Debate on Private Landlord Licensing Schemes

15th November 2017

Alok Sharma responds to a Westminster Hall debate on private landlord licensing.

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the right hon. Member for East Ham (Stephen Timms) on securing this debate. I assure him that the Department is progressing the application from the London Borough of Newham; I expect to receive advice from officials very shortly, and I assure him that I will make a decision expeditiously once the submission is with me. Given that the application is in progress, he will appreciate that today I cannot comment specifically on Newham’s proposed scheme.

I understand the right hon. Gentleman’s concern about how long it is taking to reach a decision. The Department received the application in July and has had further meetings and exchanges of information with the council. On two occasions, Newham has helpfully provided further clarification about the proposals and more evidence and information to support them. As he noted, the Department’s guidance sets out our aim to make a decision within eight weeks, but that is an indicative timetable; decisions can take longer if applications are more complex and further information is required, as has been the case with Newham.

May I ask when the latest piece of information was provided to the Department by Newham Council?

Officials received the latest information on 25 October, so they have had a few weeks to process it. They are carrying out that work right now, and I make it clear that they will make a recommendation to me very shortly.

The right hon. Member for East Ham has highlighted the benefits of the current licensing regime operated by Newham and has placed his views firmly on the record. He also mentioned agencies that have worked with the council. It might be useful if I set out in general terms the Government’s current licensing framework. We support the use of licensing to address high-risk properties, such as houses in multiple occupation. We also support selective licensing of other private rented properties in areas where this will help to combat serious problems in the private rented sector.

The Housing Act 2004 introduced legislation for selective licensing to target the areas of highest risk and the most problematic private rented accommodation. It was never intended to be a means to license the entire private rented sector in an area. It provides for licensing properties in the private rented sector in very specific circumstances: when those properties are houses in multiple occupation or are subject to selective licensing, as defined in part 3. The legislation is very clear that licensing under part 3 is selective: any scheme must be targeted to address specific areas that are experiencing serious problems and that pose risks to tenants and their community. That does not rule out the possibility that a particular problem or set of problems could affect a large area or—in exceptional cases—a whole borough. In that event, the legislation provides that there must be clear evidence to demonstrate the need for licensing.

There must also be proper, robust plans in place to show that selective licensing is a crucial part of the local authority’s strategy, either to eliminate problems or, as a minimum, to mitigate their impact. This legislative framework ensures that selective licensing is not simply a means of raising revenue from local landlords—the right hon. Gentleman referred to that issue—and ultimately from tenants, as landlords pass on their licensing fees through higher rents.

In 2015, the then coalition Government extended the criteria for making a selective licensing designation to include areas with high levels of migration, crime, poor property conditions and deprivation. Of course, the right hon. Gentleman has, as I have said, highlighted the achievements of the Borough of Newham under its current scheme in tackling poor conditions and working closely with a range of agencies.

I appreciate that there are concerns about poor property conditions in the private rented sector in the borough, to which the council itself has drawn attention recently through media coverage and, of course, both the hon. Members for Ilford South (Mike Gapes) and for Ashfield (Gloria De Piero) have also put it on the record that they have been out with the Newham team to look at the work that it does. Just to be clear, I absolutely agree that the conditions we are discussing should not be tolerated and that action must be taken.

Has the Minister found any evidence that rogue landlords who provide poor-standard accommodation are involved in other sorts of crime, such as defaulting on loans, not paying tax, or changing their names at Companies House by altering just a letter in the name of a director, because that is what investigation by some of my constituents is showing? Perhaps some work across different Departments might get to the root cause of some of these problems.

Let me briefly address the issue of rogue landlords, because the hon. Gentleman makes an important point. Local authorities in England already have strong powers under part 1 of the Housing Act 2004 to tackle poor property conditions and overcrowding in privately rented properties. They can serve improvement notices that require landlords to carry out works to remedy poor conditions, or make prohibition orders to prevent overcrowding. In the most serious cases, which pose a significant risk to the health and safety of tenants and their families, local authorities are under a duty to take action to combat the problem. Landlords who fail to comply with an improvement notice or prohibition order are committing a criminal offence.

The hon. Gentleman raised the issue of rogue landlords, and I will just say that we have gone further in tackling such landlords by introducing new powers in the Housing and Planning Act 2016, which mean that non-compliant landlords can face a civil penalty of up to £30,000. The local authority involved can also recover its legal costs of serving notices. Furthermore, we have enabled local authorities to keep the income from such fines to support their enforcement capability, and local authorities have a right to inspect properties to make sure they are in safe condition, even if the tenant has not complained.

Newham Council has used its database to identify those rented properties where enforcement under part 1 of the 2004 Act might be required. Local authorities do not need a licensing scheme to be in place to inspect and take enforcement action against poor property conditions in the private rented sector.

I am very grateful to the Minister for giving way. I am listening to his speech with a lot of interest and I am grateful to him for the points he has made to acknowledge the effectiveness of what has happened in Newham. However, does he accept that the licensing scheme in Newham provides the local authority with a lot of information that it otherwise would not have, and that that information enables it to focus attention—together with the police, the fire brigade and other agencies—on the minority of properties where there are potentially the most serious problems?

The right hon. Gentleman has set out his case and how the borough has worked with other agencies. I just say to him now that the submission from the borough will be coming in front of me, so I do not want to prejudice any decision that I may make.

In conclusion—

Before the Minister concludes, can he comment on my brief remarks about the London Borough of Redbridge?

Again, as the hon. Gentleman has noted, the scheme from Redbridge is under consideration and we have obviously heard what he has said today, so we will ensure that we review all that as quickly as we can.

I do not want to waste a few minutes with a Minister in front of us. If I were to write to him detailing some instances of rogue landlords who might be involved in other forms of crime, such as tax evasion or defaulting on loans, would he be prepared to contact his colleagues in other Departments and perhaps get those landlords and their companies investigated further?

I am always very open to receiving correspondence from colleagues and indeed to having meetings with them, so I welcome anything that the hon. Gentleman wants to put in writing to me and if it would be useful for us to meet subsequently I would be happy to do so.

It is important that licensing is properly targeted and not used as a substitute for existing strong powers. However, as the right hon. Member for East Ham will know, because he has asked parliamentary questions on this issue, we have announced that we will undertake a review of selective licensing more broadly. This review will start in due course and we are currently considering its scope.

In the specific case of the Newham application, as I have said, I hope to receive a recommendation from officials very shortly, and I promise the right hon. Gentleman that I will make a decision on it as quickly as possible.

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