Renters' Rights Bill (Second sitting)

Gideon Amos Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Matthew Pennycook]

Q Any more for any more? Liz Davies KC: I have two points. It is excellent that you have prevented bidding wars. Clause 4, I think, is about advance rent, and we were just discussing this outside. You cannot prevent bidding wars without also having a limit on advance rent of one month, because otherwise, you have outlawed bidding wars but the landlord will then be happily prepared to let to the tenant who is robust enough to be able to offer six months’ rent in advance, rather than one month’s rent. You get back to tenants’ financial circumstances in bidding—so that point is about advance rent.

The other point is smaller and more technical, and is on the subject of homelessness. Because you are taking out assured shorthold tenancies from the homelessness regime, which allows local authorities to find people private rented sector tenancies, and you have done a lot of drafting amendments to take out the words “assured shorthold”, you have also taken out a mechanism in the Housing Act 1996 that currently allows a homeless family—where they are given an assured shorthold tenancy and that ends within two years—to reapply as homeless and where they do not have to show a priority need. It helps to deal with the revolving door of homelessness, potentially in the private rented sector. You have abolished that—I imagine inadvertently, because you are taking out the words relating to assured shortholds. However, I would suggest that you try to get that back in, so that in the more unusual cases—once this Bill has gone through—if a homeless person is given an assured tenancy in the private rented sector and it comes to an end within two years, they will be able to come back to the homelessness authority. It is section 195A of the Housing Act 1996.

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

Q You said earlier that the first-tier tribunal is working better, but did you really answer the question of whether you feel the Bill will increase pressure on the tribunal and the courts, and whether they are ready for it? Have you seen any evidence of an increase in funding, given this impending legislation?

Justin Bates KC: I want to be careful not to speak for the first-tier tribunal judges. Parliament has provided additional funding for the FTT in anticipation, not of this Bill, but of other areas. Those of you who worked on the Building Safety Act 2022 will know that you gave new powers to the FTT over unsafe buildings. Funding came along with that, because new building safety judges have been appointed. For obvious reasons, I am not privy to all the spending decisions, but as a regular attendee of the tribunal, I can see that money must have been provided. Whether you provide more money for this Bill is, frankly, miles above my pay grade.

On the increased workload, it is very difficult to say. It is plausible that there may not be that much of an increase in workload, because people can still agree what the new rent will be. If they agree it, there is no need to go anywhere near the tribunal. If I were pushed, my informed guess would be that there will be an increase in the first few years, because there always is whenever the law changes, and that it will settle down after a while, but I cannot properly comment on the minutiae of how you fund the FTT.

[Jerome Mayhew (Broadland and Fakenham) (Con)]

Q Just to follow up on that point, none of us knows what the increase in tribunal work will be, but there will be an active incentive not to agree a rent increase because you have your rent, it is going to go up, there is the delay of the process, and then at the end, the worst that can happen is that you get the rent increase that you were going to get anyway. Why would not tenants always, as a matter of course, put off the evil hour? They would get six, eight, 12 or 15 months free.

Justin Bates KC: But what I am saying is that I do not know whether it will be that long. There is an assumption in the questions, which may or may not be correct, that all these cases will need a hearing. Most of the section 13 cases that the tribunal already deals with are done on the papers. It rattles through 10 of them a day because, unless there is something specific about the property—unless you need to see it to understand the condition of disrepair, or whatever—there is no reason why you cannot do rent-based determinations on the basis of written materials: the Rightmove print-offs, the price and so on.

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[Mr Amos]

Q We have the decent homes standard for social housing, and the Bill would introduce it for private housing. That seems to me to leave Ministry of Defence housing in the middle. Can you think of any other categories of housing that would not be covered by the decent homes standard?

Liz Davies KC: Currently, Home Office accommodation for asylum seekers is not in the Bill. I am pretty sure, off the top of my head, that temporary accommodation under homelessness is, but if I am wrong about that—Justin and Giles are nodding, so it is. Temporary accommodation for asylum seekers should be there; we know that has problems with conditions.

I am sorry—I am embarrassed about this—but I should have said right at the beginning that I have acted as a consultant for the Renters’ Reform Coalition. I am not here today in that capacity, but I need to put that on the record.

Justin Bates KC: I would need to really check the detail, but housing provided by local social services authorities—Children Act 1989 accommodation rather than Housing Act accommodation—may not be covered. That might be another area of exemption. But the big one will be Crown properties: MOD, Home Office and so on. If you want to bring them in, you will need to expressly say so because, as I am sure you all know, the rule is that it does not bind the Crown unless you expressly say so.

[The Chair]

That brings to an end this evidence session. I thank the witnesses for their contributions.

Examination of Witness

Judicaelle Hammond gave evidence.

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[Matthew Pennycook]

Thank you.

[Mr Amos]

Q You mentioned the planning system earlier. Do you see any risk, because of the perceived unattractiveness of the new system, that there will be an increase in short-term holiday letting? The Liberal Democrats want to see the use class brought forward for holiday lets. Would you support that in terms of controlling it in rural areas, so that councils and communities can control the amount of Airbnb-type short-term holiday lets in their areas?

Judicaelle Hammond: We recognise that is an issue in some areas of the country that are honeypots. If the proposals that were consulted on are implemented effectively, we see a need for them.

On your question about whether some properties would become holiday lets, I think if you had asked me a year ago, I might have said yes. There are other pressures on the holiday let market that make this increasingly unlikely. We hear from members that they are planning on selling full stop, which would probably be selling to people who want to be on the housing ladder rather than to people who want to take over their business of being private rented sector housing providers. That is a real issue and concern for us.

[Jerome Mayhew]

Q Building on that, we heard from a few of the witnesses this morning that one of the key concerns of the private rented sector is the delay associated with the recovery of property through the Courts and Tribunals Service. A moment ago, you said that some of your members are waiting 12 to 18 months, during which time they do not get any rent and it is an asset that is not working for them. I would like to drill into that a little further to understand fully why it is that landowners are already leaving the market and why that might happen in the future, and what impact you assess that will have on future rents.

On one side of the argument you could say, “Rents will go up as supply decreases.” Do you think that will be an unintended consequence of the proposed legislation? On the other side, which I invite you also to consider, is the question of whether, if you increase foregone earnings—that is, increase the losses associated with being a tenant—because the time required by court processes will be extended because of increased demand, that increased loss will filter into increased rents in the long run.

Judicaelle Hammond: I think the answer to both of your questions is that there is a risk. If demand and supply work in the way they are intended to, unless you increase the supply there is a risk that the rent would go up—to do exactly the two things you suggested.

What we see is broader than just renters’ rights reform, though: we are seeing, for example, the move towards minimum energy efficiency standards, and I totally understand why that is needed. At the same time, it is quite difficult for landlords to deal with some of the costs. Again, we are mostly talking about older properties in rural areas. The cost of maintenance and improvement, particularly since the Ukraine war and the surge in the cost of building materials, has not come down. It has stopped growing at the same rate, but the prices have not come down to where they were pre-pandemic, pre-Ukraine.

As a result of that, you will first have to wait for a void in your properties, in all likelihood, in order to do the kinds of work that will be needed. Those voids do not happen very often. Secondly, you need to get your hands on tradespeople, who might actually prefer to stick to their local areas, because they are within 30 minutes’ driving time and not an hour and a half’s driving time. That is something else that we hear quite a bit about. All that is bringing pressure on to the private tenanted sector.

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[Matthew Pennycook]

Q Their yields are quite generous as they are, compared with what is normal.

Victoria Tolmie-Loverseed: I do not have a tiny violin for landlords, but I am just saying what we think is likely to happen. It is a commercial operation and landlords need to cover their costs, and we think that if landlords perceive more risk they will seek to put up rents.

Your previous witness talked about the situation in Scotland. One of the things we would really like the Government to do before going much further is an impact assessment on the student market, particularly looking at Scotland, because the evidence there about student homelessness as a result of the tenure changes is compelling. The Government in Scotland have a committee looking at how they can tackle the issue of student homelessness, and I think that is a bit of a warning for us all that we could very well be in that place in a couple of years’ time if we do not think about the student market, its particular characteristics and what it needs.

[Mr Amos]

Q I have raised this already, but you seem to be suggesting that to extend the exemption you would have a special student tenancy. Is that right? Could you clarify if you would like to see that in the Bill? If not, if the Government were not willing to create a new tenancy, how would you draw the line in terms of bringing in all student accommodation?

Victoria Tolmie-Loverseed: I think there are alternative options. There was discussion on the previous Bill about creating an accreditation scheme or some sort of certification for landlords in the off-street sector. That is worth considering if a landlord is part of a quality mark and might be able to offer fixed-term tenancies similar to PBSA. There would certainly be some benefits to that, and you would offer students a quality product with landlords who are accountable to somebody but can have certainty in their business planning, which would be beneficial. I also think that ground 4A should be amended and extended to all student properties.

[Mr Amos]

Q On that point, how would you define “all student properties” in the Bill?

Victoria Tolmie-Loverseed: We think that the definition of a student property in the Bill is fine; it is just the restriction to HMOs, which are three-bedroom properties. We think the definition of the type of property, or the size of the property, should be changed.

[Mr Amos]

Q So would it be any property where one of the tenants was a full-time student? How would you define that?

Victoria Tolmie-Loverseed: The way the Bill is drafted at the moment, they all have to be students for that to apply.

[Mr Amos]

Q So that would be the control?

Victoria Tolmie-Loverseed: Yes.

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

Q I wanted to pick up on a couple of points from your written evidence on joint tenancies. Under the new Bill, if one student leaves, you have the problem where the whole tenancy might end up collapsing. Do you have any thoughts about what the Bill could do to address those concerns, save the arguments that you have already made about having a specialist student tenancy? Also, on that point about the student tenancy, would you agree that there is a bit of an issue at the moment wherein quite a lot of students drop out of university, which is an issue in and of itself, but are locked into tenancies? Would this Bill address that situation?

Victoria Tolmie-Loverseed: The joint tenancy issue is problematic, and there is no way to get around it. If you are in a joint tenancy, all the tenants are essentially treated as one. If one tenant gives notice, all the other tenants, in theory, could be asked to leave at the same time. I think landlords will be pragmatic about it and seek to manage that process actively. Unless it is in their interests to regain possession of the whole property, I think most landlords will try to smooth things out and find a resolution.

Typically, the remaining tenants are liable for the rent on the room that has been vacated, and I think it would be very difficult for landlords to backfill, so the remaining tenants may find that the rent increases. That is going to cause quite a lot of rupture and disruption in the student market. We think about half of tenancies are on a joint basis at the moment, and that is going to be really disruptive. I cannot think of a way around it. Unless there was some sort of ability to have a fixed term, I think it is going to be really difficult. Sorry; I have forgotten the second bit of the question.

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[Matthew Pennycook]

No, not investors. You made a point about tenants.

Timothy Douglas: Yes, but that is the crux of it. Unfortunately, if you push too far on the fixed-term tenancy option, the grounds are not robust enough for landlords. Unfortunately, they do not know how long the tenant is going to be in situ. They cannot plan their investment, and they do not know the return on their rent. It is a mutual agreement. We are not saying that it is one or the other. We are saying retain it as an option. Why are we legislating to reduce choice and flexibility?

Agents are telling me up and down the country that that is what tenants want. The leading letting agent in London, which manages 65,000 tenancies, says that fixed-term contracts are popular within the private-rented sector. Many tenants opted for tenancies between one and three years, with the average first term lasting 23 months. At the end of the initial term, 65% of tenants choose to renew. Only 1% of tenancies are ended early by landlords; 5% are ended by tenants. People know where they stand and where they are going to be. It is an option that should be included in the legislation. We have talked today about students as well. It would solve all the problems in the student market.

We are tinkering there with issues that just do not exist. Retain fixed-term tenancies for all, or at least within the student market, or extend ground 4A to one or more sharers. You are tying yourselves in knots in so many ways.

[Mr Amos]

Q We covered extending the grounds to more than three sharers in the previous evidence session, and I think everyone knows where I stand on that. If you are right that the biggest effect of the move away from fixed-term tenancies is on investment into the build-to-rent, or corporate, sector that you are talking about, and if the Bill were to allow fixed-term tenancies—perhaps the first tenancy of a build-to-rent new build—would that help the sector up from delivering 15,000 units to 30,000 more units?

Timothy Douglas: I was actually saying that fixed terms should be retained regardless of landlords.

[Mr Amos]

Q In response to the Minister, you did also mention the corporate sector—but it does not matter. My point is, can you comment on retaining that fixed-term option for the first tenancy in new build premises? Would that deliver some of the incentives that you want to see?

Melanie Leech: A minimum tenancy would certainly help with investor confidence.

[Mr Amos]

Q Of what length?

Melanie Leech: Ideally, we would want a year—perhaps six months.

On the impact, to answer the Minister’s point, it is not that families cannot stay for as long as they want to. This is a high-quality product—I am talking particularly about the build-to-rent sector. The risk for build-to-rent providers is that people will treat build to rent more like an Airbnb-type product. That could transform what should be rental products for families to move into for the long term. That is what we want—we want people to stay somewhere to make it their home. But this proposal will inhibit the supply of those products to long-term tenants, because we are vulnerable to short-term tenancies flipping all the time. That is the concern. It is not that people cannot stay for long if they want to; it is that those products will be easier for people to treat more like a short let—an Airbnb-style product.

Timothy Douglas: We need build to rent, but let us not forget that in build to rent, on average, the rents are a lot higher, because people are paying for a concierge and the other services, so it is not the ultimate answer for all parts of the sector. We are not going to support everyone. I do not think that there should be a timeframe on the fixed term, but we can make use of grounds that landlords cannot use as levers, and you could put break clauses in as well.

[Connor Naismith (Crewe and Nantwich) (Lab)]

Q My question goes back to the decent homes standard, and the first part of the question is potentially more for Suzannah. What insights do you have into the impact of the application of the decent homes standard in the social rented sector and then, potentially, on everyone else? How do you see it translating across to the private sector, in terms of the impact on the standard of homes there?

Suzannah Young: We believe that everyone has the right to a warm, dry, safe, secure and affordable home, and social housing has a greater proportion of decent homes than housing of any other tenure. That could suggest that having a decent homes standard helps to bring up standards in housing. We also recognise that housing associations exist to fulfil a social purpose, and we are rightly held to a higher standard. We welcome the Government’s commitment to reviewing the decent homes standard. We are pleased to continue to work with the Ministry of Housing, Communities and Local Government as this develops.

In terms of some feedback for the private rented sector, we agree that it is important to have a clear, modern and meaningful standard that reflects what residents would expect a decent home to be. It is also important that all landlords should have a clear understanding of the condition of all their homes. In the social sector, we are doing work to develop a more consistent approach in that area, as part of our response to “The Better Social Housing Review”. It would need to be something that private landlords were able to do as well to bring up standards.

Specifically—this has been mentioned in terms of the private sector—it is important to recognise that the housing association sector faces multiple and competing pressures, with budgets that are already stretched. We would like to see investment in existing homes at the same time as development of the desperately needed new and affordable homes in the Government’s long-term housing strategy. I suggest that similar attention would be needed for the private sector.

Timothy Douglas: May I pick up on that point? That argument was used in Scotland on the Cost of Living (Tenant Protection) (Scotland) Act 2022. I gave evidence on that legislation two or three times to the Committee up there. In the end, the argument was that the cap was lifted for the social rented sector because it needs to plan for its investment. That is the crux, and it goes back to my previous points—there is no parity here with the incentives, the business planning and the costs that private landlords are facing. We have to have that parity. If the legislation is extending across, the funding needs to be the same. We have to have parity in the investment, the caps and everything else—that needs to be the same. We need that review into all the taxes and costs impacting private landlords, because, quite frankly, we are not getting legislation from either Government Department—the Treasury or MHCLG—that understands the investor appetite for the private rented sector. This legislation is not helping.

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[The Chair]

Let some other people ask questions and perhaps you will have the opportunity to include those points in your answers.

[Mr Amos]

Q I was interested to hear the rest of your points. One area that is not regulated in the Act is the regulation of letting agents. Is that something that Acorn would like to see happen? Feel free to expand on your points.

Anny Cullum: We would like to see letting agents regulated. Especially with the issues around bidding wars and discrimination when you enter a new home or the private sector for the first time, in the majority of cases that will be about your experience with your letting agency. We as Acorn suggest mystery shopping, like when Trading Standards sends kids into shops to mystery shop and sees whether they will sell them alcohol. Maybe we should be sending people into letting agencies and seeing whether they are being discriminated against on the basis of any protected characteristic, but particularly on the basis of being benefit claimants. That part could be strengthened in the Bill.

[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.

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[Jacob Collier]

Q I am a younger Member of the House. My generation feel that we are locked into renting, with many people unable to save in order to get on the housing ladder. How do you see the Bill making renting more stable and affordable, so that young people can build up the savings we need?

Matthew Pennycook: That is a good question. Like a lot of the debates we have had today, it is slightly out of the scope of the Bill, but you are right to ask it in the sense that the Bill is one part of the Government’s agenda for changing the housing system. There are lots of things we have to do on the home ownership side. You will know from our manifesto that we are committed to a permanent and more comprehensive mortgage guarantee scheme and a first dibs for first-time buyers scheme. In general, the Bill will hopefully empower renters by giving them greater protections, rights and security so that they can stay in their homes longer, build lives in their communities, avoid the risk of homelessness and, in many cases, by bearing down on unreasonable within-tenancy rent hikes, have the opportunity to save, which many do not have at the moment.

In answer to your question very specifically, the Bill is part of a wider agenda and touches on the supply issues we have debated. The Bill is not our answer to affordability in the private rented sector, and it cannot be. There are things that go beyond the scope of the Bill. However, in terms of the security, stability and certainty it provides for private renters, who are mainly at the top end of the market but would have, under better circumstances, the chance to save and buy a first home, the Bill will help in a number of ways.

[Mr Amos]

Q I want to ask about service personnel housing, which I raised in the debate on Second Reading. I will go on to ask about the danger of more properties becoming short-term holiday lets—Airbnb-type things; I have a genuinely open mind on that, and I am interested in the Minister’s views on it.

On service personnel housing, I think the Minister’s position from the debate on Second Reading was that the Ministry of Defence is looking at it and different circumstances may apply, which would mean that a different form of decent homes standard would be needed. If the decent homes standard is yet to be published, and could potentially be less onerous than the one for the social housing sector, could it not also be applied to MOD housing so that our serving personnel get decent housing?

Matthew Pennycook: I do not think there is a huge amount I could add to what I said on Second Reading. We think there are particular characteristics of MOD accommodation that make it difficult to translate the approach we have in mind for driving up standards in the private rented sector and to align that with a wider push on the social housing sector. The MOD are taking forward that work. Yes, there are conversations between officials and Ministers about the crossover, how we might align standards and what the difference is, but I think it is for MOD to take that forward. We think there are good reasons to treat it slightly separately. I can address the short-term lets point, if you would like.

[Mr Amos]

With your permission, Sir Christopher, I want to come back on that point.

[The Chair]

Quickly.

[Mr Amos]

Q We seem to be talking about different decent homes standards. We have the social housing sector one, and we are talking about consulting on one for the private rented sector. Is it not the case that the MOD can have one suitable to its needs?

Matthew Pennycook: If I have understood you correctly, you are putting to me: why is MOD accommodation not coming within the consultation on a new decent homes standard for both sectors?

[Mr Amos]

I am putting to you that the MOD could have its own decent homes standards.

Matthew Pennycook: The MOD is taking forward standards for its accommodation, and it will do that as the Department responsible for that accommodation. It sits outside this legislation, and we had the same debate on the previous Bill. It is an important issue, but it sits outside the scope of this legislation.

[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.