Renters’ Rights Bill

Baroness Thornhill Excerpts

Monday 28th April 2025 Lords Chamber

[Lord Northbrook (Con)]

I am sorry to disagree with the noble Baroness but, sadly, from practical experience, I think what she is saying is not necessarily the case.

[Baroness Thornhill (LD)]

My Lords, I will wind up on this group and give a little more detail on my Amendment 264. It is a straightforward amendment; I like to be straightforward. Based on the facts given by noble Lords in this debate, there is evidently a genuine concern about the capacity of the courts to deliver. All contributions have been well evidenced and—I will be quite frank—are worrying.

From our perspective, as was evidenced by the contribution from my noble friend Lady Grender, we support this legislation, we want ir to work and, for it to work, we know that the courts have to be efficient. If they are not, it could undermine the core purpose of the Bill, as was passionately said by the noble Baroness, Lady Scott. We know of, and understand, the issues regarding the courts. These have been well articulated in every contribution across the Committee, so I will not repeat them. However, many legitimate questions have been posed to which we need answers.

On Amendment 264, it is vital that court capacity is reviewed, and that this is enshrined in the Bill to make sure that it happens formally and can be scrutinised within two years. We feel that two years is probably enough, certainly to sort out the IT—as referenced by the noble Earl—and to feel whether we are moving on to an even keel after an initial transition period. I am sure that, as we go through the rest of the days in Committee, we will look at that transition period.

The amendment looks at all the key components for the effective working of the courts. It asks to look at access to justice. We must ensure that the system is accessible, affordable and understandable for all, regardless of a tenant’s background and circumstances. It is legitimate to ask the Government for their commitment to resourcing the courts and to have hard evidence about case volume, how many cases, and how long they are taking—the last aspect being very important for both landlords and tenants.

As has been mentioned, the current evidence is of the months ticking by, which is unfair to landlords. Their concerns in this instance are valid. Under the new grounds, if eviction is legitimate, it needs to happen quickly. Delaying things by months could put some landlords in financial jeopardy and tenants in real limbo and uncertainty. I am sure that any Secretary of State would want answers to these pertinent questions within a reasonable timeframe to ensure that all is working as intended, or, if not, in time to make some remediation, as the assessment will be based on real data. I am certain that the Government, too, are concerned about this and are doing everything they can to make sure that the courts are ready; I look forward to the Minister’s reply.

However, we do not support in any way Amendment 283 in the name of the noble Baroness, Lady Scott, to delay the abolition of Section 21. The sooner the long-promised abolition of Section 21 happens, the better. Indeed, Amendments 279, 280 and 283, as well as, to a lesser extent, Amendment 69, would certainly result in delays in the Act coming into force. For this critical reason, we cannot support them.

However, this does not mean that we do not take this issue seriously; I am not wearing rose-coloured spectacles. I expect full answers on the readiness of our courts to deal with these radical changes. The criticism and concerns regarding the courts have been known now for some considerable time. Work must have been done, so we would expect the Government now to have some hard answers.

[Lord Carter of Haslemere (CB)]

My Lords, I support the comments of the noble Baroness, Lady Thornhill, and all noble Lords who have spoken about concerns about court capacity to deal with the huge increase in loads that will come their way. This is not just a serious policy issue; it is an important legal one. Article 6 of the ECHR guarantees rights of access to justice within a reasonable time, and if those rights are delayed then that will impact also on landlords’ rights under Article 1 of Protocol 1 of the ECHR, which is about rights to property. I am afraid there is nothing in the ECHR memorandum, which I have with me, addressing the Article 6 and Article 1 of Protocol 1 points relating to delays to justice in the courts. That is an important issue that has to be addressed, and I cannot see how this sensible Amendment 264 can be denied. Incidentally, the amendment overlaps with Amendment 106, which we will consider later; for some reason, they have been put in different groups.

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[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, I thank the noble Baronesses, Lady Scott and Lady Thornhill, the noble Lord, Lord Young of Cookham, and the noble and learned Lord, Lord Etherton, for their amendments, and I thank the noble Lords Cromwell, Lord Empey, Lord Wolfson and Lord Northbrook, the noble Baroness, Lady Grender, and the noble Earl, Lord Kinnoull, for their comments and for bringing the noble and learned Lord’s amendments before us.

I understand the concerns that Members have on this issue, which is why we engaged early on with noble Lords in advance of the Bill coming before this House. We have listened to noble Lords’ views and experience in this area. I appreciate that we may need to have further discussions.

I say to the noble Baroness, Lady Scott, that I started working with noble Lords on the Bill some months ago to understand the concerns that they had. Where probing amendments have been tabled, I have attempted to answer in detail. On matters requiring factual answers, such as data that I did not have at my fingertips, I have responded either in writing and/or offered further meetings to noble Lords.

However, it was too late in the day when the party opposite recognised the dreadful housing crisis that it had led us into, which meant it was too late for it to finish legislation to deal with it. Today, we are faced with amendments seeking to remove core principles of the Bill that is trying to deal with it. If those come before us, I will have no option but to disagree with them. Some of those core principles were in the Bill of the party opposite when that sat before this House. This Government will take up the challenge of dealing with the issues with a degree of balance between landlords and renters and, I believe, will do a better job of it.

The amendments before the Committee today would all require the Government to make an assessment of the justice system as a result of these reforms and, in some cases, delay commencement of the reforms until certain conditions were fulfilled. Amendment 69, in the name of the noble Baroness, Lady Scott, would require the Lord Chancellor to prepare an assessment of the operation of the process by which a county court is able to make possession orders for rented properties, and how such orders are enforced. That assessment will be published at such a such a time and in such a manner as the Lord Chancellor sees fit. The noble Baroness, Lady Scott, has also tabled Amendment 283, which, if made, would delay the commencement of these important reforms until the Lord Chancellor had carried out and published the proposed assessment and was satisfied that the court service had sufficient capacity.

The Government’s view is that the implementation of our tenancy reforms should not, as the noble Baroness, Lady Thornhill said, be held back by an assessment of current working, especially one that is so broad and undefined. We have no intention of delaying these urgent reforms while we wait for an unnecessary assessment of the existing possession process. The proposed assessment will provide no new insight or benefit to interested parties. Compelling the courts and tribunals to undertake such an assessment would detract from their vital work to make sure that the courts are ready for our reforms.

Quarterly data on the operation of the court possession process for rented properties is already, and will continue to be, published by the Ministry of Justice. This is regularly reported and scrutinised. The published statistics include both the volumes and timeliness of possession orders and the enforcement of those orders. Court rules specify that possession claims requiring a hearing should be listed within four to eight weeks of the claim being issued. Landlord possession claims are taking an average of eight weeks—not seven months, as quoted by the noble Lord, Lord Northbrook—to progress from the issue of a claim to a possession order in the most recent quarter from October to December 2024.

Instead of publishing this unnecessary assessment, we will carry out our tenancy reforms as quickly as possible. I want to reassure the Committee that we are fully focused on making sure that the justice system is prepared for the changes to court caseload and procedures which will be required for our reforms. We are working with the Ministry of Justice and HM Courts & Tribunals Service to that effect. This includes investing in additional court and tribunal capacity to handle any extra hearings generated. I hope that answers the point from the noble Lord, Lord Wolfson. I therefore ask that those amendments are not pressed.

Amendment 205 in the name of the noble Lord, Lord Young of Cookham, would require the Secretary of State to lay a Statement before Parliament setting out how the Government will ensure that the county courts are prepared for the impact of the Renters’ Rights Bill on possession cases. The Statement would need to be made within six months of the Bill being passed and assess the effect of the Bill on the volume of cases, the efficiency and timeliness of judicial proceedings, and the resource requirements of the courts in future.

As I have said, I fully recognise noble Lords’ concerns that this Bill will impose an additional burden on the justice system and understand the concern of my honourable friend at the other end of the building about the court system. As already noted, I reassure the Committee that we are fully focused on making sure that the justice system is prepared for changes to court caseload and procedures which will be required for our reforms and we are working with the MoJ and HMCTS to that effect.

To pick up the point from the noble Lord, Lord Young, about resources, we are working together to agree how these reforms are implemented. This will include ensuring that the county court will have the capacity and resources it needs to adjust to any changes in possession caseloads—which will, of course, involve the assessment that the noble Lord, Lord Northbrook, referred to—and commitments to address the resources needed. Work is also progressing on updating rules and procedures in readiness for the implementation of the new legislation.

In the longer term, we expect our reforms to reduce the volume of court possession claims, as only those cases where there is a clear, well-evidenced ground for possession will be able to proceed. This will help offset any increased pressure on the courts resulting from our reforms in due course.

His Majesty’s Courts & Tribunals Service is building an end-to-end digital service for resolving all possession claims in the county courts in England and Wales, to make processes more efficient and easier to understand for landlords and tenants—a much-needed reform. Funding has been agreed and provided to enable the design and build of this new service, which is well under way and builds on the existing digitisation of the justice system.

The noble Lord, Lord Cromwell, said it had left him with the impression that this was five years away. That is not what the court service said and not my understanding of where we are with it. As I have explained, this is not a new system that is being built from scratch; it is a further module of an existing system.

The noble Earl, Lord Kinnoull, commented on the outlining of the size of the problem that our colleagues from HMCTS set out. That was the hold system that they are developing, with the approach to design and build being at prototype stage. I understand what he is saying, but the digitisation process is not the whole picture of what we are doing with our colleagues in the courts service. This service will offer an online route for making and responding to possession claims, filing documents and receiving updates and outcomes, offering improved user experience through guided journeys.

As we have heard, some noble Lords heard first-hand about the progress being made. The noble Earl, Lord Kinnoull, said that the question was put, “How long will this take?” and colleagues replied, as I understand it, “Two years from March”. I thank him for those comments, but that is not the totality of the work we are doing with the courts service, so, while progress on that is really important to driving this forward for the future, we will be working with our friends in the courts service and supporting them in the interim. I therefore ask him not to press his amendment.

I reiterate my thanks to the noble Baroness, Lady Thornhill, for Amendment 264, which would require the Secretary of State to publish a review of the impacts on the judicial system arising from the Renters’ Rights Bill within two years of the legislation being passed. The review would need to consider the effect of the Bill on the volume of cases, the efficiency and timeliness of judicial proceedings and the resource and administrative burdens on the courts.

As I already outlined, I want to reassure the Committee that we are fully focused on making sure that the justice system is prepared for changes to court caseloads and procedures. We are taking that issue very seriously. We will monitor the effects of these reforms on the justice system by closely engaging with the sector and analysing the comprehensive data that is already collected. It is not that we do not think it is necessary to analyse the data; it is more that we think committing to a formal review on the face of the Bill is unnecessary.

The points the noble Baroness made about justice delayed being justice denied are quite right. That is why we do not want to delay all this, including abolishing the Section 21 evictions that have caused so many problems. We want to do that as quickly as possible, but I want her to be assured that we believe that analysis of the impact of the Bill on the system is critical and important, and we will be doing that using the information that is already available.

[Baroness Thornhill (LD)]

I thank the Minister for giving way. Does that mean, as I take from her words, that such monitoring and review will be an ongoing and rolling process from day one?

[Baroness Taylor of Stevenage (Lab)]

That is completely correct. We need to make sure we are taking account of the impact on the system from the start. We believe that over time it will reduce the volume of cases going to the court service. As the noble Baroness, Lady Grender, pointed out, not many cases end up in the courts system, but there are some that go down that route. We will be monitoring them from the outset.

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[Baroness Thornhill (LD)]

I do not doubt the genuine compassion and sincerity of the noble Baroness, Lady Coffey, but I feel there is a real incongruity about the current position of His Majesty’s Official Opposition to favour landlords and make evictions quicker and easier. The message to tenants via this amendment is, “Your unwanted evictions will take place only in the school holidays, so on 21 December rather than earlier in December”. I genuinely feel that it would be unworkable and that circumstances differ. I could actually argue the opposite: I would rather my children were safe in school while I negotiated trying to find where we were to live. I just do not think we can say that one size fits all on this.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank my noble friend Lady Coffey for bringing Amendment 70 before the Committee today. It is a thoughtful and considered probing amendment that rightly recognises the significant impact that housing stability can have on a child’s education. During the pandemic, our children and grandchildren suffered greatly. Schools were closed, youth clubs shut down and extracurricular activities ground to a halt. The disruption left many young people adrift at a crucial stage of their development, and only now are we beginning to understand the effects. It is therefore incumbent on us all to support and uplift the next generation. However, the Government must ensure that the burden does not fall disproportionately on individual landlords. It is not, and should not be, their moral obligation to serve as the final safety net for vulnerable families. That responsibility lies with us—with the state, with local authorities and with society.

Owning a property does not automatically confer great wealth. It does not equip an individual to shoulder the complex needs of a struggling family. The Government must tread carefully to ensure that their actions do not drive up costs in this sector, which fall most heavily and disproportionately on low-income families and the most vulnerable members of our society. A sustainable housing market depends on both tenant security and landlords’ confidence. This is a very tough balance to strike, but I believe that the onus is on us all to strike it.

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[Lord Marlesford (Con)]

My Lords, I find these amendments very curious. The whole principle of the private rented sector is that it is a capitalist operation; it is an operation which has costs and revenue. The revenue comes from rent. Obviously, rents must be very carefully determined. As to whether it is one month or two, that seems to me of little account. Basically, what tenants need to know is that rents are likely to increase by some measure which is generally agreed. In the private rented sector, this is normally the retail prices index—the RPI, as opposed to the CPI. If there is not a return on the investment, the investment will not continue to exist. Nobody can afford to let properties if there is no return on the property. The question, of course, is: what should the return be?

There are two very important factors to think of. The first is the gross return, the gross rent, as a percentage of the market value of the property, and the question of what percentage it should be. I have produced a table which shows the different levels of rent for different values of property, but, of course, that is not the only factor, because one has to remember that the rent charged is gross before the cost of maintenance, and maintenance is hugely important. The solution to having a good private rented sector is proper maintenance and, indeed, improvement through modernisation maintenance. It may be that you put in a more economic burner to heat the house—they vary a lot, and later ones are much more efficient, but that is an expenditure. You have to get a balance there.

I suggest that very often, about a third of the rent, on average, will go on the maintenance—keeping up to date—and administration of properties. If we said, for example, that a 3% return on capital was a reasonable level for the rent to be set at, that might end up at a net 2%, which is probably about what equities yield at the moment. We must see that.

Then comes a very important point, which we shall no doubt be discussing later: the affordability of rents for tenants. The Government’s guidance has for a long time been that rents should not be more than 30% of household income. Therefore, that calculation should be made. If somebody is renting a property, they should bear in mind that that is the Government’s advice as to the amount that they can afford to pay, other things being equal. Equally, the landlord letting the property will also have to take into account whether or not the prospective tenant can afford their property. Again, it is essential that if you set a rent, you know the household income, to see whether it reaches the affordability stakes.

These are important and complicated matters, but they are crucial to the private rented sector. My worry about the Bill is that half the time the Government do not seem to understand the private rented sector. It is a business enterprise like many other business enterprises. It is not particularly virtuous or unvirtuous, but I wish I could feel that the Government, in fiddling around with it all, were trying to make it work in a practical manner for investors and those receiving the benefit of the investment; that is, the product. There is no real difference between a house that you rent and a product that you buy in a shop. It is part of how the system operates, how civilisation operates. The Government are very muddled in their thinking on this. I would have liked to have got rid of the Gove Bill, which also was ill considered and ill conceived, lacking in understanding of the real world.

[Baroness Thornhill (LD)]

My Lords, we have several groups of amendments that talk about rent, money and finances, so before commenting specifically on this amendment, I want to have a little rant regarding landlord finances. The narrative is that the majority of landlords are in a terrible financial position. What evidence do we actually have for that? It is certainly not borne out by my anecdotal evidence and could be conceived as scaremongering, because my understanding is that being a landlord is, and will remain, profitable.

The idea that, to remain sustainable, landlords must be able to pass the entirety of any increased business cost and risk on to the tenant through a rent increase is, frankly, ridiculous. There is no other business model that operates in this way, and it does not add up when we look at the sum of the data that we have. The English Private Landlord Survey said that the median income of landlords, including rental properties, is around £52,000. According to the Shelter/YouGov survey of private landlords, rental income is largely additional for landlords: 50% of landlords say that they do not rely on rental income to cover living expenses.

I note that in any investments that I have made, there is a very cleverly worded phrase at the bottom: “Investments can go down as well as up”—except if you are a landlord, it would seem; even more so as you are left with a capital asset that, in this country, largely increases in value. That is my rant. If the noble Baroness, Lady Jones of Moulsecoomb, were in her place, she would probably be quite proud of me for it.

I turn to the amendments in this group tabled by the noble Baroness, Lady Scott, regarding notice periods for rent increases. When the Bill was introduced in the Commons it proposed a standard one-month period. The Government’s decision to extend this to two months represents a welcome improvement that better balances the interests of landlords and tenants. This evolution demonstrates a willingness to listen and to respond to concerns about tenant security, for which I sincerely thank the Minister and her team.

Amendment 73 seeks to revert the notice period to just one month and Amendment 81 questions the differential treatment between standard and low-cost tenancies. These amendments, particularly Amendment 81, raise fair questions, which I too would like an answer to, as I have not been able to find a reason for that differentiation. A two-month notice period for rent increases represents a reasonable middle ground that acknowledges landlords’ legitimate need to adjust rents while giving tenants adequate time to prepare financially.

For many working families, a rent increase actually requires careful budgeting. I have not got the figures to hand but we know that a significant number—into the many thousands—of moves and evictions last year were due to the inability of the tenant to pay the new rent rise. One month is simply inefficient to work a decision to relocate and make those adjustments.

I commend the Government for finding a balanced approach. This middle ground solution may not be perfect from any single perspective, but it demonstrates what good legislation can achieve when all voices are genuinely heard during the parliamentary process. With these factors in mind, I look forward to the Minister’s response.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Baroness, Lady Scott, for her amendments relating to notice periods for rent increases, and the noble Lord, Lord Jamieson, for moving Amendment 72.

I thank the noble Lord, Lord Marlesford, for his comments about the balance between landlord and tenant. We are aiming to get that balance in this Bill. He is right to point to the ratio of rent to income, but that is why tenants need longer to consider the impact on their family budget. Increasingly, the proportion of income that is taken up by rent is going up and up, particularly in certain parts of the country, making it very difficult for tenants to manage increases at short notice and without adequate notice to plan their family budgets.

The noble Lord, Lord Jamieson, talked about consultation with landlords on the impact of rent increases. Because of a question during the debate on a previous day, I undertook to give a written response on the consultation that has been carried out before and during the course of this Bill. I will provide that response in writing to noble Lords; it is being prepared at the moment, and I will get back to them with a summary of that.

I thank the noble Baroness, Lady Thornhill, for her comments. She is quite right to refer to issues of rental income and capital assets. As I have said many times, we must make this fair for everybody, and make sure that everybody gets what they want. Landlords want a tenant who will look after the property and pay their rent, and tenants want a landlord who will make sure the property is available, looked after and in good condition—that is what we are all after.

Amendment 72 would reduce the amount of notice of a rent increase that a landlord will have to give a tenant from two months to a period equal to a rental period. For example, where the rent is paid monthly, this would reduce the notice period from two months to one month. I appreciate, as the noble Lord, Lord Jamieson, said, that these are probing amendments.

Together with Amendment 72, Amendment 74 would remove the requirement for landlords to serve a rent increase notice two months before the rent increase comes into effect. We do not agree with this position. The Renters’ Rights Bill will deliver our manifesto commitment to empower private rented sector tenants to challenge unreasonable rent increases. This includes by requiring landlords to give two months’ notice of a change, rather than one. This was, as the noble Baroness, Lady Thornhill, pointed out, the result of debates in the other place and of lobbying from a number of groups that have been speaking to us. This will ensure that tenants who may struggle to pay a rent increase will have time to consider their options, seek advice and, where necessary, take steps to challenge the rent increase at a tribunal.

Receiving a rent increase can be distressing for many tenants. We want to give tenants time to reassess their budgets and consider their options. It is unfortunate that the noble Baroness, Lady Scott, and the noble Lord, Lord Jamieson, do not agree that tenants should have this protection.

Amendment 73 seeks to decrease in the Bill the notice period for a landlord to serve a rent increase from two months to one month. Similarly to Amendment 72, we do not agree with this position. A two-month notice period will give tenants time to review their budgets before the rent increase takes effect and to take advice, if necessary or appropriate, from advice agencies such as Citizens Advice.

It is regrettable that the Opposition have tabled this amendment, because they supported this position on the matter. Their original White Paper, in 2022, promised to

“increase the minimum notice landlords must provide of any change in rent to two months”.

It is disappointing that they have changed their minds on this, and now wish for tenants to have less time to consider their options when receiving a rent increase.

Amendment 81 seeks to increase from one month to two months the amount of notice of a rent increase that landlords of relevant low-cost tenancies need to provide. Social landlords that fall under a new definition of a relevant low-cost tenancy in the Bill will be exempted from most of the changes the Bill makes to rent increases. This means that landlords of relevant low-cost tenancies will be permitted to increase the rent via the Section 13 process at any point in the first 52 weeks of a tenancy, and then once every 52 weeks thereafter, and must give at least one month’s notice. The new amount may take effect after this notice period if it is not challenged by the tenant in the tribunal. These landlords will still be able to use review clauses within a tenancy to increase the rent, as they can at present.

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[Baroness Thornhill (LD)]

My Lords, there are a lot of issues in this group, but the bottom line, again and again, is the imbalance of supply and demand, and the imbalance of power between tenant and landlord. Demand significantly outstrips supply. The landlord/tenant balance is surely like a see-saw, with one fairly heavy person on one end and a nice sylph-like person on the other end. I believe this legislation just wants to even it up a little bit.

There are those of us who feel that, in this kind of market, landlords can and do charge what they want. Rents have been going up significantly, driving more people out of the private rented sector and—I think this is a point on which we have so far not joined the dots—into the arms of their local authorities under the homelessness and temporary accommodation route. We need only look at the rising figures to know that this is happening and happening at scale. We have debated it regularly in your Lordships’ House over several years.

I was not surprised to read on the front page of the Guardian this morning that one of its surveys found that private rented sector landlords are fleecing taxpayers as a direct result of the temporary accommodation crisis. The Guardian found:

“Local authorities in England are paying 60% more for rooms in … bed and breakfasts and hostels than it would cost to rent similar-sized accommodation”


in the private rented sector. There are far more details in the front-page article, but it is irrefutable that some private landlords and hotels are cashing in on England’s hidden homelessness crisis. The lack of supply creates a vicious cycle that is costing the country an enormous amount of money. Thus, we support all the measures the Government are taking in the Bill to try to curb unreasonable rent increases and prevent economic evictions. We will discuss this more in the next group.

We are also concerned about market rents being the deciding factor for the tribunal, given a market that is significantly undersupplied, especially in areas of the country with high housing prices. If market rents are used, they should be based on existing equivalent rental properties in the area and not just new builds, which are usually more expensive and can be overpriced. I look forward to debating the amendments in the next group, which are trying to bring some resolution to this.

I will dispatch positively and succinctly all the amendments tabled by the noble Baroness, Lady Warwick. Her commitment to the social housing sector and her work with registered providers is well known. It is no surprise that she was supported by the noble Lord, Lord Best, to whom the same accolades could apply. Such providers are in a dilemma over rents and at the mercy of the Government as to when and by how much they can increase rents, as the noble Baroness outlined very well. We are concerned that there is increasing evidence that a significant number are cutting back on their future development plans to build social and affordable homes at a time when we all want the opposite.

On the First-tier Tribunal, there seems to be a real fear around the Committee that renters will all rush to challenge their annual rent rise, as has been said by many. I am pragmatic about this. I think it is probably wise to expect an increase, which is why we wholeheartedly support Amendment 87, from the noble Baroness, Lady Wolf. I was a little too late to put my name to it—the nominations had closed, so to speak—but I would have. If there can be a simple mechanism to weed out claims that have absolutely no chance of success, as has happened in Scotland, it must be worth considering.

We can clearly see from recent tribunal hearings that cases are often contradictory and inconsistent, and seem to rely on different sources to make a judgment, which means they are often based on an incomplete picture. This is why I have submitted Amendment 106, supported by the noble Lords, Lord Carter and Lord Howard, for which I thank them. We are simply seeking assurances that the tribunal is fit for purpose and ready to go, and that adequate consultations have been carried out.

What is worrying is a recent survey by Generation Rent, which I too thank for its work all year round and in particular with this Bill. The survey found that less than one-third of renters had actually heard of the tribunal, with fewer than 10% claiming to know a lot about it. There is clearly a lot more work to do before we even get a trickle of people, let alone a tsunami of people or everyone, making an appeal against their rent. Thus, we could not support any amendments that involve tenants paying landlords’ costs, or allowing the tribunal to award higher rents, as these are new barriers to renters exercising their rights.

However, I have a degree of sympathy with Amendment 99, tabled by the noble Lord, Lord Carrington, and very ably supported by the noble Lord, Lord Cromwell. The rent should be backdated to when it would have been legally allowed to be raised, otherwise there really is an incentive to appeal: “What have we got to lose?”. To me, it does not seem fair.

Finally, it feels wrong, as has been said by several noble Lords, that a landlord should add value to their capital asset and then use that immediately to hike the rent—a financial win-win for the landlord. Likewise, Amendment 70 in the name of the noble Baroness, Lady Jones, has some merit.

[Lord Carter of Haslemere (CB)]

My Lords, I support Amendment 106 from the noble Baroness, Lady Thornhill. I declare an interest as a former landlord.

Clause 8 of the Bill amends Section 14 of the 1988 Act to allow any tenant to challenge a rent rise in the First-tier Tribunal. It will be free of charge. No tribunal ruling will be able to increase the rent proposed by the landlord. By challenging the rent rise, as we have heard, the tenant will automatically delay any rent rise by several months, however modest and justified it may be.

This will obviously create an incentive for tenants to challenge single rent rises, regardless of the merits, and without any risk to them doing so. As we have heard, if their appeal is unsuccessful, they will then be liable to pay the increase in rent only from the date of the tribunal’s determination. That is incredibly unfair on landlords, for the reasons the noble Lord, Lord Young, and my noble friends Lord Carrington and Lord Cromwell have given. What have tenants got to lose? My focus is to express strong support for seeking to ensure that the tribunal has adequate resources to cope with the likely increase in the number of rent rise challenges it will face. Okay, not 100% of tenants are going to challenge rent rises, but there will be a significant increase unless changes are made to the Bill to remove the incentive to do so, because they have nothing to lose.

Given that the tenant will hold all the aces in the pack, the tribunal floodgates are likely to be, or are at risk of being, opened. Without more tribunal resources, this will greatly increase delays and create even more incentives to challenge rent rises. The Government need to get this right or the system will grind to a halt, landlords will leave the sector in droves and tenants will be at risk of homelessness. As I said at Second Reading, there needs to be balance in the very welcome improvements that the Bill makes as a whole. The relationship between landlord and tenant has to be a two-way street to maximise the effectiveness of the Bill.

As this amendment proposes, there needs to be a proper consultation, including with the senior judiciary, before these provisions are commenced, to ensure that the tribunal system is adequately resourced to cope with the increased demand—what on earth could there be against that? This is such a sensible and unobjectionable amendment, and I am looking forward to seeing it accepted by the Minister and appearing in the next proof of the Bill.

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[Lord Howard of Rising (Con)]

My Lords, I support the amendments in this group in the name of the noble Baroness, Lady Scott, to which I have added my name. I endorse what she said just now when she spoke to the amendments.

When I spoke to the fourth group, I pointed out that, as presently drafted, the Bill will, at a conservative estimate, give rise to 1 million applications per annum to the rent tribunals. Other noble Lords have commented on the problems which will occur. The rent tribunals will be overwhelmed. With the delay for any rent increase, this will amount to a de facto rent control, with a corresponding and inevitable loss of rental accommodation when landlords disappear from the market as they cease to be able to cope with the ever-rising costs, not least the cost of increasing regulation.

I spoke at Second Reading to the problems in Berlin, where rent controls had to be abandoned owing to the lack of rental accommodation. These amendments would help introduce some realism into the system, so that applications to the rent tribunals are for genuine reasons and not merely because it would be silly not to go to the rent tribunal when there is no risk and a possible gain.

[Baroness Thornhill (LD)]

I had thought that there would be a few more speakers than that, but hey.

I wish I could be half as certain about what is going to happen in the future as some noble Lords here—they must have a crystal ball hidden somewhere. I feel this Bill is almost an act of faith. It is quite obvious that we believe that it is going to do good things and that Armageddon will not happen. However, the noble Baroness, Lady Scott, argued her case very well and sincerely, and likewise she believes that. At the moment, neither side really knows what is going to happen. To use the cliché: only time will tell.

The problem with so many amendments being regrouped is that we are into groundhog day, so I will be brief. As previously stated, we do not support amendments that would disincentivise tenants challenging rent rises and feel that most of these amendments fall into that category. The Bill is about a power balance between the tenant and the landlord, and is a genuine attempt to redress that balance. A lot of the amendments and statements made by some noble Lords want to maintain the status quo; for us on these Benches, that is an imbalance. We are just going to have to disagree about that.

The noble Baroness referred to the realities of the housing market. Our interpretation is that landlords can charge whatever they want—whatever the market will sustain—and we do not believe that that is right. In doing so, I genuinely believe we are creating an underclass of people who will never be able to fit into the private rented sector. That is perhaps an argument for another day.

The Minister has perhaps already answered Amendment 105, but I am quite happy to hear it again, given that I agree with the noble Baroness that such a review is important and necessary.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Baroness, Lady Scott, for her amendments on rent regulation. I thank the noble Lord, Lord Howard, and the noble Baroness, Lady Thornhill, for their comments.

As I set out earlier, the Bill will empower private rented sector tenants to challenge unreasonable rent amounts. This is a central aim of the Government’s reform agenda and reflects our manifesto commitment. The tribunal will not be able to increase rent beyond what the landlord initially proposed. This will prevent unscrupulous landlords—let us face it, most of them are good, but there are some unscrupulous ones—using rent increases as a back door means of eviction, while ensuring rents can be increased to reflect market rates.

We are clear that tenants should submit an application to the tribunal only where they believe a rent increase is above market rates. In the first instance, we strongly encourage landlords and tenants to communicate early about what adjustments to rent are sustainable for both parties. We need to think about possible triage arrangements if there is no agreement between them.

We anticipate that our reforms will lead to some increases in cases, but, as I have already stated, we are working closely with the judiciary to ensure the tribunal has the capacity to deal with cases. In the First-tier Tribunal (Property Chamber), work is progressing to increase capacity, as well as on reviewing resourcing and working practices in readiness for any increase in demand. I am not sure if it will be 1 million applications, as the noble Lord, Lord Howard, said, but we anticipate that there will be some increase initially, until the way that this works drives down demand in the future—which I think it will. This is part of our wider work to make sure the justice system is prepared for the changes to case loads and procedures which will be required for our reforms.

As now, tenants will be able to challenge the rent payable in the first six months of a tenancy if it is above market rate at the First-tier Tribunal. The tribunal can determine the open market rent only to be lower than or the same as the tenancy rent itself. The tribunal will not be able to increase the rent above the amount originally proposed by the landlord. We see this as a rebalancing mechanism, as the noble Baroness, Lady Thornhill, said.

Amendment 92 seeks to allow the tribunal to determine the open market rent to be higher than that originally proposed by the landlord. We believe that limiting the tribunal to determine a rent to be either the same as the landlord themselves proposes or an amount lower than this is fair to both parties. If landlords have agreed a rent that they consider to be acceptable at the beginning of the tenancy, they should have no fear of a challenge at tribunal.

I turn to Amendment 93. This Bill enables a tenant during the first six months of a tenancy to challenge the rent payable. It is an important provision that should stop a minority of unscrupulous landlords exploiting tenants desperate to find a new home. It strengthens our ban on rental bidding, ensuring that any landlords who seek to charge over the odds can be challenged. When a tenant challenges their rent, the Bill states that the start date of the new rent determined by the tribunal

“must not be earlier than the date of the application”.

This reflects Section 22 of the Housing Act 1988, where a similar provision already exists to allow backdating of a determination where a tenant has challenged an excessive rent.

Amendment 93 would prevent a tribunal backdating the determination of the new rent payable to the date of the tenant’s application. It would mean that the new rent could take effect only from the date of the tribunal’s determination. I understand that the purpose of this is to ensure that the landlord will not have to repay the difference in rents back to the tenant. The Government encourage landlords and tenants to communicate early about what rents are sustainable for both parties. The Bill levels the playing field to enable a more equitable discussion about levels of rent before anything comes to the tribunal. To be clear, the aim of this is to prevent as many cases as possible ending up in court action.

In our view, the noble Baroness’s amendment would limit the ability of tenants in the first six months of an above-market tenancy to get justice for the period that the case is in the courts. It would also increase the risk that landlords would seek to exploit desperate tenants by extracting above-market rents. I am really concerned about that, because one of the key principles of the Bill is to stop that happening.

--- Later in debate ---

[Baroness Thornhill (LD)]

My Lords, most of the amendments in this group are disagreeing with the Government’s ban on being able to ask for rent in advance, and all basically say the same thing. While I am very supportive of the Government’s aims, there are legitimate questions to be answered in this area. By preventing tenants paying rent up front, will the Government potentially reduce the housing options available to financially vulnerable people? So says the letting and landlords’ association. Is it a way to crack down on discrimination against low-income renters by unscrupulous landlords? So say the Government and the lobby groups for renters.

Amendments 108 and 111, which would allow up to six months’ rent in advance or even 12 months, are troubling. Rogue landlords could pressure vulnerable tenants to mutually agree to these excessive payments, circumventing the very protections that the Bill seeks to establish. Furthermore, Amendment 112’s provision for tenants to specifically request such arrangements in writing could easily be manipulated. Landlords might simply make such requests a condition of securing the property, forcing tenants to choose between signing or losing their housing opportunity.

However, what we do know is that people on fixed incomes, such as pensioners, those with lower incomes, the self-employed, the overseas students, those with a bad credit history, those who fail referencing checks and those with no family member to act as a guarantor will all have challenges passing referencing and affordability checks. They are the risky renters. The Government’s amendments are clearly designed to protect these financially vulnerable people from exploitation, but the big question is: how will agents and landlords manage tenancy risk in the future? Tenancy risk is a reality. With over 20 tenants chasing each vacancy, landlords will, legitimately and legally, be able to pick the person who represents the lowest risk. The bottom line for them is economic reality. Your Lordships have all heard my views, but even I would say, “Who can blame them?”

There are many thousands in these various groups. How do the Government think that they will get housing in the future? How will landlords mitigate the risk of tenants who fail references and have no renting history in the UK or who have CCJs against their name? Millions of people fall into these categories. My deepest worry is that the rent in advance system will go underground and people will be asked to stuff cash into brown envelopes, while rental payments will be edited to make it seem that all is well. Desperate renters will do desperate things to put a roof over their heads. I hope that I am wrong and not being unduly harsh on landlords or tenants. It seems to me that such people are left with the sole option of a professional rent guarantor service. What else is there? I am quite sceptical of local authorities stepping into that role, although they do much already to make tenancies survive and to help tenants.

What are the Government doing to ensure that those services can operate legally and responsibly, and to help this group of people? Are they part of the solution? I look forward to the noble Baroness’s answers.

Finally, to reiterate the point, a market that is significantly undersupplied and where the market rules of supply and demand result in continually rising rents, impacting most on precisely this large group of risky renters, has already resulted in a whole cohort of renters who are forced into homelessness and overpriced temporary accommodation. These are the very people who would in the past have been in social housing, of which there is, as we know, a huge shortage. The free market, under the rules as they are now, has led us to this place—a broken system—and there is no one denying that. Continuing as we have thus far can lead only to more of the same.

The Bill is a brave attempt to recognise the current imbalance between tenant and landlord, but if we do what we always do, we will get what we always get, and that is not acceptable.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Baroness, Lady Scott, and the noble Lords, Lord Jamieson, Lord Truscott and Lord Hacking, for their amendments in relation to rent in advance, and the noble Lord, Lord de Clifford, and the noble Baroness, Lady Thornhill, for commenting on these amendments.

Taken together, Amendments 108 to 110 and 112 tabled by the noble Baroness, Lady Scott, would allow landlords or agents to charge rent in advance when this has been mutually agreed with the tenants in a tenancy agreement. This Government are clear that the practice of landlords or agents charging rent in advance is unfair. Many of us will have heard the stories, many of them of requests for large amounts of rent in advance that have pushed families into financial hardship or locked some out of the sector completely. In other cases, unscrupulous landlords use rent in advance to pit prospective tenants against each other and create these dreadful bidding wars to help people secure a property. That is why the Bill will prohibit a landlord or letting agent requiring or accepting any payment of rent before a tenancy has been entered into. In addition, a landlord will be able to require only up to one month’s rent in advance in the window between a tenancy being entered into and that tenancy beginning.

I want to be crystal clear on this point: once a tenancy has begun, tenants will remain free to pay their rent prior to the agreed due date should they wish to do so, although landlords will not be able to require this and any attempt to require it will be challengeable by the tenant.

Amendment 108 would allow landlords to include terms in a tenancy agreement that require rent in advance to be paid up to six months before it is due. It is the view of the Government that this amendment would fail to protect tenants from exploitative rent in advance practices. Landlords, being able to require up to six months’ rent in advance when this is agreed in a tenancy agreement, could, in a market where properties are hotly contested, push tenants into agreements that stretch their finances to breaking point to secure a tenancy.

Amendment 109 would limit rent in advance to four months when agreed in a tenancy agreement. This has the same effect, with the potential for tenants in hotly contested markets to feel compelled to agree to terms that require significant financial outlay. Even the limit of two months, as the noble Baroness, Lady Scott, proposes in Amendment 110, in our view does not go far enough to protect tenants. In a scenario where a landlord can request two months’ rent in advance, this is still a significant financial expectation of a tenant. Given that the tenant will also likely be required to pay a five-week tenancy deposit, they could face being asked to stump up more than three months’ rent to access a property.