Renters’ Rights Bill

Baroness Kennedy of Cradley Excerpts

Monday 12th May 2025 Lords Chamber

I therefore hope that the Government will take seriously this opportunity to call time on it in the interests of both landlords and prospective tenants, many of whom are in the most vulnerable circumstances. I beg to move.

[Baroness Kennedy of Cradley (Lab)]

My Lords, I rise briefly to support Amendment 170 in the name of my noble friend Lady Lister of Burtersett. I declare my interests as a trustee of the Nationwide Foundation.

There is a growing use of guarantors in the PRS. Generation Research last year found that 30% of renters who moved in 2023-24 had been asked to provide a guarantor. Requesting a guarantor is clearly being overused and is moving towards becoming standard practice. Moreover, a guarantor in many cases has proved to be unnecessary. Shelter found that only 2.9% of landlords attempted to pursue a guarantor for unpaid rent in the last two years, despite its estimate showing that 1.85 million renters had been asked to provide one. Guarantors are overused, unused and inherently discriminative, and make renting unnecessarily burdensome. Where a renter can prove through an affordability assessment that they can pay their rent, a guarantor should not be asked for.

Amendment 170, or one like it on Report, is a necessary addition to the Bill. Will my noble friend Lady Taylor of Stevenage consider this amendment favourably or bring one very close to it back on Report? Will she also consider developing national guidance for fair and proportionate referencing? Although we may talk about this tomorrow, will she also consider adding information on guarantors to the private rented sector database?

[Baroness Grender (LD)]

My Lords, I support Amendment 170 in the name of the noble Baroness, Lady Lister of Burtersett, to which I have put my name, along with Amendment 265 from my noble friend Lord Tope. As the two previous speeches have explained, the amendments attempt to ensure that the dangers of discrimination are not unintended consequences of the Bill. As we dismantle one source of insecurity—the abolition of Section 21—we must be vigilant that new discriminatory practices do not simply rise in its place.

Requiring a guarantor is often presented as a simple piece of standard referencing—a lifeline for vulnerable tenants—but in reality it is quite the opposite. It adds a significant and often insurmountable hurdle for many prospective tenants, typically imposed in addition to demanding a deposit, the first month’s rent in advance and passing an affordability assessment. Landlords already possess simple tools to assess a tenant’s ability to pay and to mitigate potential financial risk. Tenant referencing, rent guarantee insurance and deposit protection schemes provide those robust safeguards. When tenants can demonstrate they can afford the rent, requiring a guarantor becomes unnecessary and serves only to narrow the pool of renters.

The demand for guarantors is an unnecessary additional hurdle that disproportionately impacts those on low incomes, those from low-income backgrounds, those without family support networks, benefit recipients, women, single-parent households, black and Bangladeshi households in particular and, most shockingly, people with disabilities. A renter with a disability is 20% more likely to be asked for a guarantor, and a black renter 66% more likely. This is not a lifeline for the vulnerable; it is more like drowning. Independent Age tells us that this is a problem for older people, too. An older renter who can perfectly afford the rent, secure in their pension income, has recounted facing questions about their income and being asked for a guarantor.

A self-employed single mother who could pay six months in advance, topped up with universal credit, was asked for a guarantor with an income of £45,000 per annum. That is £15,000 above the UK median income. And there will be people, of course, who do not know someone with that level of income.

Throughout our debates, we have heard much about arrears, sometimes as if the problem is endemic. However, government statistics state that 2% of private rented sector tenants reported being in arrears in 2023-24; even the English Housing Survey put it at around 5%. While that is still too high, it does not reflect certain assumptions that all tenants are inevitably going to be in arrears and therefore need a guarantor.

Amendment 170 seeks to bring sense and proportionality to this practice. It does not ban the use of guarantors; it simply and reasonably restricts their use to circumstances where a prospective tenant cannot demonstrate that they can afford the rent. As the noble Baroness, Lady Kennedy of Cradley, so ably put it, over the most recent two-year period, only 3% of landlords have attempted to claim lost rent from a tenant’s guarantor. When landlords have attempted this route, it has proved much harder than the standard insurance products to indemnify against non-payment.

The Government have rightly listened to calls to limit excessive upfront payments. If we tackle one form of financial barrier used to exclude tenants, we must tackle the other to prevent some landlords simply switching tactics—which I think is the greatest fear of noble Lords who support this amendment. Without this amendment, there is a significant risk that limiting rent in advance could inadvertently lead to an even wider reliance on guarantor requests, thus undermining the Bill's anti-discrimination provisions.

This amendment is a sensible, proportionate step that ensures landlords can still use guarantors when genuinely needed, while protecting vulnerable renters from being unfairly shut out of the market. I hope the Government will consider and adopt this amendment or agree to discuss a possible alternative.