Motion to Approve
That the draft Regulations laid before the House on 29 November 2017 be approved.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
My Lords, the Government value the private rented sector. It is an important part of our housing market, housing 4.5 million households in England. We want to support good landlords who provide decent well-maintained homes and avoid unnecessary further regulation of them. Most private landlords provide a decent service to their tenants, respect their rights and comply with the obligations and legal requirements imposed on them. We know, however, that a small number of landlords and property agents do not meet their legal obligations, sometimes exploiting their tenants by renting out substandard, overcrowded or dangerous accommodation. These landlords and property agents often do not respond to legitimate complaints made by tenants. Some would even prefer to be prosecuted rather than maintain their properties to a decent standard. Let me be clear: these practices damage the reputation of the sector and have no place in modern Britain.
The Government brought in tough measures to enable local authorities to target such rogue landlords under the Housing and Planning Act 2016. In April 2017, we introduced civil penalties of up to £30,000 as an alternative to prosecution and extended rent repayment orders to cover a wider range of housing offences, including illegal eviction and failure to comply with a statutory notice. Banning orders, which are the subject of these regulations, are an important part of the package, which will enable local authorities to take effective enforcement action against rogue landlords.
It may be helpful to noble Lords if I briefly outline the purpose of a banning order. A banning order is defined under Section 14 of the Housing and Planning Act 2016. A person subject to a banning order may be prevented from: letting housing in England; engaging in English letting agency work; engaging in English property management work; or a combination of these. Section 15 of the Act enables a local housing authority to apply to the First-tier Tribunal for a banning order against a person who has been convicted of a banning order offence. A banning order must last for a minimum of 12 months, and there is no upper limit. If a landlord breaches a banning order, they will face enforcement action.
Noble Lords may also be aware of our intention to introduce a database of rogue landlords and property agents. Any landlord or property agent subject to a banning order will be entered on to the database, which will be used by local housing authorities to target their enforcement activity effectively.
We also want to ensure that tenants who live in a property rented by a landlord subject to a banning order are adequately protected. A banning order does not invalidate any tenancy agreement held by tenants in a property, regardless of whether the agreement was issued before or after the banning order was made. This is to ensure that tenants do not lose their rights under the terms and conditions of their tenancy agreement. The Act therefore provides that, in certain circumstances, the management of a property can be taken on by the local housing authority following the making of a banning order.
Banning orders target the most prolific offenders who have been convicted of serious housing, immigration and other criminal offences connected to their role as landlords. They will prevent rogue landlords and property agents earning income from renting out properties or engaging in letting agency or property management work, forcing them either to raise their standards or to leave the sector entirely.
Noble Lords will be aware that we did not include specific banning order offences in the Housing and Planning Act 2016. During the passage of the Act, concerns were raised about the nature and scope of banning order offences. In response we held a public consultation on which existing criminal offences should be regarded as banning order offences. We also amended the Act to ensure that the regulation-making powers were subject to the affirmative procedure to enable full scrutiny of the proposed offences by Parliament.
The regulations before the House today specify which offences will constitute banning order offences under Section 14 of the Act. I will summarise briefly the offences set out in the schedule to the regulations. All the offences listed in the regulations are existing criminal offences. By making the offences “banning order offences”, we are not introducing new offences but simply introducing a new sanction for pre-existing criminal offences.
Broadly speaking, there are three types of offences in the regulations. The first type is housing offences relating to a breach of existing requirements under the Housing Act 2004 and other housing-related legislation, provided the person convicted of the offence has not received an absolute or conditional discharge. This condition is in place to ensure that banning orders remain a proportionate sanction. We want to target only the worst offenders, who have been convicted of serious housing offences.
Offences include failure to comply with an improvement or overcrowding notice, failure to comply with houses in multiple occupation licensing and selective licensing of other privately rented properties, and offences relating to fire and gas safety. They also include the unlawful eviction of tenants or violence or harassment towards tenants by the landlord or letting agent. Such offences are serious and directly impact on the health and safety of tenants at a property. These offences are directly related to the offender’s role as a landlord, and it is right that they are included as banning order offences.
The second type of offence is an immigration offence under Part 3 of the Immigration Act 2014. For a banning order to be made against a landlord, that landlord would need to be convicted of offences including letting a property to an illegal immigrant. Where the original immigration offence is prosecuted it would generally be for serious offences that may be associated with the wider exploitation of migrants, so it is appropriate that offenders could be banned.
The third type of offence is a serious criminal offence with a connection to the housing or the tenant on the part of the landlord. A banning order may be sought where a person has been convicted in the Crown Court of a serious criminal offence including fraud, misuse of drugs or sexual offences. We restricted these offences to becoming banning order offences after conviction in the Crown Court to ensure that only the most serious offenders can be subject to a banning order and that it remains a proportionate sanction. The Government consider it appropriate to include these serious criminal offences as banning order offences where there is a clear link between the offence and the offender’s role as a landlord. It is for this reason that the offence is linked to property being rented out and/or the tenants at the property.
The banning order offences regulations were the subject of a consultation held over an eight-week period between 13 December 2016 and 10 February 2017. We received responses from local housing authorities, landlord organisations, tenant groups, housing charities and representatives of letting agents. We published our response to the consultation on 28 December 2017. There were 223 responses in total and a high level of support for the proposals. Overall, 84% of respondents agreed that the proposed banning order offences were the correct ones.
In addition, we have included a range of further offences in the regulations that were suggested by respondents during the consultation because we consider that they are offences which are most commonly committed by rogue landlords against their tenants. These additional offences, listed as items 10 to 14 of the schedule to the regulations, include offences relating to the Proceeds of Crime Act 2002, harassment, anti-social behaviour, criminal damage and theft.
The vast majority of landlords and agents who comply with their responsibilities will not be affected by these regulations. Indeed, they will benefit from them, since standards and compliance with the law across the sector will be set on a level playing field, while good landlords who work hard for their tenants and comply with the law will cease to face unfair competition from rogue landlords who ignore the law and their obligations. Ultimately, it will be for local housing authorities to determine whether to apply for a banning order in any given circumstance. The department will produce comprehensive guidance for local housing authorities on using the powers. I commend these regulations to the House.
My Lords, I thank the Minister for his exposition and I support the draft regulations, which are surely an improvement. He had a distinguished tenure in the Welsh Assembly—indeed, he had a leader’s role. He clearly stated that the regulations relate entirely to England but, given his considerable Welsh insights, can he in passing indicate whether there are similar and effective arrangements in Wales or, at least, arrangements that are the equal of those in England?
My Lords, I thank the Minister for his explanation of the banning orders. This is one part of the Housing and Planning Act 2016 where we agreed with the Benches opposite, regarding the need to introduce measures to address rogue landlords. Where we parted company—although we would still like to pursue the argument—was about the need to ensure that if there were a register or database of rogue landlords, it should be transparent and made available to prospective tenants. There is still a danger of the attitude that tenants in the UK are second-class citizens. The Government are introducing lots of measures on this issue and we on these Benches are delighted with them. I am personally delighted—following my Private Member’s Bill—that the banning of letting fees is now in a draft government Bill. Nevertheless, a growing number of people are tenants. Some should not be in the private rented sector at all but on a social rent, while others need to be advocates for themselves and strong consumers. The best way for them to do that is to have as much information as possible. If the register of rogue landlords is simply held as a DCLG database and not made available to tenants, we think that that would be a missed opportunity.
By 2021, nearly one in four people will be renting, and a quarter of those will be families with children. The Minister rightly talked about how many responsible landlords there are. Indeed, there are many responsible tenants. Just under 80% of tenants pay their rent on time and in full. That is why I am delighted to support the Creditworthiness Assessment Bill proposed by the noble Lord, Lord Bird, which is about trying to even up attitudes about private lending to tenants. These tenants are having real difficulty, and there is a significant gap in the way they are treated by the private sector.
In both the consultation and the Government’s response some opposition was expressed about immigration issues in terms of the banning orders. I ask the Minister to look at that again. As there is a danger that the attitude of landlords will be that non-UK nationals are a risk, non-UK nationals could be pushed into the properties of more unscrupulous landlords. One of the case studies in the consultation presented a terrible scenario where there were 40 beds in a set of properties. Quite rightly, the Government described that as an unacceptable form of accommodation. With immigration banning orders, there is a danger that people will be pushed into even worse accommodation. We all know some of the stories. We have heard about people renting sheds in back gardens and that sort of thing. Although we support the principle, is there something else that can be done so that they are not driven into a kind of underworld?
In the consultation case studies I was also struck by the issue of electrical safety. Will the Minister update us on that? There is a reference to gas safety, but we are still waiting for the mandatory electrical safety checks that we discussed. The working group on electrical safety checks concluded in 2016 that such checks should be mandatory, but we are still waiting for them to be introduced. I would have thought that this moment and these regulations would be a perfect moment to include them. As the Minister will be well aware, 70 people are killed in the UK through contact with electricity every year, while carbon monoxide poisoning, gas leaks, fires and explosions are responsible for 18 deaths. We believe that mandatory electrical checks are extremely urgent, and I am sure the Minister will agree.
I conclude with enforcement. We often debate on these Benches how local authorities can enforce the rules given their reduced resources—we all agree, across the House, that local authorities have had their resources reduced. As banning orders such as these come in, there is other legislation already in place that is not being fulfilled. Why not? Because the resources to enforce it at local authority level are so reduced. That brings me back, again, to this issue about the transparency of the register. If local authorities are so underresourced that they cannot enforce this, surely the Government need to change their mind and allow tenants to have access to the information about who the rogue landlords are in their area, so they do not have to rely on the local authority for enforcement every step of the way. The Government changed their mind on letting fees, which was the right thing to do for the growing number of people who are renting. It would be great if the Government could also change their mind on this issue.
My Lords, I join others in supporting what the Government are doing in this rather difficult area, but I have a number of questions about the detail of the regulations. First, I make it clear that I entirely support the noble Baroness on the points that she has raised about the need for access to information on the register, about the way that immigration is dealt with and, in particular, about access to information for those tenants or would-be tenants seeking accommodation.
It seems to me that the provisions fall within the new burdens doctrine, as this will involve a new, or at any rate additional, function for local authorities. Can the noble Lord confirm that this will be taken into account when it comes to funding? The doctrine requires the Government to provide financial support for additional responsibilities.
I am not in any sense criticising the approach taken by the regulations, but I have a number of questions seeking clarification of some of the wording. For example, item 7 in the schedule of offences, relating to the Fraud Act, refers to, “Possession etc.”—I do not quite know what is meant by et cetera—
“of articles for use in frauds”.
I simply do not know what the Government are aiming at there, and perhaps the noble Lord would explain what articles the regulations are purporting to cover. Also in item 7, there is a reference to, “Obtaining services dishonestly”. Again, I do not know what that means, and it would be helpful if the noble Lord would clarify that. Similarly, there is curious wording in item 9, where it talks about:
“Prohibition of certain activities relating to opium”.
What does that mean? The following provision talks about:
“Prohibition of supply etc. of articles for administering or preparing controlled drugs”.
What does et cetera add to the wording? Further down, I question whether “the use of properties for the purposes of prostitution” should not be included in the list of prohibitions; I am not sure where that would be validated by existing legislation but it is surely a matter of some concern. The curious issue to me, and possibly to other noble Lords, about the list of 14 separate offences is that as far as I can see there is nothing about violence—previous convictions for violent behaviour, for example. That strikes me as an anomaly, unless it is covered in some other legislation.
I have some more questions to ask about the Explanatory Memorandum. Paragraph 3.3 says:
“A banning order may be made against a person … for the purpose of banning them from letting housing in England or from engaging in … letting agency work”.
I am not quite clear about what happens with limited companies, whether directors of such a company would be individually involved as well as perhaps the company itself, and what the status is of any employees of such a limited company in the event of any misconduct or breach.
I appreciate that these are the Explanatory Notes, not the text of the actual regulations, but I find the wording of paragraph 7.1 curious when it says:
“The purpose of a banning order is to enable local authorities to tackle the most serious and prolific offenders by preventing them from being involved”.
What constitutes the most serious? For that matter, how often does an offender have to have breached the law to be described as prolific? It looks like rather generalised language, which does not really help us to understand fully how the order, commendable though it is, could be applied.
Meanwhile, there might be a typing error in paragraph 7.2 but it says, “Someone”—again, one might ask who, in the light of the previous questions—
“subject to a banning order can be banned from: Letting housing in England; Engaging in English letting agency work; Engaging in English property management work, or; Doing two more of those things”.
I do not understand that. Is it meant to be “two or more”? If it is, why does it have to be two? Why would one not suffice? It is somewhat odd, to put it mildly. Then there is a reference to the consultation outcome. The document says,
“we have included a range of further offences that were suggested by respondents during the consultation exercise”—
that is very welcome—
“because it is considered that they are offences which it is likely that a rogue landlord may commit against their tenants”.
I hope the order will assist in those matters, but I have a more fundamental question: why will the Government not take steps to provide the power and the funding for local authorities to promote selective licensing schemes? Selective licensing schemes take an age to implement from the start of a process. In my ward—I declare my interest as a Newcastle city councillor—we have a selective licensing scheme. We are looking for an extension and I am told that it will probably take two years to get such a scheme on its feet, if it happens at all. I wonder whether the Government should not revisit the whole issue of selective licensing, which surely must be seen as a potential tool to deal with the problems that these regulations very properly seek to deal with. Again, if we are to make progress in that way, appropriate resources will have to be diverted to it and, given the difficulties that local authorities are currently experiencing on the financial side, that means some increased funding from the Government to allow the perfectly acceptable and welcome objectives set out in these regulations to be implemented in practice.
My Lords, I remind the House that I am a vice-president of the Local Government Association. I support the points made by my noble friend Lady Grender and those made by the noble Lord, Lord Beecham, on selective licensing schemes. I hope that we all agree that it should not take two years to adopt selective licences.
However, I support the statutory instrument. I note that it has commanded broad support during consultation, which is important. I also note that the consultation has led to several additions to the list of offences, which confirms the value of consultation. That is because it is one thing to have banning orders and another to ensure their effective implementation, as has been made clear. There is a resources issue for local authorities, which I hope that the Minister will be willing to comment on when he replies, because resources need to be there for banning orders to be implemented properly.
The Minister referred to the statutory instrument being part of a package. It is indeed only one reform that we need to the private rented sector. We need action on letting fees for agents and capping of up-front deposits—about which a great deal has been said—but also an improvement in minimum standards for private rented tenants. Mention was just made of electricity safety checks, which are fundamental to get right.
It is vital that private rented tenants feel secure. It would therefore help to have a system for tenants and potential tenants to access a database of rogue landlords. If there is a list, it needs to be transparent and available to tenants and prospective tenants, otherwise how do they know that their prospective landlord is rogue? Of course, that person would in law have been banned, but it is important that tenants know who those people are.
Twenty per cent of all homes in the United Kingdom are now privately rented. The proportion has risen by half in the past decade. As the Minister knows, I believe that we must build more social homes to rent to reduce public dependency on the private rented sector, where heavy demand has led to high rent and to 750,000 private rented homes—one in six of the total—containing, according to the English Housing Survey, a hazard representing a serious risk to personal health and safety.
This number is unacceptable. It is too high. I hope that the Minister can confirm that the Government will continue to take the necessary action to support private rented sector tenants having decent, secure accommodation.
My Lords, a number of us spoke at some length on this matter when we were dealing in 2015 with what became the Housing and Planning Act 2016. This offers us the opportunity for a further canter around the course. I shall speak briefly because in principle, like most of the House, I support the regulations. I am trying to work out how effective they will be. One stat which would be helpful would be to know to what extent local authorities have, let us say, over the past 12 months or couple of years, prosecuted landlords with the offences defined in the regulations, because they already have the power to prosecute, which brings me to my second point. If they have that power to prosecute, and they do not do so—for all sorts of reasons, which I shall come to in a moment—the chances of them using a banning order are substantially reduced. The prosecution comes first, and the banning order comes second. I stand to be corrected if I am wrong. It is absolutely dependent on whether local authorities are prepared to prosecute.
Let us take a specific example. Slough is a town notorious for the number of sheds in gardens, most of which are there illegally. The local authority is in difficulty. I presume it knows that it could say to the shed owner, “Close the shed because you are in breach of the law”. On the other hand the local authority may say, “We want to ban that particular landlord”, but it is not prepared to do so because by prosecuting him it will create a homeless situation and it will have to step in and rehouse the family concerned. I am arguing that there may well be a hesitation within local authorities to prosecute and introduce banning orders in the knowledge that they may have to take on responsibility for the tenants. That might apply equally to unfit, overcrowded housing, which is covered under a contravention of overcrowding notice, or fire and gas safety standards offences. The local authority would have to have all that in mind if it decided to prosecute and get a banning order.
If one is dependent on the other and there is a hesitation to prosecute, to what extent will that influence the preparedness of a local authority to introduce the banning order? Unless there is housing into which to place people, or the local authority is prepared to take on the property, which in itself means expenditure because it has been through the legal process, the measure being introduced here might well not work in the way Ministers intend. What we need is more houses: more houses to rent and more houses at a sensible price. That would ease the whole process whereby local authorities would feel freer to proceed and close down property, with the obvious implication for rehousing families.
What stats do we have on the preparedness of local authorities to prosecute and place landlords in a position whereby ultimately, under these regulations, they will be subject to banning orders?
My Lords, I thank noble Lords who have participated in the debate on these regulations and I will do my best to deal with the various points in the order in which they were made.
First, I thank the noble Lord, Lord Jones, for his kind words. Wales does indeed have provisions; they are not identical to these. I will write to noble Lords who have participated, covering the issues raised, and I will endeavour to give the noble Lord full details. He will know that in a devolved context, things are slightly different but there is legislation there and, I believe, in Scotland as well, which I will also seek to cover.
I thank the noble Baroness, Lady Grender, for her general welcome for these regulations. She made points about transparency, which were echoed elsewhere. The noble Lords, Lord Beecham and Lord Shipley, talked about the regulations being cast in a way that would mean tenants could look at potential landlords to find out the position by having a register that is open to the public. Noble Lords will appreciate that that is not possible under the main legislation, which was discussed and passed. The Housing and Planning Act 2016 does not permit that. This is a register for local authorities to use. It is not a ministry of housing—to use our new title—register; it will be a national register for local authorities which will contain these details. In addition—although I am not an expert in this area of the law—there are considerations under the Data Protection Act as to what can be disclosed in such situations. Again, I will endeavour to give chapter and verse on that when I respond in more detail.
The noble Baroness referred to the letting agents’ fees legislation that she was highly instrumental in bringing to the House. Once again, I congratulate her on that. It will be open to us when that legislation is cast for there to be a banning order offence in relation to letting agents’ fees. I checked this to ensure that, in future, we will be able to add instances, perhaps as new offences come on stream. Indeed, if we consider it appropriate, existing offences could be added to the schedule of offences that are subject to banning orders. This perhaps addresses some of the points that the noble Lord, Lord Beecham, made.
I will say something else that relates to points made by many noble Lords in the debate. We are producing—ahead of the regulations, so they will be available—guides for tenants on how to rent and guides for landlords on how to be a good landlord. I am paraphrasing what they will be called, but that is the essence of the guidance. There will also be guidance for local authorities.
I think that it was the noble Baroness, Lady Grender, who made the point about the potential for discrimination in relation to some of the immigration provisions. This is a very fair concern that was echoed, if I am not mistaken, by the noble Lord, Lord Beecham. Obviously, illegal acts in relation to breaches of legislation in relation to equal rights and racial and religious discrimination and so on will be met with the full rigour of the law. Recently, for example, in November of last year, an injunction was granted against a landlord for discriminating against certain groups. That breach was met with the full rigour of the law: an order was made against the landlord.
On the point about gas and electrical safety—again made by the noble Baroness, Lady Grender—we will bring forward legislation in due course. Once again, offences in those particular areas could be added to the list, and there are some already on the list that relate to fire safety.
The noble Lord, Lord Beecham, made points with a lawyer’s eye on the interpretation of different offences. I will try with a lawyer’s response to deal with some of the matters he referred to relating to offences in the schedule. I will pick them up as I go along. In so far as I do not cover them fully, I will certainly make sure that we do that in the response. For example:
“Possession … of articles for use in frauds”,
refers to Section 6 of the Fraud Act 2006, and I would be very surprised if that section does not set out possession and perhaps bailment and so on in relation to each of the matters the noble Lord referred to. In short, the description is shorthand for what would be in the section referred to in the list. I think that that would be true of some other points that the noble Lord raised—but, as I said, I will refer to them in the letter that I write.
The noble Lord asked about the position in relation to companies. This is dealt with in paragraph 2 of the regulations, if I am not mistaken, which states that,
“‘associated person’ has the meaning given by section 178 of the Housing Act 1996”.
Once again, I will try to pick that up in my written response if I may.
The noble Lord also asked for some examples of regulations that relate to violence. The Protection from Eviction Act covers unlawful eviction and harassment of an occupier. The Criminal Law Act 1977 covers the offence of using violence to secure entry. There may well be other, less obvious regulations: again, I will see whether I can pick up on that as I go through if I may. In relation to the two-or-more matter, I referred in my opening speech to the fact that the regulations were, essentially, seeking to prevent somebody being involved in various activities, or a combination of them. I suspect, therefore, that it refers to letting housing and so on, but I will pick that up in writing.
One or two noble Lords raised points about licensing. We are, of course, moving forward in due course with licensing of houses in multiple occupation, but the question was more widely cast. I will, once again, pick that up in my letter on selective licensing schemes so that noble Lords are aware of where we are on it. The noble Lord, Lord Shipley, gave a general welcome to the legislation, for which I thank him. He, too, picked up the licensing issue, which I will cover in my letter. He also asked about the open register, which I have dealt with. More than one noble Lord raised the new burdens doctrine. The Explanatory Memorandum says that the impact on all sectors is not significant, but I will cover in my letter the point that the recent legislation, to which I referred, allows local authorities to keep civil fines up to £30,000. That is a not insignificant point to bear in mind.
Lastly, the noble Lord, Lord Campbell-Savours, made the fundamental point about the need to build more houses, with which I—and I think all noble Lords—agree. He asked how considerable the impact of this is in relation to enforcement and what local authorities are doing at the moment. He cited Slough: I am not familiar with that case but, commenting on the generality, local authorities are, on the whole, very good at enforcing the existing law against rogue landlords. For obvious reasons, we are not setting a target for local authorities to come up to but we anticipate that there will be about 20 banning orders per local authority. We also anticipate, and this will be covered in the advice we are giving, that local authorities would be able to give information about a particular landlord if they were asked for it by a tenant. Without prescribing it, we anticipate that good authorities would want to do just that. Although it is not an open register, this would not prevent a local authority giving information in response to a question from a tenant.
I hope I have dealt with the generality of issues that were raised. I will try to pick up the specifics, and any issues that I have missed, when I write to noble Lords. In the meantime, I thank noble Lords for their general welcome for these regulations, notwithstanding some concerns, and commend them to the House.
Before the Minister sits down, can he clarify that he will deal in writing with the point I raised about paragraph 7.1 of the Explanatory Memorandum, which talks about tackling,
“the most serious and prolific offenders”?
I am grateful to the noble Lord. I had unintentionally missed that point in summing up. As I said, we will certainly be making guidance available to local authorities in a booklet. I will give more detail on that in my letter.