Select Committee statement
I am grateful to you, Mr Speaker, and to the Backbench Business Committee for allowing me time, on behalf of the Housing, Communities and Local Government Committee, to speak to the House today about our fourth report of this Session, which is on the private rented sector. The report concentrated on: the quality of accommodation; the balance of power between tenants and landlords; the legislative framework; and enforcement
This Committee last considered the private rented sector in a report in 2013, following which the Government carried forward many of our suggestions, including a reformed approach to selective licensing, the mandatory licensing of houses in multiple occupation and a new regulatory model for letting agents. We hope the Government will take forward many of our recommendations this time, too.
The private rented sector has doubled in size in the past 15 years. There are now 4.7 million households in the sector, including 1.8 million families with children, which represents 20% of all households. Statistics show that most housing in the sector is adequate, although Shelter told us that 53% of tenants had experienced at least one problem with conditions or repair in the past year. Although the overall proportion of inadequate properties in the sector has fallen, the absolute number has increased, and a significant minority of private rented accommodation continues to be shockingly inadequate. The English housing survey shows that approximately 800,000 private rented homes in England have at least one category 1 hazard, such as excess cold, mould or exposed wiring. In our online forum, we heard directly from tenants about the poor conditions they had suffered. One submission said:
“We live in a house full of mould and damp with four young children…We have …faulty electrics and water comes through the living room window when it rains…the whole family keeps getting ill from it.”
We wanted to know about the power relationship between landlords and tenants: are tenants, especially those at the lower end of the market, able to complain and get their problems attended to? Unfortunately, the answer is no. Citizens Advice told us that 44% of tenants said that a fear of eviction would stop them from negotiating with their landlord over disrepair. Shelter and Citizens Advice told us that they often reminded tenants about the risks of making complaints. We heard that 14% of tenants felt that they had been penalised for complaining, and more than 200,000 reported having been abused, threatened or harassed by a landlord. We found that there is a clear power imbalance, and we called on the Government to consider extending protections which they rightly introduced in the Deregulation Act 2015. We also agree with the Government that a specialist housing court would provide a more accessible route to redress for tenants and urge them to issue more detailed proposals as soon as possible.
We looked at the overall legislative framework. The Residential Landlords Association told us there were 140 Acts of Parliament and more than 400 regulations affecting landlords in the sector. Our 2013 report called for that to be consolidated and made simpler. Since then, we have had the Housing and Planning Act 2016, the Consumer Rights Act 2015, the Deregulation Act 2015 and many others, so the situation is even more complicated. Therefore, we recommend again that the Law Commission undertakes a review of the legislation and provides guidance as to whether a new approach would bring more clarity for tenants, landlords and local authorities.
We focused on the housing health and safety rating system, and heard that there is a lack of understanding about how it works among landlords and tenants, and inconsistent application by local authorities. We called on the Government to immediately update the guidance on the rating system and eventually to introduce a more straightforward set of quality standards that everyone can understand.
We heard near unanimous support for the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill introduced by my hon. Friend the Member for Westminster North (Ms Buck). We, too, offer our support for the Bill, but we want to make sure vulnerable tenants at the lower end of the market are able to make use of these powers. We have therefore called for free and easily accessible technical and legal advice to support tenants. As it is likely tenants will seek this advice from local authorities, it is vital that they are suitably resourced to provide this additional service.
Most local authorities told us they were satisfied generally with the powers they have. However, powers can be meaningless if they are not actually used, and a freedom of information request showed that six out of 10 councils had not prosecuted a single landlord in 2016. One council, Newham, was responsible for 50% of all prosecutions across the country—why is that? Clearly, the level of protection being offered to vulnerable tenants in many councils is not adequate. The reasons we heard were: the legislation is over-complicated, as I have mentioned; local authorities have insufficient resources; and some local authorities simply lack the political will.
On resources, the Local Government Association has identified a funding gap of £5.8 billion by 2019-20. The Chartered Institute of Housing showed that local authority spending on enforcement has reduced by a fifth over a six-year period. The Government have rightly introduced civil penalties of up to £30,000 and allowed local authorities to keep that money, and they brought in rent repayment orders—both were recommendations in the Committee’s previous report. Local authorities need further funding, though, and we hope the Government will work with them to try to achieve that.
Concerns were expressed that local authorities could not always cover the full cost of prosecutions, which might deter them from prosecuting some cases. The Minister said that local authorities’ duty was to prosecute regardless, but, being cash-strapped, they will often take the cost into account when they make decisions. We believe that courts should require offenders to pay costs that reflect the actual costs to local authorities of enforcement actions.
As part of our inquiry, we went to Newham to look at the enforcement activity there. I saw a garden shed configured to accommodate not one, but two households. We heard of about 25 people being accommodated in a small three-bedroom house. People were living in a walk-in freezer. A family was living in a chipboard construction in a garden, with a fridge and a washing machine powered by a wire from the kitchen. These are shocking conditions, and the fines and civil penalties should be increased.
However, the very worst landlords, whose business model relies on the exploitation of vulnerable tenants, can make hundreds of thousands of pounds a year. To them, a civil penalty of £30,000, however large an amount that is, is merely a business expense. To deal with the worst of the criminal landlords, we call for local authorities to have the power to take action to secure the confiscation of properties from landlords who commit the very worst offences, and to break their business model, which relies on the exploitation of vulnerable tenants.
Aside from the adequacy of resources or the severity of penalties, variations in enforcement between councils indicate that some local authorities have placed a higher priority on standards than others. We have called for authorities to publish their enforcement strategies and for a national benchmarking scheme, so that residents can compare enforcement between authorities. Ultimately, we believe that the disparity can be addressed only through political leadership.
In recognition of the particular interests of some Members, we supported the findings of the all-party group on carbon monoxide, which has called for landlords to install carbon monoxide alarms in the rooms of private rented properties that contain any fuel-burning appliance. We also supported the call for the Government to implement mandatory five-yearly checks on electrical installations in private rented property—an issue on which the Government have been consulting.
Finally, we looked into selective landlord licensing schemes. Since April 2015, local authorities have had to seek approval from the Government for selective schemes that would cover more than 20% of their area or more than 20% of privately rented homes in it. We heard that decision making was too slow, lacked transparency and was over-bureaucratic. Even local authorities that had decided against implementing a scheme felt that the decision should rest at local level.
In our view, decisions to implement such schemes should be made locally, where there is greater understanding of local needs and politicians are directly accountable to their electorates. We recommend that the Government remove the 20% cap; however, the Secretary of State should retain a power to require local authorities to reconsider a decision to implement a scheme that does not meet the strict criteria already set out by the Government.
As the private rented sector continues to expand and people remain in the sector for far longer, the Government need to address the clear power imbalance between tenants and landlords, and to ensure that local authorities have the resources they need to enforce the even stronger laws that we are recommending, to protect the most vulnerable tenants living in the worst conditions.
It is good to see my friend the Chair of the Select Committee back in his place after his medical treatment. [Hon. Members: “Hear, hear!”] I agree absolutely with every point made in the report. In respect of retaliatory evictions, does he agree that one issue that must be resolved is assured shorthold tenancies of six months, which are the norm for the private sector? If we extended those to three-year tenancies, that would strike a better balance between tenants and landlords.
I absolutely agree. In our previous report—my friend, the hon. Member for Harrow East (Bob Blackman), was also a member of the Committee at the time—we called for longer-term tenancies and greater certainty and security. We recognise what the Government have done under the Deregulation Act 2015 in terms of protection against retaliatory evictions, but the problem in the current market is that if a tenant does not formally complain in writing to the local authority, and the local authority then does not get enforcement action, there is actually no protection. We also recognise that the new legislation coming in, such as the private Member’s Bill of my hon. Friend the Member for Westminster North (Ms Buck), could leave the tenant open to retaliatory eviction, and in that legislation there is no protection from it. That is why we say that we should look again at that particular issue.
It is very good to see my hon. Friend, the Chair of the Select Committee, back in his place. I am a member of the Committee and it was a pleasure to work with other members of the Committee on this report, with which I agree wholeheartedly.
A family with very small children living in poor-quality rented accommodation in my constituency were recently evicted after they complained that the ceiling in the bathroom had collapsed over the bath shortly after they had finished bathing their children. I have no doubt that the next tenant is now living in that property, and that it is the taxpayer who is lining that landlord’s pockets by paying the rent. Does my hon. Friend agree that it is entirely appropriate for this report to make the recommendation that, in such despicable circumstances, the state should have the power to remove such properties from those landlords so that they can be returned to good use for families who need high-quality accommodation? Will he join me in calling on the Minister to progress that recommendation?
I thank my hon. Friend for her best wishes. May I also thank her and the hon. Member for Harrow East for the work that they did on the Select Committee while I was off in March?
Absolutely. We heard that many landlords do an excellent job. There are some who do not do it quite as well as others, and there are some who are basically criminals—the word “rogue” is used, but they are basically criminals. They are exploiting both the tenant and the taxpayer. In those extreme circumstances, the ultimate power of not merely banning them from operating as a landlord, but taking that property off them, is something we hope the Government will seriously consider.
I welcome the Chair of the Select Committee back to his place.
I recused myself from the Select Committee inquiry because of my own Member’s interests, to which, of course, the House can refer. My hon. Friend the Member for Harrow East (Bob Blackman) references longer tenancies, but does the Chair of the Select Committee accept that those should be introduced on a voluntary basis for fear otherwise of driving landlords out of the sector, thereby potentially reducing supply to this very, very important sector?
We did not particularly consider that in this report. In our previous report, we said that Shelter had produced a good model, and that we encouraged the sector to look at it. We must make landlords more aware of what is on offer. Sometimes, there is a feeling that some letting agents encourage the delivery of shorter-term tenancies because—guess what?—they make money every time the tenancy is renewed. The Government are dealing with that element in terms of tenants paying those fees, but landlords should get a bit wise to this, because I think many would actually favour longer tenancies. Let us get the information out there and encourage it.
Last night, I attended a housing assembly at a West London Citizens meeting. Some 300 people from churches, schools and community organisations were present. One of the demands on our council candidates was for there to be greater landlord licensing and a charter of tenants’ rights. What did the Committee’s report say on that? From my recollection, when these subjects came up in the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill, some Government Members said that they would lead to too much red tape; I think many of them derive income from that source. What does my hon. Friend have to say on that?
There are two issues there. We have talked about the power imbalance, and action can be taken particularly on retaliatory eviction and retaliatory rent increases to try to rebalance the power. We have also asked the Government to use social media to make more information available to tenants, rather than just using the written form. On licensing, what we are saying is that, essentially, this should be a local decision within the current criteria. I hear landlords say, “It costs us,” but what I say is that the landlords’ concern over selective licensing is not because of the fee that they pay, but because Her Majesty’s Revenue and Customs might suddenly realise that they are raking in an income and they might suddenly have to start paying tax on it. That is something we should welcome in terms of public resources—getting in more tax as a result of these schemes.
It is good to see my hon. Friend back in his place. He rightly highlighted the contribution that the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill, promoted by my hon. Friend the Member for Westminster North (Ms Buck), can make to tackling the really appalling conditions in the private sector. The Government are supporting the Bill—at the third time of asking—but it is still not being allowed into Committee. Will he use his and his Committee’s considerable weight to ensure that the Bill does indeed pass, because we absolutely need its powers?
I will certainly do everything I can. That was the view of the Committee, and of the House on the Bill’s Second Reading, which I was here for. The Bill has unanimous support, so I hope there will be no obstacles to it. We did identify two issues, however, around making the Bill work. One was to ensure protection from retaliatory eviction when tenants complain—we thought that important—and the second was access to proper legal and technical advice, which many tenants will need to take on their landlord. We also said that a reformed housing court would make such legal approaches by tenants or anyone else much easier to deal with, and asked the Government to give urgent consideration to that as well.
Excellent. It is good to welcome the hon. Member for Sheffield South East (Mr Betts) back to his place.