Renters' Rights Bill (Seventh sitting)

Carla Denyer Excerpts

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[Carla Denyer (Bristol Central) (Green)]

It has just occurred to me that the same question might apply to houses in multiple occupation, in areas where section 4 is applied. When the Minister looks into it, will he include that as well?

[Matthew Pennycook]

I am more than happy to include that in my correspondence with the Committee.

--- Later in debate ---

[David Simmonds]

I share the Minister’s view of the amendment. We note the evidence that the vast majority of the MOD estate already meets the decent homes standard. The previous Government acted to apply the decent homes standard to the MOD estate in 2016 and, as far as I am aware, the commitment given by the previous Minister, Jacob Young, remains the Government’s position unless we hear otherwise. However, the amendment highlights a significant issue across Government: the NHS has a significant residential estate for the accommodation of nurses and doctors on hospital sites, and the Home Office also has a significant estate.

As the Minister outlined, because it broadly falls within the private rented sector, the vast majority of asylum accommodation is likely to come within the purview of the Bill by one means or another—and the decent homes standard applies to it anyway. There are a couple of issues that arise in respect of that. One is the way in which that standard will interact with unregulated children’s homes. As part of the care leaving pathway under the Care Act 2014, local authorities have a duty to secure accommodation, which is designed to provide an element of support for a young person preparing to move towards adulthood.

In many cases, because of the need for that support, but also due to that young person’s age, the home falls outside the regulation of Ofsted, which normally conducts inspections of regulated children’s homes. We have known for some time that the Department for Education is looking at issues that have arisen from time to time with the standard and quality of that accommodation. It would be helpful to understand how the decent homes standard may be applied, or whether there is separate action within the remit of the Department for Education—which has made announcements about this—that is designed to address the issue.

Finally, I welcome what the Minister said about temporary accommodation—that there is a degree of discretion, but that the aim is to bring the temporary accommodation estate within the remit of the decent homes standard. One of the challenges is around the homelessness duty introduced by the Homelessness Reduction Act 2017. Many local authorities will have a conversation with a homeless household about that household or individual securing for themselves private rented accommodation. Sometimes the quality of that accommodation is not good, particularly in areas with high demand for it.

With that, I return to the subject of temporary structures, such as caravans, chalets and things like that, which are sometimes on authorised sites with planning consent, but sometimes not. We simply want an assurance that, where individuals access accommodation through that route—where the local authority is paying or subsiding the rent to prevent homelessness—but the structure is unlikely to meet the decent homes standard from the outset, there will be an appropriate enforcement mechanism or at least clarity, so that, in a sector with the highest satisfaction rate but also the most egregious outliers, the most vulnerable and marginalised people can enforce their rights.

[Carla Denyer]

I rise to support amendment 72, tabled by the hon. Member for Taunton and Wellington, who made a compelling case for the need to provide adequate housing for those who serve us in the armed forces. I want to pick up on the reassurance that the Minister attempted to offer us on the existing regulatory regime for asylum accommodation, which he believes is sufficient. There is a two-word answer to whether it is sufficient: Bibby Stockholm. Would the Bibby Stockholm meet the decent homes standard? No, it clearly would not, and the Bill is an opportunity to fix that.

[Matthew Pennycook]

I will respond briefly, partly because a number of the issues raised are outside my ministerial responsibility. I commit to replying in writing to the points raised in relation to the responsibilities of the Home Office and the Department for Education, to give the Committee more clarity. Some of those details will come out when we consult. Everyone is assuming that we are talking about the decent homes standard as if it exists—it does not exist. We need to consult on what those specific standards will be and introduce the regulations.

The powers we have given ourselves in the measures will ensure that the standard can be extended to temporary accommodation, and to other types of housing provision where needed. I will happily come back on the point that the hon. Member for Bristol Central raised about the provision of asylum accommodation.

--- Later in debate ---

[Matthew Pennycook]

These provisions deal with financial penalties. Schedule 5 sets out the process for a local housing authority to impose a financial penalty on a person and applies to clauses 39, 56, 64 and 89. Foremost, schedule 5 stipulates that, before imposing a financial penalty, a local housing authority must issue a notice of intent setting out its reasons for issuing the fine. Landlords then have 28 days to make written representations to the local authority—I have discussed this point outside of Committee with the hon. Member for Broadland and Fakenham. Following that period of representations, the local authority must decide whether to impose a penalty. If it decides to issue a penalty, the local housing authority must then issue a final notice detailing the fine to be paid by the landlords, who will be able to appeal a decision to impose a penalty or the amount of the penalty by bringing an appeal to the first-tier tribunal within 28 days. The process in the schedule follows the precedent of the Tenant Fees Act 2019 and is similar to the process in the Housing and Planning Act 2016.

Clause 99 applies the schedule 5 procedures and rules for imposing, appealing, recovering or applying the proceeds of a financial penalty related to the anti-discrimination provisions, rental bidding, landlord redress schemes and the private rented sector database. I commend the provisions to the Committee.

Question put and agreed to.

Clause 99 accordingly ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 100

Rent repayment orders: liability of landlords and superior landlords

[Carla Denyer]

I beg to move amendment 41, in clause 100, page 120, line 9, leave out from “order)” to the end of line 12 and insert—

“—

(a) in subsection (1), omit “, beyond reasonable doubt,”;

(b) at the end of subsection (3), insert—

“(d) section 46A (where an order is made against more than one landlord or there has been a previous order”;

(c) after subsection (3), insert—

“(4) Where the application for a rent repayment order relates to an offence under sections 1(2), (3) or 3(A) of the Protection from Eviction Act 1977, the First-tier Tribunal must be satisfied, on the balance of probabilities, that the offence has been committed.

(5) Where the application for a rent repayment order relates to any other offence to which this Chapter applies, the First-tier Tribunal must be satisfied, beyond reasonable doubt, that the offence has been committed.”””

This amendment would apply the civil standard of proof for Rent Repayment Orders pursued on the basis of a Protection from Eviction Act 1977 offence.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 101 stand part.

[Carla Denyer]

The amendment is related to amendment 44, which I spoke to a few days ago, and to the serious issue of illegal evictions. Amendment 41 would apply the civil standard of proof for rent repayment orders, known as RROs, which are pursued on the basis of the Protection from Eviction Act 1977 offence, known as PFEA—I apologise; there will be acronyms. RROs are extremely difficult for renters to bring under the PFEA offence, due to the criminal standard of proof. As the Minister himself pointed out in our discussions on illegal discrimination, it is notoriously difficult for tenants to prove landlords’ culpability to a criminal standard of proof.

As I understand it, RROs for PFEA offences require a landlord who has committed an offence listed in the 1977 legislation to repay rent that has been paid in respect of a tenancy or licence. RROs are brought in the first-tier property tribunal, often as compensation by self-represented applicants who seek to reclaim rent they have paid to their landlord. Importantly, legal aid is not available for RRO claims, so tenants are almost always on their own. Currently, RRO claims require a criminal standard of proof. That is inappropriate because an RRO is not a criminal prosecution. It does not follow criminal procedural rules, or result in a criminal sentence or a criminal record if the defendant is convicted. As things stand, PFEA RROs are an anomaly. A civil claim in a civil court for illegal eviction or harassment applies the civil standard, despite the fact that civil claims typically attract much higher penalties in the form of civil damages. It is therefore logical and consistent to apply the civil standard of proof to PFEA RROs, in line with the rest of civil law.

What is more, RROs are intended to be accessible to lay applicants, but although that may be so for licensing offences, it is far from the case for PFEA offences. Lay applicants—I would include myself in that category, because I would also make the following mistake—might understandably focus on proving one aspect of the offence, for example the locks being changed, rather than a separate part of the offence, for example by proving the intention of the landlord. To a non-lawyer, that might seem an insignificant distinction, but intention carries substantial legal weight.

Often, these offences are not just difficult but impossible to prove to a criminal standard. Often, if a landlord changes the locks, they do it when the tenant is not at home. Illegal eviction and harassment occur in the privacy of renters’ homes, often without witnesses or evidence. The criminal burden for PFEA RROs places an extra and often insurmountable burden on lay applicants to prove their case at tribunal. It has a chilling effect because it prevents many claims from being brought in the first place, as the evidence to meet that standard is simply not available. Under the current standard, therefore, renters cannot apply for RROs as they cannot prove their case beyond reasonable doubt, even when it is clear that an offence has occurred and that only the landlord would be motivated to commit it. That error weakens enforcement and access to justice, and it undermines the purpose of RRO legislation.

The incredibly low number of RROs and PFEA eviction offences demonstrates that the system is not working. Safer Renting—also known as Cambridge House—and the University of York have conducted research estimating that, over the two-year period from January 2021 to December 2022, there were at least 16,089 illegal evictions, and that number is almost certainly an undercount. Meanwhile, data gathered from the organisation Marks Out of Tenancy—founded in my constituency, as it happens—shows that in the same period, from 2021 to 2022, there were just 31 RROs in which a PFEA ground was successful. That is 31 out of more than 16,000. The system simply is not working.

I appreciate that the statistics that I have referred to might be explained by several things, but the standard of proof is certainly part of the problem and could be part of the solution. In fact, given that we are getting rid of section 21 evictions, I fear that failing to apply the civil standard of proof will risk creating the unintended consequence that illegal evictions will soar, as landlords find a way around the protections introduced by the Bill. I hope that, on that basis, the Minister will consider my amendment.

[Matthew Pennycook]

I will begin by addressing clauses 100 and 101, and I will then turn to amendment 41, which was tabled by the hon. Member for Bristol Central.

Clauses 100 and 101 make provision about the application of rent repayment orders to superior landlords and to company directors. To be most effective, tenants and local authorities need to be able to seek a rent repayment order against any landlord in the chain who has committed an offence. We are seeing a rise in so called rent-to-rent arrangements, which are often used by criminal landlords to mask illegal and exploitative practices and escape enforcement action. Clause 100 provides that superior landlords in such arrangements can be subject to rent repayment orders; that is currently not possible. With this important clause, we are ensuring that superior landlords cannot avoid their responsibilities. Rent repayment orders need to act as a sufficient deterrent to criminal landlords. Some criminal landlords see financial penalties simply as a cost of doing business. Clause 100 therefore doubles the maximum amount payable under a rent repayment order from 12 months to two years, making the deterrent effect significantly stronger.

Clause 101 will enable rent repayment orders to be made against directors and other similar officers of landlord bodies corporate that have committed a listed offence. Currently, if a tenant pursues a rent repayment order against a sham rent-to-rent or landlord company, the company can escape the penalty by virtue of having few or no assets or by simply dissolving. The clause will prevent this practice, for example by ensuring that, where certain conditions are met, individual directors of such companies can have a rent repayment order made against them. The clause ensures that rent repayment orders can be used effectively to tackle unscrupulous landlord companies and sham rent-to-rent companies.

Amendment 41 concerns an issue that the Government have previously considered and that I continue to keep under close review, namely what might be done to address the fact that proving illegal eviction and harassment to a criminal standard is, without doubt, extremely challenging and the prevalence of rent repayment orders in this area relative to other offences is low as a result.

As I have said before during our proceedings, the Government are clear that illegal eviction and harassment are serious criminal offences that cause significant harm and distress. Perpetrators must be robustly punished. It is right that the Housing and Planning Act 2016 extended repayment orders to cover these offences and that this Bill takes steps in other areas, including expanded civil penalties, to bear down on them.

Amendment 41, for which the hon. Member for Bristol Central made the case eloquently, would reduce from criminal to civil the standard of proof that needs to be met for rent repayment orders to be awarded in relation to unlawful eviction and harassment. To be candid with the hon. Lady and to explain my thought process, my concern about her amendment is primarily about the implications that it could have for the integrity of the rent repayment order regime as a whole. RROs are a mechanism designed to provide redress and act as a deterrent in relation specifically to criminal offences. As such, I fear that lowering the standard of proof for individual offences, as proposed in her amendment, runs the risk of weakening the link between the culpability of the landlord and the making of a rent repayment order. If the tribunal does not need to prove beyond reasonable doubt that the landlord committed an offence, we could see a weakening of that link.

I am absolutely committed to ensuring that rent repayment orders are effective across all the listed offences. I feel that that has to be balanced against the need to maintain the coherence, efficacy and fairness of a regime that is, as I hope she will acknowledge, in most instances working extremely well and that we want to strengthen. As we introduce the strengthened rent repayment orders in the Bill, I am mindful that we do not want to inadvertently damage the functioning of that regime, which we need to build upon.

Although I am more than happy to continue a dialogue with the hon. Member for Bristol Central on the matter, I kindly ask her to withdraw her amendment. We would have to resist it if she pushed it to a vote, and I would like that not to happen. We keep this area under review, and I would like to keep the conversation going.

[Carla Denyer]

I have a follow-up question. If the Minister desires to keep the criminal standard of proof for RROs, will he consider speaking to his colleagues about amending legal aid, so that it is at least available to tenants who would otherwise need to represent themselves in criminal courts?

[Matthew Pennycook]

I hope that the hon. Lady will appreciate that I cannot, as a Ministry of Housing, Communities and Local Government Minister, give her that commitment in Committee today, but we are having conversations across all Departments. This is an issue that the Government have considered, and I keep it under review. I recognise the challenge that the hon. Lady rightly poses, and which we have considered, which is that rent repayment order prevalence in this area is far too low.

As I have said, I worry about the unintended consequences of making what would amount to quite a significant change to the RRO regime. We want to strengthen it, because it is working and has worked incredibly well—particularly since the changes made in the 2016 Act—in providing effective tenant redress and acting as a deterrent. I am mindful about accepting significant changes in Committee, but I keep the matter under review. I will have those conversations, and my Department’s officials have had conversations across Government on this and many other areas.

[Carla Denyer]

On the basis of the Minister’s kind agreement to keep the conversation open—I will follow up on that—I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 100 ordered to stand part of the Bill.

Clause 101 ordered to stand part of the Bill.

Clause 102

Unlicensed HMOs and houses: offences

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider clause 103 stand part.

Renters' Rights Bill (Eighth sitting)

Carla Denyer Excerpts

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[The Chair]

Good afternoon. Before we proceed, I should say that I am fully aware that a number of Members on both sides of the Committee have not served on Committees before. If you have any problems or questions, do not be frightened—just ask. I may know the answer, but if I do not, the Clerk certainly will.

New Clause 1

Impact of orders for possession on credit ratings

“(1) The Financial Conduct Authority must develop guidance for credit rating agencies on the impact of orders for possession on the credit ratings of tenants.

(2) Guidance prepared under this section must—

(a) outline that being subject to an order for possession under Grounds 1 to 8 must not negatively impact an individual’s credit rating;

(b) be published within three months of the passing of this Act.”—(Carla Denyer.)

Brought up, and read the First time.

[Carla Denyer (Bristol Central) (Green)]

I beg to move, That the clause be read a Second time.

I rise to move the new clause tabled in the name of the hon. Member for Walthamstow (Ms Creasy). The purpose of this probing new clause is to explore how we can ensure that renters’ credit scores are better protected against the negative consequences of having to move. I do not seek a vote on the new clause, and the detail of the wording may not be exactly right, but its purpose is to let us discuss what we can do to fix an injustice.

When tenants move repeatedly, it can affect their credit scores, making it harder for them to secure mortgages and get reasonable credit on credit cards and so on. It is not the actual act of moving home that affects someone’s credit report, but the admin that goes with it. Lenders like to see stability in personal details, so if someone moves house often, it will show up on their personal records as part of their credit report and could be a red flag. Opening more than one account with a utility provider in a six-month period would likely cause a person’s score to drop until they can prove they can pay their bills responsibly and on schedule, at which point it would start to build back up again.

It is important that we protect renters who are forced to move because their landlord seeks possession of a property for a reason that is not connected to their behaviour or ability to pay their rent. It is an injustice that renters’ credit scores suffer as a result of such actions. Fortunately, the Financial Conduct Authority is undertaking a review of credit referencing. I raise this issue in Committee because it is relevant to the work we do, but rather than looking for a vote, I am looking for a commitment from the Minister to write to the Financial Conduct Authority to ask for renters’ credit scores to be included as part of its current work.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve under your chairmanship, Sir Roger. We aired the issue of credit worthiness and its impact on prospective tenants’ ability to secure a property during earlier deliberations on the Bill, and the Minister has given detailed responses about how the Government are treating this issue. I welcome the fact that the new clause is a probing one. In my view, it is a sensible question to pose, as is the question about the availability of rental insurance to those who may have a poor credit history when they seek to secure a property and undergo checks as part of the affordability process. I hope the Minister will give us an indication of how the issue will be dealt with, but I am confident that the Government have it in their sights and an appropriate solution is in the offing.

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the Chair, Sir Roger. I thank the hon. Member for Bristol Central for moving the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy), and I thank the shadow Minister and the hon. Member for Taunton and Wellington for their contributions.

The Government absolutely agree that unwanted private rental moves are not only stressful but extremely expensive in terms of both the unrecoverable costs associated with moving home and the significant up-front costs of moving into a new property, including tenancy deposits. That is why one of the Bill’s main objectives is to remove the threat of arbitrary evictions and increase tenant security.

Under the new tenancy system a small proportion of tenants will still find themselves evicted through no fault of their own in circumstances where the landlord has good reason to regain possession of the property—for example, if the landlord or a close family member wishes to live in it as their only or principal home. I therefore recognise the worthy intentions behind the new clause—namely, to ensure that tenants’ credit scores are not adversely affected by unwanted moves resulting from the use of such possession grounds.

However, I am not convinced that the new clause, which would require the FCA to issue guidance on how possession orders specifically should be reflected in an individual’s credit score, is necessary, because tenants’ credit scores are not adversely affected by evictions under ground 8 possessions. Credit reference agencies do not receive information about possession orders from the courts, and as a result possession orders are not recorded on people’s credit reports and do not negatively affect their credit scores.

I acknowledge that there is a distinct, but related, issue in respect of the impact on credit scores of changes of address in general, on which it is worth noting two things. First, the methodology that underpins credit scores is not uniform across different credit reference agencies. Experian, TransUnion and Equifax, for example, each have their own distinctive approaches to credit scores, including in how they reflect changes of address. Secondly, almost all lenders review a person’s credit report when assessing an application for credit, and a change of address would still be recorded on those reports.

Whether it is feasible and sensible to seek to have the FCA attempt to ensure that credit reference agencies treat moves resulting from the use of certain possession grounds set out in schedule 1 differently from changes of address more generally is an entirely valid question, albeit one somewhat distinct from that posed by the specific wording of the new clause. As things stand, I am not entirely convinced that it would be, but I will happily seek to ensure that Treasury Ministers engage directly with the FCA on this matter, including on the review cited by the hon. Member for Bristol Central. However, for the reasons I have stated, I will not be able to accept the new clause and ask the hon. Lady to withdraw it.

[Carla Denyer]

I and thank the Minister for his consideration and beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 2

Review of the impact of the Act on the housing market

“(1) The Secretary of State must publish an annual report outlining the impact of the provisions of this Act on the housing market in the UK.

(2) A report under this section must include the impact of this Act on—

(a) the availability of homes in the private rental sector;

(b) rents charged under tenancies;

(c) house prices; and

(d) requests for social housing.

(3) A report under this section must be laid before Parliament.”—(David Simmonds.)

Brought up, and read the First time.

[David Simmonds]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

[David Simmonds]

The measures for selective licensing have been in place for some time, and we certainly see lot of learning from the local authorities that have operated them. On the whole, those have tended to be in high-density urban areas. Clearly, a concern for the Opposition is how that interacts with the new measures introduced in the Bill, whereby there will be a nationally procured database with a set of accountability measures operated by the Secretary of State. That could interact unhelpfully with local databases. I hope that the Government are determined to learn the lessons from those existing selective licensing arrangements. The Opposition’s view is that given the measures introduced by the Bill, selective licensing in the way that it is currently undertaken would no longer be necessary nor appropriate.

[Carla Denyer]

New clause 9 would head in the opposite direction from new clause 5. It is about removing unnecessary barriers to the use of licensing schemes to improve housing standards. The new clause would do two things. First, it would increase the maximum duration of discretionary licensing schemes from five years to 10. Secondly, it would enable local authorities operating selective licensing schemes to use licensing conditions to improve housing conditions.

Licensing can be an effective way to improve housing standards for at least three reasons. First, it is proactive. It provides a means for local authorities to inspect privately rented housing using enforceable conditions and to identify and resolve problems without the need for tenants to have complained, and it provides that proactive regulation in a locally tailored form. It makes major contributions to area-based issues such as crime, antisocial behaviour and waste management, and it brings together a range of bodies to focus additional support services—for example, for landlords and tenants, improving public health and reducing burdens on the NHS. There are a huge number of wins, and I have experienced that at first hand with licensing schemes in my local authority.

Secondly, licensing is self-funding. It means that the market pays for its own regulation, which is a good principle, rather than relying on the taxpayer. It provides a sustainable and predictable source of income that enables local authorities to maintain staffing levels and support the training of new officers.

Thirdly, licensing is targeted. It enables local authorities to target regulation where that is most needed, so that the worst landlords and the most vulnerable tenants get the most attention and landlord costs can be minimised in other areas.

The problem, however, is that local authorities have to implement licensing schemes with their hands tied behind their backs, because previous Governments have made various decisions that have placed unnecessary and irrational barriers in their way. Given that licensing schemes are expensive and time-consuming for local authorities to initially introduce, it does not make sense to restrict the period over which they can act to only five years.

New clause 9 would amend sections 60 and 84 of the Housing Act 2004 to increase the maximum duration of discretionary licensing schemes, which includes both selective licensing schemes and additional—sorry, jargon again—for HMOs from five to 10 years. That would allow local authorities to advertise for longer-term posts for officers and to include training of new staff in those schemes. It would also provide more time for local partnerships formed through such schemes to become embedded and effective.

The new clause also addresses another issue, which was highlighted by the Chartered Institute of Environmental Health during oral evidence. That respected body pointed out that it does not make any sense to have the current peculiar disconnect in the 2004 Act, whereby local authorities can introduce selective licensing schemes to address poor housing conditions, but they cannot include a directly enforceable requirement relating to the housing condition as a condition of the licence—so they do not have the tools to do what they are set up to do. The new clause would therefore amend section 90 of the 2004 Act to enable local authorities to use licence conditions to improve housing conditions directly.

I stress that the new clause does not cover all that needs to be done to remove barriers to licensing. For example, I also urge the Minister to commit the Government to removing the Secretary of State’s ability to veto selective licensing schemes covering more than 20% of the local authority area.

[Matthew Pennycook]

indicated assent.

--- Later in debate ---

[Carla Denyer]

I can see that the Minister is nodding in recognition of that, and I thank him. It does not make sense for local authorities introducing selective licensing schemes to have to spend a lot of money on preparing the paperwork for the scheme without knowing whether it will ultimately go ahead. I have seen at first hand the unnecessary impact on officer time and the cost to local authorities.

Similarly, I urge the Minister to commit the Government to removing the requirement for local authorities establishing selective licensing schemes to ensure that the private rented sector forms a high proportion of properties in the area. If there are acute issues in the private rented sector that can be addressed through a selective licensing scheme, it seems arbitrary for local authorities to be unable to establish such a scheme just because that sector does not form a large proportion of the whole housing stock. The reason why those measures are not included in the new clause is that they do not require primary legislation, as far as I understand it, but I raise them because they are directly connected to the content of the new clause.

In conclusion, the changes that I am suggesting are small, but they could make a big difference to housing standards on the ground and to the ability of local authorities to do their work. I will not push the new clause to a vote, but I sincerely hope that the Minister will actively consider it. I know that the Chartered Institute of Environmental Health would be happy to meet him to discuss any further details.

--- Later in debate ---

[Claire Hazelgrove]

I rise to speak in support of new clause 8, tabled by my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), who is not a Committee member. The new clause would provide protection for bereaved guarantors by prohibiting the application of a guarantor agreement in the event of the death of a tenant. My hon. Friend was motivated to table the new clause following the tragic case of her constituents who lost their son to suicide.

The young man was a first-year university student who had signed a private tenancy for his second-year accommodation. Very sadly, he died by suicide months before the new tenancy was due to start. His parents had signed a guarantor agreement that applied in the event of the tenant’s death, and while they were grieving the loss of their son, the letting agent pursued them for the rent on the property in which he would never live. That type of clause is not common to all guarantor agreements, and it is entirely unnecessary, because the loss of rental income due to the death of a tenant is an insurable risk for landlords.

New clause 8 would prevent guarantor agreements from applying in the event of the death of a tenant. It has been tightly drafted with the assistance of lawyers from Shelter. My hon. Friend is extremely grateful to the Minister for his positive engagement on the issue, both prior to the general election and subsequently. Although I do not seek to press the new clause to a vote, I hope the Minister will be able to give assurances either that the Government will accept the new clause or introduce an amendment to the Bill to the same effect.

I hope we can all agree that no one who is grieving the loss of a person for whom they have acted as a guarantor should be pursued for that person’s rent. That small change in the law would prevent the distress that was caused to my hon. Friend’s constituents from happening to anyone else.

[Carla Denyer]

I support new clause 8, and I would also like to speak in favour of new clause 14, tabled in the name of the hon. Member for Leeds Central and Headingley (Alex Sobel). New clause 14 seeks to address an injustice around guarantors for students. In this speech, I cite heavily evidence provided by the National Union of Students and individual student union officers in my home city of Bristol, all of whom are very concerned about this injustice.

The widespread landlord practice of demanding that tenants provide a guarantor is discriminatory, especially in this situation. Tenants are asked to put someone forward, normally a parent or relative, who owns a house in the UK and/or earns an income typically above the national average. The guarantor is asked to guarantee to pay the rent should the tenant default, and to pay for any damage to the property should the tenant be unable to do so.

Although for some, this is just an inconvenience, for tenants who are from deprived socioeconomic backgrounds, who are estranged from their families, who have a background in care or who are coming to the UK, such as international students from abroad, it can be a huge barrier to securing a home. The practice can push those unable to find a suitable guarantor into unsustainable debt, because they are forced to pay either months of rent up front or for costly guarantor schemes run by private companies. Others are forced into hostels or sofa surfing, and can even be made homeless.

The stats are stark: 13% of students experience homelessness during their studies, and that figure rises to 29% for international students. This issue has a detrimental impact on the lives of student renters and their ability to focus on their studies. It is imperative that we address the issue to ensure fair and equitable access to housing for all tenants, including students, allowing them to flourish in their education.

Landlords have several other means available to protect themselves against potential losses, including tenant referencing, rent guarantee insurance and deposit protection schemes, all of which make guarantor schemes unnecessary. I am not pushing for a vote today, but I ask the Minister to have a dialogue—if he is not doing so already—with the hon. Member for Leeds Central and Headingley, who tabled the new clause, and the NUS, with a view to including the changes in the next version of the Bill. Finally, I should mention that I have joined the all-party parliamentary group for students.

[Matthew Pennycook]

I thank my hon. Friend the Member for Filton and Bradley Stoke for speaking to the new clause tabled by my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), whom I commend for her work in this area, not just in this Parliament but in the previous one. She has been prodigious in pursuing this issue on behalf of her constituents, and I have reflected further on the points that she made on Second Reading.

The Government agree that it is unacceptable for bereaved guarantors to be held liable for unpaid rent where the only reason for it is the sad death of a tenant. Guarantor arrangements are not usually intended to protect landlords against the risk of financial loss caused by the death of their tenant; rather, they are used by landlords to reduce the financial risk of letting to a tenant who, for example, may have no previous residency in the UK and consequently no references from former landlords, or who might not successfully pass credit checks.

Although we understand that few landlords would use guarantor agreements to pursue debts that occur after a tenant’s death, we do know that sadly some do. This is an unacceptable practice that compounds the grief that families face after unexpected bereavements. I hope my hon. Friend the Member for Filton and Bradley Stoke will be reassured to hear that the Government have been considering this issue closely and in detail. We take it very seriously, and I am extremely sympathetic to the issues raised. I hope to be able to say more on Report about the matter and about the new clause tabled by my hon. Friend the Member for Dulwich and West Norwood.

I thank the hon. Member for Bristol Central for speaking to new clause 14, tabled in the name of my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel). I am grateful to my hon. Friend for his work on this issue, and for his engagement with me and on the Bill more generally. The Government understand that obtaining a guarantor may be difficult for some prospective tenants, and I absolutely sympathise with those who are in that situation. For some tenants, the requirement can, as the hon. Member for Bristol Central made clear, effectively block access to the private rented sector.

The Government are clear that landlords should consider a tenant’s individual circumstances when negotiating rental contracts. I have been concerned to hear anecdotally about some landlords insisting that all tenants provide a guarantor, regardless of individual circumstances. That said, and ever mindful of the unintended consequences of weighing in without thought, I am aware that the use of guarantors can give landlords confidence to provide tenancies to individuals who otherwise may struggle to gain accommodation. That might include those with a history of rent arrears or with no previous rental history, those who are moving out of home for the first time and foreign students. As such, I am concerned that the wording of the new clause may inadvertently make it harder for those tenants to find a place to live, despite the honourable intentions behind it.

I recognise the importance of getting the balance right between barriers and enablers to accessing the private rented sector. I will continue to engage with hon. Members more broadly and with wider stakeholders, but in particular with my hon. Friend the Member for Leeds Central and Headingley, who has diligently pursued the matter. For the reasons I have given, however, I respectfully ask my hon. Friend the Member for Filton and Bradley Stoke to withdraw the new clause.

--- Later in debate ---

[Carla Denyer]

I beg to move, That the clause be read a Second time. The new clause would ensure that landlords give permission for home adaptations where a home assessment has been carried out. There are 16 million disabled people in the UK—that is more than a fifth of the population—and 19% of them live in the private rented sector. The Equality and Human Rights Commission estimates that a shocking one in three disabled people live in private rented properties that are unsuitable for them. Research by the National Residential Landlords Association found that only 49% of landlords—less than half—were willing to let to a tenant who required adaptations for accessibility needs. That number does go up when landlords are made aware of the funding that is available, but it still falls far short of where it needs to be.

Disabled renters need the landlord’s consent to make any adaptations to their homes. The Equality Act 2010 already imposes a duty on landlords to allow and make reasonable adjustments on request from their disabled tenants. Common home adaptations include changes to make the premises safe, facilitating access to things including use of the bathroom, washing facilities, cooking facilities, light controls and so on—things that it is perhaps easy for us to take for granted.

Disabled renters who are unable to self-fund may request that their local authority pays for smaller adaptations. That includes things such as grab rails to make it easier to get in and out of the bath. Through the disabled facilities grant, which is in a separate bucket, local authorities provide up to £30,000 to pay for major works that cost more than £1,000.

I tabled the new clause to prompt a discussion about the concern raised by Disability Rights UK, which points out that, unfortunately, the disabled facilities grant is a postcode lottery system that is failing and is not fit for purpose in its current form. An investigation by journalist Vicky Gayle found that in nine council areas in England and Wales, people had to wait on average more than a year to see an occupational therapist and complete the pre-application steps. On top of that, 80% of local authorities in England and Wales are using discretionary powers to top up funding, and that extra money varies wildly from council to council. There are many common barriers, including the fact that private landlords often refuse to make adaptations and many are unaware of their legal obligations to do so.

--- Later in debate ---

[Matthew Pennycook]

I very much sympathise with the intent behind the new clause, but I am afraid I will have to disappoint the hon. Lady by saying that I do not think it is necessary, and I will set out why. The Government strongly agree that landlords should not unreasonably refuse disability adaptations. As she rightly says, there is already a requirement in law that they do not. The Equality Act 2010 provides that landlords cannot unreasonably refuse a request for reasonable adjustments to be made for the purposes of a disabled person using their home. Where consent has been sought and is refused, the burden is on the landlord to show why their refusal or any conditions are reasonable.

The hon. Lady said that the Bill does nothing to target the problem that she outlines, but I think it takes a series of steps that will support disabled renters to challenge unreasonable refusals without fear of retaliatory eviction—I am talking about the general overhaul of the tenancy system, which should provide them with more confidence in that area. In addition, when the new PRS landlord ombudsman is established, tenants may be able to make a complaint to it if they think that the landlord should have given permission for disability adaptations but has unreasonably refused to do so. That is another means of redress that will be introduced through the Bill.

Notwithstanding the hon. Lady’s point about a postcode lottery—we could rehearse for many hours the pressures on local authorities’ budgets—where a tenant has applied for a disabled facilities grant, local councils have the power to override the requirement for tenants to have the landlord’s permission to make adaptations, and to award the grant without permission if they believe that permission was withheld unreasonably. For those reasons, although I will reflect on the point that she made and although I sympathise with the intent, the new clause is unnecessary and I kindly ask her to withdraw it.

[Carla Denyer]

I will be honest: I am not convinced that the new clause is unnecessary, but I can do the maths so will not seek to divide the Committee. I beg to ask leave to withdraw the new clause.

Clause, by leave, withdrawn.

New Clause 11

Rent controls

“(1) The Secretary of State must establish a body to be known as the Independent Living Rent Body within 12 months of the date of Royal Assent to this Act.

(2) The ‘proposed rent’ referred to in section 55(2) must be no more than an amount set by the Independent Living Rent Body.

(3) The amount referred to in subsection (2) must be calculated as a function of property size, quality, local incomes, location, and such other criteria as the Independent Living Rent Body sees fit.”—(Carla Denyer.)

Brought up, and read the First time.

[Carla Denyer]

I beg to move, That the clause be read a Second time.

Thank you for your forbearance, Sir Roger, as I have proposed quite a few new clauses this afternoon, but this is the last one from me. New clause 11 proposes setting a control on the amount that a stated or advertised rent can be. A control would be set by an independent living rent body, taking account of the property’s size and quality, as well as local incomes, location and other criteria that the body sees fit to include. Local flexibility will be vital.

We have a generation of people who will never be able to earn enough to have a mortgage, and who cannot even afford their rents now. New clause 11 recognises that and aims to bring some urgently needed fairness and balance to a private rented landscape that has become grossly distorted. Giving an independent body the power to set a ceiling for new rents is similar to models of new rent regulation in Germany and Spain.

I have tabled new clause 11 to probe the Minister, and I want to be clear from the outset that I am acutely aware that this is a complex policy area and that there is no silver bullet for the terrible problem of sky-high rents in the private rented sector. I know that I will be challenged in this debate, and I welcome that; there is a vital discussion to be had to ensure that unintended consequences are avoided, and I do not dismiss the importance of that. At the same time, I hope that we recognise the significance of the debate over what we do about the affordability of rents.

I put it to the Committee that we need to consider rent controls both within and between tenancies, because unaffordable private rents are hurting people and hurting our economy. Key workers are forced out of cities and out of the communities that they have made their home. Average rents in inner London, as those of us who are newly elected MPs and getting flats in inner London are very aware, are rather high. In fact, they are 106% of a teaching assistant’s salary.

The average rent in my constituency of Bristol Central has hit nearly £1,800 a month. If a 21-year-old living in Bristol rents a single room today at the average rate, they will have put £80,000 into their landlord’s bank account by the time they reach their 30th birthday. Rising rents in Bristol forced renter Anny, her key worker partner Alex and their four-month-old baby to move city completely, and to move away from their support network when they needed it most.

Private renters spend a disproportionate amount of their income—an average of 33%—on housing costs, compared with just 10% for mortgage holders, and a shocking one in five renters spends more than half of their income on rent. That has a knock-on effect on the economy. Renters are giving more and more of their wages to landlords. Many cannot make ends meet and are ending up homeless, and those who can just about afford not to become homeless are certainly not able to save anything like the eye-watering sums needed to get on the housing ladder.

Private renters have less disposable income, and therefore less buying power, in the local economy, too. Research by the Women’s Budget Group and Positive Money UK found that high private rents disproportionately impact the spending power of women and black, Asian and minority ethnic households. The knock-on costs to the taxpayer are high, too, through spending on housing benefit and temporary accommodation.

I know that the Minister has already made it clear that he will not accept the solution proposed in new clause 11, but I hope that he will at least accept that private rents are much too high relative to incomes and tell us how the Government plan to address that crisis in the here and now.

For two reasons, I am concerned that changes to the tribunal do not go far enough to address high rents, as the Bill stands. First, as discussed previously, most tenants will not use the tribunal system, because they do not have the time and energy to navigate it. Secondly, even if every tenant did so, it would not result in rents coming down overall, in relation to incomes. The tribunal panel judges only whether a rent rise is fair based on the price of new rentals of a similar size in the area, and the prices of new rentals have outstripped inflation consistently. Rental index data from the Deposit Protection Service backs that up. It found that rents outstripped inflation by a third last year, and Rightmove reports show that asking rents outside of London have risen 60% since 2020, far outstripping inflation or wage growth.

During our evidence sessions and previous discussions in Committee, we heard the important point that rent controls are not simply one thing; they are a category of policies. In an earlier sitting, we discussed in-tenancy rent controls, to stop rogue landlords hiking rents in order to kick people out, in lieu of using section 21. That is one thing, but the new clause goes further by aiming to address the unaffordable level that private rents have reached and rent hikes between tenancies.

I expect that the Minister will mention social housing. I agree that increasing the social housing supply is critical; however, the private rented sector is in an affordability crisis now, and it will take huge amounts of effort and time to increase the social housing supply at the scale and pace needed to have any impact on private rents. Models from Generation Rent and other economists predict that building 1.5 million homes over this Parliament will decrease the rent burden by just over 1%. More social rented homes are essential, but the cost of private renting is so distorted—the market is failing so badly—that we need Ministers to step in and treat rent affordability as the acute housing emergency that it is.

I am sure the Minister will also use the example in Scotland as a reason not to have rent controls here. I would strongly caution against that, though, because the data on whether rents have increased overall in Scotland are shaky, as we heard in the evidence sessions, and, if there have been increases, the data on whether they are anything to do with rent controls are even more so—if necessary, I am happy to go into that in more detail in the debate.

I imagine that the Minister will also highlight the potential unintended consequences on the supply side and the possibility that landlords will leave the sector. However, it is not enough simply to assert that any form of rent control—remember that this is a whole category of options—will break the private rented sector or cause lots of landlords to leave. That needs to be interrogated, with proper consideration given to the contrary case that rent caps would provide a clear and stable regime for rent rises for landlords, so that they know how much they can raise the rent by and plan for the future.

I encourage the Government and the Committee to look to European countries where rent caps co-exist with large private rented sectors, such as in Germany, where more than half the population rents privately and where they also have in-tenancy rent caps. In particular, I draw the Committee’s attention to comments by the chief executive officer of Greystar, one of the world’s biggest landlords, who said recently that rent controls need not stop big investors from funding new homes:

“You do not have to have the windfall of a year of 14 per cent rent increases in order to have a viable investment product…We operate in a lot of markets around the world where rent control does exist.”

The argument against rent controls is that they will break the private rented sector, but it is already broken, with immediate and severe consequences right now, for all the reasons we heard about in the evidence sessions. However, we need to talk about the risks attached to any policy of in-tenancy and between-tenancy rent controls. Any system to introduce them needs to be carefully designed and built—I acknowledge that, and I know that point will be made to me in a moment. Some robust work already exists on the kind of principles we should consider in designing a workable system, and my new clause 11 is just one suggestion.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

The hon. Lady might be coming on to the impact of the criteria in the new clause, but I am concerned that the market could respond to them by drawing investors into just one location that was already a serious hotspot. It would be helpful to understand more about why they might help.

[Carla Denyer]

Will the hon. Member clarify what she means by “drawing into” in that context?

[Rachel Blake]

I was referring to the suggestion that the proposed independent living rent body would start setting rents under subsection (2) based on the property size, quality, local incomes and location. Given the constrained market that would establish, surely it might reduce availability even further.

[Carla Denyer]

The hon. Member is correct that I was coming to that, but I thank her for asking anyway—I do welcome a debate. There is some robust work on what rent controls can look like and, without wishing to give any spoilers about the organisations that provided us with evidence, I understand that more is coming. I draw the Committee’s attention to work done in 2019 by the New Economics Foundation, which looked at how we might arrive at a rent control system in London. It set out six key building blocks all about how to transition carefully and gradually from the current market free-for-all to a controlled system, and there are some lessons to be learned there about how we address supply issues.

--- Later in debate ---

[Matthew Pennycook]

The hon. Lady’s new clause, which she has set out clearly, seeks to require the Government to establish an independent body to set the maximum rent at which a landlord could advertise a property in writing, under clause 55, which I remind Committee members requires a landlord or a person acting on their behalf to state a specific and proposed rental amount in a written advertisement or offer for a proposed letting. Although I very much recognise the concerns in relation to rising rents generally and extortionate within-tenancy rent increases in particular—I do not think anyone on the Committee dismisses those concerns, particularly in parts of the country with hot rental markets, as referenced by my hon. Friend the Member for Cities of London and Westminster—I do not believe the approach proposed in the new clause is necessary or proportionate.

I understand from the hon. Member for Bristol Central that her new clause is intended to provoke debate, and I am more than happy to debate it. However, I must confess that when I was considering the new clause’s specific wording, I struggled somewhat to ascertain how the new independent body would operate. I think she has given us a bit more clarity on her thinking, but I am still a little unsure. I will therefore put the two options in my mind that it might reasonably take.

It could mean that every landlord and letting agent in England would need to engage with the body proposed by the hon. Lady to set a maximum starting rent for every property they seek to advertise on every occasion that they require a new tenant. I think that is what she was driving at when she said that it would have to take into account specific factors relating to each property. We are debating the specific measure rather than a general point but if that is the case, the costs of administrating such an arrangement, which would have to apply to the approximately 950,000 new lets that occur each year, would be likely to be enormous. In my view, it would almost certainly have an impact on the time that landlords and tenants take to agree a rental price.

If, as the hon. Member for Bristol Central touched on later in her remarks, the body would simply be required to set maximum rents on the basis of broad principles and therefore not account fully for variation in the market, it would in effect be overseeing a form of rent control. The Government believe that would impact negatively on tenants as well as landlords, as a result of reduced supply, discouraged investment and declining property sales, as I have set out in detail previously.

I gently push back on the hon. Lady’s assertion that I am just asserting such a point; I have given the Committee extensive references to some of the negative impacts of various forms of rent control in other countries. There are academic studies on countries such as Sweden and Germany, and from cities such as San Francisco and Ontario, which show that rent regulation can have those precise effects. I was in Rome at the G7 yesterday, discussing this very matter with the German Housing Minister, who acknowledged that while there are benefits to the system in Germany, it has had an impact on supply in places. It could have a detrimental impact on tenants if we introduce it into our system here.

I am more than happy to debate. I think we will debate the issue throughout the Bill’s remaining stages in this place, and I am sure it will be a source of debate in the other place and again when it returns to us. I do not want to test your patience or the Committee’s, Sir Roger, by repeating the long discussion we have already had about rent control. I simply reiterate that the Government are confident that the Bill strikes the right balance when it comes to addressing, in particular, unreasonable within-tenancy rent increases. We do not believe the establishment of a body along the lines that the hon. Lady proposes would be beneficial to tenants or landlords.

I have made the point, and will do again, that the legislation is not the Government’s only answer to affordability pressures in the private rented sector. The hon. Lady referenced the Government’s intention to deliver the biggest increase in social and affordable housing in a generation. I appreciate the urgency with which that needs to take place. She is more than welcome to clarify the point, but I hope she commends the additional £500 million of funding in the recent Budget, the top up to the affordable homes programme this year and the action we are taking on right-to-buys, giving local councils 100% retention of discounts from sales. There will be more to come, not least when we set out further Government investment in the spending review next year.

On the basis of all the points I have made, I ask the hon. Lady to withdraw new clause 11. I do not think it will be the last time we debate the matter as part of the Bill or more widely across the Parliament.

[Carla Denyer]

I certainly welcome additional funding for social housing, and I know that many local authorities do too, although I suspect that most if not all would also say that they need more than that. In terms of what exact model of rent controls we are talking about and how the independent living rent body works it out, I am deliberately not attached to exactly how to do that.

As I mentioned, there are 17 European countries that have some form of rent controls; they are all tailored to specific circumstances and some have worked better than others. My point is that we should not rule out an entire category of available tools on the basis of looking at a few examples that have not worked. I would rather we look at how we could make it work or, if not, at what the Government are going to do instead to tackle affordability in the private rented sector, given that the positive measures on social housing are unlikely to bring down rents in that sector by anything like the necessary amount.

As it is clear that the Minister will not support new clause 11, I suggest he should at least consider the merits of setting up a living rent commission to undertake work to inform evidence-based decision making about what we can do on the issue. When I was a Bristol city councillor, I was the co-proposer with a Labour councillor of commissioning a local version of that work to look at how rent controls could theoretically work in Bristol if the Government gave the council the necessary powers. We took that route specifically because we were aware that several options were available, so we first needed research on how it might work and how to avoid unintended consequences. I would love the Government to commission an equivalent study at a national level so that we can make informed decisions in future.

[Matthew Pennycook]

I am afraid I cannot give the hon. Lady that commitment. She somewhat downplays the amount of thinking that has gone into this legislation by my officials, me and my colleagues as to the appropriate and necessary measures. We think the measures strike the right balance. This legislation is not the only intervention we are making on affordability pressures in the private rented sector. As I have said, I am more than happy to continue the debate with the hon. Lady in the remaining stages of the Bill.

[Carla Denyer]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

[Matthew Pennycook]

May I take this opportunity, Sir Roger, to put on the record my thanks to you and to the other Chairs of the Bill Committee? Several Committee members are new to the process, and you and the other Chairs have done an incredibly effective job, with patience and generosity, of helping everyone to navigate the process.

I thank our exemplary Clerks, the Hansard Reporters, and the Doorkeepers for overseeing our proceedings. I also thank my officials and private office team, who have supported me and worked tirelessly over a short time to bring forward the Bill that we have debated in recent weeks.

Finally, I thank all hon. Members, including the shadow Minister, the hon. Member for Taunton and Wellington and the hon. Member for Bristol Central for the spirited and constructive dialogue we have had. I value all the contributions and the challenges that have been made. I know that we are united in wanting to deliver the best legislation that we can for all our constituents.

As we end this stage of scrutiny and prepare for Report stage, I hope we can all agree that these important reforms will finally provide certainty for the sector and deliver meaningful change to millions of renters and landlords. I look forward to further engagement with all hon. Members as the Bill progresses through its remaining stages.

Renters' Rights Bill (Fifth sitting)

Carla Denyer Excerpts

Committee stage
Thursday 31st October 2024 Public Bill Committees

[Matthew Pennycook]

I do not think I would make that particular point. To expand further, we have taken this particular approach because we think there is a benefit provided by the burden of proof that local authorities are required to meet. It is also the case that making breaches of rental discrimination provisions a single civil matter in England is in line with our wider discrimination legislation, in the way that it is not in Scotland and Wales—we will come on to discuss those points.

It is worth noting that, where there is evidence, local authorities can take enforcement action against either the landlord or the letting agent, or indeed both, if the letting agent has been party to the breach, and they can face multiple fines. They are civil fines at the £7,000 level rather than the criminal fines found elsewhere in the Bill, which have a much higher threshold of £40,000. I hope that answers the point made by the hon. Member for Broadland and Fakenham. Again, if he writes to me, I am happy to give him a more detailed answer.

I hope that I have reassured the shadow Minister as to why we have taken this approach and that we have considered its impact on different cohorts. It is important that the power provided for in clause 38 is there. We will take it forward only very specifically, as I have said, after consultation and through the affirmative procedure, but we want to have it so that the system can to adapt to any new instances of discrimination that arise. To go back to the point that my hon. Friend the Member for Doncaster Central has put to me fairly frequently, if sufficient evidence is brought to us that shows that certain cohorts, be it care leavers or anyone else, are facing the type of discrimination we want to bear down on through the Bill, we can more easily add them and cover them with that power.

[Carla Denyer (Bristol Central) (Green)]

I will quickly clarify the comments made about my amendment 78 by the shadow Minister, and then I will discuss my amendment and answer some of the Minister’s points. If I heard correctly, the shadow Minister said that he did not support the amendment because it mixes up compensation with criminal penalties, but my understanding of the conversation that we have just had is that the clause uses civil law rather than criminal law, so that point does not stand—or have I misunderstood something?

[David Simmonds]

I raised the question to bring some clarity to it. My hon. Friend the Member for Broadland and Fakenham, who has a lot more legal experience than I do, highlighted that different standards are applied to the burden of proof, and that the way in which those standards are applied also varies because of the tariff. It is important to fully understand what we are dealing with. As the Minister’s response showed, the Government’s approach is correct in that the bringer of the enforcement action would be the recipient of the penalty.

[Carla Denyer]

In that case, I am pleased to confirm that I have anticipated those questions and concerns, and I can answer them now. Amendments 78 and 79 provide a mechanism for the complainant—the tenant, or the prospective tenant in this case—to receive a portion of the financial penalty imposed by a local housing authority as compensation for being discriminated against.

First, let me give a little context. As the Committee has heard in oral and written evidence, discrimination is rife in our private rented sector, and the Bill has the potential to deliver real change for those who find themselves wrongly and consistently locked out of housing. A YouGov survey from last year shows that 52% of landlords harbour a preference against tenants who are in receipt of benefits, and the English housing survey 2021 to 2022 found that one in 10 private renters said they had been refused a tenancy in the past 12 months because they received benefits. That shows the scale of the problem.

Families with children also face serious discrimination. There are 1.4 million families in the private rented sector with dependent children, and we have already discussed the harmful effect that it can have on them.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Does the hon. Lady think that the ombudsman could play a greater role in determining outcomes? Her point on the damage that discrimination can do was well made, but the Bill may be able to address that discrimination in other ways.

[Carla Denyer]

I thank the hon. Lady for her question, which I will come to in a moment. I have considered the role of the ombudsman, but the point of amendment 78 is predominantly to incentivise tenants to engage with the enforcement of the local housing authority.

Given the seriousness and scale of discrimination, bold measures are required. Though I welcome the Bill’s intention to stamp out discrimination, the reforms will only be as effective as the enforcement that underpins them. Under the legislation, local authorities will remain dependent on prospective tenants reporting a breach in the first instance. Let us bear in mind that we are discussing discrimination before somebody becomes a tenant—it is discrimination in the advertising of a property—so the prospective tenant may well not have an incentive for pursuing it. Local authorities will be dependent on tenants reporting the breach in the first instance, maintaining a potentially lengthy co-operation with the local authority and assisting the inquiry all the way to its conclusion.

That is a real burden. A tenant who has been refused a tenancy will likely still be contending with the extremely pressing issue of where they are going to live—they may have just been served an eviction notice or they may have had to move out of their accommodation quickly for another reason. They are unlikely to have the time or energy to volunteer their services for free to the local authority in exchange for no benefit.

I want to address a point that the Minister made against the amendment. In the circumstances I mentioned, the chance of tenants falsely or speculatively submitting a complaint is pretty slim, because they will have pressures on their time. If the prospective tenant were to get a cut of the amount received by the local housing authority, that would be a good incentive for them to report discrimination to the local authority, and discriminatory landlords would begin to be rooted out.

[Matthew Pennycook]

Will the hon. Lady give way on the point she just made?

[Carla Denyer]

Can I get to my next point? I suspect that I am about to answer the Minister’s question.

[Matthew Pennycook]

If the hon. Lady answers it, I apologise. I want to make two points. First, I understand her concern about tenants not having an incentive to take a complaint to the local authority. We want tenants to make legitimate complaints about rental discrimination, and I think that can be encouraged through Government messaging and guidance.

Secondly, one of the four concerns I expressed was about the impact on local authorities. Has the hon. Lady spoken to her own local authority to determine how comfortable it feels about losing £1,400 out of every £7,000 fine for a breach under this provision?

[Carla Denyer]

I will plough on, because I was indeed going to come to that issue.

First, however, I will address one of the Minister’s other points on the convergence of penalty and compensation principles. I understand his purpose in pointing out that these are not normally combined, but there is a precedent. Sharing the proceeds of a civil penalty between public bodies and the person on the end of the wrongdoing is a departure from the norm but, as I understand it, under section 214 of the Housing Act 2004, if a landlord has failed to comply with the tenancy deposit protection regulations, a court can award a tenant a sum of between one and three times the deposit they paid.

While there is no question in that legislation of sharing an award with the local authority, it is nevertheless an example of the convergence of penalty and compensation principles in a single move. Although deposit protection rules do not give us a blueprint for the proposal I put forward in amendments 78 and 79, they demonstrate that an acknowledgment elsewhere in housing law of the importance, proportionality and justification of restitution for tenants, which also serves as a form of deterrent and admonition for rule breaking, all in one go.

The Minister may be aware that I tabled an amendment to increase civil penalties for exactly the reason that he has highlighted: if the local authority is to share the proceeds with the tenant, the total amount should be higher to ensure that it covers the cost of the local authority taking on the enforcement. That amendment was not selected for debate, so I will not shoehorn in my comments on the subject, but since the Minister specifically asked me about it, I will make the case for increasing the total civil penalty. I proposed that it be increased to £15,000 so as to not harm the local authority’s ability to undertake enforcement activity, as well as to properly reflect the time and expertise involved in the local authority pursuing such cases. I think that addresses the concerns the Minister raised.

In conclusion, the tenant is the linchpin upon which a discrimination case such as this depends. On that basis, I believe that some form of financial compensation for the person on the end of the illegal treatment is fair and proportionate. They can pursue a case with the housing ombudsman case as well, and there is an argument for taking into account whether the tenant has received something through the housing ombudsman in determining what they receive in my proposed scheme, or vice versa, but the function of the two tools is different.

[Rachel Blake]

Will the hon. Lady give way?

[Carla Denyer]

I am seconds away from finishing my point, so I will give way shortly. My amendments 78 and 79 are designed to ensure that the ambition to eradicate discrimination in the private rented sector is realised, by giving tenants incentives to take the step of reporting and aiding investigations. I ask the Minister to consider that because, to put it bluntly, I am not sure that a public information campaign from councils will incentivise tenants as he suggested.

[Rachel Blake]

Does the hon. Lady acknowledge that her description of some kind of arrangement between the ombudsman and her proposed scheme would be incredibly burdensome, complicated and opaque for tenants? It would not necessarily deliver the type of justice she described.

[Carla Denyer]

A number of the organisations that gave evidence suggested something along those lines, and they had looked into the viability of both mechanisms existing in parallel. I do not have the exact chapter and verse of what they said in my head; we can look at that in Hansard.

[Sam Carling (North West Cambridgeshire) (Lab)]

On the suggestion made by the hon. Member for Bristol Central, the civil penalty income is imposed by a public body as a punishment for breaking the law. There is a point of principle about whether it is right—whether there is a precedent—to give a contribution back to the tenant from that. It feels very unusual to me.

I have a brief question for the Minister; it may be that as a new Member of Parliament I am not used to this yet. Is it normal to specify the amount of the fine in primary legislation? Can that cause problems later in respect of needing to uprate it with inflation or anything like that?

[Matthew Pennycook]

On the point made by my hon. Friend the Member for North West Cambridgeshire, it is conventional to put the amount of the fine on the face of the Bill. There are provisions in the Bill that allow the Government to increase the fine to reflect the increase in inflation over time, so it is not a static, once-and-for-all £7,000 or £40,000 in the case of criminal offences.

On the point from the hon. Member for Bristol Central, I sympathise very much with the intent. We have to ensure that prospective tenants who face direct or more subtle forms of discrimination take a complaint to the local authority, but I have confidence that tenants will, and I have concerns about the approach she specifies. First, on a point of principle, the penalties are imposed by a public body for breaking the law. They are not a mechanism for compensation. It would be a departure from the norm, as she rightly appreciates.

My primary concern—I think the hon. Lady underestimates it even with the increased fee she proposes —is that there would be a significant impact on local authorities. They will take issue with losing 20% of the fine they can levy. I will check with her local authority after I leave the Committee as to whether they would be happy to lose that.

[Carla Denyer]

Will the Minister give way?

[Matthew Pennycook]

Let me develop this point; then the hon. Lady is more than welcome to come back on it. Even if the loss of 20% of the £7,000 were covered by an increased fine, there are good reasons why we do not think that the fine should be higher in the Bill. Setting that aside, we think there would be significant administrative burdens to overseeing a system that redistributes part of a fine issued and secured via the specified means through the local authority. Different arrangements would need to be put in place to facilitate that. Financial incentives might create the risk of tenants taking cases where there is not sufficient evidence to press local authorities to investigate.

We have already had extensive discussion on whether, through this Bill, local authorities will be able to effectively enforce, because of the resource pressures on them. We are committed to new burdens funding to ensure that they can. I think that putting additional administrative burdens on them in the way specified is the wrong approach. The hon. Lady did not address this point, but there are real practical difficulties in identifying who has been the subject of discrimination. In her example it is simple, with a single tenant, but in cases of multiple tenants, what is the proportion of the compensation to be paid?

I think the hon. Lady’s amendment references instalments and a subdivision of the amount compensated for. This would be an over-complication of the Bill’s provisions. I am confident that the provisions will work in the way intended and that tenants will take their cases to local authorities. There is a duty on local authorities to enforce the provisions. The approach I put to the previous Minister was to put the onus on tenants and to enforce through the Equality Act. We are taking that burden off tenants and placing it on local authorities, imposing on them a duty to investigate and take action in cases of such increases. For those reasons, I am afraid I cannot accept the hon. Lady’s amendments.

[Carla Denyer]

I have a few follow-up questions for the Minister based on what he just said. First, does he recognise that 20% of double the amount still leaves a significant increase for the local authority? He was talking about the local authority receiving a reduced amount, but losing 20% of double the amount still means a larger amount than previously.

[Matthew Pennycook]

If the hon. Lady will give way, I can address that point.

[Carla Denyer]

My next point relates, so the Minister can probably address them together.

Secondly, the Minister said there were good reasons why he had selected £7,000 specifically and not a few thousand above or below that. Will he expand on why £7,000 is the magic number?

Thirdly, I would like to understand the Minister’s view on how tenants will be incentivised to have the prolonged engagement with a local authority that would be necessary to see the process through to conclusion—with only a public information campaign?

[Matthew Pennycook]

First, what research has the hon. Lady done on the administrative burden on local authorities of subdividing the amounts of money they take in through breaches to give that 20%? It is easy to say, “Increase the amount and the 20% is covered,” but, as I have put to her, there would be significant additional administrative burdens from setting up the type of arrangements she wants to see.

Secondly, why does the hon. Lady think that under the arrangements in the Bill tenants will have to spend an inordinate amount of time co-operating with the local authority to enforce breaches? As I have said, the onus is on the local authority duty, under the legislation, to investigate. Tenants have to co-operate, but I do not see any circumstances where a huge amount of their time is spent on investigation and enforcement. That is for the local authority. Does the hon. Lady have any more insight on those two points?

[Carla Denyer]

I have not myself done the calculations and consultations on what that might take a local authority. However, the amendment is based on evidence provided by experts in the evidence gathering part of the Committee’s work. I am trying to get the written evidence up on my parliamentary laptop, which is not co-operating. Off the top of my head, I believe it was from Shelter—I will try to look in a moment, when I have sat down. I am sure Shelter has done the work, so I would be pleased to get back to the Minister on the details when I can lay my hands on them.

Apologies, but I have forgotten the second thing the Minister said.

[Matthew Pennycook]

I simply asked why the hon. Lady thinks the process set out in the Bill will require huge amounts of tenant energy and time to see the enforcement process through. As I said, there is a statutory duty on local authorities in the Bill to take the process through. We have put the onus on them, not tenants. I wonder why the hon. Lady assumes it will take lots of effort on the part of the tenants themselves to seek redress through the provisions that the Bill sets out.

[Carla Denyer]

Yes, I remember now that the Minister asked whether I expected the tenants to investigate. I do not expect the tenants themselves to investigate, but I expect that a level of ongoing engagement will be required, which would be onerous if they are trying to flat or house-hunt and move house at the same time. My experience as a councillor for nine years, and as an active citizen, is that it often requires several successive engagements with a local authority to get the desired outcome.

[Matthew Pennycook]

I will respond briefly because I have set out in some detail the Government’s view on the matter. If I can say so politely, there were a huge number of assumptions in there. There is an assumption that the tenant will have to spend inordinate amounts of time working with the local authority to enforce the provision. We do not want that to be the case. Tenants will have to engage, but the onus and duty is very much on local authorities to do the work.

The hon. Lady underestimates the amount of cost, time and resource that would fall on local authorities in terms of having to set up and administer a more complicated scheme to redistribute money. The ombudsman has powers in this area to investigate complaints. The provisions in the Bill are specifically targeted at ensuring that local authorities, through that civil offence procedure and that lower burden of proof, can take action to enforce. It is right that the fees set out in the Bill are ringfenced to local authorities to be able to enforce.

I sympathise with the objective that the hon. Lady is trying to achieve, and we want tenants to take cases to their local authorities, but her amendments are flawed. I do not think they are thought through, and they rest on a series of assumptions that I do not expect to see occur in practice. For that reason, we will resist them.

[Carla Denyer]

I will follow up with the Minister on the details.

[David Simmonds]

Not that they need it, but the Government have our support in their stance on this issue.

The hon. Member for Bristol Central raises an important point. From my experience in local authorities, I know it is often extremely complicated when they seek to allocate or judge issues of compensation on civil penalties. For example, similar legislation applies in respect of environmental nuisance, and we know it is incredibly difficult to identify who has been a victim, how to quantify the level of harm they have suffered and then how to allocate an appropriate level of compensation.

Given the good will the Minister has shown on the issue, I hope there is scope for some further discussion to ensure that if there is a pattern of egregious behaviour by a specific landlord who is clearly discriminating against particular groups of people—we recognise that particularly in London there is often a high level of demand, and a tenant may visit a dozen or more properties to secure a tenancy—there is a means of providing some form of restitution for the waste of that person’s time as a result of that discrimination.

Renters' Rights Bill (Sixth sitting)

Carla Denyer Excerpts

Committee stage
Thursday 31st October 2024 Public Bill Committees

[Matthew Pennycook]

I thank the shadow Minister for those well-made questions. This is a specific problem that we are trying to target, and the majority of landlords do not engage in rental bidding. We are trying to stamp out the egregious practice of a minority of landlords who exploit the fact that, particularly in hot rental markets, there is a lack of supply vis-à-vis demand. Tenants can be pitted against each other in ways that ensure the rent of a tenancy escalates to a point beyond which many of them can afford, or which, if they can afford it, puts incredible financial strain on them.

Once these provisions are in force, we think landlords will—in much the same way as the tribunal might—determine what the market rent is in a given area and what they can expect to receive from their property, and then advertise the rent at that price. I have been asked how that would work. Will landlords not advertise a price below what they could otherwise expect? We cannot have it both ways. If a landlord can expect a certain price through a competition, that suggests that tenants can pay a slightly higher price and bid up. We expect landlords to look at the market price in a given area and advertise the property at that rent, and these provisions will ensure that they cannot encourage or invite bids over that amount.

On the specific cases that the shadow Minister raises, I would not expect organisations of the type he lists to be in breach of their fiduciary duties as a result of these provisions. I understand his point about intermediary agents, particularly in groups of property where they might look to get the best deal on any of those things. I will come back to him on that specific point in writing, because I understand the need to work through those hard edge cases, but we think that only a very small minority of landlords will be affected. This is not the usual practice across every part of the country. His points were well made, and I will come back to them.

Question put and agreed to.

Clause 55 accordingly ordered to stand part of the Bill.

Clause 56 ordered to stand part of the Bill.

Clause 57

Penalties for unlawful eviction or harassment of occupier

[Carla Denyer (Bristol Central) (Green)]

I beg to move amendment 44, in clause 57, page 79, line 31, after “section 1” insert—

“—

in subsection (4)(a), omit ‘the prescribed sum’ and insert ‘£60,000’;

(b)”.

This amendment increases the maximum fine for illegal evictions under the Protection from Eviction Act 1977 to £60,000.

[The Chair]

With this it will be convenient to discuss clause stand part.

[Carla Denyer]

I am sure we are all aware of the risk that the abolition of section 21 may lead to a rise in illegal evictions. The Renters’ Rights Bill needs measures to protect against that, and that is the purpose of amendment 44. Across the country, a segment of private landlords evade the courts and attempt to evict tenants themselves by taking actions that include changing locks, disposing of belongings, and even cutting off electricity and water supply and harassing tenants. Many illegal evictions take place in the shadow market, where landlords and letting agents deliberately breach the law to maximise rental profits. Many renters in the shadow market are on lower incomes in marginal employment, and they are unfamiliar with their rights.

In 2019, there were just 30 prosecutions of offences under the Protection from Eviction Act 1977 in the whole of England and Wales. Such a low prosecution rate allows criminal landlords to act with impunity. When sentencing, magistrates are also very lenient; fines of less than £1,000, community service and conditional discharge are common penalties for such behaviour. If the maximum fine is £40,000—as it currently is in the Bill—because of the nature of civil penalty notices, it is unlikely that the fine will ever reach that maximum unless the offence is particularly violent. So—and here is the rub—landlords may still take a calculated risk that they can save money by unlawfully evicting tenants, given the abolition of section 21. Even where illegal eviction is not violent, it is still a horrific crime, so it is appropriate that fines reflect that. I therefore propose a maximum fine of £60,000, to give space for appropriate fines to reflect the criminality and harm caused within that range.

The change would help to ensure that, for rogue landlords, illegal eviction is not the path of least resistance, as I fear it could otherwise be. Increasing the maximum will also give a strong indication to the courts that this is not just a technical breach, and that will hopefully therefore have a knock-on effect on sentences issued upon conviction.

These cases are particularly complicated and expensive for councils to pursue, and that brings us back to the point about the cost to councils that we discussed earlier, especially where landlords refer a case to the first-tier tribunal. If local authorities are bound to lose money even when they win the case, they will be hesitant to begin proceedings. Increasing the maximum fine will help them to have more confidence that they will not lose a substantial amount of money. That is particularly important in the context of 14 years of council funding cuts, as we all know, which mean that if councils stand to lose a lot, they are disincentivised to act.

[Matthew Pennycook]

As we move to the final set of clauses in part 1, we cover several miscellaneous issues. As we have heard, clause 57 concerns unlawful eviction and harassment of an occupier.

The Bill clarifies and expands grounds for possession so that landlords can take their property back when there is good reason for them to do so. Landlords must always follow correct court procedures to legally evict a tenant. There is no excuse for those who seek to gain possession in an unlawful way.

The Government are clear that illegal eviction, which can include harassing individuals to leave their home, is a criminal offence, and those who flout the rules and deprive tenants of a home in this way must be punished accordingly. Clause 57 amends the Protection from Eviction Act 1977 to strengthen local authorities’ powers to do so if they are satisfied beyond reasonable doubt that a person has committed such an offence.

At present, local authorities can only prosecute offenders. That can be a lengthy process, and the fines imposed can be low. Although local authorities will still be able to prosecute after these provisions come into force, for the first time they will be able to issue a financial penalty on landlords who evict their tenants illegally in lieu of such a prosecution. That fine will be up to £40,000. It will be an alternative route to criminal prosecution, and it may often be simpler and more cost-efficient for local authorities.

The schedule that accompanies this clause sets out the procedure that authorities must follow regarding financial penalties. That includes information on handling the imposition of financial penalties, appeals and enforcement, and how to use the proceeds of the penalties.

The provisions will ensure that local councils consistently punish the most egregious offences, while allowing them to take the context of individual cases into account. By strengthening the enforcement framework, we will deter unscrupulous landlords from flouting the rules, drive out bad actors from the sector and improve protections for tenants.

I thank the hon. Member for Bristol Central for tabling amendment 44. The Government accept that any attempt to force a tenant from their home unlawfully is unacceptable, and those who do so must be met with enforcement. However, in our view, the amendment is not required. It seeks to increase the fine for illegal eviction in the Protection from Eviction Act 1977 from £5,000 to £60,000, as the hon. Lady has just set out. However, the cap on magistrates’ court fines for these offences has already been removed by section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and the offences are punishable by a fine of any amount.

Through the Bill as a whole, we are taking strong action on illegal eviction. We are extending civil penalties and rent repayment orders, placing a new duty on councils to take enforcement action and enhancing their powers of investigation to make that easier. We consider that our approach to enforcement is a fair and proportionate one. We are taking a clear, escalatory approach to civil penalties with first time, less serious non-compliance subject to much lower maximum penalties than serious or repeat non-compliance. The Government believe that the £40,000 maximum penalty for illegal eviction will act as an effective deterrent and is consistent with other serious offences across the Bill. I point out that that is higher than under the previous Government’s Renters (Reform) Bill, in which the amount was set at £30,000. As such, in our view it will act as a greater deterrent.

As I have said, criminal prosecution of course remains available for illegal eviction, and local authorities may decide that is the right course of action for the most serious cases. In such cases, landlords can be sentenced to imprisonment or to an unlimited fine. I therefore ask the hon. Lady to withdraw the amendment.

[Carla Denyer]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 57 ordered to stand part of the Bill.

Clause 58

Abandoned premises under assured shorthold tenancies

Question proposed, That the clause stand part of the Bill.

Renters' Rights Bill (Third sitting)

Carla Denyer Excerpts

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[Matthew Pennycook]

I thank the hon. Gentleman for tabling these amendments, which allow us to have this debate. In my view—I think this is shared across the House —landlords must have robust and clear grounds for possession where there is good reason for them to take their property back. I hope that he will appreciate the steps the Government have already taken to ensure that the grounds are fair to both parties. We have overhauled the previous Government’s Renters (Reform) Bill to provide additional protections for tenants, including longer notice periods, a longer protected period and a higher rent arrears threshold. We have also scrapped the previous Government’s harmful proposals to introduce a new ground for repeat rent arrears, and we have reduced the discretionary antisocial behaviour threshold to behaviour “capable” of causing nuisance or annoyance.

However, amendments 73, 74 and 77, which would make all grounds discretionary, are a step too far. Indeed, I never argued for all grounds to be discretionary when we considered the previous Government’s Bill. Making all grounds discretionary would mean that landlords have no certainty that they would be awarded possession even if the grounds were otherwise met. That includes in situations of serious antisocial behaviour—where the tenant has been convinced of a serious criminal offence or has broken an injunction put in place to stop their behaviour. Landlords wanting to sell or move into their property could be prevented from doing so, and specialist sectors, such as temporary and supported accommodation, would not be able to guarantee regaining possession in order to house new individuals who require their support.

I assure the hon. Member that there are still many discretionary grounds in the Bill and that judges will have discretion in less clear cases or where possession may not always be reasonable, despite the ground having been met. It is absolutely right that judges have discretion where possession takes place in those circumstances, and that includes smaller breaches of a tenancy agreement or low levels of rent arrears. I believe the steps that we have taken to protect tenants provide sufficient protections against unfair evictions. On that basis, I ask the hon. Member not to press his amendments.

[Carla Denyer (Bristol Central) (Green)]

I would like to speak in favour of the amendment and to bring the Minister’s attention to the evidence we received from experts, which highlighted the fact that discretionary grounds do not make it impossible for the court to award possession. In fact, in many cases, especially ones involving antisocial behaviour, it is reasonable to assume that the courts would apply a high threshold for where to exercise discretion. Nevertheless, that does not negate the principle that there may be extremely exceptional circumstances in which discretion is needed. The Government completely tying the hands of the courts so that they are unable to consider those extenuating circumstances is counterproductive.

[Mr Amos]

I accept what the Minister says about the Bill’s intent and that there are very limited circumstances in which discretion would be available. It is disappointing, though, that it is not recognised that courts require more discretion than is given. The Bill would provide discretion only in those very limited circumstances.

--- Later in debate ---

[Matthew Pennycook]

I do not have much to add to what I have already said. I commend the clause to the Committee.

Amendment 1 agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Schedule 1

Changes to grounds for possession

[Carla Denyer]

I beg to move amendment 42, in schedule 1, page 155, line 9, leave out “1 year” and insert “2 years”.

This amendment would increase the minimum period before a landlord can use certain grounds for possession from 12 months to 2 years.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 58, in schedule 1, page 156, leave out lines 14 to 16.

Amendment 43, in schedule 1, page 156, line 15, leave out “1 year” and insert “2 years”.

This amendment would increase the minimum period before a landlord can use certain grounds for possession from 12 months to 2 years.

[Carla Denyer]

The Bill rightly seeks to address the fact that tenants do not have security in their homes. Amendments 42 and 43 would amend schedule 1 to lengthen the proposed period of protection against eviction under grounds 1 and 1A from one year to two years. This would be just one measure to start to address insecurity of tenure. It is worth recalling that the King’s Speech background briefing notes explain that one of the primary aims of the Bill is to increase tenant security and stability.

Private renting does not have to be insecure. The median length of tenancy in the UK is just under three years, while the average in Germany is 11 years. Insecurity erodes renters’ sense of belonging, and constant moving has a heavy financial cost. For children who are in privately rented homes—the Minister pointed out that they make up an increasing proportion of private renters—this insecurity takes a wider toll. Each school move at a non-standard time of year reduces expected GCSE grades by 0.5. Shelter has found that 13% of tenants with children in their household said that their last house move was stressful or upsetting for their child.

The Committee will no doubt be aware that constant moving is a major problem for private renters. Research by Shelter in 2022 found that a quarter of all private renters had lived in three or more privately rented homes in the previous five years—three different homes in five years. Amendments 42 and 43 are part of an effort to urgently change the renting culture and our ideas about what is acceptable when a property is rented out as someone’s home. I hope the Minister will look at them, not least because a central aim of the Bill is about addressing the deep unfairness of private tenant insecurity.

That unfairness is a massive problem in my constituency of Bristol Central, where a huge 47% of households are in the private rented sector. It affects many people. To give just two examples, a constituent I spoke to had to move six times in six years, and another constituent literally received her notice as she was moving her possessions into her new flat. That is unacceptable. Security is vital to allow renters to put down roots in their community and plan for the future. It is clear from the evidence gathered by the Renters’ Reform Coalition that the vast majority of tenants want security and the power to decide when to move on. They do not want the anxiety, discomfort and expense of being forced to move by a distorted, malfunctioning market.

Unwanted, unexpected home moves are stressful and costly. Generation Rent estimated in its evidence that an unwanted move costs a typical two-adult renting household more than £2,000. Almost half of renters have no savings at all. Moving frequently or a short period of time after the previous move impacts tenants’ financial resilience. For many, those costs are prohibitive and will push them into homelessness, not least because finding somewhere new can often prove impossible or mean accepting dangerous, substandard accommodation. To give one example among many from my constituents, after months of searching with no luck, a constituent and her partner had to settle for a grim place with an “unshakeable smell of damp” that made almost everything she owned “fuzzy with mould”.

Competition for properties in the private rented sector is fierce. Tenants often have little time in which to find a new home and little power to influence the terms of their tenancy agreements. They often sign 12 or six-month contracts under the current regime simply because that is the only option available to them, not because they actively prefer to be protected for only one year. Many tenants would prefer long-term security in their home. The proposed two-year protected period in amendment 42, coupled with rolling tenancies, would allow tenants a combination of flexibility and security.

We should reflect that the two-year protected period I am proposing is not radical or new—far from it. It was what was initially proposed in the former Conservative Government’s 2019 consultation, “A new deal for renting”, to ensure that security of tenure for tenants would not be undermined once fixed-term tenancies come to an end. However, when legislation was eventually brought forward, that Government watered down the protected period to just six months. The current Minister, then a shadow Minister, rightly supported a two-year protected period with regards to grounds 1 and 1A in the Renters (Reform) Bill Committee.

As well understanding its history, it is important to reflect on the fact that a longer protected period has the potential to drive professionalism in the sector. As ever, good landlords have nothing to fear from this provision. A two-year measure of security at the beginning of a tenancy is needed to create a disincentive for any abuse of the exemptions to no-fault eviction, and it would be a triple win: better for renters, for the local communities they move into, and for homelessness reduction.

The Renters’ Rights Bill is a once-in-a-generation opportunity to set out clear principles for the roles of both landlord and tenant and to develop a regulatory regime that reflects and incentivises that vision. While some landlords will have to make changes to their business plans, a two-year protected period should not amount to a significant change for many landlords or interfere with their business model. In the Renters (Reform) Bill Committee, when speaking to his amendment to create a two-year protected period, the hon. Member for Greenwich and Woolwich rightly said:

“We believe that any landlord likely to use ground 1 or 1A in good faith will have some prior awareness that they or a family member may need the property for use at some point in the coming years, or that they may wish to sell it in the near future.”––[Official Report, Renters (Reform) Public Bill Committee, 21 November 2023; c. 173.]

Buy-to-let mortgages are often made available at fixed rates for two years or longer and, currently, the average tenancy in the private rented sector is longer than two years. This should not be overly disruptive, and it can provide much-needed stability for those in most need of it.

To conclude, the change to a two-year protected period would be one of the most important things the Government could implement in the Bill to more fully deliver on their ambition to decisively rebalance renting in favour of renters. The amendment seeks to understand the reasoning behind the proposal for a protected period of one year rather than two years, as was the Minister’s position previously. While 12 months is obviously an improvement on six, we can do better to improve the security of private renting, which has such a big impact on tenants’ health, wellbeing and life choices.

[David Simmonds]

I rise to speak to amendment 58. In general terms, I am very sympathetic to the points made by the hon. Member for Bristol Central. In comparison with the UK housing market, most European countries have a much higher degree of long-term rental as part of their housing supply. The UK has a more mixed supply with a more significant owner-occupation sector. That is a challenge for the new Government, as it was for previous Governments, as we see overall demographic change bringing us a bit more in line with the housing markets of other countries. The UK, however, still remains significantly adrift of that position, which is why I am concerned that the hon. Lady’s amendments would potentially have, as with mortgage finance, a chilling effect on supply.

[Carla Denyer]

Would the hon. Gentleman be able to speak slightly louder? It is difficult to hear down here.

[The Chair]

Was the hon. Gentleman able to hear what the hon. Member for Bristol Central said?

--- Later in debate ---

As with many aspects of these reforms, I have been trying to find the right balance in this space. In my view, both proposals in this group represent extremes that take the matter too far and that would tip the scales in one direction, to the detriment of tenants or landlords. I therefore ask the hon. Member to withdraw the amendment.

[Carla Denyer]

I thank the Minister for his response. I, too, have spent a lot of time reflecting on the potential effects of the amendment, including thinking about potential edge cases, exactly as he described.

Imagine someone who became an unintentional landlord, perhaps because after buying their home, they got seconded to another country for work for a year or two. While I recognise that it might be inconvenient for a landlord to have a two-year limit, it is also inconvenient for a tenant to have instability of tenure. If someone is, for example, seconded to work abroad for a year or two, with a fixed date of return to be back in their own property, they have to consider their responsibility to provide stable housing for their tenants. If they are not able to do that for a long enough time for the tenant not to be subjected to undue costs and effects on their health, stability, education and so on, maybe the landlord needs to look into short-term lets, rather than creating a situation where somebody believes they are making a permanent home. Say that person was going abroad for a year and a half, and the limit is two years—they might have to find somewhere else to live for a few months before moving back in. Yes, that would be an inconvenience, but we have to weigh that against the huge inconvenience for tenants who have their only home constantly disrupted and moved around.

I ask the Minister to look at this again, and to think about the edge cases, as well as where the greatest inconvenience and injustice really lies between the landlord and the tenant. I would be happy to have a chat with him. I will not press the amendment to a vote this morning.

[Matthew Pennycook]

I thank the hon. Lady for her further contribution. I have weighed very carefully in the balance, and looking at the Bill in the round, whether a two-year protected period would be appropriate. I concluded it would not be, taking into account those edge cases, for the following reasons.

While I sympathise with the point the hon. Lady made about the very significant costs that tenants face with moves, and while we obviously need to ensure that tenants under the new system have the requisite amount of stability and security, she too readily dismisses the potential impact on supply in the sector. It would be inconvenient for landlords; it would be inconvenient for tenants more widely if we saw a subsection of landlords that feel that they may need to use ground 1A and would not put their property on the rental market because of the possibility that they will need to use it.

As we heard in the evidence sessions, such is the acute nature of particularly hot rental markets across the country—hers will be one; mine is another—that if we lose a chunk of supply because we say to landlords, “It is too costly, too risky for you to put your property on the market if you may need to go abroad and work for a year,” that would be to the detriment of tenants in the round.

I think the one-year period strikes the right balance. It mirrors the sort of typical fixed-term, one-year tenancy. I urge the hon. Lady to go away and think about whether, in the round, with all of the protections we have introduced vis-à-vis the previous Government’s Bill, the one-year protected period does not do enough. We will not accept the amendment. I will, however, further reflect on the points she made because, as I have said, I am sympathetic to them and had weighed up two-year protected tenancies in the context of the previous Government’s Bill, but I think, looking at this Bill in the round, one year is the appropriate period.

[Carla Denyer]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 2, in schedule 1, page 157, leave out line 13.

This allows Ground 1B to be used to obtain possession whenever the landlord intends to grant an assured tenancy to another person (whether or not it is to be granted pursuant to a rent-to-buy agreement).

Renters' Rights Bill (First sitting)

Carla Denyer Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Mr Gideon Amos (Taunton and Wellington) (LD)]

I am a landlord but only of registered social housing.

[Carla Denyer (Bristol Central) (Green)]

I am a member of the Acorn community union, which is giving evidence today.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I am a vice-president of the Local Government Association and my husband works for an organisation that has funded the Renters’ Reform Coalition.

--- Later in debate ---

[The Chair]

Three other Members are indicating that they want to come in. If we bear that in mind, with the time, we can get everybody in.

[Carla Denyer]

Q My question is a really simple one. Do you think that rents in the private rented sector are currently fair and affordable?

Theresa Wallace: It is a good question. I think that the demand is what has the effect on rents. I really believe that if we had those million social homes—I know we cannot get them overnight, but we should have a long-term strategy working towards that—you would have no pressures on rents because you would not have this imbalance in the demand and the supply, so rents would not be where they are.

Ben Beadle: Yes is the straightforward answer, for me. The rents that we have seen increased by 8.4% in the year to September. That is high by any measure, and I think, as Theresa says, it is entirely down to a lack of social housing and a lack of new stock coming to the market. It cannot be normal that you get 21 people applying to rent a property. I know the Bill deals with advance rent. As a landlord, I never ask for advance rent, but I get people saying, “I will give you 12 months’ rent up front,” before they have even seen the property. I think this mad market is not normal, and obviously it will not be resolved by this Bill. I say that because—though there are a lot of really good things in it, such as the database and the ombudsman, which we are very supportive of—it tinkers around the edges of the fundamental issue here, which is supply.

I know the Government will address social housing and right to buy, and all those things, and they are absolutely right to do so. At the same time, we do need a vibrant private rented sector. We need that vibrant private rented sector now while we work out what to do with social homes, because there is a massive lead time. What I see at the moment is everybody harking back to the wonders of the ’70s, of social housing and council housing, and looking at that as a really great thing, but we see horrible stories of local authority properties in serious disrepair. We have lower satisfaction in the social sector than we do in the private rented sector. At the same time, we are focusing on making life really difficult for responsible landlords who have good quality accommodation to bring to market. We do not want to dissuade those people from bringing it to the market; we want to encourage them. I think the sequence of this needs to be that the Bill must deliver for responsible landlords and renters, and give them security, but it must also address some fundamental issues about supply.

[Rachel Blake]

Q Theresa, I was struck by your remarks about rising homelessness. You will be aware from the public P1E data about causes of homelessness that the end of a tenancy is the leading cause of homelessness at the moment. I would be interested to know more about why you think any changes to that would actually increase homelessness.

Theresa Wallace: At the moment, a very small percentage of landlords actually terminate tenancies and serve section 21 notices. The majority of those landlords are selling, want to move back in or have rent arrears. It all comes down to our lack of supply, and losing more landlords from the sector. I think we will lose more landlords, and we are losing them at the moment—not just because of this Bill, I have to stress; they are leaving for all sorts of reasons. It might be retirement, or it might be the high interest rates that are affecting them. I do not think it is just the Bill, but our biggest issue is landlords leaving the sector when we do not have enough properties for renters.

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[Carla Denyer]

Q When I met your Citizens Advice colleagues in my constituency, they said, “We can give all the advice that you like, but ultimately, the problem is that money out is more than money in.” I have that ringing in my ears, and that inspires this question.

We all know that rents have been increasing out of proportion to incomes over the last few years, creating this growing gap where one or, at this rate, two generations of people risk never being able to afford to get out of the private rented sector. I am really worried about that, especially as that group ages. Do you think the Bill does enough to address the issue of affordability of rents and the long-term and growing problem of those generations of people, moving into old age, permanently trapped in the private rented sector?

Tom MacInnes: We will not go back to the bit about rent rises, but we will talk about some other aspects. The thing that concerns us is asking for enormous amounts of rent up front, so what we want is to have that limited to a month’s rent up front. There are also other issues around guarantors and asking for guarantors, in the next stage along the process. We think that has discriminatory consequences against people who actually can afford it, but cannot point to the evidence of it—people who could afford the rent but do not have anyone in their social circle, if you like, who could back them up for a year or whatever. We would like the instances of relying on guarantors to be reduced. If the issue of perceived affordability changes, the choice for those groups grows; we are looking for that kind of support.

We welcome the end of “No DSS, no benefits”, but we are worried about that coming in in other ways, such as someone not having rich enough friends to back them up. We would like to see that being addressed.

[Carla Denyer]

Q As far as I am concerned, you can talk about rent controls.

Tarun Bhakta: We really agree with those points about rent in advance and guarantors, which are particular priorities for Shelter. Particularly through our legal services, we have been one of the foremost organisations supporting tenants to challenge DSS or housing benefit discrimination. We see how slippery that discrimination is. It is very difficult for tenants to understand whether they have experienced it.

To add to what Tom said, we have some evidence that rent-in-advance requests are disproportionately made to housing benefit claimants, but that also applies to older renters, as do guarantor requests. Rent-in-advance and guarantor requests often come together or are linked. A lot of older renters do not have someone in their support network who is willing or able to offer to be a guarantor. The effect of these requests that landlords introduce is to lock people out of the rented sector. Tom said that they are perceived affordability issues. It is that first step into housing, and affordability is strongly relevant to that, but we find that people who can afford the rent are prevented from renting properties because of arbitrary barriers such as rent-in-advance and guarantor requests.

To answer your question more directly, it is fair to say that the Bill does not introduce measures to address affordability in the sector. We think the Government should take a longer look at that and, to go back to my previous answer, take a more reasoned approach to rent controls. Essentially, they should explore the options, particularly where rent increases for sitting tenants are forcing them out of their homes. That undermines the core purpose of this Bill, which is to provide greater security for tenants and help them to avoid homelessness. Beyond that, it is clear that we need much greater provision of social housing and much more adequate housing benefit in order to tackle some of the affordability issues in the private rented sector.

[Michael Wheeler (Worsley and Eccles) (Lab)]

Q The previous panellists believe that the Bill will increase homelessness. My simple question is: do you agree with that assessment of the Bill?

Tom MacInnes: I do not think we would agree with that, no. By way of background, the number of people that Citizens Advice is helping with homelessness has never been higher—we hit a record this summer—so the number of people who are homeless is already incredibly high. The Bill gives more power back to the tenant, so we think it redresses a power balance.

One of the things that we would like to think about to reduce homelessness is the bit that happens at the end of the tenancy. The landlord has to give a four-month notice period, but within that the tenant has to give two—two months within that four. So the tenant is given a deadline, which is shortened, to find another place, and it is often difficult to find another home. We have talked about the affordability issues. There is an issue about potential homelessness at the end of a tenancy that everyone knows is going to end in any case. We would like to see that period reduced, ideally to zero but certainly to one month.

There is also a really good case for a rental waiver—a rent-free period—within the last two months of the four so that people can afford to move out. They must be able to afford the fairly substantial initial costs of moving, and not pay two months’ rent, because there is a homelessness risk right there. No, I do not think the Bill will increase homelessness.

Tarun Bhakta: I have a simple answer followed by a less simple one. No, the Bill will not increase homelessness. We have already heard that the end of assured shorthold tenancies is the leading cause of homelessness. The Bill will eradicate short-notice and no-reason evictions, which many believe are not legitimate and would not meet the bar for eviction under the new system. We are supportive of the way that section 21 and fixed-term tenancies are being abolished and of the implementation approach set out by the Government. We think the Bill will reduce homelessness. I very much agree with Tom that, if and when tenants are served with an eviction notice, the Bill could go further in supporting tenants in access to finding a new rental home. I will come back to the point about rent in advance and guarantors.

Housing benefit claimants are disproportionately at risk of homelessness if they are served with an eviction and they face these additional barriers disproportionately. According to Acorn research, one in five renters claiming housing benefit had been asked for 12 months’ rent in advance in the last three years compared with just 6% of renters not in receipt of housing benefit, which shows how disproportionately the barrier is applied to housing benefit claimants, who are in turn themselves, being on lower income, more at risk of facing homelessness once they are served with an eviction notice. That is one area where we would say the Bill is a work in progress. We could improve that access to new rented homes where tenants are served with an eviction, and that would help people to avoid homelessness if and when they are served an eviction.

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[Claire Hazelgrove]

Q Thank you both for joining us today. It is so important to hear renters’ voices here in Parliament as we discuss this crucial Bill. A simple question from me: do you believe that, as drafted, the Bill will improve the lives of, and make things fairer for, the millions of renters across our country?

Tom Darling: Simply put, yes. We will be pushing in a number of places where we think the Bill should go further and where we do not think the Government have quite got the balance right, but the groups in our coalition have been campaigning for this change since the promise was first made nearly six years ago. We think it will be an important change to our housing system.

Ben Twomey: Yes. Our homes are the foundations of our lives. The Bill will give us some much-needed security and should drive up standards and quality. As I say, we are worried about affordability within that, but the main reason why you as politicians have probably not heard from renters so much as is in the past year or two is that things have got so desperate. We are worried that if there are some improvements to renting, suddenly we will lose our ability to have spaces like this where we can begin to make change. If this is to be a once-in-a-generation opportunity to make that change, we think you should cover all bases and make sure that no one finds themselves homeless, in poverty or in debt because of the fact that they have been forced into private renting.

[Carla Denyer]

Q You will notice that I have a rent-affordability theme, but this is probably my last question on that theme. I am aware that the Renters’ Reform Coalition would like to see a national rental affordability commission that looks into options for rent controls. If we reflect on what a previous panellist said about rent controls being not a single thing but an umbrella term for a wide spectrum of possible interventions, Tom, or Ben if you have anything to add, would you like to expand on how a national rental affordability commission might work to figure out what the best solutions would be?

Tom Darling: I think Ben touched on it. The literature shows that different types of rent control have worked best in combination with a bunch of other policy levers, and particularly the supply of social housing. If the Government are continuing to set out that affordability is not the thing they are going to deal with in this Bill, we think it would be sensible to have a national rental affordability commission that could look at all these issues in the round—including all the different policy levers such as local housing allowance, housing benefit, the supply of social housing and different forms of rent controls—to bring down rents relative to wages and make renting more affordable. That feels like a pipe dream at the moment, but it should not be. That should be our aim. If the Government are not going to take forward affordability in this Bill, that sort of commission might be a place where they could look at all the different policy levers which, it should be said, cut across different Departments, and it might be a way to take that forward.

Ben Twomey: On that point, the idea of rent regulation being a scary thing is not new, and it is something that is hammed up by the landlord groups. They obviously want to make as much as profit as they can, but they do not have a right to make profit; they have a right to seek it. In this market, it is so broken because, unlike lots of other types of markets, the landlords can just click their fingers and say, “I’m short £100 this month. I’ll get it off my tenant.” A tenant will usually be forced to pay or have no other options unless they want to leave the home or even become homeless.

It is a very broken market. We used to have regulation in many ways in the country more than 30 years ago. Things have not got better since then, so the trial we have had of not using these measures has not really worked for people. These are all things that a commission could look at, or on which the Bill could take some quite straightforward measures. Similar to the energy price cap, with which we recognise that energy is essential for our homes, our homes are also essential for our homes. We should probably think about some common-sense solutions to that.

[The Chair]

The Minister will ask the final questions.

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[Claire Hazelgrove]

Q Thank you for joining us today. I am looking at your impressive background: you have clearly done a lot of great work on homelessness and in other areas, whether at City Hall addressing rough sleeping, or on the social impact bond on homelessness. With that lens in mind, do you feel that the Bill will deliver on the Government’s aims to give renters greater security and stability and to reduce the risk of homelessness? Is there anything you want to add along those lines?

Richard Blakeway: First, thank you for recognising that previous work. There are specific things in the Bill that increase the protections for renters and the security of tenure for renters. Those are welcome and important and would prevent the risk of homelessness for some individuals. It also changes the relationship between the resident and the landlord, and addresses an imbalance of power that exists at the moment. In changing the relationship, the importance of redress is fundamental, to ensure that there is not a breakdown in that relationship and that a tenant does not end up living in conditions that are not acceptable. We must also recognise that the role of a redress provider is also to share the experience and the learning that we have through our casework to ensure that landlords can effectively fulfil their obligations and raise standards.

This Bill is not only about increasing security for individuals; it is about a wider shift and change in the role of the private rented sector in this country—a sector that is completely different from the one that was envisaged and started to emerge decades ago. It is different in scale, different in the types of properties, and different in the range of providers. So the real impact of this Bill over time will be a real shift in the landscape of the private rented sector and a raising of standards. It is important that landlords are part of that journey and can affect that in their own actions, and that an ombudsman service is there to help individuals exercise their rights, but also to provide the insight and intelligence to landlords to ensure that they prevent problems that need to go to an ombudsman from occurring.

[Carla Denyer]

Q I have three questions, but they are all yes/no, so you can be as brief as you like. First, do you agree with a previous panellist that the landlord licensing rules need to be loosened so that councils can have more discretion and flexibility to apply, for example, landlord licensing across their whole area rather than just bits of it? Secondly, do you think that the potential penalty of £7,000 that local authorities can apply is sufficient to act as a deterrent? Thirdly, do you think that the Bill goes far enough on housing quality, and especially energy efficiency, given that, as we have heard from previous panellists, homes in the UK are some of the worst in Europe on energy efficiency, and the private rented sector is the worst within that?

Richard Blakeway: On licensing, yes.

On the deterrent, yes and no. You have to recognise that the penalties have increased in this Bill, and that is important, but I emphasise my point about the scope and whether, for example, non-compliance with ombudsman decisions should be brought into the scope of that.

On energy efficiency, obviously there are significant measures in here, but it will be important to see what the decent homes standard—I think it is in clause 98—contains in order to judge what the standard of accommodation will look like in the future.

[The Chair]

I have no Members indicating to me that they have further questions, so that brings us to the end of the morning session. The Committee will meet again at 2 pm this afternoon in this room.

Ordered, That further consideration be now adjourned. —(Gen Kitchen.)

Renters' Rights Bill (Second sitting)

Carla Denyer Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Rachel Blake]

Q You rightly highlighted that tenants will rely on local authorities to pursue enforcement and that there is a very variable standard among local authorities for doing so, although you mentioned that tenants would not be able to take enforcement action themselves. You have alluded to a possible duty—that is a question that you have thrown out there—but what other alternatives might there be?

Giles Peaker: Tenants will have their existing rights under the Homes (Fitness for Human Habitation) Act 2019 amendments to the Landlord and Tenant Act 1985. Quite how far that will overlap with the decent homes standard—well, we will have to see what is in the decent homes standard. There will certainly be some degree of overlap, I imagine, through the presence of housing, health and safety rating system hazards, so there would still be a route for tenants to take action on specific hazards, but it will not necessarily enforce decent homes, full stop.

Justin Bates KC: For my part, I think that by far the better tenant-empowerment repairing provisions of this legislation are the extension of Awaab’s law to the private sector. If you get the details of secondary legislation right, that could be a real game changer, because that will be enforceable by tenants through private law proceedings in the county court. If you set sufficiently robust—fair, but robust—timescales, you will do a lot of lawyers out of work, which would be an excellent thing. Look at that.

[Carla Denyer (Bristol Central) (Green)]

This is my first time on a Public Bill Committee, Sir Christopher, so I might make a mistake with process. May I briefly point Jerome at the answers provided in written evidence and in earlier verbal evidence, which I felt answered the question already? In terms of, “Surely, won’t all tenants do it?”, I think we heard a clear answer that, for the vast majority of the population, anything to do with courts is a terrifying and bureaucratically faffy process that they will not want to engage with. On “Won’t landlords just max it out”—

[The Chair]

Order. I am going to stop you there, because this is an opportunity for Committee members to ask questions of the people who have come along as witnesses. We have limited time and once we start opening up a debate with other Committee members, it will be at the expense of being able to hear what we hope is, and is likely to be, very valuable evidence. If you have a question for any of the members of the panel, I shall be happy to take it, but if not, I suggest that you have your arguments with other Members when we get into full line-by-line consideration, when there will be plenty of opportunity for you to intervene on another Member with whom you disagree.

--- Later in debate ---

[Matthew Pennycook]

Yes, that is very useful. Thank you.

Anna Evans: In terms of the differences between your Bill and the private residential tenancy, I have to confess that I am not an expert on your Bill, so I cannot answer that in detail, but I can say that the PRT is an open-ended tenancy. It has no fixed-term period. There is the eradication of eviction with no grounds. Eviction proceedings are simplified to 18 statutory grounds and there has to be a reason—what are the grounds for eviction? There are extended notice periods and also a phased implementation. I think that is a key point. A lesson that the current Housing (Scotland) Bill is looking at is whether short assured and assured tenancies should actually just be terminated now because there has been long enough. There is still a good proportion of assured tenancies in existence—we estimate probably about 20%. Short assured tenancies are certainly less secure, so one lesson would be that if you are changing, do not do it over seven years; do not delay.

[Carla Denyer]

Q Since you are an expert on the Scottish system, I will make use of your expertise; I want to ask more about rent controls. In my understanding, when the Scottish Government initially brought in rent controls in tenancy, that was because that was all they had the power to do at the time—they brought it in using existing legislation, initially during the cost of living crisis triggered by the pandemic—and ultimately, that they might do something different. You mentioned the Bill going through at the moment. In your view, is there an inherent problem with rent controls, or could the problems that you described be remedied by having some kind of controls between, as well as within, tenancies?

Anna Evans: I think what we have concluded from all of the evidence is that the rent control has to be very carefully designed to avoid unintended consequences. It is above my pay grade to say what that design might be, but there could be a range of ways in which landlords try to get around rent control. We have seen examples of offers from tenants—I understand that your Bill will avoid wars between tenants, in terms of rent levels, but because of demand-supply imbalance, tenants do offer landlords higher rents to get properties. Evidence across different states shows that rent control efficacy is variable, so it has to be very carefully designed.

[Jerome Mayhew]

Q You mentioned unintended consequences, a topic that I have come back to repeatedly today. We heard evidence earlier that rents in Scotland have outpaced those in the rest of the United Kingdom quite considerably in, I think, the last five years. You mentioned the 2022 rent control legislation and the impact that that has had on rents. If you can strip that out in your own mind and give us an assessment of what impact rent reform has had on rents over the past seven years, can you give the Committee a flavour of whether rents have gone up as a result, stayed the same, or reduced?

Anna Evans: We show in the report that the rents increased at a similar rate to the rest of the UK until ’22. If you were trying to isolate why there was a more considerable increase since that time, you could probably fairly conclude that it was because of the 2022 legislation, but it is very difficult to isolate out. The range of legislation that has been implemented in Scotland is significant, but there was a tipping point in ’22 when rents in Scotland appear to have increased at a greater rate than in the UK. The key point was the 2022 legislation.

I should also caveat all of that—as we have in our report—by saying that the Scottish rent data is not as good. It is based on advertised rents rather than any survey of in-tenancy rents. The published data on rent levels and the hike in Scotland will be for new tenancies, and therefore, that will naturally be inflated compared with most tenancies, because we know that landlords do not tend to increase rents in tenancy. They prefer to keep them at a level that keeps tenants content and therefore they have a longer rental period. That evidence has to be considered with caution, because it is based on advertised rents.

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[Sam Carling]

Q It was about the point that quite a lot of students drop out of university, so there is an issue, on the flipside of some of the points you made before, about those students being locked in. Would you agree that this Bill addresses that?

Victoria Tolmie-Loverseed: Yes. I think a lot of landlords release tenants, certainly in the PBSA sector. If somebody leaves university or their circumstances change, I think a lot of landlords release tenants. I think it is right that if somebody leaves university, a landlord should seriously consider releasing them, perhaps with two months’ notice, and letting them leave. I think that would be a very good element of a student tenancy. Unipol is a landlord, and we release tenants if their circumstances have changed. It is a relatively small number of students who require that, but it is difficult. That would undoubtedly be an advantage to the students who need it.

[Carla Denyer]

Q I have a specific question on the new grounds for possession that we were just talking about. I interpreted the wording of the new ground that specifically gives the power to recover possession between June and September as potentially an oversight. One of the written statements we received—RRB 04, for Committee members—highlights that as well. The ground seems to fail to consider other kinds of students, such as people on a one-year Masters that starts in January, or nursing students who are often studying over the summer. I know, as I am friends with some of those people, that they found it hard enough to get housing on a non-traditional term as it was, without giving landlords a particular power to kick them out halfway through the summer when they are halfway through their course. Do you share that concern, and do you have suggestions for whether that should be changed?

Victoria Tolmie-Loverseed: There are significant numbers of students—I do not know the exact numbers, but more and more are starting with January start dates. Some universities have five points in the year when you can start a degree or a Masters. It is problematic for Masters students whose course goes on until September or October, when they are having to write up, or PhD students. That can be difficult. I think there should be more flexibility in the current timetable of June to September, and perhaps in the ability to give notice at different points in the year for student properties.

[The Chair]

I am afraid we do not have the flexibility to allow this question session to go on any further. Thank you very much for your attendance.

Examination of Witnesses

Melanie Leech, Suzannah Young and Timothy Douglas gave evidence.

--- Later in debate ---

[Sam Carling]

Q Picking up on the point you made about illegal evictions, is there anything we can do with the landlord database to help with that and some of the other issues you raise?

Anny Cullum: I think the landlord database will be excellent. It is important from our point of view that the landlord database includes information for tenants on previous enforcement action that has been taken against landlords, because you can then make an informed choice as a tenant about where you would like to rent. That will be another way to deter landlords from behaving illegally because they know they will have a mark against their name on the register. We hope the register will mean that, rather than tenants trying to compete for homes at the moment, landlords are competing for tenants by behaving in a good way and providing a good service. Having that sort of information on the database would be incredibly helpful.

[Carla Denyer]

Q I want to ask about one of the things in your submission, so this may help you to expand on it. I thought your proposal on the right to withhold rent for serious disrepair is interesting: it sounds quite radical on the surface, but in any other sector, if one party was breaching a contract and failing to deliver a service, it would be quite normal to withhold payments. Can you expand at all on how that would work in practice or how you envisage it working? What are Acorn’s views on the proposed regime for managing unaffordable rent hikes, and is it enough?

Anny Cullum: On withholding rent for serious disrepair, there are much-improved schemes and action within the Bill around the decent homes standard and improving standards for tenants, but a lot of the action set out to be taken if tenants are experiencing disrepair is retroactive or down the line. We know that councils can take a long time to act and that lots of tenants will not pursue things like rent repayment orders because they just do not have the time and energy. But if someone is living with serious disrepair—things like the damp and mould laid out in Awaab’s law, which we are pleased to see moving over to the private rented sector—we think there could be a mechanism whereby, if it is not fixed within the timescale set out by Awaab’s law, they could withhold their rent and pay it to a third party, which could then give the landlord another timescale within which to solve it. If they did not solve it, the tenant would get the rent paid back. If they did, the landlord would get the rent.

That would be an immediate incentive to do the work and stop leaving people in the dangerous conditions we see all the time. Landlords are not necessarily going to worry in the moment about a rent repayment order that a tenant may or may not put in for, which would take ages to go through a court—landlords sometimes do not even pay them anyway—whereas, if you can withhold the rent, that will speed along the process of sorting out mouldy and unsafe homes. So that is the mechanism we would think of. There are lots of considerations as to how it could work. If you consult on bringing Awaab’s law into the private rented sector, that will be a good place to think about the best mechanism to do it.

I think your second question was about rent hikes—rent rises.

[Carla Denyer]

Q Yes—whether you think that the Bill goes far enough to prevent or manage unaffordable rent hikes.

Anny Cullum: Unfortunately, no. We as an organisation at the moment would never recommend that anyone go to the rent tribunal, because we have seen tenants go there and have more rent—a higher percentage—awarded than the landlord was asking for in the first place. We are pleased to see that you are going to get rid of that, but we would like to see rent rises capped at the lower of median wage growth over the last three years or inflation. From my experience, I know most tenants are not going to go to the tribunal. It is brilliant if they do, but a lot of people will accept the rise, or have to move out because they cannot afford it, or get into debt. This means that the people who do go to the tribunal will still be judged against market rents that are way more unaffordable than the one at which they went into their contract. Does that make sense? We are not going to bring rents down just by tinkering with the tribunal.

This is mainly about making sure that people can stay in their homes and it does not undermine the Government’s efforts to prevent no-fault evictions. This could easily be used as a no-fault eviction by the back door. You could just put the rent up to a level that you know your tenant cannot afford. We do not think comparing what is affordable with new prices is the best way, so we would advocate for that cap on how much rent could be increased by.

[Connor Naismith]

Q Helpfully, the question I wanted to ask has been answered, so I will just give you the opportunity to say anything that you have not been able to cover in other answers, but that you would like to see from the Bill.

Anny Cullum: As I said, the five areas that I wanted to cover were illegal evictions, landlord licensing, capping rent up front to one month, withholding rent for disrepair and making renting more affordable. We see even the cap on in-tenancy rent rises as not really about affordability, but mainly about preventing back-door economic evictions or section 21s. We feel that, while this Bill goes far on improving security for renters, it is not going to do enough to address one of the No. 1 problems our tenants and members are coming to us with every day, which is affordability. Rents are outstripping wages all the time. We would like to see the Government set up a commission to look into ways we can bring rents down and keep them affordable once and for all. That is something that we would like to see.

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[Claire Hazelgrove]

Q Is my hon. Friend certain that the Bill, as drafted, provides enough protections against huge advance rent requests?

Matthew Pennycook: It is a very good question, and we have touched on this issue, as well as guarantors. I am happy to give the Committee a sense of my thinking, because I have reflected further on the matter in the light of concerns that have been put to us by not only external stakeholders but several hon. Members in the Second Reading debate on 9 October.

As I made clear in that debate, the Government have long recognised that demands for extortionate rent in advance place a considerable financial strain on tenants and can exclude certain groups from renting altogether. We are very clear that the practice of landlords demanding large amounts of rent in advance must be prohibited. Although it might be argued that the interaction of the new rent periods in clause 1, which are a month or 28 days, and the existing provisions of the Tenant Fees Act 2019, relating to prohibited payments, provide a measure of protection against requests for large amounts of advance rent, I am increasingly of the view, speaking candidly, that there is a strong case for putting this matter beyond doubt. I am giving careful consideration as to how best that might be achieved in the course of the Bill’s passage.

[Carla Denyer]

Q One of the topics that has come up several times today is whether grounds for possession should all be discretionary, or whether some should be mandatory and some discretionary. I understand that, when the previous Renters (Reform) Bill was going through, you were in favour of them all being discretionary.

Matthew Pennycook: That is not correct.

[Carla Denyer]

Okay, then this is an invitation for you to talk us through your rationale, because that was my understanding. While I am at it, if there is anything where your mind has changed since the previous Bill, could you briefly talk us through why?

Matthew Pennycook: It is important to give context for the debates on the previous Bill and why, in certain circumstances, we were probing the Minister on making grounds discretionary rather than mandatory, and whether we were pressing the then Minister on additional protections for tenants relating to some of those grounds. The rationale for that was ensuring that the grounds, if they were mandatory, would not be abused. I suppose where my thinking has changed on many of them—I will continue to think on whether we have done enough on specific grounds for possession to protect tenants against abuse—is that the other actions we have taken in the Bill provide the protection we need.

I will give an example. On grounds 1 and 1A, where the previous protected period was smaller and the previous re-let period was much smaller—three months, not the 12 that we are proposing—in our view there was clear scope for abuse there. In many parts of the country, particularly hot rental markets—including London, and I am sure it is the same in Bristol—landlords are quite willing to suffer three-month void periods because the rents are so high. In a sense, if that is your re-let period on those mandatory grounds, you can get rid of what you consider a problem tenant, such as one who has complained perhaps entirely appropriately about damp, mould and other hazards. If you wait the three-month void period, then re-let, you have effectively recreated section 21 by the back door.

I think we have dealt with the abuse, which is from memory where we were probing the Minister about the discretionary or mandatory distinction. We have provided protections in other ways in the majority of cases. I am giving consideration, as I say, to some of the grounds and whether we have quite got sufficient protections in place. I think Justin Bates KC, for example, raised ground 6A, where action is rightly taken against the landlord whose practices need bearing down on, but the tenant should not suffer in that regard.

[Michael Wheeler]

Q I am sure the Minister will agree that we have heard some illuminating evidence today from excellent panellists. I am wondering what he sees as the key takeaways for the Bill.

Matthew Pennycook: I welcome that question; it is an open one, and I will have to think on my feet in my response. I think a number of the debates will run through the Bill. Supply is one of those. I am clear that we do not want an exodus of landlords from the sector, but I have seen absolutely no evidence of that. It is a threat that has been bandied about for many years now, ever since the previous Government announced their intention to abolish section 21 no-fault notices.

The size of the private rented sector has doubled since the early 2000s. There has been an outflux of smaller landlords, particularly overgeared buy-to-let landlords, which is mainly a result of the section 24 tax changes that George Osborne introduced in 2015, explicitly to slow the growth of the private rented sector. So there has been an exit of certain types of landlord from the sector, but we have certainly not seen an exodus.

The feedback I have had from landlords over recent months and in the previous Parliament is that the most damaging thing for many was the uncertainty about whether reform was coming through in any form. That is why we felt we needed to act quickly. In general, good landlords have absolutely nothing to fear from the new system. We think it provides a framework in which they can continue to invest and operate.

Another point that has been prevalent in the debate is protections for renters against unreasonable within-tenancy rent hikes. In designing the Bill, I have been clear where we have overhauled and strengthened its provisions to strike that balance. We do not want to do anything that could potentially make things much more difficult for tenants, which is why the Government are not advocating rent controls in the Bill. The Scottish experience is instructive of what can happen as an unintended consequence, and we think there would be an impact on supply, quality and standards, as evidence around the world shows.

In many cases there is a judgment call on students and other possession grounds, and it is is a fine balance as to whether we have got it right in the Bill. But there are competing pressures and disincentives in a system—I am being incredibly candid with the Committee here—that has not been overhauled for 30 years. Lots of the speculation about how the tribunal will operate, and how many section 8 cases will go there, is in some ways all completely speculative. We have a sense of what we want to see and how to address the risks, but until the system is properly bedded in, I do not think anyone will know what we have to do in the design to ensure that we have the balance right and will not therefore see the tribunal overwhelmed.

We want to see more people to go to the tribunal. We want section 8 cases to go through the courts more efficiently. We absolutely concede the need for court improvements, and we are working closely with the MOJ on those—I have given some examples in response to the question about what we are taking forward. There is a balance that needs to be struck, and I think we struck the right balance in overhauling the Bill in the specific ways we have, while keeping—I gave the Conservative party the credit for this at the time—the sensible provisions that were in the previous Bill, which we think need to remain at the core of the legislation.

Renters’ Rights Bill

Carla Denyer Excerpts

Wednesday 9th October 2024 Commons Chamber

[Carla Denyer (Bristol Central) (Green)]

I congratulate the new Members who have made their maiden speeches on the interesting and important points raised. I should declare that I am a member of Acorn Community Union, which campaigns on renters’ rights. Indeed, I have personally campaigned on renters’ rights for a long time now. This welcome Bill is a once-in-a-generation opportunity to recognise the rights of the 11 million people living in the private rented sector to have a safe, decent and secure home. In the words of activist Kwajo Tweneboa, we are facing

“the biggest housing crisis since the Second World War”.

We have a generation who will never be able to earn enough to have a mortgage and cannot even afford their rents now.

The average rent in Bristol Central has hit nearly £1,800 a month, which is more than in several London boroughs, and a huge 47% of households in the constituency are in the private rented sector—that is 18,000 households. As the Secretary of State herself said, good landlords who are already acting fairly have nothing to fear from this Bill, but the rogue ones—like the landlord of my constituent who made countless reports of damp mould and leaks for months with no resolution until the ceiling fell in—need to be held to account.

I really recognise the many good parts of the Bill, but I hope the Government will go further on three key issues: security of tenure, rent affordability and energy efficiency. On security of tenure, the extension of notice periods to four months for landlord sale and moving in is progress, but we must have clear evidence thresholds for those grounds of no-fault eviction and measures to ensure that the 12-month “no re-letting” period is not broken. We also need an automatic right of non-payment of rent in the final two months to compensate a tenant for the disruption of being forced to move home.

The proposal to outlaw bidding wars is okay as far as it goes, but it is not likely to be effective in tackling rising rents. Landlords could still hike rents to kick people out, so we really need a cap on rent increases within tenancies, set at the lowest of either average wage growth or inflation. Rents in advance should be capped to one month—as a Labour Member suggested—to stop discrimination against people on low incomes. But rents are too high in the first place. To illustrate this point, if a 21-year-old living in Bristol rents a single room today at the average rate, they will have put £80,000 into their landlord’s bank account by the time they reach their 30th birthday. We need a system of rent controls, carefully introduced with local flexibility, aimed at bringing rents down relative to incomes, alongside a suite of policies to address the housing crisis, including a major increase in social housing and real support for community-led housing.

[Siân Berry (Brighton Pavilion) (Green)]

I endorse all my hon. Friend’s comments, particularly on the need for rent controls. In my constituency of Brighton, I have a very high population of renters, including myself. I have only ever been a private renter since leaving home over 30 years ago. My constituency has many young people and students renting, and my local Acorn branch and the National Union of Students have also raised the problems caused by well-off guarantors being required to secure a rented home. I have spoken with the NUS president about this. It fuels discrimination against working-class, estranged and international students, and fuels homelessness among students—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I am standing, so you must be seated. I call Carla Denyer.

[Carla Denyer]

My hon. Friend the Member for Brighton Pavilion (Siân Berry) makes a good point about guarantors, and I would also like to see that issue addressed in this Bill.

Citizens Advice reports that almost half of private renters are living in homes plagued with cold, damp or mould. Winter fuel bills are due to go up by 10%, and the winter fuel allowance is being cut for millions of pensioners. It is good to hear that the Government’s regulations will apply to social housing as well as private housing, but that commitment needs to be explicitly enshrined in this Bill, and let us get going on energy efficiency—there is no time for delay. There was a consultation on energy efficiency in the private rented sector in 2020, so let us not do another; let us just get on with it. We must properly fund our local councils, which will enforce these new rights. Councils that are on the brink of bankruptcy after 14 years of swingeing cuts will obviously struggle to deliver this part of the policy.

We need a shift in how we think about renting. In policy and practice, we should move away from viewing housing as an asset—as an investment for the wealthy— and towards prioritising and valuing the right to a stable home. Almost every point of improvement that I have suggested today has been raised by members and ex-members of the Labour party, so I hope that the Secretary of State and the Minister will give them very serious consideration.

This is such a welcome and important Bill. I hope it can be made even better to become truly transformative. My Green colleagues and I will be voting for the Renters’ Rights Bill tonight.