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Housing and Planning Bill

Volume 769: debated on Tuesday 1 March 2016

Committee (2nd Day)

Relevant document: 20th Report from the Delegated Powers Committee

Amendment 24

Moved by

24: After Clause 54, insert the following new Clause—

“Requirements relating to tenancy deposits: relevant persons

(1) The Housing Act 2004 is amended as follows.(2) In section 213 (requirements relating to tenancy deposits)—(a) in subsection (5) omit “and any relevant person”;(b) in subsection (6) omit “and any relevant person”;(c) in subsection (10) omit all the words after the second “property” to the end of the subsection.(3) In section 214 (proceedings relating to tenancy deposits), in subsection (1) omit “or any relevant person (as defined by section 213(10))”.”

My Lords, the first two amendments are in the name of my noble friend Lord Flight, who, unfortunately, cannot be here today. I should declare that I am a landlord.

My noble friend’s Amendment 24 provides that the relevant persons concept be removed, on the grounds that it is confusing and gives little or no protection to tenants. Where someone other than the tenant contributes to or pays in full the deposit for a home, they, as well as the tenant, are required to be given the prescribed information. Such a person is known as the relevant person. Failure to give the prescribed information leads to financial penalties, and the landlord’s inability to recover possession of their property should the need arise.

There is little need for this requirement, as the arrangement between the tenant and the relevant person is private, one that the landlord is not required to know about, despite being required to provide the relevant person with information. After all, the contract is between the landlord and the tenant, not some third party. Obviously, if the third party is party to the contract—for example, acting as a guarantor—that third party would and should receive the relevant information as to the whereabouts of a deposit, but not if the third party just helps out with the deposit. Surely that is a private matter between the third party and the tenant. A provision which can be forgotten about easily creates a needless trap for landlords, who are potentially hostage to unscrupulous tenants entering into such an arrangement and then seeking to conceal it from the landlord, who is left in breach of his obligations.

My noble friend’s second amendment concerns providing information electronically. Landlords are legally responsible for ensuring that deposits provided for a rented property are kept safe for the duration of the tenancy in an official tenancy deposit scheme. They are obliged to provide the tenant with details of where the deposit has been secured, known as the prescribed information. At present, the prescribed information must be issued to the tenant in paper form. In houses of multiple occupation, this can lead to volumes of paper.

The amendment would enable legal information on the location of deposit money, once secured in an official scheme, to be provided to tenants electronically. This already applies to some other communications, including the How to Rent guide, but would be best applied across the board, including to gas safety certificates and tenancy agreements. A recent survey of landlords found that 91% would prefer to send prescribed information to a tenant by email; 92% felt that their tenants would prefer such information to be sent by email and the emails stored; and 95% felt that serving information electronically would make the administration of letting out a property more efficient. We are constantly told that we now live in a paperless society, so it seems archaic to insist that prescribed information should continue to be sent only by paper.

My Amendments 26 and 31 are designed to address a particular issue which some landlords and tenants can face when seeking to reclaim a tenancy deposit held by the custodial tenancy deposit scheme. Under the Housing Act 2004, landlords are required to protect tenancy deposits by either registering the deposit with an insured tenancy deposit scheme or physically transferring the tenancy deposit given by a tenant to a custodial tenancy deposit scheme, which holds the deposit during the tenancy. The Government have included in the Bill a streamlined repossession procedure when a tenant has abandoned the property. This presents an opportunity to amend Schedule 10 to the Housing Act 2004 to similarly streamline the custodial deposit repayment procedure where a tenant or landlord is not contactable at the end of the tenancy.

The problem that I seek to address can arise at the end of a tenancy when a landlord or tenant seeks to obtain a repayment of the tenancy deposit from the custodial tenancy deposit scheme that holds it. Both the landlord and tenant have to agree on the amount of deposit to be returned for the scheme to release the funds to the relevant parties, failing which the matter can be referred to the dispute process of the scheme or to the courts. However, one of the significant issues which landlords and sometimes tenants face is recovering the deposit from the custodial scheme when the other party is simply not contactable or fails to respond to letters and emails. In these circumstances, a landlord has to go through a lengthy procedure to secure a repayment from the deposit held by the custodial scheme if they have suffered a loss. This involves the landlord drawing up a statutory declaration before a solicitor, setting out what deductions should be made and why the tenant is not contactable and forwarding this to the custodial scheme. It is a long-winded process which leads to delays and additional costs for the party making the statutory declaration.

Interestingly, legislation in Scotland and Northern Ireland approaches this problem in a different way, and my amendment to Schedule 10 to the Housing Act 2004 proposes that we should adopt that process here. In Scotland and Northern Ireland, where a tenant fails to respond to requests from the landlord regarding the deposit repayment, the portion of the deposit requested is paid by the custodial scheme to the landlord once the custodial tenancy deposit scheme is itself satisfied that the tenant has failed to respond. A similar process applies where the tenant says that the landlord is not responding. This means that the deposit is repaid more quickly, without recourse to solicitors and statutory declarations, while ensuring that if the tenant or indeed landlord later reappears, they can seek to recover any disputed deposit through the courts. I am further advised that the proposed process has been working very successfully in both Scotland and Northern Ireland for the last three to four years.

I am advised that the current statutory declaration process is used in over 4,000 cases each month. My amendment will lead to a significant streamlining of the deposit repayment process where parties fail to respond to repayment requests, and will lead to reduction in time, expense and worry for landlords and tenants who need to get the deposit repaid by the custodial scheme. I beg to move.

My Lords, as this is my first intervention in Committee, I draw attention to my various housing and planning interests on the register.

Amendment 33B, to which I am pleased to note that the noble Lord, Lord Kennedy, has added his name, seeks to address, in a modest way, the key issue that arises in this Bill. That issue, for me and I think many others in your Lordships’ House, is that the Bill seeks to do good things in increasing the supply of housing and supporting first-time home buyers, but it neglects, indeed disadvantages, those who simply cannot become owner-occupiers. While there is widespread support for the Bill’s measures to help more young people to buy, there is also widespread alarm that this is not additional to helping the less affluent but is in place of doing so. We are worried that the options for poorer households are being closed off. Councils and housing associations, as we will be exploring in later amendments, are likely to be doing less for those on average and below-average incomes. Where, then, can these families and single people go?

This amendment seeks to put in place one small but significant opportunity for the Government to assist those who, with all the good will in the world, are not going to be buying a property anytime soon, yet are most unlikely to obtain council or housing association accommodation. It would give the Secretary of State the power to underwrite a national scheme that enables organisations like Crisis—the leading charity in this field—to give private landlords a guarantee against damage, rent arrears et cetera. Where there is a bond guarantee, the landlord does not need the usual month’s rent as a deposit. As well as overcoming an insuperable barrier for a tenant with very little money, this approach avoids the administration in collecting, chasing up and returning deposits.

Now that social housing is so hard to come by, this is seldom a possibility for single homeless people since they are unlikely to get classified as in “priority need”. Even where the local authorities have a legal duty to find accommodation for homeless households, the majority of councils now look to the private rented sector to discharge that duty. This sector may be far from ideal for many people in terms of security, affordability and quality, but it is now the only answer in so many cases. The problem is that, since private landlords are not charities and are running their businesses, they do not want to take risks so even this avenue is blocked for many applicants.

The latest survey commissioned by Crisis from Sheffield Hallam University shows that 55% of landlords are unwilling to take in anyone in receipt of housing benefit, not least because the local housing allowance does not cover all their rent, and 82% of landlords were unwilling to rent to homeless people. So numbers are growing of people in bed-and-breakfast hotels or hostels, or indeed living on the streets. This is vastly more expensive than finding a place for them in the private rented sector.

With a rent deposit guarantee in their armoury, local PRS access schemes have something concrete to offer private landlords. There are currently over 280 of these schemes, many supported by Crisis with funding from the Department for Communities and Local Government. I should say in passing that the future of this grant aid is now unclear and I hope DCLG is minded to renew it. An evaluation by Sheffield Hallam University found that in four years these PRS access schemes had secured homes for 8,000 people who had been homeless and these tenancies were shown to be sustained in 90% of cases.

Bond guarantees mean these local groups can overcome the huge and understandable reluctance of landlords to take any risks in whom they house. What is needed is watertight government backing which local PRS access schemes can deploy. Only that part of the guarantee which gets called down actually costs any public money. Experience shows that in only about 15 to 20% of cases is the bond called upon at all, and in many of these instances the amount claimed is relatively modest. Compared with the bricks-and-mortar cost of a new home, this government subvention is miniscule and it achieves immediate revenue savings.

This amendment, therefore, paves the way for a national deposit bond guarantee scheme, along with a set of quality standards for the organisations who could draw upon it. As so many doors close on housing for those in the most acute need, this arrangement would give Government the chance to be helpful in a modest but important way. Since it also saves public money into the bargain, I hope the Minister finds it appealing. After all, we will shortly be discussing the very generous guaranteed support for home buyers that to date requires underwriting to the tune of £9.7 billion—hundreds of times more than this guarantee scheme that would enable much poorer people to get a roof over their heads.

My Lords, I congratulate the noble Earl, Lord Cathcart, and the noble Lord, Lord Best, on their practical and sensible amendments, which I hope the Government will accept. In terms of difficulties for people, we are dealing with a sensitive area because their homes are at stake. It is quite reasonable to adopt the proposals that we have just heard outlined in detail, and we support both amendments.

My amendment, Amendment 28, is rather different. It would require the Secretary of State to undertake a review of the tenancy deposit scheme, which was introduced in the Housing Act 2004. One reads from time to time of difficulties experienced by tenants, in particular, although it could also, I suppose, be landlords who have difficulties, in recovering deposits they have paid. Very often, one reads that allegations are made that the tenant has damaged the property and so forth. Given that usually not large sums are at stake, it seems to be the case that some tenants give up the ghost rather than pursue the matter. There is a scheme for dispute resolution, which is operated by the relevant agency without charge. However, it is not binding on both parties to accept the scheme’s involvement, so if a landlord, or it could arguably be a tenant, is at the wrong end of a claim, the other party would have to seek redress through the courts. We have already had a reference to the small claims limit this afternoon, and it is probable that most deposits would be within the range of up to £5,000. No legal aid is available and no costs are recoverable on a successful claim. This is going to make it less likely than ever that tenants will exercise their right to recover a deposit which is being wrongfully withheld.

I have only one relatively direct experience of this matter inasmuch as the daughter of a Newcastle City councillor colleague of mine and her two friends were living in accommodation in London and had paid a deposit. Issues arose about to whom the deposit had been paid and so forth. It dragged on for a considerable time. It was clearly necessary for these three young people to get some legal advice—fortunately for them, they were not seeking it from me—but it got a little too much for at least two of the three tenants, and they decided that they would rather move on and forget about it. However, they lost a modest sum of money, by most people’s standards, but money they could ill afford to do without.

This amendment is calling only for the Government to review the operation of the scheme. It has now been in existence for 11 or 12 years. I do not know whether it has been reviewed before, but given the pressure on the private rented sector, which has grown considerably with the proportion of private rented properties in the market in the order of, I think, 20%, whereas a few years ago it used to be 9% or 10%, it is a growing area and the issue of deposits potentially becomes a matter of growing concern.

I hope the Minister will indicate the Government’s willingness to inquire into this. There are various agencies and interest groups which would no doubt be willing to collaborate. It would be as well to institute such a review at an early stage and then, if necessary, to amend the scheme or amend the 2004 Act, in particular, to see that proper accessible protection can be afforded to those who might be at risk of unscrupulous landlords, in this case, taking advantage of them and relying on them to give up the ghost before seeking redress, which is difficult and potentially expensive to obtain.

My Lords, I thank my noble friend Lord Cathcart for explaining on behalf of my noble friend Lord Flight the reasons behind Amendments 24 and 25. If enacted, Amendment 24 would remove the requirement for a landlord to notify a “relevant person” that their tenant’s deposit has been secured in a Government-authorised tenancy deposit protection scheme.

Section 213 of the Housing Act 2004 defines a relevant person as,

“any person who, in accordance with arrangements made with the tenant, paid the deposit on behalf of the tenant”.

This can be a family member but in most cases it is a charity such as Crisis or Shelter, which offers deposit loan schemes to vulnerable people with a history of homelessness, or a local authority, which pays the deposit through housing benefit in cases where tenants are out of work or on a low income.

I welcome proposals which reduce burdens for business and I understand the spirit in which this amendment has been tabled. However, the proposals set out in Amendment 24 have the potential to adversely affect the willingness of a charity or a local authority to pay a deposit on behalf of a tenant. This could lead to vulnerable people or those on low incomes being unable to access the private rented sector, which is something we would want to avoid.

Amendment 25 would allow tenancy deposit protection information to be provided to the tenant by their landlord electronically by email. The Government welcome proposals that seek to reduce burdens on business but in this case primary legislation is not required. The aim of this amendment can be achieved through secondary legislation, using powers in the Electronic Communications Act 2000. I will be happy to look further into the proposals outside this Chamber and consider introducing secondary legislation at a later date. I hope that this explanation will reassure my noble friend and I hope that he will withdraw his amendment.

Amendments 26 and 31, which were tabled by my noble friend Lord Cathcart, seek to reduce the time taken to repay a deposit to a tenant or landlord where either party is absent or unco-operative. I accept that there is a minor cost to a landlord or tenant in arranging for a solicitor or magistrate to witness a statutory declaration, but this process is necessary for the landlord or tenant to prove beyond any doubt that they have attempted to contact the other party and that they have not been able to reach an agreement on the amount claimed from the deposit before it is repaid. The example that the noble Lord, Lord Beecham, gave just before he sat down underlines this. Removing the requirement could leave the process open to abuse, with no independent verification that the other party had been contacted to give their consent. With this explanation, and given that the vast majority of claims are settled without a problem, I hope that the noble Lord will not press his amendments.

Amendment 28, in the names of the noble Lords, Lord Kennedy and Lord Beecham, would require a review of the tenancy deposit scheme. I understand that this amendment has been tabled in order to ensure that tenants are treated fairly at the end of their tenancy, and I know that we can all agree with that aim. My department has a governance role to ensure that the schemes are working well. The performance of the schemes is monitored through monthly key performance indicators, regular governance meetings and information provided by the tenancy deposit scheme users’ group, which includes landlord and consumer representatives.

From the overall feedback received, we are satisfied that the alternative dispute resolution system generally works well. Of the 11.5 million deposits which have been protected since the launch of the scheme, less than 2% have gone to adjudication. On average, following adjudication, 27% are awarded to tenants, 17% to landlords or agents, and just over half are split between the two sides.

Looking to the future, we are satisfied that the tenancy deposit protection schemes awarded contracts for new custodial schemes from 1 April this year have the necessary alternative dispute resolution processes in place to ensure that tenants will continue to be treated fairly. This was a key evaluation criterion in our re-procurement exercise carried out last year.

In conclusion, I hope that this explanation will assure noble Lords that tenants’ deposits are and will continue to be returned to them fairly and quickly at the end of the tenancy, and I hope that they will not press their amendments.

Finally, I turn to Amendment 33B, tabled by the noble Lords, Lord Best and Lord Kennedy, which gives the Secretary of State powers to underwrite a national tenancy deposit bond guarantee scheme. In 2014-15, 220,000 households were prevented from becoming homeless. Of these, 54% were assisted to remain in their own home and 46% were helped to a new home. Statistics show that in at least 42% of cases households were assisted into private rented sector accommodation. In support of this, many local authorities, housing associations and charities in England already have a rent deposit or bond scheme.

The Government have already funded Crisis to the tune of nearly £14 million to develop a programme to help single homeless people to access the private rented sector. Nearly 9,000 single homeless people have been helped into private rented sector accommodation so far, with a 90% tenancy sustainment rate. This Government’s approach is to support a provision of resources to local authorities at a local level. This is because they can then use the funding flexibly to meet local needs. Of course, different areas have particular requirements. To divert scarce funding into a single national approach would not always be the best or most effective use of resources and to specifically underwrite a national scheme may not be the best use of resources.

I hope that this explanation will reassure noble Lords and I hope that they will not press their amendments. But before I sit down I will answer a specific question from the noble Lord, Lord Best, about the DCLG continuing to fund the private rented sector access programme. We have not made any decision on further funding, but from the start of the programme all funded schemes were required to attract funding from other sources and make plans for future sustainability. I will keep the noble Lord updated on this.

Before the noble Baroness sits down, I think her response to the national rent deposit guarantee scheme is quite disappointing. Will she say why? She said that a number of authorities have these schemes, but what is the objection to having a national scheme? We are talking about very modest sums of money.

I think that the noble Lord will accept that the fact that the scheme is currently working very well and that some local authorities may actually decide to underwrite the schemes themselves in certain cases to prevent homelessness is—and we are looking after every single penny—a reason not to do something unless there is evidence to say that we would need to do it.

I am aware that this is Committee stage. How many local authorities have such schemes in place, and what would be the additional cost, in the Minister’s estimate, of producing a national scheme?

Of course, but I would have thought that if the Minister was responding on cost plans, she might have the information.

That is very true. If the noble Baroness will forgive me, I will come back to her. I may well have those figures in my notes, and, during the course of Committee, I will come back to her.

I wish to return to the issue of the deposit scheme. The noble Baroness relies on the apparent success of the alternative dispute resolution scheme. She is right to do so for those who use that scheme, but of course the scheme is, in a sense, optional. Both parties have to agree to use the resolution scheme. If one party does not—and it might well be the landlord—then there is no resolution through that mechanism, so merely quoting the figures which are produced by that scheme does not necessarily reflect the situation in the marketplace. I do not know whether the Minister has or can procure any evidence of the incidence of problems outside the ADR scheme, or what the impact might be of making it not a matter to be agreed between the parties, but something in place for either party without necessarily having to sign up to an agreement. That might be a way of facilitating access to the scheme, usually for tenants, who would otherwise have to deploy other methods, including possibly their own resources. For the reasons I have already given, that will often be difficult.

With respect, while the ADR scheme is very useful, it does not necessarily cover the whole area. My amendment seeks the involvement of the Government in looking at the situation in the remaining area and deciding whether changes need to be made. I hope the noble Baroness will agree to have another look at that aspect of it.

I will look at it again, but this is covered in How to Rent. I certainly know from my own experience, and I declare a past interest in this, that within a certain period from the start of a tenancy—I think it is 28 days—not only does the tenancy deposit scheme have to be set up, but the landlord has to produce the certificate in the house. We talked about an electronic version of it. Alarm bells should ring for a tenant if such a scheme has not been set up and evidence produced of it, but maybe I am not getting the right end of the stick.

I understand the difficulties of all this, but I do not think that the noble Baroness quite has the point. You can enter into the scheme but, as I understand it, it requires both parties to agree to the alternative resolution of a problem. If one party—usually the landlord—does not, that way of disposing of the matter does not exist. The question therefore is: what other methods are available and how can the system be improved? One way is to make not just the deposit but use of ADR compulsory where there is a dispute. Perhaps that is worth looking at but, as my amendment suggests, an overview of the whole situation would be a useful start.

I will come back briefly to the national deposit scheme. When the noble Baroness writes to my noble friend about the amount of money and the authorities involved in such schemes, will she also say what percentage of tenants are protected by them, and about the thought processes behind how the Government decided not to go for the national scheme? I think she will say that most of it is covered, but what consultation took place to decide not to come forward with a national scheme?

I think my noble friend has finally sat down. I thank the noble Lord, Lord Beecham, for supporting all the amendments. I only wish that the Minister’s response had been the same. Unfortunately, it was rather like a curate’s egg—good in parts. I thank her for agreeing to take away the idea of giving the information electronically. However, I am disappointed in her response to the other two amendments I spoke to. I will read what she said and no doubt my noble friend Lord Flight and I may come back to her, but at this stage I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendments 25 to 28 not moved.

Amendment 29

Moved by

29: After Clause 54, insert the following new Clause—

“Security of tenure

(1) After section 19A of the Housing Act 1988 (assured shorthold tenancies) insert—“19B Minimum length of certain assured shorthold tenanciesAny assured shorthold tenancy (other than one where the landlord is a private registered provider of social housing) granted on or after 1 April 2018 must be for a fixed term of at least thirty-six months, and it is an implied term of such a tenancy that the tenant may terminate the tenancy by giving two months’ written notice to the landlord.”(2) In section 21 of the Housing Act 1988 (recovery of possession on expiry or termination of assured shorthold tenancy), after subsection (4) insert—“(4ZZA) In the case of a dwelling house in England, no notice under subsection (4) may be given before the end of the period of thirty-six months beginning with the first day of the tenancy.””

My Lords, I declare an interest as a councillor in the London Borough of Lewisham. Amendment 29 in my name and that of my noble friend Lord Beecham seeks to amend the Housing Act 1988 to make the minimum length of an assured shorthold tenancy granted on or after 1 April 2018 a fixed period of 36 months. Most assured shorthold tenancies usually last between six and 12 months at present. The contract says how much rent to pay, how long the tenancy lasts and who is responsible for the repairs. The landlord cannot increase the rent during the fixed term of the assured shorthold tenancy unless the contract sets that out. When the tenancy ends and the tenant decides they wish to sign up for a further fixed period the rent can be increased in the new agreement.

Even an assured shorthold tenancy for one year is a relatively short time and this amendment seeks to give tenants a longer period to live in a property, enjoy more security and put down some proper roots. It is a longer period than at present but not excessively long. The private rented sector is increasing all the time, and providing more stability and a longer tenure for tenants must be right. We hear of “generation rent”—people not being able to afford to buy their own home and more people living in properties they have to move round from more regularly. That is not good for them or the wider community. It is not great for landlords either.

As I said earlier, a greater proportion of people are living in the private rented sector. It is not only single people and couples but also people with children. People with children do not want to move round needlessly and have less certainty about their living arrangements, certainly with things such as their children’s schools. I am sure that noble Lords have seen the English housing survey for 2014-15 which showed that over the last 10 years the number of tenants in the private rented sector with dependent children had risen from 30% to 37%. I think that that trend will continue.

The amendment also allows tenants to give two months’ notice if they wish to move and leave the property. This is important as it does not hold people to a tenancy when they need more flexibility because their circumstances have changed. At the same time, it gives tenants more security in the length they can rent a particular property, subject to conforming to the other requirements of the contract they agree with the landlord. The rights of the landlord are not affected in any other way by this amendment. I will listen with interest to the Government’s response. I beg to move.

My Lords, I hate to voice a tone of slight dissent from what the noble Lord has introduced because I know where he is coming from. I declare an interest because I am a private rented sector landlord. Some of our assured shorthold tenants had six months or one-year lettings originally and now double-digit years later are still there, with or without dependent children. I think we have seen at least two families grow up and the next generation start to fly the nest. I am very proud of that. The critical point is that there is no bar in letting longer term at present.

There are also many reasons why it is convenient for both parties to rent shorter term. I live in an area that is customarily known as the “Gatwick diamond”. It is an area of Sussex and part of Surrey where the great driver is the industrial and commercial activity associated with Gatwick Airport. Many people move in or have temporary secondments to places such as that or indeed may be seconded elsewhere to postings abroad for varying times—six, 12, 18 months and so on. This applies whether they are landlord or tenant. Whether it is job secondment, moving home or being in the process of selling a property somewhere else and moving in, my wife and I have a constant source of applicants for accommodation. There is a need for the short term—it is very important and part of the fluidity of this section of the market.

Another thing I would be slightly fearful of in the noble Lord’s amendment is when a buy-to-let situation exists on that sort of mortgage. The deferral of the reversion might have undesirable effects in terms of how the mortgagee would see the risk. A mortgagee, of course, needs to be in a position to lay claim to the property and dispose of it on the open market to redeem the mortgage, and needs to be able to do so at reasonably short notice. That obviously should not be operated to the disadvantage of a contractual tenant under an AST, but if it is deferred for three years, I can see that that might interfere with the way in which a mortgagee could perceive that particular bit of the risk.

The basic premise is a little bit unbalanced as between the parties. I have some sympathy with the noble Lord here, but not every part of the country and not every sector suffer from the issue that I suspect this amendment is trying to address. The private rented sector is important. I like to think that most private sector landlords think as I do, offering a quality product and treating our tenants as decent people, as human beings, as neighbours, as friends and, indeed, seeing their children grow up and taking great pleasure in that.

However, we have been down this road before on creeping security of tenure. Memories are quite long in that respect. I remember that from the 1960s until the 1980s the private rented sector was more or less annihilated in all but name. I would not like to think that the message here is that this is a harbinger of that situation. With the benefit of those thoughts, I suggest that the Committee should not go along with this amendment, although I have some sympathy with the rationale behind it.

I very much support my noble friend’s amendment, which proposes that any tenancy must be offered for a fixed period of three years. Of course, there may be people who have sold a house and are waiting to buy who need a short tenancy, or there may be students who want it for less than a year—nine months, perhaps—and will then move on. Obviously, no one is saying that any tenant and landlord should be locked into it irrespective. The tenants themselves will be the best judge of how long they are likely to need that tenancy.

As it stands, all the power is with the landlord. I was interested to hear in the speeches opposing this no recognition of the fact that something like a third of all privately rented property is below the decency standard and that if any tenant in that situation asks for repairs, they risk—I am not saying it will happen—losing the right to extend their tenancy. After six months, 12 months, or whenever that tenancy is up for renewal, they can and will be out. As a result, we know, not just from Crisis and Shelter, but from our own environmental health officers in local authorities, how often tenants are afraid to require repairs to be done because if they do, they will lose their home. There is too much of an imbalance of power between the landlord and the tenant, given the legal situation in tenancies, the level of rents and the shortage of supply.

Who is most interested in six-month, short-term tenancies? It is not necessarily the landlord. A good landlord may be delighted to have a long-stay tenant without the risk of voids, the cost of churn and so on. I am sure that there are many such landlords in that situation; I do not doubt that the noble Earl, Lord Lytton, is one such.

Who does have an interest? The letting agencies, of course. Every time there is a new letting after six months, they get a new set of fees. The six-month limited tenancy is gold to the letting agencies. It is desperate news for tenants who might need repairs. There is also a problem in respect of mortgage providers: I understand that only a couple of building societies, one of which is Nationwide, are willing to underwrite buy-to-let where the assured tenancy is likely to last for more than six months. Therefore, everything colludes to prevent a good landlord doing what he might like to do and to prevent tenants having the security of putting down roots in their community. It is not in the interest of a bad landlord who does not want to do repairs; it is not in the interest of the letting agency; it is not in the interest of the mortgage providers. There is, therefore, a complete imbalance of power. I am not speaking about those tenants who, quite rightly, see the rented sector as a temporary tenure on their way through to either a different home in a different part of the country or to a different form of tenure. I am talking about those who are locked into the private rented sector with children who need to go to schools, with GPs’ surgeries that they need to get placements in, and who may have a disability in the family and need the support of neighbours who will help them. They should not be at the whim of a bad landlord, a bad letting agency and overly risk-averse mortgage providers for buy-to-let.

This amendment would say that that tenancy must be offered; rogue tenants would be sent on their way, as they should be. It would help good tenants and strengthen the arm of good landlords to provide what is needed, which is homes in which people can put down their roots.

My Lords, will the noble Baroness comment on the following scenario, which happens very often in the part of the world I inhabit? A family takes a foreign posting; they have a house in the UK and the posting is, perhaps, for a year, which is quite common. During that year, they wish to let the house that they own in the UK. When they come back from that foreign posting, however, they need the house back. In the circumstances that would occur under this amendment, they would not be in a position, as I understand it, to let for a certain period of a year and get their house back. Might I have the noble Baroness’s observations on that?

My Lords, in that situation I would expect there to be an agreement. Where a landlord is seeking to regain possession for their personal use—as their own home—that, in my understanding, has always been recognised in law as a different situation from someone being a permanent landlord and seeking merely to churn their tenants.

My Lords, I am very interested in this subject—noble Lords know my interests as declared—and I am interested in what is being said today. I think the noble Earl, Lord Lytton, deals with a market that he clearly understands well, and that is interesting. However, I have had many different comments and reports sent to me by different people. My own personal experience is that, when I offer people two years, they say they do not want that; they do not want to be tied to that and would like only a year. Is the landlord obliged to offer them renewals for three years, even if the person wants it for only a year?

My Lords, the proposal is that the landlord should be required to offer it, but that does not in any sense preclude the tenant and the landlord deciding that they want a different tenure.

All the agreements for letting residential properties in this country are extremely complicated. In Australia, there is just one in New South Wales. I do not know about other states because there is not a federal law. In New South Wales, you just go into the local paper shop and pay $7.50. That is your letting agreement and everyone—big and small, rich and poor—abides by those. There is about an inch and a half in which you could type quite a lot of special agreed clauses but the rest of the format is a basic thing. It is so simple.

The point made by the noble Earl, Lord Lytton, that this amendment is rather overbalanced against the landlord is relevant and important. Are you going to create a different type of tenancy from the assured shorthold? What will you do in cases where the landlord dies and his family is obliged to pay all death duties in advance of getting probate? What will happen under those circumstances? If you must sell the property with a sitting tenant, of course you will not get anything like the full value. Will the Exchequer allow for that and value the property down accordingly, or will it be done on the open-market value of the vacant property? What would be the special provision where the tenant was not paying the rent and that had built up? Would that all be covered by a new type of tenancy agreement? There are so many complexities that we need to look at here, so this is rather badly balanced.

I think the noble Baroness, Lady Hollis, described people as being at the whim of bad landlords. I am sure that anyone who has a bad landlord is pretty unfortunate but there are so many honest, reliable landlords and, likewise, many good tenants who are happy. I know many people who have rented for years and are still in the same property after well over a decade, as was mentioned. There is a difference between that and the fact that the landlord is obliged to offer three years while the tenant can go any time at two months’ notice. That seems a bit extreme, one way or the other.

My Lords, perhaps I can deal with the noble Baroness’s comment on what happens in the event that the landlord dies. This is an amendment moved by my colleague on the Front Bench, and if there is a difficulty with it there is no reason at all why the Government cannot come back with an amendment to deal with the thrust of the case laid in the amendments by my Front Bench but which includes a provision for those circumstances. That is what we are here to do: to legislate. These amendments have been proposed but Ministers could take them away and say, “Yes, there is a point here but if we build in a system of exemptions then these particular problems will not arise”.

I can also deal with the question of tenants in arrears, which the noble Earl, Lord Lytton, referred to. As I understand it, under Clause 55—in Part 3, which is headed “Recovering abandoned premises”—the Government’s position is actually to simplify the whole process of dealing with what happens where,

“the unpaid rent condition is met”.

That would cover where people are in arrears and where mortgages are being paid, as I presume that under that provision the landlord would then be entitled to secure possession of his property. That deals with one of the main objections in the contribution of the noble Earl, to which I listened carefully.

Finally, the noble Earl referred to people working at Gatwick Airport who did not necessarily need longer-term tenancies. The amendment says that,

“it is an implied term of such a tenancy that the tenant may terminate the tenancy by giving two months’ written notice to the landlord”.

The tenant is not locked into the agreement at all. The tenant can pull out of the agreement at a moment’s notice simply by saying, “I gave two months’ notice to the landlord”. What we are doing here is protecting tenants by not locking them in, in the sense that they can pull out. We are protecting landlords—or the Government are protecting them—under the provisions of Clause 55 in terms of arrears. In terms of landlords dying, as I said, that could be dealt with by further consideration by the Government.

However, what we are doing more than anything else is giving people who take on tenancies a sense of security as to where they live. From what I hear from tales brought to me by my sons’ friends, who have had different tenancies in London over a period of years, many tenants in London do not know where they are going to be. They do not know whether the landlord will want the property back at the end of 12 months. People are entitled to know that the weight is moving at least a little more in favour of the tenants to give them more rights. We are not granting people long-term security of tenure and indefinite tenancies. We are simply extending it from one to three years to give more balance to the way that tenancies operate in the United Kingdom.

My Lords, I want to put this problem in a slightly wider context. The noble Baroness, Lady Hollis, said that the present system of short tenancies was bad for tenants, bad for landlords and bad for housing. It is also bad for the local community. There are areas in the north of England of cheap, mainly terraced, housing and former council estates. The houses are cheap—as I will explain later—the rents are cheap, and keeping them in a decent condition is a constant struggle for owners, for the council and for people living in them. The result of the system is that there is a high churn—that is the technical word—of tenants. Many people live in a house for only a short period. That is clearly linked to the system of tenancies.

More than 10 years ago, I was chair of the governors of the local primary school. One problem the school had was the children who were living in that kind of property. It is a traditional area of working class owner -occupation. Some 50 or 100 years ago, people bought the houses from the mills that they worked for. When I first knew the area, owner-occupation was 80% or more, but private landlords have moved in very significantly and taken over many of the properties: one-third or more in the period I am talking about. Two-thirds of the children in the school spent most of their primary education there. In that respect, it was a very stable school: children went into the nursery or infants at the age of three or four and left at 11 when they went to secondary school. However, one-third of the children turned over every year. Every year, one-third of the children in each class were new and did not stay long enough to settle, to get a proper education and have the stability of being in the same school for some time.

That is just one example. When I first knew it 40 years ago, this was a pretty stable working class community of extended families. People who bought houses there as young couples had their parents living in the next street and their grandparents round the corner or in the sheltered housing just down the road. That has been broken down. There are lots of reasons for that, but the single most important one is the growth of private sector housing at the bottom end of the market. There are some good landlords. In that area, the best ones are those who live in the street and own one or two other properties in it. Other very good landlords are those who were left a house when their parents died, look after it well and live in the same town. However, there are absentee landlords who operate through housing agents. I have had people ringing up from Bognor Regis demanding to know why, as their councillor, I was not doing something about the rotten tenants in their house who had just done a moonlight flit and taken all the copper. I had to explain that I was not their councillor but that I was concerned about the house. But I also had to ask why they put those tenants in. I said, “Well, you know what the street is like. It is like that. We are desperately trying to hang on to the good residents there, but you know what it is like”. They said, “No, we have never been there, why should we?”. It is that kind of landlord in the private rented sector which is a disaster. That is why I would tend to support this amendment, which is just one of the things that might be done.

My Lords, Amendment 29, if enacted, would introduce a minimum of three-year tenancies in the private rented sector in England and would mean that landlords would not be able to rely on the notice-only or no-fault ground for possession—known as Section 21—within the first three years of a tenancy. Tenants would be able to end the tenancy by giving, as the noble Lord said, two months’ notice at any time.

Let me make it clear that this Government are committed to building a bigger and better private rented sector which provides security and stability for tenants and flexibility for landlords. We have taken action to support the supply and quality of private rented accommodation by resisting unnecessary and unhelpful regulation while cracking down on the worst practices of some rogue landlords.

Our model tenancy agreement, introduced in September 2014, promotes longer tenancies for those landlords and tenants who want to sign up to them, but there is no one-size-fits-all approach to tenancy lengths, as noble Lords have said. Many landlords are looking to rent out a property for the longer term, but there will be some for whom letting a property is a short-term plan and who will need the property back at some point, perhaps for their own family to live in, as the noble Earl, Lord Lytton, said. So, the system does need flexibility.

Although I understand the spirit in which this amendment is tabled, the amendment would be counterproductive. It would overburden the market with restrictive red tape, stifling investment and the supply of rented housing at a time when we most need to encourage it. This would not help landlords or, indeed, tenants.

Let me explain. Before assured shorthold tenancies were introduced in the Housing Act 1988, the private rental market was in decline. Lifetime tenancies and regulated rents meant that being a landlord was simply not commercially viable for many property owners. But since 1988, the private rented sector has grown steadily—growing from just over 9% of the market in 1988 to 19% today. Landlords, and in most cases tenants, welcome the flexibility of the current assured shorthold tenancy regime, which does not lock either party into long-term commitments and promotes mobility.

We must be mindful that recent figures show that tenancy lengths are on average three and a half years. However, without the certainty that landlords can seek repossession when required, many would be reluctant to let their properties.

If the landlord were reluctant to let the property, what would then happen? It would go on the market for sale, making it more available to young owner-occupiers, or would-be owner-occupiers. Is that a bad thing given the Government’s philosophy?

It may not go on the market. It may, as I and other noble Lords have said, be for the use of the landlord who owns the property. There are a variety of reasons why a landlord should wish to repossess a property.

The noble Baroness’s question on retaliatory eviction is very valid. She will remember that the intention of the Deregulation Act 2015 was to provide tenants with protection from such eviction. Where a tenant has raised a legitimate and verified complaint with the local authority they cannot be evicted using the no-fault Section 21 procedure for six months.

The noble Baroness also talked about buy-to-let mortgages. Mortgage lenders have told us that following the introduction of our model tenancy agreement, with appropriate break clauses, there is no longer any impediment to permitting longer tenancies for their landlord customers. The Nationwide Building Society permits tenancies of up to three years and Barclays for up to two years. Lloyds, the biggest player in the buy-to-let market, is in full agreement in offering three-year tenancies and plans to implement the policy by the summer of 2016. The Housing Minister wrote to the Council of Mortgage Lenders in January, urging it to encourage those lenders who have not changed their policies to do so, and further discussions will be held.

The noble Lord, Lord Campbell-Savours, suggested that when the tenant is in arrears the landlord could use the abandonment procedure to regain possession. The abandonment procedure, which is introduced in Part 3 of the Bill, is designed specifically to deal with abandoned properties—which may also be commensurate with not paying rent—but it is not intended as a route to remove a tenant in arrears. It is for a property that has genuinely been abandoned. Where a tenant was in arrears but confirmed that they were still in occupation of the property, you could not use that procedure.

The noble Lords, Lord Campbell-Savours and Lord Greaves, talked about the impact on communities. Recent figures from the English Housing Survey for 2013-14 show that tenancy lengths are, on average, three and a half years. According to the English Housing Survey, three in four private renters ended their last tenancy because “they wanted to move”. Tenants value the flexibility that private renting offers, with the majority of people under 35 saying that they do not want longer tenancies, as my noble friend Lady Gardner of Parkes pointed out.

I believe the current framework strikes the right balance between the rights of landlords and of tenants. I hope that that will encourage the noble Lord to withdraw his amendment.

My Lords, I thank all noble Lords for participating in this short debate. I say to the noble Earl, Lord Lytton, that I have great respect for him and his knowledge of this sector but there are landlords in the private rented sector who want a longer period to rent to tenants. My amendment seeks to address that issue by retaining the flexibility that both the landlord and the tenant want. It is only a probing amendment but it highlights an issue for some tenants and landlords; namely, allowing longer assured shorthold tenancies where these are wanted. There are, of course, many excellent private landlords, including, I am sure, all the noble Lords who are landlords. I beg leave to withdraw the amendment.

Amendment 29 withdrawn.

Amendments 30 to 33B not moved.

Clause 55: Recovering abandoned premises

Amendment 34

Moved by

34: Clause 55, page 25, line 29, at end insert—

“(e) the local housing authority responds to a request by the landlord confirming that they suspect the property to be abandoned.”

My Lords, at Second Reading I and many other noble Lords expressed reservations about the proposals on abandonment. Creating a fast-track process to reclaim possession of a property that has been abandoned has a number of risks. Taking the courts out of the process leaves the tenant in a potentially very difficult position. What is also odd about this provision is that we have spent the first day and the first part of this second day in Committee talking about rogue landlords and seeking to protect tenants from their unfair and often illegal practices. But this part of the Bill could be seen as a rogue’s charter.

It creates a court-free process to get rid of your tenant if you do not like them so that you can get other people in who may pay a few more quid in rent. In 12 weeks the landlord can get possession of their property, after eight weeks of rent arrears and if the tenant has failed to respond to three notices. There do not appear to be any significant problems regarding properties being abandoned. Can the Minister point to the evidence for these proposals being necessary?

Landlords already have powerful rights to regain possession of their property. They can evict tenants through the courts using Section 8 or Section 21 notices and can also use implied surrender in cases of abandonment. Under implied surrender, a landlord may take instant possession of a property without court approval if the action of the tenant clearly implies that they have surrendered the tenancy. We should be clear that genuine cases of abandonment are rare and this is a simple protection for tenants.

Can the noble Baroness also set out how vulnerable tenants will be protected from rogue landlords seeking to make use of these clauses? People can be called away or their circumstances might change. It could take more than eight weeks to get their benefits or other matters sorted out. Vulnerable people in particular may not respond to letters or emails that are sent to them. So although the landlord is not getting any response, it does not mean that the property has been abandoned. The provision allowing tenants to challenge abandonment at the county court after they have been evicted is very weak indeed. Who is going to do that with their possessions on the pavement? Getting a roof over your head will be your overriding concern.

The whole of Clause 55 should go, as tenants seem to have very little protection under it. If the Government are not going to do that, Amendment 34, in my name and that of my noble friend Lord Beecham, would add an additional subsection (e) to the clause, which would require the local authority to respond to a request from the landlord, confirming that it believes the property is abandoned and that the landlord can serve notice on the tenant. This should cause the Government no concern whatever. It would enable the landlord to recover their property if it has been abandoned —in addition to the powers and ways that they have at present, which I have outlined already—but would add a small but significant protection for the tenant.

Amendments 35 and 36, which both come under Clause 57, concern warning notices. Amendment 35 would give the person occupying the property an additional four weeks to respond to the warning notice, while Amendment 36 increases the maximum period within which the second warning notice can be given from four to eight weeks. The purpose of these amendments is to increase the time available to resolve these matters without the abandonment procedures being invoked and for the tenants to be able to confirm they have not abandoned the property. I beg to move.

My Lords, this is a particularly important amendment, as I read it. I am sorry that I slightly misinterpreted the wording in the legislation on this whole question of abandonment. It seems to me that this provision as it stands is wide open to abuse. Clause 58 has a reinstatement principle, which I suppose is a sort of appeal, but many landlords will believe that this is an open door for them to bring a tenancy to an end by simply asserting the fact that they believe the property to be abandoned.

I cannot see how it is possible to reject the amendment that has been tabled by my noble friend Lord Kennedy of Southwark, which says that the “local housing authority” has to respond,

“to a request by the landlord confirming that they suspect the property to be abandoned”.

In other words, the local authority has to give the seal of approval before the landlord can bring the tenancy to an end.

I hope that the Minister will not simply follow what is in her brief, assuming it says, “Reject”, but will perhaps put this back to people in her department. It is a perfectly sensible and reasonable amendment. It would provide a checking arrangement to make sure that landlords do not abuse their position and I hope that it will be supported by the House.

My Lords, I also support my noble friend’s amendment. I understand from briefings from Crisis and other organisations that this is quite a small problem. There are approximately 1.4 million landlords and I think the Government believe that only about 1,750 tenancies are abandoned every year, which is less than 0.5% of private rented households. However, the problem is that there does not seem to be enough security or protection for tenants against greedy or rogue landlords speeding up the process—whether someone is on holiday, is in hospital or has other problems with the landlord and has gone to stay with friends while work that should be done is not being done. There seems to be no way for the local authority—unless the Minister can assure me otherwise—to guarantee that the property has been properly abandoned, rather than it being a case of the rogue landlord using this as a short cut to regain possession. What is needed is an authoritative checking device—for which the local authority, the environmental health officer, the housing officer, or whoever, is best placed—to ensure that the keys have been handed in, the furniture has been removed, the tenant has moved away and the children are no longer there. That is the sort of evidence we want, not the landlord’s hope that because the tenant has not been seen for eight weeks—which might be because they are in hospital, or have gone back to a family home elsewhere in the continent for the summer—they can gain speedy possession that is not legitimate.

May I ask for some clarification? When I sat as a magistrate, we had a case of a tenant whose landlord stopped taking the rent; it was never collected. After some years he was able to come to the court and get the right to buy the property, because, technically, it was abandoned. At the time this seemed to me quite a complex procedure and I wonder where it fits in—whether the tenant is disadvantaged by this amendment, or the owner of the property. I am not sure what the amendment means.

There should, of course, be no problem over landlords repossessing genuinely abandoned property. As I was saying, Crisis estimates that there are 1,750 such cases every year. We want a procedure to ensure that the property has genuinely been abandoned, rather than the process being exploited by rogue landlords to cut corners to regain possession when they should not.

My Lords, I declare an interest as leader of a local authority. I have not so far intervened in this Committee and I apologise for the fact that, as we are setting a budget this evening, I will have to abandon the Committee almost as soon as I have arrived.

One of the features of that budget is that we are not going to be setting any new burdens or tasks for the local authority, because we all know the relevant circumstances. I have sympathy for some of the concerns expressed in Committee, and I acknowledge that at present this appears to be a relatively small problem, numerically, although some of the undertone of the conversation suggests that it might be abused and that there will be a lot more of it if this power goes on to the statute book. Local authorities are not investigative bodies; we are not private detectives. I will think about what the noble Lord, Lord Kennedy, has put forward but it slightly worries me that if the local authority is put in the position of being the body certifying, by definition, that people cannot be found, it potentially places, even in a limited number of cases, quite a strain and responsibility on that authority. Later in this part, the authority would become a party to any legal proceedings, because it would be challenged on whether it had given a proper certification. While I understand, therefore, where the noble Lord, and others who have spoken, are coming from, I would want to understand much more clearly what burdens, requirements and responsibilities on local authorities it might lead to if this were to go on the statute book.

I can tell noble Lords what it would lead to. In the event that the rogue landlord manages to get the tenant out for these spurious reasons, the local authority will be picking up the bill, and may end up having to house the people concerned. So it is better at least to have a checking mechanism in place, to ensure that the local authority is not placed in that very difficult position.

Doing some quick mental arithmetic, I suspect that we are talking about four to five instances per housing authority per year; compared to the responsibilities of local authorities for fitness standards, inspection of houses in multiple occupation, electrical safety and the like, this is trivial. As an ex-local authority person myself, I absolutely understand why the noble Lord is concerned, but we are dealing with a very small number, and probably the same landlords who are already well-known to local authority housing officers or environmental health officers as being too often on the wrong side of the law.

I am not a leader of a local authority, but I am a member of one, so I understand the noble Lord’s point. I am not a fan of the Bill, but this part has some very good things in it on strengthening protection for private tenants. By this one provision, we are opening the back door for the rogues. Good landlords would not get involved in this, but there are always the few people who see a quick way to pull a stroke, and we seem to be opening the back door for them as we shut all the other doors. That is odd. The amendment may not be right—it is only a probing amendment—but it highlights a real issue.

I thank all noble Lords for their amendments and contributions to the debate. As the noble Baroness said, the provisions are hugely important to a small number of landlords whose properties are abandoned by tenants who have stopped paying rent. We estimate that 1,750 properties in the private rented sector are abandoned a year at a cost of about £5 million to recover them. The Government want to ensure that the proper processes are in place before an abandoned property can be recovered.

Amendment 34 would require local authorities to certify for landlords in their area when a property has been abandoned. We are not convinced, and would echo the words of my noble friend Lord True, that local authorities, which may not have the resources, are necessarily in a better position to pass judgment on the matter. Such a requirement may also cause delays and hinder hard-working landlords and families from renting out empty accommodation. Amendments 35 and 36 would ensure that the minimum warning period before a landlord can recover an abandoned property was 12 weeks, and that a second warning notice was served at least four weeks and no more than eight weeks after service of the first.

I reassure noble Lords that this is absolutely not about opening a back door to landlords. It is about putting in place a procedure for dealing with abandoned properties that would allow a reputable landlord to recover a property that has been abandoned without the need to obtain a court order. The process includes a number of safeguards to ensure that a landlord can use it only where a tenant has genuinely abandoned a property. As my noble friend Lady Williams said, this is not about rent arrears.

Who will check that the landlord is not acting like a rogue and that the property is actually abandoned?

I will go through the process, which contains checks and balances which will ensure that a tenant has genuinely abandoned the property.

The landlord can recover a property only where warning notices have been served on the tenant, with a copy of the first and second warning notice sent care of any guarantor. The first warning notice could not in practice be served unless there were at least four consecutive weeks’ rent unpaid. The second warning notice can be served only when at least eight consecutive weeks’ rent is unpaid. It must be given at least two weeks and no more than four weeks after the first warning notice. Each warning notice must state that the landlord believes the premises to have been abandoned, that the tenant or named occupier must respond in writing—which could be by email—before a specified date, which must be at least eight weeks after the first warning notice is given, if the premises have not been abandoned, and that the landlord proposes to bring the tenancy to an end if neither the tenant nor a named occupier responds in writing before that date.

Following service of the second warning notice, where the tenant has failed to respond, the landlord must then put a third and final notice on the door of the property at least five days before the end of the warning period. That notice must state that unless the tenant or the named occupier responds in writing within five days—as I said, that could include email—the landlord will bring the tenancy to an end and repossess the property. The Secretary of State will prescribe the content of the final warning notice. This requirement was added in Committee in the other place to add a further safeguard to the process. Finally, if a tenancy has been brought to an end using the abandonment procedure, where a tenant had a good reason for failing to respond to the warning notices, they may apply to the county court for an order reinstating the tenancy.

I hope from this explanation that it is clear that landlords will continue to have to go through a lengthy and detailed process before they can regard a property as being abandoned. In addition to a requirement that at least eight consecutive weeks’ rent remains unpaid, they must serve a series of warning notices on a tenant and, when applicable, any other named occupiers. We believe that it would be an unnecessary burden on local authorities to impose an additional requirement that a local housing authority must also confirm that a property has in its view been abandoned. It may be difficult to determine whether this is the case or not, and requiring it to do so could place it in a difficult position. It would also be likely to introduce further substantial delay into the process of recovering an abandoned property, depriving the landlord of income and a family of the chance to occupy a property sitting empty.

It is already effectively the case that in the Bill the minimum period before a landlord can recover an abandoned property would be 12 weeks, as I have outlined. The clauses are carefully drafted but complex and, subject to Royal Assent, the department will issue guidance to landlords to help them to understand the new process. Amendments 35 and 36 would also replace the current provision in Clause 57, which specifies that a second warning notice must be served at least two weeks and no more than four weeks after service of the first warning notice. We have sought to strike the right balance between ensuring that tenants are given adequate notice, that the landlord believes that the property may have been abandoned, and to respond if they have not, in fact, abandoned the property, while also ensuring that landlords do not have to wait an unreasonable amount of time before being able to recover the property. Requiring that the second warning notice is served at least four weeks and no more than eight weeks after service of the first warning notice would add further delay and deprive the landlord of an income and another family of the chance to occupy the property when it is sitting empty.

This is my first foray into this Bill, and I draw attention to my interests in the register. Clause 57(6) says:

“The first warning notice may be given even if the unpaid rent condition is not yet met”.

On what basis can the landlord assume that the unpaid rent condition is eventually going to be met?

The first warning notice would not in practice be able to be served unless four consecutive weeks’ rent is unpaid, and the second warning notice may be served only when at least eight consecutive weeks is unpaid. So there are specific timescales for which there is unpaid rent. I am not sure whether that fully answers the question; if it does not, perhaps I can come back to noble Lords.

I would be grateful if the Minister could do so because, on the face of it, the provision seems odd. The unpaid rent condition has to be met for the abandonment provisions to proceed. Obviously, the concern is that warning notices may come thick and fast without the chance of the tenant to have due consideration. The basis on which that first warning notice can be given if the unpaid rent condition is not met is somewhat bemusing. Could the Minister, if she cannot say more today, write to us on that?

Yes, I am happy to clarify. I have talked about a lot of notices and warnings; perhaps it would be better to put it in writing so that it is clear.

Under the provisions for universal credit—it is something that I regret very much, although it is a structure that I very much support—you are not allowed as a social landlord to start alternative payment arrangements in which there is direct payment to the landlord until there is at least six weeks’ non-payment of rent. It looks to me as though a private landlord can start possession behaviour faster than a social landlord can seek direct payment of rent to the landlord.

My Lords, I do not want to intervene on the Minister, but Clause 56(1)(a) states:

“The unpaid rent condition is met if … at least eight consecutive weeks’ rent is unpaid”.

I follow what the noble Lord, Lord McKenzie, said. Clause 57(6) states—perhaps officials could note this—that the,

“first warning notice may be given even if the unpaid rent condition is not yet met”,

In construing the clause, the landlord could think, “Five or six weeks have gone by and I have not had any rent, so I am going to send out a warning notice without waiting for the eight weeks”. That is how I would read the Bill.

The Minister explained the process for getting possession of a property believed to have been abandoned but she did not mention vulnerable tenants. Will there be any special provision for vulnerable people? I am worried that those people will not be opening their mail or looking at their emails or engaging in things and all of a sudden they will find themselves on the street.

I set out the overall process but of course we will have to be mindful of people being able to access it. That is why we have put so many checks within the process to ensure that there is an opportunity for the tenant or someone else named as an occupier to respond. The final thing will be a public notice on the property to say what the situation is. We believe that this process as a whole will ensure that tenants are not disadvantaged and, of course, vulnerable tenants are on our mind.

The Minister also said that when the tenant of the property believed to have been abandoned has been evicted, they can go to the county court. Will legal aid be available for the county court action?

That would be very helpful. In this short debate we have highlighted a few issues with this section of the Bill so can I suggest that it might be welcome if a few noble Lords got together with the Minister to discuss some of them? There are issues which are not clear and could cause problems. The last thing we want is to get something on the statute book that causes everybody confusion.

I have one further question. If the rent condition is initially not met but then there is a payment which starts the process again, where does that leave the warning notices that have been issued? Will they remain in place for a possible second bout of the application of these provisions?

I am happy to agree to meet with noble Lords interested in this area so perhaps they could list all their questions and we will try to respond to them when we meet in due course.

I declare two interests: one is my local government interest which is in the register. In that context I want to reflect briefly on the burdens that might be imposed on local authorities in terms of enforcement and point out that there is such a thing as the new burdens doctrine. Admittedly it is more honoured in the breach than in the observance by the present Administration—the noble Lord, Lord True, is nodding his wry agreement with that—but technically speaking, if a new burden is imposed and incurs costs then the Government are expected to meet that cost. We are presumably not talking about large sums of money nationally in any event, as I assume that there will not be a huge number of cases, unless the Bill incentivises such procedures.

I also declare a family interest inasmuch as my daughter practises at the Bar, particularly in the field of housing law, both as counsel and as a part-time deputy district judge. My impression is that legal aid would not be available. At the moment it is confined to cases of eviction. I assume that this case would not fall within the definition of eviction. It is effectively the tenant failing to respond to the procedure that is set out here. If I am wrong about that and if legal aid is applicable, it would be as well to have that on the record. If it is not, then I hope that the Minister will not only reply to that effect but consider very carefully and quickly whether legal aid should be extended to cases of this sort, particularly because, as my noble friend has indicated, there may well be vulnerable people who will need help in presenting any kind of case for resuming possession of a property which appeared to be abandoned.

I believe that the noble Lord is correct about legal aid, but I hope he will permit me to go back and confirm that. In response to the question on what happens when some payment of rent is made, the process starts from scratch and all notices will need to be resent. But as I said, I am very happy to meet noble Lords to discuss some of the detail further.

Before we finish on this amendment, does the Minister understand that very often we are talking about very vulnerable people who simply will not understand this process? We can almost foresee the circumstances in which this is going to go wrong. I wonder whether the Minister will go away and consider the position and how this will affect the vulnerable. It is a very important issue.

My Lords, already social housing landlords—housing associations and so on—are beginning to deal with universal credit tenants. I am not confident of my figures, but I understand that something like 60% of them are in arrears and seeking alternative payment arrangements. Social landlords —local authorities or housing associations—are scrupulous in trying to ensure that vulnerable tenants who are finding it difficult to manage their money or whatever are not at risk of losing their home.

I fear that I have no such faith in the interest of private landlords. I am sure that many of them would seek to keep a vulnerable tenant afloat—but they are running a business, they cannot afford not to have rent payments and, as a result, given the changes that are now happening with universal credit for the private sector and the social sector, such tenants, vulnerable tenants in particular, will be more exposed to bad behaviour by landlords seeking a shortcut to rid themselves of an uncomfortable tenant.

I do not dissent from what the noble Baroness said, nor from what the noble Lord, Lord Campbell-Savours, said—but, as I read this part of the Bill, it is also designed to address the situation where a bad tenant who does not want to pay their rent disappears and does not want to be found. That is what lies behind my concern about local authorities. If the local authority has to certify that this person has gone—is deliberately not wanting to be found and not answering letters and has actually abandoned the property —it will want to be extremely cautious, particularly if there is a court case potentially pending, or will require very clear regulatory protection before it issues such a certification. So there is a risk if it means that the bad tenant, who is the other side of the question, will not be pursued. These matters clearly need to be discussed and my noble friend on the Front Bench has offered such discussions.

I thank all noble Lords who have spoken in this debate and I thank the Minister for agreeing to meet noble Lords from across the House. There are clearly issues here that need addressing. This is about how vulnerable tenants are treated. Another issue is whether they are English speaking; I have just thought of that. There is a question about how people are treated in court when they have no legal aid. Before this gets on the statute book, we need to take a proper, vigorous look at it. If need be, we can seek amendments later on in the process. At this stage, I am happy to beg leave to withdraw the amendment.

Amendment 34 withdrawn.

Debate on whether Clause 55 should stand part of the Bill.

My Lords, in the most recent discussion, the noble Lord, Lord Kennedy, suggested that perhaps this section should go. Like his fairy godmother, here I am with that moment. What I am proposing applies to all the clauses relevant to abandonment, and it is that they should go at this point in this discussion.

My reasons are as follows. This is a new and complex change in the law for which there is no need. The impact is on a small percentage of tenancies, so why introduce new legislation? Clauses 8 and 21 already cover this area. This change may be exploited by unscrupulous landlords with vulnerable tenants, especially if it is taken out of the county court process and without any kind of oversight. This goes against the flow of a really good piece of the Bill on rogue landlords. Above all, there is a danger that it will make people homeless.

The section on abandonment of property appears to us to be a sledgehammer to crack a nut. The number of tenancies where abandonment is an issue that would fall within the remit of this legislation is estimated, not by Crisis or Shelter but by the Government’s own analysis, to be 1,750 each year out of a total of 4.4 million tenancies. That is a tiny amount, which makes me question why we should introduce a new and deeply complex layer of additional process and legislation.

This therefore appears to be for landlords who are worried that they cannot quickly reclaim a property where it has been abandoned. Their concern seems to centre on the fixed-term period for a tenancy, which is most commonly six months—a period in which they cannot use a Section 21 notice. If, on the other hand, a property was abandoned outside the fixed-term period, an uncontested Section 21 notice would mean that possession could take place in around three months, which is about the same amount of time as is proposed in the Bill. So it seems that the issue is about getting possession in the fixed-term period.

In the fixed term, the issue that perhaps landlords have is that Section 8, a fault eviction, takes—in the view of some landlords—too long. However, as I have already said, there are very few cases of abandonment and not all of these will be in the fixed term; by the Government’s own estimate the number of properties that are abandoned within the fixed term is likely to be very few. If the Government are concerned that their own eviction processes—namely, Sections 8 and 21—are not working, should there not be a complete review of that rather than the addition of this complex layer?

This proposal, which sets a dangerous precedent, takes this outside the court’s oversight in any way, so who oversees this? There are already powers for a landlord to take possession when they are convinced that the property is abandoned. For instance, if someone’s possessions have been moved out and they have left the keys, the landlord can immediately and legally reclaim the property under something called “implied surrender”. But the tenant’s actions must clearly indicate that they have abandoned the property. So I would like to hear from the Minister why the current system of implied surrender is not being used in these very rare cases.

Shelter and other organisations deal with vulnerable tenants—and we need to focus on vulnerable tenants with regard to this, since the number of tenancies is so small. First, it opens up the possibility of unintentional evictions, where someone is taken ill or suddenly called away to care for a relative and is unable to respond to notices. If that person pays their rent in cash or their housing payment benefit payment is disrupted, they could easily get into arrears while they are away and could be mistakenly assumed to have abandoned their property.

Secondly, an unscrupulous landlord could use this process to evict a tenant they did not want outside the processes of the court or any kind of oversight. As discussed just now, we are very concerned about Clause 57(6), which states:

“The first warning notice may be given even if the unpaid rent condition is not yet met”.

In fact, by our calculations it means that the process could take as little as nine weeks, not 12 weeks. So we worry that notice could start to proceed at a much faster pace. Is there any concern here at all that landlords can use this, frankly, to jump the gun?

We recognise, as a result of objections in the Commons, that a new third warning has been added, which merely specifies that it would be fixed not to the door, as I read it in the Bill—I ask the Minister to correct me if I have got that wrong—but,

“to some conspicuous part of the premises”,

which will be specified in regulations at a later date. Let us hope that it will not be a yellow Post-it note on a lamp-post—but how do we know that it will not be? There is no specification at the moment, but how would we know? Above all, who has oversight to prove that that notice was put there, since this is out of the courts? So will the Minister explain how that will be overseen? Who will be the judge of whether the landlord, claiming to have fixed that conspicuous notice, has indeed fixed it?

The main concern is that unscrupulous landlords would be allowed to use the abandonment procedure as a pretence to carry out illegal evictions. Other noble Lords who are familiar with this area are already familiar with some of the things that landlords can do. Let us remind ourselves of some of the illegal things that landlords attempt to do, even under a Section 21 notice. I do not refer to all landlords. There are a lot of very responsible landlords. But some attempt to do things like this.

I will give you a case study with which Shelter provided me. Emma was served with a Section 21 notice. The notice was invalid because it gave only one month’s notice. She informed the landlord of the invalid notice. Since then she has experienced harassment from the landlord and his colleagues. The landlord threatened to jump over her fence, force entry, kick the door down and sublet the rooms in her house, even though she had exclusive occupation of the home—all in an attempt to force her to leave before she has to legally. Her windows have been broken and her phone line has been cut from outside. This is the kind of thing that, obviously, will be done by rogue landlords. There are a lot of good things in the legislation, but abandonment opens up a possibility of abuse by people such as this.

The vast majority of landlords, as I have said, are decent and responsible, but there are some who will try to apply this bit of the law to intimidate and evict tenants. By taking evictions outside the court and through unclear legislation, it is not difficult to imagine that an unscrupulous landlord will lie about sending the notices and tenants will become homeless.

Citizens Advice, which has great expertise in dealing with these kinds of vulnerable tenants, is also deeply concerned about this and about the likely costs and implications for local authorities. In contrast to the rest of this Bill, the section on rogue landlords is supported across the parties. It seems a shame to introduce this new, complex and unnecessary addition to the Bill. It has all the hallmarks of something that, frankly, should be submitted to the Red Tape Challenge rather than agreed by this House. The threat remains that it will be used by landlords who are unscrupulous. I asked for reassurances on this issue at Second Reading and I am still seeking them at this stage.

My Lords, I have concerns about this section of the Bill. I am very much taken with the arguments of the noble Baroness, Lady Grender, that this section needs a fundamental rethink and that, in trying to amend it, we risk simply ameliorating what is not a terribly well thought-through part of the Bill. The balance of power between landlords and tenants now is so strongly in favour of the landlord that we should think very carefully about adding a further power to landlords in relation to this issue, or indeed any issue. We should be very persuaded that there is a big enough problem to solve. We have heard quite clearly from many noble Lords that there is not a sufficient issue to be solved—that, in comparison to the scale of the private rented sector, it is a very small issue. I think we risk putting in quite a bad piece of legislation, seeking to tweak it along the way to make it slightly better. We are actually putting in place something that we do not need and that is not likely to be helpful in tackling the issues we are talking about.

I want to make a point on which I declare my interest as president of the Local Government Association. We talked earlier about the burdens on local authorities from the previous amendments. Let me tell you the burden that will come from inappropriate evictions. I think it will be considerably greater in cost, leaving aside the damage to individuals, so it is right to think again about whether these provisions are needed at all.

My Lords, this is the first time I have spoken in Committee today, so I draw your Lordships’ attention to my entry in the register of interests. I support my noble friend Lady Grender, who set out so eloquently our opposition to Clauses 55 to 61. I agree completely with the noble Lord, Lord Kerslake, that this is badly thought-out and not needed.

As has been said, these clauses are designed to solve a problem for which there is already legislation. The Government appear extremely keen to move residents out of housing association and local authority housing into the private sector. This is all well and good if the supply and standard of accommodation on offer is adequate and meets the Government’s standards for what is required. However, as I am sure the Government will readily admit, much of this accommodation is in a very poor state of repair, sometimes not secure against the elements and, in extreme cases, not fit for human habitation.

As has already been said, there is a balance to be struck between ensuring that landlords can run their properties as a viable business and the interests of tenants looking for a secure and comfortable home. In 2015, 115,000 people approached Citizens Advice with problems in private rented homes, 2,053 of which were about illegal evictions by landlords in the private rented sector. This represented an increase in inquiries on this specific issue of 32% compared with 2014. This is part of a general upward trend over more than a year. During 2013-14, 111,960 households in England applied to their councils for homelessness assistance—a rise of 26% on 2009-10. On 30 September, 68,560 households were living in temporary accommodation—13% higher than on the same day in 2014, thus producing considerable pressure on local authority homelessness budgets, as we have already heard, with residents often put in temporary accommodation.

The abandonment proposals in the Bill lower the level of proof that landlords will have to meet to claim that their property has been abandoned. The proposal would also legitimise an illegal practice: evicting a tenant without going through a formal court procedure, even when the tenant has not engaged in any conduct that might clearly show that he has abandoned the property. This suggests that, if introduced, it would lead to higher eviction rates and a similar rise in the number of homelessness applications to local authorities, resulting in higher administrative and temporary accommodation costs. Will the Minister say whether this is the Government’s intention and what action they are prepared to take to prevent this sorry state of affairs coming to pass?

At a time when the number of households with dependent children living in the private rented sector is increasing, the added financial impact on council budgets is likely to be significant, as it is these households who will have a priority need for housing by the local authority if made homeless. Using the DCLG’s findings, Citizens Advice estimates the increased social costs to the public sector of each homelessness application at between £24,000 and £30,000 per year, producing an average of £27,000 per year per family or individual. This is not a good use of taxpayers’ money. I cannot believe that this is the Government’s intention. I look forward to their response.

I am grateful to the noble Baroness, Lady Grender, for proposing that this whole part should be abandoned. I support that suggestion. I will not go through the points I made in the previous debate, but I may have a few points when the Minister responds. The removal of the oversight of the courts, as referred to by the noble Baroness, is of particular concern, and the provision that the third warning notice should be fixed in a “conspicuous” place is very weak and offers very little protection to the vulnerable tenant. The Government have not made the case for these clauses, or that these changes are needed or necessary. The Government need to think again over the procedure and the risks involved, as other noble Lords said in the debate.

My Lords, I agree with those who say that these provisions should be recast. I want to pick up on the third warning needing to be,

“given by fixing it to some conspicuous part of the premises to which the tenancy relates”.

Conspicuous to whom? Is it the tenant, the whole world, the community that passes by the front door? It seems to me that giving notice to somebody by nailing something to their front door is almost medieval. You can imagine that somebody will put the notice up, the mobile phone will come out and a photograph will be taken but half an hour later it could be ripped off and be nowhere in view—certainly nowhere in view of the tenant. It seems an incredibly archaic approach. I think the whole thing should be recast but that particular provision jars immensely.

My Lords, I thank all noble Lords who have contributed to this debate on Part 3 of the Bill. The noble Lord, Lord Kerslake, said that numbers may be small, but these provisions are nevertheless important to good and reputable landlords whose properties are abandoned by tenants who have stopped paying rent. As we have tried to make clear, we want to find a balance between protecting good landlords and good tenants. Presently, when abandonment happens a landlord can go in and change the locks. However, that involves taking a huge risk, since if the tenant has not abandoned the property the landlord could be liable to prosecution for unlawful eviction and be subject to claims for damages in the civil courts. As a result, many landlords do not take the risk and instead take possession proceedings in the county court.

However, before they are able to commence court action they must bring the tenancy to an end by serving a Section 21 notice giving the tenant two months’ notice, and when they have made the application it can be two or three further months before they get a court order enabling them to repossess the property. In the mean time they receive no rental income for a property which is standing empty, and often will still need to meet their mortgage payments. The landlord will also incur costs in taking court proceedings. As I have said, abandonment may not be a widespread problem but it is estimated that it costs landlords around £5 million a year in legal fees, missed rent and time.

When a person surrenders a property they contact their landlord and hand in their keys, but in this instance we are talking about when a person abandons a property and disappears and stops paying rent. It is a different situation. That is why we think the provisions in Part 3 provide for a simpler and cheaper method for recovering property where the former tenant has permanently left owing arrears of rent that have continued to accrue since the first warning notice was given.

I also make clear that any landlord who abuses this process by not giving tenants proper warning and takes repossession of the property knowing that it has not been abandoned will be liable to be prosecuted for unlawful eviction under the Protection from Eviction Act 1977. As we have also tried to make clear, this is not intended as a route to remove a tenant in arrears. This is about abandoned properties. A tenant will also be able to bring a claim for damages through the civil courts where the landlord has not followed the procedure as set out in legislation. The provisions are not a charter for landlords—

Have the Government made an estimate of the cost to a tenant? Since there is a cost of £5 million to the landlords—which is the Government’s estimate—what is the cost to tenants for pursuing this through the courts?

As I have said, we have heard the strength of feeling in the House on this issue and have agreed that we will meet and have a further opportunity to discuss issues. I will attempt also to ensure we have information on hand in that meeting. I reaffirm that these provisions are not a charter for landlords to carry out a do-it-yourself eviction. That is and will remain unlawful. On the basis of the strength of feeling in the House, we welcome the opportunity to discuss further details with noble Lords. On that basis, I ask that these clauses stand part of the Bill.

Can the Minister tell us a little about where the pressure for these changes is coming from? We hear that there is not a big issue and not a problem here. The Government are going to meet us and seem quite determined about this. What is behind all this? Where has it all come from?

As I have explained, the rationale behind this is to attempt to provide balance and fairness for both tenants and landlords.

Will the Minister help me on one other point, please? On the reference to rent not being paid, or rent being unpaid, what happens if a tenant, in struggling to pay the rent, pays an amount on account? Does that count as the rent being unpaid for a week, or a month? How is that dealt with? The Minister has used the expression that someone has effectively given up on paying the rent. There could be many instances where people are struggling to pay the rent, doing the best that they can, and making partial payments. If that is what they do, would that preclude the operation of these provisions?

Obviously, there will be a dialogue between tenant and landlord, and arrangements between the two may be made. As I said earlier, if some payment of rent is made and if a process had been started, it would have to start again from scratch.

I understand that if the rent is paid in full you go back to square 1. But if the rent is only partly paid, what is the position? Our concern here, as many people have said, is about unscrupulous landlords who will use these provisions for a perverse effect. If somebody has only part-paid the rent that would give them the opportunity of doing so.

In terms of part-payment of rent, if any rent is being paid, the process would be ended. It is about abandoning a property—no rent being paid. It is not about part-payment.

There would be a balanced view on this. As I have tried to set out, where payment is being made, that is not abandonment of a property. As I have said to noble Lords, we are happy to discuss this in further detail to, I hope, allay concerns.

As I have said, we believe there is a process that has a number of important elements to it. However, we have heard the strength of feeling in the House and look forward to discussing this in due course.

Clause 55 agreed.

Clause 56 agreed.

Clause 57: Warning notices

Amendments 35 and 36 not moved.

Clause 57 agreed.

Clauses 58 to 61 agreed.

Amendment 36A

Moved by

36A: After Clause 61, insert the following new Clause—

“Review of effectiveness of empty dwelling management orders etc.

(1) The Secretary of State must, within six months of the passing of this Act, commission a review of the operation and effectiveness of empty dwelling management orders and other provisions for bringing into use domestic properties that have been abandoned by their owners.(2) A report on the findings of the review must be published and laid before each House of Parliament.”

My Lords, my purpose in moving this amendment is to raise a significant problem in some parts of the country. I am very aware that the kinds of areas I am talking about are very different from the areas that the Bill seems to be concentrating on—in London and the south-east and perhaps in similar areas. The sort of areas I am talking about are, for example, east Lancashire or west Cumbria, and lots of other places like them around England. It is a different world, but it is important.

The first point that I want to make is that there is not a housing market in this country that is the same everywhere. There are many different housing markets in different places which operate in different ways. The real problem that many of us have is that legislation is almost always on a one-size-fits-all basis and is written by people with what we would see to be a very south-east England viewpoint, although it is not just south-east England. I mention EDMOs—empty dwelling management orders—in this amendment but I want to talk particularly about the “et cetera” bit to mark the problem rather than just EDMOs. I will come to EDMOs towards the end.

I am talking about areas where the background is of a housing market that is fragile and stagnant. It was identified some 15 years ago now—certainly a long time ago—by the then Deputy Prime Minister, now the noble Lord, Lord Prescott, as a market failure. A scheme was set up by central government for housing market renewal which was targeted at these areas. That was swept away in the early years of the coalition, rightly or wrongly, but we are where we are. There is now no real attempt to look at these areas and implement different policies for the different conditions. We are talking about areas mainly consisting of terraced housing that is 100 or 150 years old, some of it in really good condition now as a result of the efforts that have been made over the years, and some of it in poor condition.

As to my part of the world, the borough of Pendle, the situation is worse in Burnley but the same in Accrington and many similar towns. You can buy a terraced house which is habitable but in not-very-good condition for between £30,000 and £50,000. At least those are the asking prices. I get the sale prices every month and they are usually lower than the asking prices. In good condition in a less-popular area, the prices are £60,000 to £80,000; in more sought-after areas in towns, £80,000 to £100,000. The rest of the housing market, as I will explain further when we talk about starter homes, is depressed as a result of that. There is a real problem of abandoned houses. These are not houses abandoned in the sense of those we discussed in the last group of amendments but houses abandoned by the owners. They are empty—they might be boarded up if there is a decent council—and they might be derelict inside. They might have been stripped out by tenants at some stage in what is known as a “moonlit”, or moonlight flit.

I can speak for my borough but I know that this applies to a lot of others as well. A lot is being done about empty homes through a combination of carrots and sticks. Much of what is being done is being done with the help of national government. I will set out the overall position to pinpoint the problem. In my own borough of Pendle, the number of empty houses has been reduced from 2,000 to 1,300 in the last couple of years. Of the 1,300, about a third have been empty for more than two years. I will not say that they are basket cases, but your Lordships will know what I mean.

There are a number of things that can be done and we have certainly done, and that is fine. We have set an empty-homes levy whereby, after two years, we are levying an extra 50% on top of the normal council tax, so they are paying 150% council tax. We have directly intervened in a number of streets using our joint venture company or a housing association, and that has rescued and improved 80 to 90 derelict houses in the last couple of years. Like many councils, we have an empty homes officer working on individual houses and owners. It is intensive and expensive work, but it works by targeting the owners and talking to them. We have a system of loans to the owners of these houses, which started off with the government-sponsored empty homes clusters programme, where we will provide a loan of up to £15,000 per house. That works well, and the repayments go back in the pot for more loans. Many things can be done and different councils will deal with this in different ways. We are down to 3.3% empty houses but they are concentrated in areas, particularly those with a lot of cheap private rented properties.

However, the acute problem is not that but individual houses that have been effectively abandoned by the owners. They are often scruffy, boarded up and stripped out—if not by the previous tenants then by other people nicking all the copper and everything else. These are what we call rotten-tooth houses and they have a disastrous effect on streets whose future is in the balance. Local authorities spend a lot of time and resources trying to save them.

In the past, we used powers of direct intervention, particularly compulsory purchase orders, as a last resort. We used to do perhaps nine or 10 of those a year in our fairly small authority. However, that was powerful because everybody else knew that that was in the wings if they did not sort themselves out. In many cases, that led to voluntary sales to the council. We had a regular, annual programme of improvement for sale. The problem was that the money never stacked up. The cost of acquisition plus the cost of renovation to proper public sector standards was less than you could get in a depressed housing market. Therefore there was a gap.

That gap was filled from the council’s housing capital programme, most recently from the housing market renewal funds and the regional housing pot as it was officially called. Both those have now gone. For councils like ours throughout Lancashire and the north of England, the housing capital programme does not exist any more. Then we went on to back-to-back schemes with housing associations. The council would compulsory purchase, do the work and sell on to the housing association, or perhaps the housing association would do the work. That is now no longer viable and cannot be done so we looked again at EDMOs.

I remember debating EDMOs in this House when they first came in—I think for the Housing Act 2004—and we thought they would be a great thing. They have certainly been around for about 10 years. They were a great hope. What happens is that the council takes over a long-term empty house, repairs it to make it habitable and then lets it to a tenant. The income from the rent is put in a separate account for that house and offset against the cost of the initial renovation plus the continuing cost of repairs and management. However, that does not add up in areas of low rents, particularly if it is only a one-year interim EDMO right at the very beginning, where the owner can reclaim the house and the council loses all the money. After the end of the EDMO period—I think the ordinary period is seven years—the owner gets the house back. It is just given back to them, and if there is a deficit on the account for the house—as there will be—the council carries the can.

So we have a situation where we have rotten-tooth houses which we were, like many councils, brilliant at dealing with, thereby saving streets. However, CPOs and EDMOs do not add up any more, housing associations are not interested any more and the councils have no resources to fill the gap. This is a plea to the Government: please, what can we do to tackle these very real local problems?

My Lords, I am very supportive of the amendment moved by the noble Lord, Lord Greaves. Empty homes represent both waste and a missed opportunity. They also leave the property at risk of squatting and subject to vandalism, and there is the blight that brings to the wider community—to which the noble Lord referred.

Empty dwelling management orders are a legal device which enable local authorities to put an unoccupied property back into use as housing, securing its occupation and getting it back into use as a home. The amendment seeks that, within six months of the Bill becoming an Act, a review must be commissioned into their operation and effectiveness. These orders were brought into law with a lot of support but have not proved effective or to be a device that has been used very much in recent years. A review is sensible at this time as it would enable us to identify if there is a problem with them and, if there is, to identify a solution. The second part of the amendment would require a report to be published and placed before Parliament.

The noble Lord, Lord Greaves, referred specifically to properties in the north of England. In my former area of west Cumberland and Lancashire, terraced houses often fetched little more than £30,000 to £50,000 at auction. However, there is another group of properties, in the south, which I sometimes wonder what is happening with. In some of the most expensive parts of London you will see properties that have been effectively abandoned by their owners. It might well be that the local authorities are involved, but sometimes these properties remain empty for years. Only the other day I was looking, on behalf of a relative, at a property near Tooting. In the same street, there was a house which was shown on the internet as being sold at auction, but I understand it had been derelict for several years, despite the existence of EDMOs which were introduced in 2006. One wonders what is happening there. Might the review which the noble Lord, Lord Greaves, is calling for include consideration of what is happening in the more expensive parts of the country to properties which stand abandoned but which would be better brought into use?

My Lords, I congratulate the noble Lord, Lord Greaves, on bringing forward this amendment. This is certainly a problematic area. The original legislation in 2004 was very well intentioned in its creation of the capacity for local authorities to make an order to take over the management of empty properties. However, only a trickle of orders have been made since then. In the first four years, only 43 orders were made in the country as a whole; 17 were made in 2014. That is not to say that other actions, short of an order, were not taken, perhaps of the kind described by the noble Lord and by my noble friend Lord Kennedy. Nevertheless, there is a clear issue here. The previous Secretary of State for Communities and Local Government, Eric Pickles, changed the rules in 2012 to require a longer period—up to two years, as opposed to the original six months—after which an order could be started. This might be thought a somewhat perverse approach, given the paucity of cases before that time.

There is clearly a need, and I have experience of that in the ward I represent in Newcastle. About four or five years ago, my attention was drawn to two terraced houses—they are what are called Tyneside flats, with a lower flat and stairs leading up to one over it. They were empty, but they did not look in bad condition and were not creating any hazard in the area. It turned out that they had been like that for several years; it was a long-term problem. I got the council on the case, but the process is extremely protracted and difficult. In this case, it was compounded by arguments about who owned the property. It was not a straightforward question of looking it up at the Land Registry. Even apart from that, it was a very protracted process. Eventually, the council reached the point when—either by making the order but not directly taking over the property, or by coming to an agreement with the owners—the properties could be let.

That was bad enough, but there is another case, not that far away, of a property which is owned by an elderly lady who lives somewhere else. It is in a shocking state and the only thing I have been able to have done about it is to get the hugely overgrown garden cut back and the place tidied up. It has been empty now for many years. I have tried, more than once, to get the council to take proceedings and I think that it is now looking at that. It is in a nice residential street and is a great blot on the landscape—which at least the previous ones were not—and it lets down the whole character of the neighbourhood. I suspect that this is a significant issue and I hope that the Government will acknowledge that a properly considered view, based on evidence, should be formed.

There are, of course, other actions available, as we have heard from the noble Lord, Lord Greaves. There are others, too. Oxford, in particular, has taken quite a few initiatives short of this management process. If we are going to have a fallback position—and we must—then it is imperative that we review what is happening and the timescales. Perhaps this should be brought back from a two-year period to a six-month one in order to kick start the process and ensure that, as far as possible, it is less bureaucratic and more likely to be effective than the experience of the last 11 years has demonstrated it to be. I hope the Minister and the Government generally will look sympathetically on this amendment, which, as my noble friend said, we support.

My Lords, this amendment would insert a new clause into the Bill requiring a review of the effectiveness of empty dwelling management orders and other provisions for bringing into use domestic properties left empty by their owners. We welcome noble Lords’ interest in seeing properties being brought back into use to increase the housing supply, which is certainly an aim that the Government share, but we do not believe that this amendment is necessary because the range of measures we already have in place to tackle the issue of empty homes is working.

The Government have achieved a year-on-year reduction in long-term empty homes, with the number of homes that stand empty for more than six months now at the lowest level since records began. In London, as highlighted by the noble Lord, Lord Campbell-Savours, empty homes are at an all-time low of 2%.

When the Minister talks about empty homes, does she mean homes on which no council tax is being paid? If council tax is being paid on an empty home, is it defined within those statistics?

That figure relates to unoccupied homes.

As the noble Lord, Lord Greaves, highlighted, local authorities have a range of powers to tackle empty homes. Through the new homes bonus they earn the same financial reward for bringing an empty home back into use as building a new one. As he also mentioned, councils may charge up to 150% council tax for homes left empty for over two years. They can CPO consistently neglected houses, as the noble Lord, Lord Beecham, highlighted, and there are also empty dwelling management orders, which can be used to regain possession of a long-term empty property, which has been empty for at least 2 years.

The Government want to strike a balance between respecting the liberties of responsible home owners and the need to tackle the harm caused to the local area when homes are left empty, as graphically outlined. The threat of issuing an empty dwelling management order is often enough to encourage an owner to bring a property back into use, so the number of orders issued is not necessarily a guide to how effective they are. Of course, local authorities have a range of powers at their disposal when seeking to tackle a property that has fallen into disrepair—for instance, through improvement notices under the Housing Act, or powers under the Building Act 1984 to deal with dangerous buildings. They can also tackle nuisances caused by properties using the Environmental Protection Act.

Our strong record on the economy has helped to create a buoyant housing market. Since 2009, over 880,000 new homes have been built in England and, in addition, owners are bringing more empty homes back into use without the need for government action. We believe that we have introduced a range of measures, which local authorities can use as they best see fit.

Sorry, I am not going to let this question go. Some unoccupied homes have council tax paid on them. There are quite a lot in London, where people who own expensive property leave it abandoned but continue to pay council tax. The question is whether they are included in the figures. I understand that this is a surprise question and I do not expect an immediate response, but I hope that we will be informed of that. If that is an issue—and there are a lot of these properties in London—then surely there should be some kind of report or review in the way that my noble friend and the noble Lord, Lord Greaves, have suggested. It would mean that there is an area of the market which we are not altogether aware of.

The noble Lord makes a valid point. As he has kindly suggested, I will write to him with further details as I do not have the figures to hand. I hope that, in light of what I have said, the noble Lord will agree to withdraw the amendment.

My Lords, I am grateful to the Minister, half of whose speech was exactly the one I made in listing some of the powers that local authorities have in order to deal with empty homes and reduce their number. She is exactly right that some of those powers, such as levying council tax on empty homes, have contributed to a substantial reduction.

However, the Minister did not home in on my specific point about the relatively small number of properties which have effectively been abandoned and made derelict. They are the rotten teeth of the terraced streets, which cause immense problems. I am sure noble Lords can imagine the social problems that kids get in, or the effects of broken water pipes on neighbours. These problems are quite apart from the fact that people do not want to live on a street facing an empty property and therefore do not buy property on those streets, which reduces property values. This is a major problem in some parts of the country. The point I was trying to make—I thought I made it fairly well, but perhaps the Minister will read what I said and decide whether she agrees with me—is that the existing powers are no longer sufficient for allowing local authorities to deal with these problems.

The Minister mentioned improvement notices, which I deliberately did not include in order to keep my speech within 10 minutes. They are just the same. A council can make an improvement notice and if the owner does nothing do the work by default. It then has to put a charge on the property. Getting money back from people who have abandoned a property is not an easy thing to do and may well take many years, if it can be done at all. This is another example of a funding gap, where there is a cost to a local authority of using these powers in areas where the level of house prices and rents are low but the cost of the work is about the same as anywhere else in the country. In these areas, the cost of buying, doing work to and managing property is not matched by what the local authority can get in from selling, putting a charge on or renting the property. That is the difference. There is a gap and it is a serious problem, which applies to all of the different means that the Minister mentioned.

All I can ask is that the Minister and her colleagues look at this and write to me about how they think it may be solved. I beg leave to withdraw the amendment.

Amendment 36 A withdrawn.

Clause 1: Purpose of this Chapter

Amendment 36B

Moved by

36B: Clause 1, page 1, line 6, after “promote” insert “home ownership and”

My Lords, in moving this amendment I will also speak to the 11 other amendments standing in my name and that of my noble friend Lady Bakewell of somewhere in Somerset.

We are moving now to Part 1, Chapter 1 and Clauses 1 to 7, and, possibly for the first time, to a part of the Bill that is causing widespread concern. My amendments and the other four in this group, with which I have considerable sympathy, seek to address at least one of those concerns about starter homes. I certainly have no objection to starter homes. As far as I know, neither do many other people, so the issue is not about starter homes as such. In the right circumstances and the right places they can make a useful addition to housing provision for some people.

The concern here is that Chapter 1 of Part 1 refers only to starter homes. The present wording imposes a clear duty on local authorities, as planning authorities, to promote starter homes, with no mention of any other tenures. Councils’ ability to choose a mix of home ownership tenures for planning obligations is completely fettered by the Bill as drafted. The concern is that in Section 106 discussions, for example, local authorities are likely to say—or at least to feel—that they have to deliver a certain number of starter homes and therefore that they cannot specify other forms of affordable ownership provision. I am sure we will hear from the Minister that that is not the Government’s intention but I fear it is very likely to be the effect.

The purpose of my amendments is to widen the duty on local authorities to promote home ownership schemes, including starter homes. It is about home ownership in that we recognise the priority that this Government give to home ownership. I have considerable sympathy with Amendment 37, which refers to,

“new homes across all tenures”,

but these amendments bring in the wider range of home ownership schemes.

As I have said, starter homes provide a useful means but the role of the local authority, as the planning authority, as well as sometimes the housing authority, is to meet all types of housing need, to be in the best position to judge what the local needs are—local needs are the key to this—and what type of tenure, in what volume, places and circumstances, is appropriate to that area. It may well include starter homes but it most certainly will include other types of home ownership and other forms of tenure. Therefore, we are concerned. I think there is widespread concern from the LGA, among others, about the fettering of local authority discretion in this way. I declare my interest as one of the vice-presidents of the LGA. The aim is to allow local authorities to determine for themselves—if I might say so, in the spirit of localism—what is best and most suitable for their areas without having necessarily to feel that they must give priority to any particular form.

I mentioned the LGA. It has indeed said that starter homes will be outside the reach of all people in need of affordable housing in 220 council areas. That is two-thirds of the whole country. Starter homes will not be effective for them. I am sure that other contributors to this debate will want to speak about that.

I have been approached on this subject by a range of organisations but particularly by Future Housing Review, which is supported by the Joseph Rowntree Reform Trust and has a particular interest in shared ownership, which can make a significant contribution to housing need and is indeed one of—not the only one, by a long way—the housing provisions that we are talking about. I was pleased to note that in the Minister’s replies to a Question this afternoon she made several references to shared ownership schemes. I hope now that she has been briefed she will be able to expand a little more on that when she replies to this debate.

I have a few questions on shared ownership, which, as I say, is simply one method of provision of affordable housing in appropriate circumstances. There has been increasing interest in shared ownership as one way in which the housing crisis can be tackled. Back in March 2015, the then Government promised a review of long-term options for ownership, saying that,

“the Government will undertake a Review of shared ownership focusing on possible longer term options for change to report to Ministers in the Summer”.

That, of course, was summer 2015—last year. So far as I know, that review has not materialised at all. I wonder if the Minister can tell us what has happened to it. Did the incoming Government make a decision not to go ahead with the review? Did it get buried among all the other things that a new Government have had to do? Is it perhaps now on a slow burner and might it be available for summer 2016? I hope we can be told what has happened to the review and that we will be told it is still ongoing and perhaps now we can give it a nudge to on-go just a little bit faster.

There is an urgent need to review shared ownership models because the present Homes and Communities Agency model is said to be seriously flawed. The Government have announced very welcome funding of £4.1 billion so that registered providers can increase provision of shared ownership, but a detailed prospectus is still awaited so we still do not know the details of that programme. Again, I wonder if the Minister will be able to tell us when we will get those details.

I think these amendments will lead to a very good and useful debate on one of the concerns here. There are, of course, others, not least the issue of discounts, which we will move to later. But I very much hope that the Government will consider seriously the intention of these amendments and what is said in this debate, and will move towards at least recognising and, I hope, meeting the widespread concerns that the chapter on shared ownership is very much skewing the need, which we all recognise, to meet the housing crisis and to do so by providing a wide range of housing provision. Without these amendments, providers will not be able effectively to deliver a full range of housing ownership tenures. The spending by registered providers of £4.1 billion of funding in the open market to deliver shared ownership schemes will not represent best value and the initiative to increase shared ownership may tend to drive up prices. I beg to move.

My Lords, I will speak to Amendment 36B, just moved, and refer to Amendments 47A and 53A in my name. I draw attention in the register of interests to my unremunerated position as chair of the Cambridgeshire Development Forum, which is a group bringing together those people who wish to support development in the area in which I live—an area which exhibits many of the characteristics that are most at the heart of this debate: a very high level of demand for new homes and a relatively high and accelerating price for new homes in and around Cambridge.

By virtue of the order of consideration, we are having this discussion ahead of what I would have preferred, which is a discussion about the definition of a starter home. We will come to that in a later group and I will talk to that later, if I may. If we had the clarification of the definition of a starter home that I am personally seeking—not least in an amendment I have in a later group—the requirement for amendments to Clauses 3 and 5 would fall away. I very much support the Government’s intention to promote starter homes and give young people the opportunity to buy their own home. I mean it as simply as that: building new homes with the objective of giving young people an opportunity to own their own home. The question is how we go about that and whether we should have not only a general duty but specific requirements for it. I am in favour of that and support the Government.

However, the definition of starter homes is narrow. In the context of this group of amendments, the issue is that in places such as Cambridge and the surrounding area, where I live, it is extremely difficult for many young people to afford a new home. Across the country generally, we have seen the amounts that young people have to acquire for deposits accelerating—perhaps doubling—in the last decade. We know that to buy a house outright with a mortgage, they are very often looking not only for a substantial deposit but for family help. The Council of Mortgage Lenders suggests that more than half of young people buying their own home now need family help to make that happen. Almost by definition, therefore, it is exceedingly difficult for young people seeking to buy their own home rather than rely on other forms of tenure to succeed in doing so if they do not have family income to support them or, certainly in my area, incomes in excess of some £70,000 for a couple trying to buy a home together. That is one of the reasons why the Government have made it very clear, as they did on Report in the other place, that they,

“strongly support the need for a range of products to improve access to homeownership”.—[Official Report, Commons, 5/1/16; col. 151.]

I completely support the Government in this. However, the noble Lord, in moving his amendment, was clear that there are other schemes and significant government financial support to promote other means of securing home ownership. We should not dismiss those.

However, the issue in this legislation, especially in Clause 3, is whether a local authority should have a duty to promote the supply of a particular form—a subset as it were—of the homes that young people might aspire to buy, through various routes. We instantly get into difficulty there. The Government are clear, through the structure of Clause 3, that this does not impede the local authority from making its local plan in terms of permission in principle. However, once these local plans are in place and give access to sufficient land for housing need generally in an area, if local authorities, as a consequence of this additional duty, have a preferential or discriminatory duty in favour of planning applications being made available only for certain types of new housing, that will entail an opportunity cost for the provision of other housing. The balance of need in an area may not necessarily correspond with what young people in that area are looking to acquire, especially young people with local connections trying to access what I would regard as starter homes with particular support, if the definition of what a local authority must seek to promote is very narrowly defined and does not enable some of those additional products to be available to them.

That is rather a long-winded way of saying that in Clause 3, the Government are looking for local authorities to have a general duty to promote starter homes. If starter homes are properly defined, I am all for that; if starter homes are narrowly defined, a local authority must have the discretion to pursue other mechanisms for promoting home ownership and to help young people buy their own homes. Amendments 47A and 53A, which I have put down, bear on Clauses 3 and 5 but not on Clause 4, which we are going on to debate. There would be a duty on local authorities to promote starter homes or alternative affordable home ownership products, but that would not prevent the Secretary of State setting a starter home requirement. Local authorities would not be without a degree of specific requirements to meet the Government’s manifesto objective. I support the manifesto objective, and want us to achieve it, but starter homes, which we shall come to debate, are too narrowly defined in the Bill at present in the context of that requirement.

That said, the Government have a manifesto commitment and must, I think, have the right—which Clause 4 would continue to give the Secretary of State —to pursue it by setting specific requirements for local authorities. But the Government should do it in a more permissive context for local authorities, so that they could at the same time recognise that they have to be able to accommodate other schemes, which we all support, through the planning system—for example shared ownership and rent-to-buy schemes. That is why these amendments are there. I hope in a later group to be able to explain a better way of dealing with this, which is for starter homes to be differently defined.

My Lords, Amendments 47B and 53B follow on from the amendment in the name of the noble Lord, Lord Lansley, whose comments I much appreciated, and support the 12 amendments in the name of the noble Lord, Lord Tope. They would change the duty on local planning authorities from that of promoting starter homes exclusively to that of also promoting alternative home ownership schemes, with the added ingredient, in these amendments, that these extra home ownership products should be approved by the Secretary of State. The amendments in my name and the names of the noble Lords, Lord Kerslake, Lord Kennedy, Lord Beecham and Lord Stoneham, provide the opportunity for other—equally if not more desirable—home ownership products to be permitted in place of the one-club approach, the single option of 20% discounted starter homes.

The bright ideas of policy advisers may not always represent the only or the best approach and the starter homes initiative got its star billing without consultation with key practitioners or other politicians. In the event that a more creative, more beneficial route to home ownership already exists—or may be invented in the future—it seems wise for the Secretary of State to allow for alternatives.

My amendments would not help, sadly, the fledgling new sector of build to rent, where institutional investors are putting in long-term money to build decent market rental housing. This amendment is only about alternative home ownership products, and I am concerned that, as the British Property Federation has warned, the gradually evolving institutional rented sector is likely to lose out to its new rival of subsidised starter homes. Build to rent also addresses the demand from younger people who cannot raise sufficient deposits and/or a large enough mortgage. The sector helpfully draws in new resources from pension funds and other institutional investors, and several build-to-rent developers are now offering good-quality and longer-term security than is common in the PRS at large. But this newly emerging sector will not be able to take advantage of the grant of many thousands of pounds going to each first-time buyer of a starter home.

I am sorry these amendments will not be useful to the build-to-rent proponents. However, they seek to recognise the Government’s ambition that home ownership should take precedence over renting. Within the open market, this government priority is understandable. By extending the range of home ownership products to embrace schemes that may well prove more desirable than starter homes, these amendments and those in the name of the noble Lord, Lord Lansley, would assist the Government’s overarching aim.

Shared ownership has been a valuable option for many buyers, as the noble Lord, Lord Tope, has remarked. Despite the impending loss of social housing grant, funding for this tenure has been sustained. It can help people on the lowest rung of the home ownership ladder and reach households for whom the 80% purchase price for starter homes is still too high. Other examples of alternative home ownership models are the rent-to-buy schemes, such as Gentoo housing group’s Genie house purchase scheme and the Rentplus product, which enables households to save for a deposit while in a rented home and to buy that property after a set number of years. Such schemes extend home ownership to people whom starter homes cannot reach but who can become home owners when they have saved prudently for a number of years.

The Housing Minister has indicated in the other place strong support for a range of different products to help access to home ownership and, since the starter homes model has many imperfections—as we will explore later in Committee—the Government would regret a one-size-fits-all approach. Indeed it seems odd to endow one particular model with this level of support and enshrine it in legislation. The Government will not regret giving themselves and local planning authorities a bit more flexibility in the promotion of low-cost home ownership. I support these amendments.

My Lords, I add my support to this group of amendments, and I declare an interest as chair of Peabody and president of the Local Government Association.

It is worth recalling that the product—starter homes—had its origins in the coalition Government. It came forward as an interesting idea that would be genuinely additional to other new sources of supply. It would be applicable to what were described as brownfield exception sites—those that had not previously been identified for housing and could therefore be built on with this product. The uplift in values would cover the 20%. It was, therefore, an interesting, innovative idea with some rather ambitious numbers attached to it. In six months—between then and the election—it moved from being an interesting, innovative idea to being the main source of new supply. There is usually an in-between stage—it is called “trying something out first”. We have not yet had a property sold as a starter home; we do not yet know in detail what constitutes a starter home. Yet it becomes the centrepiece of this Bill. It makes absolute sense to think about other forms of home ownership and—we will come to this later—to let local authorities have the flexibility to think through the different sorts of tenure that they require.

On Second Reading I was clear that there is only one sustainable route to better access to home ownership: it is to build more houses. There is, ultimately, no other way to sort this problem. In the end, these access products reward a selective group of people who are able to benefit from them. In the case of Help to Buy it is an equity contribution, so people are expected to return it, as with shared ownership. In the case of starter homes—as we will discuss later—it is, in effect, a one-off gift to a select number of people. In this group of amendments, therefore, I encourage the Government to think carefully about putting every bit of their focus on starter homes at the start of this Bill, and to accept the very sensible amendments that seek to broaden this section to include other forms of home ownership. We can debate later, under other groupings, whether this product is properly formed in the first place.

My Lords, in speaking to this group of amendments, particularly in reference to home ownership and starter homes, I think it goes without saying that the need to provide enough homes to meet demand is one of today’s defining challenges. I therefore welcome initiatives such as the provision of starter homes, the extension of the right to buy to housing association tenants and the continuation of reforms to the planning system undertaken in the previous Parliament. Such measures will enable low-income families to own their own homes and provide stability for their families.

As noble Lords know, the rate of home ownership has been falling since its peak in 2003, despite the aspiration to home ownership remaining very strong. Since spring 2010 nearly 270,000 households have been helped to purchase a home through government-backed schemes, including Help to Buy and the right to buy. However, younger households in particular are now less likely to own their homes than a decade ago. We must therefore ensure that more young people are able to aspire to home ownership. I support the Government’s manifesto commitment to build 200,000 starter homes over the course of the Parliament.

Starter homes are essential to increase housing supply and will encourage younger couples who wish to start a family to get on the property ladder and provide security for their future families. To this end, the Bill includes a general duty on English planning authorities and embeds starter homes in the planning system. This will make it easier and faster for planning permission for houses to be granted and make interventions in the local planning process smarter.

However, on this point I hope that the Minister will say how the Government will assist councils in meeting these important duties. The introduction of a much-needed database, and the Government’s amendment to have it maintained by the Secretary of State rather than by local authorities—for reasons of clarity and simplicity—will allow greater co-operation between local authorities in tracking banning orders and make monitoring of ongoing trends more centrally focused. This national co-operation will prevent serious or repeat offenders from causing harm and misery to renters and placing them at serious risk from letting properties. There should be no room for such operators in the sector.

This Bill provides extensive scope for the role of local government and new duties that they must act on.

My Lords, I am pleased to support my noble friend Lord Tope on these amendments, particularly the provisions that the noble Lords, Lord Best and Lord Kerslake, spoke to. I also have some sympathy for what the noble Lord, Lord Lansley, said about the need to widen the definition of these starter homes so that we look at alternative models of affordable homes that can be approved by the Secretary of State. We will debate later in Committee whether the starter homes initiative will lead to balanced and mixed communities, and the implications of that, about which I have severe doubts. We are also going to discuss the wider issue of the impact on social housing provision, and I declare an interest as chair of Housing & Care 21.

This model of starter homes will not apply to huge areas of the country; people there will not be able to benefit, as the noble Lord, Lord Tope, explained. Although the main aim should be to build more homes, if we genuinely want to increase ownership we must look at more than one size fits all. The Government may find, if they concentrate overly on starter homes—I understand that they are doing that because it is a convenient target to get people moving—that the type of houses we are building in the long term become unsuitable.

There are two aspects of this that are quite an issue. Frankly, too many starter homes in one local market could cause market distortions, both initially, when they are trying to sell these homes, and at the end of the five years, when the purchaser can effectively take advantage of the discount. This concentration of building of starter homes will both put off lenders from lending on those houses in those areas and may well deter developers from developing sufficiently fast, as they would where they were developing more mixed tenures and different forms of owner-occupation. The communities themselves will be very unbalanced.

The amendment is an attempt to achieve greater diversity of products, which may make homes more affordable and achievable, and, by varying the nature of the home ownership, deter what could otherwise lead to quite severe distortions of the market. If we distort the market, we will put off developers and lenders, and end up not building as many homes as we need.

My Lords, like the noble Lord, Lord Tope, who introduced the lead amendment, I believe that there is enormously wide concern about this aspect of the Bill, and I certainly support this group of amendments.

As we have heard, Chapter 1 refers only to starter homes. The Bill’s demand that starter homes should carry the whole focus of housing provision means that localism and local decision-making is absolutely fettered. The fact that absolute priority is given to home ownership and starter homes is wrong. Of course, there is a place for home ownership, and I want everybody who aspires to own their own home to do so, but, whether we like it or not, many people will never be able to own their own home, and some do not wish to.

The noble Baroness, Lady Redfern, who is not in her place, spoke of the need for people to own their own homes to provide their families with stability. Most families would like a roof over their heads to provide them with stability, and that may well mean affordable rents and affordable homes. They do not necessarily have to own them. Like the rural housing group, I believe that the proposals, with their emphasis on starter homes, will undermine future provision of affordable housing in rural communities.

As we have heard, in many areas, including Cambridgeshire, even starter homes will not be affordable for many people. Shelter tells us that people in only 2% of local authority areas will be able to buy their own homes, even starter homes. In Gloucestershire, where I live, the median income for residents in 2014 was £20,935 per annum. Even with a substantial £20,000 deposit, that would be insufficient to buy a property in most villages, with or without a 20% discount. I understand what median means: for many people who I know, that income is a king’s ransom. The living wage is about £14,000 per annum. There are so many people who will simply not be affected by the Bill.

The noble Lord, Lord Lansley, mentioned that, at Report in the other place, the Minister talked about other forms of home ownership, which is encouraging, because other forms of home ownership can help people who cannot afford to buy their homes outright. Perhaps the Minister can tell us whether the Government intend to make it explicit in the Bill that they are in favour of other forms of home ownership, not just starter homes, because they cannot be the be-all and end-all.

The noble Lords, Lord Best and Lord Kerslake, mentioned the history of starter homes, which were a glorious idea devised by people thinking up innovative policies. That is great, we need innovative policies—but as the noble Lord, Lord Kerslake, said, they must be tried out first. A policy which looks good on paper cannot suddenly become the main focus of a Bill; that is entirely wrong. I hope the Government will recognise that more thought needs to be put into the policy.

The concentration of starter homes could indeed distort the market, as others have said, and provide an imbalance in our communities. I simply do not think that the focus on starter homes in the Bill provides the solution that we need to the housing crisis in this country. We will come on to many other things in that area later, but starter homes cannot be the be-all and end-all. They can be one part of the recipe to provide a solution to the current crisis, but they cannot be the only answer.

My Lords, I agree with most of the points made on this first tranche of amendments in this chapter. Although I welcome the Government’s aim to increase the supply of starter homes for those currently attempting to get on the first rung of the home ownership ladder, like others, I remain concerned that this policy is seen as the only route to provide a home for those who are in need. Home ownership is something that many residents of the country aspire to but, as has been said, by no means all of them.

Limiting the Bill to starter homes rules out other avenues of home ownership. As your Lordships are aware, there are other products in the marketplace, such as shared ownership, which we have already heard about, and the Help to Buy equity loan scheme run by the Homes and Communities Agency. By promoting starter homes to the exclusion of all other options, the Government are raising the expectation of those under the age limit that they will definitely qualify for a starter home with a hefty discount. This will lead many of them not to explore other options which could assist them to get on the housing ladder.

As the Government have already made clear, there will not be a limitless supply of starter homes. Indeed, supply will be restricted by the resources raised through the sale of high-value council homes—a policy to which we will come later in Committee. This rationing of starter homes is not clear to those whose ambitions have been raised. By concentrating wholly on their starter homes programme, the Government are setting many people up to be bitterly disappointed. Realism dictates that the Government should promote other forms of home ownership simultaneously with their starter homes programme.

We now come to the thorny issue of how these new home buyers will finance their purchase. They may have a deposit, but that does not appear to be a requirement in the Bill. They will receive a discount of “at least 20%” on the purchase price. Presumably, this is the cost of the plot plus the building costs—in other words, the market price for which a developer could expect to sell the property on the open market, outside the Government’s starter home programme. The buyer will then need to go out to the market to borrow the remainder of the purchase price of their home, so some of these purchasers will be looking to borrow up to £200,000 outside London and £360,000 in London.

In Clause 2(3), the criteria are very clear as to who these people will be: first-time buyers under the age of 40 who have “other characteristics” to be specified by the Secretary of State—which are not yet decided. The sooner the Secretary of State sets out what these other characteristics may be, the more certainty can be brought to those waiting to buy their first home.

As your Lordships are aware, there are many anecdotal stories about how difficult it is to obtain mortgages from traditional sources, with those who have been in extremely well-paid employment for a long time, looking to move from one property to another, being refused finance on the flimsiest of grounds. We cannot blame the banks or building societies for being reticent to lend when they have had their fingers burnt in recent years. However, if they will not lend to those with a good track record of repaying their mortgages and loans in a timely manner, how on earth will we encourage them to lend to those who have no track record? The very fact that they are first-time buyers means that they will not have had a mortgage in the past. The Government will need to produce an effective scheme which will encourage lenders to participate in a starter homes programme.

I note from the Statement of 19 January that those areas engaged in the pilots will get their administration costs reimbursed only during the six months of the pilot and will be reimbursed for the capital expended once the Bill has received Royal Assent. Given that the consultation is still ongoing on many aspects of this Bill, can the Minister be confident that the Bill will receive Royal Assent in sufficient time to help those housing associations engaged in the pilot to balance their books? Like others, I look forward to these five pilots being concluded.

Even with the discount supplied, research carried out by Savills on behalf of the Local Government Association—and like others I am a vice-president of the LGA—shows that starter homes would be out of reach of all people in need of affordable housing in 220 council areas, as my noble friend Lord Tope, has said, and out of reach of 90% in a further 80 council areas. The definition of people in need of affordable housing are those who have to spend 30% of their household income in rent or buying a home. Many will be spending a great deal more than 30% on housing. With 92% of council areas out of reach for those needing affordable housing, there are going to be some very disappointed and disaffected residents in the country.

Many in this House and outside are concerned that the starter homes will not necessarily be for the benefit of those originally intended. It is essential that these new starter homes should be the only residence of those who buy them. It would be against the spirit of the Bill if these homes were then rented out to others or sold on at a profit after only five years. I urge the Government to put the condition of the home being the only residence of the owner or owners in the Bill to avoid any doubt and to protect those who truly wish to participate in the scheme to acquire their own home.

The Government’s aim is to deliver 100,000 new homes over a five-year period, but that is only scratching the surface of the homes that are needed. A mix of housing is what is needed, including home ownership outside of starter homes. I urge the Minister to accept this amendment in order to achieve the Government’s aim.

My Lords, I do not want to speak for any length of time because in discussing these amendments and the following amendments, which cover largely the same area, I defer to the greater expertise of many other noble Lords, such as the noble Lords, Lord Best, Lord Kerslake and Lord Tope. However, I am struck by one thing as a relative newcomer to housing debates—that is, the extent to which we are proceeding in the dark. I went to a very interesting meeting, which I was grateful to my noble friend Lady Williams for laying on, to discuss technical aspects of the Bill. A number of noble Lords were there, and it was very interesting to clear up some of the definitions, and so forth, as far as we could. What was apparent was that the Government really had not begun to finalise any sort of modelling of the effect of the legislation—not only the financial effect, which is very germane to our discussion, but the social effect and the effects on supply of housing.

I think that we would all agree that one has to think very clearly about housing as it is a complicated situation and an important topic. It is the Government’s responsibility to think clearly, and I think we all agree that the issue is really shortage of supply rather than tenure. That is the fundamental point with which we are trying to grapple. Therefore, it behoves the Government not to let issues of tenure, whether in social housing, starter homes or wherever, get in the way of the fundamental point about shortage of supply of whatever kind of housing it may be. In trying to get at what the Government could say about the effect on housing supply and other financial matters, they confessed—and I am grateful for this to the civil servants who were there—that they had not got far enough with their modelling, simply because Ministers had not taken decisions yet. I understand that, too, but we are a long way down the road. We have had 17 Committee sittings in the other place and we are now in Committee here. Some important definitions and considerations have not been finalised and do not look as though they will be finalised for some time, which places the House in a quandary in trying to reach a clear conclusion, whatever point of view you may have.

The only bit of information that I have been able to glean by way of the consequences of this particular set of clauses on starter homes was provided by the Local Government Association. I do not know whether it is accurate or not, but the LGA says that in its present form,

“should 100,000 starter homes”—

and that is an ambitious figure—

“be built through the planning system, between 56,000 and 71,000 social and affordable rented homes would not be built”.

In other words, there is a sacrifice, in concentrating on the single issue of starter homes, of social rented homes, which we know are even more needed by even poorer people than those whom we hope will buy these starter homes.

This is the difficulty that we have. Is the figure accurate? Where has it come from? Is it the Government’s own figure? I would be interested to hear the Minister comment on this, although I do not necessarily expect her to comment this evening because I have just produced it out of the blue. But that sort of figure, without any further government explanation about what they expect the consequences of this legislation to be, is very worrying. Therefore, I hope that we can go into this as thoroughly as possible—but I fear that, even at the end of a day’s debate on this subject, around which there is a great deal of concern and interest on the part of Members, we will not be very much further forward.

I agree with the noble Lord, Lord Kerslake. We are tackling this the wrong way round. The right way round would have been to say, “There is a housing shortage. How do we tackle that and maximise housing supply?” We have three different methods of tackling supply. We have the private sector, housing associations and councils. How do we maximise the output of those three? Let us sit down and discuss that and consult expert opinion. It has happened the other way around. Someone has had a bright idea. I am not against bright ideas, I am all in favour of them, but if they do not go through the necessary and rather boring business of being talked through by people who know what they are talking about, we are liable to end up in the sort of situation we have now. Undoubtedly, this may be a very sensible idea, but we do not really know and we do not have the information to hand to decide on it. Yet this is really rather late in the process, and if we get it wrong we may have adverse effects when the Government are trying to make a favourable effect. So I am concerned from that point of view.

My Lords, that contribution was the key one in our debate, because it raises the issue of the impact of this legislation and how it will affect demand. What is absolutely clear is that many local authorities are expressing profound concern over this concentration on starter homes and a single source of housing supply to the exclusion of other forms of tenure. That is what has come through in the course of this debate—this feeling of concern about concentration on one area.

The noble Lord, Lord Horam, referred specifically to whether this work has been done. It is interesting to note that Bristol has actually done this work. I draw attention to a document sent to me that sets out findings in this area—because I suspect that what Bristol found mirrors a difficulty that we would find throughout the United Kingdom.

Bristol City Council, working with South Gloucestershire and North Somerset, recently published the wider-Bristol Strategic Housing Market Assessment. I understand that this assessment was carried out with this Bill in mind, so clearly it thought that it would be influencing events when these matters were considered by Parliament. The study identified the need for housing in the wider Bristol housing-market area to be 85,000 homes over a 20-year planned period of 2016 to 2036, of which 29,000 would need to be provided as affordable homes. Of these 29,000 affordable homes, 80% would be required as social rented homes or equivalent affordable rented homes to ensure that households with the lowest incomes were able to access housing in their region. That market assessment demonstrated that the remaining 20% would be required as shared-ownership homes. I think that that is the kind of work the noble Lord, Lord Horam, was referring to. Let us look at the demand and then construct the policies to deal with that demand on the basis of the findings of carefully carried-out research.

In order to meet the market assessment guidance in the current National Planning Policy Framework, local planning authorities obviously have to retain discretion for determining the appropriate proportion of low-cost home ownership and starter homes to meet affordable housing needs. This prescriptive approach was seen by Bristol City Council as,

“a new and worrying centralisation of planning policy which presents a significant challenge to local government autonomy”—

in other words, challenging the role of local government with policies being set nationally which do not meet the immediate needs of a particular area.

Bristol’s view is that determining the number or proportion of starter homes may conflict with its housing market assessment and risks undermining the National Planning Policy Framework which it has been trying assiduously to pursue. For that reason, the three local authorities commissioned market assessment consultants ORS—an organisation of which I know very little or nothing—to model the housing need and demand for Government-proposed starter homes and to advise on whether the Government were capable of meeting the market assessment’s identified affordable housing needs. ORS confirmed that, although there was a demand for starter homes as a first-time buyer product to boost housing growth, such a product was not considered appropriate to address the affordable housing needs identified in the wider Bristol market assessment.

Bristol City Council supports Jeremy Blackburn, head of UK policy at RICS, who commented:

“Ramping up housing supply is positive, but home ownership should not be the only game in town given the amount of private rented accommodation we need. A mix of market and rented housing is required and starter homes should not be seen as the panacea to solving the housing crisis”.

We get the feeling in this debate that the Government see starter homes as the panacea to deal with the housing crisis. I, along with many of my colleagues, do not believe that this policy will sort out the problem that exists. We need far more innovative thinking, as the noble Lord, Lord Horam, suggested. We need new packages and new ideas. This is an old idea; it is subsidised housing ownership. It will not resolve the problem and I positively support the amendments moved by the noble Lord, Lord Tope, because they seek to address the issue of defining what is actually required.

My Lords, I hope I will be forgiven for intervening again. The noble Lord, Lord Horam, mentioned a meeting with the Minister which I regret I was not able to attend. He mentioned some modelling which civil servants were doing on the impact of this policy. Will the Minister say when we are likely to receive further information about that modelling and what the recommendations are? As I have expressed in this House before, I think it is invidious if we are asked to proceed with this Bill without seeing some of the key regulations tabled by the Secretary of State. We cannot be expected to make such important policy which is going to affect the lives and well-being of so many of our citizens if we are not able to see the outcome of the modelling and whether or not this Bill is evidence-based in any way.

Perhaps I can just explain that the Minister was not present at the meeting. She kindly arranged for her civil servants to address technical questions. I asked what modelling had been done on the financial and supply effects of the legislation and the civil servants were kind enough to say that the modelling was not finished because certain decisions had not yet been taken. The definition has not been finalised and therefore they could not give me an answer. I raised the question in the House because I think it is important, as we go through the Bill, that we address these questions if possible.

My Lords, what worries me above all is that starter homes are supposed to fly the flag for affordable housing. Behind that is a recognition by the Government that the problem in this country is the lack of affordable housing, which in turn is determined by the lack of new and adequate housebuilding. Starter homes are just one part of a complicated jigsaw that the Government are offering us which all pushes in one direction—away from making social and affordable housing available to people on modest incomes. Later on in the Bill we are going to get the sale of housing association homes through right to buy, which, if council housing sales are anything to go by, will quickly be turned into buy-to-lets and then into student housing, and away from housing for young families who need affordable homes in which to bring up their children and live their lives.

Secondly, we are going to see the sale of empty council housing into owner occupation over and beyond local authority RTB in order to fund the discounts on the sale of housing association properties into owner occupation. So we will lose housing association properties and we will probably double the number of local authority housing sales—all away from affordable housing. On top of that we are ensuring that Section 106 land and grants, which have been the source of so much housing association and local authority building, will now become monopolised by starter homes. At the same time we are knocking out shared ownership.

So what is actually happening is that the sole concept of affordable housing, both for the future and with the recycling of existing property, is going to be starter homes—the only game in town. Housing association properties should be sold with discounts into right to buy; local authority RTB will continue; and on top of that empty homes will be sold to fund the discounts for housing association tenants to be able to buy in order to send the stock into buy-to-let in due course. And on top of that, not only can local authorities and housing associations not replace that stock but they will now find—because of the requirements of central government—that their Section 106 land will be available exclusively and solely for starter homes. So for the whole of the next decade, if the Government have their way, the affordable housing programme for those in the greatest need, who have least leverage in the market, whose need is highest, will have just one option, starter homes—which, we are told by Savills, will not benefit 90% of them. I ask the Minister: what on earth do the Government think they are doing?

My Lords, at the risk of prolonging this very interesting debate, I should say that my employer is a firm of chartered quantity surveyors and one of the things that we do is assist housebuilders. We have a sister company that has just secured a large contract to build houses.

It has become apparent to me as the discussion has gone on, as it was apparent to me at Second Reading, that this Bill has a very small component related to the need to build new houses generally. It just is not there, because all we have is a reference to starter homes and a reference to self-build and custom housebuilding. Those are the only two bits concerned with building new homes of any sort, so there must be a working assumption sitting behind this that somehow, in the big, wide world out there, the general thrust towards new homes will continue and that a proportion of those —on the principle of the affordable housing component under Section 106, the community infrastructure levy or whatever it happens to be—will be devoted to an element of affordability.

The noble Baroness, Lady Hollis, is right in the sense that I can confirm, from speaking to developers, that they are of the view that conventional affordability, in terms of affordable rents, will go into some form of attrition and that starter homes will indeed be the only show in town. That appears to be the belief among housebuilders. I pass no particular judgment in relation to government policy—I have to accept that this is something that they have as a manifesto commitment, and it is up to us to scrutinise the matter and make sure that it is, as far as possible, fit for purpose—but there is no doubt that the starter home will effectively be not affordable in any sort of perpetuity but will be a one-off windfall for the first person who happens to occupy it.

It is very important therefore that the studies to which the noble Baroness, Lady Royall, and other noble Lords referred should be before us. The outcome of those pilot studies should be known so that we can assess this. Otherwise, it seems to me that we are in a very brave new world indeed, in which we know neither the outcome nor, indeed, a great deal of the process that sits behind this. So I have to say that I am with noble Lords who have tabled the amendments in this group in terms of having doubts about this. I have other doubts which I have expressed in meetings which the Minister was kind enough to convene some time ago—although I was not able to attend the most recent one—about the financial viability of how this works and how you retain the substance of the starter home, or social concession, within the system.

The Select Committee on the National Policy for the Built Environment, of which I was pleased to be a member, was clear in one of its conclusions that the amount of housebuilding by the private sector on its own will not meet the targets that we need to meet if we are in any way to catch up with, let alone satisfy, the household formation taking place at the moment, with all the issues about mobility, the ability to find a home where there is a job and affordability.

As we have sort of inverted the whole process of discussion here, it is a bit difficult not to bring in some of the things that will come in later, and certainly I feel quite strongly about some of these things. I am the parent of two children in their 20s who would, under normal circumstances, probably like to a buy a flat in London—thank you very much—but, on the sort of salaries that they can get even with good university degrees and good jobs, it is just not possible in terms of the price to earnings ratio, if I can call it that, of the average salary compared with the average house price. It is just not going to happen. The only way we can deal with that is not only to expand the number of homes in totality but to have the broadest range of tenures and methods by which people can occupy them. By whatever means, that is the key to this. One of the reasons why some very large players are now moving into the private rented sector and are planning to build new is because they can see that there is going to be a complete deficit on that side of the equation. That trend tells its own story.

I repeat that I am with the concerns behind this group of amendments. We have to do some serious unpicking. If we cannot achieve it at this stage, I ask the Minister whether we can have some of the pilot study feedback for the next stage in the Bill when we really can get to grips with the nitty-gritty and work out whether this is going to work.

My Lords, I have three questions for the Minister. They are not particularly related, but they are all part of the starter homes thing. First, I shall pick up what the noble Lord, Lord Horam, said. He caused my eyebrows to rise a little bit when he said that it is all about quantity of housing and not about tenure. I basically disagree with that, but perhaps I am a more ideological politician than the noble Lord.

He came very close. We had our times together.

Then I heard the noble Lord talk about unintended consequences, and it seems to me that this proposal is full of the threat of unintended consequences. I go back to the point I made previously, which was picked up by the noble Lord, Lord Best, that this Bill is trying to fit everybody into the same pot. It is one size fits all, when what we need is a series of different answers to the problems of the housing market in different parts of the country.

When I spoke previously, I said that there are lots of different housing markets—perhaps 100—around the country. The person who first gave me that idea is now in his place and is my noble friend Lord Stunell, who gave us a talk when he was a Minister in the Department for Communities and Local Government in which he kept hammering home the point that you cannot have one rule for everybody. That means that there have to be local mechanisms for finding solutions. The only people who can legitimately do that and set out to find those mechanisms and policies are the elected local authority.

Having said that, I will ask the Minister the following three questions. One relates to the point made by the noble Lord, Lord Horam. In 2001, owner-occupation in this country reached a peak of 69%. By 2011, it had gone down to 64%, and it is now somewhere in the low 60s. I suggest that that is an unintended consequence of a number of different policies. I believe that owner-occupation is the best form of tenure, although there are people for whom it is not appropriate and people who would not want it. I first got involved in politics at the end of the 1950s, joining the Liberal Party when “Ownership for all” was a Liberal slogan. It is still a good slogan, if a little on the extreme side. My question for the Minister is: do the Government have a target of what they think is a reasonable level of owner-occupation in this country? Are they content for the level to continue to slip until it gets down to perhaps 50%, or do they want to boost it again, and if so, how far do they think we can reasonably get the level to?

The second question is totally unrelated to that and is just a question I realised I did not know the answer to. Is a person or a young couple who buy a house which is a starter home, and therefore get the 20% discount on the market price, also entitled to the 20% Help to Buy discount if they qualify for that? That is just a straight question, because if that were the case it would have an interesting impact.

My final question goes back to the kind of area which I know best, which covers a lot of the north of England outside the most rural areas and the big cities—and perhaps some of the big cities, too—as well as a lot of the rest of the country as well. What is a local authority supposed to do if it cannot find anybody who wants to build starter homes? That may seem a ludicrous question in some parts of the country, but it is not a ludicrous question in the part of the country where I live. It is quite possible that local or big housebuilding companies will not want to build any starter homes, for a whole series of reasons.

My Lords, this has been a very interesting debate. I have to say that I rather struggled, as, I suspect, other Members of your Lordships’ House may have done, with the huge number of amendments in this group and the following group, which are in many ways connected. It has not made preparing for the debate—or, I suspect, replying to the debate, for the Ministers—a very easy job. However, we have heard some extremely interesting contributions, and I hope the Government will listen very carefully to the views not just of members of different political parties but particularly of the Cross-Bench Members, who have brought their experience and independence of mind to bear on these very important problems.

In the first instance, I will speak to Amendment 48, which relates to the provision of starter homes and which relates particularly to Clause 3, under which the Bill lays down:

“An English planning authority must carry out its relevant planning functions with a view to promoting the supply of starter homes in England”.

So far, so good. Subsection (2) continues:

“A local planning authority … must have regard to any guidance given by the Secretary of State in carrying out that duty”.

Amendment 48 would add to that subsection (2) something of a restriction so that it would continue,

“except where the local authority considers that providing starter homes would prevent other types of affordable housing being built”.

In other words, it introduces into the Bill the notions that there has to be a balance between the provision of starter homes and other affordable homes, and that the Secretary of State should not be able simply to prescribe that the one—starter homes—must always prevail over any other considerations. That seems a sensible way forward.

It is interesting to read the policy fact sheet on starter homes published by the department, which lays down the general nature of the Bill. It asks what the Bill hopes to achieve and answers,

“a general duty on English planning authorities to promote the supply of starter homes when carrying out their planning functions”.

So far, that is quite acceptable. However, it continues with,

“allowing the Secretary of State to make regulations to create a starter homes requirement, so that English planning authorities may only grant planning permission if the starter homes requirement is met. This will ensure that starter homes are delivered on suitable, reasonably sized sites”.

That is not necessarily a logical conclusion, but the important thing is that it makes an absolute duty, which will ultimately be fleshed out in regulations and which, needless to say, we will not have sight of before the Bill is enacted, if it is enacted in its present form. Moreover, nothing is said either here or in any other area about the salient fact that the requirement will not necessarily be confined to providing such starter homes for residents within the locality. They could come from far away or perhaps from adjoining authorities, but there is no indication that the planning requirement will address the needs of people within the very authority that will have to carry out these proposals.

Interestingly, the fact sheet says that the Government are consulting until 22 February. Admittedly, that is only a week or so ago; given the time we have to consider the Bill, I agree that that is rather a limited period, but we do not know quite when the consultation started. They are consulting,

“on changes to national planning policy to complement these legislative reforms”,

which seems somewhat akin to the old Alice in Wonderland trope of “Sentence first—verdict afterwards”. We do not know what the consultation will produce, but the Government are in any event determined to impose their view. The noble Lord, Lord Horam, who is in some danger of being accused of political recidivism on the basis of his extremely sensible contributions to the debates on the Bill, has indicated, rightly, that we are proceeding in the dark. Of course, we have been stumbling in the dark over many Bills, given the way the Government decide to conduct their business, particularly with reference to pending secondary legislation or regulations. However, the noble Lord is also right to identify that there are no available financial data within the information that is before the Committee or, presumably, that is likely to be before it. These are surely major considerations.

Reference has been made to some of the issues which are clearly of concern, in particular the position on who will be eligible for, and capable of benefiting from, the starter home concept. In particular, we have heard of the Shelter report, which makes it clear that for a majority of people who are not on high wages or without dual salaries, the starter home project will not help them get on the ladder at all; they simply will not be able to afford it.

My noble friend Lady Royall referred to the very small percentage of authorities—I think it was 2% of authorities—in which people on the national living wage would be capable of buying a starter home; even those on average earnings are likely to be able to buy in only 42% of local authorities. That is not a particularly impressive extension of what is meant to be an important right.

There is also a question about the Government’s consultation, which, as I have indicated, is to be on changes to national planning policy, to complement these legislative reforms. It is a question, therefore, of whether the National Planning Policy Framework is now under review. Perhaps the Minister, in replying, will indicate whether the consultation that is taking place, about which we do not have much information, is intended to replace or reshape the National Planning Policy Framework. If it is, that is a serious matter, and it ought not to be a change that takes place without being properly considered in both Houses, not merely in this House, in the course of considering this Bill. As ever, though, the Government are apparently going ahead with policies, sometimes producing amendments at the last minute in the Commons or occasionally even in your Lordships’ House, without any indication of their intentions at a time when legislators can reasonably expect to influence the outcome. I hope that is not the case here, but I rather fear it may be.

The Opposition certainly support almost all the amendments that have come before us this afternoon and agree with many of the comments. The noble Earl, Lord Lytton, in particular, given his professional experience, is somebody to whom the Government should listen. He is a Member with critically relevant experience in this area. Equally, we have heard from very distinguished Members with long associations with the housing movement and local government. The noble Lord, Lord Best, made an interesting point about the potential role of institutional investors. This is something that is new and ought to be encouraged but may, as he implied, be damaged by overconcentration on the particular policy which the Government seem determined to pursue at all costs.

The noble Lord, Lord Stoneham, rightly emphasised that too great a concentration on individual areas is unlikely to be productive. That, again, raises the question of locality.

The thrust of the Government’s policy, as we shall no doubt discuss in the next group of amendments, to promote home ownership and to make it possible for people to buy starter homes, is one that we all, I think, endorse. However, the way it is likely to work out, as we have heard and I suspect will hear again in the course of debate on the next group, is extremely problematic. The Opposition support the amendments, and I include in those, as very worthy of consideration, the amendments tabled by the noble Lord, Lord Lansley, who has taken a welcome, pragmatic approach but one that is more akin to the concerns of many of your Lordships about the position than the Government’s position as it currently stands. I hope they will listen carefully to him if they have not already had private discussions. I imagine they have, and if they have not, I imagine these will take place after this debate.

There is, however, one debate on which I have a bit of a quibble. That is in relation to Amendments 36B and 37A, moved and spoken to, respectively, by the noble Lord, Lord Tope, and supported by the noble Baroness, Lady Bakewell. I am not sure that what they are saying reflects the legal position that they think it does. What they are proposing, under Amendment 36B, is on the first page of the Bill—indeed, the first line of the Bill—to make clear that the purpose of this chapter is to promote, as they say, “home ownership” as well as the supply of starter homes.

That is reasonable, but they go on, in Amendment 37A, to define “home ownership” by adding to the clause:

“‘Home ownership’ means the holding of a legal estate by a home owner in a home or in a share of a home”.

Then they say,

“‘Home owner’ means one or more individuals who holds or hold a legal estate”.

I am not quite sure whether the noble Lord and the noble Baroness have appreciated that a legal estate is not just a freehold interest. It could be any interest for a term certain. In other words, a leasehold interest for a term certain might be a long leasehold interest. In that event, if it is a 99-year lease, there is no great problem, but, in the amendment, it could be a much shorter period than that for a leasehold interest. For example, a five-year lease, which in law would constitute a legal estate, would not quite be what they contemplate in terms of the impact of that amendment. Perhaps, therefore, they might like to rethink that or, probably better yet, take better legal advice than I am currently offering. I am not absolutely sure of the implications, but they have possibly misunderstood the nature of a legal estate, and that has possibly influenced the amendment.

We are about—after the dinner break business, I suspect—to get further into the heart of this complicated issue. It is one that will concern Members across the Committee because what we do not see is the total housing picture. We are looking at one important new area—home ownership itself is an important area—but we are not considering the totality of housing need, the geography of housing need, or the impact on meeting housing need of one set of provisions as against another. The focus is so narrowly on starter homes in the Bill and in this part of the Bill that we are missing the bigger picture. I say “we”—the Government are missing the bigger picture, and we need to draw their attention to the relationship between the various aspects of housing need and the housing policy that must follow through to get a more balanced Bill as a result of discussions in this House.

I do not think they got very far in the Commons; it is our responsibility, by drawing on the knowledge and experience of Members with a long history of involvement with housing, particularly the housing association movement, to improve it. I hope the Government will listen to the debate and respond constructively to this series of amendments and particularly, perhaps, to the next group.

My Lords, before I begin my reply on this group of amendments, perhaps I may point out that Amendment 50G has not been spoken to. I am sorry if the noble Lord might have been slightly distracted, but Amendment 48 is in the next group. I am very happy to accommodate and address Amendment 48 now. Do the noble Lord, Lord Tope, and the noble Baroness, Lady Bakewell, wish to speak to Amendment 50G, or shall I just refer to it?

My Lords, I do not know exactly what is going on, but I recall starting very clearly by saying that I was speaking to all my amendments. In fact, I counted them off. If the Minister would include whatever it was that I must have forgotten to make specific reference to I would be very grateful—otherwise, we could start the debate all over again.

I think that many of us split up our contributions in the expectation that we would consider Amendment 48 in more depth in the next grouping.

Seeing as I have confused everybody—including myself—I think it would be better to deal with Amendment 48 in the next group.

If that is what noble Lords would like, that is what we will do. I just wanted all noble Lords to be satisfied that, if they wanted to speak to an amendment, they had the opportunity and I was not just running roughshod. If I miss out any contributions from noble Lords, please have a bit of sympathy with me because this has been quite a significant debate.

I thank my noble friend Lord Lansley, the noble Lords, Lord Best and Lord Tope, and the noble Baroness, Lady Bakewell, for the amendments. I support the intention behind them, which is to highlight that other home ownership products as well as starter homes can serve the needs of first-time buyers. I hope that I can refer to that in my comments on funding and on the Bill, but I hope that noble Lords will feel that the amendments are not necessary, as I will explain.

Amendment 46A from the noble Lord, Lord Tope, and the noble Baroness, Lady Bakewell, Amendment 47A from my noble friend Lord Lansley, and Amendment 47B from the noble Lord, Lord Best, all seek to extend the duty to promote starter homes under Clause 3 to other forms of home ownership. Amendment 48D and associated amendments from the noble Lord, Lord Tope, and the noble Baroness, Lady Bakewell, seek to change the starter home requirement under Clause 4 to cover home ownership more broadly.

There was a question from, I think, the noble Baroness, Lady Hollis, about whether everyone aspires to own their own home. There is evidence that the vast majority of people—some 86%—aspire to own their own home. We are determined to extend the opportunity of home ownership to hard-working families by measures aimed at doubling the number of first-time buyers. We believe that shared ownership and other home ownership products have an important role to play as part of the diverse and thriving housing market in helping those who aspire to home ownership but who may be unable to afford it.

My Lords, how does the noble Baroness square that circle? It is great that the Government wish to ensure that everybody who aspires to own their own home can do so, but the figures that the noble Baroness gives do not match the figures that we have quoted around the Chamber on the finances that individuals and families have. Even with the 20% discount it is clear that the vast majority of people in this country are unable to buy the starter homes.

I was going to come on to that later, but I will deal with it now. Excluding London—I absolutely appreciate that London is a different case—the average price of an affordable home will be £145,000. A couple on the mean wage in this country, £26,000, would be well able to afford a starter home or an affordable home. The point I am trying to get at—and I appreciate that not everyone is on the mean wage, because by definition there will be a lot of people under it—is that there are other products available, such as shared ownership. Outside London, it is estimated that the deposit required for a shared-ownership home is approximately £1,400, but there may be people unable to access even the shared-ownership home market. We have announced £1.6 billion to put into 100,000 affordable homes for rent. They are examples of what products are available within the various affordability brackets.

I think the noble Lord, Lord Kerslake, said that we need to build more homes. My noble friend Lord Horam also said that. We do need to build more homes; there is absolutely no doubt about it. This Government have elected to build 1 million more homes by 2021. The spending review announced a doubling of the housing budget of £20 billion to deliver those homes across a mix of different types of tenure. Yes, we are focusing on starter homes because there is a demographic that has been particularly precluded from home ownership—the young buyer—which has gone down from 61% of home ownership back in the 1980s to some 38%. That is why there is such an emphasis on the starter home, but it is not to preclude other types of tenure. In fact, in the spending review noble Lords will see the various funding streams that the Government have put forward to deliver those different types of tenure.

We all share the concept of mixed tenures. I built several thousand houses for sale when builders would not and attached 100% mortgages when building societies would not, to give people choice. That is fine. My problem, which the Minister has not so far addressed—maybe she will go on to do so—is that by exclusively emphasising starter homes while reducing affordable rent in the housing association and local authority sectors, those at the bottom will be squeezed out of the opportunities not of buying, but of living in a decent affordable home.

I get what the noble Baroness says, but for home ownership there are those at the bottom as well. We have to start somewhere. The starter homes will address a demographic that is not being served and has not been for more than 20 years. In terms of the Government putting their money where their mouth is, £20 billion is an awful lot of money over the spending period.

All of the Section 106 land on which alternative, affordable rented housing would be built will be monopolised—used exclusively for, effectively—starter homes.

My Lords, there will be an expectation from the Secretary of State that a certain percentage of housing will be starter homes, but it does not exclude other types of tenure. There will be fundamental disagreement on this, but the emphasis on younger buyers is there because they are the demographic that has been priced out of home ownership for the last 20 years, as I said.

My Lords, there are some 9,000 or 10,000 families in Norfolk, waiting patiently on waiting lists for affordable social housing. Why is that demographic not worth thinking about?

My Lords, the £1.6 billion to build 100,000 affordable rented homes will add to the mix of addressing supply. As noble Lords have said this afternoon, the fundamental issue of the housing market today is lack of supply. All these different types of tenure will add to the supply. I accept that we will disagree, but one cannot—

I wonder if I can just tempt the Minister again to say perhaps that in many parts—or even most parts—of the country that is the case? Lack of supply is not the case in areas where the market has collapsed, and we need different policies to solve the problems we have got and provide people with good homes.

I do not think that the noble Lord is wrong that in certain parts of the country—and I think I know the parts he is referring to—home ownership has declined because people do not want to live there. I think that some of the regeneration and transport policies and some of the policies for the northern powerhouse for rebalancing the economy will contribute to all parts of the country being able to maximise their economic potential and make people want to live there. I give the example of Salford, where MediaCity was built. That area of Salford is a very desirable place to buy.

There are a number of interventions that the Government can make that all add to the mix of a place being an attractive place to live. I have seen where transport investment suddenly has made areas that people did not want to go near—Wythenshawe—into ones where suddenly the house prices have increased dramatically. They are becoming very vibrant places in which to live because of those transport links and investment in the airport. I accept that point. We cannot just take individual government policies and criticise them. We have to take everything in the mix in terms of improving and rebalancing our economy outside the south-east while recognising that the south-east is a fantastic place to live and is the engine of this country in many ways.

One of the interventions the Government have made has been to impose a 1% reduction in rents for social housing, which is going to have a significant impact on the capacity of local authorities and the housing association sector to maintain or improve stock or build. That reduction will reflect itself in a reduction in housing benefit to local authority tenants but will not in any way contribute towards meeting housing need.

My Lords, we have talked a lot this afternoon about tenants and tenants on lower incomes and actually the 1% reduction will help tenants. Housing associations are in a very—

My Lords, could I just make some progress? I may be repeating myself here but the noble Baroness, Lady Royall, asked what other products were reflected in the Bill and, of course, custom and self-build is referred to. It is a small but important part of the market and, culturally in this country, it is a part of the market we have not taken a lot of notice of over the last few years but there is a desire for people to get involved in custom and new build.

I shall go back to talking about housing growth in all tenures. Some of the planning reforms to help builders to get building are included in later parts of the Bill. To help councils build their own homes we have increased borrowing headroom by £222 million for 36 councils and we are continuing and building on our Help to Buy programme to support new housebuilding.

The noble Earl, Lord Lytton, asked whether people could afford to buy. I hope I have partially answered that question by answering the intervention from the noble Baroness, Lady Royall, in terms of affordable house prices outside London.

On that matter the Minister said that a £150,000 house was affordable on an income of £26,000. That was the reply she gave. I was just looking it up on a mortgage calculator. After tax it is about 40% of income.

My Lords, the example I gave was a couple on a mean wage of £26,000, not one person on £26,000. Four times one wage would be under £150,000. To clarify, I am talking about a couple on £26,000 each. It is the mean wage so I just gave it as an average example, if the noble Lord could accept that in the context in which it was given. It was an average example of an average couple.

The noble Lord, Lord Tope, asked when we will get the details of the review of shared ownership. It was a commitment made by the previous Government. This Government carried out an internal review which resulted in the announcement of 135,000 shared ownership units in the spending review of 2015. The prospectus for the shared ownership programme is due in the spring.

My noble friend Lord Lansley talked about the definition of the starter home. Clause 2 talks about the criterion for a starter home being a new dwelling available to qualifying first-time buyers aged under 40. We will specify more criteria in the regulations. It is sold at a discount of at least 20% of market value. It is sold for less than £250,000 outside London and £450,000 within Greater London. It is subject to sale and letting restrictions to be specified in the regulations and we will consult.

I am grateful to my noble friend the Minister but, as I expressly said in my contribution, I am looking forward to debating the definition of a starter home in Clause 2 on a later group.

That is fine. I just thought I would set that out now. I know we will be talking about it later.

The noble Baroness, Lady Bakewell, talked about Clause 2(3) and the Secretary of State specifying in the regulations further characteristics of first-time buyers. She asked when the characteristics will be agreed. We have taken a power to specify additional criteria in regulations to provide the Government with some flexibility as to who should be eligible and we intend to consult shortly on what criteria should be applied. This forms part of a wider consultation on the aspects of starter home regulations to be introduced later this year.

Starter homes are a new product and, although we have debated the merits and demerits of them being so prominent, we want to ensure that councils are delivering on the key manifesto commitment. The electorate will expect us to deliver on this commitment, and for this reason we want the starter homes clauses to focus on starter home delivery, as I have pointed out.

The noble Lord, Lord Horam, asked about the impact on other forms of housing. We will be consulting on the starter homes requirement under Clause 4 shortly. I want to reassure noble Lords that councils will still be able to seek other forms of home ownership from new development, as I have previously stated, once this requirement is in place. These clauses do not switch off the abilities of councils, as I have pointed out, to secure other forms of alternative home ownership products, just as previously the affordable housing duty did not switch off other housing home ownership products. We expect them to actively support starter homes, but it does not remove their ability to deliver home ownership products, as I have pointed out.

The noble Baroness, Lady Bakewell, asked how people will get mortgages. In January, house prices increased by 2.5% in England and Wales, with annual house price inflation increasing from 6.4% in December to 7.1% recently. The number of mortgage approvals has actually grown by 42% since April 2010. Noble Lords will recall that last week I was asked about the decline in home ownership. Actually, for the first time in seven years, home ownership is in fact increasing, so that probably demonstrates that people are buying and lenders are lending.

The noble Lord, Lord Greaves, asked about the target for owner occupation. As I stated previously, we want to double the number of first-time buyers within this Parliament.

I will now talk to Amendment 50G, on the monitoring arrangements, and why I think it is unnecessary. We need to ensure that the monitoring arrangements reflect the delivery of starter homes for first-time buyers so that there is a transparency about delivery and that first-time buyers are aware of the measures which have been taken at the local level to deliver on supply. Councils already have to report on market and affordable housing supply through their authority monitoring reports, so I do not think that the amendment would serve any useful purpose.

That is also true of Amendments 53A, 53B and 53ZA, which all seek to amend the compliance direction. The compliance direction is only intended to be used in extremely limited circumstances. To keep its scope narrow by focusing on starter homes provides a clear sanction for the circumstances where the local planning authority is in breach of its starter home duties. We envisage that it would be rarely used but would act as a strong incentive to deliver starter homes in accordance with the provisions in the Bill.

It has been a long debate, and I hope that it has provided—

I am terribly sorry—I know that it is dinner time and people are anxious to move away from this debate—but my frustration in terms of regulation and consultation is mighty. I do not blame the Minister because this is a blight on many Governments. The noble Baroness mentioned twice the consultation that is about to begin on starter homes. Why start the consultation now? We will finish this Bill, I presume, around Easter, by which time we will not have had the results of the consultation and the Government will not have been able to shape their policies in relation to the consultation. Either it is a sham consultation—that does sometimes happen—or, what is the point?

I understand the frustrations of noble Lords, and I feel a degree of frustration myself. It is not a sham consultation, I can assure the noble Baroness. In terms of regulations generally, I have on numerous occasions elected to provide to the House details on regulations as soon as I could. I hope that the noble Baroness is somewhat reassured by that and that noble Lords will feel free to withdraw their amendments.

My Lords, I have been listening to this debate with great interest and, in thanking the Minister for her careful reply, I cannot help but think about the comments of the noble Lord, Lord Green, about migration flows into this country. We know that 1 million migrants came into Europe last year. It is a huge pressure on this country and other countries in terms of receiving these migrants. There are problems across the world, in the Horn of Africa, and so on.

I have lived and worked in the East End, and I know that for many poor people the major concern they have about foreigners coming into their country is a shortage of housing. When they perceive that foreigners are taking their homes, they get really upset. In this context, I suppose I want reassurance from the Government that they have thought about how they will cater for all those migrants who are desperate refugees from abroad to ensure that there is sufficient housing for poor families from both this country and abroad and that we do not get into a situation of antagonism between the incomers and the nationals, as it were.

If there is one thing on which we can all agree in this Chamber, it is the need to supply more housing. We are all united on that. Certainly, Governments projecting forward populations is a crucial part of that.

My Lords, I am very grateful to all noble Lords who have spoken, and to the Minister who has done her very best to respond to what she rightly described as a very long debate. One feature of the debate was a pretty wide measure of agreement. We may all have our own particular favourites on the nature of housing tenure, but I do not think that any of us believes that any one form of housing tenure is a solution to the problem—manifestly it is not. The concern is that the Bill, with the references to starter homes coming right at the front of it, gives the impression that it is rather more important in the delivery that actually most of us believe there will be.

We would probably have had just as long a debate, but perhaps a slightly different one, if Clause 1 of Chapter 1 of Part 1 of a housing Bill had simply said, “The purpose of this Chapter is to promote the supply of decent homes in England”. We may well have had a debate on how to do that, but there would have been even more measure of agreement.

I am grateful to all noble Lords who have spoken. I am grateful to the noble Lord, Lord Beecham, for his free legal advice, and I note the value of that advice. I am grateful to the Minister, as I said, for listening very carefully to the debate. All I hope—I think on behalf of all of us who have spoken and listened to this—is that it is not just that the Minister has listened but that the Government will hear. Undoubtedly, we will return to this subject at the next stage of this Bill when we will be seeking to find an acceptable—acceptable to your Lordships’ House—change to the current wording of the Bill. With that, I beg leave to withdraw the amendment.

Amendment 36B withdrawn.

House resumed. Committee to begin again not before 8.36 pm.