Private Rented Sector: Regulation

Navendu Mishra Excerpts

Wednesday 24th May 2023 Westminster Hall

[Navendu Mishra (Stockport) (Lab)]

I congratulate my hon. Friend the Member for Liverpool, Walton (Dan Carden) on securing this debate. On a more negative note, housing is a constituency issue on which I receive a vast amount of correspondence. I am grateful to several local organisations, including Citizens Advice Stockport, Stockport Tenants Union and Stockport Homes, which do a lot to support tenants who might be struggling and homeless people in our constituency and town. They do a really important job, but the bottom line is that those organisations are a last resort. The Government have failed, and they continue to fail.

It also happens to be the case that when issues arise in the private sector it is always the social housing sector that must pick up the pieces, at a considerable cost in terms of emergency and temporary accommodation. I have cases in my inbox about landlords who are serving section 21 notices because they know they can get more rent from a new tenant. I have cases in which the housing standards are very poor, with damp and mould—my hon. Friend mentioned a couple of such cases in his inbox. People have come to my office who have an informal agreement with their landlord with regard to their tenancy, which offers them zero security and has a negative impact on their physical and mental health.

Members on both sides of the Chamber will be aware of people in their constituency who cannot afford deposits for a tenancy and who can forget about saving up for a deposit for a mortgage because their wages are so low. Rents keep going up, and they keep getting priced out of tenancies, mortgages and secure housing, which I believe is a fundamental human right—I am sure many Members will agree that secure, safe, clean housing is a fundamental human right. People with pets are often disadvantaged when looking for tenancies; I have had several cases on that issue. The local housing allowance simply is not adequate in my borough. The median rent value in Stockport is much higher than the local housing allowance in the two broad rental market areas, so it simply is not good enough.

I would like to mention a couple of cases. One constituent said that his son had to enter a bidding war to get his apartment in Stockport—not a house, an apartment—which was advertised at £850 per calendar month. At the end of the bidding war, the agreement was made at £880 per calendar month. I appreciate that £30 a month might not be a lot for some people, but for a lot of people struggling in the current cost of living crisis it is a large amount of money. If we multiply that by 12, it is a significant amount for many people on low wages. Another constituent had his rent increased by a huge £300 per calendar month, and the landlord still refused to undertake essential repairs to the property. That sort of behaviour is simply shameful. I do not see much action from the Government, and I do not see a credible plan to tackle these issues.

I would like to mention one more case, which is that of a single person earning less than £30,000 a year who does not qualify for any help and has lived in a tiny one-bedroom flat of 42 square metres for many years. The property has not been updated in many years. It has dated storage heaters, which are very expensive to run during the daytime, and rent increases annually by 3%. However, the constituent has been told that this year it will increase by 5%. She feels that she has no security and stability. In addition to the rent going up by 5%, she was issued an affordability assessment by the landlord’s estate agent, which implied that if she was not able to meet the threshold, she would be asked to leave. When questioned, the landlord’s agent said that they are

“employed by Landlords to protect their assets and to minimise their risks”.

That sort of behaviour has to be labelled as shameful. Protecting an asset should not be more important than someone having the opportunity to live in safe, clean and secure housing. This person told me that she cannot find alternative affordable accommodation, and she has a cat, which many landlords will not accept. That goes back to my point that many people who have pets are simply excluded from the market.

The average rent in Stockport is £850 per calendar month, which is almost a 9% increase since 2021. Most people in England have not seen their wages go up by 9% since 2021. Increasing rents and the cost of living crisis are adding up. Last year, Citizens Advice reported that rent growth was at its fastest in five years, and one in five expect their rent to rise this year. Additionally, it estimated that 425,000 renters are in arrears, owing an average of £937 each. That is almost £1,000, which is a significant amount of money for anyone.

A point has to be made about the demographics. Young people and people from working-class backgrounds are now losing at least 30% of their monthly income to rent. The Government’s Renters (Reform) Bill is a positive step, but there are lots of loopholes, and there have to be assurances on a number of factors in the Bill.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Member agree that one factor that should be taken into account is Government support for greater availability of good-quality social housing, which would help to suppress the increase in rents? Allied with that, the Bill and the tax regime should pursue bad landlords, support good landlords and protect tenants at the same time.

[Navendu Mishra]

I agree, although my experience is that Stockport Homes, one of the major local social housing providers, has been struggling to secure properties because their cost has risen significantly. Recent census data shows that Stockport has seen a 48% increase in property values in the past five years, whereas the average in England is 20%. For social housing providers, securing or building new properties, particularly with the rising cost of building materials, is a significant financial commitment that many of them are not able to make. I agree that bad landlords need to be pursued. I do not think the enforcement regime is good enough. Of course, there are good landlords out there—I am not going to dispute that—but they often get tarred with the same brush that bad landlords leave us with.

The Renters (Reform) Bill is a positive step, but there are many loopholes. The rules around section 21, on landlords evicting tenants by claiming to move families in, need to be looked at. There is no provision on rising rents. It is unclear what the penalties will be for landlords who break the rules. There are so many loopholes that we need a serious discussion about how to deliver for people across England.

I have already mentioned the statistics on the average rent values in my constituency. I would like to conclude by making two further points. Owner-occupiers spend 18% of their household income on mortgage payments, while private renters spend 31% of their household income on rent. That is simply unfair, and it is also unsustainable. It is evident from the data for constituencies across England that many—not all—private landlords are making large amounts of money out of the cost of living crisis.

Yesterday, Labour MPs, along with those of several opposition parties, voted to end the unfair leasehold system. Labour is serious about reforming the housing sector; it is not just warm words. I am sorry to say that the Government have failed and continue to let down renters consistently, year after year. In 13-plus years of this Government, we have not seen serious action. I hope the Minister will address these points.

--- Later in debate ---

[Sarah Owen]

It behoves all of us to represent everybody who lives in rented accommodation, whether they are students, pensioners, workers, people who are not working at all or families. I will talk more about that.

Only last week, more than three and a half years after it was first promised, did we finally see the Secretary of State’s Renters (Reform) Bill. We welcome that long-overdue legislation and look forward to engaging constructively on its development, but it is clear that in improving it we will have our work cut out for us. My hon. Friend the Member for Liverpool, Walton was right to highlight the loopholes in the Bill. He mentioned unfair evictions and spoke powerfully and movingly about the heartache and uncertainty caused by section 21 notices, which are a leading cause of homelessness in England. The Government’s delay since first committing to ending them in April 2019, more than four years ago, has resulted in 60,000 households being threatened with homelessness by section 21 notices.

Labour and our stakeholders welcome the Bill’s steps towards scrapping section 21 evictions, but there remain ways for ill-intentioned landlords to remove tenants unjustly. The Government must take steps swiftly to amend that flaw in their legislation. In the short term, we call on them to extend notice periods to a legal minimum of four months, with firm, punitive measures for landlords who do not abide by the law.

We are not naive about the fact that some evictions are warranted. Landlords who are dealing with antisocial behaviour or even criminal activity from their tenants must be supported in reclaiming their properties. We recognise that robust and effective grounds such as those cannot be diminished. However, the Government have yet to assure us that grounds could not be exploited by bad-faith landlords to continue their unjust evictions. Will the Minister provide any detail on how the Government will defend against that?

The Bill also lacks support for local authorities to act on injustices in their local private rented sector, as has been mentioned throughout the debate. We expect measures that would strengthen enforcement powers, require councils to report on enforcement activity and allow them to cap the advance rent that local landlords can ask for. The Government owe local authorities an explanation of why they have neglected to give them the muscle to ensure that the new legislation is successfully enacted.

It is also incredibly troubling that the Bill does not include a ban on landlords refusing to rent to benefit claimants or those with children. That allows discriminatory “no DSS” practices to continue. No children? This is hardly a family-friendly policy, is it? I would be grateful if the Minister assured us today that this oversight will be reviewed and amended.

[Navendu Mishra]

I receive a lot of correspondence from people who have pets and are not able to get a secure tenancy. Often, they are people who live on their own with their pet, and they do not have a family member or are housebound. Does my hon. Friend agree that the Government need to strengthen the legislation in relation not only to people on benefits but to people who have pets? There is a whole other debate to be had about people who have no recourse to public funds.

[Sarah Owen]

I thank my hon. Friend for that really important intervention, and he is absolutely right. What we should see from this legislation is the removal of barriers to good housing for all renters, but what we are actually seeing is, unfortunately, opportunities being missed. I sincerely hope that the Minister takes on board some of the suggestions that have been made today.

When it comes to affordability—or, in reality, unaffordability—the freezing of local housing allowance has only exacerbated the problem, as my hon. Friend the Member for Liverpool, Walton explained. In many parts of the country—including, as we have heard, in the constituencies of the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Bath (Wera Hobhouse); in the constituencies of my hon. Friends the Members for Stockport (Navendu Mishra), for Erith and Thamesmead and for Liverpool, Walton; and in my own constituency in Luton—rents in the private rented sector are surging and the costs involved with moving are soaring. By making the shameful decision to freeze LHA yet again, the Government have pushed millions of hard-pressed tenants to breaking point, with the risk of mass arrears and evictions that that entails—more evictions, more temporary accommodation and more people sleeping on the streets.

My hon. Friend the Member for Stockport highlighted the situation when it comes to affordability. It is becoming harder for our constituents not only to find an affordable place to rent but to stay for the long term. Some of our lowest-paid workers face rent rises of 30% to 40% within their tenancy. Labour is exploring options to address this, starting with consulting landlord and tenant groups on how best to stabilise rent increases within tenancies. I would be grateful to hear from the Minister what discussions she has had on the issue. We do not want to see people continually having to jump from place to place, finding somewhere affordable that turns out to be overcome with mould or somewhere decent that then has its rent doubled. That is no way to live.

It does not have to be this way: Labour has other ideas. Our housing White Paper, to be produced within our first 100 days if we are elected to government, will set out how longer-term tenancies will become the norm, because we know that tenancy security is key for a settled life and that home must be a place where we can relax, knowing that another catastrophe is not around the corner.

We are ambitious about revolutionising what “home” means in Britain. We stand for building new homes. That is why the Shadow Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for Wigan (Lisa Nandy), proudly has the mantra of “council housing, council housing, council housing”, and it is why Labour-led councils, such as my own in Luton, are building homes. They are building eco-friendly council homes, fit for the future.

We will help more first-time buyers to get on the housing ladder; we will abolish the scandalous leasehold scheme; and we will introduce a national register of landlords and licensing for letting agents, as well as a legally binding decent homes standard, updated for the next decade. We will afford new rights and protections to tenants, including the right to have pets, the right to make reasonable alterations, the right to request speedy repairs and, as has been mentioned, mandatory longer notice periods from landlords.

Labour will tilt the balance of power back towards renters by introducing a powerful new private renters charter, to make renting fairer, more secure and more affordable. We will achieve this by finally bringing forward an effectively regulated private rented sector. This is what our constituents need and it is certainly what they deserve.

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

It is a great pleasure to serve with you in the Chair, Mr Davies, and to have the opportunity to make my remarks. Of course, I thank the hon. Member for Liverpool, Walton (Dan Carden) for securing this debate. I also thank the other Members who have spoken, who I will turn to in just a moment. They have spoken passionately about the need for greater security for tenants and improved standards in the private rented sector.

I am grateful to the hon. Gentleman for bringing his considerable experience to this debate. He has a long history of campaigning and speaking on this issue in Parliament, and I say to him and to any Member that of course the Government will listen to constructive dialogue from all parties in the House. That is the right thing to do as we go forward and get this legislation right.

I thank the other Members who have spoken—the hon. Members for Stockport (Navendu Mishra), for Bath (Wera Hobhouse), for East Londonderry (Mr Campbell), for Brighton, Pavilion (Caroline Lucas) and for Erith and Thamesmead (Abena Oppong-Asare)—who all made useful contributions. We all agree there is a considerable amount of consensus that we need to provide a better deal for renters, which is exactly what we are doing through the Renters (Reform) Bill. Members have brought to the House’s attention, again, the very good reasons why we need to act and are acting.

The private rented sector is the most expensive, least secure and lowest quality of all housing tenures. A fifth of renters pay a third of their income to live in substandard accommodation. That is the reality and it is unacceptable. We are determined to crack down on irresponsible and criminal landlords and to make the private rented sector a better place to live and work. That is why I am delighted to talk about the vital measures we are bringing forward to meet the needs of renters and good landlords.

The hon. Member for Liverpool, Walton brought to my attention, as did other Members, the experiences of constituents. I assure him and the House that I have spoken to many tenants who have faced situations similar to the ones he described. I visited tenants in Leeds last week and saw for myself some of the conditions and why we need to act. It is worth reminding the House that the reforms are the biggest in a generation and the biggest in the sector for many years. They have been welcomed by tenants’ groups, people who represent tenants, Shelter and many others that have been referenced by Members. They have also been welcomed by groups who represent landlords. It is important to get that balance right.

I know that feeling safe and secure in a home is vital to a person’s wellbeing and so that they are able to put down roots in a community. The threat of a section 21 no-fault eviction with just two months’ notice hangs over many renters and prevents them from complaining about poor standards. The Renters (Reform) Bill will deliver our manifesto commitment to end section 21 no-fault evictions. Tenants will be able to challenge poor standards without fear of retaliatory eviction. We will abolish fixed terms and move to periodic tenancies that allow either party to end the tenancy when they need to.

As Members have highlighted, there are legitimate reasons why landlords could or would need to regain their properties, which is why we are reforming the grounds so that they are fair, comprehensive and efficient. In future, landlords will be able to regain possession only if one of the grounds for possession defined in law applies. We will introduce a new ground for use when the landlord intends to sell the property and extend the existing moving-in ground so that it can also be used if close family members of the landlord intend to live in the property.

We have changed the rent arrears grounds so that they are fair and proportionate, striking a balance between protecting tenants’ security and supporting landlords who face undue financial burdens. We have retained the existing mandatory rent arrears ground that allows a landlord to serve notice once a tenant is in two months’ rent arrears, and introduced a new ground for repeated rent arrears.

To ensure that landlords can swiftly gain possession when a tenant’s antisocial behaviour is causing problems for their neighbours and communities, we are allowing landlords to make a possession claim to the courts immediately, and we have lowered the discretionary ground to include behaviour capable of causing nuisance or annoyance. We are considering further changes to the way the courts handle antisocial behaviour possession cases, including in respect of prioritisation and the matters that judges must consider when deciding whether to award possession under the discretionary ground. There are other grounds, and I encourage Members to look at the information that the Government have published.

We understand that rent is likely to be a tenant’s biggest monthly expense. It is important that tenants have notice of any rent rises so that they are able to plan effectively. Our reforms will simplify the system for tenants and landlords. All rent increases will take place via one mechanism. We will retain existing legislation that allows rent increases once per year in periodic tenancies, and increase the notice that landlords must give to two months, thereby giving tenants more time to plan and seek advice.

Our reforms will also prevent revenge or forced evictions by the small minority of landlords who may look to use rent hikes to force a tenant out once section 21 can no longer be used. That will create a fairer system that allows both parties to negotiate rents effectively, while protecting security of tenure. Where the landlord has served notice on the tenant to increase their rent, the tenant may refer the notice to the tribunal. The tribunal will assess what the landlord could expect to receive if re-letting the property on the open market and will determine the rent. That will help to avoid the large rent increases used by a minority of landlords as a back-door method of eviction. We will update the guidance to ensure that tribunal users have the confidence and information they need to engage with it effectively. That includes helping parties to understand how they can provide evidence of comparable rents.

The Conservative party does not support rent controls. Evidence suggests that they would discourage investment in the sector, lead to declining property standards, and be negative for both tenants and landlords. We are absolutely committed to outlawing the unacceptable discrimination against families with children and people in receipt of benefits through blanket bans, but we want to ensure that landlords retain the final say over who they rent to. Members have asked for more clarity on that, and we are carefully considering how we get it right. We will introduce legislation at the earliest opportunity.

Members raised local authority enforcement. We expect local councils to take a proactive approach to enforcement and make it a priority. Substantial civil penalties will be available if landlords fail to comply with our reforms. Local councils are able to keep the revenue they receive from civil penalties; it is ringfenced for further enforcement activity. In accordance with the new burdens doctrine, we will ensure that, where necessary, the net additional costs that fall on local councils as a result of our reforms are fully funded, and we will continue to explore how best to create a sustainable self-funding system over the long term, including through fees.

Members will be interested to hear that we are providing £14 million to 10 pathfinder projects that have been designed to build capacity and team capabilities and to test and disseminate innovative enforcement approaches. I am pleased that one of those pathfinder projects is being led by Liverpool City Council, which covers the constituency of the hon. Member for Liverpool, Walton. It is working with a number of other key players locally to create a multi-agency, intelligence-led model for proactive enforcement in the PRS. That will ensure that enforcement is streamlined more effectively, particularly against landlords engaged in serious criminality. I have seen for myself the effectiveness of the selective licensing scheme in Leeds, to which Members referred, and how effectively the housing teams work to deal with issues.

[Navendu Mishra]

The Minister is generous to give way. Will she address the point that, over the past 13 years, local authorities have lost hundreds of millions of pounds in central Government funding? My local authority in Stockport has lost a significant amount of money since 2010, when the Conservative-Liberal Democrat coalition came in.

The Government do not seem to have a sense of urgency in addressing the loopholes in the Renters (Reform) Bill and the crisis in the private rented sector. There are no Conservative Back Benchers in this debate; they must have either local authorities that are financially secure or tenancies that are long-term and reasonably priced.

[Rachel Maclean]

I gave way to the hon. Gentleman because I thought he was going to ask a question about the issues in front of me. I am happy to address them. I will continue my remarks, which will address the substantive issues of this debate.

Information is key when it comes to regulating effectively and efficiently. That is why the Bill will legislate for a new private rented sector database that will support the new privately rented property portal digital service. That service will support the Government’s aim of reducing the number of non-decent rented homes by 50% by 2030, and will give local councils tools to drive criminal landlords out of the private rented sector. It will help landlords to understand their obligations and give tenants the information they need to make informed choices.

My team is working hard to develop the portal, which recently passed its Government Digital Service assessment. It was assessed against standards to ensure that it meets clear user needs, is simple to use, is designed securely to protect privacy, and uses tools and technology that are fit for purpose. We will take forward the development of that service and continue to engage with end users to ensure we get it right.