Private Landlord Licensing

Stephen Timms Excerpts

Wednesday 15th November 2017 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I beg to move,

That this House has considered private landlord licensing.

A couple of weeks ago, Tim Roache, general secretary of the GMB trade union, accompanied the Mayor of Newham and Metropolitan police officers on a series of raids on suspected exploitative landlords in my borough. He describes what he saw as “heartbreaking”. He reports families living in a single room with one toilet in the corner; bunk beds stacked six to a tiny room; floors lined with mattresses; and dozens of people using one kitchen that was clearly meant for two people. Bad practice of that kind is sadly not unknown in our part of London and it has a severe impact on the people who live in those conditions and on the wider neighbourhood. I welcome Secretary of State’s commitment to

“protect renters against poor practice”,

and I put it to the Minister that the private landlord licensing scheme operating in my borough for the past five years has been extremely effective in tackling that.

[Clive Efford (Eltham) (Lab)]

Bad practice is a problem in my constituency, particularly on Flaxton Road. A company has even named itself after the road and is buying up properties there at higher than market value because it can afford to, based on the anticipated rents. Several company owners have changed their company’s name at Companies House. That needs investigation beyond the housing issue.

[Stephen Timms]

There certainly is some bad practice around, as the Secretary of State has acknowledged.

The Newham scheme expires at the end of next month. The council applied in July to reauthorise it. I urge the Minister to permit the reauthorisation of the scheme and to do so soon—the Department’s guidance specifies eight weeks for making such decisions and we are now a good way past that—to ensure that the gap between the current and reauthorised schemes can be kept to a minimum.

Under the Newham scheme, landlords are required to register the homes they rent with the council and to agree to conditions to ensure the homes are safe, of a good standard and properly managed. The scheme gives the council additional powers to enforce standards because failure to license or comply with the terms of a licence constitutes an offence. In extreme cases, the council can ban the worst landlords from operating altogether.

[Gloria De Piero (Ashfield) (Lab)]

My right hon. Friend is making a powerful speech. I add my congratulations to Ashfield District Council. The licensing scheme is now in operation in Stanton Hill and New Cross. Landlords have to take responsibility for the safety of their tenants through smoke detection, insulation and wiring—those improvements must be made. These councils are leading the way.

[Stephen Timms]

My hon. Friend is right and I share in her congratulations to Ashfield District Council.

In five years, Newham has banned 28 landlords. With the great majority of landlords, everything is fine, but there are powers available to intervene when things go wrong. The Newham scheme is widely supported by local residents, the Mayor of London, the borough police and the fire service. A crucial aspect of the scheme is its support of important enforcement work by central Government agencies. For example, the council emailed all licensed landlords jointly with HMRC soon after introducing the scheme with advice about getting the landlords’ tax affairs up to date. That and other joint work between the council and HMRC since then, which has been possible only because of the scheme, has led to the identification of significant previously undisclosed rental income. The fight against tax evasion requires the scheme to be reauthorised.

There has been joint work with the Home Office. Immigration Enforcement said that the collaboration with the Newham scheme has been

“an effective and productive workstream in terms of addresses that are being used by illegal migrants.”

The Minister will not want that work to be undermined. There has also been excellent joint working with the London fire brigade, which says:

“The property licensing scheme in Newham has saved lives and injury to people. The London Fire Brigade therefore supports the Newham application to continue licensing private rented properties, and we look forward to continuing our successful partnership.”

The Minister is no doubt spending a great deal of time reflecting on the lessons of the Grenfell Tower tragedy. One of those lessons must be the need for effective local vigilance against fire risks in homes.

The Metropolitan police work very closely with the housing team in the borough on enforcement work. In the five years of the scheme, officers have made 752 arrests through licensing operations for a whole range of criminal offences. In reflecting on that, the Metropolitan police have also formally supported the Newham scheme. They say that it has

“assisted the police in dealing with crime, both operationally and through the utilisation of joint intelligence…if the Government is serious about having the tools to fight crime then it must allow Newham to continue its excellent work against criminal landlords.”

The Minister has no interest in giving the green light to wrongdoers, so when crime is rising and the activities facilitated by rogue landlords are a significant part of the problem, it is not the time to block enforcement powers that the police have found so valuable.

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

Much of what my right hon. Friend has said, particularly on rogue landlords, applies to the Page Hall community in my constituency. With the expansion of the number of private landlords, does he think that we should introduce a statutory private landlord register? Particularly in communities where English may not be people’s first language, it can take a considerable time for the local authority to find out who landlords are. With the cuts to public services that have occurred, it would be timely to have a debate about ensuring that all private landlords are registered and that the register is open to the public for scrutiny.

[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 ---

[Alok Sharma]

Let me briefly address the issue of rogue landlords, because the hon. Gentleman makes an important point. Local authorities in England already have strong powers under part 1 of the Housing Act 2004 to tackle poor property conditions and overcrowding in privately rented properties. They can serve improvement notices that require landlords to carry out works to remedy poor conditions, or make prohibition orders to prevent overcrowding. In the most serious cases, which pose a significant risk to the health and safety of tenants and their families, local authorities are under a duty to take action to combat the problem. Landlords who fail to comply with an improvement notice or prohibition order are committing a criminal offence.

The hon. Gentleman raised the issue of rogue landlords, and I will just say that we have gone further in tackling such landlords by introducing new powers in the Housing and Planning Act 2016, which mean that non-compliant landlords can face a civil penalty of up to £30,000. The local authority involved can also recover its legal costs of serving notices. Furthermore, we have enabled local authorities to keep the income from such fines to support their enforcement capability, and local authorities have a right to inspect properties to make sure they are in safe condition, even if the tenant has not complained.

Newham Council has used its database to identify those rented properties where enforcement under part 1 of the 2004 Act might be required. Local authorities do not need a licensing scheme to be in place to inspect and take enforcement action against poor property conditions in the private rented sector.

[Stephen Timms]

I am very grateful to the Minister for giving way. I am listening to his speech with a lot of interest and I am grateful to him for the points he has made to acknowledge the effectiveness of what has happened in Newham. However, does he accept that the licensing scheme in Newham provides the local authority with a lot of information that it otherwise would not have, and that that information enables it to focus attention—together with the police, the fire brigade and other agencies—on the minority of properties where there are potentially the most serious problems?

[Alok Sharma]

The right hon. Gentleman has set out his case and how the borough has worked with other agencies. I just say to him now that the submission from the borough will be coming in front of me, so I do not want to prejudice any decision that I may make.

In conclusion—