§ Order for Second Reading read.
§ 2 pm
§ Mr. Allan Roberts (Bootle)I beg to move, That the Bill be now read a Second time.
The Bill is designed to give the tenants of private landlords the right to buy their dwellings, the right to repair and maintenance and the right to be provided with full information about the identity of their landlord and to deal with other related purposes. It is an important Bill which deals with a large sector of the population. It is estimated that 12 per cent. of the population live in private rented accommodation.
In the short time that has been left to me to move the Bill's Second Reading I shall deal with the need for the Bill and what it includes. I shall then try to deal with the objections that might be advanced. I hope that the Parliamentary Under-Secretary of State will not be among the objectors because I believe that most of the objections to private tenants' right to buy and their right to repair and maintenance and adequate information are spurious.
The Bill has been supported by a wide range of organisations including the National Union of Students, the Association of Metropolitan Authorities, the Labour housing group—a prominent and powerful campaigning group for housing and improved housing — that non-political body that is known as the Greater London council and many other local authorities. Various tenants' groups have supported it, especially the Organisation of Private Tenants, which I thank at this early stage for the background work that it has done in helping and supporting me in assembling the Bill.
I move the Second Reading of the Bill in the light of my experience on Merseyside, especially in my Bootle constituency. In the old town of Bootle and Litherland, which covers about half of my constituency, and in the new part of the constituency that came into being with the boundary changes—Waterloo and Seaforth—there are many who suffer from living in private rented accommodation. About 48 per cent. of the population in that part of my constituency continues to rent from private landlords. That is a phenomenally high percentage when set against the national average of 12 per cent. I experience daily at my advice surgeries and in telephone calls the hardship that is suffered by many in the private rented sector.
The background to the Bill and the need for it is a growing housing crisis. Under this Government, housebuilding has hit its lowest level for 60 years. Older housing is decaying faster than it is being improved. Between 1976 and 1981 the number of homes in serious disrepair needing over £17,000 worth of work at 1981 prices increased by 20 per cent. to over 1 million. I understand that 4 million homes need £2,500 or more spent on them on repairs at 1981 prices. Disrepair is not confined to the old Victorian housing stock; it is to be found in much newer property. As the supply of decent homes contracts, the housing waiting list queues for council accommodation are lengthening, homelessness is increasing and people are being made more and more dependent on the private landlord. They are being forced to be dependent upon him as they cannot gain access to other tenures as owner-occupiers, council tenants or tenants of very good housing associations. It is well known that the tenants of private 1057 landlords are, in housing terms, among the most deprived members of society. Every national survey shows that private tenants live in the worst housing conditions. The 1981 house condition survey showed that 42 per cent. of private rented dwellings were in substantial disrepair compared with only 18 per cent. in the other main tenures.
Who is housed in the private rented sector? There is a wide range of household types to be found within it. It is important not to generalise, but some generalities and statistics are available. The groups most likely to be private tenants consist of those who are over 60 years of age, and often poor, in unfurnished accommodation, single people, childless couples and groups of young sharers, who are not necessarily poor, who live in furnished flats. The sector also houses significant numbers of families with children, often poor, and living in bad conditions.
Who are the landlords? That is another question which needs to be asked, because when one suggests a right-to-buy provision for the tenants of private landlords or taking away landlord's rights and giving them to private tenants we hear the myth that many private landlords are benevolent widows who rent one or two houses. The typical landlord is not a widow with a few houses but the Freshwaters and Burgers of this world—the property speculators who are in the market to make a quick killing. To do so, because of the way that the housing market operates, they need to exploit the tenants and not to fulfil their statutory repair and maintenance obligations.
Since the passing of the Housing Act 1980 we have had shorthold and assured tenancies and the continuing use of the loopholds in the existing Rent Acts. There has been the use of bogus licences instead of tenancies, which destroys security of tenure in the private rented sector, and the use of bogus holiday lets. Bootle is not famous as a holiday resort, but one would be surprised at how many holiday lets there are in Bootle. That is true in London and many other parts of the country where there are housing shortages and stress. They are used by the private landlord to get round legislation. My proposals would do something about that.
The harassment and illegal eviction of private tenants has become increasingly widespread as property speculators buy tenanted properties and then use any method to get the tenant out so as to reap the benefit of improvement grants and sell the converted properties for owner-occupation.
One of the arguments that might be used against the Bill is that we are forcing private landlords, the owners of a private asset, to sell against their will. Most private landlords want to sell on the basis of vacant possession so that they can make a large profit and a quick killing. They refuse to sell to the sitting tenant. They use harassment to winkle out the sitting tenant and obtain vacant possession.
The suggestion that Rent Act controls, which give security of tenure to private tenants and fix rents, dry up the supply of private rented accommodation is a myth. Experience shows the opposite. When the Rent Act 1957 was passed, which destroyed security of tenure, the supply of private rented accommodation declined. Private landlords managed to get tenants out because they did not have the same security, and the properties were sold for owner-occupation. In 1974 when the Labour Government gave security of tenure to private tenants in the furnished, rented sector, there was not the corresponding decline in that sector that everyone predicted.
1058 The private rented sector has declined and continues to decline because of the financial position and the subsidies in the housing market. The Government subsidise owner-occupation to the tune of £7 billion a year. They do that through mortgage tax relief, which amounted to £2.75 billion in 1983–84; capital gains tax and stamp duty exemption, which amounted to more than £2.5 billion in 1983–84; and through the discounts of £1.45 billion given to public sector tenants to buy their homes in 1982.
The Labour party does not say that people should not be helped to buy their homes or that the subsidies should not be given. On the contrary, the Bill proposes to extend the frontiers of owner-occupation, something in which the Labour party believes. I challenge Conservative Members to oppose a Bill that will do that.
In the period during which £7 billion of subsidies were given to owner-occupiers, private tenants received nothing by way of general subsidies. That is iniquitous and the Bill tries to give some public support to the private tenant in the way that a great deal of public support is given to the owner-occupier.
Not only do private tenants not receive any general subsidies; the subsidies that are going to owner-occupiers increase the pressures on private tenants as landlords try to get vacant possession in order to take advantage of the subsidised prices that owner-occupiers can afford to pay. Therefore, it is in the name of equity that I introduce the measure. How disgraceful it is that public sector tenants have a right to buy while private tenants, who, on the whole, pay higher rents for inferior accommodation, are denied at least an equal right.
Part I, chapter II gives private tenants the right to buy the home they are living in, and that surely can only be right. Day after day we hear about the Government's commitment to home ownership. Indeed, according to the Secretary of State for the Environment, it is well known that the Prime Minister strongly supports the home ownership drive. So do the Opposition. We have a philosophy that people should be able to own their own homes, either as owner-occupiers or as socially owned dwellings, where they own them collectively through a socially accountable housing association or local authority. I am against the idea of people owning other people's homes and making a profit out of the basic human need of everyone to have a home and a roof above his head.
Part II deals with some of the issues that have been exercising the mind of the Minister for Housing and Construction, such as the rights of long leasehold tenants, some of whom would have become long leasehold tenants by exercising the rights to buy and some of whom became long leasehold tenants by other means.
Chapter II gives some tenants the means of maintaining a proper degree of control over the amount of service charge that they pay. It also gives long leasehold private tenants in a majority the right to collective purchase of the freehold of a block of flats. That is a measure on which the Law Commission has commented in its report. "The Laws of Positive and Restrictive Covenants". It is a measure which should receive support from all parts of the House.
Private landlords are notoriously reluctant to fulfil their repairing obligations. As I have said, the 1981 "English House Condition Survey" found that 42 per cent. of private rented dwellings were in substantial disrepair. Part II lays a clear duty upon landlords to maintain an adequate 1059 standard of repair, and a duty upon local authorities to ensure that the minimum repair standards are met—another measure that is necessary in present circumstances.
Part II also gives real meaning to tenants' house renovation grants to make provision for 100 per cent. repair grants for private tenants.
Part III is very important in that it turns into duties many of the permissive powers that local authorities have to try to protect private tenants, and by part III we want to enable local authorities to fulfil the intention of existing legislation. It makes provision for inspections of their areas, the provision of adequate housing aid, tenancy regulations and legal services, and the publication of such information as will assist tenants and landlords to become aware of their rights and duties. That is very important, because there are rights and duties in existing legislation which tenants know nothing about, and the Bill would put that right.
I have tenants in my constituency who have lived in properties for 40 years and do not even know who is their landlord and cannot find out. That is a scandal. The Bill would require in any kind of private rented accommodation, no matter under what legislation it fell, that the rent book would have to be provided and the real name and address of the landlord would be on the rent book. Even if it happened to be the Church of England or the National Union of Mineworkers, it would make no difference. The real name of the landlord should be on the rent book.
The Government might want to oppose the legislation because they think it is unfair to force a person with a private asset to sell at a discount. Their argument in favour of discounts in the public rented sector for council housing was based in first instance on the idea that a tenant in the private rented sector received a discount because the value of the property that he was purchasing was lower than the value of the property at vacant possession. If landlords sell property with sitting tenants, they probably receive more than the price that they paid for it. No landlord with a sitting tenant gets the market value for the property.
It can be argued that one should not give the same rights to the private tenant because it is not fair on the private landlord. If that is so, let the Government amend the Bill in Committee so that they do for tenants of private landlords what they have done for tenants of charitable housing associations. They should make public money available to provide discounts in the same way as money is handed out to tenants of charitable housing associations who wish to become owner-occupiers. If the Government believe in the principle of the right to buy and extending the frontiers of owner-occupation to all, let them do that.
The Bill meets the needs of the present housing crisis. It is an attempt to help those in the housing market who are often the worst housed and pay the highest rents. It extends the frontiers of owner-occupation. I do not believe that anyone who really wants to fight for better housing conditions for the British people would oppose it. The only people who would are those who are interested in property as a means of speculation and making a profit, who do not see housing as a social service meeting a basic human need.
It is impossible to have a free market for housing. The Government agree with that. They are not in favour of a free market because they defend subsidies and income tax 1060 relief to owner-occupiers, as I do, although I should like the system to be reformed. To get a competitive rate of return, the private landlord would have to charge about £80 a week on a property worth £30,000, yet the same property would cost £60 a week if it was bought under a mortgage, after deducting interest relief. That shows the unfairness and disparity of treatment between the tenant in private rented accommodation and an owner-occupier.
The Bill seeks to put right those inequities and to help those in housing need. In many areas Rachmanism is beginning to appear again, as the housing crisis is worsening, waiting lists are becoming longer, people are being forced back into dependence on the private landlord, and fewer houses in the public rented sector are available to those in need.
§ Mr. John Fraser (Norwood)I congratulate my hon. Friend the Member for Bootle (Mr. Roberts), not just on his good fortune but on his ingenuity in getting the Bill before the House. I hope that it will be unanimously and quickly passed, so that it can go into Committee.
Part I gives the right to buy to those in the privately rented sector. Three things have a particular influence over a person's life—his job, if he is lucky enough to have one, his family and his home. The idea that someone in the private sector can own and control something that has such great influence is good and to be welcomed. All the evidence from the "English House Condition Survey" about changes in tenure and the amount of money spent on maintaining one's own property provides a good reason for giving the right to buy to those in privately rented accommodation. This alternative for dealing with the privately rented sector has appeared in many Labour party policy documents. Although I do not endorse every detail put forward by my hon. Friend, the principle is right, not only for reasons of principle but for practical reasons, because it would bring about an improvement in the poor conditions of privately rented accommodation.
My hon. Friend has made proposals for long leaseholds of flats. There is an increasingly grave problem for those who took leases on flats and maisonettes beginning in the 1930s, who now find, after about 50 years, that they have unsaleable properties on their hands. There is no reason why my hon. Friend's proposals for the collective purchase of the freehold, the collective management of a block of flats or the individual extension of long leases on flats and maisonettes should not be implemented.
The Government said that they were awaiting the Royal Commission report. Unfortunately, that does not solve the problem now, although it may do so in future. The matter is now extremely urgent, and in common justice the Government must move to allow leaseholders to extend their leases and collectively to purchase. I hope that the Minister will confirm that the committee set up by the Department to look into the management of tenement blocks will be able to make recommendations on which the Department will introduce legislation on the lines of my hon. Friend's Bill to allow the collective enfranchisement of leaseholders in tenement blocks, the acquisition of management, and the extension of individual leases.
The present situation has led to the growth of a polite, legal method of extortion by landlords of tenement blocks who can extract premiums and other unfair advantages from tenants who, because of the gap in the law, cannot properly defend their interests. I hope that the Minister 1061 will respond briefly to that part of the Bill which would give some liberation and enfranchisement to people who are often distressed and agonised about their position with shortening leases on flats and maisonettes.
§ The Parliamentary Under-Secretary of State for the Environment (Sir George Young)Listening to the hon. Member for Bootle (Mr. Roberts) one might have imagined that the intention of the Bill was to strengthen the rights of tenants in the private rented sector. When he first introduced the Bill, however, he made it clear that its purpose was to
facilitate the decline of the private rented sectorto the point ofnear oblivion" — [Official Report, 8 November 1983; Vol. 48, c. 154.]I fail to see how private tenants can benefit if the sector to which they look for accommodation is allowed to decline to that extent.I fear, therefore, that this is just another example of sheer Labour party dogma. It opposes the independent sectors in education and medicine and now wishes to bring about the decline of the private rented sector in housing. That is wholly consistent with the rather narrow minded Socialist outlook that favours public sector monopolies. The private rented sector has made a valuable contribution to tackling some of our housing problems. Far from trying to reduce its resources, we should do all that we can to encourage that investment.
It is certainly ironic to hear the hon. Member for Bootle of all people arguing for a proposal to extend the right to buy. I have fresh in my memory the passage of the Housing and Building Control Bill through its various stages in this House — not once, but twice. Labour Members, including the hon. Member for Bootle, opposed just about every measure that we proposed to extend the existing statutory right-to-buy scheme. They opposed our proposals to reduce the qualifying period from three years to two years, to extend the right to buy if the council does not own the freehold, to increase the maximum discount to 60 per cent., and many other provisions. As the hon. Gentleman knows, many of his colleagues in local government have also done all that they can to frustrate the effective operation of the existing scheme. It therefore seems odd, to say the least, for the hon. Gentleman to seek to promote a scheme to extend to private sector tenants a right-to-buy scheme modelled closely in many respects on legislation that he and his colleagues have consistently and vociferously criticised.
There is a real case for the Government to answer, however, although Labour Members are scarcely in a position to make it. If public sector tenants have the right to buy, why should not private sector tenants be treated similarly? The answer is that local authorities, housing associations and new towns provide housing on a statutory basis from public funds whereas private landlords do not. The Government do not believe that we have the right to require the disposal of houses purchased by private owners with their own assets. We certainly do not oppose sales to sitting private tenants, but we believe that they must be achieved through voluntary negotiation. Between 150,000 and 200,000 private tenants have indeed bought their homes in this way over the past decade—many at less than full market price.
1062 We have welcomed the British Property Federation's recommendation, made in 1982, that its members should notify tenants of their intention to sell a block of flats. This gives tenants the opportunity to bid collectively for the block if they wish to do so, and has already enabled blocks to be bought by tenants.
The hon. Member for Norwood (Mr. Fraser) asked me about the terms of reference of the committee of inquiry which has just been set up. He asked whether the matter that he raised would be covered. The terms of reference are:
To collect and examine evidence of the nature, scale and incidence of problems for landlords and tenants arising from the management of privately owned blocks of flats; to assess the difficulties caused by these management problems and to make recommendations on how they might be resolved.It will be for the members of the committee to interpret those terms of reference as broadly or as narrowly as they wish. If they make a recommendation on the subject to which the hon. Member referred, the Government will give it serious consideration.The Bill perpetuates the Labour party's total failure to recognise the important role that the private sector has to play in meeting housing need. The private sector provides a great range of accommodation, far wider than local authorities can provide, and therefore increases choice and flexibility. It is increasingly important for the young, single and mobile. Young people often cannot afford a house, even under the generous terms in the Bill, and they are not generally provided for by local authorities. By providing accommodation especially suited to the mobile—which local authorities are simply unable to provide—the private sector makes an important contribution to economic and housing flexibility.
§ Mr. Eric S. Heffer (Liverpool, Walton)Will the hon. Gentleman give way?
§ Sir George YoungOut of generosity, I will.
§ Mr. HefferIt is true that local authorities are not providing homes for people to rent, but the responsibility for that is on the shoulders of the Government.
§ Sir George YoungI wish that I had not given way. As the hon. Gentleman knows, the major cuts in public housing investment were made by the Labour Government after the IMF intervened in 1976. The reduction in housing investment in the public sector began in 1976 and continued until 1981–82 when it was arrested by the present Administration.
Whether under a Conservative or a Labour regime, it is in no one's interest that the supply of privately rented accommodation should continue to decline at the rate at which it has done in recent years. For this reason, we believe that private tenants' rights are best served through the creation of a healthy and responsible private rented sector, with a good supply of decent accommodation to let. To do this we must achieve a fair balance between the interests of landlords and tenants. Landlords must be given sufficient encouragement to continue letting, to let vacant property, and to bring more accommodation on to the market, while tenants must be given adequate safeguards and rights, as well as the benefit of a wider choice of accommodation to rent.
§ Sir George YoungIn the last Parliament, therefore, we introduced an important package of measures in the 1980 Housing Act. I will today concentrate on the measures of principal benefit to tenants.
Shorthold tenancies have been mentioned. They enable landlords to let for between one and five years with the certainty of regaining possession. Shorthold has already been effective in bringing back into the private rented sector accommodation which would otherwise have been left empty unnecessarily — because of the security of tenure for three generations conferred by Labour's Rent Acts — or let under loophole agreements outside any form of statutory control. Many more landlords would let under the statutory provisions of shorthold rather than through loopholes had it not been for the Labour party's irresponsible threat to repeal the measure.
We also introduced assured tenancies under which bodies approved by the Secretary of State can build for rent at freely negotiated rents outside the restrictions of the Rent Acts. The success of this scheme has grown steadily and for the first time in many years new property is being built specifically for rent in the private sector. The number of landlords approved to let on an assured tenancy basis has now risen to 150, and further applications are still in the pipeline. The scheme has been successful in attracting new areas of investment into private renting. Approved bodies include the major housebuilders, property developers, financial institutions and housing associations at one end of the scale, and, at the other, local building firms, small property and investment companies and partnerships. Neither of these measures affected the security of tenure or rights of existing tenants, and, indeed, the 1980 Act improved the rights of existing as well as new tenants.
In order to maintain incentives for landlords to offer accommodation, we reduced the period before which a registered rent can be reviewed from three years to two, so that rents more fairly reflect increases in the costs of maintenance and improvements to rented property. At the same time, however, we retained the phasing provisions so that tenants do not have to pay the full amount of any increase in their rent for one full year from the date of registration. The actual criteria which rent officers use for the assessment of rents were left completely unchanged.
§ Mr. Tony Banks (Newham, North-West)rose in his place and claimed to move, That the Question be now put; but MR. DEPUTY SPEAKER withheld his assent, and declined then to put that Question.
§ Sir George YoungWe also amended the effective date——
§ It being half past Two o'clock, the debate stood adjourned.
§ Debate to be resumed upon Friday 4 May.