Jack Dromey
Main Page: Jack Dromey (Labour - Birmingham, Erdington)Private Rented Sector
Jack Dromey Excerpts(11 years, 3 months ago)
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Jack Dromey (Birmingham, Erdington) (Lab)
I beg to move,
That this House recognises the private rented sector’s growing role in meeting housing need; notes that there are 8.5 million people, including more than one million families with children, now renting privately; recognises there are major implications of the growth in this tenure for families and communities in Britain today; notes with concern the lack of protection afforded to tenants and landlords by the unregulated lettings market and the confusing, inconsistent fees and charges charged by letting and management agents; further notes the lack of stability, security and affordability for families and other renters; further notes the increasing number of complaints about rogue landlords and the poor standards in the sector compared with other tenures; calls on the Government to regulate residential lettings and management agents and to end the confusing, inconsistent charges regime, making fees easily understandable, upfront and comparable across agents; further calls on the Government to promote longer term tenancies where tenants want them; and finally calls on the Government to introduce a national register of landlords and empower local authorities to improve standards and deal with rogue landlords.
The question for debate today is simple: how do we ensure that the private rented sector provides enough homes that are sufficiently stable and secure, affordable and of a decent standard? Nearly 8.5 million people, including more than 1 million families with children, now rent privately. Labour believes that the private rented sector has an important role to play in meeting housing need. As a result of the biggest housing crisis in a generation, more and more people are being locked out of home ownership and are looking to find their homes in the private rented sector.
The housing crisis gets worse by the day. House building is down; new starts are down 9% in the past year alone to fewer than 100,000. Homelessness is up, having risen by more than a third since the general election. People struggle to get mortgages and rents are ever rising in the private rented sector.
Most people dream of owning their own homes and we want them to realise their dream—as we did in government, when more than 1 million more families were able to buy their own homes. However, more people are finding themselves in the private rented sector, and for longer periods than at any time in years gone by.
We want a strong and thriving private rented sector that works for all those people, but the evidence shows that too many tenants are being ripped off by unscrupulous letting agents, lack security in their homes, face ever-increasing and unpredictable rents, and are plagued by rogue landlords and poor standards. We need a private rented sector that protects tenants and landlords from being ripped off by unscrupulous letting agents who do not protect their money and are not clear about the fees that they charge.
Liz Kendall (Leicester West) (Lab)
Last year, I conducted a secret shopper survey of letting agency fees in Leicester West. One agency charged a £125 application fee, a £150 tenancy fee and another £100—I do not know what for—on top of a month’s rent in advance. Does my hon. Friend agree that such huge, unclear and unfair fees must be tackled?
Jack Dromey
My hon. Friend is to be commended on her initiative. On a wider scale, Which? undertook that same kind of mystery shopping initiative, and it demonstrated an enormous variation in charges. For example, the charges for checking a reference vary between £10 and £275. As I will argue later, the opaqueness and the scale of the fees charged is wrong, and that must change.
We need a sector where 1 million families with children have the certainty that the rent will not rise at any time and that their children will not be forced to move school. We need a sector where there is no place for rogues who prey on vulnerable tenants and where every home is a decent home.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
There are many areas in my constituency where I am afraid that private rented housing is not fit. A recent poll by The Guardian suggested that 84% of people wanted landlords to be required to make rented homes decent. How can we ensure that the right of people to live in decent homes with secure, value-for-money tenancies does not risk landlords exiting the market?
Jack Dromey
I will come to that precise point later.
The sad facts are these: 37% of homes in the private rented sector do not meet decent homes standards, and we have a business model that does not work for tenants or for landlords. In no way do we want to promote flight from the private rented sector; on the contrary, we want to transform the private rented sector so that we move in future to a sector of choice that works for landlords and for tenants.
Jeremy Corbyn (Islington North) (Lab)
A third of my constituents live in private rented accommodation. Because of a combination of rapidly rising rents and the new benefit cap, many poorer people are being forced out of my area and out of central London. Does my hon. Friend agree that it is high time that we not only regulated the letting agents and the landlords but dealt with the need for fair rents in this sector?
Jack Dromey
Again, I will come to that point later.
We must move progressively towards more affordable and predictable rents, while recognising that moving to longer-term tenancies is better for the landlord, who has a secure income stream, and better for the tenants, because the evidence is that they pay considerably less.
Mr Andy Slaughter (Hammersmith) (Lab)
Because of benefit caps, including housing benefit caps, almost 1,500 families in my constituency are being forced out of properties in Hammersmith and Fulham. In talking about displacement into the private sector, will my hon. Friend also address the condition of these properties? If the Government are going ahead with their misguided plan to force people out of social housing and out of London in this way, they at least have a duty to see that the condition of the properties they are moving into makes them fit for habitation.
Jack Dromey
My hon. Friend makes a powerful point, not least because £9 billion of housing benefit is paid to landlords in the private rented sector, so we are right to expect decent-quality accommodation in return.
Damian Collins (Folkestone and Hythe) (Con)
Do not local authorities already have powers to enforce measures against private landlords—powers that were given to them by the Housing Act 2004, which was passed by the hon. Gentleman’s party when it was in government?
Jack Dromey
As I will explain later, the use of those licensing powers has been very effective in some local authorities around the country.
Labour is calling on the Government to act now to change the private rented sector so that it works for all: for tenants and for landlords. I read with interest an article—it appeared only today—by the right hon. Member for Rossendale and Darwen (Jake Berry), who is Parliamentary Private Secretary to the former Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps). It is entitled, “The private rented sector is blocking aspiration and isolating families”, and the very first sentence is:
“The private rented sector is no longer fit for the people it now serves.”
That is absolutely right. If there is a growing recognition across the House that that is the case, we welcome it.
We cannot have two nations divided between those who own their own homes and those who rent. That is why Labour is determined to find a one nation solution to the problems associated with private renting. Everyone, whether renting or buying, should have a decent home at a price that they can afford and enjoy security in that home. Thus far, the Government have taken some welcome steps in the right direction, but they have overwhelmingly failed to rise to the challenge now posed in the private rented sector.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I draw attention to my entry in the Register of Members’ Financial Interests. Does my hon. Friend agree that one of the biggest mistakes of the many that the Government made in their first few months was to cancel the register of landlords? The desire to change policy and improve the quality of private rented housing is now much more difficult, because we do not know where all those private landlords are.
Jack Dromey
A national register of landlords will not in itself solve the problems we face, but it could make a significant contribution. I will address that in greater detail later.
Never has action been more badly needed than now. Millions of families up and down the country are living through the biggest squeeze on living standards in a generation.
Jack Dromey
I want to make some progress, but I will gladly give way later.
Families are reeling from the latest waves of energy price hikes and facing ever-greater bills to renew their rail season tickets, and now millions face living in the most insecure of all housing tenures—the private rented sector.
Jake Berry (Rossendale and Darwen) (Con)
I thank the hon. Gentleman for referencing my article, which is on The Spectator’s “Coffee House” and for promoting me to the position of right hon. Gentleman. I agree that we need to increase security of tenure for those in private rented houses. What specific changes referenced in my article would he make to the Housing Act 1988 to ensure further security for PRS tenants?
Jack Dromey
I will come later to the precise point of how to move to longer-term tenancies by linking them, for example, to indexed rents.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Will my hon. Friend give way?
Jack Dromey
I would like to make some progress.
On the problems facing both landlords and tenants, a landlord from Yorkshire who wrote to me about his letting agent told me that the agent planned to charge his tenants—a young couple—£400 just to renew their tenancy agreement, and planned to charge him £100. That is £500 for a 15-minute job. The landlord said that the tenants could not afford to renew and he was in danger of losing the tenancy. As he put it, this is an example
“of the rip off charges that these agencies charge and the further pressure that this then puts on the housing market in these tough economic times.”
This is not just about the fees that letting agents charge; many of them are entirely unregulated and provide no protections to their customers, whether they be tenants or landlords. More than 4,000 managing and letting agents are entirely unregulated. It is possible to set up a letting agency with no qualifications whatsoever. There are no requirements on their conduct or safeguards for the consumer and, unlike estate agents, there is no need to register with a redress scheme whereby awards can be made against agents for financial loss to clients. In other words, letting agents operate in the property market’s “wild west”, as the Royal Institute of Chartered Surveyors puts it so well.
The RICS are not the only chartered surveyors who back the regulation of letting and management agents. The Minister for Housing tabled an amendment to a Bill in 2007 on behalf of the then Conservative Opposition, to regulate what he called
“an industry that now handles over £12 billion of people’s money annually and yet, ironically, it is an industry that is without…redress”.
He argued that, as a Conservative, he was
“instinctively cautious about arguing for more regulation. However, as a chartered surveyor and a constituency Member of Parliament, I know that we need to put lettings on the same regulatory footing as sales.”––[Official Report, Consumers, Estate Agents and Redress Public Bill Committee, 24 April 2007; c. 190-192.]
I agree with him. Does he agree with himself, or does he agree with his predecessor, the right hon. Member for Welwyn Hatfield, who scrapped such proposals? Surely multiple identities are not a prerequisite for the position of Housing Minister.
The Minister for Housing (Mr Mark Prisk)
That final comment was slightly laboured. I did table a probing amendment—as all good Opposition spokesmen do—but will the hon. Gentleman explain why the Labour Government refused to act on it?
Jack Dromey
I welcome the hon. Member’s support, which I presume will read across into supporting the Opposition motion before the House today.
Regulating letting agents would protect tenants and landlords, and raise the reputation of an industry that Which? recently ranked second from bottom across 50 consumer markets. The Opposition hope that the Government will support the proposals and back our motion today, not least because the proposals have the support of the entire sector—the Association of Residential Letting Agents, the National Landlords Association and the British Property Federation. We also hope that the Government will recognise that the private rented sector simply does not provide the 1 million families with children, and other tenants in the sector, with the stability and security they need.
Andy Sawford
Is my right hon. Friend aware of a recent study by Crisis which shows that instability is a growing problem because of the Government’s cuts to housing benefit? It showed that three quarters of people are finding it much more difficult to find affordable accommodation, and there is a particular problem in Corby and east Northamptonshire—and across the country—for under-35-year-olds on the shared accommodation rate.
Jack Dromey
My hon. Friend is absolutely right and there will be an increasingly serious impact on many people in our constituencies as a result of the Government’s benefit and welfare changes.
Jack Dromey
I will make a bit more progress and then I will gladly give way to both hon. Members.
On security and stability, the private rented sector gives a legal minimum of just six months before the landlord can evict a family, and they can raise the rent by any amount with two months’ notice. We recognise that there are tenants who value the flexibility offered by that form of tenure, and we believe that such flexibility should remain for those who want it. However, the greater number of families with children who find themselves living in the private rented sector, either through choice or circumstance, must be able to enjoy longer-term tenancies so that they can plan where they send their children to school.
In 2011, families with children in the private rented sector were 11 times more likely to have to move than if they owned their own home. There are real costs of such insecurity and instability to children and young people because insecurity holds them back at school. Evidence shows a troubling gap in attainment between children from families who move home at short notice and those who do not. There are real costs to tenants who pay fees when moving home, from administration costs to deposits, often running into thousands of pounds. There are costs to the communities concerned where the bonds that tie us together are weakening.
However, this is not just about tenants, families and communities; the system does not work for landlords either. A report by Jones Lang LaSalle, a respected estate agent services and investment management company, has shown that landlords’ returns and business models are enhanced by longer-term tenancies linked to index rents. The case for longer-term tenancies and predictable rents is clear: it offers landlords secure returns, and tenants who need it—particularly the million-plus families with children—the security they deserve.
Chris Ruane (Vale of Clwyd) (Lab)
The three great stresses are death, divorce and moving house. If children and young families are moving every six months, what type of stress does my hon. Friend think that is putting on those families and communities?
Jack Dromey
My hon. Friend is right. The disturbing evidence of the impact on educational attainment is associated with disturbing evidence that bad and overcrowded housing—sadly, 37% of the private sector is precisely that—has a serious impact on the GCSE results of children and therefore their lifelong earnings potential.
Mark Pawsey (Rugby) (Con)
On the length of tenancies, does the hon. Gentleman agree that there is nothing to stop landlords and tenants agreeing longer terms? There is an institutional problem. People assume that the terms need to be six months or a year, but if we can make more people aware of the legislation, landlords and tenants should be able to agree longer terms.
Jack Dromey
I agree that there is an institutional barrier, but there is an absurdly short-termist culture in the private rented sector. In fairness, landlords face problems, including, for example, buy-to-let mortgages that insist that tenancies cannot be longer than a year. The question is how we achieve the security and predictability of affordable rents that I have described.
Jake Berry
I should take this opportunity to draw Members’ attention to my declaration of interests—I should have done so in my previous intervention. What change in the law does the hon. Gentleman propose? I accept there is a problem with the banks, which I will address in my speech, but what change in the Housing Act 1988 does he propose?
Jack Dromey
No doubt the hon. Gentleman eagerly read all the Opposition’s proposals in the policy document we published in December. We have said that we will consider—including through a dialogue with the entire sector—a combination of incentives, including, for example, tax incentives. Landlords are vociferous about the impact of—dare I say it—direct payment. On the other hand, we will consider whether we need a change by way of statute. However, our direction of travel is absolutely clear. Those 1.1 million families must have the ability to count on longer-term tenancies, which they need and want. I hope the next stage is for the Government to engage with the Opposition on how we can achieve that necessary change.
Jake Berry
I thank the hon. Gentleman for clarifying his position. Does he therefore agree that no change in the law whatever is required, and that we instead need a change in the culture of letting? Does he also agree that it would be more responsible to talk about working with landlords to try to change that culture rather than about burdening them with new regulation?
Jack Dromey
We are working with landlords. For example, the first thing the Opposition did was work with landlords, letting agents, the British Property Federation and a range of others on the regulation of letting agents. As one, they supported the Labour party proposal for regulation. We are moving forward in dialogue, but we must send an unmistakable message on the destination we must reach. It is then a question of how best we reach it. I hope hon. Members on both sides of the House agree on the destination.
Jack Dromey
I will make further progress if I can.
If it is true that the majority of private landlords are responsible and treat their tenants well, it is also true that too many rogue landlords undermine responsible landlords and prey on vulnerable tenants. The small but dangerous minority of rogue landlords make people’s lives a misery. They condemn their tenants to living in run-down, unsafe or overcrowded properties, and they intimidate those who speak out and threaten them with evictions.
Despite an increase in the number of prosecutions against such landlords, the problem is getting worse. We could consider, for example, the health care assistant paying £350 a month for the pleasure of living in a shed in Newham; those found living in a walk-in freezer in Newham; or the landlord in Welwyn Hatfield who subjected his tenants to unsafe and potentially lethal living conditions, blocking the fire escapes and removing smoke detectors, and blackmailing his tenants to take the blame for the conditions in the house.
Lyn Brown
I am grateful to my hon. Friend for citing two examples from Newham. In Newham, the private rented sector’s annual turnover is estimated to be approximately £300 million, and yet we had 12 men sharing a flat whose only source of water was a single sink for washing, cleaning and cooking; two people sleeping in a commercial freezer; and, worst of all, 38 people, including 16 children, living in one family-sized home. All were paying rent to a landlord who was profiting from the fact that these people felt they had nowhere else to go.
Jack Dromey
My hon. Friend is exactly right. The evidence is that in excess of 40% of people in Newham might soon be living in the private rented sector. I commend Newham council and the admirable leadership by its mayor, Sir Robin Wales, for introducing a licensing scheme, initially in Little Ilford and then borough-wide, and, as a consequence of effective local enforcement action and the licensing arrangements, uncovering, exposing and tackling problems of appalling abuse.
Luciana Berger
I thank my hon. Friend for kindly giving way; he is being very generous with his time. He is rightly highlighting some of the terrible conditions in the private rented sector in which some of our constituents live. He will know that the private rented sector has some of the most energy inefficient properties. and that people who rent spend the most on their electricity and gas bills, paying for heat that escapes out of their properties rather than keeping them warm. Does he therefore share my disappointment that the Government did not take the opportunity, in the Energy Act 2011, to introduce a minimum efficiency standard in the private rented sector? Instead, from 2018, they are insisting that landlords must introduce a green deal package, but that will not necessarily lift the property above an F or G rating.
Jack Dromey
My hon. Friend is right. What we need is a decent homes standard that extends across all homes for rent, public and private, and includes energy efficiency.
A survey carried out by Shelter found that complaints against landlords increased by 27% in the past three years, rising to more than 85,000 last year. These are not minor matters: 62% of those complaints are related to serious and life-threatening hazards, such as dangerous gas and electrics, and severe damp.
Damian Collins
I, too, draw the attention of the House to my declaration in the Register of Members’ Financial Interests. On the point I made earlier, local authorities have the power in law to take action against rogue landlords who leave their properties in such a state, including putting the property right themselves and billing the landlord for the work. Why are more councils not doing this?
Jack Dromey
They can if they know who those people are and where they live. One of the values of a national register is precisely that it is a light-touch, non-bureaucratic, simple obligation that just asks landlords what their contact details are and what premises they own.
Rosie Cooper
During the course of my casework I have come across a seriously unscrupulous agent called Lancashire Lettings Agency. It has an appalling record that is well known to Lancashire county council’s trading standards and various other agencies. The Lancashire Lettings Agency continues to operate in this era of well-intentioned voluntary arrangements. It has a history of charging people £200 to do a credit check, and my hon. Friend will not be surprised to learn that people fail that credit check and lose their £200. Does he agree that it is time for action to better protect the often desperate people who are searching for a home from these kinds of agencies, and that only action will make a difference?
Jack Dromey
My hon. Friend is exactly right. That is why the Association of Residential Letting Agents, which represents letting agents, has been one of the most vociferous advocates of letting agent regulation, supported by the National Landlords Association, the Residential Landlords Association and the British Property Federation. There is a universal agreement in the sector that the time has come to regulate letting agents, so that in the future we do not have the practices of the past that she has detailed so graphically.
Jack Dromey
I am anxious for as many speakers as possible to contribute to the debate, so I want to start bringing my remarks to a conclusion.
There can be no place in future for rogue landlords. The time has come to drive them out, but the problem is not simply criminal landlords. There are also a large number of amateur landlords, who—through having inherited a property, for example—are often accidental landlords. Often well-meaning, many are unaware of their rights and responsibilities when letting out a property as a home for another. A recently publicised case illustrated the severity of the issue. It involved a young mother of two, just 33 years of age, who had made her dream move to a private rented home in Cornwall. Six days later she was found dead by her young daughter, electrocuted because of a faulty heater. The electricity had not been inspected since 1981, when the house was rewired.
Sadly, this is no surprise because, as I have said, 37% of homes in the private rented sector do not meet the decent homes standard—a greater proportion of the total stock than in any other sector. Nearly 15% of private rented homes lack minimal heat in the winter. Imagine, Mr Deputy Speaker, being unable to heat your home in this weather for even minimal warmth.
Jack Dromey
I am moving to a conclusion.
Poor housing has wider costs, including to the taxpayer. The annual cost of poor housing to our national health service is up to £2.5 billion. Labour wants a strong private rented sector—vibrant and diverse, helping to meet the nation’s housing need—but the nation does not need a sector in which landlords and tenants are hit with rip-off fees and charges by unscrupulous letting agents. The nation does not need a sector in which families do not have access to longer-term tenancies and predictable rents, leaving them feeling insecure and unable to plan their lives. The nation does not need a sector in which there are rogue landlords preying on vulnerable tenants and, in the worst cases, risking their lives. We cannot have two nations, divided between those who own their own homes and those who rent.
We therefore call on the Government to regulate letting and management agents to ensure that tenants, landlords and the reputations of reputable agents are protected—regulation that, I stress again, is supported by the entire sector and industry. We call on the Government to end the confusing, inconsistent and opaque fees and charges imposed by letting agents and ensure transparency and comparability. We call on the Government to introduce a light-touch national register of landlords and to grant local authorities greater powers to root out and strike off rogue landlords who are found to have broken the rules, in particular by way of criminal behaviour, so assisting more councils, including leading Labour local authorities such as Newham, as we have heard, Oxford, Blackpool and now Liverpool, which are already using the powers granted to them by the last Labour Government, to tackle some of the most appalling abuse by some of the worst landlords in England.
We call on the Government to take action to ensure that families and tenants who want longer-term tenancies are able to enjoy them, providing flexibility for those who want it and security for those who need it—a very different model of the private rented sector for the future; a sector of choice in the 21st century, like in many continental European countries. We call on the Government to back our motion today. I commend the motion to the House.
Jack Dromey
The Minister is citing the impact study produced at the time we made those proposals, but he fails to talk about the benefits that would accrue to the sector, which the study asserted would be up to £1 billion.
On the nature of the sector, the overwhelming majority of landlords are small landlords, and it would take them a matter of minutes to register who they are and the properties they own. Such a register would enable Government and local government to communicate with landlords about changes to the law or entitlements. Crucially, it would enable tenants to check that their landlord was registered and it would help local enforcement. With a licensing scheme or environmental health enforcement, if action is taken against a landlord who is found guilty of serious criminal behaviour, that landlord would no longer be registered, and rightly so.
Mr Prisk
We heard some details there, the most interesting of which was the admission that there would be a new cost of at least £300 million—all hon. Members will note that. Instead of having a national register that has the danger of being both toothless and highly expensive, we believe that enforcement can be closely focused and robustly applied using existing laws. We have heard about how local authorities have a number of powers to tackle these landlords, and I will give the hon. Gentleman a couple of examples.
In Southwark, 12 people were crammed into a flat above a café that had no fire protection and where the cooker was at the top of the only staircase out. Southwark council has used its powers, issued an emergency prohibition order, stopped the use of the flat as residential accommodation and brought in social services. In a similar case in Epsom and Ewell, someone was getting six tenants into an unsafe property, where he did not have the appropriate arrangements. He got a £20,000 fine and rightly so. I say to the hon. Gentleman that a national register sounds easy and simple, but he baulked at the thought last time around when in government—or his colleagues did. If we are really going to crack down on the rogues, we need to use the laws we have before trying to pass new legislation.