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House of Lords Hansard
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15 October 2018
Volume 793

Question for Short Debate

Asked by

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To ask Her Majesty’s Government what assessment they have made of issues relating to the protection of property guardians.

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My Lords, first, I thank the London Assembly’s cross-party housing committee and its chair, my Green Party colleague Siân Berry, for doing the work on which this debate is based. I recommend its report, which will explain fully the situation of property guardians and the problems they face. Property guardians are people who act as a kind of security for sometimes interesting empty buildings—for example, schools or unused cinemas—but the law has not kept up with this new form of renting and such property guardians have no legal protection.

I shall start by laying out what I hope to achieve from this debate. I want to ensure that people living in a vulnerable housing situation are properly protected; I want to ensure that this issue is on the Government’s radar; and I want the Government to see that this is an issue with challenges that also presents a massive opportunity to put empty buildings to use in housing more of our population.

In England alone it is estimated that there are 279,000 long-term empty residential properties. If we add the number of empty commercial properties and places such as closed-down care homes, we could probably double that number. It is a total waste for them to be left empty when so many people are living on the streets, sofa surfing or staying with their parents because they cannot afford to live elsewhere. Councils spend huge amounts of money putting people up in temporary accommodation while a huge property down the street might be completely empty and costing someone money on security.

People have written to me ahead of this debate telling me how much they have enjoyed living as property guardians, sharing unusual properties with interesting people at a reasonable price in some of London’s most overheated property markets. For many guardians it is a fun lifestyle that saves them money. For property owners, property guardianship is an attractive option. Having property guardians living in an empty building can be much cheaper than the traditional options of boarding the place up or hiring private security. Any problems such as burst pipes can be reported immediately and damage minimised. Trespassers and vandals can be deterred by the property being occupied. These are the positives which show the massive opportunities that property guardianship can offer. That is why part of what I am calling for today is for the Government to embrace property guardianship and make it part of their housing strategy.

However, property guardianship is not without its flaws. The report from the London Assembly’s housing committee highlighted a number of them and asked the Government to act. The biggest issue is that property guardians seem to exist in some murky grey area of housing law. This has made it difficult for people living in those situations to enforce their legal rights, or even work out what those rights might be. Local authorities and other statutory bodies seem unclear about what enforcement powers they have over guardianed properties. As a result, some people are living in completely unsuitable properties that are outright dangerous. In one case, the fire service closed down a property which posed an “imminent danger to life”. In less extreme and much more common situations, guardians report feeling unable to raise concerns with their management company for fear of facing retribution or being evicted.

These concerns are made possible by the fact that property guardians have very little in the way of housing rights. The majority of the legal protections that apply to a normal rental agreement do not apply to property guardians. This is because they live under a licence agreement rather than a tenancy agreement. The differences are stark. For one, the statutory eviction protections under Section 21 of the Housing Act do not apply. People are not protected from being evicted in retaliation for raising concerns, there is no deposit protection and none of the contractual terms implied in tenancy agreements, such as a requirement to keep the property waterproof, are implied in a licence agreement. By far the most common complaint I have come across is regarding the underprovision of toilets and sanitary facilities. I am not sure what, but something seems to cause multiple toilets to break down in these properties, leaving only one or two bathrooms available for sometimes more than 20 residents. This kind of situation is unacceptable and needs action, but local authorities do not seem to understand how to apply the relevant legislation.

Property guardians used to be people who wanted to stay in hip, trendy places and live cheaply, but research is showing a move towards people in full-time employment who earn below average incomes. For many people, especially in London’s overheated housing market, property guardianship might be their only option to live somewhere affordable without having a two-hour commute to work. It really is becoming a stopgap for the failure to provide affordable housing.

The property guardian industry is dominated by a small number of companies which essentially connect guardians with empty properties. I was pleased to get an email telling me that an industry association has been formed, literally two weeks ago, in response to the London Assembly’s report. I am told that, collectively, this group is responsible for more than 80% of the property guardians in the country. It aims to work together to create common standards and improve the conditions in which property guardians live. It is developing a deposit protection scheme and a complaints process. I welcome the creation of this body. Will the Government meet them to hear more of the problems and the solutions?

Having said that, it cannot be left to the industry alone to patch the gaps that currently exist in the law. I was frankly appalled by the Government’s initial response to the issues raised in the London Assembly report. It just does not make sense to me. The Minister wrote to Siân Berry, the committee’s chair, saying that,

“we do not encourage such schemes and I do not have any plans to introduce regulation in this area which could be regarded as tacitly endorsing the use of property guardianship schemes as a legitimate housing option”.

The Minister went on to say:

“People are free to make their own housing choices, and I do not have any plans to stop the use of property guardianship schemes. However, it is very important that anyone considering living in such a building clearly understands the limitations of these schemes and that they will have very limited rights”.

I really hope that that is not the response I will get from the Minister tonight.

From those statements, it is clear that the Government recognise that there is a big problem in terms of housing rights for property guardians. However, rather than doing anything to help, the Government have said that it is not a legitimate housing option but that people are free to make their own decisions. This means that the Government have both rejected the big opportunity posed by this, while simultaneously rejecting giving property guardians any rights. That really is not very good.

The only action promised was in the final paragraph of the Minister’s letter, which said:

“My Ministry has, therefore, committed to publishing a short factsheet on its website which highlights the fact that the Government does not endorse these schemes and draws attention to their clear drawbacks, including the fact that the buildings may frequently be unsuitable to be used as accommodation and that an occupier of such buildings has very limited rights”.

It seems odd to me that the Government recognise that there are such large potential problems and that people have such limited rights, but they do not either fix the problems or ban the practice altogether. Just sitting on the fence and doing nothing is the worst possible option from a public policy perspective.

To me, it is obvious that something needs to change. The people living in these schemes say change is needed, and the industry has formed a body to make change. So it is only the Government who support inaction. There are three obvious action points for change. The Government should review the whole body of housing law and its application to property guardians, and, where there are gaps, they should legislate. The Government should produce statutory guidance for local authorities and other bodies which sets out how they should apply the laws regarding property guardian schemes. Government leadership is needed to ensure consistency. The Government must stop putting their fingers in their ears and ignoring property guardianship. They should make the law fit for purpose and then make property guardians a small but key part of their housing policy.

At the beginning of my speech I omitted to thank the noble Lord, Lord Kennedy, who drew my attention to the report and encouraged me to request this debate.

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My Lords, I remind the House that I am a vice-president of the Local Government Association. I welcome this debate and thank the noble Baroness, Lady Jones of Moulsecoomb, for bringing this important issue before the House.

During the passage of the then Housing and Planning Bill in April 2016, the noble Lord, Lord Beecham, moved an amendment on this matter. He expressed a number of concerns which I thought were justified, and we on these Benches were strongly supportive of them. Despite the Government winning that vote, I think it is time for them to look again at the issues underlying the guardianship schemes. While there are only around 5,000 to 7,000 property guardians in the UK, the number is likely to rise significantly. In the Netherlands there are some 50,000 property guardians, and we have a much higher population here so a rise seems likely. Yet in the debate on the Bill the Government refused to acknowledge that they had a role, as the noble Baroness, Lady Jones, has mentioned. The noble Baroness the Leader of the House said on 11 April 2016:

“We as a Government do not endorse these schemes and do not have any plans to introduce new regulation in this area as we believe that doing so could be regarded as tacitly endorsing the use of property guardianship schemes as a legitimate housing option”.—[Official Report, 11/4/16; col. 111.]

The Government’s subsequent factsheet for current and potential property guardians confirms this in paragraph 3, which says:

“The government does not endorse or encourage the use of property guardianship schemes as a form of housing tenure”.

I have come to the conclusion that that is insufficient in the circumstances. It may be true that a number of protections exist in law already for licensees acting as property guardians but they do not cover everything, and it is surely the role of the Government to regulate when regulation is needed. In the Netherlands the property guardianship sector has created an independent property regulator to set standards and monitor compliance. It also has a complaints board. Even though membership is not mandatory, it means that standards are clearly defined. I understand that in this country there is to be a property guardian providers association, and I welcome the fact that seven providers covering 80% of the sector are involved, although that of course raises questions about the other 20%. It will be interesting to see how its powers and effectiveness compare with the Netherlands, but I nevertheless welcome the efforts being made by the sector itself.

I acknowledge the work of the London Assembly and the 11 recommendations in its report published earlier this year. For the time being this is primarily a London issue, but there are signs of growth across the country so what is done in terms of property guardians in London will be relevant elsewhere. There would be merit in taking the London Assembly’s 11 recommendations and the mayor’s response and using it as the basis for consultation. Issues needing clarification concern redress schemes, deposit schemes, the role of the planning system, financial issues around business rates and council tax and the absence of property guardianship as a form of tenure from any existing legislation.

In principle I agree with the noble Baroness, Lady Jones, that, properly run, property guardianship can be beneficial to both landlord and licensee. It gets empty property into use and gets it looked after, and for many people the system works well. For the landlord, they have someone helping to protect the property. For the licensee, it is usually much cheaper than a conventional tenancy; it means that they can save more for a deposit to purchase a home; it means they can leave at a month’s notice; in most cases they have the benefit of being with other people; and it can be more conveniently located for them in terms of work. It gives opportunities too for social enterprise and, through social enterprise, for volunteering. I noticed that one of the companies involved, Dot Dot Dot, has a requirement for 16 hours of volunteering a month. This approach is to be commended.

The problem is that there is also a downside. As we have heard, it is usually not residential accommodation that is used, and some licensees can be exploited simply because they urgently need somewhere to live that they can afford in the absence of sufficient social housing. As a consequence they can end up in poor accommodation, and there have been numerous reports of poor plumbing, poor lighting, dirty conditions, a lack of adequate fire protection—that is, conditions that do not meet the standards required for residential accommodation. Indeed, in their factsheet the Government seem to admit this. Paragraph 8 says that the properties may be,

“in poor, unsafe and unclean condition with poor physical security and limited access to facilities”.

The key question is whether the properties are meeting regulatory standards that would apply to residential accommodation. I am afraid I do not think it is enough simply to advise licensees that they should approach their local housing authority or citizens advice bureau. It takes a lot of time, knowledge and effort to complain in that way. Clearer, publicly understood regulation would be so much better.

There is a remaining issue that I hope the Minister may be able to comment on: the implications of the Bristol judgment, where a property guardian was confirmed in his view that he was actually an assured shorthold tenant, not a licensee. The reaction to that judgment seems to be that you simply have to reword the licence to turn a tenancy into a licence, but I would appreciate the Government’s view on that because it seems to me to be a very important judgment. Indeed, the question sums up the need for clarification on the rights of property guardians as a whole.

The noble Baroness, Lady Jones, said she wants this issue to be on the Government’s radar. She also said there was a massive opportunity to use empty properties. I concur with both views: there is a massive opportunity here but, because of that and because many more properties might become used under licensee terms as property guardianship, there is a need for the Government to ensure not just that the issue is on their radar but that they have regulated when regulation is needed.

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My Lords, I refer to my local government interests as an honorary vice-president of the Local Government Association and a councillor in Newcastle. I join the noble Lord, Lord Shipley, in congratulating the noble Baroness, Lady Jones, on bringing this important issue to the attention of the House—such as it is composed of this evening. She is initiating a debate that will go rather wider than the small number of Members here tonight.

I first came across the concept of property guardians, as the noble Lord, Lord Shipley, indicated, in February 2016 during the passage through the House of the ill-fated Housing and Planning Bill. At that time, it was estimated that some 4,000 people were living as property guardians, often at high prices and, increasingly, in unsuitable living conditions. The properties involved were frequently disused former commercial buildings, often awaiting sale or major alterations. A Durham University academic, in the course of looking into the issue at the time, found one space formerly occupied by three people that was then occupied by 15. Properties used for this purpose, ostensibly to ensure that they were not vandalised, often had limited kitchen and sanitary provision and their owners paid no business rates.

I urged the then Minister, the noble Baroness, Lady Williams, who confessed to not being briefed on the issue, to bring forward an amendment to the Bill. She wrote to me and confirmed that,

“property guardianship schemes have a range of drawbacks”,

adding that buildings,

“may be in unsafe condition with inadequate physical security”,

and that guardians can be,

“required to leave at short notice”.

However, all that the Government proposed to do was to,

“publish a short factsheet on its website which explains that the Government does not endorse the schemes, that buildings may frequently be unsuitable to be used as accommodation and that an occupier of such buildings has very few rights”.

In Committee she said:

“The Government do not support the schemes”,—[Official Report, 9/2/16; col. 2223.]

but did not believe it was appropriate to apply the relevant parts of the Landlord and Tenant Act to guardianship agreements.

The noble and learned Lord, Lord Mackay of Clashfern, expressed sympathy with my view and wondered,

“whether it is possible to build something satisfactory on a foundation so unsatisfactory as a guardianship scheme for residential property”.—[Official Report, 11/4/16; col. 111.]

Alas, he still voted with the Government and my amendment to apply the Landlord and Tenant Act provision for human habitation and repairing obligations was defeated.

We now have between 5,000 and 7,000 people living as property guardians, mainly in London, as we have heard, no longer just young people looking for a cheap place to live and work for short periods but now up to 60 years of age and older and apparently staying for much longer than used to be the case—and still without the protection afforded by an assured shorthold tenancy.

The London Assembly’s housing committee report, published last February and referred to by both noble Lords, identifies many concerns, not least in relation to the condition of the properties: 22% relating to repairs and maintenance and 37% cited mould and condensation. The guardians are either unaware of or too worried to seek support from the local authority’s powers to address those issues. They even have to pay for fire safety equipment. For this far from satisfactory provision, York University has discovered that guardians pay an average of 37% of their income, which, in turn, averages £24,800 a year—the latter being significantly lower than the average for tenants of private rented property in London.

The Assembly report identifies a problem in that, where a commercial building is used for guardians, they have to pay commercial rents for utilities, phones and internet access, which can be much higher than for residential properties. In addition to regular costs of that kind, they may face difficulties in securing the return of deposits and, in addition, fork out an average of £148 for references, fire safety checks and criminal record checks.

It is also disturbing that some licensing agreements bar guardians from raising concerns about the property even with the owner, let alone the local council or, tellingly, local media. The report recommends that the mayor and the department should provide guidance about the legal rights of guardians and where they can access help. It would be even better if they could obtain legal aid and advice, although of course this is effectively limited in housing cases to eviction and repossession cases. Of course, any such recommendations would apply also to places other than London.

It is not just guardians who are affected by the system. The London report points out that guardianship can save owners up to £2,000 per week compared to engaging professionals, as well as reducing insurance costs. Of course, owners of properties with resident guardians will save the cost of council tax and empty business rates—up to as much as 90% for the latter. This is an issue which the Government should also look into.

The report makes a number of recommendations for the oversight and improvement of the sector in the context of a better system of regulation, citing the examples of the Netherlands—already been referred to by the noble Lord, Lord Shipley—and France. Crucially, the London report calls for clarification of what the Housing Act 2004 applies to property guardian premises and, if not, for the Government to bring forward the necessary legislation. Will the Minister undertake to look into these and other issues raised tonight and report back?

It is only fair to say that some businesses in this growing industry are adopting a responsible approach, as referred to by the noble Baroness in moving her Motion. Seven leading companies in the field, which provide 5,000 places—some 80% of the sector—have formed the Property Guardian Providers’ Association, aiming to promote, monitor and ensure safety standards and regulations are adhered to or exceeded by its members, securing temporarily vacant properties and providing safe and viable low-cost accommodation. In addition, it is issuing a set of benchmark standards, including: a redress scheme, under which a guardian can take a complaint to a redress panel; security payment protection, requiring members to prove that they have set up separate guardian accounts for payments and comply with rules for handling the accounts; and prescribing transparency of fees. I suggest that the Government should consult the association about developing a common standard for the whole sector and make this a condition of a licence to provide property guardianship schemes.

Guardianship should be limited to the type of property originally exemplified, where the notion of guardianship implies a temporary usage pending redevelopment for a non-housing use, and not extend to ordinary residential properties, for which of course, lamentably, there is already large unsatisfied demand. Those properties ought still to be available for either owner occupation or rent; as opposed what was originally thought to be temporary occupation, where guardianship relates to non-residential buildings left vacant until such time as they came into use again.

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My Lords, first, I thank the noble Baroness, Lady Jones, very much for bringing forward this issue, which I take seriously and do not dismiss as others may have in the past. It is an issue of significance, and I welcome the work done by the London Assembly and the University of York. I assure her that I am looking at it closely. Perhaps I may deal first with the contributions made and then outline my proposals, which noble Lords have probably kindly suggested that I do anyway, for the new association, which I also welcome.

First, the noble Baroness was very balanced and fair and said that this is often something that we should embrace and can work very well. Without really thinking about it, much as Monsieur Jourdain spoke prose without realising it, I suddenly thought, “I have been a property guardian in my past before these things were fashionable”, looking after a house for family friends who were overseas for a period. Such informal arrangements often—indeed, almost invariably—work well, and I am sure that is the case now.

There are worlds apart: this covers a wide area of activity, as I think noble Lords would agree. Some of it is clearly not the sort of thing that we should be legislating for; some of it is where, if not legislating—legislative time at the moment is precious, and there may be a need to move more quickly—we should be looking at what we can do. I am certainly keen to do that.

Again, I thank the noble Baroness for bringing the issue forward. The noble Lord, Lord Shipley, was, as always, very fair. He said that the scenario had changed. Over time, I am sure that that is what has happened. Like the noble Baroness, the noble Lord, and the noble Lord, Lord Beecham, I welcome the new organisation, of which Graham Sievers is the acting chairman. It has not yet had its first official meeting or launch. As I understand it, that will happen on Thursday in Birmingham—perhaps we have had the same email. I am keen to meet Graham Sievers, and we have already taken steps to ensure that that happens to see exactly what is being done to promote best practice and safety among the organisation’s members. I think the organisation includes seven of the United Kingdom’s leading property guardian companies, and I shall discuss with ministerial colleagues how we take that forward. I shall endeavour to meet Graham Sievers as quickly as feasibly possible, if he becomes the chair, as this suggests he will, to see what the organisation proposes and report back.

The noble Lord, Lord Shipley, asked me to comment on the Bristol judgment, which was really a question about whether that arrangement was a tenancy or a licence. The significance of that and other decisions is that what the agreement says is not necessarily definitive of the position. It can say that it is a tenancy but be a licence and vice versa. It is about weighing up all the circumstances, and each case, as lawyers say, will turn on its own particular facts. That is probably not incredibly helpful to the noble Lord, but it indicates that it is about the nature of the agreement, rather than what it is called.

In the normal course of events, if someone is a licensee rather than a tenant, they still have rights, of course. In all but a few excluded licence cases, there would, for example, be protection under the Protection from Eviction Act of 28 days’ notice. That base rights would exist. The housing, health and safety rating system would apply, as would electrical safety hazards protection, in so far as this is a dwelling. There may be issues about whether a particular arrangement is a dwelling. Normally, if someone is resident on premises, it makes it a dwelling, but I appreciate—and would want to probe this a little further—that that is not necessarily conclusive. Similarly, the rules on gas safety, smoke, carbon monoxide arrangements and so on would apply under a licence as well as a tenancy. I appreciate that it is a lesser level of protection, but it is not that there is no protection at all.

Options that I want to probe certainly involve best practice and disseminating it. That may mean working with this new organisation and certainly with the GLA. I am very happy to correspond with it on this issue, which I have not done as yet. Improving enforcement guidance seems to me quite important, because, as I say, there are rights at the moment, and maybe they are not always enforced or known. There is work to be done supporting occupants and raising awareness, and I agree the outline we have about the factsheet is not, of itself, sufficient. We need to make it more widely available, disseminate best practice and look at enforcement guidance. These are things I intend to carry forward and report back on. I am very happy to meet the noble Baroness in the interim. As soon as I have spoken to the nascent organisation, I will seek her out for an informal word about how we can carry this forward before writing to the Peers who have participated in this debate and putting a copy in the Library.

In short, this is an issue worthy of attention; I certainly do not dismiss it as having no merit. I will discuss it with colleagues in the department and report back. Once again, I thank the noble Baroness for bringing this forward and noble Lords who have participated in this debate.

Sitting suspended.