Debate on the Address

My Lords, we return to the debate on the Address. My comments relate to the Housing and Regeneration Bill and I declare an interest in a plethora of public and voluntary sector issues that the Bill covers. I also chair the Private Rented Sector Policy Forum which draws together landlord and tenant organisations. In view of our six-minute quota, regretfully I will confine my remarks to that sector. But, first, I give a hearty welcome to the underlying objectives of the Bill, in particular its intention greatly to increase the number of new homes built each year, as so well spelt out by the noble Baroness, Lady Andrews. I should like to speak about the Bill’s provision for a new housing regulator—the Office for Tenants and Social Landlords—initially for the housing associations but in a couple of years also for council housing and the arms-length management organisations (ALMOs) that look after a lot of local authority housing stock. I welcome the Government's proposals for an independent new body and I suggest that this regulator should cover private landlords too. Over the past 30 years the regulation of housing associations by the Housing Corporation has been enormously successful in ensuring an absence of scandals and mismanagement, without bankruptcies and losses of public or private investment. This sector, as well as being subject to heavy scrutiny by Audit Commission inspectors, benefits from a well-respected housing ombudsman service that considers tenants' complaints and provides redress. The new regulator, with a strong tenant emphasis, will be able to build on this success story and, indeed, relax some of the regulatory burden on the best-performing organisations. Meanwhile, in stark contrast to the position of the non-profit sector, the private rented sector—the PRS—falls outside the remit of any regulator. The constraints, safety nets and quality controls for the social landlords do not apply to the private landlords; lettings agents, who act in the place of the landlords, will not be covered by the new Consumers and Estate Agents Redress Act—and there is no compulsion on private landlords or their agents to join any kind of ombudsman scheme. Hundreds of thousands of new landlords have entered the sector over recent years. They have borrowed something over £120 billion in buy-to-let mortgages and invested billions more of their own money, but they have not had to pass any tests of competence, demonstrate any understanding of landlord-tenant law, prove their honesty or financial probity or absence from criminal convictions, let alone have any experience in this field. Any drug dealer can set up as a landlord or, indeed, as a letting agent, overnight. The buildings owned by private landlords are now meant to comply with the basic standards for health and safety redefined by the 2006 housing Act, but these steps to improve physical conditions in the worst stock do not relate to the management, the owners and their agents, of privately rented properties. It is here the tenants face the most problems—and without any means of combating injustices except through complex and costly recourse to the courts. It is excellent that measures to provide protection against landlords unfairly failing to return tenants' deposits was incorporated into the last housing Act, but that is only one hazard faced by tenants who feel cheated by their landlord when repairs never get done, complaints are never answered, absentee landlords do nothing about the noise and disruption of their tenants next door, as well as far worse abuses. Moreover, tenants who take their landlord to task can be the subject of what Citizens Advice calls ““retaliatory eviction””. Since few tenancies any longer offer the protection of security of tenure—I would not advocate a return to the Rent Act protections of yesteryear—unscrupulous landlords can simply terminate the tenancies of anyone who complains. What of the anti-social phenomenon of ““buy-to-leave””, whereby the investor acquires property and leaves it empty? This treatment of housing as an asset like gold or Old Masters, despite, or perhaps because of, the numbers of people desperately needing somewhere to live, is truly shocking. Should local authorities be levying council tax at 10 times the usual level on those apartments, as some have suggested? Fortunately, bad landlords are as unpopular with the relevant professional organisations and reputable trade associations as they are with those who champion tenants’ rights. The honourable bodies representing reputable landlords are as keen as anyone to promote sensible codes of conduct and schemes of accreditation. But the absence of any compulsion on landlords to join such schemes and adhere to any agreed standards undermines the work of respectable institutes, federations and associations: bad landlords simply refuse to join. The reason for the lack of regulation for the private rented sector is that for decades there has been a deep concern that this would deter much-needed investment in the sector. All of us, anxious to attract new investment, especially from the big financial institutions, to enhance and expand the sector, have studiously avoided advocating anything that could possibly be interpreted as a return to rent controls or Rent Act security of tenure. But now the world has changed: it would no longer be a problem to frighten off additional speculative amateur landlords who do not want to adopt industry-wide good practice. Too much money chasing the available homes for sale—with buy-to-let and overseas landlords acquiring the majority of homes in some new developments—has been a significant contributor to the dangerous inflation of house prices. Too many landlords outbidding would-be homeowners undermines aspirations for owner occupation, with a dramatic fall in recent years from about 40 per cent down to little more than 25 per cent of new homes going to first-time buyers. The rapid growth of the sector, from about 9 per cent to around 12 per cent of the nation’s homes, has been very helpful, particularly in soaking up the backlog of demand from mobile young professionals, but in many areas that market is now saturated. Today, discouraging more new speculative landlords would seem to be a positive, beneficial outcome from introducing proper regulation to the sector. The Housing and Regeneration Bill provides a perfect opportunity at precisely the right time. It allows for the extension of the new regulator’s remit to cover not just social landlords but private landlords. In commending the Bill, I ask Ministers to seize this chance to introduce, at last, proper regulation of the private rented sector.