Renters' Rights Bill (First sitting)
Tuesday 22nd October 2024
(2 months ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 October 2024 - (22 Oct 2024)
The Chair
I welcome everyone to the first sitting of the Renters’ Rights Bill Committee. We will discuss some procedural matters first. We are now sitting in public and being broadcast. I have a few reminders for Members. Hansard asks you to email your speaking notes please, particularly if you speak according to them—that is even more helpful. Please make sure that electronic devices are on silent. Tea and coffee are not allowed in proceedings; please ensure that all evidence of them is removed from the tables. Date Time Witness Tuesday 22 October Until no later than 10.00 am The National Residential Landlords Association; The Lettings Industry Council Until no later than 10.30 am Shelter; Citizens Advice Until no later than 11.00 am The Renters’ Reform Coalition; Generation Rent Until no later than 11.25 am The Housing Ombudsman Service Until no later than 2.40 pm Justin Bates KC; Giles Peaker; Liz Davies KC Until no later than 3.00 pm The Country Land and Business Association Until no later than 3.20 pm Indigo House Group Until no later than 3.40 pm Unipol Until no later than 4.20 pm The British Property Federation; The National Housing Federation; Propertymark Until no later than 4.50 pm The Local government Association; The Chartered Institute of Environmental Health Until no later than 5.10 pm ACORN Until no later than 5.30 pm The Ministry of Housing, Communities and Local Government
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 22 October) meet—
(a) at 2.00 pm on Tuesday 22 October;
(b) at 9.25 am and 2.00 pm on Tuesday 29 October;
(c) at 11.30 am and 2.00 pm on Thursday 31 October;
(d) at 9.25 am and 2.00 pm on Tuesday 5 November;
(e) at 9.25 am and 2.00 pm on Tuesday 12 November;
(f) at 11.30 am and 2.00 pm on Thursday 14 November;
(g) at 9.25 am and 2.00 pm on Tuesday 19 November;
(h) at 11.30 am and 2.00 pm on Thursday 21 November;
(i) at 9.25 am and 2.00 pm on Tuesday 26 November;
(j) at 11.30 am and 2.00 pm on Thursday 28 November.
2. the Committee shall hear oral evidence in accordance with the following Table:
3. proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 4; Schedule 1; Clauses 5 to 28; Schedule 2; Clauses 29 to 71; Schedule 3; Clauses 72 to 98; Schedule 4; Clause 99; Schedule 5; Clauses 100 to 143; Schedule 6; Clauses 144 to 146; new Clauses; new Schedules; remaining proceedings on the Bill;
4. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 28 November. —(Matthew Pennycook.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Matthew Pennycook.)
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Matthew Pennycook.)
The Chair
We now have to sit in private simply to discuss the arrangements for this morning—nothing more—and we will then shortly be back in public with our witnesses.
The Chair
We are now sitting in public and will move on to declarations of interest. I am a vice-president of the Local Government Association.
Jerome Mayhew (Broadland and Fakenham) (Con)
I declare an interest as a private landlord.
Mr Gideon Amos (Taunton and Wellington) (LD)
I am a landlord but only of registered social housing.
Carla Denyer (Bristol Central) (Green)
I am a member of the Acorn community union, which is giving evidence today.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
I am a vice-president of the Local Government Association and my husband works for an organisation that has funded the Renters’ Reform Coalition.
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
I used to work at Shelter, which is giving evidence today.
Lola McEvoy (Darlington) (Lab)
My husband works for Shelter, which is giving evidence today.
The Chair
I welcome both our witnesses to our session to answer questions following their evidence to the Committee on the Renters’ Rights Bill. Please introduce yourself briefly. Members will then ask questions about your evidence.
Ben Beadle: I am Ben Beadle, the chief executive of the National Residential Landlords Association. We have 110,000 members, who provide for nearly a million homes in the private rented sector.
Theresa Wallace: My name is Theresa Wallace and I am chair of the Lettings Industry Council. I think it is the only group that is made up of stakeholders across the property redress scheme, including tenant groups, landlord groups, professional bodies, government bodies and agents large and small.
Jerome Mayhew
Q
Theresa Wallace: I think the Bill has the best intentions, and we support a lot of its changes. However, I believe that as it is currently written there will be unintended consequences, one of which would be more homelessness. It needs some changes. We know that section 21 is going, but we have to accept that it will not solve the issues in the PRS. We have—the English housing survey has quoted this—more than one million tenants in the PRS in receipt of benefit for housing. The majority of those should really be in social housing. If we had those social homes, we would not have the current supply/demand pressures and rent pressures, and we would not have properties lower down in the market that are unfit for purpose and damp and that should not be there in the first place.
One of our problems is that a lot of the Bill will help tenants—renters—once they are in a property, but we have to stop those properties that are not fit for purpose being rented in the first place. I heard a story last week about a lady who is renting further up the country. She is paying £500 a month for a two-bedroom cottage. On the market, it would be worth £750 a month, so she is saving £250. Her property has damp and mould, which she will not be reporting to anybody because that is all she can afford to pay and she has nowhere else to go.
Jerome Mayhew
Q
Theresa Wallace: There are various reasons. We need the private landlord at the moment, no matter what his property is like—a lot of them are in very good condition. Private landlords are very scared about this Bill and a lot of them are exiting. I know some of you might think that there are other places those properties can go, but we need them in the PRS—the tenants need them. We want to keep those landlords. We have institutional investment, but that is a very small percentage—I think it is 2% or 3%—for build-to-rent. Unfortunately, the build-to-rent model does not work financially in the places we need those properties, because of the way their financial model works and margins.
Jerome Mayhew
Q
Theresa Wallace: There is evidence out there. With my agent’s hat on, I can say that we have evidence in the amount of landlords we have lost and the number of people looking at properties compared with before. I gather we have a 12% increase in properties on the market now, which is the highest since 2014, per agent.
Jerome Mayhew
Q
Theresa Wallace: Demand is up and supply is down, so that obviously does have an effect. It is not just an effect on rent: it is also an effect on the tenants who can secure the properties in the first place. The Bill is there help the people who are struggling, and in some places those are the people who will be penalised.
Jerome Mayhew
Q
Ben Beadle: With pleasure. We are largely supportive of many features in the Bill. There is a lot to be welcomed, and the Minister should take great credit for bringing in these reforms so quickly. One thing the industry has suffered with is the hokey-cokey politics of when we will see the abolition of section 21. Our position has been very clear: we do not oppose the abolition of section 21, providing the alternative is workable and fair, but there are two elements that do not quite strike the balance.
The first element is court reform and the need for landlords to have confidence in it. I appreciate that others might have viewed this as a delaying tactic in the past, but the reality is that we are waiting seven months on average to get possession of our homes, and that is for a fast-track situation with almost no proof needed. When we move to a section 8 ground, that will require more resource and more scrutiny, quite rightly, but without investment in the court system we will not deliver what either renters or landlords need.
In a survey of over 1,400 of our members, 60% of landlords said they were less confident or not at all confident that they will remain a landlord without suitable court reform. That declines to 37% if suitable court reforms are enacted. Our argument has always been that this is about confidence, striking the balance and giving support to responsible landlords, as well as delivering for renters.
The other area we have seen is that landlords will be provided with robust grounds for repossession; I may have missed them, but I do not see the doubling of notice for serious rent arrears or increasing the rent arrears threshold from two to three months as sending the right message or as fair and proportionate. Those tenancies will largely fail, whether it is two months, three months or six months, quite frankly.
What we want to do is avoid rent arrears building in the first place, so we are supportive of something like a pre-action protocol where responsible landlords can help to signpost tenants to manage their arrears. We did that during the pandemic. I worry that not addressing that point will send the wrong message. We have an average of 21 people chasing every home, so whatever nip and tuck we make around here, whether landlords are leaving or not, that is only going to worsen as confidence decreases.
Jerome Mayhew
Q
Ben Beadle: If you consider yourself an accidental amateur landlord, that is arguably part of the problem —I do not think we can have amateur landlords. Having a lettings business is a business. Whether you have one or 10 properties, you need to do it properly, and we try to support all our members with that.
We have been tracking sentiment in the sector for the last 12 years, across our membership, and it is at a record low. Only about 10% of our members are looking at actively investing in the sector, and about a third are looking at disposing of one of their properties or exiting the sector completely. I appreciate that that is sentiment rather than actuals, but we also have to point to the fact that we are seeing such a significant number of section 21s being used where a landlord is selling, and that still has not percolated through to some of the statistics. An average of 21 people applying for a rental property is not going to get better.
The Minister for Housing and Planning (Matthew Pennycook)
Q
You mentioned investment, and I wanted to press you on precisely the type of improvements you want to see. You know that, together with colleagues in the Ministry of Justice, we are already taking forward improvements towards digitising the court possession process. What are the metrics you want to see in that process as improvements? On the understanding that —I think you will accept this—not every section 21 notice will read across to a section 8, so there will potentially be a bit of an increase, what do we need to see on the section 8 side and the tribunal side to ensure that the system is fit for purpose at the point that we switch it on?
Ben Beadle: I have a couple of things to say on this, Minister. I agree that court reform has been almost like the Colonel’s secret recipe—nobody quite knows what is in it or what it looks like. It is incumbent on us to define what “the courts are ready” means in practice. For us, there are two or three areas that could be improved. First, we are getting many reports of applications that are made to the court actually running out of time because they have not been processed in time. You have the admin part of the sausage factory at the beginning, because it is not so much about the number of judges. I sit as a magistrate and I often sit around waiting for cases to come to me and to be input into the new common platform. There are delays built into the administrative process that cause frustration.
The other issue we have seen is the wait for a bailiff. Once you have patiently waited for your court hearing date and you have possession, that will be what it will be, but waiting for a bailiff can take months in some areas. Sometimes there are really poor excuses—earlier this year, we saw the stab-proof vests not being available. If it is a high-risk area, you need somebody waiting out in the car and somebody on the door. London is predominantly a high-risk area, which is why we see such slow eviction timescales.
Personally, we want to prevent evictions. Landlords do not go around evicting tenants willy-nilly, but when they have a legitimate case, we do expect it to be dealt with expediently. To me, court reform looks like sifting the cases more appropriately and more speedily; digitising that process so you see the ping and the pong of the evidence going backwards and forwards; and, when you get possession, an automatic link to the bailiff, rather than having to reapply. Those are three tangible things. Ultimately, though, it is seven months at the moment, and it needs to be lower.
Matthew Pennycook
Your point about sifting is well made. We want to see only cases that require a judgment coming to court.
Ben Beadle: Indeed.
Matthew Pennycook
Q
Ben Beadle: One of the things with section 21 is that you have an accelerated process because it is a matter of fact—if you have served all your relevant documents, it is “Tick, tick, tick. Away you go.” I think there is some merit in using that system for undisputed or very hard cases of mandatory grounds, such as where you have significant rent arrears and, although the landlord has tried, there is no chance of recovering that tenancy—hopefully the landlord has followed our pre-action protocol to signpost tenants where they need to go. There are some elements of the system that could be reused.
The other part is away from the court system and into the first-tier tribunal. We have had extensive discussions with the first-tier tribunal. Not many people challenge their rents at the moment; I think we all accept that. We want tenants to be able to challenge their rent, particularly if it is unfair or subject to a significant increase. But the way the Bill is constructed means there is no barrier, or no disincentive, to challenging your rent, and I do not think it quite strikes the balance. First, the tribunal can only award or downgrade the rent so, as a tenant, I have nothing to lose. Secondly, with the way the implementation is being put across, you run the risk of a real deluge on a system that is, frankly, antiquated—you have to fill out a Word document and email it to all parties.
Matthew Pennycook
Q
Ben Beadle: But that rent will not be applied until the date of the hearing, as I understand it, so although I understand the counter-argument, Minister, the point is that you could actually challenge a rent increase. You serve your two months’ notice; you challenge it; you wait for the tribunal to deal with it; you have your hearing cleared; and the landlord either gets it or the amount gets lowered, but that money is then not backdated.
Matthew Pennycook
Q
Ben Beadle: No, no—well, I take issue with it, in that it is not fair and it is not proportionate in the circumstances, and it will do nothing to help on court reform. That is why we have set out a managed implementation for these things. I totally get your point that it was held hostage previously, but there are some really fundamental points around the court system being on its knees, and I think there is a way of implementing regulations so that that is mitigated. The first-tier tribunal is a classic example of where you could make some nips and tucks to what is set out, to protect the first-tier tribunal from a steep rise in cases because it will not be able to cope.
Matthew Pennycook
Q
I have one last general question, which maybe you could come in on, Theresa. There are broad framework powers in the Bill for both the database and the ombudsman. The database will be critical for landlords in understanding their obligations and demonstrating compliance, and the ombudsman will potentially provide routes to landlord-initiated mediation. As we come to flesh out the detail in secondary legislation, what do you want the database and the ombudsman to do? What is the most critical thing, from a landlord point of view?
Theresa Wallace: I am very supportive of both, and I think we definitely need both. My fear is that the database could end up just being a landlord database, with the landlord’s name, the property details and the address, so that the local authorities know where those landlords are. That is part of it—I completely accept that—but I think that we have a huge opportunity with this landlord database, and so much could be done with it. We really could reach a situation where we could stop properties that are not fit for purpose being let, if the database is built with that end in mind and we can digitally upload certificates. I think that we absolutely need central registers for gas and electric, and we need one standard certificate for each so that they can easily be read digitally to see whether they are in date, whether there are any code 1s and all sorts of things. I think that that would be amazing, but I actually think that we should go a step further.
A long time ago, the Lettings Industry Council came up with a model of a property MOT. Think about how you MOT your car, and it is checked in the background that you have got your tax and your insurance. We could do that with properties. We could have very easy and simple pre-let checks, so that a property is viewed visually. You have energy performance certificate providers that go and do their EPC checks, and you could easily have online or face-to-face training for providers to do a visual check so that you can see if you have damp and mould, slips and trips or other things. I think that it could be done very cost-effectively, and I think that the portal would pay for itself as well as providing local authorities with some income for enforcement. Enforcement is something that we absolutely need, and I know there is not the resource for it.
The Chair
Three other Members are indicating that they want to come in. If we bear that in mind, with the time, we can get everybody in.
Carla Denyer
Q
Theresa Wallace: It is a good question. I think that the demand is what has the effect on rents. I really believe that if we had those million social homes—I know we cannot get them overnight, but we should have a long-term strategy working towards that—you would have no pressures on rents because you would not have this imbalance in the demand and the supply, so rents would not be where they are.
Ben Beadle: Yes is the straightforward answer, for me. The rents that we have seen increased by 8.4% in the year to September. That is high by any measure, and I think, as Theresa says, it is entirely down to a lack of social housing and a lack of new stock coming to the market. It cannot be normal that you get 21 people applying to rent a property. I know the Bill deals with advance rent. As a landlord, I never ask for advance rent, but I get people saying, “I will give you 12 months’ rent up front,” before they have even seen the property. I think this mad market is not normal, and obviously it will not be resolved by this Bill. I say that because—though there are a lot of really good things in it, such as the database and the ombudsman, which we are very supportive of—it tinkers around the edges of the fundamental issue here, which is supply.
I know the Government will address social housing and right to buy, and all those things, and they are absolutely right to do so. At the same time, we do need a vibrant private rented sector. We need that vibrant private rented sector now while we work out what to do with social homes, because there is a massive lead time. What I see at the moment is everybody harking back to the wonders of the ’70s, of social housing and council housing, and looking at that as a really great thing, but we see horrible stories of local authority properties in serious disrepair. We have lower satisfaction in the social sector than we do in the private rented sector. At the same time, we are focusing on making life really difficult for responsible landlords who have good quality accommodation to bring to market. We do not want to dissuade those people from bringing it to the market; we want to encourage them. I think the sequence of this needs to be that the Bill must deliver for responsible landlords and renters, and give them security, but it must also address some fundamental issues about supply.
Rachel Blake
Q
Theresa Wallace: At the moment, a very small percentage of landlords actually terminate tenancies and serve section 21 notices. The majority of those landlords are selling, want to move back in or have rent arrears. It all comes down to our lack of supply, and losing more landlords from the sector. I think we will lose more landlords, and we are losing them at the moment—not just because of this Bill, I have to stress; they are leaving for all sorts of reasons. It might be retirement, or it might be the high interest rates that are affecting them. I do not think it is just the Bill, but our biggest issue is landlords leaving the sector when we do not have enough properties for renters.
Rachel Blake
Q
Theresa Wallace: I think there is that, and there is also the matter of introducing this Bill on one date. I think that will cause more homelessness because landlords are panicking, so they will serve their section 21s while they can, to get possession of their properties, and they will come out of the market.
If, rather like with the Tenant Fees Act 2019, all new tenancies had to comply and existing tenancies had 12 months to do so, or until the end of their fixed term—that might be sooner—when the Bill came in and landlords saw it working in practice, they might see that things were not as bad as they had feared. Although I understand the reasons behind not wanting two levels, I think that doing it all on one day will have a knock-on effect for tenants. There are tenants who have long-term rents for two or three years, but once this Bill comes in, if they have already had their 12 months, they could suddenly find they have four months’ notice coming their way because their landlord has decided they want to sell or move back in. I do not think we are giving tenants the protection that they thought they had when they secured their tenancy.
Mr Amos
Q
Theresa Wallace: Often a tenant has put their children into school, and they do not want to have to move within two, three or four years. It might be a fixed-term job contract for two years, or it might be caring for elderly parents—whatever the reason, it is often the tenants that are asking us for fixed terms. It is not us saying, “You have got to take a fixed term.” If they want a fixed term, we understand the need for flexibility, because circumstances can change, so let them still have their two months’ notice. We would prefer to see minimum terms of four months, but that is not for landlords; that is to stop properties going over to the short-let sector.
I spoke to an agent last year who does short lets as part of their business model, and the average short let was 91 days. I can see we are going to lose properties to short lets; they are going to be paying for long-term rentals at short-let prices. I see that as being an issue.
If a landlord is happy to commit to two years and say, “Look, I don’t want to sell and I don’t want to move back in; I can guarantee you two years,” but the tenant still has their notice period for their flexibility, I do not understand why that is not allowed, because that is in the tenant’s best interest. Now, the landlord can say, “I am not going to sell my property. I don’t need to move back into it. You can have two years on a rolling contract,” and he then might change his mind nine months down the line, and there is nothing to stop that.
Ben Beadle: I wonder whether I can comment from a student perspective, which has not been picked up by the Committee yet. One of the areas that we are very worried about is the cyclical nature of the student housing market. I operate in Uxbridge near Brunel University. As Mr Simmonds well knows, tenants coming in want to have the security that the property is going to be available.
Where I do not think the Bill quite strikes the right balance is that I think it needs to maintain the moratorium period that was brought in under the previous Bill, because that did three things. First, it protected set-up costs for landlords. It costs a lot of money to set up a tenancy. I do not think we are going to see a huge change in behaviour in terms of churn, but I am sure we will see some behaviour change where tenants can give two months’ notice. Having a minimum six-month period—four months plus two—is sensible for that. Secondly, it is sensible from the point of view of not turning the private rented sector into Airbnb via the back door. Nobody wants that. Thirdly, it goes some way to protect the student cycle, which is in the interests of both landlords and tenants.
The Chair
For the very last question—a short question and short answer—I call David Simmonds.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Q
Ben Beadle: Yes. Straightforwardly, yes it is. Landlords will have to act differently under section 13. I would encourage landlords to speak with their tenants. No one wants to get a section 13 notice through their door as a surprise, so landlords do need to have some soft skills about them and have a sensible chat with their tenants, but yes is the straightforward answer.
The Chair
We have to bring things to a close now as the next witnesses are due in. I thank both our witnesses very much for coming and giving evidence this morning.
Examination of Witnesses
Tarun Bhakta and Tom MacInnes gave evidence.
The Chair
Good morning to both our new witnesses. Could you begin by introducing yourselves? Then I will go to Members to ask questions.
Tom MacInnes: Good morning. My name is Tom MacInnes. I am the director of policy at Citizens Advice.
Tarun Bhakta: My name is Tarun Bhakta. I am policy manager at Shelter.
David Simmonds
Q
Tarun Bhakta: First, I would like to thank the Committee for inviting us to give evidence today. To answer your question on how the Bill is different, there are significant changes from the previous version of the Bill. In our view, the previous version was of good intention, but full of aspects that would undermine its core purpose, particularly as the Bill moved forward and changes were introduced, for example to essentially remove periodic tenancies or reintroduce fixed-term tenancies—that minimum period for tenants.
Similarly, there were policies with a lot of shortcomings —ideas such as the no re-letting period after landlords evict a tenant. We have seen in Scotland that one in five landlord sale evictions have not ended up in sale, so there is evidence of abuse in the system. It is really important that there are measures to deter landlords from abusing the new section 8 system, and to catch landlords who are dishonestly evicting tenants. The previous Bill included only a three-month no re-letting period, which would have been much too small a deterrent for landlords seeking to abuse the eviction grounds and evict tenants dishonestly. We are really pleased to see changes in this Bill that go significantly further, such as the 12-month no re-letting period.
There were measures in the previous Bill that we would call half-baked, particularly when it came to notice periods. We know that the most common type of eviction in the new system will be for landlord sale or for landlords moving in. The previous version of the Bill included just two months’ notice, which would have retained and recreated many of the problems that we see in our current private rented sector, where tenants are faced with short notice and unreasoned evictions. We think many of those are avoidable, but we also know that that short notice is not long enough for renters to find a new place to live. There are really positive changes in this Bill in comparison with the previous version. We think it will go a very long way to addressing the needs, but given that we are so early in the Parliament —we welcome the speed at which the Bill is being implemented—it is still important to view this Bill as a work in progress.
In our evidence today, we will pick out two key areas. First, we think the Bill can go further in chapter 3—the discrimination clauses—on improving access to rented homes. Secondly, we think the Government need to take another look at rent increases. Looking at the evidence from tribunal cases, we do not think the current approach in the Bill—to tweak the work of the tribunal, as discussed in the previous panel—will achieve its aim of preventing evictions by the back door, or economic evictions, as they have been called. We think that the evidence that we have heard today on the tribunal today shows that we need to go further there.
Tom MacInnes: We would agree with quite a lot of that. The Bill does improve the position for renters. We agree with the changes around re-letting, but we would say that that is probably only as strong as the enforcement, so we would be interested in looking at that further. We also welcome the longer notice period and the stronger rules on discrimination against families and those receiving benefits. Those are definitely things that we think are improvements.
We may come on to this, but there are other areas in which we might be looking for a couple of improvements. In particular, there was some discussion earlier around the portal and the use of the portal. We think that it could be used for better establishing what the market rent was in an area. If you are talking about in-tenancy rent rises, is that possibly a place where you could agree what actual rents were, rather than past rents? There could be something useful there, but broadly speaking it is a step in the right direction.
David Simmonds
Q
Tarun Bhakta: Yes, I think so. I think you might be referring to talking about the evidence requirements on eviction grounds.
David Simmonds
indicated assent.
Tarun Bhakta: It has long been our call that the Bill should specify and set a higher threshold and make that clear, particularly for the landlord sale and the landlord moving in eviction grounds. We also think that the Bill should introduce a post-eviction proceeding.
There are two really important parts to establishing that clarity in the Bill. First, tenants and landlords need absolute clarity about what constitutes a legitimate eviction. We see through our legal services that the decision on whether to challenge an eviction notice in court is an incredibly complex and difficult one for tenants to make. The process of going through the courts to challenge an eviction is time-consuming, costly and very stressful for tenants, so it is about setting out that clarity, particularly in those landlord sale and landlord moving in eviction grounds. Making that threshold clear would provide clarity for tenants to help to make that decision. We believe that that would also have the effect of supporting tenants to understand where an eviction is legitimate and prevent some of those cases from making it to court.
Secondly, the current wording in the Bill is very open. It goes further in Scotland, in our view, and although it is all very well being confident in setting guidance for the courts and hoping that the judges make the right decision in court, tenants need that clarity before we reach the court stage. Also, judges do need some steer; we see some inconsistency in cases between judges, and it is not the case that they will all interpret the law in exactly the same way, so setting that clarity in the legislation is important. We cannot have a situation in which the landlord states that they intend to sell the property and that is case closed: we need more clarity than that.
Matthew Pennycook
Q
Tarun Bhakta: It is difficult to set that to one side, so you will forgive me if I do not.
Matthew Pennycook
Q
Tarun Bhakta: First, we believe that the Government need to look at the proportions by which rents are increased. Currently, the tribunal is able to access only the eventual rent, whether or not that is a market rent, so in effect it works with a ceiling, rather than looking at the proportions of rent increases. This is really important, because through the tribunal and our services outside the tribunal we see very large proportional rent increases. This is what matters to tenants: they cannot afford large proportional increases in their rent because of that shock, particularly where they are on fixed incomes and receive housing benefit or pensions.
The data at the tribunal is really telling. The average size of a rent increase permitted by the tribunal in the last hundred cases was 23%. The majority of renters tell us that they could not afford a rent increase of more than 10%, yet two thirds of cases in the last 100 cases in the tribunal ended with a rent increase for a tenant of 10% or more.
Matthew Pennycook
Q
Tarun Bhakta: That is exactly right, and 16 of the 100 cases we looked at saw an eventual rent increase of more than 40%. We know, both through our services and through our research, that that is not manageable for tenants. That is the kind of rent increase that pushes tenants out of their homes or into debt. The problem is using a ceiling of market rent to judge the eventual rent increase.
Setting limits on proportional rent increases is commonplace across Europe. I know the Government have said they will not introduce any measure of rent controls, but it is quite unhelpful to lump all rent controls together when there is such a range. Rent controls is not a policy, but a category of policies. It is common across Europe to limit the proportion by which rent can increase during tenancies. The purpose of that is not to bring down rent or tackle affordability in any major way, but to protect people from those disproportionate rent increases that force them out of their homes.
In the tribunal there is evidence of landlords, where they are not able to secure section 21 eviction for whatever reason, turning to rent increases. There are at least four cases in that 100—this is only where the tribunal have provided background notes, which is not very common—where a landlord has clearly sought to evict the tenant and has not been able to, so has turned to a very large rent increase, and all the tribunal has been able to do is permit a large rent increase. In many of those cases we assume the tenants will have had to leave the property.
Matthew Pennycook
Q
You heard the concerns from the previous witnesses about how that would operate and the unfairness of that. With your experience, how would you say the new system would operate? We have been very clear that we want more tenants to take challenges to tribunal, though we do not want the tribunal overwhelmed. What would you say to the charge that the decision the Government have made, to put the point of payment when the tribunal makes its determination, will see a flood of cases come in and all advice groups will tell tenants to take every single rent increase to tribunal?
Tarun Bhakta: We are often accused of plotting to tell everyone to take things to court. We do not think that would be the case. As you say, we want more tenants to be able to challenge their rent increase at tribunal because, particularly in the last couple of years, we have seen extremely large rent increases for tenants during tenancies. The reason we do not think there will be a flood of cases to the tribunal and the reason we would not advise tenants to do that is that, if you look at this evidence, there is very little that the tribunal is able to do at present to address those large rent increases. We would not advise tenants to simply delay the inevitable, because, looking at the data, a large rent increase is somewhat inevitable—it might not be the exact rent increase the landlord asked for in the section 13 notice, but there is strong evidence that the tribunal will permit a very large rent increase.
Matthew Pennycook
Q
Tarun Bhakta: Yes, absolutely. Before I talk about what the process looks like for tenants, which Tom can maybe add to, we need to understand that, for tenants who do not interact with courts or tribunals or anything like that in their daily lives, going through one of these processes, whether we know it to be arduous or not, sounds and feels scary to tenants. That is really important to understand. The vast majority of tenants do not want to go through these processes. It is not fun—it never has been fun—but there is also the fear of what might happen and of how it might damage the relationship with the landlord. All those things weigh heavy on tenants’ minds. That is a really important factor to consider. The proposals that we have for limiting rent increases would, in effect, do away with the need for tribunal decisions, but for a very rare and small amount of cases.
When it comes to the actual process of tribunal, there is such poor data out there about rents in the wider sector that it is very difficult for tenants to gather that evidence. It is somewhat on them; it is also on the landlord, but it is somewhat on them to gather and provide that evidence. The tribunal will do some of that work, but tenants are expected to, or generally do, provide evidence at the start.
Tom MacInnes: From our perspective, it is basically exactly that: people do not have the time or, really, the capacity to take these things to tribunal, and they often decide that it is not worth it.
To the point about the data available out there about what a reasonable or market rent is, there are so many different sources. Even at an Office for National Statistics level, there is not complete agreement. We really welcome the end to bidding wars, for instance, for new tenancies, but our concern is that an unintended consequence might be that a landlord would put in a very high price to start with and then bring it down, and it is that high price that gets logged and sets the market rate.
For us, the role of the portal is to establish what the actual rents are—a basis that everyone can proceed on together, rather than it being some debated fact. There is a real role there for making that stuff public and known. Then you get two well-informed sides of an argument.
Matthew Pennycook
Q
Tom MacInnes: I do not know whether it is about expertise, but it is simply an observation of what always happens—it tends to end up on the high side. What the rates are is just so contested.
The Chair
Quite a number of Members want to come in, so it would be helpful to have quick questions and answers.
Carla Denyer
Q
We all know that rents have been increasing out of proportion to incomes over the last few years, creating this growing gap where one or, at this rate, two generations of people risk never being able to afford to get out of the private rented sector. I am really worried about that, especially as that group ages. Do you think the Bill does enough to address the issue of affordability of rents and the long-term and growing problem of those generations of people, moving into old age, permanently trapped in the private rented sector?
Tom MacInnes: We will not go back to the bit about rent rises, but we will talk about some other aspects. The thing that concerns us is asking for enormous amounts of rent up front, so what we want is to have that limited to a month’s rent up front. There are also other issues around guarantors and asking for guarantors, in the next stage along the process. We think that has discriminatory consequences against people who actually can afford it, but cannot point to the evidence of it—people who could afford the rent but do not have anyone in their social circle, if you like, who could back them up for a year or whatever. We would like the instances of relying on guarantors to be reduced. If the issue of perceived affordability changes, the choice for those groups grows; we are looking for that kind of support.
We welcome the end of “No DSS, no benefits”, but we are worried about that coming in in other ways, such as someone not having rich enough friends to back them up. We would like to see that being addressed.
Carla Denyer
Q
Tarun Bhakta: We really agree with those points about rent in advance and guarantors, which are particular priorities for Shelter. Particularly through our legal services, we have been one of the foremost organisations supporting tenants to challenge DSS or housing benefit discrimination. We see how slippery that discrimination is. It is very difficult for tenants to understand whether they have experienced it.
To add to what Tom said, we have some evidence that rent-in-advance requests are disproportionately made to housing benefit claimants, but that also applies to older renters, as do guarantor requests. Rent-in-advance and guarantor requests often come together or are linked. A lot of older renters do not have someone in their support network who is willing or able to offer to be a guarantor. The effect of these requests that landlords introduce is to lock people out of the rented sector. Tom said that they are perceived affordability issues. It is that first step into housing, and affordability is strongly relevant to that, but we find that people who can afford the rent are prevented from renting properties because of arbitrary barriers such as rent-in-advance and guarantor requests.
To answer your question more directly, it is fair to say that the Bill does not introduce measures to address affordability in the sector. We think the Government should take a longer look at that and, to go back to my previous answer, take a more reasoned approach to rent controls. Essentially, they should explore the options, particularly where rent increases for sitting tenants are forcing them out of their homes. That undermines the core purpose of this Bill, which is to provide greater security for tenants and help them to avoid homelessness. Beyond that, it is clear that we need much greater provision of social housing and much more adequate housing benefit in order to tackle some of the affordability issues in the private rented sector.
Michael Wheeler (Worsley and Eccles) (Lab)
Q
Tom MacInnes: I do not think we would agree with that, no. By way of background, the number of people that Citizens Advice is helping with homelessness has never been higher—we hit a record this summer—so the number of people who are homeless is already incredibly high. The Bill gives more power back to the tenant, so we think it redresses a power balance.
One of the things that we would like to think about to reduce homelessness is the bit that happens at the end of the tenancy. The landlord has to give a four-month notice period, but within that the tenant has to give two—two months within that four. So the tenant is given a deadline, which is shortened, to find another place, and it is often difficult to find another home. We have talked about the affordability issues. There is an issue about potential homelessness at the end of a tenancy that everyone knows is going to end in any case. We would like to see that period reduced, ideally to zero but certainly to one month.
There is also a really good case for a rental waiver—a rent-free period—within the last two months of the four so that people can afford to move out. They must be able to afford the fairly substantial initial costs of moving, and not pay two months’ rent, because there is a homelessness risk right there. No, I do not think the Bill will increase homelessness.
Tarun Bhakta: I have a simple answer followed by a less simple one. No, the Bill will not increase homelessness. We have already heard that the end of assured shorthold tenancies is the leading cause of homelessness. The Bill will eradicate short-notice and no-reason evictions, which many believe are not legitimate and would not meet the bar for eviction under the new system. We are supportive of the way that section 21 and fixed-term tenancies are being abolished and of the implementation approach set out by the Government. We think the Bill will reduce homelessness. I very much agree with Tom that, if and when tenants are served with an eviction notice, the Bill could go further in supporting tenants in access to finding a new rental home. I will come back to the point about rent in advance and guarantors.
Housing benefit claimants are disproportionately at risk of homelessness if they are served with an eviction and they face these additional barriers disproportionately. According to Acorn research, one in five renters claiming housing benefit had been asked for 12 months’ rent in advance in the last three years compared with just 6% of renters not in receipt of housing benefit, which shows how disproportionately the barrier is applied to housing benefit claimants, who are in turn themselves, being on lower income, more at risk of facing homelessness once they are served with an eviction notice. That is one area where we would say the Bill is a work in progress. We could improve that access to new rented homes where tenants are served with an eviction, and that would help people to avoid homelessness if and when they are served an eviction.
The Chair
Gideon Amos and then Jacob Collier—if you both ask quick questions, we can get you both in.
Mr Amos
Q
Tarun Bhakta: First, the evidence is that section 21 evictions are increasing. We do not have evidence that that is because the Bill is coming. We heard in the evidence that many landlords will wait and see, and find that being a landlord in the new system is not so bad. That is what the evidence of tenancy reform in Scotland in 2017 showed. The evidence we have does not point to that.
Can you remind me what your second question was?
Mr Amos
It was about retaining the option of fixed-term tenancies to two or three years if it were agreed between landlord and tenant.
Tarun Bhakta: No, we would not support that at all. It is an illusion that a fixed-term tenancy is a mutual agreement between tenant and landlord. Tenants expect that that is what they have to do. Tenants most commonly sign—the majority sign—12-month contracts, yet we know that tenants want longer than that. It is just that tenants do not feel that they have the power in the sector to ask for a different length of fixed-term tenancy.
In our services, we see fixed-term tenancies locking tenants into unsuitable properties; maybe repairs were promised and not done, or the property has deteriorated, their circumstances have changed, or the rent has increased and tenants are locked in and liable for the rent during that period—
Jacob Collier (Burton and Uttoxeter) (Lab)
Q
Tom MacInnes: We welcome it as an organisation. We think it improves renters’ stability. It gives a bit more power to the renters. There is more that could be done—for example, there is stuff around the two months’ notice only being required after a four-month period. To repeat some previous points, there is a bit about landlords selling their properties and the evidence required. If the evidence landlords needed to provide was increased, we think that there would be a reduction in the misuse of that ground and an increase in stability for renters. We do think the Bill makes a difference and increases stability, and if a change could be made in enforcement, it could do even more.
The Chair
That brings us to the end of that session. Thank you very much indeed. We will move on to our next witnesses.
Examination of Witnesses
Tom Darling and Ben Twomey gave evidence.
The Chair
Could the panel begin by introducing themselves?
Tom Darling: I am Tom Darling, director of the Renters’ Reform Coalition, which is a group of 21 leading housing organisations that have been campaigning for progressive reform of the private rented sector.
Ben Twomey: Good morning. I am Ben Twomey. I am a private renter myself. I am also chief executive of Generation Rent, the voice of private renters across the UK.
David Simmonds
Q
Tom Darling: I think you are asking about affordability assessments and the role they play in tenants being able to access rented housing. Is that right?
David Simmonds
Q
Tom Darling: As regards the Bill, we think that those sorts of affordability checks are acceptable, but we think that measures—as you have heard from previous witnesses—that go beyond that can be discriminatory, and often look to punish tenants and discriminate against tenants on the basis of their income. You heard about rent in advance and guarantors. We would like to see a limit to guarantors that says that, if you pass an affordability check, you should not be asked for a guarantor in addition.
Ben Twomey: We are in an interesting situation where someone could be working in a key worker or essential worker role but there are parts of the country in which it is unaffordable from them to live. They probably would not be able to pass some of these affordability checks to rent privately. That would be fine if there were other options available, but most private renters cannot afford to become a homeowner if we want to and cannot wait the 10-plus years to access social housing if we need to, so the only option is to find a way into private renting—otherwise we find ourselves in temporary accommodation. There are 150,000 children living in temporary accommodation right now. The Bill needs to go further to try to address that, because it speaks to some of the wider Government ambitions around making work pay. It does not really help us if our income increases but it is taken off us by our landlords before it reaches our pocket. Wider affordability questions, which I am sure we will come to, are relevant to the credit checks and the ability to rent privately.
David Simmonds
Q
Tom Darling: We think that local authorities should be funded on a per privately rented property basis. We have heard that the Government will set out new burdens funding, but we think that the funding should be allocated according to the size of the private rented sector in that area. I want to be really clear that we support selective licensing and would like to see it enhanced and deepened alongside the new database, and we think that a number of changes made by previous Administrations to the way selective licensing worked made it harder for local authorities to apply for selective licensing schemes. There are some straightforward changes that this Government could make: removing the Secretary of State’s veto over the schemes; allowing local authorities to refer to housing conditions when they are applying for selective licensing; and extending the schemes from five years to 10 years. We think that would work well alongside the database and not in lieu of the database.
Ben Twomey: If I could take the resourcing point and slightly widen it, there was a cost of £1.7 billion in the last year to local authorities for temporary accommodation —for housing people who are no longer in their homes. This Bill will end section 21, which is really welcome, because that is the leading cause of homelessness and ending it will hopefully make some savings for local authorities, as well as bring enormous benefits for tenants, who will be better protected.
There is also a Government cost of local housing allowance, which has been in the billions in the last few years. That is to give benefits to people so that they can afford to privately rent. This Bill could go further with affordability not only to protect people in their own homes but to make the Government change the way they resource the support they provide for people in their homes—moving some of that burden of cost away from the need to pay so much for private renting and towards a better-regulated market, which would put limits on the ability of landlords to raise rents.
David Simmonds
Q
Ben Twomey: I do not have any with me, but I can take a look at that and write to the Committee.
Matthew Pennycook
Q
It would not be a Bill Committee evidence session if every interest group was not telling us that it had a way to improve the Bill in some way and from different perspectives. We have heard a lot this morning about the various concerns and how they are being addressed. In general terms, however, particularly given your concerns about the previous Government’s Renters (Reform) Bill, do you think this Bill strikes the right balance and levels the playing field between landlord and tenant?
Tom Darling: I will start by introducing the situation in the private rented sector as it is today. The Resolution Foundation said this year that
“the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.”
The private rented sector is the worst of our ageing housing stock; in fact, it is the worst of the worst. It is the least secure, the worst quality and the most expensive of the housing tenures in this country, and we have the worst of any major country in the world. That is embarrassing and that is what we are talking about here. We need root and branch reform. We are happy that the Government have acknowledged that more significant reforms are required than those that the previous Government put forward, but we still need to see some changes to the Bill to go even further and deal with the scale of the crisis we are dealing with.
Ben Twomey: We are delighted that the Government are pressing on with this work very quickly, and there is a promise in the manifesto to end section 21 immediately—as quickly as we can get this law passed. That is really welcome, as it will protect people from homelessness.
There are also lots of things in the Bill that I have no notes on. For example, the bidding wars legislation seems well-written; it seems like it will make a genuine difference to people like me, who have experienced being invited to bid on homes just because we reached the front of a queue and the landlord realised that they could up the rent. Some of the provisions—including the introduction of Awaab’s law into private renting—are beginning to create more of an even playing field, as you say, for renters compared with other tenures.
I want to take a moment to talk about someone I will call Ayesha from Hertfordshire. She is a schoolteacher and a single parent, and she has been struggling to keep up with the relentless rises in rent that she has faced in recent years. She says, “There are moments when I feel so overwhelmed and exhausted, like I’m carrying the weight of the world on my shoulders. I try to stay strong for my children, but the stress and anxiety are always there, lingering in the background. I just want to provide them with the life they deserve, but with the way things are going I fear that I might not be able to. It’s a lonely, terrifying feeling, and it’s hard not to feel defeated by this constant struggle.”
It is important for people like Ayesha—given what is being said in this Committee, this Government and this Parliament as a whole; every MP in this room promised to end section 21 and, in more words or less, promised a fairer deal for renters—that this Bill takes the opportunity to resolve these issues. Maybe we will come to this, but we believe that that will involve limiting the ability for landlords to raise rents—not raising them to the market rate, but instead limiting them to the level of inflation or wage growth, so that rents begins to match the real, lived experience of people who are renting.
Matthew Pennycook
Q
On rent increases, Ben, I understood that you were effectively talking about a cap—to the level of inflation or wage growth. A previous witness rightly drew our attention to the nuances around different forms of rent control. Given the evidence out there across the world, which I have looked at in great detail, do you not have any concerns about the potential negative impact on supply discouraging investment into the sector? We have heard about the supply challenges, impact on property standards and the very practical concern that if we implement an inflation-linked or wage growth cap, every single landlord in the country will raise rents every year to that cap, whether they would have done so under the current system or the system we propose or not. You must engage with the challenges on the other side from the measures you propose.
Ben Twomey: I am very happy to. The idea of raising to the cap just does not happen in many countries; landlords do not do that. When you have a sitting tenant, I guess there are elements of the risk being reduced once you know that person, and that is not really accounted for when you take on the market rate. There is also an element of knowing the human being in the home, which changes the behaviour of landlords to some extent.
The use of the market rate is flawed, to say the least. It is not real; it is a made-up number. It is not the actual rent, it is not a transaction, and it is not even an agreed rental price, but the advertised price that a landlord has put out there. More than one in five homes advertised on Rightmove in the last year had to be re-advertised at a lower rent before they were actually let. That really skews the figures, because landlords will seek higher rents to begin with, and what is actually agreed by the tenant is very different. Looking at actual rents would be useful, and that should be recorded on the property database.
There is the matter of linkage as well, which relates to the first-tier tribunal if that is going to be used as the mechanism to challenge rent increases. At the moment, if you were looking at the market rate, you would have a lot of confusion. As a tenant or a landlord, you would not necessarily know where you were going to place the rent rise or whether you would come out the other end of the tribunal happy with the result, whereas if you link to inflation or wage growth—whichever is lower—you can place a number on that every year or every month, if you want to. With that number, all renters would be empowered to know their rights. Landlords would not risk going to court, because they would know that they were within the safe amount that they could raise the rent by, and it would become a much clearer process for everybody, rather than an obscure, complex and financially burdensome process for tenants and landlords, and for the Government to implement.
Tom Darling: Can I briefly answer the point around supply? You heard my analysis of the situation in the private rented sector earlier. It is worth saying that since the year 2000, the private rented sector has doubled in size. Those are the outcomes that we are dealing with now. It is the worst tenure in the worst advanced economy, and that is after 20-plus years of investment ploughing into the sector and it growing massively. Right now, we are living the experiment of what happens if you try to cannibalise the existing housing stock and turn it into an ever-increasing private rented sector.
Matthew Pennycook
That was under the old system, and we want to transform the system, but I take your point.
Tom Darling: Of course.
Matthew Pennycook
Q
Tom Darling: I am happy to answer that. We were very supportive of the expanded use of rent repayment orders when we worked on the previous Government’s Bill. They are a great opportunity for tenants to avail themselves of the possibility for compensation. Some of the awards that have been increased by the Government would potentially be life-changing amounts of money for most renters. Half of renters have no savings; as a renter and someone who is very much not on the frontlines of this crisis, I try to keep that in mind the whole time. If you are getting a big award in terms of compensation of one or two years of rent repayment, because your landlord has done wrong, that is a potentially life-changing sum of money, so we are very supportive of that.
I think you are right to identify that enforcement works best when the tenant is incentivised to work with the landlord. That works best when the problem is ongoing and the tenant is in situ in the tenancy. One of the problems we have with the new eviction grounds—we have seen this with the poor enforcement of the new tenancy regime in Scotland—is that when the tenant moves on from the tenancy it is hard to motivate them to follow up and check that the eviction was legitimate.
Our concern is that to properly enforce the system, tenants almost need to be motivated by a sort of righteous anger to get back at their landlord. That is one of the reasons why we think post-eviction evidence should be required from the landlord, and potentially no-fault eviction compensation too, where the tenant does not have to pay the last two months of rent before they leave. That way, there will be a broader-based disincentive for landlords to use those grounds. For the vast majority of tenants, after they have been evicted, they just want to move on with their lives, and they are not thinking about their previous landlord or previous home, or checking Rightmove to see whether the landlord has re-let the property and fraudulently used that eviction ground.
Ben Twomey: I completely support the call from Tom for no-fault eviction compensation. That would recognise the harm of no-fault evictions to tenants, which I think every MP here has recognised, and try to disincentive the use of any new grounds of no-fault eviction.
On the rent repayment orders, I will quote the late, great Simon Mullings, a housing expert who gave evidence to the Renters (Reform) Bill Committee, and who would have been here had he not sadly passed away very recently. He talked about an “army” of tenants who could be ready to enforce the legislation. That only works if it is really clear what their rights are and the route to achieving the compensation or repayment of rent is straightforward.
There is another area that could be strengthened. At the moment, if a landlord is not registered with the database or the ombudsman—the redress scheme—they need to have repeat offences before a rent repayment order is available. If I, as a tenant, found that my landlord was not registered, I would have to challenge that, wait for the local authority to make warnings based on what I had said, and then continue to live in the home, feeling probably much less secure than I previously did, without receiving a rent repayment order.
If we want to make sure that landlords are not punished because they were not aware of their obligations, perhaps a smaller rent repayment order would at least give some incentive to a tenant to raise the issue on that first offence. More thought needs to be given to how to stop rent-hike evictions that could happen later, because a rent hike, being an eviction by the back door, could be another way in which I as a tenant or someone else pursuing that would feel insecure, were we to come into conflict with the landlord.
Lola McEvoy
Q
Ben Twomey: Relating the database to rent repayment orders would be useful. If there is a way in which tenants or tenant groups can access the database to make sure that landlords are compliant with the database, it would be helpful. Adding the actual rents to that database would be useful, because we would finally get an honest and clear picture of what people are paying in rent. That would start to change the inflated idea that a landlord can stick their finger in the air and charge whatever they like just because it is a new tenancy. We would start to see the patterns appear for when people are in tenancies.
We should also have certain restrictions for evictions. We think eviction notices should be logged on the database. That would give a clearer picture of why people are being evicted, so that measures later down the line can be taken to reduce the number of evictions. It is helpful that in the Bill they will now have to have a reason for eviction, because currently we do not know why landlords are evicting. We know that it coincides far too often with complaints made by a tenant, but we could continue to track that through the database. We think that landlords should be restricted from making evictions or even rent hikes if they have not registered with the database and the redress scheme.
Tom Darling: I would agree with all that. I know that the Government intend to set out what will be on the database in secondary legislation, but I think it would be helpful to have a steer from Ministers throughout this process on what they intend to be on the database.
Sam Carling (North West Cambridgeshire) (Lab)
Q
On your point about the idea of limiting rent increases to wage growth or inflation, how would you respond to the counter-argument that it might lead to landlords setting a much higher baseline rent between tenancies, knowing that they would not necessarily be able to increase the rent as much within a tenancy?
Tom Darling: To take the first point about the lessening of security, similar reforms in Scotland led to an increase in average tenancy length. The idea that abolishing fixed-term tenancies will lead to Airbnb-lite, as we heard earlier, is ridiculous. Clearly, the people proposing that have not been through joining a tenancy recently, because it is an incredibly stressful experience. That is the last thing people would think of to do to go on holiday or to stay for only two months. There has been no evidence of that in Scotland, despite similar reforms in place there, so I would dismiss the idea.
The ability to leave the tenancy to be used in very rare circumstances—for example, where you realise there is some black mould that you did not see, which was being hidden from you when you viewed the property, or you have a serious change in personal circumstances—is an essential protection. It is to be used by tenants in very rare circumstances. Actually, the arguments about that are more about landlords: they would prefer to have the certainty of six months’ rent up front—I am sure they would. We think the Government have the balance right on that particular point at the moment.
Ben Twomey: To add to that quickly, the point made by the letting agents about someone on a two-year fixed-term contract who might find themselves at risk of a form of no-fault eviction by the end of one year is a valid concern. We would welcome support in calling for a longer protective period from no-fault evictions in that case. At the moment, one year is in the Bill, which we welcome as security for renters, but doubling that to two years would be very welcome to make sure that people on such contracts do not find themselves disadvantaged.
To address the point about rent-stabilisation measures, it is important that the vast benefit to potentially millions of private renters is weighed against any potential disadvantages. Millions of renters finding themselves better protected from arbitrary evictions through a rent hike, and from being driven into debt, poverty or homelessness, is an enormous success.
In Scotland, which introduced such measures recently, there has not been an enormous increase in market rents disproportionate to what has happened in England, Wales or indeed Northern Ireland. It was similar tracking of rent inflation with new tenancies. While doing that, we have protected all those people, yet what is happening in the market is similar. One of the ways to solve part of that market problem and to begin to drive down rents is, as has already been said, to build lots of homes at the same time. Some of the most successful rent-cap regimes across Europe are in places with lots of social housing, which takes some of the pressure off the private rented sector.
Claire Hazelgrove
Q
Tom Darling: Simply put, yes. We will be pushing in a number of places where we think the Bill should go further and where we do not think the Government have quite got the balance right, but the groups in our coalition have been campaigning for this change since the promise was first made nearly six years ago. We think it will be an important change to our housing system.
Ben Twomey: Yes. Our homes are the foundations of our lives. The Bill will give us some much-needed security and should drive up standards and quality. As I say, we are worried about affordability within that, but the main reason why you as politicians have probably not heard from renters so much as is in the past year or two is that things have got so desperate. We are worried that if there are some improvements to renting, suddenly we will lose our ability to have spaces like this where we can begin to make change. If this is to be a once-in-a-generation opportunity to make that change, we think you should cover all bases and make sure that no one finds themselves homeless, in poverty or in debt because of the fact that they have been forced into private renting.
Carla Denyer
Q
Tom Darling: I think Ben touched on it. The literature shows that different types of rent control have worked best in combination with a bunch of other policy levers, and particularly the supply of social housing. If the Government are continuing to set out that affordability is not the thing they are going to deal with in this Bill, we think it would be sensible to have a national rental affordability commission that could look at all these issues in the round—including all the different policy levers such as local housing allowance, housing benefit, the supply of social housing and different forms of rent controls—to bring down rents relative to wages and make renting more affordable. That feels like a pipe dream at the moment, but it should not be. That should be our aim. If the Government are not going to take forward affordability in this Bill, that sort of commission might be a place where they could look at all the different policy levers which, it should be said, cut across different Departments, and it might be a way to take that forward.
Ben Twomey: On that point, the idea of rent regulation being a scary thing is not new, and it is something that is hammed up by the landlord groups. They obviously want to make as much as profit as they can, but they do not have a right to make profit; they have a right to seek it. In this market, it is so broken because, unlike lots of other types of markets, the landlords can just click their fingers and say, “I’m short £100 this month. I’ll get it off my tenant.” A tenant will usually be forced to pay or have no other options unless they want to leave the home or even become homeless.
It is a very broken market. We used to have regulation in many ways in the country more than 30 years ago. Things have not got better since then, so the trial we have had of not using these measures has not really worked for people. These are all things that a commission could look at, or on which the Bill could take some quite straightforward measures. Similar to the energy price cap, with which we recognise that energy is essential for our homes, our homes are also essential for our homes. We should probably think about some common-sense solutions to that.
Matthew Pennycook
Q
Tom Darling: I am happy to answer that. Obviously, we have been talking a lot about Scotland, and you will hear later about the “Rent Better” report, which has essentially written the book on it.
Matthew Pennycook
That issue is highlighted in the report.
Tom Darling: Yes. Our view would be that where these systems have worked, they have been part of a broader strategy that sets a clear direction for both tenants and landlords. I am sure you will have other landlord organisations here today that will talk about the need for certainty. There definitely has not been that in Scotland. There has been political instability and the chopping and changing of policy every couple of years, essentially—from the 2017 reforms to the pandemic freeze, the rent cap and now moving to a system of between-tenancy rent controls, and the latest political instability. I am sure landlord organisations will tell you that that makes it very difficult to have any certainty about what you are doing with rent levels in the future.
We would argue that if a Government with a big majority early on in their term set a clear direction on what the policy would be, landlords would be able to deal with that. You see that in European countries where there are big landlords who do just fine under systems where there are rent caps.
Matthew Pennycook
But you do not dispute that rents have risen faster in Scotland than anywhere else in the UK since those rent controls were introduced—
The Chair
Order. Sorry, but we have hit the deadline for this session. I thank the witnesses very much for coming. We now move on to our final witness.
Examination of Witness
Richard Blakeway gave evidence.
The Chair
This is our final witness; please introduce yourself for the benefit of Members.
Richard Blakeway: Thank you very much. I am Richard Blakeway, the housing ombudsman for England.
David Simmonds
Q
Richard Blakeway: That was not the first question I was expecting, but thank you very much. One of the requirements the Bill introduces is for landlords to be on the landlord database, with the checks required on that database, and then for them to join the ombudsman service. Whether or not there is a requirement around that as part of the criteria to be eligible to let properties is a consideration, and then that depends on whether or not they would join the ombudsman service.
In terms of the decisions that any ombudsman in the future might make, if there were issues around insurance—typically those are matters that tend to sit with the courts—or a landlord not facilitating claims around insurance, there might be an issue around whether or not insurance is in place, and that might be something that we then highlight in our decisions, which might be information we should share with the lead enforcement agency under the duty set out in clause 109. You may feel I have not fully answered your question.
David Simmonds
Q
Richard Blakeway: The Bill is obviously quite comprehensive and will make a significant difference as a piece of legislation, but a considerable amount of information will be set out in statutory instruments after the Bill. There are, then, some answers in the Bill and some that will come in future regulations.
Your point about the clarity of jurisdiction between an ombudsman and other actors is fundamental. One of the most important elements to clarify the role of the ombudsman service will be the ombudsman’s scheme. Clause 63 sets out requirements around what should be in the scheme—what must be in the scheme and what could be in the scheme. I would probably encourage there to be more in the choices for Ministers as to what could be in the scheme than in the list of what must be in the scheme, because there will need to be agility, as the ombudsman—whoever is appointed as the ombudsman service—and the other actors start to come together.
The importance of clarity is obviously for individuals to know what route to take if they are seeking redress, and it is also important to make sure that there is real coherence in terms of raising standards and promoting good practice in the rental sector.
I can give a specific example where I think there would be nuance between the ombudsman service and the tribunal, which is around changes to rent. If a section 13 notice were issued, the decision on the rent would be a matter for the courts, and the Bill seeks to change the role of the courts, or the tribunal, in relation to that. But we or whoever was appointed as the ombudsman service could potentially play a role to decide whether a fair process had been gone through rather than the actual level of the rent. That is very similar to what we have today on the social rented sector and service charges, and our role as an ombudsman in the social rented sector and the role of the tribunal.
David Simmonds
Q
Richard Blakeway: If you look at our current powers, role and approach around charges, we are very clear that we will consider transparency around why those charges are being made and their purpose, we will consider whether the service has been provided and the quality of that service, and we will consider whether an appropriate process was gone through. For example, at the moment we would consider section 20, where significant charges have to go through a process, and ask whether that process was followed. Those are decisions that we make and we can therefore very clearly consider what the requirements are, either set out in statute or under the provider’s own policy. That is the basis on which we would make a judgment.
I think that is a parallel that is relevant in your example in this space. Clearly, if we were seeing evidence that another mechanism was being used to increase the charges on a tenant and that was unclear and potentially unjustified, that could be a point of maladministration where we would uphold a complaint.
Matthew Pennycook
Q
I have a follow-up question; I will ask them in one go, Mr Betts, and leave more time for others. We have been very clear already that the new ombudsman will need to work collaboratively with others to resolve complaints and that will be set out in statutory guidance. What do you think needs to be included in that guidance to ensure, in particular, that the ombudsman is working effectively with local authorities?
Richard Blakeway: Those are really important questions. The Bill introduces a new framework of rights and responsibilities for both landlords and tenants and, as you set out, the ombudsman service—whoever is appointed as the ombudsman—plays a part in that. I would say as an aside very early on that I welcome the Government’s recognition of the strategic benefits of bringing together the social rented sector and the private rented sector, particularly given the common body of existing and new legislation that is tenure blind and speaks to both the private and rented sector, whether that is the existing Landlord and Tenant Act or the potential to extend Awaab’s law and the decent homes standard. I think there is a real benefit to system coherence and the right relationships, as you highlight, and also to making sure that benefits do not unintentionally fall in the wrong place, by appointing the housing ombudsman as the provider of redress.
I think there are three key relationships. There is the lead enforcement body, and working out the role of that body. In particular, looking at clause 109, information sharing between the ombudsman service and the lead enforcement body will be vital, so codifying that role will be important.
There is the tribunal, which we have alluded to. One of the really important pieces of work is to develop, very early on—I would have thought in advance of any statutory instruments—a draft scheme for the ombudsman service, and to collaborate with a number of bodies, including the courts, on what is in the scheme and therefore the decisions that the ombudsman might take, and what is outside it and clearly rests with the courts. I have given the example of section 13. The ombudsman could potentially play a role in looking at aspects of section 13, which might relieve pressure on the courts.
There is then the relationship with local authorities and enforcement. On the database itself, I think there has to be a decision about who owns the database and is going to provide it—whether it sits with the Department or the lead enforcement agency, for example—and the pace at which it could be developed to support the introduction of the redress service.
One of the other areas to consider, where there may be a pressure that emerges in the system—a pressure that I think the legislation recognises but could go further to address and relieve—is enforcement. The Government have rightly indicated that there is concern around compliance with ombudsman remedies. There was a survey in, I think, 2018 that showed 46% of private landlords not complying. At the moment, the Bill includes a kind of last resort to try to enforce compliance, which would be introduced later through statutory instruments. I wonder whether consideration should be given to bringing that forward, so that compliance issues are not having to be directed towards local authorities, and creating pressures there.
I also wonder whether the legislation could go further by, for example, amending clauses 66 and 96 to include rent repayment orders as part of non-compliance with ombudsman decisions. The Bill is rightly clear that if a landlord does not sign up to the ombudsman service then it could be subject to a rent repayment order, but it is silent on whether a landlord that is non-compliant with the ombudsman’s decisions should also be subject to a rent repayment order. I think that if you were to introduce that, that would strengthen compliance and reduce the need to direct things around the system to try to address them.
Harpreet Uppal (Huddersfield) (Lab)
Q
Richard Blakeway: That is a really important question. It is one thing having an ombudsman service; it is another people being aware of it and being able to access it. We have certainly been on a journey within our current jurisdiction to think about how we interface with the public and become more accessible to them, and we have obviously seen the benefits of that.
A number of initiatives have been required to bring about a change, but the Department has done a number of surveys of social tenants to understand awareness levels. Awareness is now at around 70% among social tenants, according to two surveys that were done in the last three years, compared with probably sub-50% previously. There is a playbook there, if you like, for how you create awareness of access to an ombudsman. We have sought to use our existing service and be very open and visible. For example, in the 2023-24 financial year, about 6,000 residents engaged in open forums that we hosted around the country where they could come along and ask any questions. That is really important.
I have two brief thoughts. First, the complaints process does not start with the ombudsman service; it starts with the landlord. A very important thing to do very early on is make sure that there is a robust framework to support landlords to handle and resolve complaints, but that includes signposting to an ombudsman service so that there is clear awareness at a local level. That work is really important to do in advance of any ombudsman service going live.
The second thing that I think is important is how you stitch the ombudsman service into other bodies and advice agencies—Shelter, Citizens Advice and so on—which, again, is something that we have at the moment. One of the benefits of having a single front door through the housing ombudsman for both social and private tenants is that you can effectively introduce no wrong door for people. Once a tenant reaches someone, to be told “Actually we can’t help you” and be sent somewhere else is probably the last thing they want, but that is what they hear currently. About one in five inquiries that we get from the public at the moment are from people who we cannot help because they are outside our jurisdiction. We could effectively provide a single front door and prevent that, building on the awareness activities that we have at the moment. Again, it is really important to introduce that early on. Were the housing ombudsman to be designated as the redress provider, that is something that I would want to be able to introduce through our existing inquiries service immediately, even in advance of us being able to handle cases, so that we could provide effective advice to residents so that they understand their rights and where to go.
Claire Hazelgrove
Q
Richard Blakeway: First, thank you for recognising that previous work. There are specific things in the Bill that increase the protections for renters and the security of tenure for renters. Those are welcome and important and would prevent the risk of homelessness for some individuals. It also changes the relationship between the resident and the landlord, and addresses an imbalance of power that exists at the moment. In changing the relationship, the importance of redress is fundamental, to ensure that there is not a breakdown in that relationship and that a tenant does not end up living in conditions that are not acceptable. We must also recognise that the role of a redress provider is also to share the experience and the learning that we have through our casework to ensure that landlords can effectively fulfil their obligations and raise standards.
This Bill is not only about increasing security for individuals; it is about a wider shift and change in the role of the private rented sector in this country—a sector that is completely different from the one that was envisaged and started to emerge decades ago. It is different in scale, different in the types of properties, and different in the range of providers. So the real impact of this Bill over time will be a real shift in the landscape of the private rented sector and a raising of standards. It is important that landlords are part of that journey and can affect that in their own actions, and that an ombudsman service is there to help individuals exercise their rights, but also to provide the insight and intelligence to landlords to ensure that they prevent problems that need to go to an ombudsman from occurring.
Carla Denyer
Q
Richard Blakeway: On licensing, yes.
On the deterrent, yes and no. You have to recognise that the penalties have increased in this Bill, and that is important, but I emphasise my point about the scope and whether, for example, non-compliance with ombudsman decisions should be brought into the scope of that.
On energy efficiency, obviously there are significant measures in here, but it will be important to see what the decent homes standard—I think it is in clause 98—contains in order to judge what the standard of accommodation will look like in the future.
The Chair
I have no Members indicating to me that they have further questions, so that brings us to the end of the morning session. The Committee will meet again at 2 pm this afternoon in this room.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Second sitting)
Tuesday 22nd October 2024
(2 months ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 October 2024 - (22 Oct 2024)
The Chair
Good afternoon and thank you for coming along. As this session has to end at 2.40 pm, with no Chair’s discretion in relation to that, I suggest that we get started straight away. May I ask you to introduce yourselves briefly?
Justin Bates KC: I am Justin Bates, a barrister and King’s counsel at Landmark Chambers here in London, and I am the editor of the “Encyclopedia of Housing Law and Practice”.
Giles Peaker: I am Giles Peaker, a solicitor at Anthony Gold Solicitors and a partner in the housing law team.
Liz Davies KC: I am Liz Davies, a barrister and King’s counsel at Garden Court Chambers, and I write about homelessness and for Legal Action magazine on housing.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Q
Justin Bates KC: Obviously, the best people to ask about the FTT’s resources and whether it is ready will be the FTT staff, the president and so on. I simply note that Parliament has given the first-tier tribunal a lot of new powers over the last few years, and I am sure it would welcome additional funding to enforce all these things. My impression, as a practising barrister, is that the FTT works better than the county court system; my experience is that it is generally faster and more responsive. But you are giving it a lot of new work to do, and I am sure it would be grateful for any money you can send its way.
Giles Peaker: The ombudsman would have to answer the question on the ombudsman. My impression is that the ombudsman—the social housing ombudsman as it is—is currently receiving a lot of complaints and there is some impact on the timescale in which they deal with matters. Clearly, if there were an extension or a new ombudsman, the resourcing of that would have to be looked at. I do not think any of us could say that the county courts are not under strain at present—they are, across the board. How much of an increased workload there would actually be as a result of the Bill, though, is more of an open question.
Liz Davies KC: I just add, in respect of the county court, that part of the problem with litigation at the moment is litigants in person. There are new rights in the Bill that tenants will want to rely on. Housing legal aid is in crisis, there are what are called housing deserts across the country, and frankly, it is more efficient for tenants to be able to receive early legal advice so that they know whether there is or is not a point to take to the county court. I suppose one message to you, although it is beyond your remit, would be to try to increase legal aid as well. It would make litigation more efficient.
David Simmonds
Q
Liz Davies KC: I am concerned about mandatory grounds 1 and 1A. Clearly, they bring an end to no-reason evictions, with the end of section 21, but they are still no-fault evictions as far as the tenant is concerned. It is helpful that the period will be one year and that there is four months’ notice, rather than the two months’ notice in the previous version of this Bill, the Renters (Reform) Bill. But I am concerned that the balance is not right.
Mainly, I am concerned about the idea of a court being faced with mandatory grounds when the tenant has done nothing wrong, and there may be incredibly compelling circumstances about the tenant but the court cannot look at them; it has absolutely no remit and no jurisdiction. So the tenant might say—I am sorry to have to say this—“Myself or a member of the household has a very serious terminal illness. To ask me to move within four weeks or two weeks, or what have you, is going to have an appalling effect on that.” They might say, “We have a very severe disability and so it will take us longer than other people to find somewhere to live.”
My preference would be to make all grounds discretionary, because I think that does provide the balance. But even if Parliament were to reject that view, it seems to me that courts ought to have the opportunity, in exceptional circumstances, to look at the tenant circumstances and to either reject a possession order, or have the flexibility to make a possession order that is suspended for a certain period of time—postponed for a certain period of time. It seems to me wrong in principle that a court cannot consider any circumstances of the tenant, whatever they are. That is my concern on 1 and 1A, and I think Justin will speak about 6A.
Justin Bates KC: Can I ask you to also look very carefully at ground 6A when it comes to scrutiny? Ground 6A is the new ground for possession, where the landlord needs possession, because they are on the banned landlord database or because they are operating an overcrowded house in multiple occupation—the landlord is effectively a criminal landlord and needs possession to deal with the consequences of their criminality. Presently, that is a mandatory ground for possession. I understand why, because I can see that there is a difficulty with one arm of the state saying, “You are breaking the law and you will keep breaking the law if we don’t act, and we won’t allow you to get people out.”
Can I flag two concerns? First, there is a concern among those in frontline tenant services that it will act as a disincentive to people reporting their rogue landlords, because if you report your rogue landlord to the local authority and it then puts them on the banning order list, you face a mandatory ground for possession.
Secondly, it strikes me as odd that a tenant who has done nothing wrong—save had the misfortune to have a criminal landlord—is required to move with no compensation and no provision of suitable alternative accommodation and so on. I can understand why we need 6A. I understand that we do not want to leave people committing crimes because a judge will not give a possession order, but it strikes me that you could look at some sort of compensation scheme. If you were minded to do so, the model is section 34 of the Housing Act 2004, which already gives the tribunal the power to order compensation when people have to leave because of prohibition orders. You could steal lots of the language from section 34, put it into ground 6A, and you would have much less scope for the unfairness that seems to me to be evident.
Giles Peaker: On the broader question of whether a balance is struck, I think it is a political decision as to where the balance falls, but broadly there is one. I do have specific concerns about 1 and 1A, as well as those raised by Liz, which are in terms of the evidencing of a mandatory ground. If the ground is the landlord wants to sell, or the landlord wants to move in or move in a family member, what standard of evidence is required for them to demonstrate that? In terms of the current wording, it would probably be enough to simply express an intention to do so. My sense is that there needs to be at least a level of formality—a signed declaration of truth on a statement or a particulars claim signed by the landlord—in terms of bringing possession proceedings on the back of that.
But there is also what follows on from that, and I think this issue has come up in Scotland, where there is a similar sort of provision. If a landlord re-lets a property within the 12 months proposed, the potential enforcement is great: it is a criminal breach, with a prospective civil penalty, and a prospective rent repayment order application by the former tenants. That is all great. The question is how you get from the possession order being made to action on the breach. As it stands, it appears that the only way in which that could possibly happen is if the ex-tenants realise that the property has been re-let—heaven knows how, and heaven knows where they will be in the country by that point—and then notify the local authority, which can take enforcement action. It strikes me that there should be some kind of recording that that ground has been used—a landlord database might be a place for that. The local authority can be aware that that ground has been used, and if it becomes aware of a re-letting, the full enforcement apparatus can kick in.
The Minister for Housing and Planning (Matthew Pennycook)
Q
Could I ask you to draw out a bit further how you expect this to work? In a sense, when we talk about discretionary grounds, we are always told, “Let’s trust judges”—that was certainly the case with the previous Bill. In a sense, what we intend to do here is trust judges’ judgment on whether those grounds have been used appropriately, and we would expect the type of evidence that they look at to include things like a letter instructing solicitors or an affidavit. But do you not expect the courts to operate in that way on the basis of the Bill? Do you expect them to act in a more light-touch way, as you have suggested? It is not usual practice for Governments to force the courts to consider certain types of evidence, and if that is the case—if you accept that—where do we go to try to influence the courts to look at certain categories of evidence, to ensure that these grounds are being used appropriately?
Giles Peaker: In terms of how you can specify things, to some degree, it is a question of wording. Grounds 1 and 1A are expressed as an intention, and if the intention is there, the ground is made out. If a landlord has written to the court to say, “I intend to sell”, it seems quite difficult for the court to go behind that, unless the tenant has evidence to the contrary. So partly it is around language. Intention—settled intention—needs looking at. But with different wording, a different evidential requirement may well follow—so potentially, as you say, the landlord would have to evidence engagement with an estate agent or a solicitor on a sale, or would need evidence from the relative who was intending to move in, to the same effect.
Matthew Pennycook
Q
Giles Peaker: Yes, hence my talking earlier about the reason to fill in the gap between the notice seeking possession or the court order, and potential enforcement, which is a bit of a lacuna at the moment.
Matthew Pennycook
Q
Justin Bates KC: I will go first, because this is what we spend our time talking about. Clause 30 is wholly defective and should not be allowed to stay in this form after the Bill Committee. It is a loophole. Clause 30 presently says that something will not be an assured tenancy under your new regime if it is for a tenancy of more than seven years. So I will grant you a tenancy of seven years and one day, and I will reserve to myself, as landlord, a landlord-only right to break, exercisable after six months on two months’ rolling notice. There you go: I have just recreated section 21 and there is nothing you can do about it.
You need to look at clause 30 very carefully. The reason it is in there is to fix a different problem. It is there because certain shared ownership leases and certain long leases have accidentally ended up being treated as assured shorthold tenancies, so that is what you are trying to close. The better way to solve that problem is to amend schedule 1 to the Housing Act 1988, which is the main Act you are grappling with, to say that shared ownership leases cannot be assured tenancies, and that long leases for terms of more than 21 years—which is the normal definition of a long lease—cannot be assured tenancies. And then take clause 30 out, because what will happen—as sure as night follows day, and as the entire history of housing law since 1915 shows you—is that landlords will offer seven years plus a day with a landlord-only break, because this is not an area where there is equal bargaining power. It will be, “Take it or leave it, and I’ve just brought section 21 back in through the back door.” So please look very carefully at clause 30.
Matthew Pennycook
Q
The other point is smaller and more technical, and is on the subject of homelessness. Because you are taking out assured shorthold tenancies from the homelessness regime, which allows local authorities to find people private rented sector tenancies, and you have done a lot of drafting amendments to take out the words “assured shorthold”, you have also taken out a mechanism in the Housing Act 1996 that currently allows a homeless family—where they are given an assured shorthold tenancy and that ends within two years—to reapply as homeless and where they do not have to show a priority need. It helps to deal with the revolving door of homelessness, potentially in the private rented sector. You have abolished that—I imagine inadvertently, because you are taking out the words relating to assured shortholds. However, I would suggest that you try to get that back in, so that in the more unusual cases—once this Bill has gone through—if a homeless person is given an assured tenancy in the private rented sector and it comes to an end within two years, they will be able to come back to the homelessness authority. It is section 195A of the Housing Act 1996.
Mr Gideon Amos (Taunton and Wellington) (LD)
Q
Justin Bates KC: I want to be careful not to speak for the first-tier tribunal judges. Parliament has provided additional funding for the FTT in anticipation, not of this Bill, but of other areas. Those of you who worked on the Building Safety Act 2022 will know that you gave new powers to the FTT over unsafe buildings. Funding came along with that, because new building safety judges have been appointed. For obvious reasons, I am not privy to all the spending decisions, but as a regular attendee of the tribunal, I can see that money must have been provided. Whether you provide more money for this Bill is, frankly, miles above my pay grade.
On the increased workload, it is very difficult to say. It is plausible that there may not be that much of an increase in workload, because people can still agree what the new rent will be. If they agree it, there is no need to go anywhere near the tribunal. If I were pushed, my informed guess would be that there will be an increase in the first few years, because there always is whenever the law changes, and that it will settle down after a while, but I cannot properly comment on the minutiae of how you fund the FTT.
Jerome Mayhew (Broadland and Fakenham) (Con)
Q
Justin Bates KC: But what I am saying is that I do not know whether it will be that long. There is an assumption in the questions, which may or may not be correct, that all these cases will need a hearing. Most of the section 13 cases that the tribunal already deals with are done on the papers. It rattles through 10 of them a day because, unless there is something specific about the property—unless you need to see it to understand the condition of disrepair, or whatever—there is no reason why you cannot do rent-based determinations on the basis of written materials: the Rightmove print-offs, the price and so on.
Jerome Mayhew
Q
Justin Bates KC: The tribunal’s KPI internal target is all decisions within six weeks.
Jerome Mayhew
Q
Justin Bates KC: It broadly keeps to that. The FTT is pretty good at keeping to its standards. You can safely assume that we are looking at three months. Those are the figures you are throwing at me, and I can see that being realistic.
Jerome Mayhew
Q
Justin Bates KC: I do not know, is the answer. That is not a cop-out; it is recognising the limits of what lawyers should safely talk about.
Jerome Mayhew
Q
Justin Bates KC: Broadly, yes.
Jerome Mayhew
Q
Justin Bates KC: Yes.
Liz Davies KC: Of those where the landlord increases the rent. You are assuming an annual increase.
Jerome Mayhew
Q
Justin Bates KC: There is a famous housing benefit case, which the Commission on Social Security likes to remind us of, that says that Rachman is not the only model of landlord. It is entirely possible not to do that, or to agree sub-ones. Remember that the private rented sector is so difficult to pin down as a single, homogeneous beast. A landlord who lets to someone who is predominantly reliant on welfare benefits to pay their rent will not hike it beyond the inflation rate of the benefit, because all they would be doing is creating a situation in which the tenant cannot pay.
I do not think you are wrong to raise that spectre; I just struggle with how we identify how likely that is to play out, and what the numbers will be in any given period. I do not think, for my part, that we can safely assume that every landlord will go as high as humanly possible, or that everyone will be defended, but on your broad point that there will be a delay, yes, that must be right.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
Q
Giles Peaker: What is envisaged is it being enforced by local authorities, and the powers of the local authorities appear to be great. The question, as with existing powers for local authority housing enforcement, is the very variable performance—or the extremely variable performance—between local authorities. Whether one wants to impose a duty on local authorities, rather than a power, would be an interesting question; I strongly suspect that funding demands would follow on from that. But the powers are there and could be very effective; it is a question of the will to utilise them.
We do not yet know what the contents of the proposed decent homes standard will be. It would be good to see a unified standard across social and private tenancies—there is no reason why there should be any distinction between the two kinds of accommodation. The social housing side, as I understand it, will be enforced by the social housing regulator, which is a slightly different situation, but the same standard would apply. Tenants, as it stands, will not be able to enforce the specific standard except by complaint to the local authority.
Rachel Blake
Q
Giles Peaker: Tenants will have their existing rights under the Homes (Fitness for Human Habitation) Act 2019 amendments to the Landlord and Tenant Act 1985. Quite how far that will overlap with the decent homes standard—well, we will have to see what is in the decent homes standard. There will certainly be some degree of overlap, I imagine, through the presence of housing, health and safety rating system hazards, so there would still be a route for tenants to take action on specific hazards, but it will not necessarily enforce decent homes, full stop.
Justin Bates KC: For my part, I think that by far the better tenant-empowerment repairing provisions of this legislation are the extension of Awaab’s law to the private sector. If you get the details of secondary legislation right, that could be a real game changer, because that will be enforceable by tenants through private law proceedings in the county court. If you set sufficiently robust—fair, but robust—timescales, you will do a lot of lawyers out of work, which would be an excellent thing. Look at that.
Carla Denyer (Bristol Central) (Green)
This is my first time on a Public Bill Committee, Sir Christopher, so I might make a mistake with process. May I briefly point Jerome at the answers provided in written evidence and in earlier verbal evidence, which I felt answered the question already? In terms of, “Surely, won’t all tenants do it?”, I think we heard a clear answer that, for the vast majority of the population, anything to do with courts is a terrifying and bureaucratically faffy process that they will not want to engage with. On “Won’t landlords just max it out”—
The Chair
Order. I am going to stop you there, because this is an opportunity for Committee members to ask questions of the people who have come along as witnesses. We have limited time and once we start opening up a debate with other Committee members, it will be at the expense of being able to hear what we hope is, and is likely to be, very valuable evidence. If you have a question for any of the members of the panel, I shall be happy to take it, but if not, I suggest that you have your arguments with other Members when we get into full line-by-line consideration, when there will be plenty of opportunity for you to intervene on another Member with whom you disagree.
David Simmonds
Q
I know there is some pressure around issues such as tenants with pets and making sure that they have a right to occupy. A landlord may discover that the cost of insurance is significantly higher because of the pet or because of some other circumstance relating to the tenant —for example, they might have a poor credit history and are therefore not insurable for failing to pay the rent via the landlord’s normal insurance company. I am interested in how you see the Bill dealing with that issue and ensuring that tenants are not effectively barred from applying to rent particular properties because of those insurance issues and also that landlords do not find that the insurance they must have is so expensive as to effectively make their business as a landlord impossible.
Giles Peaker: My understanding was that the tenant could be required to have pet insurance. It is a permitted payment.
Liz Davies KC: Or the landlord has the insurance and the tenant refunds them. You have made a broader point, but just looking at clause 11 on pet insurance, the tenant will refund the landlord, so it becomes an exempted permitted payment under the Tenant Fees Act 2019. On the cost of insurance, I am sorry, but that is certainly beyond my legal expertise.
Giles Peaker: In terms of that situation, it is hard to see an impact on building or contents insurance. For insurance for unpaid rent, you would have to ask the insurers, but my immediate sense would be to ask why it would be different from now, when the tenant will face possession proceedings for rent arrears if the rent is not paid. But that would have to be one for the insurers.
David Simmonds
Q
Giles Peaker: Deposits are already capped.
Justin Bates KC: You cannot do it through deposits, because paragraph 2 of schedule 1 to the Tenant Fees Act 2019 will stop you doing that. You can presently do it through rent in advance, because the Bill does not prevent that, although I query whether it should. You could not do it by increasing the rent above market value, but you cannot do that anyway because section 13 as it stands would kick in.
Liz Davies KC: Is Giles’s point not right that this is a current problem in any event? Sorry to be asking you questions, but he is suggesting that it is alleviated because of the mechanism of section 21.
David Simmonds
Q
Liz Davies KC: So it is the rent-in-advance point. We would have to look at what the Bill says about guarantors. I am sure the Minister knows, but that would be the answer—something around advance rent or guarantors. It negates the point earlier, I accept that. This needs some thought.
Lola McEvoy (Darlington) (Lab)
Q
Liz Davies KC: The fact that landlords are required to be registered will raise the bar for good landlords. We do not yet know what information should be on the database. I cannot remember whether it is in the Bill or the explanatory notes, but it is assumed that any enforcement action or rent repayment orders they have had to make—anything that affects their quality as a landlord—will be there. That must raise the bar and set a minimum standard for landlords, which we currently do not have. Tenants, frequently those at the bottom of the market, are then subject to the consequences and disadvantages of that, so having that bar is really important.
The other thing is that making the information, when we know what it is, publicly available is extremely important because it holds landlords to account. Finally, it also affects the local authority’s ability to bring the various enforcement measures they have under both the Housing Act 2004 and the Bill.
Justin Bates KC: I did not hear Ben Beadle’s evidence this morning, but if you get the right details on the database—so that it is a publicly searchable database that shows you whether your landlord has done anything in a list of prohibited things and so that it has details about the safety of the building, for example whether the gas safety certificate has been uploaded or not—I would have thought that he and the NRLA would have been crying out for something like the landlord database. It gives them what they have always wanted: a way of differentiating the good landlord from the bad landlord and a simple way for a tenant to identify the good landlord and the bad landlord. If I put your name in and it comes up on the database that you are subject to a banning order, I probably should not rent from you. If I put the property address in and discover a prohibition order—those are registered on the database—I probably should not live there. That is what you should be able to do if you can get the database to work properly.
The way you have done it, for obvious reasons, it is all at the level of principle. The critical information is what you will do in secondary legislation about what is accessible. But if you get the database right, you go a really long way towards helping tenants to make informed decisions and helping good landlords to drive bad landlords out.
Mr Amos
Q
Liz Davies KC: Currently, Home Office accommodation for asylum seekers is not in the Bill. I am pretty sure, off the top of my head, that temporary accommodation under homelessness is, but if I am wrong about that—Justin and Giles are nodding, so it is. Temporary accommodation for asylum seekers should be there; we know that has problems with conditions.
I am sorry—I am embarrassed about this—but I should have said right at the beginning that I have acted as a consultant for the Renters’ Reform Coalition. I am not here today in that capacity, but I need to put that on the record.
Justin Bates KC: I would need to really check the detail, but housing provided by local social services authorities—Children Act 1989 accommodation rather than Housing Act accommodation—may not be covered. That might be another area of exemption. But the big one will be Crown properties: MOD, Home Office and so on. If you want to bring them in, you will need to expressly say so because, as I am sure you all know, the rule is that it does not bind the Crown unless you expressly say so.
The Chair
That brings to an end this evidence session. I thank the witnesses for their contributions.
Examination of Witness
Judicaelle Hammond gave evidence.
The Chair
Welcome; please introduce yourself.
Judicaelle Hammond: I am Judicaelle Hammond, director of policy and advice at the Country Land and Business Association. We represent 26,000 members in England and Wales who own and run land-based properties. We estimate that our members account for about a third of properties in the rural private rented sector.
David Simmonds
Q
Judicaelle Hammond: Unfortunately I do not think the Bill is going to make it much better in the sense that the main issue is the availability of housing full stop, and particularly the availability of affordable housing. Our members are doing a great deal already to provide that. We reckon that 23% of our members’ properties are let out at less than 80% of market rates, but at the end of the day there probably is not enough to go round and therefore we see the changes to the planning sector as the key. What the Bill might do, particularly with the demise of section 21, is to make it more difficult for people to enter or want to stay in the private rented sector, which is an issue. Again, as I said, it is by no means the only issue. I think the real key is supply.
David Simmonds
Q
Judicaelle Hammond: Yes. The main issue is the ability of the courts to deal with the extra cases that might be coming their way. One of the solutions, perhaps, is to look at some of the mandatory grounds and make them paper-based. That might improve things.
In terms of section 21, I should make it clear that among our membership the average time that the tenancy lasts is 7.5 years, which is nearly twice as long as the national average. Our members are responsible landlords; many of them will have had tenants who have been there for decades. We are not in the business of evictions or fast turnaround. We are not using section 21 very much, but when it has been used—it has included, for example, issues about antisocial behaviours—we have had some horror stories of members waiting for 12 to 18 months to get their properties back.
Without section 21, in the courts I think it takes at the moment 24 weeks from application for possession to actual possession, and some members are taking far longer than that with county courts that have closed. Digitisation might be a good thing, but how long will that take? There is an issue for us about reducing, unwittingly perhaps, the supply of private rented sector properties in rural areas as a result of the Bill.
David Simmonds
Q
Judicaelle Hammond: We are grateful to the Government for the new ground 5A, which deals with incoming agricultural workers. That will help—no question about that. And we are grateful for the new ground 5C, which is a ground to get property back because a job has ended, where the property was limited to the employment.
There are a couple of other grounds that are not covered at the moment and would be needed for rural businesses. The vast majority of rural businesses are not linked to farming or agriculture, but there might still be times when—we hear this from our members all the time—the provision of accommodation is necessary to attract or retain people, particularly when there is nothing else around. They could be in a really remote rural area or it could be because, for example, the person in that job needs to be on call, which would apply to security, caretakers or vets. Or it could be for people working antisocial hours in hospitality, for example, or at a wedding venue, where there is no longer public transport available at the time they are meant to finish or they need to start really early to set up before the wave of tourists come—and so on.
Increasing and expanding ground 5A to include service occupancies in very defined circumstances would be really helpful. To avoid abuse, there are definitions of what that could cover in other legislation that could be referred to. That is the main ground.
The second ground that is needed for agricultural workers is a new ground for what is known as suitable alternative accommodation. Some categories of agricultural workers have protected tenancies under existing legislation—the Rent (Agriculture) Act 1976—and assured agricultural occupants are also protected under the Housing Act 1988. For example, you might have a retired dairyman or indeed their widow who is still in the main dairy. You need to recruit somebody to replace that dairyman. If you have more than one property, it would be useful to have a ground to get it back, in order to then move the retired dairyman or the widow in that property. Obviously, if you have only one property, it is game over, but in the case that you have a small portfolio, it would be really useful to have that, because you have a legal obligation to rehome that person but you need the property in which they currently are.
Matthew Pennycook
Q
Judicaelle Hammond: Yes, sure. I think it needs updating because it was designed for problems in the social sector. It might or might not be applicable to the private rented sector. It also does not deal very well with older properties, which is the vast bulk of what our members have. To judge the private rented sector against the decent homes standard as it currently is would be, I think, misleading, and it would have all sorts of unintended consequences. For example, in small cottages in rural areas, there are typically very small kitchens and so on. They would not necessarily fit, and it would destroy the character if you were to change that—
Matthew Pennycook
Q
Judicaelle Hammond: No, it is not the principle. The issue at the moment is that what we have got, which is the decent homes standard that applies to the social sector, would not work in the private rented sector in the rural context. The other thing that we do have, however, is the housing health and safety rating system and, indeed, the minimum energy efficiency standards. We reckon that that probably covers the ground, but it absolutely needs to be enforced. I think you have already got levers there. That is what we would say.
Mr Amos
Q
Judicaelle Hammond: We recognise that is an issue in some areas of the country that are honeypots. If the proposals that were consulted on are implemented effectively, we see a need for them.
On your question about whether some properties would become holiday lets, I think if you had asked me a year ago, I might have said yes. There are other pressures on the holiday let market that make this increasingly unlikely. We hear from members that they are planning on selling full stop, which would probably be selling to people who want to be on the housing ladder rather than to people who want to take over their business of being private rented sector housing providers. That is a real issue and concern for us.
Jerome Mayhew
Q
On one side of the argument you could say, “Rents will go up as supply decreases.” Do you think that will be an unintended consequence of the proposed legislation? On the other side, which I invite you also to consider, is the question of whether, if you increase foregone earnings—that is, increase the losses associated with being a tenant—because the time required by court processes will be extended because of increased demand, that increased loss will filter into increased rents in the long run.
Judicaelle Hammond: I think the answer to both of your questions is that there is a risk. If demand and supply work in the way they are intended to, unless you increase the supply there is a risk that the rent would go up—to do exactly the two things you suggested.
What we see is broader than just renters’ rights reform, though: we are seeing, for example, the move towards minimum energy efficiency standards, and I totally understand why that is needed. At the same time, it is quite difficult for landlords to deal with some of the costs. Again, we are mostly talking about older properties in rural areas. The cost of maintenance and improvement, particularly since the Ukraine war and the surge in the cost of building materials, has not come down. It has stopped growing at the same rate, but the prices have not come down to where they were pre-pandemic, pre-Ukraine.
As a result of that, you will first have to wait for a void in your properties, in all likelihood, in order to do the kinds of work that will be needed. Those voids do not happen very often. Secondly, you need to get your hands on tradespeople, who might actually prefer to stick to their local areas, because they are within 30 minutes’ driving time and not an hour and a half’s driving time. That is something else that we hear quite a bit about. All that is bringing pressure on to the private tenanted sector.
Jerome Mayhew
Q
Judicaelle Hammond: It was proposed to be £10,000 in the last consultation. It is every five years.
Jerome Mayhew
Q
Judicaelle Hammond: I am afraid that the answer, which is probably for another day, is that it depends. For example, it depends where you are in the country and what kind of rents you are going to be able to charge. I was talking to a member this morning who said, “There is no way I can put the rents up. The people who are paying for it will not be able to cope with an increase in order to recoup that.” We need to look at that carefully and have either a ramp-up system or a different system for exemption, or indeed better or more suitable technology, which might well be coming. My plea on that would be: let us use the time we have before the standards are tightened to improve things like the energy performance certificate methodology and look at alternative technologies as well.
Rachel Blake
Q
Judicaelle Hammond: It is a question of finding ways quickly to improve things, and using the current regulations. Again, I am not here to ask you questions, but I am really curious about the barriers that you see. If this was enforced properly, you would find ways of doing it. For us, it is a question of asking, “Well, there is legislation already. Why don’t we use it?”
On the decent homes standard, it is less an objection in principle. It is more about taking what we have at the moment and applying it without thought or adaptation to the private rented sector, where some of the conditions might be different. For example—going back to my argument about the availability of trades, maintenance staff, and so on—if you have a large portfolio, that might be doable, but if you do not, you really are in a different position.
The Chair
Order. I am going to bring in Jacob Collier because we are running out of time.
Jacob Collier (Burton and Uttoxeter) (Lab)
Q
Judicaelle Hammond: It might help. We see that database as a way of increasing transparency for both tenants and landlords. Our plea would be: let us do it effectively, and let us ensure that we have an IT system that works and is not basically a massive white elephant. An awful lot of that data is already available in other places. Can that system be built using the available data, rather than having a completely different program that requires quite a lot of time and money?
Rachel Blake
Q
Judicaelle Hammond: Sorry, I really cannot give you a proper answer because it would depend on the circumstances.
The Chair
Thank you, everybody. Thank you for coming along and giving us a bit of your experience and knowledge. We will move on to the next panel.
Examination of Witness
Anna Evans gave evidence.
The Chair
Straighten your ties, because we are now going to be on Zoom. We have until 3.20 pm. Please can you introduce yourself?
Anna Evans: I am Anna Evans, director of Indigo House. We are a housing consultancy based in Scotland, but we cover the UK in terms of affordable housing research and consultancy.
David Simmonds
Q
Anna Evans: I am here as an expert on the Scottish private rented tenancy and the reforms that have happened in Scotland, so I do not think I could necessarily answer the question about what the Bill could do. So far, the legislation in Scotland, through the private residential tenancy, has failed to address anything on affordability. It brought in rent adjudication and what were called rent pressure zones, which local authorities had the power to determine. Those failed due to a lack of data, and the rent adjudication system has been effective for only about 230 tenants out of the 300,000-odd households in the private rented sector. The Scottish Government are looking to address that through the current Housing (Scotland) Bill, rent regulation and rent control, but to date, the legislation has done nothing for affordability.
David Simmonds
Q
Anna Evans: We have not examined that particular question, but in terms of supply, new build in the private rented sector in Scotland has probably stabilised rather than grown. Most of the growth in the private rented sector has been through the existing stock, and of course, there is growth in purpose-built student accommodation. There has not been a huge amount of new build and regeneration in the private rented sector, certainly over the last five years, but I do not think you could necessarily attribute that lack of growth solely to new tenancy. A huge number of other things have been happening in regulation in Scotland, and there is obviously the wider tax regime, too.
David Simmonds
Q
Anna Evans: For tenants, the positives are a new foundation of rights and there should be more legal security. Tenants in Scotland enjoy open-ended tenancy and specific grounds for eviction, and there are longer notice periods. It is gradually moving to more of a contractual, rather than a subjective, relationship.
I should say, though, that there are very considerable differences in satisfaction between the general population of private rented tenants and the lower end, where lower income tenants or those who are more vulnerable are still disadvantaged. That is because of the overriding demand-supply imbalance. There is a fear among tenants about challenging, if they know that there are very few affordable alternatives on the market.
For landlords, I would say that they are generally settled with the private residential tenancy now—it has been in place for over five years, and they can see the consistency in practice and greater clarity in rights and responsibilities. Clearly, it is less flexible, but the difficulties that landlords have in Scotland are to do with subsequent legislation, and in particular, rent control.
Matthew Pennycook
Q
Anna Evans: Yes.
Matthew Pennycook
Q
Anna Evans: I will take the rent control issue first. This was nothing to do with private residential tenancy; it was the result of emergency legislation on the cost of living, which was brought in in 2021-22. That brought in a rent increase freeze and then rent increase caps. If we look at the data following that on rent increases, there are arguments around this, but basically average rent increases have not frozen or been curtailed. Some would certainly argue that rent increases in Scotland have been greater than what you could see across the UK.
We should remember—I was looking at evidence on this earlier—that landlords, certainly in Scotland, usually increase rents at a change of tenancy, not on an annual basis. What happened when rent control came in, with a range of other pieces of legislation and regulation, was that it became more of a hostile environment—that is what landlords are saying—and so as a result, they tended to hike rents up more at a change of tenancy. But we have found that most landlords want good, stable tenants for a long time. Most actually do not increase rents during a tenancy, but only take the opportunity to increase rents at a change of tenancy, and because of the environment and the hostility that they were feeling, they thought they had better increase rents at change of tenancy. Does that answer your question on rent control?
Matthew Pennycook
Yes, that is very useful. Thank you.
Anna Evans: In terms of the differences between your Bill and the private residential tenancy, I have to confess that I am not an expert on your Bill, so I cannot answer that in detail, but I can say that the PRT is an open-ended tenancy. It has no fixed-term period. There is the eradication of eviction with no grounds. Eviction proceedings are simplified to 18 statutory grounds and there has to be a reason—what are the grounds for eviction? There are extended notice periods and also a phased implementation. I think that is a key point. A lesson that the current Housing (Scotland) Bill is looking at is whether short assured and assured tenancies should actually just be terminated now because there has been long enough. There is still a good proportion of assured tenancies in existence—we estimate probably about 20%. Short assured tenancies are certainly less secure, so one lesson would be that if you are changing, do not do it over seven years; do not delay.
Carla Denyer
Q
Anna Evans: I think what we have concluded from all of the evidence is that the rent control has to be very carefully designed to avoid unintended consequences. It is above my pay grade to say what that design might be, but there could be a range of ways in which landlords try to get around rent control. We have seen examples of offers from tenants—I understand that your Bill will avoid wars between tenants, in terms of rent levels, but because of demand-supply imbalance, tenants do offer landlords higher rents to get properties. Evidence across different states shows that rent control efficacy is variable, so it has to be very carefully designed.
Jerome Mayhew
Q
Anna Evans: We show in the report that the rents increased at a similar rate to the rest of the UK until ’22. If you were trying to isolate why there was a more considerable increase since that time, you could probably fairly conclude that it was because of the 2022 legislation, but it is very difficult to isolate out. The range of legislation that has been implemented in Scotland is significant, but there was a tipping point in ’22 when rents in Scotland appear to have increased at a greater rate than in the UK. The key point was the 2022 legislation.
I should also caveat all of that—as we have in our report—by saying that the Scottish rent data is not as good. It is based on advertised rents rather than any survey of in-tenancy rents. The published data on rent levels and the hike in Scotland will be for new tenancies, and therefore, that will naturally be inflated compared with most tenancies, because we know that landlords do not tend to increase rents in tenancy. They prefer to keep them at a level that keeps tenants content and therefore they have a longer rental period. That evidence has to be considered with caution, because it is based on advertised rents.
Lola McEvoy
Q
Anna Evans: As I said, I do not think it is possible to absolutely isolate this out, but on advertised rents—new advertised rents—there was an increase post 2022 when that legislation came in. But you must remember that that does not include evidence of in-tenancy rents, which would be lower. So we cannot say that all average rents have increased as a result of that—we cannot say that at all.
Lola McEvoy
Q
Anna Evans: Yes.
Rebecca Smith (South West Devon) (Con)
Q
Anna Evans: Not through this research, sorry; no.
The Chair
Thank you very much indeed for your evidence, and I hope the weather is good in Scotland.
Anna Evans: It is a beautiful day today.
Examination of Witness
Victoria Tolmie-Loverseed gave evidence.
The Chair
Good afternoon. Thank you very much for coming along. Would you like to introduce yourself, please?
Victoria Tolmie-Loverseed: My name is Victoria Tolmie-Loverseed. I am deputy chief executive at the student housing charity Unipol Student Homes.
The Chair
The acoustics in this room are notoriously bad, so it would help us all if you were able to keep your voice up, please.
Victoria Tolmie-Loverseed: I will do.
David Simmonds
Q
Victoria Tolmie-Loverseed: I agree with that exemption. Purpose-built student accommodation exists for a very specific purpose. Therefore, operators of that kind of accommodation need to ensure that they are renting only to tenants—they need to have the means to regain possession. Often, they have planning obligations linked to the fact that they should only house students in that type of housing, so if they had a situation where students were able to stay for an indefinite period, they might start to have non-students living in the accommodation, which would be problematic for the ongoing management of the property.
David Simmonds
Q
Victoria Tolmie-Loverseed: Yes, that is problematic. Every year, about 700,000 students live in the kind of housing that you describe, which I will call off-street housing. I hope everybody knows what I mean by that: a shared student house or flat that is not in purpose-built accommodation. About 700,000 students rely on that type of housing every year. It is more affordable, and it is available when students need it, which is at the start of their academic cycle. We are concerned about the potential loss of that housing, and we are concerned that because of elements of the Bill, it could become more expensive over time. It is an affordable part of the student housing sector at the moment. Rents are generally much lower than for other types of student housing—about £130 a week, on average—so it supports students with lower budgets to live at university in a more affordable way. We are concerned about the loss of that type of housing.
David Simmonds
Q
Victoria Tolmie-Loverseed: In principle, I support the idea that landlords who are part of some sort of accreditation or recognised scheme should have an exemption for their accommodation in the same way as PBSA does. There are other ways of doing that. We at Unipol submitted some evidence with a suggestion that there should be a student tenancy for use in the off-street housing sector, which offers a fixed term with some other elements to it that would be very advantageous to students. Student housing is niche—it is very specific and has a very specific function—and certain practices and elements in there we think need special attention.
A fixed-term tenancy for students would allow landlords to regain possession but provide the security of a fixed term to students, as well as benefits to them that speak to their specific needs. For example, people should not be able to use guarantors for students—that is restrictive and difficult for students from low-income backgrounds —and students should be able to give notice in certain circumstances, such as if they have left their course. If they are no longer at university, it would be very handy if they could give two months’ notice and that is that. We think that would be right.
We also think that there is a real problem of early renting in the world of student housing—students who might need a tenancy from July end up renting places in September and October, because of pressure in the market. There is a shortage of student housing, and that is a real issue, so students rent earlier and earlier to get ahead of the market. We think that a cooling-off period should be attached to a student tenancy.
Those are real pressures and difficulties that students experience, so we think that they need special treatment in the Bill. As I said, there are 700,000 students, which is not an inconsiderable number. They should have special treatment.
Matthew Pennycook
Q
If we were looking to take action on sign-ups in advance, what is a reasonable period when landlords should be able to ask students to sign up in advance that does not, as you say, force them all to sign up far too early and in ways they may regret or have to re-examine? What is an appropriate period in which a sign-up would be reasonable? Lastly, do you understand why the sign-up arms race, as I might put it, has developed? It is hard to find an explanation for why all landlords are locked into a cycle of earlier and earlier sign-ups; it seems to have developed organically. Could you outline why you think that problem has arisen in the first place?
Victoria Tolmie-Loverseed: To take the first point, in the Bill you have proposed ground 4A for possession of student tenancies. That is definitely a helpful addition and we were glad to see it brought forward. However, at the moment it is just for HMOs, which we assume is deliberate wording, so it is for properties with larger groups of three or more people living in them, and you have excluded one and two-bedroom properties. We think that will result in a loss of smaller properties from the student housing sector.
The sector is quite particular. These properties have been set up close to universities, and the businesses are run in a particular way. I can understand why you might think that one and two-bedroom properties would perhaps have more mature students or students with families living in them. Often they do, but the reason why all students rent all properties in the student market is to do with them being at university. Generally, they are in that city and living in that housing only because they are at a university nearby.
We think that excluding one and two-bedroom properties is problematic, because they are quite a big part of the market—more than you would think; it is not just mature students or students with families. A national advertising platform called Accommodation for Students has given us some data on this, and 31% of the properties listed on its website nationally are one and two-bedroom off-street houses. If you were to lose that amount of property from the student market, that would be problematic. I think that is likely, because if you are in a one or two-bedroom property and you can have an indeterminate tenancy and give notice at any point, you may give notice in January when there is no demand for students, and that property will end up leaving the cycle of the student market and going into the professional market.
The average is 31% across the Accommodation for Students website, but in some locations it is even higher. In Newcastle and Preston, over 50% of the properties advertised are one and two beds, so it is not just mature students; it is younger undergraduates who are living in those types of houses because they suit their needs and they are available. Losing them would be very problematic over time and would reduce the supply of housing available to students.
The second part of your question was about cooling-off periods and early renting. Why does it happen? I think it is a mixture of things. Students want to secure a nice house, so they go out early and try to beat the rest of the market. In some cities, there are shortages of accommodation because student numbers have increased considerably over recent years, and there is a cap on the amount of off-street housing that there can be because of planning—article 4 direction—so we are not making any more shared student housing.
Students are aware that there is a shortage, and if they want to get the house that they want, they will try to get out there earlier and earlier to beat the market. That is why it happens, but it is really problematic, so we would like it to not happen. We have suggested that if you could say to students that they could cancel that agreement up to four months before the tenancy was due to begin, it would stop early renting. There would be nothing in it for landlords to try to get properties signed earlier and earlier, because students would be able to drop out. We do not think that would be problematic. It will not be an issue for landlords as the properties will still be let, but hopefully it would stop the silliness.
Matthew Pennycook
Q
Victoria Tolmie-Loverseed: No, they do not at all. It is not a problem. No-fault evictions are very rarely, if ever, used in the student housing market, because the need is cyclical, and generally most students will very happily move out when their tenancy is finished. I think it would be used very rarely, but it sends a useful signal that it is time to think about leaving.
The real issue for me, and the more problematic thing that will stop the cyclical nature of student housing, is the ability of students to give two months’ notice. I understand not wanting to treat students differently from the rest of the market, but the need for housing is so tied to the particular reason of being at university. Most landlords deal with their tenancies on the basis of 12 months, and they set their rents on an annual basis. If you say, “Your tenant is able to give notice, and they might choose to leave in April or May,” those landlords will respond to that and think, “I will have to increase my rent, because I have an annual rental figure that I need.”
Matthew Pennycook
Q
Victoria Tolmie-Loverseed: I do not have a tiny violin for landlords, but I am just saying what we think is likely to happen. It is a commercial operation and landlords need to cover their costs, and we think that if landlords perceive more risk they will seek to put up rents.
Your previous witness talked about the situation in Scotland. One of the things we would really like the Government to do before going much further is an impact assessment on the student market, particularly looking at Scotland, because the evidence there about student homelessness as a result of the tenure changes is compelling. The Government in Scotland have a committee looking at how they can tackle the issue of student homelessness, and I think that is a bit of a warning for us all that we could very well be in that place in a couple of years’ time if we do not think about the student market, its particular characteristics and what it needs.
Mr Amos
Q
Victoria Tolmie-Loverseed: I think there are alternative options. There was discussion on the previous Bill about creating an accreditation scheme or some sort of certification for landlords in the off-street sector. That is worth considering if a landlord is part of a quality mark and might be able to offer fixed-term tenancies similar to PBSA. There would certainly be some benefits to that, and you would offer students a quality product with landlords who are accountable to somebody but can have certainty in their business planning, which would be beneficial. I also think that ground 4A should be amended and extended to all student properties.
Mr Amos
Q
Victoria Tolmie-Loverseed: We think that the definition of a student property in the Bill is fine; it is just the restriction to HMOs, which are three-bedroom properties. We think the definition of the type of property, or the size of the property, should be changed.
Sam Carling (North West Cambridgeshire) (Lab)
Q
Victoria Tolmie-Loverseed: The joint tenancy issue is problematic, and there is no way to get around it. If you are in a joint tenancy, all the tenants are essentially treated as one. If one tenant gives notice, all the other tenants, in theory, could be asked to leave at the same time. I think landlords will be pragmatic about it and seek to manage that process actively. Unless it is in their interests to regain possession of the whole property, I think most landlords will try to smooth things out and find a resolution.
Typically, the remaining tenants are liable for the rent on the room that has been vacated, and I think it would be very difficult for landlords to backfill, so the remaining tenants may find that the rent increases. That is going to cause quite a lot of rupture and disruption in the student market. We think about half of tenancies are on a joint basis at the moment, and that is going to be really disruptive. I cannot think of a way around it. Unless there was some sort of ability to have a fixed term, I think it is going to be really difficult. Sorry; I have forgotten the second bit of the question.
Sam Carling
Q
Victoria Tolmie-Loverseed: Yes. I think a lot of landlords release tenants, certainly in the PBSA sector. If somebody leaves university or their circumstances change, I think a lot of landlords release tenants. I think it is right that if somebody leaves university, a landlord should seriously consider releasing them, perhaps with two months’ notice, and letting them leave. I think that would be a very good element of a student tenancy. Unipol is a landlord, and we release tenants if their circumstances have changed. It is a relatively small number of students who require that, but it is difficult. That would undoubtedly be an advantage to the students who need it.
Carla Denyer
Q
Victoria Tolmie-Loverseed: There are significant numbers of students—I do not know the exact numbers, but more and more are starting with January start dates. Some universities have five points in the year when you can start a degree or a Masters. It is problematic for Masters students whose course goes on until September or October, when they are having to write up, or PhD students. That can be difficult. I think there should be more flexibility in the current timetable of June to September, and perhaps in the ability to give notice at different points in the year for student properties.
The Chair
I am afraid we do not have the flexibility to allow this question session to go on any further. Thank you very much for your attendance.
Examination of Witnesses
Melanie Leech, Suzannah Young and Timothy Douglas gave evidence.
The Chair
Q
Timothy Douglas: Good afternoon, and thank you very much for the opportunity to give evidence today. I am Timothy Douglas, the head of policy and campaigns at Propertymark, which is the UK’s leading professional membership body for property agents. We have 18,000 members working across the UK in lettings, sales, commercial property, as valuers, auctioneers and inventory service providers in commercial property.
Melanie Leech: Thank you very much for the opportunity to give evidence this afternoon. My name is Melanie Leech. I am the chief executive of the British Property Federation, which represents institutional investment into the private rented market, which is everything from student accommodation to the build-to-rent sector to co-living and senior living.
The Chair
And Suzannah Young, who is joining us on Zoom.
Suzannah Young: Thank you, Chair. I am Suzannah Young, a policy officer at the National Housing Federation. We represent housing associations in England—social landlords providing 2.7 million homes to 6 million people. I will say a word about housing associations, if I may, because the Bill will have implications for them, as they offer assured tenancies. As they are not for profit, housing associations invest any income back into the development and maintenance of homes and into supporting residents and communities. They seek to provide tenants with long-term stability and security of tenure in good-quality, safe and affordable homes. We are a sector that has always offered assured tenancies and lower rents, and that delivers housing types unlikely to be found in the private rented sector, including three quarters of supported housing for people on low incomes with care and support needs. We therefore support the Bill’s aims to give greater rights and protections to renters.
David Simmonds
Q
Melanie Leech: Shall I kick off? Thank you for the question. The first thing to say is that we support the aims of the Bill and the drive to raise standards in the private rented sector. In particular, I would highlight measures such as the compulsory ombudsman—of course, many institutional landlords are already voluntarily members of the housing ombudsman service—along with the landlord database, which we have been calling for since 2008, the application of the decent homes standards and Awaab’s law to the sector, and recognition of the particular nature of the purpose-built student accommodation sector, which of course you have just been talking about.
Our major concern with the Bill is that the courts will not be ready for the abolition of section 21. A cross-party consensus that a better functioning court system is an essential part of the reforms has been a significant factor in maintaining landlord support for rental reform. Its importance has consistently been recognised in the political debate—by the Select Committee on Housing, Communities and Local Government in the last Parliament, which looked at the previous Government’s reforms, and by the Mayor of London in his work on a London model. However, despite serious discussions starting on rental reform in 2017, we have made almost no progress on court reform, which leaves landlords with little confidence that sufficient improvements will be made to make these reforms work well. That, of course, should be the objective: not just to pass these reforms, but to ensure they work well for both landlords and tenants.
One way of improving the court process is to digitalise both the process and the interface with claimants and defendants. We are really pleased that the Housing Minister is committed to continuing with the digitalisation project, but that is not going to deliver improvements any time soon. We are therefore heartened to hear the Housing Minister also talking about additional resource. This is essential because with section 21 gone, the courts will need to consider and process possession cases under section 8. Government data suggests that it currently takes just over seven months to process section 8 possession cases, including cases related to antisocial behaviour and rent arrears. It is worth stressing that that is an average. It is not uncommon to hear of cases taking more than a year.
There is also a huge shortage of court bailiffs in parts of the country. For example, in some London boroughs it can take five months to secure the services of a court bailiff, even when your claim has been vindicated. That also, of course, has consequences for people who cannot access those homes that would be freed up, for example in cases of poor behaviour and rent arrears.
While we recognise that improving the courts will not be a precondition of section 21 ending, at the very least we can call on the Government to outline what the justice system being ready means, both for tenants and responsible landlords; to commit to bringing waiting times down when it comes to the courts considering and processing legitimate possession cases; to ensure that the courts have clear and commonly agreed key performance indicators, which the Select Committee in the last Parliament recommended; and to improve staffing of the courts and tribunals, including recruiting more bailiffs.
We would also urge this Committee to scrutinise that aspect of the Bill in detail, and to consider calling for evidence from the Ministry of Justice—so far as we are aware, we have never actually heard directly from the Ministry of Justice, which is best placed to explain what procedures will be in place to make sure the courts are strengthened to deal with these cases—and to ask what progress is being made on digitalisation. We urge the Committee to scrutinise the justice impact test shared between the Ministry of Housing, Communities and Local Government and the Ministry of Justice—which will contain the projections on which the impact for this part of the Bill is based—so that we can all see that those have been properly scrutinised and that the court reforms that we need can be delivered.
Timothy Douglas: At Propertymark, we recognise that there is an ongoing cost of living crisis and there is huge demand for private rented property. We also recognise the manifesto commitments from this Government and the other parties to the changes contained in the legislation. We certainly acknowledge a drive towards improved standards, but we all have to recognise the unintended consequences and the impact of the changes on landlords, agents and the supply of property.
Certainly, our members are left wondering how this Bill will help to meet the huge demand for private rented property. Our data shows that on average there are almost 10 new applicants registered for each available property. One member in the west midlands, who has 13 offices across the region, has seen their lets—the number of properties—reduced from 5,348 to 5,006 since the start of the year, so we cannot underestimate the incentives for landlords or the investor appetite. These are significant changes. As has been said, we must get a commitment to reform the courts, the grounds have to be robust, and we must see enforcement of the existing rules by local authorities, never mind the raft of additional heavy-handed measures included in this legislation. We must retain fixed-term tenancies as an option where mutually beneficial for all parties, to retain flexibility and choice in the market.
The Chair
Suzannah Young, do you wish to add to your initial remarks?
Suzannah Young: In response to the specific question on the private rented sector, it is not an area where I have the most evidence to give, as my main area is the impact on housing associations. However, one thing I can say specifically is that we think that the proposed private rented sector housing ombudsman is absolutely right. Residents in the private rented sector should have access to an ombudsman. It is important that access is clear and easy to navigate for tenants, and that they have routes to redress where things have gone wrong.
From that perspective, and from the perspective of housing associations, we would like to ensure clarity about the remit of the new ombudsman. There is already an ombudsman service for social housing. However, some housing associations also provide market rent homes. It will therefore need to be clear what the expectations on housing associations are, in terms of reporting on their market rent homes, and it should also be clear to tenants which ombudsman they should go to. For example, sometimes there will be social and market rent tenants in the same building with the same landlord. We need clarity on remits so that there is no confusion.
I would like to comment on the points that Melanie Leech made about the readiness of the courts. Housing associations have experience of the impact of delays in the courts and the fast-tracking of possession cases during lockdown. Our members have experience that could be of use in the future. Our members report to us that there are already delays in the court system, which we heard earlier. It can take many months to get a possession hearing. That is a particular problem where possession is being sought, for example, for serious antisocial behaviour or domestic abuse, where delays to possession can increase the risk to tenants from perpetrators.
If the Government wish to implement, for example, a system of fast-tracking of serious cases, there will need to be a robust mechanism. If all cases are fast-tracked, we will be in the same position as if no cases are fast-tracked. We had some feedback from our members about how the courts could have helped with improving their capacity, such as increasing bailiff availability, increasing clerk availability to help to deal with the paperwork and logging of cases on the new online portal, ensuring training for district judges, and addressing the health and safety concerns of bailiffs. If the Committee wishes, I can also give some evidence, either now or later, on the impact on housing associations.
David Simmonds
Q
Timothy Douglas: I think more clarity is needed in the letting agent space. Letting agents are already required to sign up to one of the two Government-approved redress schemes, but those two schemes do not adjudicate in the same way. The property ombudsman will work to a code of practice, and the property redress scheme would work to that code of practice or common law in order to make the adjudication. We are adding an additional layer to that through a landlord ombudsman. Our recommendation would be that those landlords who are fully managing property should sign up to a redress scheme, but we realise that that argument is not necessarily in the legislation and has not been won.
We must look at the myriad management practices—let and rent collection, or fully managed. As a tenant, working with both a landlord and an agent, we have to get adjudication of this new scheme and the existing schemes, and get a code of practice in place for the sector, so that we are all working to the same standards and the same adjudication. Are we also expecting landlords, like agents, to have a complaints procedure that tenants have to work through? We need that parity before we even talk about tribunals and the other things.
We must use the existing schemes and that expertise in the sector. There are 19,000 letting agents in England, and roughly 50% of landlords use an agent, so 50% of landlords are already plugged into those schemes. They have knowledge and experience. Let us get a code of practice built in, so that we are all adjudicating on the same level. Let us get some sort of housing complaints portal across tenures, so that the tenant can make a complaint that is filtered to the relevant ombudsman. We must help the consumer. We are adding a layer of complexity and we need to iron out some of those issues first.
Melanie Leech: I will build on that, but by standing back slightly from the question, because I think this is a subset of a much broader set of issues around transition. This will be hugely complex. We have 4.6 million tenants who will need new leases. Some of them are sub-letting and so on. We have all those new agreements to draft. We are going to need lots of training for the professionals who are managing this. We will need new processes and guidance for agents and local authorities. We will need adjustments to insurance and mortgage policies. The lesson from Wales and Scotland is that a big bang approach does not necessarily work because you cannot get all of that right in one go. We are keen to work with the Government to start thinking now about the implementation strategy. Clarity for tenants and landlords about how the new system will work, where to go and so on is critical to that, but we need to start thinking about that now and to create an implementation framework, because if we do not, these new reforms will not work well.
Timothy Douglas: Scotland has been talked about as an example, but of course, it has phased in private residential tenancies—there still are assured tenancies working in Scotland. But Scotland has a long-standing landlord register, and it has letting agent registration and regulation. There is a tribunal that is free to use for both landlords and tenants. Scotland definitely had a 12 to 15-month phase-in approach for the PRT to kick in. From what we are hearing, we will have Royal Assent, three months and a commencement, and then all these tenancies will switch over. That is an issue for all agents, but certainly for our larger agents, who are managing thousands of tenancies up and down the country. A consideration of the impacts of the transition and extending that would be welcome before the implementation of this legislation.
David Simmonds
Q
Timothy Douglas: From Propertymark’s point of view, we want to see warm, decent homes. The agent can actually be a layer of enforcement, whether they instruct the landlord to take on that property or not, as well as mortgage providers. Unlike social housing, which is designed to specific specifications, the property redress scheme comprises a range of property without specification. The decent homes standard was argued about in the previous Session. It was consulted on by the last Government. There were numerous working groups with the last Government and, yes, it is going to be consulted on again.
From Propertymark’s point of view for the private rented sector, we have to link up with local authority assessments. We have to focus on fit-for-purpose. I know that local authorities—certainly a local authority in the midlands—will, without fail, change all the boilers every five years in their housing stock. I am sorry, but private rented landlords do not have the money to do that, and the social rented sector has received billions of pounds in eco funding as well. If we are to get that parity between the private and social rented sector, the private rented sector needs to see that funding come forward, certainly in the thermal comfort space—cool in the summer, warm in the winter. Why, for the 18 different archetypes of property across the country, are we going for a one-size-fits-all energy efficiency target? That is going to nullify older properties in England and Wales where the regulations extend and rural properties. Let us simplify the HHSRS as well. There are existing levers that we need.
Finally, on this point about extending decent homes and Awaab’s law, we welcome these steps as long as we get them right for the uniqueness of the private rented sector. In the Social Housing (Regulation) Act 2023, which was passed in the last Parliament, there is a requirement for all property managers in the social rented sector to be qualified. We think that should be extended to the private rented sector to all letting agents as well. If we can get that code of practice in place through adjudication and redress, we can qualify our letting agents. We get parity, drive up standards and help enforcement. That would certainly go a long way towards the decent homes standard and Awaab’s law being implemented in this sector.
Matthew Pennycook
Q
Melanie Leech: The first thing to say, as you know, is that institutional investment into the build-to-rent sector specifically is a growing part of the housing supply mix. It is bringing in genuinely additional investment, because it is the type of investment that does not typically invest in build to sell—you have people wanting to use large amounts of capital to generate secure income streams so that they can match against pension liabilities, insurance liabilities and so on. Probably the key word in that is “secure”. Anything that damages investors’ confidence that the income they will get from their investment is at risk will undermine our potential to unlock investment into homes and the rental sector. Currently, the peak year for build-to-rent delivery was 15,000 homes. We think that you can double that to 30,000 homes, with the right conditions, and some of my members would go further and say that you can double that again. We are looking at an investment stream that could be a very significant part of helping to deliver the Government’s aspirations to build more homes.
What I have already talked about, in terms of the ability of the courts to cope with the reforms, is an important indicator of confidence. Investors will look at that and think, “This changes the basis on which I have invested. It makes it more difficult for me to manage the property efficiently.” I think the issues around rent determination also have that potential, so there is nervousness around needing to use section 13 and rent increases. There is a suspicion that tenants have nothing to lose by challenging any rent increase, so it is about getting the framework right around how we define what an unreasonable rent increase might be and how we manage those cases that might come before tribunals. There are some issues around that that we would like to see more clarity around and redressed.
In general, we are really supportive, because in the part of the market that I represent the decent homes standard already would not cause us an issue in terms of implementation and so on. We are trying to raise standards in the private rented sector, and we are raising standards in the private rented sector, but the key thing is to implement the reforms in a way that does not undermine investor confidence, so that we do not inhibit the supply of homes.
Matthew Pennycook
Q
Melanie Leech: This is pure speculation, because I have not asked members this question. History suggests that once legislation is passed, those affected by it figure out the best way to protect their interests in the light of the new framework, so I would broadly expect that to happen. But if we are asking ourselves how we get back to a position where investors can have confidence, we should probably ask ourselves why we are asking that question in the first place. We should be creating a framework within which investors can have that confidence.
For example, some of the nervousness will be around the fact that, if you have a litigious tenant who takes you to the tribunal and ultimately to the courts over a rent increase, and the decision goes in the landlord’s favour, you have still lost several months. You cannot backdate the reasonable rent increase for which you have just won the court’s authority, so you have lost a lot of money in terms of both the rent accruing and the amount of time you have to spend going through that process. Let us just remind ourselves that when I talk about landlords here, I am primarily talking about pension funds and insurance funds, so it is our money.
Timothy Douglas: I think that is the point. While we need supply—and we need supply from all sources—landlords in the private sector are a broad community. The bulk of private rented sector landlords have one, two or three properties. What is disincentivising investor confidence is not necessarily the competence of this Bill, but the sector would welcome a review of all taxes and costs that have impacted private landlords in the past five years. We have seen the reduction in mortgage interest relief, the 3% additional surcharge when you buy a rented property, tinkering with capital gains tax—some are taxed as businesses while some are not—and changes to the wear and tear allowance. If we really focus and want to be sensible about incentivising landlords and the investment community, we have to shine a spotlight on taxes and costs.
Alongside this legislation, we need to enact the registration requirements in the Levelling-up and Regeneration Act 2023 on short-term lets as well. Otherwise, we are going to see a further exodus of landlords to the short-term lets market, which is less regulated and has fewer controls in place.
We need to build more social homes. Ultimately, as you will know, Minister, our argument remains that we need to retain fixed-term tenancies as an option. They give the landlord and the tenant a guarantee of the length of time they will be there and the rent that they will pay. Families renting with children near schools, as well as nurses who have placements, are coming to our agents saying that they want to know how long they are going to be in situ. As I say, we need to provide long-term tenancy options for those who want them and ensure that people do not go to the unregulated short-term lets market.
Matthew Pennycook
Q
Timothy Douglas: We have just been talking about the other side of the coin, which is investors.
Matthew Pennycook
No, not investors. You made a point about tenants.
Timothy Douglas: Yes, but that is the crux of it. Unfortunately, if you push too far on the fixed-term tenancy option, the grounds are not robust enough for landlords. Unfortunately, they do not know how long the tenant is going to be in situ. They cannot plan their investment, and they do not know the return on their rent. It is a mutual agreement. We are not saying that it is one or the other. We are saying retain it as an option. Why are we legislating to reduce choice and flexibility?
Agents are telling me up and down the country that that is what tenants want. The leading letting agent in London, which manages 65,000 tenancies, says that fixed-term contracts are popular within the private-rented sector. Many tenants opted for tenancies between one and three years, with the average first term lasting 23 months. At the end of the initial term, 65% of tenants choose to renew. Only 1% of tenancies are ended early by landlords; 5% are ended by tenants. People know where they stand and where they are going to be. It is an option that should be included in the legislation. We have talked today about students as well. It would solve all the problems in the student market.
We are tinkering there with issues that just do not exist. Retain fixed-term tenancies for all, or at least within the student market, or extend ground 4A to one or more sharers. You are tying yourselves in knots in so many ways.
Mr Amos
Q
Timothy Douglas: I was actually saying that fixed terms should be retained regardless of landlords.
Mr Amos
Q
Melanie Leech: A minimum tenancy would certainly help with investor confidence.
Mr Amos
Q
Melanie Leech: Ideally, we would want a year—perhaps six months.
On the impact, to answer the Minister’s point, it is not that families cannot stay for as long as they want to. This is a high-quality product—I am talking particularly about the build-to-rent sector. The risk for build-to-rent providers is that people will treat build to rent more like an Airbnb-type product. That could transform what should be rental products for families to move into for the long term. That is what we want—we want people to stay somewhere to make it their home. But this proposal will inhibit the supply of those products to long-term tenants, because we are vulnerable to short-term tenancies flipping all the time. That is the concern. It is not that people cannot stay for long if they want to; it is that those products will be easier for people to treat more like a short let—an Airbnb-style product.
Timothy Douglas: We need build to rent, but let us not forget that in build to rent, on average, the rents are a lot higher, because people are paying for a concierge and the other services, so it is not the ultimate answer for all parts of the sector. We are not going to support everyone. I do not think that there should be a timeframe on the fixed term, but we can make use of grounds that landlords cannot use as levers, and you could put break clauses in as well.
Connor Naismith (Crewe and Nantwich) (Lab)
Q
Suzannah Young: We believe that everyone has the right to a warm, dry, safe, secure and affordable home, and social housing has a greater proportion of decent homes than housing of any other tenure. That could suggest that having a decent homes standard helps to bring up standards in housing. We also recognise that housing associations exist to fulfil a social purpose, and we are rightly held to a higher standard. We welcome the Government’s commitment to reviewing the decent homes standard. We are pleased to continue to work with the Ministry of Housing, Communities and Local Government as this develops.
In terms of some feedback for the private rented sector, we agree that it is important to have a clear, modern and meaningful standard that reflects what residents would expect a decent home to be. It is also important that all landlords should have a clear understanding of the condition of all their homes. In the social sector, we are doing work to develop a more consistent approach in that area, as part of our response to “The Better Social Housing Review”. It would need to be something that private landlords were able to do as well to bring up standards.
Specifically—this has been mentioned in terms of the private sector—it is important to recognise that the housing association sector faces multiple and competing pressures, with budgets that are already stretched. We would like to see investment in existing homes at the same time as development of the desperately needed new and affordable homes in the Government’s long-term housing strategy. I suggest that similar attention would be needed for the private sector.
Timothy Douglas: May I pick up on that point? That argument was used in Scotland on the Cost of Living (Tenant Protection) (Scotland) Act 2022. I gave evidence on that legislation two or three times to the Committee up there. In the end, the argument was that the cap was lifted for the social rented sector because it needs to plan for its investment. That is the crux, and it goes back to my previous points—there is no parity here with the incentives, the business planning and the costs that private landlords are facing. We have to have that parity. If the legislation is extending across, the funding needs to be the same. We have to have parity in the investment, the caps and everything else—that needs to be the same. We need that review into all the taxes and costs impacting private landlords, because, quite frankly, we are not getting legislation from either Government Department—the Treasury or MHCLG—that understands the investor appetite for the private rented sector. This legislation is not helping.
Rebecca Smith
Q
Timothy Douglas: It is difficult to say. We know anecdotally that if you are in an agent branch and a landlord wants to sell, the branch would try to push that property towards a bigger landlord who could perhaps take it on before it goes on to the open market. We know that that happens in order to retain property. Anecdotally, we know that, because of legislative uncertainty and costs of legislation, as well as the cost of living, which has also hit landlords with their costs, landlords have left the sector—I gave the example of the agent in the west midlands previously. However, it is difficult to ascertain hard data across the board. That could be another recommendation to the Government: to come back with an annual review to Parliament on the state of the private rented sector.
Suzannah Young: May I come in on that?
The Chair
We are going to have to go on to the next question, because we are running short of time. I call Michael Wheeler, who has been waiting.
Michael Wheeler (Worsley and Eccles) (Lab)
Q
Suzannah Young: Thank you for your question. As I said, we welcome the Bill, and we support the Government’s ambition to give greater rights and protections to people renting their homes, and to value the contributions made by responsible landlords who provide quality homes. We do think it is crucial that the details of the legislation do not have unintended consequences for housing associations and for people living in social housing. We would like to ensure that the changes do not impact housing associations’ ability to provide decent, safe, secure and affordable homes for people who need them most. It is clear that care has been taken in drafting the Bill to minimise the impacts on social housing and tenants of social housing, and we are grateful for the engagement on these issues from MHCLG so far.
However, there remain a few areas that we feel need ironing out to avoid impacting the ability of our housing association members to deliver housing in what is a challenging environment, while still keeping rents affordable. Those specifically relate to the changes to rent increases, with ground 1 being the rent to buy ground and ground 6 being the redevelopment ground. First, we would like to see the proposals around rent increases made clearer or changed to make absolutely certain that they retain social landlords’ ability to increase rent in a harmonised way, which is to avoid impacts on the supply of social housing and to ensure fair rent levels for neighbours and the ability to deliver repairs, maintenance and services to tenants. That is because, as I mentioned earlier, all rental income is reinvested into providing those services. So any loss of rent would have an impact on tenants who receive those services, and repairs and maintenance.
We would also like to see ground 1B extended to apply when the home is converted to another rental product, which is not currently in the ground. That would be in order to help housing associations to meet local housing need where there is no demand for rent to buy or purchase. We would like housing associations to have access to ground 6 in all cases, so that they can carry out essential works that are of benefit to tenants.
We will follow up with more detail in our written evidence, and we would be happy to meet any members of the Committee if they would like to discuss any of these points in more detail.
The Chair
Thank you very much, and I thank all the panel for the evidence that they have provided to us. I am sorry that we do not have any discretion, but we now have to move on to the next panel.
Examination of Witnesses
Councillor Adam Hug and Dr Henry Dawson gave evidence.
The Chair
We have Dr Dawson here physically and Councillor Hug on Zoom. Could you please introduce yourselves briefly?
Dr Henry Dawson: Good afternoon. My name is Dr Henry Dawson. I work as a lecturer at Cardiff Metropolitan University and I am a member of the Chartered Institute of Environmental Health’s housing advisory panel. I am here today to represent the Chartered Institute of Environmental Health.
Cllr Adam Hug: I am Councillor Adam Hug. I am the Local Government Association’s chair for local infrastructure and net zero, which basically means its housing spokesman, among other things, and I am the leader of Westminster City Council. I am here at the LGA conference in Harrogate; apologies for that.
David Simmonds
Q
Dr Henry Dawson: Councillor Hug, shall I start and then pass on to you?
Cllr Adam Hug: Okay.
Dr Henry Dawson: At the moment, we have quite considerable extra burdens being placed on local authorities. The two major areas for that would be in the enforcement around the database and in managing the landlords who have either been rejected from or refused to join the ombudsman’s scheme.
In both cases, the fees that are available to be charged for the schemes will generate some revenue. However, national schemes, by their very nature, will have to be relatively low cost. Rent Smart Wales is a good example. It has an application fee that is little more than £100, so that allows for some intervention. However, the majority of the burden for the enforcement side of things under this new Bill will be placed on local authorities. If just 5% of a sector was to refuse to engage with one scheme or the other, a typical local authority would have around 700 properties that it had to carry out formal enforcement work on, and an awful lot of those would require civil penalty notices or prosecutions.
The CIEH is very keen to see that the funding for local authorities is linked directly to the fees for these schemes and represents the cost proportionately, with the additional burden being placed on the enforcement bodies for the private rented sector—environmental health and private housing enforcement teams.
The notable exception in the Bill is that the ombudsman fees are permitted to cover the cost for the ombudsman to enforce its statutory functions, but there is nothing specific in there, as there is for the database, for those funds to be passed on directly to a local authority.
The other thing we have found with previous legislation is that there is usually short-term additional funding from the Secretary of State’s general budget to support local authorities in introducing these new burdens, but then that sort of tails off. It is replaced with a whole miscellany of short periods of funding, which makes it impossible for local authorities to manage staffing and attract and train up new staff. We are therefore ending up with a situation where approximately half the posts we have for local authority enforcement teams in environmental health are going unfilled for more than six months. It has been a real hand-to-mouth existence for local government enforcement teams. If we could have funding proportionate to the size of the sector in a particular area coming directly from the fees for these national schemes, it would be very gratefully received by local authorities.
David Simmonds
Q
Cllr Adam Hug: To echo that, I think it is important to understand where we are starting from. We have seen environmental health teams in councils cut over the last 14 years, because of the financial situations councils find themselves in. Environmental health officer posts are one of the top three most challenging roles for councils to fill at the moment. It is really important that the new burdens doctrine is applied properly, with up-front funding to make sure that councils can build teams to deliver this as quickly as possible.
We welcome the proposed fine retention, but we think there may be a case for raising the upper limit for the most egregious cases from the current £7,000 up to about £30,000 to fully capture the impacts of some of the worst properties, but also to ensure that revenue can fund council services that are enforcing this. We welcome this, but we must make sure that local councils are properly resourced to deliver it.
Dr Henry Dawson: May I make one additional comment, please? At the moment, the Bill makes substantial use of civil penalty notices. We welcome the use of them. It is very welcome to see funding coming directly into local authority enforcement coffers, as it is something we do not get through prosecutions that are carried out through the courts. It is, however, worth pointing out that they represent the very thinnest end of the wedge for the enforcement activity of local authorities. We only use them where all the informal approaches—service of legal notices and so on—have been unsuccessful, and we are forced to resort to taking more punitive action.
In the majority of cases, we can resolve things informally with landlords, and the majority of landlords are good providers. It is just worth noting that while the penalties are a source of income, they are not predictable or particularly sustainable. Only around 50% of what we charge in penalties at the moment is collected, because of the difficulties in trying to capture the money at the other end of the process. I would just caution against assuming that they are a very reliable source that will keep us going. There are an awful lot of other things we have to pay for.
David Simmonds
Q
Under the Homelessness Reduction Act 2017, local authorities are significant users of the private rented sector for people who would otherwise be at risk of homelessness. It is common for local authorities to pay rent-in-advance deposits and use various other guarantee schemes to secure private rented sector homes for people who would otherwise not be able to access a home. Councillor Hug, I am interested in how you think the Bill would impact on the performance of that duty.
Cllr Adam Hug: In terms of the ability for councils to procure accommodation, having stability in the rental market will help us in managing demand pressures. We are conscious that there is an interaction with the Housing Act 2004 requirements around the prevention duty. That is one of the major challenges created by this Bill, so we want to ensure that local authorities are properly resourced to cover the potential additional time beyond the current 56 days, where we are having to provide prevention support to people while enforcement happens—[Interruption.]
David Simmonds
Q
Cllr Adam Hug: Apologies; I was just saying that the biggest area of concern about our homelessness duties is ensuring that the increased costs to councils of providing the additional prevention duty over the length of time for which the section 8 notices are going through the court are properly captured. That, on the interaction with housing, is the area we are most concerned about, but it is all perfectly solvable.
David Simmonds
Q
Cllr Adam Hug: We are not aware that this Bill creates a particular problem in that regard. We can come back to you in writing if there is anything further, but it is not an area of particular concern to us at the moment.
David Simmonds
Q
Cllr Adam Hug: No, we do not think it does. The key thing for us is that you have the current selective licensing mechanisms, but councils face bureaucratic hurdles in terms of getting the Secretary of State’s sign-off for large schemes that wish to go down that route. In terms of ensuring decisions are made at the right level, in line with the Government’s commitment to devolution, we think that for selective licensing to really fulfil its potential we must ensure there is no longer a need for the Secretary of State’s sign-off.
Obviously, that sort of licensing can improve standards in the sector, help councils to recruit environmental health officers, beef up the function and make sure we are playing a proactive role in helping manage the private rented sector in a local area. Different councils have used it, but at the moment it is hamstrung by the bureaucratic hurdle of getting it up to the Secretary of State. Obviously, we have a Secretary of State who is probably more minded to support the use of such schemes than was the case in the past, but it still creates an unnecessary hurdle and a delay when councils could just get on and use these licensing schemes that are desperately needed.
Dr Henry Dawson: May I add some responses? At the moment, we have a maximum five-year duration for discretionary licensing schemes. Once the schemes have been brought into force, it takes a certain amount of time to create the partnerships with other organisations, such as waste and street scene departments, police and antisocial behaviour teams, and antisocial behaviour schemes within the council, other charities and NHS-related bodies. They usually take between one and three years to mature.
Local authorities are also required to entice enough staff to be able to immediately provide a strong inspectorate to run these schemes. That can be anything from five to 50 staff, depending on the size of the scheme. We find that the five-year duration of schemes is a significant impediment, so it would be much more welcome to see something like a 10-year timeframe. That would permit us to train up new staff through the existing one or three-year qualifications. It would also allow these partnerships to mature so we see some of the true benefits of the schemes.
The other thing is that a large private rented sector is required; that is a point that a local authority has to prove when it is setting up one of these selective licensing schemes. We see that as an unnecessary hurdle to their introduction. They are part of a package of measures to address a range of problems associated with housing conditions, crime and antisocial behaviour across an area, and we see that as being an unnecessary impediment to their execution. It is one more thing that the local authority has to prove.
Finally, discretionary schemes, and particularly selective licensing, are one of the few things that provide access to properties. Even though the legislation has been changed, with some regulations to expand the use of selective licensing to include dealing with poor housing conditions, under the Housing Act 2004 we are unable to enforce conditions relating to the condition and contents of a property. We can only change those in HMO licensing conditions; we cannot change them in selective licensing conditions. Therefore, this is the first opportunity that we have really had, with a piece of primary legislation, to amend the Housing Act 2004 to provide parity in what local authority environmental health officers can require in the conditions and contents of properties through selective licensing, in addition to HMO licensing.
Matthew Pennycook
Q
You mentioned the fines—£7,000 for first or minor compliance issues, and £40,000 for more serious ones— and they can be levied repeatedly. I just want to get a sense of how much of the cost of enforcement you think those fines can account for. We recognise that it will not be enough, and that the new burdens principle will have to operate, but have you got a sense of it in terms of, as you say, how many cases are resolved before it reaches that point? What will be the willingness under the new system to levy these kinds of fines, and what proportion of the enforcement costs do you think, on average, local authorities might see those fines account for?
Dr Henry Dawson: Thank you for your question, Minister. At the moment, we have the use of civil penalty notices, and I would defer to a report by the National Residential Landlords Association to provide a summary of their use over the period between 2001 and 2003. We see that approximately £12 million was given in penalties over that period, and around £6 million of that was recorded as collected through penalties over that period.
It is also worth noting that these civil penalty notices are intended to be an alternative to a prosecution through the courts; they are not intended to be a revenue generator. The licensing fees, the ombudsman fee and the database fees are where we can generate the revenue at the front end. These civil penalty notices are being used as a final, ultimate punishment for some of the worst offenders. Yes, we can administer £7,000 for the initial offence and £40,000 for ongoing offenders, but they really are intended to be a deterrent, as opposed to a source of revenue.
The majority—maybe 90%—of a local authority’s work is carried out through informal advice giving, with people ringing up and asking for guidance in what is a very complex legislative environment. That is certainly something that landlords and letting agents would like to have more of. We serve formal legal notices, but it is only when we have gone through a whole series of informal approaches that we move to a formal approach through a legal notice and, ultimately, a prosecution or penalty notice. Therefore, really, we are looking at maybe 5%—to pluck a figure out of the air—which is a tiny proportion of what we have got across the country, and probably the only national figures we have on this are those that have been pulled together by the NRLA.
Matthew Pennycook
Q
Cllr Adam Hug: indicated assent.
Matthew Pennycook
You are nodding vigorously, which is a good indicator, but have you got views more widely about the changes that we have made on antisocial behaviour—about being able to take action immediately, for example, or considering the implications on other people in a household, as well as that switch back to “likely”, rather than “capable of”, which we felt was too broad under the previous legislation?
Cllr Adam Hug: Absolutely. We agree that the previous legislation was too broad to be meaningful. I think the key thing for us is supporting where we are now, in terms of reverting to “likely”, but, also, there needs to be clear guidance given by the Department—obviously, building on existing case law—with clear definitions from your team about what constitutes antisocial behaviour, both so that landlords know and so that councils can know regarding enforcement. I am sure that there are teams at the LGA, and others, that are happy to work with you on the development of that, but giving clear guidance to the sector is going to be essential to ensuring that the powers are used effectively.
Matthew Pennycook
Q
Dr Henry Dawson: The CIEH would be keen to be part of discussions with the Ministry of Housing, Communities and Local Government about the operation of that database. I note that quite a lot of the content in the Bill is to be delivered through secondary legislation, and if we could be part of the shaping of that legislation, it would be very welcome. Things that would make it more effective include ensuring local authorities’ ease of access to the records on the database; providing local authorities with broad enforcement powers that would allow things such as the provision of information from any person; and the ability readily to access records of other local authorities’ enforcement activities. These sorts of records make it much easier for us to co-ordinate our activity across different areas of the country.
Having a single database operator, providing, as one of its functions, a source of advice in the industry would also provide us with a single point of information to refer people to when they come to us asking for support. That would alleviate a lot of the burden and the time our officers spend managing these requests for information. Therefore, we would not be relying on what are often chat forums and other informal information sources for our landlord operators to address problems on what is usually a responsive and as-and-when-they-occur basis.
Eighty-five per cent of landlords in the sector own one to three properties. That is roughly half the sector’s total housing stock, so those are the landlords we need to focus on trying to support. Providing advice and guidance will be an invaluable function of the database operator.
Rebecca Smith
Q
Dr Henry Dawson: Councillor Hug, would you like to start?
Cllr Adam Hug: As much support as possible in training up the next generation of environmental health officers is essential. There is a whole raft of skills shortages across the housing sector that you touched upon. Obviously, we want to make sure that people are considering this line of work as a career they want to go into rather than leave. There is a pipeline problem in terms of people coming into environmental health as a workstream, but I do not think that should necessarily delay what we are doing with the Bill. Ultimately, it has been talked around for some time; we need to crack on and get it done. It is absolutely the case that getting that local funding piece is right. Then we can join up with skills and training by making sure that local authorities have a pathway to recruit people into their teams. It is about getting the funding piece right alongside the direction of travel.
Dr Henry Dawson: We face some barriers to bringing people into the profession. For example, we have some more sustainable sources of income with things like licensing legislation, where we can charge a fee; at the moment, my own research finds that only about half those schemes charge enough in fees to cover the full costs of management and enforcement. The Lawrence and Wilson review of selective licensing has shown that if we do not charge enough, it ends up reducing the exercise into a sort of glorified paperwork, so we have to charge enough to make it meaningful.
I would argue that staffing is probably one of the most fundamental issues when it comes to the effectiveness of the interventions proposed in the Bill. At the moment, the predominantly hand-to-mouth existence with local authorities, which we have had for quite a long time now, has been predicated on the fact that we are relying on the council tax payer to fund the enforcement of the private rented sector. That is quite peculiar compared with other industries such as building control or planning, which are able to levy up-front fees that do not have to go through a test of political will—which a lot of local authority managers have to navigate to try to predict what the market within their local political support will accept. It takes a lot out on the guesswork and acceptability side.
The ability to charge a fee also provides us with a sustainable and predictable source of income, and that has been lacking for a long time in local government. If you are never sure of whether you will have funding beyond one or possibly three years, with short-term pots of money that are provided often based on a competitive approach—it is about winning them—then you get a member of staff, but you have to train them once you have got them in. Being optimistic, we can train them through an apprenticeship scheme lasting a year to do just housing work, or if we are training them as an environmental health officer, it is three years for the traditional degree route or five years for an apprenticeship.
Having some form of ringfencing of the funding, which allows local authorities to dedicate resources to attract people into the profession, would be very helpful, as the report that I have pretty much every time I speak to a local authority about recruitment for my programme at the university is, “We don’t have the resources to send people to these events to raise awareness about the profession.” A lot of people are just not aware of what we do; once they find out, it is something that sells itself.
Fire and police are comparable bodies, and they tend to have much more success because they have the resources to devote to this. It comes down to sustainable and predictable funding. That allows us to train and retain, and attract new staff.
Naushabah Khan (Gillingham and Rainham) (Lab)
Q
Cllr Adam Hug: I think the provision will help; the whole point is that we are desperate for this. It has been talked about for a long time and as soon as it can be brought in to provide security in the market, it will be extremely helpful to help stabilise a lot of tenancies where there is still uncertainty. The quicker it can come in, the more helpful it will be.
The Bill will not be a magic bullet that will solve the homelessness problems that councils are facing. I pointed out earlier one of the small technical challenges: the duties that local government will be dealing with will be extended in time and go up, we think, from 56 days to 21 weeks on average under the prevention duty. That is a small price to pay, but ultimately, we would like some help paying for that price.
In terms of stability in the private rented sector, this measure is long overdue and will hopefully take some heat out of the sector, but there are all sorts of things going on that mean that it is going to take a long time to turn around the wider issues of local government finance for temporary accommodation, because that is one of the biggest pressures; there are so many councils at the moment that are working hard to procure as much temporary accommodation as possible.
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
Q
You both have a wealth of experience and expertise; thank you for what you have shared already. I want to follow on from the last question and open the floor a bit more to see whether you had any additional thoughts about the Bill’s strengths or any areas where you feel it could be further strengthened—points that our questions so far have not let you speak to.
Dr Henry Dawson: Councillor Hug, would you like to go first?
Cllr Adam Hug: I think we have identified the key thing for us. Dr Dawson explained some of the challenges around funding stability, and we think that on many different levels it would be extremely helpful if the Bill made it easier to apply selective licensing schemes. Making it easier to use that existing tool would help to provide stability, but ultimately we are just very keen for this legislation to be passed through Parliament so that tenants get the extra protection and councils have certainty about what will be expected of them. We want to ensure that we are properly funded to help us to deliver this important task, but we are keen to get it right.
The Chair
That brings us perfectly to our finishing time. May I thank both witnesses for their evidence? We will move on to the next panel.
Examination of Witness
Anny Cullum gave evidence.
The Chair
Anny Cullum, would you like to introduce yourself?
Anny Cullum: I am Anny Cullum, and I am the policy officer at and a founding member of Acorn, an organisation that has been running for the last 10 years. It has been operating like a trade union but on community issues, so we have lots of members who campaign on housing issues and operate effectively as a tenants’ union in around 27 places across England and Wales.
David Simmonds
Q
Anny Cullum: We are pleased to see stricter measures and penalties for landlords laid out in the Bill, and we are particularly happy that new burdens funding will be available to councils to enact them. However, our experience as a tenants’ union is that often councils are so overstretched trying to do the things that they already have to do that tenants are waiting months before getting the support they need. Often their landlords have been given very informal notices and long timescales to get things done, which is no good for a tenant living in a dangerous home.
A great thing about this Bill is that section 21s will be banned. Something that we have seen a lot—we had a member in Sheffield go through this recently—is a local authority coming in and investigating poor conditions in a home, giving an informal notice to the landlord, and the landlord then issuing a section 21; the tenant basically has to pay for the fact that they dared to complain. We are really pleased that that will end, but we think there should be more funding for local authorities, not just extra burden funding for the new things, but for the stuff that they already have to do.
Our union really supports landlord licensing. We have done campaigns in this area in 11 different places around the country. It is incredibly popular with our members; it came out as one of our top motions at our recent conference. If done well, landlord licensing can be self-funding, and—this is a great thing to think about—it gives councils the ability to inspect homes without the tenant having to raise the issue themselves, so you can find out about bad practice and malpractice without the tenant feeling at risk of complaining. Obviously, they will have fewer risks once this legislation comes through, but it will take a long time for tenants to feel comfortable raising their voices, which our organisation tries to help them to do.
We really support the points made by colleagues in the Chartered Institute of Environmental Health. We have campaigned in a lot of places for city-wide landlord licensing, as it is something that our members really care about, but a lot of councils have told us that they are not willing to take the risk of trying to implement wider licensing schemes, because they can be turned down by the Secretary of State. They have said that the work you need to do to put that application in is quite labour-intensive, and they do not want to risk doing all that work for it not to come to fruition. In the spirit of devolution and supporting local authorities to do the job they should be doing, give them back powers to license as much of the city as they want, increase the term to up to 10 years, and do away with the bureaucratic hurdles and the evidence gathering they need to do to get the wider licensing schemes.
Matthew Pennycook
Q
Anny Cullum: One area our Members feel particularly strongly about that could be strengthened in the Bill to ensure that it delivers the change we all want to see is measures against illegal evictions. It will be wonderful when section 21 is banned, but we know that there are lots of landlords who issue section 21 eviction notices in response to tenants complaining, because they do not want to maintain their properties. For that unscrupulous group, we are worried that illegal evictions might take the place of section 21 evictions once section 21s are banned. We feel that the Bill could go further to make sure that this is not an easy option for them to take.
Hardly any cases of illegal eviction ever make it to court. Safer Renting data showed that there were 26 prosecutions in 2022—the year we have the most recent data for—but it knew about 9,000 cases of illegal eviction. Even when illegal evictions get to court, the fines are £1,000. That is less than my monthly rent. It is not a deterrent for the average landlord. We would like to suggest some changes to make sure that this is not used as a back door to get around the legislation.
We would like to see local councils given a statutory duty and the funding to investigate all cases of illegal eviction. Recently we had a member in Leeds whose landlord kept issuing false eviction notices—ones that he could not go to his local council to ask for support with, so he stayed there. The landlord used many different underhand ways to try to force him out, including sending men with knives to cut the wires in his house so that he did not have any electricity. He has been on the phone for hours to his council and the police, and they have not been very helpful. We want to see those bodies empowered with both the duties and the money to act for tenants.
Police forces need more training. I have supported tenants who landlords have tried to intimidate out of their house. The police do not seem to know that this is a criminal offence or that they have the ability to act on it, so it would be good if there was training on that. We would also like it to be made easier for people and councils to take these criminal cases forward. It can be quite hard to meet the evidence threshold needed to get a rent repayment order, so we would like to see changes there, which I have laid out in our written evidence. We would also like the civil penalty notices that councils can use to be raised to up to £60,000. I know that sounds high, but being forced out of your home with your family is a horrendous thing to happen to anyone. We want to ensure that this is treated with the seriousness that it deserves.
Illegals eviction is one area that my members asked me to speak about. I have also spoken about landlord licensing. A further issue is rent in advance. We are overjoyed that this Bill will end bidding wars, which is something we have campaigned for in different places across the country. We have tried to get agents themselves to pledge not to do it and then mystery shopped them to make sure that they are not. But if you allow agents and landlords at the start of a tenancy to ask, “How many months up front can you give me? Someone else said they could give me a year”, that is another form of bidding war, just at a different point of the process.
We conducted some research at the start of this month and found that benefit claimants were three times more likely to be asked for a year’s rent up front than people not claiming benefits. We are pleased that the Government are keen to crack down on discrimination in the private rented sector against people on low incomes, but this is one way that it is happening and we feel that the Bill could do more on that issue. I have two more areas that my members want me to speak to, if that is okay.
The Chair
Let some other people ask questions and perhaps you will have the opportunity to include those points in your answers.
Mr Amos
Q
Anny Cullum: We would like to see letting agents regulated. Especially with the issues around bidding wars and discrimination when you enter a new home or the private sector for the first time, in the majority of cases that will be about your experience with your letting agency. We as Acorn suggest mystery shopping, like when Trading Standards sends kids into shops to mystery shop and sees whether they will sell them alcohol. Maybe we should be sending people into letting agencies and seeing whether they are being discriminated against on the basis of any protected characteristic, but particularly on the basis of being benefit claimants. That part could be strengthened in the Bill.
Sam Carling
Q
Anny Cullum: I think the landlord database will be excellent. It is important from our point of view that the landlord database includes information for tenants on previous enforcement action that has been taken against landlords, because you can then make an informed choice as a tenant about where you would like to rent. That will be another way to deter landlords from behaving illegally because they know they will have a mark against their name on the register. We hope the register will mean that, rather than tenants trying to compete for homes at the moment, landlords are competing for tenants by behaving in a good way and providing a good service. Having that sort of information on the database would be incredibly helpful.
Carla Denyer
Q
Anny Cullum: On withholding rent for serious disrepair, there are much-improved schemes and action within the Bill around the decent homes standard and improving standards for tenants, but a lot of the action set out to be taken if tenants are experiencing disrepair is retroactive or down the line. We know that councils can take a long time to act and that lots of tenants will not pursue things like rent repayment orders because they just do not have the time and energy. But if someone is living with serious disrepair—things like the damp and mould laid out in Awaab’s law, which we are pleased to see moving over to the private rented sector—we think there could be a mechanism whereby, if it is not fixed within the timescale set out by Awaab’s law, they could withhold their rent and pay it to a third party, which could then give the landlord another timescale within which to solve it. If they did not solve it, the tenant would get the rent paid back. If they did, the landlord would get the rent.
That would be an immediate incentive to do the work and stop leaving people in the dangerous conditions we see all the time. Landlords are not necessarily going to worry in the moment about a rent repayment order that a tenant may or may not put in for, which would take ages to go through a court—landlords sometimes do not even pay them anyway—whereas, if you can withhold the rent, that will speed along the process of sorting out mouldy and unsafe homes. So that is the mechanism we would think of. There are lots of considerations as to how it could work. If you consult on bringing Awaab’s law into the private rented sector, that will be a good place to think about the best mechanism to do it.
I think your second question was about rent hikes—rent rises.
Carla Denyer
Q
Anny Cullum: Unfortunately, no. We as an organisation at the moment would never recommend that anyone go to the rent tribunal, because we have seen tenants go there and have more rent—a higher percentage—awarded than the landlord was asking for in the first place. We are pleased to see that you are going to get rid of that, but we would like to see rent rises capped at the lower of median wage growth over the last three years or inflation. From my experience, I know most tenants are not going to go to the tribunal. It is brilliant if they do, but a lot of people will accept the rise, or have to move out because they cannot afford it, or get into debt. This means that the people who do go to the tribunal will still be judged against market rents that are way more unaffordable than the one at which they went into their contract. Does that make sense? We are not going to bring rents down just by tinkering with the tribunal.
This is mainly about making sure that people can stay in their homes and it does not undermine the Government’s efforts to prevent no-fault evictions. This could easily be used as a no-fault eviction by the back door. You could just put the rent up to a level that you know your tenant cannot afford. We do not think comparing what is affordable with new prices is the best way, so we would advocate for that cap on how much rent could be increased by.
Connor Naismith
Q
Anny Cullum: As I said, the five areas that I wanted to cover were illegal evictions, landlord licensing, capping rent up front to one month, withholding rent for disrepair and making renting more affordable. We see even the cap on in-tenancy rent rises as not really about affordability, but mainly about preventing back-door economic evictions or section 21s. We feel that, while this Bill goes far on improving security for renters, it is not going to do enough to address one of the No. 1 problems our tenants and members are coming to us with every day, which is affordability. Rents are outstripping wages all the time. We would like to see the Government set up a commission to look into ways we can bring rents down and keep them affordable once and for all. That is something that we would like to see.
Lola McEvoy
Q
Anny Cullum: It might have a small impact, but I think that the reality is that most landlords will expect most tenants not to make use of that scheme.
Lola McEvoy
Q
Anny Cullum: The problem with this is that it is going to be judged by the market rates—what the going amount for other-sized homes in your local area is for new tenancies—and those are going up all the time. Unless we do something to stop those rates going up all the time, you as my landlord could say, “I want to put your rent up by 50%”, and if I challenge it at the tribunal, if I have been there for three years, for example, I suspect that could be what the going market rent now is in my local area, because the system, as Ben Beadle said earlier today, is absolutely mad and out of control.
We need more drastic action to bring down rents, because it is unreasonable to ask someone to pay 50% more than they are paying at the moment, but in some places—
The Chair
Order. Thank you very much. I am afraid I have to interrupt, because otherwise we will not have time to listen to the Minister. Thank you for your evidence.
Examination of Witness
The Chair
Minister, would you introduce yourself very briefly, please?
Matthew Pennycook: Yes. I am Matthew Pennycook and I am the Minister of State for Housing and Planning.
David Simmonds
Q
The first question is simply this: what advice have you received so far and what are the plans in respect of the interaction with the Homelessness Reduction Act 2017? That is the point I was asking Councillor Hug about—the Homelessness Reduction Act creating that opportunity for local authorities to act as a guarantor to pay deposits, including rent in advance, to secure a property that would not otherwise be available to that tenant. I ask that question in the light of some of the evidence that we have heard about the impact of guarantors and deposits within the Bill, which I appreciate is not yet a settled matter.
Secondly, I invite you to share your thoughts on enforcement authorities, which my hon. Friend the Member for South West Devon highlighted, which are referred to in chapter two. I have an idea why this might be the case, but the Bill creates a specific measure, in clause 104(4), that says:
“A county council in England which is not a local housing authority may—
(a) enforce the landlord legislation;”—
The joy of local government: the Minister will know that county councils are not housing authorities, so it would perhaps be helpful if you could set out the Government’s thinking around that, and say how any advice or engagement may have taken place already with local Government to determine the way forward on that.
Matthew Pennycook: Did you say three or two questions?
David Simmonds
There are three questions, but I have forgotten the third one, so I will ask you those two questions and then find the third question and come back with it, if I may.
Matthew Pennycook: Let me take those two questions forward.
The point that I took from Councillor Hug was a very specific one about the trigger for homelessness prevention duties under the Bill. Currently the trigger is a section 21 notice; once the new system is in place, it will be a section 8 notice. In theory, that broadens the scope of the duty, if you like, and therefore we will consider new burdens funding for local authorities as a result, because it could increase the costs to them.
On the specific point about county courts, I want to make sure that I have understood the hon. Gentleman properly. I think it might be better if I write to him with the specifics, but I would assume that his question is linked to the fact that in many cases we need to look to assign a lead enforcement authority in particular parts of the country, because of the specific arrangements of governance in particular areas. However, I am more than happy to write to him with further detail on the point about counties.
David Simmonds
Q
I have a final point. A number of the witnesses today have made a point that clarity about what is permissive versus what is required is a significant issue for their organisations. In particular, we heard about that in respect of the ombudsman, the tribunal and the courts.
I am interested in hearing your thoughts about how this process evolves, and your degree of openness about bringing a higher degree of clarity, either through a greater degree of transparency about what may well find its way into the guidance given to those different organisations, or through those areas that you feel are more appropriate to becoming part of the Bill and then the Act itself.
Matthew Pennycook: On the database and the ombudsman, through this Bill we broadly mirror the provisions in the previous Government’s Bill, in the sense that the powers in the Bill are broad framework powers. A lot of the detail will come forward in secondary legislation.
There was a debate when we considered the previous Bill, which I think we will return to because it is a worthwhile one, about what prescriptive requirements, if any, you put in the Bill for either the database or the ombudsman. In general, my sense is there is a lot of value in putting most, if not all, of that detail into secondary legislation in a way that allows us to ensure over time that the database and the ombudsman evolve properly with changes to the sector, so you would not want to get too prescriptive. But we can tease out in the debates—I hope we do; we have today—the type of thing we expect the ombudsman to do, and the full range. The Housing Ombudsman made clear that there is a “must” and a “could” on the ombudsman side. Similarly, there is a skimmed and a full-fat version of what you might include on the database.
As I have said, some of my contributions indicate that I think the database in particular could be an incredibly powerful tool. We should therefore be thinking through what we might include on it that would help tenants to assess who is a good landlord and who they should be comfortable signing a tenancy agreement with, and give local authorities the relevant information they need to bear down properly on disreputable and particularly criminal landlords. I am happy to be relatively open about that. We can be, and I hope are, fairly open in some of the debates about the type of things we and our constituents might like to see in secondary legislation.
Jacob Collier
Q
Matthew Pennycook: That is a good question. Like a lot of the debates we have had today, it is slightly out of the scope of the Bill, but you are right to ask it in the sense that the Bill is one part of the Government’s agenda for changing the housing system. There are lots of things we have to do on the home ownership side. You will know from our manifesto that we are committed to a permanent and more comprehensive mortgage guarantee scheme and a first dibs for first-time buyers scheme. In general, the Bill will hopefully empower renters by giving them greater protections, rights and security so that they can stay in their homes longer, build lives in their communities, avoid the risk of homelessness and, in many cases, by bearing down on unreasonable within-tenancy rent hikes, have the opportunity to save, which many do not have at the moment.
In answer to your question very specifically, the Bill is part of a wider agenda and touches on the supply issues we have debated. The Bill is not our answer to affordability in the private rented sector, and it cannot be. There are things that go beyond the scope of the Bill. However, in terms of the security, stability and certainty it provides for private renters, who are mainly at the top end of the market but would have, under better circumstances, the chance to save and buy a first home, the Bill will help in a number of ways.
Mr Amos
Q
On service personnel housing, I think the Minister’s position from the debate on Second Reading was that the Ministry of Defence is looking at it and different circumstances may apply, which would mean that a different form of decent homes standard would be needed. If the decent homes standard is yet to be published, and could potentially be less onerous than the one for the social housing sector, could it not also be applied to MOD housing so that our serving personnel get decent housing?
Matthew Pennycook: I do not think there is a huge amount I could add to what I said on Second Reading. We think there are particular characteristics of MOD accommodation that make it difficult to translate the approach we have in mind for driving up standards in the private rented sector and to align that with a wider push on the social housing sector. The MOD are taking forward that work. Yes, there are conversations between officials and Ministers about the crossover, how we might align standards and what the difference is, but I think it is for MOD to take that forward. We think there are good reasons to treat it slightly separately. I can address the short-term lets point, if you would like.
Mr Amos
Q
Matthew Pennycook: If I have understood you correctly, you are putting to me: why is MOD accommodation not coming within the consultation on a new decent homes standard for both sectors?
Mr Amos
I am putting to you that the MOD could have its own decent homes standards.
Matthew Pennycook: The MOD is taking forward standards for its accommodation, and it will do that as the Department responsible for that accommodation. It sits outside this legislation, and we had the same debate on the previous Bill. It is an important issue, but it sits outside the scope of this legislation.
Claire Hazelgrove
Q
Matthew Pennycook: It is a very good question, and we have touched on this issue, as well as guarantors. I am happy to give the Committee a sense of my thinking, because I have reflected further on the matter in the light of concerns that have been put to us by not only external stakeholders but several hon. Members in the Second Reading debate on 9 October.
As I made clear in that debate, the Government have long recognised that demands for extortionate rent in advance place a considerable financial strain on tenants and can exclude certain groups from renting altogether. We are very clear that the practice of landlords demanding large amounts of rent in advance must be prohibited. Although it might be argued that the interaction of the new rent periods in clause 1, which are a month or 28 days, and the existing provisions of the Tenant Fees Act 2019, relating to prohibited payments, provide a measure of protection against requests for large amounts of advance rent, I am increasingly of the view, speaking candidly, that there is a strong case for putting this matter beyond doubt. I am giving careful consideration as to how best that might be achieved in the course of the Bill’s passage.
Carla Denyer
Q
Matthew Pennycook: That is not correct.
Carla Denyer
Okay, then this is an invitation for you to talk us through your rationale, because that was my understanding. While I am at it, if there is anything where your mind has changed since the previous Bill, could you briefly talk us through why?
Matthew Pennycook: It is important to give context for the debates on the previous Bill and why, in certain circumstances, we were probing the Minister on making grounds discretionary rather than mandatory, and whether we were pressing the then Minister on additional protections for tenants relating to some of those grounds. The rationale for that was ensuring that the grounds, if they were mandatory, would not be abused. I suppose where my thinking has changed on many of them—I will continue to think on whether we have done enough on specific grounds for possession to protect tenants against abuse—is that the other actions we have taken in the Bill provide the protection we need.
I will give an example. On grounds 1 and 1A, where the previous protected period was smaller and the previous re-let period was much smaller—three months, not the 12 that we are proposing—in our view there was clear scope for abuse there. In many parts of the country, particularly hot rental markets—including London, and I am sure it is the same in Bristol—landlords are quite willing to suffer three-month void periods because the rents are so high. In a sense, if that is your re-let period on those mandatory grounds, you can get rid of what you consider a problem tenant, such as one who has complained perhaps entirely appropriately about damp, mould and other hazards. If you wait the three-month void period, then re-let, you have effectively recreated section 21 by the back door.
I think we have dealt with the abuse, which is from memory where we were probing the Minister about the discretionary or mandatory distinction. We have provided protections in other ways in the majority of cases. I am giving consideration, as I say, to some of the grounds and whether we have quite got sufficient protections in place. I think Justin Bates KC, for example, raised ground 6A, where action is rightly taken against the landlord whose practices need bearing down on, but the tenant should not suffer in that regard.
Michael Wheeler
Q
Matthew Pennycook: I welcome that question; it is an open one, and I will have to think on my feet in my response. I think a number of the debates will run through the Bill. Supply is one of those. I am clear that we do not want an exodus of landlords from the sector, but I have seen absolutely no evidence of that. It is a threat that has been bandied about for many years now, ever since the previous Government announced their intention to abolish section 21 no-fault notices.
The size of the private rented sector has doubled since the early 2000s. There has been an outflux of smaller landlords, particularly overgeared buy-to-let landlords, which is mainly a result of the section 24 tax changes that George Osborne introduced in 2015, explicitly to slow the growth of the private rented sector. So there has been an exit of certain types of landlord from the sector, but we have certainly not seen an exodus.
The feedback I have had from landlords over recent months and in the previous Parliament is that the most damaging thing for many was the uncertainty about whether reform was coming through in any form. That is why we felt we needed to act quickly. In general, good landlords have absolutely nothing to fear from the new system. We think it provides a framework in which they can continue to invest and operate.
Another point that has been prevalent in the debate is protections for renters against unreasonable within-tenancy rent hikes. In designing the Bill, I have been clear where we have overhauled and strengthened its provisions to strike that balance. We do not want to do anything that could potentially make things much more difficult for tenants, which is why the Government are not advocating rent controls in the Bill. The Scottish experience is instructive of what can happen as an unintended consequence, and we think there would be an impact on supply, quality and standards, as evidence around the world shows.
In many cases there is a judgment call on students and other possession grounds, and it is is a fine balance as to whether we have got it right in the Bill. But there are competing pressures and disincentives in a system—I am being incredibly candid with the Committee here—that has not been overhauled for 30 years. Lots of the speculation about how the tribunal will operate, and how many section 8 cases will go there, is in some ways all completely speculative. We have a sense of what we want to see and how to address the risks, but until the system is properly bedded in, I do not think anyone will know what we have to do in the design to ensure that we have the balance right and will not therefore see the tribunal overwhelmed.
We want to see more people to go to the tribunal. We want section 8 cases to go through the courts more efficiently. We absolutely concede the need for court improvements, and we are working closely with the MOJ on those—I have given some examples in response to the question about what we are taking forward. There is a balance that needs to be struck, and I think we struck the right balance in overhauling the Bill in the specific ways we have, while keeping—I gave the Conservative party the credit for this at the time—the sensible provisions that were in the previous Bill, which we think need to remain at the core of the legislation.
Rebecca Smith
Q
Matthew Pennycook: Specifically on rural housing, we have to think through how the decent homes standard will deal with particular challenges in certain types of stock in certain parts of the country. As a point of principle, what we will try to do in the decent homes standard consultation is to take a view on how that should apply across both sectors. Broadly, that is my instinct across the board.
It is the same with regards to the ombudsman. There is a strong case—our preferred option as things stand, although no final decision has been made—for the Housing Ombudsman Service to take on the role of the PRS ombudsman. There is a good case for a streamlined cross-tenure service. Broadly, we want the same standards to apply across the board.
Funding is another example of where there are things that the Bill touches on, but that are not within the scope of the Bill—the minimum energy efficiency standard, for example, has been mentioned a couple of times. That, however, is a Department for Energy Security and Net Zero consultation, which we launched this year. There is also a wider package around the warm homes plan, further details of which will come forward in due course, but that does not sit within my Department either. It is not necessarily part of the Bill, although decent homes will have to account for those changes, such as those on the MEES front.
The Chair
Thank you, Minister. That brings us to the end of the evidence session. I thank all Members for participating in what has been a very constructive exchange of views.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Third sitting)
Tuesday 29th October 2024
(1 month, 3 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2024 - (29 Oct 2024)
The Chair
Welcome, everybody, to the first sitting of the Committee in which we consider the Bill’s content in detail. The only announcement that I will make at the beginning is that it is very helpful to Hansard if people hand over or email any notes they may have.
I recognise that this will be the first time that some Committee members have served on a Public Bill Committee. My view is that the best way to learn and understand the procedure is to listen to what is going on rather than looking at your phones and emails. On that basis, I am not going to make massive announcements at the beginning about the rules of procedure, because I assume that people will be able to pick them up pretty quickly.
Clause 1
Assured tenancies to be periodic with rent period not exceeding a month
David Simmonds (Ruislip, Northwood and Pinner) (Con)
I beg to move amendment 48, in clause 1, page 1, line 13, at end insert—
“unless the tenant meets the student test where the tenancy is entered into.
(1A) For the purposes of this section, a tenant who meets the student test when a tenancy is entered into has the same meaning as in Ground 4A.”
The Chair
With this it will be convenient to discuss the following:
Amendment 54, in clause 1, page 1, line 13, at end insert—
“, unless the landlord and the tenant mutually agree to have a fixed term during which period the landlord agrees to suspend the ability to seek possession under Ground 1 (Occupation by landlord or family), Ground 1A (Sale of dwelling-house) or Ground 6 (Redevelopment) of Schedule 2.
(1A) During a fixed term tenancy agreed under subsection (1) the landlord shall not be entitled to increase the rent as provided for by section 13.”
Clause stand part.
Clause 2 stand part.
David Simmonds
It is a pleasure to serve under your chairmanship, Sir Christopher. I hope the Committee will forgive me; this is the first time I have served on a Public Bill Committee as a shadow Minister. I think it is the Minister’s first time as well. I am sure we will crave your indulgence as we go forward to make sure that the Committee runs efficiently and effectively.
Amendments 48 and 54 aim to address a number of issues, relating to the situation students face when securing appropriate accommodation, that were raised both in our oral evidence sessions and in evidence that several organisations submitted to the Committee for consideration. In summary, the amendments aim to ensure a carve-out— as previously considered in deliberations on the Renters (Reform) Bill—so that not just purpose-built student accommodation but student lets more generally fall outside the direct scope of the measures in the legislation.
There are in the evidence a number of examples of how the Bill will affect the ability of students to access the accommodation that they require while they are at their place of study. International students are a significant part of our UK university financial infrastructure, and the ability for them to secure, often from another country, appropriate accommodation in advance, for a fixed period of time, and sometimes for groups of students, is extremely important, not only to them, to meet their housing needs, but to the university because of the fees they contribute.
We heard representations about the impact on students of the need to take properties off the market to make them available to rent again, which occurs largely around the time of examinations, because of the annual cycle of student accommodation. Student organisations expressed a deal of concern, particularly in the context of student mental health—a significant issue that universities are concerned about—that the pressure created would be considerable if people are required to seek new accommodation at the same time as studying for examinations. We need to ensure that the student market retains the degree of flexibility that enables student landlords to address that issue.
The Bill has a broader interaction with areas where there are student communities. Most of us will know, either from our constituencies or nearby, that where there are universities, student communities have grown up and become established and there are landlords that specifically serve that market. Accommodation that may historically have been family homes has been converted specifically for student use, with landlords who specialise in that market.
We would not wish to see that supply of student accommodation significantly diminished because, given the changes in the Bill, it may become more profitable for a landlord to make a property available to the local authority for temporary accommodation, or simply to move it entirely into a different area of the private rented market. Where there is an established market for student accommodation that is vital for the local economy and for the university, we want to make sure that that is preserved.
Finally, there is the article 4 direction issue. Because of the proliferation of houses in multiple occupation in areas proximate to universities, many local authorities have introduced controls with a view to ensuring that an appropriate supply of student accommodation remains, without other types of houses in multiple occupation springing up. That is despite the fact that the physical nature of the accommodation would lend itself to a number of different uses in that market. Ensuring a carve-out would help to guarantee the long-term supply of student accommodation, so that young people who study can secure the accommodation they need at an affordable price.
I hope I have summarised the Opposition’s thinking in tabling the amendments and look forward to hearing what the Minister has to say.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the Chair, Sir Christopher. Before I respond to amendments 48 and 54, tabled in the name of the shadow Minister, I put on the record my thanks to the witnesses who gave up their time last week to give evidence to the Committee and inform our deliberations.
It is agreeable to serve opposite the shadow Minister. He and I are of different political persuasions and, although I hope to persuade him otherwise, I fear we may not be of the same mind regarding some aspects of this legislation. He is, however, a sincere and thoughtful individual, and I know that, even when we disagree strongly in the sittings ahead, the debate will be measured and reasonable. The same applies to other Opposition spokespeople.
As the shadow Minister clearly set out, amendment 48 seeks to amend the new section 4A that clause 1 inserts into the Housing Act 1988, to provide an exemption from the single system of periodic tenancies for those who meet the student test in new ground 4A, set out in schedule 1—that is, all full-time students, irrespective of their living arrangements. The effect would be to require such students—even those who may be the sole occupant of a rented property—to continue to have fixed terms, denying them the benefits of the new tenancy system introduced by the Bill.
The shadow Minister made the case for the amendment on the basis that we require a carve-out for the student sector. I would argue that we have introduced in the Bill a limited carve-out in the form of ground 4A ground for possession. That will ensure that non-typical students can enjoy the benefits of the new tenancy system, as well as typical students, within the limited confines of that ground for possession. It should ensure that landlords can maintain the cyclical nature of that market. As I said in the evidence sessions, I suspect that that ground for possession may be used only in limited circumstances. There is no evidence to suggest that tenants overstay their tenancies en masse. We think that limited carve-out provides what is needed to maintain the unique business model in the student sector.
Amendment 54 would have the same effect for all tenants, ostensibly on a voluntary basis, providing as it does for fixed terms in circumstances where a landlord and a tenant mutually agree to them, on the basis of possession grounds 1, 1A and 6, and rent increases under section 13 are suspended for the duration.
I am afraid I cannot accept either amendment. The Government have been clear that there is no place for fixed terms of any kind in the new tenancy regime that the Bill introduces. Fixed terms mean that tenants are locked into tenancy agreements and do not have the freedom to move should their personal circumstances require that—for example, if they want to take up a job in another part of the country or if a relationship breaks down. Fixed terms also mean that tenants must pay rent regardless of whether the property is fit to live in, reducing the incentive for unscrupulous landlords to complete repairs. As a point of principle, the Government will not deny any type of tenant, including full-time students, the rights and protections afforded to them under the new tenancy system the Bill introduces.
I also find the argument that fixed-term tenancies are more beneficial to both parties than rolling periodic tenancies utterly unconvincing. In circumstances where a responsible landlord and a good tenant have a mutual wish to sustain a tenancy over a defined period without a rent increase—the conditions that underpin the rationale for amendment 54—fixed-term tenancies would provide no clear advantages beyond those that both parties will already enjoy under periodic tenancies, as introduced by the Bill.
If the shadow Minister’s argument is instead that the benefit of fixed terms is that they ensure that a tenancy is sustained, even in the event of either party having good reason to end it—for example, if the landlord wanted to sell the property, or if a tenant wanted to buy and move into a first home—that simply exposes the unnecessary restrictions that fixed terms would impose in those circumstances, locking in either party against their interests.
Finally, I want to make it clear that amendment 54 would leave the new tenancy system open to abuse. In my view, it overlooks the power imbalance between landlords and tenants. In hot rental markets across the country the mismatch between supply and demand is acute, and one could easily imagine circumstances in which a disreputable landlord says to a tenant that the only way they are going to get the tenancy, which they may be desperately in need of, is if they take on a fixed-term tenancy. Tenants could feel forced to take on a fixed-term tenancy, perhaps without even knowing the condition of the property. I accept that the two sides of the Committee may have a legitimate and sincerely held difference of opinion on fixed-term tenancies, but I urge the shadow Minister to withdraw the amendment.
On the purpose and effect of clauses 1 and 2, the single system of periodic tenancies is at the heart of the legislation, and these clauses are key to its operation. Clause 1 provides that in future all assured tenancies will be periodic and can no longer have fixed terms. Any terms of an assured tenancy providing for the duration of the periodic tenancy to be different to the rent period—in other words, fixed terms—will be prohibited and legally unenforceable, and the tenancy will instead be a periodic tenancy. The clause also ensures that the tenancy’s periods will be the same duration as the period for which the rent is paid. Terms of a tenancy that state that the duration of the tenancy is different from the rent period will have no legal effect.
Clause 1 also limits the length of the rent period of an assured tenancy, stipulating that it must either be monthly or no more than 28 days long. Terms in a tenancy agreement that try to create a longer tenancy period will, again, be of no legal effect. Instead, the tenancy has effect as if it provided for monthly periods, with rent payable on the first day of each period. It is important to note that tenancies will be able to have periods of less than a month—which is an important feature for the social sector, where rent is more likely to be paid weekly or fortnightly—but it will not be possible to have a tenancy period of longer than one month, ensuring that disreputable or rogue landlords cannot seek to abuse the clause by demanding long rent periods to recreate fixed terms.
The new tenancy system introduced by clauses 1 and 2 —and others in chapter 1 of part 1 of the Bill—will provide tenants with greater security and stability and empower them to challenge bad practice without fear of retaliatory eviction. As long as they provide the required notice, they will be able to end the tenancy at any point. Landlords will also benefit, through more straightforward regulation, clearer and expanded possession grounds, and the requirement for tenants to provide two months’ notice, which will ensure that landlords can recoup the cost of finding a new tenant and avoid lengthy void periods.
I appreciate that some landlords and groups are concerned that tenants will misuse rolling periodic tenancies as short-term or holiday lets. That concern was expressed on Second Reading and that also arose in the oral evidence. Although I understand the general apprehension and anxiety that surrounds such a significant change to the regulation of the private rented sector, those concerns are unfounded. The notion that tenants will routinely pay up to five weeks’ deposit, complete referencing checks and commit for at least two months, simply to secure a short-term or holiday let, has always struck me as improbable to say the least. As I argued on Second Reading, tenants simply do not move home unless it is absolutely necessary. Under the new tenancy system, when they do leave, they will be required to provide two months’ notice, giving landlords sufficient time to find new tenants.
Clause 2 removes the provisions of the Housing Act 1988 that established assured shorthold tenancies, so that such tenancies cannot be created in the future. The clause also removes section 21 of the 1988 Act. In addition, it removes section 6A of that Act, which provided the mechanism by which private registered providers of social housing could apply to a court to demote tenants from an assured to an assured shorthold tenancy if they committed antisocial behaviour. The change is being made because ASTs will no longer exist once the new single system of periodic tenancies has come into force.
As a result of the assured shorthold tenancy regime, and the ever-present threat of arbitrary eviction via a section 21 notice, millions of people in England live day in, day out with the knowledge that they and their families could be uprooted from their home with little notice and minimal justification. We know that a significant minority of them are forced to live in substandard properties for fear that a complaint would lead to a retaliatory eviction.
The insecurity embedded in the current system fails both tenants looking for a stable home for their families and responsible landlords who are undercut by the minority of unscrupulous landlords willing to exploit and mistreat them. A single system of periodic tenancies will provide greater security for tenants, while retaining the important flexibility that privately rented accommodation offers. It will mean that tenants can stay in their homes for longer, build lives in their communities, save—with fewer unwanted moves—and avoid the risk of homelessness.
Removing section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases. It will also incentivise landlords to engage and resolve legitimate issues of concern, given that they will be able to regain possession of a property only where there is good reason, using the clear and expanded possession grounds set out in schedule 1. With a single tenancy structure, both parties will also better understand their rights and responsibilities.
Far too many tenants are evicted from a private tenancy each year without due cause, which is why so-called no-fault section 21 notices are a leading cause of homelessness in England. As I argued on Second Reading, this broken system can no longer be tolerated, not least because the private rented sector now houses not just the young and mobile, but growing numbers of older people and families with children, for whom greater security and certainty is essential for a flourishing life. To ensure that private renters get a fair deal, we need to transform how the sector is regulated and level the playing field between landlord and tenant.
This Government will succeed where the previous Government failed, by finally modernising regulation of the sector and abolishing arbitrary evictions. I commend both clauses to the Committee.
The Chair
I assume that no one wishes to participate in the debate on clauses 1 and 2 and the amendments. Unlike in the informal hearing in which we took evidence, if people wish to participate in the debate, they must rise in their places so that I can see they wish to speak. In the absence of anyone wishing to participate in the debate, I call the shadow Minister.
David Simmonds
I thank the Minister for his comprehensive response. When we consider the history of this sector of our housing supply, it is clear that there have been many attempts by Governments over many years to address the challenges that reflect different eras. Having sought the advice of the former Member for Henley, who was the Secretary of State who introduced the assured shorthold tenancy, I know that it was originally conceived as a means of increasing supply and reducing cost, so that tenants could more easily access accommodation of the necessary quality at an affordable price. There is no doubt that it achieved that end, but we also recognise that, although according to the Government’s own figures tenants in the private rented sector expressed the highest level of satisfaction with their accommodation, compared with occupants in any housing sector, there continue to be issues that partly reflect supply but also reflect the presence of some of the unscrupulous landlords the Minister referred to.
Clearly, there is a degree of philosophical and political difference, in that we on the Opposition Benches are strongly committed to the concept of freedom of contract. We can identify many examples, including those I mentioned, where people wish—for example, because they have a fixed-term contract with particular employment —to secure accommodation for a specific period. People coming for a course of study also may wish to secure accommodation for a fixed period, especially international students who are here for a period and then wish to leave the UK to return to their families elsewhere. In such cases the opportunity to have such arrangements is significant, and it is in the interests both of the landlords who specialise in providing that type of accommodation and of the tenant themselves that freedom of contract continues to be available.
Amendment 54 explores the issue that was raised previously in Parliament by the former Member for Totnes—the Mangnall amendment. Given that, as the Minister said, the Government are not minded to accept it, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Clause 3
Sections 1 and 2: effect of superior leases
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
I will be brief, as this clause is simple and straightforward. It ensures that leaseholders can continue to sub-let under the new regime where they currently have permission to do so.
Leaseholder arrangements may currently require any sub-let to be on an assured shorthold or an assured tenancy with a fixed or minimum term. The clause will enable existing sub-leases to continue under the new tenancy system once assured shorthold tenancies and fixed terms are abolished. This will ensure that leaseholders and their superior landlords are not unduly affected by the reforms and that previously agreed arrangements can continue. It will not grant rights to leaseholders to sub-let for holiday or rental accommodation unless they were able to do so before the Bill took effect. I commend the clause to the Committee.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Changes to grounds for possession
Mr Gideon Amos (Taunton and Wellington) (LD)
I beg to move amendment 77, in schedule 1, page 155, line 6, at end insert—
“(1A) In the heading of Part 1, omit ‘must’ and insert ‘may’.
(1B) Omit the heading of Part II.”
This amendment would make all grounds for repossession discretionary.
The Chair
With this it will be convenient to discuss the following:
Amendment 73, in clause 4, page 4, leave out lines 35 to 37 and insert—
“(a) omit subsection (3);
(b) in subsection (4)—
(i) omit ‘Part II of’; and
(ii) omit ‘, subject to subsections (5A) and (6) below,’”.
This amendment would make all grounds for repossession discretionary.
Amendment 74, in schedule 2, page 175, line 40, leave out from “claims),” to the end of line 41 and insert “omit subsection (6)”.
This amendment would make all grounds for repossession discretionary.
Mr Amos
It is a pleasure to serve under your chairmanship, Sir Christopher. The intention of this amendment is to make all grounds for eviction discretionary for the court. As the Committee heard from experts during oral evidence, many in the sector are concerned that none of the grounds will be discretionary.
There are a range of circumstances in which discretion would be advisable in deciding eviction cases. The tenant may be terminally ill—a cancer patient, for example—and I understand that that example was considered during the last Parliament in relation to the previous Bill. The court would have no discretion to enable a stay of eviction in that case. The tenant could have caring responsibilities, perhaps for a disabled person. Again, there would be no discretion to vary the terms of the eviction.
There could be undue hardship caused if the tenant was unable to stay for a given period. Perhaps the tenant had already arranged to move and arranged new accommodation, but that was not available on the timescale in the Bill; in that case, there would again be no discretion. The tenant might have an impending examination to sit or a work commitment that was vital to their career. Again, there would be no discretion for the courts. The tenant may be a disabled person and need extra time or support to arrange the physical burden of moving home.
In a previous discussion, the Minister talked about the importance of taking the personal circumstances of tenants into account, and that is the intent behind this amendment. The courts will not be able to take personal circumstances into account because there will be no discretion on the terms of eviction.
Parties are especially concerned about this issue in relation to grounds 1 and 1A, which concern eviction for repossession by the landlord or their family or for the sale of the property. We heard from Liz Davies KC during oral evidence that, in many cases, a tenant could have done nothing wrong but would still be subject to eviction without any discretion for the courts to vary the terms of that.
Even if the Government do not accept the amendment, I argue that there should be discretion for the courts, if not in every case of eviction, at least in exceptional circumstances. I urge the Government to take that on board in the spirit in which I have moved this amendment.
Matthew Pennycook
I thank the hon. Gentleman for tabling these amendments, which allow us to have this debate. In my view—I think this is shared across the House —landlords must have robust and clear grounds for possession where there is good reason for them to take their property back. I hope that he will appreciate the steps the Government have already taken to ensure that the grounds are fair to both parties. We have overhauled the previous Government’s Renters (Reform) Bill to provide additional protections for tenants, including longer notice periods, a longer protected period and a higher rent arrears threshold. We have also scrapped the previous Government’s harmful proposals to introduce a new ground for repeat rent arrears, and we have reduced the discretionary antisocial behaviour threshold to behaviour “capable” of causing nuisance or annoyance.
However, amendments 73, 74 and 77, which would make all grounds discretionary, are a step too far. Indeed, I never argued for all grounds to be discretionary when we considered the previous Government’s Bill. Making all grounds discretionary would mean that landlords have no certainty that they would be awarded possession even if the grounds were otherwise met. That includes in situations of serious antisocial behaviour—where the tenant has been convinced of a serious criminal offence or has broken an injunction put in place to stop their behaviour. Landlords wanting to sell or move into their property could be prevented from doing so, and specialist sectors, such as temporary and supported accommodation, would not be able to guarantee regaining possession in order to house new individuals who require their support.
I assure the hon. Member that there are still many discretionary grounds in the Bill and that judges will have discretion in less clear cases or where possession may not always be reasonable, despite the ground having been met. It is absolutely right that judges have discretion where possession takes place in those circumstances, and that includes smaller breaches of a tenancy agreement or low levels of rent arrears. I believe the steps that we have taken to protect tenants provide sufficient protections against unfair evictions. On that basis, I ask the hon. Member not to press his amendments.
Carla Denyer (Bristol Central) (Green)
I would like to speak in favour of the amendment and to bring the Minister’s attention to the evidence we received from experts, which highlighted the fact that discretionary grounds do not make it impossible for the court to award possession. In fact, in many cases, especially ones involving antisocial behaviour, it is reasonable to assume that the courts would apply a high threshold for where to exercise discretion. Nevertheless, that does not negate the principle that there may be extremely exceptional circumstances in which discretion is needed. The Government completely tying the hands of the courts so that they are unable to consider those extenuating circumstances is counterproductive.
Mr Amos
I accept what the Minister says about the Bill’s intent and that there are very limited circumstances in which discretion would be available. It is disappointing, though, that it is not recognised that courts require more discretion than is given. The Bill would provide discretion only in those very limited circumstances.
Matthew Pennycook
Perhaps I can reassure the hon. Gentleman. The mandatory grounds for possession are very limited and specific—for example, grounds 1 and 1A, where the landlord has a clear intention to move back into the property or move a family member in or to sell the property, and they have to evidence that with the court. I ask hon. Members to consider—this was put to me many times in the evidence sessions—the challenges that our courts face and the burden that this legislation places on them. Making every ground discretionary, irrespective of how reasonable it is for a landlord in those grounds 1 and 1A circumstances, for example, to take back their property quickly, risks overburdening the courts. As I say, many of the grounds remain discretionary. However, we think that there is a good reason why a certain number of mandatory grounds are in a different bracket from the discretionary one.
Mr Amos
I hear what the Minister says. The case was made forcefully by witnesses in oral evidence that the discretionary grounds for eviction are far too limited and that we need to see further discretion given to the courts. This would not prevent evictions continuing or the courts from making the decisions in accordance with the Bill’s provisions, and it would provide discretion to the courts. I urge the Government to consider widening the categories of discretion for the courts in evictions. I hope that the Government will consider that issue during the passage of the Bill, and I am happy to withdraw the amendment on that basis.
David Simmonds
I certainly do not want to imply that there would be any degree of political love-in, but on this matter, I agree with the Minister. It is worth saying for the record that we in the Opposition understand that when the courts are considering this matter, the first issue will be an evidential test: has the necessary threshold for the mandatory ground to be triggered been met? If the court’s opinion is that there is some doubt about that, clearly it has the discretion to act differently because it considers through an evidential test that the threshold has not been met.
In practice, courts deal with this matter with a high degree of discretion, as they do with all other matters that are alike. As Members of Parliament, we will be aware of situations where constituents have been victims of serious, persistent, long-term antisocial behaviour. The grounds outlined are examples where evidence has been accumulated and a court can swiftly make a decision to grant possession in order for the situation to be resolved for the wider benefit of other people affected.
We therefore support the Government’s position that the mandatory grounds should be framed in this way and that moving to make all grounds discretionary would add an element of doubt over and above the evidential test. That would, in turn, enable those who wish to perpetrate long-term antisocial behaviour to get away with it for a longer period of time.
Mr Amos
I beg to move amendment 68, in clause 4, page 5, line 40, at end insert—
“(fa) after subsection (5A), insert—
‘(5B) Where the court makes an order for possession on grounds 1 or 1A in Schedule 2 to this Act (whether with or without other grounds), the order shall include a requirement on the landlord to file and serve evidence no later than sixteen weeks from the date of the order.
(5C) Evidence provided under subsection (5B) must—
(a) provide details of—
(i) the state of occupation of the dwelling-house since the date of the order, and
(ii) the progress of any sale of the dwelling-house, and
(b) be accompanied by a statement of truth signed by the landlord.’”
The Chair
With this it will be convenient to discuss amendment 69, in clause 4, page 5, line 41, at end insert—
“(2A) After section 7, insert—
‘7A Evidential requirements for Grounds 1 and 1A
(1) The court shall not make an order for possession on grounds 1 or 1A in Schedule 2 to this Act unless the landlord has complied with subsections (2) to (4) below.
(2) Where the landlord has served a notice for possession on grounds 1 or 1A, the court must be provided with evidence verified by a statement of truth signed by the landlord.
(3) Where the landlord has served a notice for possession on ground 1 and the dwelling house is required by a member of the landlord’s family as defined in paragraphs 2(b) to (d) of that ground, the court must be provided with evidence verified by a statement of truth signed by that family member.
(4) Where the landlord has served a notice for possession on ground 1A, the evidence referred to in sub-section (2) must include a letter of engagement from a solicitor or estate agent concerning the sale of the dwelling house.’”
Mr Amos
The amendment’s purpose is to require the evidence to be provided by landlords on grounds 1 and 1A, in the case of occupying the home or selling the property, to be clearly stated in the Bill, so that it is clear what evidence needs to be provided and the test is clearly stated. The Government have indicated that the evidence required will be contained in guidance, but it would significantly reassure Members in this House and in the other place if we could see the evidential test for landlords to gain possession. The amendment sets out the need for a statement of truth and suggests that a letter of engagement from a solicitor in the sale of a property is the kind of evidence that should be in the Bill. I believe the amendment is self-explanatory in that regard.
Matthew Pennycook
While I appreciate the sentiments behind the amendments—indeed, as a shadow Minister, I probed the previous Government on this point when discussing the previous Bill—on reflection, I do not think they are the right approach for the following reason, which relates to the previous debate. We have overhauled the Bill in a number of ways to strengthen protections for tenants, and we must be careful about tipping the balance too far the other way and penalising good landlords, who, in certain circumstances, have a right to certainty that they will get their property back and that this will move through the courts in an orderly fashion.
Amendment 68 is an attempt to deter abuse of grounds 1 and 1A, which is an honourable intention. It seeks to require landlords to present further evidence that they have fulfilled the grounds after the possession order has been granted. It does not detail what should happen if a landlord does not present the evidence. Furthermore, it will have no impact on cases that do not make it to court. Where a landlord has obtained a possession order through the courts, they will already have presented evidence to a court to satisfy a judge of their intent to meet the grounds. The amendment would also place an additional burden on courts, which would need to set up new processes to deal with the evidence, taking time away from progressing possession claims.
The hon. Member for Taunton and Wellington asked me to consider whether grounds that are currently mandatory should be discretionary, and I thought very carefully about which grounds should be discretionary and which mandatory when developing and overhauling this piece of legislation over recent months. On the basis of that reflection, I have concluded that increasing the prohibition on remarketing and reletting a property after using these grounds, including in cases that do not reach court, is a better mechanism for preventing abuse than adding requirements for evidence. This will allow a tenant to take action if they see, for example, their property advertised online following eviction.
Amendment 69 seeks to put into legislation prescribed evidential requirements for grounds 1 and 1A. We just had a discussion about how we should trust judges and their judgment on these matters. I believe that judges are best placed to consider and determine the evidence before them on these mandatory grounds. Setting an enhanced evidence threshold may mean that judges are less likely to consider wider evidence, and it could inadvertently lower the threshold where an eviction is ordered. It is right that judges have the discretion to respond to the evidence provided on a case-by-case basis. That is what the Bill provides for, and I therefore ask the hon. Member to withdraw his amendment.
Mr Amos
The Minister says that the amendment does not include what would happen if the evidence was not provided—clearly, the evidence would not be there and the case would be weakened on that basis. I contest the idea that this is an onerous or burdensome requirement. The statement of truth is an extremely simple document—many on the Committee will have seen them—that can be produced easily and at little expense. I also contest the idea that courts need separate processes to look at statements of truth. They look at statements of truth all day, every day; new processes are not required.
The engagement of a solicitor in the sale of a property is not a particularly onerous requirement on someone selling their property. I assume that the person selling the property would, in any event, have to engage a solicitor, and would therefore need a letter of engagement. It is not an onerous requirement in any shape or form. The Minister said that judges would have less discretion. Again, I contest that, because judges would simply have more evidence in front of them; it would not have any effect on the amount of discretion that judges have. I urge the Minister to continue considering the issue, but I can do the maths, so I am happy to withdraw the amendment.
David Simmonds
Again, I agree with the Government on this matter. A lot of residential property transactions are undertaken by licensed conveyancers rather than by solicitors. That is a much more affordable and efficient option, often done on a fixed-fee basis, and that is particularly relevant to smaller landlords. Introducing a requirement that a solicitor must be used would be unduly onerous and would inhibit the number of transactions in the market.
Matthew Pennycook
I wish to provide further reassurance to the hon. Member for Taunton and Wellington, because I fear that we are dancing on the head of a pin here. Under the provisions in the Bill, judges will have to consider evidence to justify the use of mandatory grounds 1 and 1A. When I gave evidence to the Committee, I provided examples of the types of evidence that judges may require. It is up to individual judges to ask for that evidence and to make a decision on the basis of what is put in front of them. We trust judges to do that. With regard to the hon. Gentleman’s amendment, I do not accept the idea that judges are not looking at evidence and not ensuring that the use of these grounds is properly justified. That is misplaced, so I am glad he has indicated that he will withdraw the amendment.
David Simmonds
I beg to move amendment 56, in clause 4, page 6, line 14, leave out “1A,”.
The Chair
With this it will be convenient to discuss the following:
Amendment 70, in clause 4, page 6, line 15, leave out “4A,”.
Amendment 57, in clause 4, page 6, line 16, at beginning insert “1A,”.
Amendment 71, in clause 4, page 6, line 20, after “4,” insert “4A,”.
David Simmonds
These amendments relate similarly to the issue of notice periods for grounds for sale. It is important to recognise that a very significant part of our housing supply continues to come from the private rented sector—in particular, from the buy-to-let market. Drawing on my experience as a financial adviser, one of the key issues for lenders in advancing buy-to-let mortgages arises because of the risks associated with them—in essence, people are much more likely to pay their mortgage payments on their own home than when they are borrowing to secure a home for investment purposes—so there is a risk premium, or a rating, on the mortgage interest. Consequently, a significant supply of finance is required to support the development of the buy-to-let market.
The introduction of significant restrictions on the length of notice periods will mean that when there is a default on those payments and they are not being made, it will be more difficult for the possession for the purposes of sale and the settlement of the outstanding debt to the bank to be progressed. That could have a chilling effect on the ability to secure finance and, in turn, an impact on the supply of properties available to those needing to secure a home in the private rented sector.
Once again, it is part of a broader, small “p”, philosophical and political argument. We are very much of the view that securing the maximum possible supply is very important, and we need to strike the correct balance so that we do not see a chilling effect having the unintended consequence of a reduction in supply.
Matthew Pennycook
As the hon. Gentleman has just made clear, amendments 56 and 57 seek to reduce the notice period for the selling ground 1A from four months to two months. The Government believe that the notice period for tenants being evicted through no fault of their own should be four months, to give them adequate time to find new accommodation. An eviction notice can turn a family’s life upside down, and four months means they will not be forced to move during a school term. I draw the Committee’s attention to the remarks I made previously about the changing nature of the private rented system and the fact that more older people and families now live in it compared with the situation in the late ’80s, when the system was introduced.
Selling a property is often a long-term decision that involves significant planning on the part of landlords. We do not believe that landlords are likely to need to evict tenants with only two months’ notice, given the time it takes to secure a sale. They also have the option of selling with tenants in situ.
Amendments 70 and 71 were tabled by the hon. Member for Taunton and Wellington. They would make an extreme change that would reduce the notice period for the new student ground 4A to a mere two weeks from the current four months.
The Government believe that students are just as deserving of adequate notice as other tenants. The purpose of the student ground is to try to balance security of tenure with the need to preserve the annual cycle of typical student tenancies. These amendments do not assist the ground in that purpose at all. Student landlords plan their business models long term around the academic year, and after our reforms will factor the four-month notice into their planning.
There is no circumstance where a competent student landlord would suddenly need to evict tenants in line with the academic year with only two weeks’ notice. Indeed, currently they have to give two months’ notice under section 21. The hon. Gentleman’s amendment is a retrograde step vis-à-vis the current iniquitous arrangements that we are trying to undo.
Students often lack the capital to organise a move at short notice. A two-week notice period means it is likely they are given notice to leave during the summer break when they might be working, or even during their exams. We believe that it is right that they have four months’ notice to organise their move.
I therefore ask the hon. Members not to press their amendments.
Mr Amos
Amendments 70 and 71 would align the two weeks’ notice for students in HMOs with the two weeks’ notice that the Bill provides that students would have in purpose-built student accommodation. All the points that the Minister has made in relation to the short-term notice period apply to the Bill because that is the Government’s intent in relation to purpose-built student accommodation. The amendments would simply align those properties under HMO ownership with those that are university or purpose-built student accommodation.
Landlords of HMO accommodation are likely to be smaller businesses than universities. Under the provisions in the Bill, universities would enjoy much greater flexibility on eviction than much smaller landlords, who would suffer as a result.
My concern is that there would be a reduction in the amount of student accommodation because of those very different terms on which HMO landlords would be able to let their properties to students compared with other tenants. Any reduction in the availability of supply of student accommodation, particularly in university towns, would have a serious impact on family housing, which is of course often occupied by students, much to the chagrin of residents who are looking for family homes.
It is vitally important that an unintended consequence of the Bill is not the reduction in supply of student accommodation. That is why we seek alignment with what the Bill provides for purpose-built student accommodation.
I urge the Government to consider reducing, if not to two weeks, then to two months, the grounds for eviction in other student accommodation, so that it is more closely aligned with the provisions that the Bill makes for the majority of student accommodation. I urge the Government to consider that and I will not press the amendment.
Matthew Pennycook
I will consider that matter further. To be candid with the Committee, some judgments on provisions relating to student accommodation are finely balanced. We are trying to strike a balance between giving student tenants the right level of security while maintaining that annual cyclical nature of student accommodation.
As the hon. Gentleman knows, we are treating purpose-built student accommodation differently from that of students living in the general PRS. We recognise the limited market for such accommodation. Regarding students in the general PRS, I am reluctant to accept the hon. Gentleman’s advice. Student landlords will adapt to the system and factor the four-month notice period into their business models. I am happy, however, to reflect further on the arguments he made.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Matthew Pennycook
I beg to move amendment 1, in clause 4, page 7, line 6, at end insert—
“(5) After section 11 of the 1988 Act insert—
‘11A Possession on ground 6A: compensation of tenant
(1) This section applies where a court makes an order for possession of a dwelling-house let on an assured tenancy on Ground 6A in Schedule 2 to this Act (whether or not the order is also made on any other ground).
(2) The court may order the landlord to pay to the tenant such sum as appears sufficient as compensation for damage or loss sustained by that tenant as a result of the order for possession.
(3) In deciding whether to make an order under this section, and what compensation to order, the court must (in particular) take into account the circumstances which led to Ground 6A being available as a ground for making an order for possession (including any conduct by the tenant which caused or contributed to Ground 6A being available).’”
This gives the court power to order the landlord to pay compensation to the tenant where possession is obtained on Ground 6A (failure of premises to comply with planning requirements etc).
Matthew Pennycook
Without the threat of arbitrary section 21 evictions, tenants will be evicted only when landlords have reasonable grounds for doing so. Clause 4 amends the grounds for possession in schedule 2 of the Housing Act 1988. The grounds themselves are amended by schedule 1 of the Bill, which we will debate shortly. Most crucially, clause 4 sets out the notice periods for the grounds for possession. It extends notice periods for the main grounds where the tenant is not at fault, including where a landlord wishes to move in or sell the property.
In the current system, tenants can be evicted with as little as two months’ notice, even when they have done absolutely nothing wrong. In future, landlords will usually need to provide four months’ notice when the tenant is not at fault, such as when a landlord wants to sell or move in. Longer notice periods are critical to ensure that tenants have time to find alternative housing.
The previous Government’s Renters (Reform) Bill did not propose longer notice periods, maintaining the two months’ notice tenants face under existing section 21 arrangements. That was one of the main concerns expressed by the Opposition at the time, as well as by groups such as Shelter and Generation Rent. I am pleased to say we have addressed their concerns here. Crucially, four-month notice periods will also mean that families with children will never be forced to move during school term time when they are not at fault. That is fundamentally a matter of fairness from the Government’s point of view. Children’s education should not be disrupted simply to allow for the quicker sale of property, or to have another individual move in. Correcting that is at the heart of the Government’s opportunity mission.
The notice periods for the rent arrears ground will be increased from two weeks to four weeks. That will give vulnerable tenants who are struggling to pay their rent longer to find funds or alternative accommodation. I am confident that that will not burden landlords unfairly, and will give a little more time to tenants to find new accommodation if necessary, or to repay their arrears.
When landlords and communities are faced with antisocial behaviour, landlords will be able to make a possession claim to the court immediately. That will ensure that poor behaviour can be dealt with swiftly. That is currently only the case for the discretionary ASB ground 14, but we are expanding it to the mandatory ASB ground 7A, for which very serious behaviour must have occurred. It is a peculiar quirk of the current legislation that the discretionary ground allows landlords to take action more swiftly than the mandatory ground where tenants have committed very serious crimes. The clause would end that anomaly.
We acknowledge that permitting landlords to seek possession immediately, although appropriate, will not give tenants long to seek legal advice on their situation, or find a new home. The court will therefore not be able to make an order for possession that takes effect within 14 days from when the landlord serves notice on the tenant. In addition to notice periods, clause 4 would make provision for specific circumstances of possession. For example, the clause would ensure that superior landlords can continue possession claims made by an intermediate landlord, even after the head tenancy has expired. That will ensue that superior landlords requiring vacant possession will not have to begin a new claim when the intermediate landlord has already done so.
Finally, clause 4 would make further and consequential changes to the Housing Act 1988, to reflect wider changes made by the Bill, including the abolition of fixed-term tenancies and the introduction of new grounds for possession. That includes ensuring that protections for Case A tenants under the Agricultural Holdings Act 1986 continue in the new system.
Members of the Committee might wonder what the wording in subsection (4),
“Disapplication of conditions where notice dispensed with”,
is designed to achieve. The use of certain grounds, including ground 4A, 5G and 6, hinges on the serving of valid notice. However, section 8 of the Housing Act 1988 permits a court to dispense with a notice requirement when it is reasonable to do so. This change will ensure that the grounds continue to work when this dispensation has occurred. The changes we are making in clause 4 will give tenants more time to find a place to live while ensuring that landlords can recover possession in a timely way when they have a legitimate reason to seek possession. That will ensure that the system works as intended.
David Simmonds
The Opposition supports the vast majority of these measures. We all recognise situations where a landlord is in breach of planning regulations, resulting in a property being overcrowded and potentially being turned into an HMO without the appropriate licence and so on, which can bedevil our constituents. It seems appropriate to take these steps to raise the stakes for landlords who seek to behave in that manner and drive them out of the market.
Matthew Pennycook
I do not have much to add to what I have already said. I commend the clause to the Committee.
Amendment 1 agreed to.
Clause 4, as amended, ordered to stand part of the Bill.
Schedule 1
Changes to grounds for possession
Carla Denyer
I beg to move amendment 42, in schedule 1, page 155, line 9, leave out “1 year” and insert “2 years”.
This amendment would increase the minimum period before a landlord can use certain grounds for possession from 12 months to 2 years.
The Chair
With this it will be convenient to discuss the following:
Amendment 58, in schedule 1, page 156, leave out lines 14 to 16.
Amendment 43, in schedule 1, page 156, line 15, leave out “1 year” and insert “2 years”.
This amendment would increase the minimum period before a landlord can use certain grounds for possession from 12 months to 2 years.
Carla Denyer
The Bill rightly seeks to address the fact that tenants do not have security in their homes. Amendments 42 and 43 would amend schedule 1 to lengthen the proposed period of protection against eviction under grounds 1 and 1A from one year to two years. This would be just one measure to start to address insecurity of tenure. It is worth recalling that the King’s Speech background briefing notes explain that one of the primary aims of the Bill is to increase tenant security and stability.
Private renting does not have to be insecure. The median length of tenancy in the UK is just under three years, while the average in Germany is 11 years. Insecurity erodes renters’ sense of belonging, and constant moving has a heavy financial cost. For children who are in privately rented homes—the Minister pointed out that they make up an increasing proportion of private renters—this insecurity takes a wider toll. Each school move at a non-standard time of year reduces expected GCSE grades by 0.5. Shelter has found that 13% of tenants with children in their household said that their last house move was stressful or upsetting for their child.
The Committee will no doubt be aware that constant moving is a major problem for private renters. Research by Shelter in 2022 found that a quarter of all private renters had lived in three or more privately rented homes in the previous five years—three different homes in five years. Amendments 42 and 43 are part of an effort to urgently change the renting culture and our ideas about what is acceptable when a property is rented out as someone’s home. I hope the Minister will look at them, not least because a central aim of the Bill is about addressing the deep unfairness of private tenant insecurity.
That unfairness is a massive problem in my constituency of Bristol Central, where a huge 47% of households are in the private rented sector. It affects many people. To give just two examples, a constituent I spoke to had to move six times in six years, and another constituent literally received her notice as she was moving her possessions into her new flat. That is unacceptable. Security is vital to allow renters to put down roots in their community and plan for the future. It is clear from the evidence gathered by the Renters’ Reform Coalition that the vast majority of tenants want security and the power to decide when to move on. They do not want the anxiety, discomfort and expense of being forced to move by a distorted, malfunctioning market.
Unwanted, unexpected home moves are stressful and costly. Generation Rent estimated in its evidence that an unwanted move costs a typical two-adult renting household more than £2,000. Almost half of renters have no savings at all. Moving frequently or a short period of time after the previous move impacts tenants’ financial resilience. For many, those costs are prohibitive and will push them into homelessness, not least because finding somewhere new can often prove impossible or mean accepting dangerous, substandard accommodation. To give one example among many from my constituents, after months of searching with no luck, a constituent and her partner had to settle for a grim place with an “unshakeable smell of damp” that made almost everything she owned “fuzzy with mould”.
Competition for properties in the private rented sector is fierce. Tenants often have little time in which to find a new home and little power to influence the terms of their tenancy agreements. They often sign 12 or six-month contracts under the current regime simply because that is the only option available to them, not because they actively prefer to be protected for only one year. Many tenants would prefer long-term security in their home. The proposed two-year protected period in amendment 42, coupled with rolling tenancies, would allow tenants a combination of flexibility and security.
We should reflect that the two-year protected period I am proposing is not radical or new—far from it. It was what was initially proposed in the former Conservative Government’s 2019 consultation, “A new deal for renting”, to ensure that security of tenure for tenants would not be undermined once fixed-term tenancies come to an end. However, when legislation was eventually brought forward, that Government watered down the protected period to just six months. The current Minister, then a shadow Minister, rightly supported a two-year protected period with regards to grounds 1 and 1A in the Renters (Reform) Bill Committee.
As well understanding its history, it is important to reflect on the fact that a longer protected period has the potential to drive professionalism in the sector. As ever, good landlords have nothing to fear from this provision. A two-year measure of security at the beginning of a tenancy is needed to create a disincentive for any abuse of the exemptions to no-fault eviction, and it would be a triple win: better for renters, for the local communities they move into, and for homelessness reduction.
The Renters’ Rights Bill is a once-in-a-generation opportunity to set out clear principles for the roles of both landlord and tenant and to develop a regulatory regime that reflects and incentivises that vision. While some landlords will have to make changes to their business plans, a two-year protected period should not amount to a significant change for many landlords or interfere with their business model. In the Renters (Reform) Bill Committee, when speaking to his amendment to create a two-year protected period, the hon. Member for Greenwich and Woolwich rightly said:
“We believe that any landlord likely to use ground 1 or 1A in good faith will have some prior awareness that they or a family member may need the property for use at some point in the coming years, or that they may wish to sell it in the near future.”––[Official Report, Renters (Reform) Public Bill Committee, 21 November 2023; c. 173.]
Buy-to-let mortgages are often made available at fixed rates for two years or longer and, currently, the average tenancy in the private rented sector is longer than two years. This should not be overly disruptive, and it can provide much-needed stability for those in most need of it.
To conclude, the change to a two-year protected period would be one of the most important things the Government could implement in the Bill to more fully deliver on their ambition to decisively rebalance renting in favour of renters. The amendment seeks to understand the reasoning behind the proposal for a protected period of one year rather than two years, as was the Minister’s position previously. While 12 months is obviously an improvement on six, we can do better to improve the security of private renting, which has such a big impact on tenants’ health, wellbeing and life choices.
David Simmonds
I rise to speak to amendment 58. In general terms, I am very sympathetic to the points made by the hon. Member for Bristol Central. In comparison with the UK housing market, most European countries have a much higher degree of long-term rental as part of their housing supply. The UK has a more mixed supply with a more significant owner-occupation sector. That is a challenge for the new Government, as it was for previous Governments, as we see overall demographic change bringing us a bit more in line with the housing markets of other countries. The UK, however, still remains significantly adrift of that position, which is why I am concerned that the hon. Lady’s amendments would potentially have, as with mortgage finance, a chilling effect on supply.
Carla Denyer
Would the hon. Gentleman be able to speak slightly louder? It is difficult to hear down here.
The Chair
Was the hon. Gentleman able to hear what the hon. Member for Bristol Central said?
David Simmonds
I shall do my best. It may be that, although seeking to comply with the rule of speaking to the Chair, I need to turn around more regularly to address the Committee. The point I was making is that while we have a lot of sympathy with the points made by the hon. Member for Bristol Central, given that the changing nature of the UK rental market will result in these becoming more significant issues, we believe the issue of notice periods needs to be addressed through amendment 58.
Matthew Pennycook
As the hon. Member for Bristol Central has set out, amendments 42 and 43 seek to extend the protected period for the moving in and selling grounds to two years. Amendment 58, in contrast, seeks to remove the protected period for the selling ground entirely. We believe that the Bill strikes the right balance in this area.
The hon. Member for Bristol Central is right that during debate on the Renters (Reform) Bill, I probed the then-Government on increasing protections for tenants beyond the six months they had proposed. I did so given the relative lack of security that that Bill afforded to tenants, which we have improved on. I reflected very carefully on this point in the development of the Bill. Viewed in the context of the many strengths and protections that we have introduced to benefit tenants, I feel that a one-year protection period against the main landlord circumstances ground—this is not a general period of protection that applies to any arbitrary eviction, but is specific to grounds 1 and 1A—strikes the right balance between tenant security and ensuring that landlords can respond to genuine changes in their circumstances.
The shadow Minister highlighted the thinking that has led to me coming down to one year, instead of remaining with two. A two-year protected period for the moving and selling grounds is, I fear, too long. It would prevent landlords from being able to respond to changes in circumstances, and therefore harm confidence in the sector and risk decreasing supply. In some circumstances, landlords may only be able to let their property for a year—for example, if they temporarily moved abroad—and a longer period may therefore remove valuable supply from the market.
Most importantly, I was convinced that a one-year protected period would deter abuse from disreputable landlords seeking to circumvent the protections in place. The one-year protected period mirrors the typical one-year fixed-term tenancy. We think it strikes the right balance, but I am more than happy to give further consideration to the points made by the hon. Member for Bristol Central. I sympathise with and understand the significant costs borne by tenants from repeated moves. I understand, as I hope I have made clear in the debate so far, the need for stability and security, but we think that in this particular area, the one-year protected period is appropriate.
Carla Denyer
I thank the Minister for his response. I, too, have spent a lot of time reflecting on the potential effects of the amendment, including thinking about potential edge cases, exactly as he described.
Imagine someone who became an unintentional landlord, perhaps because after buying their home, they got seconded to another country for work for a year or two. While I recognise that it might be inconvenient for a landlord to have a two-year limit, it is also inconvenient for a tenant to have instability of tenure. If someone is, for example, seconded to work abroad for a year or two, with a fixed date of return to be back in their own property, they have to consider their responsibility to provide stable housing for their tenants. If they are not able to do that for a long enough time for the tenant not to be subjected to undue costs and effects on their health, stability, education and so on, maybe the landlord needs to look into short-term lets, rather than creating a situation where somebody believes they are making a permanent home. Say that person was going abroad for a year and a half, and the limit is two years—they might have to find somewhere else to live for a few months before moving back in. Yes, that would be an inconvenience, but we have to weigh that against the huge inconvenience for tenants who have their only home constantly disrupted and moved around.
I ask the Minister to look at this again, and to think about the edge cases, as well as where the greatest inconvenience and injustice really lies between the landlord and the tenant. I would be happy to have a chat with him. I will not press the amendment to a vote this morning.
Matthew Pennycook
I thank the hon. Lady for her further contribution. I have weighed very carefully in the balance, and looking at the Bill in the round, whether a two-year protected period would be appropriate. I concluded it would not be, taking into account those edge cases, for the following reasons.
While I sympathise with the point the hon. Lady made about the very significant costs that tenants face with moves, and while we obviously need to ensure that tenants under the new system have the requisite amount of stability and security, she too readily dismisses the potential impact on supply in the sector. It would be inconvenient for landlords; it would be inconvenient for tenants more widely if we saw a subsection of landlords that feel that they may need to use ground 1A and would not put their property on the rental market because of the possibility that they will need to use it.
As we heard in the evidence sessions, such is the acute nature of particularly hot rental markets across the country—hers will be one; mine is another—that if we lose a chunk of supply because we say to landlords, “It is too costly, too risky for you to put your property on the market if you may need to go abroad and work for a year,” that would be to the detriment of tenants in the round.
I think the one-year period strikes the right balance. It mirrors the sort of typical fixed-term, one-year tenancy. I urge the hon. Lady to go away and think about whether, in the round, with all of the protections we have introduced vis-à-vis the previous Government’s Bill, the one-year protected period does not do enough. We will not accept the amendment. I will, however, further reflect on the points she made because, as I have said, I am sympathetic to them and had weighed up two-year protected tenancies in the context of the previous Government’s Bill, but I think, looking at this Bill in the round, one year is the appropriate period.
Carla Denyer
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Matthew Pennycook
I beg to move amendment 2, in schedule 1, page 157, leave out line 13.
This allows Ground 1B to be used to obtain possession whenever the landlord intends to grant an assured tenancy to another person (whether or not it is to be granted pursuant to a rent-to-buy agreement).
Matthew Pennycook
I will begin by discussing Government amendments 2, 3, 4, 5 and 9. Rent-to-buy tenancies help prospective homeowners to get on the housing ladder. New possession ground 1B will allow social landlords to take possession in specified circumstances, to ensure that rent-to-buy schemes can continue to function in the future assured regime. Landlords must be able to take possession in all the necessary circumstances. The amendments therefore widen ground 1B, so that landlords can simply grant another assured tenancy, without its having to be on a rent-to-buy scheme. That will ensure maximum flexibility for social landlords to meet the demands of local housing markets. However, the period of the existing rent-to-buy tenancy will need to have expired and the sitting tenant must have been offered the opportunity to purchase the property, in line with the contract. This means that it will never be a surprise for the rent-to-buy tenant if the tenancy is ended. The amendments also clarify the definition of “market rent” in possession grounds 1B and 5H, to ensure clarity and consistency.
I will now discuss Government amendments 6 to 8. New ground 6A will allow landlords to evict their tenants when eviction is necessary to comply with enforcement action. We have already debated this matter in relation to a previous Government amendment. For example, if a property were overcrowded or the landlord had received a banning order, new ground 6A would apply. The amendments ensure that the new ground also covers situations in which a tenant’s occupation needs to be brought to an end in order to comply with planning enforcement action. For example, where an industrial unit has been converted to residential use without planning permission, a local planning authority may issue an enforcement notice requiring the residential use to cease.
If planning enforcement were not included in ground 6A, there would be no guarantee that the landlord could evict the tenant in those circumstances. That would risk undermining the planning system’s ability to enforce effectively against unauthorised development. That could result in poor outcomes for residents, the community and surrounding businesses. This measure will ensure that landlords are not left in legal limbo, where the only way to comply with planning enforcement action is for a tenant to cease to occupy a dwelling, and ensures that the tenancy itself can be brought to an end appropriately. We are also bringing forward an amendment to ensure that tenants are fairly compensated when they are evicted under ground 6A, ensuring that the measures are balanced.
Amendment 2 agreed to.
Amendments made: 3, in schedule 1, page 157, leave out line 30.
This leaves the definition of “market rent” out of Ground 1B, as it is superseded by Amendment 4.
Amendment 4, in schedule 1, page 157, line 33, after “rent” insert
“(and here “rent” and “market rent” include any amount payable by way of service charge)”.
This ensures that any service charge is taken into account in both the rent and the market rent (when determining whether the rent is higher than 80% of the market rent).
Amendment 5, in schedule 1, page 165, line 18, leave out from “than” to “, and” in line 22 and insert
“80% of market rent (and here “rent” and “market rent” include any amount payable by way of service charge)”.—(Matthew Pennycook.)
This replaces the term “affordable rent” with a reference to rent that is no more than 80% of the market rent.
David Simmonds
I beg to move amendment 60, in schedule 1, page 168, line 26, at end insert—
“20A After Ground 6 insert—
“Ground 6ZA
The landlord or superior landlord who is seeking possession intends to undertake such works as are necessary to ensure that the property meets the standards set out by regulations under section 2A of the Housing Act 2004 and the intended work cannot reasonably be carried out without the tenant giving up possession of the dwelling-house because—
(a) the tenant is not willing to agree to such a variation of the terms of the tenancy as would give such access and other facilities as would permit the intended work to be carried out, or
(b) the nature of the intended work is such that no such variation is practicable, or
(c) the tenant is not willing to accept an assured tenancy of such part only of the dwelling-house (in this sub-paragraph referred to as “the reduced part”) as would leave in the possession of his landlord so much of the dwelling-house as would be reasonable to enable the intended work to be carried out and, where appropriate, as would give such access and other facilities over the reduced part as would permit the intended work to be carried out, or
(d) the nature of the intended work is such that such a tenancy is not practicable.””
I have realised, in the course of debate, that the Minister has the benefit of being a bit closer to the overhead microphones than I am, so I will do my best to direct my remarks in a skywards manner, Sir Christopher.
The amendment seeks to bring in additional grounds for possession, and it is partly on the basis of evidence that we are aware of as a Committee and which stems from the social sector, where we know that there are many examples of landlords, including local authorities, that have to go to enormous lengths to access a property to carry out basic maintenance—often, in the case of local authorities, at no cost to the tenant, who is a council tenant—and to ensure that minimum safety standards, for example gas inspections, electrical safety inspections and remedial works to deal with issues such as damp and mould, are applied. We know that there has been extensive debate and consideration of evidence in relation to Awaab’s law and the need to ensure that properties meet the decent homes standard. Therefore the aim of this proposal is to ensure, where it is necessary for a landlord to recover the property in order for those works to be carried out and the tenant does not wish to co-operate, that there is provision in the Bill to achieve that.
Matthew Pennycook
As the shadow Minister just made clear, amendment 60 would introduce a new mandatory ground for possession—6ZA—into schedule 2 of the Housing Act 1988. It would allow landlords to evict when they need to undertake works to meet the decent homes standard introduced by the Bill and those works cannot be completed without evicting the tenant. The objective that the hon. Gentleman seeks is reasonable and appropriate, but the Government do not believe that the ground is needed. I expect that the vast majority of works to meet decency requirements could be completed with the tenant in situ. Landlords may also undertake more substantial works between tenancies.
The proposed new ground is also unnecessary in the light of ground 6. The Bill’s revised ground 6 already permits a landlord to evict a tenant when they wish to undertake substantial redevelopment work that cannot be done with the tenant in situ. I am therefore reluctant to introduce a new ground that is not strictly needed, given what is in place in the Bill. However, I hope I have provided the Committee with sufficient reassurance that landlords will not be left unable to comply with the new decency requirements, as I say, in circumstances where the tenant must move out.
David Simmonds
I want to probe the Minister a bit on the point about substantial redevelopment. We are aware that to remedy issues of damp, for example, it is not uncommon for a landlord to need to remove all the plaster and potentially take out the flooring or ceiling for a lengthy period of dehumidification. Following that, extensive works would need to be undertaken to ensure that the damp does not reoccur. Those works being completed does not represent redevelopment of the property by, for example, building an extension or adding an additional floor, but leave the property substantially the same as before. It therefore does not seem to us that it would meet the test of redevelopment envisaged in the Bill.
The argument we are advancing is that in examples that may represent a significant risk to the health or safety of the tenant but the tenant does not wish to move, we need those additional grounds to be absolutely clear that that is a reasonable basis on which a landlord can seek to regain their property, so that they can carry out those works.
Matthew Pennycook
I thank the shadow Minister for that intervention, and I understand the point he makes. If it is acceptable to him, I will write to him with the technical detail about what substantial development entails. As I say, in most cases where substantial development is not taking place, works to ensure that homes come up to the new decent homes standard will be able to take place in situ. On the specific hard-edged case he mentions—that is, where the health and safety of a tenant is put at risk by the works required to take place or the conditions that the works are intended to remedy—I point him to provisions in the Bill like the extension of Awaab’s law, which will ensure that landlords have to respond to such hazards in a defined timescale and make accommodation for the tenant to move out in such circumstances. What I am reluctant to do here is to introduce a new ground that would have a substantial impact on tenants. They would have to leave the property and find new accommodation, and they might be owed a homelessness duty in those circumstances. That is a huge amount of disruption.
As I say, we think the existing provisions in the Bill do the job, but on the point he makes, which is a well-made one, as to precisely what the definition is and where the boundary lies between substantial and non-substantial redevelopment works, I will write to him with some more technical detail. I therefore ask the hon. Member to withdraw his amendment.
David Simmonds
On the basis of those assurances, I will withdraw the amendment. Clearly, we will have the opportunity to return to this debate later on. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 6, in schedule 1, page 168, line 30, leave out “situations has occurred” and insert “applies”.
This changes the opening wording so that it works better with the provision which follows.
Amendment 7, in schedule 1, page 169, line 30, at end insert—
“(g) compliance with a planning enforcement notice or injunction would be, or is, incompatible with continued occupation of the dwelling-house by the tenant.”
This enables the landlord to obtain possession where planning enforcement action has been taken and compliance with that action would be incompatible with continued occupation under the tenancy.
Amendment 8, in schedule 1, page 169, line 37, at end insert—
““planning enforcement notice or injunction” means—
(a) an enforcement notice issued under section 172 or 182 of the TCPA 1990 that has taken effect,
(b) a breach of condition notice served under section 187A of the TCPA 1990,
(c) an injunction granted under section 187B of the TCPA 1990,
(d) a listed building enforcement notice issued under section 38, 45 or 46 of the P(LBCA)A 1990 that has taken effect, or
(e) an injunction granted under section 44A of the P(LBCA)A 1990;
“P(LBCA)A 1990” means the Planning (Listed Building and Conservation Areas) Act 1990;
“TCPA 1990” means the Town and Country Planning Act 1990;” .—(Matthew Pennycook.)
This defines the term “planning enforcement notice or injunction” which is used in Amendment 7.
David Simmonds
I beg to move amendment 62, in schedule 1, page 170, line 3, at end insert—
“(za) for the first unnumbered paragraph, substitute—
‘At the date of the service of the notice under section 8 of this Act relating to the proceedings for possession—’”.
The Chair
With this it will be convenient to discuss amendment 63, in schedule 1, page 170, line 6, at end insert—
“(ba) in paragraph (b), at end insert ‘and at the date of the hearing any rent is unpaid.’”
David Simmonds
Amendments 62 and 63 also deal with grounds for possession. Amendment 62 is intended to address situations where possession of a property may be required for persons on whom the landlord may rely in order to carry on living their lives, such as a carer. We heard evidence from organisations representing landlords in the more rural parts of our country on situations where grounds for possession may be necessary to enable a person with caring responsibilities to occupy the property.
Amendment 63 deals with a similar process in respect of antisocial behaviour. We have already debated the issue extensively, so I will not speak further to that amendment now.
Matthew Pennycook
Taken together, amendments 62 and 63 seek to remove the requirement for a tenant to meet the arrears threshold for mandatory eviction at the date of hearing. Instead, they would allow a tenant to be evicted only if they met the threshold at the date of the notice and had any arrears at all remaining at the date of their hearing. I am sure we all agree we should encourage tenants in financial difficulty to pay off their arrears, but we believe the amendments would act as a significant disincentive to even try to do so, as it would mandate eviction of a tenant who has done the right thing and tried to pay off their arrears.
I understand that, with the amendments, the hon. Gentleman is most likely trying to address the perceived problem of tenants gaming the system by paying off a nominal amount of arrears, placing them just below the threshold at the date of hearing, and thus frustrating a landlord’s attempt to evict the tenants. That was the rationale that underpinned new ground 8A in the previous Government’s legislation. However, this is not a problem recognised as occurring frequently, if at all, by me or by those who advise tenants going through the eviction process—in fact, it is hard to find cases of people trying to extensively game that system.
The previous Government’s solution to this problem was ground 8A, which we consider to be punitive. Similarly to these amendments, ground 8A would have punished tenants who did the right thing in trying to pay off their arrears. While we understand how frustrating rent arrears can be for landlords, we have to accept that most tenants act in good faith when trying to pay off their arrears, and they should be encouraged to do so. I hope hon. Members agree that we should encourage the right behaviour in tenants who are trying to bring down their rent arrears.
The amendments would therefore be fundamentally unfair and, most importantly, create the wrong incentives. I therefore ask the shadow Minister to withdraw amendment 62.
David Simmonds
I managed to make the dubious mistake of making the wrong points when I moved the amendment, but the Minister has brought us back to exactly the points I omitted to make. Concerns remain, particularly where there may be delays in accessing the courts to get a decision, either because of a lack of capacity—as we know, that remains a problem—or because of future resourcing issues in the new world that this Bill seeks to introduce, in which a number of routes will be open in the event of a dispute.
The Opposition remain concerned about the risk that those who wished to could seek to game the system. Most Members of Parliament will have had constituents who have been affected by tenants who failed to pay the rent. Those constituents may be accidental landlords renting out the property of a deceased relative while waiting for probate, and they may find that someone is occupying their property and perhaps sub-letting it for cash without passing that money on, leaving them in an incredibly difficult position. We want to ensure that people who behave in that way cannot continue to game the system. Having acknowledged the Minister’s points, however, I am happy to withdraw the amendment.
Matthew Pennycook
In addition to the points I made previously, I briefly draw the shadow Minister’s attention to the fact that ground 8 will remain mandatory, and discretionary grounds will also be available when arrears do not meet the mandatory threshold, such as in cases of repeated late payment. We think the courts have the necessary provisions to be able to take action on rent arrears. What we find particularly objectionable in the amendment is that it would mean that anyone with any amount of arrears at the hearing would be subject to mandatory eviction. We think that that goes too far, so I am glad that the shadow Minister has agreed to withdraw the amendment.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
David Simmonds
I beg to move amendment 59, in schedule 1, page 170, line 13, at end insert—
“23A After Ground 8 insert—
‘Ground 8A
The landlord who is seeking possession, or, in the case of joint landlords seeking possession for at least one of them, requires the dwelling-house for the purposes of providing care to—
(a) a person under the age of 18;
(b) a person who has a disability under section 6 of the Equality Act 2010; or
(c) a person who requires personal care on the grounds of age, illness or injury.’”
I will not repeat at length the comments I made when I previously introduced amendment 59 in error. The amendment relates to the grounds for use when a landlord needs to put a carer into a property. It seeks to ensure that the required flexibility is available where the needs of a cared-for person must be put first.
Matthew Pennycook
As the shadow Minister has just made clear, amendment 59 seeks to introduce a new ground for possession into schedule 2 of the 1988 Act to allow landlords to evict tenants when they wish to use the property for the purposes of providing care. Although I appreciate the sentiment behind the shadow Minister’s proposals, I do not believe that this ground is needed. Ground 1, which is a mandatory ground, allows a landlord to move in close family members. That includes children, grandchildren, parents, grandparents and siblings. It could be used if the landlord wished to obtain possession to provide care for close family members.
This relates to a point that we have just discussed. We think that a two-year protected period might lead to such cases being prohibitive for landlords who need to make use of the grounds. We think the existing ground 1 is likely to cover the vast majority of cases of the kind that the shadow Minister seeks to help, without increasing the complexity in the system. I therefore ask him to withdraw the amendment.
David Simmonds
Each new Bill is an opportunity to consider as widely as possible the issues that our constituents may face. A property that has been adapted for occupation by someone with care needs may have been rented out by, for example, a military family who need to move to a placement abroad. They may find that they cannot access the property on their return, when it is essential that they are able to do so in order for those facilities to be available. We think it is reasonable to raise such situations.
Recognising the points that have been made, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
David Simmonds
I beg to move amendment 61, in schedule 1, page 170, line 13, at end insert—
“23A In Ground 14, in each of paragraphs (a) and (aa), for ‘likely to cause’ substitute ‘capable of causing’”.
Amendment 61 seeks to broaden out the debate on the opportunity for a landlord to seek possession on grounds where antisocial behaviour on the part of the occupant is a factor. We have considered this quite extensively in Committee, but it is clear that it remains a significant issue in some cases. As I have said, most of us will have had experience, as constituency Members of Parliament, of matters arising from the antisocial behaviour of tenants. We will be aware of the enormous frustration, at both the landlord and the community level, at the inability to tackle that effectively under the current system. We want to ensure that those powers are as strong and as flexible as possible.
Matthew Pennycook
Amendment 61 seeks to expand the discretionary antisocial behaviour ground to include behaviour “capable” of causing nuisance or annoyance. Members may recall that this was proposed in the previous Government’s Renters (Reform) Bill. When in Opposition, we strongly opposed the change, because it had the potential to significantly reduce security of tenure and, most importantly, put vulnerable tenants at risk of eviction. I remain concerned that it would leave tenants open to eviction, even when their behaviour was not causing any problems.
A huge range of behaviours are “capable” of causing a nuisance or annoyance. I was tempted to say that some of the behaviour of my children, on occasion, is more than capable of causing nuisance or annoyance. We can all agree that such a subjective term potentially includes a huge range of behaviours, and it would not be fair for someone to lose their home on the basis of some of them. For example, a baby crying frequently is capable of causing another tenant annoyance. In those cases, and there are many others that I could cite, it would be fundamentally wrong to put a family at risk of eviction because of that. Worse still—this is a point I recall very clearly from the discussions I had with domestic violence charities at the time of the previous legislation—we heard from many organisations that represent victims of domestic abuse that sometimes such abuse can be mistaken for antisocial behaviour, because of loud noises, banging or disruption in the property next door. The amendment increases the risk that tenants in such a situation could be evicted.
I understand that the shadow Minister wants to ensure that landlords have confidence that they can evict tenants who engage in genuine antisocial behaviour. That is an honourable aim, but there are already measures in the Bill to address that, including reducing notice periods so that landlords can make a claim to the court immediately when using the antisocial behaviour grounds, as we have discussed. We have also made changes to section 9A of the Housing Act 1988 to include amendments to ensure that the court considers the particular impact of antisocial behaviour on victims living with perpetrators in HMOs, which was a specific concern raised by the sector. We will also encourage the use of mediation and other tools by ensuring that judges take into account whether a tenant has engaged with attempts to resolve their behaviour, making it easier to evict perpetrators who do not engage.
For the reasons that I have set out, we believe that lowering the threshold from “likely” to “capable of” causing nuisance or annoyance could have extremely damaging consequences, and I do not believe it is in the spirit of what the Bill is trying to achieve. I therefore ask the hon. Member to withdraw his amendment.
Mr Amos
I rise to support the Government on this issue, as Liberal Democrats did in the context of the Renters (Reform) Bill in the previous Parliament. To my mind, introducing a definition of antisocial behaviour that is simply about what is “capable” of causing annoyance and disturbance is tantamount to an authoritarian approach. When the Minister talks about crying babies, I cannot help being reminded that my own crying baby was complained about by the next-door neighbour when I was in rented accommodation. She does not cry so much now—she is 32. The very idea that anything capable of causing annoyance should be regarded as formally antisocial behaviour in law is an extreme concept, and it is an extremely good thing that this new Bill has left such thinking behind. This amendment should not be accepted.
David Simmonds
I will withdraw the amendment, because again the numbers are against me. It is important to recognise as we consider it, however, that there are examples—loud music is one—that might not within the definition of “likely” to cause nuisance or annoyance, but potentially would fall within our proposed definition.
I hope that the Minister and the Government will consider this issue. We know that a children’s party—I speak as a guilty individual in this regard—can be a very noisy occasion that generally takes place in the middle of the day for a brief period of time, whereas playing loud music for one’s own freedom of enjoyment all day and night may cause significant issues. Most of us, as Members of Parliament, have seen examples of behaviour that of itself and on an individual, case-by-case basis would not cause a nuisance, but that can cause significant upset to neighbours when repeated. That can range from the environmental impact of an activity such as servicing cars or maintaining vehicles to things such as loud music, and people can do those things at times of the day and night that are antisocial in the context in which the home is located. It is important that the Government give further consideration to the matter, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: 9, in schedule 1, page 172, leave out lines 29 to 32.—(Matthew Pennycook.)
This is in consequence of Amendment 5.
Question proposed, That the schedule, as amended, be the First schedule to the Bill.
Matthew Pennycook
I beg the indulgence of the Committee to spend a little time setting out the Government’s position on this schedule, because it is a key part of the Bill. As we have discussed, the Bill reforms the grounds for possession to ensure that tenants have greater security in their homes and, importantly, that good landlords can regain a property when necessary. Without section 21 and the threat of arbitrary evictions, tenants will have that greater security in their homes. Landlords will have to use one of the defined grounds for possession in schedule 2 to the Housing Act 1988, as amended, when they need to evict a tenant. They will be able to repossess their property only when it is reasonable to do so.
Schedule 1 inserts new grounds and amends existing ones, ensuring that landlords have robust grounds for possession when there is good reason to take their property back. As we have discussed, that includes repossessing to sell, to move in or if their tenant engages in antisocial behaviour or falls into rent arrears. Although many of the grounds are broadly similar to those in the previous Government’s Bill, we have made some important changes that we believe ensure a fairer balance in the sector. There are three main types of ground: those relating to a change in the landlord’s circumstances, those to allow specialist sectors to operate and those where the tenant has not met their obligations. I will not cover each in detail here, but I will give a brief overview of some of the key provisions.
Mr Amos
I rise to ask the Minister to clarify something for my benefit, and possibly that of other people. The Liberal Democrats support the omission in paragraph 8 of the grounds for eviction for the purposes of creating holiday accommodation, but what will prevent a landlord from evicting to move in their own family, or purportedly for sale and then changing their mind and letting the property out as an Airbnb or holiday accommodation? There has been a massive rise in that type of accommodation; it is not scaremongering to suggest that there might be another increase. It is already a significant factor in the rental market, and it really hits some communities. I know we are debating this issue at a later stage, but I would be interested to hear what the Minister says about the schedule.
Matthew Pennycook
I thank the hon. Gentleman for that reasonable question. He and many others in the House have significant concerns about the impact of excessive concentrations of short-term and holiday lets in particular parts of the country. A landlord who has moved a family member back in under the mandatory grounds that he cites would not be able to re-let the property for 12 months and would be penalised if they attempted to do so. It was a three-month void period in the previous Government’s Bill, and we thought that it would not have acted as a serious disincentive. I frequently encounter landlords who can comfortably wear a three-month void because of the levels of rent that they charge, and I am sure that is the case in many other parts of the country. We think that a 12-month no re-let period will provide the necessary protection to ensure landlords are not incentivised, and do not feel able, to abuse the mandatory grounds for possession.
David Simmonds
The Minister has given a helpful and comprehensive overview of the matters that we have debated so far. Although we clearly have a different opinion about how to strike the correct balance, I accept that he is acting in good faith and, to a great degree, in line with the points previously made and the content of the Renters (Reform) Bill. The key issue we remain concerned about is the impact that all these regulations will have on supply. We all know that we have a constrained private rented sector, with areas in which significant numbers of people are chasing properties. We need to ensure that properties remain of a decent standard, at an affordable price, and in sufficiently ample supply. We have debated those concerns, and I hope that we can continue to deal with this Bill in the same co-operative and constructive spirit.
Schedule 1, as amended, agreed to.
Clause 5
Possession for anti-social behaviour: relevant factors
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
It is always better to resolve issues without resorting to eviction, but we recognise that when tenants are committing antisocial behaviour and it is impacting on neighbours, housemates and communities, it is sometimes necessary. In these cases, landlords need to have confidence that they can gain possession of their property quickly. The clause expands the matters that judges are directed to consider when deciding whether to award possession under the discretionary antisocial behaviour ground. We are making the change because we recognised landlords’ concerns about evicting antisocial tenants without section 21, and it is important that judges consider pertinent factors to ensure eviction can happen when it is right to do that.
Judges will take all relevant factors into account when determining whether to evict under these grounds, because they are discretionary, but under the current legislation, they are also guided to explicitly consider the impact of antisocial behaviour on victims. Clause 5 ensures that judges must also have regard to the question of whether the perpetrator has engaged with measures to resolve their behaviour. This will serve two purposes: making it more likely that landlords work with tenants to resolve poor behaviour, and making it easier to evict those tenants who do not engage. The change will contribute towards increasing the amount of dispute resolutions short of eviction in the private rented sector.
The clause also asks judges to give regard to the impact of antisocial behaviour on other tenants within houses of multiple occupation. Antisocial behaviour within house-shares can have a severe impact on those who live in close proximity. The clause will make it easier to evict perpetrators, which was a specific concern raised with us by a number of external stakeholders. Fellow tenants are the worst-affected victims of antisocial behaviour within HMOs, and landlords were concerned about their ability to evict perpetrators without section 21 notices. The clause ensures that courts can consider these factors.
David Simmonds
The Opposition welcome the points made in this debate. We want the following issue to be addressed. If it is expected that a dispute resolution process will be undertaken or that some form of external mediation will be accessed, there needs to be sufficient capacity to ensure that that happens in a timely manner. We do not have an example of a case in which someone who is evicted on grounds of antisocial behaviour is expected to endure a considerable period of time in order for mediation to take place, following which grounds for possession might then be sought. We need to make sure that the process is done swiftly and effectively, but we support the concept behind it.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
Form of notice of proceedings for possession
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clause 6 provides for regulations that will allow the Secretary of State to publish the form to be used when landlords serve notice of intention to begin possession proceedings. It is crucial that the information landlords are required to provide reflects current law. This gives tenants the best opportunity to enforce their rights and seek appropriate support. The clause will allow regulations to be made so that we can update the forms at speed and respond to changing circumstances. It is a simple and straightforward clause.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7
Statutory procedure for increases of rent
Mr Amos
I beg to move amendment 76, in clause 7, page 8, line 31, leave out from “determination” to the end of line 36 and insert—
“(4AA) Where the rent for a particular period of the tenancy is to be greater than the rent for the previous period by virtue of a notice, determination or agreement mentioned in subsection (4A), the rent may not be greater than the rent for the previous period increased by the Bank of England Base Rate.
(4AB) Any provision relating to an assured tenancy to which this section applies is of no effect so far as it provides—
(a) that the rent for a particular period of the tenancy must or may be greater than the rent for the previous period otherwise than by virtue of a notice, determination or agreement mentioned in subsection (4A), or
(b) that the rent for a particular period of the tenancy, where greater than the rent for the previous period by virtue of a notice, determination or agreement mentioned in subsection (4A), must or may be greater than the rent for the previous period increased by the Bank of England Base Rate.”
This amendment would mean that the maximum rent increase can only be an increase in line with the Bank of England Base Rate.
Mr Amos
At the beginning of today’s sitting, the Minister and the shadow Minister asked the Committee to bear with them, because it was their first time leading the Committee stage of a Bill in their respective positions. I ask the Committee to spare a thought for the hon. Member for Bristol Central and me, as it is our first time being elected an MP, our first time in a Committee and our first time dealing with this Bill. There are a number of amendments that we would introduced but which have not yet made it through to the amendment paper.
Matthew Pennycook
The Bill will empower private rented sector tenants to challenge unreasonable rent increases. This will prevent unscrupulous landlords using rent increases to evict their tenants—a form of section 21 by the back door. Clause 7 amends section 13 of the Housing Act 1988 to achieve this. It provides that all rent increases for private landlords will take place via the existing section 13 process. That will ensure that tenants always have the right to challenge an unfair rent increase. Any rent increase outside this process, including rent review clauses, will be outlawed and invalid.
We will also give tenants longer to prepare for rent increases, with landlords having to provide two months’ notice to tenants. Landlords will still be able to raise rents in line with market rents once a year. These changes will not level the playing field for tenants if they are unable or do not feel confident to enforce their rights. That is why we are reforming how the tribunal will work. I will turn to that in clause 8.
Clause 7 exempts “relevant low-cost tenancies” from the rent-increase changes that the Bill is making. That means that current rent-increase provisions will be retained for social tenants who have an assured tenancy of social housing within the meaning of part 2 of the Housing and Regeneration Act 2008, where the landlord is a private registered provider of social housing.
As the hon. Member for Taunton and Wellington made clear, amendment 76 seeks to limit rent increases to no greater than the Bank of England base rate, and it retains provisions in the Bill that set out how rent increases can occur. I am grateful to the hon. Member for bringing this issue to the Commons. Several witnesses in evidence sessions also made the case for greater regulation of rents, and others contributed written evidence on these points. I would like to expand on the Government’s approach before turning to the detail of the amendment.
The debate around rent controls can quickly become complex regarding both the definition and the evidence available. What is agreed is that there is a broad spectrum of possible regulation, and different approaches have been tried around the world—and, indeed, within the UK. Perhaps the better question to ask is how we should regulate the private rented sector to achieve the best outcomes possible for tenants. That leads us to look at how the regulation of rents fits within the broader context of the entire system, including security of tenure, quality standards and better enforcement.
The Government have taken that wider approach by placing protections against excessive rent increases within an overarching set of reforms to the private rented sector. The interaction between security of tenure and rent regulation is therefore critical; if rents are too strictly controlled but evictions are too easy, tenants are left at the mercy of landlords’ whims, even if they pay the rent. If tenants have legal security from arbitrary eviction but there is no limit on rent increases, they can effectively be evicted by excessive economic rent hikes.
Many international comparisons can be cited. All should come with a health warning, but I think it is instructive to look at the experience of Sweden. The result of harder rent caps has seen the emergence of a huge, unregulated sub-letting market, which, in many ways, is the worst of all worlds, as it leaves the most vulnerable groups exposed to high costs and minimal protections.
The principle of some form of regulation of rents is already established in England. Rents for certain assured periodic tenancies are already subject to some form of regulation, as the tribunal system is there to prevent excessive increases, but as we heard in last week’s evidence sessions, it has been weakened to the point that it does not provide enough protection for tenants. That is why we have taken steps to strengthen the rent determination system and empower tenants.
In Scotland, we have seen over recent years the temporary introduction of stronger rent controls—rent freezes followed by rent caps. Anna Evans, who led the research into the Scottish experience, noted in her evidence last week that once rent freezes were introduced in Scotland, landlords were more inclined to increase rents when tenancies changed. Good landlords want stable and long tenancies but, when a new tenancy begins, landlords are strongly incentivised to set rents at, or close to, the cap, which may be at a higher level than they would have chosen in the absence of such regulation. We also heard, regarding new-build investment in the Scottish PRS, that there has been stagnation rather than growth over recent years.
As the hon. Member for Taunton and Wellington made clear, his amendment seeks to limit a rent increase to no greater than the Bank of England base rate, which is currently 5%. We believe that any attempt to use a simple metric on rent increases risks unintended consequences. Let us take an example: limiting rent increases to inflation might sound fair, but it would have resulted in rent rocketing when inflation spiked following the mini-Budget in 2022. I acknowledge that the hon. Member referred to the base rate, but others have argued for inflation-linked rent increases in the past, so my point is that there is always a price to be paid. That price can also be paid in the supply of new homes and the development of the build-to-rent sector, where we believe that these types of direct interventions discourage investment, limiting supply and leading to declining property standards.
Instead, our Bill works to strengthen tenants’ rights as a whole, with the ending of no-fault section 21 evictions being the key change. Our proposed changes— giving tenants the power to challenge excessive in-tenancy rent increases—are designed to fit with that increase in security of tenure. With every change to one part of this complex set of regulations, we must be mindful of the interactions with other parts, and the combined impacts on the system as whole. We believe that the Renters’ Rights Bill strikes the right balance. It introduces a series of powerful changes that will improve the PRS overall, including protections against unfair rent increases. We are confident that this will make a material difference to the lives of tenants. I therefore ask the hon. Gentleman to withdraw his amendment.
Mr Amos
I thank the Minister for his response on those points. We would argue that the current metric for market rents is actually more closely linked to inflation, and more likely to be affected by inflation, than would be the Bank of England base rate, which is obviously a separate—
Renters' Rights Bill (Fourth sitting)
Tuesday 29th October 2024
(1 month, 3 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 29 October 2024 - (29 Oct 2024)
Mr Gideon Amos (Taunton and Wellington) (LD)
It is a pleasure to serve under your chairmanship, Dame Caroline—as it was to serve under Sir Christopher’s chairmanship until I was somewhat surprised to be interrupted by the clock. But it reminded me to get a very good lunch, including excellent apple crumble.
As I was saying, the logic of the amendment is to attach the maximum rent increase to the Bank of England base rate. We do not accept that that is capping in any other way than in the Bill, which would cap the rent increase at what is considered the market rent through recourse to the courts. In the same way, our application of the amendment would limit it to the Bank of England base rate, which is, as I said, a much better measure of the costs that landlords actually face than market rents, which are susceptible to the effects of price inflation.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
Does the hon. Member agree that further work might come through on the way the tribunal operates and how it could operate in future under the Bill, and that the changes to how the tribunal functions might help to deal with the issues addressed by the amendment?
Mr Amos
I would be delighted if that were the case. We would welcome anything that reduced the risk of extremely steep rent increases for tenants—I think Members on both sides of the Committee would want to see that. This amendment would limit increases to the Bank of England base rate. I stress that this would apply to within-tenancy increases only. However, I accept the points that the Government have made and I am willing to withdraw the amendment.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the Chair, Dame Caroline. I just thought I would offer a few more thoughts to try to further reassure the hon. Gentleman. As I made clear, we absolutely share his objective of limiting unreasonable within-tenancy rent increases, not least given the potential for that type of rent hike to act as an effective section 21 by the back door. On his specific point, the Government’s view is that linking rents to the Bank of England’s base rate would constitute a form of rent control. We may have a principled disagreement about whether rent controls are appropriate, but we are not convinced that they should be introduced, given the risks that I have set out.
I thought it would be helpful to touch on how the tribunal determines market rents, because I got the sense from the hon. Gentleman previously that he expected the tribunal to look purely at advertised rents. The tribunal has a high degree of expertise. It is composed of judges and industry experts. To determine the market rate, the first-tier tribunal can consider a wide range of evidence, such as the price of similar properties being advertised online, as he said, and also evidence submitted from both parties justifying or arguing against the rent increase. This could include statistics on changes to local rents and examples of the rent achieved by other properties—for example, the rent that neighbours are paying. The tribunal will be able to use its local expertise, including visiting a property if necessary. We think that the tribunal has the necessary expertise and understanding to take into account different factors that are forming market rates and to determine whether the rent that is being proposed reflects that.
To touch on the point made by my hon. Friend the Member for Cities of London and Westminster, the Government are exploring whether the database could play a role in providing data on rents. That would be in addition to data about the ownership and standard of private rented sector properties. We are considering the feasibility of recording a wider range of data to support more informed rental experiences.
Our approach will take into account the balance of benefits and burdens for different users, and we will look at how data can best be collected to minimise requirements for private landlords to submit information. We will stipulate those requirements in the regulations, but I hope that that gives the hon. Gentleman a bit more reassurance that the tribunal is not simply looking at advertised rents in making its determinations.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Dame Caroline. The Opposition agree with the Government’s position on amendment 76. It is clear that interest rates set by the Bank of England are not a suitable proxy or measure to be used when setting a reasonable level of rent. If we look at examples in recent history, we see that we have gone through a period of sustained very low interest rates, followed by a rise prompted by the decision of the United States Federal Reserve, which sets the baseline for the rest of the world, to raise interest rates, so they sit at today’s present rate. Of course, inflation throughout that period was very much determined by Russia’s invasion of Ukraine and the consequent increase in energy costs in particular, and also in basic foodstuffs. All those things do not amount to an effective basket of measures that can be used. What the Minister has said on that point is important.
Mr Amos
Would the hon. Gentleman accept that the main costs landlords face are not from the price of goods in the shops, but the price of borrowing—the price of the loans with which they have acquired their properties—and, therefore, it is about the logic of the increasing costs to landlords being passed on through a relationship to the base rate of interest?
David Simmonds
No, I do not entirely accept that. For a start, we need to recognise that the costs landlords face when looking at purchasing a property will be based on the commercial cost of borrowing, rather than the Bank of England base rate. A landlord who is considering, for example, refurbishment or investment in a property is considering the rising cost of maintenance and servicing the property to the appropriate standard. The costs driving that, and the inflation behind them, are related not to the Bank of England base rate, but to what is going on in the market for those particular goods and services. It is important that we recognise that.
I hope the Government will acknowledge that it is particularly important to recognise that bringing in investment to create more private rented homes depends on the build to rent sector and on investors, including investment funds, that may specifically choose to come to this market on the basis of a reasonable, if modest, rate of return. If the investors considering creating new homes are deterred because the Government are fixing the available return on rent at a low level compared with alternative investments, that will lead to an exodus of investment from the private rented sector, which will be deeply harmful to the needs of renters.
David Simmonds
I beg to move amendment 52, in clause 8, page 11, line 38, leave out from “date” to end of the line and insert—
“of the application under section 14(A1)”.
The Chair
With this it will be convenient to discuss the following:
Amendment 50, in clause 8, page 11, line 39, leave out from “is” to “the tenancy rent” in line 2 on page 12.
Amendment 53, in clause 8, page 12, line 24, leave out from “13A(2)” to the end of line 32 and insert—
“or
(b) a date that the appropriate tribunal directs, if it appears to the tribunal that applying paragraph (a) would cause undue hardship to the tenant.”
Amendment 51, in clause 8, page 12, line 35, leave out from “is” to “the proposed rent” in line 37.
David Simmonds
The amendments relate to the role of the tribunal and the tribunal process. One of the concerns that was extensively aired in debate, and about which we have heard a great deal of evidence, is the impact of a process whereby from a tenant’s point of view, going to tribunal is a no-lose situation because the only possible decision the tribunal can take is to reduce the rent they would pay. That would mean that it would essentially always be in the tenant’s interests to go to the tribunal, because it would at worst defer the point at which any higher rent took effect. We have very significant concerns about the tribunal’s capacity to absorb that level of work and about the fact that to be fair to landlords as well, we should not have a situation where a tribunal can operate in only one direction. By proposing these amendments, we seek to make it possible for changes in rent to be backdated.
Jerome Mayhew (Broadland and Fakenham) (Con)
We are talking about perverse incentives here. One way to tackle that would be through a costs regime associated with the tribunal. Is it my hon. Friend’s understanding that the current intention is that there would be no adverse costs orders awarded against a tenant, should they go through a tribunal process and not be successful in reducing the level of rent?
David Simmonds
My hon. Friend raises an extremely good point. As he outlined, this is very much about perverse incentives. We do not want to create a situation in the market where it is always in the interests of the tenant to push this to the tribunal. We need to make sure that that point is effectively addressed, and the amendments seek to do that.
Matthew Pennycook
Clause 8 amends section 14 of the Housing Act 1988, and the amended sections set out the circumstances in which a tenant can submit an application to the tribunal to challenge the rent amount either in the first six months of a tenancy or following a section 13 rent increase notice. Amendments 50 to 53 seek to alter the process for challenging initial rents and rent increases at the tribunal.
I must stress that, in the first instance, under this new system, the Government strongly encourage landlords and tenants to communicate early about what adjustments to rent are sustainable for both parties. Where an agreement cannot be reached, the Government are clear that tenants should submit an application to the tribunal only where they believe that a rent increase is above market rates. Such rises may represent an attempt by the landlord to exploit a tenant who simply wishes to remain in their home, or they may be an underhanded attempt to remove a tenant without pursuing the very clear possession grounds laid out in schedule 1. That is why we think clause 8 is so important.
Jerome Mayhew
I understand that the Government’s intention is that tenants should not go to the tribunal unless they are clear that the asked-for rent is too high, but what prevents them from gaming the system, as we discussed?
Matthew Pennycook
What I would say to the hon. Gentleman—I will expand upon my argument in due course—is that I think he underestimates how difficult it is to take a case to the tribunal. That is why we are seeing such low numbers of tenants going to the tribunal. It is an onerous process; we need to provide support and guidance about how to do it. I do not take his point that we will see a flood of tenants taking rent increase cases to tribunal.
To be very clear—I have said this on previous occasions—the Government want more tenants to take their cases to tribunal. We think the tribunal has an important role to play in setting the effective market rate for any given area, so we want to see a proportionate number of cases go through it—we obviously do not want to see it overwhelmed. However, I think the hon. Gentleman underestimates the onerous nature of taking a case to tribunal. It will not be as simple as the tenant deciding on a whim one day that they can do that, and that it is a no-lose situation, but I recognise the incentives at play on both sides. I will expand upon what I mean and why we have come to this decision in relation to this particular clause.
The shadow Minister proposes in his amendments that rent increases, where they are challenged at the tribunal, should be backdated to the date the landlord first proposed. That would mean tenants possibly facing significant arrears immediately after the tribunal hearing. That is an incentive in the other direction, which we fear would, if introduced, see no tenants taking their case to tribunal. We have just had an extensive discussion about the need to address the affordability pressures to ensure that landlords are not exploiting the system with large, completely unreasonable within-tenancy increases. We have to take that into account as well.
Tenants should not be thrust into debt simply for enforcing their rights. As such, the Bill proposes that rent increases should apply only at the beginning of the next period after the tribunal determination, or up to two months later, in limited cases of undue hardship.
Matthew Pennycook
If the hon. Gentleman would allow me to develop my argument after his intervention, I am sure I will get to his points.
Jerome Mayhew
I am grateful—I am not intervening for the sake of it; there is an important point here. The Minister says that it would be unfair on the tenant to have a significant increase in rent and a backlog after the determination of the tribunal, but that is rent that ought properly to have belonged to the landlord and has been unjustifiably denied them for the period of the process. Why is it fair for the landlord to be denied a just rent as a result of the delay in the process, yet it is for some reason not fair for the tenant?
Matthew Pennycook
I completely understand the hon. Gentleman’s point, but let me give him a bit more insight into my thinking. I recognise his point that there are incentives that operate in both directions. There is no wholly perfect, win-win solution. We have taken this decision partly because it was in our manifesto to protect renters from unreasonable within-tenancy rent rises, and also because we believe that landlords will adjust around the point in the annual cycle when they serve the section 13 notice to account for the period of time it will take for the tribunal to make a determination.
The hon. Gentleman is right that if the tribunal determines that the rent increase is reasonable, a landlord may have missed out on a short period of the rent increase—not the whole rent, but the rent increase. We want to bring down the time of tribunal determinations so that it is a very short process. I will be very clear about this: we took the view that it was better that tenants were not, by facing the prospect of significant arrears, disincentivised from taking any cases to tribunal to challenge what could be, on a number of occasions, completely unreasonable within-tenancy rent increases. We felt that that is of more benefit than ensuring that they would face significant arrears at every point, which would be too harmful to their ability to challenge, given that we have not introduced rent controls—rent stabilisation—of the kind that other parties are calling for. To address the hon. Gentleman’s point specifically, my expectation is that landlords will adjust around the point that the section 13 notice is served.
The whole system should operate in a way that, hopefully, incentivises landlords not to propose unreasonable rent hikes that might be challenged. There is a clear incentive for landlords and tenants to come to an agreement—we know this will happen in a good number of cases—on what a sustainable rent increase is that reflects the market conditions. The hon. Gentleman is more than welcome to intervene on me again if he wants, but I will just develop my argument a bit further in relation to some of the amendments.
The shadow Minister proposes that a tribunal should be able to increase the rent above the current rent payable if the rent is challenged in the first six months of the tenancy and, where a later rent increase is challenged, that the tribunal should be able to set the rent higher than what the landlord asked for. We believe that these amendments would exacerbate the worry that tenants already face in going to a tribunal to challenge their landlord. Tenants will not challenge rents if they risk being in an even worse position following a tribunal ruling. That is the sort of perverse incentive that we believe would pertain on the part of tenants if the amendment was taken forward.
As a slight challenge to Conservative Members opposite, the shadow Minister and the hon. Member for Broadland and Fakenham, their party once recognised this point. The proposed approach in the previous Government’s White Paper, “A fairer private rented sector”, is the one that we have taken in this Bill—namely, that the tribunal cannot increase the rent beyond what the landlord asked for. It is slightly disappointing to see hon. Members rescind that previous approach, which we think is appropriate.
The Bill encourages tenants to engage with the tribunal when they have legitimate concerns. By reinforcing the rights of tenants to do so, we are disincentivising the minority of landlords who may be tempted to hike rents beyond what is reasonable. The shadow Minister’s amendments not only remove these important measures but put tenants at real risk of losing their home, undermining security of tenure, which is obviously a key principle of the Bill. I therefore ask the shadow Minister to withdraw his amendment.
David Simmonds
I am grateful to the Minister for talking through the Government’s thinking, and for his points about the debates on the previous Bill. The Opposition remain concerned that the envisaged process, whereby there will be an online application for a modest fee, will make it almost invariably in the interest of the tenant to challenge, because there is no negative outcome for them regardless. A great deal will rest on an issue we will deal with later on: the capacity of tribunals to make decisions quickly. I am mindful, however, of the numbers on the Committee, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
David Simmonds
I beg to move amendment 47, in clause 8, page 13, line 6, at end insert—
“(12) The Secretary of State must—
(a) conduct a review of—
(i) the impact of this section on the tribunals responsible for the determination of rent, and
(ii) the ability of tribunals to manage an increase in applications for a review of a proposed rent increase; and
(b) consult with the Competition and Markets Authority on any measures necessary to ensure that tribunals are able to assess market rents without having a distorting effect on the market.
(13) The Secretary of State must lay the review made under subsection (12) and the Government’s response to the review before Parliament.”
The Chair
With this it will be convenient to discuss the following:
Amendment 75, in clause 8, page 13, line 6, at end insert—
“(12) The Secretary of State must consult on—
(a) the adequacy of the existing resources of the tribunals responsible for the determination of rent;
(b) the need of the tribunals for further resources to manage an increase in applications for a review of a proposed rent increase.”
This amendment would require the Secretary of State to consult on whether tribunals responsible for the determination of rents are appropriately resourced to manage any additional workload arising from this Bill.
Clause stand part.
Amendment 46, in clause 142, page 150, line 26, leave out from “subject to” to end of line 27 and insert—
“—
(a) the publication of a review under section 8 on the impact of that section on the tribunals responsible for the determination of rent; and
(b) subsections (2) to (6).”
David Simmonds
Amendment 47 relates to an issue that was briefly aired in the previous debate: the capacity and ability of tribunals to deal effectively with the workload that is likely to come their way once the Bill has made its passage through Parliament.
I understand that for a new Government there is a great deal of desire to bring forward legislation to address things that may be manifesto issues, but there has also been criticism of the risk. We have seen a lack of impact assessments that would enable us as Members of Parliament to consider properly the likely impacts of the legislation, and what resources will be required to mitigate those impacts. That issue ran through the previous debate on the ability of tribunals to make timely and efficient decisions so that both landlords and tenants are treated justly. It will also run through other debates, such as that on local authorities’ capacity to enforce effectively so that both tenants’ and landlords’ rights are protected in practice, notwithstanding what the legislation says.
Amendment 47 is designed to address the issue and ensure that the Competition and Markets Authority, which has a much wider remit in looking at how regulators and markets interact, can examine this issue and, having considered the impact of the legislation, provide us with some evidence that would then inform our thinking about the timing and operation of these facets of the Bill.
Matthew Pennycook
Before I speak to clause 8 and respond to the amendments, it might be worth my making it clear to the shadow Minister that the Government submitted an impact assessment for the Bill to the Regulatory Policy Committee on 16 September 2024, and we will publish that in due course. In line with usual practice, the Government will always consider the impact of any policies when taking legislation through Parliament.
As I set out in the debate on the previous group of amendments, clause 8 amends section 14 of the Housing Act 1988. It stipulates when a tenant can submit an application to the first-tier tribunal. They may do so to challenge the rent amount in the first six months of a tenancy or following a section 13 rent increase. When a tenant brings an application to the tribunal, the tribunal will both assess what the landlord could expect to receive if the property was re-let on the open market and determine the rent. The tribunal has, as I have noted, experts who are experienced in understanding the different factors that influence the market rate, which include the rent for similar properties in the area, the quality of fixings or the proximity to amenities.
For too long tenants have feared challenging a rent increase at the first-tier tribunal. We will end that by ensuring that the tenant will not pay more than what the landlord asks for following a tribunal determination. We are going further: we will end the practice of backdating rent increases, to stop tenants being thrust into debt. To protect the most vulnerable tenants, in cases of undue hardship the tribunal will be able to delay the start of the rent increase for up to two months from the date of determination. That puts tenants in a stronger position to challenge rents through the first-tier tribunal.
It is important to note that tenants are often scared to engage with the judicial process, so we hope that the measures I have outlined will give them more confidence to do so. Although we anticipate that there will be an increase in cases, we do not accept the frankly scaremongering assertions we have heard about the tribunal being completely overwhelmed, or about tenants risking a deterioration in the critical relationship with their landlord by challenging every single rent increase that is given to them. Nor did we hear, when they gave evidence to the Committee last week, that the groups that support tenants would recommend such action. Engaging the tribunal requires effort and time, and we believe that tenants will do so only where they have legitimate concerns, such as when a within-tenancy rent increase is unreasonable. We will continue to work with the Ministry of Justice, His Majesty’s Courts and Tribunals Service and the judiciary to ensure that the tribunal has the capacity to deal with any increase in cases.
Taken together with the measures in clause 7, the provisions in clause 8 will ensure that tenants always have a right of appeal and will prevent rent increases from being used to evict them. Rent increases outside the statutory process, such as in rent review clauses, will be outlawed. We believe the measures will ensure that all parties are clearer on their rights and responsibilities and will empower private rented sector tenants to challenge unreasonable rent increases.
Amendment 46 is drafted to prevent the Bill from coming into force until a review is published on the impact of clause 8 on the tribunals responsible for the determination of rent. The review would be provided for by amendment 47. The Government are committed to ending the scourge of section 21 as quickly as possible and have also committed to empowering private rented sector tenants to challenge unreasonable rent increases, thereby stopping unscrupulous landlords from using them as a back-door means of eviction. The sector has waited far too long for these changes, so we will not tie implementation to any arbitrary requirements, as the previous Government determined to do in the previous Parliament. As I said, we are working closely with the Ministry of Justice and HMTCS to make sure that the justice system is prepared for any changes to case load and the procedures that will be required for our reforms.
Amendment 47 would introduce a legal requirement for the Government to publish a review of the impact of the reforms to rents in clause 8 on tribunals and their ability to manage any increase in the volume of applications that challenge the amount of rent payable. As I have made clear—I will put it on the record again—we are working closely with colleagues in the Ministry of Justice and HMTCS to make sure that the justice system is prepared for the Bill’s implementation, which will come at a single point at the point of commencement. In Committee last week, we heard of the growing role of the first-tier tribunals and we heard—it is important to note this—praise for their handling of cases. We seek to build on that good practice.
We currently have no plans to consult the Competition and Markets Authority on whether any action is necessary to ensure that our reforms in clause 8 do not have a distorting effect on the market. I say respectfully to the shadow Minister that I have seen no credible evidence of that and, to be candid, I think the CMA has far better things to do with its time. The tribunal’s decision reflects market conditions rather than distorting them, so we do not think it realistic that the tribunal could affect market prices. The tribunal is also likely to determine rents for an extremely small proportion of the total rental market. We will of course continue to monitor the impact of the reforms on the market in the normal way.
Finally, amendment 75 would require the Secretary of State to launch a consultation to seek views on whether tribunals that are responsible for the determination of rent currently have adequate resource, and whether they will require further resources due to the rent reforms in the Bill. Given the ongoing work I have outlined, we do not think that launching a consultation at this time is required, and making a commitment to do so on the face of the Bill would be wholly unnecessary. I therefore ask Members not to press their amendments to a vote.
Mr Amos
I rise to speak to amendment 75 which, as the Minister said, would require the Secretary of State to consult on the adequacy of the existing resources for the tribunal system and on any further need for resources to deal with rent reviews established in the Bill. It is the same for the courts: sufficient judges and resources to ensure that the justice system works and does not seize up are vital to the supply of landlords bringing properties on to the rental market.
The Liberal Democrats know that most landlords and tenants are not going to rush to the courts unreasonably, and we do not support the use of court funding as a reason to delay the ending of no-fault evictions and the introduction of the Bill, as happened in the previous Parliament. As I have made clear several times, it is urgent that no-fault evictions are brought to an end. However, that does not mean that the courts and tribunal system is not seriously underfunded; it clearly is. I know the Minister is concerned about this—he mentioned some ongoing review work, and also spoke about it on Second Reading in response to my intervention—but we really need to go further. We need to come up with something concrete that is clear that putting resources into the courts and tribunals system will be taken seriously and will happen.
The mutually-owned Nationwide building society, which funds much of the accommodation we are talking about, has made its support for the Bill conditional on increased funding for the courts and tribunals. It says:
“In these situations, good landlords need to be confident they are able to gain possession of the property”—
I appreciate this relates more to courts than tribunals—and that once
“the situation has reached a point where a court is involved it is reasonable to expect that this process should be as quick and efficient as possible. This is not the case with the current…system which needs additional funding and resources to operate effectively”.
David Simmonds
One of the benefits of having been in government is that I have had the opportunity to consider many of these issues from the inside. We on the Opposition Benches remain concerned that it will be challenging to deliver the necessary level of capacity to provide the efficient service that tribunals need, and are expected, to provide for the benefit of both tenants and landlords. However, recognising that it is a game of numbers, I am happy to withdraw amendment 47.
Matthew Pennycook
Briefly, on the capacity of the Courts and Tribunals Service to effectively implement the new system, at the risk of repeating my extensive comments on Second Reading, it is worth trying to provide Committee members with some reassurance. First, at the risk of injecting a somewhat partisan note into the Committee, I agree entirely that our courts are in a terrible state after 14 years—I say 14 years because I am afraid the coalition Government had a hand in it—and we absolutely believe that improvements to HMCTS are needed to ensure that the new systems function effectively.
As I said, we are working closely with colleagues in government to ensure that improvements are made, as well as the exploring options for, for example, improved alternative dispute resolution so that only those cases that need a judgment come to court. There are a number of improvements we might make to take some strain off the courts, and those are the ones we are exploring.
Mr Amos
Will the Minister let me put on the record the fact that during the coalition Government from 2010 to 2015, whole Government Departments, including the Education and Health Departments, were protected and ringfenced against cuts? That bears absolutely no relation to what happened after the cuts were let loose in 2015.
Matthew Pennycook
But not the Ministry of Justice, I say gently to the hon. Gentleman.
Nevertheless, I want to reassure colleagues on the substantive point. We have chosen to implement the new tenancy system in a single stage. The commencement date will be made clear in due course, but we will ensure that the Courts and Tribunals Service is prepared for the implementation of the new system. That is essential, and a huge amount of work is going on to ensure that that will be the case.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Clause 9
Repayment of rent paid in advance
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 6—Limit on rent to be requested in advance of tenancy—
“In the 1988 Act, after section 14ZB (inserted by section 8 of this Act) insert—
‘14ZBA Maximum rent to be paid in advance
No rent may be requested or received in advance of any period of the tenancy which exceeds the rent for one month of the tenancy.’”
This amendment would impose a limit of one month’s rent on the amount of rent which can be asked for or paid in advance of a tenancy.
Matthew Pennycook
I will be relatively brief because this clause serves a specific function, but I will focus on what it achieves. I am aware that the wider issue of rent in advance concerns a number of hon. Members—indeed, it featured in our discussions during the oral evidence sessions last week, on which I will say more shortly.
The clause will require landlords to refund a tenant for any rent they have paid in advance, where the tenancy has ended earlier than the period for which a tenant has paid. That serves a practical purpose—for example, if the tenant has paid for the month that they are in occupation and the tenancy is ended by the landlord two weeks into that month, the clause allows the tenant to reclaim the additional two weeks’ rent.
On the issue of rent in advance more broadly—which also pertains to new clause 6, to which I think the hon. Member for Taunton and Wellington will speak shortly—as I stated when I gave evidence to the Committee on Tuesday, Government Members have long recognised that demands for extortionate amounts of rent in advance put financial strain on tenants and can exclude certain groups from renting altogether. We are clear that the practice of landlords requesting large amounts of rent in advance must be prohibited.
Although it might be argued that the interaction of the new rent periods provided for by clause 1 and the existing provisions of the Tenant Fees Act 2019 relating to prohibited payments provide a measure of protection against requests for large amounts of advance rent, I accept that there is a strong case for putting the matter beyond doubt. As I made clear to the Committee, I am giving careful consideration as to how best that might be achieved.
Let me briefly address new clause 6, which seeks to limit the amount of rent in advance that can be paid prior to a tenancy period to no more than one month’s rent. Many of us will have heard anecdotal stories of the pressures placed on renters through demands for rent in advance, and it is for similar reasons that we have taken steps in the Bill to tackle rental bidding. I heard the evidence from last week, and we are looking at the matter carefully to ensure that we put the matter beyond doubt on the face of the Bill.
David Simmonds
I am grateful to the Minister for what he said about looking at this area in detail. We raised, and discussed in some detail, the issue of how those with a poor credit history, or people who wish to secure a property for a fixed period—for example, international students—would be dealt with under the measures. We know that there are already limitations on the level of deposit that can be requested, but, particularly for those with a poor credit history, the ability to offer a larger sum of rent in advance can be a means of accessing a home in the private rented sector when they would otherwise not be able to access a home at all.
I am grateful to the Government for considering that particular group of people, who are in many cases extremely vulnerable tenants and often fall outside eligibility for support from the local authority under homeless duties, particularly if they have a job and an income. We need to make sure that we do not create a situation in which, inadvertently, a particular group of prospective tenants is effectively pushed out of the market. I am glad that the Government are taking that issue on board and considering how best it can work.
The Chair
Does the hon. Member for Taunton and Wellington wish to comment on new clause 6?
Mr Amos
Briefly, Dame Caroline. I am still getting used to the intricacies of the order of the agenda.
The new clause would limit rent in advance to sums of one month’s rent. The argument was well made in the oral evidence session, when we heard about the importance of rent-in-advance bidding and the need to reduce the risk of bidding up the amount that needs to be deposited in advance. One month’s rent is quite often the norm as a reasonable amount of rent to be provided in advance. Many years ago, when I was a student and renting, one month in advance was a reasonable amount. Bidding up that amount has a detrimental effect on tenants; hence the rationale for new clause 6.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
The Chair
That will come later, when we reach that point.
Clause 10
Right to request permission to keep a pet
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 55, in clause 11, page 16, line 13, at end insert—
“(4) The Secretary of State must consult with representatives of the insurance sector before this section comes into effect to ensure that appropriate insurance products are available for tenants whose landlords have required insurance as a condition for consenting to the keeping of a pet.”
Clause 11 stand part.
Matthew Pennycook
Many of the 11 million people living in the private rented sector would love to own a pet but have difficulty finding a property that allows them to do so. We want tenants in the private rented sector to enjoy the joys of pet ownership, just as homeowners do. We know the benefits of pet ownership for mental and physical wellbeing. I declare an interest: I have a dog named Clem, who I referenced in the debate on the previous Government’s Bill, and he is, as I know to be the case for many pets across the country, a valued member of the family.
We have heard the calls from animal groups for more protection for pets living in rented homes. In its written evidence to the Committee, the Royal Society for the Prevention of Cruelty to Animals highlighted the plight of renters forced to give up their pets because they cannot find a home that will allow pets. I am delighted that the RSPCA, as well as the Dogs Trust, Battersea, and Cats Protection, support the action the Bill takes in this area.
On how we support pet ownership in the private rented sector, clause 10 introduces a new implied term that allows tenants to make a request to keep a pet, which landlords cannot unreasonably refuse. That stops landlords utilising a blanket “no pets” approach and ensures that each request is considered on its merits. We understand that not all properties or situations will be appropriate for pets. Landlords will not have to accept their tenant’s request where it is unreasonable, such as where housemates have allergies and might be detrimentally affected by pet ownership.
The clause makes it clear that landlords will always be justified in refusing a request if their own superior tenancy agreement prohibits pets. That will ensure that the law is consistent and that landlords will not be put in a position where they are forced to breach the terms of their own superior lease. However, to ensure that the provisions have teeth, tenants will have the right to challenge refusals they think are unreasonable via the new private rented sector landlord ombudsman or in court. The ombudsman or court will be able to take an unbiased view on whether the landlord has reasonably refused a request.
Clause 10 also gives landlords an ample 28 days to respond to requests, with an additional seven-day window if the landlord requests more information from the tenant within the initial 28-day timeframe. I make that point because the previous Government’s Renters (Reform) Bill proposed a 42-day response window. The animal welfare charities I mentioned were concerned about that duration, especially as it would mean tenants finding it hard to adopt a pet or the charities needing to keep animals for a long time while landlords made a decision. I share those concerns and I am pleased to say that we have made an improvement by bringing down the timeframe in this Bill.
Finally, clause 10 provides reassurance to landlords by allowing them to require pet damage insurance, either by charging the tenant for it or by asking the tenant to take out an appropriate insurance policy. These measures encourage responsible pet ownership in the private rented sector while providing landlords with assurance.
Turning to clause 11, although it is right that tenants can make the house they rent their home by having a pet, I understand that some landlords will be concerned by potential damage caused by pets to their property. The Committee has discussed the joys of pet ownership, but we all know that many pets can be active and at times destructive. That is one of the joys of pet ownership, but also one of the realities, particularly when it comes to some types of animals.
Clause 11 builds on changes made by clause 10 and amends the Tenant Fees Act 2019 to permit landlords to require tenants to take out an insurance policy to cover any potential damage caused by a pet or to charge the tenant the cost of such a policy. When granting consent, the landlord will be able to decide which insurance option best meets their needs. That underscores our commitment to ensuring that the private rented sector provides secure and stable housing. We recognise that pet ownership plays a crucial role in achieving that mission.
I thank the hon. Member for Ruislip, Northwood and Pinner for amendment 55, which seeks to ensure that suitable insurance products are available before landlords are allowed to mandate that their tenants purchase them to cover pet damage. We know that one of the reasons landlords are hesitant to take on tenants with pets is a fear that those pets could cause damage to their properties, which the tenants’ deposits might not be sufficient to cover.
I recognise that not a lot of insurance companies currently offer products designed to cover damage from pets. It is understandable that in the current climate, in which landlords have discretion over whether to accept or refuse pets, there is no demand for insurance and therefore the market is limited. We believe, however, that by creating an enabling environment for the industry, the Bill will cause the insurance market to adapt. I am sure that, as firm believers in the free market, the hon. Members for Ruislip, Northwood and Pinner and for Broadland and Fakenham share that view.
I hope the hon. Member for Ruislip, Northwood and Pinner will also be reassured that my Department has already had discussions with the insurance industry regarding such products. The discussions have been promising and I am aware that there are products in development to meet his concerns.
Jerome Mayhew
The Minister is quite right; I am a believer in the free market and I am sure the market will respond. Does he have an indication from his discussions with the insurance industry of the kind of price and the surcharge that will be required to fit the need?
Matthew Pennycook
We have not considered extensively the range of prices in the Department’s discussions, but I am sure the market will respond. I do not see any particular concern that companies will charge excessive rates for pet insurance, but that is something we will monitor as we bring the relevant parts of the Bill into force.
In the light of those points, I hope the shadow Minister will consider not pressing amendment 55 to a vote.
David Simmonds
Clearly, there are a number of ways in which this issue may be addressed, and adding a third-party liability element to domestic insurance, contents insurance or building insurance would be one means of doing that. We know that the industry is likely to respond, as we have just heard from the Minister. I congratulate him on his choice of dog name; Clem sounds like the kind of animal that a future leader of the Labour party would like to have when profiled. Had the dog been called Jeremy or Karl, it might not have been quite as popular.
As we have just heard in some detail, the Government have been looking at this issue and engaging with the market to ensure that insurance providers understand the upcoming demand. I recognise the publicity that many pet and animal charities have brought to the issue, which I think will help to create a climate in which those businesses are more likely to bring forward these products. In the light of those points, and on the understanding that we are making serious progress on this matter, I am happy not to press amendment 55 to a vote.
Rebecca Smith (South West Devon) (Con)
I wonder—forgive me, because this is also my first Public Bill Committee—how this will work in a house in multiple occupation compared with a dwelling house, and who will have to have the insurance. If a HMO is operated on a joint-licence basis, who is responsible for the insurance and the indemnity that goes with it?
On another point, what safeguards are we putting in place to ensure that any noise issues arising from pet ownership can be tackled, and where does responsibility for that sit? I appreciate that, where someone owns their home or rents a home that allows them to have a pet, it is probably done through the local authority, but I am conscious, particularly in the HMO setting, of how we would mitigate against that and ensure that we do not end up in a situation where neighbours do not know who to approach to ensure that either the insurance or the antisocial behaviour is acted upon.
Matthew Pennycook
The hon. Lady rightly challenges us on some of the finer points of how the provisions will be implemented. If she is amenable, I will happily write to her with further detail on precisely how we see them working in particular circumstances. Her point on HMOs is well made, and I will take it away and come back to her as soon as I can.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11 ordered to stand part of the Bill.
Clause 12
Duty of landlord and contractor to give statement of terms etc
Matthew Pennycook
I beg to move amendment 10, in clause 12, page 17, line 7, leave out “subsection (5)” and insert “subsections (5) and (5A)”.
This amendment is consequential on Amendment 11.
The Chair
With this it will be convenient to discuss the following:
Government amendment 11.
Clause stand part.
Clauses 13 and 14 stand part.
Matthew Pennycook
We believe the rental market works better when all tenants are clear on their rights and obligations. That prevents misunderstandings and means that both parties know what to expect. Without clarity about their rights, tenants may be unable to take advantage of the new rights that the Bill will give them. That is why it is critical that tenants understand what they are signing up to from the outset. Landlords benefit from clarity too. By being clear on rights and responsibilities at the beginning of a tenancy, responsible landlords can more easily comply with the new rules and ensure that they are providing a good service to their tenants.
That is why clause 12 requires landlords to provide tenants with a written statement setting out the terms of the tenancy. This includes a requirement to state where the landlord might wish to recover possession on certain prior-notice grounds. We will set out in secondary legislation details of what must be included in the written statement, but we expect that it might include details such as the rent, contact details for the landlord, and basic rights and responsibilities that apply to both parties. It is worth pointing out that most landlords already do that, and this requirement will ensure that good practice is extended across the sector. In time, this will lead to fewer disputes and help ensure that both parties comply with the law.
Turning to clause 13, the Government will have zero tolerance for any attempts by unscrupulous landlords to evade the new tenancy system. While the majority of landlords are good and do right by their tenants, we know that there are some who will seek to evade the new laws. That is why we are strengthening the enforcement regime to identify and fine unscrupulous landlords, drive out bad actors from the sector, and protect tenants from back-door evictions. Driving out bad actors is to the benefit of good landlords and tenants alike.
All landlords must be aware of their legal obligations and operate accordingly. I know that landlords can fall into the practice of renting out a property through many different—sometimes sad—circumstances. That is, of course, where the term “accidental landlord” comes from. Many of those landlords are good people doing their best, but that cannot be an excuse for the tenant suffering, and it is not an excuse for landlords not to understand their legal obligations. If a tenant is renting a home, it should not make a difference who their landlord is. Everyone has the right to a safe, decent and secure home.
Let me be clear: the law is not accidental and must be followed. If it is not, then the Bill sets out a robust enforcement framework. With a new tenancy system coming into force, we must ensure that landlords always use the correct procedures when gaining possession and evicting a tenant. The prohibited behaviours outlined in clause 13—for example, purporting to bring a tenancy to an end by service of a notice to quit or orally, by phoning a tenant to tell them that they need to leave the property by a certain date—reflect this responsibility.
In opposition, I was clear that we had a number of reservations about the enforcement measures in the previous Government’s Renters (Reform) Bill. As a result, we have worked hard to close any potential loopholes that a small minority of unscrupulous landlords may seek to exploit. We have taken action in a number of areas. For example, we have increased the restriction on re-marketing or re-letting the property after the use of grounds 1 or 1A to 12 months. That is a significant increase, and is necessary to avoid the grounds being used to effect back-door eviction. It will make it unprofitable to evict a tenant simply to increase the rent, and will stop landlords using the grounds as a back-door section 21. It will allow tenants to enjoy protection from no-fault eviction, while ensuring that there are comprehensive possession grounds in place so that a landlord can get their property back.
Clause 14 clarifies that the duties of landlords set out in new sections 16D and 16E of the Housing Act 1988 can be fulfilled or contravened by someone acting on their behalf. Many landlords will use the services of a letting agent, for example, and that is a sensible means of meeting their obligations, such as to provide a written statement of terms. For most landlords, the clause will make compliance easier. For example, if someone acting on behalf of the landlord issued a written statement of terms to the tenant, that would meet the landlord’s duty to provide the statement. However, landlords should not be able to absolve themselves of legal responsibility for providing a safe and secure home simply by appointing an agent. The clause ensures that landlords retain overall responsibility for complying with the law.
Government amendments 10 and 11 are merely consequential provisions. They qualify the new duty to provide a written statement of terms where a demoted tenancy is transferred to a new landlord. In such circumstances, the new landlord will have 28 days from the date that they become the landlord to comply with the requirement to provide a written statement of terms, instead of having to do so before the tenancy was entered into, which they obviously would not be able to do. We do not expect that circumstance to arise often in practice, but the amendments ensure that the law will operate effectively if the situation occurs.
David Simmonds
The Opposition broadly welcome the work the Government are doing in this area. Bringing clarity to the process is very important. In our work as constituency Members of Parliament, we will all have seen many cases where a lack of clarity on whether a notice has been properly served, or on whether a tenant or landlord fully understands their responsibilities and duties, is at the heart of a dispute or difficult situation. I have a brief question for the Minister, but I wanted to be clear on the record that bringing this level of clarity is important.
The enforcement process that the Minister referred to rests on a number of different organisations. Principally, the Bill envisages local authorities as the agent of enforcement. The fire brigades are a significant part of determining the suitability and safety of properties, and they bring prosecutions in the magistrates court when they find properties that have been occupied and rented to tenants but are clearly not safe on grounds that give them the power to prosecute. What consultations has the Minister undertaken with fire brigades about those prosecutions and the evidence that emerges from them about the circumstances of tenants found in such conditions? Those tenants are often among the most vulnerable, and they may not even have a written tenancy agreement, never mind a good understanding of their rights or a landlord who understands their duties and responsibilities.
Matthew Pennycook
I thank the shadow Minister for that question. On the general point about local authority enforcement, he is absolutely right. Landlords who fail to issue a written statement of terms on or before the first day of a tenancy will face enforcement action. They risk a fine of up to £7,000 from the local authority, the proceeds of which will be ringfenced to further enforcement work in that authority.
The shadow Minister made a specific point about fire brigades. To be honest with him, I do not have the answer to hand. I am happy to engage with officials to see what conversations the Department has had with the fire service, so that I can address his points. I will come back to him in writing as soon as I possibly can.
Amendment 10 agreed to.
Amendment made: 11, in clause 12, page 17, line 16, at end insert—
“(5A) Where a tenancy becomes a tenancy to which this section applies by virtue of section 143C(3) of the Housing Act 1996 (demoted tenancies: change of landlord), the statement under subsection (2) must be given within the period of 28 days beginning with the date on which the new landlord becomes the landlord under the tenancy.”—(Matthew Pennycook.)
This creates an exception from the new duty, inserted by clause 12 of the Bill into the Housing Act 1988, for a landlord to provide a written statement of certain matters before entering into an assured tenancy, so that the landlord of a tenancy which becomes an assured tenancy following the transfer of a demoted tenancy under the Housing Act 1996 has 28 days from becoming the landlord of the tenancy to fulfil those duties.
Clause 12, as amended, ordered to stand part of the Bill.
Clauses 13 and 14 ordered to stand part of the Bill.
Clause 15
Landlords etc: financial penalties and offences
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
We pick up a point we have just debated, which is the enforcement framework that the Bill provides for. The reforms we are putting in place will be underpinned by an effective, consistent and proportionate enforcement framework. In the Government’s view, serious breaches of the law should entail serious consequences, and we are clear that we will take action where it is needed to prevent abuse of the new system. To that end, clause 15 extends councils’ powers to issue financial penalties against landlords who flout the rules. The clause allows councils to penalise initial or minor non-compliance with a fine of up to £7,000—for example, for failing to provide a written statement of terms, such as we have just discussed, or for purporting to bring a tenancy to an end orally.
Serious, persistent or repeat non-compliance will be met with a fine of up to £40,000, with the alternative being criminal prosecution. That includes knowingly or recklessly misusing a ground for eviction, and re-letting or re-marketing a property within 12 months of using the moving in or selling grounds. Local authorities will be able to take robust action against the landlord who decides they will routinely evict tenants under a false claim to be moving a family member into a property or planning to sell it. That will act as a powerful deterrent and—although this is not the original purpose of the sanction—fines will provide valuable funding for local authority enforcement activity.
Clause 16 sets out the process that local housing authorities must follow when issuing financial penalties. That includes the appeals process, recovery of unpaid penalties and how local authorities may use the proceeds of the financial penalties. It includes the stipulation that proceeds of the financial penalties should be used to fund future enforcement activity. The clause provides clarity to local housing authorities on the process they must follow when issuing financial penalties to unscrupulous landlords.
I reassure the Committee that this clause also protects good landlords. The process allows landlords to make representations to local housing authorities for consideration when issued with a notice of intent, as well as appealing a final notice to the first-tier tribunal.
Clause 17 provides definitions for terms used in sections 16D to 16L and schedule 2ZA—for example, “local housing authority” and “relevant person”. That is simple and straightforward, and it requires no further elaboration.
Clause 18 provides that criminal offences contained within section 16J do not bind the Crown, which means that the Crown cannot be found criminally liable for these offenses. However, should the Crown break the rules, it is possible for a council to issue a fine in the same way as with private landlords. The Government believe that this is a reasonable approach and one that maintains precedent established in previous legislation, such as the Tenant Fees Act 2019. However, those acting in the service of the Crown will not be exempt from criminal liability. It is only fair that they are subject to the same financial penalties and criminal offences that apply to other individuals. I commend clauses 15 to 18 to the Committee.
David Simmonds
In practice, the measures contained in this section of the Bill will probably be the most important for our constituents who are tenants. Their ability to secure enforcement, where there is a breach of the legislation, will be critical. The Minister will know that the Opposition have shared concerns about ensuring that the resource from the enforcement regime will be sufficient to be self-sustaining. It strikes me that the enforcement regime, as set out, is very similar to that which already exists for local authorities in respect of environmental crime, such as fly-tipping, where it is assumed that the proceeds from fines and costs will be sufficient. Most of us will recognise that, in reality, that is rarely the case—carrying out that enforcement action always represents a cost to the council tax payer. Although it is not a matter for legislation, it would be helpful to understand how the Government intend to engage with local authorities to understand the cost of these new burdens fully and use the new burdens doctrine to ensure that they are appropriately resourced.
As the Minister has said, there is a point at which enforcement action outside criminal prosecution is taken, and there is a stage at which criminal prosecution may be the only available option. With other types of enforcement, many local authorities find that the push towards criminal prosecution is necessary to bring an end to the antisocial behaviour that is causing the problem in the first place. The challenge is that the proceeds of any fine resulting from criminal prosecution go into the consolidated fund of central Government expenditure, rather than accruing to the local authority. Even if there is not an award of costs, the largest part of that resource, which in theory is available to sustain the system, in fact goes into a different Government pot for other uses. It would be helpful if the Minister indicated what process of engagement and consultation the Government envisage they will take with local authorities. That must be designed to ensure that the resources derived from enforcement find their way to the sharp end of it, so that in practice, in the real world, it makes the difference that we hope it will.
Matthew Pennycook
I completely agree with the shadow Minister that many of the provisions in the Bill will not work as intended without robust local authority enforcement. We have increased the fines from the levels in the previous Government’s Bill to £7,000 and £40,000. It is also worth noting that those fines can be issued repeatedly—they are not a one-off—if landlords continue to breach the relevant provisions.
More generally on local authority resourcing, I make two points. First, it is important to note that many of the provisions in the Bill will not need to be enforced immediately. They will come into play one or two years down the line, so not every measure in the Bill that needs enforcement will require it from the date of Royal Assent. We have made it clear in previous debates that although we think that fines are part of the answer—we want the “polluter pays” principle to be at the heart of the Bill—we recognise that in many cases, they alone will not be enough. That is why I have set out that in accordance with the new burdens doctrine, we will ensure that additional burdens on local authorities that result from our reforms are fully funded.
The shadow Minister made an interesting point, as he has done several times today, that challenges me to go away and think about the final destination of fines from criminal prosecutions. I will take that away and give it serious consideration. We are in agreement that we need to ensure that where local authorities enforce breaches of the provisions set out in this Bill, those funds should come to local authorities. I will come back to him on the point he raises about the consolidated fund, if he is amenable to me doing so.
David Simmonds
The Minister’s response prompts me to ask a further question. I am grateful to him for undertaking to write back on the consolidated fund. In other enforcement regimes modelled on this system that provide scope to issue significant fines, there is a common pattern of local authorities outsourcing the responsibility to third-party enforcement agencies. We see that with littering, environmental crime and all manner of areas of local authority duty. Essentially, business makes a pitch, and if they receive the delegated authority to act on behalf of the council in the performance of its duties, they will enter into a profit share agreement. In the case of parking regimes, historically, for each parking ticket that was issued, some money went to the company and some money to the local authority.
That creates a risk—this was mirrored in the earlier debate—of perverse incentives. At local authority level, the incentive could be to pursue the landlords who are easiest to deal with and most likely to yield financial restitution to contribute to the bottom line of the business undertaking the work. That could result in a scarcity of resources to deal with the more difficult and intractable cases, and the most vulnerable tenants.
Have the Government thought about how, in their engagement with local authorities, they will seek to ensure that the regime is enforced equally? Local authorities have an understandable desire to outsource. Particularly in built-up urban areas where there may be a high density of rogue landlords, how can we ensure that the process will not result in extremely vulnerable people falling outside the enforcement regime because it simply is not profitable to pursue it in other parts of the country?
Matthew Pennycook
I thank the shadow Minister for that thoughtful point. To be entirely open, it is not one that I have considered. I think it is a fair challenge, and I will go away and give some thought to how we can ensure that local authorities look at all breaches in the round and apply the same approach to each, rather than targeting the low-hanging fruit. To provide reassurance on the concern about good landlords being caught up in the process, I repeat that the process allows landlords to make representations to local housing authorities and the first-tier tribunal if they think that that has happened.
The other point, which we will debate in quite extensive detail, is that enforcement by local authorities is not the only means that the Bill provides of tackling rogue landlords and breaches. I draw the shadow Minister’s attention to the significant strengthening of rent repayment orders, which offers an alternative, tenant-led enforcement mechanism. As I think I said in my evidence to the Committee last week, across the country—in local authority terms, enforcement is a real postcode lottery—the most effective thing I have seen is where well-resourced and effective local authority enforcement is complemented by tenants taking action with rent repayment orders. When the two work in tandem, it can be of real benefit in driving bad landlords out of the sector. I will give further consideration to the shadow Minister’s specific, well-made point.
Rebecca Smith
I want to build on the point that my hon. Friend the Member for Ruislip, Northwood and Pinner has just made. It may not quite fit at this point in the consideration of the Bill, but it has come to mind while we have been talking about this. I am sure that we all have been contacted by a tenant and then found out that they are one of five or six tenants, all with the same rogue landlord. What can we do in the Bill to enable the trigger point for one tenancy to be used as an opportunity to explore other tenancies with the same landlord? I have dealt with such a case, where I encountered a landlord with five or six tenants across a city, managing properties with appalling conditions and treatment of tenants. We do not want to have to repeat the exercise six times.
Is there anything in the Bill that would enable the local authority to see whether there are any other tenants in the same situation, or is that a bit too Big Brother—would it be pursuing it too far? The whole Bill is aimed at tackling rogue landlords. Are we slowing down that process by taking each property individually? Is there a mechanism whereby we could collect them all together?
Matthew Pennycook
If I have understood the hon. Lady correctly, and if she is amenable to it, I will fold this point into the written response that I have already promised her, but multiple fines can be levied for breaches. If a landlord in a particular part of the country with multiple properties is in repeated breach over that portfolio of properties, local authorities will be able to levy fines on more than one occasion, so it is not a £7,000 limit in the first instance, or £40,000 for more serious cases, per landlord. Again, I will expand on it in a written response, but I think the database can do some work here in terms of landlords in a particular area registering all their properties. I think it will become apparent quite quickly—it depends on how we use the database—if particular landlords show a pattern of behaviour whereby they are not treating their tenants appropriately. Let me come back to the hon. Lady in more detail as part of the response that I have already committed to.
Question put and agreed to.
Clause 15 accordingly ordered to stand part of the Bill.
Clauses 16 to 18 ordered to stand part of the Bill.
Clause 19
Notices to quit by tenants under assured tenancies: timing
David Simmonds
I beg to move amendment 49, in clause 19, page 31, line 19, leave out from “substitute–” to end of line 34 and insert—
“‘(b) it satisfies—
(i) subsection (1ZA), if it is given by a tenant in relation to premises let under an assured tenancy, or
(ii) subsection (1ZC) in any other case; but in relation to landlords under assured tenancies see section 5(1) of the Housing Act 1988 (notice to quit by landlord is of no effect).’
(3) After subsection (1) insert—
‘(1ZA) A notice to quit satisfies this subsection if—
(a) it is given not less than—
(i) any length of time before the date on which the notice is to take effect, not exceeding two months, that the landlord has agreed to in writing, or
(ii) in the absence of agreement under sub-paragraph (i), two months before the date on which the notice is to take effect, and
(b) it is in relation to premises let under a repeat tenancy or, if it is in relation to premises let under any other assured tenancy, it is to take effect—
(i) no earlier than any time, within the period of six months beginning with the day on which the terms of the tenancy provide for the tenancy to begin, that the landlord has agreed to in writing, or
(ii) in the absence of agreement under sub-paragraph (i), on or after the last day of the period mentioned in that sub-paragraph.
(1ZB) In subsection (1ZA)(b) “repeat tenancy” means an assured tenancy under which the tenant becomes entitled to possession of the premises within the period of one month beginning with the day after the last day of a previous assured tenancy—
(a) under which the same premises were let, and
(b) which was between the same parties.
(1ZC) A notice to quit satisfies this subsection if it is given not less than four weeks before the date on which it is to take effect.’”
The Chair
With this it will be convenient to discuss the following:
Amendment 66, in clause 19, page 31, line 31, at end insert—
“(aa) where it is given by a tenant who meets the student test under Ground 4A, not less than ten months before the date on which the notice is to take effect;”.
Amendment 67, in clause 19, page 31, line 31, at end insert—
“(aa) where it is given by a tenant in relation to a premises in which they are the first tenants since its construction, not less than twenty-four months before the date on which the notice is to take effect;”.
Clause stand part.
Clause 20 stand part.
David Simmonds
One issue that we have debated—I think, once again, it falls to a small p political and philosophical difference—is ensuring the availability of appropriate options for levels of term, in pursuit of our aim of freedom of contract for those to whom these terms would most lawfully and best apply. The purpose of this amendment is to move us on towards achieving that, and I believe that it would.
Mr Amos
The intention behind amendment 66, which stands in my name, is to take landlords at their word that they value hugely the opportunity for fixed-term tenancies, which of course are being removed by this Bill. We support the move to longer tenancies—periodic tenancies—in the Bill. Our policy was to extend them to at least three years, and in effect this Bill extends periodic tenancies almost indefinitely. But for the student population, it is a big disadvantage that students can no longer really rent premises or rent accommodation for the 10 months for which they need it. They nearly always face being forced to rent for 12 months, and paying rent over the summer period when they do not want to do so.
We are taking landlords at their word that they really value fixed-term tenancies, and that fixed-term tenancies would unlock investment and support from the landlord sector. The amendment would offer landlords and student tenants the option to enter into a 10-month fixed-term tenancy, which would benefit students in not having to rent for 12 months. MoneySuperMarket.com—other websites are available—has said that according to a survey in 2023, average student rents are £535 a month. Saving each student two months’ rent would save them £1,000, which is well worth it from their point of view. From the landlord’s point of view, if, as we heard in oral evidence, landlords value fixed-term tenancies, the option to have such certainty would be of value to them.
Having looked at the amendment again in the cold light of day, I will be withdrawing it, because I am not sure that the wording—for which I take full and complete responsibility—delivers my proposal as an option; it seems to indicate a requirement for a rolling 10-month notice period. However, I encourage the Committee to consider the benefits to students of reducing their tenancies from 12 to 10 months.
Matthew Pennycook
Clause 19 amends section 5 of the Protection from Eviction Act 1977 to set out the rules about what period of notice a tenant must provide to end a tenancy, stipulating that they will not have to provide more than two months’ notice. This will help renters to end tenancies quickly if they have a change of circumstances, such as needing to change jobs or move to a new area. It will also prevent them from being trapped in substandard properties for long periods of time. Allowing tenants to move on from poor properties is fundamental to establishing fairness in the new system, and it will incentivise landlords to provide a good service.
This will also provide landlords with the certainty they need. We believe that two months is sufficient time for landlords to re-let the property, minimising the time and costs of void periods. Landlords will not be allowed to ask for more than two months’ notice in the tenancy agreement. That will prevent them from replicating fixed terms by locking tenants in for long periods of time. If the tenancy agreement does not mention the tenant’s notice period, clause 19 requires tenants to provide at least two months’ notice. They will be able to provide more notice if it suits their circumstances. We recognise that sometimes a shorter notice period will be preferable for both tenants and landlords. The landlord and tenant may therefore agree to a shorter notice period in writing.
Clause 20 prevents landlords from specifying the form of writing that a tenant’s notice to quit must take. Landlords will not be able to include terms in the tenancy agreement that insist the notice to quit is provided in a particular form, such as a letter. Any attempt to do so will be rendered void by this clause. Instead, tenants will be able to provide notice in any written format, such as text message, email or letter. That will remove unhelpful barriers to tenants’ ability to provide notice to quit.
Clause 20 also clarifies that a tenant’s notice to quit can be withdrawn before it comes into effect, if the landlord agrees in writing. That is a sensible clarification to ensure that both parties can agree to continue the tenancy if that suits their respective circumstances.
I have to be clear that we will not accept any change that would increase the length of notice that tenants are required to provide. Amendment 49, which was tabled by the shadow Minister, seeks to prevent tenants from ending a tenancy in the first six months by ensuring that only notices that expire after six months would be considered valid. We will not be reintroducing that measure, which even the previous Government felt was unnecessary until the very late stages of their own Renters (Reform) Bill.
Tenants will not routinely end tenancies just after moving in or use assured tenancies as an alternative to holiday lets. In our view, tenants have to go through far too much administration and provide too expensive a deposit for this to be a viable concern. If tenants do have to end a tenancy, I am confident that two months is a fair amount of time for both parties to adjust. Six months is a long time to live in a house with damp or mould that the landlord simply painted over when doing viewings, or perhaps simply advertised inappropriately online—just as it is too lengthy a period to remain living with a partner after, for example, a relationship breakdown. I note again that landlords could still regain possession in that six-month period if the tenant was at fault, using the clear grounds for possession set out in schedule 1. Why should a tenant’s right to leave, when a landlord is at fault, be any different?
I turn to amendments 66 and 67, tabled by the hon. Member for Taunton and Wellington. Amendment 66 would require tenants who meet the student test in possession ground 4A to give 10 months’ notice. That would mean that students would have to know 10 months in advance whether they wanted to remain in the property. Landlords who are concerned about making a property available for new student tenants can seek possession under ground 4A if they meet the requirements of that ground. Similarly, amendment 67 would require tenants who are the first residents in newly built properties to provide 24 months’ notice when ending an assured tenancy.
I am afraid that I do not accept that it is reasonable to penalise some tenants because of the circumstances or the property in which they live. Those tenants deserve the same flexibility that everyone else will enjoy under the single system of periodic tenancies. We do not believe that it would be fair or justifiable to lock them in for such long periods of time. Again, since most new buildings should be good quality, tenants will only leave if they really need to. In other words, they can stay for 24 months, or perhaps longer if they want to, under the periodic tenancies that the Bill provides for. For those reasons, I ask the shadow Minister and the hon. Member for Taunton and Wellington not to press their amendments to a vote.
David Simmonds
I would like to ask the Minister, not at this stage but in due course, to provide a little bit more detail. In his response to these amendments, he referred to what sounds like an asymmetric process in the expectations of how notices would be given. It would be a requirement for a landlord to put a notice of any kind to the tenant in writing, but the tenant would be able to give notice by means of a text message. It seems very clear that that situation could give rise to disputes about whether information or notices were properly served in both directions. I urge the Government to ensure that, as the Bill makes progress, there is sufficient symmetry. For example, when disputes arise that might go before the courts or the tribunal, there needs to be real clarity, by way of an audit trail of what has been said to each party.
Matthew Pennycook
I thank the shadow Minister for that. I will undertake to provide him with more detail on the specific point he has made, which is noted and understood, either at an appropriate point in our further consideration of the Bill or in writing.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 19 ordered to stand part of the Bill.
Clause 20 ordered to stand part of the Bill.
Clause 21
Limitation on obligation to pay removal expenses
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Section 11 of the Housing Act 1988 currently requires landlords of assured tenancies, who have been awarded possession under the redevelopment ground 6 or suitable alternative accommodation ground 9, to pay the tenant reasonable moving expenses. These grounds are mostly used by social landlords, who use assured tenancies and do not have access to section 21 no-fault evictions. The grounds support social landlords to manage their stock, ensuring that social housing is good quality and remains available for those who need it.
Clause 21 amends section 11(1) of the 1988 Act to ensure that only private registered providers of social housing will be required to pay removal expenses for grounds 6 and 9, once all tenancies become assured tenancies. We think it is unlikely that private landlords will regularly use grounds 6 and 9. However, on the rare occasions that they need to use them, they will not be required to pay removal expenses, ensuring that they are able to manage their assets in a reasonable way. I commend the clause to the Committee.
Question put and agreed to.
Clause 21 accordingly ordered to stand part of the Bill.
Clause 22
Assured agricultural occupancies: grounds for possession
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
As Committee members may be aware, qualifying agricultural workers are automatically entitled to an assured agricultural occupancy, which offers enhanced security of tenure to those who qualify. Tenants under AAOs cannot be evicted using section 21 or if their employment by the landlord comes to an end. Clause 22 makes consequential changes to AAOs to reflect the new tenancy system. That includes preventing landlords from evicting AAO tenants under the employment ground, now 5C, as well as ground 5A and the new superior landlord grounds. Those grounds cover circumstances where tenants under AAOs cannot currently be evicted, but they are being amended or introduced by the Bill and may pose a risk to their security in the new system. The clause will maintain the status quo.
Clause 23 seeks to replicate the existing mechanism in the Housing Act 1988 that allows landlords of qualifying agricultural workers to opt out of providing assured agricultural occupancies. They can issue assured shorthold tenancies instead, as long as they inform the tenant from the outset. We understand that many landlords make use of the opt-out, as it provides more flexibility for the agricultural sector and helps to maintain the supply of rural housing for workers. The clause therefore replaces the existing opt-out in a way that will be compatible with the new tenancy regime once ASTs are abolished, giving landlords access to the full range of new possession grounds.
I hope that both clauses are uncontroversial, and I commend them to the Committee.
David Simmonds
I can assure the Minister that we do not want to push these clauses to a vote. I am grateful to him for his explanation. It is important to recognise that agricultural workers are one category of tenant who often have different sets of circumstances, as their access to a home is connected to their job. School caretakers are another common example; it is not unusual for there to be a property on the school site that the post holder has the right to occupy.
It has become increasingly common, rather than going down the route of creating a tenancy from the outset, for the employment contract to have a side agreement of a licence to occupy, so the home is made available to the individual not as part of a tenancy agreement, but as part of a licence to occupy connected to their role. I would like the Minister to illuminate the Committee with the Government’s thinking on that issue.
There is a second issue. As has been described to us by a number of representatives from rural businesses, it is quite common for landlords to ask a tenant to vacate a particular property because its location or its facilities are directly connected with a role that they formerly did, and to offer them another like or equivalent property on the same estate. Traditionally, that has been a way of ensuring that, for example, farm workers who retire from a role in the care of animals where they had to be on the site 24 hours a day, and therefore cease to carry out that function, can be moved to another property on the estate without having to go through an extremely complicated and bureaucratic process. That process may not be good for the landlord, who has an urgent need for a worker on site to look after the animals, or for the tenant, who may have expectations about how their new accommodation will be secured, particularly at the point of retirement.
I would be grateful if the Minister could illuminate the Committee with the Government’s thinking on how that issue could be effectively addressed, so that we can take the matter into full consideration for those rural communities where it is particularly important.
Matthew Pennycook
I thank the shadow Minister for his points. If I have understood him correctly, I fear that those matters are slightly outside the scope of these clauses. I reiterate that we understand that many agricultural landlords use the opt-out to provide ASTs to their tenants instead, and that opt-out is retained by clause 23. We do, however, think that AAOs are a crucial part of the tenancy system, and we do not want to reduce their security by abolishing them outright and bringing these tenants into the wider assured tenancy system. I will take on board the points the shadow Minister made and come back to him in writing, if he will allow me; they raise a number of matters pertaining to housing that may or may not be in the scope of the Bill and these clauses. I think it is probably better if I come back to him in writing, given how specific and somewhat technical they are.
Mr Amos
I wonder whether the Minister would help me with an issue that is somewhat related to agricultural tenancies. In fact, it is a different kind of tied tenancy that has been raised with me by constituents, where the notice period required to be given for Church of England ministers—
Matthew Pennycook
The hon. Member for Taunton and Wellington tests my knowledge. I keep a lot of things in my head, but the particular tenancy arrangements as they pertain to Church of England ministers is not there. I am more than happy to discuss some of these issues with the hon. Gentleman outside the Committee, Dame Caroline.
The Chair
That would certainly help with my job.
Question put and agreed to.
Clause 22 accordingly ordered to stand part of the Bill.
Clause 23 ordered to stand part of the Bill.
Clause 24
Accommodation for homeless people: duties of local authority
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
The Bill will remove fixed tenancies and section 21 evictions, as we have discussed at length. These changes mean that we also need to amend part 7 of the Housing Act 1996 to ensure that councils’ statutory homelessness duties align with the new system. Clause 24 makes three changes to homelessness legislation to ensure that is the case.
First, clause 24 makes changes to how local authorities discharge their main housing duty. One of the ways in which local authorities may currently bring their main housing duty, which is a duty to secure settled accommodation, to an end, is by making an offer to a tenant of a suitable private rented sector tenancy with a fixed term of at least 12 months. With the removal of fixed-term tenancies, section 193 of the Housing Act 1996 is amended to instead refer to an assured tenancy.
Secondly, the clause amends sections 193(1A) and 193C of the Housing Act 1996, which concern the consequences when a person owed either the prevention or relief duty deliberately and unreasonably fails to co-operate with the local housing authority. If the local housing authority is satisfied that the applicant is homeless, is eligible for assistance, has a priority need, and is not intentionally homeless, then the applicant is still owed a duty to be accommodated. This duty, however, is currently a lesser one than the main housing duty. The lesser duty is to offer a fixed-term tenancy of at least six months as opposed to the period of at least 12 months that is required under the main duty. With the repeal of fixed-term tenancies, the lesser offer is redundant, and is removed by the clause.
Thirdly, subsection (4) of clause 24 repeals section 195A of the Housing Act 1996, which is the duty in homelessness legislation to offer accommodation following re-application after a private sector offer, known more commonly as the re-application duty. The re-application duty was introduced, alongside the introduction of private rented sector offers, as a means to end the main homelessness duty. It was introduced to respond to concerns that due to the short-term nature of assured shorthold tenancies, applicants who accepted a private rented sector offer may become homeless again within two years, and no longer have priority need.
The increased security of tenure and removal of section 21 evictions means that the re-application duty will no longer be relevant. The change will streamline the management of re-approaches and ensure that all applications will be treated according to their current circumstances at the point of approaching. There will no differential treatment between those placed in either private rented or social housing accommodation. The clause makes necessary and reasonable changes to the homelessness legislation as a consequence of the tenancy reform that we are introducing. I commend it to the Committee.
David Simmonds
The Homelessness Reduction Act 2017 was the main vehicle for ensuring that the homelessness duty might be addressed through an offer in the private rented sector. That was a means of ensuring that people who are not able to immediately access the kind of accommodation they need through the local authority can instead secure it in the private sector, and it has, to an extent, been very successful.
I want to ask the Minister what consultations are being undertaken across the Government to ensure alignment between parts of Government that have different responsibilities and duties, particularly in respect of notices that might fall within the scope of this Bill. I am thinking, in particular, of young people leaving the care system, who may be accommodated under section 20 by the local authority because of their risk of homelessness. In addition, when asylum seekers are placed in accommodation by the Home Office, there is a move-on period; the Home Office-owned legislation may result in their needing to access accommodation, so they may fall within the scope of this Bill. What consultation is being undertaken to ensure that those notice periods are aligned? I have to acknowledge that that was an issue for the previous Government—particularly in respect of asylum seekers, for whom the homelessness duty set out a different period from the Home Office’s move-on period, so individuals found themselves falling between those periods and were therefore unable to access the support they needed to find accommodation through their local authority.
Matthew Pennycook
I thank the shadow Minister for that point. I hope he will be satisfied with the following answer: extensive engagement has taken place between Departments in developing this Bill as it pertains to areas that cross departmental responsibilities. Again, given the extremely technical nature of his question—particularly in relation to asylum accommodation, which is not within my area of responsibility—I will come back to him in writing.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.
Clause 25
Tenancy deposit requirements
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clause 25 will maintain important deposit protections so that tenants can be confident that their money is being handled safely. Landlords will be required to comply with deposit protection rules before a court can make an order for possession under section 8 of the Housing Act 1988. That will apply only if the landlord has failed to store the deposit in one of the prescribed schemes or comply with the applicable rules.
The clause also makes consequential amendments to the Housing Act 2004 to ensure that deposit protection rules continue to apply in the future once assured shorthold tenancies are abolished. Deposits taken for existing assured shorthold tenancies will still need to be protected after the new system has come into force. Deposits taken for assured tenancies created after commencement will also need to be protected. This is an extremely straightforward and simple clause, and I look forward to the extremely technical question that the shadow Minister will put to me on it.
David Simmonds
The Minister will be delighted to know that I do not have a detailed, technical question to ask him on this clause, but I am sure that if he gives me some time, I will be able to come up with one.
The Chair
Let us not do that.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Tenant fees
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clause 26 amends the Tenant Fees Act 2019 to ensure that its provisions remain applicable and relevant to the tenancy reforms in the Bill. In particular, it removes the provision that prevents a landlord from serving a section 21 notice where they are in receipt of a prohibited payment from a tenant. Removing that provision is necessary, given that section 21 notices will be abolished. There will remain strong enforcement mechanisms in the Tenant Fees Act, including offences for landlords who require payments from tenants that are prohibited under that Act. That will ensure that under the new system tenants will continue to be protected from unfair and prohibited payments that were previously outlawed.
Clause 27 amends council tax rules to clarify council tax liability once fixed-term assured tenancies are abolished. That will ensure that assured tenants remain liable for council tax until the end of their tenancy agreement. That will include where they have served notice to end the tenancy but leave the property before the notice period has ended. In that instance, the liability will not fall to the landlord until the tenancy has ended. I commend clauses 26 and 27 to the Committee.
David Simmonds
I would be grateful if the Minister shared the Government’s thinking on the interaction between this issue of liability for council tax and the legal duties on local authorities to collect it, where they have an obligation to ensure that, as part of the efficient delivery of public services, they maximise the level of council tax collected. I understand the purpose of what the Minister has just described. I would try to ensure that, in situations where there may be an end to the tenancy, we do not create a situation both where the liability is difficult to assign and there is potentially an issue of who needs to be pursued for that council tax. Clearly, it is important to ensure that local authorities with a separate set of legal obligations in that respect are fully sighted on what the impact of this may be, and on the performance of their duties.
Matthew Pennycook
To reassure the shadow Minister on the general matter, there has again been extensive engagement with local authorities on the development of this Bill. I think he referred to clause 27, and it is our view that tenants should obviously be responsible for council tax payments until the tenancy has formally ended. When a tenant serves notice, the tenancy does not end until the notice period has expired, even if the tenant leaves the property before then. This measure will not change anything for most tenants, but clarifies where they will be liable for council tax until the end of the notice period, including where they have served notice to end the tenancy but leave the property earlier. It simply ensures that council tax remains aligned with other household costs, such as rent and bills. I hope that reassures the shadow Minister, but if not, I am more than happy to pick it up at a future point or in writing.
David Simmonds
That goes a long way in providing the necessary assurance. It is necessary for there to be clarity, for example, where a contract includes not just the rent but council tax within a single payment to the landlord, who will then be paying the council tax on behalf of the tenant, as happens under some rental contracts. We do not want to create a situation where the local authority is pursuing a tenant for the council tax at that point, because the tenancy has ended and the tenant argues that they have already made that payment to the landlord and it has not been passed on. I simply wanted to ensure that, in the performance and function of the collection fund, which I know is high level and a very important part of the Department’s overall calculation of the level of local government finance, we are not at risk of creating any potential loopholes.
Matthew Pennycook
That has usefully clarified the point that the shadow Minister is driving at. Local authorities are well-experienced in the administration of council tax, including determining who is liable. For example, they have powers to require residents, owners or managing agents to provide information to help establish liability, and where that is not complied with, they can impose a penalty. We will work closely with the local authority sector when implementing the new system to ensure that the new rules are well-understood, but we think local authorities have sufficient powers to determine liability for council tax in any particular circumstance.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 27 ordered to stand part of the Bill.
Clause 28
Other amendments
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 12 to 21.
Schedule 2.
Clause 29 stand part.
Matthew Pennycook
The Renters’ Rights Bill makes some significant changes to legislation, such as abolishing section 21 notices, assured shorthold tenancies and fixed-term tenancies. This means that there are references that need to be removed and changes needed to ensure that the wider stature book remains in good order.
Clause 28 sets out that those consequential amendments to existing legislation are made in schedule 2 of this Bill. Schedule 2 makes consequential changes to a number of Acts of Parliament to reflect the abolition of assured shorthold tenancies, fixed-term assured tenancies and no-fault evictions. They ensure that existing legislation can continue to operate after our reforms to the tenancy system have taken place, and they are predominantly minor and technical in nature. For example, our amendments to the Housing Act 2004 in paragraph 45 are simply repeals of legislation that prevented landlords using section 21 to evict tenants from an unlicensed HMO. We have amended the Housing Act 1985 and the Localism Act 2011 to reflect the abolition of demoted tenancies, where social housing tenants can be “demoted” to less secure assured shorthold tenancies, as ASTs will no longer exist.
In paragraph 48 of schedule 2, we have also repealed provisions in the Deregulation Act 2015 that outlawed retaliatory evictions via section 21 as this legislation will cease to have that effect after the Renters’ Rights Bill is implemented. In paragraphs 1 to 7, we have made amendments to the Reserve and Auxiliary Forces (Protection of Civil Interests) Act 1951 to ensure that mobilised reservists’ tenancies continue to be protected. From those examples, the Committee will see that the changes that schedule 2 makes are technical and uncontroversial, ensuring the statute book continues to operate effectively and consistently after our reforms to the tenancy system.
David Simmonds
I commend the Government for the work they are doing to ensure that the statute book lines up across all the different pieces of legislation. Will the Minister inform the Committee how the changes to the homelessness prevention duty will impact on tenants who have no recourse to public funds in the UK?
Matthew Pennycook
I commend the shadow Minister for challenging me on those points. I do not have that answer to hand, so I will commit to come back to him in writing on that specific point.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Schedule 2
Amendments relating to Chapter 1 of Part 1
Amendments made: 12, in schedule 2, page 174, line 29 at end insert—
“Greater London Council (General Powers) Act 1973
7A In section 25 of the Greater London Council (General Powers) Act 1973 (provision of temporary sleeping accommodation to constitute material change of use), in subsection (2)—
(a) in paragraph (a), after ‘person’ insert ‘otherwise than under or by virtue of an assured tenancy’;
(b) after that paragraph insert—
‘(aa) “assured tenancy” means an assured tenancy within the meaning of Chapter 1 of Part 1 of the Housing Act 1988;’”.
This creates an exception to the restriction on the provision of temporary sleeping accommodation in residential premises in Greater London for less than 90 days, where occupation of such accommodation is under or by virtue of an assured tenancy agreement.
Amendment 13, in schedule 2, page 174, line 31, leave out paragraph 8 and insert—
“8 The Housing Act 1985 is amended as follows.
8A In section 81ZA (grant of secure tenancies in cases of domestic abuse), in subsection (4), in the definition of ‘qualifying tenancy’, in paragraph (b), omit sub-paragraph (i).
8B In section 81B (cases where old-style English secure tenancies may be granted), in subsection (2C), in the definition of ‘qualifying tenancy’, in paragraph (b), omit ‘which is not an assured shorthold tenancy and’
8C In section 82A (demotion because of anti-social behaviour)—
(a) in subsection (1), omit paragraphs (ba) and (c);
(b) in subsection (8), omit paragraph (b).
8D In section 171B (extent of preserved right), omit subsection (1A).
8E In Schedule 3 (grounds for withholding consent to assignment by way of exchange), in ground 2A, in the definition of ‘demotion order’, omit ‘or section 6A of the Housing Act 1988’.”.
This adds further amendments to the Housing Act 1985 to remove the power of private registered providers of social housing and registered social landlords to apply for demotion orders relating to secure tenancies (new paragraph 8C(a)) and otherwise in consequence of the changes made by Part 1 of the Bill.
Amendment 14, in schedule 2, page 176, line 2, at end insert—
“17A In section 15 (limited prohibition on assignment etc. without consent), in subsection (3), omit ‘a statutory periodic tenancy or’.
17B In section 17 (succession to assured tenancy)—
(a) in subsection (1)(a), omit ‘periodic’;
(b) in subsection (1A)(a), omit ‘periodic’;
(c) omit subsection (1B);
(d) omit subsection (1C);
(e) in subsection (1D), for ‘, (1A), (1B) or (1C)’ substitute ‘or (1A)’;
(f) in subsection (5), omit ‘or (1B)(c) above’;
(g) in subsection (6), omit ‘, (1C)’;
(h) omit subsection (7).”
This makes further amendments to the Housing Act 1988 to take account of changes made by Part 1 of the Bill.
Amendment 15, in schedule 2, page 176, line 17, leave out paragraph 21 and insert—
“21(1) Section 39 (statutory tenants: succession) is amended as follows.
(2) In subsection (5), in the words after paragraph (b), omit ‘periodic’.
(3) In subsection (6)—
(a) in the words before paragraph (a), omit ‘periodic’;
(b) in paragraph (d), after the second ‘tenancy’ insert ‘(but this is subject to section 4A)’;
(c) in paragraph (e), for ‘sections 13 to 15’ substitute ‘sections 13 to 16C’;
(d) omit paragraph (f).
(4) Omit subsection (7).
(5) In subsection (8)—
(a) omit ‘periodic’;
(b) after ‘above)’ insert ‘; and section 24A does not apply in relation to the assured tenancy to which the successor becomes entitled’.
(6) For subsection (9) substitute—
‘(9) Where, immediately before the predecessor’s death, the predecessor was a tenant under a fixed term tenancy (the “former tenancy”), the following provisions of this subsection apply in relation to the assured tenancy to which the successor becomes entitled on the predecessor’s death (the “new tenancy”)—
(a) not later than the first anniversary of the date of the predecessor’s death, the landlord may serve on the tenant, or the tenant may serve on the landlord, a notice in the prescribed form (a “notice of variation”)—
(i) proposing terms of the new tenancy, other than terms as to the amount of the rent, that are different from the terms which have effect by virtue of subsection (6)(e) (the “implied terms”), and
(ii) if the landlord or the tenant considers it appropriate, proposing an adjustment of the amount of the rent to take account of the proposed terms;
(b) where a notice of variation has been served under paragraph (a)—
(i) within the period of three months beginning on the date on which the notice was served on him, the landlord or the tenant, as the case may be, may, by an application in the prescribed form, refer the notice to the appropriate tribunal under paragraph (c), and
(ii) if the notice is not so referred, then, with effect from such date, not falling within the period referred to in sub-paragraph (i), as may be specified in the notice, the terms proposed in the notice shall become terms of the tenancy in substitution for any of the implied terms dealing with the same subject matter and the amount of the rent shall be varied in accordance with any adjustment so proposed;
(c) where a notice of variation is referred to the appropriate tribunal, the appropriate tribunal must consider the terms proposed in the notice and must determine whether those terms, or some other terms (dealing with the same subject matter as the proposed terms), are such as, in the appropriate tribunal’s opinion, might reasonably be expected to be found in an assured tenancy of the dwelling-house concerned, being a tenancy—
(i) which begins on the date of the predecessor’s death, and
(ii) which is granted by a willing landlord on terms which, except in so far as they relate to the subject matter of the proposed terms, are those of the new tenancy at the time of the appropriate tribunal’s consideration;
(d) whether or not a notice of variation proposes an adjustment of the amount of the rent under the former tenancy, where the appropriate tribunal determine any terms under paragraph (c), they must, if they consider it appropriate, specify such an adjustment to take account of the terms so determined;
(e) in making a determination under paragraph (c), or specifying an adjustment of an amount of rent under paragraph (d), there must be disregarded any effect on the terms or the amount of the rent attributable to the granting of a tenancy to a sitting tenant;
(f) where a notice of variation is referred to the appropriate tribunal, then, unless the landlord and the tenant otherwise agree, with effect from such date as the appropriate tribunal may direct—
(i) the terms determined by the appropriate tribunal become terms of the new tenancy in substitution for any of the implied terms dealing with the same subject matter, and
(ii) the amount of the rent under the statutory periodic tenancy is altered to accord with any adjustment specified by the appropriate tribunal;
but for the purposes of sub-paragraph (ii) the appropriate tribunal must not direct a date earlier than the date specified, in accordance with subsection (3)(b) above, in the notice of variation;
(g) nothing in this section requires the appropriate tribunal to continue with a determination under paragraph (c) if the landlord and tenant give notice in writing that they no longer require such a determination or if the tenancy has come to an end.’”.
This makes consequential amendments of section 39 of the Housing Act 1988.
Amendment 16, in schedule 2, page 176, line 37, at end insert—
“30A In section 124 (introductory tenancies), in subsection (2)(b), omit ‘, other than an assured shorthold tenancy,’.
30B In section 125 (duration of introductory tenancy)—
(a) in subsection (3), omit ‘, or a relevant assured shorthold tenancy,’;
(b) omit subsection (3A).”.
This adds further amendments to the Housing Act 1996 relating to introductory tenancies to take account of the changes made by Part 1 of the Bill.
Amendment 17, in schedule 2, page 177, line 2, at end insert—
“31A In section 143C (change of landlord), in subsection (3), omit ‘shorthold’.”
This adds further amendments to the Housing Act 1996 relating to demoted tenancies to take account of the changes made by Part 1 of the Bill.
Amendment 18, in schedule 2, page 178, line 23, at end insert—
“(c) in Schedule 1 (demoted tenancies), omit paragraph 2(3).”
This amends Schedule 1 to the Anti-social Behaviour Act 2003 in consequence of the amendment made to section 171B of the Housing Act 1985 by Amendment 13.
Amendment 19, in schedule 2, page 178, leave out lines 25 to 27 and insert—
“45 The Housing Act 2004 is amended as follows.
46 Omit section 75.
47 Omit section 98.
48 In section 116 (general effect of final management orders), in subsection (4)—
(a) in paragraph (a)(ii), omit ‘subject to paragraph (b))’;
(b) for paragraph (b) substitute—
‘(b) paragraph (a) does not apply to the creation of an interest in the nature of an assured tenancy within the meaning of Part 1 of the Housing Act 1988.’
49 In section 136 (making of final EDMOs), in subsection (5), before paragraph (a) insert—
‘(aa) paragraph 2 is to be read as requiring the notice under paragraph 1 to also set out the rights and powers of the authority under paragraph 10(3) of Schedule 7 in connection with a dwelling in relation to which a final EDMO is in force;’.
50 In Schedule 7 (general effect of final EDMOs), in paragraph 10(4)—
(a) in paragraph (a)(ii) omit ‘(subject to paragraph (b))’;
(b) for paragraph (b) substitute—
‘(b) paragraph (a) does not apply to the creation of an interest in the nature of an assured tenancy within the meaning of the Housing Act 1988.’”
This replaces the amendments to the Housing Act 2004 and adds new amendments to the provisions in that Act relating to management orders to take account of the changes made by Part 1 of the Bill.
Amendment 20, in schedule 2, page 179, line 4, at end insert—
“(ba) in section 158 (secure and assured tenancies: transfer of tenancy)—
(i) omit subsection (3)(b)(i) and the ‘and’ after it;
(ii) omit subsection (4)(b) and the ‘or’ before it;
(iii) in subsection (8)(b), omit the words ‘that is not an assured shorthold tenancy’;
(iv) in subsection (9)(b), omit the words ‘that is not an assured shorthold tenancy’;
(v) in subsection (10), omit ‘shorthold’;
(bb) in section 159 (further provisions about transfer of tenancy under section 158), in subsection (6)(c), for ‘and “assured shorthold tenancy” have’ substitute ‘has’;”.
This adds further amendments to the Localism Act 2011 in relation to the transfer of tenancies to take account of the changes made by Part 1 of the Bill.
Amendment 21, in schedule 2, page 179, line 8, at end insert—
“(ea) in section 184 (tenancy deposit schemes), omit subsections (10) to (13);”.—(Matthew Pennycook.)
This repeals section 184(10) to (13) of the Localism Act 2011. The repealed provision amends section 215 of the Housing Act 2004 (which is replaced by clause 25(5) of the Bill).
Schedule 2, as amended, agreed to.
Clause 29 ordered to stand part of the Bill.
Clause 30
Tenancies of more than seven years
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
With this clause, we turn to chapter 2 of part 1, which deals with tenancies that cannot be assured tenancies. The clause excludes from the assured tenancy regime fixed-term leases of more than seven years, which is particularly relevant for leasehold homeowners and those who purchased via shared ownership, who can sometimes be legally considered tenants under the assured regime despite having purchased their property. The clause will therefore exclude entirely such fixed-term leases and any others over seven years in length from the assured regime, thereby supporting the continued operation of shared ownership and providing additional security to shared ownership homeowners by exempting them from the grounds for eviction in the Housing Act 1988. It will also exclude leaseholders from the assured tenancy system, finally closing the so-called tenancy trap. It is unjustifiable, in the Government’s view, that leaseholders who have purchased their homes can face repossession for rent arrears through the assured tenancy regime. The exemption will therefore ensure they are protected.
I am grateful to stakeholders for raising concerns with me over the ways the clause could be undermined or abused. Let me be clear: we will not tolerate attempts to get around the abolition of section 21 by abusing this clause. I am therefore considering whether any action is needed to ensure that the system operates as intended, and that no abuse of the system can take place.
Clause 31 rectifies an omission to ensure that, as is the case for other specified sections where local authorities have an interim duty or discretion to provide temporary accommodation, a tenancy granted pursuant to section 199A of the Housing Act 1996 cannot become an assured tenancy. This will allow the private landlord to regain possession of their property once the local authority’s duty to provide it by way of interim accommodation ceases.
David Simmonds
From our constituency work, many of us will be aware that when an individual has a “no recourse to public funds” condition because of their immigration status, although they may be employed in the UK and potentially in the public sector, the local authority has no duty to house that individual. That, however, may be compromised if, for example, there are children in the household, where duties under the Children Act 1989 and the National Assistance Act 1948 are triggered and the local authority effectively has a responsibility by another route. Although the individual may occupy a private rented sector property that has been procured for them by the local authority under those duties, they do not have any rights to public funds to pay for it, and therefore fall into a slightly ambiguous position with respect to this Bill. Some clarity would be helpful, especially given that there is a significant market of landlords, many of them directly contracted with the Home Office, who specifically provide accommodation for people who find themselves in a NRPF situation.
Matthew Pennycook
I thank the shadow Minister for that point; it is well made and well understood. As I will write to him on the subject of no recourse to public funds, I will ensure that that point is also covered in our correspondence.
Rebecca Smith
I have a point on which I would appreciate clarification. Increasingly, local authorities are purchasing properties to act as temporary accommodation because of a shortage of private rented accommodation. I am interested in whether it is within the scope of the Bill to look at how we would ensure that local authorities are not inadvertently caught up in the new legislation if, for example, they have bought 10 flats in a block to act specifically as temporary accommodation. If they put residents in it temporarily, are they inadvertently caught by the new legislation? Or will they be able to find somewhere else for the people to live, enable them to finish that tenancy and provide it for somebody else who might need temporary accommodation? It is a pretty niche example, but it is happening in my constituency. I am interested to see whether we have accidentally tied ourselves in knots.
Matthew Pennycook
That is a niche point—one of many we have had on some of the more technical clauses. That is not a concern that has been expressed to the Government in relation to this clause or other aspects of the Bill, but I will commit to go away and deal with that set of issues relating to temporary accommodation and no recourse to public funds in the round. I will give Committee members a full and detailed answer on each of the points that have been raised.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Fifth sitting)
Thursday 31st October 2024
(1 month, 3 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 31 October 2024 - (31 Oct 2024)
The Chair
With this it will be convenient to discuss the following:
Clauses 33 to 38 stand part.
Amendment 78, in clause 39, page 47, line 3, at end insert—
“(6A) On recovering a financial penalty imposed under this section, a local housing authority shall pay 20% of the recovered penalty to the person who was the subject of the discrimination.
(6B) Where the person who was the subject of the discrimination complains to the relevant landlord redress scheme about the same discriminatory behaviour, the scheme provider shall take into account any sum paid or payable to that person under subsection (6A) in assessing any further award of compensation which the relevant person is directed to pay to that person under the scheme.”
This amendment provides a mechanism for a complainant to receive a portion of the financial penalty imposed by a local housing authority as compensation for being discriminated against.
Clauses 39 to 41 stand part.
Amendment 79, in schedule 5, page 207, line 31, leave out—
“Where” and insert “Subject to section 39(6A), where”.
See Amendment 78.
Matthew Pennycook
It is an absolute pleasure, Mr Betts, to continue our consideration of the Bill with you in the Chair, not least because you will have extensive knowledge of what we are talking about as we proceed through the clauses.
Before we proceed to the substantive matter, I draw the Committee’s attention to the letter that I sent the Chair this morning, responding to the various technical questions put to me in the previous sitting. I hope that Members find my responses useful. I look forward to continuing this co-operative approach as we debate the remaining clauses.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
I put on the record my thanks to the Minister for the prompt and detailed response to the points made. We had a brief discussion this morning about a small omission involving, for example, school caretakers or NHS staff who are provided with accommodation on site as part of their employment. I am grateful that the Minister has undertaken to respond to that, too, in due course.
Matthew Pennycook
I will indeed respond to that specific point in the extensive future correspondence that I expect to have with the shadow Minister, given his form in previous sittings.
Having considered assured tenancies and tenancies that cannot be assured tenancies in our third and fourth sittings on Tuesday, we now turn to chapter 3 of part 1 of the Bill, which concerns discrimination in the rental market in England. The Government are determined to make it unlawful for landlords and agents acting on their behalf to engage in discriminatory conduct against tenants with children or those in receipt of benefits. The case for prohibiting such conduct is indisputable.
Not only should all renters be treated fairly in their search for a place to call home as a point of principle, but the changing nature of the private rented sector, and the fact that it now contains increasing numbers of families and those in receipt of housing support, make it imperative that the Government act in this area. Individuals in receipt of benefits or who have children should have the opportunity to be considered for a tenancy on their own circumstances, rather than rejected straight away under a blanket policy.
The problem that this part of the Bill attempts to resolve is that a blanket ban of the kind we are considering is already contrary to the Property Ombudsman’s code of practice, and already almost certainly unlawful by virtue of the premises provisions in the Equality Act 2010, which provide for a prohibition against discrimination in the letting, managing or dispensing of premises. However, despite a number of court rulings confirming that rejecting a tenant’s application because of benefit status or family circumstances is a breach, proving discrimination is incredibly difficult. As a result, despite a growing body of case law, it remains fairly common for landlords to refuse to allow benefit claimants or those with children to view an affordable property, or to consider them as a potential tenant, and for properties to be advertised with restrictions such as “No DSS”, “No benefits” and “No kids”.
Discriminatory conduct of this kind is constantly evolving and is therefore difficult to adapt to. For example, following landmark rulings that a “No DSS” policy is unlawful as it indirectly discriminates, explicit “No DSS” adverts morphed into more subtle forms of messaging with the same intent, such as specifying “Working professionals only”. The question is, therefore, how we best ensure that the underlying discrimination in this area does not occur in practice.
During consideration of the previous Government’s Renters (Reform) Bill, I challenged the then Minister, the former Member for Redcar, to specify through regulations behaviour that for the purposes of the Equality Act 2010 should be considered unlawful discrimination unless the contrary is shown. In other words, my suggestion to the Minister at the time was that the onus should be placed on landlords to convince a court that a ban had no discriminatory impact. In developing the Renters’ Rights Bill I considered carefully whether that approach would be the most effective way to try to bear down on the problem of discriminatory conduct against tenants with children or who receive benefits. I ultimately concluded that it would not, both because it would have entailed a complex reform of the Equality Act, and because it would require tenants themselves to bring costly civil litigation to seek redress.
Jerome Mayhew (Broadland and Fakenham) (Con)
The Minister identified other legislation that already make discrimination illegal, and went on to make the point that proving discrimination is very difficult, so my question is twofold. First, if we have already outlawed that kind of behaviour, why do we need further legislation to do exactly the same thing? Secondly, if we do require further legislation, how is the evidential burden going to be passed more easily under this clause than has been the experience under previous provisions?
Matthew Pennycook
I thank the hon. Gentleman for his two reasonable questions; I will come on to answer them both in my remarks. If he feels that I have not sufficiently explained the matter, I am more than happy to give way to him again, but I will address both those points. The first I have already touched on: despite it almost certainly being unlawful under the Equality Act, discriminatory conduct of the kind that we are trying to bear down on happens fairly routinely, so it is evident to the Government that the existing legislation does not allow us to bear down on the problem effectively in practice. We think the Bill’s provisions will allow us to do so. I will pick up the hon. Gentleman’s point about the evidential burden and how local authorities make that judgment in due course.
In contrast to the approach on which I challenged the then Minister in the previous Parliament, the advantage of the approach taken in the Bill is that, first, responsibility for enforcement lies with local authorities and not tenants, and secondly, breaches can be addressed relatively easily, in the English context, via a civil offence with a lower burden of proof than a criminal one.
Clauses 32 and 33 directly and expressly prohibit discriminatory bans and restrictions on the letting of private rented sector properties on the basis that children would live with or visit a person at the property, or to persons in receipt of benefits. They also prohibit any conduct that might otherwise effectively constitute such bans or restrictions. In other words, the provisions are intended to deal with both direct and more subtle forms of discrimination. It is important to note that landlords and agents will continue to have the final say on who they let their property to, and they will be able to continue to carry out referencing checks to make sure that tenancies are sustainable for both parties.
It is also the case, as clause 40 makes clear, that nothing in this chapter will prevent landlords from making a final decision based on an objective and fair assessment of whether the prospective tenant can afford the rent, nor will it force landlords into entering into unsustainable tenancies. The majority of landlords—those who already act fairly and conscientiously and treat applicants equally, assessing their suitability on a case-by-case basis—have absolutely nothing to fear as a result of the introduction of the new rental discrimination framework.
Jerome Mayhew
The Minister made reference to the burden of proof under the clause being the civil burden, and compared that to the Equality Act. I just had a quick look at that Act—I stand to be corrected because it was a very brief look—and the burden under that Act appears to be a civil burden and also one where the maxim res ipsa loquitur can be applied. If that is the case, what is the difference between the burden of proof in this clause and that of the Equality Act?
Matthew Pennycook
If I have understood correctly, the hon. Gentleman is challenging me on the burden of proof. I will say two things: first, who is the actor in charge of enforcement? It is for local authorities to make a judgment on whether the burden of proof has been met. That is a key difference. On the legal point, I am more than happy to come back to the hon. Gentleman in terms of how the burden applies in this case and whether it is any different from the provisions under the Equality Act, but we are talking about the provisions of the Bill and the most practical way to bear down on the problem. It is a difficult one to bear down on, as he will appreciate.
Landlords and related parties will be exempt from the prohibitions if the prohibition was necessary for the landlord to fulfil a restrictive term in an existing insurance contract that prohibits occupation by children or if a prohibition was a proportionate means of achieving a legitimate aim. The example we chose in the explanatory notes was a landlord reasonably refusing to rent a small bedroom in a house in multiple occupation to a women with two teenage children, in order to adhere to overcrowding regulations. However, in general terms the clauses will bear down on rental discrimination by ensuring that prospective tenants are considered on an individual basis rather than on the basis of whether they have children or are in receipt of benefits. To reassure Opposition Members, the provisions broadly mirror those in the previous Government’s Renters (Reform) Bill.
Clauses 34 to 37 merely nullify any discriminatory clauses relating to children and benefits in tenancy agreements, superior leases, mortgage deeds and insurance policies by rendering them unenforceable. As with clauses 32 and 33, exemptions apply for a prohibition if it is a proportionate means of achieving a legitimate aim.
It should be noted that while the mortgage and lease provisions set out in clauses 35 and 36 are retrospective, the insurance provisions set out in clause 37 are not. We have taken this approach because insurance contracts are renewed with greater frequency than mortgages and leases, so will naturally be updated to reflect the new requirements without necessitating immediate action or impacting existing insurance rates.
The provisions in this chapter of the Bill make it clear that rental discrimination against families with children or people who receive benefits has no place in a fair and modern housing market. We recognise, however, that we may need to extend the new protections to additional cohorts, if required in future. Clause 38 allows us to do so by way of regulations, subject to the affirmative procedure and following a consultation, provided that any new protections remain consistent with the existing framework.
For example, I have received representations from my hon. Friend the Member for Doncaster Central (Sally Jameson) to extend the rental discrimination provisions to care leavers. The Government feel strongly that the protections provided for by this chapter should be extended to additional cohorts only if there is sufficient evidence to suggest that is required. We do not yet have such evidence in the case of care leavers, but I intend to keep the matter closely under review. If we do need to look to extend discrimination protections to care leavers, we will. The powers in clause 38 will allow us to do so, as well as to respond promptly to any new acts of unlawful discrimination that may emerge in future.
Clause 39 gives local housing authorities the power to impose a financial penalty of £7,000 on a person if on the balance of probability—this directly addresses the question earlier from the hon. Member for Broadland and Fakenham—the local authority is satisfied that there has been a breach of a rental discrimination measure in this chapter. The penalties will be compounding for continuous or repeated breaches.
In summary, although we appreciate the inherent challenges in legislating to tackle rental discrimination, I believe that the measures in this chapter, set alongside strong communication and clear guidance, will see us make measurable progress towards ending discriminatory conduct against tenants with children or those in receipt of benefits. I commend them to the Committee.
Amendments 78 and 79, tabled in the name of the hon. Member for Bristol Central, would ensure that prospective tenants who report rental discrimination could receive a share of any financial penalty imposed on the landlord or letting agent. My assumption—the hon. Lady may well correct me—is that the intent of the amendments is to create an incentive for prospective tenants to complain to the relevant local authority where they consider they may have been a victim of such discrimination. That is an entirely worthy objective, and we do want tenants who find themselves in such circumstances to make a complaint to the relevant local council. We have placed a duty on local authorities to enforce the provisions when they have sufficient evidence to act. However, I cannot accept the amendments, for the following reasons. First, the idea of giving prospective tenants a cut of the civil penalty is wrong in principle. They are penalties imposed by a public body for breaking the law, not a mechanism for compensation.
Secondly, I worry about the potential impact on local government. Allowing a proportion of any such penalty to be allocated as compensation would undermine the principle that all civil penalty income must be ringfenced for enforcement activity in the private rented sector. Moreover, we would expect local authorities, including the hon. Lady’s, to take issue with surrendering part of a receipt that may, in practice, already not be enough to cover the costs of pursuing enforcement action. The arrangements necessary to facilitate such compensation would also add to the administrative burden on local authorities. Financial incentives might also create the risk that prospective tenants complain when it is not warranted and press local councils to propose civil penalties when the evidence is lacking.
Thirdly, there are likely to be practical difficulties in identifying who has been the subject of discrimination— for example, in instances where more than one tenant is involved. There would also be an administrative burden if the compensation were to be paid in instalments.
David Simmonds
The Opposition broadly support the clauses. I have some questions for the Minister, which are matters not of amendment but of clarification.
Clause 35 deals with tenancies where there may be restrictions on children either visiting or living in a property. There has been a significant increase in the number of retirement communities across the UK, and it is quite common for them to set out a condition— for example, that occupiers must be aged over 55. That housing supply is important, especially to encourage people who are under-occupying family homes to choose to move later in life to a retirement property that is designed and built specifically for that purpose. I seek assurance from the Government that while the clause effectively nullifies any restrictions on the ability for children to live in a property, bespoke retirement communities, constructed specifically with the needs of older people in mind, will not find it a problematic provision.
We support the Government’s position in clause 40, on taking income into account. It is clear that the purpose behind the previous voluntary codes, introduced under previous Conservative Governments, and under Labour Governments with the support of the Conservative Opposition, was to bear down on the practice of restricting benefit tenants from accessing private rented property. However, as the Minister clearly said, there is a requirement for referencing checks to be undertaken. Clause 40 specifically says that there will be no prohibition on taking income into account. There is clearly a risk of a loophole in the clause, given that the Bill does not clearly specify what is meant by referencing checks.
Landlords can use insurance to cover the risk of a loss of income where a tenant defaults on a rental payment. If the insurer says, “We consider the risk of anybody on benefits to be too high,” the landlord may say, “We do not directly discriminate, but our referencing check will always decline to provide insurance for an individual in those circumstances.” There is potentially the risk that benefit claimants will fall between two stools. Universal credit is flexible and provides a top-up on a person’s rental income, so they may eligible to receive the benefit but fall outside it for a period of time. We need to ensure that that is fully taken into account. I ask the Minister to clarify the position, perhaps in writing.
Finally, I have some points relating to the interaction of all the clauses. I previously raised the issue of people who have no recourse to public funds. They are not eligible to receive benefits but may be the beneficiary of an obligation on a local authority to provide support—for example, under the Children Act 1989 or previous housing legislation. It would be helpful to understand how the clauses will apply to that group of individuals. They are likely to be creditworthy and to apply for private rental on the basis that they have a job and an income. They are not eligible for the state benefits listed in the examples of benefits that are included. We therefore need to ensure that, so far as the Government intend, they fall within the ambit of the Bill.
There is a similar issue for care leavers, about which the Minister said he has received representations. The Children (Leaving Care) Act 2000 creates a set of obligations on local authorities to secure appropriate accommodation for care leavers as they enter adulthood. Although I understand the Government’s decision not to bring a specific category of care leavers within the scope of the legislation, those who are the beneficiaries of that obligation on behalf of somebody else will find themselves discriminated against not because of rights arising from their personal circumstances but because of the obligation to somebody else—in this case, that a statutory authority has to provide support for them.
Finally, we support the Government’s position on the amendments. Although I have complete sympathy with the point being raised, as the Minister does, there is clearly a risk that what is intended to be a matter of criminal law—discrimination against an individual, whereby a court can make an order for compensation—is mixed up with a civil penalty that is designed to ensure that landlords pay appropriately.
The Minister is correct, but he may need to provide total clarity for the sake of parliamentary proceedings that a local authority will use that civil penalty in the same way as would apply if it were dealing with an issue of fly-tipping, littering or environmental nuisance, as opposed to having to prove to a criminal standard that discrimination is taking place. As those two things are different, they need to be handled differently in the way that the legislation addresses them, as my hon. Friend the Member for Broadland and Fakenham alluded to.
Matthew Pennycook
Let me address that group of questions, which are well understood and well made. I will respond to each in turn.
I think the shadow Minister may have got the clause wrong, because clause 35 deals specifically with superior leases and ensuring they are not enforceable. However, I take his point about what is usually older people’s bespoke accommodation. I am sure that we would all welcome children visiting those sorts of accommodation. I will provide a specific written answer to confirm this position, but I would expect a provider to argue that refusing tenants living with children in such a block would be a proportionate means of achieving a legitimate aim and would therefore be appropriately accommodated within the legislation.
On clause 40, the Bill will allow landlords to check if a tenant has sufficient income to ensure that they can afford to pay for a tenancy and it is sustainable. The shadow Minister made the point again, as he did in the evidence sessions, about insurance and referencing checks. I will give him a specific answer as to whether particular referencing checks or insurance products will, as a matter of course—I think this was his point—rule out universal credit applicants as tenants who can afford to pay. I do not necessarily think that that should be the case, but if it is, I will give it due consideration.
David Simmonds
It is helpful to have this conversation with regard to insurance that covers the loss of rent and insurance that specifically requires the prohibition of a child living with tenants, as referred to by clause 35. Our concern is that although the Bill’s intention is to create a clear situation where there is no discrimination against a tenant with children who would be living with them or visiting them at the property, there is a risk of ambiguity if a landlord finds, for example, that they cannot gain any insurance or that the cost of insurance is prohibitive. They would then argue that they simply could not meet their obligations as a landlord if they were to allow tenants with children who live at or visit the property. We need to therefore bring clarity so that we do not leave a loophole through the insurance market that effectively nullifies the intended impact of the legislation.
Matthew Pennycook
I appreciate and understand that point, and the shadow Minister is right to say that we need to bring the requisite level of clarity in this area. He has asked a series of questions in Committee on insurance products more generally and I will attempt to give him a more comprehensive answer in writing so that we can draw a line under some of his concerns.
The shadow Minister asked specifically about no recourse to public funds and care leavers, which again is a specific subset of issues that he is right to raise. I will come back to him on those as well.
On civil penalties and whether they can be proved, we have taken a different approach in the Bill from Scotland and Wales where the situation is different. While they seek to enforce discriminatory provisions through a criminal offence, we have deliberately taken the civil route because of the lower burden of proof required for local authorities, and the ease with which they will therefore be able to take enforcement action against cases of discrimination where they have sufficient evidence.
Matthew Pennycook
If I have answered the shadow Minister’s point, the hon. Gentleman can come in.
Jerome Mayhew
The Minister will be aware that, although there is a civil burden of proof under English and Welsh law, the level to which the courts hold that burden of proof varies substantially, depending on the nature of the tariff or the consequence of that finding. Given that councillors will be seeking to impose what looks quite like a criminal fine under clause 39—a fine of many thousands of pounds—is it the Minister’s understanding that, although the burden of proof required is civil, it will be a high hurdle when applied by the courts?
Matthew Pennycook
I do not think I would make that particular point. To expand further, we have taken this particular approach because we think there is a benefit provided by the burden of proof that local authorities are required to meet. It is also the case that making breaches of rental discrimination provisions a single civil matter in England is in line with our wider discrimination legislation, in the way that it is not in Scotland and Wales—we will come on to discuss those points.
It is worth noting that, where there is evidence, local authorities can take enforcement action against either the landlord or the letting agent, or indeed both, if the letting agent has been party to the breach, and they can face multiple fines. They are civil fines at the £7,000 level rather than the criminal fines found elsewhere in the Bill, which have a much higher threshold of £40,000. I hope that answers the point made by the hon. Member for Broadland and Fakenham. Again, if he writes to me, I am happy to give him a more detailed answer.
I hope that I have reassured the shadow Minister as to why we have taken this approach and that we have considered its impact on different cohorts. It is important that the power provided for in clause 38 is there. We will take it forward only very specifically, as I have said, after consultation and through the affirmative procedure, but we want to have it so that the system can to adapt to any new instances of discrimination that arise. To go back to the point that my hon. Friend the Member for Doncaster Central has put to me fairly frequently, if sufficient evidence is brought to us that shows that certain cohorts, be it care leavers or anyone else, are facing the type of discrimination we want to bear down on through the Bill, we can more easily add them and cover them with that power.
Carla Denyer (Bristol Central) (Green)
I will quickly clarify the comments made about my amendment 78 by the shadow Minister, and then I will discuss my amendment and answer some of the Minister’s points. If I heard correctly, the shadow Minister said that he did not support the amendment because it mixes up compensation with criminal penalties, but my understanding of the conversation that we have just had is that the clause uses civil law rather than criminal law, so that point does not stand—or have I misunderstood something?
David Simmonds
I raised the question to bring some clarity to it. My hon. Friend the Member for Broadland and Fakenham, who has a lot more legal experience than I do, highlighted that different standards are applied to the burden of proof, and that the way in which those standards are applied also varies because of the tariff. It is important to fully understand what we are dealing with. As the Minister’s response showed, the Government’s approach is correct in that the bringer of the enforcement action would be the recipient of the penalty.
Carla Denyer
In that case, I am pleased to confirm that I have anticipated those questions and concerns, and I can answer them now. Amendments 78 and 79 provide a mechanism for the complainant—the tenant, or the prospective tenant in this case—to receive a portion of the financial penalty imposed by a local housing authority as compensation for being discriminated against.
First, let me give a little context. As the Committee has heard in oral and written evidence, discrimination is rife in our private rented sector, and the Bill has the potential to deliver real change for those who find themselves wrongly and consistently locked out of housing. A YouGov survey from last year shows that 52% of landlords harbour a preference against tenants who are in receipt of benefits, and the English housing survey 2021 to 2022 found that one in 10 private renters said they had been refused a tenancy in the past 12 months because they received benefits. That shows the scale of the problem.
Families with children also face serious discrimination. There are 1.4 million families in the private rented sector with dependent children, and we have already discussed the harmful effect that it can have on them.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
Does the hon. Lady think that the ombudsman could play a greater role in determining outcomes? Her point on the damage that discrimination can do was well made, but the Bill may be able to address that discrimination in other ways.
Carla Denyer
I thank the hon. Lady for her question, which I will come to in a moment. I have considered the role of the ombudsman, but the point of amendment 78 is predominantly to incentivise tenants to engage with the enforcement of the local housing authority.
Given the seriousness and scale of discrimination, bold measures are required. Though I welcome the Bill’s intention to stamp out discrimination, the reforms will only be as effective as the enforcement that underpins them. Under the legislation, local authorities will remain dependent on prospective tenants reporting a breach in the first instance. Let us bear in mind that we are discussing discrimination before somebody becomes a tenant—it is discrimination in the advertising of a property—so the prospective tenant may well not have an incentive for pursuing it. Local authorities will be dependent on tenants reporting the breach in the first instance, maintaining a potentially lengthy co-operation with the local authority and assisting the inquiry all the way to its conclusion.
That is a real burden. A tenant who has been refused a tenancy will likely still be contending with the extremely pressing issue of where they are going to live—they may have just been served an eviction notice or they may have had to move out of their accommodation quickly for another reason. They are unlikely to have the time or energy to volunteer their services for free to the local authority in exchange for no benefit.
I want to address a point that the Minister made against the amendment. In the circumstances I mentioned, the chance of tenants falsely or speculatively submitting a complaint is pretty slim, because they will have pressures on their time. If the prospective tenant were to get a cut of the amount received by the local housing authority, that would be a good incentive for them to report discrimination to the local authority, and discriminatory landlords would begin to be rooted out.
Carla Denyer
Can I get to my next point? I suspect that I am about to answer the Minister’s question.
Matthew Pennycook
If the hon. Lady answers it, I apologise. I want to make two points. First, I understand her concern about tenants not having an incentive to take a complaint to the local authority. We want tenants to make legitimate complaints about rental discrimination, and I think that can be encouraged through Government messaging and guidance.
Secondly, one of the four concerns I expressed was about the impact on local authorities. Has the hon. Lady spoken to her own local authority to determine how comfortable it feels about losing £1,400 out of every £7,000 fine for a breach under this provision?
Carla Denyer
I will plough on, because I was indeed going to come to that issue.
First, however, I will address one of the Minister’s other points on the convergence of penalty and compensation principles. I understand his purpose in pointing out that these are not normally combined, but there is a precedent. Sharing the proceeds of a civil penalty between public bodies and the person on the end of the wrongdoing is a departure from the norm but, as I understand it, under section 214 of the Housing Act 2004, if a landlord has failed to comply with the tenancy deposit protection regulations, a court can award a tenant a sum of between one and three times the deposit they paid.
While there is no question in that legislation of sharing an award with the local authority, it is nevertheless an example of the convergence of penalty and compensation principles in a single move. Although deposit protection rules do not give us a blueprint for the proposal I put forward in amendments 78 and 79, they demonstrate that an acknowledgment elsewhere in housing law of the importance, proportionality and justification of restitution for tenants, which also serves as a form of deterrent and admonition for rule breaking, all in one go.
The Minister may be aware that I tabled an amendment to increase civil penalties for exactly the reason that he has highlighted: if the local authority is to share the proceeds with the tenant, the total amount should be higher to ensure that it covers the cost of the local authority taking on the enforcement. That amendment was not selected for debate, so I will not shoehorn in my comments on the subject, but since the Minister specifically asked me about it, I will make the case for increasing the total civil penalty. I proposed that it be increased to £15,000 so as to not harm the local authority’s ability to undertake enforcement activity, as well as to properly reflect the time and expertise involved in the local authority pursuing such cases. I think that addresses the concerns the Minister raised.
In conclusion, the tenant is the linchpin upon which a discrimination case such as this depends. On that basis, I believe that some form of financial compensation for the person on the end of the illegal treatment is fair and proportionate. They can pursue a case with the housing ombudsman case as well, and there is an argument for taking into account whether the tenant has received something through the housing ombudsman in determining what they receive in my proposed scheme, or vice versa, but the function of the two tools is different.
Carla Denyer
I am seconds away from finishing my point, so I will give way shortly. My amendments 78 and 79 are designed to ensure that the ambition to eradicate discrimination in the private rented sector is realised, by giving tenants incentives to take the step of reporting and aiding investigations. I ask the Minister to consider that because, to put it bluntly, I am not sure that a public information campaign from councils will incentivise tenants as he suggested.
Rachel Blake
Does the hon. Lady acknowledge that her description of some kind of arrangement between the ombudsman and her proposed scheme would be incredibly burdensome, complicated and opaque for tenants? It would not necessarily deliver the type of justice she described.
Carla Denyer
A number of the organisations that gave evidence suggested something along those lines, and they had looked into the viability of both mechanisms existing in parallel. I do not have the exact chapter and verse of what they said in my head; we can look at that in Hansard.
Sam Carling (North West Cambridgeshire) (Lab)
On the suggestion made by the hon. Member for Bristol Central, the civil penalty income is imposed by a public body as a punishment for breaking the law. There is a point of principle about whether it is right—whether there is a precedent—to give a contribution back to the tenant from that. It feels very unusual to me.
I have a brief question for the Minister; it may be that as a new Member of Parliament I am not used to this yet. Is it normal to specify the amount of the fine in primary legislation? Can that cause problems later in respect of needing to uprate it with inflation or anything like that?
Matthew Pennycook
On the point made by my hon. Friend the Member for North West Cambridgeshire, it is conventional to put the amount of the fine on the face of the Bill. There are provisions in the Bill that allow the Government to increase the fine to reflect the increase in inflation over time, so it is not a static, once-and-for-all £7,000 or £40,000 in the case of criminal offences.
On the point from the hon. Member for Bristol Central, I sympathise very much with the intent. We have to ensure that prospective tenants who face direct or more subtle forms of discrimination take a complaint to the local authority, but I have confidence that tenants will, and I have concerns about the approach she specifies. First, on a point of principle, the penalties are imposed by a public body for breaking the law. They are not a mechanism for compensation. It would be a departure from the norm, as she rightly appreciates.
My primary concern—I think the hon. Lady underestimates it even with the increased fee she proposes —is that there would be a significant impact on local authorities. They will take issue with losing 20% of the fine they can levy. I will check with her local authority after I leave the Committee as to whether they would be happy to lose that.
Matthew Pennycook
Let me develop this point; then the hon. Lady is more than welcome to come back on it. Even if the loss of 20% of the £7,000 were covered by an increased fine, there are good reasons why we do not think that the fine should be higher in the Bill. Setting that aside, we think there would be significant administrative burdens to overseeing a system that redistributes part of a fine issued and secured via the specified means through the local authority. Different arrangements would need to be put in place to facilitate that. Financial incentives might create the risk of tenants taking cases where there is not sufficient evidence to press local authorities to investigate.
We have already had extensive discussion on whether, through this Bill, local authorities will be able to effectively enforce, because of the resource pressures on them. We are committed to new burdens funding to ensure that they can. I think that putting additional administrative burdens on them in the way specified is the wrong approach. The hon. Lady did not address this point, but there are real practical difficulties in identifying who has been the subject of discrimination. In her example it is simple, with a single tenant, but in cases of multiple tenants, what is the proportion of the compensation to be paid?
I think the hon. Lady’s amendment references instalments and a subdivision of the amount compensated for. This would be an over-complication of the Bill’s provisions. I am confident that the provisions will work in the way intended and that tenants will take their cases to local authorities. There is a duty on local authorities to enforce the provisions. The approach I put to the previous Minister was to put the onus on tenants and to enforce through the Equality Act. We are taking that burden off tenants and placing it on local authorities, imposing on them a duty to investigate and take action in cases of such increases. For those reasons, I am afraid I cannot accept the hon. Lady’s amendments.
Carla Denyer
I have a few follow-up questions for the Minister based on what he just said. First, does he recognise that 20% of double the amount still leaves a significant increase for the local authority? He was talking about the local authority receiving a reduced amount, but losing 20% of double the amount still means a larger amount than previously.
Matthew Pennycook
If the hon. Lady will give way, I can address that point.
Carla Denyer
My next point relates, so the Minister can probably address them together.
Secondly, the Minister said there were good reasons why he had selected £7,000 specifically and not a few thousand above or below that. Will he expand on why £7,000 is the magic number?
Thirdly, I would like to understand the Minister’s view on how tenants will be incentivised to have the prolonged engagement with a local authority that would be necessary to see the process through to conclusion—with only a public information campaign?
Matthew Pennycook
First, what research has the hon. Lady done on the administrative burden on local authorities of subdividing the amounts of money they take in through breaches to give that 20%? It is easy to say, “Increase the amount and the 20% is covered,” but, as I have put to her, there would be significant additional administrative burdens from setting up the type of arrangements she wants to see.
Secondly, why does the hon. Lady think that under the arrangements in the Bill tenants will have to spend an inordinate amount of time co-operating with the local authority to enforce breaches? As I have said, the onus is on the local authority duty, under the legislation, to investigate. Tenants have to co-operate, but I do not see any circumstances where a huge amount of their time is spent on investigation and enforcement. That is for the local authority. Does the hon. Lady have any more insight on those two points?
Carla Denyer
I have not myself done the calculations and consultations on what that might take a local authority. However, the amendment is based on evidence provided by experts in the evidence gathering part of the Committee’s work. I am trying to get the written evidence up on my parliamentary laptop, which is not co-operating. Off the top of my head, I believe it was from Shelter—I will try to look in a moment, when I have sat down. I am sure Shelter has done the work, so I would be pleased to get back to the Minister on the details when I can lay my hands on them.
Apologies, but I have forgotten the second thing the Minister said.
Matthew Pennycook
I simply asked why the hon. Lady thinks the process set out in the Bill will require huge amounts of tenant energy and time to see the enforcement process through. As I said, there is a statutory duty on local authorities in the Bill to take the process through. We have put the onus on them, not tenants. I wonder why the hon. Lady assumes it will take lots of effort on the part of the tenants themselves to seek redress through the provisions that the Bill sets out.
Carla Denyer
Yes, I remember now that the Minister asked whether I expected the tenants to investigate. I do not expect the tenants themselves to investigate, but I expect that a level of ongoing engagement will be required, which would be onerous if they are trying to flat or house-hunt and move house at the same time. My experience as a councillor for nine years, and as an active citizen, is that it often requires several successive engagements with a local authority to get the desired outcome.
Matthew Pennycook
I will respond briefly because I have set out in some detail the Government’s view on the matter. If I can say so politely, there were a huge number of assumptions in there. There is an assumption that the tenant will have to spend inordinate amounts of time working with the local authority to enforce the provision. We do not want that to be the case. Tenants will have to engage, but the onus and duty is very much on local authorities to do the work.
The hon. Lady underestimates the amount of cost, time and resource that would fall on local authorities in terms of having to set up and administer a more complicated scheme to redistribute money. The ombudsman has powers in this area to investigate complaints. The provisions in the Bill are specifically targeted at ensuring that local authorities, through that civil offence procedure and that lower burden of proof, can take action to enforce. It is right that the fees set out in the Bill are ringfenced to local authorities to be able to enforce.
I sympathise with the objective that the hon. Lady is trying to achieve, and we want tenants to take cases to their local authorities, but her amendments are flawed. I do not think they are thought through, and they rest on a series of assumptions that I do not expect to see occur in practice. For that reason, we will resist them.
David Simmonds
Not that they need it, but the Government have our support in their stance on this issue.
The hon. Member for Bristol Central raises an important point. From my experience in local authorities, I know it is often extremely complicated when they seek to allocate or judge issues of compensation on civil penalties. For example, similar legislation applies in respect of environmental nuisance, and we know it is incredibly difficult to identify who has been a victim, how to quantify the level of harm they have suffered and then how to allocate an appropriate level of compensation.
Given the good will the Minister has shown on the issue, I hope there is scope for some further discussion to ensure that if there is a pattern of egregious behaviour by a specific landlord who is clearly discriminating against particular groups of people—we recognise that particularly in London there is often a high level of demand, and a tenant may visit a dozen or more properties to secure a tenancy—there is a means of providing some form of restitution for the waste of that person’s time as a result of that discrimination.
Matthew Pennycook
Can I make a further point, which I have made before but is clearly not registering? This is where we need to take a step back and look at which different parts of the Bill do what. The ombudsman can review each complaint on a case-by-case basis. Complaints can be about discrimination and the ombudsman has the powers to put things right, including by ordering the landlord to pay compensation or correct the behaviour in question. It is not that we do not think there is a case for the suggestion—we will come to the significantly strengthened rent repayment orders that we have included in the Bill—but that this is not the place for it. Clause 39 is a quite simple provision to allow local authorities to issue fines for breaches and to be able to keep that money to fund further enforcement activity. For that reason, we cannot support the amendments.
Question put and agreed to.
Clause 32 accordingly ordered to stand part of the Bill.
Clauses 33 to 41 ordered to stand part of the Bill.
The Chair
I should explain to the Committee why we have not considered amendment 79 for a decision at this stage. Although it was been debated as part of the group, it relates to a later part of the Bill. If it does require a vote, that will be done at a later stage. The way we do things can sometimes be a bit confusing, but that is the explanation as to why that particular amendment was not considered.
Clause 42
Discrimination relating to children or benefits status: Welsh language
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
I will be brief on this group of clauses, which simply provide for rental discrimination powers and prohibitions in Wales that mirror those in England, with minor adjustments made in order to fit them into existing housing offence enforcement procedures. The measures are broadly equivalent to chapter 3 of the Bill for England, which we have just discussed at length, with adjustments made to align with the existing Welsh enforcement framework.
As I have already mentioned, Wales is taking a criminal enforcement approach, while the same conduct is a civil breach in England. That reflects the private rented sector enforcement regime in Wales, where criminal offences are in line with other housing legislation. I commend the clauses to the Committee.
David Simmonds
As the Minister has outlined, this is a fairly straightforward translation. First, I presume the measures will require a legislative consent motion on the part of the Welsh Government, and ask the Minister to clarify that.
Secondly, in respect of the proceeds of the fines, it is clearly envisaged in England that it will be the local authority that carries out enforcement and that the revenue from the fines will finance that. If it is a criminal matter in Wales—a criminal enforcement regime—will the same rules apply? We briefly debated the issue of whether fines in a criminal matter would go into the consolidated fund, as is currently the case with criminal penalties, or directly to the local authority, in order to finance the enforcement regime; will the Minister clarify how the matter will be dealt with in Wales?
Matthew Pennycook
I thank the shadow Minister for those questions. There is a simple answer to the first: yes, it requires a legislative consent motion on the part of the Senedd to bring the measures into effect.
On the approach in Wales more broadly, as I said, it reflects the established private rented sector enforcement regime in Wales. There are a number of differences. The Welsh Government, and the Scottish Government, take the criminal offence path, rather than the civil one. What that means—this is one of the reasons why we determined to go with the civil offence approach in England—is that fines are capped at £1,000 in the Welsh and Scottish contexts, whereas under the approach in the Bill we can levy £7,000, and do so repeatedly if breaches are continuous and ongoing. That is why that is reflected.
On the consolidated fund point, as it applies to the Welsh Government, I am afraid I do not have the answer. I will more than happily get an answer to the hon. Gentleman in writing.
David Simmonds
What the Minister said in respect of the consolidated fund is very helpful. I posed the question because, under the Bill, we will create responsibilities for the local authority to be the enforcement body, which as I understand it will apply in Wales as well, but the decision to take the criminal route is a matter for the Senedd, which is not the local authority. Indeed, there is some tension in the relationship between the Senedd and local authorities. Clearly, if the income is going into a consolidated fund or to the Senedd, the risk is that the enforcement body given the duty under this legislation will not receive any of the financial income raised through enforcement action. I ask so that we are completely clear about where the legislation will stand in Wales once passed.
Matthew Pennycook
I understand that point and will get the shadow Minister a precise answer in writing. It is important for the Committee and the public to have clarity on precisely all the ways in which the enforcement is, and in some cases is not, aligned in the Welsh and English contexts. I will come back to him on that point.
Question put and agreed to.
Clause 42 accordingly ordered to stand part of the Bill.
Clauses 43 to 48 ordered to stand part of the Bill.
Clause 49
Discrimination relating to children or benefits status
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
I might pre-empt the shadow Minister by saying that in the written correspondence to which I have just committed, I will give him the same set of answers on the consolidated fund and the role of local authorities in the Scottish context.
Clauses 49 to 54 provide similar protections and prohibitions in Scotland regarding rental discrimination, albeit with different processes around the power to add protection to additional cohorts. That is different from the situation as it applies to Wales. Again, the measures are broadly equivalent to those for England in chapter 3, with adjustments made to align with the existing Scottish enforcement framework. In Scottish housing law, rental discrimination enforcement is in line with other criminal penalties, as it is in Wales. I commend the clauses to the Committee.
Question put and agreed to.
Clause 49 accordingly ordered to stand part of the Bill.
Clauses 50 to 54 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Sixth sitting)
Thursday 31st October 2024
(1 month, 3 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 31 October 2024 - (31 Oct 2024)
The Minister for Housing and Planning (Matthew Pennycook)
It is an absolute pleasure—I genuinely mean that—to continue our proceedings with you in the Chair, Mrs Harris.
The clause will end the unfair practice of pitting renters against each other in bidding wars. Many members of the Committee will have come across that as councillors and as Members, and they do not need me to tell them about the severe impact on renters. Those of us who represent constituencies with particularly hot rental markets are all too familiar with the common story: a prospective tenant arranges a viewing and turns up in person, only to find themselves being asked to compete with other tenants on the spot. Their experience is not that of a viewing, but of a kerbside auction. The impact on renters of the practice is clear.
In other cases, the growth of social media and other platforms allows this practice to occur without prospective tenants even being in the same place. Renters who have applied for a property may find themselves being added to a WhatsApp group and asked to submit offers in front of each other. Again, the detrimental impact of that practice on renters cannot be overstated.
Rental bidding restricts tenants’ ability to make an informed choice about one of the most financially significant decisions they face. It is clearly an unfair practice, and one that, thankfully, only a minority of landlords make use of. The clause will end the practice for good. It will require landlords and letting agents to state a proposed rent in any written advertisement or offer. Landlords and letting agents will then be prohibited from asking for, encouraging or accepting bids above that price. That will improve the experience of prospective tenants across England and provide clarity to all involved in the lettings process.
I turn to clause 56, which sets the enforcement framework for breaches of the rental bidding measures set out in the previous clause. Once enacted, clause 56 will give local housing authorities the power to impose a financial penalty of up to £7,000 on persons who are in breach of the prohibitions. In addition, local authorities will be able to issue multiple civil penalties to any landlord or letting agent who repeatedly breaches the requirements set out in clause 55. In line with the new burdens doctrine, we will fully fund the cost of all additional duties on local government from enforcing the rental bidding prohibition. With that, I commend the clauses to the Committee.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
I echo the Minister’s comments about it being a pleasure to serve with you in the Chair, Mrs Harris.
I will not take too long on this point. The measure has been the subject of some controversy. Clearly, there is a philosophical question about the ability of the owner of an asset to gain the best possible market return, but the Government are determined on the matter. I will, however, make some practical points.
The first is about how to address the situation where the property in question is the asset of an organisation whose directors have a fiduciary duty to maximise the return on it, as is common in the case of pension funds, investment trusts or other bodies that may invest in property. Clearly, there is an obligation in law on the directors to seek the maximum possible return, but this legislation will prohibit them from undertaking any form of bidding process.
The second is about a situation where an intermediary sits between the tenant and the owner of the property. Clauses 55 and 56 set out what is meant by a prospective landlord but, in pursuit of their fiduciary duty, the ultimate owners of an asset might seek bids from a prospective managing agent or other intermediary party. They might bid to secure the maximum possible rent on that group of properties, in turn letting them out individually to tenants at a higher level of rent. Both those situations potentially create a degree of conflict.
I agree entirely with the point about the egregious practices of some landlords. It seems to me, however, that we must consider the situations that I have highlighted so that the legislation does not inadvertently lead to trustees and directors of pension funds that invest in property being in breach of their duties, or to the establishment of a get-out by means of a managing agent who sits between the property owner and the tenant.
Matthew Pennycook
I thank the shadow Minister for those well-made questions. This is a specific problem that we are trying to target, and the majority of landlords do not engage in rental bidding. We are trying to stamp out the egregious practice of a minority of landlords who exploit the fact that, particularly in hot rental markets, there is a lack of supply vis-à-vis demand. Tenants can be pitted against each other in ways that ensure the rent of a tenancy escalates to a point beyond which many of them can afford, or which, if they can afford it, puts incredible financial strain on them.
Once these provisions are in force, we think landlords will—in much the same way as the tribunal might—determine what the market rent is in a given area and what they can expect to receive from their property, and then advertise the rent at that price. I have been asked how that would work. Will landlords not advertise a price below what they could otherwise expect? We cannot have it both ways. If a landlord can expect a certain price through a competition, that suggests that tenants can pay a slightly higher price and bid up. We expect landlords to look at the market price in a given area and advertise the property at that rent, and these provisions will ensure that they cannot encourage or invite bids over that amount.
On the specific cases that the shadow Minister raises, I would not expect organisations of the type he lists to be in breach of their fiduciary duties as a result of these provisions. I understand his point about intermediary agents, particularly in groups of property where they might look to get the best deal on any of those things. I will come back to him on that specific point in writing, because I understand the need to work through those hard edge cases, but we think that only a very small minority of landlords will be affected. This is not the usual practice across every part of the country. His points were well made, and I will come back to them.
Question put and agreed to.
Clause 55 accordingly ordered to stand part of the Bill.
Clause 56 ordered to stand part of the Bill.
Clause 57
Penalties for unlawful eviction or harassment of occupier
Carla Denyer (Bristol Central) (Green)
I beg to move amendment 44, in clause 57, page 79, line 31, after “section 1” insert—
“—
in subsection (4)(a), omit ‘the prescribed sum’ and insert ‘£60,000’;
(b)”.
This amendment increases the maximum fine for illegal evictions under the Protection from Eviction Act 1977 to £60,000.
Carla Denyer
I am sure we are all aware of the risk that the abolition of section 21 may lead to a rise in illegal evictions. The Renters’ Rights Bill needs measures to protect against that, and that is the purpose of amendment 44. Across the country, a segment of private landlords evade the courts and attempt to evict tenants themselves by taking actions that include changing locks, disposing of belongings, and even cutting off electricity and water supply and harassing tenants. Many illegal evictions take place in the shadow market, where landlords and letting agents deliberately breach the law to maximise rental profits. Many renters in the shadow market are on lower incomes in marginal employment, and they are unfamiliar with their rights.
In 2019, there were just 30 prosecutions of offences under the Protection from Eviction Act 1977 in the whole of England and Wales. Such a low prosecution rate allows criminal landlords to act with impunity. When sentencing, magistrates are also very lenient; fines of less than £1,000, community service and conditional discharge are common penalties for such behaviour. If the maximum fine is £40,000—as it currently is in the Bill—because of the nature of civil penalty notices, it is unlikely that the fine will ever reach that maximum unless the offence is particularly violent. So—and here is the rub—landlords may still take a calculated risk that they can save money by unlawfully evicting tenants, given the abolition of section 21. Even where illegal eviction is not violent, it is still a horrific crime, so it is appropriate that fines reflect that. I therefore propose a maximum fine of £60,000, to give space for appropriate fines to reflect the criminality and harm caused within that range.
The change would help to ensure that, for rogue landlords, illegal eviction is not the path of least resistance, as I fear it could otherwise be. Increasing the maximum will also give a strong indication to the courts that this is not just a technical breach, and that will hopefully therefore have a knock-on effect on sentences issued upon conviction.
These cases are particularly complicated and expensive for councils to pursue, and that brings us back to the point about the cost to councils that we discussed earlier, especially where landlords refer a case to the first-tier tribunal. If local authorities are bound to lose money even when they win the case, they will be hesitant to begin proceedings. Increasing the maximum fine will help them to have more confidence that they will not lose a substantial amount of money. That is particularly important in the context of 14 years of council funding cuts, as we all know, which mean that if councils stand to lose a lot, they are disincentivised to act.
Matthew Pennycook
As we move to the final set of clauses in part 1, we cover several miscellaneous issues. As we have heard, clause 57 concerns unlawful eviction and harassment of an occupier.
The Bill clarifies and expands grounds for possession so that landlords can take their property back when there is good reason for them to do so. Landlords must always follow correct court procedures to legally evict a tenant. There is no excuse for those who seek to gain possession in an unlawful way.
The Government are clear that illegal eviction, which can include harassing individuals to leave their home, is a criminal offence, and those who flout the rules and deprive tenants of a home in this way must be punished accordingly. Clause 57 amends the Protection from Eviction Act 1977 to strengthen local authorities’ powers to do so if they are satisfied beyond reasonable doubt that a person has committed such an offence.
At present, local authorities can only prosecute offenders. That can be a lengthy process, and the fines imposed can be low. Although local authorities will still be able to prosecute after these provisions come into force, for the first time they will be able to issue a financial penalty on landlords who evict their tenants illegally in lieu of such a prosecution. That fine will be up to £40,000. It will be an alternative route to criminal prosecution, and it may often be simpler and more cost-efficient for local authorities.
The schedule that accompanies this clause sets out the procedure that authorities must follow regarding financial penalties. That includes information on handling the imposition of financial penalties, appeals and enforcement, and how to use the proceeds of the penalties.
The provisions will ensure that local councils consistently punish the most egregious offences, while allowing them to take the context of individual cases into account. By strengthening the enforcement framework, we will deter unscrupulous landlords from flouting the rules, drive out bad actors from the sector and improve protections for tenants.
I thank the hon. Member for Bristol Central for tabling amendment 44. The Government accept that any attempt to force a tenant from their home unlawfully is unacceptable, and those who do so must be met with enforcement. However, in our view, the amendment is not required. It seeks to increase the fine for illegal eviction in the Protection from Eviction Act 1977 from £5,000 to £60,000, as the hon. Lady has just set out. However, the cap on magistrates’ court fines for these offences has already been removed by section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and the offences are punishable by a fine of any amount.
Through the Bill as a whole, we are taking strong action on illegal eviction. We are extending civil penalties and rent repayment orders, placing a new duty on councils to take enforcement action and enhancing their powers of investigation to make that easier. We consider that our approach to enforcement is a fair and proportionate one. We are taking a clear, escalatory approach to civil penalties with first time, less serious non-compliance subject to much lower maximum penalties than serious or repeat non-compliance. The Government believe that the £40,000 maximum penalty for illegal eviction will act as an effective deterrent and is consistent with other serious offences across the Bill. I point out that that is higher than under the previous Government’s Renters (Reform) Bill, in which the amount was set at £30,000. As such, in our view it will act as a greater deterrent.
As I have said, criminal prosecution of course remains available for illegal eviction, and local authorities may decide that is the right course of action for the most serious cases. In such cases, landlords can be sentenced to imprisonment or to an unlimited fine. I therefore ask the hon. Lady to withdraw the amendment.
Carla Denyer
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 57 ordered to stand part of the Bill.
Clause 58
Abandoned premises under assured shorthold tenancies
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
One of the key objectives of the Bill is to give tenants greater security in their homes. It is imperative that landlords cannot evict their tenants without a valid ground for possession, and we want to ensure that none can circumvent the requirements of the Bill in respect of seeking possession. Part 3 of the Housing and Planning Act 2016 permits the landlord to recover abandoned properties let under an assured shorthold tenancy without a court order, provided that the tenant or tenants in question are in rent arrears and three warning notices have been served without receiving a response.
Although the Government recognise that genuine abandonment can cause problems not just for landlords but for the wider community, we do not believe that these historic provisions should remain on the statute book. They were criticised at the time of their introduction —I recall this, Mrs Harris; it was one of the first Bill Committees I sat on as a relatively new Member back in the 2015 to 2017 Parliament—for being a rogue landlords’ charter. It is not surprising that, as with a number of provisions of the 2016 Act, they were never brought into force.
Clause 58 repeals part 3 of the 2016 Act. As a result, where tenants abandon properties, landlords will need to demonstrate that they have a valid ground for possession under schedule 2 to the Housing Act 1988, as amended by this Bill. In unequivocal cases, implied surrender may also apply, such as when keys have been returned that the landlord has accepted, even if no notice has been provided. It is likely that when properties are abandoned, tenants are not paying rent, so the rent arrears grounds are available. Landlords may also be able to seek possession for breach of the tenancy agreement, if the agreement prohibits the property from being left unoccupied for long periods, or even the deterioration of property grounds. It is right that tenants have access to justice when they are at risk of losing their homes. Clause 58 ensures that provisions are removed from the statute book to make it coherent.
Question put and agreed to.
Clause 58 accordingly ordered to stand part of the Bill.
Clause 59
Remedying of hazards occurring in dwelling-houses in England
Matthew Pennycook
I beg to move amendment 22, in clause 59, page 84, line 23, leave out from “in” to end of line 25 and insert “section 13(1A), (1AA) or (1AB);”.
This adds a reference to the new subsection (1AA) which will be inserted into section 13 of the Landlord and Tenant Act 1985 by clause 30(3)(b)(ii).
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clause 60 stand part.
Matthew Pennycook
The death of two-year-old Awaab Ishak, as many Members will know, was caused by prolonged exposure to mould in his social rented home in Greater Manchester. It was an avoidable tragedy that shames us as a nation, and it should never be repeated. I had the privilege of meeting Awaab’s family. Following a campaign by them, the Manchester Evening News and Shelter, the previous Government legislated to introduce Awaab’s law for social housing tenancies. I must credit the previous Government and the former Secretary of State, the then right hon. Member for Surrey Heath, for introducing that legislation. It was absolutely the right thing to do. We supported it in opposition, but it was only a welcome first step. This Government are clear that we need to go further and ensure that no tenant is forced to live in a home that places their health and safety at risk. That is why, in our manifesto, we committed to extending and applying Awaab’s law to the private rented sector.
Clause 59 will extend Awaab’s law to tenancies in the private rented sector. It will allow us to set legal requirements about how private landlords must tackle hazards in their properties, including setting clear timescales for repairs. It will ensure that those living in privately rented homes are empowered to challenge dangerous conditions, and that landlords cannot ignore their complaints. We recognise that there are important differences between private and social landlords, such as the average size of property portfolios, so we plan to consult on the detail of how we will apply Awaab’s law to the private rented sector. That will allow us to ensure that our approach works effectively for the sector, and that it is fair and proportionate for both tenants and landlords.
Clause 60 allows Awaab’s law to be applied to accommodation occupied under licence. A licence to occupy is used rather than a tenancy in certain circumstances, mainly for short-term arrangements or where there is no exclusive right of occupation. In general, it would be disproportionate to apply Awaab’s law to accommodation occupied under licence, such as when homeowners have a lodger staying in a spare room. However, there are cases where it may be appropriate to do so. For example, some temporary homelessness accommodation and supported housing is occupied under licence. We should explore whether vulnerable tenants of such accommodation should be subject to the protections provided by Awaab’s law as part of the consultation to which I have referred. Clause 60 will therefore allow us, as part of that wider consultation, to consider and consult on what types of accommodation occupied under licence should be in scope. It will then allow regulations to be made to bring such accommodation within scope.
Government amendment 22 is a minor and technical amendment that will ensure that Awaab’s law continues to apply to social rented properties let by private registered providers under tenancies of more than seven years. It is simple and straightforward.
David Simmonds
This measure was introduced by the previous Government. We supported it then, and we support it in opposition. Will the Minister reassure me that, as part of the consultation, he will include large public sector landlords, particularly the Ministry of Defence and the NHS? They have significant numbers of people in employment-related accommodation, and we are all aware that there has been a history of issues such as those that this legislation is specifically designed to tackle.
Matthew Pennycook
I hope I can give the shadow Minister some reassurance in that regard, taking Ministry of Defence accommodation as an example. Colleagues in the Ministry of Defence are clear that they want to mirror the same level of standards as we intend to apply across the sector, but the approach that we are taking through this Bill is not necessarily appropriate for the unique circumstances that surround Ministry of Defence accommodation. That is a good example of where a Department is taking forward its own work on standards separate from this Bill. I will get the shadow Minister a full written response that sets out exactly how such accommodation, which is not necessarily within the scope of this clause, aligns with not only Awaab’s law but the decent homes standard more generally.
Amendment 22 agreed to.
Clause 59, as amended, ordered to stand part of the Bill.
Clause 60 ordered to stand part of the Bill.
Clause 61
Meaning of “residential landlord”
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
We move on to part 2 of the Bill, which concerns landlord redress schemes and the private rented sector database. Clause 61 sets out the meaning of “residential landlord”, “relevant tenancy” and “dwelling” for the purpose of defining which tenancies fall within the scope of that database and ombudsman service.
Most private rented sector tenants have assured or regulated tenancies, and those arrangements are covered under this clause. Certain other tenures and dwellings are excluded by clause 61. That is because some tenures, such as licences, provide tenants with very different rights from assured tenancies, while some dwellings, such as non-permanent structures, are subject to different standards requirements from typical PRS properties. Landlords of social housing will also be excluded from the requirements.
We are aware that the private rented sector is dynamic and continues to evolve, and that is why we have included a power in this clause to amend the definition of “residential landlord”, “relevant tenancy” and “dwelling”. That power is required so that the legislation can keep pace with changes in the sector. It will give us the flexibility to extend landlord redress and the database to further tenures or dwellings, if that proves necessary. I commend the clause to the Committee.
Question put and agreed to.
Clause 61 accordingly ordered to stand part of the Bill.
Clause 62
Landlord redress schemes
David Simmonds
I beg to move amendment 65, in clause 62, page 89, line 25, after “residential landlord” insert—
“, whose property is not managed by an agent who is a member of an independent redress scheme approved by the Secretary of State,”.
This amendment would only require a residential landlord to be a member of the landlord redress scheme introduced by Clause 62 if their tenant does not already have access to one by virtue of the landlord using an agent who is a member of another approved independent redress scheme.
The Chair
With this it will be convenient to discuss the following:
Government amendment 23.
Clause stand part.
Clauses 63 to 71 stand part.
Schedule 3.
Clause 72 stand part.
David Simmonds
We move on to the chapter on landlord redress schemes. The Opposition agree on the need for effective measures, but we need to make sure that those measures are functional in practice.
Matthew Pennycook
The private rented sector has lagged behind other housing tenures when it comes to access to redress. For example, tenants in social housing have long been able to escalate complaints through the housing ombudsman’s social landlord redress scheme. Private tenants have had, in comparison, severely limited options for resolving issues, in spite of the fact that they suffer from poorer housing standards on average. I believe that once tenants no longer have the threat of section 21 evictions hanging over them, they will finally feel able to challenge poor practice from landlords at the disreputable end of the market without the fear of retaliatory evictions.
The Bill introduces a new mandatory landlord ombudsman service, which will give tenants free access to redress if their landlord fails to resolve a legitimate complaint. The landlord ombudsman scheme will be a non-adversarial route for escalating complaints, and it will empower tenants to challenge landlords who provide a poor level of service or who behave inappropriately. The ombudsman will benefit landlords who are committed to providing a decent home and a good service. It will give them access to an impartial decision maker to resolve complaints in the quickest and most cost-effective way. This will help to maintain landlord-tenant relationships and therefore, we hope, sustain tenancies for longer.
Clause 62 allows the Secretary of State to make regulations to require landlords, as defined under clause 61, to be members of the private rented sector landlord ombudsman. The provisions in clause 62 will allow prospective, current and former tenants to raise complaints to the ombudsman. This is because things can go wrong for tenants at any point in the rental process, so tenants should be able to seek redress for issues that occur during the pre-letting period or at the end of a tenancy.
Clause 62 will allow the ombudsman to provide voluntary services as well as mandatory redress, which could include mediation services. As I think I said in the evidence sessions last week and on Second Reading, we are exploring options for introducing landlord-initiated mediation to complement the landlord ombudsman service. That is another example of how we are trying to take pressure off the courts and tribunals system.
Government amendment 23 to clause 62 will enable us to require landlords to register all their properties with the landlord ombudsman and keep that information up to date. That was always the intention, and the amendment clarifies that in the legislation. If a landlord chooses not to provide the correct information, they will be liable for enforcement as set out in clauses 64 and 65. That will ensure that landlords pay the correct fee, where fees are based on the size of their property portfolio.
Clause 63 allows the Secretary of State to set out in regulations the conditions that a private rented sector redress scheme must meet before it is approved or designated by Government. By putting conditions in regulations, we will set the framework for a high-quality redress service that can adapt to an ever-changing housing market. For example, to be approved, the scheme must include provision about accepting tenant complaints and requiring landlords to put things right. That could be achieved by making a repair or paying compensation. We will ensure that the ombudsman’s decisions are enforceable by requiring the scheme to set out a route of expulsion. That means that if a landlord does not comply with a redress order, they could be expelled from the scheme and liable for local authority enforcement.
The clause allows the Secretary of State to set out in regulations how a scheme will be approved or designated. In pursuit of a simple and effective user journey, we will set out in regulations in due course that only one scheme will be operational at any one time. It is crucial that the ombudsman is supported by a robust enforcement regime, so that all landlords understand the importance of abiding by the requirements to join the scheme and tenants can get the resolution that they deserve.
David Simmonds
It has been helpful to hear from the Minister in detail on those points. The intention of amendment 65 was to avoid a risk of double jeopardy for a landlord if they had a managing agent who was a member of the redress scheme, but if they were also required separately to be a member of the redress scheme by virtue of the fact that they were a landlord. The Minister has set out how he intends to deal with that in regulation.
I ask the Minister to clarify something—perhaps not today, but in due course. He mentioned examples of where damp and mould would be considered a landlord issue as opposed to a managing agent issue. We are all aware that certain blocks, which may be owned by an absentee landlord or someone who works abroad, are let and managed entirely by an agent who handles the day-to-day responsibility in return for payment and under a contract. We do not wish to exclude completely the possibility of redress through the agent, where the agent has been explicitly given responsibility for dealing with such things, by saying that that will always be a matter for the landlord. Will the Minister write to me to explain how that issue—most of us have seen it from time to time in our constituencies—will be dealt with, should it arise in practice?
Matthew Pennycook
I am more than happy to write to the shadow Minister to clarify that. If I have understood him properly, there are certain issues that we think are the landlord’s responsibility, and that is why our approach is the right one. To address his point directly, I will happily set out in some detail in written correspondence how that will operate when landlords are completely absent for the process, and the managing agent’s role in that situation vis-à-vis the new redress scheme.
Mr Gideon Amos (Taunton and Wellington) (LD)
It is a pleasure to serve under your chairmanship, Mrs Harris. The shadow Minister’s amendment refers to agents, such as managing agents, and their redress schemes. Managing agents are often also letting agents—they are the same kinds of companies. Can the Minister comment on the case for regulating those agents, for which this Bill provides an excellent opportunity? Members of the other place who are experts in housing have spoken to me about the need to do that. The Liberal Democrats would certainly support such a move, and I would be grateful if the Minister commented on it.
Matthew Pennycook
I suspect I know the noble Lord that the hon. Gentleman refers to. I have had many extensive conversations with the noble Lord about the matter, and I will continue to engage with him. We supported the implementation of the Lord Best review in opposition. We took the view that the Bill was not the appropriate place to consider those measures, but we intend to set out our approach to the regulation of managing agents, letting agents and estate agents in due course. If the hon. Gentleman wants a specific comment from me, I refer him to the answer I gave in oral questions a few a days ago on this point in response to one of his colleagues. We understand the necessity for regulation in this area, and I hope to have further discussions with him and others in due course.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: 23, in clause 62, page 90, line 16, at end insert—
“(4A) Regulations under subsection (1) may require a person—
(a) to provide relevant property information to the administrator of a landlord redress scheme, on applying to become a member of the scheme;
(b) at any time after becoming a member of a landlord redress scheme, to notify the administrator of the scheme of any change to relevant property information previously provided by the person as soon as reasonably practicable, or within a period, as specified in the regulations.
(4B) For the purposes of subsection (4A), ‘relevant property information’ means such information as may be specified in the regulations relating to—
(a) any residential tenancy under which the person is the residential landlord;
(b) any dwelling which is proposed to be marketed for the purpose of creating a residential tenancy under which the person will be the residential landlord.”—(Matthew Pennycook.)
This enables regulations made under clause 62 (landlord redress schemes) to require a person on applying to join a landlord redress scheme to provide certain information about residential tenancies of which they are the landlord, or dwellings that will be marketed for the purpose of becoming residential tenancies of which they will be the landlord. There is also a separate duty to notify the scheme administrator of any changes to such information.
Clause 62, as amended, ordered to stand part of the Bill.
Clauses 63 to 71 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clause 72 ordered to stand part of the Bill.
Clause 73
The database
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 74 to 83 stand part.
Clause 87 stand part.
Matthew Pennycook
I turn to the private rented sector database provisions. Clauses 73 to 83 and clause 87 set the framework for establishing a database and the functions required for its operation and maintenance. The database has the potential to be transformative in the regulation of the sector, and I know there is a huge amount of interest across the Committee in that regard. The database will record the details of private landlords and their properties that are currently, or will be, let as a residential tenancy.
Clause 73 introduces the legal basis for the database to be created and maintained. The database will allow local authorities to build up a detailed picture of the private rented sector in their areas. It will support improvements in health and safety standards by increasing the intelligence available to local authorities. Landlords will be required to register on the database. The registration process will ensure that landlords are aware of their legal obligations and allow them to demonstrate their compliance.
Renters will be able to use the publicly available information to understand more about a landlord or a rental property. That information will increase renters’ confidence when deciding whether to rent a property. The information on the private rented sector database will support the Government in developing a richer understanding of the sector to inform future policy. The database will be key to the successful implementation and enforcement of the wider reforms legislated for in the Bill.
David Simmonds
I have a few questions and would be grateful for the Minister’s response. In this chapter of the Bill, the regulations will clearly do a lot of the heavy lifting on what the database is like and what the tenant and landlord experience will be. First, how will the proposed database interact with the existing selective licensing schemes that a number of local authorities have in place? In the regulations, will the Government draw on the learning from the existing schemes to inform the database’s operation? It is not entirely clear how it will interact, given the different regimes in Wales and Scotland that the Minister has announced. Again, I do not necessarily expect him to answer those questions straightaway, but it would be helpful to know, particularly given that a different enforcement regime will apply in Wales.
It is also not entirely clear what the Government’s thinking is about the geographical extent of the database and the way in which it will be designed. Given that designated local authorities will be enforcement bodies, will it operate in the same way as, for example, existing children’s social care databases? Will it be maintained by individual local authorities, but in a connected way so that we can extract data from it? Will there be a single national database or an England-wide database? I appreciate that the answers to some of those questions will result from the process of engaging with the market on who the provider will be. We know, from examples where such policies have been successful or gone badly wrong, that there are significant risks to the effectiveness of the Bill if we do not get this right. It would be helpful if the Minister could address those points, either now or later in writing.
Matthew Pennycook
I am grateful for the opportunity to provide some clarification, particularly on selective licensing, because I know that is a source of interest to many Members.
The Government are clear that selective licensing and the private rented sector database have different purposes. The database is not designed to replace selective licensing. Unlike the database, selective licensing schemes aim to target specific local issues in specific local geographies by enabling more intensive practical enforcement strategies. We believe that selective licensing is a valuable tool when used appropriately and combined with other measures. It enables local authorities to drive better outcomes for local residents, tenants and responsible landlords.
What is important, and what we are committed to doing, is ensuring that the use of selective licensing complements and is aligned with the new private rented sector database. There is some important work to do, which we are already engaged in, to refine the way the two systems will work together once they are both in force.
The shadow Minister asked me a reasonable question about the geographical extent of the database. I will come back to him on that specific point, particularly in respect of how it interacts with the rental discrimination provisions in the Bill, given our previous discussions on their application in Wales and Scotland.
Mr Amos
Clause 75 deals with the making of the database, and I want to raise the importance of its content. Had I been quicker off the mark and more used to the procedures, there would be an amendment before the Committee that I would speak in favour of, but it is absent—time ran away.
Will the Minister comment on the importance and potential real value of the database, depending on the information that it carries? The Liberal Democrats want to see the Bill include: the accessibility of the property for disabled people; whether enforcement action has been taken against the landlord; the energy performance certificate rating of the property, so that people have some idea of how expensive it will be to heat and live in; and, crucially, the rent that was paid in the first tenancy.
As I said the other day, we firmly believe that market rents are often inaccurately described and arrived at, by virtue of looking at advertisements. I appreciated the points the Minister made the other day in response, but none the less it remains the case. As I also said the other day, we believe that the cost of interest is the bigger driver of landlords’ costs, rather than inflation, and it should be a better proxy for limiting rent increases. Even without that, a database with the actual rents paid could be an enormously powerful tool for both renters and landlords, as well as the market generally. More information makes for a better marketplace and will hopefully improve the lot of landlords and tenants. We particularly wish to see all those features in the register and believe that would enhance the market.
The other day, in relation to whether the Bank of England rate was a relevant proxy for landlords’ costs, the shadow Minister said that the commercial interest paid by landlords was more important, but there is a relationship between the Bank of England base rate and the commercial rates of interest paid. It is the key driver of commercial rates of interest.
My main point is that having on the register the rent, including the level of the last increase in rent, would be a really important and powerful indicator. We wish to press for the details I have outlined to be on the register. If I had been quicker off the mark, there would be an amendment before the Committee.
Matthew Pennycook
I will say two quick things. I remember probing the previous Minister about this issue during the debate on the previous Government’s Bill, because I thought it was worth teasing out. In general, we did not want to be too prescriptive with what is on the face on the Bill in terms of the frameworks, because we need to strike a balance between the primary legislation and the flexibility for the details of the database to be developed in secondary legislation, so that we can respond to any evolutions in the sector and technology. We do not want to be too prescriptive on the face of the Bill.
In response to the call from the hon. Member for Taunton and Wellington for particular data to be included on the database, I draw his attention to my previous comments, which I think I made in the third or fourth sitting, about the potential for rents to be included. I am extremely sympathetic to that. Other information could potentially go on the database that might show patterns of behaviour on the part of landlords that would inform tenants’ choices. At a minimum, we want the database to include information about private landlords, the homes they rent out and how those homes are managed. I want debate with hon. Members about what goes on the database, but all the detail, as I am sure the hon. Gentleman will appreciate, will come forward in secondary legislation. At that point, the hon. Gentleman or his colleagues will be able to have a further debate and discussion on those matters.
Matthew Pennycook
I am making no specific commitment, but such is the significance of the regulations—they will provide all the detail for how the service will work in future—it would not be a cursory debate.
Question put and agreed to.
Clause 73 accordingly ordered to stand part of the Bill.
Clauses 74 to 83 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Seventh sitting)
Tuesday 5th November 2024
(1 month, 2 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 November 2024 - (5 Nov 2024)
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to continue our proceedings with you in the Chair, Mr Betts. We now turn to clauses 84 to 86, which deal with access to the data collected on the database and the circumstances in which that may be shared.
Let me start by speaking to clause 84. One of the central objectives of the database is to provide tenants and prospective tenants with the data to allow them to make informed decisions about which landlords to rent from. For that reason, the clause gives the Government a regulation-making power to make certain information on the database visible to the public.
For the database to be a success, it is crucial that tenants have access to key information about a landlord and a rental property. The information that the Government plan to make available to the public will include details of the landlord, details of other parties involved in the management or ownership of the property, and information about the rental property. The Government also intend to use the database to make landlords’ unspent housing-related offences or penalties visible to the public. Tenants will be able to make a judgment about whether to rent from a landlord, and good landlords will be distinguished from the minority of landlords who commit offences.
Information about spent offences will continue to remain visible to local authorities until those offences must be removed from the database, as described under clause 87. That will help local authorities to devise their enforcement approaches. However, spent offences will not be visible to the public. The Government will make information from the database public only if that is necessary and proportionate to meeting the aims of the database. We are committed to providing tenants with the information they need to make sound decisions about renting, but we are determined to respect landlords’ rights to privacy and to follow data protection and human rights legislation.
The clause also gives authorities such as local housing authorities, which have an interest in enforcing property standards, unlimited access to the information on the database. That will ensure they have access to the data necessary for them to carry out their enforcement activities.
Clause 85 outlines circumstances in which restricted data may be shared. The database will contain information that could be useful to various third parties. Although it could be useful, it remains essential that the information is protected in such a way as to respect the privacy of landlords and to ensure that the data is disclosed only for the intended purpose. Under clause 84, access to information will already be possible for relevant enforcement authorities, and regulations made under clause 85 can be used to extend that access to restricted information to other important third parties. That could be another Department or other third parties, such as the police service and the fire service.
The Government remain committed to protecting the privacy of landlords, as I said, and will ensure that any data disclosed is disclosed only for the specific purposes outlined in clause 85 and in full compliance with data protection legislation. The clause contains limitations to ensure that restricted information is disclosed to third parties only when necessary—for example, to help to fulfil statutory requirements and functions, or to facilitate compliance with the rule of law.
The Government have yet to confirm which organisations will have access to that information. We believe that certain elements of the information contained in the database may be useful to other Departments and other external agencies, as I said. Should the database operator or other persons breach the restricted data disclosure restrictions imposed by clause 85, they could be guilty of an offence punishable by a fine.
Clause 86 outlines the circumstances in which data can be used by certain public bodies that are granted access. The clause restricts the use of database information by those bodies to housing-specific functions. I will list the agencies in turn, for the benefit of the Committee: local housing authorities may use information from the database only in relation to their functions concerning housing, residential landlords and residential tenancies; local weights and measures authorities will be able to use the information from the database only for purposes related to their enforcement of housing standards; the mayoral combined authorities and the Greater London Authority may use information only in connection to their housing-related functions; and, if the Government nominate a lead enforcement authority—we will discuss that in more detail in respect of a later clause—it will be allowed to use information from the database only in relation to its functions as a lead enforcement authority, and the provision of the landlord legislation for which it is responsible.
Clause 86 will mean that although those agencies will have access to the information collected by the database, they will be able to use the data only where necessary and connected to their work related to housing. That will provide for better intelligence gathering on the private rented sector, enhancing enforcement activities and driving up standards, while also ensuring the privacy of landlords. I commend the clauses to the Committee.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship, Mr Betts. We spent some time on the use of the database in the previous Committee sitting, and the Opposition are satisfied with the Government’s direction of travel.
I have a question for the Minister in respect of his comments about those who will have access to the data and the purposes for which it is used. He spoke specifically about local authorities having the ability to access the data only for the performance of their housing functions. Predictive analytics are in quite widespread use in local authorities, largely based on the gathering of data from a number of sources—for example, the Ofsted databases that contain indicators relating to children, which might include the potential for a household to be made homeless, which would then trigger a requirement for a local authority to intervene.
It would be helpful if the Minister could clarify, perhaps in writing subsequent to this morning’s sitting, how housing functions will be defined so as not to inhibit the entirely commendable use of predictive analytics to identify households where there might be a risk that would trigger the local authority to intervene. How would that interact where elements of the service were provided by, for example, children’s trusts as a third party to the local authority, in order to ensure that the good work that is already being done to prevent households with children or vulnerable people from becoming homeless, and then requiring the intervention of a local authority, continues, and so that earlier intervention can forestall the level of risk?
Matthew Pennycook
I thank the shadow Minister for that question. To reassure him, any access to restricted information that is not displayed publicly through the database must be shown to facilitate compliance with a legal requirement, a rule of law or, as I said, the performance of a specific statutory function. I understand and recognise his point—namely, what are the limits? What is the definition of what a housing function is? What are the limits of what that applies to where statutory services are—I hope I have taken the shadow Minister’s meaning correctly—not strictly housing related but shade into housing-related issues? I will happily provide him some specific detail on that point through correspondence.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clauses 85 to 87 ordered to stand part of the Bill.
Clause 88
Restriction on gaining possession
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clauses 88, 89 and 90 introduce a restriction on repossession for unregistered properties and new offences and financial penalties in relation to the database.
Clause 88 prohibits landlords from gaining a possession order for a property unless they have registered themselves and their property on the database. A comprehensive record is essential for the database to be of use to tenants —in the way I described in relation to the previous clauses—and to local authorities and central Government. This approach will incentivise landlords to register on the database, thereby empowering renters to make informed choices about where they live. However, the Government recognise the importance of tackling antisocial behaviour. It will therefore be possible for a possession order to be granted under grounds 7A or 14 if the matter relates to antisocial behaviour, even if a landlord and their property are not registered on the database.
The Government can, through regulations, amend the person to whom or circumstances in which the restriction on granting a possession order applies. This will allow the legislation to evolve to match the changing needs of the database and ensure that the possession restriction targets the right landlords.
Clause 89 allows local authorities to levy financial penalties on individuals who fail to comply with the database provisions. A transformative database will equip local authorities and tenants with the intelligence needed to make informed choices in the private rented sector. A strong enforcement framework will be crucial in maintaining the database’s integrity and ensuring that it serves its intended purpose. The clause grants local authorities powers to tailor penalties for non-compliance, and outlines a transparent and proportionate system for increasing penalties in cases where initial measures fail to achieve such compliance.
Clause 89 also allows local authorities to impose fines of up to £7,000 on persons who breach the restrictions in clause 80 regarding the marketing, advertising or letting of properties. Repeat offenders who commit similar breaches within five years, or continue to engage in unlawful behaviour, may face fines of up to £40,000, under clause 90. To further safeguard the integrity of the database, local housing authorities will have the power to impose fines of up to £40,000 on anyone who knowingly or recklessly submits false or misleading information to the database operator. Those fine levels will act as a powerful deterrent for landlords and agents, thereby ensuring high levels of compliance with the database provisions. The Secretary of State can amend the level of fines to reflect inflation; this power will ensure the continued effectiveness and relevance of our enforcement measures.
We understand that the database is a new service for local authorities, and we are designing the service to be as streamlined as possible. Our research indicates that a dependable source of information on the private rented sector will improve the efficiency of local authority enforcement practices. The clause mandates local authorities to have regard to guidance on financial penalties issued by the Secretary of State. The power will enable the Government to assist local authorities to fulfil their new responsibilities.
The success of the private rented sector database hinges on landlords and property agents fulfilling their new duties. Clause 90 will establish new offences for continued or repeated breaches of the requirements relating to the restrictions on the marketing, advertising and letting of a property imposed by clause 80. Those who continually or repeatedly breach the requirements within a five-year period are liable to an unlimited fine, following a successful prosecution.
Furthermore, clause 90 will establish a new offence where a person knowingly or recklessly provides false or misleading information to the database operator. Again, those who breach that requirement will face an unlimited fine on conviction. To ensure accountability in the private rented sector, we have extended liability for the offences to include corporate bodies. That will deter non-compliance and promote responsible behaviour among corporate entities and their representatives.
To combat these illegal practices, the Government will make regulations under the Housing and Planning Act 2016 to categorise the new offences established under clause 90 as banning order offences, which must be recorded on the database. As a result, depending on the decision of the local housing authority, landlords, agents or others convicted of such offences may be subject to a banning order.
The stringent penalties outlined in the clause will serve as a powerful disincentive for those who do not comply with the requirements of the database. By ensuring greater compliance, we will equip local authorities and tenants with essential information, while also enabling reputable landlords to differentiate themselves from those who do not, or refuse to, meet the required standards.
David Simmonds
Again, the Opposition support the measures, and I welcome the Minister’s words in introducing them.
On the restrictions around gaining possession, I have a brief question concerning the potential interaction between the database and planning law—for example, where a landlord has been registered and is letting a property that has not been authorised in planning terms. That is quite common on caravan sites, where the land might be illegally occupied, with a complex set of transactions leading up to that situation. The most vulnerable individuals and households are often accommodated in that type of property, which is sometimes of very poor quality. A local authority, therefore, needs to go down the appropriate enforcement path, in planning terms, to end the potentially illegal or unlawful use of that land.
Because planning law permits unlawful use to be rendered lawful by the seeking of retrospective permission, there is a potential risk to a tenant occupying such a property, if the local authority undertakes different courses of enforcement action simultaneously against a banned bad landlord and against a landowner or developer who has created a property that is not fit for occupation but is part of a rented-out property portfolio. I would like confirmation that those circumstances have been considered. Constituents of mine have been in that situation. I do not want to find that the most vulnerable and marginal households cannot benefit from the rights that the legislation intends to create.
Matthew Pennycook
I thank the shadow Minister for that question. I will give him the opportunity to clarify, if he feels that would be helpful. If I have understood him correctly, he is asking what would happen where there is an unauthorised development and potential planning enforcement in place, but the landlord is required under the new system to register with the database. Would they essentially be allowed to register with the database and comply with the requirements in the Bill, were they subject to a form of planning enforcement?
Matthew Pennycook
I will take that away and write to the shadow Minister. It is a good, detailed, specific question. We need to consider how various elements of local authority enforcement action relate to the Bill and how the Bill interacts with other requirements.
Carla Denyer (Bristol Central) (Green)
It has just occurred to me that the same question might apply to houses in multiple occupation, in areas where section 4 is applied. When the Minister looks into it, will he include that as well?
Matthew Pennycook
I am more than happy to include that in my correspondence with the Committee.
David Simmonds
I am grateful to the Minister for his response. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) held a Westminster Hall debate on the topic of unauthorised development, but there are also issues with authorised development in places where there may be conflicts in planning law. For example, somebody occupying a caravan or temporary structure on land where they are subject to planning enforcement, but where they have a legal contract with a landlord, is in an especially vulnerable position. We want to ensure that they are not at risk of having their rights taken away as a result of ambiguities in the legislation. I am grateful to the Minister for looking into that.
Matthew Pennycook
Let me, hopefully, bring the exchanges on this matter to a close. I have taken away from this a very valid point. Under the provisions in the clause, if landlords correct a matter of non-compliance, vis-à-vis the requirements in the Bill, the possession process will be allowed to continue. Hon. Members have asked a reasonable question about whether, in circumstances where planning enforcement is still a live issue, it impacts in any way, and that can also apply in respect of HMOs. I commit to coming back to the Committee with fulsome detail on the subject.
Question put and agreed to.
Clause 88 accordingly ordered to stand part of the Bill.
Clauses 89 and 90 ordered to stand part of the Bill.
Clause 91
Power to direct database operator and local housing authorities
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
Clauses 91 to 94 deal with the power to direct the database operator, amendments to the Housing and Planning Act 2016, provisions for joint landlords and the interpretation of chapter 3.
The Government are aware that in order to achieve the aims of the database—to raise standards in the sector—we may need to direct the database operator or local authorities in respect of how they carry out certain functions in relation to the database. Clause 91 allows the Government to give the database operator or local housing authority instructions on how they exercise their functions. This may include giving instructions to local housing authorities on how to investigate and enforce property standards. The power will provide an agile database that can respond to the changing needs of the sector.
To ensure that local authorities can build a complete picture of enforcement activities, it is essential that banning orders and banning offences are recorded in one location. Clause 92 will require local authorities to record banning orders and banning order offences in respect of landlords on the private rented sector database once it has come into force. The clause amends section 28 of the Housing and Planning Act 2016 to signpost people to the new PRS database established under the Bill.
The purpose of clause 93 is simply to ensure that we have the ability to streamline the process for joint landlords in order, where possible, to avoid the duplication of entries. We anticipate creating a single sign-up process for joint landlords, with one lead landlord registering on behalf of others.
To help the understanding and aid the interpretation of the proposed legislation concerning the database, clause 94 defines certain key terms used in the legislation, or signposts readers to definitions elsewhere. Those terms are “database”, “lead enforcement authority”, “the landlord legislation”, “relevant banning order”, “relevant banning order offence” and “unique identifier”. I hope the Committee will have no issue with these simple, straightforward clauses.
David Simmonds
Once again, we support the clauses, but I have a question for the Minister. A little later, we will debate the allocated enforcement authority—which local authority has the power to undertake the enforcement. It will be a challenge for areas of England with two-tier councils where the housing authority is the district council, because the county council also has certain responsibilities that it must fulfil. For example, under the Children Act 1989, the county council has a duty to house somebody who is at risk of homelessness even if they have no recourse to public funds, because of the risk to children of being made homeless. Were the council not able to access the database because it was not the enforcement authority for that area, it would not be able to undertake the same level of due diligence.
I want the Committee to be confident that when the allocation of powers and duties is undertaken, the process will be sufficiently comprehensive for all the parts of the local government system that could have duties triggered under various parts of this legislation to have equality of access to the database to enable them to discharge their functions properly.
Matthew Pennycook
I thank the shadow Minister for posing that question. I am confident that the provisions are comprehensive enough to deal with those sorts of eventualities. I think we will discuss the matter in a bit more detail when we come to the clauses that relate to the lead enforcement authority and who has particular responsibilities in certain scenarios envisioned in the Bill. If I have not answered the shadow Minister’s question, I will be happy to respond again at that point.
Question put and agreed to.
Clause 91 accordingly ordered to stand part of the Bill.
Clauses 92 to 94 ordered to stand part of the Bill.
Clause 95
Financial assistance by Secretary of State
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
The clauses cover financial assistance provided by the Secretary of State to the PRS ombudsman and database, rent repayment orders and the interpretation of part 2.
On clause 95, we intend the private rented sector database and ombudsman to be self-funded through landlords’ registration or membership fees. However, clause 95 gives the Secretary of State the ability to give financial assistance to a person carrying out functions related to the PRS ombudsman or database provisions. Assistance will be granted in the event of an emergency, unforeseen circumstances or to cover enforcement shortfalls in particular circumstances.
Clause 96 concerns rent repayment orders. As members of the Committee will know, an RRO is an order made in the first-tier tribunal requiring a landlord to repay a specified amount of rent, either to the tenant or to the local housing authority, for a range of specified offences. The amount owed under an RRO is enforceable as if it were a debt in the county court. To grant an RRO, it is not necessary for the landlord or agent to have been convicted, but a tribunal must be satisfied beyond reasonable doubt that one of the offences has been committed. Presently, an RRO can require the repayment of a maximum sum of 12 months’ rent.
Rent repayment orders were introduced by the Housing Act 2004 and extended through section 40 of the Housing and Planning Act 2016 to cover a wider range of offences. RROs are an accessible, informal and relatively straightforward means by which tenants can obtain redress in the form of financial compensation, without having to rely on another body in instances where a landlord or his or her agent has committed an offence. For that reason—as you know better than anyone, Mr Betts—they have proved an extremely effective means for tenants and local authorities to hold to account landlords who fail to meet their obligations. RROs empower tenants to take effective action against unscrupulous landlords, but they also act as a powerful deterrent to errant landlords.
The previous Government’s Renters (Reform) Bill brought a number of continuing or repeat breaches or offences within the purview of rent repayment orders. In our view, it did not go far enough. We made the case at the time—ultimately without success, it must be said —that RROs should be a more significant feature of the Bill. I am therefore pleased that our Renters’ Rights Bill significantly expands rent repayment orders.
At this point, it would be remiss of me not to pay tribute to the late Simon Mullings, who unexpectedly died recently while on holiday in Scotland. Spike, as he was known by many, was a real enlarger of life and a real force for good in the sector, helping a great many families in need. His work on RROs, not least in the Rakusen v. Jepsen case, which went to the UK Supreme Court, and the exchanges we had in relation to the Renters (Reform) Bill in the last Parliament heavily influenced our approach to the legislation before us. He is sorely missed, and I thought it was right for me to make special mention of him, given how he has influenced the clauses we are discussing.
Clause 96 makes a series of important measures that strengthen rent repayment orders. First, it expands rent repayment orders to new offences across the Bill, including those in relation to tenancy reform, the ombudsman and the database. That ensures robust tenant-led enforcement of the new measures and supports better compliance with the new system. Secondly, the clause ensures that for all the listed offences, the tribunal must issue the maximum rent repayment order amount where the landlord has been convicted of, or received a financial penalty for, that offence or has committed the same offence previously. The intention is that rent repayment orders will provide an even stronger deterrent against offending and reoffending. Finally, clause 96 makes it easier for tenants and local authorities to apply for rent repayment orders, by doubling the maximum period in which an application can be made from the current 12 months to two years.
Clause 97 explains what activities constitute marketing a property to let and what comprises letting agency work. Landlords, letting agents and other persons will be prohibited from marketing residential properties to let, unless the landlord has registered with the private rented sector database and ombudsman scheme. Renters will benefit from knowing that a landlord has registered with the database, and tenants should be able to seek redress for issues that occur during the pre-letting period. We will retain the flexibility to narrow the definition of letting agency work by regulations in the future, if that is needed.
I commend the clauses to the Committee.
Question put and agreed to.
Clause 95 accordingly ordered to stand part of the Bill.
Clauses 96 and 97 ordered to stand part of the Bill.
Clause 98
Decent homes standard
Mr Gideon Amos (Taunton and Wellington) (LD)
I beg to move amendment 72, in clause 98, page 117, line 20, at end insert—
“(ia) the availability of which is secured by the Secretary of State under paragraph 9 of Schedule 10 of the Immigration Act 2016, or sections 4 or 95 of the Immigration and Asylum Act 1999;
(ib) that is provided by the Ministry of Defence for use by service personnel; or”.
This amendment would extend the Decent Homes Standard to accommodation provided to people on immigration bail and to that provided by the Ministry of Defence to service personnel.
The Chair
With this it will be convenient to discuss the following:
Government amendments 24 and 25.
Clause stand part.
Government amendments 26 to 40.
Schedule 4.
Mr Amos
It is a pleasure to serve under your chairmanship, Mr Betts, particularly as I know your expertise in this policy area. Amendment 72 would apply the proposed decent homes standard both to accommodation for refugees and people seeking asylum, and to accommodation provided by the Ministry of Defence for serving personnel. As I stated on Second Reading, it would be perverse, now that we have a decent homes standard for social housing and this Bill proposes a decent homes standard for the private rented sector, to leave our serving military personnel as one of the only groups not benefiting from decent living accommodation.
In debate on the Renters (Reform) Bill, my hon. Friend the Member for Twickenham (Munira Wilson), speaking on behalf of our hon. Friend the Member for North Shropshire (Helen Morgan), spoke about RAF Shawbury and Tern Hill barracks in north Shropshire, where the service accommodation was plagued by black mould, rat infestations and chronic overcrowding, meaning that individuals who have put their lives on the line for our country are not necessarily guaranteed a warm and safe place to live in return. I agree with the words of my hon. Friend the Member for Twickenham:
“That is no way to treat people who have put their lives on the line to serve this country…they deserve better.”—[Official Report, 24 April 2024; Vol. 748, c. 1004.]
I am grateful to the Minister for advising the House on Second Reading of this Bill that
“the MOD is reviewing its target standards so that we can drive up the quality of that accommodation separately from the Bill.”—[Official Report, 9 October 2024; Vol. 754, c. 412.],
but this is a long-running issue, and no doubt any Government at any time on any day in any month would say that they were “reviewing” the situation. Frankly, that is not going far enough.
Next week, of course, we will be commemorating those who sacrificed everything for our country. It would be appropriate, would it not, for the Government to take the opportunity under this Bill to commit to giving service personnel a decent homes standard for the public buildings in which they live? I have to say that the Government’s current position is a bit disappointing. I hope that the Minister will update that position, the more so because it falls short of the position taken by the previous Conservative Government, which is something of a surprise from where I am on the Liberal Democrat Benches. I hope very much that the Minister will update the position.
As the hon. Member for Ruislip, Northwood and Pinner will no doubt remember, the former Minister and then Member for Redcar, Jacob Young, in response to the equivalent amendment proposed to the Renters (Reform) Bill by my hon. Friends, made the commitment on Report that the Conservative Government would
“ensure that service accommodation meets the decent homes standard”.
However, he also said:
“Service…accommodation has unique features…including a significant portion being located on secure military sites where there will be issues around security and access for inspections.”
Therefore, like the Minister today, he recognised the unique challenges. However, he said that with
“the appropriate monitoring and reporting arrangements”,
the Government
“intend to ensure that service accommodation meets the decent homes standard”.—[Official Report, 24 April 2024; Vol. 748, c. 1029.]
Can it really be the case that the new Government are backtracking on the commitment of the last Government when it comes to decent homes for our serving military personnel? I certainly hope not.
In earlier sittings, this Minister emphasised that the exact nature of the standard would be subject to consultation, and clause 98(4) makes provision for exactly that consultation. I do not suggest that private rented housing would necessarily have poorer standards than the decent homes standard that applies to social housing. However, it is clear in clause 98 that the Government intend to develop a distinct standard appropriate to the private rented sector. What greater opportunity is there for the clause to ensure that the Government also develop a distinct decent homes standard that would be appropriate for the MOD conditions described earlier?
Finally, there is no doubt that tenants taking refuge here from war or other disasters in their own countries, who are awaiting determination of their asylum applications and many of whom have served our military and British forces in theatres of war such as Afghanistan, should also be in decent homes. Incidentally, the Liberal Democrats believe that asylum seekers should be working for that accommodation, so that they can earn for themselves and pay for it, but that does not take away from the fact that those families should not be in poor accommodation and should have decent homes.
I strongly urge the Minister, and the Committee as a whole, to recognise that the Bill provides a legislative opportunity, one that may not come again in this Parliament, to do right by those who should have decent homes. I urge the Committee to support the amendment and finally bring a long-running campaign to a successful conclusion, such that military accommodation will meet the decent homes standard.
Matthew Pennycook
We now move to part 3 of the Bill, concerning the decent homes standard. As members of the Committee will be aware, the private rented sector has the worst conditions of any housing tenure. More than one in five privately rented homes fail to meet the current decent homes standard, which sets a minimum standard for social housing. That equates to around a million homes. We are determined to tackle the blight of poor-quality homes and to ensure that tenants have the safe and decent homes they deserve. To do that, we will apply a decent homes standard to privately rented homes for the first time.
Clause 98 allows regulations to be made setting out the decent homes standard requirements that private rented homes must meet. As the hon. Member for Taunton and Wellington just mentioned, the Government will be consulting on the content of that standard, and we will set out the details of our proposals in due course. We want as many private rented sector tenants as possible to benefit from the decent homes standard. It will therefore apply to the vast majority of privately rented dwellings and houses in multiple occupation that are let under tenancies, as well as privately rented supported housing occupied both under tenancies and licences.
It is our intention that as much privately rented temporary homelessness accommodation as possible is covered by the decent homes standard too, but we need to avoid reducing the supply of such housing. Clause 98 therefore allows, following a consultation, temporary accommodation to be brought within scope of the standard through regulations. We are committed to engaging with the sector to assess the potential impacts and to ensure that our approach strikes the right balance.
Schedule 4 establishes a robust but proportionate enforcement framework for the decent homes standard. Local councils already have a wide range of powers to take action when properties contain hazards. Schedule 4 will allow those enforcement powers also to be used where private rented homes fail to meet decent homes standard requirements. It also gives councils a new power to issue financial penalties of up to £7,000 where the most dangerous hazards are found, as well as taking other enforcement action. That will provide a strong incentive for landlords to ensure that their properties are safe.
In most instances, the landlord who lets out the property to the tenants will be responsible for ensuring that it meets the decent homes standard. To reflect that, the schedule provides that the landlord will be subject to enforcement by default. However, some circumstances are more complex, such as leasehold properties and where rent-to-rent arrangements are being used. The schedule gives councils the flexibility in such situations to take enforcement action against the appropriate person. The schedule also allows for the fact that there will be legitimate reasons why some properties will not be able to meet all elements of the standard—for example, if a property is a listed building and consent to make alterations has been refused. Local councils will be able to take a pragmatic approach to enforcement in such cases. We will publish statutory guidance to support them in dealing with such issues in a way that is fair for both tenants and landlords.
We have tabled a number of minor Government amendments to ensure that clause 98 and schedule 4 work as intended. It is important that local authorities can take enforcement action against the person responsible for failures to meet quality standards. The amendments will ensure that the appropriate person can always be subject to enforcement action in respect of health and safety hazards in temporary homelessness accommodation.
David Simmonds
I share the Minister’s view of the amendment. We note the evidence that the vast majority of the MOD estate already meets the decent homes standard. The previous Government acted to apply the decent homes standard to the MOD estate in 2016 and, as far as I am aware, the commitment given by the previous Minister, Jacob Young, remains the Government’s position unless we hear otherwise. However, the amendment highlights a significant issue across Government: the NHS has a significant residential estate for the accommodation of nurses and doctors on hospital sites, and the Home Office also has a significant estate.
As the Minister outlined, because it broadly falls within the private rented sector, the vast majority of asylum accommodation is likely to come within the purview of the Bill by one means or another—and the decent homes standard applies to it anyway. There are a couple of issues that arise in respect of that. One is the way in which that standard will interact with unregulated children’s homes. As part of the care leaving pathway under the Care Act 2014, local authorities have a duty to secure accommodation, which is designed to provide an element of support for a young person preparing to move towards adulthood.
In many cases, because of the need for that support, but also due to that young person’s age, the home falls outside the regulation of Ofsted, which normally conducts inspections of regulated children’s homes. We have known for some time that the Department for Education is looking at issues that have arisen from time to time with the standard and quality of that accommodation. It would be helpful to understand how the decent homes standard may be applied, or whether there is separate action within the remit of the Department for Education—which has made announcements about this—that is designed to address the issue.
Finally, I welcome what the Minister said about temporary accommodation—that there is a degree of discretion, but that the aim is to bring the temporary accommodation estate within the remit of the decent homes standard. One of the challenges is around the homelessness duty introduced by the Homelessness Reduction Act 2017. Many local authorities will have a conversation with a homeless household about that household or individual securing for themselves private rented accommodation. Sometimes the quality of that accommodation is not good, particularly in areas with high demand for it.
With that, I return to the subject of temporary structures, such as caravans, chalets and things like that, which are sometimes on authorised sites with planning consent, but sometimes not. We simply want an assurance that, where individuals access accommodation through that route—where the local authority is paying or subsiding the rent to prevent homelessness—but the structure is unlikely to meet the decent homes standard from the outset, there will be an appropriate enforcement mechanism or at least clarity, so that, in a sector with the highest satisfaction rate but also the most egregious outliers, the most vulnerable and marginalised people can enforce their rights.
Carla Denyer
I rise to support amendment 72, tabled by the hon. Member for Taunton and Wellington, who made a compelling case for the need to provide adequate housing for those who serve us in the armed forces. I want to pick up on the reassurance that the Minister attempted to offer us on the existing regulatory regime for asylum accommodation, which he believes is sufficient. There is a two-word answer to whether it is sufficient: Bibby Stockholm. Would the Bibby Stockholm meet the decent homes standard? No, it clearly would not, and the Bill is an opportunity to fix that.
Matthew Pennycook
I will respond briefly, partly because a number of the issues raised are outside my ministerial responsibility. I commit to replying in writing to the points raised in relation to the responsibilities of the Home Office and the Department for Education, to give the Committee more clarity. Some of those details will come out when we consult. Everyone is assuming that we are talking about the decent homes standard as if it exists—it does not exist. We need to consult on what those specific standards will be and introduce the regulations.
The powers we have given ourselves in the measures will ensure that the standard can be extended to temporary accommodation, and to other types of housing provision where needed. I will happily come back on the point that the hon. Member for Bristol Central raised about the provision of asylum accommodation.
Mr Amos
The hon. Member for Ruislip, Northwood and Pinner believes that the commitment from the last Government that the decent homes standard will be applied to Ministry of Defence housing still stands, but the Minister says that the decent homes standard will not apply to MOD homes and instead that the MOD has it under review.
David Simmonds
The Minister and the previous Government were clear that the decent homes standard has applied to MOD accommodation since 2016, so it is in effect already. That is the evidence the Committee has heard. This debate is therefore not about whether to apply it; it already applies, and has done for some time.
Mr Amos
That is not consistent with what Jacob Young said in 2023, as recorded in Hansard, namely that the intention was to extend the decent homes standard to cover Ministry of Defence accommodation. That is the intention of the amendment. That is why I tabled it and why my hon. Friend the Member for North Shropshire tabled it in the last parliamentary Session. We are hearing that someone in the MOD has it under review. At the moment, that is not a huge reassurance. The whole subject of MOD housing and the need for serving personnel to benefit from it has been omitted.
The Minister mentioned the difficulty of enforcing the decent homes standard because MOD accommodation is behind the wire, but according to him we know that 96% of MOD accommodation would meet the standard. That work has been done, surveys have been carried out and the information is being freely exchanged, so clearly it is not that difficult to inspect the accommodation and understand what standard it meets. All accommodation on MOD bases can be easily accessed with the permission of the officer commanding the base. All sorts of inspections are carried out on MOD bases.
I accept that the Government are supportive of the principle of improving the standard of asylum seeker accommodation, but as with MOD housing, the fact that it is under review is not much of an assurance. I therefore will not withdraw the amendment.
Matthew Pennycook
Unless the hon. Gentleman is pressing his amendment simply to make a political point, I ask him gently: what outcomes are we seeking? He wants to bring MOD accommodation up to the decent homes standard. I have made it very clear to him that the MOD has been benchmarking minimum housing standards to the decent homes standard since 2016, and the shadow Minister has made the same point. The MOD inspects its properties. It knows what that standard is. It reports that 96% of its accommodation meets that standard.
The MOD also has a higher standard, the MOD-developed decent homes-plus standard, to which it benchmarks its accommodation. It found that 84.4% of its accommodation meets that standard. So we know that the MOD is already inspecting and monitoring its standards. The MOD has made it very clear under the present Government that it is reviewing how it takes forward those standards and—this is important to the point about outcomes—that in driving up standards in its accommodation, it is seeking an equivalent standard that we will introduce for the private sector through the Bill.
I gently say to the hon. Gentleman that we share the same objective; it is about how that is achieved. I have tried to give him the reassurance that the MOD is not just brushing off the review; it is absolutely committed to driving up standards through its particular route, given some of the challenges it faces. I have a barracks in my constituency, and it is not that easy for local authority enforcement officers to just make an appointment to visit it and inspect. It is for the MOD to take this forward, and it is absolutely committed to doing so. If the hon. Gentleman’s point is simply about how we achieve the same objective, I am very confident that the MOD should be the one to do it through the specific route it has outlined, rather than by bringing military accommodation into the Bill, which could have all manner of unintended consequences.
David Simmonds
The Minister said earlier that there is a requirement for a consultation on the decent homes standard. It is important to recognise that a decent homes standard already exists, and in fact has existed since the previous Labour Government, which introduced it for social housing. The MOD is benchmarking its accommodation to that existing social housing decent homes standard, which includes things such as the state of repair of the property and its thermal insulation—the property needs to be sufficiently warm for safe occupation. Those criteria already exist and are already in use. Where there is an element of doubt is on the specific decent homes standard that the new Government would apply to the private rented sector. But there is already a decent homes standard, which is in use in the Ministry of Defence now.
Matthew Pennycook
I give way to the hon. Member for Taunton and Wellington.
Matthew Pennycook
We have been in office for a little over 120 days, so the hon. Gentleman will forgive us for not publishing information about every action that we are taking. I will make him this offer: I will take his point away to MOD Ministers who we are in conversation with, and if I cannot give him further assurances through written correspondence about the process that the MOD intends to take forward, including in response to his specific point about timelines, he is more than welcome to push the amendment at a later stage. However, at this stage I urge him to accept that we think there are good reasons why this is not the legislative vehicle to take the amendment forward. The objective is shared; from our point of view, this is about the means by which it is most appropriately achieved.
Mr Amos
Given the assurance that the Minister has generously given, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 24, in clause 98, page 118, line 27, at end insert—
“(ba) a building or part of a building constructed or adapted for use as a house in multiple occupation if—
(i) it is for the time being only occupied by persons who form a single household, and
(ii) the accommodation which those persons occupy is let under a relevant tenancy or is supported exempt accommodation,
except where the accommodation which those persons occupy is social housing and the landlord under the tenancy, or the provider of the supported exempt accommodation, is a registered provider of social housing,”.
This expands the definition of “qualifying residential premises”—and therefore expands the scope of the power in new section 2A inserted by this clause—so as to catch HMO accommodation which is occupied by only one household (and therefore does not count as an HMO because it is not actually in multiple occupation).
Amendment 25, in clause 98, page 118, line 34, after “(b)” insert “, (ba)”.—(Matthew Pennycook.)
This is consequential on Amendment 24.
Clause 98, as amended, ordered to stand part of the Bill.
Schedule 4
Decent homes standard
Amendments made: 26, in schedule 4, page 186, line 4, leave out sub-paragraph (3) and insert—
“(3) After subsection (8) insert—
‘9) But unoccupied HMO accommodation is “qualifying residential premises” for the purposes of this Part only to the extent provided for by section 2B(1)(ba).’”
This is consequential on Amendment 24.
Amendment 27, in schedule 4, page 202, line 5, leave out from second “premises” to “, and” in line 6 and insert “other than—
(i) homelessness accommodation (see paragraph B1), or
(ii) common parts (see paragraph 4)”.
This excludes homelessness accommodation from the scope of the new paragraph A1. Instead it is dealt with by the new paragraph B1 inserted by Amendment 29. (Common parts are already excluded from new paragraph A1.)
Amendment 28, in schedule 4, page 202, line 11, leave out from beginning to second “the” in line 13 and insert—
“(1A) Sub-paragraph (2) applies in relation to the premises if they are—
(a) a dwelling or HMO let under a relevant tenancy,
(b) an HMO where at least one unit of accommodation which forms part of the HMO is let under a relevant tenancy, or
(c) a building or a part of a building constructed or adapted for use as a house in multiple occupation if—
(i) it is for the time being only occupied by persons who form a single household, and
(ii) the accommodation which those persons occupy is let under a relevant tenancy.”
This is consequential on Amendment 24.
Amendment 29, in schedule 4, page 202, line 31, leave out paragraph (b) and insert—
“(4) In this paragraph—
“common parts” means common parts that are qualifying residential premises by virtue of section 2B(1)(d);
“homelessness accommodation” means accommodation in England—
(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and
(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).
Service of improvement notices: homelessness accommodation (whether or not it is qualifying residential premises)
(1) This paragraph applies where the specified premises in the case of an improvement notice are homelessness accommodation (which has the same meaning here as in paragraph A1).
(2) The notice must be served on any person—
(a) who has an estate or interest in the premises, and
(b) who, in the opinion of the local housing authority, ought to take the action specified in the notice.
(3) This paragraph applies instead of paragraph 1, 2 or 3 (in a case where that paragraph would otherwise apply to the improvement notice).”
The definitions are consequential on Amendment 27. The new paragraph B1 provides for the service of all improvement notices relating to homelessness accommodation (and replaces the current provision which only catches notices about requirements under regulations under section 2A).
Amendment 30, in schedule 4, page 203, line 5, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.
This is consequential on Amendment 24.
Amendment 31, in schedule 4, page 203, line 8, at end insert “or
(c) are a building or a part of a building constructed or adapted for use as a house in multiple occupation—
(i) that is for the time being only occupied by persons who form a single household, and
(ii) where the accommodation which those persons occupy is let under a relevant tenancy,”.
This is consequential on Amendment 24.
Amendment 32, in schedule 4, page 203, line 12, after “tenancy.” insert—
“(2B) Where—
(a) sub-paragraph (2A) does not apply in relation to the specified premises,
(b) the specified premises consist of or include the whole or any part of a building containing homelessness accommodation, and
(c) the person providing the homelessness accommodation—
(i) is a tenant of that accommodation under a tenancy which has an unexpired term of 3 years or less (the “short tenancy”), and
(ii) accordingly is not an owner in relation to the homelessness accommodation (see section 262(7)(b)),
the authority must also serve copies of the order on any person who, to their knowledge, is a tenant under the short tenancy, a landlord under the short tenancy, or a superior landlord in relation to the short tenancy, and who is not otherwise required to be served with a copy of the notice under this paragraph.
(2C) In sub-paragraph (2B) “homelessness accommodation” means accommodation in England—
(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and
(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).”
This requires copies of a prohibition notice to be given where homelessness accommodation is provided by a person who is a tenant of the accommodation under a lease with an unexpired term of 3 years or less.
Amendment 33, in schedule 4, page 203, line 13, leave out “after “(2)” insert “or (2A)”” and insert “for “sub-paragraph (2)” substitute “this paragraph””.
This is consequential on Amendment 32.
Amendment 34, in schedule 4, page 203, line 28, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.
This is consequential on Amendment 24.
Amendment 35, in schedule 4, page 203, line 31, at end insert “or
(c) are a building or a part of a building constructed or adapted for use as a house in multiple occupation—
(i) that is for the time being only occupied by persons who form a single household, and
(ii) where the accommodation which those persons occupy is let under a relevant tenancy,”.
This is consequential on Amendment 24.
Amendment 36, in schedule 4, page 203, line 35, after “tenancy.” insert—
“(2B) Where—
(a) sub-paragraph (2A) does not apply in relation to the specified premises,
(b) the specified premises consist of or include the whole or any part of a building containing homelessness accommodation, and
(c) the person providing the homelessness accommodation—
(i) is a tenant of that accommodation under a tenancy which has an unexpired term of 3 years or less (the “short tenancy”), and
(ii) accordingly is not an owner in relation to the homelessness accommodation (see section 262(7)(b)),
the authority must also serve copies of the order on any person who, to their knowledge, is a tenant under the short tenancy, a landlord under the short tenancy, or a superior landlord in relation to the short tenancy, and who is not otherwise required to be served with a copy of the notice under this paragraph.
(2C) In sub-paragraph (2B) “homelessness accommodation” means accommodation in England—
(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and
(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).”
This requires copies of a prohibition notice to be given where homelessness accommodation is provided by a person who is a tenant of the accommodation under a lease with an unexpired term of 3 years or less.
Amendment 37, in schedule 4, page 203, line 36, leave out “or (2A)” and insert “, (2A) or (2B)”.
This is consequential on Amendment 36.
Amendment 38, in schedule 4, page 203, line 37, leave out “after “(2)” insert “, (2A)”” and insert “for “sub-paragraph (2) or (3)” substitute “this paragraph””.
This is consequential on Amendment 36.
Amendment 39, in schedule 4, page 204, line 4, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.
This is consequential on Amendment 24.
Amendment 40, in schedule 4, page 204, line 7, at end insert “or
(iii) are a building or a part of a building constructed or adapted for use as a house in multiple occupation that is for the time being only occupied by persons who form a single household and where the accommodation which those persons occupy is let under a relevant tenancy,”.—(Matthew Pennycook.)
This is consequential on Amendment 24.
Schedule 4, as amended, agreed to.
Clause 99
Financial penalties
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
These provisions deal with financial penalties. Schedule 5 sets out the process for a local housing authority to impose a financial penalty on a person and applies to clauses 39, 56, 64 and 89. Foremost, schedule 5 stipulates that, before imposing a financial penalty, a local housing authority must issue a notice of intent setting out its reasons for issuing the fine. Landlords then have 28 days to make written representations to the local authority—I have discussed this point outside of Committee with the hon. Member for Broadland and Fakenham. Following that period of representations, the local authority must decide whether to impose a penalty. If it decides to issue a penalty, the local housing authority must then issue a final notice detailing the fine to be paid by the landlords, who will be able to appeal a decision to impose a penalty or the amount of the penalty by bringing an appeal to the first-tier tribunal within 28 days. The process in the schedule follows the precedent of the Tenant Fees Act 2019 and is similar to the process in the Housing and Planning Act 2016.
Clause 99 applies the schedule 5 procedures and rules for imposing, appealing, recovering or applying the proceeds of a financial penalty related to the anti-discrimination provisions, rental bidding, landlord redress schemes and the private rented sector database. I commend the provisions to the Committee.
Question put and agreed to.
Clause 99 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 100
Rent repayment orders: liability of landlords and superior landlords
Carla Denyer
I beg to move amendment 41, in clause 100, page 120, line 9, leave out from “order)” to the end of line 12 and insert—
“—
(a) in subsection (1), omit “, beyond reasonable doubt,”;
(b) at the end of subsection (3), insert—
“(d) section 46A (where an order is made against more than one landlord or there has been a previous order”;
(c) after subsection (3), insert—
“(4) Where the application for a rent repayment order relates to an offence under sections 1(2), (3) or 3(A) of the Protection from Eviction Act 1977, the First-tier Tribunal must be satisfied, on the balance of probabilities, that the offence has been committed.
(5) Where the application for a rent repayment order relates to any other offence to which this Chapter applies, the First-tier Tribunal must be satisfied, beyond reasonable doubt, that the offence has been committed.”””
This amendment would apply the civil standard of proof for Rent Repayment Orders pursued on the basis of a Protection from Eviction Act 1977 offence.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clause 101 stand part.
Carla Denyer
The amendment is related to amendment 44, which I spoke to a few days ago, and to the serious issue of illegal evictions. Amendment 41 would apply the civil standard of proof for rent repayment orders, known as RROs, which are pursued on the basis of the Protection from Eviction Act 1977 offence, known as PFEA—I apologise; there will be acronyms. RROs are extremely difficult for renters to bring under the PFEA offence, due to the criminal standard of proof. As the Minister himself pointed out in our discussions on illegal discrimination, it is notoriously difficult for tenants to prove landlords’ culpability to a criminal standard of proof.
As I understand it, RROs for PFEA offences require a landlord who has committed an offence listed in the 1977 legislation to repay rent that has been paid in respect of a tenancy or licence. RROs are brought in the first-tier property tribunal, often as compensation by self-represented applicants who seek to reclaim rent they have paid to their landlord. Importantly, legal aid is not available for RRO claims, so tenants are almost always on their own. Currently, RRO claims require a criminal standard of proof. That is inappropriate because an RRO is not a criminal prosecution. It does not follow criminal procedural rules, or result in a criminal sentence or a criminal record if the defendant is convicted. As things stand, PFEA RROs are an anomaly. A civil claim in a civil court for illegal eviction or harassment applies the civil standard, despite the fact that civil claims typically attract much higher penalties in the form of civil damages. It is therefore logical and consistent to apply the civil standard of proof to PFEA RROs, in line with the rest of civil law.
What is more, RROs are intended to be accessible to lay applicants, but although that may be so for licensing offences, it is far from the case for PFEA offences. Lay applicants—I would include myself in that category, because I would also make the following mistake—might understandably focus on proving one aspect of the offence, for example the locks being changed, rather than a separate part of the offence, for example by proving the intention of the landlord. To a non-lawyer, that might seem an insignificant distinction, but intention carries substantial legal weight.
Often, these offences are not just difficult but impossible to prove to a criminal standard. Often, if a landlord changes the locks, they do it when the tenant is not at home. Illegal eviction and harassment occur in the privacy of renters’ homes, often without witnesses or evidence. The criminal burden for PFEA RROs places an extra and often insurmountable burden on lay applicants to prove their case at tribunal. It has a chilling effect because it prevents many claims from being brought in the first place, as the evidence to meet that standard is simply not available. Under the current standard, therefore, renters cannot apply for RROs as they cannot prove their case beyond reasonable doubt, even when it is clear that an offence has occurred and that only the landlord would be motivated to commit it. That error weakens enforcement and access to justice, and it undermines the purpose of RRO legislation.
The incredibly low number of RROs and PFEA eviction offences demonstrates that the system is not working. Safer Renting—also known as Cambridge House—and the University of York have conducted research estimating that, over the two-year period from January 2021 to December 2022, there were at least 16,089 illegal evictions, and that number is almost certainly an undercount. Meanwhile, data gathered from the organisation Marks Out of Tenancy—founded in my constituency, as it happens—shows that in the same period, from 2021 to 2022, there were just 31 RROs in which a PFEA ground was successful. That is 31 out of more than 16,000. The system simply is not working.
I appreciate that the statistics that I have referred to might be explained by several things, but the standard of proof is certainly part of the problem and could be part of the solution. In fact, given that we are getting rid of section 21 evictions, I fear that failing to apply the civil standard of proof will risk creating the unintended consequence that illegal evictions will soar, as landlords find a way around the protections introduced by the Bill. I hope that, on that basis, the Minister will consider my amendment.
Matthew Pennycook
I will begin by addressing clauses 100 and 101, and I will then turn to amendment 41, which was tabled by the hon. Member for Bristol Central.
Clauses 100 and 101 make provision about the application of rent repayment orders to superior landlords and to company directors. To be most effective, tenants and local authorities need to be able to seek a rent repayment order against any landlord in the chain who has committed an offence. We are seeing a rise in so called rent-to-rent arrangements, which are often used by criminal landlords to mask illegal and exploitative practices and escape enforcement action. Clause 100 provides that superior landlords in such arrangements can be subject to rent repayment orders; that is currently not possible. With this important clause, we are ensuring that superior landlords cannot avoid their responsibilities. Rent repayment orders need to act as a sufficient deterrent to criminal landlords. Some criminal landlords see financial penalties simply as a cost of doing business. Clause 100 therefore doubles the maximum amount payable under a rent repayment order from 12 months to two years, making the deterrent effect significantly stronger.
Clause 101 will enable rent repayment orders to be made against directors and other similar officers of landlord bodies corporate that have committed a listed offence. Currently, if a tenant pursues a rent repayment order against a sham rent-to-rent or landlord company, the company can escape the penalty by virtue of having few or no assets or by simply dissolving. The clause will prevent this practice, for example by ensuring that, where certain conditions are met, individual directors of such companies can have a rent repayment order made against them. The clause ensures that rent repayment orders can be used effectively to tackle unscrupulous landlord companies and sham rent-to-rent companies.
Amendment 41 concerns an issue that the Government have previously considered and that I continue to keep under close review, namely what might be done to address the fact that proving illegal eviction and harassment to a criminal standard is, without doubt, extremely challenging and the prevalence of rent repayment orders in this area relative to other offences is low as a result.
As I have said before during our proceedings, the Government are clear that illegal eviction and harassment are serious criminal offences that cause significant harm and distress. Perpetrators must be robustly punished. It is right that the Housing and Planning Act 2016 extended repayment orders to cover these offences and that this Bill takes steps in other areas, including expanded civil penalties, to bear down on them.
Amendment 41, for which the hon. Member for Bristol Central made the case eloquently, would reduce from criminal to civil the standard of proof that needs to be met for rent repayment orders to be awarded in relation to unlawful eviction and harassment. To be candid with the hon. Lady and to explain my thought process, my concern about her amendment is primarily about the implications that it could have for the integrity of the rent repayment order regime as a whole. RROs are a mechanism designed to provide redress and act as a deterrent in relation specifically to criminal offences. As such, I fear that lowering the standard of proof for individual offences, as proposed in her amendment, runs the risk of weakening the link between the culpability of the landlord and the making of a rent repayment order. If the tribunal does not need to prove beyond reasonable doubt that the landlord committed an offence, we could see a weakening of that link.
I am absolutely committed to ensuring that rent repayment orders are effective across all the listed offences. I feel that that has to be balanced against the need to maintain the coherence, efficacy and fairness of a regime that is, as I hope she will acknowledge, in most instances working extremely well and that we want to strengthen. As we introduce the strengthened rent repayment orders in the Bill, I am mindful that we do not want to inadvertently damage the functioning of that regime, which we need to build upon.
Although I am more than happy to continue a dialogue with the hon. Member for Bristol Central on the matter, I kindly ask her to withdraw her amendment. We would have to resist it if she pushed it to a vote, and I would like that not to happen. We keep this area under review, and I would like to keep the conversation going.
Carla Denyer
I have a follow-up question. If the Minister desires to keep the criminal standard of proof for RROs, will he consider speaking to his colleagues about amending legal aid, so that it is at least available to tenants who would otherwise need to represent themselves in criminal courts?
Matthew Pennycook
I hope that the hon. Lady will appreciate that I cannot, as a Ministry of Housing, Communities and Local Government Minister, give her that commitment in Committee today, but we are having conversations across all Departments. This is an issue that the Government have considered, and I keep it under review. I recognise the challenge that the hon. Lady rightly poses, and which we have considered, which is that rent repayment order prevalence in this area is far too low.
As I have said, I worry about the unintended consequences of making what would amount to quite a significant change to the RRO regime. We want to strengthen it, because it is working and has worked incredibly well—particularly since the changes made in the 2016 Act—in providing effective tenant redress and acting as a deterrent. I am mindful about accepting significant changes in Committee, but I keep the matter under review. I will have those conversations, and my Department’s officials have had conversations across Government on this and many other areas.
Carla Denyer
On the basis of the Minister’s kind agreement to keep the conversation open—I will follow up on that—I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 100 ordered to stand part of the Bill.
Clause 101 ordered to stand part of the Bill.
Clause 102
Unlicensed HMOs and houses: offences
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
I will be fairly brief on these two clauses. Licensing requirements are a fundamental part of ensuring that HMOs and other rented properties are safe and well managed. Clause 102 ensures that superior landlords can be liable for the offences of failing to ensure that a property is properly licensed.
In a situation in which a correct licence is not in place for a property, local authorities and tenants need the ability to take enforcement action against the person, or persons, responsible for failing to obtain a licence. The measure ensures that superior landlords can be held to account where they are responsible. Building on our discussion of a previous clause, that is critical to tackling sham rent-to-rent arrangements. It is important that superior landlords who could not have known that the property was being let as an HMO—for example, freeholders of a large block of flats with long leases—are protected. Clause 102 provides additional defences to make sure that that is the case.
Clause 103 seeks to ensure that both landlords and superior landlords can, where appropriate, be served with improvement notices requiring the removal of hazards. The provisions in the Housing Act 2004 do not allow improvement notices to be served on landlords or superior landlords in rent-to-rent arrangements in all circumstances. Clause 103 addresses that anomaly by giving local councils the ability to serve improvement notices on landlords and superior landlords, based on who should take the remedial action required. It will also ensure that tenants can pursue rent repayment orders against such landlords if they fail to comply with improvement notices. I commend the clauses to the Committee.
Question put and agreed to.
Clause 102 accordingly ordered to stand part of the Bill.
Clause 103 ordered to stand part of the Bill.
Clause 104
Enforcement by local housing authorities: general duty
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
We expect that the vast majority of landlords will do the right thing and meet their new legal responsibilities, but there will be a minority who fail to do so. That is why, for this package of reforms to be effective and achieve its aims, consistent and effective enforcement by local authorities is absolutely necessary.
Clause 104 places a duty on every local housing authority in England to enforce the new measures in their areas. We expect local authorities to take a proactive approach to enforcing these reforms and give this area the priority that it deserves. Equally, we want councils to have flexibility and take action in a way that best addresses local problems and priorities. The duty is broadly framed to allow that to happen.
We recognise that different types of enforcement will be more suited to different cases. When considering enforcement, local authorities will be able to issue a civil penalty as an alternative to criminal prosecution for an offence, allowing them to decide the most effective method of enforcement in each case. Clause 104 also empowers county councils that are not local housing authorities to take enforcement action, and it enables local authorities to take enforcement action outside their own local authority areas.
Clauses 105 and 106 set out the notification requirements where local authorities take enforcement action outside their own boundaries, or where a county council that is not a local housing authority takes enforcement action.
Clause 107 places a duty on local authorities to supply information to the Secretary of State, as required, on the exercise of their functions under the measures created or amended by the Bill. Regular and robust data from local authorities will be vital to understanding the impact of our reforms and the action taken by local authorities. We will work with local authorities to agree a data reporting framework that is rational, proportionate and helpful to both local and central Government, and in line with similar data collections.
Clause 108 allows the Secretary of State to appoint a lead enforcement authority for the purposes of any provisions in the landlord legislation, which include many of the provisions in the Bill.
Clauses 109 and 110 outline the functions of the lead enforcement authority, which include: overseeing the operation of the provisions in the legislation for which it is responsible; providing guidance, advice and information to local authorities; and, where necessary, enforcing the provisions. We are carefully considering whether having a lead enforcement authority for any of the provisions in the landlord legislation will be beneficial, and we will continue to engage with local authorities and other stakeholders to shape our plans. I commend the clauses to the Committee.
David Simmonds
Although the Opposition are supportive of the clauses, it is important to clarify a few things. First, the aim of clause 104 is clearly to ensure that a very high standard is met in the private rented sector. Many local authorities will take action themselves to ensure that the standard is met in a property—particularly in respect of social housing—if the landlord fails to do so. The powers under this legislation do not go as far as that; they extend to imposing a financial penalty or instituting proceedings against a person for that offence. Renters may expect that the local authority will effectively take possession of a property to remedy a problem giving rise to a breach—for example, a breach of the decent homes standard at the property—and it is important to recognise their expectations.
I will ask the Minister a question about clause 110. Local authorities will generally find it more efficient to enforce the decent homes standard as a single function, rather than having separate private rented sector and social housing functions, both of which effectively do the same work. The financing of the social housing element would normally come through the housing revenue account, which, like a number of other local authority revenue accounts, is ringfenced—something I know you are familiar with, Mr Betts—meaning that resources raised through that account cannot be applied to another purpose. Clearly, we would not wish to allow a degree of inefficiency to creep in by creating duplication.
It would be helpful if the Minister could say whether the guidance provided to local authorities will clarify that there is no objection, in respect of the private rented sector, to a sharing of services that are funded partially through the housing revenue account and partially through the regime introduced by the legislation. I know that this issue has been significant in different types of funding provided to local authorities for particular functions.
Matthew Pennycook
I will be fairly brief, because I am more than happy to go away and check whether this is an error on my part rather than that of the shadow Minister, but we have to be very clear which provisions in the Bill these enforcement powers relate to. Clause 104 sets out that every local housing authority has a duty to enforce the landlord legislation in its area, which covers chapters 3 and 6 of part 1 of the Bill, part 2 of the Bill, sections 1 and 1A of the Protection from Eviction Act 1977, and chapter 1 of part 1 of the Housing Act 1988.
We will consult on it, so further detail will come forward, but, to put it simply, enforcement of the decent homes standard will come via a different track. Nothing in the enforcement provisions will interfere in the housing health and safety rating system, or the enforcement of Awaab’s law or the decent homes standard to come.
I am more than happy to go away and check, and I will write to the shadow Minister if I have misunderstood his question. To reassure him, though, I think we are talking about enforcement against specific parts of landlord legislation under the Bill.
Question put and agreed to.
Clause 104 accordingly ordered to stand part of the Bill.
Clauses 105 to 110 ordered to stand part of the Bill.
Clause 111
Power of local housing authority to require information from relevant person
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
The Committee will forgive me for talking at some length to ensure that we fully set out the rationale for this large group of clauses. The group of clauses provides new investigatory powers to local housing authorities to tackle non-compliant landlords. The measures aim to enhance compliance and accountability among landlords.
Clause 111 gives local housing authorities the power to require information from landlords, licensors, agents and marketers. The information will be for the purpose of exercising the local housing authority’s functions under specific new provisions introduced by the Bill or in other specified legislations. Clause 111 also contains provisions that enable housing authorities to more effectively enforce financial penalties. It also provides safeguards to ensure that the powers are not misused.
Clauses 112, 113 and 114 provide the power to require information from persons other than the landlord or agent. That includes information from banks, accountants and client money protection schemes. This information will support prosecution and help in setting appropriate levels of civil penalties, which should take rental income and the landlord’s financial position into account. To ensure that the power is used proportionately, local housing authorities can only use it when they reasonably suspect that a relevant breach or offence has occurred.
Clauses 115 to 122 and clause 130 give local housing authorities the power to enter the business premises of landlords. There is a power to enter business premises without a warrant and a power of entry under warrant. Local housing authorities will be able to use the powers to enter business premises if they require the production of documents or to seize and detain documents for the purpose of ascertaining whether there has been compliance with the rented accommodation legislation and whether documents are required as evidence in proceedings. A local housing authority officer will need to reasonably suspect a breach of, or an offence under, rented accommodation legislation before they can exercise the power to require the production of documents or to seize and detain them.
In many instances, the evidence will likely be on a landlord’s business premises. That evidence includes tenancy agreements, bank statements, letters and communications. Following entry, local housing authorities will be able to require a relevant person on the premises to produce documentation. An officer of a local housing authority may seize and detain such documentation if they consider that it may be needed as evidence in proceedings for breaches of, or offences under, rented accommodation legislation.
This set of clauses contains safeguards to prevent them from being misused. For example, unless certain circumstances apply, local housing authorities must give at least 24 hours’ written notice prior to entry into business premises without a warrant. They will not be able to use that power where the premises are used wholly or mainly as residential accommodation. The clauses allow for relevant persons who have had their documents seized and detained to request access under supervision when appropriate, and all such documents will only be detained for as long as required.
Clauses 123 to 127 will give local housing authorities the power to enter residential premises without a warrant if they have a reasonable suspicion that the premises contain evidence that a relevant breach or offence has taken place. For entry into residential premises, with and without a warrant, the powers will apply only for the limited purposes of investigating specific breaches or offences relating to the private rented sector database or illegal evictions. Those breaches or offences are associated with serious potential harm and circumstances where physical evidence may be found on the premises.
The power of entry without a warrant will be available only where a specially authorised officer considers it necessary to enter the property to investigate whether there has been a relevant breach or offence. The power of entry with a warrant will be exercised only where a justice of the peace is satisfied that it is necessary for an officer to inspect the premises to investigate whether there has been a relevant breach or offence. The enforcement of the private rented sector database will sometimes require local authorities to enter the premises to establish whether the property needs to be registered. This will enable them to gather evidence to demonstrate that it is a residential tenancy, such as photographs of locks on bedroom doors or tenancy agreements.
Local housing authorities will also be able to use the powers to enter residential premises to investigate suspected illegal evictions, for example by checking whether locks have been changed or whether areas in the property have been blocked off. For the power of entry without a warrant, a written notice period of at least 24 hours is required unless the right to notice has been waived. The power can be used only where a specially authorised officer reasonably suspects that the premises are subject to a residential tenancy and entry is necessary to investigate whether a relevant breach or offence has occurred. These safeguards are in place to ensure that the power is used only where necessary.
Clause 128 will create new offences in relation to the new investigatory powers in part 4, including new offences in relation to requiring information from a relevant person, or any person, and the powers of entry into business and residential premises. The clause introduces a set of offences of obstructing an officer, failing to comply with requests, failing to provide other information or assistance if reasonably required by the officer for the purposes of exercising the powers, and providing false or misleading information.
The clause also introduces an offence with an unlimited fine for anyone falsely purporting to be a housing officer acting under the investigatory powers chapter. This is to protect landlords and tenants from anyone falsely trying to gain access to their property or obtain private information. It also makes it clear that a person is not committing an offence if they refuse to answer any question or give any information that might incriminate them.
Jerome Mayhew (Broadland and Fakenham) (Con)
I apologise for being rather slow on the uptake, but may I take the Minister back to clause 124, “Duties where occupiers are on residential premises entered without warrant”? Subsection (1) states:
“If an officer of a local housing authority enters premises under section 123(1) and finds one or more occupiers on the premises”—
in other words, if there are people there—
“the officer must produce evidence of the officer’s identity and special authorisation to that occupier or (if there is more than one) to at least one of them.”
That is very sensible—it means that the person must demonstrate who they are to the people in the premises—but subsection (2) states:
“An officer need not comply with subsection (1) if it is not reasonably practicable to do so.”
If we have already identified that an officer is entering premises that are occupied, what are the circumstances in which it would not be reasonably practicable for him to identify himself?
Matthew Pennycook
That is a very reasonable question. If the hon. Member will allow me, I will come back to him via written correspondence. In drafting the clause— I am raking my memory for our discussions about it—we thought that there would be certain circumstances in which the reasonability test might not need to be met. Some of the clauses have been developed following exchanges with local authorities. I will come back to the hon. Member on the specific point about whether we have met the test for it being necessary to include the subsection in the Bill.
Jerome Mayhew
The difficulty is that the Minister is asking us to support the wording of the Bill now, not subsequently to a letter being received. It is hard to support a clause that suggests on the face of it that an officer could come in and decide that it is not reasonably practicable to show their authority to somebody who is in occupation of their own residence. This is not an office building; it is where people live. I invite the Minister, who has his officials with him, to provide a more substantive answer in his next comments, because it is difficult for someone like me to support the clause as drafted.
Matthew Pennycook
I will happily try to do so: I will take away the point and try to get the hon. Member some reassurance in short order. I reassure him that we have drafted the clauses carefully, following extensive dialogue with local authorities and local authority stakeholders. We do not take the power lightly. If I understand him correctly, he is putting to me the reasonable point that such a power would never be necessary. If, in the course of our ongoing exchanges, I can give him an example in which it might be necessary, perhaps he will be reassured.
Question put and agreed to.
Clause 111 accordingly ordered to stand part of the Bill.
Clauses 112 to 133 ordered to stand part of the Bill.
Clause 134
Interpretation
Question proposed, That the clause stand part of the Bill.
Matthew Pennycook
I turn to part 5, on general provisions.
Clause 134 sets out the meaning of three terms used in the Bill: “lease”, “local housing authority” and “the 1988 Act”. Clause 135 sets out the Bill’s application to the Crown. Clause 136 sets out its application to Parliament.
Clause 137 clarifies various aspects of powers to make secondary legislation under the Bill. In particular, it contains a power to make consequential, supplementary, incidental, transitional or saving provision. It also clarifies which powers in the Bill will be subject to the affirmative or the negative procedure where exercised.
Clause 138 contains a power that will allow the Welsh Ministers to make consequential amendments arising from part 1 of the Bill. Clause 139 contains a power that will allow the Scottish Ministers to make consequential amendments arising as a result of chapter 5 of part 1 of the Bill, which makes provision to address rental discrimination in Scotland.
Clause 140 will give the Secretary of State the power to make consequential amendments arising from the Bill, such as by removing now defunct terms from other legislation. This is necessary to ensure that existing legislation continues to function as intended once the Bill has passed into law.
Clause 141 provides that the Bill’s extent, for the most part, is England and Wales. Housing is within the devolved legislative competence of the legislature in Wales, and in practice the application of the majority of the clauses will be to England only. A small number of changes will apply in England and Wales to address remaining aspects of the tenancy system in Wales that are still dependent on English law. Chapter 4 of part 1 applies the rental discrimination measure in Wales. Similarly, chapter 5 of part 1 extends only to Scotland and applies the rental discrimination measure in Scotland. I commend the clauses to the Committee.
Question put and agreed to.
Clause 134 accordingly ordered to stand part of the Bill.
Clauses 135 to 141 ordered to stand part of the Bill.
Clause 142
Commencement
David Simmonds
I beg to move amendment 45, in clause 142, page 150, line 26, leave out from “subject to” to end of line 27 and insert—
“—
(a) the publication of an economic impact assessment in relation to the bill, which must include the impact of abolishing fixed term assured tenancies on the student housing market; and
(b) subsections (2) to (6).”
The Chair
With this it will be convenient to discuss the following:
Amendment 64, in clause 142, page 150, line 26, leave out from “subject to” to end of line 27 and insert
“—
(a) the publication of an economic impact assessment of the bill, including abolishing fixed-term tenancies on student accommodation;
(b) the publication of an assessment under section [Assessment of operation of possession process]; and
(c) subsections (2) to (6).”
Clause stand part.
Clause 143 stand part.
Schedule 6.
Clauses 144 to 146 stand part.
David Simmonds
Amendments 45 and 64 would require the Government to give broader consideration to the economic assessment required to understand the full implications of the Bill. A lot of the evidence that we have heard on the Bill, and on the Renters (Reform) Bill in the last Parliament, concerns impact on supply, especially on the supply of accommodation for particular categories of tenant. Those categories include people in the student housing market, to which both amendments refer.
We are all aware that for local authorities and other public bodies such as transport authorities, the ability to predict and plan the need for student accommodation in particular locations is very significant. Transport for London and other transport authorities in major cities plan bus routes and other public transport based on the need for students to get to and from the places where they receive their education. The same is true in respect of retirement homes and so on.
This is a matter not merely of general political interest, but of practical interest for the public bodies whose responsibilities will be affected by the Bill. Although we recognise that a substantial amount of the Bill was already envisaged under the previous Government and has been through a significant process of scrutiny, we do not fully understand what the impact will be on supply, particularly on the supply of homes required by students. We have heard a great deal of evidence about the economic significance of students for our towns and cities, as well as for our university sector. The Opposition regard that as very important. I am interested to hear what the Minister has to say about our amendments and the clauses to which they relate.
Matthew Pennycook
I will speak briefly to the clauses in the group and then discuss the shadow Minister’s two amendments.
Clause 142 provides how and when the provisions in the Bill will be brought into force. This Government have made it clear on multiple occasions that we are determined to end the scourge of section 21 evictions as soon as possible. I think it has now been more than five years since the previous Government promised private renters across the country that section 21 evictions would be abolished. Renters have waited far too long for a Government to take action. We are determined to act for them to end the insecurity that they face, including the risk of homelessness, and—this is a point I have tried to stress throughout our discussions—to give good landlords certainty about what change means.
The clause provides the mechanism for ending section 21 once and for all for private tenancies. The new tenancy system for the private rented sector that is set out in chapter 1 of part 1 will come into force in a single stage for all assured tenancies. On that date, the new tenancy system will apply to all private tenancies. Existing tenancies will convert to the new system; any new tenancies signed on or after that date will also be governed by the new rules. This will give all private tenants the same security immediately: that will be the effect of clause 142(8). I reassure the Committee that we will work closely with all parts of the sector to ensure a smooth transition to the new system and that we are committed to providing sufficient notice ahead of implementation.
Beyond tenancy reform, the clause sets out how and when other provisions in the Bill will be brought into force. Some provisions, such as the investigatory powers in part 4, will come into force automatically two months after Royal Assent.
Clause 143 provides that the commencement of chapter 1 of part 1 will not have an impact on the continuation of existing tenancies. The Bill will apply to those tenancies, but they will not be treated as new tenancies. For example, although the landlord will not be able to use a section 21 notice in relation to such tenancies, the protected period during which the moving and selling grounds cannot be used will count from when the tenancy first began.
Schedule 6 will ensure a smooth conversion for existing tenancies to the new tenancy system by making specific provision to avoid unnecessary cliff edges, for example by maintaining the validity of rent increases and notices served prior to implementation. This will ensure that landlords and tenants are clear about which legal framework applies before and after the transition.
Clause 144 provides clarity about what happens when a fixed-term assured tenancy expires and becomes a statutory periodic tenancy. This will ensure that the periodic tenancy will be treated as continuous, meaning that any provisions in the Bill that apply from when the tenancy began will count from the beginning of the original tenancy rather than from when the statutory periodic tenancy arose.
Clause 145 will give the Secretary of State the power to make regulations that have transitional or saving provision in connection with the coming into force of any provision of the Bill. It will give powers to Welsh and Scottish Ministers to make transitional or saving provision in connection with the coming into force of chapters 4 and 5 respectively of part 1, which apply the rental discrimination measures in Wales and Scotland. The clause will also give the Secretary of State power to make provision concerning pre-application instruments that the Secretary of State considers will not operate effectively as a result of the Bill. It is standard and appropriate for the Secretary of State to have the power to make transitional or saving provisions; this is important to facilitate an orderly implementation of the new regime and to ensure that agreements and private legal instruments that were entered into prior to the Bill continue to operate as intended under the new regime.
Clause 146, as I think is self-evident, provides that the short title of the Act will be the Renters’ Rights Act 2024.
I turn to the shadow Minister’s amendments 45 and 64. Amendment 45, as he made clear, would require the publication of an economic impact assessment for the Bill, including an assessment of the impact of abolishing fixed-term assured tenancies on the student housing market, before its provisions are commenced. Amendment 64 would do the same, but would also make the publication of any assessment by the Lord Chancellor of the operation of possession proceedings for rented properties a prerequisite for commencing the provisions of the Bill.
I say gently to the shadow Minister that I have tried this trick before in a previous role, and I do not for one second condemn him for doing so, but we are committed to robustly monitoring and evaluating the private rented sector reform programme and the implications of the Bill. Our approach builds on the Department’s existing long-term housing sector monitoring work, and we will conduct our processes, impact and value-for-money evaluation in line with the Department’s published evaluation strategy. We will publish the evaluation findings in a timely manner that is consistent with our policy for the publication of research. Further data on the operation of possession proceedings for rented properties, to which amendment 64 refers, is already published and will continue to be published quarterly by the Ministry of Justice.
We are committed to ending the scourge of section 21. The sector and particularly tenants have waited too long for these changes to come into effect. We are therefore not minded to tie implementation to any additional requirements of the type that the shadow Minister mentions. I do not begrudge his trying, but I ask him to withdraw his amendment.
David Simmonds
I will have to accept the Minister’s gentle rebuff, but we have heard from the housing sector and from student organisations that these are very important issues. We recently debated rough sleeping in Westminster Hall; one challenge that emerged is that we did not count the number of rough sleepers until 2010, so it is very hard fully to understand what was going on. That is a lesson in the importance of doing the research and having impact assessments: they are a key part of the evidence that the Committee needs to consider to understand the direction of travel and whether it will do the job intended. However, I take the Minister’s point.
Matthew Pennycook
May I briefly intervene? I do not want to deprive the hon. Member for Broadland and Fakenham of an answer to his question about clause 124. I am told that the power is in place for very limited exceptions, in particular where an agent might face aggression from an occupier of a property and is therefore unable to show identification. The powers mirror the provisions in the Consumer Rights Act 2015 that apply to trading standards officers. It is a very limited exception for those circumstances. I hope that that provides some clarification and reassurance.
David Simmonds
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 142 ordered to stand part of the Bill.
Clause 143 ordered to stand part of the Bill.
Schedule 6 agreed to.
Clauses 144 to 146 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Gen Kitchen.)
Renters' Rights Bill (Eighth sitting)
Tuesday 5th November 2024
(1 month, 2 weeks ago)
Public Bill CommitteesRead Full debate Renters' Rights Bill 2024-26 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 November 2024 - (5 Nov 2024)
The Chair
Good afternoon. Before we proceed, I should say that I am fully aware that a number of Members on both sides of the Committee have not served on Committees before. If you have any problems or questions, do not be frightened—just ask. I may know the answer, but if I do not, the Clerk certainly will.
New Clause 1
Impact of orders for possession on credit ratings
“(1) The Financial Conduct Authority must develop guidance for credit rating agencies on the impact of orders for possession on the credit ratings of tenants.
(2) Guidance prepared under this section must—
(a) outline that being subject to an order for possession under Grounds 1 to 8 must not negatively impact an individual’s credit rating;
(b) be published within three months of the passing of this Act.”—(Carla Denyer.)
Brought up, and read the First time.
Carla Denyer (Bristol Central) (Green)
I beg to move, That the clause be read a Second time.
I rise to move the new clause tabled in the name of the hon. Member for Walthamstow (Ms Creasy). The purpose of this probing new clause is to explore how we can ensure that renters’ credit scores are better protected against the negative consequences of having to move. I do not seek a vote on the new clause, and the detail of the wording may not be exactly right, but its purpose is to let us discuss what we can do to fix an injustice.
When tenants move repeatedly, it can affect their credit scores, making it harder for them to secure mortgages and get reasonable credit on credit cards and so on. It is not the actual act of moving home that affects someone’s credit report, but the admin that goes with it. Lenders like to see stability in personal details, so if someone moves house often, it will show up on their personal records as part of their credit report and could be a red flag. Opening more than one account with a utility provider in a six-month period would likely cause a person’s score to drop until they can prove they can pay their bills responsibly and on schedule, at which point it would start to build back up again.
It is important that we protect renters who are forced to move because their landlord seeks possession of a property for a reason that is not connected to their behaviour or ability to pay their rent. It is an injustice that renters’ credit scores suffer as a result of such actions. Fortunately, the Financial Conduct Authority is undertaking a review of credit referencing. I raise this issue in Committee because it is relevant to the work we do, but rather than looking for a vote, I am looking for a commitment from the Minister to write to the Financial Conduct Authority to ask for renters’ credit scores to be included as part of its current work.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. We aired the issue of credit worthiness and its impact on prospective tenants’ ability to secure a property during earlier deliberations on the Bill, and the Minister has given detailed responses about how the Government are treating this issue. I welcome the fact that the new clause is a probing one. In my view, it is a sensible question to pose, as is the question about the availability of rental insurance to those who may have a poor credit history when they seek to secure a property and undergo checks as part of the affordability process. I hope the Minister will give us an indication of how the issue will be dealt with, but I am confident that the Government have it in their sights and an appropriate solution is in the offing.
Mr Gideon Amos (Taunton and Wellington) (LD)
It is a pleasure to serve under your chairmanship, Sir Roger. I add the support of the Liberal Democrats for the intent of the new clause. Clearly, tenants should not be penalised for having to move frequently, and we are interested in the Minister’s response on the subject.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the Chair, Sir Roger. I thank the hon. Member for Bristol Central for moving the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy), and I thank the shadow Minister and the hon. Member for Taunton and Wellington for their contributions.
The Government absolutely agree that unwanted private rental moves are not only stressful but extremely expensive in terms of both the unrecoverable costs associated with moving home and the significant up-front costs of moving into a new property, including tenancy deposits. That is why one of the Bill’s main objectives is to remove the threat of arbitrary evictions and increase tenant security.
Under the new tenancy system a small proportion of tenants will still find themselves evicted through no fault of their own in circumstances where the landlord has good reason to regain possession of the property—for example, if the landlord or a close family member wishes to live in it as their only or principal home. I therefore recognise the worthy intentions behind the new clause—namely, to ensure that tenants’ credit scores are not adversely affected by unwanted moves resulting from the use of such possession grounds.
However, I am not convinced that the new clause, which would require the FCA to issue guidance on how possession orders specifically should be reflected in an individual’s credit score, is necessary, because tenants’ credit scores are not adversely affected by evictions under ground 8 possessions. Credit reference agencies do not receive information about possession orders from the courts, and as a result possession orders are not recorded on people’s credit reports and do not negatively affect their credit scores.
I acknowledge that there is a distinct, but related, issue in respect of the impact on credit scores of changes of address in general, on which it is worth noting two things. First, the methodology that underpins credit scores is not uniform across different credit reference agencies. Experian, TransUnion and Equifax, for example, each have their own distinctive approaches to credit scores, including in how they reflect changes of address. Secondly, almost all lenders review a person’s credit report when assessing an application for credit, and a change of address would still be recorded on those reports.
Whether it is feasible and sensible to seek to have the FCA attempt to ensure that credit reference agencies treat moves resulting from the use of certain possession grounds set out in schedule 1 differently from changes of address more generally is an entirely valid question, albeit one somewhat distinct from that posed by the specific wording of the new clause. As things stand, I am not entirely convinced that it would be, but I will happily seek to ensure that Treasury Ministers engage directly with the FCA on this matter, including on the review cited by the hon. Member for Bristol Central. However, for the reasons I have stated, I will not be able to accept the new clause and ask the hon. Lady to withdraw it.
Carla Denyer
I and thank the Minister for his consideration and beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Review of the impact of the Act on the housing market
“(1) The Secretary of State must publish an annual report outlining the impact of the provisions of this Act on the housing market in the UK.
(2) A report under this section must include the impact of this Act on—
(a) the availability of homes in the private rental sector;
(b) rents charged under tenancies;
(c) house prices; and
(d) requests for social housing.
(3) A report under this section must be laid before Parliament.”—(David Simmonds.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 3—Report on certain matters relating to tenancy reform—
“(1) The Secretary of State must make arrangements for an independent person to prepare a report on—
(a) the impact of sections 1 and 2 on the provision of relevant tenancies;
(b) the extent to which the grounds in Schedule 2 to the 1988 Act as amended by this Act—
(i) operate effectively;
(ii) are comprehensive;
(iii) are fair.
(2) The Secretary of State must, within the period of 18 months beginning with the relevant date, lay before both Houses of Parliament—
(a) a copy of the report, and
(b) a statement setting out the Secretary of State’s response to the report.
(3) Nothing in subsection (1) prevents the Secretary of State from arranging for the independent person to include in the report matters additional to those mentioned in that subsection.
(4) In this section—
‘relevant date’ means a date 18 months after the coming into force of sections 1 and 2 of this Act;
‘relevant tenancy’ means an assured tenancy within the meaning of the 1988 Act other than a tenancy of social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008.”
New clause 7—Impact of Act on provision of short-term lets—
“The Secretary of State must, within two years of the passing of this Act, publish a review of the impact of sections 1 to 3 on the number of landlords offering properties on short-term lets rather than in the private rented sector.”
This amendment would require the Secretary of State to review whether the prohibition on fixed term contracts had increased the number of landlords choosing to offer short-term lets instead of letting in the private rented sector.
David Simmonds
I suspect that we rehearsed this debate earlier, when the Minister gently rebuffed the point and commended me for trying to secure a degree of impact assessment in advance of the implementation of the measures in the Bill. These new clauses are designed to increase the degree of scrutiny on the Government, in respect of both the Bill’s potential impact in advance, where we are able to consult on that, and its impact on the housing market, on which new clause 2 would require an annual report. A lot of the debates in the Committee’s evidence sessions revolved around the impact on supply of various of the Bill’s measures. We know that those are valid and legitimate concerns, and I would be interested to hear what the Minister has to say in response to the new clauses.
The Chair
If the hon. Gentleman wishes to intervene, and he is quite entitled to, he must get to his feet before I call the Minister. The procedure is that the Minister is called last after he has heard what everybody else has to say.
Mr Amos
I will bob more enthusiastically in future, Sir Roger.
I rise to speak to new clause 7, which is in my name and concerns the proliferation of short-term lets, holiday lets, Airbnbs and the like. In June 2023 there were 432,000 short-term rental properties in the UK, a steady increase from the pre-pandemic levels. Growth is particularly significant in regions such as mine. The south-west has the highest volume of listings, with 81,000 properties, while the east midlands saw a 49% rise. The increase is concentrated in holiday locations—the south-west, Cornwall and the Lake district. In Cornwall, more than one in 10 addresses are used as holiday homes, according to the Office for National Statistics.
The Liberal Democrat policy would be to license the system. We would like to see holiday lets controlled in a similar way to other rental properties. A licensing system that aligns short-term lets with the requirements of longer-term properties would address disparities in regulation. The danger that we face today is in regulating the private rented sector but not moving forward on the regulation of short-term lets. That would create disparity and could lead to the leeching of more homes into the Airbnb, short-term let sector.
We also want to see the creation of a new planning use class for short-term and holiday lets. I am aware that most recently, in February, although it has repeatedly come up, the then Government stated that planning permission would be required for short-term lets—that is lets of more than 90 nights per year—and that a mandatory national register would be created. We are waiting for that, and we are interested to know what the new Government will do in that policy area.
Landlord groups such as the National Residential Landlords Association and Dexters letting agency have argued that the Bill risks pushing landlords out of the sector and into short-term holiday lets. The NRLA estimates a 1% to 2% drop in rental stock. There is agreement on the topic across the sector, and there is a plausible worry that without any additional controls there will be a leeching of stock into more short-term holiday lets. For locations that particularly suffer from that phenomenon, the consequences could be the closure of businesses and services locally. New clause 7 would put into the Bill a requirement for a review of the legislation’s impact on the provision of short-term lets, so that the issue can be controlled.
The Chair
Just so that the Committee understands the procedure, because the new clauses are grouped, new clause 7 will not be moved now, but if the hon. Member for Taunton and Wellington wishes to move it when we come to it, then he may do so without further debate.
Matthew Pennycook
I am afraid I will have to resist all three new clauses. Although I will try to limit it, I fear that I may be somewhat repetitive in doing so, because the Government’s logic in each instance is similar.
As the hon. Member for Ruislip, Northwood and Pinner has made clear, new clause 2 would introduce a legal requirement for the Government to publish an annual review of the impact of the Bill’s reforms on the availability of homes. In particular, it would require an assessment to be made on the availability of homes in the private rental sector, rents charged under tenancies, house prices and requests for social housing. As per our previous discussion, I recognise that the underlying rationale for the measure is an interest in the practical difference the legislation will make over the coming years. I reassure the Committee that this is an interest I share, which is why we are committed to robustly monitoring and evaluating the private rented sector reform programme introduced by the Bill.
I will not detail the Government’s general approach to monitoring and evaluation, but suffice it to say that we believe that setting an arbitrary deadline for the work in law—as the new clause would require—would be an unnecessary step, and there is a risk that it would detract from evaluation and prevent us from conducting as robust an assessment as possible. However, given the interest in the Bill’s impact, I wish to reassure the Committee that we do not expect the Bill to have a destabilising effect on the rental market. This Government value the contribution made by responsible landlords who provide quality homes to their tenants. We will continue to work with good landlords and their representative associations throughout implementation.
New clause 3 would introduce a legal requirement for the Government to appoint an independent person to prepare a report on the impact of the reforms to the tenancy system and the grounds for possession. We are committed to robustly monitoring and evaluating the impact of our reform programme in line with the Department’s evaluation strategy; however, setting an arbitrary deadline in law for that work is unnecessary and, again, may detract from the quality of evaluation and prevent us from conducting as robust an assessment as possible.
New clause 7, tabled by the hon. Member for Taunton and Wellington, would introduce a legal requirement for the Government to publish a review of the extent to which the abolition of fixed terms and assured shorthold tenancies and the changes to leasehold covenants lead to landlords leaving the private rented sector to provide short-term lets within two years of the Bill passing. It is important to state that this Government value the contribution made by responsible landlords who provide quality homes to their tenants, and believe they must enjoy robust grounds for possession where there is good reason to take their property back. As such, good landlords have nothing to fear from our reforms and should be in no rush to change legitimate business models, as I have said repeatedly.
The private rented sector has doubled in size since the early 2000s. There is no evidence of an exodus since reform was put on the table by the previous Government. Our proposals will ensure that landlords have the confidence and support they need to continue to invest and operate in the sector.
Matthew Pennycook
I will come to the specific proposals under consideration for short-term lets and holiday lets. The use class was consulted on as one of a number of measures that the previous Government introduced. I will touch on that specific point shortly.
I will preface this with a point that I think all Committee members appreciate. The Government are very alive to the fact that there are many parts of the country—coastal, rural and some urban constituencies—where excessive concentrations of short-term lets and holiday homes are having detrimental impacts, not least on the ability of local people to buy their own homes or, in many cases now, rent their own homes. I have stated this on many occasions in the House since being appointed, but I will say it again: that is the reason why we will progress with abolishing the furnished holiday lets tax regime, and with the introduction of a registration scheme for short-term lets. That will give local authorities access to valuable data on them.
Those measures were committed to by the previous Government, and we will take them forward. However, as I said a number of times in the previous Parliament, we do not think they go far enough and we are considering what additional powers we might give to local authorities to enable them to better respond to the pressures they face as a result of the excessive concentrations of short-term lets and holiday homes. I hope to say more on that in due course.
In respect of this Bill, we are committed to robustly monitoring and evaluating the impact of our reform programme in line with the Government’s evaluation strategy. However, setting an arbitrary deadline in law for this work is unnecessary and may detract from our efforts in that regard. On that basis, I encourage Members not to press their new clauses.
David Simmonds
Given the Minister’s response, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 4
Assessment of operation of possession process
“(1) The Lord Chancellor must prepare an assessment of the operation of the process by which—
(a) on applications made by landlords, the county court is able to make orders for the possession of dwellings in England that are let under assured and regulated tenancies, and
(b) such orders are enforced.
(2) The Lord Chancellor must publish the assessment at such time, and in such manner, as the Lord Chancellor thinks appropriate.
(3) In this section—
‘assured tenancy’ means an assured tenancy within the meaning of the 1988 Act;
‘dwelling’ means a building or part of a building which is occupied or intended to be occupied as a separate dwelling;
‘regulated tenancy’ means a regulated tenancy within the meaning of the Rent Act 1977.”—(David Simmonds.)
Brought up, and read the First time.
David Simmonds
I beg to move, That the clause be read a Second time.
At risk of rehearsing the debate we have already had, the new clause seeks to address the assessment of the possessions process. In evidence to the Committee a degree of concern was expressed on the part of landlords that the backlog in the courts may make it difficult to secure possession when that is necessary. Governments of all parties, including the previous Government, have put in place measures seeking to address that. We know that they are beginning to bear fruit, but it is important in maintaining the confidence of landlords both to come to the market and to remain in the market that they know it is possible to secure a court hearing, should one be necessary to gain access to the property. The new clause seeks to ensure that an assessment of that process is carried out.
Matthew Pennycook
New clause 4 would require the Lord Chancellor to prepare an assessment of the operation of the process by which the county court is able to make possession orders for rented properties and by which such orders are enforced. The assessment would be published at such time and in such a manner as the Lord Chancellor saw fit.
Hon. Members who followed the debates in the last Parliament will recall that the previous Government introduced a similar clause to their own Renters (Reform) Bill in the late stages of that Bill’s progress, via a Government amendment, together with a clause that prevented the Secretary of State from laying regulations to bring tenancy reforms into force for existing tenancies until after the Lord Chancellor’s amendment had been published. This Government have been clear that we will not follow a similar approach. We do not consider it reasonable that the implementation of our reforms should be constrained by such an assessment, not least an assessment of the kind proposed in the new clause, which is extremely broad and undefined.
The hon. Member for Ruislip, Northwood and Pinner tabled amendment 64, which would delay commencement until the Lord Chancellor has carried out and published the proposed assessment. I reaffirm that we have no intention of delaying these urgent and necessary reforms while awaiting an unnecessary assessment of the possession process against what is an unspecific metric. We will instead move ahead with tenancy reform as quickly as possible, but in conjunction with an extensive parallel workstream with colleagues from the Ministry of Justice and His Majesty’s Courts and Tribunals Service to ensure that the courts are ready at the point of implementation.
In any case, the assessment required by new clause 4 is entirely unnecessary and unhelpful, because data on the operation of possession proceedings for rented properties is already published by the Ministry of Justice on a quarterly basis, and will continue to be. Court rules specify that possession claims requiring a hearing should be listed between four weeks and eight weeks of receipt.
The Committee may be interested to know that figures for April to June 2024 show that claim to order median timeliness is 8.1 weeks, suggesting that—I am not necessarily attributing this to the shadow Minister—some of the more alarmist statements about the readiness of the county court system may have more to do with fundamental opposition to the abolition of section 21 and the current tenancy regime than they are an impartial assessment of court performance.
The proposed assessment would provide no obvious additional insight or benefit to any interested parties, in our view, and would merely detract from the vital work of the courts and tribunals by subjecting them to a nugatory additional process. All our focus is on ensuring that HMCTS is ready to stand up the new system at the point of commencement, and that should be our focus in the coming weeks and months. On that basis, I kindly ask the hon. Gentleman to withdraw his new clause.
David Simmonds
It is pleasing to hear from the Minister that the performance of the courts in this respect was so good under the previous Government. I am aware that one of the challenges has been the construction of a new IT platform to enable the new measures envisaged in the Bill to operate efficiently. This might be a legitimate concern for landlords to express, especially given that although the overall performance was good, there have been regional variations that have given rise to concern. However, bearing in mind what the Minister has said and the fact that there would be a degree of transparency about the data, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 5
Repeal of requirement for selective licensing
“Part 3 of the Housing Act 2004 (Selective licensing of other residential accommodation) is repealed.”—(David Simmonds.)
This new clause would remove the ability of local housing authorities to designate areas as subject to selective licensing.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 9—Changes to discretionary licensing—
“(1) The Housing Act 2004 is amended as follows.
(2) In section 60(2), omit ‘five’ and insert ‘ten’.
(3) In section 84(2), omit ‘five’ and insert ‘ten’.
(4) In section 90(1), at the end of the subsection insert ‘or its condition and contents’.”
This new clause would increase the maximum duration of discretionary licensing schemes from five to ten years and would enable local authorities operating selective licensing schemes to use licence conditions to improve housing conditions.
David Simmonds
The measures for selective licensing have been in place for some time, and we certainly see lot of learning from the local authorities that have operated them. On the whole, those have tended to be in high-density urban areas. Clearly, a concern for the Opposition is how that interacts with the new measures introduced in the Bill, whereby there will be a nationally procured database with a set of accountability measures operated by the Secretary of State. That could interact unhelpfully with local databases. I hope that the Government are determined to learn the lessons from those existing selective licensing arrangements. The Opposition’s view is that given the measures introduced by the Bill, selective licensing in the way that it is currently undertaken would no longer be necessary nor appropriate.
Carla Denyer
New clause 9 would head in the opposite direction from new clause 5. It is about removing unnecessary barriers to the use of licensing schemes to improve housing standards. The new clause would do two things. First, it would increase the maximum duration of discretionary licensing schemes from five years to 10. Secondly, it would enable local authorities operating selective licensing schemes to use licensing conditions to improve housing conditions.
Licensing can be an effective way to improve housing standards for at least three reasons. First, it is proactive. It provides a means for local authorities to inspect privately rented housing using enforceable conditions and to identify and resolve problems without the need for tenants to have complained, and it provides that proactive regulation in a locally tailored form. It makes major contributions to area-based issues such as crime, antisocial behaviour and waste management, and it brings together a range of bodies to focus additional support services—for example, for landlords and tenants, improving public health and reducing burdens on the NHS. There are a huge number of wins, and I have experienced that at first hand with licensing schemes in my local authority.
Secondly, licensing is self-funding. It means that the market pays for its own regulation, which is a good principle, rather than relying on the taxpayer. It provides a sustainable and predictable source of income that enables local authorities to maintain staffing levels and support the training of new officers.
Thirdly, licensing is targeted. It enables local authorities to target regulation where that is most needed, so that the worst landlords and the most vulnerable tenants get the most attention and landlord costs can be minimised in other areas.
The problem, however, is that local authorities have to implement licensing schemes with their hands tied behind their backs, because previous Governments have made various decisions that have placed unnecessary and irrational barriers in their way. Given that licensing schemes are expensive and time-consuming for local authorities to initially introduce, it does not make sense to restrict the period over which they can act to only five years.
New clause 9 would amend sections 60 and 84 of the Housing Act 2004 to increase the maximum duration of discretionary licensing schemes, which includes both selective licensing schemes and additional—sorry, jargon again—for HMOs from five to 10 years. That would allow local authorities to advertise for longer-term posts for officers and to include training of new staff in those schemes. It would also provide more time for local partnerships formed through such schemes to become embedded and effective.
The new clause also addresses another issue, which was highlighted by the Chartered Institute of Environmental Health during oral evidence. That respected body pointed out that it does not make any sense to have the current peculiar disconnect in the 2004 Act, whereby local authorities can introduce selective licensing schemes to address poor housing conditions, but they cannot include a directly enforceable requirement relating to the housing condition as a condition of the licence—so they do not have the tools to do what they are set up to do. The new clause would therefore amend section 90 of the 2004 Act to enable local authorities to use licence conditions to improve housing conditions directly.
I stress that the new clause does not cover all that needs to be done to remove barriers to licensing. For example, I also urge the Minister to commit the Government to removing the Secretary of State’s ability to veto selective licensing schemes covering more than 20% of the local authority area.
Carla Denyer
I can see that the Minister is nodding in recognition of that, and I thank him. It does not make sense for local authorities introducing selective licensing schemes to have to spend a lot of money on preparing the paperwork for the scheme without knowing whether it will ultimately go ahead. I have seen at first hand the unnecessary impact on officer time and the cost to local authorities.
Similarly, I urge the Minister to commit the Government to removing the requirement for local authorities establishing selective licensing schemes to ensure that the private rented sector forms a high proportion of properties in the area. If there are acute issues in the private rented sector that can be addressed through a selective licensing scheme, it seems arbitrary for local authorities to be unable to establish such a scheme just because that sector does not form a large proportion of the whole housing stock. The reason why those measures are not included in the new clause is that they do not require primary legislation, as far as I understand it, but I raise them because they are directly connected to the content of the new clause.
In conclusion, the changes that I am suggesting are small, but they could make a big difference to housing standards on the ground and to the ability of local authorities to do their work. I will not push the new clause to a vote, but I sincerely hope that the Minister will actively consider it. I know that the Chartered Institute of Environmental Health would be happy to meet him to discuss any further details.
Matthew Pennycook
As we have heard, new clause 5 seeks to abolish selective licensing. This would remove the ability of local authorities to set up a selective licensing scheme of any size in their area. In contrast, new clause 9 seeks to extend selective and additional licensing of houses in multiple occupation by allowing local authorities to increase the maximum duration of schemes from five to 10 years. It also seeks to allow local authorities to use licence conditions under selective licensing to improve housing conditions, as the hon. Member for Bristol Central made clear.
This Government support selective licensing. It allows local authorities to proactively and more intensively target specific issues in private rented properties, where it is needed most. That includes tackling poor housing conditions and antisocial behaviour. If we abolish selective licensing, local authorities will lose a crucial tool in taking effective enforcement action against landlords who flout the rules. However, I take the shadow Minister’s point, and I reiterate that it is important that the selective licensing system, and the system introduced by the Bill, operate effectively alongside each other. That is very much our intention.
However, we recognise that licensing imposes a burden on landlords. Correspondingly, we think a maximum duration of five years for discretionary licence schemes strikes the right balance for the following reasons. It gives local authorities time to realise improvements while ensuring that landlords are not by default subject to increased regulation for prolonged periods. Of course, licensing in any given area may be part of a longer-term strategy. That is why, where a scheme has expired and there is still a case for licensing, local authorities may simply introduce a new scheme to drive further improvements. The duration that the hon. Member for Bristol Central is seeking selective licensing schemes to cover can be achieved in any given local authority area, if the local authority simply extends matters through a new scheme. We think that a five-year timeframe gives an opportunity to review the effectiveness of individual discretionary licensing schemes and ensure that they are proportionate in achieving their aims.
The broad intention of the hon. Lady’s new clause is to improve housing conditions. Let me be clear again that every private renter, not just those in licensed properties, has the right to a good-quality home. That is why, through the Bill, we are introducing a decent homes standard and applying Awaab’s law to the sector to tackle the blight of poor-quality homes.
Our reforms will establish a level playing field across the sector, ensuring that all renters and local authorities, not just those in areas with licensing schemes, can challenge and enforce against dangerous conditions. I will not address the hon. Lady’s specific point on the Secretary of State’s veto, because it is somewhat outside the scope of the Bill, but I take that on board. On the chartered institute, I will say nothing more at this stage other than that we will continue to review the use of selective licensing as we develop the database and other measures in the Bill. On that basis, I ask the hon. Members not to press their new clauses.
David Simmonds
We remain a little concerned that where selective licensing schemes are in operation alongside the measures introduced by the legislation, a degree of ambiguity and potential confusion is created, especially for some landlords who may seek to evade responsibility. Two schemes of a similar nature will be in place, with potentially different fees and standards in operation. However, I accept the numbers on the Committee, so I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
The Chair
New clause 6 has been debated and there is no requirement to call it for a decision, unless a Committee member wishes to move it—Mr Amos?
The Chair
Technically, the hon. Gentleman cannot withdraw the clause because it has not been moved, but his words are a matter of record.
New Clause 8
Guarantor to have no further liability following death of tenant
“(1) Subject to subsection (3), a guarantee agreement relating to a relevant tenancy ceases to have effect upon the death of a relevant tenant.
(2) Upon the death of a relevant tenant the guarantor in respect of a relevant tenancy shall incur no further liability in relation to matters arising under the tenancy.
(3) Nothing in this section shall affect the liability of a guarantor in relation to matters which arose before the date of the death of the relevant tenant.
(4) In assessing any liability under subsection (3), account shall be taken of any tenancy deposit paid in respect of the tenancy.
(5) Where there is more than one relevant tenant, this section shall apply only upon the death of both or all of the tenants.
(6) In this section—
a ‘guarantor’ is a person who enters into a guarantee agreement in relation to a relevant tenancy;
a ‘guarantee agreement’ is a contractual promise (whether incorporated in or separate from the tenancy agreement) to indemnify or compensate a relevant person in respect of an obligation under the tenancy if the tenant fails to perform or comply with the obligation;
a ‘relevant tenancy’ has the same meaning as in section 36, and ‘relevant tenant’ is to be interpreted accordingly; and
‘tenancy deposit’ has the same meaning as in section 212(8) of the Housing Act 2004.”—(Claire Hazelgrove.)
Brought up, and read the First time.
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to consider new clause 14—Restrictions on the requirement for tenants to provide a guarantor—
“(1) A relevant person must not, in any of the circumstances set out in subsection (3), require a person, as a condition of the grant of a relevant tenancy, to provide a guarantor in relation to the observance or performance of the tenant’s obligations under the tenancy.
(2) For the purposes of this Act, requiring a person to provide a guarantor includes accepting an offer by that person to provide a guarantor.
(3) The circumstances are—
(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme;
(b) that the person is required to pay rent in advance equivalent to one month’s rent or more;
(c) that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy;
(d) that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to the relevant person;
(e) that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent; or
(f) such other circumstances as may be prescribed in regulations made by the Secretary of State.
(4) In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee shall not exceed a sum equal to six months’ rent.
(5) In any case where a relevant person requires a tenant, as a condition of the grant of a relevant joint tenancy, to provide a guarantor, the sum claimed under the guarantee shall not exceed such proportion of the loss as is attributable to the act or default of the individual tenant on whose behalf the guarantee was given; and if such proportion cannot be proved, shall not exceed the sum obtained by dividing the total loss by the number of tenants.
(6) In this section—
‘guarantor’ is a person who enters into a guarantee in relation to a relevant tenancy;
‘guarantee’ is a contractual promise to be responsible for the performance of an obligation owed by the tenant to a relevant person under the tenancy if the tenant fails to perform the obligation;
‘deposit scheme’ includes a scheme whereby a sum payable by way of depositor a bond or guarantee is provided by a local authority, registered charity or voluntary organisation for the purpose of providing security to a landlord for the performance of a tenant’s obligations under a tenancy;
‘tenancy deposit’ has the same meaning as in section 212(8) of the Housing Act 2004.”
This new clause would restrict the circumstances in which a landlord can request a guarantor.
Claire Hazelgrove
I rise to speak in support of new clause 8, tabled by my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), who is not a Committee member. The new clause would provide protection for bereaved guarantors by prohibiting the application of a guarantor agreement in the event of the death of a tenant. My hon. Friend was motivated to table the new clause following the tragic case of her constituents who lost their son to suicide.
The young man was a first-year university student who had signed a private tenancy for his second-year accommodation. Very sadly, he died by suicide months before the new tenancy was due to start. His parents had signed a guarantor agreement that applied in the event of the tenant’s death, and while they were grieving the loss of their son, the letting agent pursued them for the rent on the property in which he would never live. That type of clause is not common to all guarantor agreements, and it is entirely unnecessary, because the loss of rental income due to the death of a tenant is an insurable risk for landlords.
New clause 8 would prevent guarantor agreements from applying in the event of the death of a tenant. It has been tightly drafted with the assistance of lawyers from Shelter. My hon. Friend is extremely grateful to the Minister for his positive engagement on the issue, both prior to the general election and subsequently. Although I do not seek to press the new clause to a vote, I hope the Minister will be able to give assurances either that the Government will accept the new clause or introduce an amendment to the Bill to the same effect.
I hope we can all agree that no one who is grieving the loss of a person for whom they have acted as a guarantor should be pursued for that person’s rent. That small change in the law would prevent the distress that was caused to my hon. Friend’s constituents from happening to anyone else.
Carla Denyer
I support new clause 8, and I would also like to speak in favour of new clause 14, tabled in the name of the hon. Member for Leeds Central and Headingley (Alex Sobel). New clause 14 seeks to address an injustice around guarantors for students. In this speech, I cite heavily evidence provided by the National Union of Students and individual student union officers in my home city of Bristol, all of whom are very concerned about this injustice.
The widespread landlord practice of demanding that tenants provide a guarantor is discriminatory, especially in this situation. Tenants are asked to put someone forward, normally a parent or relative, who owns a house in the UK and/or earns an income typically above the national average. The guarantor is asked to guarantee to pay the rent should the tenant default, and to pay for any damage to the property should the tenant be unable to do so.
Although for some, this is just an inconvenience, for tenants who are from deprived socioeconomic backgrounds, who are estranged from their families, who have a background in care or who are coming to the UK, such as international students from abroad, it can be a huge barrier to securing a home. The practice can push those unable to find a suitable guarantor into unsustainable debt, because they are forced to pay either months of rent up front or for costly guarantor schemes run by private companies. Others are forced into hostels or sofa surfing, and can even be made homeless.
The stats are stark: 13% of students experience homelessness during their studies, and that figure rises to 29% for international students. This issue has a detrimental impact on the lives of student renters and their ability to focus on their studies. It is imperative that we address the issue to ensure fair and equitable access to housing for all tenants, including students, allowing them to flourish in their education.
Landlords have several other means available to protect themselves against potential losses, including tenant referencing, rent guarantee insurance and deposit protection schemes, all of which make guarantor schemes unnecessary. I am not pushing for a vote today, but I ask the Minister to have a dialogue—if he is not doing so already—with the hon. Member for Leeds Central and Headingley, who tabled the new clause, and the NUS, with a view to including the changes in the next version of the Bill. Finally, I should mention that I have joined the all-party parliamentary group for students.
Matthew Pennycook
I thank my hon. Friend the Member for Filton and Bradley Stoke for speaking to the new clause tabled by my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), whom I commend for her work in this area, not just in this Parliament but in the previous one. She has been prodigious in pursuing this issue on behalf of her constituents, and I have reflected further on the points that she made on Second Reading.
The Government agree that it is unacceptable for bereaved guarantors to be held liable for unpaid rent where the only reason for it is the sad death of a tenant. Guarantor arrangements are not usually intended to protect landlords against the risk of financial loss caused by the death of their tenant; rather, they are used by landlords to reduce the financial risk of letting to a tenant who, for example, may have no previous residency in the UK and consequently no references from former landlords, or who might not successfully pass credit checks.
Although we understand that few landlords would use guarantor agreements to pursue debts that occur after a tenant’s death, we do know that sadly some do. This is an unacceptable practice that compounds the grief that families face after unexpected bereavements. I hope my hon. Friend the Member for Filton and Bradley Stoke will be reassured to hear that the Government have been considering this issue closely and in detail. We take it very seriously, and I am extremely sympathetic to the issues raised. I hope to be able to say more on Report about the matter and about the new clause tabled by my hon. Friend the Member for Dulwich and West Norwood.
I thank the hon. Member for Bristol Central for speaking to new clause 14, tabled in the name of my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel). I am grateful to my hon. Friend for his work on this issue, and for his engagement with me and on the Bill more generally. The Government understand that obtaining a guarantor may be difficult for some prospective tenants, and I absolutely sympathise with those who are in that situation. For some tenants, the requirement can, as the hon. Member for Bristol Central made clear, effectively block access to the private rented sector.
The Government are clear that landlords should consider a tenant’s individual circumstances when negotiating rental contracts. I have been concerned to hear anecdotally about some landlords insisting that all tenants provide a guarantor, regardless of individual circumstances. That said, and ever mindful of the unintended consequences of weighing in without thought, I am aware that the use of guarantors can give landlords confidence to provide tenancies to individuals who otherwise may struggle to gain accommodation. That might include those with a history of rent arrears or with no previous rental history, those who are moving out of home for the first time and foreign students. As such, I am concerned that the wording of the new clause may inadvertently make it harder for those tenants to find a place to live, despite the honourable intentions behind it.
I recognise the importance of getting the balance right between barriers and enablers to accessing the private rented sector. I will continue to engage with hon. Members more broadly and with wider stakeholders, but in particular with my hon. Friend the Member for Leeds Central and Headingley, who has diligently pursued the matter. For the reasons I have given, however, I respectfully ask my hon. Friend the Member for Filton and Bradley Stoke to withdraw the new clause.
Claire Hazelgrove
I beg to ask leave to withdraw the new clause.
Clause, by leave, withdrawn.
New Clause 10
Home Adaptations
“(1) The Housing Act 1988 is amended as follows.
(2) After section 16 insert—
‘16A Home adaptations
(1) It is an implied term of every assured tenancy to which this section applies that a landlord shall give permission for adaptations where a local council has carried out a Home Assessment and recommends adaptations which constitute reasonable adjustments under the Equality Act 2010. Tenants have the right to appeal a landlord’s refusal to adapt a property.
(2) This section applies to every assured tenancy other than a tenancy of social housing, within the meaning of Part 2 of the Housing and Regeneration Act 2008.’” —(Carla Denyer.)
This new clause would ensure that landlords give permission for home adaptations where a Home Assessment has been carried out.
Brought up, and read the First time.
Carla Denyer
I beg to move, That the clause be read a Second time. The new clause would ensure that landlords give permission for home adaptations where a home assessment has been carried out. There are 16 million disabled people in the UK—that is more than a fifth of the population—and 19% of them live in the private rented sector. The Equality and Human Rights Commission estimates that a shocking one in three disabled people live in private rented properties that are unsuitable for them. Research by the National Residential Landlords Association found that only 49% of landlords—less than half—were willing to let to a tenant who required adaptations for accessibility needs. That number does go up when landlords are made aware of the funding that is available, but it still falls far short of where it needs to be.
Disabled renters need the landlord’s consent to make any adaptations to their homes. The Equality Act 2010 already imposes a duty on landlords to allow and make reasonable adjustments on request from their disabled tenants. Common home adaptations include changes to make the premises safe, facilitating access to things including use of the bathroom, washing facilities, cooking facilities, light controls and so on—things that it is perhaps easy for us to take for granted.
Disabled renters who are unable to self-fund may request that their local authority pays for smaller adaptations. That includes things such as grab rails to make it easier to get in and out of the bath. Through the disabled facilities grant, which is in a separate bucket, local authorities provide up to £30,000 to pay for major works that cost more than £1,000.
I tabled the new clause to prompt a discussion about the concern raised by Disability Rights UK, which points out that, unfortunately, the disabled facilities grant is a postcode lottery system that is failing and is not fit for purpose in its current form. An investigation by journalist Vicky Gayle found that in nine council areas in England and Wales, people had to wait on average more than a year to see an occupational therapist and complete the pre-application steps. On top of that, 80% of local authorities in England and Wales are using discretionary powers to top up funding, and that extra money varies wildly from council to council. There are many common barriers, including the fact that private landlords often refuse to make adaptations and many are unaware of their legal obligations to do so.
Matthew Pennycook
I very much sympathise with the intent behind the new clause, but I am afraid I will have to disappoint the hon. Lady by saying that I do not think it is necessary, and I will set out why. The Government strongly agree that landlords should not unreasonably refuse disability adaptations. As she rightly says, there is already a requirement in law that they do not. The Equality Act 2010 provides that landlords cannot unreasonably refuse a request for reasonable adjustments to be made for the purposes of a disabled person using their home. Where consent has been sought and is refused, the burden is on the landlord to show why their refusal or any conditions are reasonable.
The hon. Lady said that the Bill does nothing to target the problem that she outlines, but I think it takes a series of steps that will support disabled renters to challenge unreasonable refusals without fear of retaliatory eviction—I am talking about the general overhaul of the tenancy system, which should provide them with more confidence in that area. In addition, when the new PRS landlord ombudsman is established, tenants may be able to make a complaint to it if they think that the landlord should have given permission for disability adaptations but has unreasonably refused to do so. That is another means of redress that will be introduced through the Bill.
Notwithstanding the hon. Lady’s point about a postcode lottery—we could rehearse for many hours the pressures on local authorities’ budgets—where a tenant has applied for a disabled facilities grant, local councils have the power to override the requirement for tenants to have the landlord’s permission to make adaptations, and to award the grant without permission if they believe that permission was withheld unreasonably. For those reasons, although I will reflect on the point that she made and although I sympathise with the intent, the new clause is unnecessary and I kindly ask her to withdraw it.
Carla Denyer
I will be honest: I am not convinced that the new clause is unnecessary, but I can do the maths so will not seek to divide the Committee. I beg to ask leave to withdraw the new clause.
Clause, by leave, withdrawn.
New Clause 11
Rent controls
“(1) The Secretary of State must establish a body to be known as the Independent Living Rent Body within 12 months of the date of Royal Assent to this Act.
(2) The ‘proposed rent’ referred to in section 55(2) must be no more than an amount set by the Independent Living Rent Body.
(3) The amount referred to in subsection (2) must be calculated as a function of property size, quality, local incomes, location, and such other criteria as the Independent Living Rent Body sees fit.”—(Carla Denyer.)
Brought up, and read the First time.
Carla Denyer
I beg to move, That the clause be read a Second time.
Thank you for your forbearance, Sir Roger, as I have proposed quite a few new clauses this afternoon, but this is the last one from me. New clause 11 proposes setting a control on the amount that a stated or advertised rent can be. A control would be set by an independent living rent body, taking account of the property’s size and quality, as well as local incomes, location and other criteria that the body sees fit to include. Local flexibility will be vital.
We have a generation of people who will never be able to earn enough to have a mortgage, and who cannot even afford their rents now. New clause 11 recognises that and aims to bring some urgently needed fairness and balance to a private rented landscape that has become grossly distorted. Giving an independent body the power to set a ceiling for new rents is similar to models of new rent regulation in Germany and Spain.
I have tabled new clause 11 to probe the Minister, and I want to be clear from the outset that I am acutely aware that this is a complex policy area and that there is no silver bullet for the terrible problem of sky-high rents in the private rented sector. I know that I will be challenged in this debate, and I welcome that; there is a vital discussion to be had to ensure that unintended consequences are avoided, and I do not dismiss the importance of that. At the same time, I hope that we recognise the significance of the debate over what we do about the affordability of rents.
I put it to the Committee that we need to consider rent controls both within and between tenancies, because unaffordable private rents are hurting people and hurting our economy. Key workers are forced out of cities and out of the communities that they have made their home. Average rents in inner London, as those of us who are newly elected MPs and getting flats in inner London are very aware, are rather high. In fact, they are 106% of a teaching assistant’s salary.
The average rent in my constituency of Bristol Central has hit nearly £1,800 a month. If a 21-year-old living in Bristol rents a single room today at the average rate, they will have put £80,000 into their landlord’s bank account by the time they reach their 30th birthday. Rising rents in Bristol forced renter Anny, her key worker partner Alex and their four-month-old baby to move city completely, and to move away from their support network when they needed it most.
Private renters spend a disproportionate amount of their income—an average of 33%—on housing costs, compared with just 10% for mortgage holders, and a shocking one in five renters spends more than half of their income on rent. That has a knock-on effect on the economy. Renters are giving more and more of their wages to landlords. Many cannot make ends meet and are ending up homeless, and those who can just about afford not to become homeless are certainly not able to save anything like the eye-watering sums needed to get on the housing ladder.
Private renters have less disposable income, and therefore less buying power, in the local economy, too. Research by the Women’s Budget Group and Positive Money UK found that high private rents disproportionately impact the spending power of women and black, Asian and minority ethnic households. The knock-on costs to the taxpayer are high, too, through spending on housing benefit and temporary accommodation.
I know that the Minister has already made it clear that he will not accept the solution proposed in new clause 11, but I hope that he will at least accept that private rents are much too high relative to incomes and tell us how the Government plan to address that crisis in the here and now.
For two reasons, I am concerned that changes to the tribunal do not go far enough to address high rents, as the Bill stands. First, as discussed previously, most tenants will not use the tribunal system, because they do not have the time and energy to navigate it. Secondly, even if every tenant did so, it would not result in rents coming down overall, in relation to incomes. The tribunal panel judges only whether a rent rise is fair based on the price of new rentals of a similar size in the area, and the prices of new rentals have outstripped inflation consistently. Rental index data from the Deposit Protection Service backs that up. It found that rents outstripped inflation by a third last year, and Rightmove reports show that asking rents outside of London have risen 60% since 2020, far outstripping inflation or wage growth.
During our evidence sessions and previous discussions in Committee, we heard the important point that rent controls are not simply one thing; they are a category of policies. In an earlier sitting, we discussed in-tenancy rent controls, to stop rogue landlords hiking rents in order to kick people out, in lieu of using section 21. That is one thing, but the new clause goes further by aiming to address the unaffordable level that private rents have reached and rent hikes between tenancies.
I expect that the Minister will mention social housing. I agree that increasing the social housing supply is critical; however, the private rented sector is in an affordability crisis now, and it will take huge amounts of effort and time to increase the social housing supply at the scale and pace needed to have any impact on private rents. Models from Generation Rent and other economists predict that building 1.5 million homes over this Parliament will decrease the rent burden by just over 1%. More social rented homes are essential, but the cost of private renting is so distorted—the market is failing so badly—that we need Ministers to step in and treat rent affordability as the acute housing emergency that it is.
I am sure the Minister will also use the example in Scotland as a reason not to have rent controls here. I would strongly caution against that, though, because the data on whether rents have increased overall in Scotland are shaky, as we heard in the evidence sessions, and, if there have been increases, the data on whether they are anything to do with rent controls are even more so—if necessary, I am happy to go into that in more detail in the debate.
I imagine that the Minister will also highlight the potential unintended consequences on the supply side and the possibility that landlords will leave the sector. However, it is not enough simply to assert that any form of rent control—remember that this is a whole category of options—will break the private rented sector or cause lots of landlords to leave. That needs to be interrogated, with proper consideration given to the contrary case that rent caps would provide a clear and stable regime for rent rises for landlords, so that they know how much they can raise the rent by and plan for the future.
I encourage the Government and the Committee to look to European countries where rent caps co-exist with large private rented sectors, such as in Germany, where more than half the population rents privately and where they also have in-tenancy rent caps. In particular, I draw the Committee’s attention to comments by the chief executive officer of Greystar, one of the world’s biggest landlords, who said recently that rent controls need not stop big investors from funding new homes:
“You do not have to have the windfall of a year of 14 per cent rent increases in order to have a viable investment product…We operate in a lot of markets around the world where rent control does exist.”
The argument against rent controls is that they will break the private rented sector, but it is already broken, with immediate and severe consequences right now, for all the reasons we heard about in the evidence sessions. However, we need to talk about the risks attached to any policy of in-tenancy and between-tenancy rent controls. Any system to introduce them needs to be carefully designed and built—I acknowledge that, and I know that point will be made to me in a moment. Some robust work already exists on the kind of principles we should consider in designing a workable system, and my new clause 11 is just one suggestion.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
The hon. Lady might be coming on to the impact of the criteria in the new clause, but I am concerned that the market could respond to them by drawing investors into just one location that was already a serious hotspot. It would be helpful to understand more about why they might help.
Carla Denyer
Will the hon. Member clarify what she means by “drawing into” in that context?
Rachel Blake
I was referring to the suggestion that the proposed independent living rent body would start setting rents under subsection (2) based on the property size, quality, local incomes and location. Given the constrained market that would establish, surely it might reduce availability even further.
Carla Denyer
The hon. Member is correct that I was coming to that, but I thank her for asking anyway—I do welcome a debate. There is some robust work on what rent controls can look like and, without wishing to give any spoilers about the organisations that provided us with evidence, I understand that more is coming. I draw the Committee’s attention to work done in 2019 by the New Economics Foundation, which looked at how we might arrive at a rent control system in London. It set out six key building blocks all about how to transition carefully and gradually from the current market free-for-all to a controlled system, and there are some lessons to be learned there about how we address supply issues.
Matthew Pennycook
The hon. Lady’s new clause, which she has set out clearly, seeks to require the Government to establish an independent body to set the maximum rent at which a landlord could advertise a property in writing, under clause 55, which I remind Committee members requires a landlord or a person acting on their behalf to state a specific and proposed rental amount in a written advertisement or offer for a proposed letting. Although I very much recognise the concerns in relation to rising rents generally and extortionate within-tenancy rent increases in particular—I do not think anyone on the Committee dismisses those concerns, particularly in parts of the country with hot rental markets, as referenced by my hon. Friend the Member for Cities of London and Westminster—I do not believe the approach proposed in the new clause is necessary or proportionate.
I understand from the hon. Member for Bristol Central that her new clause is intended to provoke debate, and I am more than happy to debate it. However, I must confess that when I was considering the new clause’s specific wording, I struggled somewhat to ascertain how the new independent body would operate. I think she has given us a bit more clarity on her thinking, but I am still a little unsure. I will therefore put the two options in my mind that it might reasonably take.
It could mean that every landlord and letting agent in England would need to engage with the body proposed by the hon. Lady to set a maximum starting rent for every property they seek to advertise on every occasion that they require a new tenant. I think that is what she was driving at when she said that it would have to take into account specific factors relating to each property. We are debating the specific measure rather than a general point but if that is the case, the costs of administrating such an arrangement, which would have to apply to the approximately 950,000 new lets that occur each year, would be likely to be enormous. In my view, it would almost certainly have an impact on the time that landlords and tenants take to agree a rental price.
If, as the hon. Member for Bristol Central touched on later in her remarks, the body would simply be required to set maximum rents on the basis of broad principles and therefore not account fully for variation in the market, it would in effect be overseeing a form of rent control. The Government believe that would impact negatively on tenants as well as landlords, as a result of reduced supply, discouraged investment and declining property sales, as I have set out in detail previously.
I gently push back on the hon. Lady’s assertion that I am just asserting such a point; I have given the Committee extensive references to some of the negative impacts of various forms of rent control in other countries. There are academic studies on countries such as Sweden and Germany, and from cities such as San Francisco and Ontario, which show that rent regulation can have those precise effects. I was in Rome at the G7 yesterday, discussing this very matter with the German Housing Minister, who acknowledged that while there are benefits to the system in Germany, it has had an impact on supply in places. It could have a detrimental impact on tenants if we introduce it into our system here.
I am more than happy to debate. I think we will debate the issue throughout the Bill’s remaining stages in this place, and I am sure it will be a source of debate in the other place and again when it returns to us. I do not want to test your patience or the Committee’s, Sir Roger, by repeating the long discussion we have already had about rent control. I simply reiterate that the Government are confident that the Bill strikes the right balance when it comes to addressing, in particular, unreasonable within-tenancy rent increases. We do not believe the establishment of a body along the lines that the hon. Lady proposes would be beneficial to tenants or landlords.
I have made the point, and will do again, that the legislation is not the Government’s only answer to affordability pressures in the private rented sector. The hon. Lady referenced the Government’s intention to deliver the biggest increase in social and affordable housing in a generation. I appreciate the urgency with which that needs to take place. She is more than welcome to clarify the point, but I hope she commends the additional £500 million of funding in the recent Budget, the top up to the affordable homes programme this year and the action we are taking on right-to-buys, giving local councils 100% retention of discounts from sales. There will be more to come, not least when we set out further Government investment in the spending review next year.
On the basis of all the points I have made, I ask the hon. Lady to withdraw new clause 11. I do not think it will be the last time we debate the matter as part of the Bill or more widely across the Parliament.
Carla Denyer
I certainly welcome additional funding for social housing, and I know that many local authorities do too, although I suspect that most if not all would also say that they need more than that. In terms of what exact model of rent controls we are talking about and how the independent living rent body works it out, I am deliberately not attached to exactly how to do that.
As I mentioned, there are 17 European countries that have some form of rent controls; they are all tailored to specific circumstances and some have worked better than others. My point is that we should not rule out an entire category of available tools on the basis of looking at a few examples that have not worked. I would rather we look at how we could make it work or, if not, at what the Government are going to do instead to tackle affordability in the private rented sector, given that the positive measures on social housing are unlikely to bring down rents in that sector by anything like the necessary amount.
As it is clear that the Minister will not support new clause 11, I suggest he should at least consider the merits of setting up a living rent commission to undertake work to inform evidence-based decision making about what we can do on the issue. When I was a Bristol city councillor, I was the co-proposer with a Labour councillor of commissioning a local version of that work to look at how rent controls could theoretically work in Bristol if the Government gave the council the necessary powers. We took that route specifically because we were aware that several options were available, so we first needed research on how it might work and how to avoid unintended consequences. I would love the Government to commission an equivalent study at a national level so that we can make informed decisions in future.
Matthew Pennycook
I am afraid I cannot give the hon. Lady that commitment. She somewhat downplays the amount of thinking that has gone into this legislation by my officials, me and my colleagues as to the appropriate and necessary measures. We think the measures strike the right balance. This legislation is not the only intervention we are making on affordability pressures in the private rented sector. As I have said, I am more than happy to continue the debate with the hon. Lady in the remaining stages of the Bill.
Carla Denyer
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill, as amended, to the House.
Matthew Pennycook
May I take this opportunity, Sir Roger, to put on the record my thanks to you and to the other Chairs of the Bill Committee? Several Committee members are new to the process, and you and the other Chairs have done an incredibly effective job, with patience and generosity, of helping everyone to navigate the process.
I thank our exemplary Clerks, the Hansard Reporters, and the Doorkeepers for overseeing our proceedings. I also thank my officials and private office team, who have supported me and worked tirelessly over a short time to bring forward the Bill that we have debated in recent weeks.
Finally, I thank all hon. Members, including the shadow Minister, the hon. Member for Taunton and Wellington and the hon. Member for Bristol Central for the spirited and constructive dialogue we have had. I value all the contributions and the challenges that have been made. I know that we are united in wanting to deliver the best legislation that we can for all our constituents.
As we end this stage of scrutiny and prepare for Report stage, I hope we can all agree that these important reforms will finally provide certainty for the sector and deliver meaningful change to millions of renters and landlords. I look forward to further engagement with all hon. Members as the Bill progresses through its remaining stages.
David Simmonds
I share the Minister’s sentiments. I will pay him the highest compliment that I can: at times, he could have been a Conservative in the way he addressed the issues that I raised. I add my thanks to the officials, as I know that the Minister’s swift responses would not have been possible without their diligent work behind the scenes; I am enormously grateful that issues have been dealt with in such detail. I also add my thanks to Committee members for their sensible and sound contributions. I am sure the debate will continue, but we have carried out an efficient piece of work.
The Chair
All that is strictly out of order, but I am sure that the comments will be appreciated. I add my thanks to the Committee and to the Officers of the House, without whom our work would simply not be possible.
Question put and agreed to.
Bill, as amended, accordingly to be reported.