HL Deb 20 October 2004 vol 665 cc870-89

Part 6, Chapter 3 of this Act shall apply equally to permanently moored serviced residential houseboats."

The noble Baroness said: My Lords, in Committee we introduced amendments to deal with the problems being faced by permanently moored serviced residential houseboat owners in relation to security of tenure and protection from harassment. We got some helpful answers from the Minister, but the clear indication was given that this Bill would not he an appropriate place to make those changes. However, I never give up, so I have come back to the matter. In saying that, I thank the Minister for the response that he gave me in annex 1 of the compendium.

I shall unpick a little more the problems that I want to deal with. The owners of park homes, who are effectively the owners of chattels, are covered by security of tenure and, I guess, under the housing Acts. The same protection is not extended to permanently moored houseboat owners. I keep on saying "permanently moored" because these are houseboats that never move. They are tied to the side of the river and do not move thereafter. The same provisions of the Housing Act on security of tenure do not apply to such owners. The area seems to be completely devoid of any legislative involvement.

There are a number of moored residential houseboats, and not only in London. The Minister knows that I speak from personal knowledge of the houseboats in Chelsea, as it is in my constituency, and I suppose that I should declare an interest. But there are other residential houseboats around the country. A number of discussions have taken place about the problem. Security of tenure and protection from harassment are the two specific areas which would, I believe, fit in to this Bill, as they are already covered under the park homes legislation.

The Minister kindly gave me a long, detailed reply about what was being done, including information on the discussions that were taking place with Defra and with his department and others. When we last discussed this, I indicated that the information I had received was that Defra did not think it was involved, that it was therefore not particularly engaged in the process and that the parcel had been passed to the Office of the Deputy Prime Minister to sort out.

The Minister has indicated that there is now an initial work plan for houseboats and that the scope of the discussions with other departments and stakeholders have been extended. Looking at it, I do not think that it is confined to residential, moored and serviced houseboats, but will include a much wider discussion on the nature of houseboats in this country. However, I am still anxious to try to get those two aspects included in the Bill if we can.

The Minister's response in annex A says that the question of security of tenure would be dealt with by about April 2005. However, the initial work plan for houseboats does not say that. It gives no indication on that. Nor does it give any indication of when legislation in which we might deal with these problems is likely to come before the House. The suggestion is that the issue could be dealt with in the Law Commission's tenure reform Bill. However, I am sure that the Minister has not the faintest idea when that legislation is likely to come forward, and I am not sure that Her Majesty the Queen is likely to be announcing it in the Gracious Speech. If she does, that will be encouragement; but I do not know whether she will. We have no idea when such a Bill might come forward.

There is a problem here that needs to be resolved on a shorter timescale than that envisaged in the work plan. I am sure that all sorts of houseboat issues need to be discussed. We have had useless discussions, not in this House but elsewhere, about navigation rights and related problems, but those are not applicable to the subject we are discussing now.

I have returned to the amendment, although I know that it is the wrong one. I say to the Minister that I will come back with yet another amendment at Third Reading because I need to plug away at the issue to ensure that it is taken seriously and dealt with at the earliest opportunity. If we can find a Trojan horse to get it into the Bill, we will.

Having laid out the case again, I look forward to seeing whether the Minister can give us any hope that we can deal with these two specific areas. His less than robust defence of the fact that houseboat owners are covered by legislative protection against eviction and harassment does not seem to have been followed up with enthusiasm in legal circles. I hope that I have given the two Ministers an opportunity to have a little chat and that we may be able to have a response today to my amendments. I beg to move.

Baroness Hamwee

My Lords, I support the noble Baroness in this. I have spoken about the issue before, and I am sure that Ministers are sympathetic. I entirely accept that what happened at the start of the Bill was an honest and straightforward accident and that it would not have happened had their sympathies not been with those who are affected. It is perhaps a little unfortunate that the useful action plan and notes which we received from the Minister said that it was "premature" to look at amendments. I suppose that it is in terms of the work plan but not in terms of the problems which need to be addressed.

On the previous occasion the Minister helpfully said—I hope that it is helpful and that someone can pray it in aid at some point if that is necessary—that it is the department's view that houseboat residents are already covered by the Protection from Eviction Act, as the noble Baroness said. I hope that the Minister will put on the record how that protection applies and confirm that it applies to moorings. As I reread the measure, I wondered whether we were talking about eviction from boats or from boats moored to a bank or pontoon.

I wanted to put that view on the public record to try to help people who are in this difficult position. Some of them are in a very difficult position indeed. While clearly the Government do not constitute a court of law, if the Minister is able to expand on the matter it would be very welcome. I am glad that the noble Baroness has raised the matter once more.

Lord Rooker

My Lords, I, too, am glad that the noble Baroness has raised the matter. However, at the moment, my answer is exactly the same as it was previously. The noble Baroness said that she would return to the issue at Third Reading.

Amendment No. 186A is identical to an amendment discussed in Committee. I am not saying that the issue is unimportant but it has not been accorded the importance that it perhaps should have been; otherwise, Parliament would have dealt with the matter some time ago.

As I said in Committee, the rights of a residential houseboat dweller will depend on the terms of any agreement with the landlord of the mooring. There is no statutory security of tenure, and the security of someone living in a houseboat is dependent entirely on the terms of their contractual agreement. To this extent they are protected by the law of contract, including the prohibition against unfair contract terms, which can be enforced by the Office of Fair Trading.

The amendment would not achieve the desired aim—I believe that I said this in Committee although I do not criticise the desire to discuss the issue again—because the clauses in the Bill dealing with mobile homes are amendments to existing legislation, which applies to mobile homes only. It would be meaningless to extend these clauses to houseboats because the legislation simply does not apply to houseboats.

One of the mobile home amendments to Clause 200 was to remedy an anomaly where mobile homes had been explicitly taken out of the protection afforded by the Protection from Eviction Act 1977 and given separate mirror protection. But when the 1977 Act was amended and updated, the protection for mobile homes was not similarly amended and updated. Clause 200 remedies that situation. Houseboat residents on the other hand are not excluded from the Protection from Eviction Act 1977, and it is the Government's view—for what it is worth as obviously these matters are for the courts to decide in the end—that they are therefore protected under that Act.

We are, of course, aware of the worries about the adequacy, or rather inadequacy, of houseboat legislation. As outlined in our letter to Peers of 11 October, we are in discussion with colleagues across government—this is not just an ODPM matter but involves also Defra and the Department for Transport—regarding gathering the necessary evidence base to ensure the correct solution is reached. Legislating on part of the matter would probably raise false expectations for houseboat dwellers. It is a complex issue. At the moment it is premature to believe that the amendment before us, or any other amendment, would solve the majority of problems. I believe that rather more legislation than that would be required.

The amendment would put ill considered legislation on houseboat owners, because the matter has not been properly considered in the processes of the machinery of government. However, we are currently undertaking that. I cannot promise to report on how far we have got or any further work by Third Reading, but if I can give any information on top of what we have already said in the letter of 11 October, I shall certainly seek to do so. We accept that the issue will not go away, so Parliament will have to find a solution to help such people.

9 p.m.

Baroness Hanham

My Lords. I am grateful to the Minister for his largely sympathetic reply and for being much firmer in what he said about people not being excluded from the protection from eviction and harassment. Perhaps we had it round the other way before—whether they were included—but to know that they are not excluded is far clearer.

My only caveat about the initial work plan for houseboats is that it is the whole question of houseboats that is being looked at, not the probably quite small number of permanently moored houseboats. I accept that there are two areas, but at the moment I am interested in the permanently moored houseboats. I need to consider whether I can try another Trojan horse at Third Reading. If I think that I can, I shall bring the matter back. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 201 [Tenancy deposit schemes]:

Baroness Hanham moved Amendment No. 187:

Page 158, line 41, at end insert—

"(2) If the appropriate national authority considers that a tenancy deposit scheme submitted to it is satisfactory for the purposes of this section, they may approve it for those purposes.

(3) Sections 164 (approval of redress schemes) and 165 (withdrawal of approval of redress schemes) shall apply for these purposes subject to the following modifications—

  1. (a) references to "a tenancy deposit scheme" replace references to "a redress scheme" wherever they appear;
  2. (b) the word "tenants" is substituted for the words "of sellers and potential buyers of residential properties" in section 164(2); and
  3. (c) omitting section 164(3)."

The noble Baroness said: My Lords, the amendment would allow landlords' associations and representatives of managing agents, as well as any others interested, to take the initiative and bring forward either a tenancy deposit scheme or a custodial scheme for approval. If the appropriate criteria were met, approval should be given. Landlords' associations, such as the Residential Landlords Association and the Association of Residential Letting Agents, have already indicated their interest in promoting such schemes. I appreciate that the Government have tabled amendments that would incorporate some of these matters.

Provided that they meet the criteria in Schedule 10, such developments should be welcomed. Many landlords are already members of landlords' associations, and the amendment would enable those associations to provide an important service to their members. At the same time, it would safeguard tenants' interests in accordance with the legislation. Such schemes would encourage membership of the associations, which would benefit the private rented sector. It would help to increase professionalism all round. Many trades and professional bodies already have insurance-backed schemes where money is handled, so that there is an established insurance market able to serve as a product of this kind. Such initiatives should be welcomed and encouraged, and the amendment would allow that.

I move on to Amendment No. 194. As drafted, Schedule 10 makes provision for only two situations. The first is where an agreement is reached at the end of the tenancy on the way in which a deposit is to be held. The other is where there is a county court decision. Other circumstances are not dealt with in the schedule, particularly those relating to custodial schemes. Those include cases where the tenant disappears and cannot be found. That poses a problem in the case of the custodial scheme, because there is then no mechanism for the deposit to be released to the landlord to offset arrears or make good damage to the property. There would be difficulties if a tenant could be found but simply failed to respond.

Again, the landlord may face rent arrears hut, if the tenant will not co-operate, the landlord is then put to the time, trouble and expense of bringing court proceedings. A mechanism could be put in place under which the scheme administrator, on being satisfied of the existence of the arrears or damage, could order the release of the deposit.

At the moment, Schedule 10 deals only with the situation at the end of the tenancy agreement. It is not unknown during the course of a tenancy for a tenant to agree with the landlord that the landlord can offset the deposit held against rent arrears. This regulation-making power allows regulations to be made to enable the scheme administrator to release moneys from a custodial scheme under such circumstances.

The final situation to be addressed is the most common of all; namely, where the landlord simply refunds the deposit at the end of the tenancy as no offset is claimed. The schedule currently seems to envisage some kind of formal agreement for this to happen and provision should be made that in such circumstances the scheme administrator simply refunds the money to the tenant. I beg to move.

Lord Best

My Lords, I welcome both amendments tabled by the noble Baroness, Lady Hanham. All the other amendments in the group stand in my name; Amendments Nos. 189, 190 to 192, 200 and 204. Perhaps I may swiftly speak about them, not doing justice, I fear, to the excellent briefings from the National Association of Citizens Advice Bureaux, Shelter and others. Perhaps I may also comment on government Amendments Nos. 191A to 191F.

Amendment No. 189 seeks to tighten the definition of a tenancy deposit by restricting the use of the deposit by the landlord to cover proven financial loss, not for the performance of any obligations of the tenant. Therefore, if a tenant ruins the carpet by spilling a bottle of wine, the landlord could deduct the cost of the new carpet. But if the tenant has a visitor to stay where that is forbidden, that would not be enough to allow the landlord to keep part of the deposit. It is a tightening up of the definition.

Amendments Nos. 190, 191 and 204 all relate to the custodial schemes in the tenancy deposit arrangements. These are the schemes where the deposit is meant to be held by an independent third party. The problem is that some landlords will fail to pay the deposit into the scheme as is required of them and as the Bill is currently drafted the only sanction the tenant has is to go to court about it. That is the same problem tenants have today when they are aggrieved about their deposit not being returned to them. Without some support for the tenant in this, I fear that despite the excellent intentions of this important addition to the Bill, the whole tenancy deposit scheme begins to look less likely to work on the ground.

If landlords are going to fail to comply, the way around this must surely be for the tenants to be allowed themselves to pay the deposit directly into the custodial scheme rather than give the deposit to the landlord, who may not then pass it on. If there are cases in which the tenant has given his deposit directly to the landlord but the landlord has done nothing with it except sit on it and allow interest to accumulate and the money to be used for some other purpose, the tenant should have the right to make a payment into that custodial scheme equivalent to the deposit in lieu of paying that amount in rent to the landlord. Those amendments would bypass the problem that landlords may simply not comply with the requirement to pay money into a custodial scheme. At the moment, that would merely leave the tenant to fight it out in the courts.

Amendment No. 192 deals with the other kind of tenancy deposit scheme—not the custodial one but the insurance-based one. Here the government Amendments Nos. 191A to 191F seek to address the key concern that my amendment tackles about the insurance-based schemes. The government amendment provides that at the end of a tenancy the landlord should pay over within clear time limits any disputed sum to the scheme administrator who will hold it until either there is agreement or a court decision has been reached on how the money should be allocated between landlord and tenant.

That meets the concern of Shelter, the National Association of Citizens Advice Bureaux and others that there should not be a perverse incentive for the landlord to delay reaching an agreement or to opt for the more lengthy court system to resolve a dispute so that he can hang on to the deposit, perhaps indefinitely. Therefore, I think that the government amendments very ably cover the point raised by my own Amendment No. 192. I am very grateful to both Ministers for accepting the case for these amendments, and I shall not move my Amendment No. 192.

That leaves Amendment No. 200, which, on the face of it, appears to deal with something bigger and rather different from the subject of the other amendments. It concerns the so-called administrative charges on tenants which landlords impose and which more landlords or indeed sometimes their agents—particularly those who have been used to keeping tenants' deposits when they should have been giving them back—may keep and make money from at the expense of tenants.

The kind of situation that we are talking about here, of which citizens advice bureaux up and down the country have a great deal of experience, is where landlords require, for example, a payment for credit checks. A firm called Experian—one of the three credit reference agencies operating in the UK—offers a full tenant verifier service for landlords and agents at a cost, which does not seem unreasonable, of £20.86. But citizens advice bureaux report that the amount charged by landlords, or sometimes by their agents without the landlords necessarily having part of it, is often far higher than they have paid to Experian or another firm. For example, in Greater Manchester, a student reports that he had to pay £75 plus VAT for a credit search before he could take over a property and, as he was a student, there was a further credit search against his father, incurring a further charge of £75 plus VAT. I declare an interest as having a son at Manchester University, but I was not the father in this case.

Then there are the renewal of tenancy charges, which are a real con. These occur where a landlord is going to continue with a tenancy. He can give the tenant a photocopy of the previous tenancy agreement or simply allow the tenancy to run but the agents or the landlord charge a fee. For example, in Kent, a young woman with a baby whose only income was income support, housing benefit and child benefit was charged a fee of £90 to renew her tenancy. Because that fee was not included in the rent, she did not have any way of paying it; she had to find the £90 from her very meagre resources. She would have been able to recoup, through housing benefit, money collected through the rent to cover all such charges. Then we come to leaving the tenancy and the required inventory on departure. As reported by a CAB in Sussex, it is quite common for a fee of £80 to be charged for that inventory.

Amendment No. 200 seeks to nail down those practices and to outlaw payments over and above what a tenant pays by way of rent or other properly prescribed service or occupation charges. Although it sounds like quite a wide extension to this part of the Bill, this is in fact a fairly logical consequence of looking at tenancy deposit schemes. In the consultation paper which the Government issued about tenancy deposit schemes, they suggested that these issues should be considered, and I am hoping for that consideration.

Baroness Gardner of Parkes

My Lords, it seems that we are speaking to two series of amendments—certainly the noble Lord, Lord Best, was doing that. I had demarcated them into the two lines in which they appear on the groupings list. However, as the noble Lord has spoken to them, perhaps I should do the same for reasons of speed. In the past, I have declared an interest in that for many years I have been, in a small way, a landlord.

Amendment No. 187, moved by my noble friend Lady Hanham, seems logical to me, and I have no comment on that.

9.15 p.m.

Amendment No. 188, tabled by the noble Lord, Lord Rooker, is clear and again presents no problem to me. I support Amendment No. 189, and in particular the comment by the noble Lord, Lord Best, that a visitor who damages a carpet in the circumstances he described should pay for such damage but not for some other non-financial loss to the landlord. That is perfectly reasonable. However, that raises a point I have mentioned before; that is, that it is essential for the landlord under those circumstances to be able to claim that amount for the carpet at the time the damage occurs, if they are notified at the time.

Many issues, particularly if the tenant is a long-term tenant, have to be dealt with at the time. If money has to be claimed from the deposit and the tenant has an obligation to top up the deposit, it should be dealt with at the time. Under the insurance scheme, one would not be able to claim, but under the custodial scheme one would be able to. I should like clarification on that point. If that is true, will the landlord be able to opt for the custodial scheme? Who will decide whether the scheme is custodial or insurance based? That is an interesting point.

Amendments Nos. 190 and 191 are a matter of language and tidying-up. I question Amendment No. 191A, tabled by the noble Lord, Lord Rooker. It seems terribly complicated. Again, would one be able to claim under an insurance-based scheme, or would the insurance money simply be tied up totally until the end? It is important to clarify that.

Lord Rooker

My Lords, if we are not careful, we shall have an enormous amount of repetition. For the avoidance of doubt, I shall respond to the group of amendments headed by Amendment No. 187. My noble friend Lord Bassam will move 20 government amendments and will explain them. He may well answer some of the noble Baroness's questions. If the noble Baroness starts to ask all those questions in this group, I shall not answer what she is asking.

Baroness Gardner of Parkes

My Lords, to save time I shall ask questions now. If the noble Lord, Lord Bassam, answers them, or if no one answers them, at least they are on record so that they can be considered by his department at a later stage.

As regards Amendment No. 191D, I presume that the amount to be paid would not exceed the original deposit. Amendment No. 192 concerns the point I made. I think that it is fair to hold money, but it may be important to be able to claim partially, and that is what I am unsure about. I support Amendment No. 194, which is a good amendment. However, it does not cover a situation which I think I have mentioned in these debates; that is, the death of a tenant. I think that something should be put in to clarify the position. Over the 40 or more years that I have been letting property, I have had two occasions where tenants have died. In one case it was an American civilian employed by the American forces, who stepped in and did everything. They found his next-of-kin and arranged everything. The other case was very much more difficult. Landlords can be faced with a slight difficulty about what to do with a tenancy if the tenant dies suddenly.

The amendment which worries me very much—I listened to the explanation by the noble Lord, Lord Best—is Amendment No. 200. At lunch today I sat next to the chairman of the Association of Residential Letting Agents (ARLA) who told me that that organisation is very concerned about this. Certainly, I would find it very unsatisfactory if all the charges that were mentioned have to be added to the rent. Obviously, one would have to ask a much higher rent. The ARLA believes that it would be fair to have a tariff set out quite clearly so that the whole matter is completely transparent.

It is right that one has to take up credit references. Experian are noted to be the good people for that. There has to be a legal agreement and the solicitor probably charges by time. I always say to tenants, "I would expect you to meet half the cost of the legal agreement, half the cost of the inventory check-in and half the cost of the inventory check-out". They can tell you how much that is. If you have let the same property for some years, you are pretty clear on that.

The only exception is if you get a tenant who wants to change tenancy agreements, in terms of company lets or something very complicated. Of course the solicitor will charge you much more to make a completely new tenancy agreement. I support the view of ARLA that these things should not be excluded. I think that they are an essential part of the letting.

A different issue arises. As the noble Lord explained, people on benefit might not be able to claim these charges. So perhaps landlords and agents between them should be able to devise some way whereby, for those people who are on benefit, these could be included as part of their letting agreement. That does not necessarily mean that other people should not have to pay them.

A point which I feel has not come out in this debate is that if the rental is more than £25,000 per year, as I understand it, shorthold tenancy does not apply. Therefore, presumably none of the Bill will apply at all. That is another interesting point.

The noble Lord, Lord Rooker, mentioned that you could not put in unfair contract terms. Clearly, it would give tenants a certain degree of cover. If you were suggesting all sorts of charges that were unreasonable you would not be able to put them into the contract. But I think it is very important, and every article you read in every newspaper emphasises that all these people who move into a place without any check would be far better off if they had had an independent inventory clerk check them in and check them out. The fact that some independent person has been able to assess the matter removes one of the greatest sources of contention between landlord and tenant.

Baroness Maddock

My Lords, my name is attached to Amendments Nos. 189, 190 and 191. Indeed, I am tempted to attach my name to rather more of the amendments tabled by the noble Lord, Lord Best. But, even at the second time of asking, I failed to do so.

I can add very little to the very eloquent way in which the noble Lord, Lord Best, moved these amendments. Suffice it to say that those of us concerned with this issue very much welcome the Government's amendments that deal with the issues addressed in Amendment No. 192, which apparently the noble Lord, Lord Bassam, will move in a moment.

The other amendments raise critical questions. If the Minister is not able tonight to give satisfaction on these points, it would be very helpful if there could be some discussion with interested parties before Third Reading. Many of us have waited a number of years for tenancy deposit schemes to get on the statute book. It would be very sad if we did not take notice of all those people, particularly bodies like Shelter and citizens advice bureaux which have been pressing for this over the years. We need to take notice of what they say. I hope that the Minister will find time to do that if he is not able to satisfy us this evening.

Lord Rooker

My Lords, I start off as the noble Baroness finished. There will be plenty of time for discussing this because it will not be a five-minute wonder in terms of implementation. So there will he plenty of time for discussion. On behalf of my right honourable friend Keith Hill, I shall be quite happy to offer good and constructive meetings.

I do not wish to be discourteous to the House in any way, shape or form, but as I said when I interrupted the noble Baroness, Lady Gardner of Parkes, I thought that it would be best to deal with the amendments this way, because it just so happens that that is the way we have divided things up. It is done on an ad hoc basis. Obviously if I responded to every single amendment in this group I would not save repetition. So what I thought I would do is to respond to Amendments Nos. 187, 194 and 200 in some detail. All the other amendments are virtually covered by what my noble friend Lord Bassam will say when he introduces the government amendments. Is that acceptable? As I say, I do not wish to be discourteous but it saves repetition. Clearly, the three particular amendments deserve a separate response because they are not covered by the government amendments.

Amendment No. 187 seeks to amend Clause 201 to allow for the appropriate national authority to give approval to any tenancy deposit scheme which is satisfactory, rather than procure it through a competitive tendering process as the Government intend. I understand that the amendment may be motivated by the desire to allow schemes run by industry bodies on behalf of landlords or agents for the benefit of their own members to be approved without the need to go through a tendering process. We want to ensure that any organisation chosen to run a tenancy deposit scheme is chosen on the basis of a fair selection process and that no particular organisation or its members are given unfair financial and competitive advantage. Our provisions allow for any private organisation to submit a bid to set up and manage a scheme as part of the tendering process. We recognise the specialist knowledge that existing industry bodies have and we obviously welcome their submitting bids for tender.

Whereas, up until now, industry organisations have considered only insurance-based schemes, under these provisions there is now potential for an industry body to set up and manage a custodial scheme. Indeed, there is nothing in the provisions to prevent one organisation managing more than one scheme. However, membership of or access to a tenancy deposit scheme should be entirely separate from membership of any other organisation.

The amendment suggests that that approval could be granted on similar terms to that of the approval to be granted to estate agent redress schemes under Clauses 164 and 165. However, the two cases are not comparable. Estate agent redress schemes will be independent organisations performing a regulatory function. The safeguarding of deposits is simply a service to be provided on behalf of the Government. We want to ensure that we can choose the best providers for the service.

We estimate that about £700 million-worth of deposits will be safeguarded by these schemes. We intend to specify the detail of how that money should be safeguarded and how the schemes should operate in practice in our contractual arrangements. That will ensure that such monies are kept safely and dealt with in accordance with our requirements. Therefore, I hope that the noble Baroness will not pursue her amendment.

I shall deal with Amendment No. 194, before I come to Amendment No. 192. Amendment No. 194 would introduce additional provision into Schedule 10 to allow the Secretary of State to introduce regulations on a number of specific issues. First, where, at the end of the tenancy, the tenant cannot be traced or will not respond when contacted by the landlord, I understand that, where tenants have vacated their property leaving damages, the landlord would wish to use the deposits to offset this.

Under our existing provisions, if the deposit has been retained by the landlord under an insurance scheme, in the circumstances described, unless the tenant requests repayment of the deposit, the landlord will keep it. If the deposit is held by a custodial scheme, the landlord will need to obtain a court order confirming that he is entitled to the money, in the same way that a tenant would be, if the landlord disappeared. That must be right; they are two sides of the same coin. I should be concerned about the implications of allowing the deposit to be released to one party based purely on their say-so.

The amendment also refers to circumstances where, during the tenancy, the tenant causes damage or is late with a rent payment and both parties agree that the landlord can take an equivalent amount of the deposit. If that amount consisted of the whole of the deposit amount, that would remove the landlord's guarantee of the tenant's good behaviour. That does not make sense. If, at the end of the tenancy, the tenant has not paid the arrears or repaired the damage, the landlord will be entitled to the deposit.

Finally, the amendment would allow for regulations to be made to set out what a scheme must do when there is no dispute and the deposit is to be returned to the tenant in full. Our provisions already deal with that circumstance. Under the insurance scheme provisions, the landlord would simply pay the tenant the deposit. That is set out in Schedule 10(6). Under the custodial scheme arrangements, the landlord and tenant would confirm their agreement to the custodial scheme, which would then pay the tenant. That is set out in Schedule 10(4). Those are matters of detail that I am grateful have been drawn to the attention of the House.

As the amendment acknowledges, there is already a power in paragraph 9 of the schedule that allows the appropriate national authority to amend any part of the schedule as appropriate. Therefore, there is no need for another provision allowing for regulations to be made on specific issues. Obviously, problems emerge once the provisions come into force. We will consider amending the schedule; I hope that I have properly explained why we would not do so at this stage.

My noble friend and I are grateful to the noble Lord, Lord Best, for Amendment No. 192. I am also extremely grateful for the co-operation of the Liberal Democrats and the Conservative Party in allowing the Government to bring forward their tranche of amendments. We were committed to no more big blocks of government amendments, so it was necessary to get the approval of the two Front Benches before ODPM got permission from the powers that be to introduce the amendments. It was a good package but it needed consent.

The existing provisions offer protection to any amount paid by a tenant to a landlord to act as security on an assured shorthold tenancy, irrespective of whether it is called a deposit. If a tenant pays money in the expectation that, if he does not breach his agreement, he will get it back at the end of his tenancy, this will be protected. Amendment No. 200 would prevent landlords or their agents charging any other unjustified fees in relation to tenancy agreements, in particular charging a fee instead of a deposit.

The issue of unjustifiable fees was touched on in the consultation paper that we issued in November 2002. However, the responses indicated that there was no consensus on the issue. Respondents were evenly split on whether those fees were reasonable. Of those who thought that it was reasonable, the majority qualified that by saying that it depended on the amount, the situation or the work actually done. Further thought is needed on the issue.

The ability to curb such fees goes beyond the scope of these provisions, which are concerned only with the protection of tenancy deposits. We hope that tenants' awareness of the new deposit protection provisions would lead them not to deal with agents or landlords who took an extortionate non-refundable fee instead of a deposit. Preventing landlords from charging unjustified additional fees would not be possible by way of a simple amendment to these provisions. Careful thought would be required on what would amount to "unjustified". If we were to legislate for the prevention of taking other fees, one undesirable effect would be that landlords who still wish to avoid safeguarding a deposit would simply add the value on to the rent they charge. It is a very complex issue; that is why I am sticking to the notes.

We will consider the issue again in the context of the Law Commission's review of housing tenure, following the publication of its draft Bill early next year. Earlier I asked my noble friend Lord Bassam whether we had seen that in our speaking notes because, although I had read it, it had passed me by and was therefore new to me. It is a positive development. I must make clear that that is not to say that Parliament will deal with the issue early next year. Once we get the Bill from the commission it will be useful.

As the noble Lord, Lord Best, said, some fees are a problem. In fact, some agents charge those fees and others, including charges for inventories, to landlords. That shows that the issue of unjustified fees charged by agents to landlords and tenants is wider than the issue of tenancy deposits. We recognise the tenancy deposit because we can see it, so we know what we are talking about; fees such as the charge for checking inventories or others referred to by the noble Lord, Lord Best, involve very complex legislation. They go way beyond the scope of the few clauses that the House inserted into the Bill a few sittings ago. We will return to the matter, particularly in view of the Law Commission's draft Bill, which will be available for everyone to see early next year.

I hope that that explanation is sufficiently satisfactory to enable this group of amendments to be withdrawn, so that my noble friend can move the package of 20 government amendments.

Lord Best

My Lords, I am not quite sure whether the Minister has covered Amendments Nos. 190 and 191, which are about the custodial scheme. We are worried that some landlords will simply ignore the whole thing, forcing tenants to go to court if they want any redress. Those amendments would allow the tenant to pay their deposit not to the landlord, but straight into the custodial scheme. The other comments—

Lord Rooker

My Lords, as I said, those amendments will be referred to when my noble friend moves the government tranche. Otherwise, I would be making the same speech as my noble friend.

Baroness Hanham

My Lords, I thank the Minister for his reply to my two amendments. I think I heard him say that the Residential Landlords Association or similar organisations could set themselves up a scheme, but that they would have to tender alongside other people on a competitive basis. That seems to be perfectly acceptable and clarifies the matter as far as I am concerned. It may not clarify it for others, but it seems to me to be a perfectly good answer. I am happy with that.

As regards the custodial schemes where the tenant disappears, the problem is simply having to take the time and trouble to go to the expense of bringing court proceedings. The issue of a tenant disappearing could probably be synonymous with one who dies. The situation is effectively the same. But I hear what the Minister has to say on that. I do not need to take the matter any further tonight. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton moved Amendment No. 188:

Page 159, line 33, at end insert— money" means money in the form of cash or otherwise:

The noble Lord said: My Lords, these amendments refine the clauses on tenancy deposits, to which my noble friend Lord Rooker has referred, which we introduced to the House in Committee. I shall quickly go through the amendments. In doing so, I trust that I shall answer points that emerged in the earlier debate.

Amendment No. 188 is a minor amendment to Clause 201(8) to clarify the meaning of "money" in these provisions as not just cash but also cheques, which seems quite important to me. Amendment No. 195 amends Clause 202, entitled, Requirements relating to tenancy deposits". It requires a landlord to deal with a deposit in accordance with an authorised scheme to comply with the initial requirements of a scheme within 14 days and to give the tenant the appropriate information relating to the taking of the deposit within 14 days of receiving it. Amendments Nos. 196, 197 and 198 are minor and consequential amendments to Clause 202.

Amendment No. 199 seeks to ensure that assisted deposit schemes, which provide a valuable service offering an opportunity for the disadvantaged, such as the homeless or those on low incomes to enter into private rented housing, are not undermined by these provisions. Of course, some such schemes offer a letter of guarantee to the landlord of an amount up to the value of the deposit. The organisation promises to pay the landlord at the end of the tenancy if the tenant has been found to have caused any damage to or theft from the property. We have altered the definition of a deposit so that it consists of "movable property" in order that such guarantees fall outside the scope of the provisions and the organisations offering them can continue to operate effectively.

Instead of offering letters of guarantee, some local schemes pay the deposit direct to the landlord. In some instances the tenants are required to pay back the deposit amount to the local organisation in monthly instalments while the landlord then returns the deposit to the tenant at the end of the tenancy. In others, the tenant is bypassed completely and the landlord returns the deposit to the organisation which paid it in the first instance. Those types of deposit loan schemes will need to operate within the new tenancy deposit provisions as money is passed into the landlord's hands. However, we have amended the provisions so that they take account of situations where a third party has made arrangements for the tenant to pay the deposit on their behalf.

In responding to Amendments Nos. 190, 191 and 204 earlier, my noble friend touched briefly on Amendments Nos. 201, 203 and 205. These amendments streamline the proceedings for tenancy deposits to make it easier for tenants to enforce sanctions against non-compliant landlords, an issue raised by the noble Lord, Lord Best, and certainly one of his concerns. A landlord or a letting agent acting on his behalf now has 14 days from receiving the deposit to ensure that it is safeguarded by a scheme, that he has complied with the initial requirement of the scheme and to provide a tenant with information about that scheme and its operation. Until this is done, the landlord is unable to regain possession of the property using the usual "notice only" grounds for possession.

Additionally, we have cut down the number of court hearings required to enforce the provisions. If the landlord or his agent has not complied within 14 days, the tenant can now apply for a court order requiring the landlord to either return the deposit or pay it into a custodial scheme and an order requiring the landlord to pay the tenant an amount equivalent to three times the deposit. We believe that this provides a greater certainty for landlords that they will face a financial penalty if they do not comply with the provisions.

Finally, we have introduced Amendments Nos. 191A, 191B, 291C, 291D, 219E and 291F, which amend Schedule 10 to change the way in which deposits are dealt with at the end of a tenancy where that deposit is safeguarded by an insurance-based scheme. Under the existing provisions, if there is a dispute the landlord retains the deposit and the interest it generates until that dispute is resolved by agreement or a decision of the court. This provides no incentive for the landlord to return the deposit to the tenant until a court order has been granted, irrespective of whether there is any justifiable reason for the landlord to retain it. This is obviously not a desirable effect.

We have therefore amended the provisions so that where the tenant asks the landlord to repay the deposit amount to him and he does not do so within 10 days, the landlord can be required to transfer this amount to a designated account held by the scheme administrator. This will mean that both parties have an equal incentive to resolve any disagreement between them. When a decision has been reached as to what portion of the deposit is due to each party, the scheme administrator must pay any moneys due to each party.

I know that I have gone over this issue at some speed, but I think I have addressed many of the points that were raised in the earlier debate. I am extraordinarily grateful to the noble Lord, Lord Best, the noble Baroness, Lady Hanham, and noble Lords on the Liberal Democrat Benches for the constructive way in which they have approached the whole issue. We have put something in place in legislation which will not only stand the test of time but, more importantly, will match the very understandable concerns over tenancy deposits which have been expressed by tenants—and to a degree by landlords—over a considerable period of time.

The noble Baroness, Lady Gardner of Parkes, asked what it is about these provisions that applies to tenancies with rents of more than £25,000. It is true that if the rent is more than £2,000 per month these provisions will not apply. Most ordinary tenants are not paying rent at that level. We have introduced these amendments with the aim of dealing with the worst abuses in the private rented sector. Obviously those abuses have a disproportionate effect on the poorest members of our communities.

We will look more widely at some of the issues raised by the noble Baroness in the context of the Law Commission's review of tenure. I would not like the noble Baroness to think that the issue has been completely lost. Further work is being done and I hope that, as a product of that, there will be some resolution of the issue. I beg to move.

The Countess of Mar

My Lords, when the Minister referred to the amendments he kept quoting "219s"; I think he meant "191s".

Lord Bassam of Brighton

I did, my Lords.

Baroness Hanham

My Lords, the Minister may be glad to hear that, at this hour, I am going to be uncritical of the amendments moved by the Government. It makes a change. Certainly on our side of the House we have appreciated for a long time that a tenancy deposit scheme needed to be introduced. There have been all kinds of abuses. One of the first things that I did in this House was to deal with the initial phases of the tenancy deposit scheme when it was mooted. It is very desirable.

I am sure that there are small issues which other people may wish to deal with but, like my noble friend Lady Gardner, in terms we welcome the provisions that have been brought forward. Certainly they are a good step forward. Apart from the fact that the Minister does not believe that anyone paying a rent of more than £2,000 a month needs protection, we are broadly satisfied.

9.45 p.m.

Baroness Gardner of Parkes

My Lords, I mentioned the death of a tenant. If the Minister's department is looking at this, it should also look at the equally possible death of a landlord.

On Question, amendment agreed to.

[Amendment No. 189 not moved.]

Schedule 10 [Provisions relating to tenancy deposit schemes]:

[Amendments Nos. 190 and 191 not moved.]

Lord Rooker moved Amendments Nos. 191A to 191F:

Page 255, line 38, leave out from "landlords" to end of line 6 on page 256 and insert "on the basis that, at the end of the tenancies—

  1. (i) such amounts in respect of the deposits as are agreed between the tenants and the landlords will be repaid to the tenants, and
  2. (ii) such amounts as the tenants request to be repaid to them and which are not so repaid will, in accordance with directions given by the scheme administrator, be paid into a designated account held by the scheme administrator,
  1. (ba) amounts paid into that account are kept by the scheme administrator in the account until such time as, in accordance with the scheme, they fall to be paid (wholly or in part) to the landlords or tenants under the tenancies,
  2. (bb) landlords undertake to reimburse the scheme administrator, in accordance with directions given by him, in respect of any amounts in respect of the deposits paid to the tenants by the scheme administrator (other than amounts paid to the tenants as mentioned in paragraph (ba)), and"

Page 256, line 14, leave out "and 6" and insert "to 6B"

Page 257, line 13, leave out "is to be paid" and insert "is payable"

Page 257, line 36, leave out from "if' to end of line 39 and insert "the scheme administrator directs the landlord to pay him any amount in respect of the deposit in accordance with paragraph 6(3) or (7), the landlord will comply with such a direction."

Page 258, line 8, after "this paragraph" insert "and paragraphs 6A and 6B"

Page 258, line 13, leave out sub-paragraphs (2) to (9) and insert—

"(2) Sub-paragraphs (3) to (9) apply where the tenant notifies the scheme administrator that—

  1. (a) the tenant has requested the landlord to repay to him the whole or any part of the deposit, and
  2. (b) the amount in question ("the outstanding amount") has not been repaid to him within the period of 10 days beginning with the date on which the request was made.

(3) On receiving a notification in accordance with subparagraph (2), the scheme administrator must direct the landlord—

  1. (a) to pay an amount equal to the outstanding amount into a designated account held by the scheme administrator, and
  2. (b) to do so within the period of 10 days beginning with the date on which the direction is received by the landlord.

(4) The following sub-paragraphs apply where the tenant or the landlord notifies the scheme administrator—

  1. (a) that a court has decided that the outstanding amount is payable either wholly to one of them or partly to the one and partly to the other and the decision has become final (see paragraph 4(6) and (7)), or
  2. (b) that the tenant and landlord have agreed that such an amount is to be paid either wholly to one of them or partly to the one and partly to the other.

(5) If the scheme administrator is satisfied as to the matters mentioned in sub-paragraph (4)(a) or (b) (as the case may be), he must—

  1. (a) pay to the tenant any amount due to him in accordance with the decision or agreement (and, to the extent possible, pay that amount out of any amount held by him by virtue of sub-paragraph (3)), and
  2. (b) comply with sub-paragraph (6) or (7), as the case may be.

(6) Where any amount held by the scheme administrator by virtue of sub-paragraph (3) is more than any amount due to the tenant in accordance with the decision or agreement, the scheme administrator must pay the balance to the landlord.

(7) Where any amount so held by the scheme administrator is less than any amount so due to the tenant, the scheme administrator must direct the landlord to pay him the difference within the period of 10 days beginning with the date on which the direction is received by the landlord.

(8) The scheme administrator must pay any amounts required to be paid to the tenant or the landlord as mentioned in subparagraph (5)(a) or (6) within 10 days beginning with the date on which the notification is received by the scheme administrator.

(9) The landlord must comply with any direction given in accordance with sub-paragraph (3) or (7).

6A (1) The designated account held by the scheme administrator must not contain anything other than amounts paid into it as mentioned in paragraph 6(3) and any interest accruing on such amounts.

(2) Subject to sub-paragraph (3), the scheme administrator may retain any interest accruing on such amounts.

(3) The relevant arrangements under section 201(1) may provide for any amount paid in accordance with paragraph 6(5)(a) or (6) to be paid with interest—

  1. (a) in respect of the period during which the relevant amount has remained in the designated account, and
  2. (b) at such rate as the appropriate national authority may specify for the purposes of paragraph 3(5)(b).

(4) With the exception of any interest retained in accordance with sub-paragraph (2), nothing contained in the designated account may be used to fund the administration of the scheme.

(5) In this paragraph "the relevant amount", in relation to a tenancy deposit, means the amount, in respect of the deposit, paid into the designated account by virtue of a direction given in accordance with paragraph 6(3).

6B (1) The scheme must make provision for preventing double recovery by a tenant in respect of the whole or part of the deposit, and may in that connection make provision—

  1. (a) for excluding or modifying any requirement imposed by the scheme in accordance with paragraph 6 or 6A, and
  2. (b) for requiring the repayment of amounts paid to the tenant by the scheme administrator.

(2) In this paragraph "double recovery", in relation to an amount of a tenancy deposit, means recovering that amount both from the scheme administrator and from the landlord."

On Question, amendments agreed to.

[Amendment No. 192 not moved.]

Lord Rooker moved Amendment No. 193:

Page 259, line 19, at end insert—


In this Schedule references to tenants under shorthold tenancies include references to persons who, in accordance with arrangements made with such tenants, have paid tenancy deposits on behalf of the tenants."

On Question, amendment agreed to.

[Amendment No. 194 not moved.]

Clause 202 [Requirements relating to tenancy deposits]:

Lord Rooker moved Amendments Nos. 195 to 199:

Page 160, line 7, at end insert—

"(2A) Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.

(2B) For the purposes of this section "the initial requirements" of an authorised scheme are such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit.

(2C) A landlord who has received such a tenancy deposit must give the tenant and any relevant person such information relating to—

  1. (a) the authorised scheme applying to the deposit,
  2. (b) compliance by the landlord with the initial requirements of the scheme in relation to the deposit, and
  3. (c) the operation of provisions of this Chapter in relation to the deposit,
as may be prescribed.

(2D) The information required by subsection (2C) must be given to the tenant and any relevant person—

  1. (a) in the prescribed form or in a form substantially to the same effect, and
  2. (b) within the period of 14 days beginning with the date on which the deposit is received by the landlord."

Page 160, line 15, leave out "Subsections (1) to (4)" and insert "The provisions of this section"

Page 160, line 16, leave out subsection (6).

Page 160, line 24, leave out "subsection (6)" and insert "this section—"

Page 160, line 25, at end insert— "property" means moveable property; relevant person" means any person who, in accordance with arrangements made with the tenant, paid the deposit on behalf of the tenant."

On Question, amendments agreed to.

[Amendment No. 200 not moved.]

Clause 203 [Proceedings relating to tenancy deposits]:

Lord Rooker moved Amendments Nos. 201 to 203:

Page 160, line 27, leave out subsections (1) to (3) and insert—

"(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person (as defined by section 202(7)) may make an application to a county court on the grounds

  1. (a) that section 202(2A) or (2D) has not been complied with in relation to the deposit; or
  2. (b) that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

(1A) Subsections (4) and (4A) apply if on such an application the court—

  1. (a) is satisfied that section 202(2A) or (2D) has not been complied with in relation to the deposit, or
  2. (b) is not satisfied that the deposit is being held in accordance with an authorised scheme,
as the case may be."

Page 160, line 43, leave out "tenant" and insert "applicant"

Page 161, line 3, at end insert—

"(4A) The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order."

On Question, amendments agreed to.

[Amendment No. 204 not moved.]

Clause 204 [Sanctions for non-compliance]:

Lord Rooker moved Amendments Nos. 205 to 208:

Page 161, line 11, leave out from "tenancy" to end of line 12 and insert "at a time when—

  1. (a) the deposit is not being held in accordance with an authorised scheme, or
  2. (b) the initial requirements of such a scheme (see section 202(2B)) have not been complied with in relation to the deposit."

Page 161, line 13, leave out "202(6)" and insert "202(2D)"

Page 161, line 15, leave out "that provision" and insert "202(2D)(a)"

Page 161, line 16, leave out subsections (3) and (4).

On Question, amendments agreed to.

Baroness Hanham moved Amendment No. 209:

After Clause 204, insert the following new clause—