Private Landlords and Letting and Managing Agents (Regulation) Bill
Debate between Stephen Williams and Alan Meale
The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
What a pleasure it is to thank you, Madam Deputy Speaker, for calling me to speak. You and I served together for nearly three and a half years on the Political and Constitutional Reform Committee, so we know each other well. I feel somewhat sorry for the Committee Chairman, the hon. Member for Nottingham North (Mr Allen). In the space of a week, he has lost the hon. Member for Stoke-on-Trent Central (Tristram Hunt), who has become the shadow Secretary of State for Education; he has lost me, moving to my present position; and then the House took away you, Madam Deputy Speaker, to your position as well. I know that the hon. Member for Nottingham North wishes you well, as do I.
This is an extraordinary occasion. We began the debate this morning, and it has already lasted well into the afternoon. It is a pleasure to follow the hon. Member for Hammersmith (Mr Slaughter). Before—as he mentioned—my latitude was somewhat constrained, we worked closely together on foreign policy issues, and I like and respect him greatly as a Member of Parliament.
The hon. Gentleman mentioned a video in which I took part with members of Shelter. I had forgotten about that. I am sure that we all often forget things that we say: one thinks of Paul Simon’s lyric,
“all my words come back to me in shades of mediocrity”.
However, I do not resile from anything that I said when I took part in that video with Shelter in the pop-up shop on College Green in my constituency during the Bristol mayoral elections in November last year. The state of some parts of the private rented sector should indeed disturb us. I was talking then about my own experience of living in rooms in a terraced house which was in poor condition, and of being evicted. The one detail that the hon. Gentleman left out—perhaps he had not watched the full clip—was that I was 10 at the time. That was in 1977, and obviously things have moved on a bit since then.
We have heard several speeches so far, although perhaps not as many as we thought could be accommodated in the time available. I pay tribute to the verbal dexterity of the hon. Members for Shipley (Philip Davies) and for North East Somerset (Jacob Rees-Mogg), although they have now left the Chamber. I believe that we may be hearing from more Government colleagues shortly.
Let me begin by responding to some of what has been said. I believe that the private rented sector plays an essential role in the English, and British, housing markets, and I would not want anyone who operates in that sector to think that the House is against it. A great deal of negativity has been expressed about it today, although some Members have issued the caveat that they recognise it to be an essential part of our housing market. I believe that it provides much-needed flexibility to that market.
When I graduated from Bristol university a quarter of a century ago—I know that is hard to believe—I lived first in a one-room bedsit with plenty of strangers in the house. When I could afford it, I lived in a two-bedroom bedsit in the attic of a terraced property in Bristol, but still had to share a bathroom. Then, when I could afford it, I rented a one-bedroom flat, and when I could afford a bit more, I bought a two-bedroom flat. The private rented sector provides people with not just the first rung, but often the second and third rungs on the housing ladder, as well as providing liquidity and flexibility in the housing market. That is certainly true in my constituency, Bristol West, which contains the highest proportion of people living in the private rented sector in the country.
I am grateful to the House of Commons Library for providing me with figures from the 2011 census while I have been sitting on the Front Bench this morning and this afternoon. I think that I could have read the entire census during the four hours that have elapsed so far. In Bristol West, 21,538 households rent in the private sector, just over 40% of the total housing market in my constituency. That is topped only by the proportion in Cities of London and Westminster—where we are at the moment—which is 42%. The average in the country as a whole is about 15%. I have looked up the statistics relating to the constituency of every Member who has spoken today.
Let me at this point congratulate the hon. Member for Mansfield (Sir Alan Meale) on his success in the ballot, and on provoking and stimulating a very good discussion. I can inform him that the proportion of households in the private rented sector in Mansfield is 13.6%. In Hammersmith—as I am sure the hon. Member for Hammersmith is aware—it is just under a third. In Shipley and in Bury North—I believe we may be hearing from the latter shortly—it is about 14%, as it is in Corby. In north-east Somerset it is rather lower, at 10%.
The private rented sector has a great role to play in the future as well. Traditionally, private landlords have often been small providers who might only have one property that they let out; they might have acquired it to generate a stream of rental income to support them during their current life or, as is often the case, to provide for their retirement. This country has over a long period lacked large institutional investors in the private rental market, however, and the hon. Member for Hammersmith lamented that. In many other European countries it is the norm to rent accommodation and not to have this country’s obsession with buying, and they also have many large investors in their private rented sector. The Government want that market to develop here, too, so that there is more choice for tenants. Large providers are likely to invest heavily in quality and provide long-term leases.
That is why the Government have set up the Build to Rent fund, which hopes to generate £1 billion in investment. The Department has already agreed its first contract, in Southampton on Centenary Quay, where, as part of a wider scheme, 100 homes will be provided in the private rental market. The Government have helped to the tune of £3.5 million to get that development off the ground. We are, therefore, doing what we can to encourage larger investors and larger schemes to become more the norm in this country. Other first-round bids are being evaluated by the Department, and we have opened a second round of invitations to bid, which will end on 31 October. We would welcome more bids from new providers in this market.
We also have the private rented sector guarantee scheme. We are prepared to guarantee £3.5 billion for large potential investors who wish to enter the private rental market and provide new accommodation. Discussions are ongoing with several large institutional investors who may be interested in taking advantage of that scheme.
The growth of the private rental housing market—and, of course, of social housing as well—is key to the economy, so I should also mention the Government schemes Help to Buy, which enables more people to buy their own home, and the Growing Places fund, which has helped house builders, including in my own constituency in Bristol, to get schemes that were frozen after the crash of 2008 and 2009 off the ground.
The Government also want more affordable housing to be built. Our aim is to have 170,000 more affordable housing units built by the end of this Parliament, and we have already achieved 84,000, which will go some way towards addressing the shortfall that arose during the 13 years of Labour Government. For much of that period—certainly the first half of it when the economy was growing strongly and tax revenues were buoyant—they could, frankly, have done rather more to get affordable housing going.
As the housing market is important for the economy, it gives me great pleasure to be able to say that today’s GDP figures again show that the economy is returning to strong growth. We have had news that the economy has grown by 0.8%—again, that news came to us while we have been sitting in the Chamber today. Most pleasing of all, the construction sector, which is the sector that collapsed the most during the difficult period, grew in the most recent quarter by 2.5%. I think we can say that the economy is growing and Britain is getting building again.
Let me turn to points that the hon. Member for Mansfield made in introducing the Bill. He said that he found it amazing that 9 million people lived in the private rented sector. I found that amazing as well; I raised my eyebrows at that point. My understanding is that there are about 3.8 million households in the private rented sector, and as other speakers have said, there are children in about a third of those. I do not know whether we can extrapolate 9 million from that, but I suspect that the number is a little smaller. However, the number is significant, and the point is that the Government wish it to grow.
Sir Alan Meale
The figures are from the Minister’s Department, so I think that they are correct.
Stephen Williams
I thank the hon. Gentleman for that. We have heard that there are many estimates, and indeed ranges of estimates, available to Departments from various providers and people who survey the housing market, but the firm figure that is often quoted is that 3.8 million households are in the sector.
The hon. Gentleman referred to selective licensing, a power that is already available to local authorities. When Bristol city council was controlled by Liberal Democrats, it initiated selective licensing in Easton in my constituency, so I know that authorities are making use of that power. He said that it was being strangled by red tape; I am not sure what the evidence base is for that, because he did not expand on that point, but back in the summer, when my predecessor, my right hon. Friend the Member for Bath (Mr Foster), was in office, he initiated a survey of all housing authorities. We are still gathering in the responses, but thus far we have had 194. Given that there are about 300 housing authorities, obviously quite a lot have not yet responded, or did not feel that there was an issue with selective licensing that merited a response. From the 194 that did respond, we know that 16 selective licensing schemes have been introduced in different parts of the country. Obviously, there are still data to be crunched, and I am sure that we will be able to say more about that in due course.
The hon. Gentleman also mentioned the issue of rogue landlords—as did other speakers, perhaps to counter what he said—as if there was nothing that local authorities could do about the minority of private sector landlords who can be described in that way. Of course, local authorities already have powers that they can use; certainly, as regards health and safety, there are powers to do with the safety and sanitary condition of houses, flats and bedsits in the private rented market. I think that somebody—possibly the hon. Member for Hammersmith or the shadow Minister—mentioned that local authorities face budgetary pressures. I certainly acknowledge that, but the Department has made available a £3 million fund for district, unitary or metropolitan authorities that feel that they have particular issues with tackling poor standards in private sector accommodation. They can bid for resources to deal with those issues.
Stephen Williams
On the last point, I imagine that the Department has invited all housing authorities to bid for money from the fund, and has published the criteria. Hopefully Corby council knows what it needs to do. On take-up, if the hon. Gentleman puts his question in a written form, I am sure that I can give him a full answer, but I am afraid that I cannot give him an oral answer at this moment.
As I listened to the hon. Member for Mansfield and others, I thought: what problem is his Bill seeking to address? Obviously, there are problems in the sector. I looked at some tenant satisfaction statistics from the English housing survey, from which we get our most recent, comprehensive data. There are some interesting comparisons between the private rented and local authority sectors.
In the private sector, the English housing survey found that 83.6% of tenants were fairly or very satisfied with their landlord, compared to 76.6% who had the local authority as their landlord. Some 9.7% of private sector tenants were dissatisfied, compared with almost 17% of people in local authority housing. That might back up the point made by the hon. Member for Shipley that his constituency surgeries quite often see complaints about a sector that is already heavily regulated and has democratic accountability—that is, local authorities. Although there are clearly problems in the private rented sector, they are smaller than in the sector that is under the direct control of housing authorities.
Sir Alan Meale
Assuming that the Minister’s figures might be correct and about 15% of tenants in the local authority sector are dissatisfied, let us take the figure for the private rented sector, which is 3.7 million households. Fifteen per cent. of that is half a million—a not insignificant number—so we have to deal with the fact that huge numbers of people show dissatisfaction.
Stephen Williams
Those are not my figures. As I said, they are from English housing survey data, which are available for all of us to look at. I have acknowledged several times that there are problems in the sector. The hon. Member for Hammersmith mentioned the Shelter pop-up shop. When that was in Bristol, people cited extreme cases of exposed electrical wiring, poor plumbing and awful sanitation. Local authorities already have powers to deal with those transgressions. That is what we want to see them tackling, and the £3 million fund that the Department has opened should help them.
On the tenant satisfaction data, repairs are often an issue about which people come to see us as constituency MPs. The housing survey data show that 72% of tenants in the private sector are satisfied that their landlord deals with repairs in a satisfactory way, compared with 66% in local authorities. I am not in any way trying to diminish the fact that there may well be problems in the private rented sector; I am trying to put those into context. Even in a regulated environment, and even in an environment where each of the three main parties in the Chamber controls housing authorities and councillors have oversight of what they are doing, there is a certain amount of tenant dissatisfaction. No matter what the regulation, we can never make that dissatisfaction go away.
Stephen Williams
I will look at the survey in even more detail to deal with the points that the shadow Minister raises, but he is right. The private sector is growing, and that is something that we wish to encourage. That is why we have the policies in place to get people investing in the private sector in order to provide extra accommodation, which is needed in general, but is needed also to provide the flexibility that many of our constituents would want.
Let me turn to the Bill and its four clauses, the first of which establishes a mandatory national register of private landlords. When the shadow Minister was speaking, he allowed me to intervene once about the Rugg review. I tried to put it to him that that review was commissioned by the Labour Government. One issue that it considered was whether there should be a national register of landlords. It rejected that and the then Labour Government, as represented either by the present shadow Home Secretary, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), or by the right hon. Member for Wentworth and Dearne (John Healey), both of whom were Housing Ministers in the period of the Rugg review, accepted that recommendation. The hon. Member for Corby said to me, but would not allow me to intervene in response, that the general election got in the way of implementation. The Rugg review was in 2008. A lot of things happened between 2008 and May 2010, but clearly a decision was made by predecessors in my Department not to introduce a mandatory national register of private landlords.
The range of benefits that a register might provide was not clear, but one was that tenants would be able to find out who their landlord was. Under the Landlord and Tenant Act 1985, a tenant can ask the collector of the rent, which in many cases may well be a letting agent, to disclose the identity of the ultimate landlord. That information has to be provided within 21 days and failure to do so is an offence. If as constituency Members we find that people do not know who their landlord is, or the local authority does not know and may want to encourage the tenant to find out, perhaps we should publicise that provision, which has been on the statute book for quite a long time.
It is unclear what a national register would achieve. We certainly believe that it would create an unnecessary burden on all landlords, whereas what has been acknowledged in the debate is that there is a small minority of potentially rogue landlords whom we should be concerned about, rather than the vast majority who provide a good service to their tenants. None the less, many private landlords are already in industry accreditation schemes.
One concern is that the introduction of any new compulsory burden of regulation involves a cost. The hon. Member for Mansfield said that there would be no compliance costs, but I would be surprised if a national register of anything was introduced without some compliance costs. People in the private rented sector are looking to make a profit and like any private enterprise or individual in business they will pass costs visited on them on to their customers, who in this case are tenants.
Sir Alan Meale
Why is there a strange state of affairs that tenants have to list themselves on either the electoral or the community charge registers, but landlords do not have to register, unless they are in the social sector? Why are many of them trying to keep out of the limelight and not live up to their responsibilities?
Stephen Williams
With respect, the hon. Gentleman is conflating several obligations that are not the same. You and I, Madam Deputy Speaker, will have debated the requirement to register to vote many times on the Select Committee and during consideration of Government legislation on individual electoral registration, but that is totally different from someone in business having to disclose their business practices via a register. We have Companies House, where directors have to be registered, but I would be hard-pressed on the spur of the moment to think of another area of business where the owners of the business have to be on a national register. Perhaps the hon. Gentleman will give a real example from the world of business in which every provider in the country of a service to our constituents must be on a national register. I cannot think of one.
Sir Alan Meale
If nothing else, such a register will allow local authorities and Government to communicate with landlords and tell them what makes a good, safe and fair landlord. Surely that is the basic context.
Stephen Williams
In the event of a problem, the person most likely to need to know the identity of the landlord is the tenant, if they pay their rent via an intermediary, whether a letting agent or someone else, and under the 1985 Act the tenant has a statutory right to have the identity of that landlord disclosed to them within 21 days. That might be a long time to wait for the disclosure, but there is a statutory right to know a landlord’s identity if it is needed for dealing with a problem.
The Communities and Local Government Committee, which has been referred to several times, produced a report in the summer. Despite the evidence it heard, which the shadow Minister was keen to refer to, it rejected the idea of a mandatory national register of private landlords. Local authorities already have powers to introduce landlord licensing schemes to tackle problems such as antisocial behaviour where there are houses in multiple occupation that do not already fall within the statutory licensing regime to which the hon. Member for Shipley referred. A house that is three storeys high and has more than five unconnected people living in it already has to be licensed, but local authorities can license properties that fall below those criteria if they have identified particular problems. Therefore, with regard to the problems that a national register might solve, there are already laws in place, passed by this place, and opportunities for local authorities to introduce regulations in their areas.
Clause 2 deals with the regulation of private sector letting agents and managing agents. That area is already heavily regulated. There is a whole range of legislation governing the activities of letting agents—if the hon. Members for Shipley and for North East Somerset were still here they would probably need smelling salts by the time I finish reading this out—including the Consumer Protection from Unfair Trading Regulations 2008, the Consumer Protection Act 1987, the Consumer Credit Act 1974, the Price Marking Order 2004, the Housing Act 1988, the Housing Act 1996 and the Protection from Eviction Act 1977.
Perhaps my parents should have known about that Act in 1977, because that was when we were evicted. Incidentally, that was the first time I met a politician. I will use that anecdote now—why not? Abercynon in south Wales was represented by a communist councillor, Mrs Ann Williams, who came to talk to my mother. I listened to them talk and asked my mother afterwards, “Who was that woman?” My mother replied, “She’s the person we vote for on the council.” I was 10, and perhaps that was what sparked my interest in politics. Perhaps we could have done with knowing about the Protection from Eviction Act 1977.
There is also legislation passed by this Government, the Enterprise and Regulatory Reform Act 2013. It has a rather ugly name, but it does rather important things. The sector is therefore already quite heavily regulated. Some 60% of letting agents operating in the sector already belong to an ombudsman scheme that can deal with complaints, but it is important to recognise—the Government certainly do—that a minority of agents do not belong to the scheme and probably do not provide a good enough service. That is why we introduced the 2013 Act.
Sir Alan Meale
The figures are important. There are around 9,000 agents across the country, and the number who are unregulated are indeed a minority, but there are 4,000 of them. Those are the ones we are trying to get to, not the ones who are very good, fair and just. I say that those 4,000 operate in a manner that does not meet the needs of my constituents.
Stephen Williams
I thank the hon. Gentleman for that point. We have already acknowledged that there is uncertainty about the number of letting agents, although I hear what the hon. Gentleman says about the 4,000.
Perhaps when the hon. Gentleman was successful in the ballot and chose this cause for his Bill, he was not aware of the Enterprise and Regulatory Reform Act 2013. I do not blame him; I am not sure I was aware of it until I was told about it, although no doubt I voted for it earlier this year. That Act allows us to introduce more regulation in this area.
Sir Alan Meale
If the Minister looks at Hansard tomorrow, he will see that I mentioned the 2013 Act in my speech.
Stephen Williams
Under the 2013 Act, various new powers are available to the Department to do with how we could regulate this area. The hon. Gentleman will have noticed last Wednesday’s announcement from the Secretary of State dealing with the whole private rented sector. Specifically, the Secretary of State said that we would lay the first order under the 2013 Act. I am pleased to say that we laid the order today. It is an affirmative order, which means that we will have an opportunity to debate it in the normal way. Early in the new year, subject to the order’s being approved, we will ask people from around the country to bring forward schemes for approval. We will then make it mandatory for all letting and property management agents in England—this is a devolved matter, of course—to become members of an approved redress scheme later next year.
Sir Alan Meale
I acknowledged that a major move had been made by the Government in the 2013 Act. Here and now I put it on the record that I am grateful for that movement. However, I want something much larger and more comprehensive than has been offered. The Government’s move is a great step forward, but it is only one move.
Stephen Williams
I suppose all politicians are guilty of saying, “You’ve done that, but I want you to go further.” That is the nature of the business that we are in. We do it to each other. Campaign groups will always say to those in Government, “Thank you for that—we’ve banked and bagged that one, but can you take the next step?”
All I am saying is that the next step has yet to be taken. The first step was the 2013 Act and the second was taken with the laying of the order today. The next step will no doubt be a Statutory Instrument Committee, which will consider the matter. Let us hope that those important steps are successful.
Requiring letting agents to belong to an ombudsman’s scheme will also empower tenants and consumers to make complaints and should be an effective way of driving up standards with the minimum regulatory burden. Our emphasis now is on making the measures that we have already introduced, and will shortly introduce, work, rather than, as the hon. Gentleman might like us to, anticipating the need to go even further.
As I mentioned, letting agents are already subject to a whole range of consumer protection legislation. If they are in breach of aspects of the legislation about charging unfair fees, for example, action can already be taken against them by local authority trading standards, which have both criminal and civil enforcement powers. My Department is keen to hear from trading standards authorities from county and unitary councils up and down the country to see how they use those powers so that we can have a full understanding of whether any action is necessary.
I can deal quickly with the third part of the Bill, which is about establishing a body to administer the national register monitoring compliance with regulations applying to letting and managing agents. Unless I missed it, the hon. Gentleman did not say what body would maintain that national register. It is not clear who would hold the data, who would have access to them, or whether there would be a charging mechanism. I can think of various people who might see some merit in having access to such data; I am sure that our friends in the Treasury might be interested. There is quite a lot of unfilled-in detail. Our basic position is that we do not accept the need for a national register because remedies are already available, so obviously we do not accept the proposal to set up a new quango to administer it.
Sir Alan Meale
The Minister is now approaching the Bill rather well. On the question of what the body would be and who would serve on it, it would be the Minister and his colleagues in Government. It would not be me or Parliament or anyone else; it would be the Secretary of State. That is what I am asking for; I am not asking for somebody out there to do it. When I was a Minister at the Department of the Environment, Transport and the Regions, I abolished quite a lot of quangos. I took the number down from 116, which was unnecessarily large, to fewer than 100. I am not a great fan of quangos. The Secretary of State will decide on this. The Minister, as a Minister, will help to decide on how the body is set up and functions.
Stephen Williams
I hear that, but our basic position is that we do not accept the premise of clause 1 that a national register needs to be set up. I speak as a liberal. It is a shame that the hon. Member for Shipley is not here, because he rather doubted my liberal credentials compared with his libertarian credentials. At least the hon. Member for North East Somerset was a little kinder, saying that I was a good liberal. As such, despite what may have been prepared for me, I am in any case suspicious of national registers for any purpose. One can see a social need for them in some circumstances, as with a register of organ donors, but it is pretty difficult to see what merit there would be in having a national register of people who are in business to provide housing services.
Where would it end? Once the precedent had been set that one sector of the private sector economy had to register every single provider of a service in that sector, no doubt other hon. Members who were successful in the ballot in future years would introduce private Members’ Bills, or table early-day motions or introduce ten-minute rule Bills, saying that it should apply to plumbers, electricians, painters or decorators. I could go through a whole list, but I am not trying to filibuster, unlike some people today. There would be calls on many other sectors of the economy to set up a national register, and we do not want to run our economy in that way.
Clause 4 would require all tenancy agreements entered into with private landlords to take the form of written agreements. The general rule at the moment is that tenants can already make a written request under section 20A of the Housing Act 1988 for certain terms of their tenancy to be provided in writing, including the amount of rent payable, the date on which the rent falls due; whether there are any terms that the landlord wishes to impose for providing for a review of the rent, and, if there is a fixed term of tenancy, how long it is. The tenant can already request that those extremely important items be put beyond reasonable doubt by having them in writing. In the case of a tenancy of more than three years, the information must be in writing, created by deed and signed by both sides. It is not a matter of it being an option that the tenant can ask for.
There is a need for greater understanding of the rights and obligations that already exist in the law of England and Wales. The Department is in discussions with representatives of the sector to produce a model tenancy agreement that landlords and tenants will be able to draw on to eliminate areas of uncertainty where a landlord is possibly trying to put one over on the tenant.
Sir Alan Meale
Whatever happens to this Bill, will the Minister give an assurance that he will consider how he could improve on those standards for the future? I would be very grateful if he would do that.
Stephen Williams
Yes. The tenant’s charter is now available among the range of documents published by the Secretary of State last week. The model tenancy agreement is not yet available, because we are working with the sector on how it should look.
Last Wednesday, the Secretary of State announced that there would be a Government-endorsed model tenancy agreement, which we will develop with the sector. His announcement included a timetable for when we will introduce the agreement. We think it will provide extra security and stability for families entering into an agreement with a landlord.
We have also published a draft tenants charter, but that is not the end of the matter, because it is out for consultation and we would very much welcome people’s comments on it. The purpose of the charter, as opposed to the legal agreement of the tenancy, is to help tenants—and, indeed, landlords—to understand what they should reasonably expect from their rental deal and how they can take action if they are the victims of hidden fees, which many Members have mentioned, or poor standards of accommodation.
The Select Committee has looked at some of the issues and its findings no doubt enabled the Government to make their proposals. The Committee said that longer tenancies and rental control should be sought within the existing legal framework.
The Government also announced last week that there would be a mortgage lenders summit—summits are a very good thing—to consider how lenders can make it easier for landlords to offer longer tenancies. The Government will review the process by which tenants can raise concerns about the standard of their private rented property and the response they should expect from the council if they do not get anywhere with their landlord, particularly in enforcing standards of safety and hygiene. As I mentioned earlier, powers already exist for local authorities to uphold that. We will also consider as part of this review whether we should require landlords to repay rent, which would be the ultimate sanction for most of them, if their property is found to have the sorts of serious hazards highlighted to me by Shelter in Bristol.
In conclusion, the private rental sector is an increasingly important part of the housing market. This Government want to see that private rental market remain. We want it to grow and to serve even more of our constituents. That is why we are concerned about whether regulation is appropriate. We certainly should not stifle the growth of the market through poorly targeted and disproportionate new regulation. The hon. Gentleman made many good points and the interesting points and perorations made by others are also relevant, but the Government are taking action. New provisions are just starting to come in, so we feel the time is not right for this Bill to proceed further.