Teresa Pearce
Main Page: Teresa Pearce (Labour - Erith and Thamesmead)Housing and Planning Bill (Seventeenth sitting)
Teresa Pearce Excerpts
Dr Blackman-Woods
I want to make it clear that, in moving the motion, we were not in any way suggesting that we were against a degree of overseas investment. The new clause is clear that the provisions would relate to a proportion of the dwellings that are marketed. It was simply intended to allow local people to have a way in to some of the new developments and to ensure that the new homes were not totally unavailable to them because they had all been bought up by overseas investors.
I have heard the Minister’s comments, however, and I think the Government are seeking to find a way of addressing the issue. We will mull over his comments and decide whether to investigate things at a later stage. I therefore beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Security of tenure
“After section 19A of the Housing Act 1988 insert—
‘(1) Any assured shorthold tenancy (other than one where the landlord is a private registered provider of social housing) granted on or after April 1, 2018 must be for a fixed term of at least thirty six months. It is an implied term of such a tenancy that the tenant may terminate the tenancy by giving two months’ written notice to the landlord.’
(2) In section 21 Housing Act 1988 insert—
‘(4ZA) In the case of a dwelling-house in England no notice under subsection (4) may be given for thirty six months after the beginning of the tenancy.’”—(Teresa Pearce.)
This amendment would prevent private sector landlords from using the ‘notice only’ grounds for possession for the first three years of a tenancy, without affecting the rights of tenants to give notice and leave the tenancy early.
Brought up, and read the First time.
Teresa Pearce (Erith and Thamesmead) (Lab)
I beg to move, That the clause be read a Second time.
The new clause would have the effect of making longer-term tenancy much more common. Landlords and tenants would both have stability, but with the ability to terminate contracts early with proper notice, if they have to, just as they can now.
The private rented sector is an important and growing part of the housing sector. The number of people living in the private rented sector has increased by 2.5 million since 2010. Now, 1.5 million families with children are renting from a private landlord and could be evicted with as little as two months’ notice. Some 9 million people now rent privately. Almost half of those who rent are over 35. Many of them want the same security and stability that they would have if they owned their own home but the rules on private renting have not caught up with the way people live now.
Kevin Hollinrake (Thirsk and Malton) (Con)
I am very supportive of the principle of longer tenancies, but should that not be the option of the landlord as well? Has the hon. Lady considered the impact on landlords and on supply in the private rented sector if conditions on landlords are made too onerous? Does she understand that that might restrict supply and mean that properties are not there to rent in the first place?
Teresa Pearce
I recall in an earlier debate on rogue landlords that we also said that there were rogue tenants. There needs to be security on both sides. Later, I will come to the fact that the Residential Landlords Association supports the measure. It needs to be done sensibly, but I take the hon. Gentleman’s point.
Kevin Hollinrake
The RLA supports this measure—a minimum of three years on a tenancy agreement? The hon. Lady must give us more details.
Teresa Pearce
I will, later in my speech. The RLA supports the Government looking into the ability to have longer tenancies as a more normal structure. It is particularly bothered about the situation where a landlord has a leasehold property bought from a local authority freeholder, and the local authority will not allow that landlord to let for longer than a year. The association just wants a discussion about that sort of thing, which is why I am bringing the matter to the Committee today.
Kevin Hollinrake
I am aware of its proposals in that regard, but that is optional, not compulsory. The new clause would make it compulsory for a landlord to give a three-year agreement. I do not know any landlord association that would support that.
Teresa Pearce
This is a probing amendment to see what we agree on. I am glad that you do think that longer tenancies—
Teresa Pearce
I note that the hon. Gentleman does think that longer tenancies can be a good thing. The purpose of the amendment is to have that debate and to understand the Government’s direction of travel—possibly with longer tenancies in the future. I completely accept what you say.
Teresa Pearce
I completely accept what the hon. Gentleman says.
Insecurity in housing affects not only individuals—tenants or landlords—but our whole society. There is a small school in my area that is in a fairly settled part of my constituency, and yet staff there told me that they had a whole class of pupils—30 pupils—that had churned in and out since September. It really affects the way that teachers can make progress with a class when there are new children coming in and out all the time, and the staff put that churn down to the private rented sector.
There is also a doctors’ surgery in my constituency that has 14,000 patients, and every year 4,000 of those patients move on and move to a different practice. A third of patients coming and going makes it nigh-on impossible for the doctors to deal with long-term health issues. They cannot run campaigns on diabetes, obesity or smoking with any success, because a third of their patients are constantly churning in and out. Many of the patients are living in bad conditions with mould and damp, and suffering from asthma, which puts more pressure on GP services.
Also, more secure tenancies and housing will allow families to become more settled, which I believe would help the local economy. Many employers, small and large, that I go to see tell me that they have a problem with recruitment, and it is because of the insecurity in the housing sector.
New clause 22 is designed to encourage longer-term tenancies and to make them much more common, so that both landlords and tenants have more stability. It is important to note that that should not penalise responsible landlords who may need to evict tenants, perhaps because their own financial position has changed or perhaps because they are unhappy with the way the tenant is treating the property. These are legitimate circumstances in which landlords should still be able to evict tenants by providing proper notice.
Measures to increase long-term tenancies are supported not only by me personally but across the industry. In particular, I will highlight some of the written evidence that the Residential Landlords Association gave to the Committee. The RLA wrote:
“We believe that reforms are needed to encourage a culture of long termism within the private rented sector which would play a significant part in stabilising rents for tenants.”
It also wrote:
“Too often letting agents base their business models on short term tenancies, charging fees (and thereby increasing rents) when they are renewed.”
It continued:
“The evidence shows that where tenants stay in their properties for longer periods, landlords are reluctant to increase rents, at least beyond inflation…Landlords often want to offer longer tenancies…Many landlords are prevented from voluntarily providing for tenancies longer than a year by mortgage lenders and the owners of blocks of flats”,
including the freehold owners of blocks of flats. Those were the words of the RLA.
I raised this issue in the most recent Department for Communities and Local Government oral questions with the Minister, and I hope that I might hear more today about what conversations are being had with mortgage providers. I know that the Nationwide now does not have a clause in buy-to-let mortgages whereby it will not allow lettings for longer than a year. However, other lenders have not been as enlightened, so I would be interested to know whether Ministers have had any discussions with the Treasury regarding this issue.
Finally, it is worth noting that many other countries already have longer-term tenancies. I accept that in some other countries in Europe there is not the same attitude towards home ownership that we have in this country, and that renting is a much more normal way of life there. However, in countries such as Germany, Switzerland and Belgium, long-term contracts and more flexibility give tenants the chance to plan for the future. In Germany, leases are usually signed for an unlimited period of time, and in France, where one in five people rent, longer leases are always available.
I am sure that Members from all parties have been contacted in the past by tenants who are struggling because they cannot find stable housing. I think we all agree that we want stability in housing, and longer-term tenancies could be a way of securing that stability. So we hope that we find some common ground with the Minister, and I am very interested to hear the Government thinking regarding longer tenancies becoming more of a norm than they are at the moment.
Mr Jones
Let me make it clear that this Government are committed to building a bigger and better private rented sector, which provides security and stability. We have taken action to support the supply and quality of private rented accommodation by resisting unnecessary and unhelpful regulation, while cracking down on the worst practices of some rogue landlords. Our model tenancy agreement, which was introduced in September 2014, promotes longer tenancies for landlords and tenants who vote to sign up to them.
However, there is no one-size-fits-all approach to tenancy length. Many landlords are looking to rent out a property for the longer term, but there will be some for whom letting a property is a short-term plan and who need the property back at some point, perhaps even for their own family to live in. Although I understand the spirit in which the amendment has been tabled, I think it would be counter-productive and would overburden the market with restrictive red tape, stifling investment and the supply of rented housing at a time when we most need to encourage it. That would not help tenants or landlords.
Mr Jones
The hon. Gentleman gives me a very good opportunity to segue into explaining that before assured shorthold tenancies were introduced by the Housing Act 1988, the private rental market was in severe decline. Lifetime tenancies and regulated rents meant that being a landlord was simply not commercially viable for many property owners. Since 1988, however, the private rented sector has grown steadily, increasing from just over 9% of the market in 1988 to 19% today. Landlords, and in many cases tenants, welcome the flexibility of the current assured shorthold tenancy regime, which does not lock the parties into long-term commitments and promotes mobility. Without the certainty that landlords can seek repossession when required, many, I am sure, would be reluctant to let their properties. I believe that the current framework strikes the right balance between the rights of landlords and tenants. With those points in mind, I hope that the hon. Lady will withdraw her amendment.
Teresa Pearce
I am interested in what the Minister said, but he has not responded to the point about the artificial barriers to some landlords, who want the choice to have either a short let or a longer let, but who are restricted by the freeholder—often the local authority—or the mortgage lender. Perhaps he would like to answer that or write to me about it at some future point.
Teresa Pearce
That is not the case in my constituency, I assure him; that is very rare.
I believe that longer tenancies are a very good idea. It is interesting that in the heated debate we had this morning, tenancies of two to five years were meant to be the right thing for social tenants, but for private rented tenants, there is resistance to it. However, given that the Minister is going to write to me regarding the particular issue I am concerned about, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 24
Local Authorities and Development Control Services
“(1) A local planning authority may set a charging regime in relation to their development control services to allow for the cost of providing the development control service to be recouped.
(2) Such a charging regime will be subject to statutory consultation.”—(Helen Hayes.)
Brought up, and read the First time.
Helen Hayes (Dulwich and West Norwood) (Lab)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 26—Requirement to carry out electrical safety checks—
‘(1) A landlord of a rental property shall ensure that there is maintained in a safe condition—
(a) any electrical installation; and
(b) any electrical appliances supplied by the landlord so as to prevent the risk of injury to any person in lawful occupation or relevant premises.
(2) Without prejudice to the generality of subsection (1), a landlord shall—
(a) ensure that the electrical installation and any electrical appliances supplied by the landlord are checked for safety within 12 months of initial leasing and thereafter at intervals of not more than 5 years since they were last checked for safety (whether such check was made pursuant to this Act or not);
(b) in the case of a lease commencing after the coming into force of this Act, ensure that the electrical installation and each electrical appliance to which the duty extends has been checked for safety within a period of 12 months before the lease commences or has been or is so checked within 12 months after the electrical installation or electrical appliance has been installed, whichever is later; and
(c) ensure that a record in respect of any electrical installation or electrical appliance so checked is made and retained for a period of 6 years from the date of that check and which shall include the following information—
(i) the date on which the electrical installation or electrical appliance was checked;
(ii) the address of the premises at which the electrical installation or electrical appliance is installed;
(iii) the name and address of the landlord of the premises (or, where appropriate, his agent) at which the electrical installation or electrical appliance is installed;
(iv) a description of and the location of the electrical installation or electrical appliance checked;
(v) any defect identified;
(vi) any remedial action taken;
(vii) the name and signature of the individual carrying out the check; and
(viii) the registration number with which that individual’s firm is registered with a Part P competent persons scheme approved by the Department for Communities and Local Government and certified as being competent in periodic inspection and testing.
(3) Every landlord shall ensure that any work in relation to a relevant electrical installation or electrical appliance carried out pursuant to subsection (1) or (2) above is carried out by a firm registered with a Part P competent persons scheme approved for the time being by the Department for Communities and Local Government.
(4) The record referred to in (2)(c), or a copy thereof, shall be made available upon request and upon reasonable notice for the inspection of any person in lawful occupation of relevant premises who may be affected by the use or operation of any electrical installation or electrical appliance to which the record relates.
(5) Notwithstanding subsection (4), every landlord shall ensure that—
(a) a copy of the record made pursuant to the requirements of (3)(c) is given to each existing tenant of premises to which the record relates within 28 days of the date of the check; and
(b) a copy of the last record made in respect of each electrical installation or electrical appliance is given to any new tenant of premises to which the record relates before that tenant occupies those premises save that, in respect of a tenant whose right to occupy those premises is for a period not exceeding 28 days, a copy of the record may instead be prominently displayed within those premises.
(6) A landlord who fails to comply with this section commits an offence and is liable on summary conviction to a fine not exceeding level 4 on the standard scale”.
This new clause would introduce a requirement for landlords to undertake electrical safety checks.
Teresa Pearce
Both new clauses in this group relate to standards in the private rented sector.
New clause 25 would place a duty on landlords to ensure that their properties are fit for habitation when let and remain fit during the course of a tenancy. The new clause is largely about probing the Minister to see whether he is open to putting that duty into legislation and follows on from the private Member’s Bill promoted by my hon. Friend the Member for Westminster North (Ms Buck), which had a similar aim but which was talked out by the hon. Member for Shipley (Philip Davies)—a fate that befalls some of the worthiest private Members’ Bills, including my own.
Before moving on to the detail of new clause 25, I note that the majority of landlords let property that is and remains of a decent standard. Many good landlords go out of their way to ensure that even the slightest safety hazard is sorted and that any repairs are attended to, so it is even more distressing when we see reports of homes that are frankly unfit for human habitation being let, often at high prices.
Parliament has for more than 100 years considered and legislated for standards in the private rented sector. The Housing of the Working Classes Act 1885 and, 100 years later, the Landlord and Tenant Act 1985 placed obligations on landlords regarding safety in their properties. Indeed, the 1985 Act placed a statutory duty on landlords covering issues such as damp, mould and infestation, yet that duty applies only to those fulfilling a rent criterion, and that criterion has not been changed since 1957, so the duty now applies only to properties where the annual rent is less than £80. The new clause would remove those limits to allow the 1985 Act to fulfil the intention and place a duty on landlords to provide a safe, secure environment.
I am sure that all Members in their casework receive letters from constituents living in poor conditions—indeed, it is one of the biggest issues in my constituency. My office phone rings every day with people calling about mould and infestation in their property, the impact that has on their health and the inaction of some landlords in rectifying the situation. It is also a consumer issue, because where else in the modern day could one buy something that is not fit for purpose? If someone buys a television that does not work, they can take it back and get a refund. We are pretty much assured that the food in a food shop is safe to eat—if it was unsafe to eat, the food premises would be shut down. Yet a landlord can let a property that is unfit for human habitation and there is no easy recourse.
About this time last year, I was asked by a family in my constituency to visit the property that had been occupied by their father, who had just passed away from a respiratory illness. They wanted me to see at first hand the conditions he had lived in. The walls were so thick with mould that it looked like flock wallpaper. The air just smelled of damp. This man had died on his sofa on a Saturday night from lung disease while living in that accommodation. His family lived some distance away, which is why they were not fully aware of the conditions he was living in. They had contacted the landlord on numerous occasions, and the landlord failed to assist. Nothing could be done.
I am sure the Government will want to consider the new clause. It would only affect a small number of tenants in the few properties let by bad landlords that are unfit for human habitation, but it would change the lives of many tenants. Earlier in our consideration of the Bill, we discussed rogue landlords and banning orders, but the new clause would try to alleviate suffering before we got to that position. It is a basic consumer, health and productivity issue. It is hard for someone to be productive at work when they live in a property which is not fit to live in. It is also a moral issue where children and elderly people are concerned, so I am interested to hear what the Minister has to say on the new clause.
New clause 26 would introduce a requirement for landlords to undertake electrical safety checks. Electrical Safety First has been leading the way on the issue by raising awareness and lobbying parliamentarians—I think it was in Parliament this week doing that very thing—on the need to ensure that the private rented sector is fire-safe. Many other organisations support the measure, and the Local Government Association, the London fire brigade, Shelter, the Association of Residential Letting Agents, British Gas, Crisis and the Fire Officers Association have all supported previous measures to introduce mandatory electrical safety checks.
It is estimated that each year electrical faults cause more than 20,000 house fires and lead to around 350,000 serious injuries and 70 deaths. It is worth noting those figures, because we now see fewer deaths and injuries—only 300 injuries and 18 deaths—caused by gas and carbon monoxide, on which action has been taken. The risks remain serious, so it is right that we continue to monitor that, but those figures show what is at stake when we discuss electrical fires in the home.
Although landlords have a duty to keep electrical installations in proper working order and to ensure that any electrical appliances they supply are safe, poorly maintained installations remain in the sector and there is no explicit requirement for landlords to prove to tenants that a property is electrically safe. Landlords of houses in multiple occupation are required to have a periodic inspection every five years, but those whose properties are not HMOs are not legally obliged to do that. It is not right that people would be safer in a bed and breakfast or an HMO than in a privately rented home. What is the difference in fire risk between a property that meets the HMO requirements in which a landlord lets to six people and a property that is not an HMO where six different people live? The standards should be the same because the risk is the same.
Of course, many good landlords ensure that their properties are safe. The property is their asset, so they have as much interest in keeping it safe as their tenants. Many good landlords run electrical safety checks and ensure that all appliances are tested at the beginning of the tenancy and at points during it, but there is growing consensus that the introduction of mandatory electrical safety checks is a worthy cause.
We have seen action on the issue in Scotland, where the Scottish Government have introduced fire safety requirements for private rented properties, and the authorities in Northern Ireland are currently running a review of the private rented sector which includes a consultation on mandatory fire checks. In Wales, we have growing cross-party support and we hope that the Welsh Government will introduce such requirements.
Helen Hayes
I want to share an example of a constituent who emailed me recently. She is a private tenant in Lambeth who told me how she lies awake at night going over and over in her mind her worries about the electrical safety in her property and the lack of fire safety in general, and about how she would get out with her children if there was a fire. Does my hon. Friend agree that the clause would provide great comfort to tenants in that situation?
Teresa Pearce
I thank my hon. Friend for her intervention. That is the exact scenario. People have said to me, “If that is the case, why don’t they move somewhere else?” but particularly in London housing is scarce, so sometimes people have to take whatever is available and thereby risk their and their family’s safety if the place is not safe to live in.
We have mandatory annual gas checks in the private rented sector, and secondary legislation has added regulation for smoke detectors and carbon monoxide detectors, so I hope that the Minister will consider accepting new clause 26. There is growing support for the measure across the UK, in Parliaments and with landlords. In fact, Janet Finch-Saunders, the Welsh Conservative spokesperson on this issue in the Welsh Parliament, has pledged her support and she also happens to be a landlord. We have broad support.
To recap, new clause 25 would introduce a duty on landlords to ensure that their properties are fit for human habitation, which would drive up standards. New clause 26 would introduce a requirement for landlords to undertake electrical safety checks. I hope that the Minister will accept that new clause.
Brandon Lewis
I have enjoyed listening to the hon. Lady’s thoughts. I have some sympathy with the points she made in the latter part of her speech. We have listened to hon. Members talk at length about the private rented sector in the past few weeks, so I apologise to those listening now or reading our deliberations later in Hansard, because some of the points I will make have been made before. If the hon. Lady had tabled the new clauses for consideration when we debated the private rented sector, we could have saved ourselves some time and had a more focused debate at a relevant point.
The new clauses cover—once again—property condition in the private rented sector. The hon. Lady outlined new clause 25. I agree that all homes should be of a decent standard and that all tenants have the right and should expect to be able to live in a safe place, regardless of tenure. However, we do not consider that amending the Landlord and Tenant Act 1985 in the way proposed would ensure that.
Local authorities already have strong and effective powers to deal with poor-quality, unsafe accommodation and we expect them to use those powers. Where tenants raise concerns, they can carry out an inspection using the housing health and safety ratings system introduced in the Housing Act 2004, which assesses 29 categories of hazard found in a property. Local authorities can issue an improvement notice or a hazard awareness notice, or prohibit the property from being rented out. In serious cases, the local authority may decide to make repairs itself.
The Government want to crack down on the small minority of rogue and criminal landlords who exploit their tenants by renting out unsafe and substandard accommodation and who fail to comply with statutory notices. Measures in the Bill that we have already debated will ensure that our powers against rogue and bad landlords go further than ever before. I hope that Members are advising their constituents with bad electrics or mould that they are covered in that way, and telling them to contact their local authority so that the local authority can use its powers. In addition, the Government have a wide range of policy initiatives to improve existing properties in the private rented sector. New clause 25 would result in unnecessary regulation and cost to landlords, which would deter further investment and push up rents for tenants. I ask the hon. Member for Erith and Thamesmead to withdraw it.
The hon. Lady outlined how new clause 26 would introduce a requirement for landlords to undertake electrical safety checks. I support measures to help safeguard tenants in their homes, so I will consider it. Any new legislation must strike the right balance, protecting tenants without over-regulating or causing unnecessary burdens for landlords. I remind hon. Members of all parties that landlords are already under a general legal duty to ensure that electrical installations are safe, but we are committed to creating a strong and professional private rented sector that works for all, where good landlords can prosper and tenants are protected.
We will carry out further work to understand what legislative amendments for undertaking electrical safety checks, if any, would be beneficial and appropriate to the private rented sector, and ensure that they do not harm the sector by stifling it with red tape. With that assurance, I hope that the hon. Lady will not press the new clause.
Teresa Pearce
I thank the Minister for his response. On the point about late tabling, the reason why the new clauses were tabled when they were is that I did not have time to table them. Knives were put in that I did not expect. I apologise for the fact that they are at the end of the Bill.
Brandon Lewis
I am just wondering what the hon. Lady means by unexpected knives. We have gone late some nights and moved things around to suit the Opposition, so I am not quite sure what she is referring to.
Teresa Pearce
Because the Minister at the time seemed to understand that we had moved further on the Bill than the Opposition expected, he accepted starred amendments, for which I thank him. I was trying to point out that we did not deliberately put the new clauses at the end of the Bill; it was because we moved much more swiftly through the Bill than I had expected. That was my explanation.
On new clause 25, I understand what the Minister says about existing ways for tenants to get in touch with their local authority and get it to come inspect a property, but one problem is that there are so few people working in local authority departments at the moment who can carry out such checks that often it is a feeble hope that somebody will come inspect a property. When we considered banning orders and fines, I hoped that the fines could be ring-fenced to employ people to go out and do that work. I hope that the Government will take that on board as a possibility.
On new clause 26, I am heartened by what the Minister has said. I am pleased that he will consider it. I think that there is consensus across all parties that it would be a good thing to do. On that basis, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 27
Description of HMOs
“(1) The Licensing of Houses in Multiple Occupation (Prescribed Descriptions) England Order 2006 is amended as follows.
(2) Clause 3, subsection (2), leave out paragraph (a).
(3) Clause 3, leave out subsection (3)”.—(Teresa Pearce.)
This new clause would remove the three storeys condition from the conditions HMOs must satisfy in order to be of a description prescribed by article 3(1) of the Housing Act 2004.
Brought up, and read the First time.
Teresa Pearce
I beg to move, That the clause be read a Second time.
This is a probing amendment, and it is quite short. I am aware that the Government have published a consultation on houses in multiple occupation, and I was pleased to see it. HMOs come in a variety of forms. In the past, they were accommodation mainly for students, or for lots of single people, and they were basically tenement buildings, but increasingly in crowded cities, HMOs can be just a three-bedroom semi or similar building.
In my street, there is a bungalow that is an HMO, with about 10 people living in it, but because it does not have three storeys it does not fall within the definition of an HMO. That means many people living in HMOs and bed and breakfasts now have a better standard of safety than people who live in a private rented property that is clearly an HMO by every other definition, but not under the current definition because it has only one or two storeys, not three.
I am sure the Minister will say he needs to wait for the consultation to end, but I hope he will agree that the HMO sector needs revisiting. I would like to hear a little more about why the consultation has gone out now and what his intentions are for changes to the management and licensing of HMOs.
Brandon Lewis
The hon. Lady is right; there is a technical consultation out at the moment. We recognise that not all local authorities have made additional licensing schemes. It is well known that some of the worst management standards, living conditions, disrepair and overcrowding in the sector are found in smaller HMOs, which is why we issued the technical discussion paper. We wanted to seek views on whether mandatory licensing should be extended to smaller HMOs. The closing date for those responses is 18 December. I do not want to pre-empt at this stage how the proposals will be taken forward; I want to wait and get the final remarks from the consultation.
I can assure the hon. Lady and the Committee that the Government are committed to tackling abuse in the HMO market as we are in any other part of the private rented sector. Extending mandatory licensing is an option to achieve that, but I want to fully consider all responses before announcing how I will proceed. I can give the Committee some assurance about how we may do that. Any change to the scope of mandatory licensing can be achieved through secondary legislation. With that assurance, and given our commitment to stamping out abuse in the HMO market, I hope the hon. Lady is willing to withdraw her new clause.
Teresa Pearce
I thank the Minister for his response. I am sure we will return to this issue at a later stage, and I look forward to seeing the results of the consultation. On that basis, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 28
Reporting of Housing Benefit Paid
‘(1) Each local housing authority must disclose information quarterly to HMRC regarding any monies paid to landlords through Housing Benefit in accordance with the Social Security Contributions and Benefits Act 1992.
(2) In this section—
“HMRC” means the Commissioners for Her Majesty’s Revenue and Customs;
“local housing authority” has the meaning given by section 1 of the Housing Act 1985”.
This new clause would require local housing authorities to disclose the amount of Housing Benefit paid to landlords to HMRC quarterly.—(Teresa Pearce.)
Brought up, and read the First time.
Teresa Pearce
I beg to move, That the clause be read a Second time.
The new clause is largely a probing one, but it raises an important issue. In many cases up and down the country, someone making a claim for housing benefit has to send in a copy of their lease or tenancy agreement, on which the landlord is named. I would like local authorities and housing benefit departments to ensure there is quarterly or annual reporting to HMRC of the moneys paid when they pay out housing benefit.
The overwhelming majority of landlords pay their taxes in a timely and correct fashion. However, a few choose not to. I have seen evidence of that myself, where tenants have to pay every Sunday, when the landlord comes round and collects the money in cash. That is public money—housing benefit money—but it goes into the landlord’s pocket, and they do not pay any tax on it.
I was so concerned about this issue that I wrote to Lin Homer at Her Majesty’s Revenue and Customs and to HM Treasury. I got a reply from a Minister and Lin Homer, both of whom estimated that the tax gap for letting income could be as high as £500 million a year. Something needs to be done about that, because housing benefit is public money—it is taxpayers’ money, and we should ensure that where it goes to a landlord, it is treated with the respect it deserves.
If HMRC had quarterly or annual reporting of the moneys paid, it would have more information to allow it to track down certain individuals, ensuring that those who are not being proper landlords and acting as decent citizens are caught up with much sooner. At the moment, we all know that HMRC is running on less resources, but it is clear that it wants to tackle tax evasion wherever that occurs. Where someone evades tax on public money they have received, it is even more important that HMRC does that.
Dr Blackman-Woods
My hon. Friend makes a powerful case. The Government want to set up a whole public body to transfer information about tenants’ incomes from landlords to HMRC. Does she agree that this is another thing the body could do? That would be helpful for recouping much-needed money for the taxpayer.
Teresa Pearce
I completely agree with my hon. Friend. We are talking about people who are receiving taxpayers’ money, taking it as income and not paying tax on it. We should do whatever we can to tackle those people, because they are exactly the same group of people who will not be carrying out electrical safety checks on the properties they rent out and who are cramming people into bedrooms that are too small. They are exactly the rogue landlords that this Bill seeks to ban, so we should also be ensuring that they are not profiting from this.
This is a probing new clause to raise the issue for consideration by the Committee. I look forward to the Minister’s response, and I hope that something can be done to ensure that every citizen of this country who gets income pays the right amount of tax on that income.
Mr Jones
The new clause would place an additional requirement on each local authority to collect information about housing benefit paid to landlords and to disclose that information to Her Majesty’s Revenue and Customs on a quarterly basis. Local authorities are already accountable to the Department for Work and Pensions for their housing benefit expenditure as part of the subsidy scheme, which is subject to an annual audit. For claimants in social housing, housing benefit is often paid directly to the landlord, although that is starting to change with the roll-out of universal credit, which pays benefits directly to the claimant in most cases. For claimants in the private rented sector, housing benefit is not, for the most part, paid directly to private landlords but is paid to the claimant, who is then responsible for the rent, so any reporting would only provide a partial picture.
Universal credit, which is replacing housing benefit for working-age claimants, is currently being rolled out across the country and is not administered by local authorities, which means that the proposal would become of diminishing relevance in the medium to short term. On that basis, I urge the hon. Lady to withdraw her motion.
Teresa Pearce
I understand what the Minister says about the roll-out of universal credit but, at present, every local authority has a payroll department and has to make annual reports of payments made outside of the payroll to contractors and people like that. The proposal is not that onerous on councils, but I accept that it might not fix the problem, so I ask the Minister to go away and consider what would fix the problem. There clearly is an issue, and I would like to think that the Government will consider it and try to find some way of ensuring that such people are not avoiding their due taxes. In the spirit of accepting that he may do that, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 29
Accreditation and licensing for private landlords
“Local authorities shall be required to operate an accreditation and licensing scheme for private landlords.”—(Dr Blackman-Woods.)
This amendment would require local authorities in England and Wales to put in place a scheme to license and provide for the accreditation of private sector landlords in their area.
Brought up, and read the First time.
Dr Blackman-Woods
I beg to move, That the clause be read a Second time.
New clause 29 would introduce an accreditation and licensing scheme for private landlords. It is possible to argue that we would not have needed to table so many new clauses to improve the quality of much of our private rented sector and to improve the way in which landlords operate if we had followed the excellent example of some of our devolved Administrations by having a proper register of landlords. I will use the scheme set up and operated by the Scottish Government since 2006 as an example. That register is extremely straightforward. Anyone who owns residential property in Scotland that is let must apply to register with the local authority for the area in which the property is located unless the property is covered by one of the exemptions. It is the owner of the property who must register, and in some cases that may not be the landlord who has the letting agreement, but they must declare that information. The scheme is very straightforward, and it is operated online. The exemptions are very clear and it is the property that is exempt from registration: it is the only or main residence of the landlord; there are not more than two lodgers; it is let under an agricultural tenancy; it is let under a crofting tenancy; it is used for holiday lets; it is regulated by the Care Commission; it is owned by a religious organisation; it is occupied only by members of a religious order; or it is let to members of the landlord’s family. We can see that those are very sensible and straightforward exemptions.
Dr Blackman-Woods
As I suggested earlier to the Minister, this new clause is very much about getting further clarity from him about the extent of land, and the purpose, that could be behind permission in principle. It appears that it goes beyond housing and the Minister has helpfully clarified that this afternoon. On that basis, I beg to ask leave to withdraw the new clause.
Clause, by leave, withdrawn.
New Clause 34
Extension of the Housing Ombudsman to cover the Private Rented Sector
“(1) The Secretary of State shall by regulations introduce a scheme to extend the Housing Ombudsman Scheme, as set out in section 51 and Schedule 2 of the Housing Act 1996, to cover disputes between tenants and private landlords in the Greater London Authority.
(2) The scheme under subsection (1) shall—
(a) last at least one year and no longer than two years; and
(b) come into effect within 6 months of this Act receiving Royal Assent.
(3) The Secretary of State shall lay before each House of Parliament a report of the scheme under subsection (1) alongside any statement he thinks appropriate, within 3 months of the closing date of the scheme.
(4) The Secretary of State may by regulations extend the powers of the Housing Ombudsman Scheme as set out in section 51 and Schedule 2 of the Housing Act 1996, to cover disputes between tenants and private landlords nationwide.”—(Teresa Pearce.)
This new clause would give the Secretary of State the power to introduce a pilot scheme which would see the Housing Ombudsman extend its cover in London to private sector housing and disputes between tenants and private landlords, to require that the Secretary of State reports on the pilot scheme, and to give the Secretary of State power through regulations to extend the Housing Ombudsman to cover private sector housing and disputes between tenants and private landlords nationwide.
Teresa Pearce
I beg to move, That the clause be read a Second time.
The new clause would give the Secretary of State power to introduce a pilot scheme that would see the housing ombudsman extend its cover in London to the private sector. That would require a report from the Secretary of State following the pilot, and would give the Secretary of State the ability to extend the powers of the housing ombudsman to the private sector nationwide if that pilot is successful.
In London, the private rented sector is growing and is a significant proportion of the housing market. Extending the ombudsman scheme to cover the private rented sector would be a big change. That is why this new clause proposes a pilot to establish whether such an extension would be worth while.
Most landlords are effective and efficient in letting their property, but disputes between landlords and tenants can and do occur. They could be about a delay in responding to a situation in a flat. Perhaps there could be problems with electrics, gas or heating, or there could be a concern that the property is dangerous. A tenant could be concerned that part of the tenancy agreement or lease has not been upheld. The housing ombudsman is a fantastic independent service that helps to resolve many such complaints and concerns.
The ombudsman considers complaints about how a landlord has responded to reports of a problem, and considers what is fair in all circumstances. The ombudsman does not look at the original problem. For example, it does not decide whether or not a property is damp. What they look at is whether or not the landlord has done what he needs to do in line with the tenancy agreement and the ombudsman’s policies. It helps to defuse disputes by having an independent person look at them.
All local authorities and housing associations must be a member of the ombudsman scheme. At present, private sector landlords can join on a voluntary basis, but not nearly enough of them do so, leaving many tenants in a position where they have nowhere left to turn when things go wrong.
In total, 87% of cases referred to the housing ombudsman were resolved by landlords and tenants with the support of the ombudsman. Many of those landlords and tenants have gone on to build and keep good relations, and they continue to rent from and let to each other.
The measures in the Bill will bring about a decline in social housing, whether it is managed by the local authority or a housing association. As a result, the private rented sector, particularly in London, will increase its share of the housing market. Surely, therefore, it is right to ensure that all tenants across the sector are afforded the same protections and dispute resolution service.
That is why I have tabled new clause 34, which would extend the housing ombudsman scheme as a pilot in London. I hope the Minister will look favourably on it and let me know whether he sees any merit in this scheme. If he does, I hope he will accept the new clause.
Brandon Lewis
Of course, private sector landlords can already join the housing ombudsman scheme on a voluntary basis. Many landlords who wish to assure their tenants of the quality of their services already do so. I suggest that tenants reading Hansard in their quiet moments this weekend might take that on board and ensure that they look for landlords who are members of that scheme and the housing ombudsman scheme, because it sends a clear signal. The Greater London Authority would need to take a view on whether it would be appropriate for the housing ombudsman to expand its role in London, given the linkages with the London rental standards.
I have made it clear that we have absolutely no intention of introducing unnecessary regulation on landlords or a national register of landlords. If the new clause were agreed, all landlords would be required to sign up to the scheme in order for it to work. Despite the excellent work of the housing ombudsman to resolve complaints, membership in the scheme for private landlords should remain voluntary at present, and we encourage private sector landlords to sign up.
Private landlords who have signed up voluntarily are signalling to their tenants that they are committed to a high level of service and can be expected to comply with any determination. Were they to be required to sign up, we would not expect the same level of engagement in the process or the same level of compliance. Indeed, the rogue landlords whom we want to target are the landlords who would ignore and avoid such a measure in the first place. Determinations would not therefore be enforceable, and we could risk increasing costs while tenants of reluctant landlords might not see any benefit. Although we accept and acknowledge the ethos of the hon. Lady’s new clause, I hope she will agree to withdraw it at this stage.
Teresa Pearce
I thank the Minister for his response. Given that in London we have the GLA, I hope that, in conversations with the GLA and the next Mayor of London, whoever that might be, the Minister will press them to publicise the scheme and ensure that private landlords sign up for it. I agree that the rogue landlords that we discussed some weeks ago do not pay their tax or look after their tenants, and are not likely to sign up to the scheme. That is why we asked for a pilot scheme. In the hope that the Minister will take on board what we are trying to do, which is to raise the standard in the sector, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 35
Cover for money received or held by lettings agents in the course of business
“(1) Subject to the provisions of this section, a person may not accept money from any person who seeks residential accommodation which is to let or who has a tenancy of a residential premises, or other right or permission to occupy, in the course of lettings agency work unless there are in force authorised arrangements under which, in the event of his failing to account for such money to the person entitled to it, his liability will be made good by another.
(2) In this section ‘lettings agency work’ has the same meaning as in section 83 of the Enterprise and Regulatory Reform Act 2013 and a ‘lettings agent’ is a person who engages in lettings agency work.
(3) The Secretary of State may by regulations made by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament—
(a) specify any persons or classes of persons to whom subsection (1) does not apply;
(b) specify arrangements which are authorised for the purposes of this section including arrangements to which a enforcement authority nominated for the purpose by the Secretary of State or any other person so nominated is a party;
(c) specify the terms and conditions upon which any payment is to be made under such arrangements and any circumstances in which the right to any such payment may be excluded or modified;
(d) provide that any limit on the amount of any such payment is to be not less than a specified amount; and
(e) require a person providing authorised arrangements covering any person carrying on lettings agency work to issue a certificate in a form specified in the regulations certifying that arrangements complying with the regulations have been made with respect to that person.
(4) Every guarantee entered into by a person who provides authorised arrangements covering a lettings agent shall tenure for the benefit of every person from whom the lettings agent has received a relevant payment as if the guarantee were contained in a contract made by the insurer with every such person.
(5) A ‘relevant payment’ means any sum of money which is received in the circumstances described in subsection (1).”—(Teresa Pearce.)
This new clause would require lettings agents to have Client Money Protection to cover all money received in the course of business.
Brought up, and read the First time.
Teresa Pearce
I beg to move, That the clause be read a Second time.
New clause 35 would require letting agents to have client money protection to cover all money received in the course of their business. Client money protection is an issue of which the sector has been incredibly supportive, and I thank those who have been in touch with me to share their support for the new clause.
It is estimated that letting agents currently hold approximately £2.7 billion in clients’ funds. The figure has been derived from the assumption that letting agents will potentially have a tenant’s deposit and one month’s rent in their client account at any given time, yet if a letting agent is not covered by client money protection, both the landlord and the tenant stand to lose their money. The new clause is designed to protect both parties in the unlikely event that an agent goes into administration or misappropriates the client’s funds. Any losses could be recovered through the scheme. The Bill’s extension of banning orders to letting agents has acknowledged that there are times when letting agents do not act in the best interests of landlords or tenants.
The new clause would provide a type of consumer protection to the financial services industry’s Financial Services Compensation Scheme, but it would be financed by the industry itself. We have a tenancy deposit scheme, which has been influential in ensuring that tenants’ deposits are fairly and securely held, so why are letting agents and the tenants who use them not granted the same protections? The Enterprise and Regulatory Reform Act 2013 already requires all letting and managing agents to be members of a redress scheme. The new clause would simply complement that.
I have spoken about the industry support for the clause. Indeed the Association of Residential Letting Agents believes that
“the client money protection scheme is fundamental for tenants and landlords to ensure that they have peace of mind should an agent go bust or take off with their funds...Last year’s move for all letting agents and property management agents in England to be a member of an approved redress scheme is a welcome step but essentially is only a half measure without a Client Money Protection scheme in place to ensure that, if necessary, we can cover losses for both the landlord and tenants...To not include such an amendment would be a missed opportunity.”
The introduction of a CMP would clearly be a positive step towards enhancing the professional reputation of letting agents across the board and for protecting clients’ money. I hope the Committee and the Minister will consider the new clause and that, in his response, the Minister will indicate whether he is minded to proceed in this direction and ensure that landlords’ and tenants’ money is protected when letting agencies are in administration or make off with the money.
Brandon Lewis
I am aware that there is some support for the new clause in the housing sector, as the hon. Member for Erith and Thamesmead and my hon. Friend the Member for Thirsk and Malton have just outlined, but I am concerned that requiring letting agents to belong to a client money protection scheme at this stage could introduce into the sector significant costs, which would have implications on many levels.
We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation. Requiring agents to pay to belong to a client money protection scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not. Introducing a mandatory client money protection scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation. However, in May 2016 we will review the impact of the transparency measures that were put in place only recently. At that stage, I will take due consideration of whether any further action is needed, and obviously I will take into account the comments made this afternoon. I hope that, with those points in mind, the hon. Lady will withdraw the new clause.
Teresa Pearce
I thank the Minister for his response. When people are handling money that does not belong to them, it is important that it is ring-fenced and safeguarded. For example, solicitors have to keep a completely separate client account, which is audited, because it is not their money. That principle is important with letting agents as well. Nevertheless, I hear what the Minister says and look forward to what may happen in 2016. With that, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 36
Restriction on permitted changes of use
Where the Secretary of State has exercised or exercises his powers conferred by sections 59, 60, 61, 74 or 333(7) of the Town and Country Planning 1990 Act to make an Order in respect of change of use from office buildings (currently Class B1(a) of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (as amended)) to use as dwelling-houses, the Order shall have no effect in respect of any building situated within Greater London as provided in the London Government Act 1963.”—(Mr Gareth Thomas.)
This new clause would exclude from the permitted changes of use provided in a Permitted Development Order made, or to be made, by the Secretary of State changes of use from offices to housing in London. Such changes would require planning permission from the local authority.
Brought up, and read the First time.
Mr Thomas
I beg to move, That the clause be read a Second time.
The new clause would require proposals to change offices in London into homes to go through a planning application process. Greater London has been particularly badly affected by the introduction of permitted development rights for those wanting to convert office accommodation into residential dwellings without seeking planning permission. There is a significant difference between office and residential values, which, combined with the high demand for housing and the scarcity of land, has created big incentives for landlords to convert, without planning permission, viable and occupied offices into homes. London Councils estimates that between May 2013 and April this year, at least 100,000 square feet of office floor space was lost. It argues that one consequence of that had been to drive up office rents in some parts of London, increasing costs for businesses; hon. Members know about all the implications of that.
London Councils has expressed concerns about the impact of the provisions on affordable housing in such developments. Because developers do not have to go through section 106 agreements when offices are converted into flats, there is no requirement to provide any affordable housing. London Councils estimates that some 16,000 new dwellings have avoided the full planning process and, as a result, many affordable homes that could have been built, had a planning application been required, have not been built. The LGA and London Councils have argued for change, and they support the intent of the new clause.