Private Rented Sector

Sarah Jones Excerpts

Thursday 29th November 2018 Westminster Hall

[Sarah Jones (Croydon Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. This is an important debate, and we have heard some really helpful contributions. I thank my hon. Friend the Member for Sheffield South East (Mr Betts) for securing it and for his leadership of the Select Committee, and I thank the other Committee members who are here. All have raised important points.

I should be clear at the outset that, as hon. Members might expect, the Opposition agree with the Committee’s assessment that the majority of landlords are good. I do not think anybody questions that. They play an important role in the housing system and in our society. However, as the Committee’s report illustrates, the situation faced by a growing number of private renters is intolerable. Most of us here today will see in our constituency surgeries—I certainly do—the horrible things that too many people have to endure. That includes the 800,000 privately rented homes with at least one category 1 hazard, landlords cutting off electricity to vulnerable tenants, and letting agents demanding hundreds of pounds to do things such as view a property.

We need to keep in mind all the time what private renters want, and that needs to be the test for policy makers. I think there are two things: first, people want to rent a property fit to be called a home; and, secondly, they want the same rights and redresses enjoyed by consumers in lots of other areas of society. For many, the private rented sector undoubtedly fails those two tests. Standards at the bottom end of the market are poor. As Opposition Members have said many times, people have more rights when buying a fridge-freezer than when renting a property.

The report identifies some important failings in Government policy that have led us to this point. I will look at two broad areas: the lack of intervention and enforcement, and the imbalance of power between tenants and landlords. On the first, as the report demonstrates, outdated legislation and a lack of enforcement mean that the current system of setting and enforcing standards does not work. We agree that the current legislation is overly complicated. It has built up over many years and has become somewhat hard to navigate and dated. Penalties are not strong enough to deter bad practice, and fines are too small to incentivise legal action in the first place.

We have already heard about the Homes (Fitness for Human Habitation) Bill introduced by my hon. Friend the Member for Westminster North (Ms Buck). However, the Government could have helped its provisions to become law years ago by accepting Labour amendments to the Housing and Planning Act 2016. The fact that so little enforcement action is taken is all the proof we should need that the system is broken. As we have heard, Advice4Renters estimates that just 0.1% of landlords letting non-decent homes are prosecuted each year.

The Guardian revealed today that nine out of 10 local authorities failed to issue a single civil penalty notice against a landlord or letting agent last year. It is impossible to deny that the billions of pounds of cuts faced by local authorities have affected their ability to enforce through environmental health and trading standards. I accept the argument that we also need leadership in local authorities, but the extent of the cuts has been very significant and must inhibit what local authorities can do. The fines being so low means that there is neither a deterrent for bad landlords nor an incentive for councils to take action. We share the disappointment expressed by the Local Government Association and others that the Government ignored the Select Committee’s recommendations to improve enforcement through increased fines and powers.

The report was right to express concerns about the situation with landlord licensing schemes. I have seen the positive impact of such schemes in my own borough, where Croydon Council has issued more than 30,000 licences. It is wrong for the Secretary of State to hold a veto over councils wanting to tackle rogue landlords. The Secretary of State has blocked councils such as Redbridge from introducing borough-wide licensing. There is a clear contradiction: Ministers talk about standing up for renters, but their actions prove otherwise.

Let me turn to the imbalance in the private rented sector. The report is clear about the things that need to be done to make the rules fit for purpose and to ensure that they are enforced more, but there are deeper structural issues in the private rented sector. The Committee rightly points out that we cannot draw a clear line and say that there is a small minority of rogue landlords and everyone else is perfect. That would oversimplify the issue and ignore the structural problems that mean that a landlord does not have to be rogue or even breaking the law in any way to make tenants’ lives difficult. There is an imbalance that no court or enforcement authority can solve, because it is part of a system that is fundamentally skewed against private renters.

The system is stacked most heavily against those at the very bottom—that is clear. Permitted development and abuse of the local housing allowance in lockdown properties make a mockery of planning and welfare rules. That is a symptom of a broken housing market. We are failing so badly to build the homes that the country needs that the Government are essentially saying, “Anything will do.” Tenants, left with little or no choice, pay the price, but yet again the Government ignore the Committee’s valid recommendations on this topic.

We could talk more about what needs to be done about landlords refusing to rent to people on benefits. That issue comes up repeatedly in my constituency. I know that Shelter is trying to take some legal cases through the courts to affect that. I will not talk more about that now, but it really is heart-wrenching in constituency surgeries.

Retaliatory evictions are a real concern. They have been talked about today and were rightly raised by the Committee. When 44% of renters say that they will not negotiate over disrepair for fear of eviction, and when charities are having to warn people that raising a complaint might get them evicted, that is a structural failure in the system. We agree that the current protections are nowhere near robust enough to avoid retaliatory evictions or punitive rent rises. I have seen this happen to my own constituents, as we all have. Labour would go further than the Committee’s suggestion of extending the time limit for protecting tenants from section 21, which the Government seem not to be observing anyway. If we say that section 21 is unfair for those who have made a complaint, why do we accept it for those who have not complained? No-fault evictions are at the heart of the imbalance between tenants and landlords and should be scrapped entirely.

The Government have admitted that they need to do more. They say that they want to rebalance the relationship in the rented sector and give tenants access to redress. But given the record of the Government in relation to renters, people would be right to be sceptical. Consultations, calls for evidence or plans to introduce measures such as a housing court, ombudsman schemes or letting agent regulation are worth very little if they do not result in action. The Department has a bad record in terms of turning consultations into legislation: 185 housing consultations have been launched by the Department since 2010. Too often, consultation fails to translate into anything substantial.

The Government recently announced plans to look at introducing three-year minimum tenancies, which then appeared to be quietly dropped. There is little point in a housing court or ombudsman if tenants do not have rights to protect in the first place. The Department’s record on private renting so far has been to talk tough but under-deliver. The Government have blocked Labour’s proposals to amend the Tenant Fees Bill so that deposits could be capped at three weeks’ rent. As we have discussed, that would mean an average saving of £575 for tenants across England and £928 in London. The current six-week cap has the potential to cost tenants more: we know that the majority—more than 50%—of landlords charge four weeks’ rent as standard, so it would end up increasing people’s deposits and not saving them money.

[Mr Prisk]

The hon. Lady is setting out her party’s views on various issues. A number of people who are good landlords are very anxious about future rents. Would it be Labour party policy in government to cap them or index them?

[Sarah Jones]

As I was about to say, we would introduce three-year tenancies, and it would not be possible to increase rents above inflation over that period. It is a matter not of setting what the rent would be, but of people having more security in a tenancy and more ability to understand the level at which the increase would happen over that longer period.

[Mr Prisk]

I take it from that that there could be no tenancy shorter than three years.

[Sarah Jones]

It is interesting that the hon. Gentleman should say that, because we are looking at developing our policies in this area and have also said that we want to scrap section 21. We need to look at how that would work and what the conditions would be. It is really important to stress, though, that we are not saying that people should have the right to remain in their home indefinitely if, for example, they are not paying their rent or are, in other ways, causing disruption or antisocial behaviour. That is absolutely not the point of what we want to do. There will always be a need for a landlord to be able to evict tenants who are not paying their rent or who, for whatever reason, should not be in the property.

We need to find the middle ground. At the moment, there is a problem, particularly in London, and I have seen it in Croydon. When we talk to renters organisations such as Generation Rent, they talk of a cycle whereby people are being evicted for no obvious reason. For example, a landlord might not be an expert landlord, as we have talked about. Someone may have inherited a property or have moved out of London. They might have a property and not really know what they are doing. They might decide to move back in or they might decide to do something else with the property. Then we have a group of people who are constantly having to move because they are being moved on through section 21 evictions, or we have people who cannot afford the rent increases, so they are also having to leave through section 21. An imbalance of power is our starting point when we are looking at policy development. I hope that that answers the hon. Gentleman’s question.

[Mr Betts]

Is my hon. Friend basically saying that the proposal will be very similar to one that I think Shelter put before the Select Committee in 2013-14, which was to introduce three-year tenancies, with the rent in that period linked to some inflation measure so that there was a clear understanding by both landlord and tenant of how it would progress in the course of the tenancy? The other issue that we raised, which brings us back to the housing court idea, is that if that tenancy proposal happens, landlords do need a way reasonably quickly to get out a tenant who is not paying their rent. Having a housing court might be one way to enable that process to happen and to make landlords more comfortable with longer-term tenancies.

[Sarah Jones]

I thank my hon. Friend: I did not see Shelter’s evidence in 2013, but, yes, that sounds a reasonable way forward. The absolute starting point, as I said at the start of my contribution, is that we know that most landlords are good landlords. We are not trying to create a system in which they cannot function and cannot evict people when they need to; we are trying to create a system that is fair. The Labour Front-Bench team were fortunate to go to Berlin recently to see, as many people have, the system of renting that people have there and to look at some of the other models. There are lots of lessons to be learned from other countries.

I should make progress. The Guardian and ITV investigation into the private rented sector, which has been talked about and has forced a U-turn from the Prime Minister, is worrying. Despite the Government estimating that there are 10,000 rogue landlords, not a single name, at the time of that investigation, had been added to the database; that was in October, which was more than six months after its launch. One wonders what the point of a rogue landlord database is if the rogue landlords have not been identified. The Mayor of London’s database has more than 1,000 entries. I hope that the Government, through the Minister, can update us on where the rogue landlord database has got to today.

The Government announced that they would give £2 million to local authorities to take action against bad landlords, but that amounts to £6,000 per council. Meanwhile, the trading standards teams expected to enforce new legislation such as the Tenant Fees Bill have seen enforcement officer numbers go down by 56% since 2009. These teams have faced funding cuts of almost £100 million since 2010. Local authorities overall have had billions of pounds taken away from their budgets. In that context, £6,000 does not feel like enough.

The Opposition recognise that the scale of the challenge means we need a more radical response—a consumer rights revolution. We have a commitment to end unfair evictions. I am proud that my local authority, Croydon Council, was the first to pass a motion calling on the Government to scrap section 21. We have committed to give renters greater security, as we have just discussed, with a three-year cap on rent rises. We want to name and shame rogue landlords and introduce tougher fines for those who fail to meet minimum standards, with those fines funding local authority enforcement work. We would properly support landlord licensing. We also want to see greater powers for Mayors across the country to control rents, if appropriate, in high-cost areas such as London.

Inspired by the system in Germany, we have committed to spend millions to kick-start renters’ unions. I spent time at the Labour party conference talking about that with London Renters Union, which has helped many renters out of situations in which they would have struggled on their own. We want root-and-branch reform of the private rented sector. It is too dysfunctional for us to tinker around the edges. The end result of insecure tenancies, unsafe homes or extortionate rents is staring us all in the face. The end of a private tenancy is the leading cause of homelessness today. There are 1.6 million people in chronic debt, and 120,000 children will wake up tomorrow without a home. That is not to mention the extra 1 million people under the age of 35 who are unable to buy their own home and are forced to rent in the private rented sector. For all of their sakes we should reform the private rented sector.