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6 Nov 2008 : Column 150WH—continued
Turning to the private rented sector, there were a number of points that we wanted to make. I reiterate that the private rented sector is extremely diverse. Large parts of it benefit from good-quality and excellent landlords and provide for real need. However, other parts are of extremely poor quality. For example, the private rented sector has the least fuel-efficient housing of any sector in this country. At the low end, some private rented properties are of very poor quality, have
appalling management who offer poor service generally in respect of repairs and maintenance, give tenants little security and are, moreover, extremely expensive. We focus most of our attention on that unsatisfactory bottom end rather than the whole sector.
We think that there is a great need for more variety in the length of tenancies available. Many private tenants are concerned by the fact that tenancies seem to have very little security and that people are forced to move frequently. That is particularly important where people have been directed by councils to the private rented sector because insufficient council accommodation is available.
We believe that the Government should have responded to the Law Commission’s findings and its suggestion of a common tenancy agreement that would apply across the social and private rented sectors and give more security. The Government have still not responded to the findings, and we wish that they would. I note that the private rented sector report by Rugg and Rhodes suggests that there should be more concentration on the reasons why tenancies fail, rather than a focus just on the contract.
The Committee recommended at the time that greater research should be done on the effect of buy-to-let investment and how the resources of public sector bodies could be used to direct private sector investment into appropriate areas to create more mixed communities. We noted that poor management often occurred with what the sector called “pop and mom” landlords, or private individuals who bought one, two or three properties as a way—so they thought—of accumulating capital. Such properties were often extremely poorly managed. Personally, I think that the credit crunch has reduced the urgency of some of the Committee’s concerns about how buy to let operates, but some still remain.
We are concerned about the regulation in general of the private rented sector. Again, the Rugg and Rhodes report suggests light-touch regulation across that sector, and the Committee agrees. The licensing regime for homes in multiple occupation definitely needs to be strengthened, and local authorities should be encouraged to prioritise problem landlords in the HMO—houses in multiple occupation—sector. We think that that would provide a good foundation for introducing a system of accreditation for landlords and letting agents, devised by trade bodies and enforced by the involvement of local authorities, with ultimate oversight by the TSA. That would be in line with what the Rugg report suggests. Interestingly, it is also favoured by the Association of Residential Letting Agents, the body representing landlords, because good landlords have an interest in the proper policing of bad landlords.
We made a number of points relating to housing providers. We believe that regulation in the social rented sector should minimise administrative burdens and free up resources for the vital task of maximising supply. In the private sector, we want the Government to consider reforms to the regulatory and taxation systems to incentivise the supply of new rented housing and better management of existing housing. We also stress that the Government need to reform the housing revenue account system as soon as possible to remove perverse incentives and enable councils to use the system to fund the construction and acquisition of more social housing.
We want housing associations to be able to use their surpluses to increase the supply of social housing. They should also be enabled and encouraged to diversify into other private and social enterprises, backed up by Government support where appropriate. We commend the efforts that a number of social housing providers are already making to avoid the negative consequences of polarising worklessness, and also the work that they are doing with their own tenants to encourage and support those tenants who are not in work to get into work. We highlighted the need for allocation schemes, whether they are run by housing associations or by councils, to be designed to enable the movement of tenants who are genuinely making an attempt to become more engaged in employment, thereby allowing them to move nearer to their work and minimise transport costs.
Regarding housing benefit, we highlighted a number of reforms to the system that we thought were essential. However, we also cautioned the Government in making those reforms to ensure the continued viability of the “temporary to settled” schemes that a number of councils are using, whereby housing benefit money is effectively used to enable the properties that are being used in the private sector to finish up in the social housing stock.
I have obviously skated over a huge amount of work that our report covers. Rented housing is a huge and complex issue, and the report made more than 60 recommendations or conclusions. The Government response to our report has been broadly positive, but there is a certain lack of detail in many areas. Perhaps perfectly reasonably, the Government have referred us to documents or reports that are not yet published, including the housing reform Green Paper, which is due at the end of the year, and the review of housing finance, which is due in spring 2009. The Committee will look at such documents as they appear, and will check whether or not they respond to the recommendations in the report that have not yet been responded to.
In conclusion, I believe that this report has come at a crucial time for housing policy. The creation of the new regulator of social housing, the Tenant Services Authority, is very welcome and the Committee hopes that it will eventually become responsible for tenants in all social housing. In addition, the Homes and Communities Agency, which was formed by the amalgamation of the Housing Corporation and English Partnerships, is particularly necessary, given the extra strain that the credit crunch is placing on the public sector in its attempts to take forward regeneration and create new housing. We believe that all those developments are significant milestones in the progress of the Government’s housing policy and many of our recommendations will fall to the HCA or the TSA to implement. I therefore commend the report to the House. I am interested to hear the points that other Members wish to make, and I hope that we all agree that there is a need to increase the quantity, and improve the quality, of the supply of both social rented and private rented housing.
3.3 pm
Paul Holmes (Chesterfield) (LD):
I offer heartfelt congratulations to the members of the Select Committee on producing this absolutely outstanding report. One
reason that I welcome it so much is that it says exactly what I have said for the last seven years, since I entered Parliament. However, the members of the Select Committee are not the usual suspects. Normally in the last few years, when hon. Members such as myself, the hon. Member for Great Grimsby (Mr. Mitchell) and a number of other people have stood up in Parliament to say these things, we were all too often dismissed by the Government and Conservative Front-Bench spokesmen as the same old suspects saying the same old things, locked in the same old memory of the past and not living in the real world.
However, this report says with great independence and in great detail, which is based on great research and great evidence, exactly those things that I have been banging the drum about for the last seven years, although so far it has been to absolutely no avail because the Government have not listened or given an inch of ground. So I really welcome what the Select Committee has produced, after taking a great deal of evidence from a great number of expert witnesses and others who are involved in the field. I know the process that is involved from being a member of the former Education and Skills Committee and a current member of the Children, Schools and Families Committee.
We have just heard an exposition of what the report says and I would just like to highlight some of the points that were made in summary. First, the report says that people in rented housing are 30 per cent. of the people in the UK. Seventy per cent. of people in the UK are owner-occupiers, which is the highest rate in nearly all of Europe, although I believe that figure has fallen slightly in the last year or two, to about 69 per cent., and, given the current economic conditions, it will probably fall some more. Nevertheless, the figure for owner-occupiers is among the highest in Europe.
As the report says and as we have just heard, there really has been an emphasis from the Government that only owner-occupation matters, and that people who rent are somehow inferior and they should all rush out to buy their houses. Owner-occupation is certainly a worthwhile aspiration. Obviously, most Members of Parliament are owner-occupiers. The aspiration is to own property, invest in property and in the long run to make money out of property, although, of course, as we are seeing at the moment and as we saw in the period between 1990 and 1992, it does not always work that way.
For people to be part of a property-owning democracy is a great aspiration and one that should be encouraged. In recent years, however, a number of people have asked repeatedly, “Have we gone too far? Are we pushing too many people into owner-occupation, including people who cannot actually afford it?” As we are seeing, we have hit the buffers on housing this year, with negative equity and people who took 125 per cent. and self-certified loans from Northern Rock that they just cannot afford to repay. As soon as problems arise, we get massive, soaring repossession rates and people then come in to councils asking to be rehoused, but the councils have to say, because of Government policies over the last 11 years, “Sorry, we don’t have the houses for you.” I will also return to that subject later.
As an aspiration, therefore, owner-occupation is certainly a good thing, but have we gone too far and have we created a lot of problems that we are now reaping the whirlwind of in the current economic crisis and the recession that we are just entering?
So I have highlighted those figures on owner-occupation and renting. As the report goes on to point out, the Government have a responsibility to ensure that tenants, as well as owner-occupiers, have the opportunity of a decent home at a price—a rental price, obviously, in the case of the rented sector—that they can afford, and within a sustainable community.
We must say that a lot of the remaining social housing in this country has tended to have a ghettoisation effect. It has become housing of last resort—housing for very poor people, and therefore there is a concentration of social problems with social housing. That is because people can only get housing through councils now if they are at the very bottom of the ladder, in absolute desperation and have myriad problems. If those problems are concentrated into limited areas, of course they will multiply and create further problems.
Mr. Drew: The hon. Gentleman will not be surprised to hear me say that there is a marked disparity between the urban and rural parts of our society now, quite simply because we have driven people out of rural areas. As we have sold the council houses, we have not replaced them with social houses through housing associations. It is a great tragedy: those rural areas are so much the worse because of the lack of variety of housing there.
Paul Holmes: The hon. Gentleman is absolutely correct. This is an issue that is a bit like the post office debate, where people say that if post offices are lost it is a disaster for rural communities. Well, I keep saying that it is a disaster for suburban communities too. With housing, it is undoubtedly a disaster for some of the communities in my constituency, which is an urban area; it is doubly disastrous in rural areas, where social housing is the only alternative housing but that alternative has gone completely. That is a point that I will return to later.
As we have heard from the hon. Member for Milton Keynes, South-West (Dr. Starkey), who is the Chair of the Committee, and in the report itself, we have now reached a point where renting is seen as second best in many cases. That perception is very unhelpful to the people who are in the rented sector, especially the social rented sector. Those people’s needs and aspirations are surely just as important as those of home owners and people who can afford to be home owners, especially to a Labour Government. Clearly, however, in the last 11 years those people who are renting have not been as important; they have been at the bottom of the pile and treated as rejects.
In the private rented sector, there is a particular problem in that some landlords—the report says that it is a minority of landlords—are not fulfilling the obligations that they have to tenants to provide, in return for the rent that they receive, a decent home. The Government need to take stronger action in providing guidance, regulation, monitoring and inspection to improve the lot of private rented tenants. Again, that is a point that I will return to later.
During the debate in November 2007 on Second Reading of the Housing and Regulation Bill, I and others pointed out that that Bill was looking very much at the social rented sector and was not particularly covering the private rented sector, so there was a need
for the Government to take action on that sector. During that debate the point was made that in previous years—in the 1980s—the private rented market almost collapsed because of various Government policies, so Governments have since then been very cautious about regulating the private rented market, in case they drove private landlords out of the market altogether, as happened some 20 or 30 years ago. However, given the state of the housing market today, and the way things have moved, that is the least of our worries, and we need to consider regulating the private rented sector more. Shelter has produced lots of research material on that, and we discussed some of that in November on Second Reading as well.
Andrew George: I entirely agree with my hon. Friend. He introduced his comments by saying that renting, especially private renting, was perhaps perceived to be second best. I agree with him about regulation, but does he agree that one reason for that perception is the introduction of shorthold tenancies and the consequent lack of security, within the private rented sector especially?
Paul Holmes: Absolutely; that is a point I wanted to make later, so I may as well cover it now. It is an issue raised by people who come to my constituency surgeries, and I know it arises elsewhere, because other hon. Members have mentioned it in parliamentary debates. Shelter and other bodies working in the sector have a lot of documentation about it. Private rented accommodation is often inferior and substandard anyway, but even when it is good it is often offered on very short-term tenancies. With the present incidence of repossessions and negative equity more and more families will become homeless. For families, especially those with school age children, the impact on family life, education and social stability is appalling when they move into short-term private rented accommodation and must move on three or four times within a year, 18 months or two years, so that the children suffer disruption and may have to change schools, depending on where the family ends up after each move. The Government need to return to that issue, which they did not do at the time of the Housing and Regeneration Bill.
The summary of the report comments:
“More family homes are needed in the social rented sector to address overcrowding.”
It could have gone a bit further, because the issue is not just overcrowding but the non-existence in many areas of family houses for social rent. To take the example of Chesterfield again, last year—I keep saying things happened last year, but now I probably mean the year before—in a period of 12 months in the whole of Chesterfield, where there are roughly 50,000 houses, 100,000 people and 10,000 council properties, exactly 49 three-bedroomed family homes became available from the council to let to social tenants. However, the number of families who applied from the waiting list, who were in flats, sofa-surfing at their in-laws and so on, and needed that family accommodation, massively outstripped the 49 houses that became available. It is not just a matter of making more family homes available in the rented sector to ease overcrowding; it is a matter of making more available to get people out of one-bedroomed flats, or situations in
which they are sofa-surfing at relatives’ and friends’ homes. Those situations have led to marital breakdown in some cases that I have heard about at my constituency surgery, because of the tensions affecting young couples with children, who sleep one week at the home of one set of in-laws, and the next week with the others, or who move into the houses of their brothers and sisters. That creates immense pressures. Massive neglect of the situation is creating huge social problems, with all the knock-on effects on children’s education, including failure in schools. Again, I speak as someone who was a teacher for 22 years who as a head of year with pastoral care responsibilities often had to deal with some of the results.
The summary goes on—and this is one of the few parts that I disagree with:
“An increase in the supply of social rented homes of some 50,000 a year will be necessary to reduce significantly the backlog in demand.”
I am not quite sure what figures that statement is based on, because the Barker report, for the Government, said that an absolute minimum of 46,000 new socially rented homes a year was necessary simply to stand still—not to reduce the backlog. According to those figures 50,000 homes a year would not significantly reduce the backlog. It would make a small inroad into it. However, perhaps we may make a comparison with what has been achieved in the past 11 years: councils have stopped building entirely; they built 4,000 houses in the past 11 years and 300 last year, which is the lowest number since before world war one. The Government say, “It is okay, the registered social landlords—the housing associations and so on—will fill the gap from the private sector or semi-private sector.” They have not, of course. They have built an average of 22,000 a year in the past 11 years. That is nowhere near the 46,000 minimum that the Barker report says is needed, the 50,000 that the Select Committee report says is needed, or the average of 100,000 to 120,000 that councils built in the first 50 years after the second world war.
The housing associations have failed, and they are the flagship of the Government’s policy in the past 11 years. They failed to replace the houses that have been lost, let alone to get waiting lists at a steady level or start cutting them. Those waiting lists have nearly doubled from 1 million in 1997; they will approach 2 million in the next year or two—very rapidly with the negative equity and repossessions that we are now experiencing.
Jeremy Corbyn: The hon. Gentleman must be aware of the problems of housing association finances: increasingly the associations are under pressure either to borrow in the private sector and build, or build for sale or sell off existing properties or land. That means in effect that they become socially owned property companies, rather than organisations with the aim—which was their original aim and should continue to be their aim—of providing housing for people in desperate housing need.
Paul Holmes:
Indeed, the hon. Gentleman is quite correct. There are some terrific housing associations. There are some that have kept fairly true to their purpose, even as they have grown massively, as a result of recent Government policy. However, some have become, effectively,
property management companies, whose particular interest, and only way of keeping afloat financially, is, as the hon. Gentleman says, to build houses and sell them on. We must in all seriousness ask, about many of the housing associations now operating in the environment created in the past 11 years, what their financial books look like. If much of their financial planning was based on building sets of houses of which at least half would be sold, a quarter would be rented at perhaps a little above market prices, and a quarter socially rented—that financial model is falling apart at the moment.
I know that some housing associations are worried about their viability and whether they will survive in the next year. How can they continue to build new houses even at the pathetically low average level of 22,000 a year that they have managed for the past 11 years if their funding is partly predicated on being able to sell at least half what they build to generate more money to build the next lot? The Government’s policy of putting all their eggs in that basket has failed over the past 11 years. Waiting lists have nearly doubled; only 22,000 homes a year have been built, which is way below what is needed. Now the approach has hit a brick wall, given what is happening economically.
“The Government must be prepared, if necessary, to raise investment in new supply still further.”
If that was true in April, before the extent of the crisis that we are approaching became publicly acknowledged—that we are entering a recession with the housing market collapsing and repossessions soaring as the figures every fortnight show worse levels—it is certainly true now. It will be even more true in the next six months to two years.
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