HC Deb 02 March 2000 vol 345 cc656-62

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Touhig.]

7.1 pm

Ms Karen Buck (Regent's Park and Kensington, North)

I am extremely grateful for the opportunity to highlight the renewed threat facing tens of thousands of protected tenants so soon after it seemed that the Government had at last provided them with some security, following a decade of steep, sometimes stratospheric, rent rises.

Two years ago, I introduced an Adjournment debate drawing attention to the plight of protected tenants. Many of them are elderly or facing retirement; some are vulnerable, the majority are on fixed incomes and almost all of them, by definition, are tenants of long standing. Their secure tenancies predated the deregulation of the private rented sector brought about by the Housing Act 1988. At the time, they were given assurances that their position would not be affected by deregulation, but that proved not to be the case.

Before the 1988 Act, rent assessment committees had to consider factors such as the age, character, location and state of repair of a dwelling. Rent officers and rent assessment committees were also obliged to assume that there was no scarcity of comparable rented accommodation in the locality, as that would have had the effect of sending the price of accommodation up. This provision traditionally meant that fair rents were held below the market price.

The 1988 Act created more tenancies at market rents in the form of assured tenancies and assured shortholds. It also allowed rent assessment committees to take the market into account when setting rents for regulated tenants. The entire framework for the setting of protected tenants' rent was drastically altered. Rent officers and rent assessment committees were increasingly being persuaded that fair rents should be set in line with market rents.

Rent rises started to run well ahead of inflation. By the mid-1990s, rents were often many thousands of pounds a year higher than they had been at the start of the decade.

In my debate in 1998, I urged on a sympathetic Government the need for swift action to prevent people from losing their homes, to redress the fear and anxiety that was shadowing so many lives and to protect the character of our inner-city communities, which is dependent on a stable and mixed residential base, but is in danger of being swept away by the pressures of the international property market.

I was therefore delighted, as were many of my constituents, when, 14 months ago, the Government introduced regulations, based on section 31 of the Landlord and Tenant Act 1987, to impose a rent cap. While still allowing rent rises well in excess of the retail prices index—up to 7.5 per cent. above in the case of initial re-registrations—the cap none the less assured tenants that they did not face a doubling or trebling of their rents over the following years. It allowed them to plan their future—sometimes their last years—with confidence. The rent cap was greeted with relief and gratitude.

In January this year, however, the relief turned to anguish and dismay when the Government's use of section 31 was successfully challenged by the Spath Holme landlords. Spath Holme argued that the section 31 powers had been introduced as counter-inflationary measures, that this was not the purpose of the order issued in February 1999, and that the Secretary of State had, therefore, acted ultra vires.

The ramifications of the judgment are extremely serious. Many protected tenants who were saved by the order find themselves yet again faced with the risk of losing their homes. Despite the spin that has been placed on the judgment by some landlords, they are not—certainly they are not exclusively—a group of affluent people who have been enjoying an unfair subsidy to shield them from the cold blast of market forces. As the Government's consultation document on the issue made clear, more than 60 per cent of private protected tenants are retired and only 20 per cent. are working, while 70 per cent. of regulated tenants in the private and registered social landlord sector have gross incomes of under £200 a week.

Mr. Michael Portillo (Kensington and Chelsea)

I am very grateful to the hon. Lady for initiating this debate. I should simply like to confirm what she is saying. Even in a constituency such as Kensington and Chelsea, which has its fair share of affluent people, many people are deeply dismayed by the rises that are now in prospect and face the future with great anxiety. The hon. Lady will know that I have taken an interest in the issue, particularly after the Spath Holme judgment. I hope that we can continue to work together on the issue in the spirit of cross-party endeavour. We look forward very much to hearing whether the Minister will be able to give any reassurance today to those who are now in a state of great anxiety.

Ms Buck

I entirely agree with the sentiments expressed by the right hon. Gentleman and endorse his statement that we have been working together, on a cross-party basis, trying to reach a satisfactory conclusion to the matter.

In the few weeks since the Court of Appeal judgment, I—like other hon. Members—have been flooded with letters from desperately worried tenants. I should like to draw attention to some of the sentiments expressed in those letters, to confirm the anxiety and fear felt by many protected tenants. One letter stated:

My landlords did not wait a moment to put in their latest proposed rent increase…another 150 per cent. increase…they are now asking for £21,000 per annum…I greatly fear the prospect of having to go to the Council "cap-in-hand" for benefits which I have never had to ask for before. A second letter—from a couple in their late 70s who have been at their current address for 28 years—stated:

We were faced immediately with a proposal for a 150 per cent. increase, on top of one of 150 per cent. two years ago. Another of my constituents has advised me of an application for an 85 per cent. rent increase that has been lodged since the Court of Appeal judgment.

Another letter states:

As a widow of 70, what am Ito do if rents are raised beyond my means?…I have lived in this house for 48 years and, over those years, have spent some £150,000 on the upkeep of the property. The same theme emerges time and again. A Kensington resident states:

We do not want to leave the flat we have lived in for 45 years…Where would we go, anyway? A tenant from elsewhere in London wrote of living alone on a small private pension plus a state pension. She now faces a rent increase of more than 100 per cent. With her health suffering from the stress, she asks the Government to help quickly, so that

a lot of suffering, worry and fear might be avoided. I have initiated this debate to urge the Government to act with due urgency to leave no option unexplored in restoring the rent cap. Tenants who entered into their agreement 20, 30 or 40 years ago, in good faith, do not deserve to be treated as badly as many of them are now being treated. If, in future, market forces are going to wipe out privately rented accommodation in central London for all but the super-rich and for those with company lets, let us at least safeguard the future of current residents.

Some landlords have stated that tenants who find their rent increases unmanageable can apply for housing benefit. Not only do I resent the implication that the public purse should subsidise excessive rent increases, but the washing of hands by landlords is misguided. Housing benefit restrictions are likely to apply to many, if not all, of those properties because of their location, leaving many tenants still in financial hardship.

I am aware, of course, that the Government are petitioning the House of Lords for leave to appeal against the court judgment. Although that is clearly an option that has to be pursued, time is of the essence. Many protected tenants fear that, in the time that that process is likely to take, and without certainty of success, help may come too late for them.

I therefore urge the Minister at least to consider other options, so that action can be taken swiftly. If primary legislation is possible—either freestanding or achieved through the vehicle of a leasehold reform Bill—we might be able to secure the position of protected tenants sooner and more conclusively. I am aware of the difficulties that attend on either of those options, but even in the next two years, while the issue is resolved thousands of tenants will either lose their homes or be in fear of losing them.

I should like to give the last word to a Westminster pensioner, who said: I really do implore you to speak out on behalf of us tenants who are now fearful that we may lose our homes…I have worked all my life for my country and now I want to live my retirement in peace.

7.9 pm

Ms Glenda Jackson (Hampstead and Highgate)

I congratulate my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) not only on obtaining this particular Adjournment debate, but on consistently raising in the House an issue that has a major effect on some of the most vulnerable people in our society. The situation that she is describing is certainly replicated in my own constituency. It is no exaggeration to say that many of my pensioners live in daily fear of losing their homes and such small amounts of money as are left to them.

The Government's action on the Rent Acts (Maximum Fair Rent) Order was welcome, but the recent judgment, to which my hon. Friend and the right hon. Member for Kensington and Chelsea (Mr. Portillo) referred, has struck fear into the hearts of the most vulnerable people in society, whom it should be one of our first duties to attempt to protect.

I shall not repeat any of the points so tellingly made by my hon. Friend the Member for Regent's Park and Kensington, North. I shall simply touch on some of the experiences of my pensioner constituents. One pensioner couple have lived for 30 years in a property that they are entirely and exclusively responsible for. They have maintained, modernised and repaired it and have seen their rent rise over that period from £500 a year to £12,500. After the Spath Holme judgment, that will rise overnight by an additional £3,000.

Another pensioner couple have been tenants for 36 years. Again, they are responsible for the maintenance and improvement of the property. As their letter says, they have turned a dirty, vermin-infested flat into the desirable one it is today. The landlord has done nothing, yet in 1998 they faced rent increases of 68 per cent. After the recent judgment, there will be additional increases of £20 a week.

My final example of the realities of life for some of my most vulnerable constituents is a household in which the head of the household receives incapacity benefit. Their rent has risen from £77 a week in 1999 to £220 a week in 2000. That is clearly unacceptable and untenable.

I take this opportunity to pay tribute to the Camden Federation of Private Tenants, which has been assiduous in trying to help my constituents who are so grievously concerned by the recent judgment. In a letter to the Evening Standard, the chairman of that federation made the point that my hon. Friend has made—that all regulated tenants have suffered massive rises in so-called fair rents in the past 10 years. He gave an example of a two-bedroom flat in my constituency for which the rent went up from £1,000 a year in 1988 to £5,400 in 1998. He agrees that the fair rent order controlled rents, but the lifting of the controls as a result of the new judgment will mean massive increases almost overnight.

Like my hon. Friend, I have concentrated on the experiences of my pensioners, but if we do not tackle the issue of fair rents, London is in grave danger of losing some of its most necessary skills and workers, particularly those who are dedicated to public service, such as nurses, teachers, firemen and policemen. They find it increasingly difficult to pay the rents asked when rises across London are spiralling out of control.

I welcome the Government's appeal to the House of Lords against this decision, but I strongly underline my hon. Friend's wish for the Government to act speedily on the issue. Given the vagaries of the courts, I trust that the Government will examine the possibility of introducing legislation so that some of the most vulnerable people in society can live out their remaining years without fear.

7.13 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin)

I thank my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) for raising this important issue. I also thank my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) and the right hon. Member for Kensington and Chelsea (Mr. Portillo) for indicating the extent to which it affects many of their constituents. It is good that this is a cross-party issue, because that lends weight to the serious arguments.

I share the concerns expressed about the problems now facing protected tenants, particularly those who are retired and on low incomes, whose plight has been graphically outlined tonight. I am fully aware of the profound anxiety and uncertainty caused by the Court of Appeal's decision.

I start by placing the figures quoted by my hon. Friend in context. We believe that about 56,000 tenants had their rents capped under the order and are immediately affected by the judgment. All 121,000 regulated tenants with registered rents, as well as 241,000 secure housing association tenants, are potentially affected as their rents next come up for review. Regulated tenants are found throughout the country, but the main impact of the judgment falls in London and the north-west—where for historical reasons the gap between existing registered rents and market rents is greatest. For a few tenants—almost all in central London—the difference may be large. Elsewhere, it may be much smaller. Since the introduction of the order, the capped rent has on average been £5.70 per week less than the uncapped rent—though it is obvious from the speeches that that figure is misleading, so I do not seek to make too much of it.

Ultimately, it will be for the courts to determine the effect of the judgment, but I assure the House that we have acted to minimise the inevitable uncertainty. On 4 February, we issued guidance to the Rent Service Agency and rent assessment panels, which states that for new cases registered on or after the date of the judgment, the limit on increases cannot be applied. For cases that had already been capped, the fair rent determined by the rent officer before the cap was applied should be treated as the registered rent, effective from the date of the original registration. The guidance recommended that amended registrations should be issued with a covering letter to all affected tenants and landlords. Those letters are now being sent out.

On 18 February, we issued further guidance on the position on recovery of arrears. It stated our view that if the landlord issues a new notice of increase as required by the Rent Act, tenants will be liable for 28 days' arrears from the date of the notice. Some landlords may decide not to pursue the matter further where the difference is small, but in other cases the difference is big and is likely to be pursued.

The guidance states that it will be open to landlords to seek a county court order amending the original notice of increase, but the courts will have to decide whether the circumstances fall within the relevant provision of the Rent Act. If the court decides to amend the notice, it may apply terms and conditions with respect to arrears of rent as it thinks fit. In any case, recovery of arrears is limited to six months from the date of the county court order. Tenants will not be liable for arrears beyond one month, unless and until an order is made.

On 25 February, we issued guidance on the position of tenants of registered social landlords. We believe that, where the landlord is a housing association, tenants will not be liable to pay any arrears as there is no provision in the Rent Act that would allow a housing association to backdate an increase or to have a notice of increase amended by the courts.

The position of tenants claiming housing benefit is of particular concern. About half of all regulated tenants with registered rents and about two thirds of housing association tenants receive housing benefit. Local authorities have discretion on backdated payments, but claimants on full benefit are likely to have the full additional rent and the full cost of any arrears met by housing benefit. It is likely that tenants who make a new claim for housing benefit because of an increased rent or arrears of rent will also be covered. A circular was issued by the Department of Social Security on 21 February to all local authority housing benefit departments explaining the position.

I appreciate that that explanation may not give my hon. Friends' constituents much immediate comfort, but I assure the House that the Government remain fully committed to protecting tenants from excessive increases in fair rents. We were surprised by the Court of Appeal decision and even more surprised that it refused leave to appeal, but that is not the end of the story. A petition for leave to appeal was submitted to another place on 17 February and we expect to hear the outcome of our application within the next two weeks. If leave is granted, we will vigorously pursue the appeal. We intend also to seek an expedited hearing to resolve the issue as soon as possible.

I am aware that this process is likely to take several months, and that in the meantime some tenants will experience increases in rent and face the possibility of falling into arrears. I also acknowledge that, even for those who are not immediately affected in this way, uncertainty about existing arrears and possible large increases of rent at a future rent review will cause considerable anxiety and worry.

Mr. Portillo

I had a feeling that the Minister was coming to the end of his remarks. I am grateful for all the things that he has said. However, the combination of accumulating arrears and the length of time that the House of Lords judgment is likely to take is not very encouraging to the many people who are affected by great anxiety. Also, the very fact that he was refused leave to appeal from the Court of Appeal does not give the best indicator of the likelihood of success in the House of Lords. Therefore, does he accept that a much more expeditious route would be to initiate new legislation?

Mr. Mullin

I was going to touch on that in my closing remarks. I said as well that we expect to hear the outcome of our application for leave to appeal within the next two weeks, when the position will become much clearer. If there is to be an appeal, we have a period of several months in which to work out how to address it. If there is to be no appeal, we must take action fairly quickly.

I hope that what I have already said about existing arrears will go some way to allaying people's fears. However, in these circumstances, it is entirely understandable that my hon. Friend the Member for Regent's Park and Kensington, North and the right hon. Member for Kensington and Chelsea should raise the possibility of introducing new primary legislation.

As I have said, we share my hon. Friend's concern to provide these tenants, many of them vulnerable, with protection from excessive increases in rent, which we continue to believe is reasonable. I am sure that the House will appreciate that we cannot pre-empt the decision to be made in another place. We must await the result of our petition and if leave is refused, I assure the House that we will consider the position urgently.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes past Seven o'clock.