Renters (Reform) Bill

Baroness Warwick of Undercliffe Excerpts

2nd reading
Wednesday 15th May 2024 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I declare my interest as chair of the Property Ombudsman. I warmly welcome the Bill. I am sure the Minister is well aware of the large number of organisations from which we have all had briefings. The Bill has taken a long time to get here, and expectations are riding high.

That is not surprising. Since 2001, the number of families forced to rent privately has doubled. High housing costs both cause and worsen poverty. The number of family homes available to social rent has reduced dramatically. For households on low incomes, this has significantly worsened living standards. The Bill needs to be seen in that context. We must not miss the opportunity to tackle long-standing issues of unfair eviction, rent increases and access to dispute resolution.

A number of issues will be raised in this debate from organisations such as Shelter, Crisis, Marie Curie and others, which I hope to be able to support in Committee. Today I will say a few words about Section 21 —in effect, the centrepiece of this legislation. I will then look briefly at some points that affect social housing providers and the property portal, the front door that will be crucial to enabling enforcement, then focus my main attention on the new PRS landlord ombudsman.

There is now some real doubt about when Section 21 evictions will actually be abolished. This part of the Bill has near-universal support, and tenants and landlords need certainty. The Government have said that it would be wrong to introduce it before the courts are ready, but have not defined what ready means or how we—or they—will know. It is five years since the Government made this commitment, yet there is still no progress. I hope the Minister will take the opportunity to give the House, as well as landlords and tenants, the certainty they need, by providing a plan for court reform and a timetable for when the abolition will come into effect.

The Bill largely concentrates on the private rented sector, but it will also have an impact on social housing providers, particularly where they use assured tenancies. The Government responded to some of these points on Commons Report and introduced amendments, but these themselves are likely to have unintended consequences, which I hope the Minister will be ready to consider. I refer to the new rent-to-buy ground 1B, introduced in the Commons as Amendment 158, and ground 6. The noble Baroness, Lady Pinnock, has given the House the details of these and I will not repeat them, but this has been raised by the National Housing Federation and I am sure it would welcome a meeting with the Minister to discuss the technical detail.

Next, I would like to mention the new portal. The Government have recognised the need for local authorities to have information about PRS properties in their area, for landlords to be clear about their responsibilities, and for tenants to know where to go for help if their landlord fails to put right a problem. The TDS Charitable Foundation’s survey work raises serious concerns about the ability of tenants to enforce the new rights that the Bill will give them. It is developing a new “My Housing Issue” gateway or portal, to which the noble Lord, Lord Best, referred, which will act as a signposting service. I understand that it will identify for tenants the correct route to solve their problems, encourage an early resolution of disputes and provide relevant information about housing rights and options. I certainly encourage the Minister to look at this in relation to the new portal; it may be very helpful.

I now turn to my main concern: the way the new PRS ombudsman will be selected. The new ombudsman will play a vital role in delivering the Government’s objectives to improve experience in the sector for tenants and landlords alike. I declared my interest as chair of the board with responsibility for the Property Ombudsman. TPO deals with complaints and requests for assistance from private sector tenants of the 39,000 property agents who subscribe to this service. The new ombudsman will provide that service for PRS tenants whose landlords do not use an agent. This has been a huge gap in redress, as my ombudsman knows all too well from the thousands of requests for help that we have to refer elsewhere or to the courts.

We should not underestimate the scale of the new regulatory role proposed. The latest data from HMRC states that there are almost 2.4 million incorporated private landlords in England, with almost half owning only one property. Moreover, local authorities, which are responsible for investigating poor housing standards and taking enforcement action against rogue landlords, are overstretched, as we know. At the same time, many tenants struggle to enforce their rights through the courts, not least because, as the Law Society notes, 44% of people in England and Wales do not have access to housing legal aid providers in their local authority area.

The scale of, and challenges for, an ombudsman for this part of the private rented sector will be completely different from those presented, for example, in the social housing sector. Given the size of the task, it seems right that the Government have said they have yet to decide how the new position will be filled and supported. Clearly, this requires an open competition among the existing bodies in this field, to determine which might provide the best service.

However, the Minister made clear today that their preference is for the Housing Ombudsman, which covers the social rented sector, to have its remit extended to cover private sector landlords. I find that quite confusing because, although the decision about who should operate the service looks like a foregone conclusion, the Government have been at great pains to explain that no decisions have yet been made about whom to appoint to run the service. Indeed, the Housing Ombudsman has indicated that he is undertaking preparatory work, funded by the Government, to investigate how the PRS ombudsman could work and how it should be funded.

In a Written Question I put to the Minister some weeks ago, asking for the extent of the support provided to the Housing Ombudsman and the terms under which it was provided, the Government declined to provide that information. I can tell her that the gossip in the sector is that it is about half a million pounds. That does not bode very well for fair, open and transparent processes. Given what the Minister said about the Government’s preferred option, has she considered that TPO has uniquely detailed knowledge and experience in the private rented sector and is certainly well placed to be considered to deal with complaints for the landlord part of the sector?

This is my main point: in making important appointments for this role, it is imperative that the Government follow a clear and transparent procurement exercise, not least to ensure the best value for the taxpayer. Given that, can the Minister confirm that the Government will publish clear criteria setting out how they expect the new PRS ombudsman to operate and ensure that they fully consider all potential providers of the service? I reiterate that I broadly welcome the Bill as a chance to empower tenants to call out bad practice in the private rented sector, while supporting the vast majority of private landlords who do the right thing.

--- Later in debate ---

[Baroness Swinburne (Con)]

I thank noble Lords.

Some noble Lords were concerned that the Bill restricts landlords’ ability to charge a market rent. I will be very clear: this Government do not believe in rent controls, unlike the noble Baroness, Lady Jones. Nothing in this Bill prevents landlords increasing rents to the market rate each year or dictates what rent they can charge at the start of a tenancy. Tenants can appeal above-market-rate increases to the First-tier Tribunal, which will make an objective assessment and determine whether to raise, or indeed lower, the proposed rent. The noble Lord, Lord Marlesford, referred to the First-tier Tribunal—I think he wanted it to go. We are working closely with the Ministry of Justice and the judiciary to assess the impact on the First-tier Tribunal of this new Bill. We anticipate that the reforms will lead to an increase in cases, but we will ensure that the tribunal has the capacity to deal with these cases.

Regarding overall supply, noble Lords asked what measures in the Bill will mean for supply in the private rental sector. I will try to reassure noble Lords—if not today, maybe as we go through the Bill—including the noble Lords, Lord Frost and Lord Carrington, and the noble and learned Lord, Lord Etherton, that there is no evidence to suggest that a fairer private rental sector for tenants and landlords will lead to a reduction in supply. The statistics I have from the department suggest that the sector doubled in size from 2004, peaking in 2016, and has remained roughly stable since then; we will continue to monitor the impacts. New costs to landlords are expected to amount to a tiny fraction of average annual rents, at approximately £10 per landlord in England. We are by no means complacent and recognise the vital role that good landlords play in providing homes for millions of people across the country. That is why the Bill requires the department to provide an annual update to Parliament on the state of the private rented sector, to include stock, size and location of properties.

With regards to social housing supply, noble Lords have heard me talk at this Dispatch Box, on a number of occasions, about the affordable homes programme of £11.5 billion. I will not rehearse those arguments today in the interests of time, but they underpin the supply part of the equation. Since 2010, there have been an additional 482,000 affordable homes for rent, of which 172,600 are for social rent.

On retired clergy, the right reverend Prelate the Bishop of Chelmsford raised concerns that the Church of England Pensions Board will no longer be able to evict existing tenants to house retired clergy. The way this has been achieved until now is through the use of Section 21, which we are abolishing. Ground 5 allows landlords to evict tenants from properties which are usually held to allow ministers of religion to perform their duties when needed again for that purpose. She is therefore correct that the ground will not apply in situations where they wish to house retired clergy. We have carefully considered the needs of tenants and religious organisations when reviewing the grounds for possession, and we believe that the ground balances the unique needs of the sector—ensuring that religious ministers can occupy properties where needed to carry out their duties—with the rights of existing tenants.

I will write to the noble Baronesses, Lady Pinnock and Lady Warwick, about the ground 1B impact on social landlords and how we will select the administrator for the PRS ombudsman. I bow to the experience of ombudsmen of the noble Baroness, Lady Warwick, which is much greater than mine, but I can tell her that the Bill allows for government either to select a scheme through an open competition or to appoint a provider to deliver a designated scheme. To reiterate, we have not made a final decision on what is happening, and we are not ruling out the possibility of delivering this through alternative provision. Our priority is choosing a provider that offers a high-quality, value-for-money service. I will seek the clarification that she has asked for and will revert with more detail on the process being used as discussions continue on the Bill.

On the cost of the ombudsman, which the noble Lord, Lord Marlesford, raised, it is right that the landlords pay for this scheme. It is in line with common practice for funding other redress schemes, including for social landlords, who pay some £5.75 per unit for membership of the Housing Ombudsman scheme. We will ensure that the fee for private rental is proportionate and good value.

On portal offences, local authorities will have a duty to enforce where landlords fail to comply with their portal obligations. Tenants who become aware that a landlord is, for example, not registered on the portal or has provided inaccurate information can contact their local authority so that they can take the appropriate enforcement action.

I reassure the noble Lord, Lord Truscott, that we recognise the importance of having a healthy supply of private rented homes at affordable prices in all parts of the country, which is why we are taking decisive steps to stop short-term lets undermining the supply of long-term homes for local people. This includes abolishing the furnished holiday lettings tax regime, introducing a national mandatory register of short-term lets, and introducing a new planning use class for short-term lets.

On the suggestion by the noble Lord, Lord Adonis, that we should introduce a specialist housing court, we do not think that this is the best way to improve the court process for possession. This view is shared by the judiciary, which responded to our call for evidence. A new housing court would not address the concerns raised by landlords, such as the timeliness and complexity of the processes. We are committed to reforming the court system instead. Indeed, the majority of tenancies end without ever going to court. For those that do, where court reform is necessary, we will make sure that the system is working. The new system will have great new training for the analogue system to do the immediate new contracts, followed by digitisation. I am a lot more optimistic that new, large digitisation projects can now be delivered on time, and I am confident that we will be able to scope and deliver this as quickly as needed.

If it is okay with the House, I will continue, as there is not much left. On the portal duplicating the work of selective licensing, unlike the property portal, selective licensing schemes aim to target specific local issues by enabling more intensive, proactive enforcement strategies. The two are therefore complementary and do not prevent each other from working.

The question from the noble and learned Lord, Lord Etherton, was very detailed and, I am sure, very precise. I will write to him on it once my department’s legal experts have had time to consider his points—otherwise, I am in danger of stepping into waters that I cannot.

With regard to the comments on guarantors, we recognise that some tenants have difficulties in meeting such requirements. The use of guarantors and upfront rent can give landlords confidence to rent to individuals they might otherwise not choose to, but we will continue to carefully monitor both practices, to ensure that they are not having an adverse effect on the market. We have already committed to limiting upfront rent through the Tenant Fees Act if necessary.

With regard to the death of a tenant, we are extending the period for ground 7 to be used. The Government are aware that tenants who have been living in a property for a while may reasonably believe that they have a right to remain living there, which is why we have introduced an extension from 12 to 24 months to help resolve cases where disputes might arise, particularly for grieving tenants.

With regard to legal aid, which was mentioned by the noble Baronesses, Lady Thornhill and Lady Lister, the Ministry of Justice is investing an additional £10 million a year in housing legal aid through the non-means-tested Housing Loss Prevention Advice Service—HLPAS—to give people the best chance of keeping their home when they fall into difficult financial times. Through this scheme, tenants can receive free, non-means-tested advice as soon as they receive written notice that their landlord is seeking possession of their home. The MoJ is funding a panel of specialist legal advisors to provide grant funding for the recruitment of trainee solicitors to support that endeavour. Free on-the-day legal help will continue to be available when a tenant is facing the loss of their home at a possession hearing in the county court.

It is true that private landlords must meet existing minimum efficiency standards—the MEES regulations—which are set at EPC E. Although we will not tighten that requirement, as we have in the social sector, we will work with landlords. We are currently investing some £6 billion this Parliament and a further £6 billion to 2028 on making buildings cleaner and warmer; this is in addition to the £5 billion that will be delivered through the energy company obligation, ECO4, and the Great British insulation scheme up until March 2026. Landlords can and should participate in these schemes to upgrade their properties.

In conclusion, I thank all noble Lords—

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I do not wish to prolong this. In relation to the comments that the Minister made on ongoing discussions about the role of the landlord ombudsman, could she undertake to ensure that the following is taken into account? The Cabinet Office guidance makes clear the importance of avoiding

“multiple redress schemes within individual industry sectors”,

and goes on to note that this is best achieved

“by utilising existing Ombudsman schemes”.

I hope she will take that into account, or ensure that it is taken into account.

[Baroness Swinburne (Con)]

I will take that into account, but I also extend an invitation to the noble Baroness to meet my team to discuss this in more detail.