Renters (Reform) Bill (Eighth sitting)

Helen Morgan Excerpts

Committee stage
Thursday 23rd November 2023 Public Bill Committees

[Jacob Young]

I shall write to the hon. Gentleman on that point and on the other questions that he raised.

Question put and negatived.

Clause 9 accordingly disagreed to.

Clause 10

Other duties of landlords and former landlords

[Helen Morgan (North Shropshire) (LD)]

I beg to move amendment 132, in clause 10, page 13, line 11, leave out “three” and insert “six”.

This amendment would increase the time which must elapse between a landlord taking ownership of a property for the purposes of them or their family occupying it and making the property available to rent from three months to six months.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 140, in clause 10, page 13, line 11, leave out “three” and insert “12”.

Amendments 140 and 141 would prohibit a landlord from reletting or remarketing a property within 12 months of obtaining possession on the ground for occupation or selling; and from authorising a letting agent to market the property within that period.

Amendment 134, in clause 10, page 13, line 13, after “tenancy” insert

“or on a short-term let or holiday let”.

This amendment would clarify that a landlord cannot let a property as a short-term or holiday let for at least three months after taking ownership of the property for the purposes of them or their family occupying it.

Amendment 135, in clause 10, page 13, line 14, at end insert

“or on a short-term let or holiday let”.

This amendment would clarify that a landlord cannot market a property as a short-term or holiday let for at least three months after taking ownership of the property for the purposes of them or their family occupying it.

Amendment 133, in clause 10, page 13, line 19, leave out “three” and insert “six”.

This amendment would increase the time which must elapse between a landlord taking ownership of a property for the purposes of them or their family occupying it and the landlord authorising a letting agent to make the property available to rent from three months to six months.

Amendment 141, in clause 10, page 13, line 19, leave out “three” and insert “12”.

Amendments 140 and 141 would prohibit a landlord from reletting or remarketing a property within 12 months of obtaining possession on the ground for occupation or selling; and from authorising a letting agent to market the property within that period.

Amendment 142, in clause 10, page 13, line 27, leave out paragraph (b) and insert—

“(b) the tenant either surrenders the tenancy without an order for possession being made or delivers up possession of the dwelling house under the terms of an order for possession.”

This amendment would extend the prohibitions on a landlord reletting or remarketing a property, and from authorising a letting agent to market the property, for which possession has been obtained on the Ground for occupation or selling by court order.

Clause stand part.

Government new clause 4—Other duties.

Government new clause 5—Landlords acting through others.

[Helen Morgan]

Once again, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests, on which there are two jointly owned properties: a residential property and a holiday let.

During our evidence sessions, we heard that experience in Scotland has shown that grounds 1 and 1A are open to abuse by landlords who are simply looking to re-market their property either at a higher rent or to a different tenant who will not complain about serious defects in the property. We heard about a pretty horrifying case in which a rat and maggot-infested property was simply re-marketed three months later. Clearly, the time in which the property could not be re-marketed was not enough of a deterrent to prevent abuse of such a clause. Amendments 132 and 133 therefore seek to extend from three to six months the period before which a property can be re-marketed.

In our debates over the past couple of days, I have spoken at length about the need to ensure the maintenance of balance between tenants and landlords, so that landlords are not driven from the market, which would exacerbate the chronic shortage of rental property in the whole UK and the decline in the size of the private rented sector in rural parts. I do not think that these amendments would have an impact on that balance. Any landlord who is seeking repossession under ground 1 or 1A and is acting in good faith has no intention of re-marketing the property at the point at which they seek repossession. Extending the period beyond which it can be re-marketed should not influence their decision in any way.

We understand that people’s circumstances can change, sometimes very suddenly. I think six months is a reasonable length of time both to provide a deterrent to abuse of grounds 1 and 1A and to provide fairness for landlords who have acted in good faith but have suffered an unexpected change in circumstances. I would be grateful if the Minister commented on the steps needed to prevent the recurrence of the situation in Scotland that we heard about and, ultimately, to support the lengthening of the period.

Amendments 134 and 135 seek to address the problem facing many tourist areas that properties for private rent are being flipped into holiday lets or Airbnb-style holiday homes. Members of all parties who represent tourist hotspots have raised the issue in the main Chamber, and there is broad consensus that the over-supply of holiday accommodation is having a hugely detrimental effect on those areas.

There needs to be some holiday accommodation, but the balance of holiday and private rented sector accommodation is very important for those areas, because over-supply of holiday accommodation hollows out communities. It has led to a situation in which the workers needed for the tourist industry to thrive have nowhere to live, so hotels and restaurants are unable to operate at full capacity. That is bad for the local economy, as well as for people who cannot find anywhere to live in the area.

Meanwhile, in rural areas, the private rented sector is shrinking rapidly. Local families and people working in essential services, such as care workers, teachers and nurses, are being driven away. The sector is completely out of balance. My understanding of the legislation is that landlords seeking repossession under ground 1 or 1A must not re-market the property as a residential let within a three-month period; I would prefer six months. There is no provision for holiday let-style marketing, because those properties do not require tenancy agreements.

My amendments recognise that problem by adding holiday letting to the three-month, or ideally six-month, moratorium on re-marketing once ground 1 or 1A has been used to regain possession. I think that that is a pretty uncontroversial addition to the Bill; I very much hope that Government Members support me when I press amendments 134 and 135 to a vote.

[Matthew Pennycook]

I rise to speak to amendments 140 to 142. It is a pleasure to follow the hon. Member for North Shropshire. We agree fully with the spirit behind amendments 132 to amendments 135, and we will support the hon. Lady when she presses either amendment 134 or amendment 135, regarding short-term lets, to a vote. They highlight a valid concern.

As we made clear during an earlier debate on mandatory possession grounds 1 and 1A when considering clause 3, we believe that there is a clear risk that these de facto no-fault grounds for eviction could be abused in several ways by unscrupulous landlords. As a result, we are convinced of the need to amend the Bill to provide tenants with greater protection against their misuse. However, we do not believe that the hon. Lady’s proposal to extend the no-let provisions in clause 10 from three to six months for both standard periodic and short-term lets is sufficient, for reasons I will go on to explain.

We are once again considering mandatory possession grounds 1 and 1A because clause 10 would insert proposed new section 16E into the 1988 Act, prohibiting certain actions by landlords or former landlords, including re-letting or re-marketing a property or authorising an agent to market the property within three months of obtaining possession on those grounds.

We take no issue with the prohibitions that the clause provides for. It is obviously right that the Bill seeks to prevent landlords letting a fixed-term tenancy; serving an incorrect form of possession notice; failing to give prior notice where required; specifying a ground for possession that the landlord is not entitled to use; and issuing a notice for possession proceedings within the proposed six-month protected period that applies to grounds 1, 1A and 6. We also welcome the clause’s explicit prohibition of the re-letting or re-marketing of a property obtained by means of issuing a ground 1 or 1A notice, and the fact that clause 11 provides for financial penalties and offences for a breach of that prohibition.

As I remarked to the Minister in a previous debate, the fact that the Government have introduced that prohibition highlights that they clearly accept that amended ground 1 and new ground 1A could be used as a form of section 21 by the back door. However, we are absolutely convinced that a three-month no-let period is simply not sufficient to deter and prevent abuse of the kind we fear will occur if the two possession grounds in question remain unchanged. We take that view because of our understanding of the English rental market.

Three months of lost income, which is what any unscrupulous landlord who deliberately abuses mandatory possession grounds 1 and 1A in order to evict a tenant will incur, may act as a significant disincentive for some buy-to-let landlords, particularly those with highly geared large portfolios who have seen their rental yields reduced by rising interest rates and the restriction of mortgage interest tax relief as a result of tax changes under section 24 of the Finance Act 2015.

However, a significant proportion of landlords do not have a mortgage; they own their property outright. A recent survey carried out by Shelter suggested that well over half of all landlords come under that category. For landlords who are mortgage-free or have a mortgage but can absorb extended void periods, a three-month no-let prohibition, which could ultimately see them losing only one month of rental income if the tenant serves out the two-month minimum notice period that applies to grounds 1 and 1A, is not a particularly strong deterrent against abuse.

We believe that the no-let prohibition provided for by clause 10 in respect of mandatory possession grounds 1 and 1A must increase from three months to 12 months. That would ensure, taking into account the full minimum notice period, that any landlord not legitimately using the landlord circumstances grounds to occupy or sell the property would lose 10 months of rent—a financial penalty that we think would be sufficient to deter and prevent such misuse. Amendments 140 and 141 would provide for that 12-month no-let period. I urge the Minister to reflect further on the issue and to accept the amendments.

Amendment 142 seeks to address a distinct but related issue with the no-let prohibitions provided for by clause 10 in relation to grounds 1 and 1A. Proposed new section 16E(5) provides that the prohibition is applicable only if the tenant surrenders the property as a result of a notice having been served, without an order for possession being made. To put it another way, the proposed three-month no-let ban will be applicable only in instances where a tenant has left a property voluntarily without court proceedings, not where a court has issued an order. That is genuinely inexplicable, from our point of view.

Is it the Government’s view that where a ground 1 or 1A notice is served and the tenant wishes to contest it, the no-let prohibited period would, in effect, run throughout the possession proceedings, so that if they take three months or more, the period will have been deemed to have already expired prior to any order being issued? Is that the reason? If so, we would welcome clarification. Otherwise, we cannot understand why the prohibition does not apply where a court has issued an order. The Minister must provide a detailed explanation of the rationale behind the Government’s decision, because we cannot understand why it is equitable to apply the prohibition only to instances where a tenant has left a property without court proceedings, vis-à-vis having challenged them by taking the matter to court.

We are also concerned that the decision to do so will prevent tenants themselves from seeking redress in instances where they have good reason to believe that grounds 1 and 1A have been misused. It stands to reason that tenants who have challenged their eviction in court are inherently more likely to suspect that they are being wrongfully evicted and to be willing and able to pursue their landlord if they are abusing the grounds subsequent to losing their home.

To reiterate a point I made in an earlier debate, it is almost certain that a minority of unscrupulous landlords will abuse grounds 1 and 1A to unfairly evict tenants they perceive as problematic, and will then proceed to re-let those properties in short order. As things stand, if and when they do so the courts will be able to do nothing. Indeed, how will they even know what happened subsequent to a ground 1 or 1A possession case? The obvious mechanism to ensure that grounds 1 and 1A are used legitimately in each instance is to require landlords to evidence and verify prior and subsequent to a notice being issued, but the Government rejected our amendments 138 and 139 out of hand.

--- Later in debate ---

[Matthew Pennycook]

No, I genuinely do not. In a case where a tenant has felt so strongly that they are potentially being evicted unlawfully that they have taken the matter all the way to the court, it is right that the no-let period should apply from the point that the award is granted. Again, that may be a point of genuine disagreement, but we will press amendment 142 to a vote.

[Helen Morgan]

I thank the hon. Member for Greenwich and Woolwich for his comments. I am in general agreement with his point about needing to extend the period beyond which a property can be re-marketed, although my view is that 12 months is excessive. If a landlord’s circumstances have changed—for example, if they repossess their house to sell it because they are facing financial hardship but are unable to sell and need to re-let it—12 months is punitive.