Renters’ Rights Bill [HL]

Baroness Gardner of Parkes Excerpts

Friday 10th June 2016 Lords Chamber

[Baroness Gardner of Parkes (Con)]

My Lords, I declare my interests as set out in the register. Since the 1960s, when I had tenants in the self-contained basement of a large house in which I then lived, I have usually been a small landlord. The ideal situation is to have landlords and tenants who have good relations, and neither feels cheated or treated unfairly. Sadly, there are too many instances where that is not the case, and ill will arises and tensions can build up. The aim of the Bill is to set out clearly the position of each party so that each knows and respects the other’s rights. There should be no suggestion of exploitation on either side.

The purpose of the Bill is good but there are many aspects that need detailed thought, and possibly even piloting, to avoid potentially disastrous unintended consequences. The noble Baroness, Lady Grender, talked about making rents cheaper. Although I have not prepared anything in my speech about that, it is unrealistic to think that anything in this world comes down. Stabilising rents and making them fair value for money is the more important feature.

I mention unintended consequences because I recall clearly, at the time when I was letting my basement, the rent freeze that was introduced by the Labour Government in the 1960s. As landlords’ costs rose, restrictions could not be sustained. When the limitation was removed, rents rose dramatically, making things much more difficult for renters, who were faced with a sudden jump in living costs, whereas otherwise the costs would have just gradually increased over that time.

I have read the Bill carefully, along with the excellent briefings from the Library and Shelter. I have a number of points that I wish to place on record for further consideration. Clause 1 could be helpful. We need to have some idea of the cost to the local authority, as all local authorities are hard-pushed for funds at present. What type of information is kept on a database, and is such information open to anyone? If so, what is the cost of that?

Clause 2 lists charges that may not be made. I am concerned about this clause and wonder if the full implications of such changes have been considered. The noble Baroness referred in her speech to an inventory that never happened. Of course, it is scandalous to charge for something that never happened but, on the other hand, why did it not happen and whose fault was that? She also mentioned double-charging, to which I am 100% opposed. It has to be clearly decided who is responsible for a cost, and people need to know that in advance. She quoted £600 being charged for credit checks. I have never encountered that, so it must be that the type of agent she is quoting is a bit slippery. I understood that all letting agents now have to be registered with the Association of Residential Letting Agents, so I do not understand why these cases are not being reported to ARLA, which should be able to check with its members and see why these claims are being made and whether they are justified.

There are costs associated with the creation of any tenancy, and they have to be funded in some way. The law now obliges landlords to carry out checks on any prospective tenant to see whether they are legally entitled to be in the UK. Some have said in the past that landlords are now being asked to act as immigration officers, and there is quite a degree of resentment at that. It can be a time-consuming process. Recently, when I had a tenancy available, I had as many as five would-be tenants who failed to meet the necessary requirements. To have to do this check for tenant after tenant can be quite expensive.

An inventory check is essential for any tenant, so that they have a basis on which to determine any change or damage to the property at the end of the tenancy. It protects both tenant and landlord. It means that the situation is being independently assessed and people are not just arguing one against the other about how things were when they moved in.

To me, an exit fee, which has been mentioned, is a bad phrase, but I am not entirely sure what it means in this context. I associate it with a fee charged to people leaving retirement housing schemes. I know it is being phased out by many major providers of retirement homes, which in fact are trying to persuade all the rest to phase out exit fees.

I return to my earlier point. If these expenses have to be funded and the tenant is not asked to meet the cost, it will have to be met from somewhere. Without doubt, that will result in it being included in the rent element. Sometimes it will be a once-only payment for a tenancy but, in Clause 2, which amends the Landlord and Tenant Act 1985, there is mention of,

“a tenancy extension or renewal fee”,

which would apply on each renewal. I have not come across that myself, but I am interested to learn that it might exist and I take the noble Baroness’s word for it. However, has she considered that if the inventory cost for the landlord is built into the rent, then on every rent renewal the tenant is going to pay an increase on whatever that inventory cost was, whereas if they had paid their inventory bill separately it would not be included in anything that was going to have an increase in the renewal after the first year and every successive year? I am not good at maths, but I am not sure that that quite adds up.

Whatever the terms of a tenancy agreement, it is available for the tenants to negotiate before signing up. It is important that the Government keep up to date the advice that they provide for prospective tenants. I was pleased that during the recent Housing and Planning Act debates, the noble Baroness, Lady Miller, was able to confirm that a correction had been made just at the time when we were all asking for it, and included on the website of information and advice for renters.

The loss of the leasehold valuation tribunals has resulted in a much more costly and difficult situation for both tenants and landlords. This change, under Statutory Instrument 1036, came into force on 1 July 2013. Sadly, I was the only person to speak against that instrument, which could not be amended. Whereas in the past tenants could easily bring their problems to the leasehold valuation tribunal without fear of higher costs, which had a normal maximum of £500, now, the minimum fee to apply to the property chamber of the First-tier Tribunal, to which you now have to apply, is £500. The leasehold valuation tribunals had extensive powers covering the determination of the price to be paid by tenants if they were compulsorily acquiring either a freehold or a lease extension; the determination of whether a service charge was payable; granting dispensations to landlords from compliance with statutory consultation regarding service charges; on a tenant’s application, preventing the landlord treating the costs of proceedings as relevant costs—that is, adding them to the tenant’s service charge; determining the appointment of managers, and so on. They played a lot of roles, and they were readily available for ordinary people. I believe that the re-creation now of some easily accessible and financially possible body to deal with renters’ problems is necessary to make this Private Member’s Bill workable for most tenants and landlords. To push all these matters into the hands of the legal profession is not good; it will certainly be very costly and will probably reduce the effectiveness of the Bill.

Clause 2 contains a list that is unclear, in that it says:

“A letting agent may not charge”.

I agree that there should be no double charging, as I have said, but what is a chargeable expense to the tenant is as agreed in the terms of the letting agreement. Such agreements are amazingly complicated. For any letting I receive 10 or more pages of small print covering a huge range of items, prepared by a solicitor specialising in property matters. That is in contrast to the system in Australia, where I still have my flat that I let, and one person has occupied it for many years now. A tenancy agreement out there is something that you buy from the local paper shop. The last price that I recall was 7 Australian dollars and 50 cents, although I am not up to date with the current pricing. However, the terms are as considered necessary for the legal letting of any property, and are easily understood by most people. If a large legal bill does not have to be paid for preparing a special agreement, that reduces the landlord’s costs and therefore helps to reduce the tenant’s costs. On what is about the size of an A4 double-fold of printed terms, a two-inch white space is left for any special condition agreed by both parties. Why can we not have something equivalent to that system? It would mean that renters would be in no doubt about the terms of their tenancy.

Meanwhile, it is in the interests of all good landlords and good tenants to co-exist and ensure that properties are maintained in a good condition, with occupancy providing a fair tenancy for both parties. I hope that the Bill will help and I support it.