Renters’ Rights Bill

Earl of Lytton Excerpts

Tuesday 4th February 2025 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, I have to declare a personal and professional interest with the private rented sector since 1968. Members of my family are also private rented sector landlords. I thank the Minister for introducing the Bill so cogently, and I add my tribute to our two excellent maiden speakers.

My professional training, which started in 1969 or thereabouts, involved an understanding of the Protection from Eviction Act, the Rent Acts, the rent officer service, rent assessment committees and fair rents. That regime, I know for certain, created a severe attrition of the private rented sector. The statistics show that it fell from 31% of homes in 1961 to under 10% in 1991, with substantial value write-downs in the process. The 1988 Act brought some relief and brought in shortholds. The emphasis was on the “short” bit; that was what it was intended to do, and you could not let for more than five years in the early stages. It has continued pretty much uninterrupted, under several subsequent Administrations. Even so, the proportion stood at 9.7% of homes in 2000.

The Government have been strident in their insistence that under the Bill no rent controls are planned, but I see the ability to challenge above-market rents, and the allied pressure for CPI pegging of rents and the whole question of affordability, to amount to the same principle of fair rents under the 1965 Act, give or take a bit, and likely to have very similar outcomes. At any rate, I believe that it is a distinction without a real difference, and could be adjusted and altered at the stroke of a pen.

The market will take note of this, looking at the headwinds and the new obligations under this Bill. My take is that the private rented sector is now destined for material decline. Halving it to the sub-10% of homes it was in 2000 seems a least a possible medium-term prospect. There will be no rush to the exit, just a steady attrition, with probably the 45% of the PRS in the buy-to-let component leading the way.

Does it matter, in what is actually a highly interconnected and joined-up housing sector, where people can move from one to the other? If the noble Lord, Lord Best, is right—I am glad to see him in his place —the surplus would be hoovered up by social landlords and new companies to be let at affordable rents— I assume this means an absolute maximum of 80% of market rent. However, having bought the property, which may need work and improvement, at market levels, to then let at a 20% discount, with rising costs and current interest projections, and the added duties, risks and so on, strikes me as improbable. I would like to know where the model for this is. Maybe he is right and giving incentives to sell to the sitting renter—those of them who have the cash—would be a way forward.

If these properties are released in dribs and drabs on to the general housing market, they cannot fail to have a dampening effect, likely over an extended timeframe, on the growth in housing values and the viability of new-build rollout because of the interconnected nature of the sector. I remind your Lordships that the CBRE suggests that there are at least 1 million consented residential plots that have not been built out and are sitting there waiting to go.

If I am right here, and we are moving to a higher proportion altogether of social rented property, then, again, the pressure on homes to purchase might, by that token, reduce. Good, I hear noble Lords say, but be careful what you wish for. Year-on-year increases in house prices are, in large part, what underpins our economy. From the Treasury at one end, with the tax revenues in sight, through developers and constructors, and local authorities to first-time buyers at the other end hoping to build equity in their home, this is all about money supply, banking, consumer spending and so on.

I am no fan of a model based on inventory rather than productivity—a point that the noble Lord, Lord Inglewood, almost touched on. I consider, in any event, that it will only end in tears, eventually. But it is such an important driver in our post-industrial, service industry-based economy, where we in the UK have about the fifth or sixth highest exposure to property-related debt in the world, that it cannot be ignored.

So, what about the inventory valuation that sits behind this? Has anybody done the calculations? I see this Bill as having the potential to trigger much larger events in a system of very many moving parts. I hope it is not an adverse trigger. I would hate things to get back to the stage we were at in 2008. This is why I would prefer a less iconoclastic reform, despite all the ills and abuses in the existing private rented sector, which I readily acknowledge. I would like to see choice, flexibility, freedom to transact, ease of entry and exit and all the mobility that this implies. That also implies a fair balance. It is a world of complementary needs. We should remember, too, that after 2008 the expansion of the private rented sector was able to absorb a lot of the pain that would have otherwise resulted from that debacle. But I am afraid that I see a bulky document, inherently encapsulating more cost, risk and delay and a transactional drag while it all beds in.

We have to stop conflating the problems within the private rented sector with other matters such as social inequality, lack of affordability, housing costs, high and inward migration, employment problems, income distribution and so on. We have to remove it from that—

[Captain of the King’s Bodyguard of the Yeomen of the Guard and Deputy Chief Whip (Baroness Wheeler) (Lab)]

Excuse me. Will the noble Earl please wind up? The advisory time is seven minutes.

[The Earl of Lytton (CB)]

I am actually finished. If I am right, there is little that can be done with this Bill. None the less, I will engage in order to try to improve it. Like my noble ancestor Lord Byron, I deny nothing but I doubt everything.