§ 3.41 p.m.
§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)My Lords, on behalf of my noble friend Lord Ferrers I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.— (Lord Mackay of Ardbrecknish.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
§
Lord Dubs moved Amendment No. 242C:
Before Clause 89, insert the following new clause—
1840
RETALIATORY EVICTION
("—(1) After section 9 of the Housing Act 1988 there shall be inserted—
"Discretion of court not to make an order for possession.
9A.— (1) Notwithstanding section 9(6) above, the court may refuse to make an order for possession if it is satisfied that not earlier than six months prior to the notice of possession proceedings—
(2) After section 21 of the Housing Act 1988 there shall be inserted—
"Discretion of court not to make an order for possession.
21A.— (1) Notwithstanding section 21 above, the court may refuse to make an order for possession if it is satisfied that not earlier than six months prior to the notice of possession proceedings—
§ The noble Lord said: There are good landlords and there are bad landlords but it is only proper that tenants should have a proper basis for their tenancies and that tenants should have certain rights which they can exercise without landlords being able to retaliate or evict them. The purpose of this amendment is to prevent landlords from evicting tenants because the tenants have tried to stop their landlords harassing them, or have exercised their rights under discrimination law to get repairs done, or to get unreasonably high rents lowered.
§ The difficulty with the Government's proposals on tenure is that an increasing number of tenants will have even less security than is the case at present. Even under the present system there are many instances where tenants have made perfectly reasonable complaints to landlords and landlords have used their powers to evict the tenants. As I said, there are good and bad landlords. I am sure that I am talking about a minority of landlords but nevertheless it seems to me proper that tenants should have a measure of protection. This amendment would extend the discretion of the courts in not granting possession to a landlord in cases where the courts judged that the eviction was an act of retaliation following a perfectly proper and lawful complaint by a tenant.
§ It seems to me that under the shorthold scheme there is a limited period of security. This has weakened the bargaining power of tenants. They cannot always with safety negotiate with their landlords for repairs or 1841 maintenance to be carried out. Tenants may have to pay excessive rents or suffer major disrepairs or harassment, because tackling the problem may have the grave consequence that they lose their homes.
§ There is another problem. Responsible landlords keep their properties in a decent condition and respond to the views and representations of tenants. However, those responsible landlords will face unfair competition from unscrupulous landlords. When local authority environmental health enforcement teams receive a complaint from a tenant they have to act discreetly in order not inadvertently to disclose the fact that they are responding to the complaint of a particular tenant. They have to adopt a generalised approach. This is a simple amendment. It would simply give the individual tenant a little more protection than he has under the Government's policies. I beg to move.
§ Lord MestonI support this amendment. It seems to be based on elementary fairness. It would prevent the victimisation of tenants by means of retaliatory action when a tenant has exercised, or has proposed to exercise, his rights and the landlord is shown to have been motivated by the very fact that the tenant has done so. The evidence suggests that this happens all too often. It strikes me that this amendment in some ways replicates the law relating to victimisation in the field of employment. There is, of course, protection from victimisation if an employee asserts his or her rights, for example against discrimination. This amendment seems to me to provide a good way of ensuring that tenants are not unfairly inhibited by fear of possession proceedings when they reasonably assert their legal rights. It therefore provides a useful deterrent against unscrupulous or vindictive landlords. That is not to say that the landlord automatically loses his rights. The court retains the discretion to order possession in appropriate cases.
§ Baroness Gardner of ParkesI declare an interest in that I occasionally let property on the basis of shorthold tenancies. I hope that when my noble friend replies he will clarify the position— or perhaps the noble Lord, Lord Dubs, will do so. Could a tenant receive legal aid in this situation? The amendment poses a frightening prospect for a small landlord who perhaps just lets one part of his own property. We have all heard of cases where people who receive legal aid sue business enterprises. The business enterprise in question is in a no-win situation because even if it wins the case it cannot recover its costs. It is important to know the financial implications of this measure. I have sympathy with the point that the noble Lord, Lord Dubs, has made. It is wrong for landlords to be vindictive. I do not know how often that happens but it is a most unfortunate occurrence. However, it would be equally unfortunate if we killed off the assured shorthold tenancy system simply because small landlords in particular could not afford to let their property because of the risk of someone being granted legal aid and therefore being able to take action against them.
The Earl of BalfourI am concerned about the measure for the following reason. From what I can 1842 gather of this amendment, a case has to go to court. Courts seldom grant an immediate eviction. They almost invariably delay that for at least six months to give the tenant the opportunity to obtain other accommodation. That occurs almost regardless of the circumstances in which the tenancy is proposed to be terminated. I fear that this measure would place an unnecessary burden on the landlord who happens to have an objectionable tenant. Unfortunately such tenants exist.
§ Lord Hamilton of DalzellI, too, take that view. I also let houses on assured shorthold tenancies. They are becoming the only form of rented accommodation available in the country. I always thought that the Government's object in producing the assured shorthold tenancy was to encourage people to let their houses in the short term. I can see a situation arising where a landlord wants his house back and a tenant at once raises some spurious reason to take the matter to court and object to the landlord having his house back when he requires it.
§ Lord MonkswellI support my noble friend's amendment. However, it is worth while pointing out to Members of the Committee on the other side of the Chamber who seem to raise objections that the situation will already be before the court. There is, too, motivation by the landlord. If a good landlord is doing nothing wrong but wishes to gain possession of the property in the normal way, as a result of the amendment there should be no bar, let or hindrance to his doing so.
§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)The noble Lord, Lord Dubs, explained that the purpose of the new clause is to deal with retaliatory evictions. He has put forward the view that where tenants have little security of tenure, it is difficult for them to use any of their legal rights because if they take action against the landlord they risk losing their homes. He has therefore proposed that where a landlord is seeking possession shortly after a tenant has complained or exercised some legal right, the court should have discretion not to allow possession even though normally it would have no option.
Before dealing with the detail of the new clause it may be helpful if I put the situation in context. The survey of English housing found that most tenants are on good terms with their landlords. Seventy-five per cent. of assured shorthold tenants say they are on good terms with their landlord and only 4 per cent. say they are on bad terms. The balance say they are on neither good nor poor terms. So in only a minority of cases— 4 per cent.— is there friction. Similarly, over three-quarters of tenants are either satisfied or very satisfied with their accommodation. Nine per cent. are slightly dissatisfied, and 6 per cent. very dissatisfied. I would not wish to suggest that these are grounds for complacency but it does put the private rented sector as a whole in context. For the most part, people are satisfied with what they get.
1843 The new clause deals with the situation where a tenant may have complained and subsequently feels that the landlord is seeking to end the tenancy because of that. I have some difficulty with what the noble Lords, Lord Dubs and Lord Meston, are proposing.
The new clause will undoubtedly create enormous scope for dispute, delay, and confusion. By introducing an element of discretion into the grounds, which are otherwise mandatory, or the automatic procedure at the end of a shorthold tenancy, it opens up scope for arguments. There are bound to be court cases. And those cases will turn on the question of motivation. Why is the landlord seeking to end the tenancy? Is it due to the tenant exercising some right, or to some other circumstances? It is extremely difficult to establish what someone's motive may be for acting in a particular way. I understand that those who draft laws in this country seek to avoid using the word "motive" for that very reason. Often people act out of mixed motives. The new clause would allow a court to consider any mixed motive. It would put landlords in a very difficulty position, especially if their tenants were apt to complain.
To go down that route would mean not only that we were presented with those practical difficulties; it would also create uncertainty in the minds of landlords. They would be deterred from letting their property. My noble friend Lady Gardner of Parkes rightly raised the question of a tenant on legal aid. It is a fair point. Fear of the cost of gaining possession is one of the major reasons that people with empty properties are reluctant to let them. My noble friends Lord Balfour and Lord Hamilton of Dalzell echoed that point. The new clause might give a difficult tenant a way of retaining possession when the landlord wishes to cease the tenancy and the possession.
I believe that we should not seek to put any obstacles in the way of people with empty property letting them, especially people with one empty piece of property who do not let it as a business as such. Such people are even more put off if they feel that once a tenant gets into the property the legal structure is designed to be almost entirely in the tenant's, and not in the landlord's, favour.
For those reasons, I do not believe that the fears expressed are justified. On the evidence we have, I believe that they are largely unjustified. The new clause would introduce for landlords the fear of another step to be overcome if they wanted repossession. That could inhibit the growth of the private rented sector which we on this side are keen to see.
It is interesting that there are 14,000 successful actions a year on proceedings for possession out of some 2 million tenancies. The picture painted of the country populated by rapacious landlords who take this difficult view of their tenants is quite false. If they have a good tenant, most landlords would wish to keep him, as the bother of finding another tenant is great. I believe therefore that the new clause and the procedures that the 1844 noble Lord, Lord Dubs, proposes are not necessary. With that explanation, I hope that the noble Lord will feel that he can withdraw the amendment.
§ Lord StallardBefore the noble Lord sits down perhaps I may ask this question. Is not the landlord already safeguarded? He has an agreement signed by himself and the tenant for six months. What other safeguards does he need?
§ Lord Mackay of ArdbrecknishI understand that the noble Lord's amendment provides that if the tenant decided not to move at the end of six months and if, as my noble friend Lord Hamilton of Dalzell, mentioned, just before the end of the six months the tenant tries to exercise one of his rights of complaint and the landlord does what he had always intended to do and asks for possession and the tenant refuses to go, when he goes to court the new clause allows the tenant to say, "I am being chucked out because I complained against this landlord." That is the point.
§ Lord DubsI listened with interest to what the Minister said. At the outset I made it clear that only a minority of landlords were bad landlords. I do not suggest that in most instances there would be any need for the provisions of the amendment to be brought into effect. But the fact is that there are not only difficult tenants but also difficult landlords. It was argued that the provision would impose a burden on landlords. Any landlord— he may not make a lot of money— is letting as a business. However, for the tenant it is his home. In those circumstances, it does not seem unreasonable to have at least a balance between the rights of the two parties. My contention is that government policy in the Bill is tipping the balance very much to the disadvantage to tenants and to the advantage of landlords.
If I understood his figures correctly, the Minister said that 15 per cent. of tenants were dissatisfied with their landlords to a greater or lesser extent. He referred to very dissatisfied and partly dissatisfied. Fifteen per cent. means that more than one in seven of all tenants are dissatisfied. That seems a fairly large number of individuals who are in danger of losing their homes if they have the temerity to complain.
I agree with the Minister that motive may sometimes be hard to assess. Perhaps I may cite a few instances. For example, I understand that in one part of the London borough of Camden the environmental health department started a programme of improvement works in HMOs. The department's assessment was that many landlords had evicted shorthold tenants to avoid doing essential improvement work to make the property safe and fit for human habitation. It believes that this led to a 15 per cent. loss of accommodation.
In Bristol, the environmental health department estimates that 10 per cent. to 13 per cent. of private accommodation is lost because of retaliatory evictions after notices have been served. Other local authorities make the same point. Those examples may not represent the majority of tenants. But they present sufficiently clear evidence to make one believe that doing nothing about the problem is unfair and will become increasingly so. In support of my amendment, perhaps 1845 I may refer to the position in one or two places overseas. I understand that in New South Wales, Australia, provision has had to be made for legal measures to protect tenants in such situations. The same has happened in some states in the United States, so it is not just in this country that the problem of retaliatory action by landlords exists. I hope that it happens to a small extent, but it happens in other countries as well as here. I am not at all happy with what the Minister said. Perhaps he could give me more comfort.
§ Lord Mackay of ArdbrecknishIt is difficult to do so. The noble Lord neatly added 9 per cent. to 6 per cent. and reached 15 per cent. of tenants dissatisfied. However, I remind him of what I said: 9 per cent. were slightly dissatisfied, 6 per cent. were very dissatisfied. It is not fair to add the 9 per cent. and the 6 per cent., although the noble Lord managed to do so and then prayed it in aid. If he wishes to pray the figures in aid, then perhaps the 6 per cent. is the better figure.
We believe that tenants are protected to a reasonable extent, but so also must landlords be protected. Many landlords do not let as a business; they let their homes while they are working away, they let a retirement home that they might have bought and where they hope to live in two or three years' time. Meanwhile, they receive income from letting the property. They are vitally concerned about regaining possession when necessary. One must guard against landlords fearing that the law has swung against them and if the day comes when they need possession of their property, the tenant will be able to use the law to remain in situ, to the landlord's great inconvenience.
The noble Lord, Lord Dubs, made a point about enforcement notices and a house not being habitable. I find it odd that a tenant should want to stay in a house if he has asked the local authority to judge it to be not habitable. If the landlord wishes to repair that house, he may need vacant possession, and a tenant insisting on staying would make a nonsense of the reason for the enforcement notice. I am afraid that I cannot give the noble Lord, Lord Dubs, any more comfort on this. I believe that he is asking for something that is unnecessary and, more important, that would lead to landlords being more reluctant to go into the business of letting their properties, especially with the important single property lettings. Many people, not only landlords but also tenants, find them extremely useful and the last thing we wish to do is to create difficulty. By lifting the bureaucracy from the sector we have increased the private rented sector considerably. We still have a long way to go if we consider what our continental colleagues have in the private rented sector. Taking the full package, we believe that the balance is fair and that the new clause would begin to tilt it back against the landlord.
§ 4 p.m.
§ Lord MonkswellWill the Minister reflect on the arguments that he used when he prayed in aid that apparently only a small proportion of tenants are dissatisfied and would presumably like to obtain redress from landlords? The Minister suggested that 1846 that is an argument for not ensuring that tenants should adequately obtain their rights. If we extend that argument to other areas of society we could suggest that only a small percentage of the population is subjected to violent assaults. The argument could be used that people subjected to violent assaults should have no redress for their difficulties. Is the Minister saying that? I suspect that he would say no. On that basis, I hope that he will reflect on his use of a small percentage of tenants being dissatisfied as an argument for not ensuring that they obtain their rights. That is not a satisfactory way of defending the Minister's position.
§ Baroness Gardner of ParkesThe noble Lord, Lord Stallard, said that he did not understand what we were talking about because if one has an assured shorthold one has a fixed term which is assured. That is right, but the amendment suggests removing that assurance on the landlord's side. If I am a tenant in a place where I know that I have a fixed six months, one month before it is time to give up possession I can immediately complain because I can keep the fixed tenancy for much longer. The landlord will then consider the position and say: "This is a real hazard, if my vacant possession is never to be vacant".
I remind the noble Lord, Lord Dubs, that we go back to the days when he and I served on the same local authority in London and the subject was a long-running political argument. The Francis Committee report removed the right of the landlord to regain possession of his furnished property. I remember one day travelling in a car with the then Labour leader of the London Boroughs Association. I told him that the proposal would have a damaging effect and that the supply of furnished tenancies would dry up in the way that the supply of unfurnished tenancies had dried up. He said: "No, I am sure that that won't be so". Noble Lords will remember that the Labour Government implemented the minority report on the Francis Committee which took away any right of the landlord to recover his property. What happened is that all furnished property became almost non-existent. People went to the trouble and financial loss of keeping their properties empty rather than letting them. If a member of their family was about to get married or if they themselves wanted to retire to a property, whatever the reason, they kept the property empty because the one thing they wanted was to be able to regain possession. The assured shorthold process came in after that and suddenly properties were available to tenants.
If we accept the fixed term to which the noble Lord, Lord Stallard, referred, and plenty of other people provide fixed term accommodation with shorthold tenancies and a large supply of accommodation becomes available because landlords are willing and able to let their properties, there will be somewhere for people to live. The amendment is dangerous and threatens the whole assured shorthold process.
§ Lord MestonI wish to correct the impression which the noble Baroness has gained that the amendment would mean that merely by complaining before the end of the tenancy a tenant could automatically prolong it. That is not correct. Surely, all the amendment means is that if the motivation of the landlord can be proved to the satisfaction of the court, the court will have a discretion. It is nothing more than that.
§ Baroness Gardner of ParkesThe amendment would slow the whole process down and extend it possibly to great length, instead of the tenancy terminating on the appropriate day of the fixed term to which the noble Lord, Lord Stallard, referred. I speak as an Australian and we are all pretty devious. We, as tenants, particularly those who are devious, would go to the trouble of complaining at the appropriate moment to be certain of ensuring our continuing interest. It is a delaying process. It is also risky in that if the tenant succeeds— as he might in a few cases— there is a parallel with the present Asylum and Immigration Bill and whether one wishes to draw things out for a long time. If we do so because of the introduction of court proceedings, we risk damaging the whole assured shorthold process.
§ Baroness Fisher of RednalI wish to ask the noble Baroness whether we are talking about devious tenants but perfect landlords. To me, it is one-sided, as though all tenants are out for what they can get and all landlords are willing to be the benefactors of those who suffer homelessness.
§ Baroness Gardner of ParkesI am not saying that at all. The noble Lord, Lord Dubs, has already suggested that there is a small minority of bad landlords, so there is probably a small minority of bad tenants. The question is whether the clause would be of benefit to the letting and availability of properties in this country or whether it would be damaging. Those are the grounds on which I oppose the amendment.
§ Lord DubsI listened with interest to the noble Baroness's remarks. She reminded the Committee of the days when she and I faced each other across the political divide on Westminster City Council. I know that the noble Baroness has a lot of experience of the housing situation in our cities. But I am bound to say that on this particular occasion I differ from her assessment as to the effectiveness of this amendment. I believe it would help to tip the balance just a little more towards tenants and away from landlords, thereby giving them a little more of a level playing field. The amendment would give people living in such tenancies a little more security. That is desirable. In the circumstances, I wish to take the opinion of the Committee.
§ 4.11 p.m.
§ On Question, Whether the said amendment (No. 242C) shall be agreed to?
§ Their Lordships divided: Contents, 71; Not-Contents, 135.
1849| Division No. 1 | |
| CONTENTS | |
| Addington, L. | Judd, L. |
| Annan, L. | Kennet, L. |
| Archer of Sandwell, L. | Kirkhill, L. |
| Avebury, L. | Lockwood, B. |
| Berkeley, L. | Longford, E. |
| Birk, B. | McNally, L. |
| Blease, L. | Mar and Kellie, E. |
| Borrie, L. | Meston, L. |
| Bruce of Donington, L | Methuen, L. |
| Carter, L. | Milner of Leeds, L. |
| Castle of Blackburn, B. | Monkswell, L. |
| Cledwyn of Penrhos, L. | Morris of Castle Morris, L. [Teller.] |
| Clinton-Davis, L. | |
| Cocks of Hartcliffe, L. | Murray of Epping Forest, L |
| Dahrendorf, L. | Nicol, B. |
| David, B. | Prys-Davies, L. |
| Donaldson of Kingsbridge, L. | Rea, L. |
| Dormand of Easington, L. | Redesdale, L. |
| Dubs, L. | Richard, L. |
| Ezra, L. | Robson of Kiddington, B. |
| Fisher of Rednal, B. | Russell, E. |
| Fitt, L. | Sainsbury, L. |
| Gallacher, L. | Sandwich, E. |
| Geraint, L. | Seear, B. |
| Gladwin of Clee, L. | Shaughnessy, L. |
| Graham of Edmonton, L. [Teller.] | Stallard, L. |
| Greene of Harrow Weald, L. | Stoddart of Swindon, L. |
| Hamwee, B. | Strabolgi, L. |
| Harris of Greenwich, L. | Taverne, L. |
| Hayman, B. | Thomas of Walliswood, B. |
| Hilton of Eggardon, B. | Thomson of Monifieth, L. |
| Hollis of Heigham, B. | Tordoff, L. |
| Hooson, L. | Turner of Camden, B. |
| Howie of Troon, L. | Wallace of Coslany, L. |
| Jay of Paddington, B. | Williams of Elvel, L. |
| Jenkins of Putney, L. | Winston, L. |
| NOT-CONTENTS | |
| Aberdare, L. | Courtown, E. |
| Addison, V. | Cranborne, V. [Lord Privy Seal.] |
| Ailesbury, M. | |
| Ailsa, M. | Crickhowell, L. |
| Alexander of Tunis, E. | Cross, V. |
| Alport, L. | Cuckney, L. |
| Astor of Hever, L. | Cullen of Ashbourne, L. |
| Balfour, E. | Cumberlege, B. |
| Belhaven and Stenton, L. | Davidson, V. |
| Berners, B. | Dean of Harptree, L. |
| Birdwood, L. | Denton of Wakefield, B. |
| Blaker, L. | Dixon-Smith, L. |
| Blatch, B. | Eccles of Moulton, B. |
| Boardman, L. | Elliott of Morpeth, L. |
| Boyd-Carpenter, L. | Elton, L. |
| Brabazon of Tara, L. | Ferrers, E. |
| Braine of Wheatley, L. | Fraser of Kilmorack, L. |
| Brentford, V. | Gainford, L. |
| Bridge of Harwich, L. | Gardner of Parkes, B. |
| Brigstocke, B. | Gisborough, L. |
| Burnham, L. | Goschen, V. |
| Caldecote, V. | Hailsham of Saint Marylebone, L. |
| Campbell of Alloway, L. | Halsbury, E. |
| Campbell of Croy, L. | Hamilton of Dalzell, L. |
| Carnegy of Lour, B. | Harding of Petherton, L. |
| Carnock, L. | Harmsworth, L. |
| Charteris of Amisfield, L. | Harris of Peckham, L. |
| Chelmsford, V. | Harrowby, E. |
| Chesham, L. [Teller.] | Henley, L. |
| Clanwilliam, E. | Holderness, L. |
| Clark of Kempston, L. | HolmPatrick, L. |
| Coleraine, L. | Howe, E. |
| Colwyn, L. | Hylton-Foster, B. |
| Ilchester, E. | Plummer of St. Marylebone, L. |
| Inglewood, L. | Prentice, L. |
| Kinloss, Ly. | Quinton, L. |
| Knollys, V. | Rathcavan, L. |
| Lauderdale, E. | Rawlings, B. |
| Layton, L. | Rees, L. |
| Liverpool, E. | Renwick, L. |
| Long, V. | Rodney, L. |
| Lucas, L. | Romney, E. |
| McColl of Dulwich, L. | St. Davids, V. |
| McConnell, L. | Saltoun of Abernethy, Ly. |
| Mackay of Anibrecknish, L. | Seccombe, B. |
| Mackay of Clashfern, L. [Lord Chancellor.] | Selsdon, L. |
| Shannon, E. | |
| Mackay of Drumadoon, L. | Shaw of Northstead, L. |
| Macleod of Borve, B. | Skidelsky, L. |
| Merrivale, L. | Soulsby of Swaffham Prior, L. |
| Mersey, V. | Strafford, E. |
| Miller of Hendon, B. | Strathcarron, L. |
| Milverton, L. | Strathclyde, L. [Teller.] |
| Montgomery of Alamein, V. | Sudeley, L. |
| Mottistone, L. | Suffolk and Berkshire, E. |
| Mountevans, L. | Swansea, L. |
| Mowbray and Stourton, L. | Swinfen, L. |
| Munster, E. | Tenby, V. |
| Murton of lindisfame, L. | Terrington, L. |
| Newall, L. | Teviot, L. |
| Nickson, L. | Thomas of Gwydir, L. |
| Northesk, E. | Thurlow, L. |
| O'Cathain, B. | Wade of Chorlton, L. |
| Orkney, E. | Westbury, L. |
| Orr-Ewing, L. | Wilcox, B. |
| Oxfuird, V. | Willoughby de Broke, L. |
| Pender, L. | Wise, L. |
| Pilkington of Oxenford, L. | Wynford, L. |
| Young, B. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 4.19 p.m.
§ Clause 89 [Tenancies which are assured shorthold tenancies]:
§
Lord Dubs moved Amendment No. 242D:
Page 61, line 6, after ("tenancy") insert (", subject to a written tenancy agreement,").
§ The noble Lord said: When we come to debate the Question that Clause 89 stand part of the Bill, that will be the better occasion on which to discuss all the principles as regards shorthold being the default tenancy. It would make more sense if we left that point until then. Therefore in speaking to this amendment I shall simply confine myself to the narrower point, which is that the shorthold should not automatically be the default tenancy where there is a written and signed tenancy agreement. The danger is that landlords who do not care very much and are not very effective will not bother to give written tenancy agreements. But they provide some protection for the tenant. Under the Government's scheme the default tenancy will automatically be the shorthold tenancy and the landlord would not even give proper notice that that had happened.
§ The effect of the amendment would be to ensure that the tenancy would not become a shorthold tenancy unless there was a written and signed agreement to that effect. So the landlord would have to take some steps to ensure that the tenant was properly informed of the 1850 situation. That provides a small safeguard because it means that the landlord has to do the minimum to give effect to achieving the tenancy— which the landlord may or may not want— in the default position. Therefore, it provides something of a safeguard. However, I should like to keep my main arguments on this matter for the debate on the clause as a whole. I beg to move.
§ Lord Mackay of ArdbrecknishI shall try to do the same and keep our arguments on the main points of principle in this clause until the debate on whether the clause shall stand part of the Bill. That is quite difficult to do because the amendment now before the Committee is almost the equivalent of voting against the whole clause. So I shall attempt to shorten the argument, knowing that we shall have the same discussion again in a few minutes.
The amendment seeks to exclude tenancies from being assured shorthold tenancies where there is no written agreement. A prudent landlord would, of course, want to have a written agreement. It provides a clear statement of who is responsible for what. It can also put the landlord in a much stronger legal position if anything should go wrong or he needs to seek possession. A landlord can only recover his property using the accelerated possession procedure if he has a written agreement with the tenant.
However, my difficulty with the amendment is that it would create exactly the same procedural trap for landlords as the clause itself proposes to remove. There is no reason why a landlord should face the disproportionate penalty of having a shorthold tenancy converted into a fully assured tenancy simply because he has not provided a written tenancy agreement.
We do believe, however, that tenants with oral agreements with their landlords should have a right to evidence of the main terms of the tenancy in writing if they want it. It is for that reason that we listened to concerns raised in another place and introduced Clause 90, which places a duty on the landlord to provide the tenant, on request, with written details about the important terms of the tenancy relating to rent and security of tenure. That will provide a safeguard against the minority of landlords who might seek to exploit the rights of their tenants. Where a landlord fails to comply with his tenant's request within a period of 28 days, and there is no reasonable excuse for his failure, he will be liable on summary conviction to a fine.
With the explanation that Clause 90 gives tenants the right to ask for a written agreement and puts on the landlord the obligation to provide that written agreement, perhaps we can delay the main argument on the whole principle of Clause 89 until later.
§ Lord MonkswellI am sorry to hear that my intervention seems to concern a couple of Members on the Government Benches. However, as I understand the Minister, if a landlord lets premises to a tenant and says to him, "You can be my tenant for as long as you like and I shall charge you rent as and when I feel like it", it effectively puts the landlord in a very powerful position. He can subject the tenant to all kinds of different conditions or demands for rent. As soon as the 1851 tenant says, "Hold on a moment. This is not terribly satisfactory. Can you give me something in writing to say that I have a long lease on these premises and my rent is fixed at a certain figure?", the landlord can, by default, convert what the tenant thought was a long tenancy into an assured shorthold tenancy. That means that the landlord can then get the tenant out at very short notice.
I am sure that that is not the Government's intention. One of the difficulties when dealing with this whole subject is that the Government start off with the presupposition that the problem is difficult tenants for good landlords, whereas there is a tendency on this side of the Chamber, I suspect, to feel that the problem is bad landlords for good tenants. We should be seeking a solution which protects everybody and does not put any particular party, whether landlord or tenant, in a situation in which he can be exploited.
§ Lord Mackay of ArdbrecknishI always try to be helpful to the noble Lord, Lord Monkswell, because he takes a great deal of interest in all the matters which come before the Chamber and he always brings interesting points to our debates. Indeed, such is his workload on the Bills for which I have been responsible that I wonder that the Party opposite should ever think of abolishing hereditary peerages— it gets so much work out of the noble Lord. It seems a reasonably good advertisement for the hereditary peerage. I am surprised that the Opposition Front Bench is so determined to remove his right to sit in this Chamber and ask questions of Ministers.
§ Baroness Hollis of HeighamDoes the noble Lord also endorse with equal enthusiasm the efforts of the hereditary peerage on his own Benches?
§ Lord Mackay of ArdbrecknishOf course, hereditary peers play a very important part in this Chamber and bring to it a wide range of views. But I am not in the position of wishing to abolish my noble friends' right to sit here and take an active part in proceedings. It is the party opposite which wishes to do that.
In reply to the noble Lord, Lord Monkswell, and without attempting to duck out of this debate, the point that he raised relates to the whole principle of Clause 89. I do not want to make a speech at this point and in a few minutes' time by and large repeat the same speech when his noble friend Lord Dubs moves that the clause should not stand part of the Bill. I wonder whether the noble Lord can contain himself a little until we come to that point, when we can perhaps address the wider issues.
If a landlord and tenant decide that they should enter into an agreement which is a full assured tenancy, the tenant right from the very outset must have a properly written document to show that it is a full assured tenancy. However, if there is just a casual arrangement and, once the tenant gets in, he feels that he would like to know where he stands, then Clause 90, as I explained, can be triggered by the tenant. He can go to the landlord and say, "I know that we made an oral agreement but 1852 I should like to see it in print. Would you kindly send it to me." The landlord is then under an obligation within the time to do so.
So from the point of view of the kind of case hypothesised by the noble Lord, the tenant has the right to have that clear statement. But the general question of whether, in the absence of a strictly drawn up piece of paper, a tenancy should be considered a fully assured tenancy, as it is now, or a shorthold tenancy, to which we propose to move, is a subject for the debate on whether the clause shall stand part of the Bill.
§ 4.30 p.m.
§ Lord DubsThere is one weakness in the Minister's argument. He says that under Clause 90 the tenant can ask the landlord for the necessary documentation or agreement. The difficulty is that the tenant may not be as well versed in the law as is the Minister; he may simply not know what his rights are. He will find, by default, that his tenure has been altered. It is that point which the amendment seeks to address.
If all tenants were well informed, there would be no need for the amendment. They would know what right they had to obtain an agreement from the landlord and that would be fine. The problem is that tenants do not necessarily know that. They are not aware and therefore a little protection would not come amiss. After all, it is not onerous to produce a written agreement— shops do it all the time for hire purchase. It is common for shops to have agreements available, and the onus is not on the purchaser to demand the document for a hire purchase agreement; the onus is on the shop selling the goods to provide it. I should have thought that in relation to something as important as a person's home, that is not an unreasonable position.
I hoped to tempt the Minister into saying a little more. I shall leave my arguments for the next debate. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 89 shall stand part of the Bill?
§ Lord DubsI hope that this will give the Committee an opportunity to hear the Government justify what is a fairly significant change in the conditions of housing tenure brought about by Clause 89. It is my contention that this clause completely changes the nature of the private rented sector into a predominantly insecure form of housing and forces that situation even when there is no express intention to do so. As has been said on a number of occasions, it is the default tenancy which then becomes the more important one.
When the Housing Act 1988 was passed, the Government claimed that the deregulation of rents was needed to encourage private landlords to extend the private rented sector. But when the Government developed their forms of tenure under the 1988 Act, there was no suggestion that within a few years we would have the significant change now being introduced— a change which goes against what the Government suggested at the time.
1853 At the time the Government were clear that shorthold tenancies were not expected to become the norm. Now they certainly will become the norm. I am unhappy with Clause 89. The conditions for many tenants in our country would be better if the clause did not exist and I therefore ask the Committee not to accept it.
§ Lord StrabolgiAs another hereditary Peer, perhaps I too may attempt to intervene. I support the arguments of my noble friend Lord Dubs. This is yet another erosion of the security of private tenants which we have seen occurring ever since 1988.
The so-called "assured shorthold tenancy" is a complete euphemism. It means very little. There is no assurance in it at all. If the tenant asks for a written agreement, there is no proof that he asked for it. The landlord may say, "I am not going to give you one because I would rather you did not have the flat. There are a lot of people after it and I shall give it to someone else". If the tenants complain about the lack of repairs and so forth, they often face eviction.
The case arose of a married couple who rented a flat in Fulham which they moved into in 1993. They had a 12-month shorthold tenancy. Before they moved in the landlord promised to carry out some repairs, including the fixing of a loose, dangerous cooker socket. For almost a year they asked their landlord to carry out the repairs and his reply was simply that they should leave if they were unhappy with the situation. Eventually the couple got fed up and called in the Environmental Health Department after a December night when British Gas had to come in the middle of the night and disconnect their boiler because it was too dangerous to use. The couple took legal advice and instigated proceedings against their landlord to get repairs carried out and to claim damages. What happened? The landlord immediately issued a notice to quit and followed that with possession proceedings. That is what happens in the real world.
The 1988 Housing Act allows tenants with shorthold agreements to refer their rents to a rent assessment committee if they consider it to be unreasonably high and the landlord will not agree to a lower rate. That is all very well in theory. But very often a referral of that kind in the real world leads to eviction. So there is little security of tenure for tenants and the landlords can now do exactly what they like.
The Minister claimed that according to a survey there were only 4 per cent. of so-called "rogue" landlords. That may well be true. But surely legislation of this kind is introduced to protect tenants against rogue landlords. I do not know whether noble Lords on the Front Bench opposite read the evening papers; the Evening Standard particularly has printed some horrifying stories. It seems that the ghosts of Rachman are still abroad. I hope that the Government will realise that and think again regarding further protection to the tenants.
§ Lord MonkswellCan the Government say what is the standing of a verbal agreement under Clause 89? As I attempted to mention earlier, a situation could arise where a tenant and landlord come to a verbal agreement 1854 that it will be a long-term let. It may be that the tenant cannot read or write and therefore the only agreement to which they can sensibly come is a verbal one.
If, during the course of the tenancy, the tenant complains— similar complaints to those mentioned by my noble friend Lord Strabolgi— what is the situation? Does the tenant have any security at all? If the tenant takes advice and through advisers asks the landlord to provide a written agreement to confirm the verbal agreement that he thought they had, the landlord can effectively institute a shorthold tenancy in the absence of a written agreement. My understanding of English law is that a verbal agreement can be upheld in court. Presumably the wording of the Bill destroys that ability. Perhaps the Minister can explain how a verbal agreement for an assured tenancy can be protected.
§ Lord Mackay of ArdbrecknishObviously, my earlier remarks have brought two hereditary Peers opposite to their feet and I welcome the points that they make. Before entering the general discussion on the clause, perhaps I may say to the noble Lord, Lord Monkswell, that if the landlord offers a verbal fixed term, that is binding; if it is periodic, then that will be a shorthold. A verbal fixed term is indeed binding.
The clause changes the basis for creating assured shorthold tenancies defined in Section 20 of the 1988 Housing Act. It provides that any new assured tenancy created on or after the day the provision comes into force, will automatically be an assured shorthold tenancy unless it meets the conditions in Schedule 6 to the Bill. Schedule 6 lists those tenancies which cannot be assured shorthold tenancies. Landlords who wish to do so will be able to continue to let property on full assured terms by serving a simple notice to that effect or by including a simple declaration in the tenancy agreement itself. Where the tenant has existing rights of security of tenure, those rights will be preserved.
The noble Lord, Lord Dubs, seeks to give greater security to the private sector tenant. I am sure we would agree in principle that security for the tenant is wholly desirable. It would be nice if tenants could live where they wanted for as long as they wanted to. But, frankly, the great majority of landlords are unlikely to let property on that basis, and it was excessive regulation of the private rented sector by successive governments that led it to decline to an all-time low in 1988 when only 1.7 million households were in that sector.
The introduction of assured shorthold tenancies has been a major factor in the recent revival of private renting. Landlords need the flexibility that is available from the assured shorthold tenancy. For example, anyone with a mortgage on a property is unlikely to get the agreement of a building society or a bank to let the property unless the tenancy is on shorthold terms. That is why more than 70 per cent. of tenancies are on shorthold terms, and the number is increasing. If the noble Lord, Lord Dubs, is keen to see a healthy private sector, I put it to him that his desire to give tenants greater security than is given in the Bill currently before us and in current legislation which is not being amended by the Bill is unrealistic. It would reverse the revival we 1855 have seen since 1988. It would lead to fewer landlords letting their properties, more properties being left empty and, of course, less choice for tenants.
We do not propose to remove the existing right of shorthold tenants to a minimum of six months' security of tenure; nor is there any reason why a landlord who intends to continue letting his property should want the existing tenant to leave after six months, provided he pays his rent and complies with the terms of the tenancy agreement. Indeed, the average completed length of residence of a shorthold tenant is well over two years.
When shorthold tenancies were first introduced, tenants were accustomed to regulated tenancies which gave long-term security of tenure. In 1988 we felt it appropriate to require the landlord to give prior notice on a special form that the tenancy was to be on shorthold terms and would not provide long-term security of tenure. However, we need to consider what purpose the notice procedure now serves. Shorthold tenancies have been around for more than seven years. Most private tenants— the figure is now 70 per cent.— expect to be offered a shorthold tenancy and know that it will not give security of tenure. If we were setting up a shorthold system from scratch today, we would not invent a special procedure requiring the landlord to say, "If you agree to a one-year tenancy I will give you a separate form, served in a special way, confirming that we have agreed to a one-year tenancy".
Furthermore, the notice procedure can be a trap for the unwary landlord because through a simple administrative error, such as failing to sign the form or even misspelling the landlord's name, the form can be ruled invalid. As a consequence, landlords can accidentally create a full assured tenancy, giving the tenant long-term security of tenure. That puts people off letting property all together. Instead, they may leave it empty, which is liable to lead to disrepair and means that there is one fewer house on the private rented market. What Clause 89 will do is dispense with the prior notice requirement, making it easy to create a shorthold tenancy. That will give more confidence to the landlord and encourage owners of empty property to let it.
When the Bill is enacted, unless the landlord actually gives specific notice in writing that he is creating with the tenant an assured tenancy, the tenancy will be assumed to be a shorthold tenancy. That reverses the current position. As the years have rolled on since the advent of shorthold tenancies— it is seven years now— we believe that it is now reasonable to reverse the procedure we introduced in 1988 which was designed against the background that this was a new procedure and people did not know about it. Now, as I have already said, 70 per cent. of tenancies are on an assured shorthold basis. We believe now is the time to reverse the position so that landlords, who may be deciding to rent a house as a one-off piece of business, will not be put off by the idea that all they have to do is make one mistake and they will suddenly find themselves landed with a fully assured tenancy. This will prevent that 1856 happening. We believe that it is now sensible to take this decision and reverse the position that has held since 1988.
§ 4.45 p.m.
§ Lord StallardAs I listened to the noble Lord, I could not help thinking that he is solely intent on fixing the Bill so that it safeguards the landlord at every stage. We know that shorthold tenancies are being used as an excuse to get rid of a tenant or to say that a landlord will get rid of a tenant at the end of six months unless the rent is increased for the following six months. That is what the Bill says to me. Landlords are determined that they will only have to have the tenant for six months before they can increase the rent. That is what the Bill is about. There is no safeguard for the tenant. Landlords will now be assured, without anything in writing or any legal papers, that at the end of six months they can say to the tenant, "You can carry on for another six months but I shall have to double your rent", or whatever the process is. That is what is happening and that is what I think is wrong with the Bill. It is one-sided.
§ Lord Mackay of ArdbrecknishI do not believe it is one-sided. As I said, 70 per cent. of new tenancies are assured shorthold tenancies. The normal position now is for assured shorthold tenancies. We believe that it is the advent of those tenancies which has given rise to the welcome increase in the private rented sector.
§ Lord StallardThe noble Lord mentions the figure of 70 per cent. Is that an overall United Kingdom figure, or does it take account of the special circumstances of the inner cities? The position in the inner cities is quite different. I live in an inner city area where tenants are in and out. It is like shelling peanuts. They are in and out, rents go up and landlords seem to be doing what they like. Where does this figure of 70 per cent. overall come from?
§ Lord Mackay of ArdbrecknishI think the 70 per cent. will be for England and Wales. It includes inner cities, outer cities, country areas and so on. It is 70 per cent. of new tenancies, just as I said. I think the noble Lord has got the wrong end of the picture. In fact, the 70 per cent. is England only. I included Wales but the statistic is for England, although the legislation applies to England and Wales. However, I do not suppose the figure will be much different for England and Wales.
The noble Lord seems to think that at the end of every six months the landlord will decide to get the tenant out and hike up the rent. I do not believe that getting the tenant out does help to hike up the rent because tenancies are already at market rents. If the landlord tries to double the rent to an amount above the market level he may well find that there is little market for his property.
§ Baroness Gardner of ParkesIt is unrealistic to think that landlords will try to double the rent. Tenants simply would not accept that. It has become a highly competitive market. My experience is that rents are 1857 reviewed annually rather than every six months and assured shortholds are regularly replaced with another assured shorthold, a continuation, an extension, or whatever is the term decided at the time. Many tenants even argue about an increase in line with inflation. Therefore, it is unrealistic to think that landlords will try to double the rent. If you have an adequate supply of assured shorthold tenancies, the tenants have plenty of choice to find somewhere else. At the moment, there is quite a supply available.
§ Lord StallardI do not think I said double the rent. I said increase the rent.
§ Lord MonkswellWhat are the Government's wishes for the private rented sector? Do they wish that the private rented sector should provide just temporary accommodation for people, or do they envisage that the private rented sector should provide permanent homes for people? There is a difference. If 70 per cent.— probably that figure will rise— of private rented accommodation is under assured shorthold tenancies, effectively that means it is temporary accommodation. There is no assurance that people can be certain that their home can become their permanent home.
If that is what the Government want the difficulty is that we shall have the private rented sector categorised as being only for temporary accommodation. I am not sure that even the Government would like the private rented sector to be stigmatised in that way. If that is going to be the predominant form of tenancy then that is the reality for people living in that kind of accommodation. They will not have long-term security where they can say, "This place is my home". It will only be temporary accommodation. If that is the way the Government want the private rented sector to be seen, that is fine, but we shall have to say to the people of this country, "If you want a home which you can call your own and which you can live in permanently, don't rent privately". I am not sure that even the Government would like that to be the situation that the people of this country have to face.
§ Lord SelsdonI have listened to Members of the Committee opposite, both hereditary and non-hereditary, and I have listened to my noble friends on this side of the Committee. I have tried to sit back and view the matter dispassionately. But I believe that Members of the Committee are all looking backwards over their shoulders. We must be all agreed that we want more property to rent. We have forgotten the impact of inflation and the return that landlords look for. The Committee will know that many people have accommodation that they would have liked to have let, but were too frightened to do so because of the impossibility of being assured that they could get rid of a tenant when they needed the accommodation for their own family in the future. If we reject this particular clause it will effectively reduce the number of people who will want to let their houses or flats, or indeed invest their pensions or savings in rented accommodation. That will be the impact of rejecting this clause. I cannot understand why Members of the Committee opposite say that they want a larger 1858 availability of accommodation in the country at relatively fair and reasonable rents because rents are fairer and more reasonable now when inflation has gone and indexation no longer necessarily applies. The yield expected by an investor is perhaps only 5 per cent., which is not a large amount. I cannot agree with Members of the Committee opposite.
§ Baroness Fisher of RednalFurther on in the Bill we shall be discussing the situation of people who have been declared homeless where the local authorities say that they cannot help very much in providing accommodation but that they can provide a list of properties which the prospective tenant should see and then negotiate the rent. That means that we might not be giving any help at all to homeless people, who will not understand all the rules and regulations of this Bill. They will be completely distraught that they are homeless and that the local authority cannot help. In those circumstances the shorthold tenancy may be a very precarious way of trying to help a family to get back into secure accommodation. What concerns me most is that that kind of accommodation will be offered to homeless people.
§ Lord DubsI hope that I have understood the Minister's arguments. He said that one must make the market for housing attractive for landlords so that more properties are brought forward. That is reasonable. He further said that over the past few years, since the 1988 Act, the Government have taken certain steps which have resulted in more properties being available for letting. That is fair and good. The Minister is now saying that that is not good enough and that the Government have to do something different. In that last step of the argument I was hoping that the Minister would put more of a case for this particular clause. We are not talking about the effect of deleting the clause because, after all, that will leave us with the status quo and the position that has been maintained for the past six to eight years when the number of properties available has increased.
We are talking about what difference this particular clause will make to that situation. We have not heard very much from the Minister to the effect that this change is necessary. I concede that in years gone by there was not enough property available and landlords were not making properties available in the numbers required, but that is water under the bridge. Changes have already taken place. I am looking for an argument as to why we need this further change.
Perhaps I may set that in context. I disagree with the noble Baroness when she says that there is plenty of choice. For people in our inner cities who are not well off there is very little housing choice. I know that from people who are looking for accommodation. It is very hard indeed to find tolerable accommodation unless one has a great deal of money. Of course, at the top end of the market there is plenty of property available, but for poorer people there is very little.
§ Baroness Gardner of ParkesThe noble Lord is overlooking the housing benefit situation, which allows people to take accommodation at very high rents in some parts of London.
§ Lord MonsonPerhaps I may point out to the noble Lord, Lord Dubs, that the Business Expansion Scheme, which provided a good deal of housing to let at reasonable rents, has now been wound up. I suspect that that is one of the reasons for the changes proposed in this Bill.
§ Lord DubsI am not sure how much that scheme produced by way of accommodation, but that is not an argument that the Minister has used so far. It is not one that I have heard. I am simply commenting on the fact that some of the changes in the housing market that have been necessary over the past 10 to 20 years have had some beneficial results. But to my mind there is no need for this particular clause, or, if there is, a case has not been made out for it. Would the Minister like to elaborate on that?
§ 5 p.m.
§ Lord Mackay of ArdbrecknishFirst, perhaps I may go back to 1988. When we introduced assured shorthold tenancies it was felt by the Government at the time that many people might not be acquainted with the concept and therefore it was fair that the procedure should be that unless the landlord specifically entered into an assured shorthold tenancy the tenancy should be considered a full assured tenancy. As I have explained, we now have a situation in England where about 70 per cent. of new tenancies use the assured shorthold tenancy system.
I do not take the rather negative view put forward by the noble Baroness, Lady Fisher, about the ability of people to understand these things. By and large, people can understand matters which concern their daily lives and the questions they have to address. I am not a subscriber to the view that the great majority of the public are unable to look after themselves and that the paternalistic state has to look after them and watch every move they make. I believe people are able to make these decisions for themselves and, given the change over the past seven years, they are certainly well aware that shorthold tenancies now form the majority of the market. I do not agree with the noble Baroness.
I believe that my noble friend Lord Selsdon made the point absolutely clear. We are doing a great deal of looking back over our shoulders. We want to see the progress that we have made improved on and more property coming forward to be let. Now is the time to shift the problem around and to come at it from the opposite direction. If a landlord wants a full assured tenancy that is what he says. If he does not say that explicitly it is assumed to be an assured shorthold tenancy.
The noble Lord, Lord Monkswell, asked me to try to explain why we have a private rented housing market. Private rented housing serves many needs. Some landlords look on it as a long-term investment, as my noble friend Lord Selsdon mentioned. Other landlords 1860 may want to rent out a property because they have gone abroad for a year or two. I have had the privilege of being the tenant of another sort of landlord. That gentleman bought a house for his retirement, but he was not ready to retire and wanted to let it out for a couple of years. I was the lucky beneficiary of that decision. I can assure the Committee that that gentleman certainly did not want a full assured tenancy— and rightly so.
Therefore, different landlords approach matters from different angles and have different motivations. Just as a landlord may be interested in the short term or the long term, some tenants may want to be in the private rented sector for a long time while others are interested only in a short-term tenancy while, say, they are working away from their normal home or because they know that they are not going to settle in a certain town but need to live there for a while before moving on. Therefore, both landlords and tenants may want to use the private rented sector for a number of different reasons.
As I said earlier, the interesting point is that the average stay in an assured shorthold tenancy is greater than two years. It is actually about two-and-a-half years, so I would not like the Committee to get the impression, which seems to be being portrayed by the Benches opposite (but perhaps not deliberately), that such tenancies last for only six months and then come to an end, leaving the tenant to look for somewhere else. That is not true. Obviously, many wise landlords who rent out property as a long-term business interest will want to continue the tenancy of a good tenant, but they may prefer to do so on a shorthold basis so that if circumstances change they can have some certainty of regaining the property.
The noble Lord, Lord Dubs, asked whether I thought that there might be an increase in the number of houses coming forward for rent. I have with me a copy of a letter sent to my honourable friend Mr. David Curry, the Minister for Local Government, Housing and Urban Regeneration, from the Empty Homes Agency, which clearly states that that organisation welcomes the changes proposed in the Bill, adding:
Anything which helps to make private letting simpler and more certain has our support. In particular, it seems to us to be crucial to the expansion of private letting that small Landlords can be certain that they will not give Tenants security of tenure by mistake".That is a point that I made earlier. We believe that this clause removes that danger and makes it quite clear that if a landlord and a tenant want to have a full assured tenancy they enter into that form of tenancy.As I said earlier, we encourage tenants and landlords to have written agreements about the tenancy. However, if there is no such written agreement— if the agreement is verbal— it is assumed to be an assured shorthold tenancy. Although we think that that is wise, I fear that I may not have persuaded the noble Lord, Lord Dubs, of that. However, I believe that that is the right way to improve the supply of houses in the private rented sector.
§ Lord DubsI thank the Minister for what he has said although I am not persuaded by it. The Minister said that the average stay in an assured shorthold tenancy 1861 was between two and two-and-a-half years, but that average begs a number of questions. One needs to know the range of lengths of tenancy. I put it to the Minister that in inner-city areas it is extremely likely that the average length of a tenancy is shorter than may be the case in other parts of the country. Although I am not persuaded by the Minister's argument, we have had a lengthy debate on the clause and we may return to it on Report.
Clause 89 agreed to.
Schedule 6 agreed to.
Clause 90 [Duty of landlord to provide statement of terms of assured shorthold tenancy]:
§
Lord Dubs moved Amendment No. 242E:
Page 62, line 8, at end insert—
("() A landlord who seeks to rely on terms set out in a notice provided under subsection (1) above, which were not agreed by the parties, in order to gain possession under any ground, shall be guilty of an offence of illegal eviction under the Protection from Eviction Act 1977.").
§ The noble Lord said: In moving this amendment, I should like to speak also to Amendment No. 242F. We now reach Clause 90, to which the Minister referred on a number of occasions in earlier debates. The purpose of the amendment is to protect tenants from landlords who might attempt to use the clause to change the terms of a tenancy, which could enable them to gain possession or to achieve some other end. The amendment is a safeguard for tenants against the minority of landlords who might seek to exploit their tenants.
§ We are seeking to build onto Clause 90, which was introduced by the Government as a response to the likelihood that landlords will increasingly fail to provide written tenancy agreements once shorthold tenancies become the default tenancy. This is a simple proposition. It provides an additional safeguard for tenants against that small minority of landlords who might wish to abuse their position by changing the nature of the tenancy in a way that was not agreed originally between the landlord and the tenant. I beg to move.
§ Lord MestonI should like briefly to support the amendment which stands in my name also. As the noble Lord, Lord Dubs, said, Clause 90 is of value but it is open to some abuse as the landlord may try to slip into a written statement a unilateral variation of the oral terms of the original tenancy. There is a sanction within Clause 90 for failure to comply with the requirement to provide a written statement, but it seems that there is no specific sanction or remedy for giving an incorrect or an incomplete statement.
Perhaps I may draw another analogy to the employment field where there is a requirement— indeed, a more stringent requirement— on employers to provide a written statement of the terms of employment. In that area, a dispute as to what was or was not a term of the original contract of employment can be referred to an industrial tribunal. There does not seem to be any equivalent provision in this clause to deal with disputes over terms which the landlord may put into the written 1862 statement when called upon to do so. The amendments would provide a valuable reinforcement of the provisions of Clause 90.
§ Lord StrabolgiI support the proposed amendments which stand in the names of my noble friend Lord Dubs and the noble Lord, Lord Meston. Without the amendments, tenants who have no written contracts may well find themselves subject to tenancy clauses which they did not originally agree. In the worst scenario, they may find themselves facing eviction based on terms which the landlord has provided but to which the tenant did not agree or on incorrect information. When tenants take up occupation, landlords frequently agree to vary the rent level if the housing benefit is set at below the rent level that is asked. However, at the end of the tenancy landlords often claim arrears of rent based on the original agreement. More often than not, that results in a tenant being unable to get back the deposit.
The introduction of the notices will provide an opportunity for unscrupulous landlords to claim rents which were never originally agreed and to claim possession on the ground of arrears— and they can do that if there is no security. Also, there have been cases where deposits have been given to third parties such as house agents, some of which are fly-by-nights and disappear or go bankrupt. If the deposit is then not forthcoming, the tenant gets the blame and is thrown out. I support the amendments.
§ Lord SwinfenI understand what the amendment is intended to do, but if the original agreement was oral, how on earth does the tenant prove that a notice is changing the terms of that agreement?
§ Lord Mackay of ArdbrecknishIt might be worth starting by saying that it is sensible both from the tenant's point of view and the landlord's point of view that there is a written statement of terms and conditions before the tenancy is even taken up. That is a sensible precaution for both to take.
Clause 90 was introduced on Report in another place. It acts as a safeguard for shorthold tenants whose landlords do not provide a written tenancy agreement under the new arrangements. The clause would require the landlord to provide the tenant, on request, with the most important terms of the tenancy relating to rent and security of tenure. A landlord who failed to provide the information on request would be liable to a fine on summary conviction.
It may not be prudent, as I have said, for a landlord not to have an agreement in writing. Nevertheless, an oral contract is every bit as binding on both parties as a written agreement. I understand the concerns of the noble Lord, Lord Dubs, that a minority of landlords may seek to exploit their tenants' rights by changing the terms of the tenancy in a subsequent written statement in order to gain possession. However, let me reassure the noble Lord that there are safeguards in the system to prevent a landlord from succeeding in such action.
The noble Lord, Lord Meston, said that there was no provision for resolving disputes. I do not agree with him. Under existing legislation a landlord cannot 1863 repossess his property without a court order if the tenant is unwilling to leave. If he evicts a tenant without a court order, he is likely to be found guilty of illegal eviction under the Protection from Eviction Act 1977. That is an important safeguard for tenants which the Government are committed to retain.
To recover his property, the landlord will have to persuade the court that he has grounds for doing so under the Housing Act 1988. In coming to its decision on whether to grant a possession order, the court will take into account all the facts of the case, including the views of both the landlord and the tenant on the nature and terms of the tenancy. The tenant will have an opportunity to put his views at the court hearing. The court would need to satisfy itself that, where a landlord has supplied a written statement under Clause 90, the terms contained in it are an accurate reflection of what both parties had originally agreed.
In order to reinforce the court's discretion in that area, the Government included subsection (5) in Clause 90. That makes it clear that the written statement provided by the landlord
shall not be regarded as conclusive evidence of what was agreed by the parties".In other words, the court is not obliged to regard the written statement as a binding document.If the court is in any doubt about the nature and terms of the tenancy agreement, that would be reflected in its decision on whether to grant a court order. If the court is not certain that the landlord has a right to repossession, it will not grant an order. If the reverse is true, it will. In neither circumstance would the tenant be evicted illegally.
Amendment No. 242F would impose a criminal sanction on landlords seeking to use the written statement as a means of changing or introducing terms which had not previously been agreed by both parties. As I have already explained, Clause 90(5) provides the tenant with reassurance that the written statement cannot be deemed conclusive evidence of the original oral agreement. If the tenant disagrees with any of the written terms, he is free to pursue that with the landlord and to express his view in a court hearing if the landlord subsequently seeks a possession order. As I have already explained to the Committee, the landlord would have to persuade a court that the statement was a bona fide record of the original tenancy agreement.
I hope that I have explained the situation, and that the noble Lords, Lord Dubs, Lord Meston and Lord Strabolgi can be assured that there are protections against the kind of scenario that they described. Clause 90 provides adequate reassurance for the minority of tenants— it is a minority— whose agreements are made orally. I hope that with those assurances and explanations the noble Lord, Lord Dubs, will feel able to withdraw his amendment.
§ 5.15 p.m.
§ Lord DubsI take some pleasure from a statement that the Minister slipped in at the beginning of his last remarks; namely, that it would be prudent and sensible, 1864 when beginning a tenancy, for there to be a written agreement. The implication of that is that it would also be prudent for there to be a written statement on a change in the agreement, but that was the subject of an earlier amendment. I note that the Minister is conceding the argument after we have left that amendment. As regards this amendment, I hear what the Minister has to say. I am not totally convinced by the arguments, but I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 242F not moved.]
§ Clause 90 agreed to.
§ Clause 91 [Form of notices under section 21 of the Housing Act 1988]:
§
Lord Dubs moved Amendment No. 242G:
Page 62, line 29, after ("possession"),) insert—
("(a) for "two", substitute "six"; and
(b)").
§ The noble Lord said: I shall speak at the same time to Amendment No. 242H. The purpose of the amendment is to increase from two to six months the period of notice that would have to be given under the shorthold arrangements. Why is that important? It would give some protection against short eviction notice times, and therefore give some stability to the lives of tenants who are being evicted. It would also give tenants more time to find alternative accommodation, thereby preventing them from becoming homeless.
§ This is a modest proposal. We are merely seeking to give a little more notice time, realising how difficult it is to find alternative accommodation. That of course is where the landlord relies upon the tenancy being a shorthold tenancy and where the landlord can gain possession when a tenant has done nothing wrong. However, in cases where the landlord requires possession on other specified grounds, the length of notice remains unaltered. So we are talking only of the situation where the landlord wants to gain possession under the shorthold arrangements without having to give any reason for it. It is merely that the landlord wants to have the property. In that instance it seems reasonable that the length of notice that needs to be given should be a little longer than two months. The amendment suggests six months. I beg to move.
§ Lord StrabolgiI support the amendment. It will give the Government an opportunity to explain why the period is as short as two months. That does not seem to be long enough to give tenants some protection against counter-action by their landlords where they pursue their legitimate right to remedy disrepair or apply for rent assessment.
Also surely two months will increase the number of homeless families presenting themselves to the local authority as homeless, who will be required to be housed. That cannot be in the interests of the nation as a whole. I should have thought that the Government would look favourably on this amendment. Surely a landlord can wait six months, can he not? Two months is no time at all for a family to have to move, arrange for removers, find other accommodation, and so on. In 1865 many cases they will of course become homeless. That cannot be in the national interest or indeed even in the Government's interest. I support the amendment.
§ Baroness Gardner of ParkesI oppose the amendment, because if a tenancy is for six months and there is then a notice period of six months, the length of the tenancy is being doubled. The whole purpose of an assured shorthold is that it is agreed at the outset that the tenancy is for a fixed term. As I understand it, that has to be a minimum of six months, but it can be a year in the first instance.
If a tenant has taken a property knowing that it is available for six months, surely long before the end of the six months was reached that tenant would have inquired from the landlord whether a further period was likely to be granted.
Most landlords are happy to have a tenant carry on, because it means that there is no process of re-letting and perhaps having a void period. Those are all factors to be considered from a landlord's point of view, as any small increase in rent is rapidly counterbalanced by a void period. It is not in the landlords' interests to wish to have people out of their properties. They want good tenants in their properties. But as has been brought out again and again during the debate, landlords have various reasons for wishing to let their property. It might be that they have a posting somewhere else for six months, and at the end they wish to return to occupy the property themselves.
The noble Lord, Lord Strabolgi, mentioned families being made homeless. However, we are talking not only about families but also about single people and couples. An assured shorthold can be given to any tenant, not just to a family with small children. The noble Lord introduces a slightly emotional element that does not necessarily exist. I believe that an extension from two to six months on what might be only a six month tenancy is disproportionately long and I oppose the amendment.
§ Lord MonsonThe noble Baroness has said everything that I would have wished to say, albeit much better. However, there is a further fact that the noble Lord, Lord Strabolgi, has failed to consider. The landlord may wish to sell the property because he may be in desperate need of cash. To force him to wait for six months before he can get the tenants out and refurbish the property to make it suitable for sale would impose a great hardship upon him.
§ Lord SelsdonI wonder whether there may be a conflict of interests. I understand what the noble Lord, Lord Dubs, is trying to do and perhaps he has an idea of how to overcome a situation to which I shall draw attention. When I worked in the banking world many people were often sent abroad and they let their property during that time. Other people to whom the bank had given mortgages would let part of their house perhaps in the basement area while their children were at university or were in the Army.
I am not an expert on the mater but I recall that people may try to let a property for a year and know that they would have to let it for at least six months. There was 1866 then a two month period on both sides after the six months letting, or two months at the end of the year. Usually the people who rented the accommodation wanted it for the period of time involved, otherwise they would not have taken up that particular tenancy. Often there would be good will. Sometimes the tenancy would be rolled over or sometimes the owner wanted to sell the house. In those days it was difficult to sell a property if there was a tenant in a part of it.
Perhaps we are talking about two different types of situation. Perhaps the noble Lord, Lord Dubs, has a way of overcoming the situation that I have described. Many people let accommodation on a short-term basis and there is a two month notice period after the six months. I am not sure how we achieve one without jeopardising or penalising the other.
§ Lord Mackay of ArdbrecknishI am grateful to Members of the Committee who have taken part in the short debate. My noble friends Lord Selsdon and Lady Gardner of Parkes put forward a convincing argument and I should be dotting the "i"s and crossing the "t"s of their argument if I spoke at length.
Perhaps I may set out what Clause 91 achieves and therefore what the amendment seeks to change. It amends Section 21 of the Housing Act 1988 which requires a landlord to give an assured shorthold tenant with either a fixed-term or a periodic tenancy at least two months' notice if he requires possession of the property. Clause 91 makes it clear that the notices must be in writing; it is two months' notice in writing. If we are carrying out a balancing act I would have thought that that would have been something that I was doing in favour of the tenant.
The noble Lord, Lord Dubs, has chosen Clause 91, which makes that small change of adding a qualification in writing, as a vehicle to increase the period of notice which a landlord must give a tenant before he can seek possession of his property from two to six months, thereby, I believe, undermining the landlord's position which has existed since 1988.
My noble friend Lady Gardner rightly pointed out that if the tenancy is an assured shorthold tenancy which must run for six months and at the end the landlord decides he wants repossession, he must give notice in writing of another six months. That takes the period up to a year and, adding in the time that it takes the landlord to go to court to obtain possession, a six months' tenancy rapidly begins to approach 18 months.
I do not believe that the noble Lord, Lord Dubs, is serious about wanting such a change. I believe that it would act against what we are all trying to achieve, which is to encourage landlords to come forward with properties to let. In particular, it would discourage those people who want only short-term tenants because they are going abroad, or to another part of the country, or whatever. They may want to rent out the house only for a short time and will want to be sure that when they return they can return to their own house.
I believe that the noble Lord's proposal would go a long way towards discouraging the owners of empty properties making them available. It would significantly 1867 damage the landlord's right to possession. We have tried to go in the other direction in order to make sure that the landlord believes that if he lets out his property there will be a reasonable balance between himself and the tenant when he wants repossession. It is important that the landlord has that knowledge. I believe that two months gives the tenant a reasonable time to find alternative accommodation, especially if the tenant originally knows that the tenancy is for six months. He will know that at the end of that time it must be in his interest to make some inquiry of the landlord about whether the tenancy will continue and will take steps to find other accommodation. I believe that two months' notice is reasonable. If a tenant believes that he has the right to retain the tenancy, within that two months he can begin action to contest the landlord's right to possession. In any event, as I have already said today, the landlord cannot require the tenant to leave without a court order for possession. There is no question of a tenant being thrown out on to the street without a reasonable period in which to find accommodation.
I repeat that we wish to sustain the recent growth in the private-rented sector and not to reverse it. That is why the Bill includes measures to make it easier and less risky to let property. Landlords have a real fear about not being able to gain possession of their property when they need to. I believe that the amendments would bolster that fear and reduce the supply of private-rented accommodation. I cannot believe that that would be in anyone's interest.
I hope that with that explanation of the clause and of what I believe the noble Lord's amendment would achieve he will feel able to withdraw his amendment.
§ Lord DubsHaving heard the Minister's explanation, but not saying that I am totally convinced by his arguments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ [Amendment No. 242H not moved.]
§ Clause 91 agreed to.
§ Clause 92 [Restriction on recovery of possession on expiry or termination]:
§
Lord Meston moved Amendment No. 242HA:
Page 62, line 42, leave out ("original") and insert ("replacement").
§ The noble Lord said: In moving the amendment I do not wish to pre-empt a wider debate on the question of whether Clause 92 shall stand part of the Bill. I wish to move the amendment briefly.
§ As today's debate has already revealed, private-sector housing will be further deregulated by the combined effect of Clauses 89 and 92. Assured tenancies entered into on or after the day on which the Act comes into force will be shorthold tenancies unless the landlord serves a notice on the tenant stating that the tenancy is to be a full, assured tenancy instead. Some exceptions are contained in Schedule 4.
§ Clause 92 is complex to say the least. As drafted, it raises the possibility that shortholds may in future be periodic from the outset rather than commencing with a fixed term of at least six months, as at present. That is 1868 because the clause adds to Section 1 of the Housing Act 1988 the provision that possession orders made in relation to new shorthold tenancies may not take effect between six months from the beginning of the tenancy.
§ Where the shorthold is followed by a replacement tenancy— one in which the landlord and tenant are the same as under the original tenancy— a possession order may not take effect earlier than six months after the beginning of the original tenancy. Thus, landlords, if they wish, may recover possession by means of the accelerated possession procedure at any time after six months from the grant of a shorthold tenancy, even though there is a so-called "replacement" tenancy.
§ I suggest that that allows for too prompt repossession and the amendment is designed to ensure that possession orders cannot take effect earlier than six months after the beginning of each tenancy, whether that be an original tenancy or a replacement tenancy. I beg to move.
§ 5.30 p.m.
§ Lord Mackay of ArdbrecknishIt may be helpful once again if I set out the background to Clause 92 which the amendment moved by the noble Lord, Lord Meston, seeks to change. The noble Lord and I certainly agree about one thing; that is, that Clause 92 is complex. It amends Section 21 of the Housing Act 1988. Section 21 sets out the procedures for a landlord to recover possession when a shorthold tenancy expires at the end of the initial fixed term. The initial fixed term must currently be for a period of at least six months. An amendment is required because Clause 89 of the Bill will remove the requirement for a new shorthold tenancy to have an initial fixed term.
Clause 92 will prevent a court from making an order under Section 21 for possession of a new assured shorthold tenancy until six months after the beginning of the tenancy at the earliest. Where the tenancy is a replacement tenancy, the possession order may not be made so as to take effect until six months after the beginning of the original tenancy. This will ensure that shorthold tenants retain their existing right to a minimum of six months' security of tenure even if their tenancy agreement has no initial fixed term— for example, because it is simply a periodic tenancy— or the initial fixed term is for less than six months.
The amendment of the noble Lord, Lord Meston, intends to provide tenants with greater security by offering a minimum of six months' security at a time for each replacement tenancy. Clause 92 as it stands seeks to replicate tenants' existing security of tenure. It offers a minimum six months' security. Many landlords currently negotiate longer fixed term tenancies. The average completed length of residence of an assured shorthold tenant is about two-and-a-half years. This has advantages for both parties. The tenant has longer security and the landlord retains a good tenant. The last thing a sensible landlord would want to do is to evict a good tenant and incur the hassle and expense of finding a new one who may turn out to be not as good.
Indeed, when a fixed term tenancy comes to an end it is often the case that the landlord will offer a further fixed term rather than a periodic tenancy. Conversely, it 1869 may be convenient to both parties to extend the tenancy beyond the fixed term by only a relatively short period; for example, two or three months. The amendment would prevent such flexible arrangements taking place because the six-month period would bite immediately.
Many landlords have very real fears about not being able to gain possession of their property when they need to. The amendment would compound those fears. It is right that tenants should have a minimum period of security from the beginning of their original tenancy and we consider six months strikes the right balance. However, it would not be right to say that if a replacement tenancy is created, a further six months' security is warranted. This would deter a landlord from creating a replacement tenancy if there is the slightest chance he will need to repossess his property before six months have expired.
With that explanation of the clause and the negative impact of the amendment, I hope that the noble Lord will withdraw the amendment.
§ Lord MestonI am grateful to the Minister for his explanation. I need to think quite hard about this matter because, in my mind, it begs the question as regards what is the point of a replacement tenancy. It is a complex area. I wish to reflect and reserve the right to come back at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 92 agreed to.
Clause 93 [Applications for determination of rent: time limit]:
§
Baroness Hollis of Heigham moved Amendment No. 242J:
Page 63, line 15, leave out subsections (2) and (3) and insert—
("(2) In subsection (1) after "may" insert "at any time during the original tenancy or any replacement tenancy until such time as the landlord serves a notice under section 13(2).
(3) In subsection (4) (a) after "application" insert "and, provided there is no change of circumstances, the determined rent shall remain for such period between one and two years as the rent assessment committee shall direct, regardless of any change of tenant or landlord.".").
§ The noble Baroness said: All opposition amendments are important but we judge this to be among the more important. It seeks to protect from eviction tenants who are trying to reduce their rent to a figure regarded as a fair market rent by the rent officer. The Bill provides tenants with powers to bring down the rent. However, if they exercised those powers, they could be penalised by the landlord and would not be protected.
§ Perhaps I may give some background. In the late 1980s, Sir George Young decontrolled private rents saying that housing benefit would take the strain. As a result, as we know, housing benefit increased by something like 200 to 300 per cent. The Treasury then kicked in and sought to control housing benefit, despite the fact that it is supposed to be taking the strain, by limiting it to what the rent officer regarded as the fair market rent, given the needs of the family. If the rent was excessive or the tenant was in over-costly or 1870 over-large accommodation, the rent officer would certify only a proportion of that rent as being legitimate for housing benefit.
§ The position was toughened by further housing regulation changes which further cap the amount of housing benefit that a tenant may receive after reference to the rent officer. As a result, at present in 40 per cent. of all cases referred to the rent officer, housing benefit covers less than the full rent. On average in London, it is by just less than £20 per week. If someone living in London who is receiving income support wishes to keep his home he must take that £19 and top-slice it off an income support of £45 if he is a single person. That leaves him with something like £26 per week on which to live, even though £45 is regarded as the appropriate figure, as indicated by the amount of income support. Therefore, he has a choice of home and poverty or no home and a little less poverty.
§ In consequence, local authorities have been encouraging shorthold tenants who find themselves in that position to apply to the rent assessment committee to bring down the rent so that it is closer to what the rent officer said was appropriate. But they dare do that only if they know they will not be visited by eviction as a result; hence this amendment.
§ The amendment achieves two things. First, it allows shorthold tenants greater flexibility when they seek a determination of the rent. It means that they are not permitted to seek a determination only at the beginning of the tenancy but are able to do so if their circumstances change. For example, they may become unemployed and have to claim housing benefit. They may then find that housing benefit does not cover the full cost of the rent because the rent officer has said that the rent is excessive and well above market value. In the circumstances in which the tenants' conditions have changed they should have the flexibility of being able to seek a rent assessment in the course of that tenancy. That seems only reasonable because circumstances may change and the issue of rent may become more significant.
§ Secondly, once the rent has been determined by the rent assessment committee, it should not last just for six months because, if so, the tenant will be evicted. It should apply for between one and two years, as the rent assessment committee determines. That is not excessive. It still means that the landlord can raise the rent probably after a year, and at worst two years, in line with inflation. He need be no worse off. But it means that there can be no incentive for the landlord to evict the tenant who has tried to bring down the rent because he knows that the next tenant coming in will still enjoy that same rent. Therefore, the landlord will lose the incentive to evict when the tenant has sought to bring down the rent to what the rent officer has said was a fair rent for housing benefit purposes.
§ I use a phrase much favoured by the Minister when I say that we believe that this achieves a fair balance. The landlord still receives a fair rent and will know that after a year to two years he can raise the rent in line with inflation and will be no worse off. But it prevents his having the power, first, to exploit the tenant, and, 1871 secondly, if the tenant uses his legal remedies, to victimise him for doing so. That is the purpose of the amendment. I beg to move.
§ Lord MestonI should like to express my support for the amendment on the simple basis that Clause 93, as I understand it, simply introduces an arbitrary limitation on the right to apply to a rent assessment committee. It limits the ability of a tenant with a new assured shorthold tenancy being able to refer an excessive rent to the committee under Section 22 of the Housing Act 1988. The limited security of tenure afforded by an assured shorthold tenancy will be further eroded by that loss of right to refer to the rent assessment committee. Some tenants will be vulnerable to the threat that, as a result of attempting to bargain for a more affordable rent, their shorthold tenancy agreement will not be renewed.
The opposition to Clause 93 is supported by the Law Society which responded to the White Paper produced by the Government by pointing out, quite correctly, that tenants are, broadly speaking, in the economically weaker position and tend to be less commercially aware, and are therefore more vulnerable. They are in greater need of protection, not only in terms of being aware of their position but also in terms of protection against demands for unreasonable rents by landlords who seek to benefit in areas of housing shortage.
There are already hurdles within Section 22(3)(a) and (b) of the 1988 Act which serve to limit the number of cases in which application to a rent assessment committee can be made. In the White Paper, the Government, as I understand it, sought to justify that provision by saying, "Well, the existing rent assessment committee regime is little used". However, the other hurdles which already exist must be taken into account when drawing inferences from the limited number of applications to the rent assessment committee. I suggest that the clause as it stands will do a great deal of harm and, potentially, very little to assist tenants or, indeed, landlords. I suggest the tenant's right to refer an excessive rent to a rent assessment committee should be preserved.
§ Lord Mackay of ArdbrecknishI am now back in my more customary position of addressing amendments proposed by the noble Baroness, Lady Hollis. When I read the amendment before us, I have to say that it seemed to me that she still hankers after the days of rent regulation, as indeed, according to a recent survey by the Roof magazine, do 93 per cent. of her colleagues in local government.
I have to confess that I have some difficulty in reconciling the amendment with the belief that I thought, throughout the time we have run in Committee this afternoon, was shared by us all; namely, that we need to sustain a healthy private rented sector.
De-regulation of the private rented sector since 1988 has allowed landlords to earn a reasonable return on their investment. Research shows that the average gross return from a shorthold tenancy is now about 9 per cent. From that, management and maintenance costs and rent 1872 lost from arrears and voids must be deducted. I do not regard that as excessive. Indeed, research shows that only about two-fifths of lettings have been acquired mainly for investment purposes.
Assured shorthold tenants were given the right in 1988 to refer to a rent assessment committee to provide a safeguard against unreasonably high rents as the shorthold tenancy and market rents were introduced. As Members of the Committee are no doubt aware, the Government originally proposed in the housing White Paper to remove that right on the grounds that it was little used. In 1990 there were just over 400 referrals from 140,000 assured tenancies—less than 1 per cent. Referrals are still running at the same level; that is, about 1,600 a year from over 800,000 assured tenancies. However, in the light of responses to that proposal, we decided to maintain shorthold tenants' right of referral during the first six months of the original tenancy. Six months provides a reasonable opportunity for the tenant to make an application while giving the landlord the certainty that an appeal cannot be made after the deadline has passed.
I believe that the noble Baroness suggested that extending the role of rent assessment committees would save the Government substantial amounts in housing benefit expenditure. However, I should point out that, since last October, rent assessment committee determinations have not been binding for housing benefit purposes. Housing benefit is calculated on the basis of rent officers' determinations, even where a committee has made a determination. The rent agreed by the rent officer for benefit cases may be below the contractual rent for various reasons—for example, the property may be too large or it may be too expensive, despite the fact that it is the market rent for that property. So even if a fixed, contractual rent at market level is there, there is no guarantee that housing benefit will meet it.
The legislation was changed last October in the light of evidence that landlords and local authorities were encouraging tenants to refer the rent to a rent assessment committee in the hope of obtaining a higher rent for housing benefit purposes. We have therefore already dealt with one of the issues which the amendment seeks to address.
Similarly, I cannot accept the proposal that a committee should set a rent for a period of more than a year. The landlord must have the certainty that he can increase the rent in line with market movements. It is unlikely that a landlord would be able to get a rent above the market rent from a new tenant. If he puts up the rent and gets a tenant out, he is unlikely to find a new tenant if that rent is way above the market level. Indeed, he is unlikely to find a new tenant who will take on that tenancy.
Therefore, I do not believe that there is an incentive here to evict as suggested by the noble Baroness. The tenant will have the opportunity to negotiate with the landlord the new rent for any replacement tenancy. He will be able to take account of any determination by the committee during the original tenancy.
1873 If the original tenancy lapses into a periodic tenancy, the tenant will have another opportunity to apply to the committee for a determination if the landlord serves a notice of a rent increase under Section 13 of the Housing Act 1988. Any such determination will have effect for a year. If the landlord serves a further notice after a year, the tenant can apply to the committee again.
I believe that our proposal in Clause 93 provides adequate protection for the tenant while giving the landlord the confidence to let the property in the knowledge that he can at least cover the costs of letting and perhaps also make a small return on his asset. With that explanation, I hope that the noble Baroness will feel able to withdraw the amendment.
§ 5.45 p.m.
§ Baroness Hollis of HeighamI am most disappointed by the Minister's reply. I really feel that he failed to engage with what it is like "out there". Because he calls something a market rent, the noble Lord assumes that any rent that follows represents a fair, negotiated balance of power, if you like, between landlord and tenant. That is not the situation. For the most part, it is a landlord's market out there. It is tenants who find it difficult to get reasonable, clean and relatively salubrious accommodation, especially if they have children or are regarded as "DSS".
The same research to which the Minister referred earlier shows that the two biggest groups to which private landlords will not let are, on the one hand, young people, people with children and, on the other hand, "DSS" families. Most landlords will not let to those groups. But they are precisely the groups that are most at risk of falling into arrears if housing benefit does not cover the rent; most at risk of eviction if they fall into arrears; and, therefore, are most likely to add to the growing pressure of homelessness on local authority stock. That is the world out there. It is not the world as the Minister wishes it to be, with markets being somehow a matter of fair negotiation; it is the world of supply and demand where the landlord has most of the cards, and certainly the trump cards.
I do not recognise the response the Minister gave to those two arguments. We argued that it was not unreasonable that because a tenant's situation may change he may appeal to a rent assessment committee. The Minister did not answer my next point. The tenant may suddenly become unemployed and therefore need to apply for housing benefit. He may find that housing benefit will not cover his rent. We need to protect a tenant in that situation; otherwise he may be evicted.
The Minister made much of the point that landlords should be in a position to raise their rents after six months. He said that they were in a market situation and would only attract tenants if their rents were reasonable. That is not the case. People may well accept such accommodation because the alternative is to sleep rough, sleep in a car or go to a hostel. The Minister simply does not know what housing stress is like out there. Once a tenant has accepted accommodation he may hope to negotiate a lower rent but he may find that he cannot do so.
1874 The other argument the Minister offered was that the landlord needed to have the right to raise his rent after six months. Why is that? I thought this was the Government of low inflation and that we had inflation of 2.5 per cent. Why is it that landlords, peculiarly, have to have the right to impose two price increases in a year, even when the rent assessment committee says that it is not reasonable?
This is a simple amendment. It allows the tenant to have the rent reviewed, not just at the beginning of the tenancy, but also later. If the rent is fair, the landlord has nothing to worry about. It is only if the rent is excessive that the landlord has something to worry about. Are the Government really on the side of landlords who charge excessive rents, because that is what the Minister is saying? The amendment provides that if the rent assessment committee so judges it, the rent should be stable for a year to two years, thus protecting the tenant from being evicted for trying to exercise his rights under the law. Is the Minister saying he is on the side of the landlord who evicts the tenant for exercising his rights under the law? Is that what the Minister is saying? I wish to test the opinion of the Committee.
§ 5.52 p.m.
§ On Question, Whether the said amendment (No. 242J) shall be agreed to?
§ Their Lordships divided: Contents, 43; Not-Contents, 109.
1875| Division No. 2 | |
| CONTENTS | |
| Addington, L. | Methuen, L. |
| Archer of Sandwell, L. | Milner of Leeds, L. |
| Beaumont of Whitley, L. | MLshcon, L. |
| Berkeley, L. | Monkswell, L. |
| Ciffori of Chudleigh, L. | Morris of Castle Morris, L.[Teller.] |
| Dahrendorf, L. | |
| Dormand of Easington, L. | NicoI, B. |
| Dubs, L. | Plant of Highfield, L. |
| Geraint, L. | Redesdale, L. |
| Gladwin of Clee, L. | Richard, L. |
| Graham of Edmonton, L.[Teller.] | Russell, E |
| Seear, B. | |
| Shannon, E. | |
| Hamwee, B. | Stoddart of Swindon, L. |
| Harris of Greenwich, L. | Strabolgi, L. |
| Haskel, L. | Strafford, E. |
| Hollis of Heigham, B. | Thurso, V. |
| Howie of Troon, L | Tordoff, L |
| Jeger, B. | Turner of Camden, B. |
| Jenkins of Putney, L. | Wallace of Coslany, L |
| Lawrence, L. | White, B. |
| McNally, L. | Williams of Elvel, L. |
| Meston, L. | Winston, L |
| NOT-CONTENTS | |
| Addison, V. | Blatch, B. |
| Ailsa, M. | Boardman, L. |
| Ashbourne, L. | Boyd-Carpenter, L. |
| Balfour, E. | Brabazon of Tata, L. |
| Belhaven and Stenton, L. | Braine of Wheatley, L. |
| Berners, B. | Bridgeman, V. |
| Birdwood, L. | Brigstocke, B. |
| Blaker, L. | Burnham, L. |
| Cadrnan, L. | Mersey, V. |
| Caithness, E | Miller of Hendon, B. |
| Caldecote, V. | Milverton, L. |
| Carnpbell of Croy, L. | Monson, L. |
| Carmegy of Lour, B. | Monteagle of Brandon, L. |
| Carnock, L. | Montgomery of Alamein, V. |
| Carr of Hadley, L | Mottistone, L |
| Chesham, L. [Teller.] | Mountevans, L. |
| Clanwilliam, E. | Mowbray and Stourton, L. |
| Clark of Kempston, L. | Munster, E. |
| CoJwyn, L. | Murton of lindisfame, L. |
| Courtown, E. | Nelson, E. |
| Craigavon, V. | Nickson, L. |
| Cranborne, V. [Lord Privy Seal.] | Norrie, L. |
| Cranbrook, E. | Northesk, E. |
| Cumberiege, B. | O'Cathain, B. |
| Dixon-Srnith, L. | Orr-Ewing, L. |
| Dudley, E. | Oxfuird, V. |
| Eccles of Moulton, B. | Pearson of Rannoch, L. |
| Elliott of Morpeth, L. | Pender, L. |
| Elton, L. | Prentice, L. |
| Feldman, L. | Rawlings, B. |
| Gardner of Parkes, B. | Rees, L. |
| Geddes, L. | Renton, L. |
| Gisborough, L. | Romney, E. |
| Hamilton of Dalzell, L. | St Davids, V. |
| Harding of Petherton, L. | Sanderson of Bowden, L. |
| Harrowby, E. | Seccombe, B. |
| Haslam, L. | Selsdon, L. |
| Henky, L. | Shaw of Northstead, L. |
| Holderness, L. | Shrewsbury, E. |
| HolmPatrick, L. | Soulsby of Swaffliam Prior, L. |
| Howe, E | Stewartby, L. |
| Inglewood, L. | Strathclyde, L. [Teller.] |
| Kinnoull, E. | Sudeley, L. |
| Layton, L. | Swinfen, L. |
| Lindsey and Abingdon, E. | Thomas of Gwydir, L. |
| Long, V. | Thomas of Swynnerton, L. |
| Lucas, L. | Tollemache, L |
| McColl of Dulwich, L. | Trefgarne, L. |
| Mackay of Ardbrecknish, L. | Trumpington, B. |
| Mackay of Clashfem, L. [Lord Chancellor.] | Tugendhat, L. |
| Wakeham, L. | |
| Mackay of Drumadoon, L. | Wilcox, B. |
| Macleod of Borve, B. | Willoughby de Broke, L. |
| Massereene and Ferrard, V. | Wise, L |
| Merrivale, L. | Wynford, L. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.1 p.m.
§ Clause 93 agreed to.
§ Clause 94 [Mandatory possession for non-payment of rent: reduction in arrears required]:
§
Lord Meston moved Amendment No. 242JA:
Page 63, line 31, at end insert ("; and
(c) at the end of the Ground there shall be inserted—
provided that no order for possession shall be made under this ground if a court is satisfied that—
§ The noble Lord said: Clause 94 deals with the grounds for making a possession order and amends the mandatory rent arrears ground (Ground 8) to enable landlords to take action when the level of rent outstanding is eight weeks in the case of weekly or fortnightly tenancies, and two months for monthly tenancies. It is a reduction of five weeks in the case of weekly or fortnightly tenancies, and of one month in the case of monthly tenancies.
§ One wonders what is the case for the amendments brought about by Clause 94. Having read the debates in another place, I have been unable to find a clear justification for Clause 94. If there were clear evidence of substantial difficulties experienced by landlords one might understand the case for Clause 94; but I am not aware of such evidence. All the clause does is to put an increased number of tenants at risk. That is not to say that one does not sympathise with landlords whose tenants will not or cannot pay.
§ However, there are in practice two problems which the amendment seeks to address. First, delay in obtaining housing benefit is the basis of the first limb of the amendment which I propose. If a proper claim to benefit which would help to meet some or all of the arrears is still pending when a possession claim comes to court, surely it is right that the courts should have a discretion not to order possession. Likewise, if there is an arguable set-off. That is the second problem in practice.
§ The amendment ensures that landlords are not able to recover possession where the tenant has claimed compensation by way of a counter-claim—for example, for disrepair, harassment or any other breach of the tenancy agreement. An amendment in similar terms was discussed at Report stage in another place. The Government's response at that stage was that there was a potential for the amendment to lead to long and protracted disputes about the cause and extent of the counter-claim; and, further, that the existing state of the law catered sufficiently well for the question. It is that latter proposition which I challenge. Without the amendment it will remain uncertain whether a tenant with a counter-claim for damages can resist a Ground 8 possession claim. The question was specifically left open by the Court of Appeal in a case reported in 1993, Mountain v. Hastings. The landlord will still have available to him the discretionary ground on which possession can be claimed under Ground 10 of the legislation. That would provide for any amount of arrears to be the basis for a claim for possession.
§ I suggest that mandatory orders for possession should be made only where there is clearly a substantial breach of the tenancy agreement. If there is any doubt about there being a substantial breach, or about the ability of the tenant to rectify that breach wholly or in part—for example, by way of housing benefit when it arrives; or by having a good, arguable counter-claim or set-off—the tenant quite properly should have the benefit of the doubt. I beg to move.
§ Baroness Hollis of HeighamI support the amendment. One of the increasing causes of homelessness, as we know, is eviction from the private 1877 rented sector, usually, though not always, associated with failure to pay rent. Increasingly that failure to pay rent may be due to local authority errors or delays, for good and bad reasons, in processing housing benefit. A good reason, for example, is where the local authority needs quite detailed information and the employer refuses to co-operate.
Those delays mount up. The Minister may say that payment may be made on account. Nonetheless, anyone who has had to handle housing benefit will know that that is not a satisfactory way forward, in particular if there is doubt about the nature of employment. If a payment on account is made, one cannot subsequently recover it. The local authority is then in difficulties with its district auditor. I would counsel the Minister against encouraging local authorities to go down that route as an easy option.
What are we now seeing? Perhaps we shall cover the issue more fully during the debate on clause stand part. First, we are seeing increased risks of delay in paying housing benefit in particular as local authorities are being asked, rightly, by the Government to investigate more thoroughly to eradicate fraud. Secondly, we are seeing payment of housing benefit four weeks in arrears. Thirdly—it is a point that I do not believe has been mentioned—the Government propose to send out to compulsory competitive tendering the payment of housing benefit. If the tender is successfully won by a private firm it will introduce temporary chaos into the system, thus increasing the likelihood that housing benefit will be delayed and the tenant will risk eviction through arrears. Yet at the same time that that is happening, the Government seek to allow landlords to evict tenants after eight weeks instead of 13.
We all agree, surely, that tenants need protection from eviction where the cause of that eviction—for example the non-payment of rent—is through no fault of their own. The amendment goes some way towards that protection. It allows a tenant to have his eviction delayed where there is a prospect of housing benefit being paid to cover arrears in rent; or where he may expect other payments, such as compensation, to have the same effect.
We need this amendment because at present even if the courts believed that that eviction is unfair they cannot stop it. They have to grant possession. It is mandatory. The amendment allows that mandatory provision to become discretionary in the light of the circumstances: that is, that there is a reasonable possibility for the tenant to pay. I warmly support the amendment.
§ Lord StrabolgiI should like to support everything that has been said. There is even more cause for concern since I understand, as my noble friend Lady Hollis said, that there is a proposal to pay housing benefit under the Housing Benefit (General) Amendment Regulations four weeks in arrears. That will mean even greater risk to tenants since under most tenants' contractual obligations rent is almost always required in advance. With some tenants permanently four weeks in arrears, even a short-term unexpected change could result in a claimant being eight weeks in arrears. If the 1878 Government intend to press ahead with the payment of housing benefit in arrears, it is surely essential that the mandatory possession ground is not simultaneously reduced from three months to two months. I support what has been said.
§ Lord Mackay of ArdbrecknishI shall deal first with the part of the amendment of the noble Lord, Lord Meston, concerning housing benefit. I imagine that he fears that tenants who have made an as yet undetermined claim for housing benefit may be evicted through no fault of their own. I wish to assure the noble Lord that his fears are misplaced. Even under the new limits proposed in Clause 94, a tenant is unlikely to be evicted until at least three to four months have elapsed since he first started to get into arrears. Perhaps I may explain why.
First, the tenant will have to be at least eight weeks in arrears before the landlord can start any action. The landlord must give the tenant two weeks' notice of proceedings. It will then take at least a month for the case to reach court. A court order can only be made if eight weeks' arrears still exist at the time of the hearing. The whole process will take at least three or four months, which I submit is a reasonable period for a responsible tenant to sort out his financial affairs.
I heard the concerns about the implications of change for tenants whose housing benefit claims are subject to delay. However, under social security legislation, housing benefit claims should be processed within the statutory 14 days of all the required information being received. Department of Social Security statistics show that over 80 per cent. of claims are now processed within this deadline and performance is steadily improving.
§ Baroness Hollis of HeighamI wonder whether that is the correct statistic. The Minister has used it several times. I may be working on last year's figures, but my information is that the target is for 80 per cent. of housing benefit payments to be made within 14 days and that 70 per cent. of local authorities meet it. It is not as the Minister suggested.
§ Lord Mackay of ArdbrecknishI repeat what I said. The statistics we have show that over 80 per cent. of claims are now processed within the deadline of 14 days. The noble Baroness mentioned in her contribution that if the deadline is not met local authorities have a statutory duty to make payments on account where the delay is not the fault of the tenant. Although the noble Baroness warned me against using that argument, I still believe that it is valid. If the local authorities are fearful of using that responsibility because they fear that the district auditor may challenge them, it gives them a motive for ensuring that they meet the target of the statutory 14 days.
The Department of Social Security has strengthened its guidance as recently as April, to remind local authorities of their legal duties to make payments on account. Housing benefit claimants should therefore not be affected by the change.
1879 The noble Lord, Lord Strabolgi, raised the question of new claimants and claimants who move having their housing benefit paid wholly in arrears from this October. The change will not affect their entitlement to housing benefit or the frequency of benefit payments. Most people coming on to benefit will have already received some kind of income, such as final wages, which they can use to pay their rent before they are due any benefit. Eighty per cent. of housing benefit applications are delivered within 14 days and I cannot see the situation beginning to get near the eight weeks, let alone the eight weeks plus the two weeks and the month it takes to get to court before matters can be sorted out.
Local authorities must also ensure that the method and frequency of payments suit the reasonable needs of the tenant. They have wide powers to pay housing benefit direct to the landlord. They have discretion to make direct payments if the tenant requests it or if it would be in the best interests of the tenant. They must make payments direct if the tenant is eight weeks in arrears. Recent guidance from my department recommends them to give serious consideration to direct payments if there are about six weeks' arrears. We would therefore expect that where the tenant is receiving benefit and is in arrears with his rent, benefit will be paid direct to the landlord long before the case gets to court. A recent sample survey suggests that some 70 per cent. of payments are made direct to the landlord.
The landlord is contractually entitled to his rent. Furthermore, his lender will not consider his monthly loan or mortgage repayments to have been repaid just because his tenant's housing benefit may be in the pipeline. The amendment would enable a tenant to avoid a possession order by making an application for housing benefit before the court hearing, even though he knew that he would not be eligible for benefit. That cannot be right.
Perhaps I may turn to the other part of the amendment, which seeks to prevent the court from making an order for possession if it is satisfied that the tenant has an arguable set-off against the unpaid rent of an amount of liquidated or unliquidated damages capable of reducing the rent outstanding to below the amounts claimed. The noble Lord, Lord Meston, is concerned about cases where a landlord fails to meet his repairing obligations. But tenants have a common law right to undertake repairs to the property where the landlord is in breach of his repairing obligations and to recover the costs by deduction from the rent, unless there is an express term in the tenancy agreement to prevent that. The court would be able to take this into account as a defence where the landlord is seeking possession under Ground 8 and may decide that no or insufficient rent arrears exist to grant an order for possession.
Tenants also have an equitable right to set off against rent due any damages, whether liquidated or unliquidated, for breach by the landlord resulting from disrepair, provided the damages relate to the property on which the rent is due and there is no express term in 1880 the tenancy agreement to prevent that. The court would be able to take into account such a counterclaim by the tenant in deciding whether to grant the landlord a possession order under Ground 8. But requiring the court to offset liquidated or unliquidated damages against rent arrears would encourage tenants to counter-claim for damages due to disrepair in all Ground 8 cases. That would lead to long and protracted disputes and create so much uncertainty that landlords would be deterred from letting property.
The Committee will be aware of the recent Law Commission report on the landlord's responsibility for the state and condition of property. We are considering it carefully and will publish our response in due course. It will cover some of the ground which concerns the noble Lord, Lord Meston. On the basis of what I have said about the housing benefit system and Ground 8, I hope that he will withdraw his amendment.
§ 6.15 p.m.
§ Lord MonkswellI wish to question the Minister on one point raised by the noble Baroness, Lady Hollis. He gave a glowing account of how admirably administered housing benefit was and how quickly it was paid. As I understand it, the statistics he quoted were on the basis of all the relevant information being available to assess the benefit claim. One of the questions which my noble friend Lady Hollis raised concerned the situation where the tenant had provided all the information but the local authority was not in a position to complete the assessment because of other information which was required from employers.
Can the Minister advise the Committee whether there is any legal duty on employers to provide such information, which the tenant may not have? It must come from the employer. Is there a legal duty on the employer to provide that information? Also, is there a time limit on the delay which the employer could cause in providing the information required?
§ Lord Mackay of ArdbrecknishThe noble Lord is right that the provision is for 14 days after all the required information has been received. It could be no other than that. I am sure that he agrees that the tenant has therefore an obligation to ensure that all the relevant information is received. We now turn to the employer. In the case postulated by the noble Baroness, if the employer were responsible for the delay, what would the situation be? For most of the afternoon the landlord has been the wicked fairy, but we appear to have moved on and now the employer is the wicked fairy. There is not much change in the historic position of the Labour Party on wicked fairies.
In the case of housing benefit, most of the information comes from the tenant. If a tenant has given all the information that he or she can give, the question of payment on account immediately arises. That is the position. I noticed the noble Baroness throwing her hands up in the air. If a tenant has given accurate information about his employment, and even if the employer is dilatory in backing that up, I cannot believe that the employer will do other than present evidence that will simply back up the information that the tenant 1881 has already given. In those circumstances, I cannot believe that the district auditor would find that the local authority had given a wrong payment.
§ Lord MestonI shall resist the temptation to identify the good and bad fairies in this debate. I am grateful for the support I received from the noble Baroness, Lady Hollis, and from the noble Lord, Lord Strabolgi.
My hope was that the Minister would make clear at this stage the underlying case for Clause 94. We may have to wait for the debate immediately following. Whether or not housing benefit delays happen, or should not happen, is by the way. In practice there are delays in providing housing benefit. I have evidence of that from practitioners in this field. At a later stage I wish to reinforce that evidence by introducing an amendment along similar lines.
So far as the second part of the proposed new clause is concerned, I remember sufficient landlord and tenant law to know the common law right and equitable rights to which the Minister referred. However, there still appears to be an uncertainty in the law in that, as I said in opening, the Court of Appeal has apparently left open the question as to whether a tenant with a counterclaim for damages can resist a Ground 8 possession claim. That again is something I wish to research further.
I certainly challenge the Minister's suggestion that this amendment would tempt a tenant to raise a specious set-off when confronted with a claim for rent arrears and a Ground 8 possession claim. To avoid that, it may be that I should return at a later stage and, instead of using the expression, "an arguable set-off", use an expression such as, "a reasonably arguable set-off'.
My remaining concern is that Clause 94 relates to mandatory orders for possession. Some care must be taken on the face of the Bill before abbreviating the period of arrears that must arise before a mandatory order can be made. These amendments are designed to mitigate—and only to mitigate to some extent—the otherwise drastic effect of Clause 94. I reserve the right to come back on this matter. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 94 shall stand part of the Bill?
§ Baroness Hollis of HeighamI wish to oppose the Question that Clause 94 stand part of the Bill, as indicated in the names of my noble friend Lord Dubs and the noble Lord, Lord Meston.
I remind the Committee of the cumulative pressures surrounding housing benefit that we now see building up. I should like to bring together a whole series of different issues, some in different departments, all of which bear on the issue. I ask the Minister: do the Government really understand the effect that all these interlocking and cumulative decisions have on the housing market?
First, the Bill reduces the mandatory grounds for possession from three months to two months (from 13 weeks to eight). The court has no discretion; it must grant possession. Therefore, tenant insecurity is being 1882 increased. Secondly, however, the Government are introducing this measure at the very time when poorer tenants are experiencing real cuts in housing benefit, partly because of the new regulations. We are likely to find a growing percentage, beyond the existing 40 per cent., of those who now find that housing benefit does not cover their rent. The percentage is increasing.
In addition to cuts in housing benefit, we shall also see further delays in payment of housing benefit. I accept that in some cases that may be due to the inefficiency of local authorities. But before the 14-day clock can start ticking, all the information has to be collected.
The Minister was baffled as to why any tenant should not be able to produce identical information to an employer. The Minister does not seem to appreciate that something like 40 per cent. of all workers are now in part-time, casual, contract or shift work, and the percentage is growing. Those are precisely the sorts of low-paid occupations in which people are likely, while in work, to claim housing benefit. The man or woman in a 38-hour or 40-hour full-time job will almost certainly be earning enough to float him or her off housing benefit levels. That is not always the case, but it is usually so. It is precisely the poorer worker in the part-time, casual, low-paid or irregular job who is likely to be claiming housing benefit and is least likely therefore to be able to produce the information for the statement of earnings for the four prior weeks, and where the local authority will rightly need corroboration from the employer as to average earnings. That is what it is like out there when you are seeking work. This week a person may receive £60; in another week it may be £80, and in another £72. The local authority has to make a judgment in order to assess housing benefit. Of course the information has to be corroborated by the employer. In any case, the employee may very well not have all the appropriate records. So delays arise as a result of the need to collect information.
Another reason why delays occur is that local authorities have, quite rightly, been made aware of the extent of landlord fraud. Mr. Lilley seems to think that housing benefit fraud presently accounts for some £1 billion a year. The latest information to the Select Committee on Social Security suggests a figure of nearer £2 billion a year. Almost all that is landlord fraud—claiming, for example, for 35 tenants, nine rooms and the like. Local authorities agree with the Government that such fraud should be stamped out, because a penny mis-spent is a penny denied somewhere else. But investigation of fraud takes time; and the more it is investigated the more delays will occur. Already, some London boroughs are refusing to pay tenants housing benefit while the landlord is being investigated for fraud.
What would the Government have the local authority do—particularly when the cheques are being paid direct to the landlord? Would they have tenants stop the cheques and risk eviction, or pay the cheques and let the taxpayer risk fraud? What choice would the Government have us make? They have to answer that question in dealing with this clause.
1883 We see cuts and delays in housing benefit; we are to see housing benefit paid four weeks in arrears; and by the time the Bill becomes law another measure will have made the administration of housing benefit catastrophic—namely, the exposure of this service to compulsory competitive tendering. Private companies which may gain the tender, will have no experience and will be in a learning curve. We shall see error, fraud and problems of take-up all being magnified in the process of handover.
So tenants can be evicted more quickly; housing benefit is to be paid in arrears; we see increased delays in the ability of local authorities to be sure that they are paying the right sum; and we see cuts in the amount of housing benefit being paid. Taken together, those factors increase the risk of tenants being evicted by landlords for non-payment of rent.
We are seeing increased insecurity in the private rented sector; increased evictions from that sector; a growth in homelessness coming out of the private rented sector; and added pressure on the ability of local authorities to meet the needs of the homeless. None of that is necessary. This clause is not necessary. There is no evidence at all that we need Clause 94 in the Bill. If we removed it, we might produce a fraction more security in the housing benefit system. I move that the clause do not stand part of the Bill.
§ 6.30 p.m.
§ Lord Mackay of ArdbrecknishWe have already gone over some of this ground and I apologise if I do so again. Clause 88 amends Ground 8 of the Housing Act 1988 which requires a court to grant an order for possession of a property let on an assured tenancy when a specified level of rent arrears has accrued. The current level is at least 13 weeks or three months' rent, depending on whether the rent is payable weekly or monthly. That level of rent must be unpaid, both when the landlord serves notice of possession proceedings under Section 8 of the 1988 Act and at the date of the court hearing. Clause 88 will reduce that level to eight weeks or two months' rent.
The vast majority of tenants pay their rent on time and in full. However, our research shows that landlords are concerned that, although the Housing Act 1988 made it easier to recover possession of their property, they continue to have problems regaining possession when the tenant is in rent arrears. The noble Baroness argues the case from the point of view of the tenant. I ask her to consider for a minute what having a tenant in rent arrears, with no prospect of recovering the arrears, means for the landlord. One quarter of lettings are owned by a landlord with only one property. For those landlords, having a tenant who withholds the rent will be very difficult, particularly if they have a mortgage or loan to repay. Small landlords will only let property if they are confident that they can cover their loan or mortgage. They need the certainty that when a specific amount of rent arrears has accrued, they can get their property back.
1884 Even under the proposal in Clause 88, the tenant is unlikely to be evicted until at least three or four months have elapsed since he first started to get into arrears. Perhaps I may just explain the procedure "out there", about which, of course, I know nothing and where the noble Baroness is continually inviting me to look. Under the new proposal the tenant will have to be at least eight weeks (it was 13 weeks) in arrears before the landlord can start any action. The landlord must then give the tenant two weeks' notice of possession proceedings, so 10 weeks will now have elapsed. It will then take at least a month for the case to reach court. In fact, the average time is nearer three months. So should I be kind or unkind in this calculation? I shall be kind and take the month—just four weeks—though I point out to the Committee that it could easily take 12 weeks. Indeed, it is more likely to be nearer 12 weeks before the landlord and tenant have their day in court.
A court order can only be made if, at that point, eight weeks' arrears still exist. The whole process will take at least three or four months, if not more. I should have thought that that is a reasonable period for a responsible tenant to sort out his financial affairs.
I know that there are concerns about the implications of the change for tenants whose housing benefit claims are subject to delays. I have already covered that ground and have no desire to go over it again. But I do not believe that the noble Baroness has proved her case about the difficulties that might arise in regard to housing benefit. We all know that there is a certain amount of fraud in housing benefit. The Secretary of State, Mr. Peter Lilley, has spoken about it. We believe that it amounts to about £1 billion. The noble Baroness has quoted £2 billion, which is the figure now favoured by her party. That figure comes from the Select Committee of another place and is based on the evidence of one person extrapolating from the experience of one London borough. We do not believe that that is a fair and proper calculation. Our calculation is much more detailed. A great deal more work has been put into it. We reckon that the figure is £1 billion. But we are certainly happy to have on board the party opposite in our pursuit of fraud in the benefits system—in housing benefit and anywhere else. One landlord fraud is that there is no tenant. There cannot be an eviction if there is not a tenant to evict, so I do not feel that there is a huge problem so far as concerns that particular fraud.
This clause, reducing the period to eight weeks from 13 weeks and to two months from three months, provides a better balance between the interests of the landlord and tenant than do the current requirements, especially when account is taken of the two weeks' notice and the time taken to get to court. Then the tenant will usually ask the court for four weeks in which to find a new house. "Out there" the court usually grants the additional four weeks. At the end of the four weeks, if the tenant has not moved and still has not paid anything, the landlord has to apply for a bailiff's warrant. That may take another two or three weeks. So perhaps 36 weeks may elapse from the day the tenant stops paying rent. At any time during that period the 1885 tenant can deal with the problem of arrears. I should have thought that that is a fair and reasonable balance between the tenant and the landlord.
As I said, the small reduction helps the balance. It will give confidence to those people who currently have property they would like to let but who are fearful about letting it. We believe that, along with the other steps—this has to be looked at as a package—it will encourage further development of the private rented sector. The more properties in the private rented sector, the less may be the market rents in that sector. That is the way market forces work. I should have thought that the noble Baroness would welcome any step that we take to free up the market and get more houses on the market. That way we might see a reduction in the levels of rents which can be charged in certain areas, because shortage—supply and demand—is, of course, a major factor in the market.
I hope that the noble Baroness will withdraw her suggestion that the clause should not stand part of the Bill. If she does not do so and divides the Committee, I trust that those who support me—I am sure, the majority—will accompany me into the Lobby.
§ Baroness Hollis of HeighamPerhaps I may take up that last point. The Minister tries to put all the arguments in the one direction. He says that the Government's primary concern is to continue to strengthen the private rented sector. He points to the success of the past few years. What, of course, he should admit to the Committee (but he will not do so) is the reason for the success of the private rented sector. When we combine that fact with the information that the Minister continues to give—namely, that most houses that are rented are single houses owned by people who do not let anything other than one house—one realises that those houses are let because they cannot be sold. Why cannot those people sell the houses? It is because the Government's policies have wrecked the housing market for owner occupiers.
§ Lord Mackay of ArdbrecknishPerhaps the noble Baroness can tell the Committee where those people who want to sell their house will live while they rent the house to someone else?
§ Baroness Hollis of HeighamThey may be in the situation in which I have been. My parents died and I have one house which is shared with my brother and sister. In the past I have let it simply because I am unable to sell it in a housing market that has been destroyed by the Government. The moment that the housing market picks up, that house will come on the market for sale. That is the situation in which hundreds and thousands of people—hundreds and thousands—currently find themselves.
All the evidence shows that something like one-third or so of the new lettings that have come on the market in the past three years are the result of people's inability to sell. They have therefore gone on somewhere else and rented and, in turn, have let out their own home. That is what has been happening to the private rented sector. If the Minister had read the research on the matter, he would realise that the private rented sector will shrink 1886 as and when any confidence is restored in the market for purchase. I am sure that he is aware of that. His point that most people have only one house to rent is precisely evidence of the point I make.
The broader point is that in this Bill, in regulations, and in changes to housing benefit and the like, we have seen blow upon blow—those words are not in any way over the top—to the situation of the tenant in the private rented sector. We have seen something like seven or eight shifts in housing benefit regulations and the grounds for possession, every one of which is on the side of the landlord. That undermines the security of the tenant. Indeed the Minister's remarks earlier today seemed to suggest that, even when the landlord is fraudulent, the Government are willing to be soft on the landlord rather than deny him access to the flow of rental income from which he has to pay his mortgage.
There is a huge gulf between us. The Government are interested only in the landlord for whom the property is his income and not at all in the tenant for whom the property is his home. That is why the next government will reverse much of this legislation.
Clause 94 agreed to.
Clauses 95 and 96 agreed to.
§
Lord Meston moved Amendment No. 242JB:
After Clause 96, insert the following new clause—
AMENDMENT OF DATE WHEN SECURE AND ASSURED TENANCIES END
(" .—(1) In section 82(2) of the Housing Act 1985 (security of tenure) for "the tenant is to give up possession" substitute "possession is delivered up to the landlord".
(2) In section 7 of the Housing Act 1988 (orders for possession)—
(a) after subsection (6) insert—
(6A) Where the court makes an order for possession under this section the periodical tenancy ends on the date when possession is delivered up to the landlord in pursuance of the order."; and
(b) in subsection (7) for "date on which the order takes effect" substitute "date possession is delivered up to the landlord in pursuance of the order".").
§
The noble Lord said: The purpose of Amendment No. 242JB is to redefine the statutory ending of a tenancy. Under Section 82(2) of the Housing Act 1985 it is provided that,
Where the landlord obtains an order for the possession of the dwelling-house, the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order".
§ In reality—I know that we all claim to occupy the real world out there somewhere—possession proceedings are often used for rent collection. The landlord may obtain an order for possession for arrears of rent or for a breach of the tenancy agreement, but the tenant may then pay up and remedy the breach. Peace, if not harmony, is then restored. The tenant is allowed to stay and, by agreement, stays beyond the date stipulated under the possession order.
§ Under Section 82(2) of the Housing Act 1985, the tenant will lose the rights he held under his original tenancy agreement after the date the tenancy is deemed to end, and thereupon his status inevitably becomes uncertain until it is redefined either by agreement or by court proceedings. This amendment 1887 proposes that the tenancy should not be treated as having come to an end unless and until his actual departure delivering up the premises to the landlord. That would accord with practical reality and avoid the sort of artificial situation which can arise when a tenant stays on by agreement with his landlord. I beg to move.
§ Lord Mackay of ArdbrecknishThe proposed new clause tabled in the name of the noble Lord, Lord Meston, would extend the length of a secure or assured tenancy when a court has granted the landlord an order for possession until the tenant gives up the tenancy. Under existing legislation, the tenancy ends on the day the court order takes effect, or in the case of a suspended possession order, when the conditions of the suspended order are breached.
Court procedures will leave a tenant who is subject to a suspended possession order in no doubt about the seriousness of his position. The tenant will already have had an opportunity to make his case in court, and will know that if he breaches the condition of the suspended order, he will lose his home.
Where a court has determined that the landlord has a right to possession, I do not believe that it is right for the tenant to expect to enjoy the rights conferred by the tenancy beyond the date when the possession order comes into effect. Where the landlord is prepared to give the tenant another chance he may offer the tenant a new tenancy.
I understand from research—Rent Arrears in Local Authorities and Housing Associations in England (1994)—that almost without exception social landlords in arrears cases ask for suspended possession and, where agreements for payment are ratified in the court, those cases are monitored carefully for default. Only where arrangements break down irretrievably do the landlords consider using the final deterrent of eviction.
It cannot be right that if somebody is in arrears, has been taken to court and, for example, asked for time to pay the arrears, and the court agreed that the tenant should have that time and stipulated it, that from that point on the tenant should continue to have the rights of a tenancy. The tenancy should not carry on until the tenant leaves as a result, presumably, of not paying arrears. He forfeits his right to a tenancy until he makes good the rent arrears due. The amendment therefore is not sensible and I hope that the noble Lord will withdraw it.
§ Lord MestonHaving heard the Minister's reply—for which I am grateful—I cannot help feeling that perhaps we are not as far apart as his reply suggests. I am not talking of non-compliance with suspended orders; I am talking of orders where the statute provides the date on which the order takes effect and that determines the end of the tenancy. Nevertheless, the relationship between the landlord and tenant may continue for months, or even years. An artificial situation is created by the provisions of Section 82.
1888 I shall need to consider this matter further and consult with those more expert than myself. I reserve the right, therefore, to come back to it and in the meantime beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 6.45 p.m.
§
Lord Meston moved Amendment No. 242JC:
After Clause 96, insert the following new clause—
SUSPENDED POSSESSION ORDER NOT TO BE ENFORCED WITHOUT LEAVE OF THE COURT
(". In section 85 of the Housing Act 1985 and in section 9 of the Housing Act 1988, in each case after subsection (4) there shall be inserted—
(4A) Where an order for possession is suspended on conditions in accordance with subsections (2) and (3) and the order ceases to be suspended by reason of the conditions not being complied with, the order shall not be enforced more than two years after the order was made, without leave of the court.".").
§ The noble Lord said: This is a similar amendment to Amendment No. 242JB on an analogous point. The simple point, which I hope is self-explanatory, is that a suspended possession order should not be enforced without the leave of the court if it has lasted for more than two years. That would avoid the tenant finding himself in a sort of limbo with a suspended order hanging over him for an indefinite period of time with the risk of the landlord choosing, for good reason or bad, to activate stale orders.
§ The amendment does not prevent enforcement of orders which have been outstanding for more than two years; it simply requires that the court be asked to reconsider the matter before giving its leave to enforce. On such reconsideration the court can look at any fresh circumstances which have arisen on either side in the period of two years or more which must have elapsed. I beg to move.
§ Lord Mackay of ArdbrecknishThe new clause tabled by the noble Lord, Lord Meston, is concerned with protecting the interests of those who fail to comply with a suspended possession order from the courts.
The new clause appears to be designed to allow secure and assured tenants another opportunity to make their case to the courts when they have breached the conditions of a suspended order for possession under either Section 85 of the Housing Act 1985 or Section 9 of the Housing Act 1988.
Where a landlord has sought possession of a tenancy under any one of the various grounds where reasonableness has to be proved—for example, certain rent arrears grounds—the county court can decide to suspend the possession order so long as certain conditions are met. In the case of rent arrears, where the landlord's primary interest is in getting the arrears paid and the tenant back into regular rent payment, rather than in evicting him, the condition of the suspension may be that the tenant pays his current rent plus so much per week towards the arrears.
If payments are kept up, the possession order is never enforced; if not, the landlord may apply in writing to the court for the bailiffs to take possession of the 1889 property. The new clause would build in an extra procedural step at this stage in cases where two years had elapsed since the court had made the order, giving the tenant an opportunity for a further court hearing.
Therefore, if the rate at which the rent arrears are being repaid is such or the monthly rate is such that it is still ongoing after two years, the noble Lord's amendment would build in at that stage another procedural step for the landlord if the tenant decided to stop paying those arrears.
The amendment is unnecessary. The tenant will have had an opportunity to make his case. He will be aware of the position he is in; he will be aware of the agreement that was decided upon in order to suspend possession. The court already has the discretion, under the Housing Acts of 1985 and 1988, to suspend an order for a period which it considers fit, and if the tenant's circumstances change and he finds he is no longer able to comply with the terms of the suspension, he may apply to the court for the terms of the suspension to be varied. But the noble Lord's amendment would actually impose a further burden on landlords, requiring them to seek another court hearing in cases where a tenant breaches the condition of a suspended order just, say, two years and a day after the order has been made.
There must come a point at which a tenancy has come to an end, either when a possession order takes effect or where a suspended order is breached. It is up to the tenant, who has the rights under the tenancy, to ensure that he does not put himself in danger of losing his rights through the possession order taking effect or the suspended order being breached. The tenant will have ample opportunity at the court hearing to explain his position and to put his house in order in order to avoid these consequences. It is almost worth pointing out that if the landlord seeks a warrant of possession it is because the terms of a suspended order have been breached. In those cases the court still has the power to entertain an application by the tenant to suspend the warrant for possession.
It would not be sensible to accept the noble Lord's amendment. We should stay with the position we have at the present time. Perhaps it is worth saying as a postscript on this general subject that I understand that the forthcoming report of the noble and learned Lord, Lord Woolf, on access to justice will include proposals for the handling of housing possession cases through the courts. Perhaps it would be sensible to await publication of that report so that the Government and others have a chance to reflect carefully on its findings rather than to legislate in the way proposed by the noble Lord.
§ Lord MonkswellI am not a legal expert but there seems to be one situation which the Minister did not mention. Perhaps I may put it to him in order to get a response. If the landlord has a suspended order of possession and the tenant breaches that order, which would enable the landlord to take possession, but the landlord does not take possession, does the right of the landlord to take possession at the time of his choosing remain available to him? It would seem to be rather unfair if a tenant inadvertently or almost by agreement with the landlord technically breached the order but the 1890 landlord did not seek to obtain possession but held it over the tenant in some form of threat, that he would use it at a later stage. Could the landlord hold over the tenant that kind of threat, or, if the suspended order was breached, would he have to take possession?
§ Lord Mackay of ArdbrecknishI am in a little difficulty with the noble Lord's hypothetical question. Perhaps I may make sure that I understand it. He asks about the position where a landlord has a suspended possession. Let us say, for the sake of argument, that it involves paying rent arrears at so much a week or so much a month. Then, before the rent arrears are paid off, the tenant stops paying them. I think I am asked: must the landlord act immediately; and if he does not act immediately—if he lets a week or two elapse—what would happen? Could he let a week or two elapse and then decide to enact his possession? Perhaps he just wants to be sure that the tenant has really meant to stop paying the arrears.
I always find hypothetical questions about legal matters a little difficult. It is the case that if the landlord then decided to activate the situation but the tenant could not respond and the landlord had to get an order for the bailiffs, the court would still have the power to entertain an application by the tenant to suspend the warrant for possession. So before a warrant for possession was granted to the bailiffs, there could at least be an argument in court to allow the tenant to argue the case.
However, I think that much of this depends on the case before the court, if it comes to the court, and the intentions of the parties. There is no doubt that a tenancy can be revived—for example, if the arrears are paid. The situation then continues with the tenancy simply revived. Case law shows that it can revive.
I hope that I have answered the noble Lord's question. I shall read in Hansard what he asked and ensure that I have not misunderstood the question and that I have given him a reasonable answer to the situation he hypothecated.
§ Lord MonkswellI think the Minister has reassured me. However, perhaps I may clarify my example so that he may find it easier to read in Hansard tomorrow. The situation I envisaged was where a tenant was in arrears with rent and the suspended possession order was given on the basis that the tenant would start paying his rent on a particular date, which would have left some arrears. However, the tenant does not start on that date but starts perhaps a week or two later. The landlord then says, "Okay, I'll let it ride", and then at a future stage the landlord activates the suspended possession order—perhaps quite some time down the road—just because the landlord wants to obtain possession when in fact the tenant would have been an assured tenant if the suspended possession order was not available. That may help the Minister when he is considering tomorrow whether the exchanges we have just had resolve the problem.
§ Lord MestonI was not particularly reassured by the Minister's answer and it may be that I shall need to come back at a later stage rather than wait for the 1891 valuable reforms which are to be introduced on the recommendation of the noble and learned Lord, Lord Woolf.
The amendment is designed to prevent a possession order limping on for years and being held over a tenant, rather in the way described by the noble Lord, Lord Monkswell, or in other circumstances. The Minister criticised it for requiring an extra procedural step. I would prefer to describe it as a safety net. The amendment presupposes that the tenant has complied with the terms of the suspension for at least two years, and it is only in those circumstances that I suggest by the amendment that a landlord should not thereafter be enabled to go straight in and enforce the order without at least going back to the court for the court's sanction to enforce. The Minister said that the tenant is aware of the position. The tenant is, of course, aware of the original position but the court may not be aware of any change of circumstances. The amendment proposes a revision at least by the court of the circumstances of the original order and any developments since then.
§ I would wish to come back at a later stage with an amendment along these lines. Meanwhile, I beg leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ Clause 97 agreed to.
§ Schedule 7 agreed to.
Lord LucasI beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage resumes not before eight o' clock.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.