Private Rented Sector

John Stevenson Excerpts

Wednesday 25th June 2014 Commons Chamber

[Nick Boles]

I entirely apologise—I did not know that that was the practice, and I should have. I assumed that the hon. Gentleman would be here because he is the Chair of the relevant Select Committee. I will write to him straight after the debate to apologise for having referred to him without warning him.

[John Stevenson (Carlisle) (Con)]

I bring to the House’s attention my declaration in the Register of Members’ Financial Interests. Is the Minister surprised that the Opposition’s motion makes no reference to the supply of housing, an increase in which would transform the market for all sectors—privately owned, social housing and private rented?

[Nick Boles]

My hon. Friend is exactly right, and he brought that insight to the Select Committee review that led it to draw such intelligent conclusions. The Select Committee’s approach is the right one. It is the core of the Government’s strategy, and I would even go so far as to call it a central plank in our long-term economic plan. I therefore urge Members to oppose the motion.

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[Dr Huppert]

I am happy to accept that some places should be looked at more, and I am about to talk about some of the safety issues. The question is whether the council should introduce some sort of accreditation scheme, as Cambridge has, to make sure that HMOs are safe, or ban them. I hope that the hon. Lady would not suggest capping the number of HMOs in her constituency because she knows as well as I do the problems that that would cause for people looking for somewhere to live.

We have problems with safety in the private rented sector. There are far too many unsafe properties. In particular, we have problems with electric fires. There are about 17,000 electric fires in the private rented sector and it seems bizarre that there are no requirements for them to be safety checked. We should introduce such a requirement; it is not excessive red tape, it is a simple safety measure.

We want a fair deal for tenants. One group that we also need to consider is people who rent from private landlords and pay their rent using the local housing allowance. This was touched on earlier. There have been shocking cases of people being told that they cannot rent because they are on benefits. That simply should not be tolerated. We should not let landlords exclude a large number of people who need to find housing.

We have a particular problem in Cambridge. The local housing allowance was introduced by the previous Government with broad rental market areas. One of the problems was that the rent levels for Cambridge were set by averaging places as far afield as Haverhill and Littleport, which are both much further out and have lower rents. It became impossible for anyone to find anything to rent in Cambridge on the LHA amount. My predecessor fought strongly against this when it was set up. It was highlighted by the Work and Pensions Committee, which emphasised the specific problems in Cambridge and Blackpool. Those problems were not fixed. The message that the Labour Government sent to people in Cambridge on benefits was, “You can’t afford to live in Cambridge. Go somewhere else.” They made Cambridge unaffordable and increased rents in places such as Littleport and Haverhill. It was a poor scheme and I am pleased that the Government have finally, after much effort, launched an independent review of the adequacy of LHA levels and increased the levels in Cambridge by 4%—well above inflation. That is a start.

There is agreement across the House that we should make it easier for people to have longer tenancies. The stability is worth while. Some time ago in our policy paper, we in the Liberal Democrats proposed mini-leases, with new fixed-term leases of at least three years after a probationary period.

[John Stevenson]

rose—

[Dr Huppert]

I am sorry; I have given way twice so I am running short of time.

I hope we can go forward and find alternatives, with greater agreement between landlords and tenants, so that people can turn their houses into homes.

Another aspect that concerns me is the status of guarantors. When they rent, many people are told to find a guarantor who will apparently underwrite the cost of their rent. That is discriminatory for people who do not have somebody who has sufficient income to provide such a guarantee. I am aware of cases in Cambridge where people whose parents live in Scotland have been told, rather bizarrely, that a guarantee from somebody in Scotland is not acceptable because it may not be legally binding. I hope the Minister can clarify that that is not the case. There are a number of students from Scotland who should certainly be able to rent places in Cambridge.

Letting agent, fees are a serious issue and make people’s blood boil. I agree with Shelter and many of the 9 million people who rent that fees are out of proportion. That is why I proposed ending any permission to charge above-cost fees. They should not be allowed. I was interested in the proposal from the Opposition, and I voted for an amendment, but for reasons that I do not understand, the Labour amendment specifically excluded any controls on fees that could be charged for credit checks. I hoped to press the shadow Minister on that. It is a great flaw in the Opposition’s proposal as it means that letting agents who do not wish to comply will charge vast amounts for a credit check and shift all the money on to that.

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[John Stevenson (Carlisle) (Con)]

I remind the House of my declaration in the Register of Members’ Financial Interests. I would like to start—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I mentioned earlier that Members should declare interests that are relevant to the debate, so we need to know the details.

[John Stevenson]

I am a landlord, Mr Deputy Speaker.

I will start with two general points on housing policy. First, the United Kingdom has three distinctive housing sectors: home ownership, social housing and the private rented sector. In many respects we have Government policies for each sector. I acknowledge that they are different, but they are often seen in isolation, rather than as part of an overall housing strategy with policies that help all three sectors and create greater consistency and overlap between them.

Secondly, we have housing policies for the whole country. I accept that we need a national framework, but I believe that we need greater flexibility so that different parts of the country can adopt slightly different policies to reflect their particular circumstances. The reality is that we have many different local housing markets, and not just in the private rented sector, but in the social housing sector and, indeed, in home ownership. Compare my constituency of Carlisle with London, for example. Even within Cumbria, the lake district market is incredibly different from that of Carlisle. Prices in London and Carlisle are so different. The social housing requirements in Carlisle are very different from those of Manchester, and the same is true of the private rented sector.

I will turn now to the private rented sector. The Communities and Local Government Committee’s report on the private rented sector states:

“The market is a developing one which we need to help edge its way towards maturity. This requires a careful balancing act which does not upset the market developing naturally.”

It is a balanced report that drew support from both sides of the House. It was endorsed by Opposition and Government Members. It recognised that the market is relatively young and effectively immature, but that it has been and is developing. It acknowledged the rapid growth there has been in the market and the creation of a large number of accidental landlords, which brings its own problems. I commend the report to the House. I am delighted that the Government’s response accepted many of its recommendations.

[Bob Blackman (Harrow East) (Con)]

Does my hon. Friend and Select Committee colleague agree that when we were considering the evidence and constructing the report, we discussed in detail the suggestion that rent controls should be introduced, and our cross-party Committee agreed that they would be a disaster for that emerging market?

[John Stevenson]

I completely agree with my hon. Friend that that was the Committee’s conclusion. We recommended model tenancy agreements—I am delighted that the Government will be introducing them over the summer, after a consultation—a redress scheme and transparency in letting fees.

Addressing the specific issues raised in the motion is remarkably easy. I believe that the Opposition are misguided in their approach to that market. In fact, their motion does not even mention the critical issue: the need for more housing of all types. It mentions stability and certainty, but there is actually a remarkable amount of certainty, combined with a large degree of flexibility. Leases can be for six months, which is the default position, but we often forget that they can be for any length thereafter. It could be five years, 10 years or 18 months; it depends on the relationship between the landlord and tenant and the requirements of both. Indeed, many tenants do not want a three-year tenancy. They might want six months because they are moving into an area to see whether it is the right place for them to live or because they are looking to buy a property or to rent long term.

The same applies to the landlord. The accidental landlord might not want to grant a three-year tenancy. They might want a six-month tenancy, with a view to putting the property on the market afterwards. The existing arrangements create a great deal of flexibility. It is also interesting to note that a large number of tenancies are brought to an end by the tenant, not the landlord.

[Ian Mearns]

As a member of the Education Committee, I often hear head teachers and governors talk about churn, mobility and turbulence in their school populations. A big factor in that churn and turbulence is undoubtedly the existence of a great many short-term, six-month tenancies in the private rented sector, but they are used as a matter of course in many neighbourhoods.

[John Stevenson]

I accept that six-month tenancies are used as a matter of course, and that is a cultural issue that I will touch on in a minute.

The English housing survey notes that the average length of residence for a tenant is 3.8 years and that 66% of tenants are in a property for more than a year. We have heard a lot about rapidly rising rents, but I must confess that I am slightly perplexed. Figures from the Office for National Statistics for the period 2005 to 2014 show that the consumer prices index has risen by 13.3% and rents have risen by 9.5%—12.5% in London. Indeed, tenants who remain in a property often see their rent increase more slowly. I will give a personal example. I mentioned in my declaration of interests that I am a landlord. I have rented out a property to the same tenant for over five years, and during that time the rent has never been increased. Yet the tenancy was not for three years; it has varied from six months initially to a year and then was renewed each year. With regard to letting agents, transparency is the key, not regulation. It is quite right that landlords will look to see their costs being met in a different way. It is transparency we need, not further regulation.

Ultimately, what we want is a vibrant, flexible and competitive private rented sector with quality housing. Therefore, I remind the House of the Select Committee’s key conclusions. First, the present market is broadly working and will continue to develop. Yes, we need a cultural change on the length of tenancies. I think that having six-month tenancies is partly a habit developed by letting agents and landlords, but it has also been influenced by mortgagees, who are reluctant to see tenancies go beyond a year. Secondly, we clearly need much more housing of all types. Thirdly, to improve standards we need proper enforcement by local authorities of the existing laws. We need to allow the market to develop within the existing laws and the recent Government proposals. I believe that that, rather than further regulation and state interference, will lead to a successful private sector market.

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[Lyn Brown]

There is no evidence from Scotland that that has happened. I genuinely believe that people out there who are listening to this debate, many of whom will be experiencing these fees, will not understand the hon. Gentleman’s argument today.

Short-term tenancies are now the norm. Shelter’s mystery shopping of letting agents found that 29 out of 30 of them told landlords that they would offer the property on only a six or 12-month assured shorthold tenancy. As a result, 30% of private renters worry about their landlord or letting agent ending the contract before they are ready, and two-thirds would like to have the option to stay in their tenancy longer if they wanted to.

Living in uncertainty and being forced to move on regularly is not just a nuisance and expensive; it has other costs, too. Families are unable to settle or put down roots, and, as my hon. Friends the Members for Islington North (Jeremy Corbyn) and for Hyndburn (Graham Jones) reminded us, children often have to change schools a number of times or face long journeys and they lose any friends they make. They are rootless and their education faces massive disruption. These are the families who are not on doctors’ lists and not accessing preventive health care; it is members of these families who are turning up at A and E and being diagnosed with stage four cancers.

We have heard that families in the private rented sector are nine times more likely to move than those who live in other tenures—and often forcibly through eviction, as movingly described by my hon. Friend the Member for Hayes and Harlington (John McDonnell). That is why Labour has set out our proposals to legislate for longer-term tenancies. As my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) rightly said, Labour’s proposals to make longer-term tenancies the norm and to set a ceiling on rent increases would give families the support and the security they need to budget.

[John Stevenson]

Providing a three-year tenancy may be great for the tenant, but what about the landlord, particularly the accidental landlord, who does not want to have to give away a three-year tenancy?

[Lyn Brown]

I am not sure that the hon. Gentleman was in his place when my hon. Friend the Member for Wolverhampton North East answered that question. She talked about how we need to ensure that there are protections in place for the short-term landlord. Believe me, I have a quarter share in a property, so I understand what it is to be an accidental landlord.

Lack of security of tenure means that tenants in the private rented sector feel less able to complain about poor standards. A third of these homes are “non-decent”, and we heard from my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) the story of Cathleen who lost her home after complaining about its poor condition. I want to talk about some of the conditions that people experience in my own borough of Newham.

Newham is an area in east London that has seen a startling change in housing tenure over the years, as similarly and ably illustrated by my hon. Friend the Member for Southampton, Test (Dr Whitehead) in respect of his home town. Over the last decade, the private rented sector in Newham has doubled from 20% to 40% of the housing stock, so it now stands at double the national average for England. Labour-led Newham council understood that the unprecedented growth in the largely unregulated private rented sector and increasingly poor housing conditions—not to mention income tax and council tax evasion—meant that something needed to be done. The council listened to the community it serves and showed real leadership by implementing a licensing scheme to tackle those who refused to play by the rules, whose poorly run properties ruin neighbourhoods and blight family lives through unsanitary, squalid, overcrowded and insecure tenancies.

Let me provide just one example of what Newham’s licensing scheme has uncovered. Seven adults and two children living in a small three-bedroom house were paying £2,300 in rent each month. The kitchen window was cracked with sharp edges in places and the bathroom window could not be closed. Fixtures, fittings and appliances were in such poor condition that they presented serious health and safety, fire and electric shock risks—and they did not even have a smoke alarm. Those tenants, afraid of losing their home, felt unable to complain. I am sure that Members will agree that those are terrible conditions for a high and unpredictable rent. High rents, low wages, the shortage of housing supply and insecurity of tenure all exacerbate conditions in which exploitative practices flourish.

I do not think that we have heard anything from the Government today to suggest that they understand that this housing crisis—and it is a crisis—is a major driver of the cost of living pressure on hard-working families. We are building less than half the number of homes that we need to build in order to keep up with demand. That creates conditions in which families can be ripped off by letting agencies, and can find themselves in exploitative, insecure, short-term tenancies, experiencing unpredictable rises in their rent bills. Our families deserve so much better, and I urge Members to vote for those families today. I commend the motion to the House.