Renters' Rights Bill (Eighth sitting)

Claire Hazelgrove Excerpts

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[The Chair]

Technically, the hon. Gentleman cannot withdraw the clause because it has not been moved, but his words are a matter of record.

New Clause 8

Guarantor to have no further liability following death of tenant

“(1) Subject to subsection (3), a guarantee agreement relating to a relevant tenancy ceases to have effect upon the death of a relevant tenant.

(2) Upon the death of a relevant tenant the guarantor in respect of a relevant tenancy shall incur no further liability in relation to matters arising under the tenancy.

(3) Nothing in this section shall affect the liability of a guarantor in relation to matters which arose before the date of the death of the relevant tenant.

(4) In assessing any liability under subsection (3), account shall be taken of any tenancy deposit paid in respect of the tenancy.

(5) Where there is more than one relevant tenant, this section shall apply only upon the death of both or all of the tenants.

(6) In this section—

a ‘guarantor’ is a person who enters into a guarantee agreement in relation to a relevant tenancy;

a ‘guarantee agreement’ is a contractual promise (whether incorporated in or separate from the tenancy agreement) to indemnify or compensate a relevant person in respect of an obligation under the tenancy if the tenant fails to perform or comply with the obligation;

a ‘relevant tenancy’ has the same meaning as in section 36, and ‘relevant tenant’ is to be interpreted accordingly; and

‘tenancy deposit’ has the same meaning as in section 212(8) of the Housing Act 2004.”—(Claire Hazelgrove.)

Brought up, and read the First time.

[Claire Hazelgrove (Filton and Bradley Stoke) (Lab)]

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

[The Chair]

With this it will be convenient to consider new clause 14—Restrictions on the requirement for tenants to provide a guarantor—

“(1) A relevant person must not, in any of the circumstances set out in subsection (3), require a person, as a condition of the grant of a relevant tenancy, to provide a guarantor in relation to the observance or performance of the tenant’s obligations under the tenancy.

(2) For the purposes of this Act, requiring a person to provide a guarantor includes accepting an offer by that person to provide a guarantor.

(3) The circumstances are—

(a) that the person has paid a tenancy deposit or has been assisted under a deposit scheme;

(b) that the person is required to pay rent in advance equivalent to one month’s rent or more;

(c) that on a reasonable assessment of their means the person’s income (including state benefits received and any other lawful source of income) is sufficient to enable them to pay the full rent due under the tenancy;

(d) that arrangements will be made for housing benefit or the housing element of universal credit to be paid directly in respect of rent to the relevant person;

(e) that the relevant person has entered into a contract of insurance under which they are insured against non-payment of rent; or

(f) such other circumstances as may be prescribed in regulations made by the Secretary of State.

(4) In any other case where a relevant person lawfully requires a person, as a condition of the grant of a relevant tenancy, to provide a guarantor, the sum for which the guarantor may become liable under the relevant guarantee shall not exceed a sum equal to six months’ rent.

(5) In any case where a relevant person requires a tenant, as a condition of the grant of a relevant joint tenancy, to provide a guarantor, the sum claimed under the guarantee shall not exceed such proportion of the loss as is attributable to the act or default of the individual tenant on whose behalf the guarantee was given; and if such proportion cannot be proved, shall not exceed the sum obtained by dividing the total loss by the number of tenants.

(6) In this section—

‘guarantor’ is a person who enters into a guarantee in relation to a relevant tenancy;

‘guarantee’ is a contractual promise to be responsible for the performance of an obligation owed by the tenant to a relevant person under the tenancy if the tenant fails to perform the obligation;

‘deposit scheme’ includes a scheme whereby a sum payable by way of depositor a bond or guarantee is provided by a local authority, registered charity or voluntary organisation for the purpose of providing security to a landlord for the performance of a tenant’s obligations under a tenancy;

‘tenancy deposit’ has the same meaning as in section 212(8) of the Housing Act 2004.”

This new clause would restrict the circumstances in which a landlord can request a guarantor.

[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.

[Claire Hazelgrove]

I beg to ask leave to withdraw the new clause.

Clause, by leave, withdrawn.

New Clause 10

Home Adaptations

“(1) The Housing Act 1988 is amended as follows.

(2) After section 16 insert—

‘16A Home adaptations

(1) It is an implied term of every assured tenancy to which this section applies that a landlord shall give permission for adaptations where a local council has carried out a Home Assessment and recommends adaptations which constitute reasonable adjustments under the Equality Act 2010. Tenants have the right to appeal a landlord’s refusal to adapt a property.

(2) This section applies to every assured tenancy other than a tenancy of social housing, within the meaning of Part 2 of the Housing and Regeneration Act 2008.’” —(Carla Denyer.)

This new clause would ensure that landlords give permission for home adaptations where a Home Assessment has been carried out.

Brought up, and read the First time.