the most part, paid directly to private landlords but is paid to the claimant, who is then responsible for the rent, so any reporting would only provide a partial picture.

Universal credit, which is replacing housing benefit for working-age claimants, is currently being rolled out across the country and is not administered by local authorities, which means that the proposal would become of diminishing relevance in the medium to short term. On that basis, I urge the hon. Lady to withdraw her motion.

[Teresa Pearce]

I understand what the Minister says about the roll-out of universal credit but, at present, every local authority has a payroll department and has to make annual reports of payments made outside of the payroll to contractors and people like that. The proposal is not that onerous on councils, but I accept that it might not fix the problem, so I ask the Minister to go away and consider what would fix the problem. There clearly is an issue, and I would like to think that the Government will consider it and try to find some way of ensuring that such people are not avoiding their due taxes. In the spirit of accepting that he may do that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 29

Accreditation and licensing for private landlords

“Local authorities shall be required to operate an accreditation and licensing scheme for private landlords.”—(Dr Blackman-Woods.)

This amendment would require local authorities in England and Wales to put in place a scheme to license and provide for the accreditation of private sector landlords in their area.

Brought up, and read the First time.

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[Dr Blackman-Woods]

Absolutely not. I will come to the matter of payment in a moment or two.

The scheme is very straightforward. The information is given online and all the council has to do is to check that there is documentation to back up an exemption if a landlord asks for one. Furthermore, the person letting must be fit and proper according to three categories. They are considered not to be a fit and proper person if they have committed an offence involving fraud, dishonesty, violence, drugs, discrimination, firearms or sexual offences; if they have practised unlawful discrimination in connection with any business; or if they have contravened any provision of the law relating to housing or landlord and tenant law.

As the hon. Gentleman said, I was keen to find out how such a straightforward scheme was funded. It is funded by the application of a fee, which is extraordinarily low; it is £55. Often what we hear back from the Conservative party is, “Oh, we couldn’t possibly have a landlord register operating, because it’s so expensive, puts unreasonable charges on to landlords and is much too complicated”, but in Scotland an excellent, straight- forward and reasonably charged scheme is in operation. I can see no landlord who would be unable to pay £55. I would like to hear from the Minister why such a scheme cannot operate in the UK.

Alongside that we could have an accreditation system. We already have the London Landlords Accreditation Scheme, which seeks to enable landlords to register and get accreditation to show that they are fit and proper persons who operate as good landlords. Some other such schemes operate locally—for example, Oxford City Council has a landlord accreditation scheme.

Those are examples of good practice, often carried out by Labour authorities. It would be excellent if such good practice could be rolled out nationally. I look forward to hearing from the Minister why we do not have the ability to operate in this country schemes that operate easily in Scotland and under other devolved Administrations.

[Mr Jones]

The new clause would require all local authorities to operate an accreditation and licensing scheme for private landlords. The existing licensing arrangements for the private rented sector were introduced to give local authorities the ability to deal with problems that might arise in connection with rented property. Three types of licensing are provided for: mandatory licensing of larger homes in multiple occupation; additional licensing of smaller houses in multiple occupation; and selective licensing of all types of private rented sector housing.

Additional and selective licensing are discretionary powers. Additional licensing may be introduced by a local authority for smaller houses in multiple occupation in all or part of its area where there are significant management issues, or the properties are in poor condition. Selective licensing allows local authorities to license all private rented housing in a designated area that suffers issues such as low housing demand and/or significant antisocial behaviour.

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[Dr Blackman-Woods]

Will the Minister outline what is burdensome about filling in an online form, which takes about 10 minutes, and paying £55 to do so, given that that scheme operates effectively elsewhere in the country?

[Mr Jones]

I thank the hon. Lady for that question. It was typical of the last Labour Government that more and more bureaucracy was layered on to business. The problem is that the more bureaucracy that is layered on, particularly to decent business people who are doing the right thing, the more it discourages them from investing and running businesses and, in this case, from housing people. It is apparent that where this system has been or is being used—Scotland—the additional required administration has resulted in increased rents for tenants.

Several voluntary landlord accreditation schemes have already been introduced by many local authorities and are promoted by the main landlord associations. We strongly encourage that approach. The aim of voluntary accreditation is to raise standards by providing education and training to landlords, identifying poor practice and generally increasing the levels of professionalism among landlords. However, I do not believe that local authorities should be required to operate an accreditation scheme in their area. Accreditation is only of interest to good landlords who rent out decent accommodation, so it does not help to identify and tackle criminal landlords. Local authorities are in the best position to decide whether there is a need for an accreditation scheme in their area. On that basis and following that explanation, I hope the hon. Lady will withdraw the new clause.

[Dr Blackman-Woods]

The Minister gave exactly the response that I thought he would and that we have heard a number of times from this Government. The lack of consistency in approach is pretty breathtaking. Earlier in our discussions, we found out that local authorities have been given powers to offer fixed-term tenancies to their tenants. Local authorities do not think that is a good idea and they do not want to do it, so what are the Government doing? They are making them do it through this legislation. Exactly the same situation pertains to the registration of landlords.

It is extremely difficult for local authorities to run selective licensing schemes and, in this instance, any sensible Government would say, “We would want to ensure that we have maximum protection and ease of information for tenants. Therefore, we will set up a very cheap, easy-to-administer national scheme.” I just do not understand the logic, but it is getting late in the deliberation of the Committee. No doubt we can return to the issue at some later stage in our deliberations. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 30

Restrictions to granting permission in principle

“Permission in principle shall apply—

(a) to brownfield sites only for the provision of housing, and

(b) to sites that have already been approved in an adopted local plan for the provision of housing”.—(Dr Blackman-Woods.)

This amendment would restrict the circumstances in which permission in principle can be applied to brownfield sites for housing and to sites that have already been approved in an adopted local plan for the provision of housing.

Brought up, and read the First time.