Renters' Rights Bill (Fifth sitting)

David Simmonds Excerpts

Committee stage
Thursday 31st October 2024 Public Bill Committees

[Matthew Pennycook]

It is an absolute pleasure, Mr Betts, to continue our consideration of the Bill with you in the Chair, not least because you will have extensive knowledge of what we are talking about as we proceed through the clauses.

Before we proceed to the substantive matter, I draw the Committee’s attention to the letter that I sent the Chair this morning, responding to the various technical questions put to me in the previous sitting. I hope that Members find my responses useful. I look forward to continuing this co-operative approach as we debate the remaining clauses.

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

I put on the record my thanks to the Minister for the prompt and detailed response to the points made. We had a brief discussion this morning about a small omission involving, for example, school caretakers or NHS staff who are provided with accommodation on site as part of their employment. I am grateful that the Minister has undertaken to respond to that, too, in due course.

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Finally—this is an important point, and I hope the hon. Lady will take some reassurance from it—the private rented sector landlord ombudsman will be able to handle prospective tenants’ complaints about inappropriate landlord actions or behaviours, which could include discrimination. The ombudsman will review each complaint on a case-by-case basis and—to address amendment 78 directly—would in any case take into account previous compensation paid as they strive to put things right for tenants. For those reasons, notwithstanding my sympathy with the objective of ensuring that tenants who face discrimination make a complaint to the relevant local authority, I kindly ask the hon. Lady not to press her amendments.

[David Simmonds]

The Opposition broadly support the clauses. I have some questions for the Minister, which are matters not of amendment but of clarification.

Clause 35 deals with tenancies where there may be restrictions on children either visiting or living in a property. There has been a significant increase in the number of retirement communities across the UK, and it is quite common for them to set out a condition— for example, that occupiers must be aged over 55. That housing supply is important, especially to encourage people who are under-occupying family homes to choose to move later in life to a retirement property that is designed and built specifically for that purpose. I seek assurance from the Government that while the clause effectively nullifies any restrictions on the ability for children to live in a property, bespoke retirement communities, constructed specifically with the needs of older people in mind, will not find it a problematic provision.

We support the Government’s position in clause 40, on taking income into account. It is clear that the purpose behind the previous voluntary codes, introduced under previous Conservative Governments, and under Labour Governments with the support of the Conservative Opposition, was to bear down on the practice of restricting benefit tenants from accessing private rented property. However, as the Minister clearly said, there is a requirement for referencing checks to be undertaken. Clause 40 specifically says that there will be no prohibition on taking income into account. There is clearly a risk of a loophole in the clause, given that the Bill does not clearly specify what is meant by referencing checks.

Landlords can use insurance to cover the risk of a loss of income where a tenant defaults on a rental payment. If the insurer says, “We consider the risk of anybody on benefits to be too high,” the landlord may say, “We do not directly discriminate, but our referencing check will always decline to provide insurance for an individual in those circumstances.” There is potentially the risk that benefit claimants will fall between two stools. Universal credit is flexible and provides a top-up on a person’s rental income, so they may eligible to receive the benefit but fall outside it for a period of time. We need to ensure that that is fully taken into account. I ask the Minister to clarify the position, perhaps in writing.

Finally, I have some points relating to the interaction of all the clauses. I previously raised the issue of people who have no recourse to public funds. They are not eligible to receive benefits but may be the beneficiary of an obligation on a local authority to provide support—for example, under the Children Act 1989 or previous housing legislation. It would be helpful to understand how the clauses will apply to that group of individuals. They are likely to be creditworthy and to apply for private rental on the basis that they have a job and an income. They are not eligible for the state benefits listed in the examples of benefits that are included. We therefore need to ensure that, so far as the Government intend, they fall within the ambit of the Bill.

There is a similar issue for care leavers, about which the Minister said he has received representations. The Children (Leaving Care) Act 2000 creates a set of obligations on local authorities to secure appropriate accommodation for care leavers as they enter adulthood. Although I understand the Government’s decision not to bring a specific category of care leavers within the scope of the legislation, those who are the beneficiaries of that obligation on behalf of somebody else will find themselves discriminated against not because of rights arising from their personal circumstances but because of the obligation to somebody else—in this case, that a statutory authority has to provide support for them.

Finally, we support the Government’s position on the amendments. Although I have complete sympathy with the point being raised, as the Minister does, there is clearly a risk that what is intended to be a matter of criminal law—discrimination against an individual, whereby a court can make an order for compensation—is mixed up with a civil penalty that is designed to ensure that landlords pay appropriately.

The Minister is correct, but he may need to provide total clarity for the sake of parliamentary proceedings that a local authority will use that civil penalty in the same way as would apply if it were dealing with an issue of fly-tipping, littering or environmental nuisance, as opposed to having to prove to a criminal standard that discrimination is taking place. As those two things are different, they need to be handled differently in the way that the legislation addresses them, as my hon. Friend the Member for Broadland and Fakenham alluded to.

[Matthew Pennycook]

Let me address that group of questions, which are well understood and well made. I will respond to each in turn.

I think the shadow Minister may have got the clause wrong, because clause 35 deals specifically with superior leases and ensuring they are not enforceable. However, I take his point about what is usually older people’s bespoke accommodation. I am sure that we would all welcome children visiting those sorts of accommodation. I will provide a specific written answer to confirm this position, but I would expect a provider to argue that refusing tenants living with children in such a block would be a proportionate means of achieving a legitimate aim and would therefore be appropriately accommodated within the legislation.

On clause 40, the Bill will allow landlords to check if a tenant has sufficient income to ensure that they can afford to pay for a tenancy and it is sustainable. The shadow Minister made the point again, as he did in the evidence sessions, about insurance and referencing checks. I will give him a specific answer as to whether particular referencing checks or insurance products will, as a matter of course—I think this was his point—rule out universal credit applicants as tenants who can afford to pay. I do not necessarily think that that should be the case, but if it is, I will give it due consideration.

[David Simmonds]

It is helpful to have this conversation with regard to insurance that covers the loss of rent and insurance that specifically requires the prohibition of a child living with tenants, as referred to by clause 35. Our concern is that although the Bill’s intention is to create a clear situation where there is no discrimination against a tenant with children who would be living with them or visiting them at the property, there is a risk of ambiguity if a landlord finds, for example, that they cannot gain any insurance or that the cost of insurance is prohibitive. They would then argue that they simply could not meet their obligations as a landlord if they were to allow tenants with children who live at or visit the property. We need to therefore bring clarity so that we do not leave a loophole through the insurance market that effectively nullifies the intended impact of the legislation.

[Matthew Pennycook]

I appreciate and understand that point, and the shadow Minister is right to say that we need to bring the requisite level of clarity in this area. He has asked a series of questions in Committee on insurance products more generally and I will attempt to give him a more comprehensive answer in writing so that we can draw a line under some of his concerns.

The shadow Minister asked specifically about no recourse to public funds and care leavers, which again is a specific subset of issues that he is right to raise. I will come back to him on those as well.

On civil penalties and whether they can be proved, we have taken a different approach in the Bill from Scotland and Wales where the situation is different. While they seek to enforce discriminatory provisions through a criminal offence, we have deliberately taken the civil route because of the lower burden of proof required for local authorities, and the ease with which they will therefore be able to take enforcement action against cases of discrimination where they have sufficient evidence.

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[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.

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[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.

[Matthew Pennycook]

Can I make a further point, which I have made before but is clearly not registering? This is where we need to take a step back and look at which different parts of the Bill do what. The ombudsman can review each complaint on a case-by-case basis. Complaints can be about discrimination and the ombudsman has the powers to put things right, including by ordering the landlord to pay compensation or correct the behaviour in question. It is not that we do not think there is a case for the suggestion—we will come to the significantly strengthened rent repayment orders that we have included in the Bill—but that this is not the place for it. Clause 39 is a quite simple provision to allow local authorities to issue fines for breaches and to be able to keep that money to fund further enforcement activity. For that reason, we cannot support the amendments.

Question put and agreed to.

Clause 32 accordingly ordered to stand part of the Bill.

Clauses 33 to 41 ordered to stand part of the Bill.

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[Matthew Pennycook]

I will be brief on this group of clauses, which simply provide for rental discrimination powers and prohibitions in Wales that mirror those in England, with minor adjustments made in order to fit them into existing housing offence enforcement procedures. The measures are broadly equivalent to chapter 3 of the Bill for England, which we have just discussed at length, with adjustments made to align with the existing Welsh enforcement framework.

As I have already mentioned, Wales is taking a criminal enforcement approach, while the same conduct is a civil breach in England. That reflects the private rented sector enforcement regime in Wales, where criminal offences are in line with other housing legislation. I commend the clauses to the Committee.

[David Simmonds]

As the Minister has outlined, this is a fairly straightforward translation. First, I presume the measures will require a legislative consent motion on the part of the Welsh Government, and ask the Minister to clarify that.

Secondly, in respect of the proceeds of the fines, it is clearly envisaged in England that it will be the local authority that carries out enforcement and that the revenue from the fines will finance that. If it is a criminal matter in Wales—a criminal enforcement regime—will the same rules apply? We briefly debated the issue of whether fines in a criminal matter would go into the consolidated fund, as is currently the case with criminal penalties, or directly to the local authority, in order to finance the enforcement regime; will the Minister clarify how the matter will be dealt with in Wales?

[Matthew Pennycook]

I thank the shadow Minister for those questions. There is a simple answer to the first: yes, it requires a legislative consent motion on the part of the Senedd to bring the measures into effect.

On the approach in Wales more broadly, as I said, it reflects the established private rented sector enforcement regime in Wales. There are a number of differences. The Welsh Government, and the Scottish Government, take the criminal offence path, rather than the civil one. What that means—this is one of the reasons why we determined to go with the civil offence approach in England—is that fines are capped at £1,000 in the Welsh and Scottish contexts, whereas under the approach in the Bill we can levy £7,000, and do so repeatedly if breaches are continuous and ongoing. That is why that is reflected.

On the consolidated fund point, as it applies to the Welsh Government, I am afraid I do not have the answer. I will more than happily get an answer to the hon. Gentleman in writing.

[David Simmonds]

What the Minister said in respect of the consolidated fund is very helpful. I posed the question because, under the Bill, we will create responsibilities for the local authority to be the enforcement body, which as I understand it will apply in Wales as well, but the decision to take the criminal route is a matter for the Senedd, which is not the local authority. Indeed, there is some tension in the relationship between the Senedd and local authorities. Clearly, if the income is going into a consolidated fund or to the Senedd, the risk is that the enforcement body given the duty under this legislation will not receive any of the financial income raised through enforcement action. I ask so that we are completely clear about where the legislation will stand in Wales once passed.

[Matthew Pennycook]

I understand that point and will get the shadow Minister a precise answer in writing. It is important for the Committee and the public to have clarity on precisely all the ways in which the enforcement is, and in some cases is not, aligned in the Welsh and English contexts. I will come back to him on that point.

Question put and agreed to.

Clause 42 accordingly ordered to stand part of the Bill.

Clauses 43 to 48 ordered to stand part of the Bill.

Clause 49

Discrimination relating to children or benefits status

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