Tuesday 14th November 2023
(5 months, 3 weeks ago)
Public Bill CommitteesRenters (Reform) Bill 2022-23 View all Renters (Reform) Bill 2022-23 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 14 November 2023 - (14 Nov 2023)
Matthew Pennycook (Greenwich and Woolwich) (Lab)
Q
Ben Twomey: Thank you, shadow Minister. On the grounds, it is important to think about the question of what actually changes for the renter experience if the Bill passes in its current form. We welcome the Renters (Reform) Bill and think it is an important piece of legislation, but on some key areas not much will change.
The Government promised to abolish no-fault evictions. The Bill does not do that. It removes section 21 no-fault, or no-reason, evictions but introduces new no-fault grounds. Particularly on grounds 1 and 1A, which are where a landlord can move a family member in or may sell the property, it is important that we put ourselves in the renter’s shoes when that happens. A no-fault notice is given. That could happen to me or any renter across England. Right now, I could go home and find one of those notices on my doorstep. I would have to be out of my home within two months. Given the current economic climate, it is going to be difficult for me to find a new home quickly, so the risk of homelessness—no-fault evictions are one of the leading causes of homelessness—is very great.
In the current wording, that situation does not change for renters, and their experience does not change. A renter receives a no-fault notice and is out within two months. We think there should be better protections there. It should go to four months instead, to give the renter time to make the savings, look around and find somewhere to live. That saves the Government money because they do not then have to support people who are in temporary accommodation or are otherwise homeless. That is one of the key areas we want to change in respect of the grounds.
Similarly, I currently have a fixed-term contract that will move under the Bill to a rolling tenancy. The minimum fixed term is six months, and as soon as that ends I can receive a no-fault eviction. Within the rolling tenancy, under the wording of the Bill, once the six-month protected period ends, again, a renter can receive a no-fault eviction. It is important that there are better protections so that there is more security for renters. We say that period should move to two years instead.
Finally, on the no-let period, if the grounds are to be introduced, they need to be enforced. It needs to be clear that they cannot be abused by some landlords. At the moment, if someone says that they are moving a family member in or that they are going to sell the property, there are three months during which the property cannot be re-let. We think that should move to one year to make sure we rule out the idea that some landlords could still do retaliatory evictions or abuse the grounds in other ways. By moving that, we make sure that tenants have that greater protection and can enforce where local authorities may not be able to. If we can put that information on the property portal in the Bill, which we welcome, it will be much easier for tenants to play a role in the enforcement and scrutinise what is happening.
As I said, I could go home today and receive a no-fault eviction. The Bill could pass and I could go home and find one and the same thing could happen. I would be out within two months and it could happen after six months of my having a tenancy. That is a big problem. If you want to reduce one of the leading causes of homelessness and save the Government money in doing so, you need to address those factors.
Sue James: What we are talking about today is someone’s home. Over the past 20 years we have seen a huge increase in families who are living in the private rented sector, and we are talking about having enough protection for them. The private rented sector has doubled in size, so we do need to pay attention to it.
At the moment, the new grounds are all mandatory grounds, and we say they should be discretionary grounds. We want the court to make an order that will take into account the circumstances of the tenant and of the landlord. Grounds 1A and 1B, as they are currently written in the Bill, will essentially be a back door for section 21. I agree with what Ben said about improving the notice periods that are outlined in the Bill.
We also have a problem with grounds 1A and 1B in relation to the evidence. At the moment, it does not look like the landlord will have to provide much evidence. We want that to be strengthened so that you would have to have evidence that the landlord required the property for a member of their family or wanted to sell it.
The problem also is that once a landlord takes possession on that basis, or tells the tenant that they are going to seek possession on that basis, you have just a three-month period in which they are not allowed to let. That needs to be much longer—at least a year—in order to protect the tenant from unscrupulous landlords taking back their premises. Three months is not a very long time at all.
The other issue relates to enforcement. Currently, that rests with the local authority and the ombudsman. The tenant must have the right to challenge that and to take action against the landlord, including when the landlord has taken possession in court, because at the moment it is only if the tenant voluntarily leaves. It needs to be a bit more joined up in terms of having that protection.
The biggest problem is ground 8, and ground 8A in particular. I know you heard some evidence on that this morning. It is a particular problem: basing it on three times in three years when someone is at least one day in arrears is going to cause grave hardship. It has a perverse incentive, because the final time that the tenant is in arrears, a possession order will be made and they will not have an incentive to make that payment. That seems really perverse. All of that needs to be discretionary. The court absolutely has to have a look at that.
The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)
Q
Ben Twomey: We absolutely welcome the end of section 21 no-fault evictions—it could not come soon enough. We were promised it some time ago. For renters, that is one of the biggest insecurities we face. That is why I talk about the experience needing to change for renters. In Generation Rent, we love it when renters are aware of their rights and when they know what the system is like, yet those renters who discover they have received a section 21 suddenly become aware that the rights they have do not mean much at all, because they will be out in no time and there is not much they can do to challenge it.
One of the saddest things I have heard from renters we support is that insecurity follows them into the next home. Even when they are trying to feel settled and comfortable and to build their lives again, they are in constant fear that another no-fault eviction notice could come. It needs to be really clear that the new no-fault grounds do not keep that insecurity in the system.
We welcome the end of section 21 and we welcome the property portal. It will be really good to finally have a register of landlords. We hope to be able to put things into that portal that are not yet in the Bill: we hope that we will be able to track evictions, so that they are enforceable around the no-let grounds, and that we will be able to look at actual rents and properly monitor what goes on. One of the big advantages of ending section 21 will be that finally a reason is given for every eviction, so we can understand when things start to go wrong that lead to homelessness. At the moment, quite a lot of guesswork is happening to prevent that problem.
We also welcome an ombudsman coming into the sector, to have an equivalence with the social housing sector. As much as possible, in any way we can, we think renters should have the same rights across social housing and private renting. When the experience can be very similar, and the risks, insecurity and unaffordability are still factors across the piece, there is no reason to have a two-tier system. In fact, I would go further and say that we will have reached our goal only when homeowners start to kick themselves and say they wished they were renting because there are so many rights available, so much security of tenure and so much flexibility, and because they have organisations such as mine and Sue’s to inform people. We look forward to working with the Government to see how that ambition can happen.
Sue James: I agree. The property portal has such potential if we get the information in there right so that there is transparency around renting. That would be amazing. We absolutely love the fact that this has been brought in. There are some changes that we think need to be made. The fact that you are looking at delaying action on section 21 is something I would love to talk about, if you would like to hear that.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Q
With Ben, I would like to probe no-fault evictions, which are very expensive for the person who is not at fault. They have to pay for removal costs, a new deposit and, very often, a month’s rent up front, which is very difficult for people. Are there any ways that could be ameliorated when it is no fault and the tenancy is being curtailed early, within two months?
Sue James: Shall I go first? You also heard this morning that the Government need to hold their nerve, and I absolutely reiterate that. The Bill has been a long time coming, and we have a crisis out there. Colleagues of mine who are at law centres have queues of people coming to see them because of this, and we absolutely need to get it right.
The county court is not the experience I have been hearing about in some of these conversations. You heard this morning that the county court is pretty much getting it right: it is not one of the courts with a huge backlog of hearings and stuff like that. When you start a possession claim, there are fixed rules around that. The case has to be listed within eight weeks, and it is usually listed in six to eight weeks. You then have a hearing before a judge, so it is not actually taking that long. You have the hearing and the court has to apply strict criteria on whether it is just and proportionate, and whether there is a reasonable defence that can be pursued.
In the court, we have a fantastic duty solicitor regime that has just been improved to include benefits advice beforehand. So you already have judges who are experienced in housing, you have duty advisors who are very experienced in housing, and then you have income officers who are at the same courts all the time. You build these relationships, and as duty solicitor, you are working out a plan where you can get the arrears paid off and get the stuff sorted out. We now have crisis navigators in law centres, and they resolve the benefit issues that are sitting behind it. Of the rent-arrears cases I have ever seen, I would say that probably about 60% to 70% have been a benefit-related problem. I think those issues are different from the issues around the court.
The only thing that you could invest more in—well, obviously if we invested more in the court that is brilliant, but I do not think we need to wait for that—is the bailiffs and the end period. Sometimes, with a bailiff’s work, it can take up to eight weeks to fix a date. That is just about money. If you address that, you do not have these problems. That is why I am saying that discretionary is the way to go, because it provides fairness.
You already have a housing court sitting there. It could do with some tweaking, but you are already there with that. I think we are good to go. Given that section 21 is the biggest cause of homelessness, you would rebalance in the way that you want to, so I would say, “Hold your nerve and go with it.”
Ben Twomey: I have two very quick points on the court reform before I go into your other question, Lloyd. First, in quarter 3, the latest data from the Ministry of Justice shows that the median time it took for a repossession case was about 22 weeks in both section 21 and in section 8. The idea that section 21 is much quicker is not true. With section 21, more people move out beforehand because there are fewer ways in which you can legitimately challenge it. There is a problem if you are setting up the court system to say that we want to basically stop tenants having their rights and a way in which they can challenge an eviction. That is a really important point: it does not actually lengthen the time that will be taken. That is not true.
Secondly, I will talk quickly about Jasmine, a renter who very recently challenged an eviction because she could not move in time. She was given two months to move under a section 21, but she could not move in time, so she challenged it and it took up the court’s time instead. If you extend the notice period to four months, that challenge would potentially never happen, the court never has to see Jasmine, she finds a new place and is comfortable and able to move out in good time. She is happy, and potentially the landlord is happy too.
On the cost of no-fault evictions for renters, we estimate that the average cost to a renter of an unwanted move is £1,700. For a renter to be able to save, it is really important that they are able to find some way in which, when the move is through no fault of their own, they can make those savings quicker in order to be out of the home. We think the best way to do that—rather than, for example, thinking about repayments from the landlord—is just to say that the final two months of renting will have no rent cost attached. The tenant then has time in that space to save in order to find a deposit and the first month’s rent, for example, and they are able to move out with the savings they have made because of the two months’ lack of rent.
It potentially means two months out of pocket for the landlord who has chosen to do a no-fault eviction, but if it is a no-fault eviction for a sale, they are potentially getting a big windfall through that anyway. The two months out of pocket can be balanced against the fact that otherwise it would be two months in which the tenant is likely to find themselves as one of the record number of homeless people we have at the moment. It is an important balance to strike, and that is one of the ways in which you could do it.
Mike Amesbury
Q
Francesca Albanese: We at Crisis recognise that changes do need to be made to the courts. Obviously, that is one of the central themes in this Bill and it is about making sure we get that right. But the problem is that if you bring in the court reforms first and then make the changes around abolishing section 21, you are effectively creating a two-tier system. For us, that does not protect tenants in the right way, so we would argue that both need to be brought in at the same time.
Jacob Young
Q
Francesca Albanese: To clarify, are you referring to ASTs, and their length?
Jacob Young
Yes.
Francesca Albanese: We would welcome longer-term tenancies. We know through our services—this is increasingly so at the moment—that people come to us who may have had their tenancies shortened for a reason that is not of their making. Being able to have longer-term tenancies in the private rented sector gives more stability for tenants. Equally, if you look at where rent increases can happen, this also manages that part of the market—making sure that there is proportionality in terms of when rent increases are made, as well as stability for tenants through longer-term tenancies.
Jacob Young
Q
Francesca Albanese: I think they certainly help. If we are looking at longer-term tenancies, I suppose it is about having more emphasis on longer-term tenancies being used more regularly. Going back quite a lot of years of working in this space, I know that there are ways you can do that now, but it is not the norm. Most tenancies that are given are six or 12 months with a rolling period or a fixed term.
I would also go back to the points made at the beginning: this is helpful, but there are other areas that we are concerned about, such as ensuring that people getting served notice on the kind of grounds that were under section 21 and which will now go over to section 8 are protected sufficiently. Even though longer-term tenancies can give tenants more protection, from the perspective of Crisis, which works with people at the lower end of the private rented sector market, where there is often a higher turnover of tenancies, we would want to make sure that those protections are still in place so that we do not end up pushing more people into homelessness as an unintended consequence.
Lloyd Russell-Moyle
Q
Francesca Albanese: I might make a broader point first and then come back to that. At the moment, as you will all be aware, the local housing allowance does not meet rents. It has not done so for a long time, and it has been frozen since 2019. That decoupling of rents from local housing allowance levels is causing huge problems. We did some research six months ago—I would say the situation has probably got worse since then—that shows that only 4% of the market in England is affordable to people on local housing allowance. In some areas of the country, that drops to 1%, so it is a massive issue. That needs to happen now, and it is something that the Government can do now. They can give broader access to the private rental market. There is obviously a longer-term issue: we need more social housing. Where private rental sits within the broader housing market is really important.
On the point about discrimination, we do not want tenants to be discriminated against because they are in receipt of welfare benefits. Anything that prevents that is welcomed. The problem at the moment is that quite a lot of tenants are not getting anywhere near properties within the private rented sector. We are seeing record levels of people trapped in temporary accommodation and local authorities are very stretched. The point about the private rented sector is that quite a lot of people are not even getting access to it, let alone being discriminated against because of being on welfare benefits.
On the more specific point about tribunals, that is not my area of expertise, so I do not want to comment on something where I would be giving an opinion rather than factual evidence.
Matthew Pennycook
Q
Ian Fletcher: Build to rent is something that started over the past 10 years. It is trying to encourage institutional investment into market rented housing. It is not pitched at high-income earners. We do a survey each year that looks at the demographics of the build-to-rent sector, and I would say it is catering for medium earnings—often key workers and people of that nature—and supporting our core cities particularly, as a lot of investment has gone into a number of the core cities across the UK.
In terms of impact, a lot of the things we very much welcome in the Bill have, to some extent, been pre-empted by the build-to-rent sector: a number of my members are already members of an ombudsman voluntarily; the build-to-rent sector has proudly been at the forefront of welcoming pets; and decent homes is not something that will trouble the sector. The portal is something I have been campaigning for since 2007. There is a lot to welcome in the Bill.
Some challenges that are specific to build to rent are things like the Government abolishing rent review clauses and the lack of any minimum tenancy length in the Bill for landlords, which means that there could be a danger, particularly in properties in core cities, of significant churn.
Jacob Young
Q
Ian Fletcher: As I say, the stock of build to rent has been developed over the past 10 years, so it is unlikely not to be meeting the decent homes standard. Equally, the management of the property is done to a very high standard. That is something the sector is very proud of. I do not see any challenges in introducing decent homes into the sector from a build-to-rent perspective. We have sat around a number of tables with the Department as it has worked through the specifics of how the standard would impact the private rented sector, and I have not heard many dissenting voices in terms of this being introduced into the sector.
Ms Karen Buck (Westminster North) (Lab)
Q
Ian Fletcher: It is something that we have been continually concerned about. In a London context, the removal of the planning constraints on the short lets market affects property across not only the rental sector but the leasehold sector.
It is a concern, I suppose, in terms of members. At the moment, you obviously have to take a minimum six-month tenancy, but what members often find is that you do not want to restrict subletting, because often that is helping the ultimate tenant, if they have to move for various reasons. You are finding that quite a lot of people are moving into these premises and then subletting to somebody who will take it on a short-let basis, so these are portals and things of that nature that, to some extent, are exploiting that situation.
Matthew Pennycook
Q
Kate Henderson: Sure. At the moment, the social housing sector is regulated by the Regulator of Social Housing, and the vast majority of our rents are set by Government and set annually. The Bill makes changes that would restrict rent increases to once in 12 months and require landlords to give two months’ notice of rent changes.
As I mentioned in my introduction, our members manage 2.7 million homes. Requiring two months’ notice of a rent increase, and requiring each tenant’s rent to be changed on the anniversary of their tenancy, would place a huge administrative burden, whether it is on a large-volume landlord or even on a smaller landlord with fewer staff.
This would take away from a provider’s ability to deliver those core services. The Bill acknowledges that by including an exemption for social housing in the rent standard—social housing is exempt from those changes. However, some types of social housing, such as intermediate rents, specialist supported housing and some forms of low-cost home ownership, are not included and do not appear to be exempt from the changes. Not exempting some types of social housing would cause complications and administrative burdens. It might mean that neighbours had their rents increased at different times, and it would really affect delivery.
Housing associations are responsible landlords, and we are regulated by the Regulator of Social Housing, so any concerns about unscrupulous rent increases do not apply to us. We are asking that all types of social housing be exempted from the proposed approach to rent increases, whether or not they are included in the rent standard.
Jacob Young
Q
Kate Henderson: It is absolutely right that residents in the private rented sector have access to an ombudsman. It is really important that that access is clear and easy to navigate and that there are routes to address where things have gone wrong in the private rented sector.
From a housing association perspective, we want to make sure that there is clarity about the remit of a new ombudsman, because we already have an ombudsman service. However, some housing associations also provide market rent homes. If you were a resident in a market rent home, would you go to the current housing ombudsman or to the new PRS ombudsman? We need real clarity on remits so that there is not confusion either for the landlord or, most importantly, for the tenant.
Matthew Pennycook
Q
I suppose I would like to probe what you think the consequences are if that legislation takes some years to deliver. How does the delay bear on the other reforms that this Bill enacts? How might we use the Bill to tie into that other legislative process? How does this Bill need to relate, if at all, to that forthcoming legislative decent homes standard for the PRS?
Dr Dawson: Thank you for the question. I have a few thoughts with regard to indications we have had that the decent homes standard might be brought in through the Bill. That is something that the CIEH is very keen to see. At the moment, the decent homes standard provides a fairly simple set of criteria, which are measurable, are fairly easy to understand, and provide the opportunity for both tenants and landlords to have some consistent standards to refer to when considering the condition of the property. Not having that in the private rented sector results in an odd disparity: we have social rented accommodation with the highest standards, and conditions have improved considerably through that standard, and then there is private rented accommodation that does not have that standard.
We find it very difficult for the sector to self-regulate and for landlords to organise their own repairs and maintenance schedules, when they very often have to wait for a local authority inspector to visit their property to carry out an inspection under something like the housing health and safety rating system schemes. It is something we can also get some benefit from through the Housing Act 2004 licensing, which allows us to set some of these conditions, and allows us to tailor them by area. However, bringing in a national standard across the sector would be very advantageous and provide a very clear requirement, although the CIEH would like to see some more clarity and would like to be involved in the consultation on the proposed changes to the decent homes standard.
The standard could be implemented in the sector at a later date, after being included in the Bill in order to get it enacted. That would give us a two-step process, and then we could bring the standard in when the amendments had been made and we had the updated standard to work from.
Jacob Young
Q
Dr Dawson: The CIEH is very happy to see the portal introduced. I am based near Wales, and I sit on the advisory panel for Rent Smart Wales on behalf of the CIEH. We have seen the portal brought in, and it has been very effective. It provides a lot of data on where rental properties are, and who their landlords are. Local authorities have quite a hill to climb in trying to find that out independently. It will be a very useful source of information. It is also a good source to look at when collecting certificates on properties.
However, we find that the portal has limited impact with regard to the condition and contents of properties, and management practices. It is an information-gathering tool. It has the potential to be a central information portal that landlords and tenants can refer to—a sort of single source of truth. On very small landlords registering with landlord bodies, 85% of landlords own one to four properties, and we are finding what an author referred to as a cult of amateurism. These landlords have differing levels of expertise, and of knowledge of a complex legislative environment. The portal can be a central reservoir of information for them, with quite a bit of scrutiny behind it.
As I say, we welcome the portal when it comes to providing data on where the properties are and who the landlords are, though the more unscrupulous operators will still try to avoid the register so as to evade their duties. I would not go so far as to say that it will make a significant impact on the condition and contents of properties, or the management practices of landlords in the sector.
Ms Buck
Q
May I also ask a question about enforcement, which is central to this issue? As we know, the enforcement record is very patchy in local government. In your view, why is that?
Dr Dawson: With regard to the use of the decent homes standard in the sector, I have found through my personal research on the sector that there is a lot of variation in the licensing conditions and standards set for private landlords in different sub-markets up and down the country. It is only right that local authorities tailor their approach to suit their local market, but there is great need for more consistency between the licensing conditions that they set and what they require in their area.
If we were to bring in the decent homes standard across the sector, licensing standards could be revised to accommodate that new duty and any updates made to the decent homes standard. That would provide a fairly common set of grounds for properties nationally. Then, local authorities need only make small changes to what they require of properties in their area to fit local peculiarities of housing; for example, northern back-to-back houses are something to burden yourself with only if you need to be aware of the issues that they present. You get steel-framed houses in some areas and concrete houses in others. Local authorities need to be able to focus their approach and the standards that they require to fit what they have going on in their area.
We still have the opportunity to use the housing health and safety rating system under the decent homes standard. The updates to the HHSRS will come through fairly shortly; we will welcome their being brought into practice. Use of the HHSRS would remain a common requirement during the inspection of properties, to satisfy the requirement on properties not to have serious hazards.
A whole range of factors influence levels of enforcement in local authorities. At the moment, we have about 2.2 qualified environmental health officers for every 10,000 private rented sector dwellings, so that is already a pretty low rate. Where we have larger authorities and significant political backing, we see more environmental health officers, with better recruitment, better political backing and more funding for those officers, which is key, so you start to see a collection of experience building up and the legal backing behind it. For example, Newham has something like 100 environmental health officers or enforcement staff in its departments, and they can move their way through more than 200 prosecutions in a year. In contrast, a rural authority may have one or two environmental health officers, who must share their duties across all the regulatory functions of environmental health, including food safety, health and safety, environmental protection and public health.
One of the profession’s big problems is ensuring consistency in funding. When funding is renewed annually and you are looking at changes each year, it is very difficult to do succession planning. We have seen a gradual reduction in the number of people coming through university environmental health programmes in order to support the profession and provide a reservoir of expertise for the inspectorate. We are also seeing more of them going off to private sector employers, rather than the public sector.
A range of issues are affecting the sector, and the sustainable and predicable funding such as we get with Housing Act 2004 licensing has been a real lifeline for the sector. Where we have big schemes going, it has managed to keep the nucleus of staff that is required for the expertise and the momentum to move large-scale enforcement forward. My apologies—that was quite a long answer.
Jacob Young
Q
Dr Dawson: When Wales first implemented the scheme, about 196 penalty notices were given out in the first couple of years and there were about 13 prosecutions. The main reason, from the Welsh Government’s own analysis, is that they did not set up clear systems and processes for liaison with local authorities ahead of the formation of Rent Smart Wales.
There is a process whereby local authorities are expected to carry out enforcement functions and can then bill Rent Smart Wales, through an agreement—a memorandum of operation—that they have all signed up to. However, because they are trying to account for small amounts in hours and tasks, it is very difficult for local authorities to predict the workload and allocate officer time against it. That has become somewhat of a Cinderella to local authorities’ other duties.
One of the higher impact areas is that, although Rent Smart Wales provides licensing and can therefore enforce conditions, it also has a separate registration function, which is purely information gathering and gives it the ability to send out mailshots to landlords and letting agents about changes to the law and training courses that are available. However, landlords have the opportunity to exempt themselves from those communications, and a very large proportion did so at the point at which they registered. Therefore, they receive no communications and no updates, so they are none the wiser, despite the benefit of having registered and made themselves available to get that information. That was a sad loss, and there is not much you can do about it now.
Lloyd Russell-Moyle
Q
Dr Dawson: I think we could probably do with the portal as an information repository. That is very welcome. Research shows that a lot of landlords tend to deal with the need for information on a reactive basis, when a situation presents itself. As most of them are not members of recognised landlord bodies, they are using things such as internet portals, chatrooms and blogs to get information on what is required of them. Through local authority licensing, local authorities are getting much better penetration and being brought closer to landlords, and that allows them to provide advice, but landlords in general will tend to use online resources to get information. We would like them to use a single portal that we have quality control over.
The same goes for tenants. At the moment, one of the main reasons for tenants’ not complaining is ignorance of their rights; I am sure that Generation Rent will have raised that in its submissions. If we can point to a single, consistent source of information, that will help the sector to regulate itself. Given that so many landlords are small scale—85% of properties in the sector are owned by landlords with portfolios of one to four properties —providing the opportunity for more self-regulation in the sector would be a big help. Local authorities have limited budgets, and because the regulations are so complex and there is such a range of operators—there is a sort of sliding scale from the good to the poor—a more interventionist approach is required. Using rent repayment orders incentivises tenants to keep an eye on landlords.
Things like the three-month period in which you are unable to re-let a property after you have used grounds 1 and 1A will be exceptionally difficult for a local authority to follow up on. We just do not have the resources to react in that sort of time and proactively go out and visit these properties. Six months to a year would be much more sensible.
On incentivising tenants to take action separately from the local authority, the only thing we would say is that we should be able to give them advice. Under the original rent repayment order clauses, we were prevented from giving advice to tenants on cases. If we are taking action, they will often come to the local authority and ask for information. We have not looked at that as an option. We would certainly be open-minded to it, and we would support anything that helps the sector to regulate itself.
Matthew Pennycook
Q
Dr Rugg: That is a very big question. I do have concerns about the Bill as it currently stands. We have become quite focused on the abolition of section 21, and I can understand why, but the abolition of section 21 does not deal with the reasons why a landlord might serve a section 21 notice. My feeling is that, if the Bill goes through as it stands, it will give tenants the impression that they have greater security than they in fact have.
One of the biggest concerns with the Bill as it stands relates to possession on the ground of the landlord selling the property. The fact that the landlord is selling is one of the biggest reasons tenants are asked to leave, and a lot of landlords are exiting the market. The Bill does not prevent that, so that will continue. We have to think about how we neutralise the market. At the moment, the market is weaponised for both landlords and tenants in ways that are very unhelpful.
We have to think about how to calm everybody down and start thinking about what the problems are in the market. One of the biggest issues in the market at the moment is the lack of supply. That is quite problematic for tenants, and it is one of the reasons there is a lot of energy around section 21. Abolishing section 21 is not going to deal with supply issues. From the evidence we have at the moment, it is very likely to make supply issues worse.
Professor Gibb: My perspective on this stems to a large extent from the experience we had in Scotland after the introduction of some aspects of the Bill and some of the kinds of measures that you are now proposing. I would echo what Julie says, in that we made these changes, which brought some confidence to tenants—that is what some research tells us—but some fundamental issues remained unchanged.
Despite investing in tribunals—in justice, as it were—there is still a strong sense of asymmetry in access to justice, which is to the detriment of tenants. People supported the changes, which are very similar in terms of the grounds for possession and so on, but none the less we find ourselves with a similar housing rental market in Scotland, which exhibits a great deal of shortage and very high and accelerating rents.
The counterfactual is what it would have been like without the changes. It probably would have been worse, but the changes have not stopped those kinds of things happening. In a sense, they probably are not supposed to do that. It is not enough to do these necessary things to make the rental market work more satisfactorily.
Jacob Young
Q
Dr Rugg: On the issue of supply and section 21, counterfactually, a lot of landlords let because of section 21; they do not evict people because of section 21. Section 21 gives them the confidence that, if they run into severe difficulties, they will not have to go through a protracted court process in order to end a tenancy. This is particularly pressing for smaller landlords, who might find themselves paying two or three mortgages at the same time, with tenants that are problematic. You can understand the reasons why risk is hugely important to landlords a lot of the time. Antisocial behaviour is really problematic. If there is a tenant causing lots of problems in the neighbourhood, the landlord wants to get that situation to a close as fast as possible.
Abolishing section 21 would increase landlords’ perception that there is risk in the market. An area that will be problematic is that landlords who come to the sector with property—perhaps they have inherited it or they have started a partnership and there is a spare property—will think very hard about whether to bring that property to the market. I think that is one of the consequences we will see. The market does not look like a very friendly place to landlords at the moment, and that is the big issue we have around supply.
How we help local authorities deal with criminal landlordism is something that I am particularly concerned about at the moment, because it is part of a big project I am working on. Local authorities have very different approaches to dealing with enforcement action in their area. One of the issues is that there is an awful lot of variation in political—i.e. councillor—attachment to the notion that this is something they should be dealing with, so councils invest at different levels in their enforcement activity. That is a democratic issue, and that is something we cannot do anything about, but I agree with the notion that Dr Dawson introduced that we really need some baseline standards that everybody can expect to adhere to.
One thing we have not really mentioned is the use of letting agents. They cover an awful lot of property in the market, but we do not expect them to show responsibility for the quality of the property they are letting. In a sense, I think that is soft policing, if we think that letting agents should have greater responsibility for ensuring that the properties they have responsibility for meet the standards that we set for the sector. In some ways, that would relieve local authorities of some of the burden of inspecting all properties. At the moment, local authorities are obliged to inspect only a certain proportion of properties that sit under licensing regimes. An awful lot of the sector sits outside that and is covered by letting agents. I think we are missing an opportunity to think about how we skill up different parts of the market to improve property quality.
Professor Gibb: I think one of the reasons I am here is that yesterday my colleagues and I published an evidence review for the Department for Levelling Up on the question, “Is there evidence that increasing non-price regulation has led to disinvestment in the private rented sector?” That is clearly a very important question for the kinds of policies being proposed here. In producing the review—it is an international evidence review over the last 20-odd years—we found that it is very hard to answer that question, because there is very little research that directly speaks to it, but you can infer from some of the peer-reviewed literature, and there is actually very little evidence that that is the case.
In other words, we believe that there is probably a constellation of factors that drive disinvestment in the sector, and it is very hard to identify whether increasing regulation, per se, is behind that. The fact of the matter is that in England, there was increasing regulation in the last 20 years, while the sector was growing. There is also evidence internationally that where regulation has increased in the short-term lets market, there might have been a short period of disinvestment, but there has not been disinvestment in the longer term. In the longer term, investment tends to have stabilised and continued to grow.
So we have been quite struck that there is very little evidence to that effect. That is not to say that there is not disinvestment going on, but it is a much more complicated thing. Another problem is that often we have several regulations being introduced at the same time, and it is quite hard to unpick the causal forces of individual things. The bottom line is that we found it quite hard to identify that increased regulation was causing disinvestment or was correlated with it.
Ms Buck
Q
Dr Rugg: I am better able to speak about the lower end of the market, because that is the area that I specialise in. We had some comments earlier about build to rent, and there are some concerns about the build-to-rent sector, but I will not go into those here.
Thinking about the lower end of the market, the proposed regulation seeks an end to “No DSS”, as a catch-all. I do not think that that will necessarily work particularly well. Landlords seek not to let to people in receipt of benefits for two reasons: first, because they might have some prejudiced view about the people who tend to be in receipt of benefits, and that is something that is certainly not right; and the other set of reasons sits around frustration with the benefits administration and the level of benefits being paid.
I have researched landlords and housing benefit for many years—too many to mention. In the past, landlords who routinely let in the housing benefit market enjoyed quite good relations with their local authority and they worked together to deal with problems that their tenants might encounter in the benefits market. The introduction of universal credit has completely taken that link away. A lot of landlords are feeling quite exposed now: they have tenants with quite high needs having problems with their benefits, and they simply cannot do anything about it. That is a problem that we need to think about.
One of the earlier speakers referred to the rent control that sits in the local housing allowance system. That is hugely problematic. It means that tenants who receive local housing allowance simply cannot shop around the market, because the rent levels are far too low for them to act as effective consumers. Essentially, they are having to shop where they can, and some landlords are definitely exploiting that situation, letting very poor-quality property on the understanding that the tenants do not have very much choice.
Professor Gibb: I do not have much to add, except to say that I completely agree on the local housing allowance. We have just been doing some research in Scotland that suggests that the levels are far too low to be effective for the great majority of people. It is really welcome to think about the market rental sector as a series of segmented markets. We should therefore not expect regulation that covers the whole area to have equivalent effects in different parts of that area.
The only other thing I would say is that we also need to think as much as we can about housing as a system, recognising the importance of social and affordable housing alongside the bottom end of the rental market, and thinking about how those things can connect together and about the value that increasing investment in social and affordable housing would bring.
Matthew Pennycook
Q
To the extent that the system still needs to be improved, what is your understanding of what the metrics are? My reading of the Government’s response to the Select Committee, what is in the White Paper and what was in the King’s Speech briefing notes is that there is a whole set of different metrics—end-to-end digitalisation, new digital processes, bailiffs and so on. How are we to know, because the concern is obviously that the abolition of section 21 could be years away, if we have court improvements that are undefined or are large in scope?
Fiona Rutherford: That is one of the concerns that we have. Looking at the history of the reform project, while there have clearly been some successes, there have also been quite a few delays. And we are also concerned given the implications for the tenants in particular in relation to section 21, and given that a proper argument has not been made as to why that dependency between the two exists.
I am just thinking of the court performance, which you have just raised. Civil court performance, even during the pandemic, was better than that of most of the other jurisdictions and even now section 21 is taking roughly 28 weeks from notice to point of repossession, versus the estimation that the Government have made that section 8—the new approach in the new Bill—would take possibly the same time, maybe even a week less.
We would say, first, that a proper rationale has not been put forward as to why that dependency exists and why section 21 cannot proceed. Secondly, the implications for the tenants themselves are so considerable that it is not at all clear to us why that cannot proceed as fast as possible.
Professor Hodges: I tend to look at things in terms of quite long stages of evolution. Going back a hundred years, we had courts that administered law. One realises, and I speak as a professor of law, that law is not the answer to everything; in fact, in some situations it is not the answer to very much. A lot of colleagues would shoot me for saying that, but I profoundly believe it.
What we have discovered is that human behaviour, and therefore psychology and other forms of dispute resolution and supporting people to work together and restore relationships, is important. The answer to that is usually not law and the process is usually not an adversarial process involving courts or judges, however sympathetic they are.
We then started talking about a technique of mediation and that went into an institution of alternative dispute resolutions, or ADR, and the courts are sort of playing with trying to put these things together at the moment. Actually, that has been leapfrogged by things like ombudsmen, in the private sector as opposed to the public sector—parliamentary or local government ombudsmen. In the private sector, virtually every regulated sector now has an ombudsman—financial services, energy, communications, motor vehicles, lawyers, blah blah blah. It is quite a long list.
There are various reasons why that is true. The first is that the ombudsmen usually deal with codes—codes of behaviour—and not just legal rights. They can and do decide legal issues, but it is usually codes. They are looking at the underlying behaviour of the bank or the rail company or whatever it is, and therefore you need a different process as well. So it is not adversarial and it is usually free to the consumer, because the business is made to pay or pays for the infrastructure of the ombudsman.
However, there is a very considerable advantage of an ombudsman over a redress scheme, and many of the redress schemes are still somewhat old-fashioned because they are basically arbitration and basically adversarial, and therefore the larger party will bowl up with a whole load of expensive lawyers and you just maintain cost—an adversarialism of not bringing people together. And there is an imbalance of power in that situation.
That does not happen with an ombudsman, because it is a question of “Let’s talk to each other.” The mediation technique is automatically in the process—you encourage communication. If it is not going to work, the ombudsman makes a decision.
Another big function of why the ombudsman is really useful is that they collect data. In all the sectors I can think of, and critically in financial services, energy and so on, ombudsmen are the data controller for the sector because they can tell the banks or the regulator what is going on and what consumers are worried about. That is a feedback system within which people can see in real time exactly what is going on and can therefore respond to it. You sometimes then need responses. On the legal side, the responses may be enforcement of law by a court, or by a regulator if you have one—we do not have one in private rented yet, but we are, perhaps, close—and on the other side, you can have decisions by an ombudsman that are then put in place.
It was very interesting listening to Dr Rugg, who knows much more about the sector than I do. She spoke about support for landlords. Every regulatory system I know needs support for all the actors—tenants, landlords, agents, whatever. Ombudsmen can help with that, but I think there is a gap in local boots-on-the-ground support. Enforcers, like local authorities, or a national regulator if there is one, are sometimes able to support and help, but we have a missing piece.
Summing up, therefore, my view is that this Bill is a very important step forward in modernising towards a useful, effective future system. It is taking an ombudsman as being a central institution, as well as the portal where you get data—admittedly, it is a regulatory portal, rather than a disputes portal, but we may evolve; it is fairly easy to evolve once you have it. These are absolutely critical elements of what a really good future system would be.
I would go further, with just a couple of sentences. One point is that one needs to think about boots on the ground, with people supporting people. An ombudsman is national, so one has to fill that gap. Actually, I think tribunal judges, ombudsmen, local authorities and maybe others—I have had discussions with people about this—could fill that gap. It is critical for everyone. The other part is that one should ensure that everyone knows where to go—“Where do I go to get support? Have we got too many people?” On the dispute resolution side, do you go to court, a tribunal or an ADR scheme? How many ombudsmen are there? We already have three in the property and housing sector. Proliferation is never a good idea, and there are other sectors that show that. The objective is to pull things together. The inevitable logic of this means that you squeeze together the courts, the tribunal and the ombudsmen.
At their request, I chair an ad hoc committee involving the president of the tribunal, the various ombudsmen and the property redress scheme, who, in the past year, have worked on working together on service charges. It has been very effective. I am not sure it has actually been announced yet, as such, but it is not secret. They are working on how to work together. From the point of view of the tenant, certainly, but also the landlord, you want a simple pathway: where do you go? The data reason for that is that if you have a pathway where you have one database, you are going to maximise it; the data is all over the place at the moment, and we do not collect it.
I see this as a direction of travel. The answer to your question on when we will be ready to institute it is: do it now. I would be bold and move the county courts into the tribunal. We already know that the tribunal and the ombudsman can work together. You just squeeze people together one way or another. Then, you will have a fantastically good system, which is the basis of a very self-regulating regulatory space.
Jacob Young
Q
Fiona Rutherford: Thank you for the question. I think I am going to quote Dr Rugg again—I am afraid I only joined recently—but I thought the point on supporting the tenancy was really good: it is about neither the landlord nor the tenant, but the relationship. That is key to ensuring that, whatever solutions are put in place, you are looking at that as being your key outcome, as opposed to trying to take sides, as we have seen all too often.
The other thing that we have seen—Professor Hodges has strongly alluded to it—is the disaggregation of the amount of services that exist. To some extent that is great, because it means that there are potentially lots of places to go. However, the reality is that most landlords and tenants do not know that those services exist or how to access them. Whether or not that is through another ombudsman—I have some concerns about creating more and more ombudsman, and whether there is a way to streamline the available services—I think the most important thing is that those services are signposted to individuals, which means landlords and tenants, and also that the services are provided.
JUSTICE alluded to that in the report we published in 2020, where we talk about our long-term vision of adopting a multidisciplinary approach to avoid escalation and address the common underlying features behind tenants going into arrears, such as debt, family issues or employment issues. If there is a way to keep the longer term in mind, while not delaying on things like section 21, but also thinking carefully about addressing the disaggregation of services and including signposting and information, then ultimately, as far as I am concerned, all those things will be ingredients to success.
Professor Hodges: I have a quick comment. Your question was, “How do we get people to engage in mediation?” It is automatic in the pathway. It is not in courts; it is in ombudsman, and to some extent it is now in tribunals. The Ministry of Justice has just introduced a mediation stage for low-value cases, but it is not necessarily automatically in the pathway.
All the consumer ombudsmen have been using this for up to 20 years, automatically. You put in your complaint and the ombudsman then says, “Okay.” It is investigative and collaborative, rather than adversarial. You do not need lawyers; they do not do anything. You just say, “Tell me about it,” because you have a central expert. It is not that you have two lawyers and a judge—who are not there. Rather, you have one ombudsman in the middle, so it is efficient and quick, and they are saying, “Tell me about it.” So you pull all the evidence in, and then you say, “Okay, what do you say? And you?”
That is automatically mediation, and most cases settle at that stage, because they talk to each other. If it is not going to work, you know fairly quickly, in which case you just get more evidence and then make a decision, unless they agree. So it is in the process. The courts are moving toward that but, because of the cost of public provision, they cannot do it as well as the ombudsmen.
Matthew Pennycook
Q
Professor Hodges: The signposting is to have a single ombudsman.
Jacob Young
Q
James Prestwich: Again, as other witnesses have said, there is an awful lot to like about the landlord portal. We have talked quite a lot about the benefits that the portal will have for tenants, but it is right that there are significant advantages for landlords as well. This point might not have been made yet, but the overwhelming majority of landlords, regardless of the number of homes they own, are thoroughly decent people doing a decent job. We know there are examples of poor quality and poor practice, as there are in all professions, but any tool that enables landlords to get a better understanding of the responsibilities expected of them is to be welcomed. The point about how we get the portal to work both ways is really important. There is something about the sort of information that local authorities will be able to access from the portal, although they do not at the moment. That should enable local authorities, providing they have got the capacity and resources, to be able to take a harder line when people fall below the standards that we all want to expect from landlords.
Lloyd Russell-Moyle
Q
James Prestwich: There is a lot that Ben Twomey said that you could agree with. I think the challenge here is about how we try to find that balance. We know that a lot of people in the private rented sector are accidental landlords. Previously, I was an accidental landlord and an accidental tenant, and neither of those things was particularly pleasant, so I have a little experience of that. There is a real challenge around all of that that we have not quite bottomed out yet.