Renters’ Rights Bill

Lord Truscott Excerpts

Tuesday 4th February 2025 Lords Chamber

[Lord Truscott (Non-Afl)]

My Lords, I congratulate the noble Lord, Lord Wilson of Sedgefield, and the noble Baroness, Lady Brown of Silvertown, on their excellent and passionate maiden speeches. As other noble Lords have said, they were an inspiring couple of maiden speeches.

I declare an interest as a landlord of over two decades and a former renter in the private rented sector for some 16 years. The Bill before your Lordships’ House has much to commend it. I support ending arbitrary evictions under Section 21, and the imposition of a decent homes standard and Awaab’s law in the PRS. Of course, as ever, with these and other elements of the Bill, the devil is in the details and how they are implemented.

On Section 21, as has been noted, the courts will have to be ready to deal with the expected increase in workload. I welcome HMG’s commitment to the digitisation of the court process, but this must be made an urgent priority.

However, my main concern with the Bill is the impact of moving to periodic tenancies only, with a ban on longer terms and upfront payments. Both those measures, as we have heard, will have a significant unintended impact, which will reduce the availability of homes, increase rents and affect the financial viability of the PRS as a whole.

The inability to negotiate upfront payments, as we have heard, will hit the self-employed, foreign students, those with a poor credit history and vulnerable people. It also risks a legal challenge under common contract law. No one has yet satisfactorily explained to me the benefits of moving to periodic tenancies and scrapping assured shorthold tenancies; it seems a solution in search of a problem.

Two reasons have been given by Ministers—and I thank the Minister for her engagement on this Bill: first, to enable those suffering domestic abuse to be able to leave; and, secondly, to enable tenants to leave unsatisfactory properties and give them additional flexibility to perhaps move to a new job or area, both while giving two months’ notice. In the first case, someone suffering domestic abuse is unlikely to give two months’ notice. In fact, charities dealing with abuse have told me that it is the abuser who stays in the home as the victim flees. In the second case, most ASTs, in my experience, have a six-month break clause, allowing enough flexibility for most tenants.

As for unsatisfactory homes in the PRS, that is exactly the reason for the decent homes standard, Awaab’s law, the ombudsman, the database and rent repayment orders. Any bad landlord providing sub-standard accommodation will find themselves subject to up to £40,000 in fines and swingeing rent repayment orders, payable to the local authority or the tenants themselves.

I found the Government’s impact assessment of the PRS very negative. It is, in fact, the most popular form of rental tenure, compared to council or other social housing. I recall being a councillor in Essex, where I represented what was once the largest council estate in Europe, and, believe me, the tenants were not very enamoured of the local council or the housing provided. Later, when I was a renter in the PRS, I moved 10 times in 16 years, but only one of those was a forced move, when my landlords discovered that they could make more money renting to Americans in the summer than to me all year round. In any event, most tenants do not intend to stay in the PRS for life, and many stay in a tenancy for just one year—and that is particularly applicable to students.

I understand the need for security. For five years I worked for a national charity and housing association providing housing for young homeless people and people with mental health issues. The idea was to provide homes and stability for vulnerable people, but two-month periodic tenancies are not the answer. Tenants will have less security, not more, as instead of a one or two-year tenancy, if mutually agreed, landlords will be able to give notice at any time, up to four months if reoccupying or selling their property. Why cannot reasonable people agree a fixed term, with a break clause if required? Incidentally, the majority of tenants want fixed-term tenancies.

Another unintended consequence is that landlords will increase rents, because tenants will be able to move out at short notice and many costs for the landlord are front-loaded, such as cleaning and referencing each time. The risk of voids or vacancies will increase, and landlords will increase rents to cover the added risk.

There may or may not be a mass exodus of landlords from the PRS; some will wait and see, but up to 70% are considering selling up—that is a fact. It is also true that the PRS has doubled in size since 2002. That was an era when buy-to-let mortgages were introduced, money was relatively cheap and baby boomers invested their pensions in the PRS—but those days are over. The issue is not whether there is a mass exodus from the PRS; it is that supply is not keeping up with demand, which will continue to be the case for the foreseeable future.

Even if the Government’s housebuilding target of 1.5 million homes is met, it does not mean that affordable homes will be built where people need them. What is needed is a commitment to build more affordable and social housing in the right places. Build to rent is expanding, but at nowhere near the scale to take up the slack. More regulation of the PRS is welcome, but if the costs associated with it spirals, including the cost of new EPC regulations, investing in the PRS will simply no longer be viable.

Costs have already spiralled for existing landlords, with around 40% of landlords paying double or even up to quadruple for their mortgages. For those new PRS investors that there are, they are increasingly chasing yields of 8% to 9%—impossible in the south but available in the north. That will create a regional imbalance. Some argue that if landlords leave the PRS that will be a good thing, as more property is opened up for first-time buyers. That will happen in many instances, but in many others, landlords will gravitate to ultra-short lets, as we have heard from other noble Lords. They are far more profitable and virtually unregulated; a register will not make a blind bit of difference.

Once purely periodic tenancies are introduced, the line between ultra-short lets and long-term lets will become blurred. In many cities and coastal resorts, long-let availability for local residents will simply disappear. In many apartment blocks, the sense of community will be lost. It is already happening. In some apartment blocks in London, 90% of flats are Airbnb. Even in Camden in London, for example, short lets can be four times more expensive than a long let, and hence much more profitable. Airbnb will try to say that its accommodation is being rented out by old grannies. The fact is that Airbnb and other ultra-short-let platforms are being increasingly dominated by professional landlords, who often avoid tax, as, unlike with estate agents, their rental income is not registered with HMRC. Local communities and all of us suffer as a result.