HL Deb 09 September 2004 vol 664 cc695-726

11.36 a.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Lord Rooker.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Schedule 11 [Buildings which are not HMOs (except in Part 1)]:

On Question, Whether Schedule 11 shall be agreed to?

Baroness Maddock

It was agreed last time that we had discussed this matter enough and I have nothing else to add today, unless the Minister has something to say.

Schedule 11 agreed to.

Clause 220 [HMOs: certain converted blocks of flats]:

[Amendment No. 65 not moved.]

Clause 220 agreed to.

Clause 221 [HMOs: persons not forming a single household]:

Lord Rooker moved Amendment No. 65C:

Page 167, leave out lines 4 to 7 and insert—

  1. "(b) one of them is a relative of the other, or
  2. (c) one of them is a relative of one member of a couple and the other is a relative of the other member of the couple.

(4) For those purposes—

The noble Lord said: I beg noble Lords' pardon for the short delay as my notes have had to be changed due to changes in the selections. In order for a building to be regarded as being in multiple occupation, it must be occupied by persons who do not form a single household. In other words, there need to be at least two households occupying the building. Clause 221 provides that unless persons form part of the same family or are in a relationship with one another, as prescribed in regulations—for example, carers—those persons will not be regarded as a single household. For example, a group of unrelated students or young professionals sharing a house will not constitute a multiple household. Members of the same family living together will be regarded as a single household. The family definition is in subsection(3).

Government Amendment No.65C is intended to clarify that as regards unmarried partners. A relation of one of the couples is also treated as a relation of the other partner for the purpose of defining a family in subsection (3). In effect, the amendment is intended to clear up an anomaly in subsection (3) as currently drafted, which, it could be argued, discriminates in its treatment of unmarried couples and their family relations. That would be very unfair. I beg to move.

Baroness Hanham

I thank the Minister for his description of the amendment. It looks about as opaque as a closed window. If that is the Minister's understanding of the amendment, we go along with it.

On Question, amendment agreed to.

Clause 221, as amended, agreed to.

Clause 222 agreed to.

Clause 55 [Designation of areas subject to additional licensing]:

Baroness Hanham moved Amendment No. 66:

Page 37, line 9, leave out "persons" and insert "both tenants and landlords"

The noble Baroness said: Clause 55 creates discretion for local authorities to apply additional licensing when they deem it appropriate. The clause makes specific reference to issues that may arise when a house in multiple occupation is being managed "sufficiently ineffectively"—a lovely way of using English—as to cause a range of problems for those who occupy the HMO or for members of the public.

By its very nature, additional licensing is contentious. Landlords will be mindful of the fact that Parliament is giving local authorities a significant power. Although the Bill describes the circumstances in which they might exercise that power in broad terms, it is important that the Government be more specific when the Bill is implemented.

With that in mind, Amendment No. 66 attempts to bring a greater degree of clarity to those individuals that a local authority must consult before making a decision to extend licensing. As it stands, the authority has only a requirement to take reasonable steps to consult "persons" who are likely to be affected. We believe that that is too vague for comfort. Our amendment would stipulate that the authority must attempt to consult both landlords and tenants before going ahead with an extension to its licensing regime.

Amendment No. 67 would place on an authority a duty to make public as wide as possible its decision to extend the licensing scheme to a certain property. We believe that this is a sensible and practical way forward allowing for the widest possible number of people to see the steps that the authority has decided on.

There are two further amendments in this group, Amendments Nos. 69 and 110. Clause 78 would in effect place on an authority the duty to show both to the appropriate national authority and to the authority's own local electorate that the powers that it had decided to use to extend the use of selective licensing of HMOs was in the best interests of all in tackling the problems it had so identified.

In effect this is a safeguard measure that would make an authority think twice before it was able to use the powers of extending selective licensing. For whatever reasons, we would be concerned that an authority with these new powers could in effect decide to extend the licensing regime to any property if it so wished. Perhaps the Minister can give us some reassurance that these powers would not be open to abuse. Under this amendment the local authority would have to show both upwards and downwards that its intended action was indeed merited. I beg to move.

Baroness Maddock

My Amendment No. 68 is grouped with the amendment now moved. It refers specifically to local authorities being sure that they are taking a strategic approach to homelessness when designating further areas of houses with multiple occupation to be licensed. Therefore, I support what the noble Baroness has just said because I believe that that will help it to happen. It is important that everyone knows what is going on when this provision comes into effect, particularly the tenants, and that the local authority is mindful of what may happen to tenants if it goes ahead and designates. That does not mean that we on these Benches are not in favour of licensing. The Minister knows that that is not so. It is right that we have as many safeguards as we possibly can to ensure that we are not creating unnecessary homelessness.

11.45 a.m.

Lord Rooker

I believe that I shall be able to satisfy the noble Baronesses. Clause 55 allows a local authority to designate part or all of its area as subject to additional HMO licensing for specified descriptions of houses in multiple occupation. This means that a local authority will have discretion to extend the scope of HMO licensing to HMOs which fall outside the scope of mandatory licensing.

The clause also requires the local authority to consult persons likely to be affected by the designation and most certainly to take account of any representations received before making a designation.

Amendment No. 66 proposes that local authorities consult "both tenants and landlords". In practice the amendment would actually restrict those persons to be consulted. Although landlords and tenants are obviously the people who will generally be most affected by a proposal to extend licensing, they are not the only people whose views matter. Mismanagement of houses in multiple occupation can also have a significant effect on other people such as other local residents.

It is for that reason that we require consultation with all people who would have a relevant interest in an additional licensing designation, which includes landlords and tenants in the proposed designated area. However, to prescribe narrowly the groups that should be consulted, as the amendment does, would deny local authorities the flexibility to tailor their consultation to the particular circumstances. Therefore, I hope that that particular amendment will not be pursued.

Amendment No. 67 would require a local housing authority, in addition to consulting those likely to be affected by designation, to publicise the intent of the designation electronically outside the relevant properties and in the local media.

As currently drafted, the Bill provides that local authorities should take "reasonable steps" to consult those likely to be affected by the designation. We are confident that all local authorities over many years, particularly recently, have developed methods of consultation which are most appropriate for their particular areas. Not all areas are the same. Therefore, we do not believe that it is necessary to specify the forms that the consultation should take. We would rather leave it to the local authorities.

It is perfectly possible that the methods of publicity proposed by the amendment such as notices and electronic means, would be among those employed by various authorities. We believe that the matter should be left to the local authority based on local circumstances and the authority's own procedures and to the relevant groups with which consultation has taken place in order to find the best way to deal with the matter.

Another problem with prescribing the form of the consultation, as suggested in the amendment, is the danger that it could have the effect of limiting the consultation to those methods alone. There are always opportunities for local authorities to use their discretion. Innovative methods are very important. We shall be doing more about that as regards other legislation which has passed through the House such as the planning Bill.

I give some advance warning. All that I say as regards Amendment No. 69 applies to Amendment 110. I shall not repeat myself. Clause 56 sets out further requirements that a local authority must meet when making designations for additional licensing. They are, first, to ensure that licensing fits with the local authority's overall housing strategy: secondly, to seek to adopt licensing as part of a co-ordinated approach to deal with wider issues such as homelessness, anti-social behaviour and empty properties; thirdly, to consider whether there are other courses of action that could be used to deal effectively with the problems identified, and, fourthly, to decide whether additional licensing will, on its own or in conjunction with other policies, make a significant contribution to dealing with the particular problems from which the area is suffering.

Amendment No. 69 would require that in making designations for additional licensing, the local housing authority must be able to provide evidence to the relevant national authority and the local population to show that the designation is necessary to sort out the problems identified in the designated area. As drafted, the Bill provides that in making designations for additional licensing, the local housing authority must consider that the designation would significantly assist it in dealing with the problems identified.

Clause 55 requires the local authority to carry out a public consultation with those likely to be affected by the designation, such as local residents, landlords and tenants, before making the designation. As part of that process, the authority will need to demonstrate why it considers it necessary to create the scheme by identifying the problems it is intended to address and why alternative measures are not available or would be less effective in tackling those problems. The designations require either general approval or confirmation from the appropriate national authority before they come in to force.

The approval process is not about second-guessing the local authority's reasons for making the decision. We in Whitehall do not know the particular housing market conditions in great detail. The local authority is best placed to know—much better than any national authority. The approval system is concerned with ensuring that the local authority has carried out the requirements imposed on it through the legislation before making the designation. One of those requirements is to consult on the proposed designation and give local people an opportunity to make representations. So the process is about demonstrating to the appropriate national authority not the need for the designation but that it has gone through a proper, constructive consultation process.

Amendment No. 68 would require that in considering designations for additional licensing, local authorities must ensure that they adopt a co-ordinated approach to homelessness and the provision of advice and assistance to those likely to be affected by the designation. The Bill already provides that, where a local housing authority identifies a problem and wants to make a designation for additional licence in its area, it must seek to adopt a co-ordinated approach to deal with the wider issues, such as homelessness. Local authorities are already under a duty under the Housing Act 1996 to provide advice and assistance for those who are homeless.

We would expect local authorities to use the additional houses in multiple occupation licensing only where it was the most appropriate tool and where there was a problem with a particular category of HMOs. However, we are committed to providing as much flexibility to local authorities as possible on the issue and do not agree that it is necessary to include the requirement provided in the amendment, because the clause already expressly requires local housing authorities to consider the impact of additional licensing on homelessness. I hope that that satisfies the noble Baroness.

As I said, the issues raised by Amendment No. 110 are identical to those covered by Amendment No. 69, so what I have said covers them.

Baroness Hamwee

On Amendments Nos. 69 and 110, can the Minister confirm that the normal rules of reasonableness—the Wednesbury reasonableness— apply? Having asked that, perhaps I may ask the noble Baroness whether she is seeking something stronger than that normal reasonableness.

Baroness Hanham

Perhaps I should just say that the answer is no, from my point of view.

Lord Rooker

And I will just say that the answer is yes, from my point of view.

Baroness Hanham

I thank the Minister for his extensive response. I think it was helpful to table Amendment No. 66, because the Minister's response clarified the fact that the intention is to ensure that "persons" goes wider than tenants and landlords. By inserting "tenants and landlords", we really wanted a definition of "persons", but I see that it would be really helpful if people in an adjoining property who were complaining, perhaps, were included in that as well. I think that the Minister confirmed that that is the situation, so I am content with his response.

On designation and the inclusion of publicity by electronic and other relevant means, as far as I can see it is still for the local authority to decide how it undertakes the publication of the designation. However, again, this is a brutal provision giving wide powers and it would seem sensible that it would use at least electronic means of passing on the information and the local media. If it then wants do that in other ways, it can. At least we should lay down a baseline; it would be unfortunate if we cannot at least establish that that will be the situation.

I hear what the Minister says in response to the other two amendments, but I return to the point that the Bill provides reasonably draconian measures for extending licensing and the more that it can be demonstrated that they are taken against the background of authority that has been explained and understood, the better. I thank the Minister for his reply. He has answered Amendment No. 66 to my satisfaction; I beg leave to withdraw it but do not promise not to return to the other three.

Amendment, by leave, withdrawn.

[Amendment No. 67 not moved.]

On Question, Whether Clause 55 shall stand part of the Bill?

Baroness Maddock

We do not actually oppose the clause, but it is difficult to make general comments unless we speak to the Question. This is an important part of the Bill—the Government have also said that—because we have had disagreements about what should be designated as a house in multiple occupation. Unlike the noble Baroness, I worry that there are too many hoops through which to go for local authorities when they are trying to deal with difficult areas. I used to represent an area in the City of Southampton next to the university with a lot of houses in multiple occupation. They had been three-bedroom, two-storey 1930s family houses and created all sorts of problems. If we had been able to designate the area, we may have been able to deal with some of the more difficult problems. With those few comments, I shall not oppose the clause.

Clause 55 agreed to.

Clause 56 [Designations under section 55: further considerations]:

[Amendments Nos. 68 and 69 not moved.]

Lord Rooker moved Amendment No. 69A: Page 37, line 44, leave out "locality" and insert "vicinity

The noble Lord said: Before I speak to the amendment, I want to go back for a moment to my first, inadequate speech on government Amendment No. 65C. It took me a while to rise to my feet and when I did, I had the wrong note, or an old version. I made a statement which, reading it now, I am surprised was not contradicted by the experts sitting opposite. I said that a house comprising unrelated students or professionals would not constitute a house in multiple occupation. I was wrong in saying that; it would indeed constitute a house in multiple occupation. I hope that that saves the need for any letters on that.

I turn to the amendment and with it will speak to government Amendment No. 131A. Clause 56(5) provides a definition of what amounts to anti-social behaviour for the purposes of the Bill. This definition refers to the conduct of occupiers of premises that might constitute nuisance or annoyance in an area surrounding the property, which is referred to as "locality".

Clause 98 provides that the appropriate national authority can prescribe a special interim management order to be made where it relates to protecting the health, safety or welfare of the occupants or others around the premises, which is also referred to as "locality" in that clause.

Elsewhere in the Bill, in particular in Part 4 relating to management orders, the word "vicinity" rather than "locality" is used. These technical amendments have therefore been tabled to ensure consistency in the Bill where the provisions relate to matters affecting persons not residing in the property.

While as a lay person I might argue that locality and vicinity would generally be held to mean the same thing—part of the neighbourhood—apparently there is a subtle difference in definition according to the dictionary. If two different words with a similar meaning are used in a Bill they can be applied and interpreted differently. All that will do is to make loads of money for lawyers in a very unjustifiable way.

Noon

It is amazing how such things occur. The Government have opted for "vicinity", since it is defined as "surrounding area"—that is, of the property—as opposed to the locality, which is wider in its meaning and refers to the area per se. I beg to move.

Baroness Hanham

I thank the Minister for making that change. It may seem arcane, but the description he has given places it finely in focus.

Lord Brooke of Sutton Mandeville

I rise to comment on the Minister's opening remarks. He reminds your Lordships' House of the occasion when the great Winston Churchill read—I think, to a party conference rather than to the House of Commons—the same page of his speech twice. At the conclusion of his second rendering he said that the members might be surprised by what he had just done, but he thought it was so important a passage that he really should read it out twice.

It is a compliment to the Minister that when he says something that we should have picked up as nonsense, such is our respect for him as the fount of conventional wisdom that we automatically assume that he is right.

On Question, amendment agreed to.

Clause 56, as amended, agreed to.

Clauses 57 to 59 agreed to.

Clause 60 [Requirement for HMOs to be licensed]:

Baroness Maddock moved Amendment No. 70:

Page 39, line 29, at end insert ", or (c) it is exempt from licensing under section (Exemption where landlord is a member of an approved accreditation scheme)

The noble Baroness said: Amendments Nos. 70 and 73 are grouped together. Amendment No. 73 is a proposed new clause. The purpose of the amendments is to exempt some properties that are already in existing accreditation schemes from the need to obtain a licence.

Under the amendments, a house in multiple occupation would be exempt if the person managing or having control of that property were already a member of an approved accreditation scheme. Local authorities would approve accreditation schemes operating within their area for those purposes so long as they complied with the requirements laid down by the appropriate national authority. The regulations would set out the criteria for deciding when accreditation schemes could be approved and when approval could be withdrawn. The exemption has to be claimed by giving notice to the local housing authority. It will cease if the person concerned is no longer a member of an approved accreditation scheme.

Many voluntary accreditation schemes have been established throughout the country in conjunction with local authorities. The Residential Landlords Association is promoting its own accreditation scheme. There is a national accreditation network with many local authorities involved. The accreditation movement has developed quickly over the past five years or so and plays a significant part in the private rented sector. We know that accreditation improves standards and increases the competence of landlords, particularly as a result of training. The amendment would cover all types of rented property.

The Government have indicated that the main purpose of licensing houses in multiple occupation is, first, to identify properties; secondly, to ensure that those involved in managing houses in multiple occupation are fit and proper people; and thirdly, to ensure the proper management of those properties.

Accreditation and my proposed amendment achieve all those objectives. As the exemption has to be claimed, local authorities will be notified about the existence of houses in multiple occupation. People are concerned about how they will find out where they all are. Applicants would be vetted and there could be disciplinary measures to ensure that those who break the rules are dealt with, but accreditation schemes have shown that they can ensure good standards of management and good management practice.

We are not discussing Scotland, but the Scottish experience is helpful. In the first year of licensing there, it was shown that responsible landlords applied for licences. That is true for accreditation schemes in this country.

I want to see proper control of rented properties and proper standards, particularly in houses in multiple occupation, but we do not want to create unnecessary amounts of bureaucracy and to put aside the good work that landlords have already carried out. These provisions will not work unless there is a partnership between those who rent in the private sector and the Government. One of the reasons the Government gave for limiting the definition of a house in multiple occupation is that they are concerned about numbers. Local authorities are going to have difficulty in setting up a new bureaucracy.

Finally, why do away with an existing bureaucracy that is achieving many of the things that we want? I hope that, even if the Minister does not like the wording of my amendments, he will take away the principle and ensure that we use what is already there to help us achieve our aims. I beg to move.

Lord Best

I rise to speak in support of the amendment. I spoke rather harshly about the measures for licensing houses in multiple occupation earlier because only one-fifth of those properties are covered due to the restrictions on the number of people and the height of buildings. We all know that there are appalling conditions in some of the remaining four-fifths of properties.

However, in relation to this amendment, I take a much softer line and feel sympathetic to those landlords who genuinely want to be part of the good landlord practice that is apparent in many regards in the sector by joining an accreditation scheme. Accreditation schemes are doing quite well. I agree with the noble Baroness, Lady Maddock, that they are taking off, but they still represent a tiny proportion of private landlords.

They are an extremely good way of bringing together the landlords in an area and better educating them, helping those who want to do the right thing to do so. I met two landlords in north London recently who had a good deal of trouble in speaking English. They were, however, keen not to be breaking the law and to be doing the right thing as responsible landlords. They need to be part of a club in which they will receive training and support from colleagues in an area.

It would be a huge incentive for people to be part of an accreditation scheme—which at the moment looks rather bureaucratic to many landlords, who may ask why they should want to be a part of it—if tied to membership was an exemption from at least some of the restrictions placed on landlords by being licensed in their HMO holdings. I have heard from the National Federation of Residential Landlords, which is very approving of such a measure and is trying to get its members to become involved with others and with the local authority in many areas. They believe that this would be a boost to accreditation schemes, and I am sure that it would. I have seen the work in Newcastle of a wonderful woman, Maggie Drury, who works with private landlords to better educate and train them. The amendment supports the good guys and sends out a message that we will not come down like a ton of bricks with all the licensing regulations if a landlord is among those trying to do better, so I support it.

Lord Borrie

I wish to indicate a measure of support for the amendment, particularly on the lines along which the noble Lord, Lord Best, has spoken. Later today we shall discuss the complexities of the provisions dealing with the licensing scheme that the Bill introduces. I will probably express my concern about the great task that local authorities will have in initiating and putting through an effective licensing scheme which fulfils all the objectives in the Bill. It will be a formidable task.

The amendment tabled by the noble Baroness, Lady Maddock, seems designed to provide an exemption, not to make it easy for some landlords or those in some parts of the country to avoid an effective licensing scheme, but to play a part in the massive job that lies ahead in achieving effective control of homes in multiple occupation.

Lord Bassam of Brighton

I have listened with great interest to the comments made in support of the amendments and can certainly acknowledge the sincerity and warmth with which the amendments have been supported. However, we need to take a hard practical look at the amendments and the way in which they might operate. For that reason, I wish to start by setting the context.

Clause 60 provides that every HMO to which this part applies must be licensed unless it is under a temporary exemption notice or subject to an interim management order or final management order. It requires that local housing authorities take reasonable steps to ensure that applications for licences are made on behalf of all relevant HMOs in their area. It explains that a licence limits the occupations of an HMO to a maximum number of people or households. Subsection (5) also provides that the appropriate national authority may make regulations setting out how licensing provisions apply in the case of certain converted blocks of flats.

Amendment No. 70 amends subsection (1) of Clause 60 to provide that a house is exempt from the requirement to have a licence if the person managing or having control of it is a member of an approved accreditation scheme. The detail of that exemption is set out in Amendment No. 73, which inserts a new clause. The proposal is that regulations would provide for the approval and withdrawal of accreditation schemes and introduce criteria for the local authority to use in determining whether to approve a scheme. The amendment provides that a person managing or in control would have to notify the local authority in order for this exemption to apply. It also provides that if at any time the person ceased to be a member of an approved accreditation scheme, this exemption would cease to apply.

It is only right to say that the Government applaud the accreditation movement, the way in which local authorities, landlord associations and organisations have developed the schemes and the growth of interest in the voluntary nature of such schemes. The schemes exist for a diverse array of properties in the private rented sector, which is very diverse, and I have no doubt that they will continue to be effective for properties unaffected by the licensing provisions in the Bill.

I must also emphasis that the Government believe that such schemes are ultimately insufficient to improve standards for the HMOs targeted in the Bill for mandatory or additional licensing. That is why the HMO licensing provisions have been introduced. As the noble Lord, Lord Rooker, and I have said from the Dispatch Box, we must tackle the worst problems in the sector with an appropriate level of regulation—the worst problems being most commonly with the larger HMOs with the greatest number of occupants. But we also propose to introduce management regulations that will apply to all HMOs, something on which we will consult later this year.

12.15 p.m.

One of the most important distinctions between accreditation and mandatory/additional licensing is that the latter is about licensing a landlord or manager—where a manager acting on behalf of a landlord is the most appropriate person—in respect of a specific property. This is with the principal objective of ensuring that management standards and licence conditions appropriate to that particular property are strictly adhered to. The usual accreditation route would simply not be sophisticated enough in this respect. It would not provide anything like the required level of regulation on a property-by-property basis.

It is important to point out that provisions for new accreditation schemes in respect of properties already targeted by the Bill would serve no useful purpose. At best, they could end up duplicating, and at worst, falling short of the provisions already in the Bill. To end up with a patchwork of accreditation exemptions and mandatory licences would probably add to the bureaucratic burden about which the noble Baroness, Lady Maddock, is rightly concerned. We want a bureaucracy-free system. In reading through the exemption and the way in which it might operate, I can see that it would add to and perhaps extend the bureaucracy that we want to keep to a minimum to make the scheme effective.

I understand and sympathise with the approach being adopted, but ultimately we need a universal scheme targeted at the worst properties first, rather than offering what might end up a patchwork system that is ill suited to dealing with the worst properties.

Baroness Maddock

I thank the Minister for his very full answer, and other Members of the Committee for their support for this approach.

I agree with the Government: obviously, we want to deal with the worst properties first. I suppose, to a certain extent, the Government have limited the number of properties that will be covered because the definition of what constitutes a house in multiple occupation is so limited. I would have liked to hear a little more commitment from the Government to enabling landlords and local authorities to work together and not doing away with all the good work that has been done. I hear what the Minister says, but I did not get from him the feeling that they believed that there was something useful that they could take on board in this legislation. I ask the Minister and his department to look again and see whether there is some way of avoiding throwing away all the good work that can help us to achieve what we all want. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 60 agreed to.

Clause 61 [Temporary exemption from licensing requirement]:

Baroness Hanham moved Amendment No. 71:

Page 40, line 16, at end insert "including reversion to single occupancy status"

The noble Baroness said: This simple amendment would ensure that if an owner or landlord sought to return a house in multiple occupation to a single-occupancy dwelling, a licence would be unnecessary. I recognise that most local authorities have planning policies which resist the changing back of houses in multiple occupation to single-family ownership, but it happens from time to time. It would be sensible to include this small opt-out clause to ensure that a lot of bureaucracy did not result from the sale of a property being moved back legitimately into single-family ownership. I beg to move.

Lord Bassam of Brighton

I am always a bit wary about simple amendments. If I explain Clause 61 to the noble Baroness, I hope that she will agree that it is workable and fit for the purpose that she seeks through her amendment.

The amendment seeks to clarify that an application can be made for a temporary exemption from the requirement to license the property where the manager of the property notifies the local authority of their intention to convert.

The amendment is unnecessary because Clause 61 already gives local housing authorities sufficient power in such circumstances. However, when a manager notifies the local housing authority of the intention to convert the property so that it will have single occupancy status and the authority is satisfied that steps have been taken to achieve this, we would expect—and this is the important point—that the housing authority would consider granting an exemption notice in those circumstances.

Clause 61 has been drafted with the intention of giving a wide discretion to local housing authorities to serve temporary exemption notices; it should not include specific instances where a temporary exemption should be granted in any event by a local housing authority.

I confirm that Clause 61(1) covers the situation that is described in Amendment No. 71, so it does what the noble Baroness is trying to do with her amendment. I hope that this explanation will assist the noble Baroness,

Baroness Hanham

It assists greatly and clarifies the position.

I hope that planning authorities and housing authorities speak to each other, because in some cases this is a planning matter before it becomes a housing matter and so it would have to be moved between the two. In the light of the Minister's comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 72:

Page 40, line 18, at end insert— ( ) An owner of a property in the process of selling that property shall be entitled to a temporary exemption until it has been sold, and the subsequent owner shall be entitled to a similar temporary exemption in which to make the necessary preparations to obtain a licence, if a licence is required under the terms of the Act.

The noble Baroness said: This is a not dissimilar matter and I expect that I may get a similar reply from the Minister.

We all recognise that the housing market is an evolving environment. It includes first-time buyers, people moving from one property to the next and properties moving in and out of the rented sector and the licensing regime. It is important that we make provision for properties in transition and ensure that landlords or freeholders who are either buying or selling properties are not unnecessarily penalised under the Bill.

As with the last amendment—which has now been nicely explained—I hope that this is a sensible amendment that would make provision for landlords to have an appropriate exemption in the case of selling or buying a property.

Amendment No. 97 works in conjunction with the lead amendment. It would allow being in the process of selling a property to be a defence for not having a licence. Some people who are buying a property and are not fully familiar with their obligations on licensing could be caught out. A suitable and reasonable period should be allowed so that they can be made aware of the particular requirements demanded of them. I beg to move.

Lord Bassam of Brighton

I explained in part the effect and impact of Clause 61. It provides that a person managing unlicensed property can notify the local housing authority of their intention to take particular steps to ensure that the property is no longer required to be licensed—for example, if he or she intends to sell it or convert it to single occupancy status.

The local housing authority can, if it wishes, serve on that person a temporary exemption notice which is valid for three months. That notice is renewable for a further three months if the housing authority considers that there are exceptional circumstances that justify serving a second notice. No more than two temporary exemption notices may be served.

The problem with the amendment is that it is too wide. It is conditional upon the property being sold and is consequently for an indefinite period.

This amendment was tabled and debated in another place and the Minster pointed out at that stage that the amendment would allow a potential loophole to the legislation. It could give rise to situations where unscrupulous landlords who want to avoid licensing their property could simply put their property on the market indefinitely and ensure that it was never sold. Landlords could also use the exemption to delay obtaining a licence by claiming that the property was in the process of being sold. I am sure that the noble Baroness does not intend that to be the case, but the creation of that loophole would be a consequence of the amendment.

The objective behind the amendment can be met by use of the temporary exemption notice procedure. This is valid for a period of three months and can be renewed for a further three months when a person genuinely intends to sell the property with vacant possession.

Temporary exemption is only available where genuine steps are being taken. A property transaction with tenants in situ is not in itself evidence that such action is being undertaken. When a property is transferred there should be sufficient time during the sale process for the prospective owner to take steps to obtain a licence. Clause 71(4) provides that they will not be committing an offence of operating without a licence if they have made an application for a licence which is yet to be determined or which is still subject to appeal.

If an application for temporary exemption is refused by the authority, an appeal against that decision can be made to a residential property tribunal.

Amendment No. 97 would provide that in proceedings against a person for an offence of managing an unlicensed property, it should be a defence that the owner of the property is in the process of selling it at the time that the requirement for a licence is issued. The fact that a person is in the process of selling a property is not necessarily conclusive evidence that it is no longer a house in multiple occupation or that the seller is taking serious steps to ensure that it will cease to be one and will not therefore be subject to licensing. Why should tenants lose the protection that is given to them under licensing simply because of a proposed change of landlord?

As I commented in relation to an earlier amendment in the same vein, the proposal would create a potentially large loophole that would allow people to avoid licensing. Landlords could claim that they are in the process of selling without ever having a serious intent to do so.

Having explained the background and pointed out the deficiencies of the amendment—although I can see the import of these matters—I hope that the noble Baroness will see the problems that it would create and withdraw it.

Baroness Hanham

I can confirm that I will withdraw the amendment today, but I cannot confirm that I will not come back to it. The Minister has demonstrated to my satisfaction that this amendment is flawed because of the potential loophole that he suggests.

There are ways in which that loophole could be addressed within the amendment by giving a time scale. It is important that people who seek to sell property in a bond fide manner with or without tenants—who may or may not at that stage have had to seek a licence or been licensed—are not then encumbered with the problem of registration and being licensed at the time when they are also trying to sell.

I hear what the Minister says. I am less satisfied with his reply about this aspect on this amendment than I was on the previous one regarding the implications on Section 61. The Minister has produced evidence of an area that we have not addressed correctly and I think it is likely that we will return to this at a later stage. I thank the Minister for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 61 agreed to.

[Amendment No. 73 not moved.]

12.30 p.m.

Clause 62 [Applications for licences]:

Baroness Hanham moved Amendment No. 74:

Page 41, line 27, leave out "maximum"

The noble Baroness said: Under the Bill, authorities will prescribe the maximum fee payable for a licence. That could cause confusion, for example, where an owner has a number of houses in multiple occupation in areas that are administered by different authorities. The amendments suggest that the Government or the National Assembly for Wales should set out in guidance what local authorities should charge so that we do not have someone paying substantially different fees in different areas and not understanding why.

While we favour local discretion on fees and other such charges, there is very real concern among landlords about the costs of such schemes contained within the Bill. Therefore, we seek to leave out the word "maximum". I beg to move.

Lord Rooker

I regret that my answer will be a little longer than that short speech because the matter is more complicated than the noble Baroness would have us think. As she said, Clause 62 provides that in making an application for a licence a local authority may require the payment of a fee. Currently, we are having discussions on that issue. We are making good progress with the Local Government Association on the costs of running licensing schemes. The maximum fee will be set through secondary legislation. Of course, we will consult on that in due course.

Amendment No. 74 would remove from local authorities the discretion to set their own licensing fees. In effect, it would require a fixed fee to be imposed across all local authorities. I shall seek to explain why that would not be a good idea. First, I want to make it clear to those people who would be affected that the Government are committed to ensuring that the costs of licensing to landlords are kept to a minimum. There is no question about that. We also wish the licensing regime to be self-financing through the revenue received. That of course is also important.

There is a case for a common approach between authorities. The noble Baroness made a point about landlords with properties in more than one authority, but there is a case for local discretion. The average cost of running schemes will vary in the country from authority to authority, and local fees should reflect that.

A flat rate national fee, as suggested by the amendment, would inevitably have to be set at the upper end of what would be considered to be viable. That would mean many local authorities making a profit on running the scheme. We are not in favour of that and do not want that to happen. We seek to avoid local authorities making a profit from running the scheme. Therefore, if a local authority has a lower cost base and can recover its costs, it can charge a lower fee.

Of course, local authorities might want to set lower fees in certain circumstances; for example, to landlords who are part of an accreditation scheme where, by definition, the cost of running things should be a lot less. That is inevitable. In some ways, it is almost a financial advantage for landlords to join such a scheme. That approach would reward good landlords who are part of such schemes.

Effectively, I would make the same points in relation to Amendment No. 113. It is seductive to suggest having one fee nationally in order to take account of the one example given by the noble Baroness; that is, landlords with properties in more than one authority. Here is a case for making local authorities accountable for the service that they are providing; for getting the costs of the scheme recovered by the fees; for keeping the fees as low as possible; and for using the discretion to reward landlords who, for example, are part of accreditation schemes. The cost of doing business with them will inevitably be less, which would be an incentive to keep fees lower. The alternative is local authorities making a profit, which we do not want to happen.

Baroness Hanham

I thank the Minister for that reply. The setting of a maximum fee seems to do almost everything that the Minister has described as being unfeasible or incorrect. In most authorities, the amount of work that has to be done for registration and licensing will be fairly similar. The only difference will be the costs in London where there are probably slightly higher salary scales. But in reality the costs ought to be fairly uniform across the base. For the Government to give an indication in guidance what those fees should be would be helpful. Although the Minister talked about local authorities not making profits, there might be a sort of leapfrogging of local authorities looking over their shoulders and saying, "Well, actually, they are charging so and so. Why do we not put it up as there is no limit?".

Here, there is an element of trying to ensure that those fees are reasonably constant and that there is not a great discrepancy between local authorities. The Minister is obviously not moved by my very short speech. I shall consider his reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 62 agreed to.

Clause 63 [Grant or refusal of licence]:

Lord Hanningfield moved Amendment No. 75:

Page 41, line 42, at end insert ", or (c) grant a provisional licence in the circumstances set out in subsection (6)

The noble Lord said: The Housing Bill as currently drafted requires local authorities to grant or refuse licences for houses in multiple occupation. The authority may grant a licence if it is satisfied that the house is reasonably suitable for occupation for the maximum number of households or persons set out in the application; that the proposed licence holder is fit and proper; that the proposed manager is either the person having control or is an employee or agent of the person having control; that any proposed manager is fit and proper; and that the proposed management arrangements are satisfactory.

Where applications for HMO licences are made local authorities will have five years to satisfy themselves that there are no Part 1 functions that ought to be exercised, although licence applications should be dealt with within six weeks.

There appears to be a presumption that local authorities will grant licences without an inspection of the property as they will identify health and safety hazards that are the landlord's responsibility and can be dealt with under Part 1 during the licence periods.

There are faults with that approach, which could lead to the following range of practical problems. Local authorities will be reluctant to issue full licences without inspection. The granting of a licence implies to tenants and landlords that the house is wholly satisfactory, therefore giving a false sense of security. No local authority will be willing to take the chance of a fatal fire occurring in a "licensed HMO" that has not been inspected, or that might contain other serious hazards.

Few, if any, local authorities know where all the licensable HMOs in their areas are, despite the duty on fire safety contained in the 1997 fire safety order. For many authorities there will be relatively few HMOs that have been inspected recently, prior to the licensing provisions coming into force. Local authorities cannot be satisfied that a house meets prescribed standards without inspection.

The demands on resources however will be substantial if local authorities try to inspect every licensable HMO before grant of licence. It is likely that the system will grind to a halt and thereby fall into disrepute. It would not therefore achieve the goal of securing the protection of those living in the so-called "higher risk" HMOs.

The primary responsibility for ensuring that the health and safety of the occupants of HMOs is not put at risk as the result of the housing conditions—either physical or the result of management failures—lies with the owner or licence holder. Therefore, within the licensing system there should be provision that does not rely wholly on policing and inspection by local authorities or on inadequate information provided in licence applications.

A system of provisional licences could meet those concerns and be issued where the landlord supplies evidence not only that there are in place satisfactory management arrangements but also that in all respects the house is reasonably safe, including no unacceptable hazards under Part 1. That is what Amendment No. 78 attempts to achieve in introducing such a provisional system. In effect, Amendment No. 75 would allow that to happen. I beg to move.

Baroness Maddock

My name is attached to Amendment No. 75. I wonder whether, with the leave of the Committee, I can put the groupings back and group Amendment No. 79 with Amendments Nos. 75 and 78, because Amendments Nos. 75 and 79 are virtually the same.

Lord Rooker

This is why I am gob smacked with the running of this place and the shambles that we are in. All three amendments were grouped together, and this morning they were degrouped. My staff worked until midnight, and from six o'clock this morning, reorganising all the files because of the degrouping.

It so happens that I was going to make the same speech in answer to the new two groups because the three amendments were grouped together in one speech. There was no separation.

The noble Baroness says that she wants them put back together again. Why separate them in the first place, causing untold extra hours for Civil Service staff? I shall have to register a complaint about it. I am happy to go along with what the noble Baroness wants to do because it is obviously convenient. But why degroup in the first place?

Baroness Maddock

I was unaware of how the degrouping happened. It had nothing to do with me.

Lord Rooker

Who is in charge of this place? The Government are not.

Baroness Maddock

I arrived at 10.30 a.m. and it had been changed, I am not sure how it happened, but for the convenience of the Committee, I think we agree on what we should do.

All the amendments have been brought to our attention by the Chartered Institute of Environmental Health Officers. Environmental health officers are concerned about how they will operate and whether they will do so satisfactorily. I do not have a great deal to add to what the noble Lord has said, but I hope that the Minister will look favourably at the issues behind the amendment, which is about ensuring that the system works effectively and smoothly. In a sense, it is in line with other amendments in that we are trying to use what is already happening, and trying not to recreate new things to deal with the same problems.

I look forward to hearing what the Minister has to say, and I certainly do not want him to have to say it twice.

Lord Borrie

For many years I was the licensing authority under the Consumer Credit Act 1974, covering lenders, credit brokers, credit reference agencies, debt collectors, and so on. I am conscious of the work involved in making such a scheme a reality in terms of effectiveness and perceived effectiveness. Any licence issued by a responsible body tends to give the licensee a stamp of approval. If a licence issued by a respectable public authority is given without adequate inquiry, or without the adequate inspection of premises, which we are discussing today, it may suggest fitness of the property for various purposes, fitness of the landlord, fitness of management arrangements, and so on, which is unreal.

Local authorities must introduce timely procedures so that there are not too many bureaucratic delays. Will that mean that some licences are awarded although they are not justified in the terms of the fitness required under the Bill?

I have the consultation document published only a couple of months ago from the Office of the Deputy Prime Minster, which deals with licensing in the private rented sector. On page 7, there is a convenient executive summary of the consultation document. It uses words that are a little stronger than those used in the Bill, but it suggests what the Government believe. It states: Licensing will ensure that relevant landlords are fit and proper persons or if they are not that they employ agents who are. It will also ensure that the standards of tenancy relations management and property management employed by a landlord or agent are adequate. There must be a great deal of anxiety and doubt among those of us both inside and outside the House who are concerned with the problems of multiple-occupation housing and whether the licensing proposals that we are now discussing will be as effective as they ought to be.

12.45 p.m.

Lord Rooker

I accept the thrust of what has been said, not least the remarks of my noble friend Lord Borrie. We are not in an ideal world, but I hope that I can give a satisfactory explanation as to why we would ask the Committee to reject the amendments. There are two further stages, so we may be able to explore matters further on the basis of what I say now.

Clause 63 sets out the matters about which a local housing authority must decide before it can grant a licence. Those include the suitability of the house for multiple occupation, that the proposed licence holder or manager is a fit and proper person, and that the proposed management arrangements are satisfactory.

Clause 66 provides that a local housing authority may include conditions in licences, for example, to require facilities and equipment in good working order to be made available to meet prescribed standards for multiple occupation under Clause 64, or that necessary works are carried out within prescribed periods.

I shall give an example of what I mean, as I came across one last week. There is a house in multiple occupation in the city of Birmingham. I think that five students occupy the house, and the landlord is getting an enormous sum of money every month. They have joint facilities. I have not been inside the house, but each student has his own CD, computer, hairdryer, Uncle Tom Cobbleigh and all, with all the plugs that we can imagine. I said, "Lots of two-pin plugs?", and they said, "Yeah, lots of three-pin plugs as well".

When they are all in the house, they keep having to go to the circuit breaker because the switches keep tripping. Those are obviously not suitable facilities for five people using lots of electrical equipment as individuals. That is an example of equipment which is in good working order because they obviously need another ring main in the property.

Such conditions will be in addition to those laid out in Schedule 4 as mandatory conditions, covering specific things such as gas safety certificates and smoke alarms. A local housing authority is required as a general rule to address health and safety issues through its Part 1 functions, and not by means of the licensing conditions. This is where there is a split between the Government's approach and the amendments—between Part 1 and Part 2.

The local authority may impose conditions relating to the installation or maintenance of facilities or equipment as part of the licence.

Clause 54(5)(c) requires local authorities to satisfy themselves, as soon as is reasonably practicable, but at the latest within the period of five years, beginning with the date of the application for the licence, that no Part 1 functions ought to be exercised in respect of houses in multiple occupation for which applications have been made.

That will mean that category 1 hazards are progressively eliminated from houses in multiple occupation and, in the case of the highest-risk properties, prioritisation will ensure this happens at the earliest opportunity.

A local authority can satisfy itself through an inspection, or based on relevant previous knowledge of a property, that no action is needed to tackle health and safety problems on premises for which licence applications are made. If, following an inspection, a category 1 hazard is found, the local authority has a duty to act. If a category 2 hazard is found, the local authority has discretion to act.

Taking them together, Amendments Nos. 75, 78 and 79 provide that a local housing authority may grant only a provisional licence in circumstances when the local housing authority has not inspected the house, and there is no possibility of an inspection being carried out before the granting of the licence. They would do this on the strength of written evidence supplied by the applicant.

We want local authorities to consider health and safety implications in high-risk properties as soon as practicable, and we do not want licensing to be delayed or made unnecessarily complicated because of this. We want a fully comprehensive licensing scheme in place as soon as possible. Not only will that improve management standards, it will ensure that the highest risk HMOs and their landlords are clearly identified as soon as possible for targeting under the provisions of Part 1 of the housing health safety and rating system.

The Bill places a duty on all local authorities to assess the housing conditions of all licensable houses in multiple occupation within five years. This is a brand new requirement since, under the existing legislation, authorities are not under any duty to assess HMOs, although they have the powers to do so. I hope, therefore, that noble Lords will agree that this is a positive obligation for the benefit of tenants which is intended to eradicate the worst hazards in the shortest possible time.

However, the Government recognise that the duty does place an additional burden on local authorities, and it is essential that they are able to plan and prioritise their workload around a sensible timeframe, dealing with the highest risk properties first. Local authorities know the properties in their area and can decide how best to carry out this duty at the earliest opportunity, and well within the maximum of five years. We do not think that central government are in a position better to judge the circumstances in individual local authority areas.

Due to the concentration of houses in multiple occupation in certain areas, it is important to bear in mind that some local authorities may not have the resources to inspect all HMOs subject to licensing within the first few years, and we would not wish to add to the burdens of all local authorities by imposing a whole new set of additional provisions and regulations for provisional licences. We are confident that the pressure on local authorities, not least from tenants and their representatives once this legislation is put on the statute book, will be to achieve the shortest possible time-scale and an adequate system.

I should make the point that, in an ideal world, all properties would be properly managed and free of hazards, but we know that we do not live in such an ideal world. We want to be able to make sure that the highest risk properties are targeted first. It cannot be done overnight. Were we to pass legislation for that, the public would think we were barmy because they know that we could not do it. The resources would not be available and it would be impossible. Therefore we have a phased time-scale but, notwithstanding that, one that deals with the highest risk properties first.

That is what we expect local authorities to do. We do not expect them to waste time doing the easiest properties first because they can then chalk up bigger numbers. We want to deal with the safety of tenants and ensuring that we get good management. However, we do not think that a regime of provisional licences would do anything to speed up the process. In fact, it might even slow things down.

I realise that there is a split between us on this. On behalf of the Government, I shall respond by saying that this is a practical matter. In an ideal world all these things would be linked together, but taking a practical approach and making sure that local authorities can target, and be seen to be targeting, the highest risk properties, is important. We are not able to accept these amendments, but no doubt we shall return to this matter at a later stage.

Baroness Maddock

I thank the Minister for his good and full answer. He understands the problems we are trying to deal with here, and what he has said for the record is quite helpful, in particular in guidance for local authorities. However, as he said, it is likely that when we have considered his remarks and again consulted those who work at the chalk face, we may well return to this matter to see whether we can come up with something a little more practical that the Government could go along with.

Lord Hanningfield

I too thank the Minister for that reply, but I do not think that he gave me an adequate answer to why there could not be a system of provisional licensing built into the scheme. No one wants to make the scheme more complicated or bureaucratic, but there could be a stage at which provisional licences are issued. That would not stop other measures to make certain that authorities tackle the most important and hazardous properties first.

As I said earlier, local authorities will be reluctant to grant licences without some form of inspection. We know that even now local authorities have problems in dealing with enforcement processes—just under the simple procedures now in place. At the moment, local authorities are looking for reductions of up to 20,000 staff as a result of the Gershon proposals for management, but here we are imposing new burdens. We must find systems to make the process work more productively.

I echo the comments of the noble Baroness by saying that I shall withdraw the amendment for today, although we shall certainly return to it. However, during the intervening period I hope that the Government will think again about how we can reassure some of those who are unhappy about the present scheme without introducing a provisional licence scheme. If they do so, I hope that we can consider these matters again at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 76: Page 42, line 2, leave out "may" and insert "shall

The noble Lord said: The purpose of Amendment No. 76 is to make it mandatory for a local housing authority to issue an HMO licence provided that the criteria set out in Clause 63(3) are met. Those criteria are that the house is suitable for occupation by a certain number of persons or households; that the proposed licence holder is a fit and proper person; that the proposed manager of the HMO is a person having control of the house, or an agent or employee of that person—and that he or she is also a fit and proper person; and that the proposed management arrangements are satisfactory—very much as we discussed during the last amendment.

As currently drafted, Clause 63(2) stipulates that if a local authority is satisfied with these specified methods, it may grant a licence. The use of the word "may" introduces a discretion. My amendment would substitute "shall" for "may", so that there would be a duty on the authority to grant a licence once it was satisfied that the specified criteria mentioned above had been met. Otherwise, there is a possibility that local housing authorities could take other matters into account which are not set out in the Bill, which could vary from authority to authority. That would be unfair to the applicants for licences, who would not know the full criteria they have to meet. They may discover that they satisfy one local authority, but not meet the criteria for another. All this will create uncertainty, inconsistency and confusion.

A Bill of this kind ought to set out in full the detailed requirements which have to be complied with. Once those have been met, a licence should automatically follow. In any case, a wide variety of issues already have to be considered before a licence is granted. Subsequent sections of the Bill elaborate on the various criteria and introduce further wide discretions. For example, as the Bill stands, if a house meets the prescribed criteria as regards suitability for occupation, Clause 63(3) gives local authorities the discretion to determine that the property is still not suitable. Under the fit and proper person test, while various issues such as criminal convictions are addressed, these procedures are not exhaustive.

There are restrictions in Clause 66 relating to the licensing conditions, although there is nothing on the face of the Bill to prevent the local authority refusing the licence in the first place for reasons unconnected with the criteria laid down in Clause 63(3). Although there is a right of appeal, landlords should not have to rely on that. It can be costly and time-consuming, and the outcome is uncertain.

Finally, Amendment No. 77 would allow the relevant national authority rather than the local authority to decide on the number of occupants who could reasonably reside in a particular household, thus achieving conformity and a standardised playing field across the country. I beg to move.

Lord Rooker

This may be arcane, but I have a good and brief reply to Amendment No. 76 which I am tempted to stick to. The clause is an example of standard drafting of statutory duty. If it will give the noble Lord some comfort, I should like to provide him with the assurance that the amendment would not affect the exercise of local authorities' discretion. If need be, I can explain in detail the background, but in effect it would not make any difference to use "shall" rather than "may" simply because once the criteria laid down in Clauses 63, 64 and 65 have been met, the local authority is basically duty-bound to issue the licence. The amendment would not make any difference.

Amendment No. 77 is slightly different in that it provides for the appropriate national authority rather than the local housing authority to specify the maximum number of households or persons who can occupy a house. There are several problems with this amendment. First, it would remove all discretion from the local housing authority to set a maximum number of households or persons for each individual property in the area. This is when it is precisely the local housing authority which is best placed to carry out this function. Central government in Whitehall is certainly not the best place to carry out that function.

The amendment also goes against the spirit of the licensing provisions elsewhere in the Bill, which are designed to provide local housing authorities with the powers they need to enable them to drive up standards of living accommodation in their area.

Secondly, by definition, the amendment would mean that the appropriate national authority would have to set the maximum number of occupants per living accommodation at a level which is achievable on a national scale. As a consequence, there would be no scope for providing for a greater amount of living accommodation per occupant in those areas of the country where higher standards can be reasonably expected and are achievable.

Thirdly, I must emphasise that the appropriate national authority is already responsible for setting national minimum standards of amenity in secondary legislation—which, incidentally, we shall be consulting on later this year. Such minimum amenity standards can include the occupant to living space ratio that the local housing authorities would, in turn, be able to use when it comes to setting the maximum number of occupants for each property.

It is also worth pointing out that under the existing provisions, licence applicants can appeal to a residential property tribunal against the terms of a licence if they consider them to be unreasonable. This would include terms relating to the maximum number of occupants. So it is not as if, by not having a national maximum number of occupants to living space ratio, the local housing authorities will be setting out the maximum numbers of occupants in licences which are unreasonable without there being any check, as there is a right of appeal in those circumstances.

The intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the amendment would do the exact opposite and drive down standards in some areas of the country. Therefore, I hope that it will not be pursued.

1 p.m.

Lord Hanningfield

I thank the Minister for his reply. With regard to "may" or "shall", I shall look at his answer and give it some further thought before the next stage. I accept that the Government believe that licences would have to be granted if the requirements were met.

The Minister's reply to Amendment No. 77 was much longer and more detailed. I note what he said and will reflect on it to see whether we need to take this matter further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 77 to 79 not moved.]

Clause 63 agreed to.

Clause 64 [Tests as to suitability for multiple occupation]:

Lord Hanningfield moved Amendment No. 80:

Page 42, line 34, leave out subsection (2).

The noble Lord said: This amendment would leave out Clause 64(2). It is intended that there will be nationally prescribed standards to decide whether a property would be suitable for occupation by a certain number of persons or households. It is anticipated that these standards will deal with issues such as suitability of rooms and the amenities and facilities provided—the number of toilets and bathrooms, and so on. Under Clause 64(2), the local housing authority is given a discretion to decide that the house is still not suitable, even though it may comply with the nationally prescribed standards.

This kind of provision leads to the potential for anomalies between local authorities with similar types of housing—there was a similar issue in the previous amendment. It also allows for gold-plating, allowing authorities to require unnecessarily high standards.

HMOs provide much needed accommodation, primarily aimed at the cheaper end of the market. Imposition of extra requirements will lead to increased costs, driving up rents, making this kind of accommodation less affordable. If national requirements are imposed, then there is a prospect of landlords converting HMO accommodation into self-contained flats which will not automatically require an HMO licence. These flats will then either be sold off or rented out, but at higher rents, causing further loss of affordable accommodation. This has already happened on a large scale, especially in London. That trend could be accelerated.

National prescribed standards will provide for the decent basic requirement. There is no need to give local authorities power to elaborate on these. There will be no firm criteria which landlords can work to because local authorities could consider a house not suitable even though the landlord has met the national standards. I beg to move.

Lord Rooker

Clause 64 provides that the appropriate national authority may, by regulation, prescribe national minimum standards of amenities or facilities which must be available to render a house in multiple occupation reasonably suitable for the number of occupants. Subsection (4) sets out the matters that may be prescribed in the regulations. These include the adequacy of number, type and quality of bathrooms, toilets, washing, cooking and other facilities. The Government intend to consult on these prescribed standards before laying the statutory instrument before the House.

Subsection (2), which is the subject of the amendment, provides that before determining that a property is reasonably suitable for occupation by a particular maximum number of households or persons, a local authority may take into consideration more than the prescribed standards for occupation. A person who has been refused a licence or is aggrieved by a condition imposed in the licence because it does not conform, or it is required to conform, to local standards, will, as I said earlier, have the right of appeal to the residential property tribunal against that decision.

Amendment No. 80, which would remove subsection (2), would remove any discretion from a local authority not to grant a licence where it may require a licensing standard higher than those prescribed by the national regulations. As I have said before, the intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the effect of the amendment would, like the previous proposal, be to drive down standards in some parts of the country.

The amendment would make the regulations the maximum standard on which a local authority could insist, rather than a minimum national provision. In some areas of the country, the general standard may be somewhat higher than in the hardest pressed areas. Obviously, the appropriate national authority, in setting the minimum standards to be achieved nationally, will have to organise and pitch those standards at a level which is realistically achievable in all areas. There is no reason for this to drag down standards in areas of the country where higher standards are reasonably expected.

We want to make it clear, however, that if a local authority wished to impose standards above those which were nationally prescribed, those standards must be reasonable and, in particular, relate to the suitability of the house for multiple occupation. Authorities cannot do things willy-nilly or on a hunch. It would therefore not be appropriate for a local authority to require the taps in the bathroom to be gold-plated, for example. Surely no local authority in its right mind would require taps to be gold-plated. I am sure that even in the well heeled local authority of Kensington and Chelsea, houses of multiple occupation do not have gold-plated taps. In other words, local authorities must act reasonably, even where they want to set standards which are higher than those nationally prescribed.

It is entirely appropriate that local authorities should be able to set those standards, having regard to the housing stock and conditions in their area. While it is essential that there are prescribed national minimum standards, it is not the role of central government to dictate standards to be applied in every case uniformly across the country, as the prevailing market will vary from town to town and region to region.

Subsection (2) will allow the local authority to take into consideration additional factors. Local authorities are operating in a much more sensible way than they have done for years. I am slightly surprised that the leader of one of our great and esteemed local authorities should have come forward with an amendment that would remove discretion from local authorities. If they act reasonably, it is perfectly right that they should have the powers in subsection (2).

Lord Hanningfield

I thank the noble Lord for that reply. Obviously, I very much believe in local discussion. We drafted the amendment because we were worried that in some areas we could deprive the market of affordable housing because people might prescribe conditions that were too elaborate, therefore taking the houses out of the renting market. However, the Minister has answered my point, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hanningfield moved Amendment No. 81:

Page 42, line 38, after second "standards" insert "relating only to health and safety"

The noble Lord said: Amendments Nos. 81 and 82 define more precisely the tests as to the suitability for multiple occupation. They identify health and safety considerations, which are at the heart of the purpose of Parts 1 and 2, at the very core of the clause.

Amendment No. 81 would require that the standards prescribed under the clause relate only to health and safety standards. The clause at present is intended to deal only with standards of facilities and equipment. We strongly believe that health and safety considerations must be at the forefront of such considerations, and should not be downgraded in our perception of such matters. We are probing to see how much the Government share our belief.

Amendment No. 82 returns us to the subject of fire, as it specifically adds the standard of susceptibility to fire hazards to subsection (4), by providing for fire safety standards to be prescribed. That matter also relates to the Part 1 health and safety regime. As was mentioned in another place, there is proper consideration of washbasins, showers and bathrooms, areas of food storage, preparation and cooking, and laundry facilities and so on, but there is no mention of the safety equipment that might reasonably be expected in an HMO to deal with a fire hazard. I hope that the Minister can provide us with a better reassurance, as provided during the Committee stage in another place. I beg to move.

Lord Rooker

This is another case in which matters relating to Part 1 are being transposed to Part 2. However, I am not being critical in that regard, because the Bill is long and complicated. I have a good example with which I can, I hope, satisfy the noble Lord.

Clause 64 is intended to deal with standards of facilities and equipment. It is about requiring certain minimum standards of acceptable living accommodation in multiply occupied houses in the 21st century, rather than whether the multiple occupation is injurious or dangerous in itself to health and safety, because that is covered by Part 1.

Clause 64(4)(b), which is right at the top of page 43 of the Bill, allows for standards to be prescribed, as to the number, type and quality of other facilities or equipment which should be available in particular circumstances". It is our considered view, for example, that that could cover fire safety equipment, so we do not see the need for fire safety standards to be prescribed in that sense. This is a matter anyway for Part 1, and the health and safety regime, but the amendment is unnecessary because, according to the advice that I have, subsection (4)(b) could cover fire equipment.

Lord Hanningfield

If it could, why are the Government against mentioning it in the Bill? It is obviously an important part of the process.

Lord Rooker

Because we are dealing with Part 2 of the Bill, not Part 1. That is the dilemma that we face. I understand why there is an attempt to use matters relating to health and safety in this part of the Bill, because we are dealing with houses in multiple occupation. We all understand why we are coming forward with the proposals in the first place: it is not just about good management of the property. There are other matters relating to health and safety, but we believe that they are covered in the detail in Part 1.

I shall go back and check on the matter, because the advice that I have is that the provisions could cover fire equipment. What I need to know is that it does cover fire equipment, so I shall seek further advice and drop the noble Lord a note between courses.

Lord Hanningfield

I thank the Minister, particularly for the last part of his reply, and hope that he can clarify the situation for us before the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 82 not moved.]

Clause 64 agreed to.

Clause 65 [Tests for fitness etc. and satisfactory management arrangements]:

Baroness Hanham moved Amendment No. 83:

Page 43, line 7, at end insert— ( ) On application for a licence, "P" will be required to make a full disclosure of any recorded convictions on the sex offenders register to the licensing authority. ( ) Before the local authority awards a licence it will required to validate both the identity of "P" and information supplied by "P" with the national sex offenders register. ( ) Every HMO manager within an authority's area of jurisdiction will be required to report to that licensing authority any sexual offence conviction gained since the award of an HMO manager's registration. ( ) Every year, local authorities will be required to check the names of all HMO managers within the area of their jurisdiction against the sex offenders register.

The noble Baroness said: This amendment, or something very similar, was moved in the other place, and the Minister there gave a commitment to consider the issue. That is why we are bringing it back at this stage—to see whether by any chance consideration has already been given to it.

At present the Bill does not set out anything to do with sex offences with regard to a manager's fitness to manage a house in multiple occupation, although such crimes could possibly be included under the general heading of "violence". That is not specific, and under most circumstances these days the category is written out as a separate entity. We all know that people who have responsibility for houses in multiple occupation may have vulnerable people in their properties. We are therefore probing again the Minister to explain why such offences were not included in the list of subjects in the Bill.

Amendment No. 83 sets out some of the grounds on which an authority must pay regard to the question of whether a person is fit and proper to hold a licence, were they to have a previous sexual conviction or were they to be registered on the national sex offenders register. They would not be automatically barred, but the fact should be taken into account in deciding whether to grant a licence.

Amendment No. 115 is a related amendment, and would introduce a similar requirement with regard to tests for fitness to cover the later clauses on selective licensing or other residential accommodation. I hope that the Minister has a response that will indicate that the matter has been considered in the interim between the two stages in the other place and here. I beg to move.

Lord Rooker

Clause 65(2)(a) does of course refer expressly to the Sexual Offences Act 2003. An amendment was made to that Act following the debate in the other place.

Clause 65 sets out, among other matters, the evidence that the local authority must consider when addressing the question of whether a person is a fit and proper person to be a licence-holder or manager of a house. That includes whether the person has committed an offence involving fraud, dishonesty, violence or drugs. Following debate in the other place, offences listed in Schedule 3 of the Sexual Offences Act 2003, which attract notification requirements, were also added to the list. To that extent, I believe that we have met the thrust of the noble Baroness's amendment.

Amendment No. 83 would specifically require a person to disclose recorded convictions on the sex offenders register to an application for a licence to act as an HMO manager, as well as requiring the local authority to verify such information. In addition, the third subsection of the amendment would require HMO managers to inform the licensing authority should they be convicted of a sexual offence since their registration as an HMO manager. The fourth subsection of the amendment would require local authorities to check the names of all HMO managers in their area, annually, against the sex offenders register.

The exact same amendment was tabled by the Opposition and debated in the other place, at which time the Minister said that we would consider the issues raised. As a result, we introduced amendments to the Bill that added offences listed in Schedule 3 to the Sexual Offences Act 2003 to the list of evidence within Clause 65(2). I hope that that satisfies the noble Baroness.

Baroness Hanham

I apologise to the Minister as I had not noticed that the Sexual Offences Act was included in subsection (2). The Minister's reply satisfied me as regards the inclusion of the measure as a result of the considerations in the other place. I thank him for drawing attention to that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 84: Page 43, line 40, leave out "and funding arrangements

The noble Baroness said: Before it can grant an HMO licence the local housing authority has to be satisfied regarding the management arrangements for the property. One of the specific requirements is to take into account the landlord's funding arrangements. The amendment would remove this specific requirement to consider funding arrangements in each and every case.

Before granting an HMO licence the authority must be satisfied that the proposed licence holder and the proposed manager, if different, are fit and proper persons. While there is an indicative list of matters that the local authority must consider, this is not exhaustive and there is no reason why the financial position of the proposed licence holder or manager should not be considered as part of this test if there were circumstances making this appropriate in a particular case.

There may be cases where a local authority has justifiable concerns for financial reasons that a licence holder will not be able to meet his obligations. However, these are likely to be reasonably rare. The Government do not appear to have appreciated the heavy burden that is going to be placed on local authorities as well as on landlords and managers. The licensing system will be administered by environmental health officers. Environmental health officers have, in most cases, little experience of financial matters. Is it proposed by the Government that environmental health officers should vet landlords' accounts? Is it intended that bank references should be taken up? Anyone who deals with bank references knows that they are written in code. Environmental health officers will not necessarily have the experience to vet accounts or council references.

Local authorities have limited experience of interpreting private sector accounts and probably none at all in relation to landlords who are small businessmen and women. Their experience is limited to one-off contracts. A provision of this kind will also work to the detriment of new entrants because such landlords will have no financial track record.

The financial assessment for a landlord should be left to the financial institutions funding the borrowing on a property. If they are not convinced of the landlord's financial position, there will be no money forthcoming. The automatic requirement to consider the financial circumstances of the applicant is unnecessary and bureaucratic. It will require considerable resources of an entirely new kind not possessed at present by local housing authorities. I beg to move.

Lord Bassam of Brighton

Clause 65 sets out the matters to which a local authority must have regard in determining whether the conditions in Clause 63 are met for it to grant a licence. One of the matters it must consider in deciding whether the management arrangements for an HMO are satisfactory is that funding arrangements are suitable. As the noble Baroness clearly explained, Amendment No. 84 seeks to remove that requirement in subsection (6)(c).

We take a contrary view. We take the firm view that it is necessary to ensure that funding arrangements are suitable as that goes very much to the heart of adequate, effective and responsible property management. Clearly, standards of management or repair will seriously deteriorate if a manager does not have the money, or access to that money, to carry out his obligations. I am sure that the noble Baroness would agree that being a landlord is not simply about collecting rents and making profits; it imposes important obligations on that person to ensure that the property is well maintained, well managed and entirely suitable for the number of residents for whom it provides housing and shelter. We take the view that it is therefore quite proper that under a licensing scheme the local authority should be satisfied that the manager of the property has, or has access to, sufficient funds to carry out those obligations.

The noble Baroness prayed in aid of her argument that local authorities have limited experience in looking at business finance and that environmental health officers might lack the relevant expertise. My experience as a local authority leader was that on many occasions my local authority had to consider the financial arrangements for developments and for businesses taking over council leases and properties and so on. I should be very surprised if the noble Baroness's local authority did not have access to that kind of expertise within its financial management and other sectors. Local authorities are highly complex business organisations themselves and therefore well understand the importance of dealing with people who have the means to run and effectively manage the properties that we are discussing. Therefore, I do not find that a convincing or compelling argument. If this provision is not in the Bill, it will potentially lead to a situation in which local authorities are invited to grant licences to people who frankly do not have the means to run or manage effectively property in their control and ownership. We do not believe that the amendment has merit. I hope that, on reflection, the noble Baroness will withdraw the amendment today and not bring it back on a future occasion.

Baroness Hanham

I thank the Minister for his reply. The whole question of whether a local authority has adequate resources to deal with all the matters that will have to be considered under the fitness test is something that we have not dealt with in very great detail. As my amendment suggests, environmental health officers will require a wide variety of experience. In view of what the Minister said, funding will clearly constitute part of that; namely, an ability to look at and certify accounts, or, indeed, to transfer that to someone else.

I hear what the Minister says. I thank him for his reply and, for the moment at least, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 65 agreed to.

Lord Rooker

I beg to move that the House be resumed. In moving this Motion, perhaps I may suggest that the Committee stage begins again not before 2.30 p.m.

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

House resumed.