My Lords, perhaps I may start by talking about the pilot. A number of noble Lords have expressed interest in a pilot and I can see its significance.
The Government have made public commitments in relation to the implementation of these provisions and have reiterated those commitments in correspondence with the Joint Committee on Human Rights. The Government’s intention is that the provisions relating to landlords and their agents will be subject to a phased implementation on a geographical basis. This will allow a proper evaluation of the scheme to ensure that it delivers its objectives without unintended consequences such as discrimination. Noble Lords are quite right to emphasise their concerns and I recognise that it is up to me to reassure noble Lords on that point. Through the courtesy of the noble Lord, Lord Best, I heard from Crisis directly when we had meetings with parties interested in this provision.
Discrimination is one factor and increased difficulties in the vulnerable accessing accommodation is another. We intend to work with bodies such as crisis in conducting
the evaluation. It will not be an evaluation in which the Government examine their proposals on their own in isolation. The first phase and evaluation will also enable the Government to develop and deliver suitable support services for landlords and tenants, a point made by a number of noble Lords.
The Government have agreed that we will initiate the first phase from October 2014; that a formal evaluation will be produced; and that decisions on implementing the scheme more generally will be taken in the next Parliament on the basis of this proper evaluation. Implementation beyond the initial phase will be via a negative resolution order, enabling a debate to be triggered in both Houses of Parliament at that stage if there remain concerns following the initial phase.
These carefully constructed commencement provisions are already provided for in Clause 67. The proposed new clause goes no further. It would require Parliament to debate not only the wider rollout but also the establishment of the initial phase, and it would require all this to take place during the current Parliament rather than the more careful approach we have set out, which involves an initial phase and evaluation during this Parliament, with decisions to be taken on wider implementation under the next Parliament on the basis of a proper evaluation. We believe that this latter approach, which is provided for in the Bill, is the right one.
The commencement provisions in Clause 67 indicate the Government’s commitment to ensuring that, should it wish to do so, Parliament may scrutinise the implementation of the scheme following the initial rollout and before the subsequent stage commences. Any commencement order which brings the landlord provisions into operation in a subsequent area following the initial rollout will be subject to the negative resolution procedure. The House will be able to trigger a debate regarding the further rollout of the measures and any questions can then be addressed.
I am grateful to the noble Baroness, Lady Hamwee, and the noble Lord, Lord Clement-Jones, for raising their concerns by way of these amendments, which are intended to be helpful and to improve the operation of the proposed landlord scheme. I recognise the particular concern that has been raised about the risk of unlawful discrimination. The Government are clear that race discrimination is unlawful, unacceptable and should be confronted.
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Perhaps I may turn now to Amendments 56A to 56D to Clause 28, and Amendments 87A and 89 to Clause 68. These amendments require that the instructions and advice contained within an anti-discrimination code of practice for landlords should not only be laid before Parliament but should also be reviewed and approved by Parliament following a pilot scheme. Amendments 56C and 56D require the Secretary of State to take all reasonable steps to publicise the code of practice to landlords. The Government have already committed to produce and publish comprehensive guidance and codes of practice to landlords, including a separate anti-discrimination code. The Government have taken full account of concerns raised during the public consultation on this issue and the codes of
practice and guidance attached to the scheme are designed to minimise the risk of discrimination. The scheme will apply to all new occupants within the private rented sector, is based on documentary evidence, and will be supported by an advice and checking service. Most landlords already check references for new tenants and do so professionally and fairly.
The success of the scheme depends on codes of practice and guidance that are fit for purpose. I think that noble Lords would acknowledge that. These will be further revised and updated in the light of consultation with stakeholders and in the light of experience gained as the scheme progresses. The Bill already requires these codes, including the non-discrimination code, to be laid before Parliament. It places a duty on the Secretary of State to consult certain specified statutory non-discrimination bodies before issuing a draft code in relation to anti-discrimination. I can confirm that the codes will be in place before the landlords scheme is implemented for the initial phase. In evaluating the initial phase, we will of course take account of all aspects of the scheme, including the adequacy and clarity of the codes. I should say to my noble friend Lady Hamwee that the Government are currently considering recommendations made by the Delegated Powers and Regulatory Reform Committee as to the legal process for bringing the codes under Clauses 27 and 28 of the Bill into force, and we will provide a response to these recommendations before the Report stage.
I turn now to Amendment 56E. The Government intend to commence the provisions in a careful and phased manner starting in just one locality first. This will allow us to test the effectiveness of the provisions before they are implemented further. The power in Clause 15(7) allows for amendment to be made to the exclusions from the landlords scheme in Schedule 3. It is possible that it will be necessary during the early implementation to amend the exclusions as we learn from experience when rolling out the scheme. Should there be a need to do so, an argument could be made that a draft instrument made under Clause 15(7) might be hybrid because it may affect private interests in the initial rollout area in an adverse way in circumstances where no other locality not involved in the rollout is affected in the same way. The dehybridising provision is therefore considered appropriate in case there is a need to exercise the power in Clause 15(7) during the initial phase.
Perhaps it would help if I address the whole substance of Clause 15 and the proposal that it should not stand part of the Bill. In general, this is a policy area that has given rise to significant debate and I wish to spend some time in addressing the concerns. Indeed, we have had a large number of speakers on this subject. I am reminded that the right honourable Member for Delyn, Mr. David Hanson, remarked at Committee stage in the House of Commons that he was not opposed in principle to the policy and that if we could stop people here illegally renting property, that could be a good thing. I suspect that most noble Lords would probably agree with that.
Successive Governments have brought about restrictions to services for illegal immigrants: first, so as to protect our economy and legitimate business;
secondly, to protect public resources for those with a rightful claim; and thirdly, to address the factors that act as a draw to and sustain illegal immigration. Illegal immigrants are already excluded from accessing most benefits and general access to social housing. There are controls in place to address illegal working, but as yet no similar controls around access to the private rented sector in the same way as we see in some EU states.
The relative ease with which illegal immigrants can secure or change accommodation gives them the opportunity to set down roots and gain an established lifestyle, and the means to evade detection or frustrate their removal. It is also unfair to our lawful residents that they may have to compete for our finite housing stock with people who simply have no right to be here. In some cases, these immigrants fall prey to rogues who are happy to house them in poor or unsafe conditions—we have heard references to beds in sheds—and charge extortionate rents, and who have no concerns about the impacts on local communities. They have also, until now, been able to operate with relative impunity. Where an immigration officer removes one illegal immigrant, these rogue landlords simply move another in. This cannot be right. We have established a system of checks by employers to prevent illegal working. I refer the noble Lord, Lord Watson of Invergowrie, to that precedent for these sorts of checks. The Bill introduces a similar system of checks for private sector landlords, with penalties for landlords who accommodate illegal migrants having failed to conduct the proper checks.
I will look now at how the scheme will work. The Government have made it clear that the checks should be light touch in nature and workable, without creating additional burdens and costs. They must ensure that the vulnerable among us are protected and discriminatory behaviour avoided. Some argue that the checks are complex and beyond the capability of most landlords, but this is at odds with the evidence heard during the public evidence session in the Commons. There we heard from witnesses representing landlords and letting agents that there was no issue with the principle of establishing the identity of a prospective tenant and that most already do so to protect their interests and their property. Indeed, letting agents often consider the immigration status of a tenant. Many then conduct credit or tenant referencing checks, asking for a full range of documentation on the tenant. In most cases, these existing checks will be sufficient for conducting an immigration status check.
For a UK or EEA citizen, a passport will satisfy the check. For immigrant tenants here with limited leave, a biometric residence permit, known as a BRP, will confirm their name, date of birth, nationality and immigration leave in one document the size of a credit card. That will also satisfy the required checks. We started rolling out BRPs in November 2008 and have issued more than 1.5 million. We will be rolling out BRPs to all non-EEA migrants coming here from abroad from November 2014. Biometric residence permits make the process of conducting checks even more simple and straightforward. The landlord is not being asked to identify a forgery or be an immigration
expert, only to check the identity of the tenant as they do now and, most importantly, note the time at which their leave expires.
The Government have also considered the potential for these checks adversely to impact on the vulnerable. As I have said, discussions with Crisis, Shelter and the Housing Rights Service in Northern Ireland have played a direct part in designing the checking scheme. This is why checks can also be satisfied by the tenant presenting a full birth certificate and one other document, such as evidence that they are in receipt of benefits. Furthermore, there are a broad range of exclusions from the checking requirement in relation to accommodation provided by a housing authority as a consequence of a duty placed on them, hostels and refuges, as set out in Schedule 3. We have already discussed these.
There is also the facility for the Home Office to authorise persons to rent property in certain circumstances even though they do not have a lawful immigration status. We will exercise this power in favour of those with outstanding asylum applications and failed asylum seekers who face a recognised barrier to returning home. The landlord will be provided with confirmation of the authority to rent by contacting the Home Office, and will receive a response within 48 hours.
Exclusions are also provided so as to avoid unnecessary double regulation; for example, tied accommodation and student accommodation, where the employer or educational institution will already have conducted immigration status checks, are expressly excluded. We have listened carefully to concerns raised by the higher education sector about the adequacy of the exemption for student accommodation. The Government are aware of the concern about the scope for creating a double regulatory burden on higher education institutions as a consequence of introducing the landlord scheme. Colleges and universities already have obligations to check the status of their students under the student sponsorship arrangements, as the noble Baroness, Lady Warwick, will know.
I am sorry that the noble Lord, Lord Hannay, is not here to hear this but it is important because it represents our evaluation of this issue in the light of the debates we have had. We have listened carefully to the views expressed by Universities UK, the Russell Group and Universities Scotland that we have not got this exemption quite right, that it does not go far enough in covering the different circumstances in which higher education institutions arrange accommodation for their students. After careful further reflection, we have concluded that a broader exemption would be appropriate, to cover all accommodation that is owned, managed or arranged directly by higher education institutions. As I have indicated, we will be bringing forward an amendment in relation to this exclusion on Report. I reassure the noble Baroness that it will be possible for students from abroad to arrange their accommodation through the university without any further checks because the university, in effect, will be providing the assurance and checking the student’s documentation on arrival, as universities do at present. I hope that goes some way towards meeting the concerns of universities on this measure.
As I have said before, the UK remains a welcoming destination for overseas students. We have made it clear that overseas students will continue to be able to arrange accommodation in advance of arriving here to commence their studies. The Government will also make it clear, through codes of practice and guidance, that the landlord scheme will not provide any succour to those who are minded to act in a discriminatory fashion. Equalities legislation will continue to apply and the code of practice relating to discrimination will be available to courts and tribunals to take into consideration. Landlords and letting agents need ensure only that they conduct these checks in a consistent manner of all prospective tenants.
In addition, I wish to remind your Lordships of the Government’s clear commitment to introduce the landlord scheme in a carefully phased manner, allowing us to gauge the guidance and assistance required by landlords and the capability of our checking services. Working with local authorities and housing charities in understanding any potential adverse impact on the vulnerable will inform our evaluation of the scheme.
I hope that I have assisted in addressing the Committee’s concerns. I add simply that the proposed sanctions are a civil penalty and therefore proportionate. The Bill does not create a criminal offence, as we see in some EU member states. The checking scheme is indeed light-touch and workable. The needs of the vulnerable have been heard, and nothing in the Bill will provide any comfort to those who are minded to act in a discriminatory fashion.
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Perhaps I may deal with some of the points that came up. The noble Baroness, Lady Smith, asked how the scheme would be enforced. It will be enforced as part of the normal business of enforcing immigration law. Where immigration offenders are detected or, as a result of an arrest or intelligence received, are found to be working illegally or to have committed a criminal offence, Home Office immigration officials will investigate where the person is living and apply penalties where appropriate. Rogue landlords and repeat offenders will face far heavier penalties.
The noble Baroness asked how people will prove the right to rent. Checks apply only where the person is renting as their main and only home. The document list has been broadened following the consultation to reflect existing checking practices by landlords. Many classes of tenancy are exempt to protect the vulnerable, such as refuges and hostels. We will phase in the scheme carefully and gradually, starting in a single area, to ensure that support arrangements work effectively.
The noble Baroness also asked who is included in the checking requirement. Landlords must take reasonable steps to establish which adults will be living at the property. It applies to those granting a licence to lodge. Where a tenant sublets the property or grants a licence to lodge, the tenant in turn is responsible for the checks. The checking requirement applies only where the property is rented as a person’s main or only home. It does not apply to guests.
The noble Baroness asked also about the codes. We have published draft codes to help practitioners’ and Parliament’s consideration of the Bill. The two codes
will be formally laid before Parliament before the scheme comes into force. We are aware of the DPRRC’s recommendation that these be introduced by order and are carefully considering it. We are continuing to develop the codes.
The noble Baroness asked about 16 to 17 year-old care leavers. Only adults over 18 are subject to the requirements. Care leavers whose accommodation is arranged by local authorities, which owe this group a duty to provide assistance, will benefit from the exemption in paragraph 7 of Schedule 3. The noble Lord, Lord Best, said that he thought that the scheme might drive people into the hands of rogue landlords. For the first time, we have legislation in place which will make the position of rogue landlords that much more difficult. It gives us the power for the first time to take action against rogue landlords. We need new powers to tackle the shadow housing market which already exists.
My noble friend Lady Neville-Rolfe mentioned a number of matters in her very positive suggestions, for which I am grateful. The vast majority of landlords operate on a small scale. The policy is intended to impact hardest on unscrupulous landlords, as I have said, but the scheme takes account of the wide-ranging circumstances within the sector by allowing for a range of penalties that reflect the number of immigration offenders detected within a property. The highest fines are reserved for serial offenders—I shall come on to fines in a moment.
My noble friend commented on the planned trial of the scheme. We are not yet in a position to announce a timetable and location for the trial, but will do so shortly. The lessons learnt will be evaluated and will impact on the guidance and code of practice that will be published before the start of the scheme. I am grateful for my noble friend’s suggestions as to how the provisions should be communicated. We are committed already to working with the Department for Communities and Local Government to raise awareness.
We will make full use of any available tools to include that, including placing guidance and codes of practice online, together with other tools and links, to guide landlords and tenants through the process. The noble Baroness’s suggestion about model terms and conditions is a good one. The Government will not seek to impose restraints on the contracts, but see value in consistency and transparency. We will continue to dialogue on this point.
I do not accept that the scheme need introduce excessive bureaucracy. The noble Baroness, Lady Lister, asked about the application to lodgers. They are indeed covered by the scheme. We will work with social landlords to help them support their tenants who decide to take in a lodger, ensure that they understand their obligations and help them to comply with the scheme. I hope that noble Lords are getting the message that we want the scheme to be implemented in full co-operation with those who are responsible for good housing policy everywhere.
The penalty at the bottom end in the case of someone who has committed an offence involving a lodger will be £80. For multiple breach, it may go up as high as £500. The first breach of tenants in rented accommodation
will start at £1,000 and may rise to £3,000 but, as with all penalties of this type, there is a proper system for evaluating the level of the fine.
On what review will take place of discrimination, I think that I explained that we will work with local authorities and representative bodies during the first phase to evaluate the impact of the scheme. We want to get this right. We think that this is important. We would not be doing it if we did not think that it was important. We appreciate that it will not be simple and straightforward—we will have to change people’s habits—but we can see the benefits.
I say to the noble Baroness, Lady Meacher, that the letting agent carries the responsibility in the case of a proper arrangement made between the letting agent and the landlord. The letting agent takes that responsibility on.
I think that I have dealt with the point made by the noble Lord, Lord Watson of Invergowrie. Employers discriminating will be a breach of the code, as I have already said. I reassure the noble Lord, Lord Hylton, regarding the code against discrimination. I realise that he takes this matter very seriously.
I conclude by referring to the amendment proposed by the noble and learned Lord, Lord Hope of Craighead. I apologise for leaving it until last, but it seemed the most appropriate place to consider it. We want to provide reassurance that the Secretary of State would consider any representation from the Scottish Human Rights Commission on the code of practice relating to the avoidance of discrimination. However, the Equality and Human Rights Commission is the national equality body for Great Britain, which is to say, mainland UK, which is why it appears expressly, and the Scottish Human Rights Commission does not. In practice, of course, any information that is provided by an authoritative body on the matter is of concern to the Home Office, and the Secretary of State will take proper note of it.
The Equality and Human Rights Commission has a statutory duty to monitor compliance with equality and human rights legislation, and may advise the Government on the likely effect of a proposed change in the law and, in our view, it is the appropriate body to be consulted on this matter.
This is a complex issue. I have spoken at some length, but a lot of points have been raised. I have rather taken a leaf out of the book of the noble Baroness, Lady Smith, in that I want to see the clauses in this part of the Bill dealt with to some degree by the way in which we have been able to debate this issue. I thank noble Lords for their contributions.