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Determining A Rent By Rent Assessment Committee

Volume 130: debated on Tuesday 29 March 1988

The text on this page has been created from Hansard archive content, it may contain typographical errors.

'— (1) A tenant may, at any time, irrespective of any existing rent agreement between himself and the landlord refer the rent of his home for assessment by a rent assessment committee and the committee shall determine the rent at which the committee consider that the house might reasonably be let to the individual tenant concerned.

(2) In making a determination under this section the committee shall have regard to:

  • (a) The amount of rent which the tenant can reasonably afford to pay
  • (b) The suitability of the house concerned to the requirements of the tenant and any members of his family.'.—[Mr. Home Robertson.]
  • Brought up, and read the First time.

    With this it will be convenient to take the following: New clause 6—

    Prohibition of premiums for assured tenancies

    'It shall be unlawful for any premium to be charged to a tenant for the creation of an assured tenancy, except that a deposit not exceeding one month's rent may be charged.'.

    New clause 16— Application to rent officer by local authority

    In Part V of the Rent (Scotland) Act 1984, after section 46 there shall be inserted the following section:

    "Application to Rent Officer by Local Authority.

  • 46A. — (1) A local authority may apply to the rent officer for consideration of fair rent for any dwelling-house within their area for which a rent may be or has been registered under this Part of this Act.
  • (2) If on the application the rent officer is satisfied that the rent, or the highest rent, payable for the dwelling-house under any lease or agreement exceeds what in his opinion is a fair rent, he shall register a rent for the dwelling-house.
  • (3) The rent officer may under subsection (2) above take account of the rent payable under any lease or agreement whether or not that exceeds the recoverable rent and whether or not the lease or agreement has taken effect.
  • (4) Where a rent for a dwelling-house has been registered under this Part of this Act, no application under this section shall be entertained before the expiry of three years from the relevant date (as defined in section 46(5) of this Act) except on the ground that, since that date, there has been such a change in the condition of the dwelling-house (including the making of any improvement therein), the terms of the tenancy, the quantity, quality or condition of any furniture provided for use under the tenancy (excluding any deterioration in that furniture due to fair wear and tear) or any other circumstances taken into consideration when the rent was registered or confirmed as to make the registered rent no longer a fair rent.
  • (5) For the purposes of section 46(5) of this Act, a case where the rent officer does not register a rent on an application under this section shall not be treated as a confirmation of any rent already registered.".'.
  • Amendment No. 1, in page 15, line 16, leave out clause 25.

    This new clause enables the House to move on from its consideration of the needs for housing and the condition of housing in Scotland to the question of the likely spectacular increase in rent levels that will be generated if the Government are successful in imposing the new system of so-called assured tenancies in a supposedly increasing private rented sector in Scotland. Frankly, we doubt whether there will be the spectacular increase in private renting on which the Government are evidently pinning their hopes. However, tenants who are enticed into that form of tenure could find themselves in serious difficulties, and the House should dwell on that for a moment.

    The assured tenancy system is designed to promote the interests of private landlords and to undermine the rights of tenants in Scotland. Nowhere is that more evident than in rents. The concept of fair rents is being jettisoned by the Government in favour of the law of the jungle and a free market approach to rents in the private sector in Scotland. In that context, it is important to emphasise the fact that for the foreseeable future housing in Scotland is likely to be a seller's market, certainly in connection with rented housing. The drastic cutback in local authority new building and the continuing erosion of existing local authority stock is contributing to a slow-down in the turnover of local authority housing in Scotland, whatever the Minister may try to say on the subject. That means that waiting lists are getting longer and things are bound to get worse.

    We know that there are already as many as 200,000 people stuck on housing waiting lists in Scotland. There may be some duplication in that figure, but that is the number of outstanding applications for houses being held by local authorities in Scotland at present. Another connected figure is the depressing and distressing statistic that 1·25 million people in Scotland are living in overcrowded accommodation.

    In circumstances such as those, people are obviously desperate to obtain homes. Anybody is bound to be desperate for a house for himself and his family, and it is not surprising that some people take serious risks in order to secure a house. In that connection, I have noticed a disturbing increase in the number of mortgage defaults, and that is a symptom of the problem.

    There must be a significant number of people who, finding themselves stuck for years on end on waiting lists for district council houses, recognise that one way out of that problem is to get a mortgage and buy a house. They look at the Barratt show houses and are taken in by the soft sell. They manage to secure a mortgage and move into a house. So far, so good. However, it takes only a minor change in circumstances, such as someone losing his job or becoming ill or any other change in a family, to mean that the household can no longer afford to keep up the mortgage repayments. People face the prospect of having their homes repossessed and as a result finding themselves homeless.

    That is happening in Scotland today as a result of the Government's obsession with the promotion of owner-occupation. A significant number of people being allocated local authority houses under the homeless persons procedure at present come from the private sector because they are mortgage defaulters. Other people stuck on the local authority housing waiting lists see that as queue-jumping and that is causing considerable ill-feeling.

    8.30 pm

    Any landlord who can offer a house to let in most areas in Scotland will be able to depend on fierce competition to rent it. There will be a buoyant market for rents as prospective tenants try to outbid each other in the hope of obtaining a home for themselves and their families. That is the kind of market that the Government are trying to stoke up. One does not need to be terribly clever to understand the pressures that that will cause as people who cannot afford high rents find themselves facing high rents and other inducements as they try to secure housing for their families. That situation is wide open to abuse by unscrupulous landlords. It is shamefully irresponsible of the Government to undermine rent controls to the extent proposed in the legislation.

    In passing, it is relevant to refer to the new restrictions on housing benefit which will come into effect next month. They will cause severe difficulties for people who depend on them as a source of cash to pay their rents. I am indebted to Edinburgh city council for making available the results of a survey that it carried out in the city of Edinburgh into the effects of the social security changes on housing benefit. I understand that nearly 2,000 claimants who currently receive housing benefit in Edinburgh will lose that completely. They will receive no housing benefit after the changes come into effect. In addition, another 17,000 claimants will see a significant reduction in the amount of benefit that they receive under the housing benefit system. In total there will be 19,000 losers under the new regime of housing benefit in Edinburgh alone. On average, each claimant will lose £6·42 a week. That gives us an idea of the kind of squeeze that will be imposed on people claiming housing benefit.

    The city of Edinburgh will lose £6·8 million in housing benefit. No doubt there will be similar figures of loss in other cities of Scotland. People must be protected in those circumstances, and there is no sign of that protection in the housing benefit system or in this legislation. On the contrary, the Government are deliberately seeking to stoke up rents in Scotland.

    New clause 5 would enable a tenant to refer the rent to the rent assessment committee, which would be able to consider all relevant circumstances in determining and enforcing a reasonable and affordable rent for the sake of the household and tenant concerned.

    New clause 6 would deal with the likely abuse of the principle of key money or premiums whereby a landlord might require a payment from a prospective tenant to secure a lease. That is a fundamentally corrupt and unjust practice, which most of us hoped had been stamped out of the Scottish housing scene a long time ago. Inevitably, that practice would be encouraged under this pernicious new regime of so-called assured tenancies which the Government are heralding in the legislation. That practice should be outlawed, and we have tabled new clause 6 to give effect to that.

    I am not surprised that the Minister is totally isolated and all alone on the Conservative Benches tonight. We have the spectacle of the Parliamentary Under-Secretary of State for Scotland without a single Conservative Back Bencher in sight. The only other Member on the Government Bench is the indefatigable hon. Member for Penrith and the Border (Mr. Maclean), an Assistant Government Whip, who does not even represent a Scottish constituency. The Minister alone is facing the music for what he is doing to Scottish tenants.

    I am not surprised that the Minister's hon. Friends are embarrassed by the legislation. I invite the Minister to put something on the record about the extent to which he envisages that rents in Scotland will rise as a result of the legislation. Is he prepared to do anything about that, or is he not in the least bit concerned about the hardship that the legislation will inevitably create for many tenants in Scotland?

    I fully support all that my hon. Friend the Member for East Lothian (Mr. Home Robertson) has said about new clauses 5 and 6. I want principally to refer to new clause 16, which is being considered with the other new clauses. New clause 16 stands in my name.

    New clause 16 deals with a long-standing scandal of outrageous rents being levied by landlords on slum properties, many of which are in Glasgow. However, the problem is not restricted to Glasgow. The rents are typically imposed on tenants who are unemployed or otherwise receiving DHSS benefits. The scandalously high rents have therefore been paid straight from the public purse by the DHSS, sometimes direct to the slum landlord.

    The scandal was exposed some years ago by the Glasgow Evening Times in relation to particular landlords in Glasgow, one of whom I shall refer to shortly. At that time some of my colleagues from Glasgow constituencies and I pressed the Government to take action to stop this outrageous behaviour, which was an imposition and hardship on the tenants because they were often subjected to harassment and intimidation. It was also an imposition on the public purse. As I have said, the money to pay for the rents came from the Government through the DHSS.

    At the same time the Government refused to take any action, although the scandal was well documented. There was no excuse on the Government's part for saying that they did not realise the problem. Mr. Michael Ancram dealt with the problem from the Scottish Office at the time.

    The Government refused to take action. They said that the tenants could always apply to the rent officers for a reduction in rents, but that was completely unrealistic, for several reasons. First, there was no financial incentive on the tenants to apply through the fair rent procedure, because they were not paying the rents. The rents were being paid by the DHSS. Incidentally, the rents charged for unemployed tenants were several times higher than those applied by the same landlords to tenants in similar slum properties who were not unemployed. The people receiving the worst rents had no financial incentive to apply to the rent officer for a fair rent, because, I repeat, they were not paying the rent. They were also vulnerable in other ways, and in many cases they were subjected to harassment and intimidation.

    I produced a private Member's Bill in 1985 to do what new clause 16 would do if it was accepted by the House, as I hope it will be. My Bill would have given power to the local authority in those circumstances to apply to the rent officer. It did not take power out of the hands of the tenant, because none of his powers would be reduced. It gave additional power to the local authorities in those cases to apply to the rent officer for the establishment of a fair rent. The local authorities supported that. It granted to Scotland a provision that existed, and as far as I know still exists, in the corresponding rents legislation in England. However, the Government blocked the Bill, despite the fact that there was a scandal that was costing the public purse considerable sums of money. That situation has been maintained to the present day.

    I am glad to say that the most notorious landlord involved, a Mr. Barry Solomons, who was responsible for a company called Norman Properties, was eventually caught by the police. He had to be extradited from Florida, where he was living in considerable style on the backs of my unfortunate tenants and at the expense of the DHSS. He was prosecuted, and I am glad to say that just a fortnight or so ago he was convicted and sentenced to four years' imprisonment.

    The verdict and trial vindicated everything that we had been saying right back to 1985, and, indeed, before. This was an outrageous abuse of the system. Reporting the sentence, the Glasgow Herald said:
    "Landlord Barry Solomons made a killing from needy tenants. He rented out slum flats to the penniless and jobless, and made thousands of pounds by fraud."
    He did not only make that money by defrauding the tenants; he was also involved in false claims for mortgages and a number of other criminal activities, for all of which he has now been convicted and sentenced.

    In sentencing Mr. Solomons, Lord Weir said:
    "I hope that lessons have been learned by those who disburse public funds for the benefit of people who cannot support themselves. This case has revealed remarkable gaps in the safeguarding of these funds."
    That is precisely the point that we have made all along and was dealt with in the private Member's Bill that I introduced in 1985 that was blocked by the Government.

    Belatedly, the Government have now noticed that such abuses are going on. However, they seek to deal with them by giving a new power to rent officers in clause 64. I am glad to see that a later amendment seeks to leave out clause 64. This clause gives rent officers powers to determine a rent lower than that being charged where housing benefit or rent allowance is being paid. It does not give powers to reduce the rent; it simply gives powers to reduce the amount of money that goes to the tenant to pay the rent.

    In other words, the abuse has been dealt with, not by getting at the landlords who are responsible for the abuse and are making vast sums of money out of the public purse, but by penalising the tenants even further. Those tenants are either unemployed or on benefit, they are vulnerable and, I repeat, often subject to harassment and intimidation.

    It is scandalous that the Government should be tackling the problem in that way when public money is involved. The Government are constantly lecturing local authorities about not squandering public funds. New clause 16 is, with adjustments, a copy of the equivalent English legislation and would give local authorities the power to step in in those circumstances and have a fair rent determined. This would mean that rents in such cases would be reduced to only a fraction of what they are at the moment. The position will get even worse with assured tenancies. The clause would protect the tenants and the public purse.

    I repeat that it is a scandal that we do not already have such a provision in our legislation. It will be a scandal if the Bill is enacted with the powers contained in clause 64 and the Government fail to tackle the problem at its roots— the problem of unscrupulous and, in some cases, positively crooked landlords abusing and milking the system.

    I am grateful to have the opportunity to speak on these new clauses because they go to the heart of the Government's philosophy in producing the Bill— that is, not just to seek an expansion of private landlords, but to back up the worst type of exploitative aspects of private landlords that we have seen in our history in Scotland. The Bill is an extension of landlords' rights as against tenants' rights.

    I should like to cite a number of examples to back up what my hon. Friend the Member for Glasgow, Govan (Mr. Millan) has said. It is clear that the use of the rent assessment committees is a retrograde step. There is no doubt, from the evidence of Edinburgh, Glasgow and other towns and cities in Scotland that the rent assessment committees are far more harsh and impose far higher rents than the rent officers or, indeed, the local authorities or any objective observer would think to be fair.

    8.45 pm

    In Edinburgh, the advice of housing advice agencies, which are non-political, is that a tenant should not go to the rent assessment committee because it is likely that the rent will be increased to an even higher level than it was thought it would be set originally. Therefore, to use the rent assessment committee is a retrograde step, and it is better to stick with the present rent officer system. That would be consolidated by the Government's acceptance of the new clause this evening.

    The crucial point is the ability of people on low incomes, or without independent incomes, to have their rent met via housing benefit. Another terrible aspect of the Bill is the fact that people who have brought up their children in houses with more than one bedroom—perhaps two or three bedrooms—will suddenly be faced, if the Government get their way this evening, with someone coming along and saying that their housing benefit will not cover that size of house because it is too large or, in the words of the Secretary of State, "too luxurious" for them. That is a retrograde step and will penalise many people in Edinburgh, Glasgow and other parts of Scotland.

    The net impact will be to force people on modest and low incomes, who have their housing benefit restricted by the Government's agents, to dip further into their low incomes to preserve the homes that they have. It is outrageous that the Bill should seek to impose and implement that.

    The Government know that the reason why housing benefit, and, indeed, the DHSS social security budget, has rocketed is nothing to do with the fact that the Government have increased the incomes of people on supplementary or housing benefit, but everything to do with the fact that the Government have driven millions of people into poverty and made them dependent on housing and social security benefits. The way to address that problem is to provide a climate for getting people back to work, not to throw them on the dole and then penalise them for that—[Interruption.] I will happily give way to the hon. Member for Tayside, North (Mr. Walker), who is making comments from a sedentary position, but I do not think that they are worth paying attention to.

    It is vital that we drive out the worst type of exploitative landlords, and that is what our new clause seeks to do. It is vital that we do not encourage them, but that is what the Bill does. We must make sure that we do not go back to the Rachmanism of the 1960s, or, indeed, do anything to consolidate the position which my right hon. Friend the Member for Govan said exists today in Scotland and the United Kingdom where private landlords, who have thrived under the Government for eight years, can not only exploit their tenants, but, in many cases, get away with it. There is no doubt that the sort of prosecutions about which we have been hearing are rare and too few and far between.

    What we need to do, and what we can do by accepting new clause 16, is to ensure that the powers of local authorities to control landlords and drive out the bad ones are consolidated. The Government need to back up local authorities in driving out private landlords of the worst type, but to protect good and responsible landlords of whom there are a fair number. The problem is that good landlords find it hard to compete with bad landlords. They find it hard to provide good conditions for tenants, to carry out repairs and to levy fair rents when they know that bad landlords can exploit the system to make sure that the weakest and most vulnerable groups in our society are exploited to the full.

    We need the Government to provide some determination to ensure that bad landlords are driven out and that local authorities are provided with the resources, the funds and the staff to monitor landlords so that those who provide good services are consolidated. Sadly, the Bill contains precious little to achieve that aim.

    I support the new clause moved by my hon. Friend the Member for East Lothian (Mr. Home Robertson). In Committee, it became evident that the Government had not put a lot of thought into the Bill. Their guiding philosophy was that, by freeing private landlords and thereby removing various benefits which tenants presently enjoy under the Rent (Scotland) Act 1984 and the Housing (Scotland) Act 1987, more housing would come on to the market and the Scottish housing problem, including homelessness and damp houses, would thereby be resolved. As the Committee progressed, it became clear that that was a fallacy.

    The new clauses deal with rent control and the removal from tenants of their present right of access to the rent assessment committee. In Committee, I managed to enumerate a large number of rights that tenants will lose. Tenants will lose the right to a written lease; they will lose the right to attend meetings of local authorities or to send a delegation to that local authority if they are local authority tenants; local authority tenants will lose the right to buy if the Government have their way; they will lose the right to the phasing of rent and to protected or secure tenancies. Tacit relocation, an ancient legal document, was virtually written off in Committee. Tenants will lose protection against eviction; and the right of succession.

    In regard to rent control, a tenant has the right to go to the rent assessment committee, if he or she regards the rent as unfair. If the Bill is enacted, the process of determination of rent will be in the hands of the landlord. The landlord will be able to send a notice to a tenant on one occasion only that he requires an increase in rent. There will be no question of a fair rent; it will simply be an increase in rent.

    It has to be stated as loudly as possible that the Bill is a considerable diminution in the rights of tenants. What incentive will there be for a tenant to move from an existing landlord if all those rights are removed? On the question of rent, my hon. Friends have already made the point about the housing benefit system and its impact on housing. In Scotland, we are reaching a crazy position.

    In Committee, I put it firmly to the Minister that the rent assessment officer would be required to do two distinct jobs for the same tenant. In column 1191, I asked the Minister a straight question:
    "It could be read from what the Minister has said that a rent officer may, by applying the criteria in section 48 of the Rent (Scotland) Act 1984 determine a rent for a particular property, but that he could, thereafter, for the purposes of the housing benefit regulations, be required to determine a different rent. Is it possible that two different rental figures could be provided by the same person? From what the Minister says, the criteria will be different."
    The Minister's reply was blunt and stark. He simply replied:
    "The answer is yes." —[Official Report, First Scottish Standing Committee, 1 March 1988; c. 1191.]
    That is a crazy situation. As my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) pointed out, it will impact more seriously on the most vulnerable and poorest sections of society—on those who depend on housing benefit to pay their rent.

    There is a prospect of a gap opening between what the rent officer, wearing one hat, thinks is a fair rent for the property, and, wearing another hat as the agent of the Government in determining a fair rent for housing benefit purposes, determining another rent. In the middle will be tenants living on unemployment benefit, invalid benefit, pensions and supplementary benefit who will have to find the difference. Tenants will find not only that their social security supplementary benefit payments are being reduced in real terms, but that more of that benefit will be clawed away through measures such as those in the Bill.

    It is important to bear in mind just how substantial are the payments from the public purse to the private sector. A huge subsidy of something like £5·4 billion a year is paid in housing benefit. Not all of that goes to the private sector, but £600 million a year is paid in Scotland. Those are huge figures. Not only do we subsidise private landlords to a huge extent, but there is no real benefit to the tenant because the majority of houses in the private sector are at the lower end of the market. They are the least modernised houses in the worst areas, and the tenants are the most exploited.

    Finally, the Secretary of State made a statement today on urban Scotland. The document is entitled "New Life for Urban Scotland." He repeated some of the specious claims that he had made during the debate on Second Reading and in Committee. He said that the housing objectives are encouraging greater individual responsibility for and control over the conditions in which people live. I do not see how the Government can live up to that claim given the number of rights being taken away from tenants, the impositions being placed on tenants and the whole philosophy in which the power base is shifted to the private landlord and the further exploitation of the most vulnerable people in society.

    I strongly agree with the speech of my right hon. Friend the Member for Glasgow, Govan (Mr. Millan). It is a pity that the private Member's legislation to which he referred did not reach the statute book.

    I wish to ask the Minister one question. In east Scotland, house prices have rocketed in the past 12 months. Clearly this is either the reason, the excuse, or both, for raising rents. My question is rather simple. What work has gone on in the Scottish Office about the likely rise in rents? Before introducing the Bill, the Scottish Office must surely have made some rough estimate about the likely effects. Can the House of Commons have the results of any work that has been done?

    The Under-Secretary of State knows that there are some Ministry of Defence houses in my constituency and that there is a great deal of pressure to push up the rents of those houses. The local authority ought to be able to acquire those houses, which it cannot do now, or they ought to come under a new form of Scottish housing authority. The Under-Secretary has some Ministry of Defence houses in his constituency and he knows that there is a problem.

    These homes are occupied by old people, many of whom are on supplementary benefit or other forms of social security. It is unfair that the rents of a large number of people who have served their nation well should be pushed up. I speak in particular of the village of Crombie. I hope that the Minister will refer to that problem.

    9 pm

    The hon. Member for East Lothian (Mr. Home-Robertson) asked by how much rents will rise. It is impossible to say. The present system has distorted the market, to the detriment, we believe, of tenants' interests. The rent increase will be different in different areas. I expect that in some areas property rents will not rise. Because of the drop in the oil price, market levels in the north-east will be very different from elsewhere in Scotland.

    The hon. Member for Linlithgow (Mr. Dalyell) asked what studies the Government had made of rent levels. I shall have to inquire, but what I have just said correctly states the position. We cannot estimate exactly how different areas will respond, because it will depend on market levels. If our policy works, and we strongly believe that it will, more accommodation in the private rented sector will become available. That will have a favourable impact on rent levels. A prospective tenant will choose the best available accommodation.

    The right hon. Member for Glasgow, Govan (Mr. Milian) said that it is unrealistic to expect tenants on housing benefit to seek an unregistered rent. That is correct. Consequently, we have inserted clause 64, which provides a new power to control such abuses of housing benefit. It will ensure that excessive rents will not be charged.

    That is being done at the expense of the tenant. If a rent officer determines that the rent is excessive and fixes a lower rent, why should that not be the rent that is registered and paid to the landlord? Why should the landlord get a scandalously high rent?

    It will operate as a deterrent. It will deter landlords from fixing excessive rents. We are not in favour of controlling rent levels because that would militate against freely negotiated agreements. We are putting forward plans to increase the private rented sector. The hon. Member for Edinburgh, South (Mr. Griffiths) said that good landlords cannot compete with bad landlords. That is because good landlords have been prevented from earning a proper return on their property. The assured tenancy system w11 create more choice in the private rented sector, which will make life much harder for bad landlords.

    I should like to explain the purpose of clause 25 which the Opposition seek to delete from the Bill. It deals with the situation where, at the end of a contractual assured tenancy or during a statutory assured tenancy, the tenant receives from his landlord a notice of a proposed rent increase and refers that notice to the rent assessment committee for adjudication.

    When a tenant refers such a notice to the rent assessment committee, the committee will determine the rent which should apply. The rent so determined will be the rent which, in the committee's opinion, the house could fetch on the open market. The rent determined by the committee will be the rent payable, unless the landlord and tenant agree a different rent—either a higher or a lower one. There may be circumstances in which the two parties will want to settle on a different rent. But the tenant will have the protection that he need not pay any rent above the figure determined by the committee. The determined rent will be payable from the date specified in the landlord's notice, unless the committee specifies a later date, which it will do if it considers that starting the new rent on the landlord's proposed date would cause the tenant undue hardship.

    The Opposition's new clause 5 would introduce a completely different system, although the defective drafting makes it difficult to know exactly how the system would operate in all respects. The two main elements of this are that all tenants, whether assured, protected, secure, or otherwise, would be able to apply for a determination of rent at any time, not only at the end of a contractual tenancy or during a statutory assured tenancy and that rents would be determined according to the tenant's means and the "suitability" of the house, rather than by reference to market rent levels. I cannot accept either of those propositions.

    One of the underlying principles of the assured tenancy regime is that rents will be freely negotiable between landlord and tenant and it follows that whenever a landlord and tenant enter an agreement both parties should be bound by that agreement. When a tenancy agreement comes to its end, it is appropriate that the tenant should then have the right of recourse to the rent assessment committee. The existing clause 25 provides precisely that right. But it would be contrary to the whole purpose of the assured tenancy regime if tenants were to be given an open-ended right to challenge their contracts, and to give the right to all tenants, whether assured or not, would be entirely unacceptable.

    Turning to the question of the criteria for the determination of rents, I quite understand that Opposition Members do not like the idea that a tenant should pay a market rent. That is because they oppose anything that would lead to a regeneration of the private rented sector, which has shrunk enormously in the years since the second world war and is now just over 6 per cent. New clause 5 would be an invitation to tenants deliberately to seek unsuitable accommodation, negotiate a reasonable rent with a landlord and then apply to the rent assessment committee for a determination of a lower rent. That would be unfair on landlords who had negotiated a tenancy agreement in good faith.

    The essence of the Bill is to get an appropriate balance between the rights of tenants and the rights of landlords. We believe that the proposals are most certainly not a charter for Rachmanism. They strengthen the protection of all tenants against harassment and illegal eviction. Tenants will have security of tenure very similar to that under existing legislation and there are safeguards built in to prevent the charging of excessive rents above market levels.

    I have listened carefully to the case put forward for new clause 16, but I am convinced that the power that it would give local authorities is unnecessary.

    The main purpose of part II of the Bill is to introduce the new assured tenancies which will steadily replace the regulated tenancies, which are subject to the Rent (Scotland) Act 1984. The provisions in that Act will therefore become transitional, although the period of transition is likely to cover many years. It is therefore right that regulated tenants and their landlords should retain the right to have a rent registered. I do not see a strong argument for extending that power to local authorities.

    Hon. Members argued in Committee that tenants on housing benefit had no incentive to have a rent registered for fear that their rent would be reduced, and it was argued that local authorities would be seen as being neutral and therefore not likely to be affected by these considerations. I have to say that the evidence from England and Wales, where local authorities have this power, is that very little use of it is made in practice. And in Scotland, where local authorities can refer rents of part VII contracts to the rent assessment committee for registration, the number of such referrals is very small indeed. I see no point in legislating to give local authorities a power that will be used little if at all and will become useless as regulated tenancies are phased out.

    New clause 6 seeks to prohibit premiums on short assured tenancies. The arguments in favour of prohibiting premiums on assured tenancies have been fully expounded in Committee and I accept that there is no place for premiums in the present tenancy regime. If landords had been allowed to charge premiums for granting protected tenancies, that would have been used as a device for effectively avoiding the system of rent control.

    That argument does not apply to the new regime, because landlords who grant assured tenancies will not be subject to any statutory rent control and will be able to charge a market rent. So landlords will have no incentive to charge a premium. Indeed, any landlord who did attempt to charge one would probably not succeed in letting his property. I expect that some landlords will want to charge a moderate deposit on letting; that practice is fair enough.

    I said during the Standing Committee's consideration of a similar proposal that the Government would give particular thought to the case for prohibiting premiums on short assured tenancies. It is true that there will be a form of rent control for short assured tenancies, in that anyone with this type of tenancy will be able to seek a determination of rent from the rent assessment committee at any time during the tenancy. However, as the rent assessment committee will make its determinations on the basis of market rents, we believe, on reflection, that landlords will have no greater incentive to charge premiums for this type of tenancy than for assured tenancies. Our current view, therefore, is that there is no need to prohibit premiums under the new regime.

    The Minister is an innocent abroad. He is suggesting that there would be no incentive for landlords to try to secure premiums—key money—to enable a tenant to take up a tenancy. There will be considerable incentives to do so because they will be able to get away with it. Given that there is a severe shortage of housing to let in Scotland and that there will be fierce competition to take up tenancies whenever they occur, it will be all too easy for landlords to abuse the system in this way.

    It is appalling that the Government are not prepared to take any steps to outlaw this sort of abuse. The Minister implicitly acknowledged that it was an abuse, but he is not prepared to do anything about it. He chides us on the grounds that we are hostile to his proposed redevelopment of the private rented sector, but he is wrong to do so. The Opposition would be happy about any development of the rented sector in Scotland that would meet the need, but the difference between the Minister and us is that we are not prepared to accept that tenants should have to pay any price for that development in the private rented sector.

    We have already established that there is a severe shortage of housing to let in Scotland. We know that there are many desperate people who would be prepared to make serious sacrifices, which they probably cannot really afford, to secure homes for their families. They are likely to be prepared to pay premiums under these desperate circumstances and may be prepared to offer inflated rents. Yet the Minister has the gall to describe them as freely negotiated rents. There is no freedom for people facing the threat of homelessness; that is the point that the Government refuse to tackle.

    We are discussing a distorted and unfair market, and it is deplorable that the Government are introducing legislation that will deprive tenants of any protection from unfair practices by landlords. The reference to freely negotiated rents is absurd.

    My right hon. Friend the Member for Glasgow, Govan (Mr. Milian) mentioned experience in his constituency, where there has been palpably criminal conduct on the part of one private landlord. I have no doubt that there are perfectly reasonable private sector landlords in Scotland. No one wants to inhibit them, but the Minister has acknowledged on another occasion that there is a criminal element, and my right hon. Friend the Member for Govan made it clear that there has recently been a serious abuse in his constituency.

    In spite of that, the Government are apparently prepared to open the floodgates and allow rents to go sky high, with no recourse to tribunals or controls of any kind. We want to ensure that there is a proper regime of fair rents, as there is now. We are not prepared to see tenants in Scotland making the sacrifices that the Minister seems prepared to impose on them.

    We are extremely alarmed about the difficulties that will confront people claiming housing benefit in these circumstances. I shall quote from the Scottish Development Department's consultation paper on the private rented sector and the implications for housing benefit. Paragraph 13 states:
    "The rent set by the rent officer will not be a maximum rent chargeable for the dwelling. It will be open to the landlord to set the rent at the maximum eligible level, or to charge a higher rent and seek a tenant willing to pay that rent. It will be open to the existing tenant, should he have the means to do so, to make up the difference."
    How on earth can someone on housing benefit make up the difference? That is a formula for forcing these people out of their homes, and the Government are apparently prepared to accept it. The formula means more evictions, more insecurity and more homelessness, and the Minister should he ashamed of himself. I urge my hon. Friends to vote for the new clause.

    Question put, That the clause be read a Second time:—

    The House divided: Ayes 175, Noes 230.

    Division No. 238]

    [9.15 pm

    AYES

    Abbott, Ms DianeGodman, Dr Norman A.
    Adams, Allen (Paisley N)Gordon, Mildred
    Allen, GrahamGraham, Thomas
    Alton, DavidHardy, Peter
    Archer, Rt Hon PeterHattersley, Rt Hon Roy
    Ashley, Rt Hon JackHeffer, Eric S.
    Banks, Tony (Newham NW)Henderson, Doug
    Barnes, Harry (Derbyshire NE)Hinchliffe, David
    Barron, KevinHogg, N. (C'nauld & Kilsyth)
    Battle, JohnHome Robertson, John
    Benn, Rt Hon TonyHood, Jimmy
    Bennett, A. F. (D'nt'n & R'dish)Howarth, George (Knowsley N)
    Bermingham, GeraldHughes, John (Coventry NE)
    Bidwell, SydneyHughes, Robert (Aberdeen N)
    Blair, TonyHughes, Roy (Newport E)
    Bray, Dr JeremyHughes, Sean (Knowsley S)
    Brown, Gordon (D'mline E)Illsley, Eric
    Brown, Nicholas (Newcastle E)Ingram, Adam
    Bruce, Malcolm (Gordon)Janner, Greville
    Buchan, NormanJohn, Brynmor
    Buckley, George J.Jones, Barry (Alyn & Deeside)
    Caborn, RichardKaufman, Rt Hon Gerald
    Callaghan, JimKinnock, Rt Hon Neil
    Campbell, Menzies (Fife NE)Kirkwood, Archy
    Campbell, Ron (Blyth Valley)Lamond, James
    Campbell-Savours, D. N.Leadbitter, Ted
    Canavan, DennisLewis, Terry
    Carlile, Alex (Mont'g)Litherland, Robert
    Clarke, Tom (Monklands W)Livingstone, Ken
    Clay, BobLivsey, Richard
    Clelland, DavidLloyd, Tony (Stretford)
    Clwyd, Mrs AnnLofthouse, Geoffrey
    Cohen, HarryLoyden, Eddie
    Coleman, DonaldMcAllion, John
    Cook, Frank (Stockton N)McAvoy, Thomas
    Cook, Robin (Livingston)Macdonald, Calum A.
    Corbett, RobinMcFall, John
    Corbyn, JeremyMcKay, Allen (Barnsley West)
    Cox, TomMcLeish, Henry
    Crowther, StanMcNamara, Kevin
    Cryer, BobMcTaggart, Bob
    Cummings, JohnMcWilliam, John
    Cunliffe, LawrenceMadden, Max
    Dalyell, TamMarek, Dr John
    Darling, AlistairMarshall, David (Shettleston)
    Davies, Ron (Caerphilly)Marshall, Jim (Leicester S)
    Davis, Terry (B'ham Hodge H'I)Maxton, John
    Dewar, DonaldMeacher, Michael
    Dixon, DonMeale, Alan
    Doran, FrankMichael, Alun
    Douglas, DickMichie, Bill (Sheffield Heeley)
    Duffy, A. E. P.Michie, Mrs Ray (Arg'l & Bute)
    Dunnachie, JimmyMillan, Rt Hon Bruce
    Eadie, AlexanderMitchell, Austin (G't Grimsby)
    Eastham, KenMoonie, Dr Lewis
    Evans, John (St Helens N)Morgan, Rhodri
    Ewing, Harry (Falkirk E)Morris, Rt Hon J. (Aberavon)
    Ewing, Mrs Margaret (Moray)Mullin, Chris
    Fearn, RonaldMurphy, Paul
    Field, Frank (Birkenhead)Nellist, Dave
    Fields, Terry (L'pool B G'n)O'Brien, William
    Fisher, MarkO'Neill, Martin
    Flannery, MartinOrme, Rt Hon Stanley
    Flynn, PaulPatchett, Terry
    Foster, DerekPike, Peter L.
    Foulkes, GeorgePowell, Ray (Ogmore)
    Galbraith, SamPrescott, John
    Galloway, GeorgePrimarolo, Dawn
    George, BruceRandall, Stuart
    Gilbert, Rt Hon Dr JohnRedmond, Martin

    Rees, Rt Hon MerlynTaylor, Mrs Ann (Dewsbury)
    Reid, Dr JohnTurner, Dennis
    Richardson, JoVaz, Keith
    Robertson, GeorgeWall, Pat
    Robinson, GeoffreyWallace, James
    Rogers, AllanWalley, Joan
    Rooker, JeffWardell, Gareth (Gower)
    Rowlands, TedWareing, Robert N.
    Ruddock, JoanWelsh, Andrew (Angus E)
    Salmond, AlexWelsh, Michael (Doncaster N)
    Sheerman, BarryWilliams, Alan W. (Carm'then)
    Sheldon, Rt Hon RobertWinnick, David
    Shore, Rt Hon PeterWise, Mrs Audrey
    Skinner, DennisWray, Jimmy
    Soley, CliveYoung, David (Bolton SE)
    Spearing, Nigel
    Steel, Rt Hon DavidTellers for the Ayes:
    Steinberg, GerryMrs. Llin Golding and
    Stott, RogerMr. Nigel Griffiths.
    Strang, Gavin

    NOES

    Adley, RobertField, Barry (Isle of Wight)
    Alexander, RichardFookes, Miss Janet
    Alison, Rt Hon MichaelForman, Nigel
    Allason, RupertForsyth, Michael (Stirling)
    Amess, DavidFox, Sir Marcus
    Amos, AlanGale, Roger
    Arbuthnot, JamesGarel-Jones, Tristan
    Arnold, Jacques (Gravesham)Gill, Christopher
    Arnold, Tom (Hazel Grove)Glyn, Dr Alan
    Ashby, DavidGower, Sir Raymond
    Atkins, RobertGreenway, Harry (Ealing N)
    Atkinson, DavidGreen way, John (Ryedale)
    Baker, Rt Hon K. (Mole Valley)Gregory, Conal
    Baker, Nicholas (Dorset N)Griffiths, Sir Eldon (Bury St E')
    Baldry, TonyGriffiths, Peter (Portsmouth N)
    Banks, Robert (Harrogate)Grist, Ian
    Bellingham, HenryGrylls, Michael
    Bendall, VivianGummer, Rt Hon John Selwyn
    Bennett, Nicholas (Pembroke)Hanley, Jeremy
    Benyon, W.Hannam, John
    Bevan, David GilroyHargreaves, A. (B'ham H'll Gr'
    Biffen, Rt Hon JohnHargreaves, Ken (Hyndburn)
    Blackburn, Dr John G.Hawkins, Christopher
    Blaker, Rt Hon Sir PeterHayes, Jerry
    Bonsor, Sir NicholasHayhoe, Rt Hon Sir Barney
    Boscawen, Hon RobertHayward, Robert
    Bottomley, PeterHeddle, John
    Bottomley, Mrs VirginiaHicks, Robert (Cornwall SE)
    Bowden, A (Brighton K'pto'n)Hill, James
    Bowden, Gerald (Dulwich)Hind, Kenneth
    Bowis, JohnHolt, Richard
    Boyson, Rt Hon Dr Sir RhodesHordern, Sir Peter
    Braine, Rt Hon Sir BernardHoward, Michael
    Brandon-Bravo, MartinHowarth, Alan (Strat'd-on-A)
    Brazier, JulianHowarth, G. (Cannock & B'wd)
    Bright, GrahamHowell, Rt Hon David (G'dford)
    Browne, John (Winchester)Howell, Ralph (North Norfolk)
    Bruce, Ian (Dorset South)Hughes, Robert G. (Harrow W)
    Buck, Sir AntonyHunt, David (Wirral W)
    Burns, SimonHunt, John (Ravensbourne)
    Burt, AlistairHunter, Andrew
    Butler, ChrisIrvine, Michael
    Butterfill, JohnIrving, Charles
    Carlisle, John, (Luton N)Jack, Michael
    Carrington, MatthewJanman, Tim
    Carttiss, MichaelJohnson Smith, Sir Geoffrey
    Cash, WilliamJones, Gwilym (Cardiff N)
    Coombs, Anthony (Wyre F'rest)Jones, Robert B (Herts W)
    Cormack, PatrickJopling, Rt Hon Michael
    Couchman, JamesKellett-Bowman, Dame Elaine
    Currie, Mrs EdwinaKilfedder, James
    Davis, David (Boothferry)King, Roger (B'ham N'thfield)
    Dorrell, StephenKirkhope, Timothy
    Douglas-Hamilton, Lord JamesKnapman, Roger
    Dunn, BobKnight, Greg (Derby North)
    Durant, TonyKnight, Dame Jill (Edgbaston)
    Fairbairn, NicholasKnowles, Michael
    Fallon, MichaelLamont, Rt Hon Norman

    Lang, IanRowe, Andrew
    Latham, MichaelRyder, Richard
    Lawrence, IvanSackville, Hon Tom
    Leigh, Edward (Gainsbor'gh)Sainsbury, Hon Tim
    Lennox-Boyd, Hon MarkSayeed, Jonathan
    Lester, Jim (Broxtowe)Shaw, David (Dover)
    Lightbown, DavidShaw, Sir Giles (Pudsey)
    Lloyd, Peter (Fareham)Shaw, Sir Michael (Scarb')
    Lord, MichaelShephard, Mrs G. (Norfolk SW)
    Lyell, Sir NicholasShepherd, Colin (Hereford)
    MacKay, Andrew (E Berkshire)Shepherd, Richard (Aldridge)
    McLoughlin, PatrickShersby, Michael
    McNair-Wilson, M. (Newbury)Skeet, Sir Trevor
    McNair-Wilson, P. (New Forest)Smith, Tim (Beaconsfield)
    Malins, HumfreySoames, Hon Nicholas
    Mans, KeithSpeller, Tony
    Maples, JohnSpicer, Sir Jim (Dorset W)
    Marland, PaulStanbrook, Ivor
    Marshall, John (Hendon S)Steen, Anthony
    Marshall, Michael (Arundel)Stern, Michael
    Martin, David (Portsmouth S)Stewart, Andy (Sherwood)
    Mayhew, Rt Hon Sir PatrickStradling Thomas, Sir John
    Miller, HalSumberg, David
    Mills, IainSummerson, Hugo
    Mitchell, Andrew (Gedling)Taylor, Ian (Esher)
    Mitchell, David (Hants NW)Taylor, John M (Solihull)
    Moate, RogerTaylor, Teddy (S'end E)
    Monro, Sir HectorTemple-Morris, Peter
    Montgomery, Sir FergusThompson, D. (Calder Valley)
    Morris, M (N'hampton S)Tracey, Richard
    Morrison, Hon P (Chester)Tredinnick, David
    Moss, MalcolmTrippier, David
    Neale, GerrardTrotter, Neville
    Nelson, AnthonyTwinn, Dr Ian
    Neubert, MichaelVaughan, Sir Gerard
    Newton, Rt Hon TonyWaddington, Rt Hon David
    Nicholls, PatrickWakeham, Rt Hon John
    Nicholson, David (Taunton)Waldegrave, Hon William
    Nicholson, Emma (Devon West)Walden, George
    Onslow, Rt Hon CranleyWalker, Bill (T'side North)
    Oppenheim, PhillipWaller, Gary
    Page, RichardWard, John
    Pattie, Rt Hon Sir GeoffreyWarren, Kenneth
    Pawsey, JamesWatts, John
    Porter, David (Waveney)Wells, Bowen
    Powell, William (Corby)Wheeler, John
    Price, Sir DavidWhitney, Ray
    Raffan, KeithWiddecombe, Ann
    Raison, Rt Hon TimothyWilkinson, John
    Rathbone, TimWilshire, David
    Redwood, JohnWood, Timothy
    Riddick, GrahamWoodcock, Mike
    Ridley, Rt Hon NicholasYeo, Tim
    Ridsdale, Sir JulianYoung, Sir George (Acton)
    Rifkind, Rt Hon Malcolm
    Roberts, Wyn (Conwy)Tellers for the Noes:
    Roe, Mrs MarionMr. David Maclean and
    Rossi, Sir HughMr. Kenneth Carlisle.
    Rost. Peter

    Question accordingly negatived.