Oral Answers to Questions

Debate between Jacob Young and Matthew Pennycook

Monday 4th March 2024 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

In resisting Labour’s efforts to strengthen the Renters (Reform) Bill, Ministers have repeatedly argued that the legislation as drafted strikes precisely the right balance between the interests of tenants and those of landlords, yet by watering down protections for renters and further delaying the long-overdue abolition of section 21 evictions, the package of draft Government amendments to the Bill that we saw last week will tilt the playing field decisively back towards the landlord interest. Are we to believe that the Government have honestly decided, at the 11th hour, that it is landlords who need more rights and powers, or is this not simply a crude attempt to manage an increasingly fractious Tory party at a shameful cost to hard-pressed private tenants?

[Jacob Young]

The hon. Gentleman, like various Members who have spoken, is a committed campaigner on this issue. I enjoyed our time together in the Public Bill Committee. We need to strike the balance he has just spoken about. That is why we are discussing the Bill with both landlord groups and tenant groups. We are meeting colleagues on the Government Benches and the Labour Benches, and those in the smaller parties, too. We are ensuring that when we bring the Bill back it is in the best possible shape so that it affords protections and security for tenants, but protections, in fairness, for landlords too.

Renters (Reform) Bill (Tenth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 28th November 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

It is a pleasure to see you in the Chair, Ms Fovargue.

Everyone deserves to live in a safe and decent home. It is completely unacceptable in this day and age that people are forced to live in homes that do not meet basic standards of decency. There is already a decent homes standard for social housing that has been successful in improving housing conditions. Since the standard was last updated in 2006, the level of non-decency in social housing has fallen from 29% to 10%, but there is no equivalent standard for the private rented sector, and homes in that sector are more likely to be non-decent.

Of the 4.6 million households that rent privately, 23% live in properties that would fail the decent homes standard that currently applies to social housing. That is around 1 million homes. That is why we committed in the levelling-up White Paper to halving the number of non-decent rented homes by 2030 and, in the “Fairer Private Rented Sector” White Paper, to introducing a legally binding decent homes standard in the private rented sector for the first time. It is also why we have tabled the Government amendments, which will allow Ministers to set a new standard to apply the private rented sector and for it to be enforced.

It is imperative that we get the content of the new standard right and that we ensure that it is both proportionate and fair. We are working closely with a range of stakeholders to co-design the standard and make sure the balance is right for landlords and tenants. For most PRS properties, our expectation is that the landlord will not need to do any additional work to meet the decent homes standard beyond what is needed to meet existing requirements and keep their properties in a good state of repair. We will provide further details on our proposals for the standard in due course.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to continue our deliberations with you in the Chair, Ms Fovargue.

Clause 63 is a short and straightforward clause that would require the Secretary of State to prepare a report that sets out the Government’s policy on safety and quality standards in relation to supported housing and temporary accommodation and to publish it within one year of the day on which the measure comes into force. The group of Government amendments we are considering with the clause, which are intended to replace it entirely, will extend part 1 of the Housing Act 2004, which relates to housing conditions, to cover temporary accommodation, and provide for regulations to specify new requirements that will form part of a decent homes standard that applies to temporary accommodation, supported exempt accommodation and rented property more generally. We welcome both the intent and the design of the amendments.

The private rented sector is manifestly failing to provide safe and secure homes for all those who live in it. We fully accept that the absolute number and proportion of poor-quality private rented homes continues to fall—albeit steadily rather than drastically—as part of a half-century, if not longer, of improvement in housing standards. However, it remains the case that some of the worst standards in housing are to be found in the private rented sector. It should be a source of real shame for the Government that after they have been in office for 13 years, an estimated one in four homes in the private rented sector—the Minister made it clear that that equates to around a million properties—do not meet the decent homes standard, and one in 10 has a category 1 hazard that poses a risk of serious harm.

For the considerable number of private tenants who are forced to live in substandard properties—those who wake up every day to mould, vermin or dangerous hazards—what should be a place of refuge and comfort is instead a source of, at best, daily unease and, at worst, torment and misery. More must be done to bear down decisively on this problem. Measures designed to drive up standards in the sector should be enacted as a matter of urgency.

As I made clear during the debate on clause 52, the Government deserve appropriate credit for seeking to introduce a decent homes standard that covers the private rented sector through this Bill rather than through separate future legislation. We believe that Government new clause 20, new schedule 1 and the related amendments are well drafted and that they have the potential to tackle the blight of poor-quality homes in local communities and ensure that renters have safer and better homes to live in; however, I would like to take this opportunity to put to the Minister several questions about those provisions.

My first question concerns enforcement. A decent homes standard that covers the social rented sector has been in place since 2001, yet we know that far too many social tenants still live in damp, cold and mouldy properties that harm their health and their life chances. Indeed, that was one of the chief reasons why the Government felt it necessary to enact the Social Housing (Regulation) Act 2023. That demonstrates that over the 22 years of the decent homes standard’s existence, although it has led to some improvements it has not been enforceable in the social rented sector. That experience suggests that introducing a decent homes standard covering the private rented sector will not achieve its objectives unless it is properly enforced.

Given that the Government intend, by means of new schedule 1, which amends part 1 of the Housing Act 2004, for enforcement of the new standard in the PRS to be undertaken using the same powers as the regime for the housing health and safety rating system, it should be a relatively straightforward matter for local authorities. However, local authorities’ ability to do so successfully depends in practice on their capacity and capabilities. As we debated just prior to the break, in relation to clauses 58 to 61, a great many authorities are struggling when it comes to resources and skills. Will the Minister provide more detail on what steps, if any, the Government intend to take, in addition to the various proposals in the Bill, to ensure that local authorities can appropriately enforce the application of the decent homes standard to the private rented sector where it is not already being met?

My second issue concerns the nature of the standard itself. The Government consulted on the introduction and enforcement of a decent homes standard in the private rented sector in England late last year, and the responses to that consultation obviously fed into the Government amendments we are considering. However, the Government have also committed themselves to a more fundamental review of the standard at some unspecified point in the future. Will the Minister confirm whether that commitment remains in place? If so, will he give us some idea of when that more fundamental review, presumably across both the social rented and private rented sectors, might begin?

The third issue relates to the current enforcement regime for the housing health and safety rating system. The regime is primary means by which local authorities can tackle poor property conditions and compel prompt action from landlords who do not fulfil their responsibilities to provide homes free from dangerously hazardous conditions. We take it from the Government amendments that while the new decent homes standard for the private rented sector will be located in part 1 of the Housing Act 2004, it will not necessarily be the same thing as the HHSRS, which is also in part 1 of that Act. We will presumably need to wait for secondary legislation to work out how, if at all, the decent homes standard and the HHSRS differ, but their workings will need to complement each other.

In answer to a written question that I tabled on 2 May, the then Housing Minister confirmed that a review of the HHSRS, including the statutory operating and enforcement guidance, was under way. Given the obvious implications of that answer for the functioning of the new decent homes standard introduced by this group of Government amendments, will the Minister tell us whether that review has concluded, as the decent homes consultation suggested? If it has, when did it conclude, when will the results be published, and does it remain the Government’s view that any changes will require further legislation? The status and outcome of the review of the HHSRS and its associated statutory, operating and enforcement guidance are important because that guidance is applied when local authorities consider using their statutory powers to remedy defective housing conditions, including and especially damp and mould.

That brings me to our new clause 60. When the Social Housing (Regulation) Act 2023 was on Report, the Government tabled and passed, with our support, amendments designed to force social landlords to investigate and fix damp and mould-related health hazards within specified timeframes, with the threat of legal challenge if they do not, owing to the insertion of an implied covenant into tenancy agreements. The provisions were termed Awaab’s law because they were a direct response to the untimely death of two-year-old Awaab Ishak from respiratory arrest, as a result of prolonged exposure to mould in the rented Rochdale Boroughwide Housing property in which he and his family lived. Although enactment of the new requirements is dependent on secondary legislation, with the consultation having closed last week we are hopeful that the necessary statutory instrument will soon be forthcoming. We look forward to its enactment so that social landlords who continue to drag their feet over dangerous damp and mould will face the full force of the law.

New clause 60 would simply extend Awaab’s law to the private rented sector by amending the relevant section of the Landlord and Tenant Act 1985, and the reasoning behind that is straightforward. The Government were right to introduce Awaab’s law in the social housing sector, but the problem of debilitating damp and mould, and landlords who fail to investigate such hazards and make necessary repairs, is not confined to social rented homes.

A Citizens Advice report published in February made it clear that the private rented sector has widespread problems with damp, mould and cold, driven by the poor energy efficiency of privately rented homes—an issue that we are minded to raise later in the Bill’s proceedings. The report went on to evidence the fact that 1.6 million children in England currently live in cold, damp or mouldy privately rented homes. In the face of such a pervasive problem, we can think of no justification whatsoever for restricting Awaab’s law purely to the social housing sector. We hope that the Government will agree and accept new clause 60, because we can think of no reason whatsoever why they would resist doing so.

Before I conclude, I want to touch briefly on a final issue in relation to this group of amendments. We welcome the inclusion of supported exempt accommodation in a decent homes standard and part 1 of the Housing Act 2004. We believe that will resolve an issue of concern that we flagged in the Social Housing (Regulation) Bill Committee—namely, the loophole that exists, and is being exploited by unscrupulous providers, as a result of non-profit-making providers of supported exempt accommodation being able to let properties at market rents that are eligible for housing benefit support, on the basis that “more than minimal” care, support or supervision is being provided, without those properties coming within the scope of consumer regulation.

The inclusion of temporary accommodation is also welcome, but it is slightly more problematic, because local authorities are responsible both for enforcing part 1 of the Housing Act 2004 and for procuring sufficient temporary accommodation to meet their duty to prevent and relieve homelessness. As such, while there may not be a legal conflict of interest, there is certainly a potential practical conflict of interest, as local authorities will be forced to weigh the case for any potential enforcement action, outside the scope of the contract in question, against the need to retain private landlords as an ongoing source of desperately needed temporary accommodation. It is for precisely that reason that we tried to convince the Government, in the Social Housing (Regulation) Bill Committee, to have temporary accommodation regulated by a third party, such as the Regulator of Social Housing.

The Government amendments will undoubtedly help to improve the quality of some temporary accommodation, and the inclusion of temporary accommodation in a decent homes standard and part 1 of the Housing Act 2004 is to be welcomed for that reason. However, we encourage the Government to consider whether they might go further. For example—here, I again commend my hon. Friend the Member for Westminster North for her Homes (Fitness for Human Habitation) Act 2018—could the Government extend section 9A of the Landlord and Tenant Act 1985 to also cover properties occupied under licences as homelessness temporary accommodation? I would welcome the Minister’s thoughts on that, and I look forward to his response to new clause 60 and all the other issues that I have raised regarding this group of amendments.

[Jacob Young]

Let me address the hon. Gentleman’s point about local authorities and their ability to enforce. We will establish a new duty on landlords to ensure that their properties meet the decent homes standard. For landlords who fail to take reasonably practicable steps to keep their properties free of serious hazard, local councils will be able to issue fines of up to £5,000. That will encourage those landlords who do not already do so to proactively manage their properties, which will allow local councils to target their enforcement more effectively on a small minority of irresponsible and criminal landlords.

We will also explore requiring landlords to register compliance with the decent homes standard on the property portal. That will support local councils in identifying non-decent properties to target through their enforcement activity. As I have already said in response to different parts of the Bill, we will also do a full new burdens assessment for local authorities, and where there is a new burden, they will be resourced to fund that.

On the hon. Gentleman’s questions about the HHSRS review, the simple answer is that we will publish that in due course. Secondary legislation obviously needs to coincide with that, so I do not have anything further to add at this point. However, I am happy to write to him in further detail on that. Similarly, I will commit to writing to him on on the DHS review too.

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[Matthew Pennycook]

I welcome that response from the Minister. With regard to Government amendments, I thank him for what he said about the HHSRS and the more fundamental review of the decent homes standard across both tenures. If he has any further detail on that, I would welcome it. I particularly welcome the implied suggestion that the registration of a decent homes standard, when it is forthcoming, will form part of what is required for landlords to submit on the portal. That is a very good idea, and in that way we could help to drive up standards by making it part of the general information that needs to be submitted as part of registration with the database. That is very welcome.

On Awaab’s law and new clause 60, I have to say to the Minister that he gave a particularly unconvincing answer. I entirely understand that when it comes to standards, the Government’s focus is on the measures in the Bill. We all want to see local authorities able to enforce properly, and we all want to see the ombudsman provide a mechanism for redress. However, I still fail to understand—I do not think the Minister responded to this point—why the Government believe that Awaab’s law is appropriate for the social rented sector, but not for the private rented sector.

[Jacob Young]

rose—

[Matthew Pennycook]

I will just make this point. The Minister said that the Government do not think it is of interest to tenants; I would be very interested to know what surveys the Government have done of tenants to find out their views on this matter, because I am certainly not aware of any such evidence. I think it would be of real interest to tenants if their landlords could be forced to respond within specific timeframes to sufficiently serious cases of damp and mould, as Awaab’s law provides for the social rented sector, with the threat of legal challenge as a stock response. I am happy to give way, but I find the Minister’s arguments on this point quite unconvincing. If these measures are appropriate for the social rented sector, with all the other measures in place in that sector, they should be appropriate for the private rented sector.

[Jacob Young]

I simply say to the hon. Gentleman that there is an obvious difference between a large social housing sector landlord, which has maintenance teams that can quickly act to address an issue, and an individual landlord, who may have only one or two properties, and may not have a wealth of skill behind them to address such issues in the timeframes that we hope to set out for social landlords. As I said, local authorities can request timely changes to properties.

[Matthew Pennycook]

I thank the Minister for that answer. I fully accept that there is a difference between a large registered social landlord, and a mum-and-dad landlord, who might own only one or two buy-to-let properties. However, we should not therefore say that it is acceptable for the kinds of cases that Awaab’s law would cover, if extended to the private sector, to go on unchallenged. I am not satisfied that there are existing powers to challenge those cases. If there were such powers in the social rented sector, the Government would not have needed to bring forward Awaab’s law. Actually, if the Government were properly resourcing local authorities to enforce, Awaab’s law might not be necessary, but the Government deemed it necessary in the social rented sector.

As the Bill demonstrates, the difference between the private rented sector and the social sector will break down to some extent, whether as a result of the ombudsman, who will cover both sectors, or other measures. We think the law should cover both sectors, and I find the Minister’s response unconvincing. I will press new clause 60 to a Division.

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[Matthew Pennycook]

I beg to move amendment 169, in clause 67, page 62, line 21, at end insert—

“, save that section 2(b) comes into force on the day on which this Act is passed only to the extent that it repeals section 21 of the Housing Act 1988; such repeal will not affect the validity of any notices served under that provision on or before the day on which this Act is passed and the provisions of that section will continue to apply to any claims issued in respect of such a notice”.

This amendment would ensure that the abolition of section 21 evictions would come into force on Royal Assent, with saving provisions for any notices served before that date.

In opening the Committee’s fifth sitting for the Opposition, I set out in exhaustive detail our concerns about the huge uncertainty that surrounds the implementation of chapter 1 of part 1 of the Bill as a result of the Government’s recent decision to tie the implementation of the new tenancy system directly to ill-defined court improvements. As I argued, because of the Government’s last-minute change of approach, private tenants have no idea when the new tenancy system will come into force. They do not even know what constitutes the requisite progress on court reform that Ministers deem necessary before the new system comes into force.

At that point in our proceedings, I put three questions to the Minister. First, do the Government believe that the county court system for resolving most disputes between landlords and tenants is performing so badly that reform is a necessary precondition of bringing chapter 1 of part 1 into force? Secondly, if the Government’s view is that reform of the court system is absolutely necessary prior to chapter 1 coming into force, what is the precise nature of the improvements that are deemed to be required? Thirdly, what is the Government’s implementation timeline for those court improvements? The Minister’s terse response to the clause 1 stand part debate provided no convincing answers whatsoever to those questions; indeed, he failed to respond to almost all the detailed and cogent points of concern raised by Opposition Members in that debate. I hope that he will take the opportunity to respond to them in debate on this amendment, and thus provide the Committee with the assurances that were sought, but not secured, earlier in our proceedings.

Toward the end of the debate on clause 1 stand part, I put a question to the Minister about clause 67. I asked why the two-stage transition process that the clause provides for, with precise starting dates for new and existing tenancies to be determined by the Secretary of State, does not afford the Government enough time to make the necessary improvements to the courts. The Minister’s reply was:

“We will come on to that point when we discuss clause 67.”––[Official Report, Renters (Reform) Public Bill Committee, 21 November 2023; c. 159.]

Well, here we are, Minister, and we would still like to know not only why the Government believe that court reform is a necessary precondition of enacting chapter 1 of part 1, what improvements they believe are necessary, and the timeline for their implementation, but why the two-stage transition process that this clause facilitates is not sufficient to get the job done. We really do deserve some answers from the Government today.

I remind the Committee that clause 67 would give the Government an incredible amount of leeway on when the new system comes into force. It allows Ministers to determine an initial implementation date at any point after Royal Assent, after which all new tenancies will be periodic and governed by the new rules, and also to determine a second implementation date, which must be at least 12 months after the first, after which all existing tenancies will transition to the new rules. Although we want firm assurances that the two-stage process will not be postponed indefinitely pending unspecified court improvements, we take the view that the proposed two-stage process is the right approach. It would clearly not be sensible to enact the whole of chapter 1 of part 1 immediately on Royal Assent. Additional time will be required for, for example, new prescribed forms for the new grounds for possession.

However, landlords and tenants need certainty about precisely when the Government’s manifesto commitment to abolish section 21 no-fault evictions will be enacted. Amendment 169 seeks to provide that certainty. It would ensure that section 21 of the Housing Act 1988 was repealed on the day that the Bill received Royal Assent, with saving provisions for any notices served before that date, so that they remain valid and of lawful effect. By ensuring that section 21 is repealed on the day the Act is formally approved, we would prevent a significant amount of hardship, and the risk of private tenants being made homeless. We urge the Government to accept the amendment.

I want to press the Minister on a final point that I raised about clause 67 during our clause 2 stand part debate. As is clearly specified in guidance published by the Government, they propose a minimum period of 12 months between the first and second implementation dates, but there is no maximum period, so the Bill would allow for all new tenancies to become periodic, but then there could be an extensive period—perhaps even an indefinite one—before existing tenancies transitioned to the new rules.

We believe that the Bill should specify a maximum, as well as a minimum, amount of time between the first and second implementation dates. The Minister agreed to write to me on that issue, but unless I have missed some correspondence, that has not been directly addressed in any of the letters I have received thus far. I would be grateful if he could give me a commitment today that the Government will revisit this issue before Report. Otherwise, we will be minded to return to it then.

[Jacob Young]

On the hon. Gentleman’s final point, I fully accept his desire for a maximum period. The reason we have not set a maximum is to give us as much flexibility as possible. There is no real incentive for a landlord today to try to get around the system. Were a landlord to introduce a new three-year fixed-term tenancy agreement to try to game the system and avoid the six or 12-month time limit, that would simply block the landlord, and they would not be able to use the powers that section 21 affords them currently. That would be restrictive to that landlord as well as to the tenant, so we do not see a situation where a landlord would try to subvert the rule.

[Matthew Pennycook]

That is an interesting point. Let me probe the Minister on it. There is no maximum period for the implementation of the second date—in other words, there is no period by which the Government have to have brought forward the date when all existing tenancies are converted. Is he saying that between the first implementation date and the second, when all existing tenancies remain as is, other measures in the Bill will apply to them? That is the logic of his argument about landlords not gaming the system. I do not think we are talking about landlords gaming the system; we are talking about the Government having too much leeway to postpone the conversion of existing tenancies to the new system.

[Jacob Young]

The vast majority of fixed-term tenancies will be a 12-month agreement, so they would naturally roll on to being a periodic tenancy at the end of that fixed-term agreement. It is unrealistic to expect there to be tenancy agreements that are longer than three years, so they would all naturally convert to this new system anyway. We want to create a gradual process for all tenancies to join the new system; otherwise, it would cause confusion and perhaps overload the portal. If that does not satisfy the hon. Gentleman, I am happy to write to him setting that out further.

On amendment 169, I understand that the hon. Gentleman’s intention is to gain more clarity on the timeline for implementation of our reforms. However, the amendment would mean that on the day of Royal Assent, section 21 would be removed immediately. There would be no transition period; no time, once the final detail of the legislation was known, to make sure the courts were ready for the changes; and no time for the sector to prepare.

As we have said a number of times in Committee, these are the most significant reforms of the private rented sector in 30 years, and it is critical that we get them right. I am as wedded to ensuring that section 21 is abolished at the earliest opportunity as the hon. Member is, in order to provide vital security for tenants, but we have to ensure that the system is ready.

It might be helpful for me to explain how we are improving the courts, and what needs to happen to prepare the courts for the new tenancy system. Court rules and systems need updating to reflect the new law; there is no way that this can be avoided. Furthermore, we have already fully committed to a digital system that will make the court process more efficient and fit for the modern age. Let me reassure the Committee that we are doing as much as possible before the legislative process concludes. The design phase of our possession process digitisation project is under way, and has more than £1 million of funding. That will pave the way for the development and build of a new digital service.

We are also working to tackle concerns about bailiff delays, including by providing for automated payments for debtors. That will reduce the need for doorstep visits, so that bailiffs can prioritise possession enforcement. We are going further with the Ministry of Justice and His Majesty’s Courts and Tribunals Service in exploring improvements to bailiff recruitment and retention policies; we touched on that. It would simply be a waste of taxpayers’ money to spend millions of pounds building a new system when we do not have certainty on the legislation underpinning it. That is why we will set out more details and implementation dates in due course.

Let me be clear that this is not a delaying tactic. There are 2.4 million landlords. Urban and rural landlords, their representatives and business tell us that they have concerns about delays in the courts. We cannot simply ignore that. We have always been clear that implementation would be phased, so that the sector has time to adjust, and we committed to giving notice of the implementation dates in the White Paper last year.

[Jacob Young]

Of course it is, and I entirely accept the hon. Gentleman’s point. However, every one of the 11 million renters in this country has a landlord. We have had representations from all the organisations representing the 2.4 million landlords in this country saying that they are concerned about the courts. Trying to introduce a new system and overriding the concerns of landlords would be unwise.

[Matthew Pennycook]

The Minister says that this is not a delaying tactic. I take him at his word. Will he therefore explain why the two-stage transition process provided for by the clause does not provide the Government with enough time to make the necessary improvements? He said that the improvements are already under way, and that huge progress is being made in a number of areas. Why is that not enough time for him to say, “By the second implementation date, we will have got the courts to where they need to be, and we can give tenants the assurance that the new system will be in place at that point”?

[Jacob Young]

As I have outlined, we need to give time for the courts to improve. We need to give them the space to do that. I do not think that the measures in the Bill mentioned by the hon. Gentleman are adequate to do that. However, if there is another mechanism for us to ensure that the courts are prepared before the implementation of the Bill, I am happy to discuss that with him further. I remind all hon. Members that this is the biggest change to the sector in a generation; it is important that we take the time to get it right. The Government are ensuring that we have a smooth transition to the new system, and I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

I thank the Minister for that response. That is probably the most detail we have had on what the Government see as the necessary court improvements, but, to be frank, it is not enough detail. There are no metrics in there by which we can measure the reform that he talked about.

The Minister mentioned that the Government want the reforms introduced at the earliest possible opportunity. We have heard that they are targeting bailiff delays, processes and the new digital system. I take it from his response that the implementation of an entirely new digital system relating to possession grounds is a prerequisite to enacting part 1 of chapter 1. However, there is still too much uncertainty about what constitutes a necessary reform, and we are not convinced that the two-stage transition process provided for by the Bill does not afford the Government enough time to get the courts to a point at which we can introduce the new system. Indeed, in the evidence sessions, we heard different points of view on whether we had not better introduce the measures in the Bill and then see how the courts respond to the new system before phasing it in, so we remain unconvinced.

There is a fundamental point of difference between us on the abolition of section 21. We are deeply concerned about the number of people put at risk of homelessness while the Government have delayed bringing the legislation forward. We are deeply concerned about the additional people who will be at risk of homelessness, and who will be made homeless, while the Government get on with court improvements that, frankly, should already have been delivered, so that the Bill could be ready to go. We very much feel that tenants and landlords need certainty about precisely when section 21 will be abolished, so I will press the amendment to a vote.

Question put, That the amendment be made.

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[Matthew Pennycook]

I beg to move, That the clause be read a Second time.

I was going to apologise to the Committee for the slightly obscure nature of my new clause, but after all that, I think it is the Minister who should be apologising for tabling so many Government new clauses to the Government’s own Bill. Perhaps he will do so when he stands up.

New clause 53 is very consciously a probing amendment, in so far as it seeks to ascertain whether there are any safeguards against what we believe might constitute a potential loophole in Bill that could be exploited by unscrupulous landlords.

Clause 14 sets out rules about the period of notice that a tenant can be required to provide when they wish to end an assured tenancy. Specifically, it provides that a tenant’s notice to quit relating to an assured tenancy must be given not less than two months before the date on which the notice is to take effect. That two-month period is intended, rightly, to provide landlords with sufficient time to re-let the property as required. However, the two-month default period of notice can be set aside where both parties agree as much in writing, whether in the tenancy agreement or in a separate document.

There may be entirely legitimate reasons for individual landlords and tenants to agree a shorter notice period. However, we are concerned that some tenants might find themselves informally pressured to agree a shorter notice period in writing as a precondition of being granted a tenancy. For many landlords, there will be absolutely no incentive to agree a shorter notice period than the two-month default; after all, they are likely to need much of that time, if not all, to re-let their property. However, it is entirely conceivable that unscrupulous landlords, particularly in hot rental markets, would have every incentive to get a sitting tenant out as quickly as possible after the point at which that tenant had given a notice to quit, because they will have no trouble in rapidly re-letting their property, probably at a far higher rent level.

We are therefore worried that the freedom for landlords and tenants to agree notice periods shorter than two months in writing could be used to the detriment of tenants—particularly vulnerable tenants, who in all likelihood will not be aware that two months is the default period and who might come under considerable pressure from their landlord to agree to a shorter period. New clause 53 seeks to protect such tenants by simply requiring the court to authorise any agreement in writing that provides for a notice period shorter than the two-month default. I look forward to the Minister’s response.

[Jacob Young]

I apologise to members of the Committee for how long it took to get through all those new clauses. However, I do not apologise for the new clauses themselves, because they strengthen the Bill and give additional rights to tenants and landlords under it. I am very proud that we have been able to add them.

I thank the hon. Gentleman for moving new clause 53, which would prevent landlords and tenants from agreeing contract clauses that override statutory provisions protecting tenants’ rights unless a court has preauthorised it.

Subsection (1) is an unnecessary provision. It is already the case that contractual clauses cannot affect statutory rights unless legislation expressly so allows. This is a long-standing principle of our legal system.

Subsection (2) would give the courts the power to authorise the waiver of tenants’ statutory rights under the Bill. That could have unintended consequences. More importantly, subsection (2) would weaken tenants’ rights. It would allow a judge to authorise the waiver of the rights that the Bill grants them. We do not think that this is appropriate or required.

[Matthew Pennycook]

I note the Minister’s criticism of the new clause as drafted, but does he recognise the point it seeks to raise: the concern that vulnerable tenants might come under pressure from a landlord to agree in writing to a shorter notice period that they may not necessarily want but that comes as a precondition of the tenancy? Notwithstanding his concerns about our new clause, will the Government give some more thought to whether it is a potential weakness of the Bill and how that might be addressed?

[Jacob Young]

I am happy to give the matter more thought in conversation with the Opposition. We intend to give tenants as much information as possible about their rights. That has been discussed at numerous points during the Committee’s consideration. I hope he will consider that assurance sufficient to withdraw his new clause.

[Matthew Pennycook]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 56

Extending discretion of court in possession claims

“(1) The Housing Act 1988 is amended as follows.

(2) In Section 9 subsection (6)(a), after ‘Schedule 2 to this Act’ insert ‘, except for grounds 6A, 8 and 8A,’”.—(Matthew Pennycook.)

This new clause would extend the discretion of the court to adjourn proceedings, and stay, suspend or postpone any orders made, to cases where possession is sought under grounds 6, 8, and 8A.

Brought up, and read the First time.

--- Later in debate ---

[Matthew Pennycook]

I beg to move, That the clause be read a Second time.

In considering the replacement possession regime that the Bill will introduce, we have been at pains to convince the Government that the courts should be given a greater measure of discretion than the Bill currently provides for. Whether it is through allowing for a very limited amount of discretion in relation to mandatory grounds 1, 1A and 6A so that judges could consider whether the tenant would suffer greater hardship as a result of the possession order being granted, or through seeking to make new ground 8A entirely discretionary rather than mandatory, we believe in principle that we should be putting more trust in the judgment of the court to determine whether to make an award, taking into account all the circumstances that are pertinent in any given case.

In the Committee’s proceedings, we have deliberately not made the case for every possession ground to be discretionary. We take the view that there are some limited circumstances in which it is appropriate for landlords to have the certainty of a mandatory ground to regain possession of their property. However, as things stand, we do not believe that the Government have the balance right when it comes to the amount of discretion that the courts have been afforded in relation to the new possession regime.

New clause 56 is a final attempt to convince the Government to incorporate an additional element of discretion into the new system. It would extend the discretion of the court to adjourn proceedings and to stay, suspend or postpone any orders made to cases where possession is sought under grounds 6, 8 and 8A. In so doing, it would give the courts appropriate flexibility to cater for the circumstances where the ground is already made out, but either it is right to give the tenant more time or there is a way to resolve the dispute that does not involve the tenant losing his or her home.

Currently, for all mandatory grounds for possession, once the ground is made out, the court has no choice but to make an order, and it takes effect 14 days after the date on which it is made. Judges have a limited ability to postpone an order, but only up to six weeks from the date made and only where there would otherwise be exceptional hardship as a result. In short, the court has extremely limited flexibility.

Yet there might be extremely compelling circumstances in relation to individual ground 6 possession proceedings, where a judge might want to make an order that takes effect at a date later than six weeks thence. Take, for example, circumstances in which a landlord could not start to develop until two or three months after the hearing. A judge with the discretion provided for by new clause 56 could postpone the order until around the time at which the development could begin, giving the tenant more time to find a new home and providing the landlord with additional rent or income.

Similarly, in individual ground 8 and 8A possession proceedings, the courts currently have no flexibility to make an order suspended. Providing them with that discretion, as new clause 56 would, would allow judges to suspend an order upon terms that might allow for the outstanding arrears to be repaid under an agreed realistic payment plan, and within a timely manner.

The court could not make such a suspended order on a whim or with the mere hope of repayment without any evidence to provide reasonable reassurance that the rent would be repaid, as Liz Davies KC made plain in her evidence to the Committee on 16 November. By providing the courts with the discretion to suspend an order made in those circumstances, we would be helping both tenant and landlord: the tenant because they get to remain in their home rather than be evicted with four weeks’ notice, and the landlord because the arrears owed would have been paid off. If the tenant were to break the terms, then the landlord would still have the right to arrange for bailiffs to start the eviction process.

New clause 56 would simply give the courts the opportunity to exercise a measure of discretion in circumstances in which they were convinced that that was the right course of action, rather than constraining them, as the Bill currently proposes, in relation to mandatory possession grounds. As James Prestwich of the Chartered Institute of Housing said in evidence to the Committee two weeks ago:

“It is important that we are able to trust judges to make informed decisions based on the evidence of the case”.––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 74.]

That is all that this new clause seeks, in relation to a discrete number of mandatory grounds for possession. I do not hold out much hope, but I hope that the Minister will consider accepting it.

[Jacob Young]

I thank the hon. Member for moving new clause 56, which would allow the courts to adjourn a possession claim, stay or suspend enforcement of a possession order, or delay the enforcement of an order made under ground 6A, 8 or 8A.

Ground 6A covers situations in which evicting the tenants is the only way for the landlord to comply with enforcement measures such as banning orders; we have already discussed that issue at length earlier in our debates. Delaying enforcement action will therefore mean that the tenant continues to live in an unsafe or overcrowded property, or that the landlord fails to comply with the law. That is not an acceptable situation for either party.

Nor is it fair to ask landlords to bear significant arrears for longer, as applying the new clause to grounds 8 or 8A might. These mandatory grounds already set a high bar for eviction. Asking landlords to bear the cost of significant arrears for longer puts them under unsustainable financial pressure. The Government believe that the new clause strikes an unfair balance that will ultimately hurt tenants. I therefore ask the hon. Member to withdraw the motion.

[Matthew Pennycook]

I thank the Minister for his response. I do not intend to labour the point at any length, as we have discussed the matter on a number of occasions. I think that there is a clear difference of principle as to the amount of discretion that the courts are afforded regarding mandatory possession grounds. We think that they require a bit more flexibility to be able to exercise their judgment when there are compelling circumstances. The Government clearly do not, but I think we may return to the issue at a later stage. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 57

Extension of rent repayment orders

“(1) In Section 40(3) of the Housing and Planning Act 2016, at end of table insert—

--- Later in debate ---

[Jacob Young]

Ms Fovargue, I would like to put on record my thanks to you and the other Chairs of this Bill Committee; to all the Clerks and parliamentary staff; and to the many other people who have worked hard on this Bill, including all my officials and my private office, who have had to get up to date with this Bill in a matter of weeks.

I thank all members of the Committee, including Opposition Members, for their constructive dialogue. We have had some robust debate on several measures, but I hope we can all agree that these are important reforms—the first in a generation—for landlords and tenants. I look forward to further engagement with all hon. Members as the Bill progresses through its remaining stages.

[Matthew Pennycook]

Ms Fovargue, may I take the opportunity to put on record our thanks to you and your colleagues in the Chair for overseeing our proceedings? I also thank our exemplary Clerks for all their assistance; the Doorkeepers and Hansard reporters for facilitating the Committee’s work; and officials in the Department and our own staff for the support that they have provided. Finally, I thank the Minister—as well as the occasional Government Back Bencher who has defied the orders of the hon. Member for South West Hertfordshire and contributed to our debate. [Laughter.] There has been the odd robust exchange, but none has been uncivil, and we appreciate the spirit in which consideration of the Bill has taken place.

Question put and agreed to. 

Bill, as amended, accordingly to be reported.

Renters (Reform) Bill (Ninth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 28th November 2023 Public Bill Committees

[Matthew Pennycook]

It is a pleasure to continue our proceedings with you in the Chair, Mr Gray.

Clause 19 makes a number of amendments to chapter 4 of part 6 of the Housing Act 2004, the effect of which is to ensure that the requirement for landlords and letting agents to place deposits in a Government-approved tenancy deposit protection scheme is maintained in relation to new assured tenancies and tenancies that were assured shorthold tenancies immediately before the extended application date. Currently, any section 21 notice served on a tenant may be invalid if the deposit requirements are not adhered to, but the clause will ensure that, if landlords take a deposit and do not fulfil the relevant statutory requirements, they cannot be awarded a possession order on any of the grounds set out in the amended schedule 2 to the Housing Act 1988.

On the surface, the clause appears simply to apply the existing tenancy deposit requirements to the new tenancy system that will apply whenever chapter 1 of part 1 of the Bill comes into force. However, there is an important difference between the requirements, which speaks to our wider concern about future landlord compliance with the regulatory obligations that have developed around section 21 notices over the course of the 35 years in which the present tenancy system has been in place. We will explore those wider concerns in more detail when we debate our amendment 176 to clause 34.

With regard to tenancy deposit requirements, the main difference between how the relevant protection rules apply to the existing system and how the Government propose that they will apply to the new one is that, under the Bill, they must be adhered to before a court will award possession, rather than, as now, when a notice is served. Put simply, instead of the landlord having to protect a deposit within 30 days of receipt and provide the prescribed information about how that will be achieved before the notice is served, the Bill will allow them to do either of those, or return the deposit, at any time up to the court hearing date.

From a tenant’s perspective, that situation strikes us as a less stringent application of the requirements than we currently have in relation to assured shorthold tenancies. Taken together, amendments 170 to 172 would ensure that landlords must protect deposits with an authorised scheme and provide prescribed information in connection with it before a notice for possession is served rather than doing so, or repaying a deposit, at any time up to a court making an order for possession. I hope that the Minister will consider accepting the amendments.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

It is a pleasure to see you in the Chair again, Mr Gray. I thank the hon. Gentleman for tabling amendments 170 to 172, which seek to change the requirement that landlords must comply with the deposit protection rules before a court can order possession. The amendments would require landlords to comply with the deposit protection rules both before serving a tenant with notice and at the time of the possession hearing. If those conditions are not met, courts could not make a possession order.

The Bill already protects tenants from landlords who are not complying with existing tenancy deposit rules, because clause 19 requires landlords to comply with deposit protection rules before a court may make an order for possession. That will impact only on those landlords who are not complying with existing tenancy deposit rules. If the landlord has stored the deposit correctly in one of the prescribed schemes and has complied with all the applicable rules, the measures in the clause will not hinder or delay the possession process. Landlords will also be able to rectify the problem before the case reaches the court, ensuring that those provisions will not trip them up if they have made an honest mistake. Because we recognise that some possession cases are too critical to delay, that will not apply to the grounds relating to antisocial behaviour.

The aim of our measures in clause 19 is therefore not to prevent or frustrate possession, but to ensure that tenancy deposits are protected for the benefit of the tenant. The hon. Member’s amendments would simply act as another administrative trap that good-faith landlords could fall into. The Bill already ensures that deposits will be protected, while giving landlords sufficient time to comply with the rules before the case reaches the court. I therefore ask the hon. Member to withdraw his amendment.

--- Later in debate ---

[Matthew Pennycook]

I welcome the Minister’s response. What I remain unclear about—if he wishes to clarify this, I will happily allow him to intervene—is whether, in the Government’s view, the change is a less stringent application of the requirements that currently apply to assured shorthold tenancies. That is all we are seeking to probe, and if the Minister can reassure me on that point I will withdraw the amendment.

[Jacob Young]

The existing possession restrictions have made the possession process more complex for all parties, and we do not feel that they are an effective way to ensure that tenants are living in safe and decent homes during a tenancy. That is part of the reason for the changes.

[Matthew Pennycook]

I do not know about other members of the Committee, but from the reasons that the Minister stated, I take it that the change is a less stringent application. I will not press the amendment to a vote at this point, but we may return to this issue, and we will discuss another amendment that we have relating to preconditions and requirements of the Bill around section 21 notices. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 ordered to stand part of the Bill.

Clause 20 ordered to stand part of the Bill.

Schedule 2

Consequential amendments relating to Chapter 1 of Part 1

Amendment made: 60, in schedule 2, page 77, line 13, at end insert—

“7A In section 39 (statutory tenants: succession) omit subsection (7).

7B In section 45 (interpretation of Part 1), in subsection (2) omit ‘Subject to paragraph 11 of Schedule 2 to this Act,’.

7C In Schedule 2 (grounds for possession), omit Part 4.

7D In Schedule 4 (statutory tenants: succession), in Part 3, omit paragraph 15.”—(Jacob Young.)

This amendment makes changes to the 1988 Act which are consequential on the changes to the regime for prior notice for some grounds for possession.

Schedule 2, as amended, agreed to.

Clause 21 ordered to stand part of the Bill.

Clause 22

Penalties for unlawful eviction or harassment of occupier

Amendment made: 61, in clause 22, page 28, line 4, at end insert—

“(10) In this section and Schedule A1, ‘local housing authority’ means a district council, a county council in England for an area for which there is no district council, a London borough council, the Common Council of the City of London or the Council of the Isles of Scilly.”—(Jacob Young.)

This amendment defines “local housing authority” for the purposes of section 1A of, and Schedule A1 to, the Protection from Eviction Act 1977.

Clause 22, as amended, ordered to stand part of the Bill.

Clause 23

Meaning of “residential landlord”

--- Later in debate ---

[Matthew Pennycook]

Part 2 of the Bill concerns landlord redress schemes and the private rented sector database. We welcome part 2 and the Government’s intention to use its clauses to bring the private rented sector within the purview of an ombudsman and to establish a new property portal, including a database of residential landlords and privately rented properties in England. As the Committee will know, two letting agent redress schemes already exist, but the case for bringing all private landlords within the scope of one, irrespective of whether they use an agent to provide management services on their behalf, is compelling and has existed for some time.

The Government first announced their intention to explore options for improving redress in the housing market in late 2017, and in 2019 committed themselves to extending mandatory membership of a redress scheme to all private landlords through primary legislation. Much like the abolition of section 21, a statutory single private rental ombudsman has been a long time in the making. There are myriad issues with the ombudsman that lie outside the scope of the Bill, not least how the Government will address its role within what is already a complicated landscape of redress and dispute resolution; there are already multiple redress schemes and tenants already have recourse to local authorities, the first-tier tribunal, a deposit protection scheme and ultimately to the courts.

However, we support the principle of bringing the private rented sector within the scope of a single ombudsman. If the ombudsman covering the private rented sector, whoever it ultimately is, makes full use of the powers available to it and is well-resourced, and if the potential for confusion and perverse incentives that might result from multiple schemes is addressed, that should ensure that tenants’ complaints can be properly investigated and disputes can be resolved in a timely, more informal manner. That would help to ease the pressure on local authorities and the courts.

In contrast to the proposal for an ombudsman covering the private rented sector, the commitment to introduce a new digital property portal was made only last year in the White Paper. Nevertheless, we strongly support it. Indeed, I would go so far as to say—I have done so on previous occasions—that we believe a well-designed, resourced and properly enforced portal has the potential to utterly transform the private rented sector and the experience of tenants within it. 

We want the Bill to deliver a property portal that makes it easier for landlords to understand and demonstrate compliance with their existing obligations and evolving regulations; which empowers tenants by rendering transparent the rental history of landlords; and which enables landlords to be held to account by those they are renting to. We also want the property portal to help local authorities with enforcement against non-compliant landlords and to monitor and crack down on the minority of rogues in the sector.

We are concerned that chapter 2 of part 2 of the Bill, which deals with landlord redress schemes, is arguably too prescriptive, and that chapter 3 of part 2, which deals with the private rented sector database, are not nearly prescriptive enough. Fundamental to the operation of both measures is the question of which tenancies fall within their scope. As a means to probe the Minister on this issue, we tabled amendment 173, which would extend the definition of residential landlord to include park home operators, private providers of purpose-built student accommodation and property guardian companies. Each of those was explicitly referenced in the White Paper with regard to the schemes. I will make some brief comments on each to explore how the Government might define the scope of the private rented sector database and landlord redress scheme provisions via regulations in due course.

When it comes to residential park home operators, the Government’s October 2018 review of the legislation in this area found that some site operators

“continue to take unfair advantage of residents, most of whom are elderly and on low incomes.”

Furthermore, the Government said in their 2019 report, “Strengthening Consumer Redress in the Housing Market”:

“Currently, if a site operator fails to meet their contractual obligations a resident has little recourse except via the First-tier Tribunal, and those who rent directly from the site operator also lack access to redress. We are satisfied that there is a gap in redress services for park home residents and are committed to extending mandatory membership of a redress scheme to all residential park home site operators.”

When it comes to purpose-built student accommodation, the 2019 report also stated:

“Responses highlighted a gap in redress provision amongst students living in purpose-built student accommodation run by private companies.”

While the majority of such private companies have signed up to a code of practice administered by Unipol, the Government nevertheless made clear that private providers of purpose-built student accommodation, as opposed to educational establishments that provide student accommodation, should come within the scope of a redress scheme. When it comes to property guardians, recent reports in the press have highlighted rising instances of misconduct on the part of some property guardian companies that operate through licences to occupy rather than tenancies, which provide significantly fewer protections.

Research conducted by Sheffield Hallam University, commissioned by the Department and published last year, found that most property guardians

“reported very poor conditions, with properties frequently described as deteriorating and susceptible to adverse weather conditions. Local authorities also reported poor conditions in properties they had inspected. Persistent issues with damp and mould were very commonly reported, including damp from flooding, faulty plumbing and leaking roofs.”

That research also found that local authority enforcement teams are not routinely reviewing, inspecting or enforcing standards in guardian properties. There would therefore appear prima facie to be a strong case for including property guardians as well as park home sites and purpose-built student accommodation within the scope of the ombudsman and property portal as a means of increasing enforcement action and driving up standards.

It may well be the case that the Government fully intend to include each of those within the scope of the ombudsman and the private rented sector database in chapters 2 and 3 of part 2 when they introduce the relevant regulations and to provide access to redress for residents living in each type of accommodation, but we would appreciate a degree of clarity from the Government so that we can understand how extensive the operation of both schemes should be. I look forward to the Minister’s response.

[Jacob Young]

I thank the hon. Member for moving amendment 173, which proposes to expand the scope of the mandatory landlord redress scheme, which I will now refer to as the ombudsman, and the database, which I will now refer to as the portal. Specifically, the amendment would expand the ombudsman and portal to include park homes and dwellings occupied under licence, such as private purpose-built student accommodation and buildings occupied under property guardianship schemes.

Clause 23 sets out the tenancies that will fall within the scope of the ombudsman and the portal. It currently provides that they will capture assured and regulated tenancies, which make up the great majority of residential tenancy agreements in England, so under the clause the majority of landlords of private tenancies in England will initially need to be registered with the ombudsman and the portal.

We want to ensure that the introduction of the ombudsman and the portal is as smooth as possible, so tenants and landlords will need to have clarity over their rights and responsibilities. The issues that affect students, property guardians and park home owners can often be quite different from those faced by the majority of those in the private rented sector. Given those differences, it is reasonable to first apply the ombudsman membership requirements to the majority of private landlords. That will mean that all initial landlord members will be subject to the same expectations. We can then consider expanding the remit of the ombudsman to more specialised accommodation.

The clause also gives the Secretary of State the power to make regulations to amend the definitions and change the letting arrangements that would be captured by the requirements. We intend to use the regulations to potentially include different types of letting arrangements in future. I assure the hon. Member that we will continue to engage with the sector, and that we have the flexibility to determine the best course of action following such engagement. I therefore ask him to withdraw the amendment.

I turn to Government amendments 62 to 64. The current definition of “dwelling” would potentially preclude shared accommodation from being brought into scope. The amendments change the definition of “dwelling” that could be used in future so that shared accommodation may be included. In addition, clause 23 provides clarity on the meanings of private “residential landlord”, “relevant tenancy” and “dwelling” for the purposes of determining which tenancies are within the ambit of the private landlord ombudsman and the portal. Ministers will be able to make regulations to allow for divergence between the scope of the ombudsman and the portal. That will ensure that each scheme can retain full autonomy and operate independently in the future.

[Matthew Pennycook]

That was a very helpful clarification from the Minister. I take it from his answer that, although the Government are quite rightly focused on bringing assured and regulated tenancies within the scope of the ombudsman and the portal to cover the majority of private landlords, they are open to considering how their remit and scope may expand in the future to cover important other types of tenancy, as I have described. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 62, in clause 23, page 32, line 5, leave out from second “building” to “it” in line 6.

This amendment removes words that are no longer needed as a result of Amendment 64.

Amendment 63, in clause 23, page 32, line 7, leave out

“so occupied or intended to be so occupied”.

This amendment removes words that are no longer needed as a result of Amendment 64.

Amendment 64, in clause 23, page 32, line 8, at end insert—

“(ia) so that it includes a building or part of a building, and anything for the time being included in the meaning of “dwelling” by virtue of sub-paragraph (i), which is occupied or intended to be occupied as a dwelling that is not a separate dwelling,”.—(Jacob Young.)

This amendment allows the power to amend the definition of "dwelling" that applies for the purposes of Part 2 of the Bill to be used so as to add to that definition places that are not occupied as a separate dwelling. This will enable the power to be exercised to bring shared living accommodation within the definition of "dwelling".

Clause 23, as amended, ordered to stand part of the Bill.

Clause 24

Landlord redress schemes

--- Later in debate ---

[Jacob Young]

Amendment 174 would legally oblige the Government to make regulations requiring residential landlords to be members of a landlord redress scheme, rather than giving the Government the discretion to do so. The Government are committed to requiring private landlords to be members of an ombudsman, and a binding obligation is not required on the face of the Bill. We have taken powers in the Bill to allow the Government to ensure that the ombudsman is introduced in the most effective way, and with the appropriate sequencing.

Amendment 196 would require the ombudsman to handle complaints about tenancy deposits. It would be unwise to list in the Bill specific issues that the ombudsman can or cannot look at. The ombudsman would need the flexibility to consider any complaint duly made, but also to direct a tenant elsewhere if more appropriate. As tenancy deposit schemes already provide free alternative dispute resolution, the ombudsman may decide that the case is better handled elsewhere, but it will ultimately depend on the circumstances of each case. The ombudsman will have the final say on jurisdiction, subject to any agreement with other bodies.

We have made provision under clause 25 to enable the ombudsman to publish a Secretary of State-approved code of practice, which would clarify what the ombudsman expects of its landlord members. The ombudsman scheme will also provide more clarity about the circumstances in which a complaint will or will not be considered. I therefore ask the hon. Member for Brighton, Kemptown not to press his amendment.

As discussed, clause 24 provides the Secretary of State with powers to set up a mandatory redress scheme, which all private residential landlords of a relevant tenancy in England will need to join. We intend for the scheme to be an ombudsman service, and will look to require former landlords, as well as current and prospective landlords, to remain members after their relevant tenancies have ended, for a time specified in secondary regulations.

Members have asked for clarity about who the new PRS landlord ombudsman will be. No new ombudsman can be selected until after regulations have been laid following Royal Assent, but we can show the direction of travel. We have listened to the debates and the evidence given to this Committee, and our preferred approach at this time is for the existing housing ombudsman service to administer redress for both private and social tenants. As an established public body already delivering redress for social tenants, the housing ombudsman is uniquely positioned to deliver the private sector landlord redress scheme. Having one provider for all social and private renting tenants would provide streamlined and simple-to-use redress services for complainants.

To be clear, we are not ruling out the possibility of delivering through a different provider; we are still in the early stages of designing this new service. We now intend to explore how best to deliver on our ambition for a high-quality, streamlined and cross-tenure redress service.

To address the point that the hon. Member for Greenwich and Woolwich made about multiple redress schemes, the intention is to approve a single ombudsman scheme that all private landlords will be required to join. However, allowing for multiple schemes in legislation offers the Government flexibility, should the demand for redress prove too much for a single provider to handle effectively. I hope, on that basis, that the hon. Member will withdraw his amendment.

[Matthew Pennycook]

That is useful clarification from the Minister. Based on the assurances he has given, I do not intend to press amendment 174 to a Division. I understand fully, with the caveats that he has just given, what he is saying about a single ombudsman. We would welcome the Government’s preferred approach—for the housing ombudsman to take on responsibility for the private rented sector. The Landlord and Tenant Act 1985 does not distinguish between tenures, and we think that the ombudsman is probably best placed to provide that service and to do so quickly.

I would push back slightly against what the Minister said about how the clause is drafted, purely because, in a sense, it diverges from precedent. Most other Bills that we have looked at are very clear about establishing a single body and not being too prescriptive about how it operates. The Government have taken a different approach here. The Minister has given as one reason for doing so that the ombudsman might be overwhelmed by demand. Our response would be that we should ensure that the ombudsman that is given responsibility is properly resourced and adequately supported to do its job, rather than contemplate setting up additional redress schemes. However, it has been useful to hear the Government’s response, so we will not push the issue any further at this stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 ordered to stand part of the Bill.

Clause 25 ordered to stand part of the Bill.

Clause 26

Financial penalties

--- Later in debate ---

[Matthew Pennycook]

In precisely the same way that amendments 163 and 164, which we debated previously, sought to raise the maximum financial penalty that local authorities could levy where the provisions in clauses 9 or 10 were contravened or an offence committed, amendments 165 and 166 seek to raise the maximum financial penalty in respect of breaches relating to the requirements in clause 24 to be a member of an approved or designated redress scheme—that is, the ombudsman.

If the ombudsman is to cover all private landlords who rent out property in England, as I think every member of the Committee would wish, the penalty for not complying with mandatory membership must be sufficiently severe to act as a deterrent. We have tabled these amendments because we remain unconvinced that a £5,000 fine for a breach and a £30,000 fine as an alternative to prosecution will deter the minority of unscrupulous landlords who wish to evade regulation from failing to join. We urge the Government once again to reconsider.

[Jacob Young]

As the hon. Gentleman has mentioned, we discussed related points in earlier debates. His amendments 165 and 166 relate to the requirement for landlords to be members of the Government-approved redress scheme, which we intend to run as an ombudsman service, and a ban on marketing a property where a landlord is not registered with such a scheme. Our proposed fine regime is fair and proportionate. A £5,000 fine will be enough to deter non-compliance for most, yet fines of up to £30,000 are also possible if non-compliance continues. The legislation allows for fines to be imposed repeatedly every 28 days after a penalty notice has been issued. For repeat breaches, local housing authorities can also pursue prosecution through the court, which carries an unlimited fine. This escalating procedure gives our new ombudsman the necessary teeth for maximum compliance without making the fines unnecessarily excessive. I therefore ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

I will withdraw the amendment, as I made clear, but there is a point of difference here. We do not believe these fines will be enough. I take on board, as I have previously, the Minister’s point that repeat fines can be levied. For us, these fines are important because of their deterrent effect in cautioning landlords away from ever contemplating a breach or repeat offences. The maximum fine level also has implications for enforcement more generally, which we will debate in due course. In this instance we are probing the Government on the maximum levels, so I do not intend to push the amendment to a Division.

[The Chair]

On a slight technicality, the Member is seeking the leave of the Committee to withdraw the amendment. Other members of the Committee may press it to a Division if they wish to, although in this case they do not.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

Clause 27

Offences

--- Later in debate ---

[Matthew Pennycook]

My hon. Friend makes a very good point, which pre-empts one that I am about to make. We think that rent repayment orders can and do provide an incentive for landlords in these areas.

We believe, specifically when it comes to new clause 57, that allowing the tribunal to make rent repayment orders for these additional specific breaches would provide an additional incentive for landlords to comply with the relevant duties, requirements and prohibitions, and enable wronged tenants to be compensated for any losses incurred. Extending rent repayment orders to the relevant requirements of clause 39, for example, would be a powerful stimulus for landlord portal registration, because it would become the norm for tenants to check whether their landlord or prospective landlord was compliant.

Conversely, if the entitlement to apply for a rent repayment order were to apply to the relevant requirements of clause 39, it would provide tenants with a compelling reason to visit the portal, to learn about their rights and access information and resources they might not otherwise come across until the point they had a serious complaint or were engaged in a dispute with a landlord. This example also illustrates how an extension of rent repayment orders could alleviate some of the burdens that would otherwise fall on local authorities as the only mechanism to enforce, by means of financial penalties and criminal offences, a number of the breaches in the Bill to which they currently do not apply.

In the scenario I have outlined, tenants incentivised by the potential to apply an RRO to a landlord who was not compliant would act as an intelligence-gathering mechanism for local authorities, helping them to identify unregistered properties that they might otherwise struggle to locate and register. Put simply, as Dr Henry Dawson said to the Committee in the evidence session on 14 November:

“Using rent repayment orders incentivises tenants to keep an eye on landlords.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 60, Q74.]

The Minister may assure me that the regulations to come may provide for rent repayment orders in relation to clauses 24 and 39(3). If that is the case, we would welcome it, but I would much prefer him to accept the new clause and expand the use of rent repayment orders in the Bill to encourage compliance and give tenants the means to secure, for themselves, redress for poorly behaving landlords. I look forward to the Minister’s response.

[Jacob Young]

The purpose of rent repayment orders is to provide an effective means through which tenants can hold criminal landlords to account and receive due remedy. Extending rent repayment orders to cover non-criminal civil breaches would mean landlords could be ordered to pay up to two years’ worth of rent for a relatively minor non-compliance. We think that this would be disproportionate. We think that scarce court time should be focused on dealing with serious offences rather than more minor breaches. For first and minor non-compliance, with provisions in the Bill there will be several means of redress and enforcement, including the ombudsman and civil penalties of up to £5,000, but I am happy to continue this conversation with the hon. Member for Greenwich and Woolwich further.

[Matthew Pennycook]

I welcome the Minister’s response. There may be a difference of principle here, in that we feel quite strongly, actually, that rent repayment orders should be extended to non-criminal civil breaches of requirements set out in the Bill. I take the Minister’s point about this being an excessive response to landlord non-compliance for first or minor breaches. I say to him that perhaps the Government could explore a grace period as the schemes are being introduced, where landlords are not caught within an extended rent repayment order scheme, or some sort of get-out from first or minor offences.

We are trying to address a way, once the scheme is bedded in and landlords—without committing a criminal offence—are regularly not complying with mandatory membership of the ombudsman or registering with a portal, for landlords to be further incentivised, so that tenants are aware of their rights and hold their landlords to account. This may be an issue that we will come back to, but I very much welcome the Minister’s assurance that we will continue the dialogue on this point.

Amendment 65 agreed to.

Clause 27, as amended, ordered to stand part of the Bill.

Clause 28 ordered to stand part of the Bill.

Clause 29

Guidance for scheme administrator and local housing authority

Amendment made: 66, in clause 29, page 39, line 4, leave out “in England”.—(Jacob Young.)

This amendment leaves out words which have no legal effect because a “local housing authority” as defined by clause 57(1) could not be situated outside of England.

Question proposed, That the clause, as amended, stand part of the Bill.

[Jacob Young]

Clause 29 allows the Secretary of State to issue or approve guidance on effective working between local councils and the ombudsman, who will run the only approved or designated landlord redress scheme. Both must have regard to any guidance published under provisions in this clause. We have designed the guidance alongside local councils and the ombudsman. Local councils and the ombudsman will have different but complementary roles and responsibilities in the private rented sector. We intend for the guidance to provide clarity on a range of situations where communication and co-operation between councils and the ombudsman would be advantageous or necessary. We also want it to set out roles and responsibilities for when a tenant complains about a problem that both the ombudsman and local councils can help to resolve.

[Matthew Pennycook]

We agree that the new or expanded ombudsman, with responsibility for dealing with complaints from tenants in the private rented sector, will have to work effectively with local authorities given the latter’s enforcement role. When the new ombudsman has been established, a complaint from a tenant concerning the breach of a regulatory threshold will be able to be made either directly to the ombudsman or to the local authority that would have the power to take enforcement action to bring the landlord in question into compliance with the said regulations, and if they fail to do so, to sanction them. There is therefore a clear risk not only that the role of the ombudsman vis-à-vis local authorities is not clearly delineated, but that tenants themselves will be confused about which body it is appropriate to approach in any given circumstance.

This issue was raised during the progress of the Social Housing (Regulation) Act 2023 because there is a general issue about how the ombudsman relates to local authorities. Given the Minister’s indication that the Government’s preferred approach is to have that ombudsman take on a responsibility for the private rented sector, I think—if anything—this point becomes more pertinent. The Government acknowledge, as is clearly stated in the explanatory notes accompanying the Bill, that the new ombudsman and local authorities must have “complementary but separate roles.” I put this point to the housing ombudsman, Richard Blakeway, in one of our evidence sessions two weeks ago. He replied that

“that is a really important point, because there is a risk of duplication between the role of a council and the role of an ombudsman. Again, there is a lack of clarity for residents—tenants—about which route to take. An ombudsman does not operate in isolation—it will not operate in a bubble—so the relationship between the ombudsman and the courts will be critical, as well as the ombudsman discharging its own functions.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 28, Q28.]

It is crucial that guidance on how local authorities and the ombudsman will work together to resolve complaints, including how they share information and how each signpost to the other where appropriate, is fit for purpose. The clause allows for such guidance to be published, and I would be grateful if the Minister, either now or in writing, could perhaps give us a little more insight into how the Government will ensure that the roles of the two are separate but complementary, as the Government have indicated they must be.

[Jacob Young]

Redress and enforcement achieve different but complementary outcomes. Local councils enforce regulatory standards. Ombudsman schemes are not enforcement or regulatory bodies but instead protect consumer rights by providing redress, in this case where a landlord has failed to adequately deal with a legitimate complaint. Where the complaint from a tenant concerns the breach of a regulatory threshold, local councils may take enforcement actions to bring the landlord or property into compliance with the regulations and use their discretion to sanction landlords. In such circumstances, tenants will be able to complain to both the council and the ombudsman. The local council will address the regulatory breach and the ombudsman will provide redress for the tenant. I hope that that reassures the hon. Gentleman.

Question put and agreed to.

Clause 29, as amended, accordingly ordered to stand part of the Bill.

Clause 30

Interpretation of Chapter 2

--- Later in debate ---

[Matthew Pennycook]

The clause removes the jurisdiction of the housing ombudsman service over private residential landlords and the private rented sector housing activities of social housing providers. I simply want to ask the Minister, given his announcement today about the housing ombudsman being the Government’s preferred provider of private rented sector redress, whether the provisions of this clause are still necessary, as the Government have made it clear that they intend the existing ombudsman to extend its remit to cover the private rented sector. Will the Government review the clause in the light of that announcement?

[Jacob Young]

Any social housing redress scheme approved under the Housing Act 1996 provides redress services for the private rented tenancies of social landlords. An approved social redress scheme can also provide redress to tenants of private landlords who choose to join voluntarily. Currently, only one approved social housing redress scheme is administered by the housing ombudsman service.

Once brought into force, the clause will remove the private rented sector activities from the general jurisdiction of any approved social housing scheme. The clause will also stop any social housing redress scheme accepting relevant private landlords as voluntary members in relation to their private sector interests. However, the clause allows a social housing redress scheme to retain some jurisdiction over private rented sector activities if agreed with the Secretary of State. It does not prevent one organisation, such as the housing ombudsman, from administering both social and private redress schemes through a single, joined-up service. The clause will ensure that tenants who complain under the joined-up service are treated in exactly the same way as others who rent in the same sector.

The Bill provides a mechanism to bring the clause into force, but only once the new private rented sector ombudsman scheme is established. That will prevent disruption to members of existing schemes and avoid gaps in redress for tenants. If the hon. Member for Greenwich and Woolwich has further questions, I am happy to write to him.

Question put and agreed to.

Clause 31 accordingly ordered to stand part of the Bill.

Clause 32

The database

[Matthew Pennycook]

I beg to move amendment 175, in clause 32, page 40, line 18, at end insert—

“(ba) details, which may include copies, of all notices seeking possession served by the residential landlord in respect of each dwelling of which he is the landlord, and”.

This amendment would require the database to record details of notices of possession served by a landlord in respect of each dwelling of which they are the landlord.

[Matthew Pennycook]

In the debate on our amendment 173 to clause 23, I remarked on the concern among Opposition members of the Committee that, in contrast to chapter 2 of part 2 concerning the ombudsman, chapter 3 of part 2 concerning the private rented sector database is not nearly prescriptive enough.

To be clear, when it comes to establishing a private rented sector database and developing the new digital property portal service that it will support, we do not wish to tie the Government’s hands too tightly. We believe it is right that much of the detail is put in regulation at a later date: how the database will be operated and overseen; how entries are verified, corrected and removed; what the registration fees are and how they will be collected; and how information on the database is shared with third parties. However, we also believe that certain requirements of the functioning of the portal should be placed on the face of the Bill.

In our view, such requirements should include one for landlords to submit key information on their history and for that information to be publicly available so that tenants may make informed decisions when entering into a tenancy agreement and hold their landlord to account. Key information might include details of past enforcement action taken against a landlord or an agent representing them; any rent repayment, banning or management orders made against them; rent levels for the property over time in the form of past section 13 notices; and details of notices of possession served to previous tenants.

Amendment 175 would add to the Bill a requirement for

“the database to record details of notices of possession”

—as one example—

“served by a landlord in respect of each”

of their dwellings let. As I said, we feel strongly that the Bill should be amended to guarantee a minimum set of expectations for the database and the new digital property portal service; the amendment would go some way to ensuring that is the case. I look forward to hearing the Minister’s thoughts on it.

[Jacob Young]

Clause 32 provides for the establishment and operation of the portal, as we have been discussing. With access to a comprehensive and standardised dataset on private rented sectors across England, local authorities will be best equipped to develop and implement their enforcement strategies. By requiring landlords to undertake a registration process, as provided by clause 34—which I will turn to in due course—the portal will help them to meet standards within the private rented sector by making them aware of their legal requirements.

With legislative backing and clear duties on users, a portal with entries for private landlords and dwellings will support a much richer understanding of the private rented sector and assist the Government in developing targeted policy. As such, the portal will be key to the successful implementation and enforcement of the wider reforms legislated for in the Bill.

Clause 33 sets out who can be the portal operator; a role required to create and maintain a working database of private landlords and their properties. The operator can appointed by the Secretary of State or a person arranged by the Secretary of State. The Government envisage the portal will be centrally co-ordinated by a single operator. Our legislation allows for the portal to be operated by the Department or to arrange for an alternative, such as a public body, to take on that responsibility.

I thank the hon. Gentleman for his Amendment 175. This would require landlords to record their use of possession grounds, under section 8 of the Housing Act 1988, on the property portal. To ensure the portal maintains the flexibility to meet the future needs of the sector, it is necessary that we use regulations to prescribe the information it collects, rather than including these in the Bill.

We intend for the portal to be a source of basic information about properties and their health and safety compliance. This legislation also allows for the ability to record tenancy-related issues, such as details of possession notices. We will consider the matter of recorded possession notices on the portal ahead of passing regulations, and carefully consider the balance of benefits and burden on landlords and local authorities when deciding what information to record. We will continue to work with stakeholders to assess the merits of information requirements, ahead of introducing any regulations. I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

That is a helpful response. I took from it that the Government are considering including a history of past possession notices granted to a landlord. That is very welcome.

We tabled this amendment because it gets to the heart of how the new portal will operate. It could be a source of very basic information about a property, and whether it is strictly compliant with health and safety standards. We would hope the Government—the noises the Minister has made indicate they might—will take a more expansive view of how the property portal might work. Namely, that it will give tenants, as consumers, real power, because of the transparency and the amount of information recorded, to be able to know whether the tenancy agreement they are prospectively entering into is good for them, and whether the landlord is a good-faith landlord—as we know the majority are—or potentially an unscrupulous landlord. I welcome the indications the Minister has given, and look forward to debating—whether between us, or with other Ministers—the regulations in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Clause 33 ordered to stand part of the Bill.

Clause 34

Making entries in the database

--- Later in debate ---

[Lloyd Russell-Moyle]

As I take it, the Minister has agreed that he will consider including disputes. That is a separate point from whether they are part of the ombudsperson; it is about whether their own processes and outcomes are being recorded properly. I will not push the amendment to a vote, but I do hope that the Minister will keep us in touch with his thinking as matters progress.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 176, in clause 34, page 41, line 33, at end insert—

“(3A) The regulations must provide for the following information or documents to be provided to the database operator as part of the process of creating entries on the database—

(a) an address, telephone number and email address for the residential landlord;

(b) an address, telephone number and email address for all managing agents engaged by the residential landlord;

(c) details of every dwelling that is being let by the residential landlord;

(d) evidence that the residential landlord has supplied a copy of the ‘How To Rent’ booklet to each relevant tenant;

(e) the rent that is currently being charged in respect of every dwelling that is being let by the residential landlord;

(f) details of any enforcement action that a local housing authority in England has taken against the residential landlord;

(g) details of any banning orders that have been made against the residential landlord pursuant to Chapter 2 of Part 2 of the Housing and Planning Act 2016;

(h) in respect of every dwelling that is being let by the residential landlord, copies of the documents required by:

(i) Regulation 6(5) of the Energy Performance of Buildings (England and Wales) Regulations 2012;

(ii) Paragraph(s) 6 and/or 7 of Regulation 36 of the Gas Safety (Installation and Use) Regulations 1998;

(iii) Regulation 3 of the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020;

(iv) Regulation 4 of the Smoke and Carbon Monoxide Alarm (England) Regulations 2015;

(i) details of whether the dwelling house is required to be licenced under Part 2 (Houses in Multiple Occupation) or Part 3 (Selective Licensing) of the Housing Act 2004”

This amendment would ensure that a number of the regulatory obligations that built up around section 21 notices are maintained by means of the database following the removal of section 21 of the Housing Act 1988.

We discussed, in relation to amendment 175, the fact that we believe that certain requirements relating to the functioning of the portal should be placed in the Bill. In speaking to amendments 170 to 172 to clause 19 in relation to deposit protection, I briefly touched on the fact that a number of regulatory obligations that have developed around section 21 notices over the 35 years for which the present system has been in place will fall away when it is abolished at the point at which chapter 1 of part 1 of the Bill comes into force.

The preconditions and requirements that have built up around section 21 notices, which presently prevent landlords from using the no-fault eviction process unless they can show compliance, include providing copies of gas safety certificates; providing copies of energy performance certificates; providing copies to each tenant of the ever-evolving how-to-rent booklet; and showing evidence of complying with the licensing requirements for houses in multiple occupation. There are no provisions in the Bill to ensure that landlords will have to continue to meet these and other regulatory obligations as a precondition of operating under the new tenancy system.

We fear that that will leave under-resourced local authorities—or tenants themselves, through the pursuit of civil claims—as the only means of enforcing these important statutory duties. We believe that compliance should instead be achieved by making it mandatory for landlords to submit the relevant information and proof of compliance to the database operator as part of the process of creating entries on the database. Amendment 176 would ensure that that is the case in respect of a wide range of existing regulatory obligations. We urge the Minister to accept it.

[Jacob Young]

I thank the hon. Member for moving amendment 176, which would require certain information to be recorded on the property portal. I very much agree with the sentiment of it; we already intend to record much of that information on the portal. Alongside basic personal and property details, we intend to require landlords to supply evidence that health and safety standards are being met within their rental property. This is likely to include the selected information that landlords are currently legally obliged to provide to tenants, such as gas safety certificates.

To ensure that the portal maintains the flexibility to meet the future needs of the sector, it is necessary that the information it collects be specified in regulations, rather than in the Bill. I therefore ask the hon. Member to withdraw his amendment.

--- Later in debate ---

[Jacob Young]

I commend the clauses to the Committee. I am interested to hear the thoughts of the hon. Member for Greenwich and Woolwich.

[Matthew Pennycook]

I have two brief questions for the Minister in relation to this group of clauses. I am more than happy for him to write to me on these points, as they are quite niche.

First, the powers under clause 38 will be used to set fees in relation to registration on the database. Clause 38(5) allows for all or part of the amount received in fees to be paid to local housing authorities or into the Consolidated Fund. Is the implication of the inclusion of this provision in the Bill that the Government expect there to be a surplus from fees collected by the database? If so, why do the Government not believe, given that they are the relevant enforcement body, that any available funds should be allocated to local authorities alone rather than central Government?

Secondly, we take it from the nature of the charging regime that the Government hope the database will be financially self-sufficient. However, the work needed to maintain and verify entries on the database will be onerous, and the start-up costs could be significant. Can the Minister provide any detail at this stage as to what the Government expect the resourcing requirements of the database to be? Can he provide assurances as to how its implementation and running costs will be met?

[Jacob Young]

In answer to the hon. Member’s question about landlords having to pay to join the service, we intend to fund the service through fees charged to private landlords when they register on the portal. We will take steps to ensure that these costs remain reasonable, proportionate and sustainable. The new service will bring substantial benefits to landlords as well as tenants, providing a single source of information about their legal responsibilities and helping them to showcase their compliance. It will also support local councils to enforce against unscrupulous landlords, who undercut the responsible majority.

On resourcing for local authorities, the information recorded on the portal will save local authorities time when enforcing health and safety standards in the PRS. Our research has shown that locating landlords and properties takes up a significant proportion of local authorities’ resources. Additionally, we are undertaking a new burdens assessment and will ensure that additional burdens created by the new system are fully funded.

Question agreed to.

Clause 35 accordingly ordered to stand part of the Bill.

Clauses 36 to 42 ordered to stand part of the Bill.

Clause 43

Access to the database

--- Later in debate ---

[Matthew Pennycook]

Amendments 167 and 168 would raise the maximum financial penalty that local authorities can levy when there has been a breach of a requirement imposed by clause 39 for private landlords to be registered on the database before they can market, advertise or let associated dwellings, or an offence has been committed under clause 48.

I intend to speak to the amendments only briefly, as we have already debated the issue of maximum financial penalties on two occasions. Suffice it to say that the Opposition remain of the view that the Government should reconsider the proposed maximum limits of £5,000 and £30,000 respectively, on the grounds that fines of up to those levels are unlikely to act as an effective deterrent. I come back to this point briefly because it has a direct bearing on the ability of local authorities to finance enforcement activity, an issue that we will debate shortly in relation to clauses 58 to 61. That is why the Local Government Association supports the amendments.

I remind the Minister that the amendments would bring the maximum financial penalties in line with others that can be issued by enforcement authorities against landlords who breach the legislation, for example in respect of the Leasehold Reform (Ground Rent) Act 2022.

I do not want to press the point, and I do not necessarily expect a response from the Minister, but we urge the Government to reconsider.

[Jacob Young]

I thank the hon. Gentleman for tabling the amendments. As he says, we have discussed these points a few times.

Our proposed fines regime is fair and proportionate. Fines of up to £30,000 are possible if non-compliance continues. The legislation allows fines to be imposed repeatedly every 28 days; and for repeat offences, local housing authorities can pursue prosecution through the courts, which carries an unlimited fine. This escalating procedure will give local authorities the ability to effectively enforce the requirements of the new property portal, without fines being excessive. The Department will issue guidance to local authorities to help them to make use of the new fine-setting powers. I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 ordered to stand part of the Bill.

Clause 48

Offences

--- Later in debate ---

[Jacob Young]

Blanket bans on letting to families with children or people who receive benefits have no place in our modern housing market. We agree that landlords and agents must not discriminate on that basis, and should fairly consider individual prospective tenants. Our package of amendments and new clauses prohibits landlords from discriminating against families with children or people who receive benefits in England and Wales. The blanket ban measures respond to calls for additional safeguards for some of the most vulnerable renters, while confirming that landlords can ensure that a tenancy is affordable, and that they retain the final say on whom they let to.

[Matthew Pennycook]

Clause 52 simply provides local authorities with the power to impose financial penalties on those who do not meet the requirements of the private rented sector database, as set out in clause 39, or an offence relating to it, as set out in clause 48.

The large group of Government amendments and new clauses that we are considering with this clause add proposed new chapter 2A to part 1 of the Bill. It includes several new clauses, commenced by regulations made by the Secretary of State, that seek to prohibit discriminatory practices associated with children and benefits status in relation to the grant of tenancies, as the Minister made clear. Incidentally, proposed new chapter 2B will provide for the same clauses to apply in Wales, pending commencement by order of Welsh Ministers.

Without question, we welcome the intent behind the amendments and new clauses. As I am sure the Minister can see, we have consistently expressed concern since the Bill’s publication that the commitment in the White Paper to ban so-called “No DSS” or “No kids” practices was not on the face of the Bill. The Government deserve credit, as they do for deciding to extend a decent homes standard to the private rented sector and for seeking to make these important changes through this Bill rather than separate future legislation.

The case for prohibiting “No DSS” and “No kids” practices is indisputable. All renters should be treated fairly in their search for a safe, secure, decent, and affordable place to call home, regardless of whether they are in receipt of benefits or their family circumstances. Yet in addition to the various informal barriers to renting privately that we know exist, some of which we debated when considering advanced rent payments in relation to clause 5, there is incontrovertible evidence that some landlords and agents acting on behalf of landlords actively discourage, or even prevent, people in receipt of benefits or with children from renting their properties.

We know that some landlords refuse to allow benefit claimants to even view an affordable property or to consider them as a potential tenant, and prospective renters across the country will be familiar with messages in property adverts such as “No DSS”, “No benefits”, “Working households preferred” or “Professional tenants only”. The scale of this discrimination is almost certainly significant. Successive YouGov surveys of private landlords in England have made clear not only that a comfortable majority of them prefer not to rent to people in receipt of benefits but that a significant minority operate an outright ban. Outright bans on renters with children may be less prevalent, but they are still extremely commonplace. The result is that hundreds of thousands of families have been unable to rent a home that they wanted and could afford, simply due to their benefit status or because they have children.

As we have touched on numerous times during the Committee’s proceedings, the number of such families in the PRS has increased markedly over recent decades, with woefully inadequate social housing supply and rising house prices making private renting the only option for many families, including working families with children. Of course, such discrimination does not affect all people equally. The reality, particularly in hot, competitive rental markets, is that women, disabled households and people of colour will be disproportionately affected by it. For example, we know that the overwhelming majority of single parents receiving housing benefit are female. I grew up in one of those households; the challenges they face daily are considerable enough without having to navigate discriminatory and potentially unlawful policies in the private letting industry.

Whether they are the result of landlords’ misperceptions, of frustrations with the workings of the benefit system or of ill-informed advice from letting agents, blanket bans of the kind in question are simply unacceptable. They are not only unacceptable but almost certainly already unlawful by virtue of the premises provisions in the Equality Act 2010, which provide for a prohibition against discrimination in letting, managing or disposing of premises. However, although a number of court rulings have confirmed that rejecting tenancy applications because of an applicant’s benefit status or family circumstances is a breach of the 2010 Act, proving discrimination is incredibly difficult. As a result, despite the growing body of case law, “No DSS” and “No kids” practices remain widespread.

The Government amendments in this group perfectly demonstrate the nature of the problem. They specify discriminatory practices that are already unlawful under part 4 of the Equality Act 2010. Indeed, Government new clauses 8 and 9 even mirror the language of the Equality Act—“provision, criterion or practice”—in relation to discriminatory practices, yet they do nothing to clarify that the various practices are henceforth always to be deemed discriminatory. As such, although we welcome the motivation behind the Government amendments in attempting to provide for a strict prohibition of such practices, we are concerned that they will not achieve that objective, because, although they will have the effect of removing terms discriminating against benefit claimants and families with children from contracts, they will not prevent the underlying discrimination from occurring in practice.

What we propose, by way of our new clause 61, is that the weaknesses of the various Government amendments in question are resolved by ensuring that the underlying conduct is clearly unlawful by making it a breach of the Equality Act 2010. Our new clause is aimed at prohibiting indirect discrimination and discrimination arising from disability, by giving the Secretary of State the power to define, by regulation, what behaviour is, for the purposes of part 4 of the 2010 Act, considered to be unlawful discrimination unless the person accused of discriminating can prove the contrary. It would remove, for example, the need for a female prospective private renter to prove that a “No DSS” blanket ban had a disproportionate impact on her as a woman. It would mean that, in any court proceedings, the first threshold stage would always be passed unless the landlord in question could convince the court that the ban had no discriminatory impact—which, of course, would never happen.

By forcing landlords to prove that some objective justification exists for refusing to rent to people in receipt of benefits or with children in order to advertise or market a property on the basis of a “No DSS” or “No kids” ban, our amendment would have the effect of ensuring that such discriminatory practices were finally banned in practice, because the number of privately rented properties where there could be such an objective justification is tiny.

I hope the Minister will respond to this amendment in the spirit in which it is intended—namely, as a constructive means of compelling the Government to consider whether their proposed new chapter 2A to part 1 of the Act may fall short in practice. I look forward to the Minister’s response.

[Jacob Young]

I am grateful to the hon. Member for tabling new clause 61. As I set out earlier, we agree that blanket bans against letting to families with children or to people who receive benefits have no place in our modern housing market. That is why our amendments to the Renters (Reform) Bill make express provisions to ensure that landlords and agents cannot discriminate on that basis.

Our measures take direct action to address blanket ban practices in the private rented sector, and our targeted approach tackles both overt and indirect practices. We have designed our enforcement approach with the tenants that are most vulnerable to this type of discriminatory practice in mind, and we understand that their priority is finding a safe and secure home in the private rented sector. Unlike the provisions in the Equality Act 2010, we are giving local councils investigatory and enforcement powers to tackle unlawful blanket ban practices. Tenants will not have to shoulder the burden of taking their complaint to court; local councils will be enabled to take swift and effective enforcement action. We think that it is right that prohibitions on blanket bans in the private rented sector are part of the Renters (Reform) Bill and that they are incorporated into the enforcement framework, rather than the Equality Act 2010.

I say to the hon. Gentleman that we are of one mind when trying to stop these blanket bans, so I am happy to have further conversations with him to that effect. I therefore ask him to withdraw his amendment.

[Matthew Pennycook]

I absolutely agree with the Minister that we are of one mind in wanting to ensure that these blanket bans are prohibited: he is right that they have no place in our modern housing market. However, we remain concerned—I do not think that the Minister addressed the specifics of our new clause—that the Government’s amendments will not achieve that objective. As I said, although they will have the effect of removing, from contracts, terms discriminating against benefits claimants and families with children, they will not, in practice, prevent that underlying discrimination from occurring.

We feel very strongly about this issue. If the Government do not get this right and these practices are not abandoned, we will have to return with a future piece of legislation to ensure that they are prohibited in practice. For that reason, we will seek to press the new clause to a Division at the appropriate time.

Amendment 71 agreed to.

Clause 52, as amended, ordered to stand part of the Bill.

Ordered,

That clause 52 be transferred to the end of line 30 on page 57.—(Jacob Young.)

This amendment is consequential on Amendment 71 which expands clause 52 so that it is no longer limited to penalties under Part 2 of the Bill. This amendment moves clause 52 into Part 3 of the Bill (enforcement authorities). Part 3 is expected to be added to so as to include other provision about enforcement generally. Clause 52 is expected to form its first Chapter.

Schedule 3

Financial Penalties

Amendments made: 72, in schedule 3, page 78, line 8, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 73, in schedule 3, page 80, line 20, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 74, in schedule 3, page 80, line 25, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 75, in schedule 3, page 80, line 33, at end insert—

“(ca) the activities of a superior landlord in relation to such a tenancy,”.—(Jacob Young.)

This amendment ensures that the proceeds of financial penalties imposed under clauses 26 and 47 can be applied towards meeting enforcement costs relating to superior landlords as well as immediate landlords.

Schedule 3, as amended, agreed to.

Clause 58

Enforcement by local housing authorities: general duty

[Jacob Young]

I beg to move amendment 76, in clause 58, page 57, line 35, after second “of” insert “, or an offence under,”.

This amendment ensures that the duty in clause 58(1) does not prevent a local housing authority from taking enforcement action in respect of an offence under the landlord legislation which occurs outside of its area.

[Jacob Young]

I am interested to hear the thoughts of the hon. Member for Greenwich and Woolwich.

[Matthew Pennycook]

Part 3 of the Bill concerns the enforcement authorities, and clause 58 is the key clause. It imposes a new duty on local authorities to enforce, by means of financial penalties or by instituting offence proceedings, prohibitions of the landlord legislation in their areas. Subsection (4) sets out the definition of “landlord legislation”, referring to sections 1 and 1A of the Protection from Eviction Act 1977 and chapter 1 of part 1 of the Housing Act 1988. Neither of those are new, obviously, but local authorities have never had a duty to enforce them before, and the 1977 Act will require a different approach from the police to unlawful evictions. It also refers to the whole of part 2 of the Bill—all the prohibitions relating to the ombudsman and the property portal. By any definition, that constitutes a significant array of new regulatory and enforcement responsibilities for local authorities to meet.

Various proposals in the Bill could, if they work well, make local authority enforcement of prohibitions of the landlord legislation in their areas easier. The new ombudsman has the potential, for example, to provide an alternative route for dispute resolution and a distinct and effective route to redress when it comes to breaches of prohibitions relating to the misuse of possession grounds and for not providing a written statement of terms, thus ensuring that local authorities are not the only enforcement body for such contraventions. Similarly, the new private rented sector database has the potential, for example, to allow local authorities to far more easily identify poor-quality and non-compliant properties and who owns them, thus addressing a key barrier for local authorities when it comes to enforcing standards.

--- Later in debate ---

[Jacob Young]

It is under way now.

[Matthew Pennycook]

Can the Minister also give us a clearer view of the Government’s view of the future of selective licensing following the Bill’s enactment, given that such schemes are crucial sources of local authority funding in a number of areas? I look forward to the Minister’s response to those points.

[Jacob Young]

I am grateful to the hon. Member for Greenwich and Woolwich for speaking to his amendments, and to the hon. Member for Westminster North for her comments. We expect the vast majority of landlords to do the right thing and meet their new legal responsibilities but, as ever, a minority will fail to do so. The Government are committed to supporting local authorities and taking proactive enforcement against this minority of landlords.

Clause 58 will place a new duty on every local housing authority in England to enforce the new measures in their area. When considering enforcement, local authorities will be able to use a civil penalty as an alternative to a criminal prosecution for an offence, allowing them to decide the most effective method of enforcement in each case.

Government amendments 78, 81 and 82 will extend the power in clause 58, though not the duty, to enforce the landlord legislation to county councils in two-tier areas in England. While local housing authorities have a duty to enforce the landlord legislation in their areas under clause 58, there may be some instances where breaches and offences are better pursued by the authority responsible for trading standards. For example, in relation to advertising a property to rent, county councils also have this responsibility. In this Bill, we make a distinction between less serious breaches of the legislation and more serious offences. Government amendments 76, 83, 84 and 85 strengthen clause 58 to ensure that the ability of a local housing authority to take enforcement action outside its local area extends to offences as well as breaches.

Clause 59 will further support effective enforcement by ensuring that the local authorities are fully aware of the enforcement action in their areas that is going to be taken by a different authority, and of the final results of such action. This will facilitate local authorities to take cross-border enforcement action, and deliver greater efficiency and enable local authorities to provide the most complete case to the courts.

Clause 60 will allow the Secretary of State to appoint a lead enforcement authority for the purpose of provisions in the landlord legislation, which includes many of the provisions in this Bill. We plan to carefully consider whether having a lead enforcement authority for any of the provisions in the landlord legislation will be beneficial. We plan to engage with local authorities and other stakeholders to establish this.

Clause 61 sets out the various duties and powers of a lead enforcement authority. The principal duty is to oversee the operation and effective enforcement. This includes the duty to provide advice to local authorities about the operation of the legislation and may include information relevant to the enforcement of specific cases.

Government amendments 86 to 91 will ensure that a lead enforcement authority’s duties and powers provided in the Bill to help local housing authorities are extended to county councils in England that are not local housing authorities. Government amendments 92, 93 and 95 ensure that county councils in England that are not local housing authorities are required, when requested, to report to a lead enforcement authority, in the same way that a local housing authority is on the exercise of its functions. New clause 22 will ensure that enforcement action is not duplicated when those county councils that are not also local housing authorities take enforcement action in relation to landlord legislation. Government amendment 77 ensures that new provisions of the new clause 22 are referenced in clause 58, which is the clause that encloses the duty to enforce on local housing authorities.

Finally, new clause 23 will place a duty on local authorities to supply data to the Secretary of State in relation to the exercise of their functions—I believe that point was mentioned by the hon. Member for Greenwich and Woolwich—under part 2 of this Bill, and other relevant legislation as and when it is requested. In order to evaluate the impact of our reforms and understand the action that local authorities are taking against the minority of landlords who flout the rules, it is vital that the Secretary of State is able to seek regular and robust data from local authorities. My officials will work with local authorities to agree a data reporting framework that is rational, proportionate and helpful to both local and central Government, and in line with other similar data collections. With their input, we will undertake a new burdens assessment and fully fund any additional costs generated to fulfil this duty. I hope that addresses the points raised in Committee.

Amendment 76 agreed to.

Amendments made: 77, in clause 58, page 57, line 38, after first “authority)” insert—

“, (Enforcement by county councils which are not local housing authorities: duty to notify)(3) (enforcement by county council in England which is not a local housing authority)”.

This amendment is consequential on NC22.

Amendment 78, in clause 58, page 57, line 38, at end insert—

“(3A) A county council in England which is not a local housing authority may—

(a) enforce the landlord legislation;

(b) for that purpose, exercise any powers that a local housing authority may exercise for the purposes of enforcing that legislation.”

This amendment confers a power to enforce the landlord legislation on county councils in England which are not local housing authorities and for that purpose enables such councils to exercise powers equivalent to local housing authorities.

Amendment 79, in clause 58, page 58, leave out lines 1 to 3.

This amendment removes the definition of “local housing authority” for the purposes of Part 3 of the Bill. It is consequential on Amendment 107 which inserts a definition of “local housing authority” for the purposes of the Bill as a whole.

Amendment 80, in clause 58, page 58, line 4, at end insert—

“(za) Chapter 2A of Part 1 of this Act,”.

This amendment adds the new Chapter expected to be formed of new clauses relating to discriminatory practices in relation to the grant of tenancies to the definition of “the landlord legislation” in clause 58.

Amendment 81, in clause 58, page 58, line 9, leave out “a local housing authority”.

This amendment is consequential on Amendment 78.

Amendment 82, in clause 58, page 58, line 10, leave out “that authority”.—(Jacob Young.)

This amendment is consequential on Amendment 78.

Clause 58, as amended, ordered to stand part of the Bill. 

Clause 59

Enforcement by local housing authorities: duty to notify

Amendments made: 83, in clause 59, page 58, line 16, after second “of” insert “, or an offence under,”.

This amendment ensures that a local housing authority notifies another local housing authority if it proposes to take enforcement action in respect of an offence under the landlord legislation which occurs in the area of that other authority.

Amendment 84, in clause 59, page 58, line 23, after “breach” insert “or offence”.

This amendment is consequential on Amendment 83.

Amendment 85, in clause 59, page 58, line 27, after “breach” insert “or offence”.—(Jacob Young.)

This amendment clarifies that a financial penalty imposed under the landlord legislation may also relate to an offence under that legislation.

Clause 59, as amended, ordered to stand part of the Bill.

Clause 60 ordered to stand part of the Bill.

Clause 61

General duties and powers of lead enforcement authority

Amendments made: 86, in clause 61, page 59, line 30, leave out “local housing” and insert “relevant local”.

This amendment requires a lead enforcement authority to provide information and advice to county councils in England which are not local housing authorities.

Amendment 87, in clause 61, page 59, line 35, leave out “local housing” and insert “relevant local”.

This amendment provides for a lead enforcement authority to disclose information to county councils in England which are not local housing authorities for certain purposes.

Amendment 88, in clause 61, page 60, line 1, leave out “local housing” and insert “relevant local”.

This amendment provides for a lead enforcement authority to issue guidance to county councils in England which are not local housing authorities.

Amendment 89, in clause 61, page 60, line 4, leave out “Local housing” and insert “Relevant local”.

This amendment requires county councils in England which are not local housing authorities to have regard to guidance issued by a lead enforcement authority under subsection (4) of clause 61.

Amendment 90, in clause 61, page 60, line 14, leave out “local housing” and insert “relevant local”.

The amendment provides for a direction given under subsection (7) of clause 61 to relate to county councils in England which are not local housing authorities.

Amendment 91, in clause 61, page 60, line 16, at end insert—

“‘relevant local authority’ means—

(a) a local housing authority, or

(b) a county council in England which is not a local housing authority;”.—(Jacob Young.)

The amendment defines “relevant local authority” for the purposes of clause 61.

Clause 61, as amended, ordered to stand part of the Bill.

Clause 62

Enforcement by the lead enforcement authority

Amendments made: 92, in clause 62, page 61, line 1, leave out “local housing” and insert “relevant local”.

This amendment requires a county council in England which is not a local housing authority to report at the request of a lead enforcement authority on the exercise of the county council’s functions under the provisions for which the lead enforcement authority is responsible.

Amendment 93, in clause 62, page 61, line 3, leave out “local housing” and insert “relevant local”.

This amendment is consequential on Amendment 92.

Amendment 94, in clause 62, page 61, line 5, at end insert—

“(7) The powers of a local housing authority referred to in subsection (1)(b) include the power to authorise persons to exercise powers of officers under sections (Power of local housing authority to require information from relevant person) to (Investigatory powers: interpretation) (see section (Investigatory powers: interpretation)(2)).

(8) Section (Suspected residential tenancy: entry without warrant)(7) is to be read, in relation to an officer of a lead enforcement authority, as if—

(a) the reference to a deputy chief officer whose duties relate to a purpose within subsection (1)(b) of that section were a reference to—

(i) a person who is employed by, or acts on the instructions of, the body which is the lead enforcement authority and has overall responsibility for the exercise of the functions of that body in that capacity (‘the head of the lead enforcement authority’), or

(ii) a person who is employed by, or acts on the instructions of, the lead enforcement authority, and has been authorised by the head of the lead enforcement authority to give special authorisations within the meaning of section (Suspected residential tenancy: entry without warrant), and

(b) paragraph (b)(ii) were omitted.”

This amendment is consequential on other new clauses which provide for investigatory powers of local housing authorities. It deals with how the references to officers of a local housing authority are to apply in the case where the powers of a local housing authority are to be exercised by a lead enforcement authority.

Amendment 95, in clause 62, page 61, line 5, at end insert—

“(9) In this section ‘relevant local authority’ has the same meaning as in section 61.”—(Jacob Young.)

This amendment defines “relevant local authority” for the purposes of clause 62.

Ordered, That further consideration be now adjourned. —(Mr Mohindra.)

Renters (Reform) Bill (Eighth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Thursday 23rd November 2023 Public Bill Committees

[Jacob Young]

Yes, I do.

New clause 62 seeks to align the maximum amount of rent in advance that landlords can charge tenants with the limits set on security deposits by the Tenant Fees Act 2019. Although I understand the reasoning behind the new clause, to link the two on an arbitrary basis would not be an efficient means to achieve its intended effect. It would mean that any changes to one would directly affect the other.

As the Committee will be aware, and as the hon. Member for Greenwich and Woolwich mentioned, the Government committed to introduce a similar power to limit rent in advance as part of our White Paper. We have concluded, however, that no such additional power is needed, as it is already possible to limit rent in advance using the power in section 3 of the Tenant Fees Act 2019. Before deciding to use that power, which would significantly infringe on the business interests and financial freedoms of private landlords, it is vital that we gather strong evidence of need and undertake a thorough impact assessment.

Furthermore, rent in advance can be beneficial in a variety of situations. For example, it can be employed to balance a financial risk when a prospective tenant could not otherwise pass a reference or affordability check. Above all, it is vital that landlords retain the ability to ensure a sustainable tenancy for both parties. We have made it clear that asking for a large amount of rent in advance should not be the norm.

On new clause 66, we will update the guidance to ensure that tribunal users have the confidence and information they need to engage with it effectively. This includes helping parties to understand how they can provide evidence of comparable rent. Our reforms strike a balance between the landlord’s ability to increase rent in line with the market and protecting tenants from back-door evictions through excessive rent hikes.

[Matthew Pennycook]

Forgive me if I missed it, but I do not think the Minister addressed the argument that underpins amendment 160. Why did the Government commit in their White Paper to limit the tribunal to determining a rent increase in line with or below the section 13 notice, instead of giving the tribunal the power to increase notice? If a landlord asks for a certain amount of rent and the tribunal determines that that is the amount to be paid, surely a tenant should not suffer by seeing the rate increased. Does the Minister not worry, as we do, that the Government’s approach will have a chilling effect on the confidence that tenants have in taking such cases to the tribunal?

[Jacob Young]

I understand the argument that the hon. Gentleman is trying to make, but we have listened to concerns and think it is fair that the tribunal is not limited when determining the market rent. This will mean that the tribunal has the freedom to make full and fair decisions, and can continue to determine the market rent of property.

--- Later in debate ---

[Lloyd Russell-Moyle]

They could, so why not? It would be expected if a property was marketed at a certain price for that to be the accepted price. If someone puts a section 13 down, it is a form of marketing what this property is now worth. The Minister is quite right that it is wrong to engage in unfair advertising practices. A section 13 is a form of advertising to a sitting tenant, to say, “I’m advertising that this is the rent that I now want.” To then change their mind via a tribunal is, in my view, unfair. I think the Minister probably gets that point, but I wonder whether it might be possible to change it through regulation, and advice to the courts and the tribunals. These things need to be considered, and the same goes for widening the scope of what the tribunals could push. I will not push my amendments now, but I hope the Minister will genuinely think about how we can increase the scope of what the courts can consider, so that rents are not always inflated up to the very highest level, but are fair for all our communities.

[Matthew Pennycook]

There were some points of interest raised in this debate that we will certainly come back to—I will check the transcript in relation to a couple of them—but I do not think they satisfy us sufficiently not to press these amendments.

On new clauses 58 and 59, I took the Minister to imply that bidding wars could fall under the category of false, misleading or essentially unfair practices—I think he mentioned dishonesty. I do not think he has given us a cast-iron commitment that bidding wars of any kind constitute an unfair practice. If they do, and the Government know that, why are they not taking action to stamp them out? Lots of people in cities and towns across the country, and certainly in my constituency, are being impacted financially by bidding wars. In some areas, they are extremely intense, and people end up paying huge amounts more than were initially advertised.

I agree with the Minister that advance rent should not be the norm. It seems to be somewhat the norm in many parts of the country. I am interested that he says there is a potential means of addressing this via the Tenant Fees Act 2019. It sounded to me like it may take quite a long time for the Government to bring forward any proposals in that regard. We will certainly not see advance rent stamped out any time soon. The Minister did not address my point on undue hardship. I absolutely realise—it was part of my remarks—that under the Government’s proposals, when a tribunal determines the rent, it will kick in from the point of determination. We think that vulnerable residents need a little more time to adjust and move out if they simply cannot afford those rents.

Finally, on the tribunal awarding rent levels in excess of what is asked for, I think the Government have got it wrong. The Minister referenced unspecified interests that the Government had heard lobbying from—I think he said, “We’d heard concerns.” Who from? I do not know. We can all take a guess who from. There were proposals in the White Paper, this being one of them, that we thought extremely sensible. He is right that some landlords may, having been told by the tribunal that they can increase the rent level even further than asked for, be good-natured enough to charge only the initial rate, but I cannot think that many of them would. They are, after all, running businesses. We need a measure—we will no doubt return to this at a later stage—to ensure that the rent level that the landlord asked for via section 13 is the maximum. In many cases it may reduce, but it should be the maximum that a landlord can ask for. On that basis, I am afraid that we will press our amendments 160 and 161 to a vote.

[Jacob Young]

I want to be absolutely clear: the Government’s position is that bidding wars are not illegal.

[Matthew Pennycook]

That was my understanding as well, so I am not sure what the Minister was saying about false, misleading or unfair practices. If that does not apply to bidding wars, it applies to something completely separate from what we are talking about, so he has convinced me that new clauses 58 and 59 are even more necessary than I thought. I thought there was a glimmer of hope there, but there clearly is not. We will press all our amendments to a vote.

--- Later in debate ---

[Jacob Young]

That is certainly a role the ombudsman can play, which brings me on to the point raised by the hon. Member for Greenwich and Woolwich as to whether a tenant requesting a pet could challenge the landlord’s decision. We feel that the ombudsman could play a role in that ahead of any court proceedings.

On new clause 64, tabled by the hon. Member for Greenwich and Woolwich, it would be unusual for an insurance policy to explicitly ban pets as a condition of insurance. It is much more likely that pet damage simply would not be covered. We are grateful to the hon. Gentleman for raising that matter, and we will consider whether further action is necessary in relation to the new clause.

On amendment 181, we must ensure that the Government are able to work flexibly with stakeholders and properly align our planned guidance with implementation. I am happy to commit on the record today to guidance being issued, but it is vital that the Government are not constrained by the imposition of an arbitrary deadline. In the light of those points, I kindly ask the hon. Member for Greenwich and Woolwich to withdraw the amendment.

[Matthew Pennycook]

I will not press the amendment to a vote. I welcome the clarification from the Minister about guidance being forthcoming and in a number of other areas. I think all our concerns could be addressed if we had greater clarity on what constitutes a reasonable refusal and the circumstances in which a landlord could draw upon that. As I said to the Minister, all I can see in the Bill is proposed new section 16A(1)(b) of the Housing Act 1988, which says thats

“such consent is not to be unreasonably refused by the landlord.”

We need to know whether there is only a very narrow set of circumstances where that can be drawn on by landlords, or a wider range. The 42-day period does not matter in some ways if tenants have robust assurance on the reasonable implied period. There will also be far fewer ombudsman cases if there is only a narrow range of grounds on which a pet can be refused. I urge the Minister to write to us, perhaps before Report stage, to give us a bit of clarification around the circumstances in which landlords can reasonably refuse that request. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

Clause 9

Duty to give statement of terms and other information

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Jacob Young]

The Government are committed to ensuring that tenants and landlords are aware of their rights and responsibilities. Government new clause 3 will replace clause 9 and insert a new duty requiring landlords to provide tenants with a written statement setting out certain terms of their tenancy. Having terms in a written agreement or statement can help to avoid disputes. If things go wrong, they can provide effective evidence to resolve disputes, and they can provide valuable evidence if the landlord needs to evict an irresponsible tenant. Details of what must be included in the written statement will be set out in regulations made by the Secretary of State, and may include such information as the tenancy start date, rent level and landlord’s address, as well as the basic rights and responsibilities of both parties.

We know that the vast majority of good landlords already put tenancy terms in writing, and we want to formalise that good practice. For those landlords, we intend that there will be little practical difference between this new duty and the tenancy agreement that they already provide. Landlords will need to specify when certain grounds may be used to evict the tenant. These are predominantly specialist grounds, such as where the property is used for a specific purpose or connected to the tenant’s employment.

New clause 3 will help to ensure that all tenants and landlords, as well as those working for the landlord, are aware of their rights and obligations. I commend it to the Committee in place of clause 9.

[Matthew Pennycook]

Clause 9 would insert proposed new section 16D into the 1988 Act. It places a duty on landlords to provide the tenant, as the Minister made clear, with a written statement of terms and information on or before the first day of a tenancy. Landlords must state in the written statement of terms where they may wish to make use of any of the prior notice grounds 1B, 2ZA, 2ZB, 4, 5 to 5G or 18. Given that prior notice is currently required for use of possession ground 1, but the Government propose to remove that requirement from the new ground 1, may I press the Minister again to explain precisely why the Government believe that that change is necessary?

I would like to make some brief comments about Government new clause 3 and put a number of questions to the Minister about it. These are complex questions, so I have no issue with the Minister writing to me at a later date rather than answering now. New clause 3 replaces clause 9, thereby applying the provisions of the clause to landlords’ contractors as well as landlords; carving out certain tenancies by implication; and modifying specific provisions for certain tenancies. Leaving aside quite how the Government got themselves in the situation where they are replacing entire clauses in Committee, I would be grateful if the Minister clarified why the Government have alighted on applying these provisions to “contractors”, given that the standard term, both in plain English and in statute, is “agent”?

A whole series of further questions arises from the new clause. What is the definition of a contractor? Does it have to be a written contract? What happens if the information is not provided? Did the Government consider whether a rent repayment order might be appropriate in the circumstances, or whether a court should be given the power to order that it be provided? What if the contractor excludes liability for providing the material in question, given that we know that that happens in other instances, for example with letting agents excluding liability to tell the landlord about any relevant licensing schemes? I would appreciate any insight that the Minister can offer today into any of those points. As I say, I am more than happy to accept a written response to my detailed questions, if necessary.

[Jacob Young]

On the hon. Gentleman’s question about prior notice, we are making it a requirement of the new mandatory written statement of terms that landlords must warn their tenants where they may wish to rely on a certain grounds at the outset of the tenancy. If the landlord fails to comply with the mandatory written statement of terms, the tenant can seek redress and local authorities may issue fines.

[Matthew Pennycook]

But that does not apply to ground 1, does it? I am trying to understand the Government’s thinking on why they have removed the prior notice requirement on ground 1.

[Jacob Young]

I shall write to the hon. Gentleman on that point and on the other questions that he raised.

Question put and negatived.

Clause 9 accordingly disagreed to.

Clause 10

Other duties of landlords and former landlords

--- Later in debate ---

[Jacob Young]

I will not give way again.

Amendments 132, 133, 140 and 141 seek to extend the three-month period to six or 12 months. That would be excessive and keep good properties sitting empty if a landlord’s circumstances changed. It is quite possible that a landlord might not be able to sell and might subsequently need to re-let. Amendment 142 would extend the no-let period to cases where the landlord has gone through the court process to obtain a repossession order. We feel that that restriction is unnecessary, as such a landlord will have proved to the court that their intentions are genuine.

Amendments 134 and 135 look to restrict a landlord from letting their property as a short-term let, as the hon. Member for North Shropshire said. It may be reasonable for a landlord to offer a property as a short-term or holiday let within the three months, for example if there is a long gap before a sale completes. However, I have heard her comments and those of the hon. Member for Greenwich and Woolwich, and I know that that is an issue in places such as Cornwall and Devon. I commit to working with the hon. Member for North Shropshire and others to address those points.

If a landlord tries to abuse the system, there are financial repercussions for breaches and offences. We are giving local councils powers to fine landlords up to £5,000 for minor breaches and up to £30,000 for serious offences. The Government think the amendments would cause unreasonable cost to landlords whose sale or plans to move into a property may have fallen through, through no fault of their own.

Turning to Government new clauses 4 and 5, I am grateful to the hon. Member for Greenwich and Woolwich for his questions and confirm that I will write to him on those points. The new clauses replace clause 10, retaining the policy intent in the original drafting but updating it to better reflect its intention. We are clear that any attempt to misuse the grounds will not be tolerated. That is why the Government new clauses prohibit landlords from re-letting or re-marketing a property for three months after using the moving and selling grounds, and why we are prohibiting landlords from authorising a letting agent to re-market the property on their behalf. The three-month period represents a significant cost to landlords and will deter misuse. I therefore commend new clauses 4 and 5, which will replace clause 10, to the Committee and ask hon. Members to withdraw their amendments.

[Matthew Pennycook]

I thank the Minister for that answer. On the length of the no-let period, I think there is just a genuine principled disagreement between the two sides of the Committee about whether the proposed three months will act as a deterrent. In all honesty, because this is a completely new system—although we have the Scottish experience to draw on—we have no evidence on either side to prove that that is the case, but we genuinely fear that three months is not enough to prevent misuse. I will therefore press amendment 140 to a vote.

On amendment 142, I will go back and check the transcript, but I am not convinced that I understood the Minister’s reasoning when he talked about the court knowing that the landlord’s intentions were genuine simply because, at the point of the notice’s being served, the re-let prohibitions apply. I still do not understand why the prohibition on re-letting should not apply in instances where the court has awarded possession. We still want the landlord not to re-let in that period under either scenario, so we cannot understand why one would be exempt and not the other.

[Jacob Young]

To reiterate my point, amendment 142 would extend the no-let period to cases where the landlord has gone to court to obtain a repossession order. We think that restriction is unnecessary because, if a landlord has gone to court and the judge has granted the possession order, the landlord has proved that their intentions are genuine on those grounds. That is why we feel the amendment is unnecessary.

[Matthew Pennycook]

I follow the Minister’s argument, but, under those circumstances, the no-let prohibition should apply from that point under that scenario, just as it would at the point when a notice is served.

[Jacob Young]

The hon. Gentleman’s argument would suggest that a landlord wanting to move into a property within five months would serve notice on their tenant, the tenant would have two months in the property and could then take the landlord to court because they wanted evidence, which could take six months—and he is suggesting an additional three months on top of that. Does he not see that that would be unfair to a landlord, in a genuine case?

[Matthew Pennycook]

No, I genuinely do not. In a case where a tenant has felt so strongly that they are potentially being evicted unlawfully that they have taken the matter all the way to the court, it is right that the no-let period should apply from the point that the award is granted. Again, that may be a point of genuine disagreement, but we will press amendment 142 to a vote.

--- Later in debate ---

[Jacob Young]

As I made clear when I spoke on clause 10, the Government will not tolerate any abuse of the new system. Clauses 11 and 12 give local housing authorities the power to fine the minority of landlords who break the rules, as well as introducing new financial penalties and criminal offences for repeated wrongdoing. Clause 13 provides that those criminal offences do not bind the Crown, although it will be possible for councils to issue fines to private landlords. Under that new provision, local housing authorities will be able to fine landlords and former landlords up to a maximum of £5,000 for less serious and initial breaches of the new tenancy system, including failing to follow process when evicting a tenant and trying to offer a fixed-term tenancy. To be clear, £5,000 is the maximum that a landlord can be fined, rather than the norm.

We expect local authorities to be reasonable, and we are issuing guidance that they must have regard to when issuing fines. We are exploring a national framework for setting fines to ensure a consistent approach. This will ensure that penalties are proportionate to the severity of the breach of conduct, and that local authorities impose them accordingly. If landlords deliberately and seriously flout the new rules, local housing authorities will be able to fine them up to £30,000, or choose to prosecute them, including for re-letting or re-marketing a property within three months of using possession grounds for sale and occupation, or knowingly or recklessly misusing a ground for eviction. Repeated breaches will also be met with those higher fines.

Amendments 163 and 164, tabled by the hon. Member for Greenwich and Woolwich, would increase the maximum fine for initial or less serious breaches from £5,000 to £30,000, and the potential fine for repeated breaches and serious offences from £30,000 to £60,000. I would like to reassure him that multiple fines can be issued where a landlord has committed more than one breach. We will issue guidance to support councillors in making enforcement decisions, but we think that the maximum fines that the amendments would introduce are disproportionate to the severity of the breach or offence. The fines proposed by the hon. Member are out of step with other housing enforcement, such as the existing measures for breaches and offences under the Tenant Fees Act 2019 and the Housing Act 2004. Given the substantial fines that can already be levied repeatedly under the legislation, I ask him not to press his amendments to a Division.

The Government amendments extend the prohibited activities to those acting on a landlord’s behalf. That means that local housing authorities can impose penalties on all relevant persons who breach the rules, not just landlords. That includes those with formal relationships, such as letting agents, and more informal relationships. The amendments apply the penalties to those people.

The Government amendments also further strengthen rules against landlords and agents. Instead of demonstrating that a tenant left a property as a result of receiving an improper notice, local authorities will simply have to prove that a tenant left within three months after receiving the notice. That will make it easier for local authorities to take action against the minority of landlords who break the law.

I commend the Government amendments to the Committee and ask the hon. Member for Greenwich and Woolwich to withdraw his amendments.

[Matthew Pennycook]

I rise to speak to amendments 163 and 164. As the Minister has just set out, clause 11 inserts four new sections into the Housing Act 1988, setting out the financial penalties and offences he has referred to for breaches of the prohibitions in clause 10, including those relating to mandatory grounds 1 and 1A, which we have just discussed, and for not providing for a written statement of terms, as required by clause 9.

Clause 11 raises for the first time the crucial issue of enforcement, which arises in relation to a number of the prohibitions and requirements in the Bill, including those I just mentioned. It is obviously preferable to ensure that there are sufficient incentives in place to encourage landlords to comply with the various requirements in the Bill, and that abuse of possession grounds is identified before eviction takes place. It is, however, inevitable that some landlords will fail to comply with the requirements in the Bill, including the requirement to provide a written statement of terms and conditions to the tenant on or before the first day of a tenancy, and that there will be misuse of possession grounds 1 and 1A that are identified after an eviction has taken place.

The Government are currently proposing two means by which redress might be secured in those circumstances. First, they are proposing to enable the new ombudsman to award compensation to the wronged tenant. Secondly, as the Minister made clear, they are giving local authorities the power to impose financial penalties if the relevant authority is satisfied beyond reasonable doubt that a landlord or former landlord has contravened provisions contained in clauses 9 or 10, or if a landlord or former landlord is guilty of an offence but is not prosecuted.

I note and welcome the Minister’s comments, in terms of the Government’s intention to look at developing a national framework that might ensure that those fines are properly co-ordinated across the country. We will come on to consider whether those two means of redress could be supplemented by others when we address the issue of whether tenants themselves should be allowed to seek compensation for an abuse of possession grounds by means of a rent repayment order, as provided for by our new clause 57.

Amendments 163 and 164 are probing amendments that are designed to facilitate a debate on whether the amounts that the Government have chosen as the maximum financial penalties that a local authority can impose—namely £5,000 for a contravention and £30,000 for an serious offence—are sufficient. Notwithstanding the point that the Minister has just made—and it is useful to have clarification that multiple fines can be levied—we are concerned that the maximum levels are insufficient.

It is our contention that the type of unscrupulous landlord that might seek to abuse ground 1 or 1A to evict a tenant who has made a legitimate complaint—the rectification of which, if it is a serious hazard, may cost them tens of thousands of pounds—is unlikely to be deterred by the prospect of a fine of £5,000 or less. That is assuming that the local authority has the capacity and capability to investigate and enforce it. The Minister was also very clear that £5,000 is the maximum; the Government do not wish for it to be the norm. Similarly, a fine of £30,000—or less—for an offence strikes us as far too low to act as a serious deterrent.

Amendments 163 and 164 would raise the maximum financial penalty that local authorities could levy from £5,000 to £30,000 in instances where the provisions contained in clauses 9 or 10 were contravened, and from £30,000 to £60,000 where an offence has been committed. We have proposed those higher figures, very deliberately, on the basis that £30,000 mirrors the current maximum financial penalty for housing offences, and by doubling the maximum financial penalty for an offence to reflect the severity of that outcome. I hope that the Minister might go away and reconsider whether the maximum levels that the Government have chosen are sufficient to act as the deterrent that I think we both absolutely wish to see.

Clause 12, which is grouped with these amendments, requires a local housing authority to issue a notice of intent before imposing a financial penalty on a person under two of the new sections—16F and 16H—inserted into the 1988 Act by clause 11. It requires them to do so within six months of collecting sufficient evidence or, if the conduct is continuing, during the period that it continues within or within six months of it ending.

The clause further specifies that after a landlord has been issued with a notice of intent as required, a landlord will have the opportunity to make representations to the authority, which will then decide whether to issue the fine. What is more, even after an authority has heard representations and has still decided to impose a financial penalty, clause 12 gives the sanctioned party a right to appeal to the tribunal.

I ask the Minister—particularly in the light of the Government’s having resisted our efforts to strengthen the Bill to ensure that the replacement possession regime cannot be so easily abused—why the Government have provided landlords, who, let us remember, a local authority is satisfied beyond reasonable doubt have contravened provisions contained in clauses 9 or 10, with a series of opportunities to evade a financial penalty.

[Jacob Young]

I am grateful to the hon. Member. I did not quite catch his question, so, if it is fine with him, I will write to him on that point. I apologise, because I did not quite follow it.

--- Later in debate ---

[Jacob Young]

I know that the Opposition have a few questions about the clause, so I will allow them.

[Matthew Pennycook]

I bridle slightly at the use of the word “allow”. [Laughter.] I have two questions for the Minister in relation to this clause. Under the provisions of the Housing Act 1988, landlords of assured tenancies are currently required to pay the tenant’s reasonable moving expenses when they are awarded possession under ground 6, relating to redevelopment, or ground 9, where suitable alternative accommodation is available. This clause restricts that requirement solely to registered providers of social housing.

The Bill’s explanatory notes simply state:

“When the Bill takes effect, all landlords will use assured tenancies, so this provision is necessary to ensure only private registered providers of social housing are required to pay removal expenses.”

From our point of view, that does not explain why the Government believe it is necessary to remove the existing requirement for landlords to pay the tenant’s reasonable moving expenses in instances where possession has been gained under grounds 6 or 9. I would be grateful if the Minister could respond to the following questions: first, why do the Government no longer believe it is reasonable to pay for a tenant’s removal costs in cases under ground 6, where substantial redevelopment cannot take place with the tenant in situ, or ground 9, where suitable alternative accommodation has been identified? Secondly, why do the Government believe it remains appropriate for providers of social housing to cover those costs, if it is now judged inappropriate that private landlords should have to do so?

[Jacob Young]

I am grateful to the hon. Gentleman for his questions. We think it is an unfair burden to ask private landlords to pay for removal costs, which prevent them from redeveloping and ensuring that good-quality housing stock is available on the market. The purpose of the current requirement is to ensure that social tenants are paid moving costs when a social landlord is using grounds that help them to manage their stock—that is, redeveloping a property and moving tenants into suitable alternative accommodation. It would be unfair to place that burden on private landlords if it were applied to them and widened to include all no-fault grounds: for example, a landlord might find themselves in financial difficulties and need to sell or move into a property. I hope that answers the hon. Gentleman’s questions, but if he wants to reply, he can do so.

[Matthew Pennycook]

I am still not clear why it is deemed appropriate under those two specific grounds for assured tenancies—as is currently the case—but not under the new system. However, I am not going to press the matter any further.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18

Accommodation for homeless people: duties of local authority

Question proposed, That the clause stand part of the Bill.

Renters (Reform) Bill (Seventh sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Thursday 23rd November 2023 Public Bill Committees

[Jacob Young]

With respect to the hon. Gentleman’s question, he mentioned whether a victim of domestic abuse would fall short of these grounds. I would say to him that that is exactly what a judge is there to determine—whether it is reasonable to grant possession to the landlord in those circumstances. I think that I have addressed that in my remarks. I hope that this provides some reassurance and that hon. Members will withdraw their amendments.

To further bolster landlords’ confidence in being able to regain their properties in cases of antisocial behaviour, Government new clause 1 expands the matters a judge must consider, as I outlined previously, when making a discretionary antisocial behaviour eviction. It ensures that the court must also consider specific issues that have been of concern to the sector. First, the new clause asks judges to give regard to whether the perpetrator has engaged with measures to resolve their antisocial behaviour, making it easier for landlords to evict non-compliant tenants.

[Matthew Pennycook]

I asked the Minister a very specific question about this new clause, to which I would be really grateful for an answer. Does new clause 1 in any way imply or direct landlords, by a new requirement, to proactively engage with their tenants to resolve the behaviour, rather than just putting the onus on tenants to do so, and therefore, in instances where the landlord will not engage, leave that tenant in an impossible situation, one might say?

[Jacob Young]

I do not believe that it does, but I will write to the hon. Gentleman to clarify. Turning back to what I was saying, it asks judges to give particular regard to the effect of antisocial behaviour on other tenants within houses of multiple occupation, which the hon. Gentleman had mentioned.

--- Later in debate ---

[Jacob Young]

We are not discussing 5A right now, but I will write to the hon. Gentleman to clarify that point.

As I was saying on houses in multiple occupation, this measure will make it easier to evict perpetrators who are having a severe impact on those living in close proximity with them day to day. I therefore commend Government new clause 1 to the Committee.

[Matthew Pennycook]

I will say two things to the Minister, because I think that was a helpful answer, although his officials are going to be doing a lot of writing over the coming days and weeks. It was helpful in two ways: it is welcome to hear an assurance that we expect guidance before these measures come into force, and that the working group has been set up to that end.

This is where the private rented sector is very different from the social rented sector, where registered providers operate. Registered providers often have trained antisocial behaviour teams who are equipped and trained with the tools—injunction powers and others—to remedy antisocial behaviour before eviction action has to take place. They are trained to distinguish between antisocial behaviour and things such as the domestic violence instances that we are worried about, and to take safeguarding action to protect tenants from either eviction or criminalisation. The private rented sector has none of that. I do very much think we need guidance in this area, so I welcome the Minister’s clarification in that regard. On that basis, I am happy to not to push new clause 55 to a vote.

However, what I am still concerned about, and why we will support the hon. Member for North Shropshire if she pushes her amendment to a vote, is that in some ways it does not matter what the guidance says if the definition of what constitutes antisocial behaviour is very broad and the change from “likely” to “capable” is made. That still concerns us a great deal. The Minister has not given me an example—I only want one—of a kind of behaviour that would be “capable of causing” antisocial behaviour without falling under the existing “likely to”. I do not think he has any such behaviour in mind; I do not think the officials have any idea, either.

I think the Minister gave the game away, intentionally or otherwise, that this power is to be used to make it easier for landlords to threaten tenants in the first instance, and most will not go to court, and then to be able to evict tenants. As he said, the behaviour in question does not have to have caused or be likely to have caused antisocial behaviour in any given instance. It will enable an argument on the basis that there is a pattern of behaviour that now meets the reduced threshold.

None of the evidence I listened to last week suggested that that was necessary. I remember—one good example—that Timothy Douglas from Propertymark could not understand the difference between “likely” to cause and “capable” of causing, and the need for the change in this instance. He did call for guidance—absolutely. However, none of the evidence I heard supported the change, apart from evidence from some landlords, who, of course, are going to say that they welcome a widened power. They do not have to deal with the consequences. It is local authorities and society that will have to do that.

I know this is not the Minister’s brief, but he really should know whether tenants, if evicted under these grounds, will be made intentionally homeless. I suggest that it is almost certain that they will be. We are talking about an easier way to make people homeless, and we will all pick up the costs in various ways. This will impact some incredibly vulnerable tenants. We therefore think that this measure needs to be removed from the Bill. Again, we will certainly return to the issue at a later stage.

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[Matthew Pennycook]

I beg to move amendment 177, in clause 4, page 3, line 34, at the beginning insert—

“(1) In section 8 of the 1988 Act, after subsection (2) insert—

‘(2A) A notice under this section must include reference to the unique identifiers allocated to each person and dwelling-house with an entry on the database in accordance with section 41 of the Renters (Reform) Act 2023 (Allocation of unique identifiers).’”

This amendment would require landlords to be registered on the database to serve grounds for possession notices.

We will debate at some length the provisions in the Bill that will establish a private rented sector database when we consider chapter 3 of part 2 in detail, so I do not intend to dwell on our view of the Bill’s database provisions more generally, or how they might be improved. We will have sufficient time to do so in due course. Suffice it to say that we take it as given that the Government wish to see, as we do, as many existing and prospective residential landlords registering themselves and their properties on the property portal that the database will support.

We acknowledge that the Bill already contains provisions designed to ensure that registration rates are high. These include the financial penalties that local authorities can impose, assuming that they have the capacity and capability to do so, on people who, for example, do not meet the requirements in relation to marketing, advertising and letting set out in clause 39. However, we believe that the Government should seek to make it virtually impossible for a residential landlord to operate without registering themselves and their property on the database by ensuring that every single process that the Bill covers bites on them in that regard.

Amendment 177 seeks to contribute to that objective by inserting into section 8 of the Housing Act 1988 a new subsection that would compel landlords to be registered on the database in order to serve grounds for possession notices by requiring them to add to any possession notice served the unique identifier that they will be allocated on registering. Requiring landlords to append a unique identifier to a possession notice, and thus denying landlords not registered with the database the opportunity for a court to make an award of possession, would be an important means of ensuring maximum compliance with the proposed portal and properly regulating the new system to the benefit of both landlords and tenants. For those reasons, I hope the Minister will look favourably on the amendment.

[Jacob Young]

I thank the hon. Gentleman for moving amendment 177, which would require landlords to have registered on the property portal before serving a tenant with a valid notice for possession under section 8 of the Housing Act 1988. The property portal will play a crucial role in helping landlords to understand their legal obligations and will give tenants the information they need to make informed choices before starting a tenancy. Our view is that the enforcement mechanisms in the Bill, including the mandatory duty on landlords to be on the portal and the ability of local authorities to find those, will prevent abuse. However, I note the hon. Member’s concerns, and if there are further measures we can take to ensure that all landlords are on the portal, we will explore them further.

[Matthew Pennycook]

I welcome the Minister’s response and his commitment to look further at this matter. Although the mandatory duty is welcome, we have real concerns about the ability of local authorities to properly investigate and enforce. We will come back to those concerns, because they relate to a number of areas in the Bill. I therefore hope that the Minister goes away and thinks about every—

Renters (Reform) Bill (Sixth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 21st November 2023 Public Bill Committees

[Jacob Young]

Again, I understand the hon. Gentleman’s point. We are trying to strike the right balance in these reforms. That is all I can say on that.

Government amendments 2 to 5 deliver technical changes that will ensure that grounds for possession work as intended, allowing the selling ground to apply to both freeholders and leaseholders who wish to sell their interest in their property. The changes to possession ground 1A are slight, and ensure that the selling ground for private landlords applies to all circumstances where it would be reasonable to consider the landlord to be selling their property, and ensuring that their valid desire to manage their property as they see fit is not unintentionally thwarted. These small changes will ensure that the selling ground works as intended.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

We are disappointed with the Minister’s response, for the following reasons.

We will, no doubt, hear ad nauseam about the Government’s intention and the obvious need, with which we all agree, to get the balance right between the interests of landlords and tenants. We do not think the Government have got that balance quite right in this and many other areas of the Bill.

It is, of course, reasonable that landlords who legitimately want to use grounds 1 and 1A either to take back a property for themselves or a family member, or to sell it, should be able to. We take no issue with the mandatory grounds. However, the Minister has failed to address Labour Members’ arguments about the clear risk of those mandatory grounds being abused in several ways. We know that they are being abused in Scotland, where they have already been introduced—that is the proof point here—and there are several other layers of protection in Scotland that this Bill does not provide.

The Government know that there is a risk of these grounds being abused; they would not otherwise have the three-month no-let period. We have clearly identified the loopholes that exist as a result of there being no evidential requirement, unlike in Scotland. Evidence suggests that the Scottish provisions are still open to abuse, but Scotland at least has the Private Housing (Tenancies) (Scotland) Act 2016, which requires the landlord to provide specific evidence. That is not the case here. The Minister makes the point that it is for judges to make a determination, but grounds 1 and 1A are mandatory grounds. The judge literally just has to determine whether the landlord has proved that ground 1 or 1A applies. The judge does not assess the merits of the case, as they would if these were discretionary grounds. Judges do not have the freedom to say that they do not think the landlord is legitimately taking back the property. As we have argued, at the end of four months of the protected period, any landlord can, under these grounds, serve notice or evict on the pretence that they will use the property for themselves or sell it, but they can then not sell it; nothing prevents that.

[Jacob Young]

On the hon. Gentleman’s point about providing evidence to a court, a judge would have to determine whether the intention to sell the property is valid.

[Matthew Pennycook]

I will happily give way to the Minister again if he can say how the judge would prove an intent to sell or occupy the property without evidential requirements. The judge does not have to ask the landlord for any evidence that they will use those grounds.

[Jacob Young]

It is our position that the types of evidence that can be used do not need to be in the Bill, but as I have already set out, they will be in guidance.

[Matthew Pennycook]

That is some progress. If we have a commitment from the Minister that we will get detailed guidance that landlords need to submit—

[Jacob Young]

I did say that.

[Matthew Pennycook]

That is welcome, but I think the concern is still there, because what does the guidance say? We do not know. What proof does it ask for? We have a clear set of evidential requirements in amendment 138.

We feel strongly about the point of protected periods. In amending ground 1, the Government have removed the requirement for prior notice of the use of the ground. If a landlord wants to take back a property for their own use, they must tell the tenant when the tenancy agreement is made that they may wish to engage the provision for prior notice. There is no prior notice under the amended ground 1. Any tenant could find themselves evicted with six months’ notice, and they would have no clue when they agreed the tenancy with the landlord that they could face that scenario. We very much support the legitimate use of these grounds, but it is essential to strengthen the Bill and the guidance that may come forward to prevent and deter abuse.

For that reason, we will press amendments 138, 139 and 143 to a vote. We also support amendment 194, in the name of my hon. Friend the Member for Brighton, Kemptown. It is completely reasonable for landlords to have to offer the sitting tenant first refusal on purchase of a property. To be frank, I do not really understand what the Minister says about the alternative scenario of a landlord having a buyer in mind who is not the tenant. That does not sound like a particularly fair ground. The tenant is in the property; they should have first refusal at the market price that the landlord asks for. If they cannot meet that price, the landlord can sell to any other buyers.

[Matthew Pennycook]

That is a reasonable point. Landlords will adapt to the system. They will have it in mind that they must automatically make an offer to the sitting tenant. If they determine that the market price is more than the tenant can afford, they can go to the second buyer that they have in mind. We are not quibbling about them selling at market rate, obviously, but it is important to help renters on to the home ownership ladder if possible.

[Jacob Young]

I understand the hon. Member’s point, but consider a landlord who wanted to sell a property to a family member. That is perfectly legitimate. They might want to sell to their child. If there was a duty on the landlord to offer the tenant first refusal, surely they could not do what they wanted with their property. [Interruption.]

[Matthew Pennycook]

My colleagues behind me are making the case for me. In that scenario, I respectfully say that the landlord could legitimately exercise ground 1 and, within six months, take the property back for that family member. They could then sell it freely. However, evicting a tenant to do so is, we think, questionable, because it is reasonable to give the tenant first refusal. If I have understood the Minister’s point correctly, if I am a landlord and I want to sell to my son, I can take back the property under mandatory ground 1. My son could live in it, and I could then sell it to him at any point. I do not see why a sitting tenant would need to be evicted for that to happen.

[Jacob Young]

Under the hon. Gentleman’s argument, the landlord would have to charge rent to the family member. Say the landlord wanted to sell to a close friend; they would not be covered by ground 1. There is a difference on a point of principle between the two sides here. We think that landlords should be able to sell their property to whomever they want. The Opposition seem to take a different view.

[Matthew Pennycook]

We do take a different view, because, as I have said, it is reasonable that landlords should offer first refusal to tenants. I do not know how many landlords out there are desperately planning to sell to a close friend and would not be able to. That scenario might arise, but in the majority of cases, landlords will sell a property on the open market, and they could give tenants first refusal, at the price that they seek. As I said, we support amendment 194, and will press our amendments in this group to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Jacob Young]

I thank the hon. Member for Greenwich and Woolwich for tabling amendment 136, which seeks to lengthen the notice period that landlords must give for some grounds of possession. The notice period in the Bill balances the needs of both tenants and landlords. We have not reached our decisions without a lot of thought and careful consideration over many years and in collaboration with the sector.

It is important to give tenants sufficient time to find a new home. However, notice periods must also balance that aim with ensuring that landlords can manage their assets. For example, they may need to sell or move into the property, which might also be their long-term family home. Landlords must also be able to comply with enforcement measures or contractual requirements, such as superior leases, in a timely manner. Setting a longer notice period would undermine landlords’ confidence in dealing with such reasonable scenarios. We encourage landlords to work flexibly with their tenants and notify them of their intentions as far in advance as possible, but we also recognise that that is not always possible.

As Members have indicated, we think our approach strikes the right balance, so I ask the shadow Minister to withdraw the amendment.

[Matthew Pennycook]

I will not withdraw the amendment; I am going to press it to a vote because, again, I do not think the Government have got the balance right. I do not think that two months’ notice is sufficient for a whole cohort of tenants, and I think my hon. Friend the Member for Weaver Vale is absolutely right. There is a basic issue of fairness here in terms of the profile of the private rented sector, as it now is. We can all look at the minimum notice period in the explanatory notes and think that it seems very reasonable: “Two months. Who could not make two months?” But we all look at that as highly paid professionals who could move in that period of time. Older people, disabled renters, or renters with a family simply cannot do that.

I put the Shelter figure to the Minister again. He may question the figure, but it seems like it comes from a very detailed study. What are the Government saying to the 34% of renters who could not move within that two-month period when they last moved? The Government are effectively saying to those renters, “You’re at risk of homelessness,” and we do not think that is fair. On the de facto no-fault grounds—which, just to be very clear, are mandatory; we are not talking about every ground—the Government should think again.

[Jacob Young]

The hon. Member refers to fairness, but the situation is not fair for the landlord either. A landlord who wants to move into their property for whatever reason—we do not know the reasons, but it could be a reasonable ground—or sell it would have to wait an additional two months. We are talking about two months’ notice to provide grounds for possession, so in reality it could be much longer than that because it could be two months plus whatever court proceedings come afterwards.

The hon. Member is saying that we should extend the period to four months. On the basis that a typical court hearing would take 22 weeks, as we have heard elsewhere, we are talking about a period of nine months between when a landlord might want to move into their property and when they can actually do so. I do not think that that is fair either. As I say, we believe that we are striking the right balance.

[Matthew Pennycook]

I say two things to the Minister. First, the minimum notice periods are from the date of service of the notice. I take the point about court reform, but this is at the point of service of the notice, not the point of the possession award; they are the minimum periods that apply. Secondly, what is his answer to the 34%? There is evidence out there from organisations with expertise in this area. What the Minister is saying is that the Government are content to see a third of tenants given a minimum notice period in which they cannot possibly reasonably find a new property.

There is a fairness point and also a cost point, which the Government should, from their own perspective, be more concerned about. The cost of those renters not being able to find properties will be borne by local authorities. As Parliamentary Under-Secretary of State for Levelling Up—I think I have his title correct—the Minister will know what is happening with Liverpool City Council. Its spend on temporary accommodation increased by 7,660% by the end of the fiscal year compared to 2019. Several London councils, including my own, are in financial difficulty because of temporary accommodation costs. This is not sustainable. If the Government are going to allow this broad swathe of new mandatory de facto grounds to be in place with a two-month notice period, that situation will persist.

The last thing I would say goes to a point made by my hon. Friend the Member for Brighton, Kemptown earlier. Lots of tenants served with these notices are going to find somewhere and move out before the date. We are talking about the hard cases where people cannot move out. I think the Government have a tin ear on this—they have a mindset issue when it comes to grappling with what the PRS looks like now. By refusing the amendment, the Government are effectively saying, “That’s their problem.” We think the Government should think again, so we intend to press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Jacob Young]

I completely take the hon. Gentleman’s point. Obviously, on the back of the conversations we have had today, we will consider these measures further. The ground has been carefully designed in consultation with stakeholders—landlords, universities and so on—to facilitate the annual cycle of short-term student tenancies. That is why we specifically created that gap in the change in the academic year.

[Matthew Pennycook]

If I have understood the Minister correctly, he has made a commitment to go away and think further about this. As it stands, is there anything in the Bill that would protect students whose courses are not on that summer-to-summer cycle from being evicted through the use of the new mandatory ground? We do not think there is, which is why we think the Government need to think again. Is anything forthcoming or in the Bill that is designed to protect against the problem I spoke about—postgrads or others who go beyond the summer cycle? It may be a minority of students, but it is still a significant minority.

[Jacob Young]

I undertake to write to the hon. Gentleman with the assurances he seeks. We have designed the ground carefully with landlords, because we have listened to their concerns, particularly about the student market. None of us in Committee today would want to end up in a situation where, on Royal Assent, we were not able to facilitate student accommodation.

--- Later in debate ---

[Jacob Young]

I appreciate the hon. Gentleman’s point, but it is not usual for us to include such a review on the face of the Bill.

[Matthew Pennycook]

I thank the Minister for his response, but it is a little disappointing, and I want briefly to say why.

The point that my hon. Friend the Member for Westminster North made is absolutely right. Unlike in other sectors, we really have no idea of the composition of the private rented sector. That is one reason why the portal is so important: it is such a potential game changer that we can start to get that information, but we do not have it at the moment, so we do not know what the impact of these reforms will be, nor do we know the impact of the changes to the grounds for possession.

I want to bring it home to the Committee that the changes to the grounds for possession are not small. We have new grounds that could potentially work in ways that the Government do not intend; we also have significantly amended grounds. We really need a more formalised review than the Department’s ongoing review process that the Minister has set out.

I urge the Minister to think about that point. If the two years set out in amendment 137 is the wrong deadline or, as he sees it, an arbitrary deadline, we would welcome the Government coming forward with some more formalised means of reviewing the impact not only on tenants, who might find themselves at the sharp end of abuse on some of the grounds, but on landlords, for whom the new grounds simply may not work in the way the Government want. I will not press the amendment to a vote, but I encourage the Government to think about whether we can have something beyond the usual departmental processes. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3, as amended, ordered to stand part of the Bill.

Schedule 1

Changes to grounds for possession

Amendment proposed: 143, in schedule 1, page 65, line 10, leave out “6 months” and insert “2 years”.—(Matthew Pennycook.)

Amendments 143 and 144 would prohibit evictions under grounds 1 and 1A within two years of the beginning of a tenancy.

Question put, That the amendment be made.

--- Later in debate ---

[Jacob Young]

Government amendments 6 and 7 will apply to ground 1B, which ensures that private registered providers of social housing can gain possession if they want to sell, dispose of a lease on or grant a lease on a rent-to-buy property, having first given the sitting tenant the opportunity to buy it. Many private registered providers will sell their rent-to-buy homes to the existing tenants on shared ownership terms, but where they do not, they will be able to sell the home to another buyer on the same terms as those on which they had intended to sell to the sitting tenant. The amendments are technical changes to ensure that ground 1B works as intended; they will simply ensure that there is no ambiguity about what selling means. They will support the operation of rent to buy.

I thank the hon. Member for Greenwich and Woolwich for tabling amendment 147, which would expand ground 1B. As I have set out, the Bill already takes steps to allow rent to buy to continue to operate in the new system. We are aware that stakeholders are concerned about the issue of providers selling to a different tenant from the sitting one; I will carefully consider that issue further.

I commend Government amendments 6 and 7 to the Committee, and I ask the hon. Gentleman kindly not to press his amendment.

[Matthew Pennycook]

I rise to speak to amendment 147, which stands in my name and the names of my hon. Friends the Members for Weaver Vale, for North Tyneside and for Brighton, Kemptown.

As we have discussed, schedule 1 specifies the reasons that landlords will be able to seek possession once the new tenancy system has come into force. As the Minister has explained, paragraph 4 of schedule 1 provides for a new mandatory ground 1B, which will require a court to award possession when private registered providers of social housing are selling a property under a rent-to-buy or London living rent arrangement. Social landlords will be able to use the new ground only where the defined period stated in the rent-to-buy agreement has expired, and to do so they will have to have complied with any terms in the relevant agreement that require them to offer the sitting tenant the opportunity to purchase the property.

The Bill is concerned primarily with the private rented sector, but it has implications for social housing providers in a number of different areas. New mandatory ground 1B relates to one of those, namely affordable products, offered by registered providers, that are designed to enable tenants to use the savings accrued by sub-market rents to save up for a deposit and ultimately purchase the property at a price no more than market value before it is offered for general sale. New ground 1B will ensure that rent-to-buy schemes, including London living rent, will remain viable in the new tenancy system by providing a mechanism for possession to be gained to sell the property at the end of the scheme in line with the terms of agreement.

Although the new ground is absolutely necessary, the proposed drafting would prevent it from being used when a rent-to-buy property is not being sold but when a new tenant is moving into it. A hypothetical example was given by the chief executive of the National Housing Federation, Kate Henderson, in Tuesday’s evidence session:

“you have somebody who is in a rent-to-buy property, has been there for five years and has decided that they do not want to buy it or they cannot buy it; we would like the ground available so that that property could be given to another tenant who would like to use the property as it was intended and designed to be used—as a rent to buy.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 52, Q63.]

--- Later in debate ---

[Jacob Young]

The points that the hon. Gentleman raises are fairly technical in nature, so I will endeavour to write to him as soon as possible; I will copy in members of the Committee. As I have already outlined, I will consider his amendment 147 carefully in the further steps of the Bill.

[Matthew Pennycook]

I think that that is about as positive a response as will come, so I look forward to what may be forthcoming from the Government.

Amendment 6 agreed to.

Amendment made: 7, in schedule 1, page 66, line 29, after “dwelling-house” insert

“or to grant a lease of the dwelling-house for a term certain of more than 21 years which is not terminable before the end of that term by notice given by or to the landlord”.—(Jacob Young.)

This amendment makes the ground of possession for when a landlord is selling the dwelling-house after a rent-to-buy agreement (Ground 1B) also available to a landlord who is granting a lease of over 21 years.

--- Later in debate ---

[Matthew Pennycook]

In her evidence to the Committee last week, in addition to the request that she made on behalf of housing associations in respect of new ground 1B, the NHF chief executive Kate Henderson also made the case for greater clarity in the Bill on new mandatory ground 2ZA. As is set out in the explanatory notes accompanying the Bill, new ground 2ZA will require a court to award possession when a social or other specified intermediate landlord

“has a superior lease and that superior lease is coming to an end”,

thus enabling them to comply with the terms of the superior lease to which they were subject. The clarification for which Ms Henderson argued related to if new ground 2ZA could be used on a tenancy at will—in other words, a tenancy that arises when a tenant occupies a property with landlord consent indefinitely on the basis that either party can end the arrangement by giving immediate notice at any time.

Amendment 188 would ensure that new ground 2ZA would apply in a situation in which a tenancy at will may arise. That is particularly important for social landlords who use superior and intermediate leases to provide specialist supported accommodation.

Amendment 189 would ensure that social or specified intermediate landlords obtain possession of a property when serving notice under the ground. That would see those landlords remain the landlord of the occupational tenant until the conclusion of possession proceedings, rather than running the risk of the superior landlord becoming the landlord for the occupational tenant. We believe that these are both common-sense amendments, and we hope that the Government will accept them either today or at some future point.

[Jacob Young]

I thank the hon. Gentleman for tabling amendments 188 and 189, which seek to amend new ground 2ZA. I know he said they were a concern to the National Housing Federation. We have had similar conversations with the federation. The amendments would change the ground so that it would continue to apply where the superior lease should have ended but is carrying on in some capacity, either as a tenancy at will or in another form. The ground is already drafted to cover those circumstances, so the amendments are unnecessary.

The amendments would also seek to make a much broader change that would allow the intermediate landlord to retain an interest in the property after the superior lease has come to an end. That would be where the intermediate landlord has commenced possession proceedings, presumably to enable them to conclude them. It is already the case that superior leases can make contractual provision for exactly that scenario, and the Bill does not interfere with that. Where there is not contractual provision in the superior lease, ground 2ZB in the Bill allows a superior landlord to continue the same possession proceedings. That will ensure that possession proceedings can continue.

I therefore ask the hon. Member kindly to withdraw his amendment.

[Matthew Pennycook]

Those were two very helpful explanations of why these amendments are necessary. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Jacob Young]

These amendments will make technical changes to remove separate definitions of “local housing authority” and create a single definition to be used throughout the Bill, to ensure alignment and greater simplification as far as possible. For example, Government amendment 11 excludes Welsh local authorities and includes county councils in England where there is no district council, in new possession ground 5G. I commend the amendments to the Committee.

[Matthew Pennycook]

I will be very brief. The Minister and I discussed this subject outside the Committee earlier. As he knows, the Levelling-up and Regeneration Act 2023 has created a new kind of authority for England: combined county authorities. However, CCAs are not referred to in these amendments, which are otherwise completely uncontroversial and whose inclusion we welcome. I just wonder whether the Minister could give us a reason, on the record, for their omission. Is it because a county council cannot ordinarily be a local housing authority, or is there another reason?

[Jacob Young]

I am grateful to the hon. Gentleman for allowing me to clarify. A combined county authority can exercise the functions of a district council, which will be a local housing authority, if the regulations made under the Levelling-up and Regeneration Act provide for the conferral of those functions on a case-by-case basis. As a result, the Government do not believe that there is any need to include combined county authorities in the general definition of a local housing authority at present.

Amendment 11 agreed to.

--- Later in debate ---

[Jacob Young]

On the hon. Gentleman’s questions around security, tenants will have much more security under the new system; under it, landlords will always need a reason to evict a tenant, and must be prepared to evidence that reason in court. That is unlike what happens under section 21. He referred to my comments about properties sitting empty before redevelopment. Obviously, a landlord who was looking to redevelop a property in the near future, but was not yet able to, would not be minded to put a tenant in there unless they had reasonable means of taking back control of that property.

[Matthew Pennycook]

That scenario raises an interesting question that takes us back to the debate we had on ground 1. As the Minister has just argued, landlords who wish to substantially redevelop their property probably have some prior awareness of the likelihood that they will do that. If he will not accept our amendment, will he at least consider having some form of prior notice mechanism, as there used to be for ground 1 before the Government amended it, so that tenants signing up to a tenancy at least have some indication, when signing their agreement, that a landlord may seek to use this ground in the future? Then, at least, the tenant would enter the agreement fully aware that they may be evicted, with six months’ notice, on that ground.

[Jacob Young]

The challenge in going down the route of prior notice is that there is a unique circumstance in which prior notice might be used. If we were to apply prior notice across all types of tenancies, it could be argued that it would be less obvious to tenants that they were in a unique circumstance in which prior notice was relevant. I therefore do not accept the arguments on prior notice.

Amendment 12 agreed to.

Amendments made: 13, in schedule 1, page 72, line 10, at end insert—

“(ab) if the landlord seeking possession is a relevant social landlord and is the person intending to carry out the work, the landlord gave the tenant, before the beginning of the tenancy or on the day on which it began, a written statement of the landlord’s wish to be able to recover possession on the basis of an intention to carry out work mentioned in this ground, and”.

This amendment provides that a “relevant social landlord” as defined in Amendment 15 may only regain possession on the basis of their intention to carry out redevelopment work if they have given a statement to the tenant of their wish to do so before the beginning of the tenancy or on the day on which it began.

Amendment 14, in schedule 1, page 72, line 14, for lines 14 to 33 substitute—

Table

[Matthew Pennycook]

I beg to move amendment 152, in schedule 1, page 74, leave out line 7.

This amendment would retain the existing 12-month period within which the landlord can initiate proceedings on this ground for possession.

--- Later in debate ---

[Jacob Young]

I understand the hon. Member’s concerns. I will write to him to clarify that point.

Amendment 152, tabled by the hon. Member for Greenwich and Woolwich, would reduce the time in which landlords can initiate proceedings back down to 12 months. We have been told by a number of social housing providers that it can often take longer to establish whether succession has occurred. Indeed, the hon. Member for Brighton, Kemptown, mentioned that as well. That can hinder providers’ ability to regain possession from someone who is not entitled to social housing, and therefore prevent the property from being occupied by someone who is.

It is right that private tenants cannot name anyone they want to succeed their tenancy, as that would leave the landlord with no control over who lives in their property. Therefore, it is vital that ground 7 remains available to both private and social landlords. The ground will not be used frequently, and provides the right balances in those instances when it is used. I therefore hope that the hon. Member for Greenwich and Woolwich will withdraw his amendment.

[Matthew Pennycook]

I take on board what the Minister says about the rationale for the 24-month period for social rented landlords. The situation he mentioned would not arise if he accepted amendment 151 and confined the use of the ground to the social rented sector. I will not press the amendment to a vote, but I am not convinced by the Minister’s argument for why ground 7 should continue to be used in this way. I do not think it would bind the landlord unnecessarily if we said that someone who lives with a person whose name is on the tenancy, but is not their legal partner—the Minister did not refute the point made by my hon. Friend the Member for Brighton, Kemptown—should not be at risk of eviction simply because the person on the tenancy died. I worry about the implications of the threat of eviction hanging over their head for 24 months. However, as we may return to the issue at a later stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Renters (Reform) Bill (Fifth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 21st November 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

May I join you, Mr Gray, in thanking members of the Committee for their engagement with the Bill so far?

My view is that the Bill delivers a better deal for renters and for landlords. As hon. Members are aware, however, we must tread lightly. This is a fine balancing act. Go too far one way, and good landlords will find it harder to operate and exit the market; go too far the other way, and the Bill will not give renters the protections we all seek against bad actors in the private rented sector. As we delve into the Bill, I ask all hon. Members to consider the impact of proposed amendments on that delicate balance.

Everyone has the right to a secure and decent home, whether they own it or are among the 11 million people living in the private rented sector; that is the guiding principle of the entire Bill. Clause 1 will remove fixed terms. It provides that tenancies will be periodic in future: under the clause, the tenancy will roll from period to period. Any term in a contract that includes a fixed term will not be enforceable.

The clause also has limits on how long a rental period can be. That is to prevent unscrupulous landlords from emulating fixed terms by introducing longer periods to contracts. Fixed terms lock tenants into contracts, meaning that they may not be able to end their tenancy before the end of the term and move to another property when they need to, for example to take a new job or when a landlord fails to maintain basic standards or repair a property. The changes will also give landlords more flexibility: they may end the tenancy when they need to, under specified grounds that are covered in later clauses, rather than waiting for the end of the fixed term.

Government new clause 2 will require landlords to refund rent in advance where the tenancy has ended earlier than the duration already paid for. That applies regardless of how the tenancy came to an end. It will ensure that rogue landlords do not try to lock tenants in with large up-front payments.

Government new clause 6 will deliver a technical change to council tax rules in the light of the abolition of fixed-term assured tenancies. It will ensure that tenants who hold assured tenancies are liable for council tax until the end of their tenancy agreement. In particular, tenants will remain liable for council tax when they have served notice to end their tenancy but leave the property before the notice period has ended. That will ensure that liability for council tax does not pass back to the landlord until the tenancy has formally ended. I commend the clause to the Committee.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a real pleasure to begin our line-by-line consideration with you in the Chair, Mr Gray. It is a genuine privilege to serve on a Committee with such evident expertise in the subject matter. It is my sincere hope that we can draw constructively on it all in the days ahead to improve this long-overdue but welcome piece of legislation.

As the Opposition argued on Second Reading, the case for fundamentally reforming the private rented sector—including by making all assured tenancies periodic in future, as clause 1 seeks to do—is watertight. As the Minister implied, regardless of whether someone is a homeowner, a leaseholder or a tenant, everyone has a basic right to a decent, safe, secure and affordable home. However, millions of people presently renting privately live day in, day out with the knowledge that they could be uprooted with little notice and minimal justification, if any. The lack of certainty and security inherent in renting privately today results not only in an ever-present anxiety about the prospect of losing one’s home and often one’s community, but—for those at the lower end of the private rented market, who have little or no purchasing power and who all the evidence suggests are increasingly concentrated geographically—in a willingness to put up with often appalling conditions for fear that a complaint will lead to an instant retaliatory eviction.

This House last legislated to fundamentally alter the relationship between landlords and tenants in 1988, when I was just six years old. The Minister may have been even younger.

[Jacob Young]

I wasn’t born!

[Matthew Pennycook]

Well, that just makes my point that the sector should have been overhauled a long time ago. The fact that it has changed beyond recognition over recent decades and now houses not just the young and the mobile, but many older people and families with children, for whom having greater security and certainty is essential to a flourishing life, renders urgent the need to transform how it is regulated and to level decisively the playing field between landlords and tenants.

This Bill is a good starting point to that end. We are glad that after a very long wait, it is finally progressing. However, we are determined to see it strengthened in a number of areas so that it truly delivers for tenants. In this Committee and the remaining stages, we will seek to work constructively with the Government to see this legislation enacted, but we also expect Ministers to give serious and thoughtful consideration to the arguments we intend to make about how its defects and deficiencies might be addressed.

Part 1 of the Bill seeks to amend the assured tenancy regime introduced by the Housing Act 1988. In the nearly 35 years since that Act came into force in January 1989, with some limited exceptions, all new private sector tenancies in England and Wales have been either assured or assured shorthold tenancies, with the latter becoming the default PRS tenancy following the implementation of the Housing Act 1996. As the Committee will know, assured tenancies can be either periodic or fixed, but the vast majority of ASTs are fixed.

Clause 1 will insert a new section 4A before section 5 of the 1988 Act, thereby providing, as the Minister made clear, that all future assured tenancies will be periodic and open-ended, and that they can no longer have fixed terms. That change will empower tenants by giving them more flexibility to end tenancies where and when they want or need to, including when landlords are not meeting their responsibilities and obligations or in instances in which the property that they have moved into is not as advertised. We support it.

We take no issue with Government new clause 2. Although we are not convinced that it is strictly necessary, given how the Apportionment Act 1870 applies to rent paid in advance, we believe that it is a worthwhile amendment none the less, to the extent that it makes express provision for that.

We believe that Government new clause 6 is a necessary change to how council tax works, given that the Bill abolishes fixed-term tenancies. However, in the sense that its effect will be to render a tenancy that

“is or was previously an assured tenancy within the meaning of the Housing Act 1988”

a “material interest” for the purposes of this Bill, we would be grateful if the Minister provided some clarification. Could he tell us the effect of the proposed change in circumstances in which a tenant used to have an assured tenancy but, after this part of the Bill comes into force, now does not because of circumstances that are out of their control? Let us say, to take an extreme example, that a tenant died prior to the end of their assured tenancy, and the relevant provisions came into force. Would their estate be forced to pay the council tax liability as a consequence of the new clause?

We understand the Government’s intention with regard to the new clause, which is to manage the transition between the two tenancy regimes when it comes to council tax. However, we are a little concerned that, as drafted, the new clause may be unnecessarily broad and may create some problematic outcomes. The explanatory statement accompanying the new clause suggests that it may have another purpose altogether—namely, to make people liable if they leave a tenancy without giving notice—but that raises the obvious question of how the Valuation Office Agency and the relevant local authority are meant to know that, and how the local authority might ever hope to find the tenant who is liable. Could the Minister tell us whether the Government have discussed the matter at all with either the Valuation Office Agency or the Local Government Association?

Lastly in connection with this new clause, is there not a risk that unscrupulous landlords may game this provision by claiming that there is still a tenant in situ who should settle the council tax liability, rather than the landlord doing so? Our concern is that the provision could be abused along those lines and that local authority revenue would suffer as a result. I would appreciate some reassurance and clarification on those points in the Minister’s response.

With or without the incorporation of Government new clause 2 and new clause 6—after clause 6 and before clause 20 respectively—huge uncertainty now surrounds the implementation of clause 1, and the rest of chapter 1 of part 1, as a result of the Government’s recent decision to tie implementation of the new system directly to court improvements. Whatever the motivation behind that—renters will no doubt have reached their own conclusions—the decision has significant implications for when clause 1 and the other clauses in this chapter become operational. We need answers today, so that those whose lives stand to be affected are clear as to what they are.

Clause 67, “Commencement and application”, gives the Secretary of State the power by regulations to appoint a day when chapter 1 of part 1, including clause 1, comes into force. In other words, the Bill has always given Ministers discretion as to precisely when the new system becomes operational—a matter that we will debate more extensively in a future sitting when we come to clause 67 itself and our amendment 169 to it.

The Government were previously clear that there would be a two-stage transition to the new tenancy system, with precise starting dates for new and existing tenancies to be determined by the Secretary of State, and that a package of wide-ranging court reforms was to accompany the legislation, but at no point prior to the response issued on 20 October this year to the Select Committee on Levelling Up, Housing and Communities did the Government indicate that the new system’s implementation was directly dependent on such reforms. As things stand, because of the Government’s last-minute change of approach, not only do tenants have no idea when the new tenancy system will come into force, but they do not even know what constitutes the requisite progress in respect of court reform that Ministers now deem is necessary before it does.

There are three distinct questions to which the Government have so far failed to provide adequate answers. First, is the county court system for resolving most disputes between landlords and tenants performing so badly that reform is a necessary precondition of bringing this clause and others in this chapter into force?

--- Later in debate ---

[Matthew Pennycook]

Can the Minister tell us clearly why the two-stage transition process set out in clause 67 does not afford the Government enough time to make the necessary improvements?

[Jacob Young]

We will come on to that point when we discuss clause 67. I want to address some of the points that have been raised, particularly the question about bailiffs. HMCTS has already begun making improvements at the bailiff stage, including automated payments for debtors, to reduce the need for doorstep visits in those cases. We are also improving guidance to increase awareness of each party’s rights and responsibilities.

The hon. Member for North Shropshire spoke about the concern raised in evidence about longer fixed-term tenancies. I completely understand the hon. Lady’s position. I understand the genuine concern that she and the people giving evidence have. Our fear, which was rightly identified by the hon. Member for Brighton, Kemptown, is that to include any fixed-term tenancies creates a loophole. We are certain about abolishing section 21, so we do not believe that having a fixed-term tenancy will provide any security to the tenant. It could, in fact, lock a tenant into a property that they would be unable to get out of, even if the property was of poor quality, because the term of their tenancy was fixed. I hope that the hon. Member for North Shropshire can accept that.

I will write to the hon. Member for Brighton, Kemptown other Committee members specifically on the points raised by the Opposition on new clause 6. I am pleased that there is a consensus on clause 1. We all want to see this measure implemented. I commend it to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Abolition of assured shorthold tenancies

Question proposed, That the clause stand part of the Bill.

[Jacob Young]

Clause 2 removes the assured shorthold tenancy regime entirely, including section 21 evictions, meaning that in future all tenancies will be assured. Ending these section 21 no-fault evictions will provide tenants with more security and the knowledge that their home is theirs until they choose to leave, or the landlord has a valid reason for possession. It will allow tenants and their families to put down roots, providing them with the stability that we know is a prerequisite for achievement.

Government new clause 18 deals with property abandonment. The Housing and Planning Act 2016 introduced provisions that would allow a landlord of an assured shorthold tenancy to recover possession without a court order if the tenant had abandoned the property, owes more than two months’ rent and the landlord has served three warning notices. Those provisions were never brought into force and we consider they are inconsistent with the intentions of the Bill to provide greater security. Removal of the provisions will help prevent landlords from ending a tenancy without a court order where a property appears to have been empty for a long period. It is possible that, on occasion, a property may appear to have been abandoned, but the tenant is in hospital or caring for relatives. Instead, landlords will need to use one of the specified grounds.

[Matthew Pennycook]

Let me start by making it clear that the Opposition welcome Government new clause 18. Although I have not been in Parliament long compared with other Members, I have been here long enough to remember sitting on the Bill Committee for the Housing and Planning Act 2016. Part 3 of that Act, which this new clause repeals, was always a foolish provision, and has rightly never been brought into force. We believe it is right that we rid ourselves of what might be termed statutory dead wood.

Clause 2 will remove section 21 of the Housing Act 1988 and, as the Minister made clear, will abolish assured shorthold tenancies and remove mechanisms by which assured social housing tenants can currently be offered ASTs—for example, as starter tenancies—or be downgraded to an AST as a result of antisocial behaviour. The provisions in this clause, as well as those in clause 1, will be brought into force on a date specified by regulations made by the Secretary of State under clause 67. It is appropriate to raise a very specific issue on this clause. We have just discussed court improvements at length. I know that is not the Minister’s brief, and that this is his first Bill, but I have to say to him that his answers on court reform were not adequate. At some point, the Government will have to explain specifically what improvements they wish to see enacted and on what timeline they will be brought into force. Leaving that aside, can the Minister provide further details on precisely how the Government intend to phase in the provisions in this clause? What consideration, if any, has been given to preventing unintended consequences arising from the proposed staged implementation?

The guidance on tenancy reform that the Government published alongside the Bill on 17 May said:

“We will provide at least six months’ notice of our first implementation date after which all new tenancies will be periodic and governed by the new rules”—

that is when they will introduce Part 1, Chapter 1. It continued:

“The date of this will be dependent on when Royal Assent is received”.

I take that to mean that, at some point in the future, a Government Minister will hopefully determine that the court system is, in the their eyes, finally ready to implement the new system—although there is nothing in the Bill to ensure that will happen. He or she would then presumably announce that the first implementation date—that is, the date when all new periodic tenancies come into force—will be six months hence.

I would like the Minister to confirm whether my understanding of how the Government expect the process to develop is correct. If so, can he respond to the concern—the flip side of my hon. Friend the Member for Mitcham and Morden’s point on a rush to section 21 evictions—that this may create a clear incentive for landlords to offer new tenants a lengthy fixed-term assured tenancy before the new system comes into effect?

If the safeguard in the Government’s mind is that all existing tenancies will transition to the new system on the second implementation date, can the Minister provide any reassurance that the period between the first and second implementation dates will not be overly long? I raise the point because the guidance makes explicit reference to a minimum period between the first and second dates, but does not specify a maximum period after which the second date would have to come into effect. As the Bill stands, it could enable a scenario where all new tenancies become periodic, but there is an extensive period of time where all existing fixed tenancies remain as such. It could be an indefinite period, there is nothing in this Bill to put any time limit on it at all. I look forward to hearing whether the Minister can provide any reassurances in relation to that concern. If he cannot, we may look to table another amendment to account for this loophole, whether it is intended or unintended.

[Jacob Young]

I thank the hon. Member for his support. He asked about the first and second dates. He is entirely right on the first date—it is six months. The second date is 12 months. I hope that gives him reassurance.

[Matthew Pennycook]

Just to clarify: as I understand it, 12 months is the minimum. Is the Minister saying that there is a maximum? If not, will the Government consider introducing a maximum? I see the officials shaking their heads. There is no maximum in the Bill. We could have a system where, six months after Royal Assent, all new tenancies become periodic and all existing tenancies could remain fixed indefinitely. What is there in the Bill to prevent an incentive for landlords to rush before the first implementation date to hand out fixed tenancies across the board for very extended periods of time to circumvent the measures in the law?

[Jacob Young]

Ultimately, we want to bring in these measures as quickly as we can. The system will be in place soon. What I will do to give the hon. Gentleman the assurances he desires is to write to him further. We can agree on that principle and if changes are needed to the Bill, I am happy to consider them.

[Jacob Young]

I appreciate the hon. Gentleman’s concern about this point. As I mentioned earlier, I think we will discuss this issue when we debate clause 67, so we can have that debate then.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Changes to grounds for possession

[Matthew Pennycook]

I beg to move amendment 145, in clause 3, page 2, line 32, at end insert—

“(aa) after subsection (5) insert—

‘(5ZA) The court shall not make an order for possession under Ground 1 if the court is satisfied that, having regard to all the circumstances of the case, greater hardship would be caused by granting the order than by refusing to grant it.’”

This amendment would extend the greater hardship provisions to new Ground 1 (occupation by landlord or family).

--- Later in debate ---

[Jacob Young]

I thank hon. Members for their contributions. I thank the hon. Member for Greenwich and Woolwich for his amendments 145, 146 and 150. As has been discussed, the amendments look to make grounds 1, 1A and 6A discretionary.

[Matthew Pennycook]

To clarify, the amendments do not seek to make those grounds discretionary in any case. We accept that they are mandatory. We believe that the amendments would allow those mandatory grounds to be used in almost every case, unless great hardship would result from them. They do not make those three possession grounds discretionary.

[Jacob Young]

However, judges would be required to assess whether possession would cause greater hardship than not. We think that would count as making the grounds discretionary.

The changes would add significant uncertainty to the system. It is right that landlords should have confidence in the process, and can manage their properties, including when they want to move into or sell a property. The uncertainty that the amendments would cause means that landlords may simply choose not to rent their properties in the first place if they know that they may want to move into or sell a property in future. That would reduce the vital supply of homes in the private rented sector. In the case of ground 6A, on enforcement compliance, if possession is not granted, the landlord would continue to be in breach of their obligations, and could face fines and other penalties. Given the adverse consequences that the amendments would cause, I hope that the hon. Member will withdraw them.

[Matthew Pennycook]

I am disappointed by the Minister’s response. I welcome the clarification he gave. The amendments would introduce a limited amount of discretion. We would argue that they do not make the grounds discretionary—it is a point of debate—but introduce a limited amount of discretion into the system. However, we trust judges in county courts to make these decisions in most cases. The amendments would put the burden on the tenant to prove great hardship, and make the presumption that the mandatory ground award will be issued in most cases.

I will bring the Minister back to some of the hypothetical scenarios I gave. We absolutely agree with the Government that landlords need robust possession grounds to take their properties back. In one of my hypothetical examples, the Bill would allow a terminally ill cancer patient to be evicted and put at risk of homelessness, just because the landlord wished to sell. They may have no need to sell; they might own eight properties and wish to sell one or two of them. In limited circumstances and cases, we should give the judges a bit of discretion. Otherwise, some very vulnerable and in-need tenants will evicted through these means.

I am disappointed that the Government have not accepted the amendments. I hope that they go away and think about them, but I will not push them to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Jacob Young]

I should be clear that the landlords who are subject to enforcement action are the rogues; they are the people we are trying to root out of the system through the Bill. They are unlikely to be able to provide the suitable alternative accommodation that the hon. Member mentioned. If things get to this stage, they are that bad. We therefore do not feel that we can accept amendment 149, and I hope that the hon. Member for Greenwich and Woolwich will withdraw it.

[Matthew Pennycook]

I have been on enough Bill Committees to know that the Minister has been sent out with explicit instructions to resist amendments—we all understand that—but the Government will have to grapple with the Bill’s weaknesses regarding how the new possession grounds will affect tenants who are not at fault. They could clearly be affected by a landlord’s using ground 6A—a ground that I find perverse, because it allows for possession where the landlord is at fault.

The Minister gave the game away when he said that 6A can be used only when it is the only way that the landlord can comply with an enforcement order. Well, we could leave it to the court to make that determination under the amendment. If possession is the only way that the landlord can comply with an enforcement order, the court will grant the possession order, but there will be cases in which it is not the only way, and the Minister said that he encourages local authorities to explore those other means. I would say that, in those circumstances, encouragement is not enough. We need some provision to ensure that all alternatives are completely exhausted before this very severe mandatory ground—we are talking about eviction and potential homelessness—is brought into force.

[Jacob Young]

I take the hon. Gentleman’s point on board, but as I have outlined, these are landlords who are subject to enforcement action. Does he accept that such landlords should not be operating in the private rented sector anyway, and that this ground allows us to root out those bad landlords?

[Matthew Pennycook]

I think the Minister has to be very careful on that point. It depends on what the enforcement action is, and on the degree to which the landlord is at fault. The enforcement action could relate to a breach under the housing health and safety rating system that merely needs to be rectified before the landlord can continue to rent as an appropriate and good-faith landlord; or it could relate to a very severe enforcement ground, as the Minister described. I come back to the point I made when moving the amendment: there are other enforcement powers that could deal with those types of landlords. I gave the example of a management order under the 2004 Act. There are ways that local authorities could enforce that do not require a mandatory possession ground order to be awarded. All we are saying is: give the courts the discretion to decide that.

If the Government are not minded to give the courts that discretion, there are other ways that the clause might be changed. The local authority might be required to have first exhausted other grounds before the landlord can issue a 6A notice. Let us find a way of protecting tenants who are not at fault from being evicted by landlords. In this situation, landlords, not tenants, are to blame, and they could abuse this new mandatory ground in ways that will have detrimental consequences for tenants.

I hope that the Minister has taken that point on board. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Renters (Reform) Bill (Fourth sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Thursday 16th November 2023 Public Bill Committees

[Matthew Pennycook]

Q Briefly, to follow up on clause 6, which revolves around challenging the amount or increase of rent, we have concerns that even with the expanded right to challenge, the tribunal system will not provide sufficient protection. Do you have any thoughts on how, leaving aside other options, that process might be tightened? For example, should the tribunal’s ability to award rents higher than what the landlord specifies be taken out of the Bill? Should there be other protections that allow renters to leave if they are served with that higher notice? Should they have another section 13 notice? I am keen to hear your views on how we might tighten clause 6.

Simon Mullings: A simple amendment to do exactly what you are saying, which is so that the tribunal does not set a higher rent than the landlord is asking for, would be extremely welcome. The reason for that is that if somebody comes to me asking whether they should challenge the rent that has been set by their landlord, I am bound to advise them that, unlikely as it is, the tribunal could set a higher rent. That has a real chilling effect on somebody’s willingness to then challenge a rent. It has been in section 14 of the Housing Act 1988 since it came into force in 1989, but this is a real opportunity to cure what seems to be a rather bizarre anomaly. I am not really sure why it was there in the first place, but it has this chilling effect. Also, section 13 challenges will become much more important when the Bill passes.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

Q Thank you to our panel of witnesses. We have spoken a few times about ground 8A. What would you say to someone who said that it is unfair for landlords to suffer multiple breaches of rent arrears? And on a completely separate thing from ground 8A, we are introducing a new ombudsman to the private rented sector. How do you think that ombudsman can work? Would you say that it can help to reduce the pressure on the court system?

Liz Davies: I will start with the point about multiple breaches of rent arrears. I think that the answer to that is to trust the wisdom of the courts. The courts have the mandatory ground at the moment under ground 8—again, the concern is gaming and you have heard Simon’s answer on that—and they have discretionary grounds for possession under grounds 10 and 11. A well-advised landlord who wants to ensure that they can get a possession order from the type of tenant you have just described will ensure that they plead all the rent arrears grounds available to them, including ground 8A, if you put that through.

When you get to the court hearing, courts are perfectly capable of identifying somebody who has got into arrears in the past but has made them up or is in a position to pay current rent and to pay off the arrears within a reasonable period. Courts deal with people in financial hardship day in, day out; they are very good at scrutinising budgets and knowing whether or not an offer to pay is realistic. They are equally good at looking at a rent arrears history, no doubt prodded by the landlord, and saying, “Hang on a minute. You’ve just told us when your payslips were and you were not paying rent at that time. You really have been abusing the system.” And they will make an outright possession order.

Case law on suspended possession orders on the basis of rent arrears requires that a suspended possession order, as an alternative to an outright order, can be made only where the court is satisfied, first, that the current rent will be met in the future, and secondly, that if there are arrears at the date of hearing, those arrears will be paid off over a reasonable period. There is some case law, depending on a landlord’s circumstances, about what a reasonable period is. Courts are very sympathetic to the point that private landlords in particular need that money paid back to them, so they are not going to approve an unrealistic repayment offer. I think that all the appropriate safeguards are there in the courts now. Of course, they are not currently used by private landlords because of section 21, which means that they do not need to. I think that those safeguards are there against the scenario that you have just suggested.

On the ombudsman, I will leave Simon and Giles to develop that point. All I would say is that an ombudsman is a very good thing. Access to justice through the courts is also a good thing. It would be wrong if some of the matters that courts deal with on behalf of tenants are then solely dealt with by the ombudsman. You have to have two opportunities.

Giles Peaker: Briefly on the ombudsman, in principle it is a very good thing, but it generally tends to depend on the ombudsman. It really is a question of somebody actually being able and willing to take a serious and proactive approach. I think that there has been quite a market change in the social housing ombudsman over the last five or six years, and performances have really turned around. An ombudsman is not necessarily an answer in and of itself, but it can be a very good thing and, in the right hands, it can be extremely useful.

Simon Mullings: We heard Mr Blakeway’s land grab earlier in the week—he fancies a crack at it. As Giles said, Mr Blakeway has done extremely well in the social housing sector, and, as Liz said, the ombudsman will do well in the jobs that it can do. It is not fair for landlords to face that situation, but it is also not fair for landlords to face a ground for possession that, whether they use it or not, will incentivise tenants to stop paying rent. I really believe that that is what 8A will do in certain circumstances.

--- Later in debate ---

[Jacob Young]

Q We heard evidence this morning that suggested that the courts are currently overwhelmed and that the abolition of section 21 would increase contested cases. That is not your assessment?

Giles Peaker: I do not see that it would necessarily increase contested cases. It would inevitably involve the process that leads to an initial hearing—those are 10-minute hearings on a list day. I really do not see why it would increase the number of contested hearings, because unless there is a defence, the possession order is highly likely to be made at the first hearing. On at least some of these new grounds, if the ground is made out, there is no defence. So I am unsure of the amount of additional burden.

Liz Davies: I think that is the point. Currently, under section 21, landlords can get possession on the papers. There is no court hearing: the papers go in; the tenant has the right to respond; the district judge considers on the papers whether or not there is a defence. If there is no defence, the possession order is made; if there is a defence, it is put over to a hearing. Once section 21 is abolished, the starting point is that there will be a five or 10-minute hearing, which is usually about eight weeks after issue. That is about the same period of time as for the paperwork procedure I just described. At that hearing, the question for the court is, “Is the case genuinely disputed on grounds that appear to be substantial?” That is set out in the rules.

The great thing about that hearing is that there are housing duty solicitors at court. If a tenant does not have legal advice or advice from a citizens advice bureau beforehand, they turn up and talk to a duty solicitor—I am sitting next to one of them. Duty solicitors give realistic advice. If there is a defence—if the landlord has got it wrong—the duty solicitor will go in front of the court and say, “Actually, there is a defence,” and it gets adjourned for a trial, and that is right and proper. But if there is not a defence, the duty solicitor will say, “I’m sorry, there is absolutely nothing that can be said legally to the court,” and a possession order will be made.

One of the important things about advice, and indeed early advice, is that tenants get realistic advice, so they know whether they have any realistic chance of prolonging the proceedings, and so forth. In many ways, a hearing with a duty solicitor will be beneficial to landlords, and, as Giles says, it takes about the same length of time. There is lots to be said about county courts’ efficiencies and inefficiencies, but I do not think that is the problem.

[Matthew Pennycook]

Q The Government dropped 111 pages of amendments on us on Tuesday evening, which is not particularly good practice—I will put that on the record—so you may not have had a chance to look through them, but if you have, do you have any thoughts about whether they address some of the deficiencies in the Bill that we and others have highlighted? My reading of the decent homes standard amendment is that it does most of what we want it to do; my reading of the “No DSS” amendment is that it does not. I wonder if you could flesh out a couple of the amendments that have been introduced and whether they do what is needed.

Simon Mullings: Two of us were involved in Rakusen v. Jepsen, and we were very happy about amendment 21—thank you very much for that; Christmas has come early. I understand that Shelter is looking very carefully at the “No DSS” amendment. I do not want to try to drive a tank on its lawn; I suspect that it will write in with any concerns it has about that. The principle, though, is extremely welcome. Forgive me, Mr Pennycook, but you mentioned another one.

Liz Davies: The decent homes standard amendment.

Simon Mullings: There was too much to read overnight, I am afraid, so I do not have anything particular to say on that.

Liz Davies: I was very pleased to see it, in principle. I am reserving my position on the wording. I am sorry; I am in the same position you are in, Mr Pennycook, from Tuesday night.

--- Later in debate ---

[Matthew Pennycook]

Q As a tenants’ union, you are in a unique position to give us some insight into the broad question of whether the Bill strikes the right balance between the interests of landlords and tenants. Can we open with that?

Ben Leonard: What my experience working with tenants and addressing their issues has taught me is that there is a massive imbalance of power between landlords and tenants, which leads to tenants being too afraid to speak up about repairs or harassment. The issue of no-fault evictions is central to that imbalance of power. If people know that a landlord can turf them out of their property and potentially make them homeless with just a couple of months’ notice, they will not speak up about things that need to be addressed, such as repairs. I am sure you are all familiar with the terrible condition of a lot of private housing in this country. In the case of harassment, including sexual harassment, we see tenants just grin and bear it because the stress of having to find a new property within two months is too much.

The Bill could be transformative for tenants. It could offer dignity and security to millions of renters who up until now have been denied that. But I am sorry to say that in its current form the Bill fails to address the fundamental problems that renters face. If a landlord can effectively pretend to need to sell or move into their property and turf out the tenants, we will still have no-fault evictions. If landlords can raise rents past what their tenants can afford, in practice we will still have no-fault evictions. If a landlord can send a tenant an eviction notice as little as four months into their tenancy, with just two months to find somewhere new, unfortunately the Bill will fail to give tenants the secure housing that they desperately need.

[Jacob Young]

Q Thank you for your evidence. How do you think the Bill will improve the experience for tenants? We have discussed section 21. Do you think that abolishing section 21 will give tenants more confidence in going for new rental agreements?

Ben Leonard: As long as the loopholes that I have mentioned are ironed out and the Bill is strengthened in that way, it will massively shift that balance of power and give renters the confidence that they need to come forward. We are a tenants’ union, so we use our strength in numbers to put pressure on a landlord to make repairs and things like that, but it should not have to be that way. A tenant should be able to complain about repairs and get them dealt with in a reasonable timeframe. Often they are just too afraid to complain. I am not saying that every single landlord is a demon, but, as things are at the moment, the system allows bad landlords to treat people horrendously, with very little recourse for tenants. If the changes that I have outlined are made in the Bill, it could be really transformative for tenants.

--- Later in debate ---

[Matthew Pennycook]

Q I have two quick questions. The National Residential Landlords Association has called for the selective licensing of landlords to be abolished. Do you think it falls away if the portal operates in a particular way, or will elements of selective licensing still need to be in place to augment the portal if the local area in question chooses that? I am thinking of space standards and other things that the portal might not necessarily cater to.

Secondly, is the Bill missing something by not incorporating any regulation of property agents? Are we missing an opportunity to incorporate the recommendations set out by Lord Best’s working group in or alongside this legislation in some form?

James Munro: The first part of the question is a very good one, and I am not sure I am going to be able to give you an answer. I think the answer is probably yes and no, or somewhere in between. It is very difficult. It is one of those things where time will tell. Selective licensing schemes can bring benefits, but they are also a rather blunt tool in some respects, so I think it is a mixed bag. Possibly yes, that could happen.

Again, to be transparent, I sat on the working group with Lord Best where the regulation of property agents was debated. I think regulating property agents would be a good thing. When the public deal with professional people responsible for significant assets or significant issues in their life, they are, generally speaking, licensed or regulated in some way. As things stand, there is quite a mixed bag of regulation that applies to estate and letting agents—collectively, property agents. For example, the regulatory regime applying to estate agents is completely different from the regulatory regime that applies to letting agents, and I think bringing them together would be a good thing. Obviously, it would be expensive and would probably require another public body to be set up. There are issues about who would take on that role, but in theory I think that is a good thing.

[Jacob Young]

Q I am interested in your view on the principle of blanket bans and the measures we are taking in the Bill to stop them.

James Munro: Blanket bans are a good thing on paper, but in practice they can be very difficult to enforce. Obviously, the enforcement is where I am coming from with this. That is what we do with estate and letting agents at the moment, and with landlords in respect of the Tenant Fees Act 2019. We are the leading enforcement authority under the Estate Agents Act 1979 and the Tenant Fees Act. It is very tricky when you start putting blanket bans on things—for example, on saying, “No pets”, “No children”, or “No DSS”—because ultimately it is up to the landlord to decide who he or she wants in the property. It is very difficult to prove that that decision has been taken to directly discriminate against somebody with a pet, with children or in receipt of benefits.

While I am on that subject, I think the legislation would benefit from always including the words “prospective tenant” when dealing with issues around discrimination. Clearly, at the point at which someone is being discriminated against, they are not normally a tenant—they might well be a tenant at some stage, but at that point they would be a prospective tenant. It is important to have consistency throughout the legislation in that respect.

Renters (Reform) Bill (Third sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Thursday 16th November 2023 Public Bill Committees

[Matthew Pennycook]

Q Would you accept that if the private rented sector is overhauled and improved, for example if we drive up standards, there should hopefully be a trend towards tenants not needing to move out after that minimum period, and we should have a system in which people have security and have less reason to stay in a property for only a short time?

Helen Gordon: I think that that is absolutely the intent, and it is the business model. I want to talk about the fact that there is a lot of bad practice. If you go now to Rightmove’s website, or wherever, you will pay significantly more for a short-term tenancy than you would for a six-month or 12-month tenancy. People will abuse that. Searches of Rightmove’s data will give you only a certain amount of data, but we have data showing that in London up to 10% of the people wishing to rent only want to rent for a couple of months. Not having a minimum term greater than a couple of months will lead to a lot of Airbnb and transient renting. That is why, in planning, Westminster City Council and many other councils insist on a minimum term for rental property. The two months approach in the Bill seems to fly in the face of that.

[Jacob Young]

Q Thank you to our witness. You are proposing that tenants should not be allowed to give notice to end the contract for the first six months. What would you say to someone who says that it is unfair for a landlord to be able to end a tenancy early, after less than six months, when a tenant is not able to end it early?

Helen Gordon: Just to clarify, I think a minimum term of six months would work. That could be four months with two months’ notice. There is a balance between the two. Most landlords will work with a tenant if they make that decision. What I am trying to stop is the abuse of sub-letting and the unintended consequences of financing. Obviously, there is all the protection, so if it does not meet the minimum home standard, it is in breach or it was misrepresented to the tenant, they have all of those grounds, in any event, to leave. But if their circumstances change, I think most landlords would work with the tenant on that.

--- Later in debate ---

[Matthew Pennycook]

Q Just to be clear, do you agree with Mr Miller that we should introduce the new system and then look to improve the courts, or do you think that it would be fair to instead specify metrics for what we mean by improvement and then put a time period in place for it to happen?

Nimrod Ben-Cnaan: Our opinion is that, as I think Polly Neate said on Tuesday, the Government should hold its nerve and not wait at all. We can do this without that. There will be a surge; there are other ways to address that surge. That is our opinion.

[Jacob Young]

Q Thank you to both our witnesses. This question is specifically for Mr Miller. I am a little confused by your argument, because you seem to be suggesting that we should implement the changes to section 21 before court reform, but you then say that the courts are currently overwhelmed and that there would be more contested cases, therefore overwhelming the courts even further, if we were to abolish section 21 straight away. Could you clarify the points that you are making about that? What could we do to improve the court system today, before we bring in the changes to section 21?

Then, on Nimrod’s point about resolving cases before they even get to court, which I think is really relevant, I would be keen to know how you think the ombudsman could be used in such dispute resolution.

Richard Miller: In response to the issue of digitisation, our view is that digitisation is one part of the picture only, and it is a part of the picture that will take a long time and involve quite a bit of investment. Fundamentally, the issue is that we do not know exactly what functionality will be required of the system until we have implemented the process.

Let us suppose that the digitisation programme did not exist. We would be saying, “As long as the courts have the resources to handle the cases, that is fine.” That is what we are saying should happen here: digitisation should be on the cards—it should be something that we intend to do over the coming years—but the starting point is to make sure that the courts are resourced to handle the cases as they are conducted at the moment. That does mean more judges, more court staff to process applications and more investment in legal aid, but the digitisation is not a necessary prerequisite to get the courts into a state where they can handle this workload.

--- Later in debate ---

[Matthew Pennycook]

Q Do you think that there is a risk of discrimination, with landlords attempting to filter out pet owners so that they do not have to encounter the unreasonable refusal provision?

Jen Berezai: Research that we have done, along with research undertaken by the likes of Battersea Dogs & Cats Home and Cats Protection, seems to indicate that a large number of landlords would be willing to consider pets provided that they are able to protect their own interests. That is why we proposed an amendment to the Tenant Fees Bill to add pet damage insurance to the list of permitted payments. Having said that, the rental market is very hot at the moment. I believe that there are something like 20 to 25 applications per property in London. In the east midlands, I think there are about 11 applications per property, and viewings are usually closed off at about 30. That means that landlords are able to cherry-pick tenants. A lot will take the course of least resistance and choose what they perceive to be the lowest risk.

[Jacob Young]

Q What are your concerns around the Bill?

Jen Berezai: My concern is that it is an excellent step in the right direction, but it is probably going to benefit those who rent houses more than those who rent flats. That is because of the head lease issue. I know that leasehold reform is going through; it would be nice if the two things could work hand in hand. Giving landlords the ability to say either “You must hold pet damage insurance” or “I am going to charge you for pet damage insurance” will make a difference to a lot of landlords who are currently on the fence about allowing pets.

Renters (Reform) Bill (Second sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 14th November 2023 Public Bill Committees

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Q38 Thank you to the witnesses for coming to give evidence to us. I want to start off with possession grounds. We have heard from the Government, and from a number of the witnesses this morning, about the need to strike the right balance between the interests of landlords and the interests of tenants. What are your views on the new and revised possession grounds in that regard, and specifically the ones we have heard some concerns about: grounds 1, 1A, 6, 7, 8A and 14?

Ben Twomey: Thank you, shadow Minister. On the grounds, it is important to think about the question of what actually changes for the renter experience if the Bill passes in its current form. We welcome the Renters (Reform) Bill and think it is an important piece of legislation, but on some key areas not much will change.

The Government promised to abolish no-fault evictions. The Bill does not do that. It removes section 21 no-fault, or no-reason, evictions but introduces new no-fault grounds. Particularly on grounds 1 and 1A, which are where a landlord can move a family member in or may sell the property, it is important that we put ourselves in the renter’s shoes when that happens. A no-fault notice is given. That could happen to me or any renter across England. Right now, I could go home and find one of those notices on my doorstep. I would have to be out of my home within two months. Given the current economic climate, it is going to be difficult for me to find a new home quickly, so the risk of homelessness—no-fault evictions are one of the leading causes of homelessness—is very great.

In the current wording, that situation does not change for renters, and their experience does not change. A renter receives a no-fault notice and is out within two months. We think there should be better protections there. It should go to four months instead, to give the renter time to make the savings, look around and find somewhere to live. That saves the Government money because they do not then have to support people who are in temporary accommodation or are otherwise homeless. That is one of the key areas we want to change in respect of the grounds.

Similarly, I currently have a fixed-term contract that will move under the Bill to a rolling tenancy. The minimum fixed term is six months, and as soon as that ends I can receive a no-fault eviction. Within the rolling tenancy, under the wording of the Bill, once the six-month protected period ends, again, a renter can receive a no-fault eviction. It is important that there are better protections so that there is more security for renters. We say that period should move to two years instead.

Finally, on the no-let period, if the grounds are to be introduced, they need to be enforced. It needs to be clear that they cannot be abused by some landlords. At the moment, if someone says that they are moving a family member in or that they are going to sell the property, there are three months during which the property cannot be re-let. We think that should move to one year to make sure we rule out the idea that some landlords could still do retaliatory evictions or abuse the grounds in other ways. By moving that, we make sure that tenants have that greater protection and can enforce where local authorities may not be able to. If we can put that information on the property portal in the Bill, which we welcome, it will be much easier for tenants to play a role in the enforcement and scrutinise what is happening.

As I said, I could go home today and receive a no-fault eviction. The Bill could pass and I could go home and find one and the same thing could happen. I would be out within two months and it could happen after six months of my having a tenancy. That is a big problem. If you want to reduce one of the leading causes of homelessness and save the Government money in doing so, you need to address those factors.

Sue James: What we are talking about today is someone’s home. Over the past 20 years we have seen a huge increase in families who are living in the private rented sector, and we are talking about having enough protection for them. The private rented sector has doubled in size, so we do need to pay attention to it.

At the moment, the new grounds are all mandatory grounds, and we say they should be discretionary grounds. We want the court to make an order that will take into account the circumstances of the tenant and of the landlord. Grounds 1A and 1B, as they are currently written in the Bill, will essentially be a back door for section 21. I agree with what Ben said about improving the notice periods that are outlined in the Bill.

We also have a problem with grounds 1A and 1B in relation to the evidence. At the moment, it does not look like the landlord will have to provide much evidence. We want that to be strengthened so that you would have to have evidence that the landlord required the property for a member of their family or wanted to sell it.

The problem also is that once a landlord takes possession on that basis, or tells the tenant that they are going to seek possession on that basis, you have just a three-month period in which they are not allowed to let. That needs to be much longer—at least a year—in order to protect the tenant from unscrupulous landlords taking back their premises. Three months is not a very long time at all.

The other issue relates to enforcement. Currently, that rests with the local authority and the ombudsman. The tenant must have the right to challenge that and to take action against the landlord, including when the landlord has taken possession in court, because at the moment it is only if the tenant voluntarily leaves. It needs to be a bit more joined up in terms of having that protection.

The biggest problem is ground 8, and ground 8A in particular. I know you heard some evidence on that this morning. It is a particular problem: basing it on three times in three years when someone is at least one day in arrears is going to cause grave hardship. It has a perverse incentive, because the final time that the tenant is in arrears, a possession order will be made and they will not have an incentive to make that payment. That seems really perverse. All of that needs to be discretionary. The court absolutely has to have a look at that.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

Q Thank you to the witnesses. You have mentioned aspects of the Bill that need to be strengthened; what aspects do you welcome or think of as helpful? How do you think the private rented sector supply might be impacted by the reforms?

Ben Twomey: We absolutely welcome the end of section 21 no-fault evictions—it could not come soon enough. We were promised it some time ago. For renters, that is one of the biggest insecurities we face. That is why I talk about the experience needing to change for renters. In Generation Rent, we love it when renters are aware of their rights and when they know what the system is like, yet those renters who discover they have received a section 21 suddenly become aware that the rights they have do not mean much at all, because they will be out in no time and there is not much they can do to challenge it.

One of the saddest things I have heard from renters we support is that insecurity follows them into the next home. Even when they are trying to feel settled and comfortable and to build their lives again, they are in constant fear that another no-fault eviction notice could come. It needs to be really clear that the new no-fault grounds do not keep that insecurity in the system.

We welcome the end of section 21 and we welcome the property portal. It will be really good to finally have a register of landlords. We hope to be able to put things into that portal that are not yet in the Bill: we hope that we will be able to track evictions, so that they are enforceable around the no-let grounds, and that we will be able to look at actual rents and properly monitor what goes on. One of the big advantages of ending section 21 will be that finally a reason is given for every eviction, so we can understand when things start to go wrong that lead to homelessness. At the moment, quite a lot of guesswork is happening to prevent that problem.

We also welcome an ombudsman coming into the sector, to have an equivalence with the social housing sector. As much as possible, in any way we can, we think renters should have the same rights across social housing and private renting. When the experience can be very similar, and the risks, insecurity and unaffordability are still factors across the piece, there is no reason to have a two-tier system. In fact, I would go further and say that we will have reached our goal only when homeowners start to kick themselves and say they wished they were renting because there are so many rights available, so much security of tenure and so much flexibility, and because they have organisations such as mine and Sue’s to inform people. We look forward to working with the Government to see how that ambition can happen.

Sue James: I agree. The property portal has such potential if we get the information in there right so that there is transparency around renting. That would be amazing. We absolutely love the fact that this has been brought in. There are some changes that we think need to be made. The fact that you are looking at delaying action on section 21 is something I would love to talk about, if you would like to hear that.

--- Later in debate ---

[Matthew Pennycook]

Q Thank you for attending, Mr Fletcher. I want to ask you about build to rent. In terms of supply, build to rent is mainly catering to—let’s say—the top half of the market, rather than meeting mainstream supply. What do you think the impact of this Bill will be on the build-to-rent sector?

Ian Fletcher: Build to rent is something that started over the past 10 years. It is trying to encourage institutional investment into market rented housing. It is not pitched at high-income earners. We do a survey each year that looks at the demographics of the build-to-rent sector, and I would say it is catering for medium earnings—often key workers and people of that nature—and supporting our core cities particularly, as a lot of investment has gone into a number of the core cities across the UK.

In terms of impact, a lot of the things we very much welcome in the Bill have, to some extent, been pre-empted by the build-to-rent sector: a number of my members are already members of an ombudsman voluntarily; the build-to-rent sector has proudly been at the forefront of welcoming pets; and decent homes is not something that will trouble the sector. The portal is something I have been campaigning for since 2007. There is a lot to welcome in the Bill.

Some challenges that are specific to build to rent are things like the Government abolishing rent review clauses and the lack of any minimum tenancy length in the Bill for landlords, which means that there could be a danger, particularly in properties in core cities, of significant churn.

[Jacob Young]

Q You mentioned the decent homes standard. Could you elaborate on your thoughts on that?

Ian Fletcher: As I say, the stock of build to rent has been developed over the past 10 years, so it is unlikely not to be meeting the decent homes standard. Equally, the management of the property is done to a very high standard. That is something the sector is very proud of. I do not see any challenges in introducing decent homes into the sector from a build-to-rent perspective. We have sat around a number of tables with the Department as it has worked through the specifics of how the standard would impact the private rented sector, and I have not heard many dissenting voices in terms of this being introduced into the sector.

--- Later in debate ---

[Matthew Pennycook]

Q I think that you implied there that you might send us further evidence, but could you touch briefly on the rent increases point that you made earlier? I think that it was the first of your areas for clarification.

Kate Henderson: Sure. At the moment, the social housing sector is regulated by the Regulator of Social Housing, and the vast majority of our rents are set by Government and set annually. The Bill makes changes that would restrict rent increases to once in 12 months and require landlords to give two months’ notice of rent changes.

As I mentioned in my introduction, our members manage 2.7 million homes. Requiring two months’ notice of a rent increase, and requiring each tenant’s rent to be changed on the anniversary of their tenancy, would place a huge administrative burden, whether it is on a large-volume landlord or even on a smaller landlord with fewer staff.

This would take away from a provider’s ability to deliver those core services. The Bill acknowledges that by including an exemption for social housing in the rent standard—social housing is exempt from those changes. However, some types of social housing, such as intermediate rents, specialist supported housing and some forms of low-cost home ownership, are not included and do not appear to be exempt from the changes. Not exempting some types of social housing would cause complications and administrative burdens. It might mean that neighbours had their rents increased at different times, and it would really affect delivery.

Housing associations are responsible landlords, and we are regulated by the Regulator of Social Housing, so any concerns about unscrupulous rent increases do not apply to us. We are asking that all types of social housing be exempted from the proposed approach to rent increases, whether or not they are included in the rent standard.

[Jacob Young]

Q We spoke to the housing ombudsman earlier. I am interested in your reflections on the social housing ombudsman, the creation of the new private rented sector ombudsman and what lessons can be learned.

Kate Henderson: It is absolutely right that residents in the private rented sector have access to an ombudsman. It is really important that that access is clear and easy to navigate and that there are routes to address where things have gone wrong in the private rented sector.

From a housing association perspective, we want to make sure that there is clarity about the remit of a new ombudsman, because we already have an ombudsman service. However, some housing associations also provide market rent homes. If you were a resident in a market rent home, would you go to the current housing ombudsman or to the new PRS ombudsman? We need real clarity on remits so that there is not confusion either for the landlord or, most importantly, for the tenant.

--- Later in debate ---

[Matthew Pennycook]

Q Thank you for coming to give evidence. Could I ask you about the decent homes standard? In what is, I must say, a very welcome move—we have been very clear about that—the Government have made it clear that they intend to require private rented homes to meet the decent homes standard, and have committed to bringing forward legislation, in their words, “at the earliest opportunity” to see that enacted.

I suppose I would like to probe what you think the consequences are if that legislation takes some years to deliver. How does the delay bear on the other reforms that this Bill enacts? How might we use the Bill to tie into that other legislative process? How does this Bill need to relate, if at all, to that forthcoming legislative decent homes standard for the PRS?

Dr Dawson: Thank you for the question. I have a few thoughts with regard to indications we have had that the decent homes standard might be brought in through the Bill. That is something that the CIEH is very keen to see. At the moment, the decent homes standard provides a fairly simple set of criteria, which are measurable, are fairly easy to understand, and provide the opportunity for both tenants and landlords to have some consistent standards to refer to when considering the condition of the property. Not having that in the private rented sector results in an odd disparity: we have social rented accommodation with the highest standards, and conditions have improved considerably through that standard, and then there is private rented accommodation that does not have that standard.

We find it very difficult for the sector to self-regulate and for landlords to organise their own repairs and maintenance schedules, when they very often have to wait for a local authority inspector to visit their property to carry out an inspection under something like the housing health and safety rating system schemes. It is something we can also get some benefit from through the Housing Act 2004 licensing, which allows us to set some of these conditions, and allows us to tailor them by area. However, bringing in a national standard across the sector would be very advantageous and provide a very clear requirement, although the CIEH would like to see some more clarity and would like to be involved in the consultation on the proposed changes to the decent homes standard.

The standard could be implemented in the sector at a later date, after being included in the Bill in order to get it enacted. That would give us a two-step process, and then we could bring the standard in when the amendments had been made and we had the updated standard to work from.

[Jacob Young]

Q It would be interesting to know your thoughts on the portal, and on how we can make the most use of it to support councils in taking enforcement measures.

Dr Dawson: The CIEH is very happy to see the portal introduced. I am based near Wales, and I sit on the advisory panel for Rent Smart Wales on behalf of the CIEH. We have seen the portal brought in, and it has been very effective. It provides a lot of data on where rental properties are, and who their landlords are. Local authorities have quite a hill to climb in trying to find that out independently. It will be a very useful source of information. It is also a good source to look at when collecting certificates on properties.

However, we find that the portal has limited impact with regard to the condition and contents of properties, and management practices. It is an information-gathering tool. It has the potential to be a central information portal that landlords and tenants can refer to—a sort of single source of truth. On very small landlords registering with landlord bodies, 85% of landlords own one to four properties, and we are finding what an author referred to as a cult of amateurism. These landlords have differing levels of expertise, and of knowledge of a complex legislative environment. The portal can be a central reservoir of information for them, with quite a bit of scrutiny behind it.

As I say, we welcome the portal when it comes to providing data on where the properties are and who the landlords are, though the more unscrupulous operators will still try to avoid the register so as to evade their duties. I would not go so far as to say that it will make a significant impact on the condition and contents of properties, or the management practices of landlords in the sector.

--- Later in debate ---

[Matthew Pennycook]

Q Thank you both, and good afternoon. Given your extensive expertise in this area, could I ask a general question about whether the Bill strikes the right balance between the interests of landlords and the interests of tenants? I would like your thoughts specifically on the grounds for possession, linking the abolition of section 21 to “court improvements” unspecified, and other things that might, in your opinion, be missing from the Bill.

Dr Rugg: That is a very big question. I do have concerns about the Bill as it currently stands. We have become quite focused on the abolition of section 21, and I can understand why, but the abolition of section 21 does not deal with the reasons why a landlord might serve a section 21 notice. My feeling is that, if the Bill goes through as it stands, it will give tenants the impression that they have greater security than they in fact have.

One of the biggest concerns with the Bill as it stands relates to possession on the ground of the landlord selling the property. The fact that the landlord is selling is one of the biggest reasons tenants are asked to leave, and a lot of landlords are exiting the market. The Bill does not prevent that, so that will continue. We have to think about how we neutralise the market. At the moment, the market is weaponised for both landlords and tenants in ways that are very unhelpful.

We have to think about how to calm everybody down and start thinking about what the problems are in the market. One of the biggest issues in the market at the moment is the lack of supply. That is quite problematic for tenants, and it is one of the reasons there is a lot of energy around section 21. Abolishing section 21 is not going to deal with supply issues. From the evidence we have at the moment, it is very likely to make supply issues worse.

Professor Gibb: My perspective on this stems to a large extent from the experience we had in Scotland after the introduction of some aspects of the Bill and some of the kinds of measures that you are now proposing. I would echo what Julie says, in that we made these changes, which brought some confidence to tenants—that is what some research tells us—but some fundamental issues remained unchanged.

Despite investing in tribunals—in justice, as it were—there is still a strong sense of asymmetry in access to justice, which is to the detriment of tenants. People supported the changes, which are very similar in terms of the grounds for possession and so on, but none the less we find ourselves with a similar housing rental market in Scotland, which exhibits a great deal of shortage and very high and accelerating rents.

The counterfactual is what it would have been like without the changes. It probably would have been worse, but the changes have not stopped those kinds of things happening. In a sense, they probably are not supposed to do that. It is not enough to do these necessary things to make the rental market work more satisfactorily.

[Jacob Young]

Q Thank you both. First, could you clarify your initial points? What effect do you think the reforms we are proposing would have on supply in the private rented sector? On a different tangent, what are your views on how we should strengthen councils’ enforcement powers to crack down on criminal landlords?

Dr Rugg: On the issue of supply and section 21, counterfactually, a lot of landlords let because of section 21; they do not evict people because of section 21. Section 21 gives them the confidence that, if they run into severe difficulties, they will not have to go through a protracted court process in order to end a tenancy. This is particularly pressing for smaller landlords, who might find themselves paying two or three mortgages at the same time, with tenants that are problematic. You can understand the reasons why risk is hugely important to landlords a lot of the time. Antisocial behaviour is really problematic. If there is a tenant causing lots of problems in the neighbourhood, the landlord wants to get that situation to a close as fast as possible.

Abolishing section 21 would increase landlords’ perception that there is risk in the market. An area that will be problematic is that landlords who come to the sector with property—perhaps they have inherited it or they have started a partnership and there is a spare property—will think very hard about whether to bring that property to the market. I think that is one of the consequences we will see. The market does not look like a very friendly place to landlords at the moment, and that is the big issue we have around supply.

How we help local authorities deal with criminal landlordism is something that I am particularly concerned about at the moment, because it is part of a big project I am working on. Local authorities have very different approaches to dealing with enforcement action in their area. One of the issues is that there is an awful lot of variation in political—i.e. councillor—attachment to the notion that this is something they should be dealing with, so councils invest at different levels in their enforcement activity. That is a democratic issue, and that is something we cannot do anything about, but I agree with the notion that Dr Dawson introduced that we really need some baseline standards that everybody can expect to adhere to.

One thing we have not really mentioned is the use of letting agents. They cover an awful lot of property in the market, but we do not expect them to show responsibility for the quality of the property they are letting. In a sense, I think that is soft policing, if we think that letting agents should have greater responsibility for ensuring that the properties they have responsibility for meet the standards that we set for the sector. In some ways, that would relieve local authorities of some of the burden of inspecting all properties. At the moment, local authorities are obliged to inspect only a certain proportion of properties that sit under licensing regimes. An awful lot of the sector sits outside that and is covered by letting agents. I think we are missing an opportunity to think about how we skill up different parts of the market to improve property quality.

Professor Gibb: I think one of the reasons I am here is that yesterday my colleagues and I published an evidence review for the Department for Levelling Up on the question, “Is there evidence that increasing non-price regulation has led to disinvestment in the private rented sector?” That is clearly a very important question for the kinds of policies being proposed here. In producing the review—it is an international evidence review over the last 20-odd years—we found that it is very hard to answer that question, because there is very little research that directly speaks to it, but you can infer from some of the peer-reviewed literature, and there is actually very little evidence that that is the case.

In other words, we believe that there is probably a constellation of factors that drive disinvestment in the sector, and it is very hard to identify whether increasing regulation, per se, is behind that. The fact of the matter is that in England, there was increasing regulation in the last 20 years, while the sector was growing. There is also evidence internationally that where regulation has increased in the short-term lets market, there might have been a short period of disinvestment, but there has not been disinvestment in the longer term. In the longer term, investment tends to have stabilised and continued to grow.

So we have been quite struck that there is very little evidence to that effect. That is not to say that there is not disinvestment going on, but it is a much more complicated thing. Another problem is that often we have several regulations being introduced at the same time, and it is quite hard to unpick the causal forces of individual things. The bottom line is that we found it quite hard to identify that increased regulation was causing disinvestment or was correlated with it.

--- Later in debate ---

[Matthew Pennycook]

Q Thank you both for coming to give evidence. As you know, the Government have now explicitly tied the enactment of chapter 1 of part 1 of this Bill to the court reforms, and the concern is that the nature of those reforms is unspecified. To what extent do you think the court system, as it applies to matters in this Bill, needs improving? I ask that because the county court system is working relatively well vis-à-vis other parts of the criminal justice system; the guidelines are being met and the then Minister extolled the significant improvements that have been made in recent years.

To the extent that the system still needs to be improved, what is your understanding of what the metrics are? My reading of the Government’s response to the Select Committee, what is in the White Paper and what was in the King’s Speech briefing notes is that there is a whole set of different metrics—end-to-end digitalisation, new digital processes, bailiffs and so on. How are we to know, because the concern is obviously that the abolition of section 21 could be years away, if we have court improvements that are undefined or are large in scope?

Fiona Rutherford: That is one of the concerns that we have. Looking at the history of the reform project, while there have clearly been some successes, there have also been quite a few delays. And we are also concerned given the implications for the tenants in particular in relation to section 21, and given that a proper argument has not been made as to why that dependency between the two exists.

I am just thinking of the court performance, which you have just raised. Civil court performance, even during the pandemic, was better than that of most of the other jurisdictions and even now section 21 is taking roughly 28 weeks from notice to point of repossession, versus the estimation that the Government have made that section 8—the new approach in the new Bill—would take possibly the same time, maybe even a week less.

We would say, first, that a proper rationale has not been put forward as to why that dependency exists and why section 21 cannot proceed. Secondly, the implications for the tenants themselves are so considerable that it is not at all clear to us why that cannot proceed as fast as possible.

Professor Hodges: I tend to look at things in terms of quite long stages of evolution. Going back a hundred years, we had courts that administered law. One realises, and I speak as a professor of law, that law is not the answer to everything; in fact, in some situations it is not the answer to very much. A lot of colleagues would shoot me for saying that, but I profoundly believe it.

What we have discovered is that human behaviour, and therefore psychology and other forms of dispute resolution and supporting people to work together and restore relationships, is important. The answer to that is usually not law and the process is usually not an adversarial process involving courts or judges, however sympathetic they are.

We then started talking about a technique of mediation and that went into an institution of alternative dispute resolutions, or ADR, and the courts are sort of playing with trying to put these things together at the moment. Actually, that has been leapfrogged by things like ombudsmen, in the private sector as opposed to the public sector—parliamentary or local government ombudsmen. In the private sector, virtually every regulated sector now has an ombudsman—financial services, energy, communications, motor vehicles, lawyers, blah blah blah. It is quite a long list.

There are various reasons why that is true. The first is that the ombudsmen usually deal with codes—codes of behaviour—and not just legal rights. They can and do decide legal issues, but it is usually codes. They are looking at the underlying behaviour of the bank or the rail company or whatever it is, and therefore you need a different process as well. So it is not adversarial and it is usually free to the consumer, because the business is made to pay or pays for the infrastructure of the ombudsman.

However, there is a very considerable advantage of an ombudsman over a redress scheme, and many of the redress schemes are still somewhat old-fashioned because they are basically arbitration and basically adversarial, and therefore the larger party will bowl up with a whole load of expensive lawyers and you just maintain cost—an adversarialism of not bringing people together. And there is an imbalance of power in that situation.

That does not happen with an ombudsman, because it is a question of “Let’s talk to each other.” The mediation technique is automatically in the process—you encourage communication. If it is not going to work, the ombudsman makes a decision.

Another big function of why the ombudsman is really useful is that they collect data. In all the sectors I can think of, and critically in financial services, energy and so on, ombudsmen are the data controller for the sector because they can tell the banks or the regulator what is going on and what consumers are worried about. That is a feedback system within which people can see in real time exactly what is going on and can therefore respond to it. You sometimes then need responses. On the legal side, the responses may be enforcement of law by a court, or by a regulator if you have one—we do not have one in private rented yet, but we are, perhaps, close—and on the other side, you can have decisions by an ombudsman that are then put in place.

It was very interesting listening to Dr Rugg, who knows much more about the sector than I do. She spoke about support for landlords. Every regulatory system I know needs support for all the actors—tenants, landlords, agents, whatever. Ombudsmen can help with that, but I think there is a gap in local boots-on-the-ground support. Enforcers, like local authorities, or a national regulator if there is one, are sometimes able to support and help, but we have a missing piece.

Summing up, therefore, my view is that this Bill is a very important step forward in modernising towards a useful, effective future system. It is taking an ombudsman as being a central institution, as well as the portal where you get data—admittedly, it is a regulatory portal, rather than a disputes portal, but we may evolve; it is fairly easy to evolve once you have it. These are absolutely critical elements of what a really good future system would be.

I would go further, with just a couple of sentences. One point is that one needs to think about boots on the ground, with people supporting people. An ombudsman is national, so one has to fill that gap. Actually, I think tribunal judges, ombudsmen, local authorities and maybe others—I have had discussions with people about this—could fill that gap. It is critical for everyone. The other part is that one should ensure that everyone knows where to go—“Where do I go to get support? Have we got too many people?” On the dispute resolution side, do you go to court, a tribunal or an ADR scheme? How many ombudsmen are there? We already have three in the property and housing sector. Proliferation is never a good idea, and there are other sectors that show that. The objective is to pull things together. The inevitable logic of this means that you squeeze together the courts, the tribunal and the ombudsmen.

At their request, I chair an ad hoc committee involving the president of the tribunal, the various ombudsmen and the property redress scheme, who, in the past year, have worked on working together on service charges. It has been very effective. I am not sure it has actually been announced yet, as such, but it is not secret. They are working on how to work together. From the point of view of the tenant, certainly, but also the landlord, you want a simple pathway: where do you go? The data reason for that is that if you have a pathway where you have one database, you are going to maximise it; the data is all over the place at the moment, and we do not collect it.

I see this as a direction of travel. The answer to your question on when we will be ready to institute it is: do it now. I would be bold and move the county courts into the tribunal. We already know that the tribunal and the ombudsman can work together. You just squeeze people together one way or another. Then, you will have a fantastically good system, which is the basis of a very self-regulating regulatory space.

[Jacob Young]

Q Thank you, Professor Hodges, for your in-depth explanation of the benefits of the ombudsman. I wonder, Fiona, whether you have reflections on the ombudsman, particularly on some of the things that Christopher has just mentioned about how we get people to engage in the process and to engage in mediation and settling early, rather than getting lost in the court system.

Fiona Rutherford: Thank you for the question. I think I am going to quote Dr Rugg again—I am afraid I only joined recently—but I thought the point on supporting the tenancy was really good: it is about neither the landlord nor the tenant, but the relationship. That is key to ensuring that, whatever solutions are put in place, you are looking at that as being your key outcome, as opposed to trying to take sides, as we have seen all too often.

The other thing that we have seen—Professor Hodges has strongly alluded to it—is the disaggregation of the amount of services that exist. To some extent that is great, because it means that there are potentially lots of places to go. However, the reality is that most landlords and tenants do not know that those services exist or how to access them. Whether or not that is through another ombudsman—I have some concerns about creating more and more ombudsman, and whether there is a way to streamline the available services—I think the most important thing is that those services are signposted to individuals, which means landlords and tenants, and also that the services are provided.

JUSTICE alluded to that in the report we published in 2020, where we talk about our long-term vision of adopting a multidisciplinary approach to avoid escalation and address the common underlying features behind tenants going into arrears, such as debt, family issues or employment issues. If there is a way to keep the longer term in mind, while not delaying on things like section 21, but also thinking carefully about addressing the disaggregation of services and including signposting and information, then ultimately, as far as I am concerned, all those things will be ingredients to success.

Professor Hodges: I have a quick comment. Your question was, “How do we get people to engage in mediation?” It is automatic in the pathway. It is not in courts; it is in ombudsman, and to some extent it is now in tribunals. The Ministry of Justice has just introduced a mediation stage for low-value cases, but it is not necessarily automatically in the pathway.

All the consumer ombudsmen have been using this for up to 20 years, automatically. You put in your complaint and the ombudsman then says, “Okay.” It is investigative and collaborative, rather than adversarial. You do not need lawyers; they do not do anything. You just say, “Tell me about it,” because you have a central expert. It is not that you have two lawyers and a judge—who are not there. Rather, you have one ombudsman in the middle, so it is efficient and quick, and they are saying, “Tell me about it.” So you pull all the evidence in, and then you say, “Okay, what do you say? And you?”

That is automatically mediation, and most cases settle at that stage, because they talk to each other. If it is not going to work, you know fairly quickly, in which case you just get more evidence and then make a decision, unless they agree. So it is in the process. The courts are moving toward that but, because of the cost of public provision, they cannot do it as well as the ombudsmen.

[Matthew Pennycook]

Q Your comments there just provoked a thought. It might be too early to tell, but are there any lessons about signposting from the Social Housing (Regulation) Act 2023? We had the issue with that legislation, which we touched on earlier with Richard Blakeway, the ombudsman, about what the regulator can now do, which is to look at systemic things but also dip into cases. You have the ombudsman taking cases but has a view on the systemic side, so there is a potential conflict of interest. I think the Government are trying to get around that by saying to tenants, “Here’s where you go for each particular type of problem,” or “This is when you might go to the courts.” Are there any lessons from that, or anywhere else, where signposting has worked well, so that we can try, on the basis of this Bill, to send tenants to the right place in the first instance?

Professor Hodges: The signposting is to have a single ombudsman.

Renters (Reform) Bill (First sitting)

Debate between Jacob Young and Matthew Pennycook

Committee stage
Tuesday 14th November 2023 Public Bill Committees

[Matthew Pennycook]

Q Very specifically, you have had access to No. 10. What are the x, y and z that you are going in and saying need to be in place before chapter 1 of part 1 can be introduced? What are the specific metrics, if you like, of court improvement that you are pressing for?

Ben Beadle: I want timings to be much, much faster, and that needs to be supported by digitalisation. To deal with this, we need significant investment in the support team and additional judges. In London, we have seen evictions not take place because the right sort of stab-proof vests for bailiffs were not procured. That does not give me a great deal of confidence that Government is all over this like a rash, and we need to have confidence. Section 21 was brought in to give landlords the confidence to bring their properties to the market. The vast majority of our members can live without section 21 provided the alternative is fit for purpose, but until we see these things come to fruition, I do not think I can recommend that. That is not to say that section 21 should not be abolished. It is just that the alternative needs to work, because otherwise it will hurt the very people you want to protect: the renters.

Timothy Douglas: First, we have a demand crisis. If we are not looking at supply, we certainly have a demand crisis. Looking at our member data from August 2023, year on year demand is up 32%, based on tenants registering with properties. It is a demand crisis and a housing crisis. It has to be about the tax, social housing, people being able to buy homes and energy efficiency legislation. These are all part of a wider housing strategy. You cannot look at the private rented sector in isolation.

On the courts, bailiffs are an issue; certainly in London, there is an issue around not being able to get personal protection equipment, and that has spread to other parts of the country. It delays proceedings. Should we look at privatising that service—the county courts service—in order to almost remove that funding element from the Ministry of Justice and ensure that we have enough bailiffs? I think we need to provide landlords with an automatic right to a High Court enforcement officer. That is part of the process. Normally, if you cannot get the bailiff, they will have that. We have worked with officials on integrating mandatory notices for possession into the possession claim online. We have also looked at improving the Money Claim Online website and that process, which is important.

I have two final points. There are things in the Government’s antisocial behaviour action plan. The courts need to prioritise dealing with antisocial behaviour; that would help. If that were a directive from the UK Government, that would be helpful. We also need to define low-level antisocial behaviour in statutory guidance, or any guidance, so that courts can see that, deal with the behaviour and get evidence of it.

Theresa Wallace: I agree with a lot of what Timothy and Ben have said. They have covered a lot of the points that I would have made. There is no question but that we have a shortage of stock. We are experiencing that on a daily basis. More than a million tenants in the private rented sector who are in receipt of income support and benefits to pay their rent should be in social housing. We need to address that to solve the housing crisis.

We need to instil confidence in our landlords. It takes time for trends to feed through, but we are definitely seeing landlords leaving the market. We have a lot more at the moment sitting on the fence, waiting to see what this Bill brings in, before they make their decision. It is crucial that we keep those people in the market. Build to rent fills a gap, but we cannot build in the places where the demand is, because that does not work for the model. We still need the private landlord to provide properties.

There are two recent surveys. A Royal Institution of Chartered Surveyors survey came out last week, which showed that overall there were 43% fewer homes available to tenants to rent in the first 10 months of this year. Research by Hamptons came out yesterday and also showed the 43% reduction. RICS says it is definitely seeing a fall in instructions of minus 18%. We want to find a balance. We want to find more security for tenants; I do not think abolishing section 21 will do that, if I am honest. We still need some fixed-term tenancies for those tenants who really want to stay in a property for three or four years because their children are in school, and where the landlord is happy to grant a tenancy for that length of term.

We could even include a break clause for the tenant, whereby for a month, or throughout the whole time, they could terminate, if their circumstances changed. If the property is not fit for purpose, the local authority should be able to visit quickly and make a decision, and the tenant should be able to get out. That way, we are giving the tenant much more flexibility and security. We still need to let landlords know that they can get their property back if they need it, but many are very happy to commit to a longer term, and I think they should be allowed to.

Timothy Douglas: I think clause 1 should include the option of fixed-term tenancies. We are not saying that it should be one or the other; I totally agree with Theresa on the option of the fixed term. The previous panel talked about the insecurity of tenants who can be evicted after six months. If a tenant has a 12-month fixed-term tenancy, they have that guarantee at the start of the tenancy that they will be in place for 12 months before a decision can be made on eviction from that property. That is vital for guarantors. If you are going to be a guarantor for a rolling periodic tenancy, you are not sure how long you will be a guarantor. How can you have rent in advance if the tenancy is not for a set period?

The fixed term is a vital point, and we need to bring that in as an option. It should not have to be one or the other. There could be the option of a periodic tenancy or a fixed-term tenancy. That will be vitally powerful in the student market as well, for any household with a student—and for non-students. Even if the student leaves after 10 months, the tenancy could stay as a fixed-term tenancy until month 12. It could either be renewed for another 12 months, or roll on to the new periodic. We need that flexibility in the system.

[Jacob Young]

Q Thank you to members of the panel. You heard comments from the previous panel on antisocial behaviour. What do you think of the changes that the Government are introducing to the antisocial behaviour grounds? Do they strike the right balance, and ensure that landlords can evict tenants that cause significant disruption? Timothy, you mentioned students. Do you agree that the new possession ground for student landlords will be effective in supporting the operation of the student market?

Timothy Douglas: I think we need more detail on that ground. I have not seen it, I do not know what it looks like and I do not know how it will work in reality around when it is served at the time of the year. There are myriad student semesters, term times, different types of students and mixed properties. Defining a student let is really difficult. You can do it under an HMO because the licence conditions will be in place, but a lot of students these days rent in a high-rise modern flat. How do we define them as students?

From the point of view of our members, if we retain that fixed term, you have the clarity. A UK student—this is important as well for rent in advance for UK students—can have a letter from the uni. For overseas students, it is the right-to-rent check, the visa and the share code. On the students, we remain sceptical about how that ground works. The simplest and easiest way would be to retain fixed-term tenancies as an option for any household that is either a student or mixed student household, to give that flexibility as a fixed term for 12 months as an option.

On the antisocial behaviour ground 14, I am not sure what the difference between “capable” and “likely” is. That is why I reiterate the point that local partnerships between police and councils will be really important. The guidance, defining antisocial behaviour and prioritising it in the courts will be important for that ground to work.

Ben Beadle: We like the suggestion around antisocial behaviour. The Secretary of State has been very clear that managing antisocial behaviour is important. This is one of the challenges in section 21 being abolished. Like it or loathe it, section 21 allows landlords to deal with antisocial behaviour effectively. What we are trying to do is to not end up with just the perpetrator of antisocial behaviour in the property.

I would take issue with the comments that were made in the previous session. This will be tested by a judge. It is a discretionary ground. Although the wording is wider, I think that is absolutely right. It goes before a judge to assess the merits of it, and it succeeds or fails based on judicial discretion. That sounds like something that we can all support, because it means that antisocial behaviour can be dealt with. No politician wants to write back to constituents in their area to say, “That noise that is waking your kids at night cannot be dealt with because of this, that or the other.” This strikes a balance, to coin a phrase, between protecting those who are at the hands of antisocial behaviour and not making it too easy so that it is a back door to section 21, which I absolutely get.

The second thing came up around domestic violence in the previous session. I see this as quite different. We have ground 14A, which allows social landlords to evict the perpetrators of domestic violence. I suggest that something like that is more clearly made available to the private rented sector. What happens in practice is that the landlord is working closely with the victim and wants to keep—I would say “her”, but it does not have to be—the victim in the home and to deal with the perpetrator. Anything the Government can do to make that clearer would be very helpful.

The third point is on the student market, which is an area we have been campaigning on vigorously. We support the ground, obviously, and think that it can work, but a lot of good things come as a pair—Ant and Dec, strawberries and cream—and what is missing from the ground is that it does not fully protect against the cyclical nature of the market, which Tim spoke about.

We propose an amendment that would deal with a whole range of matters. In the first six months, landlords cannot give a no-fault reason for repossession; we propose that that moratorium be extended across the sector, to deal with issues in three or four areas. First, it would provide for a fixed period, and that would deal adequately —but not fully, granted—with the need to keep the cyclical nature of the student market, because it is not broken, and we want to protect it, in the interests of both renters and landlords.

Secondly, more widely, outside the student sector, it is a possibility that a tenant will give two months’ notice on day one, and set-up costs hurt landlords. In my briefing, which I sent round to you, I gave an example of that.

Thirdly, the amendment protects against the creation of an “Airbnb lite” in the sector. We do not want the private rented sector to become Airbnb by the back door, and there is a real risk of these periodic tenancies creating that.

Fourthly, the Bill is about fairness, and striking the balance between protecting tenants from bad landlords, and landlords from bad tenants, so there is no justification for us not being treated in the same way, through that moratorium.

There is a fifth thing: this is quite easy to do through an amendment. For those five reasons, I think that we can make this work.

--- Later in debate ---

[Matthew Pennycook]

Q Richard, on the landlord redress scheme, we have just had a discussion about whether the Bill is prescriptive enough on how the ombudsman would operate. I am taking it as a given that there will be one ombudsman, of whatever form—I know you have views on that. The Bill gives the Secretary of State the power to create an ombudsman, but it does not commit them to—it is a “may”, not a “must” power. If the ombudsman is set up, do you think the Bill needs to be more prescriptive about what the Government believe that ombudsman should do?

Specifically, in clause 29, there is a requirement to set out guidance on how the ombudsman redress scheme would work alongside local authorities, so that they have complementary but separate roles. What do you think that memorandum of understanding, as I suspect it will be, needs to look like? How do those roles not overlap in a way that duplicates duties?

Richard Blakeway: I think that is a very important question. This is a thoughtful Bill, but to fulfil the ambitions set out in the Bill means real operational challenges. The first challenge speaks to the first part of your question about how you design a system where the ombudsman has sufficient teeth to be effective. That is one of the reasons why we have said that creating, or enabling, an ombudsman through the Bill does not necessarily mean that people will access redress. That in itself can be a real barrier for people when navigating a system where they may be passed from pillar to post. That is exactly the reason why the Cabinet Office guidance on the creation of ombudsman redress is explicit that you should build on existing schemes.

At the moment, we are the only approved scheme that does landlord and tenant dispute resolution. I heard some of the evidence in the previous session and think we need to really distinguish between agent and landlord redress, where the responsibilities of agents are very different from the landlord’s. The Landlord and Tenant Act sets out clear obligations that rest with the landlord and cannot be delegated to the agent.

What we are seeing is a convergence in policy, which I think is welcome. You already have some of those building blocks in place. The Landlord and Tenant Act is universal; it does not distinguish between social and private. The decent homes standard potentially extends that. The health and safety rating system is, again, universal. What we need is to bring that together into a single scheme. Otherwise, regardless of the powers of the ombudsman, people are going to struggle to access the system.

In so far as the powers of the ombudsman are concerned, overall, the Bill is quite effective at setting out role of an ombudsman without being overly prescriptive. You have to avoid compromising the independence of the ombudsman to make independent decisions and to have integrity, and also agility, by being independent. The Bill is responding to a private rented market which was not envisaged 30 years ago, so you need to enable the ombudsman to be able to produce guidance and codes of practice that can respond to a changing market and changing circumstances, without being overly prescriptive in the legislation.

On clause 29, that is a really important point, because there is a risk of duplication between the role of a council and the role of an ombudsman. Again, there is a lack of clarity for residents—tenants—about which route to take. An ombudsman does not operate in isolation—it will not operate in a bubble—so the relationship between the ombudsman and the courts will be critical, as well as the ombudsman discharging its own functions.

We currently see cases in which someone has gone through environmental health, and a local authority might even issue an improvement notice, and then someone is coming to us for redress—those are two distinct roles. Any information-sharing agreement needs to be really clear that when an ombudsman sees concerns that may indicate there is a category 1 hazard, for example, that information is provided appropriately to a local authority for potential enforcement. Also, the local authority needs to be able to signpost very early to a resident who has approached it through environmental health that they may have a right to redress.

The crux of this, alongside the memorandum of understanding, is the portal or database. Part of the problem is that there are a large number of landlords and there might not be clarity about which parties are subject to the Bill—subject to enforcement and redress—and then it is about being able to access that information easily so that compliance can be met. I agree with your point: there has to be a framework for operation and a clarity about roles, but both local authorities and the ombudsman will want access to the database so that they can be effective.

[Jacob Young]

Q Thank you to the panellists. Richard, what do you feel is currently working well in social housing redress that we need to ensure we bring over to the PRS?

Richard Blakeway: That is a really good question. An ombudsman is not a surrogate for an effective landlord-tenant relationship and effective dispute resolution at source, done locally by a landlord. One thing that we have sought to introduce through our work on social housing is our complaint handling code, which has set out how to create a positive complaint handling culture and resolve disputes as early as possible without having to escalate them to the ombudsman. We have done a significant amount of work with landlords to implement that code and to avoid a postcode lottery whereby, depending on your landlord, different approaches might be taken, and some of those approaches were not promoting natural justice at a local level.

For me, although an ombudsman might be conceived as the potential stick—there is an element of that, which is important—another part of an ombudsman’s role is to promote effective complaint handling locally and support landlords. There are a lot of landlords who want to get things right—they are not rogue landlords—but sometimes they may not be aware of all their responsibilities, or they may struggle to engage the resident effectively or to discharge their responsibilities. That role is important for the ombudsman. It is something we have done in social housing and, were we to be appointed as the ombudsman, it is something we would certainly seek to do with landlords in the private rented sector.