Housing (London)

Teresa Pearce Excerpts

Wednesday 5th February 2014 Westminster Hall

[Teresa Pearce (Erith and Thamesmead) (Lab)]

It is a privilege, Mr Howarth, to have this debate under your chairmanship. It is testament to the crisis in London that several London MPs are here. I will speak about private landlords, many of whom are excellent, professional and responsible; my comments are in their interests and those of my constituents.

The capital has always been a hot spot for housing, but recent policy reforms and cuts in funding by the Government and the Mayor have resulted in Londoners facing a housing crisis. Recent polling from Ipsos MORI showed that four in five people—82%—agree that there is a housing crisis in London. House building is down, and homelessness and rough sleeping are rising. In 31 of 32 London boroughs, less than 10% of available properties for sale are affordable to a couple on average wages, with children. As an MP, I earn a good salary, but if I were starting out now, I would be unable to buy a family home in most areas of London. In addition, the lack of an adequate supply of social and affordable housing means that many people have no choice but to rent privately.

The situation could become even worse. Statistics from the Ministry of Justice show that one in 56 households in London are at risk of mortgage or landlord repossession, compared with one in 105 households nationally. Discussions tend to focus on building affordable and social housing, but neither can be provided overnight. We must focus on what needs to be done to help people now. I initiated this debate to discuss practical steps that should be urgently taken to regulate the private rented sector throughout London.

In the past 10 years, the proportion of families renting in London has increased from one in 10 to one in four. If population growth is taken into account, that is a 119% increase in the number of families renting. In my constituency, almost one fifth of all families live in private rented accommodation. The private rented sector in London has grown by 75% in 10 years, but rented accommodation is not offering people the opportunity to create secure homes and stable families.

The private rented sector is notoriously unstable. Renters typically have short contracts of six or perhaps 12 months. Rent increases are unpredictable. The life of the private renter is typically unstable, insecure and blighted by anxiety. I regularly meet families who tell me that they are living in substandard properties that are damp and overcrowded, and that their accommodation is making their children ill. They tell me that, for all this, they struggle to pay extortionate rent. They tell me they fear eviction. They tell me that they are desperate, and they are.

One of the biggest problems facing families who rent privately is the instability of the market, and the lack of a statutory system of private rented sector regulation to safeguard standards and of any meaningful security of tenure. The assured shorthold tenancy gives tenants just six months’ protection from eviction, after which landlords can evict them or raise their rent by any amount with two months’ notice. Renters have no long-term certainty, and that is no way to raise a family.

I have met families in my constituency with children under 10 who are attending their third primary school due to multiple evictions over their short lifetime. That is not surprising because, according to Shelter, renters are 11 times more likely to have moved in the last year than people with a mortgage. That has a negative impact on children’s education and well-being. Government research found that frequent movers are significantly less likely to obtain five A to C GCSEs, or to be registered with a GP. That is yet another example of children from the poorest background being failed. We must reform the assured shorthold tenancy and increase security of tenure beyond the six-month limit if we are to have stable communities and give children the best chance in life.

There is not just the emotional cost of moving: uprooting is extremely expensive. Letting agencies can charge excessive fees of hundreds of pounds for administration costs, in addition to requiring deposits and advanced rent. The result is further pressure on renters who are already struggling to balance rising rents and living costs. The instability of the private rented sector means renters face these charges more frequently—the more frequent the turnover, the more money the letting agent makes.

It is time for the industry to face regulation, as the informal code of practice has clearly not worked. The extent and level of activities that can be charged for should also be regulated to ensure consistency. Renters should not have to pay disproportionate amounts for basic services, such as swapping, renewing or editing contracts—and all the while rent is out of control: the cost of renting has soared while wages have dropped. Rent inflation in London is 4.8%, and at the same time, the average wage for ordinary Londoners has fallen by 5%. Excessive and unaffordable rent increases can be prevented only by Government intervention.

[Nadine Dorries (Mid Bedfordshire) (Con)]

My constituency is just outside London, and many people believe that it is easier to go outside London for cheaper rent if they want to remain together as a family. However, unreliable transport means that one of my constituents who was the family breadwinner but recently lost their job now finds it impossible to go back to London because of the shortage of housing and extortionate rents. Does the hon. Lady agree that moving out of London is not always the answer that some people think it is?

[Teresa Pearce]

I thank the hon. Lady for her intervention and I agree with her. The Select Committee on Work and Pensions recently visited her constituency, and we heard all about the problems in a rural constituency, such as problems with transport, and people trying to move to London but finding it impossible to obtain properties.

We need rent stabilisation. It is time to protect the consumer while allowing landlords to make a living, but some in my constituency are making a killing. Rent stabilisation is sometimes called second or third generation rent control, and is used in many other countries, including France, Germany, Sweden and Switzerland. Although some critics say that landlords would flee the sector, that has not happened in those countries, nor has it affected the development of large and functioning private sectors. Rent stability is needed to provide people with stability. That is logical, fair and overdue.

Although rents are rising, the same cannot be said about the standard of rental property. According to Shelter, private rented homes are in worse physical condition than homes in all other tenures. My postbag shows an increasing number of families whose physical and mental health is being severely affected by living in overcrowded, damp and unsafe accommodation for which they are paying inflated rent. The lack of regulation means that vulnerable tenants in substandard living conditions can be exploited. We need a fair system of checks and balances, and a national system of landlord accreditation to offer much-needed regulation.

Private properties should be assessed by local authorities to determine whether they are fit for human habitation before they are rented. The Law Commission has called for every tenancy to include the implied term that the dwelling should be fit for human habitation. I support that call. We must grant greater powers to local authorities to root out and strike off rogue landlords. There are many good and reputable professional landlords, but the rogue element shames the whole sector.

Instituting a system requiring landlords to conform to certain standards or face penalties would not only improve the quality of private rented properties, but give private renters the security they are currently denied. It is clear that there is an imbalance of power between tenants and landlords. Tenants will not ask for conditions to be improved because they fear retaliatory eviction, which occurs when a landlord attempts to evict a tenant in response to a reasonable request, such as having health and safety issues addressed. A survey by The Tenants’ Voice in 2013 found that 61% of tenants were worried about complaining to their landlords about anything. It also found that 71% of tenants had paid for repairs themselves rather than asking their landlords.

Legislation protects landlords but not tenants. Section 21 of the Housing Act 1988 provides landlords with a mandatory ground for eviction. They do not have to give any reason and the only requirement is that notice has been served correctly. It is clear that the conditions under which a section 21 notice can be issued should be reviewed urgently.

[Emma Reynolds (Wolverhampton North East) (Lab)]

Does my hon. Friend agree that a growing phenomenon is the number of people who are homeless because of eviction in the private rented sector? That is extremely worrying and one of the main drivers of the increase in homelessness in London and elsewhere.

[Teresa Pearce]

I completely agree. In my constituency, the people who present to me as homeless have always spent time in private rented accommodation, and they do not want to go back into it because of the insecurities that it creates, particularly for their children and their children’s schooling.

I understand that housing in London is a complex problem, but it must be confronted. We are facing the biggest housing crisis in a generation. For too long, some private landlords have taken the money without accepting the responsibility, while the rest of us have picked up the costs of unstable communities, marriage breakdowns and children who do not have a secure home life. Given that the private rented sector is likely to keep expanding, we must create a reputable industry that protects the vulnerable and ensures that renters are not at the mercy of unscrupulous landlords. Stable homes make stable communities, which is surely is in the interests of society as a whole.

I have eight questions that I would like to ask the Minister. First, does he agree that the private rented sector needs greater regulation and management? Secondly, I understand that the Department for Communities and Local Government has been considering the need for family-friendly tenancies in the private sector. How many families have benefited from increased security of tenure in the private rented sector since the Secretary of State’s announcement on 1 October 2013 of a package of measures to persuade landlords to offer greater security? Thirdly, does the Minister agree that rents have reached the limit of affordability for most ordinary families across the capital? Fourthly, does he support the Law Commission’s call for every tenancy to include an implied term that the dwelling should be fit for human habitation?

Fifthly, the Government promised some movement on a review of conditions in the private rented sector by the end of January 2014, but we have had no news on that. Will the Minister tell us when we might see that review? Sixthly, what new rights does the Secretary of State’s tenants’ charter give to tenants who face retaliatory eviction after making a complaint about their landlord because of dangerous conditions in their home? Seventhly, does the Minister agree that local authorities should declare to Her Majesty’s Revenue and Customs the payment of housing benefit to landlords? There are people who profit from the tax and benefit system without paying into it. Eighthly, are all local authorities required by statute to have a published housing strategy as well as a tenancy strategy?