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Private Landlord Licensing

Volume 631: debated on Wednesday 15 November 2017

I beg to move,

That this House has considered private landlord licensing.

A couple of weeks ago, Tim Roache, general secretary of the GMB trade union, accompanied the Mayor of Newham and Metropolitan police officers on a series of raids on suspected exploitative landlords in my borough. He describes what he saw as “heartbreaking”. He reports families living in a single room with one toilet in the corner; bunk beds stacked six to a tiny room; floors lined with mattresses; and dozens of people using one kitchen that was clearly meant for two people. Bad practice of that kind is sadly not unknown in our part of London and it has a severe impact on the people who live in those conditions and on the wider neighbourhood. I welcome Secretary of State’s commitment to

“protect renters against poor practice”,

and I put it to the Minister that the private landlord licensing scheme operating in my borough for the past five years has been extremely effective in tackling that.

Bad practice is a problem in my constituency, particularly on Flaxton Road. A company has even named itself after the road and is buying up properties there at higher than market value because it can afford to, based on the anticipated rents. Several company owners have changed their company’s name at Companies House. That needs investigation beyond the housing issue.

There certainly is some bad practice around, as the Secretary of State has acknowledged.

The Newham scheme expires at the end of next month. The council applied in July to reauthorise it. I urge the Minister to permit the reauthorisation of the scheme and to do so soon—the Department’s guidance specifies eight weeks for making such decisions and we are now a good way past that—to ensure that the gap between the current and reauthorised schemes can be kept to a minimum.

Under the Newham scheme, landlords are required to register the homes they rent with the council and to agree to conditions to ensure the homes are safe, of a good standard and properly managed. The scheme gives the council additional powers to enforce standards because failure to license or comply with the terms of a licence constitutes an offence. In extreme cases, the council can ban the worst landlords from operating altogether.

My right hon. Friend is making a powerful speech. I add my congratulations to Ashfield District Council. The licensing scheme is now in operation in Stanton Hill and New Cross. Landlords have to take responsibility for the safety of their tenants through smoke detection, insulation and wiring—those improvements must be made. These councils are leading the way.

My hon. Friend is right and I share in her congratulations to Ashfield District Council.

In five years, Newham has banned 28 landlords. With the great majority of landlords, everything is fine, but there are powers available to intervene when things go wrong. The Newham scheme is widely supported by local residents, the Mayor of London, the borough police and the fire service. A crucial aspect of the scheme is its support of important enforcement work by central Government agencies. For example, the council emailed all licensed landlords jointly with HMRC soon after introducing the scheme with advice about getting the landlords’ tax affairs up to date. That and other joint work between the council and HMRC since then, which has been possible only because of the scheme, has led to the identification of significant previously undisclosed rental income. The fight against tax evasion requires the scheme to be reauthorised.

There has been joint work with the Home Office. Immigration Enforcement said that the collaboration with the Newham scheme has been

“an effective and productive workstream in terms of addresses that are being used by illegal migrants.”

The Minister will not want that work to be undermined. There has also been excellent joint working with the London fire brigade, which says:

“The property licensing scheme in Newham has saved lives and injury to people. The London Fire Brigade therefore supports the Newham application to continue licensing private rented properties, and we look forward to continuing our successful partnership.”

The Minister is no doubt spending a great deal of time reflecting on the lessons of the Grenfell Tower tragedy. One of those lessons must be the need for effective local vigilance against fire risks in homes.

The Metropolitan police work very closely with the housing team in the borough on enforcement work. In the five years of the scheme, officers have made 752 arrests through licensing operations for a whole range of criminal offences. In reflecting on that, the Metropolitan police have also formally supported the Newham scheme. They say that it has

“assisted the police in dealing with crime, both operationally and through the utilisation of joint intelligence…if the Government is serious about having the tools to fight crime then it must allow Newham to continue its excellent work against criminal landlords.”

The Minister has no interest in giving the green light to wrongdoers, so when crime is rising and the activities facilitated by rogue landlords are a significant part of the problem, it is not the time to block enforcement powers that the police have found so valuable.

Much of what my right hon. Friend has said, particularly on rogue landlords, applies to the Page Hall community in my constituency. With the expansion of the number of private landlords, does he think that we should introduce a statutory private landlord register? Particularly in communities where English may not be people’s first language, it can take a considerable time for the local authority to find out who landlords are. With the cuts to public services that have occurred, it would be timely to have a debate about ensuring that all private landlords are registered and that the register is open to the public for scrutiny.

In Newham, the register is open to the public. There are wider lessons to be learned from the impact of the scheme. My focus is to seek the Minister’s support for reauthorising the scheme rather than bringing it to an end on 31 December.

The scheme has led to the recovery of £3.1 million of due council tax; the identification and stopping of £300,000 of housing benefit fraud; and the issuing of 61 rent repayment orders leading to a further £380,000 in reclaimed benefits. It is not surprising that there is such strong public support for the scheme. Some 89% of residents agree and 33% agree strongly that continuing the scheme will improve the conditions and the management of private rented sector properties.

The scheme handles the problem of disrepair in the private rented sector in a fair, proportionate and effective way. The response depends on the nature of the disrepair. In some cases, the tenant will be advised by the council’s housing team on how to tackle whatever the problem is. In other cases, a letter will go to the landlord with a reminder of their responsibilities. For more serious cases, an improvement notice will be served. Only if all else has failed and the landlord fails to comply will prosecution of the landlord be considered. It is a very graduated response.

The private rented sector in the London Borough of Newham, as in the constituency of my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), has grown very rapidly: it contains 51,000 properties —46% of the total, a far higher proportion than 15 or 20 years ago. There is no question but that most landlords are responsible and law-abiding, and for such landlords the scheme is light-touch and not intrusive, apart from a modest fee. The Secretary of State is right to recognise that, in a minority of cases, poor practice is a serious problem; the Newham scheme has proved an effective response. Licence holders are required to prevent overcrowding, antisocial behaviour, rubbish in front gardens and noise nuisance—problems that occur in a small minority of cases but that disproportionately affect the vicinity. Landlords are also required to manage homes well and keep them safe and in good repair.

I assure the Minister that the scheme is not a gratuitous tax on landlords. I understand that there may well be concerns about that, but the licence fee simply covers the scheme’s administrative costs. If the scheme is reauthorised, as I hope it will be, those who apply at the start will pay just £400—less than £7 per month over the five years of the licence’s validity. That fee is also tax-deductible as a legitimate business expense.

I joined the enforcement actions of Newham Council yesterday morning, and it was alarming to see the conditions that people were living in. A £400 fee to be part of the scheme does not seem a great deal of money as a proportion of the income that landlords receive; a three-bedroom property that I saw yesterday was being let for about £1,800 per month.

My hon. Friend is absolutely right. Licensing also supports good landlords by preventing them from being undercut by people who own properties but do not look after them properly or keep them safe. The levels of rent in my borough are exactly as she states.

Selective licensing already exists for houses in multiple occupation, but unfortunately that is not enough. Problems in the private sector are not confined to HMOs; properties can move very quickly from single family occupancy to multiple occupancy, and the line between the two is often rather thin. The Newham scheme allows that to be monitored much more effectively, particularly as licensing requires landlords to provide copies of tenancy agreements and safety certificates.

The scheme has been successful and effective in safeguarding renters in my constituency over the past five years. The Minister and I agree on the need for Government action to protect renters against the small minority of landlords whose practice is poor. I urge him to maintain, not weaken, the protection for renters in our part of London and to reauthorise the Newham private rented sector licensing scheme.

I thank my constituency neighbour and right hon. Friend the Member for East Ham (Stephen Timms) and the Minister for allowing me to speak for two minutes.

I went out at 7 am last Wednesday with the Newham team and I was really impressed by their work. I went because my borough, Redbridge, has the same problems as Newham and has great interest in the subject. Our council applied for a borough-wide scheme in 2015, but was rejected by the Department, so in August it brought in only a selective scheme in two wards in my constituency, Valentines and Clementswood. It has now applied to the Government for an additional 12 wards in the borough to be part of a scheme similar to Newham’s. The current arrangements are difficult: because of the narrow scope, many landlords do not know whether to register and so there are difficulties in collecting data.

I am very keen that the Government should approve Redbridge’s application. I understand that the Department has asked for further information, but clearly we have the same problems in Redbridge and they cannot be dealt with on a single-ward basis, because landlords often have many properties in different wards of the borough. I hope the Government will listen to Redbridge Council’s requests and agree to its proposal, as well as to Newham’s long-term plan.

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the right hon. Member for East Ham (Stephen Timms) on securing this debate. I assure him that the Department is progressing the application from the London Borough of Newham; I expect to receive advice from officials very shortly, and I assure him that I will make a decision expeditiously once the submission is with me. Given that the application is in progress, he will appreciate that today I cannot comment specifically on Newham’s proposed scheme.

I understand the right hon. Gentleman’s concern about how long it is taking to reach a decision. The Department received the application in July and has had further meetings and exchanges of information with the council. On two occasions, Newham has helpfully provided further clarification about the proposals and more evidence and information to support them. As he noted, the Department’s guidance sets out our aim to make a decision within eight weeks, but that is an indicative timetable; decisions can take longer if applications are more complex and further information is required, as has been the case with Newham.

May I ask when the latest piece of information was provided to the Department by Newham Council?

Officials received the latest information on 25 October, so they have had a few weeks to process it. They are carrying out that work right now, and I make it clear that they will make a recommendation to me very shortly.

The right hon. Member for East Ham has highlighted the benefits of the current licensing regime operated by Newham and has placed his views firmly on the record. He also mentioned agencies that have worked with the council. It might be useful if I set out in general terms the Government’s current licensing framework. We support the use of licensing to address high-risk properties, such as houses in multiple occupation. We also support selective licensing of other private rented properties in areas where this will help to combat serious problems in the private rented sector.

The Housing Act 2004 introduced legislation for selective licensing to target the areas of highest risk and the most problematic private rented accommodation. It was never intended to be a means to license the entire private rented sector in an area. It provides for licensing properties in the private rented sector in very specific circumstances: when those properties are houses in multiple occupation or are subject to selective licensing, as defined in part 3. The legislation is very clear that licensing under part 3 is selective: any scheme must be targeted to address specific areas that are experiencing serious problems and that pose risks to tenants and their community. That does not rule out the possibility that a particular problem or set of problems could affect a large area or—in exceptional cases—a whole borough. In that event, the legislation provides that there must be clear evidence to demonstrate the need for licensing.

There must also be proper, robust plans in place to show that selective licensing is a crucial part of the local authority’s strategy, either to eliminate problems or, as a minimum, to mitigate their impact. This legislative framework ensures that selective licensing is not simply a means of raising revenue from local landlords—the right hon. Gentleman referred to that issue—and ultimately from tenants, as landlords pass on their licensing fees through higher rents.

In 2015, the then coalition Government extended the criteria for making a selective licensing designation to include areas with high levels of migration, crime, poor property conditions and deprivation. Of course, the right hon. Gentleman has, as I have said, highlighted the achievements of the Borough of Newham under its current scheme in tackling poor conditions and working closely with a range of agencies.

I appreciate that there are concerns about poor property conditions in the private rented sector in the borough, to which the council itself has drawn attention recently through media coverage and, of course, both the hon. Members for Ilford South (Mike Gapes) and for Ashfield (Gloria De Piero) have also put it on the record that they have been out with the Newham team to look at the work that it does. Just to be clear, I absolutely agree that the conditions we are discussing should not be tolerated and that action must be taken.

Has the Minister found any evidence that rogue landlords who provide poor-standard accommodation are involved in other sorts of crime, such as defaulting on loans, not paying tax, or changing their names at Companies House by altering just a letter in the name of a director, because that is what investigation by some of my constituents is showing? Perhaps some work across different Departments might get to the root cause of some of these problems.

Let me briefly address the issue of rogue landlords, because the hon. Gentleman makes an important point. Local authorities in England already have strong powers under part 1 of the Housing Act 2004 to tackle poor property conditions and overcrowding in privately rented properties. They can serve improvement notices that require landlords to carry out works to remedy poor conditions, or make prohibition orders to prevent overcrowding. In the most serious cases, which pose a significant risk to the health and safety of tenants and their families, local authorities are under a duty to take action to combat the problem. Landlords who fail to comply with an improvement notice or prohibition order are committing a criminal offence.

The hon. Gentleman raised the issue of rogue landlords, and I will just say that we have gone further in tackling such landlords by introducing new powers in the Housing and Planning Act 2016, which mean that non-compliant landlords can face a civil penalty of up to £30,000. The local authority involved can also recover its legal costs of serving notices. Furthermore, we have enabled local authorities to keep the income from such fines to support their enforcement capability, and local authorities have a right to inspect properties to make sure they are in safe condition, even if the tenant has not complained.

Newham Council has used its database to identify those rented properties where enforcement under part 1 of the 2004 Act might be required. Local authorities do not need a licensing scheme to be in place to inspect and take enforcement action against poor property conditions in the private rented sector.

I am very grateful to the Minister for giving way. I am listening to his speech with a lot of interest and I am grateful to him for the points he has made to acknowledge the effectiveness of what has happened in Newham. However, does he accept that the licensing scheme in Newham provides the local authority with a lot of information that it otherwise would not have, and that that information enables it to focus attention—together with the police, the fire brigade and other agencies—on the minority of properties where there are potentially the most serious problems?

The right hon. Gentleman has set out his case and how the borough has worked with other agencies. I just say to him now that the submission from the borough will be coming in front of me, so I do not want to prejudice any decision that I may make.

In conclusion—

Before the Minister concludes, can he comment on my brief remarks about the London Borough of Redbridge?

Again, as the hon. Gentleman has noted, the scheme from Redbridge is under consideration and we have obviously heard what he has said today, so we will ensure that we review all that as quickly as we can.

I do not want to waste a few minutes with a Minister in front of us. If I were to write to him detailing some instances of rogue landlords who might be involved in other forms of crime, such as tax evasion or defaulting on loans, would he be prepared to contact his colleagues in other Departments and perhaps get those landlords and their companies investigated further?

I am always very open to receiving correspondence from colleagues and indeed to having meetings with them, so I welcome anything that the hon. Gentleman wants to put in writing to me and if it would be useful for us to meet subsequently I would be happy to do so.

It is important that licensing is properly targeted and not used as a substitute for existing strong powers. However, as the right hon. Member for East Ham will know, because he has asked parliamentary questions on this issue, we have announced that we will undertake a review of selective licensing more broadly. This review will start in due course and we are currently considering its scope.

In the specific case of the Newham application, as I have said, I hope to receive a recommendation from officials very shortly, and I promise the right hon. Gentleman that I will make a decision on it as quickly as possible.

Question put and agreed to.

Sitting suspended.