Private Landlord Licensing

Melanie Onn Excerpts

Wednesday 15th November 2017 Westminster Hall

[Stephen Timms]

In Newham, the register is open to the public. There are wider lessons to be learned from the impact of the scheme. My focus is to seek the Minister’s support for reauthorising the scheme rather than bringing it to an end on 31 December.

The scheme has led to the recovery of £3.1 million of due council tax; the identification and stopping of £300,000 of housing benefit fraud; and the issuing of 61 rent repayment orders leading to a further £380,000 in reclaimed benefits. It is not surprising that there is such strong public support for the scheme. Some 89% of residents agree and 33% agree strongly that continuing the scheme will improve the conditions and the management of private rented sector properties.

The scheme handles the problem of disrepair in the private rented sector in a fair, proportionate and effective way. The response depends on the nature of the disrepair. In some cases, the tenant will be advised by the council’s housing team on how to tackle whatever the problem is. In other cases, a letter will go to the landlord with a reminder of their responsibilities. For more serious cases, an improvement notice will be served. Only if all else has failed and the landlord fails to comply will prosecution of the landlord be considered. It is a very graduated response.

The private rented sector in the London Borough of Newham, as in the constituency of my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), has grown very rapidly: it contains 51,000 properties —46% of the total, a far higher proportion than 15 or 20 years ago. There is no question but that most landlords are responsible and law-abiding, and for such landlords the scheme is light-touch and not intrusive, apart from a modest fee. The Secretary of State is right to recognise that, in a minority of cases, poor practice is a serious problem; the Newham scheme has proved an effective response. Licence holders are required to prevent overcrowding, antisocial behaviour, rubbish in front gardens and noise nuisance—problems that occur in a small minority of cases but that disproportionately affect the vicinity. Landlords are also required to manage homes well and keep them safe and in good repair.

I assure the Minister that the scheme is not a gratuitous tax on landlords. I understand that there may well be concerns about that, but the licence fee simply covers the scheme’s administrative costs. If the scheme is reauthorised, as I hope it will be, those who apply at the start will pay just £400—less than £7 per month over the five years of the licence’s validity. That fee is also tax-deductible as a legitimate business expense.

[Melanie Onn (Great Grimsby) (Lab)]

I joined the enforcement actions of Newham Council yesterday morning, and it was alarming to see the conditions that people were living in. A £400 fee to be part of the scheme does not seem a great deal of money as a proportion of the income that landlords receive; a three-bedroom property that I saw yesterday was being let for about £1,800 per month.

[Stephen Timms]

My hon. Friend is absolutely right. Licensing also supports good landlords by preventing them from being undercut by people who own properties but do not look after them properly or keep them safe. The levels of rent in my borough are exactly as she states.

Selective licensing already exists for houses in multiple occupation, but unfortunately that is not enough. Problems in the private sector are not confined to HMOs; properties can move very quickly from single family occupancy to multiple occupancy, and the line between the two is often rather thin. The Newham scheme allows that to be monitored much more effectively, particularly as licensing requires landlords to provide copies of tenancy agreements and safety certificates.

The scheme has been successful and effective in safeguarding renters in my constituency over the past five years. The Minister and I agree on the need for Government action to protect renters against the small minority of landlords whose practice is poor. I urge him to maintain, not weaken, the protection for renters in our part of London and to reauthorise the Newham private rented sector licensing scheme.

--- Later in debate ---

[Melanie Onn]

May I ask when the latest piece of information was provided to the Department by Newham Council?

[Alok Sharma]

Officials received the latest information on 25 October, so they have had a few weeks to process it. They are carrying out that work right now, and I make it clear that they will make a recommendation to me very shortly.

The right hon. Member for East Ham has highlighted the benefits of the current licensing regime operated by Newham and has placed his views firmly on the record. He also mentioned agencies that have worked with the council. It might be useful if I set out in general terms the Government’s current licensing framework. We support the use of licensing to address high-risk properties, such as houses in multiple occupation. We also support selective licensing of other private rented properties in areas where this will help to combat serious problems in the private rented sector.

The Housing Act 2004 introduced legislation for selective licensing to target the areas of highest risk and the most problematic private rented accommodation. It was never intended to be a means to license the entire private rented sector in an area. It provides for licensing properties in the private rented sector in very specific circumstances: when those properties are houses in multiple occupation or are subject to selective licensing, as defined in part 3. The legislation is very clear that licensing under part 3 is selective: any scheme must be targeted to address specific areas that are experiencing serious problems and that pose risks to tenants and their community. That does not rule out the possibility that a particular problem or set of problems could affect a large area or—in exceptional cases—a whole borough. In that event, the legislation provides that there must be clear evidence to demonstrate the need for licensing.

There must also be proper, robust plans in place to show that selective licensing is a crucial part of the local authority’s strategy, either to eliminate problems or, as a minimum, to mitigate their impact. This legislative framework ensures that selective licensing is not simply a means of raising revenue from local landlords—the right hon. Gentleman referred to that issue—and ultimately from tenants, as landlords pass on their licensing fees through higher rents.

In 2015, the then coalition Government extended the criteria for making a selective licensing designation to include areas with high levels of migration, crime, poor property conditions and deprivation. Of course, the right hon. Gentleman has, as I have said, highlighted the achievements of the Borough of Newham under its current scheme in tackling poor conditions and working closely with a range of agencies.

I appreciate that there are concerns about poor property conditions in the private rented sector in the borough, to which the council itself has drawn attention recently through media coverage and, of course, both the hon. Members for Ilford South (Mike Gapes) and for Ashfield (Gloria De Piero) have also put it on the record that they have been out with the Newham team to look at the work that it does. Just to be clear, I absolutely agree that the conditions we are discussing should not be tolerated and that action must be taken.