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Lord Selsdon: I have listened to Members of the Committee opposite, both hereditary and non-hereditary, and I have listened to my noble friends on this side of the Committee. I have tried to sit back and view the matter dispassionately. But I believe that Members of the Committee are all looking backwards over their shoulders. We must be all agreed that we want more property to rent. We have forgotten the impact of inflation and the return that landlords look for. The Committee will know that many people have accommodation that they would have liked to have let, but were too frightened to do so because of the impossibility of being assured that they could get rid of a tenant when they needed the accommodation for their own family in the future. If we reject this particular clause it will effectively reduce the number of people who will want to let their houses or flats, or indeed invest their pensions or savings in rented accommodation. That will be the impact of rejecting this clause. I cannot understand why Members of the Committee opposite say that they want a larger

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availability of accommodation in the country at relatively fair and reasonable rents because rents are fairer and more reasonable now when inflation has gone and indexation no longer necessarily applies. The yield expected by an investor is perhaps only 5 per cent., which is not a large amount. I cannot agree with Members of the Committee opposite.

Baroness Fisher of Rednal: Further on in the Bill we shall be discussing the situation of people who have been declared homeless where the local authorities say that they cannot help very much in providing accommodation but that they can provide a list of properties which the prospective tenant should see and then negotiate the rent. That means that we might not be giving any help at all to homeless people, who will not understand all the rules and regulations of this Bill. They will be completely distraught that they are homeless and that the local authority cannot help. In those circumstances the shorthold tenancy may be a very precarious way of trying to help a family to get back into secure accommodation. What concerns me most is that that kind of accommodation will be offered to homeless people.

Lord Dubs: I hope that I have understood the Minister's arguments. He said that one must make the market for housing attractive for landlords so that more properties are brought forward. That is reasonable. He further said that over the past few years, since the 1988 Act, the Government have taken certain steps which have resulted in more properties being available for letting. That is fair and good. The Minister is now saying that that is not good enough and that the Government have to do something different. In that last step of the argument I was hoping that the Minister would put more of a case for this particular clause. We are not talking about the effect of deleting the clause because, after all, that will leave us with the status quo and the position that has been maintained for the past six to eight years when the number of properties available has increased.

We are talking about what difference this particular clause will make to that situation. We have not heard very much from the Minister to the effect that this change is necessary. I concede that in years gone by there was not enough property available and landlords were not making properties available in the numbers required, but that is water under the bridge. Changes have already taken place. I am looking for an argument as to why we need this further change.

Perhaps I may set that in context. I disagree with the noble Baroness when she says that there is plenty of choice. For people in our inner cities who are not well off there is very little housing choice. I know that from people who are looking for accommodation. It is very hard indeed to find tolerable accommodation unless one has a great deal of money. Of course, at the top end of the market there is plenty of property available, but for poorer people there is very little.

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Baroness Gardner of Parkes: The noble Lord is overlooking the housing benefit situation, which allows people to take accommodation at very high rents in some parts of London.

Lord Monson: Perhaps I may point out to the noble Lord, Lord Dubs, that the Business Expansion Scheme, which provided a good deal of housing to let at reasonable rents, has now been wound up. I suspect that that is one of the reasons for the changes proposed in this Bill.

Lord Dubs: I am not sure how much that scheme produced by way of accommodation, but that is not an argument that the Minister has used so far. It is not one that I have heard. I am simply commenting on the fact that some of the changes in the housing market that have been necessary over the past 10 to 20 years have had some beneficial results. But to my mind there is no need for this particular clause, or, if there is, a case has not been made out for it. Would the Minister like to elaborate on that?

5 p.m.

Lord Mackay of Ardbrecknish: First, perhaps I may go back to 1988. When we introduced assured shorthold tenancies it was felt by the Government at the time that many people might not be acquainted with the concept and therefore it was fair that the procedure should be that unless the landlord specifically entered into an assured shorthold tenancy the tenancy should be considered a full assured tenancy. As I have explained, we now have a situation in England where about 70 per cent. of new tenancies use the assured shorthold tenancy system.

I do not take the rather negative view put forward by the noble Baroness, Lady Fisher, about the ability of people to understand these things. By and large, people can understand matters which concern their daily lives and the questions they have to address. I am not a subscriber to the view that the great majority of the public are unable to look after themselves and that the paternalistic state has to look after them and watch every move they make. I believe people are able to make these decisions for themselves and, given the change over the past seven years, they are certainly well aware that shorthold tenancies now form the majority of the market. I do not agree with the noble Baroness.

I believe that my noble friend Lord Selsdon made the point absolutely clear. We are doing a great deal of looking back over our shoulders. We want to see the progress that we have made improved on and more property coming forward to be let. Now is the time to shift the problem around and to come at it from the opposite direction. If a landlord wants a full assured tenancy that is what he says. If he does not say that explicitly it is assumed to be an assured shorthold tenancy.

The noble Lord, Lord Monkswell, asked me to try to explain why we have a private rented housing market. Private rented housing serves many needs. Some landlords look on it as a long-term investment, as my noble friend Lord Selsdon mentioned. Other landlords

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may want to rent out a property because they have gone abroad for a year or two. I have had the privilege of being the tenant of another sort of landlord. That gentleman bought a house for his retirement, but he was not ready to retire and wanted to let it out for a couple of years. I was the lucky beneficiary of that decision. I can assure the Committee that that gentleman certainly did not want a full assured tenancy--and rightly so.

Therefore, different landlords approach matters from different angles and have different motivations. Just as a landlord may be interested in the short term or the long term, some tenants may want to be in the private rented sector for a long time while others are interested only in a short-term tenancy while, say, they are working away from their normal home or because they know that they are not going to settle in a certain town but need to live there for a while before moving on. Therefore, both landlords and tenants may want to use the private rented sector for a number of different reasons.

As I said earlier, the interesting point is that the average stay in an assured shorthold tenancy is greater than two years. It is actually about two-and-a-half years, so I would not like the Committee to get the impression, which seems to be being portrayed by the Benches opposite (but perhaps not deliberately), that such tenancies last for only six months and then come to an end, leaving the tenant to look for somewhere else. That is not true. Obviously, many wise landlords who rent out property as a long-term business interest will want to continue the tenancy of a good tenant, but they may prefer to do so on a shorthold basis so that if circumstances change they can have some certainty of regaining the property.

The noble Lord, Lord Dubs, asked whether I thought that there might be an increase in the number of houses coming forward for rent. I have with me a copy of a letter sent to my honourable friend Mr. David Curry, the Minister for Local Government, Housing and Urban Regeneration, from the Empty Homes Agency, which clearly states that that organisation welcomes the changes proposed in the Bill, adding:

    "Anything which helps to make private letting simpler and more certain has our support. In particular, it seems to us to be crucial to the expansion of private letting that small Landlords can be certain that they will not give Tenants security of tenure by mistake".
That is a point that I made earlier. We believe that this clause removes that danger and makes it quite clear that if a landlord and a tenant want to have a full assured tenancy they enter into that form of tenancy.

As I said earlier, we encourage tenants and landlords to have written agreements about the tenancy. However, if there is no such written agreement--if the agreement is verbal--it is assumed to be an assured shorthold tenancy. Although we think that that is wise, I fear that I may not have persuaded the noble Lord, Lord Dubs, of that. However, I believe that that is the right way to improve the supply of houses in the private rented sector.

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