Renters' Rights Bill (Third sitting)
Tuesday 29th October 2024
(1 month, 3 weeks ago)
Public Bill CommitteesRenters' Rights Bill 2024-26 View all Renters' Rights Bill 2024-26 Debates 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—