Renters’ Rights Bill

Lord Best Excerpts

Tuesday 4th February 2025 Lords Chamber

[Lord Best (CB)]

My Lords, I thank the Minister for her introduction and for many helpful meetings on the Bill. I look forward to the maiden speeches of the noble Lord, Lord Wilson, and the noble Baroness, Lady Brown. I declare my housing and property interests as on the register, including that I have family members who own rented property.

The Bill introduces much-needed reforms to the private rented sector—the PRS—which I greatly welcome. However, I want to address a big question that I know is in the minds of a number of your Lordships: however necessary the reforms to the PRS, will the Bill lead to large numbers of landlords exiting the market? If a lot of landlords decide this kind of investment is no longer for them, what will happen to the rental market?

A mass exodus of landlords seems very unlikely. Property remains an attractive long-term investment in uncertain times. However, analysis by the consultancy Savills shows that a gradual reduction in private rental properties has already been under way in London. Despite the arrival of the new providers of Build to Rent apartments, it seems entirely possible that the Bill will lead to more landlords selling up.

Keeping up with the new legislative requirements not only necessitates use of proper, professional lettings agents but will mean substantial investment for properties in need of modernisation. Meeting the decent homes standard comes alongside a forthcoming duty to upgrade properties to higher energy efficiency standards. Many landlords, particularly those who have borrowed heavily in the hope of making capital gains, simply lack the resources to comply with important new demands.

I conclude that the PRS will get smaller, but this is not necessarily a negative outcome. The private rented sector doubled in size in the early 2000s and, despite a tougher tax regime, there are still some 2.3 million private landlords. Meanwhile, the expansion of private renting has led the sector to take on a role for which it is not well equipped. With the steep decline in social housing—the council and housing association sector is now barely half its former size—the PRS’s expansion has had to fill the gap. Yet, private renting is seldom the best option for those needing low rents, good quality and long-term security. Nor does the enlarged PRS suit the taxpayer: the sector’s higher market rents have propelled more renters into housing benefit at escalating cost to the Exchequer. The PRS has found itself performing a role in place of councils and housing associations, which suits neither the tenants nor the public purse. The Bill could help achieve some rebalancing between the private sector and the social sector.

Of course, an expansion of provision by councils and housing associations through the building of new homes is an essential part of the Government’s plans for constructing 1.5 million homes during the course of this Parliament, but as well as a substantial new-build social housing programme, this seems an important moment to promote the purchase and modernisation of previously privately rented property to house those on lower incomes. If there are more sales of privately rented properties, and if strong enforcement of the Bill’s new measures deters purchase by less scrupulous landlords, then the opportunity—indeed, the necessity—to switch property to restock the much-diminished provision by social landlords will emerge.

Some local authorities are already active in bringing PRS rentals, including former right-to-buy private rentals, into the social housing sector, not least to provide temporary accommodation for homeless families. Buying privately rented property can achieve a speedy solution to urgent, immediate housing problems, while also being there in perpetuity as genuinely affordable, secure accommodation. This is where the housing associations of the 1960s and 1970s came in, buying and modernising the properties of Mr Rachman and his like.

It is important to note that, sometimes, owner-occupiers will step in and do up the property. No doubt some sales will transfer the homes to larger landlords, who can achieve some economies of scale and introduce professional management. However, high interest rates and the less favourable tax arrangements now in place may inhibit these buyers. For sure, local authorities will need to be on their guard to prevent property acquisitions by rogue landlords who do not intend to comply with the new environment introduced by the Bill.

How can transfers to social lettings be achieved when this legislation is enacted? I suggest that the Government look at an exemption from capital gains tax for the sales of properties from private landlords to social landlords. Such support would pay for itself in reducing the need for ever-rising housing benefit payments. Such an incentive could propel the rebalancing between sectors after so many years of decline for social housing. If the PRS were to continue to shrink by about 2% annually, the outcome could be positive, with both an additional 500,000 home owners and 500,000 more social tenancies.

In conclusion, I look forward to raising some specific issues in Committee, including the regulation of lettings agents, the constraints on switching long-term lets to short-term letting, the content of the new property register and the basis for in-tenancy rent increases. For now, I welcome the positive contribution that the Bill will make.