Renters (Reform) Bill (Second sitting)

Karen Buck Excerpts

Committee stage
Tuesday 14th November 2023 Public Bill Committees

[Jacob Young]

Q You mentioned the decent homes standard. Could you elaborate on your thoughts on that?

Ian Fletcher: As I say, the stock of build to rent has been developed over the past 10 years, so it is unlikely not to be meeting the decent homes standard. Equally, the management of the property is done to a very high standard. That is something the sector is very proud of. I do not see any challenges in introducing decent homes into the sector from a build-to-rent perspective. We have sat around a number of tables with the Department as it has worked through the specifics of how the standard would impact the private rented sector, and I have not heard many dissenting voices in terms of this being introduced into the sector.

[Ms Karen Buck (Westminster North) (Lab)]

Q When the Bill was first presented, the British Property Federation indicated some concerns about the relationship between a minimum tenancy period and the growth of the short lets sector and that this might be an additional boost to it, and I just wonder where that came from. What is your evidence for that? Indeed, have you conducted an analysis of the growth of short lets, the factors driving that and the connection between this and the legislative framework?

Ian Fletcher: It is something that we have been continually concerned about. In a London context, the removal of the planning constraints on the short lets market affects property across not only the rental sector but the leasehold sector.

It is a concern, I suppose, in terms of members. At the moment, you obviously have to take a minimum six-month tenancy, but what members often find is that you do not want to restrict subletting, because often that is helping the ultimate tenant, if they have to move for various reasons. You are finding that quite a lot of people are moving into these premises and then subletting to somebody who will take it on a short-let basis, so these are portals and things of that nature that, to some extent, are exploiting that situation.

[Ms Buck]

Q I appreciate that that is your view. Is it actually based on research that you have done, or on an evidence base, or is this mostly anecdotal? Do you have other ideas as to how the different sectors might be able to bear down on that problem, particularly the illegal element of it?

Ian Fletcher: Clearly, the Government are taking forward reforms, particularly planning reforms, and talking about licensing. In the context of this Bill, we would like to see a minimum tenancy length of six months—four months plus the two months’ notice. However, we are mindful that there are good reasons why tenants might have to leave within that six months: they have been mis-sold a property or the property is substandard. In those circumstances, we suggested that the solution might be to allow them to appeal to the ombudsman to be able to break the tenancy.

[Ms Buck]

Sorry to gently push you, but I ask again: is your view based on an actual report or evidence base, or is this anecdotal?

Ian Fletcher: It is anecdotal; there is no empirical evidence that I can give you.

[Eddie Hughes (Walsall North) (Con)]

Q I have visited probably only four build-to-rent sites, but it feels to me that you are pitching slightly above the median. It also feels to me that, exactly as you described, the quality of the product is pretty good and therefore the opportunity for there being any mis-selling of what you are getting feels more limited than in the rest of the market, where I have seen egregious cases of people being mis-sold something.

It feels to me that it is likely that your tenants will stay and all the people who I have spoken to who provide this type of accommodation give me the feeling that the type of people that you are attracting and the type of property you are offering means that people do not walk in and walk back out again very quickly. I would imagine that lots of your tenancies last considerably—when I say “lots”, I mean that a very significant percentage of your tenancies last over a year.

Ian Fletcher: You were very welcome when you visited a build-to-rent building in Newcastle.

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[Ms Buck]

Q Apart from probationary tenancies, most social housing tenants have secure tenancies. You will be aware of the Bill’s amendments to ground 14 on antisocial behaviour. Given the experience of dealing with antisocial behaviour with secure tenancies, can any lessons be learned from the work that you do in the social sector?

Kate Henderson: Housing associations take reports of antisocial behaviour very seriously, and we will always investigate them thoroughly. Many of our members have in-house teams dedicated to managing and resolving ASB that often work extensively with the police and local authorities. For any housing association, although eviction is sometimes necessary, it will always be a last resort. There are many actions that housing associations will take to resolve an ASB case prior to its reaching the point at which a tenant might face an eviction.

The Bill’s changes to ground 14 propose a widening of the definition of ASB in the ground from any behaviour “likely to cause” to any behaviour “capable of causing” nuisance or annoyance. The word “capable” is really open to interpretation. For us, it is all about clarity: what, exactly, constitutes a legal ground for eviction under the new definition, and how will it work in practice? Eviction is, of course, a last resort. It is incredibly distressing to deal with such cases, particularly if they are having an impact on multiple residents. It is really important that we do everything we can to resolve a case before it gets to an eviction.

[Lloyd Russell-Moyle]

Q Ground 14A relates to the situation in which a social landlord wishes to evict the perpetrator of domestic abuse, where the partner has fled. Very often, it requires the partner, not the perpetrator, to leave. Is the wording sufficient, or should there be some wording to allow possession even if the partner has not fled, and reallocate it to the partner? Very often the tenancy is in the name of the perpetrator.

Kate Henderson: This is an area on which I would like to see further evidence. I am a member of the Domestic Abuse Commissioner’s strategic reference group on perpetrators. In that scenario, where the victim does not want to leave the property, how can we ensure that the tenancy is in their name but the perpetrator is removed? I would like to seek the expertise of those who are working at the forefront of domestic abuse before giving you a direct answer on the strength of that ground, but I would be happy to follow that up with the Committee.

--- Later in debate ---

[Jacob Young]

Q It would be interesting to know your thoughts on the portal, and on how we can make the most use of it to support councils in taking enforcement measures.

Dr Dawson: The CIEH is very happy to see the portal introduced. I am based near Wales, and I sit on the advisory panel for Rent Smart Wales on behalf of the CIEH. We have seen the portal brought in, and it has been very effective. It provides a lot of data on where rental properties are, and who their landlords are. Local authorities have quite a hill to climb in trying to find that out independently. It will be a very useful source of information. It is also a good source to look at when collecting certificates on properties.

However, we find that the portal has limited impact with regard to the condition and contents of properties, and management practices. It is an information-gathering tool. It has the potential to be a central information portal that landlords and tenants can refer to—a sort of single source of truth. On very small landlords registering with landlord bodies, 85% of landlords own one to four properties, and we are finding what an author referred to as a cult of amateurism. These landlords have differing levels of expertise, and of knowledge of a complex legislative environment. The portal can be a central reservoir of information for them, with quite a bit of scrutiny behind it.

As I say, we welcome the portal when it comes to providing data on where the properties are and who the landlords are, though the more unscrupulous operators will still try to avoid the register so as to evade their duties. I would not go so far as to say that it will make a significant impact on the condition and contents of properties, or the management practices of landlords in the sector.

[Ms Buck]

Q Can I go back to the decent homes issue? The repair and maintenance of properties is central to the issue of the security of tenants who are seeking to enforce their rights, and who sometimes have landlords act against them. How do you see the decent homes standard being enforced? How do you see the decent homes standard interacting with other overlapping measures and standards in law, and the tools available to environmental health officers?

May I also ask a question about enforcement, which is central to this issue? As we know, the enforcement record is very patchy in local government. In your view, why is that?

Dr Dawson: With regard to the use of the decent homes standard in the sector, I have found through my personal research on the sector that there is a lot of variation in the licensing conditions and standards set for private landlords in different sub-markets up and down the country. It is only right that local authorities tailor their approach to suit their local market, but there is great need for more consistency between the licensing conditions that they set and what they require in their area.

If we were to bring in the decent homes standard across the sector, licensing standards could be revised to accommodate that new duty and any updates made to the decent homes standard. That would provide a fairly common set of grounds for properties nationally. Then, local authorities need only make small changes to what they require of properties in their area to fit local peculiarities of housing; for example, northern back-to-back houses are something to burden yourself with only if you need to be aware of the issues that they present. You get steel-framed houses in some areas and concrete houses in others. Local authorities need to be able to focus their approach and the standards that they require to fit what they have going on in their area.

We still have the opportunity to use the housing health and safety rating system under the decent homes standard. The updates to the HHSRS will come through fairly shortly; we will welcome their being brought into practice. Use of the HHSRS would remain a common requirement during the inspection of properties, to satisfy the requirement on properties not to have serious hazards.

A whole range of factors influence levels of enforcement in local authorities. At the moment, we have about 2.2 qualified environmental health officers for every 10,000 private rented sector dwellings, so that is already a pretty low rate. Where we have larger authorities and significant political backing, we see more environmental health officers, with better recruitment, better political backing and more funding for those officers, which is key, so you start to see a collection of experience building up and the legal backing behind it. For example, Newham has something like 100 environmental health officers or enforcement staff in its departments, and they can move their way through more than 200 prosecutions in a year. In contrast, a rural authority may have one or two environmental health officers, who must share their duties across all the regulatory functions of environmental health, including food safety, health and safety, environmental protection and public health.

One of the profession’s big problems is ensuring consistency in funding. When funding is renewed annually and you are looking at changes each year, it is very difficult to do succession planning. We have seen a gradual reduction in the number of people coming through university environmental health programmes in order to support the profession and provide a reservoir of expertise for the inspectorate. We are also seeing more of them going off to private sector employers, rather than the public sector.

A range of issues are affecting the sector, and the sustainable and predicable funding such as we get with Housing Act 2004 licensing has been a real lifeline for the sector. Where we have big schemes going, it has managed to keep the nucleus of staff that is required for the expertise and the momentum to move large-scale enforcement forward. My apologies—that was quite a long answer.

[Jacob Young]

Q You touched on your experience in Wales. We are aware that there are similar, but not necessarily identical, reforms in Wales. What lessons can we learn from the reforms implemented there?

Dr Dawson: When Wales first implemented the scheme, about 196 penalty notices were given out in the first couple of years and there were about 13 prosecutions. The main reason, from the Welsh Government’s own analysis, is that they did not set up clear systems and processes for liaison with local authorities ahead of the formation of Rent Smart Wales.

There is a process whereby local authorities are expected to carry out enforcement functions and can then bill Rent Smart Wales, through an agreement—a memorandum of operation—that they have all signed up to. However, because they are trying to account for small amounts in hours and tasks, it is very difficult for local authorities to predict the workload and allocate officer time against it. That has become somewhat of a Cinderella to local authorities’ other duties.

One of the higher impact areas is that, although Rent Smart Wales provides licensing and can therefore enforce conditions, it also has a separate registration function, which is purely information gathering and gives it the ability to send out mailshots to landlords and letting agents about changes to the law and training courses that are available. However, landlords have the opportunity to exempt themselves from those communications, and a very large proportion did so at the point at which they registered. Therefore, they receive no communications and no updates, so they are none the wiser, despite the benefit of having registered and made themselves available to get that information. That was a sad loss, and there is not much you can do about it now.

--- Later in debate ---

[Jacob Young]

Q Thank you both. First, could you clarify your initial points? What effect do you think the reforms we are proposing would have on supply in the private rented sector? On a different tangent, what are your views on how we should strengthen councils’ enforcement powers to crack down on criminal landlords?

Dr Rugg: On the issue of supply and section 21, counterfactually, a lot of landlords let because of section 21; they do not evict people because of section 21. Section 21 gives them the confidence that, if they run into severe difficulties, they will not have to go through a protracted court process in order to end a tenancy. This is particularly pressing for smaller landlords, who might find themselves paying two or three mortgages at the same time, with tenants that are problematic. You can understand the reasons why risk is hugely important to landlords a lot of the time. Antisocial behaviour is really problematic. If there is a tenant causing lots of problems in the neighbourhood, the landlord wants to get that situation to a close as fast as possible.

Abolishing section 21 would increase landlords’ perception that there is risk in the market. An area that will be problematic is that landlords who come to the sector with property—perhaps they have inherited it or they have started a partnership and there is a spare property—will think very hard about whether to bring that property to the market. I think that is one of the consequences we will see. The market does not look like a very friendly place to landlords at the moment, and that is the big issue we have around supply.

How we help local authorities deal with criminal landlordism is something that I am particularly concerned about at the moment, because it is part of a big project I am working on. Local authorities have very different approaches to dealing with enforcement action in their area. One of the issues is that there is an awful lot of variation in political—i.e. councillor—attachment to the notion that this is something they should be dealing with, so councils invest at different levels in their enforcement activity. That is a democratic issue, and that is something we cannot do anything about, but I agree with the notion that Dr Dawson introduced that we really need some baseline standards that everybody can expect to adhere to.

One thing we have not really mentioned is the use of letting agents. They cover an awful lot of property in the market, but we do not expect them to show responsibility for the quality of the property they are letting. In a sense, I think that is soft policing, if we think that letting agents should have greater responsibility for ensuring that the properties they have responsibility for meet the standards that we set for the sector. In some ways, that would relieve local authorities of some of the burden of inspecting all properties. At the moment, local authorities are obliged to inspect only a certain proportion of properties that sit under licensing regimes. An awful lot of the sector sits outside that and is covered by letting agents. I think we are missing an opportunity to think about how we skill up different parts of the market to improve property quality.

Professor Gibb: I think one of the reasons I am here is that yesterday my colleagues and I published an evidence review for the Department for Levelling Up on the question, “Is there evidence that increasing non-price regulation has led to disinvestment in the private rented sector?” That is clearly a very important question for the kinds of policies being proposed here. In producing the review—it is an international evidence review over the last 20-odd years—we found that it is very hard to answer that question, because there is very little research that directly speaks to it, but you can infer from some of the peer-reviewed literature, and there is actually very little evidence that that is the case.

In other words, we believe that there is probably a constellation of factors that drive disinvestment in the sector, and it is very hard to identify whether increasing regulation, per se, is behind that. The fact of the matter is that in England, there was increasing regulation in the last 20 years, while the sector was growing. There is also evidence internationally that where regulation has increased in the short-term lets market, there might have been a short period of disinvestment, but there has not been disinvestment in the longer term. In the longer term, investment tends to have stabilised and continued to grow.

So we have been quite struck that there is very little evidence to that effect. That is not to say that there is not disinvestment going on, but it is a much more complicated thing. Another problem is that often we have several regulations being introduced at the same time, and it is quite hard to unpick the causal forces of individual things. The bottom line is that we found it quite hard to identify that increased regulation was causing disinvestment or was correlated with it.

[Ms Buck]

Q Julie, your report from a few years ago was helpful in encouraging people to think about the private rented sector not as a homogeneous whole, but as having different markets within it. Given what you said, and with the Government—rightly, in my view—going ahead with abolishing section 21, I wonder what you think the impact will be on the different markets. What are the warnings there that you have just given us, in particular on the most vulnerable, at the lower end of the market? What safeguards could be introduced to ensure an adequate supply of decent accommodation for people entering the different layers of the market?

Dr Rugg: I am better able to speak about the lower end of the market, because that is the area that I specialise in. We had some comments earlier about build to rent, and there are some concerns about the build-to-rent sector, but I will not go into those here.

Thinking about the lower end of the market, the proposed regulation seeks an end to “No DSS”, as a catch-all. I do not think that that will necessarily work particularly well. Landlords seek not to let to people in receipt of benefits for two reasons: first, because they might have some prejudiced view about the people who tend to be in receipt of benefits, and that is something that is certainly not right; and the other set of reasons sits around frustration with the benefits administration and the level of benefits being paid.

I have researched landlords and housing benefit for many years—too many to mention. In the past, landlords who routinely let in the housing benefit market enjoyed quite good relations with their local authority and they worked together to deal with problems that their tenants might encounter in the benefits market. The introduction of universal credit has completely taken that link away. A lot of landlords are feeling quite exposed now: they have tenants with quite high needs having problems with their benefits, and they simply cannot do anything about it. That is a problem that we need to think about.

One of the earlier speakers referred to the rent control that sits in the local housing allowance system. That is hugely problematic. It means that tenants who receive local housing allowance simply cannot shop around the market, because the rent levels are far too low for them to act as effective consumers. Essentially, they are having to shop where they can, and some landlords are definitely exploiting that situation, letting very poor-quality property on the understanding that the tenants do not have very much choice.

Professor Gibb: I do not have much to add, except to say that I completely agree on the local housing allowance. We have just been doing some research in Scotland that suggests that the levels are far too low to be effective for the great majority of people. It is really welcome to think about the market rental sector as a series of segmented markets. We should therefore not expect regulation that covers the whole area to have equivalent effects in different parts of that area.

The only other thing I would say is that we also need to think as much as we can about housing as a system, recognising the importance of social and affordable housing alongside the bottom end of the rental market, and thinking about how those things can connect together and about the value that increasing investment in social and affordable housing would bring.

[Lloyd Russell-Moyle]

Q Dr Rugg, I want to follow up on the maladministration of universal credit, and some of the difficulties that landlords have had since the introduction of universal credit and the local housing allowance going from 50% to 30% and now probably to sub-20%, because of the cuts. We know that possession grounds 8 and 8A are about the failure to pay rent and about rent arrears. There are some weak protections around universal credit in that, but they are non-discretionary grounds in a court, so do you feel that that goes far enough to build the relationship that you were describing between landlord, universal credit and tenant, or could more be done in the legislation?

Dr Rugg: I think we need to re-establish a relationship between landlords and the universal credit system, so that landlords who are encountering problems can talk to someone in detail about those problems. It is a very basic requirement that some landlords have, that when there are individual tenants who might be falling into difficulties they need to talk to somebody about that case, and about the specifics of the case of an individual who might have high support needs. Thinking about how we support landlords through those cases—and we are talking about specialist landlord lines within the universal credit system, so that landlords can seek advice for particular cases—that is not unreasonable; that is the kind of support that we need to re-engender, so that landlords feel that, when they have difficulties, they know exactly where to get advice from.