FITNESS CERTIFICATES

HL Deb 09 September 2004 vol 664 cc741-814

(1) A person who proposes to apply for a licence in respect of an HMO within the area of a local housing authority or who proposes to become the manager of one or more houses within the area of a local housing authority may apply to that authority for a certificate that he is a fit and proper person for the purposes of section 65.

(2) The provisions of sections 62(2) to (7) and 65(1) to (3) shall apply in the case of an application for a certificate under this section.

(3) Local housing authorities shall grant a certificate if they are satisfied that the applicant is a fit and proper person for the purposes of section 63(3)(b)(i) and (d) and, in determining any subsequent application by the holder of the certificate in relation to an HMO licence, the holder of the certificate shall be treated as having satisfied the authority in relation to those matters unless proceedings are pending for the revocation of the certificate.

(4) Any certificate shall remain in force for the period of 10 years from the date of its grant unless revoked in the meantime but without prejudice to the right of the holder of the certificate to apply for a further certificate on the expiration of an earlier certificate.

(5) For the purposes of this section the following provisions of this Act shall apply—

1. (a) section 69(1) (other than paragraph (c));
2. (b) section 69(2)(a) and (b);
3. (c) section 69(7), (8) and (9) (omitting the words "or a relevant person" in subsection (9));
4. (d) paragraphs 22 to 25 and 29 in Part 2 of Schedule 5,

(except that references to "the relevant person" shall be omitted).

(6) The provisions of Part 3 in Schedule 5 (appeals against licence decisions) shall also apply to decisions in respect of a refusal to grant a certificate or the revocation of a certificate (except that any reference to "a relevant person shall' be omitted for these purposes)."

The noble Baroness said: Under this Bill, houses in multiple occupation and selected licences will be issued on an individual house-by-house basis. Each time the local council has to consider among other things whether the licence holder and the manager of the properties are fit and proper persons. That is a matter that we dealt with extensively before lunch.

The purpose of the proposed clause is to improve and simplify the system. It would enable a prospective licence holder or manager of more than one property in a local authority area to apply to the authority for an individual certificate of fitness for the purpose of licensing. The authority would then only need to investigate that particular person once. If found to be a fit and proper person, a certificate would be issued to that person. He could then rely on the certificate each time he applied to the authority for a licence for a house, so there would be no need for the authority to investigate the position time and time again.

A certificate of fitness once granted would last for 10 years, unless it was revoked for good reason in the mean time. There would be a right of appeal against the refusal of a certificate. Once the 10-year period was up, the person concerned could reapply and be reconsidered.

The Government estimate that 120,000 houses in multiple occupation licences are going to be required as a result of this legislation. We are aware of cases where the same landlord might have to apply at least 150 times for an HMO licence. It would make the process much simpler if that person could just apply the once to obtain a certificate of fitness.

A certificate would also assist when a property is sold. The seller may prefer to sell the property to someone who he knows already holds a certificate of fitness. That would assist the conveyancing process. Someone wanting to invest could obtain the certificate in advance.

This proposed procedure would allow application forms for licences to be simplified. Such a system of certificates would save a lot of work for all concerned, particularly local authorities, as they would only need to investigate any applicant who holds a certificate once. In the absence of a certificate procedure, each time an applicant completes an application form he or she will have to provide the same information over and over again.

A similar system has recently been introduced for liquor licensing, where designated supervisors have to hold a personal certificate of fitness in addition to the licence held by the individual premises. I beg to move.

Baroness Maddock

Amendment No. 86 is virtually the same as Amendment No.85. With the leave of the House, we have agreed among ourselves to debate them together.

The only difference between these two amendments is that I considered that allowing the certificate of fitness to go unchecked for 10 years was too long and I suggested that it should be five years.

This is an important point. Can the Minister clarify how the system will work? I cannot imagine that the Government meant that somebody who already has a certificate that says they are a fit and proper person has to go through the process every time. It may be that this is unnecessary as it is not going to happen. But if it does, we need to deal with this matter. As the noble Baroness said, a rule similar to the one that we are trying to put on the face of the Bill operates in liquor licensing.

I will listen to the Minister with interest. The amendment is intended to be helpful. Bureaucratic operation should not be repeated time and again. Can the Minister assure us that that will not happen, either through the agreement to an amendment like this one or through government guidance on how they envisage the licensing system operating? I speak to both amendments in that spirit.

Lord Borrie

I do not know whether these amendments are desirable but they raise an important matter. The wish to simplify the application process stems from a good motive.

If the Minister is disinclined to support the amendments and if he accepts the point made by the noble Baroness, Lady Hanham, that there is a burden of approximately 120,000 licences, can he reassure us that the licensing process will not take so long that the fundamental objectives of this part of the Bill—to control the lack of safety and other deficiencies in houses in multiple occupation—will be defeated?

Lord Bassam of Brighton

I understand the thinking behind the amendment. Cutting down on duplication and bureaucracy is worthwhile.

I will speak to both amendments as it makes sense to deal with them together. But they would not eliminate the need for separate licence applications on different properties.

Over time, it must be right that as regards every application for a licence a local authority should consider afresh whether or not the applicant remains a fit and proper person. Over time, circumstances change, new information becomes available and the ways in which properties are managed change. The presentation of a certificate valid for 10 years, unless revoked, would not provide that assurance without further checking.

We have thought carefully about this matter. The local authority will obviously need to be aware of the previous decisions that it has made about the fitness of those that it has licensed. In our consultation on selective licensing published on 16 July, we addressed this matter directly. We are dealing with the point raised by the noble Baroness, Lady Maddock, by consulting on whether landlords of several properties could provide information about themselves once in relation to all of their properties, rather than filling in these details on separate forms for each property.

We are also inviting views about the practical implications of this for the local authorities. We do not anticipate that local authorities will need or want to duplicate all of their inquiries on the fit and proper test. If it has recently found that a landlord is a fit and proper person to manage 26 Acacia Avenue, then he will obviously be a fit and proper person to manage 27 Acacia Avenue—unless there is evidence to the contrary. I cannot envisage circumstance in which that would happen if the applications were made at the same point.

The Bill enables us, by virtue of secondary legislation, to specify both the form and content of the application form used in licence applications. This should enable central and local government to have the scope to devise something that is practicable and workable, that tackles the understandable and proper concern raised by the amendment.

The amendment is not necessary. Clause 65 sets out the appropriate basis for local authorities to decide on the fitness of landlords or their agents. Clause 62(5) does that for HMO licensing and Clause 84(5) does it for selective licensing. That provides sufficient scope for regulations about the making of applications to address the issues that have been raised by the two noble Baronesses who have contributed and supported by my noble friend Lord Borrie. I hope that those words reassure them and will encourage their friends in local government to respond to the consultation that we published in July.

Baroness Hanham

We will certainly encourage people to respond to the consultation. It is absolutely a sine qua non that a person should not have to keep on applying for licences. It seems to make a nonsense of the whole process, particularly at the outset when people will have to apply for licences for every property that they own.

There must be a system whereby people can be signed off for one property in respect of all the properties that they own. I am not sure that this should not be in the Bill. The trouble with legislation and secondary legislation is that so much—

Baroness Maddock

Perhaps I may clarify with the noble Baroness that what we are trying to achieve is not about applying for the licensing of the properties, but about individuals and their fitness certificate. I am a little confused because I would not want to be associated with that. I accept what the Minister said. My sense of meaning is that we are concerned with the fitness certificate for the person and not the property: I want to make clear that I agree with the person but not the property.

Lord Bassam of Brighton

My understanding is as the noble Baroness, Lady Maddock, has said.

Baroness Hanham

I have been causing confusion. I am talking about the person, but the person will still have to be licensed. I hear the Minister's reply, which is moderately reassuring. But we need to look at it and will watch the consultation process with interest. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 86 not moved.]

Clause 66 [Licence conditions]:

Lord Hanningfield moved Amendment No. 87:

Page 44, line 1, leave out "local housing" and insert "appropriate national"

The noble Lord said: This is a simple probing amendment that is designed to press the Minister for a little more detail about what he envisages would be the additional conditions that a local authority considers appropriate in this case. Again, what assurance can he provide that any additional conditions will not be excessive, unduly bureaucratic and costly on the landlord? That goes back to a previous amendment and comments on "gold-plated taps".

If the Minister can provide us with the assurances that we are seeking we will be happy not to press the issue any further. I beg to move.

Lord Bassam of Brighton

As the noble Lord explained, Amendment No. 87 would take away local authority discretion to set appropriate licence conditions and, as such, it is a probing amendment.

We appreciate the need for some standard conditions that would be necessary in all HMOs to ensure the same level of protection for the occupants up to a point, which we are trying to achieve by licensing those properties.

That is why we have made the conditions listed in Schedule 4 mandatory for all licensable HMOs. However, we are also aware that housing situations will not be the same in all local authority areas. It is therefore important that the local housing authorities are encouraged to introduce some additional conditions that could assist them in dealing with the problems in their area. One could, for example, compare Kensington and Chelsea with Christchurch, Brighton, Basildon or wherever. They will not be the same in every local authority. It may be important for the local authority to apply some additional conditions.

Clause 66(1) would allow a local authority to take a proactive stance to set out additional standards of management for HMOs in their area. We are not seeking to allow local authorities to impose unreasonable licence conditions. The Bill lists a set of illustrative conditions that can be imposed, which has the effect of limiting the type of conditions that could be imposed. Any conditions imposed by the local housing authority must, of course, be reasonably required. The reasonableness test will obviously apply, but only to the narrow focus of issues related to the management, the use and the occupation of the house, its contents and conditions. In my recollection, certainly there are particular problems peculiar to local areas. I have no doubt that the conditional flexibility that this provision would enable will assist local authorities in targeting those HMOs that perhaps are in the worst condition and help to raise standards in the locality.

If a licence holder does not agree that a particular condition is appropriate or that the scope is reasonable, he or she can appeal against the local authority decision to a residential property tribunal, which we have discussed a little in the past. Of course, that tribunal would be able to come to a reasonable view having listened to the concerns of all the parties.

We are not seeking to impose or enable local authorities to be unreasonable. They will have to behave in a way that is consistent and practicable in the circumstances. We see this as a useful measure that will enable us to have a core approach, but with some necessary add-ons where they will be of benefit to both the landlord and the tenant in raising standards. That is how we see this working.

Lord Hanningfield

I thank the Minister for that reply. Obviously, it is in line with some of the other replies regarding the discretion that local authorities might have. We will examine those replies to determine whether we need to take the matter further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 agreed to.

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

Baroness Maddock moved Amendment No. 87A:

Page 189, line 38, after "house" insert "a minimum fixed term agreement and"

The noble Baroness said: Amendment No. 87A would amend paragraph 1(5) of Schedule 4. This issue has been raised with me by people involved in housing law. It concerns the type of agreement that a tenant will obtain and the duration of the tenancy. I understand that, currently, the Law Commission is looking at how agreements on lettings work and a standard agreement for all lettings.

Perhaps I may develop that point further in relation to the Housing Bill. At present, in effect, an assured shorthold tenant is given security of tenure of at least six months. A court cannot make a possession to take effect earlier than six months from the commencement of the tenancy. Almost entirely, the occupiers of HMOs—to whom this provision relates—are assured shorthold tenancies. The Court of Appeal has recently recognised that an assured shorthold tenancy is the normal form of tenure in the private sector.

It is possible that that security will cease following recommendations from the Law Commission, which were suggested on 5 November 2003 in its interim report No. 284, Renting Homes: Status and Security at paragraph 1.8. We are still awaiting the final report and Bill. As I said earlier, the Law Commission is recommending the application of a standard agreement for lettings.

We accept that for those who live in houses in multiple occupation, the greater proportion of the occupiers tend to be some of the most vulnerable in society. Obviously the purpose of introducing the licensing scheme is to protect such people. At the moment no minimum period is suggested for a tenancy agreement. Possibly the Government think that that would be too prescriptive but nevertheless, those properties provide homes for occupiers who would benefit from a minimum period stated, so that the occupier knows that for that period at least the landlord is committed to continue the agreement to occupy.

It may be that the Government understand that this is in the offing, and they may know that they can deal with it when it happens. I raise it as a legitimate issue, given that we are making new legislation. I beg to move.

Lord Bassam of Brighton

I am grateful to the noble Baroness for explaining her amendment in some detail. I hope that I can offer some reassurance.

Most tenancies in the private rented sector are granted as assured shorthold tenancies. Those granted before 28 February 1997 must have a minimum initial period of six months; those granted after that date need have no minimum duration.

However, the courts cannot grant orders of possession on the "no fault" ground to take effect within the first six months of any assured shorthold tenancy. Tenants who comply with the conditions of their tenancy have, in every case, a right to stay in the property for a minimum period of six months.

Imposing a requirement on landlords to grant an initial fixed term period of unspecified duration would not confer any additional rights on tenants.

The effect of the amendment, if accepted, could actually be to the detriment of tenants who wanted to give up their tenancy before the initial fixed term period had expired. They would be contractually obliged to pay rent for whatever the fixed term of the tenancy was.

I understand the sentiment behind the amendment—and understand it even better, having heard what the noble Baroness said about the Law Commission report on renting. We certainly agree that tenants should have a clear idea of the terms on which they occupy their home. We agree that it should include details of any fixed term period at the outset. But, we are not clear that passing this amendment would assist in meeting this objective. We shall, of course, reflect carefully on what the Law Commission finally reports. As things are, we think that we have covered the point raised by the noble Baroness.

Baroness Maddock

I am grateful to the Minister for that explanation. Not being an expert on housing law, I think that I shall have to consult further. The Minister's reply was helpful, and at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 88 not moved.]

Schedule 4 agreed to.

Clause 67 [Licences: general requirements and duration]:

Lord Hanningfield moved Amendment No. 89:

Page 45, line 11, leave out "That period must not end more than" and insert "The licence period shall end"

The noble Lord said: As the Bill stands, the maximum length of time that a licence can stand is five years. This probing amendment is designed to test what the Government see as the likely period of a licence. The local authority may want to issue licences for property that changes hands or changes its status. It is important to know precisely what the Government intend during the period in which the licence applies because of the possibility of rapid change in type and status of various kinds of property. I beg to move.

Lord Bassam of Brighton

Clause 67(1) provides that a licence must not relate to more than one house in multiple occupation. A licence is valid for a period that is specified in it, but for not more than five years, although it may be brought to an end earlier if there is non-compliance with a provision of the licence.

A licence is non-transferable, and upon the death of a licence holder, a three-month temporary exemption would automatically be granted.

The amendment provides that a licence must be granted for a period of five years in all cases. In practice, we expect the vast majority of licences to be granted for five years, not least because that will minimise the administrative burden on local authorities. If a licensee did not agree with a decision to grant a licence for a shorter period, he could appeal against that decision and a local authority would have to explain why a shorter period was appropriate. However, we want to allow flexibility and allow the authority to use its discretion where it is right to do so.

We think that flexibility may sometimes be advantageous. For example, if a local authority knew that an additional licensing designation would end on a particular date, it could grant licences which would run to that date and it would not have to go to the trouble of revoking each licence individually.

I am not sure that the amendment is terribly helpful, and hope that, having heard what I have said, the noble Lord will feel able to withdraw it. The issue of flexibility is important and may well benefit not just the tenant but the landlord as well, and make for an easier application of the licensing regime.

Lord Hanningfield

As I said, it was a probing amendment. I thank the Minister for his reply. We all want flexibility as long as bureaucracy is not increased. I shall read what the Minister has said in detail, but in the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 90: Page 45, line 11, leave out "5" and insert "10

The noble Lord said: The Bill currently states 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 this is a gross underestimate and considers that the figure will 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.

One large northern city has estimated that it will take more than five years to process all relevant accommodation, by which time they will be starting the process of renewing licences. With a backlog likely, it would be sensible to issue a licence for 10 years, not five, as the Bill proposes.

With all the other safeguards in the Bill relevant to the condition of a property, there are sufficient safeguards to provide for any significant deterioration in the standard of the accommodation, and so allowing for a longer gap between full assessments. If it considers it appropriate, there is nothing to stop a local authority inspecting more often to ensure compliance.

We have just talked about flexibility. There is a power to vary licences at any time. There is also power to revoke the licence in the case of a problem property, as the Minister has just said. The management regulations will also apply. HHSRS assessments can be carried out at any time.

Extending the period will remove pressure on local authorities, save them time and taxpayers' money, while removing a burden from landlords. Too frequent renewals mean that local authorities will require extra staff to process such applications when the Chancellor of the Exchequer, as I said earlier, wants to cut considerable numbers of those employed in the public sector.

Further, too frequent renewals seem to be fee driven. Again, it is simply a cost that will be passed on to tenants in the long run. A longer licence will also reduce the incidences of licence renewal assessments being made within a short time of assessments being made when a property changes ownership. Given the degree of turnover in rented properties, it is likely that a majority will change hands within 10 years, so causing most to be re-assessed at some time within the period of a 10-year licence. Ten years provides a sensible time frame in which to operate a renewal system. In many other areas, such as fire certificates for commercial premises, there are no time limits at all. Why, therefore, is it necessary in the case of licensed HMOs to impose such an unnecessarily short maximum duration for licences? I beg to move.

3 p.m.

Lord Borrie

I agree with a number of the points made by the noble Lord, Lord Hanningfield. I have already expressed my concern today about the efficacy of the licensing system and the ability or inability of local authorities up and down the country to perform this huge task. The noble Lord, Lord Hanningfield, has said that many local authorities question whether the total number of licences will be as few as 120,000 because it may be very much higher, in which case the burden on local authorities will be greater.

I am more concerned that the licensing requirement is effective and follows adequate inspection of premises and inquiries into the landlord or manager to ensure that they are fit persons than with the length of the term of the licence. However, the noble Lord, Lord Hanningfield, has made some important points about that issue. We need a reassurance from the Minister regarding the effectiveness of the local authority licensing operation being proposed in the Bill. If the Government wish to keep to a renewal of these licences every five years, they also need to satisfy us that at the end of that term local authorities will not still be dealing with the backlog of the first applications.

I do not personally support the amendment for what it says, but it does give the Minister an opportunity to give reassurances about this fundamental part of the Bill. I hope that my noble friend will be able to do so.

Lord Rooker

This is another occasion on which a seductive argument is being used because it is coming from both sides of the Committee. However, I would say at the outset that it just shows what is the position in this country: we do not know how many houses are in multiple occupation. We do not know how many fit the criteria of housing more than five people and being of three storeys and above. The figure just referred to by the noble Lord is something between 120,000 and 300,000. If nothing else, that justifies what we are proposing in the Bill.

While I may be corrected—it is always dodgy to use examples—the noble Lord, Lord Hanningfield, cited the example of the fire certificate. That is not a good example because they are being phased out. During the passage of one of the fire Bills it was proposed that we move over to the risk management of buildings. The notion that a certificate pinned up means that a building is safe, thus giving people a false impression, is being phased out.

However, I am quite prepared to admit that there is no open and shut case in opting for five years; there is nothing brilliant about that number. However, I think that 10 years is unreasonable. We would be happy to look at figures around a period of five years, but the idea of the certificate is to ensure that local housing authorities know what is going on in their area regarding houses in multiple occupation. Leaving it for a decade would be far too long because that would undermine the purpose of granting the licence in the first place.

I do not know the northern town referred to by the noble Lord, although I did note that he mentioned a "town" rather than a "city" whose councillors claim that they will not be able to deal with all the relevant houses in the five-year period. All I can say in response is that there must be something wrong with the administration in that town. Local authorities will be expected to prioritise the inspection of their houses in multiple occupation. I find it astonishing to think that a local authority run by professionals and good councillors could not get its business affairs organised to the extent that it could not do that.

I say that bearing in mind that there will be no extra costs. The fee structure will pay for the process, so there is no excuse about extra resources. It is true that planning and training must take place, but we really want to see local authorities keep in touch on the ground with regard to what happens with houses in multiple occupation. Having an overly long period in which to review the licences would undermine that process.

I have a standard line here which states: I think that the Government have pitched the maximum duration of licences about right". I cringe in reading it out. However, I started by pointing out that, while a five-year period is not perfect, 10 years is unreasonable for local authorities to keep in touch with what is happening with HMOs in their areas.

We shall certainly consider whether the term should be six years or seven years, but we are clear that 10 years is way too long. Given that the maximum duration of a Parliament is five years, I do not see why that length of time should not fit the bill here as well.

Lord Hanningfield

I thank the Minister for that reply, and for acknowledging that there could well be a problem. I agree with him that the fact that we do not know how many houses are in multiple occupation is a pretty terrible state of affairs. If the estimate varies between 150,000 and 300,000, obviously it will take a lot longer and be far more work for local authorities if they have to inspect 300,000 properties.

I was pleased to hear that there might be some flexibility in the term. As I said earlier, many authorities have trouble recruiting enforcement officers for planning purposes. These are somewhat similar inspection jobs. In particular in some cities in the south-east and parts of the London area, local authorities will not be able to recruit enough people. Even with training and so forth, there are simply not enough people. Many authorities will face problems getting the process off the ground.

While I would consider possibly moving down from a period of 10 years, I think that the Government need to consider the term again so that the whole process does not grind to a halt because people cannot cope with it. With those remarks, I hope that between now and the next stage the Government will think further on this. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 91: Page 45, line 17, leave out "not

The noble Lord said: As the Bill stands, HMO licences and selected licences are not transferable. A separate amendment proposes to delete Clause 67(6) which currently provides that licences are not transferable. These remarks also relate to that amendment.

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, although as a result of our last 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. Landlords could be forgiven for thinking that this is a system which enables a new fee to be charged all over again.

The Government's avowed intention is to simplify the conveyancing procedure, such as Part 5 of this Bill relating to home information packs. However, the inability to transfer a HMO/selective licence has the opposite effect. Virtually all property requiring an HMO/selective licence will be bought with borrowed money. ODPM representatives have suggested that all the buyer needs to do in order to secure a loan is to apply for a licence. However, our discussions with lenders indicate that they will be willing to release funds for the purchase only once the buyer has actually been granted his licence. Merely applying will not be enough. Lenders view the certificate as an essential part of the title, and without the buyer having a licence in place, the title will not be regarded as good and marketable.

The Government have indicated that the old licence will remain in force to cover the person requiring the property until he is granted a licence, but the seller will not want to be responsible for a property he no longer owns. In any case, applications will have to be made to a local authority for a licence, and this will slow down the conveyancing process. I have just mentioned the difficulties regarding the recruitment of staff in some places.

The more the local authority has to consider, the longer it will take. Different local authorities will take different times. In the first five years, local authorities will have to inspect many houses for the HHSRS assessment, a point made on an earlier amendment. What priority will they be able to give to applications made by buyers? The more that the local authority has to consider when the buyer applies, the longer and more uncertain the process will be.

Conditional contracts will become the norm for the sale of properties which require a licence. This already happens with public houses and other businesses which require licences. If there is a risk that the local housing authority will require higher standards or change the conditions, then the process of negotiation of a conditional contract will be that much more tortuous and lengthy. For example, who will meet the cost of carrying out any works, the buyer or the seller? What is to happen if the buyer does not like the new condition that is imposed? To what extent does the buyer have to act reasonably in deciding whether he rejects a new condition? These are all matters with which conveyancers will have to grapple. On the other hand, if the only issues to be dealt with are personal to the buyer, negotiating the conditional contract would be much more straightforward.

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. Finally, Amendments Nos. 91 and 122 are consequential to this new clause, removing the stipulation in the Bill that licences cannot be transferred. I beg to move.

Lord Rooker

Amendment No. 93—the substantive amendment, as the noble Lord said—is a new clause which provides that transfers may take place either with the agreement of the licence holder or when there is a change of circumstances, and that the transfer takes effect at the time that it is made. The same provisions would apply to licence transfers as apply in respect of applications for licences, including appeals to a tribunal against refusal of a transfer. The only exception is that it provides that on transferring a licence the local authority does not have to satisfy itself as to the maximum number of households or persons appropriate for the property in question.

Apart from the exception I have mentioned, the processes and considerations involved in respect of licence transfers are almost identical to those set out in the Bill for licence applications. So we do not think that there is a lot of point in setting up such a process. It would be just as much work for the new licence holder and the local housing authority but, at the end of it, the new licence holder would not have a five-year licence. He would only have whatever was left on the old licence.

I want to reassure the noble Lord that it is our intention that the application forms will enable applicants for licences to highlight relevant information that would not change with the licence holder. This will include such information as the maximum number of households or whether a licence applicant or manager has already passed a "fit and proper" test with respect to a different property. Therefore, there would be no need for a local authority to check the information again.

Twice now, the noble Lord has used the term "fee-driven". This cannot be fee-driven. This is not like the allegation about speed cameras.

Lord Hanningfield

We do not want it to be fee-driven—I am speaking for the landlords, not my local authority interest—but some landlords fear that it might be fee-driven to get income. I notice that the Minister said he did not want that to happen. We do not want that to happen either.

Lord Rooker

It cannot be fee-driven. There is no profit for local authorities to be made out of this. They can charge only for the cost of running the system. There is no interest in building up a bureaucratic system. It is not fee-driven. It is important that we send the right messages out to the industry, which is providing housing for millions of people in this country. It is a valuable commodity and a valuable service. The vast majority in the industry do a really good job and will welcome what we are doing.

The other amendments are consequential and I do not think that they need comment. We will debate another amendment that would allow transfers to existing licence holders so we have not finished this part of the debate. For the reasons I have given, we do not think that the amendment serves much purpose.

Lord Hanningfield

I thank the Minister for his reply. I am pleased to hear him say that the majority of the people in the industry are very responsible and provide a very valuable service, as we all agree. A lot of the amendments that we are tabling are promoted by the industry, which is concerned about the legislation. It supports the legislation but is concerned about its operation, as are local authorities. So the two sides are concerned, as I am sure the Minister will acknowledge. Most of the amendments that we are tabling are from one side or the other. They are not politically inspired amendments, they are inspired by people who want to make certain that the legislation works. I heard what the Minister said about that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.15 p.m.

Baroness Maddock moved Amendment No. 92:

Page 45, line 17, at end insert "except where that person is a current licence holder for one or more properties in the same local housing authority. ( ) In such cases he shall only have to satisfy the local housing authority in respect of matters outlined in section 63(3)(e) to have the licence transferred to him.

The noble Baroness said: As the Minister has just said, this is the same debate as we had on the previous amendment. The idea is to explore with the Government whether there are ways of transferring in limited circumstances. This is a probing suggestion. All afternoon, and this morning, we have been trying to see whether we can assist in the way this will operate. As the noble Lord, Lord Hanningfield, said, it is landlords who have been trying to assist by putting forward things that would assist them.

I do not pretend that this is a perfect amendment, or that it would be entirely satisfactory, but I hope that the Minister can explore how we can find ways of reasonably transferring licences. There are questions around the buying and selling of properties and mortgage lenders are concerned about how this might work out. The Government have looked at that quite carefully and have made comments on it. I look forward to what the Minister says on the general issue. I beg to move.

Lord Rooker

I take Amendment No. 92 in the spirit in which the noble Baroness has moved it. Clause 67(1) provides that a licence must not relate to more than one house in multi-occupation and that the licence is valid for the specified period, which may not be more than five years according to the Bill, although it can be revoked and finished earlier. Clause 67(6) provides that licences are not transferable. Under Clause 67(7), on the death of a licence holder the licence ceases to be in force. However, Clause 67(8) provides for a three-month temporary exemption to be granted automatically, as if one had been granted under Clause 67(2). Without this provision, the personal representatives of the deceased licence holder could inadvertently be guilty of running an HMO without a licence. The exemption can be renewed for another three months at the request of the personal representative.

Amendment No. 92 provides that the licences are transferable in certain circumstances. They are that the applicant is a person who is already a licence holder for one or more properties in the same local housing authority area and that the proposed manager of the house is either the person having control of the house or a person who is an agent or employee of the person having control of the house. It seems an eminently sensible, rational proposal that I cannot accept today. I am not saying that we will even take it away, but it does seem to be a reasonable proposal as the person is already operating in the area and is already a "fit and proper" person.

However, we come back to the issue of not knowing as much about HMOs as we should. First, we do not know how many there are. Not knowing is the real problem. One of the aims of the licensing scheme is to ensure the good management of a particular property before a licence can be granted. That means that the landlord or the proposed manager needs to be fit and proper with no relevant convictions. Suitable management arrangements must be in place for that property. We are not working on the assumption that, just because an applicant is a licence holder of the authority in relation to property A, property B, which they own and run, is run to the same management standards. It is too risky to make that assumption. They may have various sizes of HMO; they may have a licence to run a very small HMO, but, as a sideline, they may also have a couple of larger ones where the management issues are wholly different from the one for which they have the original licence. Therefore, we need to be able to check each property regarding the licence.

The argument is quite reasonable and rational—there is a fit and proper person carrying out this business in a local authority. But there is so much that we do not know about the industry that we need to tread very carefully when it comes to size. The amendment would do away with the check to ensure that, where employed, the manager of the house was a fit and proper person or that the management arrangements were suitable. The same information with regard to criminal convictions would apply. The real nub of the argument is whether the management arrangements would be relevant to and suitable for the property.

As I said, it is our intention that application forms will be designed in such a way as to enable applicants for licences to highlight all the relevant information to the authority so that they can be fast-tracked where necessary. Such relevant information would include whether the licence applicant or, indeed, the manager, where employed, had already passed the proper test with respect to a different property. The aim is to make sure that the application process for a potential new licence holder and the local authority is as uncomplicated as possible. There is no purpose in having loads of extra forms and red tape slowing down the system. Where possible, we want to avoid having the local authority carry out the same checks again, because that does not make sense.

That said, we are only at Committee stage. That applies equally to what the noble Lord, Lord Hanningfield, said. There will be a rather longer gap between Committee and Report. My right honourable friend Keith Hill is a very listening Minister—that is, assuming that he is still Housing Minister as I speak. I once made a joke at a conference and I was rung up the day after.

We are very practical about this; we genuinely want to work with the industry and will be more than happy to listen to its views and read submissions after what has been said in Committee on this group of amendments. We want this to work.

Baroness Maddock

I thank the Minister very much for his full explanation and sympathetic tone. We on these Benches hope that he is not shifted around and that he will take the Housing Bill through to completion.

I will look carefully at what the Minister has said and consult with others. There may be something that we can do to ensure that, in certain circumstances, it may be possible to have some form of transfer of licence. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 67 agreed to.

[Amendment No. 93 not moved.]

Baroness Hanham moved Amendment No. 94: After Clause 67, insert the following new clause—

"HMO LICENCES: BREACH OF CONDITIONS

(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 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 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 Baroness said: This is quite a big group of amendments, of which Amendments Nos. 94 and 95 are in my name. Amendment No. 95 is slightly akin to one tabled by the Government, so I hope that we will be able to agree to that without trouble.

Let me start with Amendment No. 94. On selective licensing for houses of multiple occupation, the whole thrust of the Bill is to criminalise in the event of noncompliance. The other sanction for breach of licence is revocation. This is draconian and ought to be reserved for serious cases or those where there have been repeated infringements. Instead, a breach of condition notice is suggested as an intermediate step which a local authority can adopt in less serious cases. That is the general thrust of this new clause.

A breach of the condition notice 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 a notice would be a criminal offence, attracting an appropriate 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. This would enable 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 would ensure compliance without the need to go any further.

The amendment would allow local authorities to fire a warning shot, and is another weapon in their armoury. It would also avoid criminalising landlords at the outset. It would save both local authorities and landlords costs and, by not having such a heavy-handed approach, would help foster good relations between housing associations and landlords.

There are many other examples in existing legislation such as an improvement notice under the Health and Safety at Work etc. Act 1974 and for breach of conditions of planning permissions.

Amendment No. 95 deals with the failure of a serious or repeated nature. The Bill does not lay down any criteria for a local authority to consider revocation or breach of a licence condition. There is therefore the possibility that a trivial breach could result in action to revoke the licence. It must be recognised that landlords are vulnerable to baseless complaints by disgruntled tenants.

The purpose of the amendment is to make it clear that a licence can be revoked only if the failure to comply with a condition is of a serious nature. Alternatively, there must have been repeated breaches.

The revocation of a licence is a serious remedy. The licence holder will have to find someone else who is suitable and willing to undertake the responsibilities and who is acceptable to the local authority. Alternatively, an interim management order can be made under which the local authority will take over the property. Revocation could have other consequences for a licence holder, such as the inability to raise mortgage finance or to obtain insurance cover. It is important that the remedy of revocation should be a last resort and reserved only for serious or repeated breaches.

The amendment also sets out a yardstick for residential property tribunals when dealing with appeals against revocation orders. Otherwise, there is no guidance for them in the Bill, as far as we can see, as to the standard by which they should judge appeals against a revocation of an HMO licence.

The Minister may well argue, as he has done today, that what we seek is inherent in the Bill, but there is no guarantee that this is the case. It is important to set the height of the hurdle over which the local authority must jump before a licence can be revoked. I beg to move.

Lord Rooker

Although these words are not in my notes, I hope that the noble Baroness will accept that the revocation of a licence by a local authority would indeed be a last resort. It definitely is not the first port of call. Let me make that abundantly clear at the outset.

I shall speak to Amendments Nos. 94 and 95 before dealing with the government amendments. Amendment No. 94 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.

The effect of the amendment would be to create an extra step in the process for dealing with breach of licence conditions in order that a person does not find himself or herself in inadvertent breach of a licence condition and is, without warning, served a summons by the local housing authority.

I assure the noble Baroness and other colleagues that we would expect the local housing authority, like all public authorities, to act reasonably in this regard. We would expect the authority to alert the licence holders of their potential breach and to give them reasonable time to remedy the situation. I want to make that point absolutely clear.

Most local authorities—I am not sure why it is not all—are signed up to the enforcement concordat, which sets out the principles of good enforcement. They underline the role that enforcement authorities have in advising and assisting with compliance, rather than simply prosecuting for non-compliance. I make that absolutely clear: it is not a first resort but a last resort. The licence conditions will be set out clearly in licences, so that it will be near impossible for any licence holder to claim ignorance of what the conditions are.

A breach of licence conditions can be a serious offence, sometimes requiring immediate rectification, which the amendment would prohibit. Therefore, local authorities should have the flexibility to deal with the breach, as is appropriate to the circumstances of the case. Normally, we would expect the local authority to give a landlord reasonable opportunity to remedy the breach before embarking on prosecution.

Allowing the approach suggested by the amendment would mean the licence holder who was in breach of his conditions of licence would continue to operate the property without adequate protection for the residents, while the whole process of notification appeal goes on. That point is probably worth considering for future stages.

Amendment No. 95 would amend Clause 69 so that only a serious breach of licence conditions, or repeated breaches, are grounds for revoking a licence. I am happy to say that we fully accept the logic of the amendment and have tabled our own amendment, Amendment No. 94A, which will meet those intentions.

That brings me on to government amendments, Amendments Nos. 94A, 95A, 122A and 123A. Amendment No. 94A provides that in deciding whether to revoke a licence because of breach of condition in accordance with the provisions in Clause 69, the local authority must consider the seriousness of the breach or whether it constitutes a repeated breach of conditions. As I said when speaking to Amendment No. 95, I expect that local authorities will by and large act reasonably when deciding the grounds on which to revoke a licence. I am happy to clarify that they must in all circumstances take such action only when the breach is serious or constitutes a repeated breach of conditions.

Amendment No. 95A provides that in deciding whether to revoke a licence because either the licence holder or some other person engaged in the management of an HMO is no longer a fit and proper person, the local housing authority must apply the same test as it would for determining whether it would have refused to grant that person a licence. It is a technical amendment to put beyond doubt that the same criteria must apply in determining both questions. As currently drafted, a local authority could impose a different test in revoking the licence from that which it must apply in refusing to grant one.

Amendment No. 122A is identical in its application to the revocation of a Part 3 licence. Amendment No. 123A is identical to Amendment No. 95A but applies to the "fit and proper person" test for selective licensing under Part 3. In due course, I shall move those amendments on behalf of the Government.

3.30 p.m.

Baroness Hanham

I thank the Minister for more or less accepting Amendment No. 95; the government amendment says near enough what we were saying, so that is fine.

However, I am disappointed with the Minister's reply to the breach of notice and the possibility of having an interim stage on a breach of condition. There are, I am sure, innumerable occasions in the management of property when it would be perfectly feasible to allow time for something to be done. I understand the Minister's remark that something might be so serious that only an immediate revocation would be a suitable answer. But it is a serious step—both the breach of conditions of the licence and the need for the local authority to step in with summonses and criminal actions.

I want to read what the Minister has said, because I still believe that there is a need for something like our amendment to give some leeway to landlords, managers and local authorities, so that they are not pitted at each other's throats early on. That might very well happen in a situation—but with a breach of condition notice they could quietly feel their way through the process.

Lord Rooker

I am only planting the point in the noble Baroness's mind—and no doubt her advisers will read what I have said—but if she is thinking of coming back with a variation on her amendment, she needs to take account of the circumstances of the tenants during the period in question.

Baroness Hanham

But of course. We are not arguing political differences in this matter; we are simply raising practical issues. There are times when people are perfectly well protected by action that does not need to take place quite so quickly. I shall make sure the noble Lord's point is taken into account. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 68 agreed to.

Clause 69 [Revocation of licences]:

Lord Rooker moved Amendment No. 94A: Page 46, line 44, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;

On Question, amendment agreed to.

[Amendment No. 95 not moved.]

Lord Rooker moved Amendment No: 95A: Page 47, line 3, at end insert— Section 65(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 63(3)(b) or (d).

On Question, amendment agreed to.

Clause 69, as amended, agreed to.

Clause 70 agreed to.

Schedule 5 [Licences under Parts 2 and 3: procedure and appeals]:

Baroness Maddock moved Amendment No. 95B: Page 192, line 32, after "interest" insert "or has a tenancy or licence

The noble Baroness said: In moving Amendment No. 95B, I wish to speak to Amendments Nos. 95C to 95E.

The purpose of Amendments Nos. 95B and 95C is to give those who are in actual occupation in the house in multiple occupation, or a Part 3 house, the opportunity to make representations on the terms of the licence, authorising occupation that the local authority proposes to grant to an applicant for a licence under Clauses 62(3) and 84(5). That can be achieved by extending the definition of "relevant person" in paragraph 13 of the schedule, as it is the relevant person on whom the local authority must serve the notice prior to granting or refusing a licence, as well as the terms of the licence granted or the reason why refused.

On the assumption that there will be occupiers of the house in multiple occupation, or a Part 3 house in some cases, it is right in principle that they should have the opportunity to make representation on the terms that will affect them, and that they should be aware of those terms when they are granted, particularly in the event of any infringement. Moreover, the exclusion of any tenant under a lease with an unexpired term of three years or less is far too restrictive. The effect of the current proposed exclusion would not be satisfactory.

The purpose of Amendments Nos. 95D and 95E is to enable those who are in actual occupation of a house in multiple occupation or a Part 3 house to appeal to the residential property tribunal on the grant or refusal to grant a licence by a local authority, or the grant or refusal of any terms of a licence—and similarly in respect of any variations or revocations of a licence already granted. This amendment is consequential on the others that I am proposing. If I seriously thought that the Government would accept the amendments, I would attempt to insert similar amendments in other parts of the Bill.

I hope that the Minister recognises that I am attempting to ensure that we pay due attention to the tenancies of tenants who own their own properties. The Government may think that the present position is satisfactory. These are probing amendments. I beg to move.

Lord Rooker

Basically, I have a bucket of cold water for these amendments for reasons that I shall explain. The noble Baroness puts her case in moderate and reasonable terms and her argument is seductive as regards tenants having a role with respect to the matter that we are discussing. However, we are not dealing with the same situation as that regarding the landlord for reasons that I shall try to explain.

The effect of the group of amendments would be to give the occupiers of licensable properties the same notification and appeal rights as owners of licensable properties. It would also give them the same rights as owners in their ability to appeal licensing decisions to the residential property tribunal. The amendments would require a local authority to notify such persons before and after a licensing decision and to consider any representations they might make on licensing decisions affecting the property in which they reside. Occupants would have the right of appeal to a residential property tribunal against the licensing decision by a local housing authority. We do not agree that such rights should be granted to occupants who do not have a long-term stake in the property. It is the Government's view that such tenants do not have sufficient ongoing interest in a property to merit influence on the outcome of the licensing process either by representation or through the avenue of appeal that these amendments would provide.

Nor does the licensing scheme have comparable implications for occupants as for landlords other than that occupants could expect to see an improvement in poorly managed properties. We hope that they will see an improvement overall in the sense of bringing in licensing in the first place.

The decision of a local authority to refuse a licence to a landlord or a decision by the residential property tribunal to overturn a decision to grant an appeal could have very significant implications for the landlord while quite probably having much less impact on the occupier of the property in question. Similarly, if an interim management order and/or a final management order were made on a property, this could have implications for a landlord long after the tenant has moved on.

Extending the obligation to identify all the occupants, provide notice of a licensing decision and consider representations from all relevant parties to all occupants could prove an exceptionally onerous burden on some local authorities without providing any commensurable benefits. I have talked about the scheme being effectively ring-fenced in the sense that the licence will pay for the process. That would add considerably to the costs but I did not see any indication in the amendment that the occupants would share the cost of that part of the process.

In relation to the right to appeal a licensing decision, there is a significant risk that the amendments, if enacted, could cause considerable delay. If every occupant of an HMO were to choose to appeal various aspects of a licensing decision, that could lead to the effective implementation of the whole regime being unduly delayed.

It is also worth noting the comparatively limited security of tenants with an unexpired lease of three years or less. To allow them involvement in the appeals process could leave them exposed to the threat of retaliatory action from landlords if they did not appeal on the landlord's behalf against the decision by the local authority. There is a bit of "legal speak" there but I have read it out word for word. The measure would appear to put the occupants at risk in those particular circumstances.

We believe that the proposed amendments would represent a significant and, indeed, an unjustified departure from the scope of rights provided elsewhere in the Bill to occupants. That is why I say that I have a bucket of cold water for this group of amendments but the whole thrust of the Bill is very pro the industry and good landlords and it is certainly pro tenants. I hope that for the reasons I have stated the noble Baroness will not press the amendments which I believe she said were probing.

3.45 p.m.

Baroness Maddock

I thank the Minister for a very clear bucket of cold water, if I may say so. I thank him for the detail with which he responded. I take very much on board the point that he made about long-term interests. I particularly take the point about problems regarding possible harassment of tenants. As I say, this is a probing amendment. However, I still believe that if you are a tenant and all kinds of management issues and licensing are being discussed over your head, you need to know something about what is going on. I shall read carefully what the Minister said and decide whether there is something that needs to be considered further. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 95C to 95E not moved.]

Schedule 5 agreed to.

Clause 71 [Offences in relation to licensing of HMOs]:

Baroness Hanham moved Amendment No. 96: Page 48, line 14, after "permits" insert "knowingly

The noble Baroness said: The HMO parts of the Bill relating to overcrowding will be unworkable. Most tenants request double rooms and this could result in occasional guests staying a night, or in a guest staying on a regular basis or someone staying a few days at a time. Are these people to be classed as occupants? How is the landlord meant to know they are there and how is he meant to police this?

To try to address this problem we have tabled two amendments. The first seeks to insert the word "knowingly" in front of the word "permits" and the second seeks to define the expression "occupation". The purpose of the first amendment is to make it clear that the landlord must have knowledge of the offence before it is committed. Under this proposal a landlord can be guilty only if he knows that the numbers allowed under the licence have been exceeded. If the wider meaning of "permits" is intended, which lays an onus on landlords to take reasonable steps to avoid overcrowding taking place, this has far-reaching consequences for both landlords and tenants/ occupiers of licensed houses in multiple occupation. The Act will become a snoopers' charter compelling landlords to intrude into the private lives of their tenants. Otherwise, the landlord is at risk of criminal prosecution with a substantial fine of up to £20,000 and even revocation of his licence if he does not do so. Clearly, if a landlord knows that the number of occupants exceeds the permitted number or ignores clear signs, he should be guilty of the offence. This amendment still provides for that.

The change in definition of HMO to bring shared houses within the scope of the legislation means that we are dealing with a wholly different situation from the traditional HMO where the landlord retains control of the common parts. With a shared house, possession of the whole property is given over to the tenants. Tenants expect privacy. They do not expect landlords constantly to inquire what is happening in their property.

If "permit" is given the wider meaning, landlords will have to visit their properties at nights and at weekends. There would be little point in going during normal hours on weekdays as the occupants will be out at work or studying.

The second amendment to this clause is intended to clarify the expression "occupation" so that the offence will be committed only where occupation is on the basis of only or main residence. Under Clause 217(2)(c), in determining whether a house needs to be licensed as an HMO, the test is that it is the "only or main residence". That is extended by Clause 222 to include residence in a building when undertaking full-time education or if the building is occupied as a refuge. The amendment would ensure that there is consistency of treatment.

Clause 71 refers to "occupation" without elaboration, which suggests that temporary residence could suffice for a landlord to be convicted of the offence as it stands. It is often the case that boyfriends or girlfriends regularly stay over. A landlord may let to five people an HMO in which all the rooms have double beds supplied by the landlord or are double rooms. Usually, nowadays, that is demanded by tenants. What happens if, on occasion, all the extra beds are occupied by guests? Alternatively, what if one room is occupied regularly—perhaps two or three nights a week—unbeknown to the landlord? Does the fact that he has provided double rooms make him guilty of permitting the offence of overcrowding?

The amendment would make it clear that the offence occurs only if the property is permanently occupied in excess of the permitted number. We should not criminalise transient arrangements. I beg to move.

Lord Bassam of Brighton

Amendment No. 96 would provide that a person having control of or managing—for convenience, I shall refer to him as the landlord—can be guilty of committing an offence under subsection (2), if he or she knowingly permits another person to occupy the property, so as to cause the house to be occupied by more persons than are permitted by the licence. I shall come to the question of the meaning of "occupation" when I address Amendment No. 99, but it is worth saying that, in the context of this amendment, "occupation" does not include a temporary stay that is beyond the control of the landlord; the clause is about occupying under a licence or tenancy.

The noble Baroness, Lady Hanham, gave full effect to her understanding of her amendment. I fully appreciate the concerns that she expressed, but I am not entirely convinced that the amendment is necessary. For a start, the person who permits the over-occupation must be the landlord himself.

I shall explain how we see the system working. It is a vital part of the licensing regime that landlords take some responsibility for the properties that they manage. I am sure that the noble Baroness will appreciate that, having, as leader of a council, been a landlord herself. Although the role is rather different, it is certainly the case that landlords in such circumstances ought to know rather basic matters such as who is living in the property, as it is fundamental to good management.

The concern has been that a landlord could be held to have permitted over-occupation unknowingly, through the actions of a tenant. It has been suggested that, in some other statutory contexts, permitting something to happen includes a failure to take steps to stop that thing happening. I reject the notion that, to make this part of the Bill effective, there must be a "snooper's charter" for the landlord. The Government must be as clear as we can about how we expect the provision to operate in the context of the Bill. A landlord would clearly be held to have "permitted" occupation by another person, if he or she granted him a tenancy or a licence and accepted payment of rent or licence fee from that person. A landlord would clearly be held to have "permitted" occupation by another person, if he explicitly gave permission to existing tenants to bring in any additional persons to live in the house. A landlord would not have "permitted" occupation by another person, if that occupation arose out of circumstances beyond his control and was in breach of a term in the tenancy agreement forbidding the existing tenants from permitting new occupation to arise. I hope that the distinction between being permitted and not permitted is clear in that interpretation of that part of the Bill.

Amendment No. 99, which works with Amendment No. 96, would insert a definition of "occupy" into the clause. The amendment is unnecessary. "Occupier" and related expressions are defined in Clause 224, and it is clear that it means occupation as a residence, not any less significant form of occupation. Moreover, subsections (2)(c) and (4)(d) of Clause 217 provide that a building is an HMO—unless an HMO declaration scheme is in force—only if it is occupied by persons as their only or main residence.

I understand the point made by the noble Baroness, and I see some force in her proposition. However, we are clear about what we see as being permitted and not permitted and about what we see as an occupier, who must occupy the premises as their only or main residence, not as a sort of overstayer, as the noble Baroness suggested in moving the amendment. I hope that the noble Baroness will feel able to withdraw the amendment.

Baroness Hanham

As with one or two other explanations, I am still not entirely happy with the Minister's response. If overcrowding is found in the premises, it is a serious offence. Although it may arise spuriously through people having guests in the premises, I do not sign up to the idea that the landlord would not find himself with serious problems if somebody were called in. Environmental health officers might come round on a Saturday night because there was a great deal of noise coming from a building and discover that there were 25 or 26 people in a house that was not meant to contain more than 13. They will set about finding out how it is that that number of people is staying in the property, which is clearly overcrowded and is causing other problems. I can see the landlord having difficulty sorting that out and explaining that he did not know that so many people were in the property.

I heard the Minister's explanation, and I am not totally happy that it covers the matter. We need to make sure that other people are content with the Minister's reply. As we shall discuss this with regard to another amendment, this offence carries a huge criminal penalty for a landlord found to be in breach. It is extremely important that the clauses are correct and watertight. I thank the Minister for his reply and, for today, I shall withdraw the amendment, although we shall probably return to the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 97 not moved.]

Baroness Hanham moved Amendment No. 98:

Page 48, line 36, leave out "£20,000" and insert "level 5 on the standard scale"

The noble Baroness said: I said that we would return to the issue of the level of penalty; this amendment relates to that issue. Under the Bill, the maximum fine for a landlord in breach of a licence because of overcrowding is £20,000. That is an excessive amount for such an offence. The fine should instead be at level 5, which is £5,000. In the magistrates' court, fines of up to £20,000 are reserved for the most serious offences, and it is not considered that this offence falls into that category.

The Minister may argue that, as a house in multiple occupation will be licensed for a specific number, there is in effect no licence at all, if the number is exceeded, so that the breach ought to carry the same fine as if there were no licence. That ignores the fact that HMO licensing is not just about numbers. It is also about the fitness of the manager and the management arrangements. Breaching one aspect of the licence is less serious than having no licence at all. A breach of a condition of a licence attracts a level 5 fine. Exceeding the permitted number should be treated in the same way. I beg to move.

Baroness Hamwee

We do not agree with the amount of fine, as presented by the noble Baroness, but could the Minister direct us to any provision for uprating the fine because the value of money does not remain the same, one assumes, for the life of the Bill?

4 p.m.

Lord Bassam of Brighton

The noble Baroness explained her amendment with her usual clarity, but we take a different view. Running an HMO without a licence when one is required is, or can be in certain circumstances, a very serious offence which can lead to considerable problems and can be quite dangerous. Running an HMO with a licence but in contravention of its fundamental terms is tantamount to running one without a licence. The Government believe that the penalty should be sufficiently substantial to deter landlords from evading the licensing requirements. The penalty should outweigh potential benefits that the landlord might gain by illegally avoiding licensing. That is why it is important that the maximum fine is pitched at this substantial level. The exceptional level of the maximum fine for the main licensing offences is intended to demonstrate the seriousness with which the Government are treating the new compulsory licensing regimes and set it apart from the other housing offences which are pitched at a fine on level 5.

That is our clear position. The noble Baroness, Lady Hamwee, asked me about uprating. Clause 215 relates to the, Power to up-rate fines for certain offences". So it answers that point.

Baroness Hanham

In that case, the previous amendment is crucial so that we establish whether the offence relates to knowingly permitting overcrowding or overcrowding that happens by accident. I declare an interest as a magistrate. The number of times that magistrates impose a fine of £20,000 is very small. Most of the serious cases that come to magistrates' courts do not attract a fine of that amount. So the fine would be a draconian outcome for a serious problem.

I would be the first to acknowledge that there are and have been known to be serious breaches of overcrowding. I have known of student hostels where people have been packed in and the number of bunk beds was well in excess of what should be there. So I acknowledge that overcrowding does happen. At the very least there should be a fine of up to £20,000, but it would be very serious if it was set at £20,000. We will look at the amendment again and the Minister's reply. For the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 99 not moved.]

Clause 71 agreed to.

Clause 72 [Further sanctions relating to unlicensed HMOs]:

Lord Hanningfield moved Amendment No. 100: Page 49, line 33, at end insert— (6) On the application of the person who would be entitled to enforce payment of any rent or licence fee, but for the provisions of subsection (2) or from whom the same are recoverable under subsection (3), the Court may, if satisfied that such person acted reasonably or it is otherwise just and equitable to do so, make an order dispensing with the sanction provided for by this section and directing that the rent or licence fee shall be payable notwithstanding the provisions of subsection (2) (and notwithstanding any rule of law prohibiting the enforcement of a contract which is illegal).

The noble Lord said: Clause 72 provides a sanction where an HMO required to be licensed is not licensed. Under this clause the landlord cannot recover his rent or licence fee for any period during which he is committing the criminal offence under Clause 71. Where a tenant has already paid the rent he can then claim it back from his landlord. The purpose of this amendment is to allow the court to grant relief from the sanction of non-recoverability. The court would be entitled to do this being satisfied that the landlord had acted reasonably or if it was just and equitable.

A number of situations can be envisaged where it might be unfair that the landlord has to forgo his rent. The landlord may be given misleading advice from a local authority official stating that no licence is needed when in fact one is required. It could be uncertain whether a property needs a licence at all. For example, a woman may own a house with her husband in London but work in Leeds. During the week she lives with her parents in Leeds where she lived before she was married and returns home every Friday night to her house in London. The house in London is a four-bedroom, three-storey house which, during the week, the woman's husband shares with three of his old university friends who now work in London but who disperse to various parts of the country at weekends to their parents' or girlfriends' houses. They pay rent. This example is based on a real life case. Is the London property to be treated as requiring an HMO licence? If one of the friends falls out can he claim his rent back if there is no HMO licence? The initial uncertainty as to whether a licence is needed at all shows how important it is that there is some discretion to waive this harsh sanction.

Under common law, rent is not recoverable if a contract is illegal and it is the view of the ODPM that the provisions of Clause 72 mirror the common law rule. The amendment makes clear that the courts' dispensing power expressly overrides that common law rule as well. I beg to move.

Lord Bassam of Brighton

The amendment seeks to allow a court, upon the application of a person to whom the sanction in subsection (2) of Clause 72 applies, to order the dispensation of that sanction if the court considers that the person has acted reasonably, it is otherwise just and equitable to do so and that this order can be made notwithstanding any rule of law that an illegal contract cannot be enforced. I will explain the general effect of Clause 72 in more detail when we move to debate its stand part, so, with the leave of the Committee, I shall address my remarks specifically to this amendment.

The amendment is a sanction for not having the necessary licence in place and it must operate as such. It provides that the court can order dispensation of the order if the person has acted reasonably. However, it misses the point that the sanction arises because a criminal offence under Clause 71(1) has been commissioned, but that it is a defence to a charge that the person had a reasonable excuse for having control of or managing the house under the provisions in Clause 71(5). If he or she has an excuse then no offence is committed and consequently the sanction does not apply.

I hope that the Committee would agree that the notion that a person can have a reasonable excuse for committing a criminal offence for which he or she has been found guilty is not sustainable. That is, in effect, what the amendment proposes to achieve. We cannot possibly support that and on reflection the noble Lord would also find it hard to support that. For that reason I hope that the noble Lord will withdraw his amendment.

Lord Hanningfield

The point was that for some inadvertent reason, some people might not receive rent or will lose out. No one was sanctioning anyone committing a criminal offence. However, there could be a situation in which people suffer and the court would be able to allow the payment of rent. I was not trying to sanction criminal activity, but was trying to point out anomalous circumstances in which people could lose out. Therefore there should be a chance for them to benefit by that. The noble Lord misunderstood my suggestion as sanctioning a criminal offence. I was not trying to do that. I was trying to illustrate a situation in which someone might get hurt.

Lord Bassam of Brighton

The noble Lord needs to understand the impact of his proposal. I can see where he is coming from, but the situation will not occur often in the circumstances he describes. However, I believe that if you are putting forward an amendment, you need to understand and work through its other implications.

Lord Hanningfield

I understand that and I thank the Minister. We will read his answer carefully to see whether we can take the problem forward in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 72 shall stand part of the Bill?

Baroness Maddock

We want to press the Government further on the effect the provision will have on the tenants rather than the landlords. Shelter is concerned, as are the Office of the Deputy Prime Minister, some tenants' rights groups and the Local Government Association. Many people believe that the no-rent-payable sanction against unlicensed landlords could lead to the eviction of tenants. Although the principle that tenants should legally be able to withhold rent if their landlord is operating without a licence seems attractive, it does not take account of the reality faced by tenants on low incomes with no security of tenure who are unable to enforce their housing rights without risking eviction.

Tenants with an assured short-hold tenancy will simply face eviction by their landlord if they attempt to enforce a provision not to pay rent on unlicensed properties. In practice, many tenants will choose not to risk losing their homes and may continue to pay the landlord. If council housing benefit is withdrawn, and if they cannot pay their rent in any other way, there is a risk of them being homeless.

We believe that it would be better to penalise a landlord by fining him so as to avoid the possibility of the tenants losing their homes. I hope that if the Minister is not minded to look at that, he can address the concerns, many of which were rehearsed in the debate in another place, and convince us that this is a better way to legislate. I beg to move.

Lord Bassam of Brighton

I am grateful to the noble Baroness for explaining her objection to the clause in such clear terms. Clause 72 provides for sanctions in relation to unlicensed HMOs. The clause provides that if an HMO is required to be licensed but is not, then the person controlling or managing the HMO is guilty of an offence and no rent is payable by occupiers and no charge can be made in lieu of rent.

It is vital that we guarantee that the occupiers of unlawfully licensed HMOs do not suffer because their landlord has committed a criminal offence in failing to obtain a licence. Therefore, Clause 72(4) preserves the existence and validity of relevant tenancies. In other words, an occupier's security of tenure is not affected by this provision and nothing in it affects the terms of occupancy, other than payment of rent.

Equally, it is crucial to ensure that persons letting properties which are required by law to be licensed, but who fail to apply for a licence, should not be able to profit from their disregard of the law by receiving rents. Bad landlords should not be able to benefit from their criminality by continuing to take money through the housing benefit system. This clause means that they will not. That is its purpose.

While we are strongly wedded to the principles embodied in the clause, the practicalities involved in enforcing these provisions are far from simple, and the noble Baroness has given us a fair example. That point is well made and we have listened to the concerns. Indeed, she gave us chapter and verse on the organisations which are concerned. We appreciate their responses to this clause. We shall continue to give consideration to the issues and review the clause.

There are alternative measures which may be available to achieve the objectives which the clause is intended to reach. Officials are at present consulting relevant stakeholders on the issues. The best we can say today is that while we are convinced that we have the principles right, it is only right for us to give some further thought to the matter and report back at a later stage of the Bill. At present we should retain the clause and further consider the issues in concert with the LGA, Shelter and the other organisations which have expressed understandable concern about a potential spin-off from the clause.

4.15 p.m.

Baroness Maddock

I thank the Minister for that reply. It would be helpful if the issue were investigated a little further. I can see the problem for a tenant. We are here finding it difficult to get to grips with the legal side of the matter. But for a vulnerable tenant, the landlord may tell him, although he should not, that he is seeking eviction. It may be that there is some way in which we can ensure that the tenant has something which makes him or her feel secure in this situation. That may be the answer. I ask the Government to look at that. Meanwhile, I am happy for the clause to stand part of the Bill.

Clause 72 agreed to.

Clauses 73 to 75 agreed to.

Clause 76 [Licensing of houses to which this Part applies]:

Lord Rooker moved Amendment No. 101: Page 52, leave out lines 8 and 9 and insert "a tenancy or licence to be an exempt tenancy or licence—

1. (a) if it falls within any description of tenancy or licence specified in the order: or
2. (b) in any other circumstances so specified."

The noble Lord said: Clause 76 provides local housing authorities with the power to operate selective licensing of rented housing in an area designated by the local housing authority under Clause 77 for the purpose of selective licensing.

The Bill provides that all private rented property within a designated area will be required to have a licence, unless it falls within one of the exemptions. The first category of exemption is for properties managed by registered social landlords. The second category of exemption is for properties which will be specified in an order made by the appropriate national authority. This would include properties managed by local authorities themselves. We have it in mind to include in such an order the kinds of arrangements which are currently exempted from statutory protection under the Housing Act 1988, such as business tenancies, holiday lets and so on.

Government Amendment No. 101 would extend the order-making power of the appropriate national authority to enable it to prescribe situations in which tenancies or licences are exempt. The amendment is a small technical change to ensure that there is sufficient flexibility to specify all the circumstances in which it is right to exclude the requirement to have a licence. For example, it might be thought appropriate to exclude properties which are subject to a demolition order from the requirement to be licensed under Part 3. We believe that it is doubtful whether it would be possible to exclude such categories as, descriptions of tenancies or licences", as the Bill currently provides.

Government Amendment No. 112 is a technical amendment aimed at ensuring that a property that should be licensed under Part 2, but is not licensed or temporarily exempted, can never fall within the requirement to be licensed under Part 3. With the unamended provisions, a house in multiple occupation that was required to be licensed under Part 2, but that was not licensed or temporarily exempted, would fall within the bounds of a selective licensing scheme in force in its area. In these circumstances a person operating such an HMO would be guilty of committing an offence under Part 3 as well as Part 2. We do not want this double jeopardy situation to occur. The amendment is to put this beyond any doubt.

Clause 88 makes provision for the general requirements and duration of Part 3 licences. The clause provides that licences granted to properties subject to selective licensing are valid for a maximum of five years and can relate to only one property. Licences are also non-transferable and a three-month temporary exemption notice is automatically granted on the death on the licence holder.

Subsection (3) provides that a licence would be in force for the period specified in the licence up to the maximum of five years unless it is revoked or on the death of the licence holder. As I said, Amendment No. 121 is technical, to put beyond doubt that a Part 3 licence can be terminated only in one of the three ways to which I have just referred. We do not want any other situation to arise where a licence ends automatically. In practice, we would expect a local authority to revoke a Part 3 licence at the point that it grants a Part 2 licence. It is just safer in our view that that is not an automatic consequence of a property becoming liable to be licensed under Part 2. Therefore, I beg to move.

Baroness Hanham

As with others, these amendments have crept upon us abruptly since the end of the Recess. I therefore do not feel entirely confident to deal with them today so, if necessary, we shall return to them on Report. They sound pretty bland, but we may need to look at them. As the Minister knows, a flurry of amendments has come in during the last few days of the Recess and I am sure that he will not expect us to be able to respond to all of them today.

Lord Rooker

No, that would be quite unreasonable. Although, as the noble Baroness says, they are bland and a couple of them are technical, I will make sure that, if we need to go beyond what I have said in Hansard, we will provide a separate note on these late government amendments that have been tabled in Committee, so that at least there is something more on the record for colleagues before we reach Report.

On Question, amendment agreed to.

[Amendment No. 102 not moved.]

Baroness Hanham moved Amendment No. 103: Page 52, leave out line 16 and insert "timescale specified by the appropriate national authority

The noble Baroness said: There are four amendments: Amendments Nos. 103, 106, 108 and 116. They are all designed to ensure consistency in the application of the provisions in regard to selective licensing of HMOs. We are concerned that without them we are in danger of having a piecemeal and fragmented system—we discussed that earlier on. Although we are firm believers in the powers of local discretion and decision-making, it appears that without a greater lead and guidance from the appropriate national authority, local authorities, and consequently local people, will find it difficult to understand what could be a confusing and complex system.

Amendment No. 103 and the other amendments are designed to ensure that the Bill is effective and that local authorities are not placed in a position where they cannot implement its provisions, but can carry out their responsibilities in a way that they can properly handle. I beg to move.

Lord Rooker

I must say that the noble Baroness moved and spoke to her amendments incredibly succinctly. Although I have flicked through all my folders during the past few days, especially yesterday, you cannot really cut things down unless you have the detail. I should like to cut my response to fit the speech, but I do not feel that I can do that because I am not close enough to the subject. I shall therefore deal with the amendments in turn.

Amendment No. 103 would amend Clause 76(5)(b) in order to require the appropriate national authority to specify the time limit by which applications for licences must be processed by local authorities. The amendment revives an issue that I understand was debated in another place with reference to the processing of licences under Parts 2 and 3.

It would not be right or appropriate for the national authority to fix rigid time limits within which licence applications must be determined. Local authorities should certainly aim to determine such matters within a few weeks of application. However, there are circumstances in which they may need to take longer. For example, in determining whether to grant a licence, it might take time to determine whether a landlord is a fit and proper person under Clause 86 and whether he or she is the most suitable person to hold the licence. The authority may want to consider whether it wants to include specific licence conditions in the case of certain landlords.

Amendment No. 106 appears to be a probing amendment designed to provoke discussion on the scope of selective licensing and how we intend to use the order-making power in Clause 77(7). The provision allows that the appropriate national authority may by order add to the two general sets of conditions specified in the clause and so enable selective licensing to be extended beyond areas of low housing demand or areas where there is a significant level of anti-social behaviour.

I am aware that many local authorities believe that they should be allowed total freedom to impose selective licensing wherever they feel that it is necessary. However, we are extremely keen that selective licensing is a tool to be properly targeted and used only where the worst problems exist. As may be known, our original plan for selective licensing was to confine it to areas of low demand—effectively parts of the Midlands and the north-east and north-west. It has now been allowed nationwide, but not at the behest of local authorities. We do not wish to license the entire private sector, because that would be unjustified—I want to make that absolutely clear.

The current Part 3 provisions strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social behaviour. We do not therefore at this stage intend to use the power under Clause 77(7) to broaden the remit of selective licensing. However, we will review how selective licensing is working in practice.

Amendment No. 108 would amendment Clause 77(9)(a) so that the appropriate national authority would specify the process by which consultation on selective licensing proposals should take place. The amendment was previously tabled in debate in another place. We resisted it then, as we do now, because we do not believe that it is necessary or desirable to micromanage every element of the licensing procedure.

We have to let—what is the phrase?—freedoms and flexibilities reign in local government. We have had a bonfire of controls and regulations in local government. Town halls up and down the country now have massive freedom to be fully accountable to their electorates; more than ever before. We have released them from financial burdens and ringfencing. We have to trust local government to be able to be reasonable and sensible.

Amendment No. 116 seeks to remove subsection (6)(c), which provides that the local authority must be satisfied that the management arrangements for the property are suitable; for example, can the manager or someone else be contacted in an emergency and does the licence-holder have sufficient funds to carry out repairs? Instead, the amendment would include a new provision that the authority must consider guidance on fitness of management arrangements as supplied by the appropriate national authority.

So the amendment's aim appears to be to require the national authority to produce guidance on acceptable management standards for licensed properties in the private rented sector. We do not intend to issue such guidance for the good reason that what constitutes "suitable" will vary depending on the type and condition of the stock, its location and the occupiers' requirements. We have to trust to good governance and the industry's good common sense in that regard.

Baroness Hanham

I thank the Minister. Freedoms and flexibilities are obviously the buzzwords of Government. I am sure that local government—certainly the upper levels—is beginning to appreciate what that means. I am probably the last to argue that national government should lay down all the rules, but at some stage there needs to be consistency. The only way that such consistency can be managed is by guidance from the top as to what is meant. That is the basis of the four amendments: to try to ensure that one local authority and another operate in more or less the same way; so that landlords with properties in more than one borough covered by more than one local authority know the rules.

We may need to return to the matter, as I am not sure that the Minister is absorbing what I am saying in my reply, so for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 p.m.

Baroness Hanham moved Amendment No. 104:

Page 52, line 16, at end insert— (6) Whatever the arrangements of management, it is the manager who shall be ultimately responsible for a house under this Part possessing a valid licence.

The noble Baroness said: I shall see whether I can engage the Ministers with my enthusiasm in moving this amendment because not much attention was paid to my final comments on the previous one.

Amendments Nos. 104 and 114 raise the interesting issue in regard to the owner of a property and his responsibility under this part of the Bill. The issue was debated in the other place at some length. However, noble Lords deserve the opportunity to pass comment on the relationship between landlord and manager in regard to this part and to probe the Government further on what could remain an area of some doubt.

The amendments would require that applications for licences be made by the manager of a house. We are concerned that, as the Bill stands, the owner rather than his agent—many owners employ some agent to manage property—remains responsible for licensing. Our amendments are designed to target accurately the responsibilities by requiring that applications for licences be made by the manager of a house. We recognise that the manager could be the owner, but equally they could be different people.

Of course the owner should quite rightly take ultimate responsibility for a property. However, practical experience of the relationship between manager and owner suggests that it would be unacceptable for us to let managing agencies off the hook by saying that they are not responsible for any of the matters dealt with in this part of the legislation when they are rewarded for running the affairs of the landlord. Additionally, does the Minister envisage possible problems were an owner to be out of the country for long periods or indeed non-resident in the United Kingdom? Both Ministers will know that there have been innumerable problems regarding absentee owners. I beg to move.

Lord Bassam of Brighton

I must confess that I am slightly perplexed as regards the true purport of Amendment No. 104. I am not sure whether the noble Baroness seeks to impose a duty on a manager to obtain a licence, or whether the amendment is intended to ensure that ultimately the manager is responsible for the management of the property, irrespective of the identity of the licence holder. I am not sure what the noble Baroness seeks to do in this probative amendment. I can certainly understand the issue that she is trying to get to the root of: to ensure that someone is responsible for the property and its licensing if absentee owners deploy a management agency to act in their stead. Perhaps the noble Baroness would like to explain the matter further.

Baroness Hanham

As I said, the amendments would in effect require that applications for licences would be made by the manager of a house. I added that I perfectly foresaw that the owner could be the manager of the house as the only person involved. Where the owner passes responsibility to someone else that other person should be the registered licence holder.

Lord Bassam of Brighton

That is helpful, because the buck must stop with the licence holder. Under the scheme as it is the local authority will know beyond doubt who to look to if any problems arise: the licence holder. They might seek to avoid their responsibilities if they could contend that some other person bore ultimate responsibility for the management of the house. That is why I think that the amendment does not work. She may wish to think about that point further.

Amendment No. 114 would replace the requirement that the local authority is satisfied with the managing arrangements in place with the requirement that the local authority is satisfied that the manager has ultimate responsibility for the management of the property in question.

If the intention is to make managers alone responsible for securing licences for properties, one problem that would arise is that it is not uncommon in areas of low demand for there to be no effective manager of the property. The landlord, as the noble Baroness knows, may live many miles away or even abroad, rarely if ever visiting, and simply collecting rent through the housing benefits system. That can easily he done through direct debits and so on.

In these circumstances, it is right that the owner should be required to make the application for a licence. There are other situations in which it might be appropriate for the owner of a property, rather than the manager, to apply for a licence—for example, if the manager has failed to make an application, or when the owner is new, or is in the process of changing the management arrangements for the property.

However, if the intention is to make the manager the completely responsible operator for the property, regardless of whether the landlord is also involved in the management, then that would be contrary to the overall aim of the licensing regime. For example, in many properties the manager is also the tenant, and while he may technically have some responsibility, the landlord is the person who is ultimately responsible and should be treated as such. The amendment does not take such circumstances into account.

Removing subsection (3)(d) from Clause 85—as this amendment would—would not give us any advantage. When deciding whether or not to grant a licence to an applicant, it is imperative that a local authority can require that the proposed management arrangements are satisfactory. There is no point having a manager who is fit and proper but who, for example, is frequently abroad.

I sympathise with the intention behind the amendments. The intention is that there should be an effective set of management arrangements and clearly-defined responsibilities in all licensed properties.

I hope that I have satisfied the noble Baroness that the licensing regime will deliver that outcome. In that sense, there must be a commonality of agreement between us. Ultimately the responsibility will lie with the licence holder.

I see where the noble Baroness is coming from. I invite her to study what I have said carefully, because in the end the way in which we envisage the licensing regime working probably covers her concerns. I see the importance of the issue that she raises.

Baroness Hanham

I will do as the Minister advises and study what he has said and the implications of that carefully.

We need to look into what happens about managing agents when the property is licensed to an owner who, within the terms of the licence, passes that responsibility to a managing agent; and whether managing agents need to have some form of licensing as well, if they are going to be responsible for the expanded nature of houses in multiple occupation. I thank the Minister for his reply. It is possible that we will return to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 76, as amended, agreed to.

Clause 77 [Designation of selective licensing areas]:

[Amendment No. 105 had been withdrawn from the Marshalled List.]

[Amendment No. 106 not moved.]

Baroness Maddock moved Amendment No. 107: Page 53, line 16, at end insert— ( ) The third set of general conditions are that the area is experiencing a significant proportion of private sector lettings that have been managed sufficiently ineffectively as to give rise, or likely to give rise, to one or more particular problem either for those occupying the privately let property or for members of the public.

The noble Baroness said: I rise to move Amendment No. 107. This is an amendment to Clause 77 and it puts in a third set of general conditions that can exist in an area in order to designate it as a licensed area. It is supported, in particular, by the Local Government Association and the Chartered Institute of Environmental Health. The amendment extends the circumstances in which a local authority can designate an area for selective licensing.

In addition to low demand and problems arising from anti-social behaviour, there are other circumstances where selective licensing could prove to be a powerful tool for local authorities seeking to address and effectively manage the private rented sector in their areas. We have already touched on some of those areas in Committee. Such circumstances could include areas where perhaps there is a large amount of seasonal holiday letting or student accommodation, which is where local authorities should be allowed to use such a tool when trying to set up licensing in a selected residential area.

The Chartered Institute of Environmental Health supports the proposals for the introduction of selective licensing. But it believes that some of the details are unduly restrictive; that the option should be more widely available; and that local authorities should not have to demonstrate that areas in which they propose licensing be introduced are likely to become areas of low demand or experience anti-social behaviour. The CIEH says that it understands the Government's thinking, but that the restrictions will tie local authorities' hands too tightly and will mean that the Government are much less likely to achieve their objectives. That is something with which I can agree.

We have heard a great deal about placing trust in local authorities. In exchanges on other amendments, the Minister has been fulsome in saying that local authorities should have a certain amount of freedom. Practitioners on the ground and those who run local authorities would like to have wider scope. That is what this amendment seeks to achieve. I hope that the Minister will look on it favourably. I beg to move.

Lord Bassam of Brighton

I am grateful to the noble Baroness for explaining her amendment, which is a very respectable amendment with some very respectable backing. It would be unfair of me if I did not say that, given my previous employment and my contacts at the Chartered Institute of Environmental Health.

The amendment adds a further ground for designating an area for selective licensing; namely, that poor management in the private rented sector is causing or likely to cause particular problems for tenants and others. Selective licensing is all about minimising the impact that poor management can have on the wider community. But, as with all regulation, it should be used in a proportionate and, probably, focused manner. It is a tool that must be properly targeted and used only where the worst problems exist. I think the noble Baroness would agree with that.

As we have previously made clear, the current provisions of Part 3 strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social behaviour. They are sufficiently serious issues that warrant the interference in the operation of the housing market for which such licensing will provide. We are aware that some local authorities would like to licence all rented properties.

The amendment would offer much broader grounds on which to designate an area for licensing. It could lead to a situation where its use is somewhat indiscriminate. In turn, that could have a serious impact on the viability of the private rented sector, which, as we all now acknowledge, is a key component of the housing market.

However, while I do not believe that the case has been made for broadening the remit of selective licensing, which is why I do not think that the amendment would be necessarily beneficial, that is not to say that the issues from which the amendment arises will not arise in the future and that, at some point, licensing might be a valuable tool. That is why in Clause 77(7) we have provided for the appropriate national authority to add to the specified conditions for designation and so enable selective licensing to be used to deal with additional challenges in the private rented sector. As we have made clear, if Amendment No. 242 is passed, this process will be subject to affirmative resolution. It is not just a sensible amendment, but one with a sensible train of thought behind it, and with a very practical impact. We do not think that it is appropriate to use it in the way suggested by the noble Baroness, but we see merit in the argument, which is why the provision is subject to the affirmative resolution procedure.

4.45 p.m.

Baroness Maddock

I thank the Minister for that—in many ways—positive reply. Would it be appropriate if we were to set a time scale for the Government to return to this issue to see whether they can put into practice Clause 77(7), which is the fall-back position?

The Minister and I both know how difficult it is to find time to get things through the House. If we say when making legislation that after a certain time there should be a review, perhaps something will happen. If we get representations, we would be in a stronger position to find time for legislation to proceed. I make that helpful suggestion to all concerned. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 108 not moved.]

Baroness Hanham moved Amendment No. 109:

Page 53, line 29, at end insert "; and (c) publicise its intent both electronically and in the local media.

The noble Baroness said: With Amendment No. 109, we are simply attempting to expand the channels whereby a decision made by a local authority as to the licensing of an area can be transmitted to the widest possible audience.

It seems to me that were an area to be so designated it would have possible consequences, not just for those individuals within the area itself but for those on its boundaries and in close proximity. This strikes at the heart of our amendment. It could be argued that such designation, given perhaps a misunderstanding of its intent, could possibly have an impact on, say, house prices. Those people, therefore, should, quite rightly, have the opportunity to be aware of such decisions.

The amendment would place on a local authority the responsibility to publicise its intent both electronically and in the local media. The Minister is fond of saying that no one reads the council notices in the local press—I have some sympathy with that, and perhaps there is an element of truth in it—but I should have thought it relatively easy for such information to be displayed on the local authority's website. I am confident that most local authorities now have websites.

Lord Bassam of Brighton

The noble Baroness tempts me to say that she has almost made my argument for me.

The amendment would require a local housing authority, in addition to consulting those likely to be affected by a designation, to publicise the intent of the designation electronically and in the local media. It is almost identical to an amendment debated on Clause 55, and for the same reasons as were given then, I would suggest that the noble Baroness withdraws it.

As drafted, the Bill provides that local housing authorities should take "reasonable steps" to consult those likely to be affected by designation. I am confident that all local authorities have, over many years, developed sophisticated methods of consultation that are the most appropriate for their particular areas. We think, therefore, that it is not necessary to specify the forms that this consultation should take, but would rather leave it to local authorities' discretion. I often hear the noble Lord, Lord Hanningfied, and the noble Baronesses, Lady Hanham, Lady Hamwee and Lady Maddock, arguing that we should maximise discretion to local authorities, that they are best left to determine what they do as to the procedure and content of the consultation, and that we should give them freedom and flexibility. That is exactly what we think should happen here. What works in one local authority as regards consultation may not necessarily be the most effective way of doing it in another.

It is perfectly possible that the methods of publicity proposed in this amendment would be among those deployed by any given authority, but I maintain that those with local knowledge are probably best placed to know what form of consultation has proved effective in the past and what might work in the future. I should also say that another problem with prescribing forms of consultation as suggested in the amendment is the danger that that could have the unintended side-effect of limiting a consultation exercise to those methods alone, which would not be particularly beneficial.

For those reasons, and on the basis of our previous arguments, I suggest that the noble Baroness withdraws the amendment.

Baroness Hanham

I thank the Minister for his reply, which was not totally unexpected. It is entirely in line with the answer he gave before. I too shall make the same response: I shall read most carefully his comments both on that and on the previous amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 77 agreed to.

Clause 78 [Designations under section 77: further considerations]:

[Amendment No. 110 not moved.]

Clause 78 agreed to.

Clauses 79 and 80 agreed to.

Clause 81 [Duration, review and revocation of designations]:

Baroness Hanham moved Amendment No. 111:

Page 55, line 21, leave out "from time to time" and insert "on a yearly basis"

The noble Baroness said: This short amendment has been tabled to draw attention to an unhappy phrase which has crept into legislation; that is: "from time to time". The phrase is a consistent failure and ought to be resisted if at all possible.

My question to the Minister is therefore short and to the point: what exactly does the phrase "from time to time" mean in terms of this legislation? Does it mean 10 years, five years, two weeks or one week? This is a shorthand phrase and I do not think that it should be used in legislation.

We have therefore put in a defined time-frame of one year on any designation that a local authority makes in this regard, which seems a sensible and practical approach and certainly gives far more definition than is available under the present terms of the Bill. I beg to move.

Lord Rooker

Clause 81 requires that a designation for selective licensing can last a maximum of five years. Clause 81(3) obliges local authorities, from time to time, to review the designation. In some ways, having to go for selective licensing shows that there is a real problem with the area and I would hope that well within five years the selective licensing would not be justified because it may well have been based on issues related to anti-social behaviour. Such licensing must be kept under constant review. I suspect that the phrase "from time to time" is the legal version of that.

Following any such review, a local authority may revoke designations if the scheme is not achieving its aims. On revocation of a designation, the local authority must publish notice of the revocation in such a manner as is prescribed by regulations under Clause 81(6). The clause is designed to ensure that the designation of selective licensing remains in force only for as long as it is needed. It is not intended to be for the foreseeable future.

The amendment would require selective licensing schemes to be reviewed annually. However, as I have said, selective licensing is a highly targeted measure. That is why, before it is allowed, a local authority has to make a very robust case in order to use it. The idea is that it has to be successful within five years. While we want to see that success, we do not want to impose rigid time limits. It may be that the scheme can be withdrawn after less than a year or at another suitable time, taking into account what is going on in the community. We need that flexibility.

It is not intended to last for ever, to be used as a tool for housing management, or as part and parcel of the normal running of a local authority's functions. It is intended to be used in a highly targeted fashion, not to last for longer than five years and, it is hoped, a lot less than that.

Baroness Hamwee

The Minister did not make the point, which was made a few minutes ago, about the desirability of local authorities running things within the framework of the Bill as they see fit for their own areas. When the noble Baroness was speaking, it occurred to me that she might feel less suspicious of this if a phrase such as "kept under review" were used. Although just before the Recess the Minister paid me the compliment of saying that I am not one of the lawyers, from my experience the terms are more or less equivalent. I hope that that might reassure the noble Baroness.

Lord Rooker

I did not use all my note, but there is a lovely sentence that states: I believe that local authorities can be trusted to carry out these reviews in a timely manner without needing to be told when to do so". I really mean that. We must trust local government.

Baroness Hanham

That is becoming a wonderful mantra. It gets trotted out on every occasion. "From time to time" does not seem to be at all the same as keeping under review. Keeping under review is a permanent action. Although my amendment did not say so, I think that keeping under review is rather better. I bow to our resident legal expert but I still think that "from time to time" has much the same meaning but it does not seem to be quite so determined. I am grateful to the Minister for his helpful explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 81 agreed to.

Clause 82 [Requirement for Part 3 houses to be licensed]:

Lord Rooker moved Amendment No. 112:

Page 55, leave out lines 33 and 34 and insert— (a) it is an HMO to which Part 2 applies (see section 54(2)), or

On Question, amendment agreed to.

Clause 82, as amended, agreed to.

Clause 83 agreed to.

Clause 84 [Applications for licences]:

[Amendment No. 113 not moved.]

Clause 84 agreed to.

Clause 85 [Grant or refusal of licence]:

[Amendment No. 114 not moved.]

Clause 85 agreed to.

Clause 86 [Tests for fitness etc. and satisfactory management arrangements]:

[Amendments Nos. 115 and 116 not moved.]

Clause 86 agreed to.

Clause 87 [Licence conditions]:

Lord Rooker moved Amendment No. 117: Page 59, line 18, leave out from "regulating" to end of line 20 and insert "the management, use or occupation of the house concerned.

The noble Lord said: This group of government amendments, Amendments Nos. 117, 118 and 120 clarify the proposed rules regarding licensing conditions under Part 3. It appears that certain local authorities in England, probably a very small minority, thought that they could unilaterally use selective licensing to impose any conditions they wished to regulate the condition and state of properties under the provisions in Clause 87(1)(b) as unamended. Amendment No. 117 puts it beyond doubt that they cannot. This amendment makes it clear that licence conditions under Clause 87(1)(b) must relate to the management and occupation of the house concerned.

New subsection (2A), inserted by Amendment No. 118, provides that this would not prevent local authorities imposing licence conditions in relation to any requirements made in regulations by the appropriate national authority concerning facilities and equipment at the house. While the Government have no present intention of introducing such regulations in England, the National Assembly for Wales is likely to do so in Wales. I beg to move.

On Question, amendment agreed to.

5 p.m.

Lord Graham of Edmonton moved Amendment No. 117A:

Page 59, line 25, leave out paragraph (b).

The noble Lord said: I rise to raise a possibly small matter but I should be grateful for the Minister's observations on its implications. I have no interests to declare, other than that which has been displayed by the Minister, his colleagues and many other noble Lords. That is that the conditions in which people live, whether in private or council property or in anything in between, are very important and are gradually creeping up the scale of interest.

At one time, as the Minister and I well know, housing was one of those topics that was high on the list when our constituents came to see us. Although housing still needs careful attention, I am convinced that the private rented sector has vastly improved in its attitudes from the time when it caused a great deal of distress and led to the scandals of bad landlords. Those times are, by and large, behind us.

I am intrigued by the situation under this clause. We are talking about the licensing conditions that can be applied. Subsection (2)(b) refers to, conditions requiring the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour by persons occupying or visiting the house".

This is a practical problem. In Edmonton and Tottenham, we have a very good private landlord, Limelight Properties. I have discussed this matter with them over many years. Mr and Mrs Papadopoulos drew my attention to precisely how one can take action to intervene when a visitor behaves in an anti-social manner. We know that good landlords will have procedures in place to ensure that they have good tenants, and good tenants are, of course, in the vast majority. But I have seen photographic evidence of people who at one time were good tenants doing terrible things to properties which are not theirs.

The purpose of the amendment is to invite the Minister to say precisely how one can deal with such a situation. Someone in a block of flats could be subject to terrible anti-social behaviour, such as drunkenness, noisiness and rudeness. In that case, how does one comply with the legislation? Does the aggrieved tenant get in touch with the landlord and say, "You had better hurry down here and sort this out because you have a responsibility to do that"?

I should be grateful if the Minister could spend a little time spelling out the practicalities for the good landlords—the vast majority, as far as I am concerned—who not only run a good business but act in a socially responsible way. I beg to move.

Baroness Hamwee

As I understand it, the noble Lord is arguing in favour of deleting the paragraph on the basis that he wants it retained. This has made me read the provision more carefully, and for that I am grateful.

The condition that is the subject of the provision is to require, the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour by occupants and visitors. Steps may be reasonably practicable but not reasonable. In other words, they could be unreasonably required and would still fall within the provision because they were practicable.

I am sorry to bring this point up at the last minute, but I have only just thought of the distinction. I am coming at this from a completely different point of view from that of the noble Lord, Lord Graham. If the Minister can comment, I should be grateful.

Lord Rooker

In the same way that not all landlords are good landlords, although it is only a small minority who are not, not all tenants are little angels—a minority are not. However, my noble friend has raised legitimate questions, and I hope that I have a sufficiently robust and clear response.

Clause 87 is almost the exact counterpart to Clause 56. There are certain conditions that a local authority must include in every licence. The local authority can decide to include other conditions in addition to these. Clause 87(2) sets out the sort of conditions that a local authority may decide to include in a licence if "appropriate in the circumstances". It is not an exhaustive list. Clause 87 (3) requires that certain conditions must be included in every licence, and these are in Schedule 4. In the case of selective licensing, paragraph 2 of Schedule 4 provides for an additional mandatory licensing condition.

For licences issued under Part 3, the landlord will be required to demand references from persons who wish to occupy the house. That condition has been included because we expect selective licensing to be used to encourage landlords to take more responsibility for the behaviour of their tenants and the impact on the surrounding community.

Amendment No. 117A would remove subsection (2)(b), which is the suggested licence condition relating to, taking of such steps as are reasonably practicable to prevent or reduce antisocial behaviour by persons occupying or visiting the house". The list in Clause 87(2) is not an exhaustive one.

I begin by reiterating that we are determined that selective licensing be used as a targeted measure for dealing with specific problems in the private rented sector. Therefore it will be only a very small proportion of landlords, in areas where the particular problems justify intervening in the operation of the housing market, who will be subject to licensing.

There are only two grounds for setting up a selective licensing scheme: low demand and anti-social behaviour. I suspect that there will not be much of an issue of low demand in the London boroughs. I am not saying that it does not occur, but not on the scale that it is prevalent in the north of the country. In that regard, London does not know what the rest of the world is like.

As for anti-social behaviour, the local housing authority must consider that such behaviour is of a significant and persistent nature and that the inaction of private landlords is a contributory factor to its continuing. In these circumstances, when communities are being blighted by the actions of irresponsible tenants while some landlords turn a blind eye, we do not believe that it is unreasonable to require that private landlords take some degree of responsibility for the tenants to whom they choose to let their property.

The key words here are "some degree of responsibility". Landlords should not be their tenants' keepers, but neither is it right that they should wash their hands entirely of the behaviour of those people whom they choose to take on as tenants. As I am sure that noble Lords are aware, this issue was the subject of considerable debate in another place, which is hardly surprising, as Members of Parliament will be very much on the receiving end of complaints about this—as my noble friend was when he was in the of her place. Then, as now, our position was that we do not expect local authorities to impose conditions that would require landlords to seek to run their tenants' lives.

Landlords should be asked only to do what is reasonable and what a good landlord would do. That is why the clause refers to, such steps as are reasonably practicable". For example, it could not be considered unduly onerous to oblige landlords in areas subject to selective licensing to respond to complaints from neighbours and, if necessary, make it clear to the tenant that their behaviour is unreasonable. If that has no effect, there is always the threat of eviction.

A condition placed upon a landlord need not relate only to how he manages his relationship with the tenant. Local authorities have powers to act against anti-social behaviour through ASBOs and other measures. But it is difficult if landlords do not choose to co-operate with authorities—for instance, by informing them about problem tenants or giving evidence in legal proceedings.

As I have previously made clear, if a landlord believes that any condition in his licence is inequitable or unnecessarily burdensome he can appeal to the residential property tribunal to have the terms of his licence amended.

That is a considered response. It is not couched in language that responds to the complaints that some tenants have whose lives are blighted by anti-social behaviour. This issue is not being dealt with at the moment. These things go on and people turn a blind eye. That must stop. That is why we are introducing the possibility of selective licensing in a targeted area of private sector landlords. As I say, this does not include the public sector where those responsibilities already apply. We do not want private sector landlords to be their tenants' keeper or run their lives but they must take some responsibility. At the end of the day, sanctions can be imposed. With selective licensing the licence can be removed or revoked and the landlord then has a serious problem because he cannot collect rent. The measure will apply to those landlords who are not prepared to be good neighbours in the sense of ensuring that their property is inhabited by tenants who are good neighbours. Those are the people we are targeting.

As I said to my noble friend, the list is not exhaustive. However, I have given some examples of the kind of anti-social behaviour on which authorities may wish to take action.

Lord Graham of Edmonton

I have gained a great deal from this short debate. I am sure that the Minister was happy to spell out in some detail the Government's thinking. No one who knows good landlords believes that they turn a blind eye to patently anti-social behaviour. That does not happen with good landlords. The good landlord knows where to seek redress and knows his rights. He can, of course, threaten a tenant with eviction if either visitors or the tenant himself turn out to be bad neighbours to those around them.

I am very grateful to the Minister for disabusing some of the fears that I had regarding the impact of the Bill and this clause on others. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 118:

Page 59, line 27, at end insert—" (2A) A licence may also include—

On Question, amendment agreed to.

Lord Hanningfield moved Amendment No. 119:

Page 59, line 37, at end insert— ( ) conditions regarding equipment necessary to limit the susceptibility to fire hazards

The noble Lord said: This is a simple amendment that would impose an additional condition for the licensing of accommodation under this section: namely, to have due regard to those devices that would help to reduce the risk of fire.

The number of deaths and injuries through fire has dropped in recent years. However, that figure is still too high. Therefore, the installation of smoke alarms and fire resistant furniture would seem a sensible provision. I suspect that such accommodation that is designed to be caught under this part of the Bill is likely to have such devices. The Minister may be able to reassure me that such an amendment is unnecessary and that there is nothing to stop a local authority from insisting on such devices already under this or another part of the Bill. I hope that that is indeed the case. I beg to move.

Lord Rooker

I believe that I can satisfy the noble Lord. Clause 87(3) refers to Schedule 4 which sets out the mandatory conditions for licences issued under Part 2 (HMOs) and Part 3 (for selective licensing). In identifying the mandatory conditions for both Part 2 and Part 3 licences, we have considered what is necessary to ensure the safety of the tenants. So, the following conditions will apply: producing a gas safety certificate every 12 months (if gas is supplied); keeping electrical appliances and furniture in a safe condition and supplying a declaration about their safety to the local authority if requested; keeping smoke alarms in proper working order; and supplying a declaration about the condition and position of these smoke alarms to the local authority if requested.

For licences issued under Part 3, the landlord will also be required to demand references from persons who wish to occupy the house, although there is no requirement on prospective tenants to supply such a reference. The appropriate national authority can amend Schedule 4 through secondary legislation.

5.15 p.m.

Clause 87(4) provides that the local authority is required as a general rule to address health and safety issues through the housing health and safety rating system under Part 1 and not by means of licence conditions. However, the local authority may impose conditions that relate to the installation or maintenance of facilities or equipment.

Amendment No. 119 would add a new potential licence condition concerning fire safety equipment. If regulations are made under the provisions to prescribe standards for facilities and equipment, they would include, equipment necessary to limit the susceptibility to fire hazards". To that extent, the amendment is not required. In other words, we are confident that the definitions that we have used would cover the point raised by the noble Lord about susceptibility to fire hazards in such properties.

Lord Hanningfield

I thank the Minister for that detailed reply. It seemed to cover the points that I made, but we will examine it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 120:

Page 59, line 46, after "imposing" insert "(in accordance with subsection (2A))"

On Question, amendment agreed to.

Clause 87, as amended, agreed to.

Clause 88 [Licences: general requirements and duration]:

Lord Rooker moved Amendment No. 121: Page 60, line 28, at end insert "or becomes an HMO to which Part 2 applies (see section 54(2))

On Question, amendment agreed to.

[Amendment No. 122 not moved.]

Clause 88, as amended, agreed to.

Clause 89 agreed to.

Clause 90 [Revocation of licences]:

Lord Rooker moved Amendment No. 122A: Page 61, line 38, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;

On Question, amendment agreed to.

Lord Hanningfield moved Amendment No. 123: Page 61, line 43, at end insert ": and ( ) where the licence holder is deemed to have committed a serious criminal offence

The noble Lord said: Amendment No. 123 would give a local authority the power to revoke the licence of a landlord who committed a serious criminal offence. The issue was debated in Committee in another place, but there appeared to be some doubt and confusion about it. We should clarify things today.

I accept that, as the Bill stands, a local authority can decide whether a licence holder is a fit and proper person and that it would be hard to see how someone who had committed an offence could be considered a fit and proper person. However, it is possible for a landlord to be a fit and proper landlord in one place and a bad one in another. The Minister used exactly those words in one of our earlier discussions. Furthermore, given the high level of discretion that the Bill affords local authorities, it is possible for different local authorities to take a different view of what constitutes fit and proper conduct.

We seek an assurance from the Minister not only that a person would be excluded from holding a licence were he to commit a serious criminal offence but that there is sufficient scope to ensure consistency of approach on a national basis. I beg to move.

Lord Rooker

Amendment No. 123 would include an additional condition that a licence could be revoked if the licence holder were deemed to have committed a serious criminal offence.

In an area subject to selective licensing, it is important that local authorities can revoke licences if there is poor management of a property, so that bad landlords or agents can be replaced. Our objective is to drive such people out, if they do not get their act together. We want the bad landlords driven out of business. I make that absolutely clear. It has taken a long time for this legislation to be introduced, and we are very serious about it. It will be used in a highly selective and targeted way.

Clause 90(2) provides that a local housing authority can revoke a licence granted if it has reason to believe that the licence holder or the manager of the property is no longer fit and proper. If a licence holder has committed a serious criminal offence that would normally be sufficient evidence that they were no longer fit and proper and we would expect the local housing authority to revoke their licence.

While I understand that the amendment might be intended to establish consistency across different authorities, we are not persuaded of the benefits of prescribing at that level of detail. Our position is to allow local authorities as much flexibility as possible in dealing with these matters while providing the appeal system for those who feel that they have been treated unreasonably. Therefore, while we understand and support the reasoning behind the amendment, the Bill already contains provisions to take care of such concerns.

Lord Hanningfield

The Minister himself said during an earlier discussion that the landlord could be good in one place and pretty terrible in another. If that landlord is terrible in another place should a third local authority have some consideration for the fact that he is good in the first authority? That is one of the purposes behind the amendment, to try to ensure that bad landlords are dealt with. We all wish to get rid of bad landlords. If they are bad in one place, although they are good in another place perhaps the third local authority should take some notice of the fact that they are bad in the first place.

Lord Rooker

If my memory is correct, the example that I raised at the time concerned someone who was managing or owned different properties in different authorities. Some properties might be smaller than others and, therefore, the management issues would be different. Clearly if the person was not a fit and proper person in one authority it would be highly unlikely that they would be deemed a fit and proper person in another authority. That would be irrespective of the nature of the different properties they ran. I was drawing a distinction that just because a person owning properties in more than one authority had a licence, and the property management was OK in one authority, that would not mean that it was OK in the other. The matter would have to be tied to the property. When it is tied to the person, however, regarding the matter of checking the licence, if they are not fit and proper in one authority it is highly unlikely that they would be in another. If they commit offences, that is bound to be known about from one authority to another. The matter is covered by the legislation.

Lord Hanningfield

I thank the Minister for clarifying that point. Perhaps he could undertake to ensure that the issue is covered. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 123A:

Page 61, line 43, at end insert— Section 86(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 85(3)(a) or (c).

On Question, amendment agreed to.

Clause 90, as amended, agreed to.

Clause 91 agreed to.

Clause 92 [Offences in relation to licensing of houses under this Part]:

Lord Hanningfield moved Amendment No. 124:

Page 63, line 16, at end insert— ( ) A lender who has taken possession of an HMO that should be licensed but is found not to be so, would not be guilty of an offence in relation to licensing of houses under this Part.

The noble Lord said: The amendment seeks to exempt a lender who has taken possession of a property requiring to be licensed, but not licensed, from committing the offence, so that they would not be liable to the £20,000 fine. Amendment No. 126 would exempt such a lender from the provision that no rent or charge is payable by the occupiers of the property and that no charge can be made in lieu of rent during the period. Finally, Amendment No. 125, as we discussed in an earlier part of the Bill, would reduce the level of fine for a person not in possession of a licence.

We were slightly disappointed by the response that the Minister, Keith Hill, gave to these amendments in the other place and by tabling them again we hope that the Government have had an opportunity possibly to rethink their approach to the legitimate concerns expressed by many mortgage lenders in the area. The Minister in the other place commented that he believed a lender generally would take possession of an empty property, thus precluding the need for a licence, and that there would be nothing then from stopping the lender from applying for a licence if he chose subsequently to let the property.

However, I believe that the Minister was speaking in general terms. His comments may well reflect the case for the majority of repossessed properties; however, the Government do not seem to have an answer for instances where properties are repossessed with occupants, yet without a licence. As the Bill stands the lender would still be facing a significant fine. These are the genuine concerns of people who have discussed the matter with us.

I hope that the Minister can provide us with a more satisfactory answer today. I beg to move.

Lord Bassam of Brighton

I understand the noble Lord's reasoning behind the amendment and can see that it is aimed at ensuring that mortgage lenders who need to repossess properties are not inadvertently caught by the provisions and subjected to the heavy penalties that non-compliance rightly attracts.

However, a lender taking repossession of a property which would fall within the scope of licensing would be likely to be seeking to obtain vacant possession of the property in any event. If the property is vacant, there will be no requirement for it to be licensed.

During any period when a lender has taken possession of a property and is taking steps to remove the occupiers, it would be possible to apply for a temporary exemption notice and the local housing authority would be able to grant such a notice. In fact, one could argue that it would be unreasonable if they did not, given the circumstances.

However, if the lender has no lawful way of removing the occupiers of the repossessed property, or if it decided to keep the property as a rented accommodation which would require a licence, we would expect it to obtain a licence in the same way as all other managers of licensable property.

I do not envisage that there should be any difficulty in reputable lenders being granted a licence and I would expect that they should easily be able to satisfy the licensing criteria. And I ought to point out the unwanted potential of the amendment for opening up a huge loophole in the legislation if any persons or companies, irrespective of how big, small or disreputable, could be exempted from the licensing provisions merely because someone to whom they had loaned money had defaulted on the loan.

I hope that the noble Lord is satisfied that there are provisions in the Bill to safeguard the interests of lenders and I would urge him to withdraw Amendments Nos. 124 and 126.

As regards Amendment No. 125, I believe that we have more than adequately made the case for the provision. Even though the amendment has been cleverly attached to those relating to lenders, I see no merit in it and it would be inconsistent with our earlier position.

Lord Hanningfield

I thank the Minister for his reply. I agree that we do not want to create loopholes in the legislation so that people can find ways around obtaining licences. However, lenders have legitimate concerns—large and local lenders—who do not necessarily want to become owners of multiple-occupation houses. They are in business merely to lend money on property.

I will examine the Minister's reply, which I think was clearer than that given in another place. I hope that it will provide assurances to the people who are concerned. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 125 not moved.]

Clause 92 agreed to.

Clause 93 [Further sanctions relating to unlicensed Part 3 houses]:

[Amendment No. 126 not moved.]

Clause 93 agreed to.

Clauses 94 to 96 agreed to.

Clause 97 [Making of interim management orders]:

Baroness Hanham moved Amendment No. 127: Page 66, line 41, at end insert ", and (c) on an application by the authority to a residential property tribunal, the tribunal by order authorises them to make such an order; and the authority may make such an order despite any pending appeal against the order of the tribunal (but this is without prejudice to any order that may be made on the disposal of any such appeal)

The noble Baroness said: Amendments Nos. 127 and 128 are to ensure that all interim management orders require the prior authorisation of the residential property tribunal. An interim management order is a severe remedy under which the local authority takes over management and control of a property. The local housing authority is under a duty to make an interim management order if a house in multiple occupation is not licensed and it considers either that there is no reasonable prospect of it being licensed in the near future or that the health and safety condition is satisfied. An interim management order must also be made where it has revoked the licence and it considers either that on the revocation coming into force there is no reasonable possibility of the house being licensed in the near future or again the health and safety condition will be satisfied.

There is a right of appeal against an interim management order, but only after the event. By then the local authority will have taken over the property and if it transpires that the order has been made unjustly, the damage will have been long since done.

Experience has shown that it can take up to six months for the decision of the property tribunal to be known. As an interim management order lasts for only 12 months, by then it would be half-way through its life. By the time an appeal has been dealt with a lender may well have repossessed the property. Although the local authority does have to pay over the income it does not have to do so straight away. An owner therefore may be unable to afford the mortgage repayments.

The absence of due process raises possible issues as to the contravention of Article 6(1) and Article 1 Protocol 1 of the European Convention on Human Rights. Under Article 1 of Protocol 1, every person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to conditions provided for by law and for the general principles of international law. It is, however, provided that this does not in any way impair the right of the state to impose such laws as it thinks necessary to control the use of property in accordance with general interest.

The European Court of Human Rights has held that the way in which contracting states procedurally interfere with property rights may well be relevant to determine whether in substance their actions conform to Article 1 Protocol 1. Under Article 6(1), in the determination of his civil rights and obligations, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

It is our contention that the European convention rights could well be infringed because the right of appeal arises only after the event and there is at the moment no prior procedure for obtaining authorisation. The length of time to deal with an appeal is also of concern and it is important that there is prior consideration before an independent tribunal.

If a property tribunal authorisation is required in advance in one category of case, why not in others? There could be issues which could well arise between the landlord and the authority as to whether there are prospects of the property being licensed in the near future. Issues could also arise as to whether the health and safety condition is fulfilled. These are matters where the landlord should be able to make representations to the property tribunal before any order is made. I beg to move.

5.30 p.m.

Lord Bassam of Brighton

I was very interested and intrigued by the human rights argument that the noble Baroness, Lady Hanham, expounded on this matter. It is the first time that we have had that particular train of thought brought to your Lordships' House on the Bill, as far as I can recall.

It might help if I go carefully through the clause and what it does and does not do and give a full explanation because it may well allay some of the concerns and suspicions which have prompted the thinking behind the amendment.

Clause 97 sets out the circumstances in which a local authority has a duty to make an interim management order and those in which an authority has a discretion to do so. If a property can be licensed under Parts 2 or 3, it must either have a licence or be subject to a management order unless it has been temporarily exempted. We would rather that properties were licensed than subject to a interim management order.

However, that will not always be possible; for instance, if no fit and proper person can be found to manage a property. Because the welfare of the tenant is paramount the Bill obliges local housing authorities to take over the management of such properties using interim management orders. The clause also provides a discretion for a local housing authority to apply to a tribunal to make an interim management order for other properties which cannot be licensed HMOs or to make a special interim management order under Clause 98.

Amendment No. 127 would require the approval of a tribunal prior to an authority making an interim management order in respect of a house which is required to be licensed under Part 2 or 3, but is not licensed and where the authority considers that there is either no reasonable prospect of it being licensed in the near future or the health and safety condition in Section 99 is satisfied.

The Bill presently requires the approval of a tribunal for discretionary interim management orders such as special IMOs under Clause 98 and IMOs for non-licensable HMOs. That recognises that an IMO is a significant imposition on a landlord's rights. The requirement for approval by a tribunal is an appropriate safeguard where an authority is exercising its discretion to make an IMO. However, in regard to licensable HMOs no discretion is being exercised.

A decision will already have been taken at the time the licensing requirement was introduced that that particular type of property must be subject to some form of management control. If the amendment were passed a residential property tribunal would effectively be seeing whether it agreed with the decision of the local authority not to grant a licence. That is more properly dealt with as an appeal.

It is important to recognise that if a landlord disagrees with the local authority's decision to make an IMO, he or she can appeal against that decision to the tribunal. The tribunal has wide powers in those circumstances and can confirm the order with or without amendments to the terms or revoke it and order that a licence should be granted or a temporary exemption notice issued, so it has considerable discretion. But I have to ask why an appeal hearing should have to take place if the landlord does not dispute the making of the order that would, in effect, be the requirement imposed by the amendment.

Management orders need to be a genuine option for local authorities and therefore as unbureaucratic as possible, unlike the current control orders which some authorities find too cumbersome. In some cases it might be essential to the health and safety of the occupiers of licensable properties, or to people living nearby that effective management controls should be put in place rapidly, not some weeks or months later or even further down the line after a tribunal has considered the issue.

It should be remembered that interim management orders are intended to be short-term orders during which a local authority will take steps to sort out the long-term management of the property. No final management order can come into force until any appeal against it has been finally resolved. So no landlord will face a long term loss of management control without the opportunity to have the tribunal consider the case and go through the process about which the noble Baroness was concerned.

I hope I have given the noble Baroness sufficient assurance that adequate safeguards are in place to ensure that management orders are made only when it is appropriate to make them. And I hope that the noble Baroness will agree that it would be impractical to insert an authorisation stage before the making of an interim management order in the case of properties required to have a licence.

Amendment No. 128 begs us to make the same range of arguments as the previous amendment, so it would be unfair on the Committee for me to rehearse them again. I recognise the import of the issue raised by the noble Baroness, but the way in which we envisage the process working will not only limit the bureaucratisation but be clearer and provide for proper due process and redress where appropriate.

Baroness Hanham

I thank the Minister for his clear explanation of how he sees the provision working. The problem as we see it is that the original decision to seek an interim management order may be for only 12 months, but it has clear implications for the owner or manager of the property. The trouble is that if an appeal process is undertaken, as I have said, it will be well into the time of the interim management order before an appeal can be made and ages before the result comes out.

Perhaps we need to try to speed up how the property tribunal makes its decisions. It is not an uncomplicated area. I would like to look again at what the Minister said; we will probably return to the issue at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 128 not moved.]

Lord Bassam of Brighton moved Amendment No. 129:

Page 67, line 16, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"

The noble Lord said: Amendment No. 129 amends Clause 97(4) to allow a residential property tribunal considering an application for the making of an interim management order for a house in multiple occupation that is not subject to a mandatory licence to rule upon the terms of the management order at the same time as deciding on the validity of the application. The tribunal can choose to approve the application and the draft order as submitted or it may approve the application but amend the order as it sees fit; for example, after hearing representations from the landlord or manager.

Amendment No. 130 makes the same change to Clause 97(7) in respect of a residential property tribunal considering an application for the making of a special interim management order. Amendment No. 156 is a technical amendment that would provide that the 28-day time limit for appeals would begin from the date specified in the notice served under paragraph 7(5) of Schedule 6. The other amendments are largely technical and relate to tribunals. I beg to move.

Baroness Hanham

I shall not comment on these amendments, but I wish to refer to the group starting with government Amendment No. 138, the group led by government Amendment 154A, and the government amendments, starting with Amendment No. 151, attached within another group. All those amendments were tabled over the Recess. We have not had a chance to consider them; they appeared suddenly on the agenda papers. It has been impossible for us either to produce amendments or to take advice on them. The absence of response to these amendments now does not mean that there will be no response subsequently. Major issues are being included in the Bill, well on the way through, that have not been considered in the other place and that will require considerable scrutiny by the House in due course. I assume that we will not go beyond Amendment No. 163 today; otherwise, we would reach another chunk of new clauses that we have not had the chance to consider.

Lord Bassam of Brighton

This group is not overly complicated and probably should not disturb the noble Baroness too much, but we recognise and respect her point. We understand that the noble Baroness may feel that she must come back on those issues at a later stage. We do not intend to go beyond Amendment No. 163 today. I am grateful to all those who have ensured that we make rapid progress on this part of the Bill today.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendment No. 130:

Page 67, line 33, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"

On Question, amendment agreed to.

Baroness Hanham moved Amendment No. 131: Page 67, line 40, leave out subsection (8).

The noble Baroness said: This probing amendment was tabled in another place, but it is important that a suitable explanation is also provided in this House. Clause 97 is not particularly easy to follow; for instance, the idea of a person having an interest in a house or in part of a house needs to be clarified. What is an interest in "part of the house"? Is it shared ownership, for example? How do we define it? I would be grateful if the Minister would be kind enough to explain. I beg to move.

Lord Rooker

I reiterate what my noble friend said in response to the noble Baroness's points about the late government amendments. We agree that we are putting into the Bill substantial new material that was not discussed in the other place. It is all good stuff, and it will still be scrutinised. There is always the danger, when everybody agrees that new provisions are all good stuff, that they will not be scrutinised properly. That is why we ended up with the disaster of the way in which the Child Support Agency was set up initially. Everyone thought that it was a good idea, so Parliament failed in its job of scrutinising. We fully expect proper scrutiny and debates on Report. We have no problem about that at all.

I also hope that I can give a satisfactory explanation to the point that the noble Baroness made about Amendment No.131.

5.45 p.m.

Where an interim management order is made, the local authority can incur expenditure on such things as repairs to the house which will be reimbursed from rental income. It may not be necessary or appropriate for this to extend to the landlord's own accommodation. For example, a landlord may occupy a self-contained basement flat. It may be reasonable for the authority to exclude that flat from the interim management order so that it does not have to carry out repairs or do other things at the landlord's expense. The landlord would have the discretion to determine how money which would otherwise be deducted from his rental income is spent on the repair of the area in which he privately resides.

In other circumstances it might be necessary to include the landlord's accommodation in the order, where, for example, he shares facilities with the tenants such as a bathroom or kitchen, or if he was behaving in an anti-social manner, or was harassing the tenants. Inclusion in the order in those circumstances would make it far more practical for the local authority to be able to take effective legal action against him, which might include, for example, seeking authority from a court to exclude him from the property.

But, of course, if the landlord is aggrieved by any decision to include or exclude his personal accommodation from the order, he will have a right of appeal against that decision to the residential property tribunal.

I have given a couple of examples of how properties are split to the noble Baroness. That is fairly normal in properties in urban areas.

Baroness Hanham

Can I ask for a further example? There are houses in multiple occupation—or which will now be deemed to be in multiple occupation as a result of the Bill—where there may be two self-contained flats and some higher floors that are single dwellings. Would the self-contained part not be considered because it would not come under the legislation? But would individual accommodation associated with it be what this clause refers to?

Lord Rooker

I will have to take advice on that matter. It is a practical question and a practical example. The self-contained area might be excluded, but I need to be reinforced with advice on that point.

The noble Baroness asked what is meant by an interest in part of a house. This could be an interest in a flat. Shared ownership of a house or flat would also fall within this definition. Under a shared ownership arrangement there would be an interest in the property.

Baroness Hanham

I thank the Minister for his reply. It will be helpful to tease out some more examples of this sometime.

The Bill expands what the term "houses in multiple occupation" relates to. Some further explanation of this matter would be helpful, either earlier in the Bill or at this point. We will come back to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 97 shall stand part of the Bill?

Baroness Maddock

Many of the issues that I wished to raise about Clause 97 have been discussed at some length. I will look carefully at what has been said and at this stage I am happy for the clause to remain part of the Bill.

Clause 97, as amended, agreed to.

Clause 98 [Special interim management orders]:

Lord Rooker moved Amendment No. 131A: Page 68, line 22, leave out "locality" and insert "vicinity

On Question, amendment agreed to.

[Amendment No. 132 had been withdrawn from the Marshalled List.]

Clause 98, as amended, agreed to.

Clause 99 [The health and safety condition]:

Baroness Maddock moved Amendment No. 133: Page 69, line 7, at end insert— ( ) A local housing authority must have regard to any breach of the duty of care owed to the person occupying the house under section (Duty of care for those having control or managing a HMO).

The noble Baroness said: Perhaps I may point out that for some reason, yet again, this amendment is in the wrong order on the list. We must do better next time. Amendment No. 133 applies to the health and safety condition currently provided for in Clause 99. It reiterates the obligation on local housing authorities to have regard to any breaches of duty of care when considering making an interim management order.

Over the years, this issue has been discussed. It began in 1983 when the late Jim Marshall MP introduced a houses in multiple occupation Bill to Parliament. In 1999, the Government consulted on the licensing of HMOs. The Office of the Deputy Prime Minister—I am sure that it was not called that in 1999—said that it had concluded that powers under housing legislation to deal with multiple-occupancy problems were necessary in parallel with the licensing scheme, which it spelt out a bit more carefully.

In July 2003, in the draft housing Bill, the Office of the Deputy Prime Minister Select Committee recommended that, landlords should be given a duty of care to maintain their properties to certain standards and conditions to protect the health and safety of occupiers. The Government should consider how the enforcement regime can be framed to give effect to such duty".

In November 2003, in its response to that recommendation, the ODPM argued that, there are already legislative provisions that impose positive obligations on landlords to maintain their properties to certain standards. These include section 11 of the Landlord and Tenant Act 1985, which implies a repairing obligation on landlords in most short leases. This is reinforced by section 4 of the Defective Premises Act 1972, which imposes a duty on any landlord who has a repairing obligation to take care that nobody is harmed by a relevant defect that should have been repaired. Additionally, detailed provisions as to how managers of licensed property should act in caring for their tenants will be set out in an approved code of practice or prescribed in management regulations".

While that can be of benefit, this legislation does not impose positive obligations on landlords generally to ensure the health and safety of tenants. The issue was not debated during the Bill's Commons stages. But in a response to a parliamentary Question tabled on 13 July 2004, the Housing Minister, Keith Hill, stated that: The Government decided not to introduce an additional provision relating to the duty of care on owners of houses in multiple occupation (HMOs) because such a duty already exists in law and will be complemented by the provisions in the Housing Bill currently before Parliament".—[Official Report, Commons, 13/7/04; col. 1084W.] He again reiterated the various Acts to which I referred earlier.

We, and others, are concerned that this provision is not as strong as we would like it to be. Given all the discussion that there has been, we would urge the Government to make the duty clear in the Bill. It should be made absolutely clear in this very important Bill and we should not just rely on other legislation. I beg to move.

Baroness Hanham had given notice of her intention to move Amendment No. 134.

Page 69, line 8, leave out "threat" and insert "written termination of a tenancy agreement where its perceived intention is"

The noble Baroness said: Amendment No. 134 is grouped with Amendment No. 133, although it is not entirely on the same lines. When this issue was debated in the other place the Planning Minister gave an assurance to look again at the matter. We are therefore tabling the amendment to determine whether the Government have managed to have an opportunity to have a rethink.

Clause 89(3) appears to be making it an offence for a landlord to seek eviction or threaten to seek eviction in such circumstances. A landlord must not have his rights of possession taken away. There is concern among landlords that the use of the word "threat" may imply a reduction in a landlord's proper rights to deal with tenants. Being "threatened with eviction" is a term widely used and may not necessarily imply that the landlord has acted improperly in any way. Being "threatened with violence" may also be a term widely used, but it has a very different meaning. Our amendment would restrike the balance, but in a way that is helpful to the purpose of the clause. I beg to move.

Lord Bassam of Brighton

These two amendments sit rather uneasily together, but I shall try to deal with each in turn. Perhaps it is worth reflecting on what Clause 99 does. It sets out very well the health and safety condition test that must be satisfied before a discretionary interim management order can be made. The condition is satisfied if it is necessary to make the order to protect the health, safety or welfare of the occupants of a house, or other persons living in, or with an owner's interest in, property in the vicinity of the house.

Amendment No. 133 would insert a new subsection in Clause 99 requiring that when considering whether the health and safety condition is satisfied, a local housing authority must have regard to any breach of the duty of care owed to an occupant under the new clause proposed by Amendment No. 174. That amendment proposed that HMO landlords should have such a duty of care. It was resisted as we felt that it was rather too vague and that it would be inappropriate to impose criminal sanctions when civil ones existed. I understand that it was withdrawn for that reason.

The health and safety condition already requires local housing authorities to consider the health, safety and welfare of occupants, or those living nearby. It is hard to see what requiring consideration of a breach of duty, as set out originally, adds. Breaches of Section 4 of the Defective Premises Act 1972 would be more relevant. As a housing adviser in the past, we used to use that section in our law centre practice to considerable effect.

I now turn to the second amendment, which was tabled by the noble Baroness, Lady Hanham. Amendment No. 134 seeks to amend Clause 99(3) which begins: A threat to evict persons occupying a house … to avoid the house being required to be licensed". The amended clause would read: A written termination of a tenancy agreement where its perceived intention is"— and continue— to evict persons occupying a house … to avoid the house being required to be licensed". That is not appropriate, as a "threat" can be made in various guises, such as orally, by withholding services, or by other forms of harassment. The amendment would prevent the local authority acting unless the landlord obliged by putting his "threat" in writing.

The amendment would narrow the effect of subsection (3) by narrowing the circumstances in which the health and safety condition is activated. A threat of eviction may lead to a tenant seeking new accommodation just as surely as any written notice. While the use of the powers in Clause 97 will be exceptional, it is our intention that they should also apply to landlords who may not be scrupulous in using written legal forms to evict tenants.

Clearly there is a judgment to be made as to the nature of a threat. I fear that the amendment does not remove the need for a judgment to be made. That is because it requires that one should go behind the issuing of a written notice and gauge what its intention might be.

In our view the amendment considers only one aspect of what a threat of eviction might amount to. It is too limiting. It is not the case that every decision to evict a tenant automatically triggers the health and safety condition and the making of a management order. All that this provision does is to make it possible for a local authority to take account of a threat to evict in its overall consideration of whether the health and safety condition is met.

If a written notice is served, and the perceived intention is to evict solely in order to avoid licensing, that may be one of the factors that would tend to encourage a local authority to determine that the health and safety condition is met. Of course, any decision by the local authority to make an interim management order can be challenged at the residential property tribunal, as I explained earlier.

I hope that this gives sufficient comfort that the rights of landlords will not be adversely affected by the provision as drafted. For those reasons, I hope that the noble Baroness will withdraw her amendment.

6 p.m.

Baroness Maddock

I thank the Minister for his reply. It was slightly disappointing, given that this issue has been around for a long time. Various people think that the Government have perhaps not been as strong as they said they would be. At this stage, however, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham

I have already spoken to this amendment, and the Minister has replied to it, so I shall respond briefly.

Clause 99(3) intimates that a landlord has been using improper means—I understand that there have been plenty of those. It is then a question of the interpretation of those who are threatening eviction because that is as if the words were quoted, not on the basis of an improper threat having been made; rather, there was a proper threat to evict. How that is untangled will ensure that everyone knows what a threat to evict means. However, I hear the Minister's response to my amendment.

[Amendment No. 134 not moved.]

[Amendment No. 135 had been withdrawn from the Marshalled List.]

Clause 99 agreed to.

Clauses 100 and 101 agreed to.

Clause 102 [General effect of interim management orders]:

Baroness Hanham: moved Amendment No. 136: Page 71, line 27, at beginning insert "only

The noble Baroness said: Amendments Nos. 136, 137 and 145 are designed to ensure that the interests of landlords are suitably acknowledged and protected by the relevant authorities when it comes to the enforcement of interim management orders. The amendments would amend subsection (3)(b) and the equivalent provision in Clause 110 in relation to final management orders. Amendment No. 137 amends subsection (3)(b) so that the local authority would have the right to do something only in relation to the management of the property if it, ensures the immediate health, safety and welfare of the occupants".

In short, these amendments seek to ensure that if a local authority takes possession of a house through a final or interim management order, it should make only the changes that are absolutely necessary to ensure the safety and welfare of the occupants. It should not be at the liberty of the authority to make all manner of changes, even though they may be regarded as improvements, over and above what is necessary because that would be at the landlord's expense.

There is in addition the issue of a standardised approach, or rather the lack of one, across the country that may well arise through this clause. Some authorities might want to take more action than others unless the wording of the Bill makes it clear that the actions they take should be directly related to the reasons for their initial involvement. The purpose of these amendments is to make that clear and slightly to reduce the flexibility and freedom of this particular aspect. I beg to move.

Baroness Hamwee

Perhaps I may ask a question on the back of this group of amendments. Although it is not directly on the point, it may provide a brief opportunity for thought rather than my asking it on the debate on whether the clause should stand part.

Clause 102(3)(a) deals, in parenthesis, with the rights of existing occupiers—referring to those rights which are preserved. What is the position of a potential occupier, by which I do not mean just anyone, but someone who has signed an agreement to occupy perhaps the following week and is expecting to do so? While one wants to protect the health and safety of that person, they could nevertheless be very much thrown by the loss of accommodation. Am I correct in thinking that Clause 117 covers the position of someone in that situation? Perhaps I should have turned my head through a 180 degree arc in asking that.

Lord Rooker

It is a fair question asked quite clearly. No doubt an answer will wing its way to the noble Baroness, Lady Hamwee.

I turn to Amendment No. 136. I think that I can reassure the noble Baroness, Lady Hanham, that the power contained in the subsection she seeks to amend is relatively limited. It is a power that will allow the local authority to manage the property effectively. It does not dispossess the owner of all his rights. Indeed, the powers of local authorities are very clearly limited by subsections (4) and (5) preventing, for example, the local authority allowing further occupation without the owner's consent, or disposing of the property. I appreciate that the noble Baroness is looking for reassurance on this.

Amendment No. 137 would further amend the provision on the interim management orders so that the local authority would be able to take action in relation to management of the property to ensure the immediate health, safety and welfare only of the occupants. Such a narrow approach would prevent action being taken once an interim management order had been made for the protection of people in the surrounding area. While we welcome the noble Baroness's desire to see the interests of the occupants protected, we think that it is important that bad management can be addressed and the interests of people in the wider community protected. But we take the point. It is absolutely clear.

This is the message that we want to give. It is important that local authorities do not see the making of an interim management order as giving them a green light to act as if they owned the property for all time. I believe that there are already adequate safeguards to protect against this. First, the authority is under a duty to sort out the long-term management of the house as soon as practicable. It will hardly fulfil this obligation if it is embarking on an extensive programme of unnecessary works. Secondly, and most importantly, the landlord can appeal to the residential property tribunal against any unreasonable expenditure incurred. If the local authority were to attempt to take unreasonable actions under the interim management order, it would find itself landed with the bill for doing so. I hope that the general thrust of that reassures the noble Baroness.

Regarding Clause 102(3)(a), which is about the rights of existing occupiers, and the question of whether the rights of a potential occupier, someone who has signed an agreement to occupy next week, are protected, they could be protected if the local authority agrees to serve a notice under Clause 117. The potential occupier would have no right to insist but we will look further into this before the next stage of the Bill.

Baroness Hanham

I thank the Minister for that reply, which is more reassuring than I expected. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 137 not moved.]

Lord Bassam of Brighton moved Amendment No. 138: Page 72, line 3, leave out paragraph (a).

The noble Lord said: This is a highly technical group of amendments that amend Part 4 of the Bill to make sure that it fits more conveniently with the law relating to the registration of land. The amendments are minor and technical and they are brought forward to clarify the legal status of tenancies granted by local housing authorities under management orders that they make under this part of the Bill.

When a local housing authority makes a management order under Part 4, one of the powers it acquires is the ability to create what appear to be tenancies and licences. However, because under a management order a local housing authority does not acquire an interest or estate—that is, ownership—in the property, it cannot grant a legal tenancy. Leases and licences granted by a local housing authority are better thought of as being quasi-leases. This might give rise to some problems if the Land Registry ever becomes involved—if, for instance, a person attempts to register a quasi-lease or purchases a property and claims that the Land Register is defective because it fails to include a quasi-lease on its register.

The main purpose of these amendments is to provide that, except in certain specified circumstances, a tenancy granted by a local housing authority under its powers in a management order is regarded as a legal lease, binding on any future owner of the property and, in appropriate circumstances, registerable at the local Land Registry. This will not give powers to local housing authorities to create legal leases, but any lease they do create must be treated as if it were such a lease.

This group of amendments also covers two other related issues. It is intended to allow local housing authorities to seek the entry of a restriction in the Land Registry in respect of a property subject to a management order. This would address a potential mischief, namely an attempt by a landlord to register a lease that, by virtue of the management order, he was not entitled to grant because under the land registration rules, if registered, such a lease would be both legal and binding.

The other issue is purely technical and is to confirm that any charge on a property is a legal charge, capable of registration at the Land Registry, and also a local land charge in relation to any monies that might be owed. The remaining amendments in this group are largely tidying up amendments consequent on the new provisions introduced by the principal amendments. I hope that that rather short explanation of a large number of amendments gives a clue to noble Lords opposite and that they find the amendments that we have tabled rather easier to swallow, even though they have been put down rather late. I beg to move.

Baroness Hanham

I reiterate that we are not swallowing the amendments. We are complaining that we have not seen them before, and we will probably respond to them on Report.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendment No. 139: Page 72, line 19, at end insert— ( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register of title in respect of such an order.

On Question, amendment agreed to.

Clause 102, as amended, agreed to.

Lord Rooker moved Amendment No. 140: After Clause 102, insert the following new clause—

"GENERAL EFFECT OF INTERIM MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY

(1) This section applies in relation to any interest or right created by the authority under section 102(3)(c).

(2) For the purposes of any enactment or rule of law—

1. (a) any interest created by the authority under section 102(3)(c)(i) is to be treated as if it were a legal lease, and
2. (b) any right created by the authority under section 102(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 102(5)(a)).

(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 102(3)(c)(i) as if the authority were the legal owner of the premises.

(4) References to leases and licences—

1. (a) in this Part, and
2. (b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 102(3)(c).

(5) The preceding provisions of this section have effect subject to—

1. (a) section 116(5) to (7), and
2. (b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 102(5)(b) the reference to leasing does not include the creation of interests under section 102(3)(c)(i).

(7) In this section— enactment" has the meaning given by section 102(10); legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20)).

On Question, amendment agreed to.

Clause 103 [General effect of interim management orders: immediate landlords, mortgagees etc.]:

Lord Rooker moved Amendment No. 141: Page 72, line 35, leave out "interest or right created" and insert "leases or licences granted

On Question, amendment agreed to.

Clause 103, as amended, agreed to.

Clause 104 [Financial arrangements while order is in force]:

Lord Hanningfield moved Amendment No. 142: Page 73, line 35, leave out from "made" to end of line 36 and insert "as soon as is practically possible after deductions to meet relevant expenditure are made

The noble Lord said: Amendments Nos. 142, 150 and 163 relate to the balance that is struck between the rights of landlords and the protection of vulnerable tenants and residents around the relevant properties. Again, we are seeking to achieve a balance in respect of the rights of landlords.

Amendment No. 142 removes part of Clause 104(4)(b) that gives the local housing authority the power, as it sees appropriate, to return moneys to landlords under interim management orders and adds the words, as soon as is practically possible after deductions to meet relevant expenditure are made".

We feel that the amendments are necessary to prevent local authorities having unfettered freedom to withhold payments. At present, no guidance is given about how they should proceed in such matters. Indeed, as the Bill stands, there is nothing to tell a local housing authority about when it should make the relevant net payments back to the landlord. I beg to move.

Lord Rooker

I want to be helpful, but I am not clear about this. The noble Lord mentioned Amendment No. 163 as being in the same group as Amendments Nos. 142 and 150. They are not grouped together on my list.

Lord Hanningfield

They are on ours.

Lord Rooker

This list is a mess today—we have government amendments that are not government amendments and the order is wrong. I am quite happy to deal with Amendment No. 163, by the way, now that I have located it, but it is not in the same group.

Lord Hanningfield

It is on the new revised list.

Lord Rooker

Yes, but I have not had one of those.

Amendment No. 142 would require the local authority to make payments to the relevant landlord as soon as practically possible after the relevant expenditure has been incurred. We wholly agree with noble Lords opposite that local authorities should be diligent in making these payments, and that they should be made at the relevant intervals. But we are also conscious that an interim management order is in force because there were problems with the landlord's former management of the property.

These orders are very short term—they can last for only up to one year—but in many cases will be for a much shorter period. They enable the local authority to put in place satisfactory management arrangements. The local authority is under a duty to pay any surplus revenue to the landlord at the end of the order if it does not proceed to make a final management order under Clause 110(2).

Clause 104(4) gives the local authority the flexibility to make payments to the landlord earlier than at the end of the order, if it considers it appropriate to do so. Obviously, we would expect it to do so. We fully accept the intention behind the amendment that landlords are treated fairly. In no way do we want landlords to be treated unfairly.

Amendment No. 150 would limit the discretion of the local authority and require it to make payment to the relevant landlord after the relevant expenditure has been incurred. We agree, again, that it should be diligent in making these payments.

6.15 p.m.

A management scheme must be agreed by a landlord before it can come into effect, or else determined by the Residential Property Tribunal on appeal. If the landlord is not satisfied with the proposed arrangements for the payment of surpluses, he already has a powerful method by which to challenge that.

The difficulty with this amendment, as with Amendment No. 142, is that it would remove the flexibility of local authorities to deal with any rent that they recover in the most appropriate manner. The landlord does have the right of appeal.

Clause 120(2) provides that, on termination of the interim management order, the surplus is to be repaid to the relevant landlord. Amendment No. 163 would remove the local authority's discretion to apportion payments when there are two or more landlords in such properties as it sees fit. In most cases, when they are joint owners of property, one would expect that they would be able to sort out between themselves who was entitled to what money. In the very rare cases when there is a dispute, someone needs to be able to resolve it, and we would argue that permitting the local authority to exercise its discretion is the best way around the problem. Disgruntled owners will have the ability to change any wrongful exercise of that discretion.

Government Amendment No. 151 is a technical amendment, which replaces an incorrect reference in other subsections of the Bill. Government Amendments Nos. 152 to 154 are technical changes to the provisions, setting out what authorities have to do with the money that they hold when a management order comes to an end. Essentially, if no further management order is made, the authority has to return the money to the landlord.

Government Amendment No. 155 provides that the exclusion will not apply when the issue is one of payment of surplus rent. Landlords will have the right to appeal against the frequency of payments of surplus rent and the rates of interest thereon in all circumstances in which an interim management order is in place. We are trying to be fair to landlords.

Government Amendment No. 165 amends Clause 120 by inserting new subsection (5A) to provide that if, at the end of either an interim or a final management order, a new final management order is made, the way in which any money held by local authorities is to be treated will be determined by the management scheme within the final management order. The amendment has been introduced to allow balances of income or deficit to be carried forward to a second or subsequent final management order. Landlords retain the right of appeal against the contents of a management scheme.

Lord Hanningfield

I thank the Minister for his reply. As I said at the beginning, I was trying to strike a balance between the rights of the landlords, the local authority position and the tenants. We shall examine his answers, for which I thank him, in detail. If we need to take them forward, we shall do so at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 104 agreed to.

Clauses 105 to 107 agreed to.

Clause 108 [Operation of final management orders]:

Lord Hanningfield moved Amendment No. 143: Page 76, line 36, leave out "5" and insert "3

The noble Lord said: Amendment No. 143 is simple enough, in seeking to reduce from five years to three years the time that is required to bring a house into proper management on a long-term basis. We would be grateful if the Minister could explain why the period of five years was picked. He might also tell us what checks the department will place on local authorities that drag their feet in dealing with such matters inefficiently or less than effectively. I beg to move.

Lord Rooker

That is a fair question. After the cooperation that has been given today, my following comment sounds almost cheap but I point out that the five years is a maximum period. Subsection (4) provides for an end date of anything up to but not beyond the five years. I now come to my cheap point. A maximum period of five years is consistent with the period allowed under the Housing Act 1985 for "control orders" where a local authority steps in to manage HMOs. In other words, we are carrying over the good works of the previous Tory government. The works that we carry over are always good, of course. I want to make it absolutely clear that the five years is a maximum period.

I also want to emphasise that the Bill provides that the local housing authority has to consult the landlord and other relevant persons on the terms of the final management order. These terms include the start and end date. Then the local housing authority has to consider any representations before issuing a final management order. At that stage the Bill also provides that if they so wish the landlord and/or other relevant persons can appeal to a residential property tribunal against the terms of the final management order. It is absolutely clear that an independent tribunal will adjudicate in the case of a grievance.

As I say, the five years is a maximum period, and there is a precedent.

Lord Hanningfield

I thank the Minister for that reply. Obviously. I shall have to agree with it if it was a Conservative government's idea to have a five-year period. I take the point that that is the maximum. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 108 agreed to.

Clause 109 agreed to.

Clause 110 [General effect of final management orders]:

Lord Rooker moved Amendment No. 144:

Page 78, line 8, leave out "occupiers preserved by section 116(2))" and insert "and other occupiers preserved by section 116(2) and (4A))"

On Question, amendment agreed to.

[Amendment No. 145 not moved.]

Lord Bassam of Brighton moved Amendment No. 146: Page 78, line 39, leave out paragraph (a).

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendment No. 147: Page 79, line 8, at end insert— ( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register in respect of such an order.

On Question, amendment agreed to.

Clause 110, as amended, agreed to.

Lord Bassam of Brighton moved Amendment No. 148:

After Clause 110, insert the following new clause—

"GENERAL EFFECT OF FINAL MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY

(1) This section applies in relation to any interest or right created by the authority under section 110(3)(c).

(2) For the purposes of any enactment or rule of law—

1. (a) any interest created by the authority under section 110(3)(c)(i) is to be treated as if it were a legal lease, and
2. (b) any right created by the authority under section 110(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 110(5)(a)).

(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 110(3)(c)(i) as if the authority were the legal owner of the premises.

(4) References to leases and licences—

1. (a) in this Part, and
2. (b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 110(3)(c).

(5) The preceding provisions of this section have effect subject to

1. (a) section 116(5) to (7), and
2. (b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 110(5)(b) the reference to leasing does not include the creation of interests under section 110(3)(c)(i).

(7) In this section— enactment" has the meaning given by section 110(10); legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20)).

On Question, amendment agreed to.

Clause 111 [General effect of final management orders: immediate landlords, mortgagees etc.]:

Lord Bassam of Brighton moved Amendment No. 149:

Page 79, leave out line 24 and insert "leases or licences granted by them under section 102(3)(c) or 110(3)(c),"

On Question, amendment agreed to.

Clause 111, as amended, agreed to.

Clause 112 [Management scheme and accounts]: [Amendment No. 150 not moved.]

Lord Rooker moved Amendment No. 151:

Page 80, line 30, leave out "(4)(c) and (d)" and insert "(4)(d) and (e)"

On Question, amendment agreed to.

Lord Rooker moved Amendments Nos. 152 to 154:

Page 80, line 32, leave out "is not to apply in respect of an interim" and insert "or (4) is not to apply in relation to an interim or (as the case may be) final"

Page 80, line 34, after "balance" insert "or amount"

Page 80, line 37, leave out paragraph (d) and insert— (d) that section 120(3) or (5) is not to apply in relation to an interim or (as the case may be) final management order that immediately preceded the final management order ("the order"), and that instead the authority intend to use rent or other payments collected during the currency of the order to reimburse the authority in respect of any deficit or amount such as is mentioned in that subsection;

On Question, amendments agreed to.

Clause 112, as amended, agreed to.

Lord Rooker moved Amendment No. 154A: After Clause 112, insert the following new clause—

"ENFORCEMENT OF MANAGEMENT SCHEME BY RELEVANT LANDLORD

(1) A relevant landlord may apply to a residential property tribunal for an order requiring the local housing authority to manage the whole or part of a house in accordance with the management scheme contained in a final management order made in respect of the house.

(2) On such an application the tribunal may, if it considers it appropriate to do so, make an order—

1. (a) requiring the local housing authority to manage the whole or part of the house in accordance with the management scheme, or
2. (b) revoking the final management order as from a date specified in the tribunal's order.

(3) An order under subsection (2) may—

1. (a) specify the steps which the authority are to take to manage the whole or part of the house in accordance with the management scheme,
2. (b) include provision varying the final management scheme,
3. (c) require the payment of money to a relevant landlord by way of damages.

(4) In this section "relevant landlord" has the same meaning as in section 112."

The noble Lord said: This is a new clause after Clause 112 enabling an application to be made by a relevant landlord to the residential property tribunal for an order enforcement of a management scheme made under Clause 112. Clause 112 provides that, when a local housing authority makes a final management order, the order must contain a management scheme.

The relevant landlord can appeal to a residential property tribunal against the provisions in a management scheme, and the scheme will not come into effect until any such appeal is resolved. That means that the landlord and the local authority must reach agreement on the contents of the scheme or have the matter settled by the residential property tribunal.

The current draft of the Bill provides for no mechanism for the enforcement of the agreed scheme. For example, although the parties could have agreed that the local housing authority would collect a certain amount of rent a year, it might collect significantly less than that because it has not promptly re-let rooms after they became vacant. The relevant landlord has no right to challenge such a breach of the scheme. The Government recognise that and other breaches. Undertaking works that are not agreed and are unnecessary could lead to a significant shortfall in the landlord's projected income, and he or she should be able to seek an order requiring a local housing authority to comply with the management scheme and to seek damages for loss of income. Amendment No. 154A provides that the landlord may apply to the tribunal.

Amendments Nos. 168 and 169 are technical amendments. Amendment No. 168 will amend Clause 121(3), making it clear that the provision applies to liability in respect of things done before the termination date. Amendment No. 169 is a technical amendment to subsection (6).

Amendments Nos. 169A and 169B are technical amendments. Amendment No. 169A will amend Clause 121(7) to correct a typographical error. Amendment No. 169B will add a new subsection to Clause 121, making it clear that its provisions apply to instruments—deeds, for example—as well as to agreements. The amendment is being made for the avoidance of doubt. I beg to move.

On Question, amendment agreed to.

Clauses 113 to 115 agreed to.

Schedule 6 [Management orders: procedure and appeals]:

Lord Rooker moved Amendment No. 155:

Page 203, line 9, leave out "This" and insert "Except to the extent that an appeal may be made in accordance with sub-paragraphs (3) and (4), sub-paragraph (1)"

On Question, amendment agreed to.

Lord Rooker moved Amendment No. 156: Page 203, line 32, leave out "7(2)" and insert "7(5)

On Question, amendment agreed to.

Schedule 6, as amended, agreed to.

Clause 116 [Effect of management orders: occupiers]:

Lord Rooker moved Amendment No. 157:

Page 82, line 35, leave out subsection (1) and insert— (1) This section applies to existing and new occupiers of a house in relation to which an interim or final management order is in force. (1A) In this section— existing occupier" means a person who, at the time when the order comes into force, either—

1. (a) (in the case of an HMO or a Part 3 house) is occupying part of the house and does not have an estate or interest in the whole of the house, or
2. (b) (in the case of a Part 3 house) is occupying the whole of the house,

but is not a new occupier within subsection (4A); new occupier" means a person who, at a time when the order is in force, is occupying the whole or part of the house under a lease or licence granted under section 102(3)(c) or 110(3)(c).

On Question, amendment agreed to.

Lord Rooker moved Amendments Nos. 158 and 159:

Page 83, line 14, at end insert— (4A) Section 110 does not affect the rights or liabilities of a new occupier who, in the case of a final management order, is occupying the whole or part of the house at the time when the order comes into force.

Page 83, line 26, leave out "section 102(6) or 110(6) or this section" and insert "this Part"

On Question, amendments agreed to.

Clause 116, as amended, agreed to.

Clause 117 agreed to.

Clause 118 [Effect of management orders: furniture]:

Lord Hanningfield moved Amendment No. 160: Page 85, line 4, leave out subsection (1).

The noble Lord said: With the amendment, we are attempting to bring a degree of clarity and understanding to this part of the Bill.

My understanding is that, as the Bill stands, on the granting of an interim or final management order, all property in the house in question is transferred to the local authority, with the exception of the occupant's property. I would welcome an explanation by the Minister of what that would mean in practice and why the Government have decided to go down what appears to be a rather outdated and regressive route. Is this an English version of the poindings and warrant sales that the Scottish Executive decided to abolish a couple of years ago?

What would happen if furniture that did not belong to the occupant were seized and subsequently sold by the local authority? I am thinking in this case of rented furniture; or, indeed, such is the definition of furniture in the clause that it includes TVs or DVD players. The company in question would surely have a legal right of redress in respect of its seized goods.

Finally, Amendment No. 161 attempts to shed a little more light on what the Government considers to be furniture. I have just mentioned some of the problems of having such a weak definition. Would that include white or electrical goods, for example? As the paragraph stands, it is written so loosely that virtually anything could be included. I beg to move.

Lord Rooker

I hope that I can satisfy the noble Lord. I have a brief response, but I hope that it will fit the bill. Clause 118 is concerned with the effect of a management order on furniture which is provided under a tenancy or occupancy agreement while the order is in force. Effectively, it provides that a local authority takes over the ownership of the furniture in the property so that it can continue to be used by occupiers.

The amendment proposes to delete subsection (1). That would make the clause unworkable and that is why it is a probing amendment. The subsection sets out the circumstances in which the clause applies. Amendment No. 161 seeks to qualify "other" with "specified" in respect of the articles in subsection (7). An "article" could be one of a number of numerous things which are provided under a tenancy but which are not conventional furniture or fittings, such as cutlery, works of art, books, candles and telephones, to name but a few examples. We think the word "other" is more appropriate in this context. It is not necessary to give anyone the power to specify what constitutes an article. There would normally be an inventory of furniture available—and it is in everyone's interests that there should be—which would specify the articles that are provided under the tenancy. There should be clarity about the matter. We could return to this matter, but I hope that I have made the point. There is furniture and there are other articles of which I have given some examples.

Lord Hanningfield

Again, I thank the Minister for his reply. We shall look at his answer to see if it covers the points I was making. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 161 not moved.]

Clause 118 agreed to.

Clause 119 agreed to.

Lord Bassam of Brighton

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at twenty seven minutes before seven o'clock.