Nick Raynsford
Main Page: Nick Raynsford (Labour - Greenwich and Woolwich)Private Rented Sector
Nick Raynsford Excerpts(11 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Prisk
I want to move on to the second issue, because I want to ensure that we deal with the crucial question of agents.
That second issue is the question of fees. The hon. Member for Birmingham, Erdington has told us that he wants to end confusing or inconsistent fees and charges that can be levied by some letting and management agents. I agree. I have seen clear evidence of bad practices in the letting sector, especially in the Which? report, which identifies that there are practices that need to be ended.
Our goal is that landlords and tenants should understand in advance the fees and charges that agents will levy. They will then be in a position to make informed decisions about whether to use their services. Frankly, that is not the case at present, and the hon. Gentleman is right to highlight that. There is widespread agreement that we need to drive up standards across the lettings sector and drive out the rogues. In practice, that means that we should be making better use of the existing consumer protection legislation, which already outlaws many of the practices that affront our constituents.
Good self-regulation is expanding across the sector. A clear majority of letting agents are now part of a self-regulatory scheme and more than 8,000 are now part of the Property Ombudsman, or TPO, scheme, ensuring that both landlords and tenants have access to redress when things go wrong. We are determined to extend that further, but the Government recognise that this is a complex area that needs careful consideration. Indeed, that was the discussion I had with the then Minister, Ian McCartney, in the debate to which the hon. Gentleman referred. I can tell the House that the Office of Fair Trading will shortly report on the lettings sector and I and my colleague, the Under-Secretary of State for Communities and Local Government, the right hon. Member for Bath (Mr Foster), will be keen not only to read but to consider its recommendations and see what more can be done.
Understandably, the hon. Member for Birmingham, Erdington talked about the need to give families who rent greater security and
“remove the barriers that stand in the way of longer term tenancies”.
We did not quite get the admission that that might involve compulsion of landlords. I think he started to veer that way, but saw sense at the end as the practicalities are very challenging.
I think it is right to strike a careful balance. We can all understand that families with children will want greater stability, especially if the youngsters are at school, but we also know that many people prefer shorter tenancies and do not want to commit for the long term. We need to be careful not to reduce the flexibility of the framework, given the wide and diverse range of renters in the market today. The latest evidence shows that most tenants in the sector stay for at least a year, not the six months that the hon. Gentleman mentioned. Indeed, in 2010-11 more than 40% of private tenants had been in their home for more than two years, and 20% for more than five years.
It is worth correcting the record by stating that only 9% of tenancies are terminated by the landlord. In the large majority of cases, it is the tenant who terminates the tenancy. That is not surprising if we stop and think about it for a moment, as for many tenants the key advantage of renting is that flexibility. Only a couple of weeks ago, I went to south Newham, to Canning Town, to meet young workers who rent at the new Fizzy Living scheme. The hon. Member for West Ham (Lyn Brown), who represents that constituency, was here a moment ago but has now left. Those workers made it very clear to me that a six-month deal is exactly what they are looking for and that they do not want greater rigidity and inflexibility. We must recognise that the people who rent now are a far more diverse range than they were five, 10 or 15 years ago and that the flexibility in the system must reflect that reality.
Mr Prisk
No, I will not, because I have been on my feet for long enough and other Members wish to contribute.
One of the features we would expect from the reforms I mentioned earlier is that institutional investors would positively welcome longer-term tenancies that gave them a steady income stream, as the hon. Member for Birmingham, Erdington said. We are therefore working to enable the market to develop a fuller range of lease terms that match what tenants and landlords want. The key point is flexibility, not prescriptive regulation.
Mr Prisk
No, I am going to conclude. I am sorry, but I am aware that many Members wish to speak.
The private rented sector represents an increasingly important part of the housing market. The Government want a bigger and better rental market, and that means taking radical steps to attract new investment, and so give tenants greater choice. It means having an effective regulatory framework for the long term, and cracking down on rogue landlords and letting agents—the minority—while promoting best practice among the majority. Good progress has been made, but there is much more to do. I welcome the debate and commend the Government amendment to the House.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
May I, at the outset, draw attention to my interest, as declared in the register?
This debate has covered a number of issues on which I would like to have contributed my thoughts. In particular, I would like to have spoken about how to support and encourage the further expansion of the private rented sector while raising standards and tackling poor conditions; how to safeguard tenants from excessively high rents and exploitation; how to avoid private rented housing being forced into inappropriate roles that it is not well placed to fulfil; and the case for regulating letting agents. All those points were discussed well by my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), but there is no time for me to comment on them and so I shall focus on just two issues, which have been touched on in the debate and which merit a little further consideration.
The first issue is the case for longer-term tenancies, which has been articulated by hon. Members on both sides of the House. Such tenancies are entirely compatible with the growing confidence in the private rented sector. I well understand how in the 1990s landlords who were nervous about the prospect of regulation favoured the idea of shorthold tenancies as the preferred option. In fact—this is an important message—when the Housing Act 1988 was passed the shorthold tenancy was not the default tenancy; the assured tenancy was the default. That was changed in the 1990s by the then Government. One measure that could send a clear message about our interest, across the House, in encouraging more longer-term tenancies without imposing an unreasonable regulation would be to return to the 1988 Act formulation, making the assured tenancy the default and leaving the shorthold tenancy as an option. I can see no objection to that. I tried to intervene when the Minister was discussing this issue, and I hope that now he has heard the case put to him in more detail than I could have in an intervention he will give it serious consideration, because this message could command support across the House. It would make a real change and would encourage more longer-term tenancies.
The second issue I wish to touch on is the case for more institutional investment. Again, we all agree on that, but I would like to add a caveat. The studies undertaken by the academics who have done the best work in this field—I think in particular of Christine Whitehead at Cambridge university and Kathleen Scanlon at the London School of Economics—show that in European countries with well-developed private rented sectors institutional landlords are not the majority. In Germany, which is often cited as the best example, 60% of private landlords are small landlords. In France, 95% of private lettings are done by one or two people only, and not by institutions. So although it is sensible to encourage more institutional investment, we should not be blind to the fact that the norm across Europe is that the small landlord plays a rather important role, and we should not put all our eggs into the basket of institutional investment. There is a real merit in institutional investment—there is the natural common interest of the landlord having a long-term view and welcoming longer-term tenancies because that guarantees rent continuity. Those are all good reasons for encouraging institutional investment, but we should not treat it as the panacea. We must have a more diverse private rented sector which continues to attract investment by smaller landlords.