Renters’ Rights Bill
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Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, before we start the debate on the first group, I remind the Committee of the protocol around declaring interests, following a number of questions. As I mentioned earlier this week, noble Lords should declare any relevant interests at each stage of proceedings on a Bill. That means that, in Committee, relevant interests should be declared during the first group on which a noble Lord speaks. If a noble Lord declared an interest during the previous day of Committee then that is sufficient, but if this is their first contribution then any relevant interest should be declared specifically but briefly.
Clause 3: Sections 1 and 2: effect of superior leases
Amendment 16
Member’s explanatory statement
This amendment seeks to probe the government’s rationale for introducing retroactive legislation.
Lord Jackson of Peterborough (Con)
My Lords, I am grateful for that clarification from the Government Whip. On that basis I declare again that, as in the register of Members’ financial interests, I receive a rental income from my one property, which was my matrimonial home.
I will speak to Amendments 16, 17 and 18. My intention is to highlight an important principle that this legislation seems to violate. The amendments in this group are underpinned by the Bill’s retroactivity. I seek to probe the Government’s use of retroactive provisions, and I urge them to reaffirm from the Dispatch Box their commitment to prospective lawmaking.
Retrospective legislation is generally defined as legislation which
“takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty or attaches a new disability in respect to transactions or considerations already passed”.
The Oxford Dictionary of Law defines retroactive legislation as:
“Legislation that operates on matters taking place before its enactment, e.g. by penalizing conduct that was lawful when it occurred. There is a presumption that statutes are not intended to have retroactive effect unless they merely change legal procedure”.
Stroud’s Judicial Dictionary of Words and Phrases—a tome that I am sure we are all familiar with—defines it in Latin as:
“Nova constitutio futuris formam imponere debet, non praeteritis”.
That is, unless there be clear words to the contrary, statutes do not apply to a past but to a future state or circumstance.
The general approach to retrospective legislation was summarised by the noble Lord, Lord Kerr, in the Supreme Court case of Walker v Innospec Ltd and others in 2017, where he said:
“The general rule, applicable in most modern legal systems, is that legislative changes apply prospectively. Under English law, for example, unless a contrary intention appears, an enactment is presumed not to be intended to have retrospective effect. The logic behind this principle is explained in Bennion on Statutory Interpretation, 6th ed (2013), Comment on Code section 97: ‘If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow’s backward adjustment of it’”.
Retrospective legislation may also be challenged under Article 6 of the European Convention on Human Rights, because such legislation will only be compliant with convention rights where there are
“compelling grounds of the general interest”—
that comment was made in the case of Zielinski, Gonzalez and others v France 1998—or where such legislation seeks to remedy existing defective legislation.
The principle of non-retroactivity is a fundamental concept within the civil law system that ensures the stability and predictability of legal relations. It refers to the restriction placed on the application of new legislation to actions or events that have occurred prior to the law’s enactment. Essentially, this principle serves as a safeguard for individuals, protecting their existing rights and expectations from being unexpectedly altered by future legislative changes. Non-retroactivity is rooted in several key rationales. It reflects the belief that individuals should be able to rely on the legal framework in place at the time they act. If laws were to apply retrospectively, it could lead to confusion and insecurity, undermining the rule of law and fairness.
That is the basis on which I move my Amendment 16 and speak to my Amendments 17 and 18. In many jurisdictions, this principle is codified within civil codes or specific statutes. For instance, the French civil code explicitly states that a law cannot have retroactive effects unless otherwise specified. Similarly, the German Basic Law incorporates this principle, which serves as a safeguard against potential abuses of legal reforms by ensuring that new laws do not adversely affect established rights and obligations. Internationally, treaties and conventions also reflect the doctrine of non-retroactivity. The European Convention on Human Rights articulates the necessity of legal certainty and protection of rights, endorsing the notion that individuals must be aware of the legal consequences of their actions at a given point in time. The UN’s International Covenant on Civil and Political Rights further emphasises that no one shall be subjected to retroactive penal laws, further demonstrating the widespread acceptance of this principle.
I accept that there are some notable exceptions to the English legal system setting its face against retroactivity. One such case, perhaps the most notable, is of course the War Crimes Act 1991. If legislation is aimed at, for instance, protecting public safety or welfare, such as in scenarios where a retroactive law serves to enhance public health standards or address urgent safety concerns, the legal system may justify its application to prior situation. Courts often assess the implications of such laws on individual rights, weighing the benefits to society as a whole against potential infringements on personal freedoms. Another example in this context is the landmark case of the European Court of Human Rights ruling in Hirst v the United Kingdom about prisoner voting rights, where the court emphasised that legislative changes should not detrimentally affect individuals who were previously adjudicated under earlier laws. In this instance, the court reinforced the significance of respecting established legal positions, thereby underscoring the essence of non-retroactivity.
Lord Marlesford (Con)
My Lords, my noble friend raises a very important point. The Bill has merit. It also endangers the overall objective of increasing the supply of housing for the people of this country. It is very important that the transitional costs of introducing the Bill, if it becomes an Act, are minimised. The point that my noble friend perhaps did not emphasise sufficiently is that if there is a retrospective element to the Act, particularly if it is a rather obscure and unclear retrospective element, that will result in more confusion and, most importantly, more need for judicial decision. We should bear in mind throughout Committee that the judicial system in this country is under huge stress, the Chancellor is being asked for more money for really crucial cases, and it must be an objective of the Government, as we consider the Bill, to make sure that, in whatever form the Bill eventually comes out, it will require a minimum of judicial intervention.
Lord Carter of Haslemere (CB)
My Lords, I support what the noble Lords have said there. The principle against retrospection is long-lasting and fundamental to our constitution and our legal system, and it is enshrined, as has been said, in the European Convention on Human Rights.
There is an ECHR memorandum on the Bill in which the assessment is made that it strikes a proportionate balance between rights of property on one hand and the rights of tenants on the other. I would like to know from the Minister whether that proportionality assessment has properly taken into account the significance and the implications of the retrospection that has been drawn attention to here. What actually are the implications of that retrospection? What does it affect? If those words are kept in the Bill, what rights do they actually affect which are imposed in a new way by the Bill?
Baroness Thornhill (LD)
Not wishing to lower the tone of erudition in the Committee, I would say, “latine non studi”. In plain English, what I would like to say is that the kernel of the noble Lord’s concerns is about certainty and clarity over arrangements. We have all had letters from different people saying, “I don’t know whether this means I now have to change”. So I genuinely think that there is an issue around clarity and understanding and, to that end, I really look forward to the Minister’s response, because what we all need is a clear and flexible framework for tenancies that everyone understands. She spoke in some of her answers about making it simpler, but it seems that, historically, we have inherited quite an amazing array of differences, and it is perhaps no wonder that some people are struggling. So I think that the transition, and transitional arrangements, is something we should look at.
Lord Empey (UUP)
My Lords, I again note my interest in the register as the owner of a single rented property. The Minister has asserted, as Ministers are required to do, that, in her view,
“the provisions of the Renters’ Rights Bill are compatible with the Convention rights”.
I am just wondering, because it does tend to be a bit of a routine that those of us who have ever done this sign these things: can she tell the Committee whether there was a very specific examination of the circumstances in the Bill?
I must also say that the tour de force by the noble Lord, Lord Jackson, was impressive. We all felt that his Latin was very good—we will give him marks for that, I think—and he raises a very significant point. It is not unique to have retrospective legislation, but it is certainly frowned upon, bearing in mind the number of people who could be directly affected—their financial welfare, their own welfare, their concerns and the worries that can be generated by having something done, in effect, long after they had agreed and thought they had a deal. I am sure that President Trump will be listening to this debate, because he might be learning lessons; we might be teaching him things to do.
Can the Minister assure the Committee that when she signed that, or gave her views on the convention rights, that it was actually properly assessed, and legal advice was provided, rather than it simply being a piece of routine that departments do when they bring legislation to Parliament? Having listened to the contribution of the noble Lord, Lord Jackson, I think there could very well be people who will feel aggrieved if something happens subsequent to an agreement that they entered into freely and, all of a sudden, things have changed. I think we do need an explanation.
Lord Cromwell (CB)
Can I just add that I was disappointed that we did not have any phraseology in ancient Greek? We will have to put up with that for today, I suppose. I echo my noble friend Lord Carter’s point: I think it would be really helpful, whatever one thinks of the rights and wrongs of retrospective legislation, that a proper list is set out as to which rights are going to be affected. I think everybody outside this Chamber is going to need that, in practice, in the rental sector. It would be very helpful if something could be published that literally specifies which bits are going to be affected retrospectively and how.
Baroness Scott of Bybrook (Con)
My Lords, I start by thanking my noble friend Lord Jackson of Peterborough for bringing Amendments 16 to 18 to the Committee today. The question of the retroactivity of the Bill is not just a question of how it will be applied, it is a question as to whether it is fair at all. It is easy for Governments armed with executive powers to apply the law retrospectively, but it should be the duty of every Minister to ask: is this the right way? Is it the fair way?
I invite noble Lords to imagine that they signed a tenancy agreement under a clear set of rules in January 2025; they followed all the rules; then, in June 2025, Parliament passes a law saying that their tenancy is now invalid. Well, many will have to imagine no longer, because once the Bill gets Royal Assent, tenants and landlords may find that their agreements are no longer valid.
The predecessor of the Bill adopted a model of prospective lawmaking by setting out a two-pronged approach to implementation. It would have assured that substantial changes were introduced at a suitable pace, one that brought the sector along with it, giving it time to understand the new requirements and adapt accordingly. In their haste to publish the Bill, the Government appear willing to abandon the principle of prospective lawmaking, placing an immediate and heavy burden on landlords. The Committee will be well aware that 45% of landlords own just a single property. These are not professional landlords with teams behind them. They lack the infrastructure to absorb complex regulatory change. They are not poring over the details of legislation, nor do they have time to follow days of Committee proceedings. How do the Government expect these individuals to implement such sweeping reforms all at once and without a serious and structured implementation period?
At this Dispatch Box on Tuesday, I quoted some statistics from Paragon. In the same survey, it noted that 39% of landlords had not even heard of the Bill. Will the Minister please explain how the Government will communicate these changes? The department must begin explaining in clear and simple terms what is coming down the track. Landlords need to know that change is coming. Regardless of the Bill’s specific contents or intentions, its retroactive nature will pose challenges. It will not only bring an abrupt end to agreements freely entered into by two consenting adults, it will unleash a wave of challenges upon landlords through its immediate implementation.
I turn to the litany of amendments put down by the Government. We welcome the right to sublet and want to ensure people do not lose that right, but we want it to be implemented with clarity. On these Benches, we would prefer those specific tenancy types which underlie the right to sublet—such as fixed-term assured tenancies or assured shorthold tenancies—to remain. We set out our clear case yesterday and we will continue to stand up for a sector that delivers choice and variety and provides the homes we need. Will the Minister explain the Government’s adjustments to the context of Clause 3? It is clear that they intend to restructure the legislation, so on these Benches we wish to ensure that the effects of superior leases are appropriately addressed within the updated framework. Can the Minister set out how the Government will ensure that tenants in sublet arrangements are not left in legal limbo?
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I thank the noble Lord, Lord Jackson, for his amendments relating to transitional provisions and retroactive legislation, and for his lesson in Latin. In the year I took my second language, I was hoping to do Latin, but they changed it to Russian, so I never got to do it. I am very grateful for the lesson this morning. I will return to his points in a moment.
I will cover a couple of other points before I explain the government amendments. First, in relation to the comments made by the noble Baroness, Lady Scott, if landlords are not aware of the legislation, it has certainly not prevented them from coming forward with their representations—we have had hundreds of them. We have also had frequent contact with representative bodies such as the National Residential Landlords Association, but that does not mean that the Government do not understand the need for effective communication of the legislation. We will continue to work on a programme for that.
In relation to the comments made by the noble Lord, Lord Empey, one thing that frustrated and annoyed me when I was a council leader was when the standard equalities clause was put at the end of a committee report, as if it was just a tick-box exercise and everybody assumed it covered all the bases. I used to insist that the statement of equalities was relevant to the paper to which it was appended. I feel the same about signing off the rights clauses in this Bill, so I take it seriously. However, he makes a very good point, and we must always be clear that what we are signing off does its intended job.
I thank all noble Lords who have contributed to the debate: the noble Lords, Lord Marlesford, Lord Carter and Lord Cromwell, the noble Baroness, Lady Thornhill, as well as the other noble Lords whom I have mentioned.
On the government amendment removing Clause 3, I think this is the first time I have had to remove a government clause from a government Bill, but that shows that we are listening and thinking about making this a better Bill as we go along. Our amendments remove Clause 3, which makes transitional provision for terms in existing superior leases, and replace it with government Amendment 296. Government Amendment 296 inserts Part 2 of Schedule 6 to make transitional arrangements which ensure that pre-existing legal instruments will continue to operate and that parties to such instruments will not be found in breach of their terms following the implementation of our tenancy reforms. The risk arises because such instruments may make express reference to certain tenancies—such as assured shorthold tenancies, to which the noble Lord, Lord Jackson, referred—which will become obsolete as a result of the Bill. Mortgages, for example, sometimes require letting only on assured shorthold tenancies, which would be impossible for a landlord to comply with after commencement. In the case of mortgages, insurance contracts and Section 106 planning obligations, landlords will be able to continue to let their properties without being found in breach of their terms where they were able to do so before the reforms. Provision is made so that parties will not be prevented from making changes or modifications to their agreements of their own volition.
In relation to existing leases, the amendment will ensure that intermediate landlords will not be found in breach of their head lease terms should they return a property to the superior landlord which is subject to a post-reform assured periodic tenancy—I realise this has a level of complexity that can be baffling. That could be the case, for example, if a subtenancy is converted from a fixed-term to a periodic tenancy on commencement of the Bill and the head lease is for a fixed term that expires shortly thereafter.
Government Amendments 184, 276, 277, 290 and 297 to 301 make technical, consequential amendments associated with government Amendment 296. Notably, government Amendments 297 and 299 enable changes to be made to Part 2 of Schedule 6. These will ensure that transitional or saving provision can be made to address all possible issues which may arise from pre-existing instruments and that are yet to be identified. Again, this ensures a seamless transition to the new legal framework in what is, admittedly, a very complex legal context.
I will make a few general comments on the amendments tabled by the noble Lord, Lord Jackson. Subsuming Clause 3 into new Part 2 of Schedule 6 is intended to ensure that leaseholders who are permitted or required to sublet on a fixed-term assured tenancy, or an assured shorthold tenancy, under the terms of a superior lease are not put in breach of a superior lease following the changes to the assured tenancy regime made by the Bill. It necessarily has a retrospective effect on parties to such superior leases which were entered into before the Bill’s provision came into force.
The explanatory statement appended to the noble Lord’s amendment explains that the intention is to probe why this clause operates retrospectively. It is not entirely clear from the drafting what the amendment wants to achieve; the intention appears to be to enable an assured tenancy to be granted pursuant to the term in a superior lease in the same circumstances and on the same terms as would have been possible before the changes made by the Bill. It is possible that the intention is even to go as far as allowing a fixed-term tenancy or an AST to be granted. If so, the amendment would very likely not achieve that.
The policy intent behind Clause 3 is important: to protect landlords with superior leases from being unable to sublet in future, or even being placed in breach of their superior leases, as a result of the reforms. It is important enough to merit interfering in existing contracts. The Government recognise that any legislation with retrospective effect needs to be carefully considered. In the case of this Bill, we will apply the new tenancy system to all private tenancies at the same time, including those entered into before commencement. This will prevent a lengthy system of two-tier tenancy, ensuring that tenants can enjoy better rights at the same time and that Section 21 is not available in relation to private tenancies. Landlords will continue to have access to strengthened grounds for possession to end tenancies when they need to.
I turn specifically to Amendments 16, 17 and 18. As I have just set out, Clause 3 has been subsumed into new Part 2 of Schedule 6. However, the intended outcome behind Clause 3 will still be delivered, so I will address the substance behind the amendments tabled by the noble Lord, Lord Jackson, as this will still be relevant even if the clause structure and numbering are somewhat altered.
The purpose of Clause 3 is to enable landlords with superior leases to continue to sublet after the reforms have come into force. Existing superior leases may require landlords who sublet to do so on an assured shorthold or a tenancy with a fixed term. These are types of tenancy that this Bill will abolish, so landlords will not be able to comply with such requirements in future.
Clause 3 therefore ensures that the intermediate landlord will not be in breach of the terms of their superior lease and can continue to sublet under the new system by issuing new-style assured tenancies. This is critical to ensuring that landlords with existing superior leases are not unduly impacted by the reforms and left in breach, and must therefore apply retrospectively to existing leases in order to operate as intended. Indeed, this preserves the effect of existing agreements and ensures that the reforms do not interfere in previously agreed arrangements—the opposite of what the noble Lord, Lord Jackson, was suggesting. Without these provisions, some landlords would be left in breach of their own superior lease, and the future supply of private rented properties could be severely affected.
I do not think that these amendments will improve how Clause 3 will operate in the proposed new structure, and therefore I respectfully ask the noble Lord, Lord Jackson, to withdraw the amendment.
Lord Jackson of Peterborough (Con)
I thank the Minister for those comments. I, too, remember when we sparred on regional television many years ago. We did it in English—not Latin, unfortunately, or even in Russian.
On a serious point, I hear from the Minister that she is cognisant of the need for a balance between the rights and obligations, and duties and responsibilities, of tenants and landlords. I was struck by the comments of my noble friend Lord Marlesford about litigation and the capacity of the courts to deal with some of these issues which may arise from aspects of retroactivity in this legislation. The noble Lord, Lord Cromwell, also made a very good point, which the Minister will hopefully take on board, that we need a proper schedule ahead of time where the Government outline where these changes will be made, in order for representative organisations, such as the NRLA and others, to communicate that. I also hope the Government take the opportunity to consult properly with small landlords and other representative bodies.
Naturally, because of the wide-ranging nature of these changes, we will no doubt have to return to this issue from the Front Bench and across the House on Report, but with the spirit of co-operation and the helpful response from the Minister, I am happy to withdraw my amendment.
Lord Young of Cookham
“(7A) Any regulations made under subsection (7) must make specific provision for shared ownership leases.”Member's explanatory statement
This amendment probes what effect the Secretary of State considers clauses 1 and 2 will have on shared ownership leaseholders who currently rent out their apartments under licences.
Lord Young of Cookham (Con)
My Lords, these probing amendments draw attention to the problems already facing many shared owners following the cladding scandal but also problems for them with the provisions in the Bill as it stands. I note that the Government’s impact assessment makes no mention of shared owners who have become accidental landlords.
This form of tenure, shared ownership, occupies the space between owner occupation on the one hand and tenancy on the other, as a shared owner owns part of the property and rents the other bit from a social landlord. Shared owners are individuals who are unable to buy a property on the open market and use a government-backed affordable housing scheme to buy a share of a property, increasing that share as their circumstances improve. So, by definition, they are not well off. The Joseph Rowntree Foundation analysis in 2020 indicated that around 20% of shared owners are in poverty—double the rate for outright or mortgaged home owners—suggesting a demographic that is vulnerable to shocks such as those following the cladding scandal.
To complicate matters, shared owners can simultaneously be both a tenant and a landlord. In its 2025 survey, the Shared Owners’ Network found that 22% of its members are now subletting, with 90% doing so because of the cladding scandal. They have to sublet to move on with their lives, because their properties are not sellable. The Government do not collect data on the number of shared owners who sublet, but the Government recently amended the Homes England Capital Funding Guide to facilitate subletting for shared owners who are trapped—so I expect that the numbers are substantial and are to increase.
Conventional leaseholders have the right to let their property, but shared owners do not. Subletting is seen as an exceptional measure, subject to social landlord and lender approval, with commercial gain from subletting prohibited. Social landlords’ approval remains inconsistent on the ground.
The Bill abolishes fixed-term tenancy and moves all tenants on to periodic tenancies, but shared ownership tenants who sublet cannot give a periodic tenancy. Any permission they get from their social landlord is time-limited and can be withdrawn. Withdrawal often happens when a compliant EWS form becomes available for the building and the social landlord argues that this makes the flat sellable. However, major lenders have agreed only to consider lending on these properties, and often other issues, such as a very high service charge and high insurance, impact mortgageability and the property is not in fact sellable. Where a licence to sublet is not renewed, shared owners are required to evict their tenants, even if they are not able to sell their property.
So how will they cope with the Bill, which, on enactment, converts all tenancies into periodic tenancies? How will any existing agreements interact with the provisions in the Bill that give tenants the right to stay in a property for a minimum of 12 months, when, as I have just explained, consent can be withdrawn by the social landlord before that period has expired?
Lord Cromwell (CB)
My Lords, I will speak very briefly because, as always, the noble Lord, Lord Young of Cookham, has set out his case so coherently and in such detail that I need raise just a couple of points. Before I do, I declare an interest: I do not let out any residential property, but I have a couple of family members who let out one each.
I support all four of the amendments in this group, because there is considerable uncertainty about how the Bill will affect shared owners who become the so-called accidental landlords that have been referred to. They often sublet as a survival strategy, to deal with exceptionally difficult financial circumstances, which the noble Lord set out. Where co-owners try but, as is common, fail to sell, the proposed 12-month letting period ban—the lack of a letting period—risks punishing the very people who simply do not have the financial resilience to cope with a 12-month void in their ability to sublet. This applies acutely to the poorer and more vulnerable end of the market, so I trust that it will be of particular interest to this Government.
Baroness Thornhill (LD)
My Lords, I too support the amendments in the name of the noble Lord, Lord Young of Cookham.
If many of the amendments to this Bill are designed to make us look at unintended consequences for certain groups of people, these amendments concern one group of people who wholeheartedly deserve and need us to look at how the Bill will impact their situation as shared owners who cannot sell their flats and are subletting due to a variety of legitimate reasons. The specific conditions of their model of part ownership were so cogently outlined by the noble Lord, Lord Young, that, noble Lords will be pleased to know, I will not even attempt to repeat them. That has led to their campaign to plead with us—“plead” is almost not a strong enough word—to look at ways to ameliorate the devastating situation in which they find themselves.
The key element of concern is the stranglehold that the registered providers have on the property—no doubt deemed to be a good thing in normal times, but this situation is far from normal. Due to that stranglehold and the restrictive rules that shared owners must abide by, for the majority of shared owners subletting is a loss-making operation by design. I am not given to hyperbole, but I cannot think of anything worse than being in the situation that they are trapped in.
The term “accidental landlord” was a new one to me, but when I heard first hand from the shared ownership owners, I felt their pain—it is a really messy issue. Let us not forget that, if you have gone into shared ownership in the first place, it is highly likely that your finances are going to be stretched anyway—no high salary, no inheritance, and no bank of mum and dad—or you would have bought outright. As has already been said, the 2025 survey of the Shared Owners’ Network found that 90% of subletters were created because of the building safety crisis.
Another shocking statistic was that, in November 2024, the National Audit Office stated that the Government will not reach their 2023 target for the remediation of high-rise buildings with dangerous cladding. This building safety crisis is set to continue for over a decade or more, so it is not a big stretch to say that the problem of accidental landlords will increase. That is why I too was disappointed that this was not picked up by the impact assessment—perhaps the Minister can explain why.
The issue is certainly complex, and I am absolutely certain that the Minister is fully knowledgeable about it and sympathetic to it. The amendments tabled by the noble Lord, Lord Young, are trying to find out whether there is a way forward through this Bill to help this group of people. Alternatively, perhaps the Minister will take it upon herself to follow this up by other means.
I will end with a few words from one of the many emails from the aforementioned Stephanie, but I will pick up on a slightly different point. She says that
“we are not bad people … we’re trying to cope with an impossible situation … we don’t need to be punished for failing to sell the unsellable flats that are already ruining us”.
Between the noble Lord, Lord Young, and Stephanie, they say it all—and they have our full support.
Lord Jamieson (Con)
My Lords, I support the amendments proposed by my noble friend Lord Young of Cookham, who made a powerful case and highlighted the unique circumstances of shared ownership owners. These amendments address the specific and pressing concerns faced by shared ownership leaseholders under this Bill, and we believe that they would help ensure that this group is treated with fairness and clarity.
Shared ownership has proved to be a valuable tenure, enabling many individuals and families to take their first step on the housing ladder. However, as has been highlighted, there are circumstances where shared ownership owners find themselves trapped, and we do not want them to be disadvantaged by this Bill and face unforeseen consequences. They are subletting not out of a desire but out of necessity
To avoid repetition, I will speak to the amendments together in a way that highlights their collective aim of protecting shared ownership leaseholders, who often have limited means. Clearly, they speak to the potential unintended consequences of the Bill and the repercussions of fire safety.
Amendments 19 and 20 focus on the impact that Clauses 1 and 2 will have on shared ownership leaseholders, particularly those who rent out their properties under licences. The amendments seek to provide clarity on how these leaseholders will be affected by the proposed regulations, ensuring that their unique circumstances are properly considered. In particular, Amendment 20, which defines “shared ownership lease” by reference to Section 13 of the Landlord and Tenant Act 1985, would be an important step towards eliminating any ambiguity in the application of the legislation to this group.
Amendment 107 addresses a significant practical issue: many shared ownership leaseholders face restrictions in their lease agreements that prevent them profiting from subletting. In some cases, they are not even permitted to increase rent during a subletting arrangement, regardless of market conditions. This amendment seeks to ensure that leaseholders in these circumstances are not unfairly burdened by rules that were never designed with their situation in mind.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lord, Lord Young of Cookham, for his amendments relating to shared ownership licensing and for his usual clarity and coherence in the way that he proposed them. I also thank the noble Lords, Lord Cromwell and Lord Jamieson, and the noble Baroness, Lady Thornhill, for their contributions to this discussion.
Amendment 19 would require any regulations made under the power in Clause 3 to include provision for shared ownership leases. As noble Lords are aware from our previous debate, the current Clause 3 will be subsumed within part 2 of Schedule 6, but that will still deliver the same effect. I will therefore respond to Amendments 19 and 20 with reference to the fact that these measures will sit elsewhere in the Bill.
As I set out in the discussion on the previous group, the new part 2 of Schedule 6 will ensure that landlords with superior leases can continue to sublet in the future system if they currently have permission to do so. Superior leases or agreements may currently require subletting to be on an assured shorthold or an assured tenancy with a fixed term. Part 2 of Schedule 6 will ensure that, where a sublease transitions into a new periodic assured tenancy, the intermediate landlord will not be in breach of the terms of their superior lease and can continue to sublet under the new system. This will include sectors such as shared ownership and leasehold, where these kinds of restrictions in superior leases are commonplace.
The Government do not believe that Amendment 19 is necessary. It would lead to additional and otherwise unnecessary drafting in any regulations made under this power. The power already requires the Government to specify what sectors the regulations will apply to.
Amendment 20 defines shared ownership for the purposes of Amendment 19. The Government believe this is unnecessary for the same reasons that I just set out for Amendment 19.
Amendment 107 would exempt landlords who are shared owners from Clauses 7 and 8. The effect of these clauses is to prevent unscrupulous landlords using rent increases as a backdoor means of eviction, while ensuring that rents can be increased to reflect market rates, as we have debated previously. Of course, the Government, and I personally, have every sympathy with shared owners who have been affected by building safety issues—such as Stephanie and James, to whom the noble Lord, Lord Young, gave testament—and who, through no fault of their own, are unable to sell their homes. We know that subletting their homes, whether it is accidental or not, is an important way in which shared owners can mitigate the effects of building safety issues.
To respond briefly to the point made by the noble Baroness, Lady Thornhill, my honourable friend Alex Norris is making good progress with the remediation action plan. Both he and the Deputy Prime Minister are determined that the targets set in that plan are achieved, and we are moving that forward. I can assure noble Lords that it is a top priority for the department.
The Government have made it clear that such shared owners should be able to charge up to full market rent when subletting their homes. The Homes England and Greater London Authority capital funding guides have been updated to make this explicit. I believe that the noble Lord, Lord Young, referred to that point. Adherence to this guidance is a condition of receiving grant funding through the affordable homes programme. Moreover, the Government have made clear their expectation that this guidance should apply to all shared owners, regardless of how their home has been delivered, and the department is working with the sector to ensure that this is implemented across the board. As the noble Lord requested, I am very happy to meet before Report to discuss this matter further.
It is therefore unnecessary to exempt these landlords from the important protections that Clauses 7 and 8 provide. These clauses will still allow these landlords to increase the rent in line with market rates, and their subtenants will be protected from egregious rent increases and enjoy the same protections as other assured tenants.
Amendment 143 would exempt landlords who are shared owners from new Sections 16E and 16F of the Housing Act 1988, as inserted by Clause 15. These sections will prevent landlords reletting or remarketing a property if they have used the selling or moving-in grounds for 12 months after the date the relevant notice was served. These sections also set out other prohibited landlord behaviours, such as trying to create fixed-term tenancies. Although we appreciate that landlords’ circumstances may change, new Sections 16E and 16F contain critical protections for tenants. The 12-month restriction will stop unscrupulous landlords using grounds 1 and 1A to evict a tenant with the intention of immediately reletting. It will be unprofitable to evict a tenant simply to increase the rent and it will stop landlords using these grounds as a backdoor Section 21.
We believe that all tenants must benefit from these protections. It would not be right or fair to compromise tenants’ security of tenure simply because of who their landlord is and the circumstances those landlords might find themselves in when selling a property. That said, I am happy to meet again with the noble Lord and anyone else who is interested in this topic before Report, but for now, I ask the noble Lord, Lord Young, to withdraw his amendment.
Lord Young of Cookham (Con)
My Lords, I am grateful to all those who took part in the debate: the noble Lord, Lord Cromwell, the noble Baroness, Lady Thornhill, my noble friend Lord Jamieson, and, of course, the Minister, who gave the sympathetic reply that we would all expect.
As I understand it, periodic tenancies will continue to be allowed after the Bill because there is an exemption in another part of the Bill which enables these tenancies, which are not assured tenancies, to continue. Therefore, a shared owner who is subletting will continue to be able to let on fixed-term tenancies or tenancies subject to notice from the social landlord without granting a periodic tenancy.
Where I was disappointed by the Minister’s reply was on the issues I raised about the four-month notice and the 12-month ban on subsequent letting. It simply is not possible for a shared owner, who we have all agreed is somebody on a limited income, to give four months’ notice when an offer is accepted before contracts are exchanged because these sales are particularly vulnerable for all the reasons that I have explained. A shared owner who does not want to have additional financial liabilities would therefore give notice to a tenant only once contracts have been exchanged. Otherwise, they are even more at financial risk. As I understand it, the Minister is inflexible on the exemption I am seeking for the four months’ notice for shared owners.
Likewise, I think the Minister was also, at this stage, resistant to an exemption to the 12-month ban on subsequent letting. A shared owner whose sale falls through, through no fault of the shared owner, is banned—unless we get an amendment—from reletting that property for the next 12 months. How on earth are they going to survive? They have no income and they continue to have all the outgoings.
I am grateful for the Minister’s offer of a meeting, and those are two issues that I will certainly want to pursue. Even if we get all these amendments, shared owners will still be running at a loss, but the long-term solution is either for them to resell the property back to the social landlord, which would solve the problem, or to get ahead with remediation of all these blocks so they can sell these properties on the open market. The first is unlikely and the second will take time, so that brings me back to the point that, in the meantime, we really must take all the pressure off shared owners where we can. I have already indicated two issues on which I will wish to press the Government to think again at the meeting, which I readily accept. In the meantime, I beg leave to withdraw the amendment.
Member’s explanatory statement
This brings the wording in this provision into line with the definitions used in the Agricultural Holdings Act 1986.
Baroness Taylor of Stevenage (Lab)
My Lords, these government amendments are broadly small and technical in nature. I will briefly refer to each in turn.
Government Amendments 21 to 23, 36, 39 and 180 will ensure that provisions regarding suitable alternative accommodation mechanisms for secure and agricultural tenancies continue to work in light of our reforms and ensure continued tenant security and consistency of language.
Government Amendments 25 and 179 will also ensure that Sections 553 and 554 of the Housing Act 1985 can continue to function effectively. These sections deal with tenancies relating to the repurchase of defective properties by local authorities.
Government Amendments 186 and 187 provide that the repairs obligations in Section 11 of the Landlord and Tenant Act 1985 will not apply to most existing PRS tenancies that have a fixed term of seven years or more. This will ensure that for those existing leases, the repairing obligations will continue to be governed by the terms of the tenancy agreement, thus maintaining the status quo for both parties.
Government Amendment 255 corrects a drafting error in paragraph 36 of Schedule 4 to the Bill.
Government Amendment 256 is a minor and technical amendment that removes paragraph 41 of Schedule 4 to the Bill. Paragraph 41 makes the consequential amendment to provisions in the Deregulation Act 2015, preventing retaliatory Section 21 evictions. These are not required, as these provisions will be repealed as a result of the abolition of Section 21.
Government Amendments 292 and 295 are technical amendments that address the period after which possession notices would remain valid after the commencement of the Bill. The Bill makes specific provision to ensure a smooth transition and avoid unnecessary cliff edges. This includes maintaining the validity of notices served prior to implementation. These minor and technical amendments address the period after which possession notices will remain valid after the commencement of the Renters’ Rights Act. Depending on when notice was served, landlords will have up to three months from the commencement date to initiate possession proceedings. These amendments clarify and define the intended meaning of “initiating possession proceedings”, by clarifying that proceedings are started when the court issues a claim form at the request of a claimant. This change better preserves the intention of the Government, and it ensures that the full maximum period of three months is available to relevant landlords to initiate proceedings on valid notices that were issued prior to the commencement of the Act.
Finally, government Amendment 183 ensures that charities do not incur additional financial and administrative burdens by being required to obtain a designated adviser report for every assured tenancy they grant. Currently, before a charity lets a property on a lease of more than seven years, it is required to obtain a designated adviser report. These can cost around £2,000. Under the new tenancy regime, the length of the tenancy will not be known when it is granted. The Charities Act 2011 could be interpreted so that the charity would need to obtain a report for every property let on an assured tenancy. This could substantially increase administrative burdens and financial costs for some charities.
The amendment seeks to change the Charities Act 2011, so that charities are not required to obtain a designated adviser report prior to the granting of any assured tenancy. Charities will still be required to obtain advice and consider whether the terms of the lease are the best that can reasonably be obtained for the charity. This amendment will provide legal clarity and certainty for charities, their trustees and the Charity Commission, while ensuring that charities do not incur additional financial and administrative burdens because of the tenancy reforms we are introducing.
I hope that noble Lords will feel able to support these amendments. I beg to move.
Baroness Scott of Bybrook (Con)
My Lords, I thank the Minister for bringing these amendments before the House and for clearly setting out the minor and technical corrections to the legislation. Ensuring legal consistency is crucial, and aligning the wording with the Agricultural Holdings Act 1986 will help maintain uniformity across legislation.
As we will discover in coming days, the agricultural aspects of the Bill are both detailed and complex, containing numerous references to specialised terminology. Any technical amendments that help harmonise such language are most welcome on these Benches.
I trust the Minister will continue to approach these proceedings with a collaborative and constructive mindset. These amendments demonstrate that the legislation, as drafted, is not beyond improvement, and we welcome the Government’s recognition of that fact. It is our hope that suggestions from your Lordships’ House are given due consideration and are not dismissed too readily from the Dispatch Box.
We trust that the Minister will also view forthcoming amendments in the spirit intended: to test and to probe the Government’s rationale in pursuing particular policy choices, particularly when it comes to the inclusion or the omission of specific clauses and definitions in the Bill. We are grateful for the opportunity to raise these important issues and we welcome continued constructive dialogue on how we can best improve the technical framework of the legislation.
On that note, I wish to ask further questions of the Government on government Amendment 183. From our understanding, this amends the Charities Act, as the Minister said, to ensure that the disposition of leases which are assured tenancies will be subject to that Act. However, as she said, the requirement to obtain a written report from an independent property adviser could be costly. The costs of these reports vary, and they can impose a significant burden on whoever is footing the bill for them. So I would be grateful if the Minister could just clarify in writing that no charities will be required to obtain this particular report and, if there are some that will continue to need it, can she set out the conditions on which those reports from an independent adviser will be required?
If trustees do not comply with the law, they may be personally liable if this report is required and they do not do it; therefore, it is really important that we get absolute clarity on who, if anybody, will be required to do that. I reiterate the importance of keeping the core text of the Bill simple and, where possible, as focused as we can.
Baroness Taylor of Stevenage (Lab)
Just to respond briefly to the noble Baroness, I understand that the change to the Charities Act 2011 means that charities would not be required to obtain the designated adviser report prior to granting. They would be required to obtain advice and consider whether the terms of the lease are the best that can be reasonably obtained by the charity; that would be the requirement for trustees. But I will respond in writing to the noble Baroness just to confirm that that is the case.
“(ba) the assured tenancy was granted immediately after the agricultural tenancy came to an end, and” Member’s explanatory statement
This means that only an assured tenancy granted by the former agricultural landlord immediately after the end of a tenancy of a smallholding to which the Agricultural Holdings Act 1986 applies will be subject to the restricted grounds of possession.
“(5ZB) The court may not make an order for possession of a dwelling-house let on an assured tenancy on any of Grounds 1 to 5H or Ground 6A where, on the basis of the proposed let of the dwelling-house on that tenancy, the dwelling-house was deemed to be suitable alternative accommodation under paragraph 1(c) of Part 4 of Schedule 2 to the Housing Act 1985 for the purposes of section 84(2)(b) and (c) of that Act.”Member’s explanatory statement
This restricts the grounds of possession that will be available in relation to a tenancy when the proposed tenancy was deemed to be suitable alternative accommodation for the purposes of enabling an order of possession to be made of premises let under a secure tenancy.