§ 'In the case of shorthold tenancies entered into after the coming into force of Part I of this Act the rent payable by the tenant to the landlord shall be the rent provided in the tenancy agreement and the rent officer shall have no power to vary the rent.'.—[Mr. Gow.]
§ Brought up, and read the First Time.
§ Mr. Gow
I beg to move, That the clause be read a Second time.
It is certainly common ground among my hon. Friend's and it may even be common ground between both sides of the House, that whatever may have been the other consequences of the Rent Acts, which have been in force for 70 years, one undesirable consequence has been to dry up the supply of privately rented accommodation. It is also common ground between both sides of the House that in some areas there is a grave housing shortage. That housing shortage makes it especially difficult for those seeking a job to move from one part of the country to another.
My right hon. Friend the Minister of State for the Armed Forces tried in the Housing Act 1980 to remedy that shortage of private rented accommodation. He introduced—and he was opposed by the Labour party—what is now known as shorthold. It is a precondition for the granting of shorthold in Greater London that a fair rent should be registered. Even outside Greater London, if a shorthold tenancy is entered into between landlord and tenant, with rent agreed between them, either the tenant or the landlord may make application to the rent officer to vary the agreed rent immediately after the agreement has been signed.
Shorthold was designed to remove one of the disincentives to letting, which was the difficulty that landlords had in recovering possession, and the very long security of tenure given not only to the main tenant, but sometimes to members of his family. I believe that the shorthold provisions in the 1980 Act have had only a modest effect in increasing the supply of privately rented accommodation. In many areas there is still unused or under-used accommodation that the landlord—actual or potential—would be anxious to make available to those looking for accommodation if only there could be a reasonable return on his investment.
That is why I believe that for all new lettings under shorthold—I emphasise that my new clause has no retrospective effect—the rent should be as agreed between landlord and tenant. The House will remember that the maximum period for shorthold is only five years. If, as I hope, my hon. Friend the Minister accepts the new 495 clause, some of those who are desperately anxious to find accommodation will have a better prospect of doing so. The potential landlord will be more willing to rent his property if he can get a decent return on his investment, which will make it worth while.
Thus, the sole purpose of the new clause is to improve the prospects of those seeking accommodation. It is both economically and morally wrong for there to be unused or under-used accommodation because of an Act of Parliament or because of the Government's failure to take action which, in their heart, they know would alleviate the distress and hardship caused to many people. If my hon. Friend the Minister requires further time to examine the consequences of the new clause, as he may do, and if he cannot recommend it to the House tonight, I hope that he will at least give an undertaking that it may be possible to move a similar, if not identical, amendment in the other place.
§ Mr. John Fraser
We are opposed to the new clause. We do not for one moment doubt that if landlords were able to let their properties in areas of acute stress without security of tenure, other than for the maximum period of five years, and without any rent control, there would be takers for it. However, it would lead to the grossest exploitation and ultimately to a vast increase in the responsibilities of housing authorities as shorthold tenancies came to an end and people found themselves bargaining lor an even higher rent or thrust back onto the local authority's homeless list. Of course landlords may feel inhibited about letting their properties if there are rent controls, but if one had to choose between protection for the tenant and uncontrolled rents, we would have no difficulty in saying that there should be protection for the tenant.
The hon. Member for Eastbourne (Mr. Gow) was formerly the Minister for Housing and Construction, and we are left wondering to what extent he was speaking with some flavour of official Tory party policy.
§ Mr. Marlow
Two subjects about which the Government, like the Opposition, are deeply concerned are unemployment and homelessness. We all want to overcome those problems—
§ Mr. Marlow
Oh dear. The hon. Gentleman is so tedious. He knows that I own an element of rented accommodation which probably cost me somewhat less than his private house cost him.
Like the Government, the Opposition are deeply concerned about homelessness and the problems of unemployment. One way of dealing with both of those problems at the same time is to increase the amount of accommodation available for rent. Another way of overcoming those problems is to help to ease mobility. There are jobs in some parts of the country that people cannot go to because they cannot find the accommodation. Equally, there are houses in other parts of the country that are blocked because, for good reasons, people do not make them available for others to live in.
When, for some reason, a tenant moves out, the landlord may consider what to do. As things stand, if the 496 landlord put his property on the market, he would get a certain price for it. However, if he put a tenant in that property at the present rate of registered rents, the property's value would immediately fall considerably. Thus it is against his interest to put in another tenant. Consequently, property owners tend to sell their properties. That is why the private rented sector of accommodation has gone down and down. Yet it is that sector that should be the flexible part of the market that helps people to move from one part of the country to another.
People cannot move from one council area to another. I know that there is a system of swaps and exchanges, but it is not particularly effective. Many people in the north-east and north-west come south looking for jobs. Someone might find a job but then discover that he cannot get the accommodation. In reality, the accommodation is available, but no one wanting to look after his family or his own self-interest would make it available. That is why we have shorthold. That prevents security of accommodation and prevents a reduction in the property's value. In those circumstances, it is in the interest of the owner to put in a shorthold tenant.
What return will the owner of the property obtain for letting it? If the rent is restricted below the market value, the property could still be sold and the money could be invested elsewhere in order to obtain a better return on it. Thus an artificially low rent means that the property will not come onto the market.
I totally agree with the new clause, and I hope that the Government will take the advice of my hon. Friend the Member for Eastbourne (Mr. Gow) and accept it.
§ Mr. Winnick
As I intend to be brief, I shall not answer at length the points raised by the hon. Member for Northampton, North (Mr. Marlow) other than to say that last time the rented market was deregulated, fewer properties were available to rent, for reasons that we all understand.
I am not surprised that the hon. Member for Eastbourne (Mr. Gow) should table this new clause. When he was Minister for Housing and Construction he lost the argument over deregulation. However, he resigned not over that but over something else. He lost, but not because the Cabinet disagreed with him. Rather, the Government were afraid that if his wishes were carried out, they would lose any chance of winning the next election. I fear that we have witnessed some sort of rehearsal, and that the hon. Gentleman hopes that the Government will accept step by step something that he has always advocated.
If someone moves into rented accommodation and the rent is clearly exorbitant, it is only right and proper that he should be afforded some protection. But the new clause would remove any possibility of a tenant being able, under a shorthold agreement, to go to the rent officer to see whether his rent could be reassessed. The hon. Gentleman wants to take away that basic protection which tenants now have, even under shorthold. That is why I believe that it would be quite wrong for the Government to accept his new clause.
§ Mr. Anthony Nelson (Chichester)
Not for the first or last time, my hon. Friend the Member for Eastbourne (Mr. Gow) has rendered the House a service, this time in moving the new clause. Those of us who were involved in the passage of the Housing Act 1980 felt that the 497 introduction of shorthold might lead to considerable advantages and opportunities, despite the Opposition's pledge that if they came to power they would repeal the legislation and extend security of tenure to tenants who benefited from it. Understandably and predictably that has had an effect on the number of shortholds that have been granted. That is regrettable, but it is an accepted Opposition power, which they no doubt relish.
But as a result, homelessness in my constituency and elsewhere has increased. Indeed, many of those who are unable to obtain tenancies, where there is plenty of vacant property which could be made available on shorthold or other forms of tenancy at market rents, have had to search the public sector for available property, have swollen the housing waiting lists or have had to pay much higher rents than they would otherwise have had to.
Opposition Members talk about the exploitation of tenants. The real exploitation is that many individuals and young people nationally are unable to obtain any low-cost rented accommodation at the present time. They are the homeless. The properties are available. If the law provides, and the Opposition give it a fair wind, the accommodation is there to satisfy much of the demand.
The sole consequence of their stubborn opposition and the reluctance with which they are dragged into the 20th century of housing legislation is that hundreds of thousands of people are either homeless or paying exorbitant rents because of the Opposition's outdated ideology.
When my hon. Friend the Member for Eastbourne was the Minister responsible for housing, he put forward proposals in this, as in other areas of the private rented sector, for liberalisation. I believe that he had in mind not only trying to ensure that more housing would be brought on to the market but that the dreadful plight of many people, especially young people, would be alleviated.
As we approach the next general election, I hope that the Government will give serious consideration not only to the proposal contained in the new clause, but to revision of the fundamental Rent Acts which underlie the private sector, at least for new tenancies in the future. If we fail to do that we will continue to have a sore in the private sector of the housing market, and dissatisfaction and elongated waiting lists in the public sector and we will deserve the acrimony of our constituents.
§ Mr. Cartwright
I know that the House wants to make progress. Therefore, I shall be as brief as possible. I want to make clear my opposition and the opposition of my hon. Friends to the approach in this new clause. I certainly support the view that we need a much greater supply of rented accommodation in this country, certainly in the areas of high housing stress. As I have made clear in previous debates on this issue, I do not believe that the best way to achieve that is to try to breathe new life into the old private rented sector which has been in decay and decline for the whole of this century.
I believe that the relationships and atmosphere which surround the private rented market is such that we shall not get agreement about it. I fear that it will be impossible to encourage people to invest in that approach because it is a matter of considerable political difference between the two sides of the House. Therefore, we should be trying to build on the steadily emerging consensus of trying to find new forms of rented housing which do not have the connotations of the old private landlord. [AN HON. 498 MEMBER: "Assured tenancies."] Yes, provided of course by reputable bodies such as housing associations, building societies and pension funds—bodies of the sort which are not looking for a quick return or a quick kill. I am afraid that the difficulty of that approach is that it has the atmosphere, image and all the connotations of the old private landlord.
I do not doubt for one minute the sincerity of some of the people who have taken part in the debate. However, I have some difficulty in believing that the sort of people who come to my advice centre on Friday nights, homeless and unemployed, will really be helped by having a free market in shorthold tenancies in London. I do not believe that we can have a free balance of bargaining between the landlord and the tenant in a situation of housing shortage such as we have in London. If we ever have that approach, I cannot believe that it will help the people who are in desperate need who cannot afford even the below market rents charged at present. Therefore, I am strongly opposed to the new clause. I hope that the Government will resist it.
§ Mr. Steen
It is strange that we should have two new clauses, one after the other, dealing with waste. The House tends to talk about trying to change things which exist but the new clause that I had the honour to move and this new clause are both about wasting assets. The clause that I moved was about wasting public assets. It is curious that the Government should have rejected that. This new clause, which was moved by my hon. Friend the Member for Eastbourne (Mr. Gow) and for which I have a great deal of sympathy and support, has been rejected by the Opposition. That is perhaps a little more to be expected. Therefore, the deregulation of wasted public land was rejected in a proposal which I moved and now the deregulation of private housing waste is being rejected by the Opposition and the spokesman for the alliance.
It is sad that in this country houses are empty and land is unused in the public and private sectors. We continue to argue in the House and nothing is being done to make use of those wasted assets. When the Minister replies, he should recognise that the House is concerned about waste.
The Government have been concerned about waste in local authorities, and they want to privatise services to reduce it. We now have a third of a million acres of land wasting in this country. That should be dealt with. We now have private housing which is being wasted and we should deal with that.
§ Mr. Deputy Speaker (Sir Paul Dean)
Order. The hon. Gentleman is straying. I am finding it difficult to relate what he is saying to the new clause.
§ Mr. Steen
I am sorry that you are having difficulty, Mr. Deputy Speaker. The point is being clearly made that my hon. Friend's new clause deals with waste. I am concerned that the Minister should deal with the waste of housing, just as he dealt with the waste of public land on the previous clause. The House wants to hear how we can use housing more effectively, whether in the private or public sector.
If the Minister cannot accept the new clause, can he give some hope that private housing will be better used even if the new clause is not the device he would use? That is the point I was trying to make. I hope that it is now clear.
§ Mr. Nick Raynsford (Fulham)
If we are concerned about waste, the most obvious example, and a symbol of 499 the present Government's housing policy, is a policy which, because it does not build homes for people in need, generates homelessness and means that far more is spent on accommodating the homeless in bed and breakfast hotels than it would cost to provide them with homes. That is what waste is about and that is the waste for which the Government are responsible.
The new clause is irrelevant. It is based on a fundamental misconception of the causes of the decline of the private rented market. Anyone with any knowledge of the history of private renting over the past 100 years knows that, since the beginning of this century, the market has been in decline for fundamentally economic reasons—because the rate of return that a landlord can expect from renting property is less than he could get by selling it and investing in other assets.
§ Mr. Raynsford
That has nothing to do with the Rent Acts; it has continued systematically over the past 70 years, whatever the hon. Gentleman might say, irrespective of whether the Rent Acts were strengthened or weakened. In fact, the greatest decline came after 1957, when the then Conservative Government sought to reduce controls—[Interruption.] Conservative Members would do well to listen to this. They ushered in the era that was known by the name of Mr. Rachman. He is a symbol of what happened when a Conservative Government sought to reduce tenant control and allow a free market.
§ Mr. Geoffrey Dickens (Littleborough and Saddleworth)
I am grateful to the hon. Gentleman for giving way and perhaps he would like to listen to what I have to say. Is it not right that the hon. Member should declare an interest in this debate as he is funded by the housing Ministry? Should he not have declared an interest in the debate before he made his speech?
§ Mr. Deputy Speaker
Order. We are beginning to stray a little. The new clause relates to shorthold, and a number of recent remarks have been difficult to relate to the subject under consideration.
§ 8 pm
§ Mr. Raynsford
The only interest that I have to declare is that I have worked for 14 years in housing and I care deeply about the problems of housing.
The reason I stressed that the new clause was both irrelevant and based on a misconception, is that it is assumed that creating short-term lettings will lead to a surge in the number of lettings coming onto the market. That is a misconception which the Conservative party adopted in the 1970s. After the introduction of shorthold under the Housing Act 1980, the decline in the private rented market continued at much the same rate as before, with only a derisory number of shortholds coming into existence. In London, the evidence for the first year of shortholds was that about 16,000 properties went out of letting in the private market and only about 300 shortholds were created. That shows that the whole shorthold experiement was misconceived and inappropriate.
The evidence is that, when property is decontrolled, there will be exploitation and high rents and tenants will be subject to especially brutal pressures from landlords, as was the case during the Rachman era which followed the Rent Act 1957.
500 I stress that, for all these reasons, the new clause is taking us in an entirely inappropriate direction for housing policy. If the new clause is passed, private renting will continue to decline and there will be more options for exploitation in London, where people in shorthold tenancies will have to pay higher rents. I accept that there are very few of those people, so not many would be affected, but those in shorthold tenancies would suffer disproportionately.
I sincerely hope that the new clause is decisively rejected.
§ Mr. John Patten
Most hon. Members are aware of my views about empty housing and homelessness. I profoundly believe that somewhere in the equation of the more than 500,000 private empty flats and houses, and the perhaps 90,000 or more registered homeless, it is possible for sensible men of good will to find ways of unlocking that empty accommodation and so make it possible not only to house the homeless but to help young people and stop the degrading scramble for accommodation by young people seeking jobs in our great cities and for accommodation in our university towns.
I do not like deeply entrenched, long-held views which people are not prepared to reconsider. I much prefer the more modern approach put forward by the SDP spokesman, the hon. Member for Woolwich (Mr. Cartwright). He showed that, although he is worried about what would happen should there be a measure of deregulation, the alliance has said that it is prepared to consider measured forms of deregulation, such as extensions to the shared tenancy scheme, where it introduces new forms of finance from building societies, responsible and respectable institutions and others. We should go down that road, across the Chamber, to see whether we can do something to unlock the supply of empty, privately rented homes, in the interests of those who need accommodation, be they the homeless, the young or the mobile job seekers.
Having said that, I believe that the shorthold tenancy scheme is excellent. It has done much to help in the way that it was designed to do, and therefore I welcome the way in which my hon. Friend the Member for Eastbourne (Mr. Gow) introduced his debate on shorthold tenancies. The new clause proposes the removal of the shorthold tenancy scheme from the fair rents system. My hon. Friend wants to deregulate—doubtless he will correct me if I am wrong—all lettings made on shorthold after the date on which part I comes into force, both inside and outside London.
My hon. Friend explained the differences that exist in the shorthold scheme between London and other areas under the provision of the Housing Act 1980, introduced by my right hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley) who is now the Minister of State for the Armed Forces. My hon. Friend the Member for Chichester (Mr. Nelson) played an important part in helping that Act on to the statute book.
I hope and believe that my hon. Friend the Member for Eastbourne has today tabled a new clause which is essentially a probing amendment. I have recently spoken in the House about the privately rented sector. My right hon. Friend the Prime Minister and I have said that any legislation in the complex area of rent control must wait until after the next general election.
501 The shorthold tenancy scheme was not designed as a deregulation measure. That is quite clear, and it does not make sense to turn it into one and to deregulate on this type of tenancy alone. We would therefore get partial deregulation, and that would create some difficulties. We must consider the whole system of rent control and see which groups of people fall inside and outside the system, and not insulate those who choose a specific form of letting agreement.
I hope that my hon. Friend the Member for Eastbourne will accept my assurances that the Government are looking hard at the options for the private rented sector. We are persuaded of the need for reform. I hope and believe my hon. Friend feels that we should legislate rationally and nationally, at the correct time, over the whole area of renting, rather than pick on one valuable and partial scheme for partial deregulation, which would lead to a greater element of confusion in the short term rather than achieve the major aims of the Government to house more people in empty houses and flats which should not be empty because of the workings of the Rent Acts. I hope that my hon. Friend will consider withdrawing his new clause after hearing my comments.
§ Motion and clause, by leave, withdrawn.