Private Rented Sector White Paper

Lloyd Russell-Moyle Excerpts

Thursday 3rd November 2022 Commons Chamber

2.10 pm

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

[R] I beg to move,

That this House has considered the White Paper A fairer private rented sector.

I thank my co-chair of the all-party group on renters and rental reform, the hon. Member for Dover (Mrs Elphicke), who is the co-lead sponsor of today’s debate, and the 30 other MPs from across the House who supported it. I also thank the Backbench Business Committee for ensuring that we have such a timely debate on the matter. Of course, I direct Members to my entry in the Register of Members’ Financial Interests and declare that I am the chair of that all-party group.

Many commentators have said that the private rented sector is really three markets. The first is the luxury and high-end market, where people wish to pay high amounts for quality housing. To some extent, that market does not need the regulation we are discussing here. It will not be harmed by it, but this regulation is not aimed at it. The second is the market for people who are unable currently to buy a home or wish to have the flexibility of renting. This White Paper is about making their market a feasible, long-term, sensible one that they can live in. The third is for people who need social housing and often wider wraparound support. They should not really be in the private rented sector, as it will never be appropriate for them, but the White Paper still must protect them while we deal with the social housing problems that the Government, in the Bill they are bringing forward on Monday, recognise we need action on.

The core of the debate is about how we create a private rented sector that is stable, affordable and safe, and where all parties have access to justice. I do not think that is a controversial thing. If it is not, the question is: how do we go about achieving those principles? It is not about whether those principles are desirable. Again, I believe there is broad consensus on the ways of doing it, most of which are laid out in the Government’s White Paper, “A fairer private rented sector”, published in June. It not only covers the points I have mentioned, but discusses information, enforcement, children and pets in the home, and giving people the protections they need.

The chief executive of the National Residential Landlords Association said, on the release of the White Paper, that the

“headline commitments to strengthening possession grounds, speedier court processes and mediation are helpful”.

The renters’ campaign group Generation Rent said:

“This is a serious set of proposals that will help to raise standards in private rented homes and restore some balance to the relationship between tenants and landlords.”

The charity Shelter said:

“This White Paper promises people safety and security in their home”.

I could go on with the countless other ringing endorsements of the White Paper and its proposals that are coming from across the sector, with everyone wanting to go further on one bit or another, but welcoming the core.

That is why it came as such a shock to many of us when it was briefed to The Times at the beginning of last month that all of that was being dropped. In Prime Minister’s questions on the same day, the former Prime Minister—I know it is hard to keep up with which one we have at the moment, but I am referring to the right hon. Member for South West Norfolk (Elizabeth Truss)—recommitted to a ban on section 21, but the full status of the rest of those proposals remains unclear. I hope that the Minister will continue in the good vein that the Minister but one initiated. I put no blame on her immediate predecessor, who did not have the brief long enough to make a difference one way or another. This is about how we make the pledges that we all put in our manifesto a reality.

Let me deal with the substance of this issue. I start with the root of so many of the problems in the private rented sector: the issue of people’s stability and security in their home. Section 21 provides the ability for a landlord to evict without any reason a person from their home—that structural power imbalance is hugely consequential and exists in almost no other form of contract that we have today.

On safety standards, I know of many cases in which renters do not wish to complain about the condition of their property, through fear of revenge evictions. The law at the moment is not good enough on revenge evictions; it currently requires a council to have made an assessment that the home is unsafe or in poor condition, in accordance with the housing health and safety rating system, in order for someone then to have the protections from eviction. That sets the bar well beyond where it is practically useful if it is to protect a renter who complains about something such as a boiler not working or the windows jamming.

On affordability, section 21 is creating a crisis that is spiralling out of control, where we see a wave of assured shorthold tenancies coming to an end and section 21 being used to get higher rents, pushing up inflation, to above 20% in some areas. I know of a schoolteacher who received a demand for a 40% rent increase at the end of their lease. Unable to pay, he is now sofa surfing and homeless. A school teacher who is working full time is homeless not through any fault of his own but due to the state of the housing market today.

Shelter commissioned research to show that some 230,000 private tenants have been served with section 21 notices since the Government made their first pledge in 2019—that is one every seven minutes. But that does not even show the scale of the problem, because a notice is not usually required; knowing they have no rights, renters will often just leave when the landlord asks them to do so, at an inconvenience to themselves. Section 21 provides no real recourse, no appeal and no exemptions, and even if it did, we know that the current court system has delays coming out of its ears, so taking things to court will not be an answer to these problems.

Last week, in preparation for this debate, I asked renters to get in touch with me with their stories. One of the many replies I received was from a young couple who said that before they moved in the landlord agreed to carry out a deep clean, but when they entered the flat they found that it had an insect infestation and it had not been cleaned for months. Both the agent and the landlord refused to do anything. Later, the couple found that two windows were broken and so they asked for repairs, but, again, there was a refusal to do anything. They contacted the council, but it did not carry out an in-person inspection—we all know the pressures on councils—and in the end, on the balance of things, it just accepted the landlord’s word against that of the tenants. At the first possible instance, in November 2021, the couple were issued with a section 21 notice. They had a three-month-old baby and they were homeless.

I have countless other such examples, and I am sure many other Members do, so it is no wonder that the commitment to deal with this was a cross-party commitment in all manifestos, but we cannot allow the abolition of section 21 to be in name only. We must not allow the next crisis to be the use of section 8 evictions due to rent arrears. If we simply abolish section 21 but allow landlords to increase rents uncontrollably, we will create a loophole that a lorry could be driven through. If a renter complains about the state of a property and the owner wants them out, the owner will just raise the rent to £10,000 a month and evict the tenant. The current rental increase protections are inadequate for protecting renters. When I last looked, the only way to make an application to the tribunal was by fax. That is ridiculous.

Potential economic evictions were foreseen by the Renters Reform Coalition, and I am pleased that the White Paper addresses the issue. It states:

“We will only allow increases to rent once per year... We will end the use of rent review clauses, preventing... rent increases that are vague or may not reflect changes in the market price… where increases are disproportionate, we will make sure that tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal”.

Those are the Government’s words. If that works, it will be a game changer for stability in the rental market. Personally, I would like the Government to take on more rental controls. I know that they have ruled that out, but I hope that others will press them on the matter. My friend the hon. Member for Dover will say more about rental controls. However, the proposal in the White Paper is a sensible compromise on which we can start to make progress.

I note the concerns of the National Residential Landlords Association about moving from periodic tenancies and the effects on student housing. It points out that both landlords and students need to know that a property will be available many months ahead. I am sure that the Government are working on solutions to that perceived problem, but if I could offer one piece of advice, it would be, please leave the proposals in the White Paper as they are. More loopholes will be taken advantage of.

I offer a solution. Dare I say that there should be an opportunity, if not a duty, for universities to house all their students who wish to be housed? Universities could engage in tenancies with the private rented sector. They would be permanent periodic tenancies, and universities could license rooms to their students. That would give the private rented sector the security it needs and students the wraparound support they often require. In our communities, we often hear complaints about people not coming forward. Such a solution would give universities the knowledge that their students were in safe and secure accommodation. It could also work for other institutions and would still mean that the decent homes standards that the White Paper requires had to be fulfilled in such accommodation.

Security of tenancy is particularly urgent. We are facing a difficult time, with many landlords selling their properties. Mortgage rates are going up and many landlords may wish to leave the market. That is fine. Some say that landlords leaving the sector means that rental provision leaves the sector. However, for every landlord who leaves the sector, there is another homeowner or private rented landlord entering it. My fear, which is shared by many, is that turmoil in the housing market will mean that renters are evicted so that landlords can sell property to another buy-to-let landlord, who would often be more than willing to allow a renter who had been paying rent for a long time to stay there.

The Government stated:

“We encourage any landlord who wishes to sell their property to consider selling with sitting tenants, which may provide an easier and faster solution.”

However, most mortgages do not allow that. I ask the Minister to sit down with mortgage providers and work out a way in which buy-to-let tenancies could facilitate that. It might mean a slightly higher premium in some circumstances or some conditions, but it needs to happen now.

Ideally, we would have a system such as TUPE, whereby when an employer is taken over, the employees continue in employment. If a landlord is taken over, the tenants should continue to live in the property. We should aim for that. Of course, a new buyer might choose to move in and renovate the property. The existing clauses allow them to remove a tenant as they see fit.

There is broad agreement on both side of the House and in the sector on access to justice. Unless we take enforcement and the ability to access redress seriously, this is all a waste of time. The rogue landlords list was set up in 2018 with a great deal of fanfare. It was meant to be a game changer. Earlier this year, the Government were asked how many landlords were on the list. The answer was 61. That makes a joke of the entire system. I could probably name more than 61 in my constituency, let alone the country. That is even more reason why the White Paper’s proposed property portal, which would require all landlords and properties to be registered, is the only way forward. I think that the Government have come to realise that. I genuinely believe that they have seen the error of their ways. That is why they talked about establishing an ombudsperson to

“provide fair, impartial, and binding resolutions for many issues without resorting to court.”

The White Paper goes on to say:

“The Ombudsman will have powers to put things right for tenants, including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000.”

That is spot on. It empowers renters and gives them a body to seek redress, but it also means that landlords know that there is a place where they will be fairly heard. That, combined with the removal of section 21, is a life changer for many. It will give people the ability to complain about poor housing.

One person told me:

“One electrician said that the wiring was the worst he had ever seen. The poor wiring led to us having a power cut, which was only repaired with a temporary fix. The landlord admitted that they were aware of the oven being faulty at the start of the tenancy but refused to fix or replace it.

Our hot water didn’t work when we moved in—the landlord had a friend (who wasn’t a qualified gas safety engineer) disconnect our heating from the boiler without telling us. We had to call out emergency gas and electrical technicians to fix these issues and shortly after” —

surprise, surprise—

“we were served with a Section 21 notice.”

If the Government enact their proposal, renters could go to the ombudsperson and get their home fixed to a decent standard, and they would not have to fear a section 21 eviction notice.

It is vital to include deposit protection schemes in the responsibilities of the ombudsperson. Decisions about such schemes should be published on the property portal. At the moment, they are not and they are only sporadically enforced.

Last year, the APPG heard from a young woman in her early 30s. She said that she was still sharing a house in an insecure renting arrangement, despite earning £35,000 a year. She spoke about wanting to start a family with her partner, but said that she could not because she could not provide a stable home. The system has robbed that young woman of the ability to start a family. The White Paper could not just address some of the imbalances in the system but restore dignity to millions of renters.

As is customary, I will finish with some questions for the Minister. Will she commit to implementing all sections—that 12-point plan—of the White Paper? Does she recognise that the pledge to abolish section 21 is not about getting rid of a clause called section 21 but about providing stability, security, and justice in the housing market? Will she commit to introducing the draft legislation this year? If not, when will that happen? Will she commit, as I have asked, to meeting mortgage lenders to discuss buy-to-rent mortgages with sitting tenants?

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Felicity Buchan)]

I thank the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), my hon. Friend the Member for Dover (Mrs Elphicke) and the Backbench Business Committee for securing this important debate on the proposals in our White Paper. I thank Members who have spoken for their considered and constructive tone and for speaking powerfully on behalf of their constituents. I also thank hon. Members for their warm words about my hon. Friend the Member for Walsall North (Eddie Hughes), who worked so hard on the White Paper. I pay tribute to my right hon. Friend the Member for Pendle (Andrew Stephenson), who took that work forward.

The Government are determined to deliver a new deal for tenants and landlords in the private rented sector. Hon. Members have made a number of points about reform and I hope to address as many of them as possible in the time I have. If I do not reach some of the points, I am happy to sit down with hon. Members on a one-to-one basis.

I want to make a couple of observations about the sector as a whole. As Members know, the private rented sector has grown significantly in recent decades. It has doubled in size since the early 2000s, with landlords and tenants becoming increasingly diverse. The sector provides a home for 11 million people—19% of all households. At least 1.3 million of those are families with children. However, the sector is also the least secure and has some of the lowest-quality housing. Too often, the current system does not work for tenants, or for the many good landlords operating in the sector.

Everyone in our society deserves to live somewhere decent, warm, safe and secure. The Government are determined to make that vision a reality.

Hon. Members will know that the White Paper sets out a 12-point action plan, and I note that it has received support from Members on both sides of the House. The changes that it sets out amount to a significant shake-up of private renting. We know how important it is to get it right. We are grateful to our partners across the housing sector who have worked closely with us on developing the reforms. We will continue to consult them closely as we move the process forward.

Several hon. Members raised the issue of the poor quality of some privately rented homes. The majority of landlords and agents treat their tenants fairly and provide good-quality, safe homes, but that is not always the case. Too many of the 4.4 million households who rent privately live in poor conditions and pay a large proportion of their income to do so. Poor-quality housing undermines renters’ health and wellbeing. It can affect their educational attainment and it reduces pride in local areas.

I am proud of the action that the Government have already taken to put things right. We have strengthened local authorities’ enforcement powers by introducing fines of up to £30,000, extending rent repayment orders and introducing banning orders for the most serious and prolific offenders. We have introduced new regulations, which require landlords to install smoke and carbon monoxide detectors and ensure that the electrical installations in their properties are safe. We are concluding our overhaul of the housing, health and safety rating system, which is the tool used to assess hazardous conditions in rented homes. That will make it more accessible to tenants and landlords and allow more efficient enforcement.

The Homes (Fitness for Human Habitation) Act 2018 empowered all tenants—private and social—for the first time to take their own action against landlords who let unfit properties. As a result, conditions have improved over the past 10 years, but we know that there is more to be done. Alongside this we have consulted on introducing a legally binding decent homes standard in the private rented sector. That consultation closed on 14 October and we are currently reviewing responses.

Many hon. Members talked about tenancy reform and, clearly, that is critical. Our reforms will provide tenants with security. They will also ensure that good landlords are still able to gain possession when necessary.

Hon. Members have rightly mentioned the insecurity caused by section 21 no-fault evictions. It is not right that a landlord can ask a tenant to leave without giving a reason. The Government are clear that they want to support the majority of landlords who act responsibly, but it is not right that tenants live in fear that their lives may be uprooted at the whim of the minority of rogue landlords. That is why, as we have set out in our manifesto and confirmed in this House, the Government have committed to abolishing section 21 of the Housing Act 1988 and giving millions of private renters a secure home.

At the same time, the White Paper proposes to simplify complex tenancy structures. It will move all tenants who currently have an “assured” or “assured shorthold” tenancy on to a single system of periodic tenancies. Periodic tenancies will allow either party to end the tenancy when they need to. That will enable tenants to leave poor-quality properties without remaining liable for the rent, or to move more easily when their circumstances change—for example, to take up a new job opportunity. Landlords will always have to provide a specific reason for ending a tenancy.

Good landlords play a vital role in providing homes for millions of people across the country. We want to reassure them that the new system will continue to be a stable market for landlords to invest and remain in. No one will win if our reforms do not support landlords as well as tenants. It is only right that landlords should be able to get their properties back when their circumstances change, or when tenants break the rules. A number of hon. Members mentioned the real issues attached to antisocial behaviour. We will reform grounds of possession so that they are comprehensive, fair and efficient, and we will streamline the possession process, removing unnecessary restrictions on landlords seeking to recover their property.

Alongside that, we will continue to listen to landlords and students, as mentioned by a number of hon. Members —landlords provide much-needed accommodation to thousands of students every year—to ensure that the sector continues to work for those in higher education, and I will continue to have those conversations.

I am sure that hon. Members will agree that going to court should be a last resort, when all other avenues have been exhausted. But we know that sometimes it is unavoidable, and that court proceedings can be costly and time consuming for landlords. That is why we are working with the Ministry of Justice and HM Courts and Tribunals Service to streamline the process and ensure that the most serious cases are prioritised. I just checked on the fax point and can assure Members that people can email or make paper submissions. Alongside that, we are reviewing the bailiff process. That is currently a big source of frustration and delay.

Many Members have mentioned issues surrounding the cost of living—

[Lloyd Russell-Moyle]

Will the Minister give way on the legal question?

[Felicity Buchan]

indicated assent.

[Lloyd Russell-Moyle]

Does the Minister not recognise that the lack of legal aid is a huge problem for people in the private rented sector? In the last Session, I introduced a Bill that would have cost the Government nothing but provided £20 million in legal aid and early legal support for private renters by taking the interest from the £2 billion- worth of deposits held in this country and putting it into a special, reserved fund for legal aid for renters. Would she look at that measure, so that the court process is supported?

[Felicity Buchan]

The hon. Gentleman will recognise that legal aid does not fall within my remit, but I am happy to meet him and have a conversation.

We empathise strongly with those affected by the cost of living issues. That is why the Government have provided over £37 billion in cost of living support this year to those who need it the most. We have given unprecedented support to protect households from high energy prices. For tenants who are unable to afford their rental payments, there is a range of potential support available through the welfare system.

My hon. Friend the Member for North Devon (Selaine Saxby) and the hon. Member for York Central (Rachael Maskell) both raised the issue of second homes and holiday lets. I am aware of the pressures in their constituencies. The White Paper contains a proposal on that issue, and I point both hon. Ladies to the Department for Digital, Culture, Media and Sport’s call for evidence on the topic.

--- Later in debate ---

[Lloyd Russell-Moyle]

I am very pleased with the contributions we have had today. I again thank the co-chair of the APPG, the hon. Member for Dover (Mrs Elphicke), and we heard good responses from my hon. Friends the Members for Stockport (Navendu Mishra), for Vauxhall (Florence Eshalomi), for York Central (Rachael Maskell), for Putney (Fleur Anderson) and for Westminster North (Ms Buck) and from the hon. Members for North Devon (Selaine Saxby) and for Harrow East (Bob Blackman).

I will not repeat what other hon. Members have said, but my greatest disappointment is that I still do not really know when something is going to come forward. We all know that “in due course” in Government and parliamentary language means the never-never. That is what the Minister has promised us: the never-never. It might come or it might not—we do not know. I am afraid I do not think that is good enough because only last week there was a debate in Westminster Hall on a similar topic, so it is not as though the Department was not forewarned that these questions would be asked. It is not good enough because at least a timetable, even an amendable one, could have been put down.

I am disappointed that we have not had that, but I am pleased that the Government are still committed to reforms. I just want them to get on with it, because we have heard of the desperate need and the proposals in the White Paper are not enough. We did not quite hear a commitment to every single one of the 12 points in the White Paper; we just heard a reiteration of the evolution of section 21.

I will take the Minister’s words in good faith. I am sure we can meet about some of these issues in person, one to one, but I want to see that timetable and I hope she will commit to updating the House “in due course”, in due course.

Question put and agreed to.

Resolved,

That this House has considered the White Paper A fairer private rented sector.