Renters’ Rights Bill

Lord Etherton Excerpts

Tuesday 4th February 2025 Lords Chamber

[Lord Etherton (CB)]

My Lords, I too congratulate the noble Lord, Lord Wilson of Sedgefield, on his impressive and, in many respects, quite moving speech. Before I turn to the two matters of substance on which I wish to address the House, I should draw attention to the fact that my husband has a small portfolio of rental properties.

First, I will briefly address the matter of court process. We all know that there will be many more contested possession proceedings by landlords following the enactment of the Bill and the abolition of Section 21 no-fault evictions. It would not be right to abolish no-fault evictions without adequate speed and resources for dealing with the increase in contested proceedings.

As the noble Baroness, Lady Scott of Bybrook, said, that might lead to such discontent on the part of small investors that they would be induced to leave the private rental sector. Any significant reduction in PRS accommodation would, as we all know, be disastrous at the present time. The Government need to demonstrate that measures have been or will be put in place which will help to secure that court claims by landlords for possession of residential properties will be disposed of in a timely and efficient way. I appreciate that the Government are well aware of this imperative and are thinking of how to address it. As the judge who had responsibility for the introduction of small money claims online, I would be very happy to give any assistance on this aspect that might be thought to be useful.

I turn now to the principal matter on which I wish to address the House, which is the issue of financial penalties. There are several respects in which the financial penalty provisions in the Bill are, I would say, wholly unsatisfactory. The penalties that can be imposed by a local housing authority for breaches of the requirements of the Bill fall into two categories: up to £7,000 and, in some cases, up to £40,000 where the local housing authority is satisfied that the landlord has committed a specified crime.

The first problem is the mishmash of the standard of proof where the penalty is £7,000 or less. The new Sections 16I, 16J, 16K and 16L, introduced into the Housing Act 1988 by Clause 17, which include prohibitions relating to the misuse of possession grounds and not giving a written statement of tenancy terms, enable the local housing authority to impose a penalty of £7,000 or less if satisfied “beyond reasonable doubt”—that is the criminal standard—that the landlord or other relevant person has contravened the prohibitions.

By contrast, Clause 42 provides that the local housing authority may impose a fine not exceeding £7,000 if, “on the balance of probabilities”—the civil standard—it is satisfied that there has been a breach of a rental discrimination measure relating to children and benefit status in Chapter 3 of Part 2 of the Bill. There is no explanation in the Explanatory Notes as to why this is a different standard of proof from that introduced in Clause 17.

Again, Clause 59 allows a local authority to impose a financial penalty on a person if satisfied “on the balance of probabilities”—the civil standard—that the person has breached the requirement in Clause 58 that an advertisement or offer must include a specific amount of rent payable under the letting and impose a prohibition against inviting, encouraging or accepting an offer of rent which exceeds the proposed rent. Again, in contrast, a local housing authority may impose a financial penalty of £7,000 or less only if satisfied “beyond reasonable doubt”—the criminal standard—that the person has breached an obligation under regulations for landlord redress schemes.

These are sufficient examples, although there are others, of the Bill specifying different standards of proof for the same level of financial penalty, £7,000 or less, without explanation either in the legislation or in the Explanatory Notes of the reason for this. One has to question whether the employees of a local housing authority, who have no legal training and no criminal trial experience, can properly and accurately swing from one standard of proof to another.

The Bill will provide for local housing authorities to impose a higher fine of £40,000 if satisfied that a relevant offence has been committed. This is the case, for example, in relation to the new provisions introduced by Clause 17 of the Bill, which I have just mentioned, and the provisions concerning financial redress schemes, which I also mentioned.

It is not right for the employees of a local housing authority who have no legal training and no criminal trial experience to be free to impose a financial penalty of larger sums—up to £40,000—on their assessment of whether the ingredients of a criminal offence had been committed. A good example of the dangers of this is the ability of a local housing authority to impose a financial penalty of up to £40,000 where it is satisfied beyond reasonable doubt that an offence has been committed under Section 16 of the 1988 Act, where the landlord relies on a ground in Schedule 2, knowing that they would not be able to obtain an order for possession on that ground or being reckless as to whether they would be able to do so.

Another example is the power of a local housing authority under Clause 92 to

“impose a financial penalty on a person if satisfied beyond reasonable doubt that the person has … committed an offence under section 93 … of knowingly or recklessly providing information to the database operator which is false or misleading in a material respect in purported compliance with a requirement imposed by regulations under Chapter 3 of Part 2”.

The mental state of “recklessness” in criminal law is an extremely difficult one and has given rise to case law. It is something less than intention but more blameworthy than carelessness. Recklessness will arise if the accused consciously—that is, looking at the matter subjectively—takes an unjustified risk. Such difficult concepts should play no part in this legislation, which will mostly affect landlords who own one or, at most, very few properties for rent.

It should certainly not be left to local authority employees to reach their own conclusion on the application of “recklessness” in criminal law. The only state of mind that should be capable of giving rise to an offence under the Bill is “intention”—that is to say, actual knowledge or actual intention of the landlord to do the matters comprising the ingredients of the offence. That is clear, easy to understand and fair. It is what good legislation should be.