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The Deputy Speaker: My Lords, I must advise the House that if the following amendment is agreed to I cannot call Amendment No. 130.

Lord Dubs moved Amendment No. 129:


Page 70, line 38, leave out subsections (2) and (3) and insert--
("(2) In subsection (1) after "may" insert "at any time during the original tenancy or any replacement tenancy until such time as the landlord serves a notice under section 13(2)".").

The noble Lord said: My Lords, the above amendment also stands in the name of my noble friend Lord Strabolgi. While moving it, I should like to speak also to Amendment No. 130. The amendment's purpose is to give shorthold tenants a longer period during which they may apply to a rent assessment committee for a determination of rent. At present, they are constrained as regards the period during which they may apply. There may be many good reasons why they have not been able to apply as quickly as the Bill as drafted suggests they should--indeed, good reasons why a longer period would be better and more appropriate for a shorthold tenant to apply to a rent assessment committee.

If the situation as suggested by the amendment were to be the case, there would be a number of advantages. Some landlords charge rents which are significantly higher than market rents. Clearly it is right and proper that their tenants should be able to go to a rent assessment committee and have that rectified. Indeed, the existence of such a provision as outlined in the amendment would, I hope, encourage landlords to negotiate rent reductions with their tenants where appropriate.

The provision would provide a link between rents charged and accommodation standards, thereby providing an incentive for landlords to improve the quality of their lettings. It would discourage the distortion of the market by excessive rents being charged to housing benefit claimants and, therefore, reduce public expenditure on housing benefit. It would also reduce the number of cases where there is a gap between the rent being charged and the housing benefit paid; and, indeed, would reduce the number of possessions for rent arrears.

It has been estimated, based on current levels of rent restrictions, that there would be a saving in housing benefit of some £20 million if shorthold tenants were encouraged to apply to a rent assessment committee. Anything which prevents them from easy access to such a committee does, I suggest, lead to higher levels of

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housing benefit being paid. Therefore, there would be some compensating savings if such a provision were introduced.

Perhaps I may just reinforce that point by giving the House a few examples of situations where a six-month limit--that is the intended period under the Bill's provisions--is simply not enough. There may, for example, be a tenant who has a reasonable income and who is perhaps not aware--or, indeed, not too worried--that his rent may be excessive. However, that tenant subsequently becomes unemployed and needs to claim housing benefit. However, at that point it may be too late for him to appeal against the level of the rent.

Tenants whose housing benefit has been restricted will appeal to a housing benefit review board. Only if their appeal is not upheld will they then apply to a rent assessment committee. An HBRB frequently takes more than six months to arrive at a decision. Therefore, during that period the tenant has lost the opportunity of going to a rent assessment committee.

Further, tenants may move to an area previously unknown to them--perhaps in the process of looking for a job--with no knowledge of local rent levels. When one has moved into a new area, it can take some time to discover just what the local rent level might be. Clearly, for a newcomer to an area, six months is an unreasonably short time within which to discover local rent levels. Indeed, I put it to the Minister, it is very hard even in parts of London to discover the going rent. Such rents vary. Of course, one can consult various publications and magazines which advertise lettings and visit estate agents but it is quite difficult to find out what rent levels apply, especially if one moves to a different part of the country. As I said, it can take some time for a person to ascertain that information.

The amendment would bring another advantage; namely, that rent assessment committees can look into such matters in a wider sense than a rent officer, who would in the first instance deal with such applications. In the vast majority of cases, my understanding is that the rent officer has little scope to look into the quality of individual lettings. He works on the basis of local reference rents, rather than on a detailed assessment of the quality of any particular accommodation. Consequently, poor quality, sub-standard or even dangerous accommodation attracts as much rent as better quality lettings, and there is no incentive for landlords to bring their properties up to an acceptable standard. By contrast, rent assessment committees will, when asked to look into these matters, invite detailed submissions by landlords and tenants about the merits of particular properties and they may carry out their own inspections before determining the rent.

Landlords providing sub-standard lettings would therefore be penalised through the informed decision of a rent assessment committee. There would be advantages in that. This is an important point. It was raised at the Committee stage and the Government made a number of points to rebut the thrust of the arguments that were then put. Of course the Government want a healthy private rented sector. I do not believe that the amendment would damage that concept. It would not

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prevent landlords continuing to earn a reasonable return by charging a reasonable market rent. The amendment would only help tenants to curb those landlords who obtain unreasonably high returns by charging a rent which is significantly higher than a reasonable rent for a particular property.

At the Committee stage the Government said that referral to a rent assessment committee is a little used practice for determining rents. I believe they referred to a figure of under 1 per cent. of assured tenancies. However, given that rent assessment committees can play a valuable role, it surely is not an argument to make referral to them more difficult. Surely we should make it easier. In some inner city areas housing benefit claimants represent over 80 per cent. of all assured tenants. Without the independent rent assessment committee determinations, by which the rent officer may still be guided, the rent officer becomes to all intents and purposes a setter of the market as all comparable rents he may consider may be his own assessments for housing benefit purposes. That could lead to higher rents than would be seen in a true market.

The Government said they thought it unlikely that a landlord would be able to obtain a rent above the market rent from a new tenant. I suggest that that does not follow. How is it that rents charged to new tenants who claim housing benefit are restricted in over 40 per cent. of all cases? That seems to me to suggest that landlords sometimes try to obtain higher rents than are appropriate, even where there are safeguards in place. At the Committee stage the Government further stated that tenants would have an opportunity to negotiate with a landlord as to the level of rent for any replacement tenancy. The fact is that a tenant has little bargaining power when he has no security. I do not think it is proper, and it does not make sense, to restrict the time period during which a tenant can approach a rent assessment committee.

I wish to speak briefly to Amendment No. 130. That would give an additional six months' security when an initial tenancy is continued. Essentially, when a six-month tenancy expires, if the tenancy continues, a new six-month shorthold will in effect be created. I suspect I know what the Government will say to that. However, I rest my case mostly on the arguments that were made to Amendment No. 129. I beg to move.

4.45 p.m.

Lord Strabolgi: My Lords, I support what my noble friend Lord Dubs said. Obviously, the fewer lettings at rents significantly higher than market levels the fewer tenants there will be who accrue rent arrears, either through housing benefit restriction or other reasons. That will surely reduce the number of possession actions on rent arrears with a consequent reduction in homelessness.

Despite all the rule changes for the assessment of housing benefit, and the role of the rent officer in the process, in the vast majority of cases there is no scope for the quality of individual lettings to be taken into account, as my noble friend Lord Dubs said. Decisions on local reference rents--what is reasonable and what

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is suitable--are all based on generalities. They are rarely based on any detailed consideration of quality. Consequently, poor quality, sub-standard and even dangerous accommodation attracts as much rent as better quality lettings and there is no incentive for landlords to bring their properties up to an acceptable standard. The Government have often said they wish to sustain a healthy private rented sector. They believe that deregulation has allowed landlords to earn a reasonable return on their investment. The amendment does not prevent landlords continuing to earn a reasonable return by charging a reasonable market rent. It seeks only to curb those landlords who obtain unreasonably high returns by charging a rent which is significantly higher than a reasonable rent.

The Government claim that the rent assessment committees are little used for the determination of market rents. According to some survey--I do not know how valid it is--the figure is less than 1 per cent of assured tenancies. But, given the valuable role the RAC can play, that is surely an argument for making referral easier and not more difficult. The Government believe that tenants have the opportunity to negotiate with a landlord the new rent for any replacement tenancy. What bargaining power does the tenant with no security of tenure have if he or she wishes to remain in his or her home? This is the real world. It is naive, I think, to suggest that they are equal partners. That is not so at all. I support the amendment.


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