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Private Sector Rented Housing

Volume 474: debated on Wednesday 23 April 2008

I am very glad to be able to have a debate this afternoon on private rented housing. I am also very grateful for the information that has been provided to me for the debate by a number of external organisations. Clearly, there is wider concern on the issue among both housing industry professional organisations and the organisations that support tenants and homeless people. I hope that my comments will feed into the current Government review of private sector rented housing, which my hon. Friend the Minister is leading. I hope that he will say more about that review when he winds up and that he will give assurances about how the points that I raise will feed into the review and be reflected in the results.

My concern is especially with the use of private rented accommodation as an alternative to social rented housing for people on low incomes and particularly homeless people. I want to raise four issues that I hope my hon. Friend will include in his review and I would like three particular recommendations to come out of it. First, however, it is important to recognise the role that private sector rented housing plays in the overall housing mix. It accounts for 12 per cent. of England’s total housing stock, catering for people at all income levels. Of course, much of it operates perfectly well. Indeed, I understand that, overall, tenant satisfaction is higher in the private rented sector than it is in relation to housing associations or among council tenants.

However, underlying that overall position are many private sector tenants who are among the most vulnerable people in society and there is evidence that that group is growing in number. One of the drivers of that is the Government’s housing options approach, which has encouraged tenants who apply for social housing to consider private rented accommodation. It would be helpful if my hon. Friend, either now or later, could clarify the Government’s intention on the way in which housing options interviews are conducted. My understanding is that the needs assessment should come first and the discussion about housing options and how those needs are met should come second. The person inquiring about housing should not be plunged into talking about options before their needs have been assessed.

Unfortunately, the expansion of the private rented sector has not been accompanied by the rationalisation of it. A very large number of small-scale landlords make their money out of renting small numbers of properties—in many cases, renting to tenants funded by the public sector—and although many of those landlords are entirely reputable, a significant minority are not.

The use of the private sector for what are basically public sector tenants can work well. Last year, I went to an excellent seminar run by Shelter, at which a number of local authorities spoke about the constructive working relations they had with private landlords in their areas, which worked in the interest of housing homeless people. The private sector was a partner in active planning for housing homeless people and assessing needs in an area. However, I know from my constituency that if the local authority—in this case, Northampton borough council—is poor, the process of considering housing options can too easily become a process that pressurises tenants into moving into private sector tenancies that are insecure, unaffordable, unregulated and, sometimes, in disrepair. That can cause real hardship for some of the most vulnerable people, who rightly turn to local authorities for support.

The biggest problem facing tenants in private sector rented accommodation is the chronic lack of security. Six-month shorthold tenancies do not provide a stable home for vulnerable families. The National Association of Citizens Advice Bureaux found that the United Kingdom provides the least security of tenure for private-sector tenants of the six European countries that it studied. In Germany, 51 per cent. of people live in privately rented properties, mostly with unlimited contracts; in Spain, where 10 per cent. of properties are privately rented, tenants have the right annually to extend contracts for up to five years. We are the only country with six-month shorthold tenancies.

For vulnerable families, the consequences are desperate. A recent study of homelessness in Northamptonshire found that, in 2006, no fewer than 17 per cent., almost one in five, of homeless families housed by the local authority were made homeless because their shorthold tenancies had come to an end and had not been renewed. Councils have to pick up the pieces when that happens, as people are almost being evicted from private rented homes.

A Shelter report, due to be published shortly, cites the survey of English housing for 2005-06, which found that 38 per cent. or just over a third of people in private rented housing had been in their homes for less than a year. That is four times the level for social tenants, and a staggering seven times that for owner-occupiers. Only 5 per cent. of owner-occupiers had moved within the past year compared with 38 per cent. of tenants in privately rented property. There is massively greater insecurity for private tenants than for any other group.

Behind those figures lies deep misery for many families. They are forced to live a nomadic existence in private rented housing. As a result, the children suffer constant disruption in their schooling and the parents sometimes have problems in keeping their jobs, and there is the social disruption of having constantly to move home.

A young couple in my constituency who came to me for help were typical; they were under real pressure. They were teenage parents; the father was in work and the mother was a former care leaver. They had to move home three times in 18 months, from one privately rented home to another. They had been forced into private accommodation as a result of a housing options interview. On the third time of moving, the mother was pregnant with a second child. The young man’s mother was very supportive of them and desperate to find a better solution for her son and his family, but they still had to move from place to place. Unfortunately, I was not able to maintain contact with them. Packing up and moving home every six months is something that I could not cope with, let alone with two young children in tow.

There was a time when security of tenure acted as a deterrent to owners renting their properties, but I believe that the pendulum has swung too far the other way and that changes are needed to redress the balance in favour of tenants.

Secondly, the cost of private rented housing can be a real problem, especially for those on housing benefit. According to figures provided by the Department for Communities and Local Government, 19 per cent. of the sector’s tenants were receiving housing benefit in 2005-06. That is a total of just under 500,000 households. However, about 30 per cent. of those people suffer benefit shortfalls, and need to top up their housing benefit from other benefits to pay the rent. A third have to top up their rents from money that only just covers their living costs and, as a result, they may be in debt or arrears. That can result in eviction, which puts them back into the revolving doors of homelessness.

Another constituent who asked me for help and advice was sharing a one-bedroomed flat with her daughter. She was paying £625 a month for the property. As a result of economic pressures, she was facing a reduction in her working hours. For the first time, she was having to think about claiming benefits. However, she discovered that she would get only £525 a month in housing benefit, leaving a shortfall of £100 a month, which had to be made up from her other benefits and a reduced wage—a near impossible task.

I know of the Government scheme to help private sector tenants with their deposits, but the experience of my constituents is that, for whatever reason, many do not seem to be able to gain access to that help. They have real difficulty in raising money for a deposit; and if they have to leave a tenancy, they find it difficult to get the deposit money back again. I would not argue for a return to the days when the Government had to underwrite whatever rents landlords chose to charge though housing benefit, but the review needs to consider what can be done about the high cost of private sector rented housing; we must ensure that landlords do not charge whatever they can from housing benefit and whatever more they think they can get from the tenants’ other benefits.

Thirdly, there are significant problems with the maintenance and repair of many properties. Although housing conditions in the private sector are improving, the Shelter study cites Government figures from 2005 showing that almost half of all homes in the private rented sector were classified as not being decent to live in. The major problems listed included inadequate heating, difficulties with water and even sanitation, structural problems, damp and poorly fitted electrical fixtures. There is also considerable evidence of the tenants’ inability to get private sector landlords to carry out repairs. The National Association of Citizens Advice Bureaux detailed a catalogue of what it calls “retaliatory evictions”, with landlords evicting tenants for trying to force them to carry out repairs. NACAB calls for Government action to stop such evictions and points to measures taken by other European Governments.

A constituent came to see me saying that she had been unable to get her private sector landlord to carry out basic repairs, and when she repeatedly complained to her landlord, she found that her tenancy was not renewed. Other constituents have complained about being unable to get landlords to carry out such basic repairs as replacing broken windows; one constituent complained of having to live for several months with the ground floor windows boarded up. Council tenants, of course, have problems of disrepair, but at least they have access to the council, whereas private sector tenants often have difficulty in getting a response from their landlords.

Fourthly, tenants have complained about the problem of getting action taken on antisocial behaviour. Local authorities are in a lead position for getting antisocial behaviour orders to combat problems on their estates, especially those linked to their own tenants. However, tenants in private accommodation do not have the same access to justice. One constituent told me of a neighbour involved in drug taking, but the landlord of the block of flats was unwilling to act; her shorthold tenancy was not renewed. I do not know whether that can be called an eviction, but the landlord has the option every six months to decide on renewal.

I recognise the importance of an active private sector in providing rented accommodation, and believe that it should be actively developed in the UK. I spent a long time living in the private rented sector when abroad. My experience of rented accommodation outside the UK is very different; that is due mainly to the lack of institutional investment in the sector here.

I hope that the Government review will help to stimulate, as well as regulate, the private rented sector by doing two things. First, they should encourage institutional investment in the sector. The buy-to-let market has until now been active, but it is patchy and fickle, with a large number of smaller-scale landlords. I have noticed that they tend to follow the market when deciding what to do with their properties. At one stage, landlords in Northampton were not letting so much to homeless families but to asylum seekers—they could get close on £100 a week for a room instead of £100 a week for the property. When the market peaked, a good number sold out completely, leaving their tenants homeless.

The Royal Institution of Chartered Surveyors gives support for institutional investment as one of its priorities. It says that there is a need for greater Government support to increase the provision of rented accommodation by larger companies as opposed to single landlords as that would offer a greater level of accountability and greater chances of ensuring better- quality stable housing. The institution has set out a number of proposals that would boost institutional investment in private rented accommodation, including using planning policy, changing the stamp duty and VAT regimes, and changing the real estate investment trust regime to encourage its use as a tool for investing in property for rent.

There is a pressing need to provide more security of tenure for tenants, especially by increasing the length of tenancies and providing an effective appeal against eviction. There is a pressing need to end the continual instability that plagues the lives of many of the poorest people. There needs to be some halfway house between the misery merry-go-round of six months shorthold tenancies and the long-term, secure tenancies enjoyed by council tenants. I was pleased that the Royal Institution of Chartered Surveyors has also supported proposals such as that for a new type of housing tenancy. Thirdly, there is a need for a comprehensive and joined-up system of national regulation that penalises the worst landlords and promotes good practice in the sector with a common code for all.

In many of our areas, council homes were a step up for people who were escaping the slum housing of the early 1990s. I know that huge problems with large-scale private sector landlords have caused real misery for many households on low incomes in my hon. Friend the Minister’s constituency. Now, for some of our most vulnerable people in constituencies such as mine, a move into the private sector is a move back into substandard and insecure housing, where they are at the mercy of landlords who charge high rents for inferior accommodation, without security of tenure, which people who turn to the state for help rightly expect. If we are to ensure that the private sector provides a realistic housing option for people on lower incomes, we need to ensure that we increase the supply, improve the quality and reduce the insecurity.

I hope that the measures that I have set out, and those put forward by Shelter, NACAB and the Royal Institution of Chartered Surveyors will be looked at seriously and adopted by the Government to ensure that their ambition for everybody to have a decent home extends to people in private rented housing.

I congratulate my hon. Friend the Member for Northampton, North (Ms Keeble) on securing this debate. She is a real champion of housing and was gracious enough to allow me to visit her constituency in the past couple of months; I greatly enjoyed the visit and hope to go back soon.

A decent home can be a major indicator of life chances, educational attainments and life expectancy. Having a home that one can be proud of is of major importance. Aspirations and expectations of home ownership and tenants’ rights have risen dramatically in the past few decades, and rightly so. Whether people buy or rent, their right to a decent home of their choice that is suitable for their needs is the same. That right underpins the priority that the Government attach to delivering housing in all sectors. Our plans for 3 million new homes between now and 2020 are absolutely essential if aspirations for greater quality and choice are to be met. Greater housing supply is vitally important, but the issue is also about giving people access to the right sort of home. As my hon. Friend said, the private rented sector can make a vital contribution.

We talk about a private rented sector as if it is a single entity, but it is actually not a homogenous market at all—quite the reverse; there are different sectors and different types of market within it. For example, nearly two thirds of households in the private rented sector are categorised as economically active, and more than three quarters of tenants in the private rented sector are under 35. For those people, who are often in the first throes of their careers, attempting to secure a professional qualification and so on, the attraction of private renting is its flexibility. Students who have moved away from home for the first time almost invariably rent, which again shows a degree a dynamism within the market.

However, it is fair to say, as my hon. Friend did, that the sector also provides housing for vulnerable people. A little under a fifth of tenants in the private rented sector are on housing benefit. The introduction of the new local housing allowance should give those tenants greater choice about where they live because it will allow them to see in advance the properties that they can afford.

I was struck about what my hon. Friend said on this matter, but I share her vision that the private rented sector should not be a tenure of last resort for those in housing need. To achieve that, standards need to be raised. She was kind enough to mention my constituency, where absentee landlords help to fuel antisocial behaviour and an exodus away from really decent communities. We need to stop that, which is why I believe that we need to increase the professionalism within the private rented sector.

By working closely with our stakeholders within and outside government, we have shown that people’s aspirations for increased quality and choice can be met by the private rented sector. One example of what I mean by that will be well known to my hon. Friend. In the east midlands, the regional housing board sponsored the creation of Decent and Safe Homes in late 2004. Since its establishment, DASH has held several regional events and has delivered both advice and training courses for landlords. I am also encouraged by Northampton council’s landlord forum and its student accreditation scheme, which looks at property condition.

A key theme in my hon. Friend’s excellent contribution was the need for better regulation. I was struck by a phrase that she used, and I shall take it on board when we discuss the private sector review. She was absolutely spot on when she spoke about how we should stimulate, as well as regulate, the private rented sector market. However, as she recognises, targeted regulation to back up voluntary approaches is important.

We are not starting with a blank sheet of paper. Measures that were introduced in the Housing Act 2004 are having a positive benefit. First, we introduced mandatory licensing of houses in multiple occupation. Real progress is being made by local authorities that use their powers to tackle what are potentially the most problematic parts of the sector. We are now beginning to see applications from some councils to establish discretionary licensing schemes. So far, we have approved five selective licensing schemes—my own borough of Hartlepool is about to put one forward—and, in the summer, I went up to the north-east and saw that Gateshead council’s excellent scheme is working incredibly well. Several more such schemes are in the pipeline, so the knowledge that local authorities can and will take targeted steps to deal with problem areas will, I believe, give confidence to people when they make their decision about where to live.

Secondly, we introduced the housing health and safety rating system. Conditions across the private rented sector are already getting better. The English house condition survey found that 49 per cent. of private rented sector dwellings were non-decent in 2001, which reduced to 43 per cent. in 2004. My hon. Friend and I have spoken in Adjournment debates about decent homes in recent months, so I know that she shares my passion to ensure that decent homes are available to all. I remain concerned that some vulnerable people, who are least able to change their housing circumstances, live in non-decent conditions, but our focus on such households is paying off. In 2001, only 57 per cent. of vulnerable people were living in a decent home but, by 2005, that number had risen to 66 per cent. Those are real step changes, and we are on target to achieve our aim of having 70 per cent. of vulnerable households living in decent homes by 2010.

Thirdly, it is a little more than a year since the Government introduced schemes to safeguard tenancy deposits, which was another potential abuse of the system—I take on board what my hon. Friend said on the matter. In that time, 1 million deposits have been protected, and around £885 million of cash has been safeguarded. I am confident that we can build on those successes and meet people’s aspirations for greater housing quality and choice, but I recognise that there is still some way to go—the issue raised by the Citizens Advice report, “The tenant’s dilemma”, which my hon. Friend mentioned, gives just one example of that. I am conscious of the issue of retaliatory eviction and have pledged to look at it, and to ensure that the review of the private rented sector also considers it.

My hon. Friend was spot on when she said that there needs to be a delicate balance of rights and responsibilities in the landlord-tenant relationship within the private rented sector. I have every sympathy for tenants mistreated by their landlords and letting agents, and I am keen to protect their rights as much as possible, but for every letter that I receive detailing tenants’ heartbreaking and harrowing experiences with bad landlords, I receive a letter from a landlord about their experience of unprovoked damage caused by tenants and the thousands of pounds that it has cost them to set it right. I know that my hon. Friend is aware that it is a delicate balance. When that is upset, the image of the whole sector suffers, creating a self-fulfilling prophecy of decline. It is something that we need to address.

That, in a nutshell, is why we commissioned the independent review of the private sector to which my hon. Friend referred. The review is being carried out by Julie Rugg and David Rhodes at the Centre for Housing Policy at the university of York. It has a wide remit. It will look at how the sector meets current needs and expectations, and whether and how both landlords’ and tenants’ experiences might be improved. In the context of future demand and supply pressures in the private rented sector, the review will consider what needs to be done to ensure that private renting offers people the right type of homes of good quality both now and in future, and what more should and could be done to raise professionalism.

I was taken by my hon. Friend’s point about institutional investment. To be terribly frank, I am keen for more players to come to the table. I want councils and private developers to expand their housing supply, and I am intrigued by her suggestions about institutional investment. Institutional investment tends to be by big pension funds, which need, quite rightly, a rate of return to ensure that pensions are paid out. That is important, but one of the things that the private sector review could consider is the current make-up of the sector and whether that acts as a barrier to a fit-for-purpose product. In particular, Julie Rugg has been considering incentives for large institutions to invest in the private rented sector. That is extremely encouraging.

I meant to intervene earlier, when my hon. Friend was talking about the rent deposit scheme. Could he arrange a briefing for me on how it works and what the rules are so that I can work out why my constituents cannot access it and how they might be able to?

I certainly pledge to do that, so that my hon. Friend can provide an even better service to her constituents.

My hon. Friend’s other main theme was security of tenure, and I have a lot of sympathy with what she said. The review is considering security of tenure in exploring whether more needs to be done to improve the experiences of both landlords and tenants in the sector in relation to their rights and responsibilities and the delicate balance to which I referred.

Because I hear about it in my constituency surgeries, I understand the point about security of tenure, six-month leases and shorthold tenants. The average tenancy in this country lasts between a year and 18 months. That seems to suggest that many landlords are happy to allow their tenants to continue their tenancy after the initial six-month or fixed-term agreement has ended. I suggest that that is a contractual matter, and that it is up to the tenant and the landlord to come to a mutually beneficial agreement on what can be achieved, but I am keen to take on board what my hon. Friend says.

Julie Rugg and David Rhodes have engaged with a wide range of stakeholders from across the sector, and I am keen for my hon. Friend to contribute. I shall ensure that a relevant copy of Hansard is provided, and I am happy to facilitate meetings with my hon. Friend. I am also grateful to other hon. Members and stakeholders who found time to take part in the review’s evidence-gathering. The review is due to report to Ministers this October, and I look forward to seeing the results.

I want a strong private rental sector that encourages and assists the well-intentioned majority of landlords to stay within it and shows less professional landlords the red card. That will mean striking a balance between the rights and obligations of landlords and tenants and between regulation and voluntary initiatives. It relates to my hon. Friend’s point about stimulating as well as regulating; I like that. I expect and hope that the conclusions of the private sector review will advise us on whether we have struck that balance or need to do more. I look forward to receiving it.