Private Rented Sector

Desmond Swayne Excerpts

Thursday 9th February 2023 Commons Chamber

[Mr Clive Betts (Sheffield South East) (Lab)]

I am tempted to note that perhaps if Members direct their questions to me, they might get slightly better answers than from the Minister—that is probably very unfair at the beginning of the statement, because the Minister came and helpfully gave evidence to the Committee and I want to put that on record right at the beginning.

The Levelling Up, Housing and Communities Committee has published its report on reforming the private rented sector. I thank the Backbench Business Committee for providing time for a statement on that report. I also thank the staff of the Committee and its specialist advisers for their support and assistance with producing the report. I thank the other members of the Committee who, once again, agreed our report unanimously.

The Committee launched its inquiry following the publication of the Government’s White Paper, “A Fairer Private Rented Sector”, which sets out the Government’s long-term vision for the sector, particularly on matters of security of tenure and housing quality. We have been told that the Government plan to implement the proposals in the White Paper this Session through a renters’ reform Bill, and we look forward to that. We hope that the Government will examine our findings closely when finalising the Bill.

Some 4.6 million tenants in England are in the private rented sector today, representing 19% of households. Twenty years ago those tenants would typically have been students or young professionals saving for their first home. Today’s tenants are on average older, perhaps living with children, and more likely to be on low incomes. In the course of our inquiry we spoke to organisations representing tenants and landlords. We found that too often tenants are afraid to complain when things go wrong, due to the threat that they may be evicted without fault.

We also heard how private rented accommodation is more likely to be of poor quality than homes in other tenures. Some 21% of private rented homes are classed as non-decent, and category 1 hazards, such as serious damp and mould, are present in 12% of rental properties. However, the majority of private tenants are satisfied with their homes, and the majority of landlords manage their properties well. But any system of regulation has to deal effectively with those who do not—the rogues and, in extremis, the downright criminal.

In that context, the proposal to repeal section 21 of the Housing Act 1988, which allows for “no fault” evictions, is a welcome step in giving tenants the confidence to complain to landlords without fear of eviction. While the Committee recognises that the majority of private landlords have no desire or incentive to evict tenants without good reason, we concluded that the repeal of section 21 is necessary to stop unfair evictions and give tenants the security they deserve. Once section 21 is repealed, landlords will be reliant on section 8 of the Housing Act to evict tenants, particularly in cases concerning rent arrears and antisocial behaviour.

The Government intend to give landlords new grounds for possession when they wish to sell, or move themselves or close family members into their property. The Committee has identified that these new grounds could be exploited by bad landlords as a backdoor to “no fault” evictions. To avoid that, we recommend that landlords should not be allowed to sell or occupy their property during the first 12 months of a tenancy agreement, and that a property should not be marketed or re-let within six months of either ground being used.

Another challenge that risks undermining the Government’s progress on tenancy reform is in respect of court hearings required under the section 8 process. As it stands, courts are already struggling to process housing cases quickly enough, and an increase in the number of section 8 possession hearings risks overwhelming the system. In our report we recommend that a specialist housing court be introduced. That repeats our predecessor Committee’s recommendation from 2018. The Government rejected that recommendation at the time, saying that there are more effective ways to increase the efficiency and timeliness of the court process.

We are calling again for a specialist housing court to be introduced, as we have no confidence that court reforms will happen quickly enough. Either way, the Government must ensure that courts can process claims quickly, efficiently and fairly for all parties. That should include fast-tracking possession claims in respect of non-payment of rent, antisocial behaviour and serious cases of disrepair. Both landlords and tenants need that process to work effectively.

Our inquiry also considered the White Paper’s proposal that fixed-term tenancies be abolished. While we found that that would go a long way towards ensuring security of tenure for most tenants, the Committee recommends one exception, which is that this should not apply to the general student private rented sector. Students will be all too familiar with the annual dash for accommodation, with many university towns and cities now seeing queues around blocks to view properties that are reserved within hours of being listed. Abolishing 12-month fixed tenancies for that group could make letting to students much less attractive for private landlords and exacerbate the problem. Most students expect their tenancy to mirror the academic year, so we recommend that fixed-term contracts be retained for that group.

On the White Paper’s proposals on housing conditions, the Committee supports the Government’s plan to introduce a legally binding decent homes standard. This will bring standards for the private rented sector into line with those of social housing. We also welcome the proposed new property portal, which will serve as a central platform and information point with details of landlords and every property they let. That will support local authorities in enforcing the new standards, and will better inform tenants about prospective landlords and properties. However, we have heard concerns about the way the portal is being designed, in that it will only be a document-holding database. We were told that if effort is put into the design to digitise the documents it holds—particularly gas safety certificates, for example—that could be codified and automatically flag any issues, rather than tenants having to search for it.

The Committee believes that the cost to landlords of implementing the new decent homes standard is proportionate, given the £10,000 cap on costs that applies to most improvement works. However, the Committee has seen evidence that demonstrates a strong correlation between the energy efficiency of a property and its levels of damp and mould. We therefore recommend that the Government consider new financing solutions where works to improve energy efficiency may exceed that cap. If the Government are serious about raising standards in the private rented sector, they must ensure that local authorities are fully equipped to enforce the new regime. In the absence of extra funding, they must consult with local authorities to ensure that the regime can become self-financing, as well as address the shortage of qualified enforcement staff. Local authorities must be confident that they can collect appropriately large financial penalties imposed on those bad landlords who breach the standards, and get back the costs that they incur in taking court cases, which are often denied by the courts at the time.

Our report notes that data points to an apparent decline in the private rented sector, which may be associated with the rise of short and holiday-let markets. We heard that some smaller landlords believe the proposed reforms will drive them out of the sector. We urge the Government to review the impact of recent tax changes in the buy-to- let market. More broadly, the Government ought to make clear what role they wish the private rented sector to play in the wider housing mix in future, and assess their proposed reforms against that.

Although the Committee broadly welcomes the Government’s proposals for reform—I repeat, we welcome what the Minister had to say when she came to the Committee—we have some recommendations for where we believe we can improve the proposals. In the end—we challenged the Minister on this—the White Paper fails to address the most serious challenge currently facing many private renters, which is the high cost of renting caused by the housing crisis. Simply put, there has been a decades-long failure by successive Governments to build enough homes. The affordability crisis in housing can only be remedied by a significant increase in house building. The Committee previously recommended that we should be building 90,000 social rented homes every year out of the 300,000 total we all want to be achieved. Although we recognise that that was not the focus of the White Paper, there are still many unanswered questions that we hope the Government will eventually address.

I thank everybody who gave evidence to the Committee as part of this inquiry, and I pay particular tribute to Paul Owen, our Committee specialist, for his work on housing matters in recent years. I am sure that reform of the private rented sector is far less challenging than his new job in the House, which is something to do with Brexit.

It is my hope that the Committee’s report will be considered carefully by the Government and our recommendations will be implemented in full through the forthcoming renters reform Bill. In the meantime, we await a timely response from the Government—that has not always been the case for most of our recent reports —and I commend the report to the House.

[Sir Desmond Swayne (New Forest West) (Con)]

I draw your attention, Madam Deputy Speaker, to my entry in the Register of Members’ Financial Interests. Is it the hon. Gentleman’s estimate that driving relatively small landlords with a few properties out of the market is the intent of Government policy, or are we just collateral damage?

[Mr Betts]

I thank the hon. Member for his question, which is one that he must address to the Minister. Certainly, we had evidence that the reforms particularly hit smaller landlords who personally own their properties, rather than the larger landlords who own their properties through a company and can continue to offset their interest payments against their rental income.