Private Rented Sector

Stephen McPartland Excerpts

Wednesday 25th June 2014 Commons Chamber

[Stephen McPartland (Stevenage) (Con)]

The positive thing about the debate so far is that Members on both sides of the House want to tackle the problem of a housing shortage and we all recognise that supply is one of the key issues in doing so. Until shorthold tenancies were introduced in the Housing Act 1988, there was almost no private rented sector in this country. In fact, rent controls contributed to the collapse in the private rented sector from more than 55% of households in 1939 to just 8% in the 1980s, and I believe the figure dropped to 7% in the early 1990s.

[Graham Jones]

The hon. Gentleman makes the point that the private rented sector fell during that period, but so did the increase in the supply of social housing. The number of people on the social housing waiting list was not that significant in those days, so there was not exactly a surplus of tenants, but there was a much larger social rented sector.

[Stephen McPartland]

I am grateful to the hon. Gentleman for making that point, but Library figures show that it has taken almost 30 years for the figure to increase to 16.5%. His point that there was no demand then but that, all of a sudden, there is now probably does not hold water.

An estimated 89% of landlords are private individuals with one or two properties, which are, in effect, their pension funds. They are, in the main, responsible and proactive people, such as my hon. Friend the Member for Carlisle (John Stevenson), who will keep his tenant in place for as long as he pays the rent on time, as has happened for a number of years.

[Ian Mearns]

The hon. Gentleman has given the interesting statistic that 89% of landlords are private individuals, but they do not cover 89% of the market. Would he care to inform the House what proportion of the market the other 11% control?

[Stephen McPartland]

The hon. Gentleman will be delighted to know that I am not someone who has all the statistics at his fingertips, but I am very happy to discuss that matter with him once I have had the opportunity to google it.

Moving swiftly on, the point I was trying to make is that a huge number of people in this country are among the 89% of landlords who are private individuals, and many of them have been encouraged to invest their family’s future and their family’s finances in what are, in effect, pensions. Those people are very important to our economy and their local communities, which we need to support. We should not attack them just because they have been able to purchase a property and give another family a home to live in. For me, those landlords often provide stability for their tenants. Landlords cannot afford to have any voids, because that might result in their losing their ability to repay their mortgage; many of them are buy-to-let landlords, whose numbers have risen—mostly under the previous Government—during the past 15 to 20 years.

The problem with three-year tenancy agreements is that many families want flexibility, and as a result the reality is that such tenancies will never be standard. There has to be a balance between flexibility and security, which the hon. Member for Birmingham, Erdington (Jack Dromey) spoke about, but rogue landlords will provide flexibility by encouraging everybody to sign up for six months, while the 89% of landlords will provide security for three years, as do they already. For me, such agreements are not the answer, and the issue is not about regulation.

In addition, particularly for the 89% with just one or two properties, landlords whose tenants are not paying the rent or are damaging the property can get possession of the property only at the end of a tenancy. Other forms of recourse are often incredibly expensive. What that boils down to is that somebody with a buy-to-let mortgage whose tenant just refuses to pay the rent for two or three months is more than likely to have their house repossessed. In effect, they will lose their pension for their family’s future. If somebody does not pay their rent for eight or nine months of a three-year tenancy, that will lead to huge legal bills and create huge problems, which is a balancing factor.

My hon. Friend the Member for Carlisle made the point that tenancies are often ended by the tenant, rather than the landlord. Figures I have been given suggest that only 9% of tenancies in this country are ended by the landlord. Landlords have come to my constituency surgeries very disappointed and upset because they cannot get possession of a property where somebody is just sitting in it and refusing to pay rent to go to their mortgage. Stevenage borough council informs such tenants not to let themselves be evicted because they will make themselves intentionally homeless, so the council will not house them. As a result, landlords have to take such tenants to court and go through the whole repossession process, which families often cannot afford. People who own just one or two properties therefore have a huge problem, and protections against that problem should be built into the system. I make that point because, for a huge number of people in all our communities, three-year tenancies without such protections might cause a huge problem for their family’s future and finances.

A ceiling on rent increases sounds attractive and is no doubt incredibly populist, but one little detail that I heard earlier is that rents might increase every year during the three years.

[Emma Reynolds]

Rents would not necessarily increase. There would not be indexation; the Secretary of State has talked about that. In some areas, such as mine in Wolverhampton, rents are pretty stable. The ceiling would apply only if rents were going up. There would be a ceiling on any rent increase, but there would not necessarily be a rent increase. There would be protections, as there are now, in three-year tenancies, but I take the hon. Gentleman’s point that many landlords with irresponsible tenants really struggle to get the tenants out and that those protections need to be strengthened.

[Stephen McPartland]

I am grateful to the hon. Lady for her clarification. However, my issue is with rogue landlords because they will push for rent increases.

The Royal Institution of Chartered Surveyors has said that

“we do not recommend that a government introduce a ceiling on rent increases.”

The Opposition will no doubt consult the RICS to discuss what flexibility to have on rent ceilings. The RICS does not want rent increases, but that is the organisation most likely to be consulted. For me, if interest rates are likely to rise because of the success of our long-term economic plan—we are now starting to see an economic recovery—landlords will want to ensure that they have some flexibility, because of potential interest rate rises and to protect their future finances. The RICS and other organisations will try to ensure that the band is as wide as possible, but if it was 10%, a rogue landlord could tell a tenant, “You’re tied into a three-year tenancy with me, and I am going to increase your rent by 10% over the next three years.” For me, the issue is about how we prevent rogue landlords from taking advantage of vulnerable people.

We must tackle rogue landlords. The only way to do so is to increase supply and to enforce regulations. Hon. Members have spoken about additional regulation and legislation, but I have discovered that 100 Acts of Parliament and 400 regulations apply to private landlords at the moment. Those are huge numbers, and I am not sure that we need any more; we just need people to get out there and enforce current regulations.

I am very proud about the over-supply provided by Stevenage borough council. For the first time in more than 25 years, it has started to build council houses as a result of this Government’s wonderful investment in the town. Under a Conservative-led coalition Government, we have 30 new council houses in a Labour area—the borough council has been Labour for many years—and I am delighted that we have been able to push for them. Thanks to the Conservative Government, we will have new council houses in Stevenage.

In my view, letting agents’ fees must be transparent. I am delighted that the Government will force letting agents to display any charges they make on tenants on online forms and, if they have any, in their shops. I am concerned that if letting agents’ fees were abolished, the charges would be passed on in a new way, as a form of tenants tax. At the end of the day, rogue landlords will ensure that they get every penny they feel entitled to, so our vulnerable constituents will again be affected, unfortunately, if they have to pay such a tenants tax. Apparently, that has happened in Scotland, where rents have begun to rise a little.

I want a vibrant rental sector, with quality housing, in which local people have faith. I am very lucky that the majority of private landlords in Stevenage are local people who are investing in our local community. Therefore, we do not have many issues, and I do not have many constituents coming to my surgery upset about private sector landlords. However, Stevenage borough council is a large public sector landlord, with more than 8,000 properties in my constituency, and I get a huge number of complaints about it.

Hon. Members have talked about decent homes funding. Again, the coalition Government have provided most of the decent homes funding given to Stevenage borough council, which was very late coming to the show in improving council houses. It is increasing rents faster than anywhere else in the whole of Hertfordshire, which I find unacceptable, and it has the biggest number of evictions and eviction notices in my constituency and in Hertfordshire. It is not therefore possible to talk about the public sector as great and the private sector as bad; this is about getting a great deal for tenants, so that they can have somewhere to live and have flexibility and security.