HL Deb 03 November 2004 vol 666 cc326-32

(1) For the purposes of this section an HMO is an "unlicensed HMO" if—

  1. (a) it is required to be licensed under this Part but is not so licensed, and
  2. (b) neither of the conditions in subsection (2) is satisfied.

(2) The conditions are—

  1. (a) that a notification has been duly given in respect of the HMO under section 62(1) and that notification is still effective (as defined by section 72(8));
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  2. (b) that an application for a licence has been duly made in respect of the HMO under section 63 and that application is still effective (as so defined).

(3) No rule of law relating to the validity or enforceability of contracts in circumstances involving illegality is to affect the validity or enforceability of—

  1. (a) any provision requiring the payment of rent or the making of any other periodical payment in connection with any tenancy or licence of a part of an unlicensed HMO, or
  2. (b) any other provision of such a tenancy or licence.

(4) But amounts paid in respect of rent or other periodical payments payable in connection with such a tenancy or licence may be recovered in accordance with subsection (5) and section (Further provisions about rent repayment orders).

(5) If—

  1. (a) an application in respect of an HMO is made to a residential property tribunal by the local housing authority or an occupier of a part of the HMO, and
  2. (b) the tribunal is satisfied as to the matters mentioned in subsection (6) or (8),
the tribunal may make an order (a "rent repayment order") requiring the appropriate person to pay to the applicant such amount in respect of the housing benefit paid as mentioned in subsection (6)(b), or (as the case may be) the periodical payments paid as mentioned in subsection (8)(b), as is specified in the order (see section (Further provisions about rent repayment orders)(2) to (8)).

(6) If the application is made by the local housing authority, the tribunal must be satisfied as to the following matters—

  1. (a) that, at any time within the period of 12 months ending with the date of the notice of intended proceedings required by subsection (7), the appropriate person has committed an offence under section 72(1) in relation to the HMO (whether or not he has been charged or convicted),
  2. (b) that housing benefit has been paid (to any person) in respect of periodical payments payable in connection with the occupation of a part or parts of the HMO during any period during which it appears to the tribunal that such an offence was being committed, and
  3. (c) that the requirements of subsection (7) have been complied with in relation to the application.

(7) Those requirements are as follows—

  1. (a) the authority must have served on the appropriate person a notice (a "notice of intended proceedings")—
    1. (i) informing him that the authority are proposing to make an application under subsection (5),
    2. (ii) setting out the reasons why they propose to do so,
    3. (iii) stating the amount that they will seek to recover under that subsection and how that amount is calculated, and
    4. (iv) inviting him to make representations to them within a period specified in the notice of not less than 28 days;
  2. (b) that period must have expired; and
  3. (c) the authority must have considered any representations made to them within that period by the appropriate person.

(8) If the application is made by an occupier of a part of the HMO, the tribunal must be satisfied as to the following matters—

  1. (a) that the appropriate person has been convicted of an offence under section 72(1) in relation to the HMO, or has been required by a rent repayment order to make a payment in respect of housing benefit paid in connection with occupation of a part or parts of the HMO,
  2. (b) that the occupier paid, to a person having control of or managing the HMO, periodical payments in respect of occupation of part of the HMO during any period during which it appears to the tribunal that such an offence was being committed in relation to the HMO, and
  3. (c) that the application is made within the period of 12 months beginning with—
    1. (i) the date of the conviction or order, or
    2. (ii) if such a conviction was followed by such an order (or vice versa), the date of the later of them.

(9) Where a local housing authority serve a notice of intended proceedings on any person under this section, they must ensure—

  1. (a) that a copy of the notice is received by the department of the authority responsible for administering the housing benefit to which the proceedings would relate; and
  2. (b) that that department is subsequently kept informed of any matters relating to the proceedings that are likely to be of interest to it in connection with the administration of housing benefit.

(10) In this section—

(11) For the purposes of this section an amount which—

  1. (a) is not actually paid by an occupier but is used by him to discharge the whole or part of his liability in respect of a periodical payment (for example, by offsetting the amount against any such liability), and
  2. (b) is not an amount of housing benefit,
is to be regarded as an amount paid by the occupier in respect of that periodical payment."

The noble Lord said: My Lords, it will no doubt be recalled that on Report we moved a group of amendments in response to amendments tabled by noble Lords to replace the no rent payment provisions in the Bill. In effect, our amendments were a synthesis of amendments tabled by the noble Baronesses, Lady Hamwee and Lady Maddock, and those tabled by the noble Baroness, Lady Hanham, and the noble Lord, Lord Hanningfield. However, in fairness, they were 11th hour in their nature and, in the circumstances, we agreed not to proceed with them in favour of working together on a final set of amendments to be tabled in good time for Third Reading.

I can confirm that government Amendments Nos. 13 to 15 and 17 to 19 are the result and a great example of that partnership working. It has been a tidying-up job, with the secret of success being down to close collaboration with other relevant parties. I take this opportunity to thank the noble Baronesses and the noble Lord, Lord Hanningfield, and express my gratitude for their close co-operation in bringing forward the amendments.

The amendments recognise the widespread concern expressed about the practical application of the provisions, in particular, the absence of clear decision-making procedures and responsibilities, as well as the potential retaliatory action by landlords for occupants withholding rent. We all agreed on Report that those potential problems could be solved by amending existing provisions to produce the effect that rent is payable but that a landlord who receives rent while operating an unlicensed HMO or other rented property could be liable to a penalty equivalent to any rent received during the period of the offence.

The residential property tribunal will be given the power to make a rent repayment order, imposing that penalty where it determines that an offence has been committed under Clauses 72(1) or 93(1). Also, the right to automatic possession in Section 21 of the Housing Act 1988 in relation to assured shorthold tenancies for unlicensed landlords is removed. A local housing authority will be entitled to make an application for such an order where it discovers that a landlord or managing agent is committing an offence and where housing benefit has been paid to that landlord during any period when such an offence was being committed. Such applications would not be restricted to cases where prosecution had been brought under Clause 72 or 93, but could also take place where the RPT was satisfied that an offence had been committed.

Tenants would also be permitted to make an application to the RPT for a rent repayment order where an order had already been granted to the local housing authority in respect of the same property, or where the landlord had been convicted of the offence. Such rent will be recoverable as an ordinary civil debt. The sanction proposed will help prevent a landlord from profiting from renting properties illegally, including cases where that would be at the expense of the public purse through housing benefit. It will also provide a civil sanction through the residential property tribunal for cases where potentially slow and resource-intensive action through the courts is impractical or not considered appropriate.

Amendments Nos. 15 and 19 remove the right to automatic possession in Section 21 of the 1988 Act in relation to assured shorthold tenancies for unlicensed landlords, unless they have a valid application or a temporary exemption notification pending with the local housing authority. That will have the effect of bringing licensing in line with similar provisions introduced in Part 6 in respect of the tenancy deposit scheme.

I have outlined the purpose of the amendments; I hope that it is clear. I return to my starting point, which was to say a big thank you to all those involved, who have enabled us to introduce a substantial body of amendments at this late stage. I hope that your Lordships' House will find the amendments beneficial. I beg to move.

Baroness Hanham

My Lords, there is nothing much to say, except that I am glad that we have managed substantially to improve this part of the Bill as a result of us all having some qualms about it. I am also grateful for the Government's co-operation and I know that people who were involved in letting arrangements are also pleased with the amendments.

Baroness Maddock

My Lords, my name is attached to some of these amendments; it was meant to have been attached to all of them, but, as we have discovered during the Bill's passage, trying to get your name on things does not always work.

I am grateful to the Minister for explaining the matter once again and especially for the time that has been taken to deal with it very constructively. We think that rent repayment orders are a much better approach and the suspension of Section 21 powers for a licence landlords is especially helpful, given the danger of retaliatory eviction.

The Minister will know that there is still concern that Section 21 powers will be reinstated as soon as the landlord makes an application for a licence. Unscrupulous landlords might seek to get round the provisions by submitting an application and moving to evict the tenant before the application is rejected.

I know that the Government are assuming that landlords are fit and proper until proved otherwise but, nevertheless, it would be helpful to have an assurance from the Minister that guidance will be issued making it clear that a local authority should decide that landlords who seek to exploit the situation that I described are not fit and proper and therefore refused their licence application. I should be grateful if the Minister could deal with that but, otherwise, I am very satisfied that we have managed to work together to produce something that I hope will be very helpful not only for tenants but for landlords.

Lord Bassam of Brighton

My Lords, I am sure that that is a matter that guidance will have to cover and I will ensure that that is the case.

On Question, amendment agreed to.

4.15 p.m.

Lord Bassam of Brighton moved Amendments Nos. 14 and 15:

After Clause 73, insert the following new clause—

"FURTHER PROVISIONS ABOUT RENT REPAYMENT ORDERS

(1) This section applies in relation to rent repayment orders made by residential property tribunals under section (Other consequences of operating unlicensed HMOs: rent repayment orders)(5).

(2) Where, on an application by the local housing authority, the tribunal is satisfied—

  1. (a) that a person has been convicted of an offence under section 72(1) in relation to the HMO, and
  2. (b) that housing benefit was paid (whether or not to the appropriate person) in respect of periodical payments payable in connection with occupation of a part or parts of the HMO during any period during which it appears to the tribunal that such an offence was being committed in relation to the HMO,
the tribunal must make a rent repayment order requiring the appropriate person to pay to the authority an amount equal to the total amount of housing benefit paid as mentioned in paragraph (b).

This is subject to subsections (3), (4) and (8).

(3) If the total of the amounts received by the appropriate person in respect of periodical payments payable as mentioned in paragraph (b) of subsection (2) ("the rent total") is less than the total amount of housing benefit paid as mentioned in that paragraph, the amount required to be paid by virtue of a rent repayment order made in accordance with that subsection is limited to the rent total.

(4) A rent repayment order made in accordance with subsection (2) may not require the payment of any amount which the tribunal is satisfied that, by reason of any exceptional circumstances, it would be unreasonable for that person to be required to pay.

(5) In a case where subsection (2) does not apply, the amount required to be paid by virtue of a rent repayment order under section (Other consequences of operating unlicensed HMOs: rent repayment orders)(5) is to be such amount as the tribunal considers reasonable in the circumstances.

This is subject to subsections (6) to (8).

(6) In such a case the tribunal must, in particular, take into account the following matters—

  1. (a) the total amount of relevant payments paid in connection with occupation of the HMO during any period during which it appears to the tribunal that an offence was being committed by the appropriate person in relation to the HMO under section 72(1);
  2. (b) the extent to which that total amount—
    1. (i) consisted of, or derived from, payments of housing benefit, and
    2. (ii) was actually received by the appropriate person;
  3. (c) whether the appropriate person has at any time been convicted of an offence under section 72(1) in relation to the HMO;
  4. (d) the conduct and financial circumstances of the appropriate person; and
  5. (e) where the application is made by an occupier, the conduct of the occupier.

(7) In subsection (6) "relevant payments" means—

  1. (a) in relation to an application by a local housing authority, payments of housing benefit or periodical payments payable by occupiers;
  2. (b) in relation to an application by an occupier, periodical payments payable by the occupier, less any amount of housing benefit payable in respect of occupation of the part of the HMO occupied by him during the period in question.

(8) A rent repayment order may not require the payment of any amount which—

  1. (a) (where the application is made by a local housing authority) is in respect of any time falling outside the period of 12 months mentioned in section (Other consequences of operating unlicensed HMOs: rent repayment orders)(6)(a); or
  2. (b) (where the application is made by an occupier) is in respect of any time falling outside the period of 12 months ending with the date of the occupier's application under section (Other consequences of operating unlicensed HMO: rent repayment orders)(5);
and the period to be taken into account under subsection (6)(a) above is restricted accordingly.

(9) Any amount payable to a local housing authority under a rent repayment order—

  1. (a) does not, when recovered by the authority, constitute an amount of housing benefit recovered by them, and
  2. (b) until recovered by them, is a legal charge on the HMO which is a local land charge.

(10) For the purpose of enforcing that charge the authority have the same powers and remedies under the Law of Property Act 1925 (c. 20) and otherwise as if they were mortgagees by deed having powers of sale and lease, and of accepting surrenders of leases and of appointing a receiver.

(11) The power of appointing a receiver is exercisable at any time after the end of the period of one month beginning with the date on which the charge takes effect.

(12) If the authority subsequently grant a licence under this Part or Part 3 in respect of the HMO to the appropriate person or any person acting on his behalf, the conditions contained in the licence may include a condition requiring the licence holder—

  1. (a) to pay to the authority any amount payable to them under the rent repayment order and not so far recovered by them; and
  2. (b) to do so in such instalments as are specified in the licence.

(13) If the authority subsequently make a management order under Chapter 1 of Part 4 in respect of the HMO, the order may contain such provisions as the authority consider appropriate for the recovery of any amount payable to them under the rent repayment order and not so far recovered by them.

(14) Any amount payable to an occupier by virtue of a rent repayment order is recoverable by the occupier as a debt due to him from the appropriate person.

(15) The appropriate national authority may by regulations make such provision as it considers appropriate for supplementing the provisions of this section and section (Other consequences of operating unlicensed HMOs: rent repayment orders), and in particular—

  1. (a) for securing that persons are not unfairly prejudiced by rent repayment orders (whether in cases where there have been over-payments of housing benefit or otherwise);
  2. (b) for requiring or authorising amounts received by local housing authorities by virtue of rent repayment orders to be dealt with in such manner as is specified in the regulations.

(16) Section (Other consequences of operating unlicensed HMOs: rent repayment orders)(10) and (11) apply for the purposes of this section as they apply for the purposes of section (Other consequences of operating unlicensed HMOs: rent repayment orders)."

After Clause 73, insert the following new clause—