Renters (Reform) Bill (Second sitting)

Lloyd Russell-Moyle Excerpts

Committee stage
Tuesday 14th November 2023 Public Bill Committees

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

Q Thank you to the witnesses. You have mentioned aspects of the Bill that need to be strengthened; what aspects do you welcome or think of as helpful? How do you think the private rented sector supply might be impacted by the reforms?

Ben Twomey: We absolutely welcome the end of section 21 no-fault evictions—it could not come soon enough. We were promised it some time ago. For renters, that is one of the biggest insecurities we face. That is why I talk about the experience needing to change for renters. In Generation Rent, we love it when renters are aware of their rights and when they know what the system is like, yet those renters who discover they have received a section 21 suddenly become aware that the rights they have do not mean much at all, because they will be out in no time and there is not much they can do to challenge it.

One of the saddest things I have heard from renters we support is that insecurity follows them into the next home. Even when they are trying to feel settled and comfortable and to build their lives again, they are in constant fear that another no-fault eviction notice could come. It needs to be really clear that the new no-fault grounds do not keep that insecurity in the system.

We welcome the end of section 21 and we welcome the property portal. It will be really good to finally have a register of landlords. We hope to be able to put things into that portal that are not yet in the Bill: we hope that we will be able to track evictions, so that they are enforceable around the no-let grounds, and that we will be able to look at actual rents and properly monitor what goes on. One of the big advantages of ending section 21 will be that finally a reason is given for every eviction, so we can understand when things start to go wrong that lead to homelessness. At the moment, quite a lot of guesswork is happening to prevent that problem.

We also welcome an ombudsman coming into the sector, to have an equivalence with the social housing sector. As much as possible, in any way we can, we think renters should have the same rights across social housing and private renting. When the experience can be very similar, and the risks, insecurity and unaffordability are still factors across the piece, there is no reason to have a two-tier system. In fact, I would go further and say that we will have reached our goal only when homeowners start to kick themselves and say they wished they were renting because there are so many rights available, so much security of tenure and so much flexibility, and because they have organisations such as mine and Sue’s to inform people. We look forward to working with the Government to see how that ambition can happen.

Sue James: I agree. The property portal has such potential if we get the information in there right so that there is transparency around renting. That would be amazing. We absolutely love the fact that this has been brought in. There are some changes that we think need to be made. The fact that you are looking at delaying action on section 21 is something I would love to talk about, if you would like to hear that.

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

Q I will ask two different questions, then. I will ask Sue about the delay that the Government propose with the courts. Earlier, we heard from the housing ombudsperson that he is willing to cover all of this, if the Government agreed, and that he could step in with transitional measures immediately on Royal Assent, so he was unclear about why there would need to be a delay on the abolition of section 21. Perhaps you could tell us why that is the case.

With Ben, I would like to probe no-fault evictions, which are very expensive for the person who is not at fault. They have to pay for removal costs, a new deposit and, very often, a month’s rent up front, which is very difficult for people. Are there any ways that could be ameliorated when it is no fault and the tenancy is being curtailed early, within two months?

Sue James: Shall I go first? You also heard this morning that the Government need to hold their nerve, and I absolutely reiterate that. The Bill has been a long time coming, and we have a crisis out there. Colleagues of mine who are at law centres have queues of people coming to see them because of this, and we absolutely need to get it right.

The county court is not the experience I have been hearing about in some of these conversations. You heard this morning that the county court is pretty much getting it right: it is not one of the courts with a huge backlog of hearings and stuff like that. When you start a possession claim, there are fixed rules around that. The case has to be listed within eight weeks, and it is usually listed in six to eight weeks. You then have a hearing before a judge, so it is not actually taking that long. You have the hearing and the court has to apply strict criteria on whether it is just and proportionate, and whether there is a reasonable defence that can be pursued.

In the court, we have a fantastic duty solicitor regime that has just been improved to include benefits advice beforehand. So you already have judges who are experienced in housing, you have duty advisors who are very experienced in housing, and then you have income officers who are at the same courts all the time. You build these relationships, and as duty solicitor, you are working out a plan where you can get the arrears paid off and get the stuff sorted out. We now have crisis navigators in law centres, and they resolve the benefit issues that are sitting behind it. Of the rent-arrears cases I have ever seen, I would say that probably about 60% to 70% have been a benefit-related problem. I think those issues are different from the issues around the court.

The only thing that you could invest more in—well, obviously if we invested more in the court that is brilliant, but I do not think we need to wait for that—is the bailiffs and the end period. Sometimes, with a bailiff’s work, it can take up to eight weeks to fix a date. That is just about money. If you address that, you do not have these problems. That is why I am saying that discretionary is the way to go, because it provides fairness.

You already have a housing court sitting there. It could do with some tweaking, but you are already there with that. I think we are good to go. Given that section 21 is the biggest cause of homelessness, you would rebalance in the way that you want to, so I would say, “Hold your nerve and go with it.”

Ben Twomey: I have two very quick points on the court reform before I go into your other question, Lloyd. First, in quarter 3, the latest data from the Ministry of Justice shows that the median time it took for a repossession case was about 22 weeks in both section 21 and in section 8. The idea that section 21 is much quicker is not true. With section 21, more people move out beforehand because there are fewer ways in which you can legitimately challenge it. There is a problem if you are setting up the court system to say that we want to basically stop tenants having their rights and a way in which they can challenge an eviction. That is a really important point: it does not actually lengthen the time that will be taken. That is not true.

Secondly, I will talk quickly about Jasmine, a renter who very recently challenged an eviction because she could not move in time. She was given two months to move under a section 21, but she could not move in time, so she challenged it and it took up the court’s time instead. If you extend the notice period to four months, that challenge would potentially never happen, the court never has to see Jasmine, she finds a new place and is comfortable and able to move out in good time. She is happy, and potentially the landlord is happy too.

On the cost of no-fault evictions for renters, we estimate that the average cost to a renter of an unwanted move is £1,700. For a renter to be able to save, it is really important that they are able to find some way in which, when the move is through no fault of their own, they can make those savings quicker in order to be out of the home. We think the best way to do that—rather than, for example, thinking about repayments from the landlord—is just to say that the final two months of renting will have no rent cost attached. The tenant then has time in that space to save in order to find a deposit and the first month’s rent, for example, and they are able to move out with the savings they have made because of the two months’ lack of rent.

It potentially means two months out of pocket for the landlord who has chosen to do a no-fault eviction, but if it is a no-fault eviction for a sale, they are potentially getting a big windfall through that anyway. The two months out of pocket can be balanced against the fact that otherwise it would be two months in which the tenant is likely to find themselves as one of the record number of homeless people we have at the moment. It is an important balance to strike, and that is one of the ways in which you could do it.

[Mike Amesbury (Weaver Vale) (Lab)]

Q Does the amendment to ground 14, the ground for possession for antisocial behaviour, strike the right balance? Or is this potentially another backroom approach to no-fault evictions?

Ben Twomey: Thank you, shadow Minister. On the point about being “capable of causing” a nuisance, the previous language in the Housing Act 1988 was “likely to cause” a nuisance. It would be difficult for me to prove that you are “likely to cause” a nuisance, but it would be a lot easier to say you are “capable of causing” a nuisance—as it would be for me, you or anybody else here. I think that change in language is potentially dangerous, particularly when you think about antisocial behaviour being relatively difficult to define.

I know that others in these sessions have expressed serious concerns about domestic abuse victims, how domestic abuse could be mischaracterised as antisocial behaviour, and how that may be a reason for eviction. Obviously I do not need to emphasise how difficult that would be—having the punishment of homelessness potentially layered on to a domestic abuse situation, where that is happening. It is important that we differentiate between criminal justice matters and housing matters.

However, the need to deal with antisocial behaviour, when it causes a real a nightmare for neighbours and other tenants, is important, but the local authority has a duty to prevent homelessness as well. They enact that duty with two months’ lead-in time. You cannot do that if the ground says that a tenant could be out of their home in two weeks. Within those two weeks, the possession proceedings can begin immediately as well. The approach does seem reckless. Are we just talking about moving a problem, which is currently in a home, on to the streets rather than addressing the fundamental issues? Is it going to catch within it some serious victims of domestic violence?

Sue James: I would agree with all of that, but I add that I have dealt with many antisocial behaviour cases in my time as a solicitor and they are complicated. They are not quite so straightforward, and there is often a mental health issue or a vulnerability at the heart of them. I think we absolutely need to keep the original language rather than change it. And I agree with Ben on the importance of the domestic abuse issues; there are going to be women facing eviction and having to experience that as well.

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[Jacob Young]

Q Would you say that the reforms we are making give renters more confidence when looking to take out a new tenancy?

Francesca Albanese: I think they certainly help. If we are looking at longer-term tenancies, I suppose it is about having more emphasis on longer-term tenancies being used more regularly. Going back quite a lot of years of working in this space, I know that there are ways you can do that now, but it is not the norm. Most tenancies that are given are six or 12 months with a rolling period or a fixed term.

I would also go back to the points made at the beginning: this is helpful, but there are other areas that we are concerned about, such as ensuring that people getting served notice on the kind of grounds that were under section 21 and which will now go over to section 8 are protected sufficiently. Even though longer-term tenancies can give tenants more protection, from the perspective of Crisis, which works with people at the lower end of the private rented sector market, where there is often a higher turnover of tenancies, we would want to make sure that those protections are still in place so that we do not end up pushing more people into homelessness as an unintended consequence.

[Lloyd Russell-Moyle]

Q The Government said in the King’s Speech that they wanted to bring forward amendments to prevent what is often called “No DSS” discrimination—“no benefits” discrimination. First, what are your thoughts on how that could be done effectively? Secondly, many people scrabble around to find a rent that is within local housing allowance, only to find that it goes above local housing allowance within a year. Should that be taken into account in the rent tribunal process to ensure that rents that were within local housing allowance remain within local housing allowance, so that people are not economically evicted?

Francesca Albanese: I might make a broader point first and then come back to that. At the moment, as you will all be aware, the local housing allowance does not meet rents. It has not done so for a long time, and it has been frozen since 2019. That decoupling of rents from local housing allowance levels is causing huge problems. We did some research six months ago—I would say the situation has probably got worse since then—that shows that only 4% of the market in England is affordable to people on local housing allowance. In some areas of the country, that drops to 1%, so it is a massive issue. That needs to happen now, and it is something that the Government can do now. They can give broader access to the private rental market. There is obviously a longer-term issue: we need more social housing. Where private rental sits within the broader housing market is really important.

On the point about discrimination, we do not want tenants to be discriminated against because they are in receipt of welfare benefits. Anything that prevents that is welcomed. The problem at the moment is that quite a lot of tenants are not getting anywhere near properties within the private rented sector. We are seeing record levels of people trapped in temporary accommodation and local authorities are very stretched. The point about the private rented sector is that quite a lot of people are not even getting access to it, let alone being discriminated against because of being on welfare benefits.

On the more specific point about tribunals, that is not my area of expertise, so I do not want to comment on something where I would be giving an opinion rather than factual evidence.

[The Chair]

If there are no further questions from Members, I would like to thank our witness for her evidence. We will move on to the next panel.

Examination of Witness

Ian Fletcher gave evidence.

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[Eddie Hughes]

Very.

Ian Fletcher: You could end up in a situation where somebody has taken a two-month tenancy and is just using that as an opportunity to earn some money for themselves by renting it out at weekends for hen parties or things of that nature; it is almost sort of hotel accommodation in some respects. That is the concern of the sector—that you end up with a lot of churn in that respect.

I think there is also another concern. We have heard, quite rightly, from Ben and other evidence givers about the costs of moving from the tenant’s perspective. There are also significant costs from a landlord’s perspective where you are setting up a tenancy and then that is churned very quickly.

[Lloyd Russell-Moyle]

Q In some of the evidence to the Levelling Up, Housing and Communities Committee, Grainger, a buy-to-let house builder, suggested that the triple-lock approach should be applied, whereby landlords are restricted so that they cannot raise rents by more than the lower of consumer price inflation or CPI, wage inflation or 5%. That was Grainger’s official position at the time.

I wonder whether you would support an idea that there should be some sort of matrix that prevents landlords from increasing rents above a certain level—that was nationally known, as it were, and that could be published by the Secretary of State, so that everyone had some security about what that ceiling is.

Ian Fletcher: Those remarks are specific to a particular context.

[Lloyd Russell-Moyle]

Q What is the context?

Ian Fletcher: The context is that at the moment the way rents are often set in the build-to-rent sector is to give the tenants some certainty. They will typically be index-linked. The Bill abolishes the use of rent review clauses, so you are not allowed to do that in terms of setting a rent beyond a year. We think that is a pity. Often, tenants appreciate the certainty of knowing whether their income will meet the rental payments going forward. I would not want somebody to be tied into those sorts of rent review clauses forever and ever, because economic circumstances change significantly, but for a short period of time that should be acceptable.

[Lloyd Russell-Moyle]

Q Would you be against the idea of a nationally set ceiling?

Ian Fletcher: I would be. I think that that is starting to look like rent controls, and that then comes with some of the adverse consequences of rent controls in terms of the quality of the stock. You tend to find with rent controls that the sector shrinks down and does not attract—

[Lloyd Russell-Moyle]

Q So are you opposed to the Government’s proposed ceiling on market rents?

Ian Fletcher: That is the market. I am supportive of the market.

[Lloyd Russell-Moyle]

Q The British Property Federation has said:

“The abolition of no-fault evictions needs to happen in tandem with…court reform.”

What indicator explicitly do you think should be hit for court reform to be sufficiently achieved?

Ian Fletcher: I obviously saw the debate on Second Reading. I thought that the tests that the Secretary of State set out were relatively good ones. The thing that we have been particularly keen to see is the digitisation of the courts. That project has not advanced as quickly as I would have liked, but it will make a huge difference to the experiences of both tenants and landlords going to court.

A lot of the complaints that we hear about the courts are to do with communication and knowing where your case is in the system and how it is progressing, and digitisation will improve that significantly. I would like to see times coming down—obviously, it is at a 22-week median at the moment. I would like to see that come down to about 16 weeks.

[Lloyd Russell-Moyle]

Q Twenty-two weeks is for what, sorry?

Ian Fletcher: Twenty-two weeks is the median time that a case takes to go from claim to possession at the moment.

[Lloyd Russell-Moyle]

Q We have heard that within that period the court’s part is actually relatively strict; the bailiff’s part is the particular problem. Are you saying that it is the bailiff’s part that needs reform?

Ian Fletcher: I think one of the Secretary of State’s other tests was that bailiff recruitment would improve. The other thing I would say is that the Levelling Up, Housing and Communities Committee recommended that there should be some sort of key performance indicators and regular measurement of them, which would give us the confidence that the courts are delivering what they should be delivering: speedy and efficient access to justice.

[The Chair]

If there are no further questions from Members, I would like to thank the witness for his evidence. We will move on to the next panel.

Examination of Witness

Kate Henderson gave evidence.

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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.

[Lloyd Russell-Moyle]

Q That would be much appreciated, so that we can get the right balance.

On ground 6, you said that you would quite like the ability for redevelopment. We know that there have been some very controversial repossessions over a state redevelopment that local authorities and housing associations have been part of. Tenants have often liked the security of knowing that they cannot just be given a few months’ notice, that they have to go through a process, and that they have the ability in the end to say, “No, this is my home.” Would giving that ability strike a balance that is not in favour of the tenant?

Kate Henderson: The context in which we are asking for access to ground 6 is when regeneration is already taking place. It is a scenario where you have a development where people have been moved out while works are taking place. That might be for building safety reasons, for energy efficiency reasons or for decency reasons. At the moment, if that accommodation is being rebuilt and the tenant has been moved into temporary decant accommodation, we would always try to do that by consent with the residents.

In that decant accommodation, we typically use assured shorthold tenancies. Obviously that will go with the abolition of section 21, which we support. This is the place for the grounds to be extended to where residents are in the decant accommodation. Those residents would be moving back into the newly built accommodation that would have been allocated to them, but we need to make sure we can have that constant flow between use of the decant accommodation and getting people back into their permanent settled accommodation.

[Lloyd Russell-Moyle]

So that is where an assured tenancy is being offered.

Kate Henderson: Sometimes it is done on licence. If the building that is being redeveloped is not being fully demolished, and people are going back in, you would move into the decant accommodation on licence. But in a situation with major regeneration—we hope to see more of that; it is great that the affordable homes programme has now opened up to that—typically with the decant accommodation the tenant would have an assured shorthold tenancy. That will not now be an option, so we want a situation where there are grounds for the decant accommodation for those people. It would be a very rare set of circumstances where somebody wanted to stay in the decant accommodation and not move back, but it has happened. We want to make sure that we are able to continue with the pace of regeneration. This could be a prior notice ground to give a safeguard to the tenants. Again, it is just about having access so we can make sure that regeneration can happen in a timely way.

[Mike Amesbury]

Q Is there anything else that should be in the Bill, or anything that concerns you about the Bill?

Kate Henderson: This is very technical, but one of the areas—in addition to rent increases; thank you for the opportunity to discuss those—relates to grounds 2ZA and 2ZB, which are two mandatory grounds for possession where a superior lease ends. This will generally be for situations in which a section 21 would previously have been used.

Let me give an example of why this is an issue. It tends to be an issue in supported housing, where you have a superior landlord who has let on a short-term lease to a housing association for, say, five years. That housing association is the intermediate landlord, and it would typically provide supported housing and sometimes very high-level support to vulnerable residents, who would be the occupational tenant.

In some situations, either the superior or the intermediate landlord will allow the lease to lapse, and then you would go into a scenario of tenancy at will; and in that situation, we do not want a situation where the superior landlord is responsible for the occupational tenant, given the high levels of support needs. It is unclear whether these grounds would then be available for use if there is a tenancy at will. Again, in most situations you would have given notice—the intermediate landlord would have given vacant possession to the superior landlord—but in the case where that has lapsed, we need to ensure that these grounds can work. The second issue is around maintaining possession of the property until proceedings have concluded.

It is a fairly technical area, but it matters to those who are providing supported housing and using leases. I would be happy to provide a further note to the Committee when I submit our written evidence. I appreciate that this is a rather technical matter, but it is important in terms of high-level support.

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[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.

[Lloyd Russell-Moyle]

Q Can I ask about the proposed property portal? Of course, some of the enforcement must be through local authorities, as you have just been talking about, but earlier we heard about the idea that, by using the property portal, tenants themselves could seek enforcement. The proposal was that, if a landlord has not met certain standards required for registration on the property portal, there would be rent repayment orders, so that the person who has been harmed is the person who benefits. What is your view, first, on the use of a property portal as a repository of all the information and, secondly, on the ability for tenants to take action rather than having to wait for the local authority?

Dr Dawson: I think we could probably do with the portal as an information repository. That is very welcome. Research shows that a lot of landlords tend to deal with the need for information on a reactive basis, when a situation presents itself. As most of them are not members of recognised landlord bodies, they are using things such as internet portals, chatrooms and blogs to get information on what is required of them. Through local authority licensing, local authorities are getting much better penetration and being brought closer to landlords, and that allows them to provide advice, but landlords in general will tend to use online resources to get information. We would like them to use a single portal that we have quality control over.

The same goes for tenants. At the moment, one of the main reasons for tenants’ not complaining is ignorance of their rights; I am sure that Generation Rent will have raised that in its submissions. If we can point to a single, consistent source of information, that will help the sector to regulate itself. Given that so many landlords are small scale—85% of properties in the sector are owned by landlords with portfolios of one to four properties —providing the opportunity for more self-regulation in the sector would be a big help. Local authorities have limited budgets, and because the regulations are so complex and there is such a range of operators—there is a sort of sliding scale from the good to the poor—a more interventionist approach is required. Using rent repayment orders incentivises tenants to keep an eye on landlords.

Things like the three-month period in which you are unable to re-let a property after you have used grounds 1 and 1A will be exceptionally difficult for a local authority to follow up on. We just do not have the resources to react in that sort of time and proactively go out and visit these properties. Six months to a year would be much more sensible.

On incentivising tenants to take action separately from the local authority, the only thing we would say is that we should be able to give them advice. Under the original rent repayment order clauses, we were prevented from giving advice to tenants on cases. If we are taking action, they will often come to the local authority and ask for information. We have not looked at that as an option. We would certainly be open-minded to it, and we would support anything that helps the sector to regulate itself.

[Lloyd Russell-Moyle]

Q You suggested two things there. The first was that the period that applies to grounds 1 and 1A should be more than three months—perhaps six months to a year—to enable your enforcement.

Dr Dawson: Yes.

[Lloyd Russell-Moyle]

The second was that there needs to be some sort of amendment to allow you to give advice to and support tenants through the rent repayment order process.

Dr Dawson: At the moment, there is nothing that specifically prohibits that in the Bill, and the original legislation has been updated to permit us to provide advice. We are just keen that, in the regulations that will be used to implement many of the changes introduced by the Bill, we do not see anything that interferes with our ability to do that.

[Lloyd Russell-Moyle]

That needs an agreement between you, the portal and the housing ombudsperson.

Dr Dawson: Yes.

[The Chair]

If there are no further questions from Members, I thank the witness for his evidence.

Examination of Witnesses

Dr Julie Rugg and Professor Ken Gibb gave evidence.

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[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.

[Lloyd Russell-Moyle]

Q Should those two grounds be discretionary or mandatory, bearing in mind that often, through dialogue and discussion, a different outcome could be sought?

Dr Rugg: The issue of what rent arrears mean is really quite complicated. Tenants can get quite confused about exactly what their rent arrears mean—whether it is because their housing benefit has not been paid or their shortfall has not been paid. Sitting within that, I think we need to be a little clearer about what rent arrears mean in a housing benefit context, so that that is clear for the landlord and the tenant.

Professor Gibb: This reminds us that the legislation that is being talked about today has to be understood alongside another critical part of the private rented sector, which is the local housing allowance. In a sense, there is something odd about making these changes and treating the LHA levels that it operates at as a constant or a given. In a sense, we are almost trying to fit in bits of legislation and policy on the basis of something that is clearly quite problematic for a lot of people, because the levels are so low.

[Mike Amesbury]

Q Would the proposed single private sector ombudsman provide sufficient and efficient redress for renters?

Dr Rugg: It is good that renters will have the option of going somewhere to get neutral advice. The best advice that you can give to the sector is advice that supports tenancies—that does not support the landlord or the tenant, but seeks to support sustainable tenancies. At the moment, that advice is just not available, coming into the market; you can either, as a landlord, ask for landlord-based advice, or you can go to one of the lobby groups and ask for that kind of advice. Getting some advice that sits in the middle, where everybody can trust that the advice is neutral and accurate, is very important.

Professor Gibb: I completely agree.

--- Later in debate ---

[Matthew Pennycook]

Q Just the one route?

Professor Hodges: I would have one for the entire property and housing sector, and this is not the first time that I have said that. My ombudsman and judge colleagues know that, and quite a lot of them would not disagree. Fiona mentioned that we have a number at the moment. It must not proliferate. I am fairly confident that, if the Government just send the right signals, they might not have to legislate and that we can get adhesion on the ADR and the ombudsman side—people joining up spontaneously, if they are encouraged and pushed—so that you actually get there.

What we are doing here is filling a gap in private rented. We have already got the property ombudsman, which largely cover agents, and the private rented redress scheme. Then you have got have got social housing—let us converge. If you converge courts and tribunals as well, that is a major step forward for all the players, and certainly tenants and landlords. You will deliver things more quickly, basically, and everyone will know where to go.

As I said, look at every other sector. In financial services, you have the Financial Conduct Authority and the Financial Ombudsman Service; in energy, you have Ofgem and the energy ombudsman; and so on. It is not 100%, but it is well over 95%. In social housing, you have got a regulator. We have not got one in private property. We could have one, which would be a regulatory space involving these elements in a new and very effective way, within which you would not have, if you like, an old-fashioned regulator. Rather, you would have a system regulator, but all the people would work together in the system on supporting good practice, because codes already exist for that. The decent homes standards is just a code. It should apply, obviously, and then everyone would work towards that, whether it is local authorities, or the system regulator, the various ombudsmen, or the various self-regulatory bodies that exist—everyone knows where they are.

I am involved in several discussions like this, in totally different regulated sectors. If you say to people in your sector, “We’re all going to work together, and this is how we’re going to do it,” and if you have responsibilities to everyone—if you are no longer just a self-regulatory body on your own, but you are an ecosystem, and it has to work—then that works incredibly well, if everyone realises that is the game that has to be played.

Fiona Rutherford: I agree with a lot of what Professor Hodges said, but I am not sure that everybody does know where to go.

Professor Hodges: No, they don’t.

Fiona Rutherford: To answer your question about where there may be good examples, the health justice partnerships, which we have seen work together, are good examples to look at. They do not rely on a tenant or a landlord to know what they cannot know or do not know, and that is what is missing. The health justice partnerships are where we have seen lawyers, or support workers or sometimes NGOs, sit in doctors’ surgeries, so that when a GP sees a patient who is suffering from mental health issues, or various other physical illnesses, and they have it diagnosed that it is probably related to something outside of a medical solution, then there is somebody in the building who that person can go to—if not immediately, then an appointment can be booked. That stops us relying on what are sometimes very vulnerable people, or people who are at vulnerable points in their lives, to seek out support services and help themselves.

Professor Hodges: Just to add one sentence, which was implicit in what I said at the start: in the regulated sectors where you have an ombudsman, such as financial services or energy, no one goes to lawyers or courts—they disappear. People have voted with their feet, because the procedure is faster and more user-friendly, it is free, and it delivers a broader range of behavioural outcomes on the part of the energy companies, or whoever it is, and does not just ask, “Are they breaking the law?” If you feed that in to the ombudsman, you might get a decision, but you will also get the point referred up to Ofgem, or whichever regulator it is, so that it can do something systemically about it, if necessary. It is an ecosystem, but everyone knows where to go. I am afraid that lawyers and courts are toast.

[Lloyd Russell-Moyle]

Q The amount that the ombudsperson can award is currently capped. Should the cap should exist, and if so, should it be fixed at £25,000, or should it be linked to another, more sensible amount, bearing in mind that that is a year’s rent on some properties?

Fiona Rutherford: I would like to make a separate comment about the fine in the enforcement process within the Bill, but that is not your question, so perhaps Professor Hodges might start.

Professor Hodges: The amount of money that either a judge or an ombudsman should award must be relevant to the dispute, because you cannot have people not being compensated. Therefore, there should be a mechanism for the amount to be amendable over time. Personally, I would not waste your time with that—coming back again and again to put it up. I would put a mechanism in the Bill, so that someone can set it, whether that is a Minister or whoever. You cannot have people not bringing forward claims because they will not get fully compensated, or bringing forward claims that are not fully compensated when they should be.

That takes you over, however, into penalties or sanctions for behaviour. That is a complicated issue, but the point is that usually we have a national regulator, and here we have a lot of local authorities, and they need the right powers as well, but quite often the right powers are not fines. I am afraid that there is rather a lot of psychological and other evidence that deterrence does not work—which is a shock, the first time that you hear it. Therefore, other, quite significant penalties—such as talking to people, explaining, informing and giving supporting about how things ought to be different, or, in the extreme, removing the licence to operate and saying, “You cannot let this property”—are the ones that work. A broader toolbox of responses and interventions—I am not using the word “enforcement” here—is what actually delivers good outcomes.

[Lloyd Russell-Moyle]

Q So are you saying that for local authority enforcement, it should be easier for them to effectively de-list or bar someone on the property portal from re-renting that property?

Professor Hodges: That would concentrate minds.

Fiona Rutherford: And even before enforcement, there is something about transparency. There is something about everybody going into a tenancy—going back to that focus on tenancy—knowing a fair amount of history on both sides.

[Lloyd Russell-Moyle]

Q So the property portal should be accessible for you to see that detail of it—potentially in public generally, or for the potential tenant?

Fiona Rutherford: Importantly for the tenant. It is there that transparency matters the most. I think that there are possibly bigger issues with making it fully public.

Professor Hodges: One of the points about the portal is that it is a very effective self-regulatory—or indeed managerial—system, because it says, “Have you got an insurance certificate? Have you got a fire certificate? Well, upload it.” It is done, and then you get a reminder saying, “You’ve got to do the next one.” Everyone should be able to see that. There is nothing secret about that information, but it delivers a baseline of regulatory compliance—“Are you compliant with the decent homes standard? Where’s your certificate?” or whatever. It is self-policing, and provides a very simple mechanism for doing that.

Just to give one dramatic example of sanctions, the Civil Aviation Authority never fines airlines in relation to safety issues—although it fines them now and again. It has an incredibly good culture among all the players—air traffic control, the airlines, engineers, and so on—and has constructed that deliberately, and it is the only reason why planes stay in the sky and we have confidence in them. It never fines anyone, but it uses the ultimate sanction—rarely—that I was talking about of saying, “I’m going to stop you operating your aircraft or your airport.” That concentrates the mind and gets the result of them saying, “Okay, we’ve fixed it,” very quickly.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Q Elaborating on that point, would you do that based on a landlord or based on the property itself? Would there not be a danger of evasion through the property group being put in someone else’s name, or using a different landlord, to escape that enforcement?

Professor Hodges: Personally, I am in favour of the broadest possible enforcement powers, but not necessarily their regular use. Therefore, whoever is involved in management and responsibility should be within scope of the discussion, and then of the potential response or intervention.

--- Later in debate ---

[Jacob Young]

Q Thank you, James; it is great credit to you for sticking through a lot of this. I thank the other witnesses who stayed and listened to some of the other responses. Obviously, a lot of these changes aim to professionalise the sector. I am keen to understand from your perspective what you see as the opportunities presented by the portal and how they can support landlords to better understand their responsibilities.

James Prestwich: Again, as other witnesses have said, there is an awful lot to like about the landlord portal. We have talked quite a lot about the benefits that the portal will have for tenants, but it is right that there are significant advantages for landlords as well. This point might not have been made yet, but the overwhelming majority of landlords, regardless of the number of homes they own, are thoroughly decent people doing a decent job. We know there are examples of poor quality and poor practice, as there are in all professions, but any tool that enables landlords to get a better understanding of the responsibilities expected of them is to be welcomed. The point about how we get the portal to work both ways is really important. There is something about the sort of information that local authorities will be able to access from the portal, although they do not at the moment. That should enable local authorities, providing they have got the capacity and resources, to be able to take a harder line when people fall below the standards that we all want to expect from landlords.

[Lloyd Russell-Moyle]

Q You said that the two-month period seemed quite short, and four months might be preferable. We heard earlier about the cost of moving, as well as the difficulty. Where there are no-fault grounds, is there an argument that there should be some payment to the tenant? Alternatively, as Generation Rent suggested, once the no-fault eviction has been ordered, should no rent effectively be paid for those two months so that a tenant can leave at any time or can use that time to save up?

James Prestwich: There is a lot that Ben Twomey said that you could agree with. I think the challenge here is about how we try to find that balance. We know that a lot of people in the private rented sector are accidental landlords. Previously, I was an accidental landlord and an accidental tenant, and neither of those things was particularly pleasant, so I have a little experience of that. There is a real challenge around all of that that we have not quite bottomed out yet.

[Lloyd Russell-Moyle]

That sounds a little inconclusive.

James Prestwich: Yes, it is.

[Lloyd Russell-Moyle]

You are saying you think work needs to be done but you are not quite sure of the solution yet.

James Prestwich: Yes, that is probably the case.

[The Chair]

If there are no further questions, I thank all the witnesses for the time and expertise that they have given with their evidence.

Ordered, That further consideration be now adjourned. —(Mr Gagan Mohindra.)