HL Deb 13 October 2004 vol 665 cc323-31

(1) A local housing authority may, if any of the conditions of the licence is not complied with, serve a notice (in this Act referred to as "a breach of condition notice") on the licence holder requiring him to secure compliance with the conditions as are specified in the notice.

(2) A breach of condition notice shall specify the steps which the authority consider ought to be taken to secure compliance with the conditions specified in the notice.

(3) The period allowed for compliance with the notice is such period of not less than 28 days from the date of service of the notice as specified in the notice but this period may be extended by the authority.

(4) If at any time after the end of the period allowed for compliance with the notice—

  1. (a) any of the conditions specified in the notice is not complied with, and
  2. (b) the steps specified in the notice have not been taken the licence holder shall be guilty of an offence.

(5) It shall be a defence for a person charged with an offence under subsection (4) to prove—

  1. (a) that he took all reasonable measures to comply with the conditions specified in the notice, or
  2. (b) that he had reasonable excuse for failing to comply with the notice.

(6) The person who is guilty under subsection (4) shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(7) The provisions of Part 3 of Schedule 1 (appeals) shall apply to a notice served under this section as if it were an improvement notice (omitting paragraphs 12, 13, 17 and 18).

The noble Lord said: My Lords, this amendment was included in an earlier group, but I wish to speak to it now. In relation to HMO selective licensing, the thrust of the Bill is to criminalise in the event of non-compliance.

I understood the Minister's remark during Committee stage that something might be so serious that only an immediate revocation would be a suitable answer. That is draconian and should be reserved for cases where there have been repeated infringements. However, we are tabling the new clause as we still believe that there is a need for something like our amendment to give some leeway to landlords, managers and local authorities in the first instance.

I will quickly remind the House of the main thrust of Amendment No. 61. A breach of condition notice is suggested as an intermediate step that the local authority can adopt in less serious cases. It would allow the local housing authority to set out the breaches complained of and the steps required of the landlord to comply with the notice. The landlord would have 28 days in which to comply.

Non-compliance with the notice would be a criminal offence, potentially attracting a level-five fine. There would be provision for a defence of reasonable excuse where the landlord could demonstrate that he had taken all reasonable measures to comply with the notice and/or that he had a reasonable excuse for failing to comply with all the conditions listed.

It enables a stern warning to be sent to the landlord without the need to go immediately to the extreme step of revoking the licence or instituting criminal proceedings. In most cases it will ensure compliance without the need to go any further. It would allow local authorities to fire a warning shot and is another weapon in their armoury. It would also avoid criminalising landlords. It will save costs for both local authorities and landlords and, through not having such a heavy-handed approach, it will foster good relations between housing associations and landlords. I beg to move.

Lord Bassani of Brighton

My Lords, Amendment No. 61 would enable a local housing authority to serve a breach of condition notice on a licence holder who fails to comply with any of the licence conditions. The notice would require the licence holder to comply with the conditions specified in the notice in a period of not less than 28 days from the date the notice was served but the period could he extended by the authority.

The amendment is aimed at ensuring that a person does not find him or herself in an inadvertent breach of a licence condition and at risk of prosecution. It inserts a procedural step to give landlords a last chance before they face having to go to court. Noble Lords will recall that Clause 70 has now been amended and provides that a licence may be revoked only where there are serious or repeated breaches of licence conditions.

It is difficult to conceive of any situation where a prosecuting authority would consider it in the public interest to bring a prosecution for a single trivial breach of a licence condition when it could not even revoke the licence for that breach. We have been over the issue and in making my comments earlier I made it plain that I did not think it was an appropriate amendment under the circumstances.

I also pointed out that it would have the unfortunate effect of inhibiting prosecutions where there have been deliberate and serious breaches of licence conditions. Some conditions are not capable of being remedied within 28 days of service of a notice and some breaches might be so serious as to warrant immediate prosecution. I hope that having heard what I have said, and what I said earlier, the noble Lord will withdraw his amendment.

Lord Hanningfield

My Lords, I thank the Minister for that reply. We will examine all this in some detail after today because we feel that there need to be steps that are not so serious as the final one. We will read in Hansard what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 [Licences under Parts 2 and 3: mandatory, conditions]:

Lord Bassam of Brighton moved Amendment No. 62:

Page 209, line 34, leave out "keep smoke alarms in the house" and insert "ensure that smoke alarms are installed in the house and to keep them"

On Question, amendment agreed to.

Clause 68 [Licences: general requirements and duration]:

Lord Hanningfield moved Amendment No. 63:

Page 46, line 11, leave out "5" and insert "7"

The noble Lord said: My Lords, we turn to the concept that an HMO licence should continue in force for not more than five years, as we have just discussed. The Government estimate that 120,000 properties will be subject to compulsory licensing. The industry believes that that is a gross underestimate and considers the figure to be closer to 300,000. Even using the Government's estimate a massive effort will be required to meet the requirement for mandatory licensing of HMOs, and local authorities do not have the resources available to deal with the number of inspections required.

I believe that in Committee the Minister was not persuaded about the merits of a five-year timetable. That is why we have come back with yet another concession—the Government are getting many concessions out of us today—suggesting a seven-year period. We believe that it would be a more practical and sensible way forward and one that we hope the Minister will look upon with favour. I beg to move.

Lord Bassam of Brighton

My Lords, this amendment would increase the maximum duration for a licence from five to seven years. The issue of for how long a licence should be granted will depend on the merits of each case. However, there must always be a maximum period after which the local authority must review the matter and decide in the light of new circumstances or existing circumstances the terms on which a new licence should be granted, if at all.

In Committee we argued that 10 years was too long a period. The only real benefit of such a protracted duration would be a small saving in administrative costs. If local authorities were to try to keep in touch with what was happening on the ground in HMOs, they would inevitably have to review licences that they had granted for such long periods. That process in itself would incur substantial additional administrative costs.

We promised to give the issue further consideration in advance of Report but, having done so, we are firmly resolved to stick by the five-year period for the arguments that were made in Committee but also on several other counts. First, five years chimes with the existing provisions for registration schemes with control orders. I shall not regale the noble Lord too long on that but those control orders were set up under the Housing Act 1996 by a Conservative government and we have been under no pressure to extend similar provisions for registration schemes.

Secondly, there is a read-across from this provision in the Bill to others such as it being incumbent on local authorities to satisfy themselves that they have discharged their Part 1 functions in respect of licensable HMOs as soon as reasonably practical and within the five-year duration of the licence.

Thirdly, we would be faced with the prospect of a not insignificant raft of consequential amendments that would need to be tabled for Third Reading—not a prospect that I think anyone in your Lordships' House would relish, particularly having heard what was said today.

Fourthly, I do not consider that we have had a convincing case made for a period longer than five years. Finally, I offer the reassurance that we are committed in any event to reviewing the licensing regime within three years of implementation and to consulting on the way in which the review is carried out. That would be the most opportune moment to make any changes once we have the benefit and knowledge of how the licensing regime is operating on the ground. We could well decide at that point that a compromise should be struck on the issue that would allow local authorities greater discretion. As a general rule and for now I think that the Government have pitched the period of five years about right for the maximum duration for a licence. As I explained, that has the benefit of being consistent with the provisions for registration schemes introduced by the previous Conservative government.

For those reasons I hope that the noble Lord will withdraw the amendment.

6.15 p.m.

Lord Hanningfield

My Lords, given the Minister's remarks I believe that he was almost persuaded that the relevant period should be seven rather than five years. I hear what has been said and note that the Government do not wish to depart from the period of five years for the maximum duration for a licence but that the matter will be reviewed in future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 64:

Page 46, line 17, leave out "not"

The noble Lord said: My Lords, as the Bill stands, HMO licences and selected licences are not transferable. These remarks therefore apply to Amendments Nos. 64, 65 and 84 that would create a scheme for the transfer of HMO licences.

Again, the arguments in favour of such a scheme were well rehearsed in Committee. However, it is perhaps worth spending a moment reminding ourselves of their merits. Each time a property is sold, the existing licence holder will have to apply for the licence to be revoked and the proposed licence holder will have to apply afresh. The result is that each time the local authority will have to reconsider the property. It may want to change the standards or impose fresh conditions, that is despite the fact that these matters can be looked at every five years when the licence has to be renewed—as we have just discussed—although as a result of our previous discussion that period may become more flexible.

If there were a system of transferring licences, the local authority would need to look only at the issue of whether the licence holder and the manager, if different, are fit and proper persons and whether the management arrangements are satisfactory. It would not have to look at property specific issues. This would also narrow the uncertainty from the perspective of both buyers and sellers. You could have a situation where a property had been assessed for a licence just a few months before it was sold, but the local authority would have to undertake a new assessment. The workload for local authorities will be tremendous anyway. Having to assess a property every few months could become a nightmare. Landlords could be forgiven for thinking that this is a system which enables a new fee to be charged all over again.

A transfer system would enable a reduced fee to be charged to reflect the simpler processes, thus reducing conveyancing costs. Conveyancing costs would also be reduced if the terms of the condition of contract could be simplified by excluding property specific topics; otherwise, conveyancing will be slowed down even more. I beg to move.

Lord Bassam of Brighton

My Lords, Amendment No. 64 would change subsection (6) of Clause 68 to allow local authorities to transfer licences instead of having to go through the full licence application process. I believe that this amendment was discussed at some length in Committee. I do not think that the amendment is particularly helpful. The application process is, after all, designed to ensure that adequate standards of management are in place. That stands even where information relating to the property has been collected as part of the application process by the original landlord. These safeguards include checks that the landlord or manager is a fit and proper person and has adequate management experience and adequate arrangements are in place. Those are some of the fundamental objectives that underlie the Bill.

Amendments Nos. 65 and 84 would provide that transfers may take place either with the agreement of the licence holder or when there is a change of circumstances. The transfer process is akin to an application for a licence with the exception that the local authority does not have to satisfy itself as to the minimum, rather than the maximum, number of households or persons appropriate for the property in question.

I have some sympathy with the intent behind the amendment but, on balance, we do not think that it achieves its purpose. Given the similarities in the process to the existing new licence application process, it is not clear to me where time savings would be made. Such time savings could equally be achieved through a well targeted application form that allows landlords to identify where the property-related information supplied by the previous landlord is still pertinent or where the applicant has met the fit and proper test for another property.

An underlying aim of the proposed transfer scheme is to reduce the application fee that applies for licence applications, and hence reduce costs for the new landlord. In our view the application fees charged for licence applications are proportionate to the costs of the scheme and can be used only towards the costs of that scheme. Even in administering a transfer application local authorities will incur some costs as they are required to check whether any new licensing applicant meets the fit and proper test and that adequate management arrangements are in place. If this amendment and Amendment No. 84 were accepted, rather than receiving a full five-year licence in exchange for an application fee, the applicant for transfer would receive whatever remained from the previous landlord's licence in exchange for a transfer fee. I do not accept that that benefits anyone. I hope that the noble Lord will feel able to withdraw the amendment.

Lord Hanningfield

My Lords, I thank the Minister for that reply. I said that I thought that under the management scheme, the owners should go through a scrutiny process, but I was concerned that a building that had been inspected and agreed only a few months before it was sold should not have to go through the process again, involving costs and time for local authorities. There are 300,000 such buildings, many of which will change hands. If they have been inspected only a few months before, it should not be necessary to inspect them again. I certainly did not want to suggest that there would be no double-checking on the appropriateness of the management of the properties.

I note what the Minister said, and we may have to come back at Third Reading to the issue of the transfer of licences. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 65 not moved.]

Clause 72 [Offences in relation to licensing of HMOs]:

Lord Rooker moved Amendment No. 66:

Page 49, line 14, after "he" insert "knowingly"

On Question, amendment agreed to.

[Amendment No. 67 not moved.]

Baroness Hanham moved Amendment No. 68:

Page 49, line 16, at end insert ", and (d) in this subsection "occupy" means occupation as an only or main residence (or treatment as such in accordance with section 222) and any reference to occupation shall be interpreted accordingly.

The noble Baroness said: My Lords, Clause 72(2) creates an offence whereby a landlord permits a house in multiple occupation to be occupied by a number in excess of that permitted under the HMO licence for the property. The Government have met some of our concerns about the provision by introducing an amendment so that the landlord is guilty only if he "knowingly" permits occupation in breach of the licence. We have just supported the Government's amendment and withdrawn our one. I want to make that clear.

However, Amendment No. 68 is concerned with the definition of occupation for these purposes. Clause 245(6) defines an occupier simply as someone who, occupies the premises as a residence". Legally one can have more than one residence. The presence at a property of someone who is a casual resident as opposed to a permanent resident could mean that a landlord is guilty of an offence. The amendment would clarify the expression "occupation" so that an offence would be committed only if occupation were by someone for whom the property is his only or main residence.

There is an inconsistency. When determining whether the house needs to be licensed, the test is one of only or main residence. We had understood that the offence would be committed only when the number of permanent residents exceeds the permitted number. Without the amendment there is a mismatch between the offence under the clause and the criteria for whether a house is one in multiple occupation in the first place.

In this day and age boyfriends or girlfriends regularly stay over, or people often stay with friends overnight. A landlord may let a licensed HMO to five people in which all the rooms have double beds that have been supplied by the landlord and are capable of being occupied by more than one person. Nowadays that is what tenants usually demand. What happens if on occasion all beds are occupied to their full capacity by guests? Alternatively, what if one room is occupied regularly at the weekend, for example?

The amendment would make it clear that the offence occurs only when the property is permanently occupied in excess of the permitted numbers rather than criminalising transient arrangements. I beg to move.

Lord Rooker

My Lords, it does not really matter whether the residence is "only" or "main". It just needs to be a residence. There is no way that weekend or overnight occupation will count as residence.

We are satisfied that the definition in Clause 245(6) is strict. It would prevent people who have stayed overnight being counted as occupiers for the purposes of Clause 72. That makes the amendment unnecessary. There are definitions, but it would not matter whether it was "only" or "main". It must be a residence. Transient, weekend or overnight occupation cannot be claimed as residence.

Baroness Hanham

My Lords, I am grateful for that reply. I hope that the Minister is correct. If an inspection took place and the number was in excess of that for which a licence had been granted, there would be a test of strength as to whether that person was a resident. If that is plainly and clearly on the record, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 69 not moved.]

Baroness Hanham had given notice of her intention to move Amendment No. 70:

Page 49, line 36, leave out "£20,000" and insert "level 5 on the standard scale"

The noble Baroness said: My Lords, the Minister dealt with this point and made it absolutely patently clear that there was not much point in my going further as the amendment would not be accepted. I shall not waste any more time on it.

[Amendment No. 70 not moved.]

The Deputy Speaker (Lord Boston of Faversham)

My Lords, Amendment No. 70A is on the supplementary sheet. I must point out that if either this amendment or Amendment No. 71 is agreed to, I cannot call Amendment No. 72.

Baroness Hanham

My Lords, before the Minister speaks—

Lord Rooker

My Lords, what I am about to say will be really helpful.

Baroness Hanham

My Lords, shall I say it first so that the Minister can tell me how helpful he will be, as he will know the burden of my objection?

Lord Rooker

My Lords, if I get it wrong the noble Baroness can come back to me. I am determined to stay in order. There is no one to call order in this place as there are no orders. It is run on an anarchy basis. However, I shall move Amendment No. 70A so that I can speak to the government amendments. At the same time, I shall speak to the opposition amendments. Finally, when I am asked to move my amendment, I shall not do so. Does that help?

Baroness Hanham

My Lords, it would be helpful if the Minister could explain his amendments. The government amendments are being moved in anticipation of the amendments that we have tabled. The Minister said at the outset that his amendments were meant to address the matters raised by the amendments in the next group, the first of which is Amendment No. 71.

If the Minister is kind enough to explain his amendments, perhaps it will be possible for us to move our amendments and then for the Minister not to move his amendments formally.

Lord Rooker moved Amendment No. 70A:

Leave out Clause 73 and insert the following new Clause—