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Housing: Shorthold Tenancies

Volume 718: debated on Monday 29 March 2010


Tabled By

To ask Her Majesty’s Government what plans they have to alter the present annual rent limit of £25,000 for assured shorthold tenancies; and what impact assessment of any such change has been carried out.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest which is in the Register.

My Lords, the Minister for Housing made a statutory instrument on 22 March raising the annual rental threshold for assured tenancies to £100,000 from 1 October 2010. This will extend the framework of assured and assured shorthold tenancies to the majority of private lettings as the original legislation intended. An impact assessment was published alongside the SI and placed in both Houses’ Libraries.

I thank the Minister, but really the notice has been quite short. That was obviously tabled after my Question. Is he aware that the Royal Institution of Chartered Surveyors said that London will be the most adversely affected and that it says:

“The Government needs to ensure that landlords and agents dealing with these properties are aware of the changes and will have time to access a relevant scheme.”

How much time is he proposing to allow?

The consultation around these proposals shows that there was very broad support for raising the threshold. So far as timing is concerned, these will not come into effect until 1 October 2010, which gives time for landlords to enter into arrangements, particularly around security for tenants’ deposits, which I think is the point being pressed by the noble Baroness.

My Lords, I wonder whether the Minister could help me with two questions. One concerns students, who I know have been very anxious that the threshold should rise. Could he assure me that students and landlords will be ready for this on 1 October, which is the start of the new student year? Secondly, I understand that no guidance about how this will be rolled out has been published. Could the Minister tell us when it will be published?

On the first point, it is of particular benefit to students, because although a £25,000 threshold might seem quite a high rent, when students club together to lease a property they have fallen outside the protections of the shorthold tenancies and the assured shorthold tenancies in particular. So far as guidance is concerned, I cannot give a precise timetable on that. Obviously the change here is relatively straightforward. Key protections for tenants are that their deposits be protected and the right to have two months’ notice.

Is the Minister aware of the extreme concern which has been expressed on this matter by the British Property Federation? It says that the amendment—which is what it amounts to—is very crude and that the inevitable serious consequences have not yet been properly considered.

My Lords, yes, we are aware of the representations that the BPF has made. We have liaised with it, and I think that some of its concerns have been assuaged. It was concerned in particular about a possible read-across to the Local Government and Housing Act 1989 and the ability of leaseholders to get security of tenure at the end of their leasehold period. We do not think that read-across is fair. Certainly there is no direct read-across in the legislation. Concerns have also been expressed around the Leasehold Reform Act 1967. No decisions have been taken on what, if any, amendments may be required to that legislation as a result of the changes we are proposing.

My Lords, is the Minister happy that the tenants’ deposit scheme is working properly? It has, I understand, been reported that landlords are bypassing the tenants’ deposit scheme by taking post-dated cheques, which does not seem to be quite the spirit.

Indeed, I have no particular data about that device being used to get round it. Obviously the three deposit protection schemes are very important. There is the custodial one in which it does not cost landlords anything to participate, other than the interest they lose in hanging on to the deposit. The two other schemes are insurance based, which obviously incur a premium from them. It is very important and I think it is right to say that if they do not participate in these schemes, they lose their right to just give two months’ notice to secure the property that is leased.

Does the Minister agree that it is extremely difficult for small landlords who may not be using an agency to know where to go for these deposit schemes? I use an agent, but I went on the internet to try to locate details of these schemes, and found it extremely difficult. What will the Government do to publicise this arrangement so that people know where they stand?

My Lords, as part of our broader response to the Rugg review, we have outlined a package of measures including not only a national register for landlords and regulation of letting and managing agents but setting up a private sector tenants’ helpline, which we are hoping to have in place by the end of this year.

My Lords, will the Minister assure me that that will be in place by the time the scheme is introduced, which he originally said would be October? Now he says that we will know about it by the end of the year.

My Lords, I was talking about one particular component of the package of measures—the private sector tenants’ helpline. This is an ongoing proposition which will be available to tenants for years to come. However, the point about making sure that tenants and landlords are fully aware of this when it comes into operation on 1 October is a fair one.