Tenant Fees Bill

Lord Bourne of Aberystwyth Excerpts

Monday 5th November 2018 Grand Committee

[Baroness Gardner of Parkes]

I accept what the noble Baroness says but I think she will find that a deposit is usually paid by the tenant as a deposit for their agreement. If the landlord or agent has to make other checks as well, even a deposit of one week’s rent might not be enough to cover them. It depends on how much people charge for checking proof of identity and how much the deposit is. I hope that clarifies the matter.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I thank noble Lords very much for participating in the debate on this part of the Bill. I should like to speak to the range of amendments that deal with the treatment of holding deposits.

As noble Lords are no doubt aware, this is the first time that we are seeking to cap the level of holding deposits—it has not been done before. I am pleased that we all agree that it is important to permit landlords and agents to charge a holding deposit. That seems to be universally accepted and I thank noble Lords for that. However, it seems that we still have some areas of disagreement and I will discuss each of them in turn.

First, Amendments 18 to 20 seek to lower the level of the cap on holding deposits from one week’s rent to three days’ rent. I am afraid I cannot accept these amendments. A cap of three days’ rent could unfairly penalise the landlord because the costs incurred in referencing a potential tenant include not only the cost of the reference check. Payment of a holding deposit means that a property should be taken off the market, and therefore costs might include lost rent for the landlord if the tenancy does not proceed. That lost rent will be higher in Fulham than it will in Newcastle.

Where a tenancy proceeds before the deadline for the agreement, the tenant will receive their holding deposit back in full. However, if the tenancy does not go ahead owing to the tenant’s default, it is not fair that the landlord or agent is penalised. We are seeking fairness here—no more, no less. We believe that tying the maximum holding deposit that can be retained to a week of rent is fair compensation for the landlord’s likely actual loss. However, our consumer guidance will encourage landlords and agents to retain only the costs they have incurred. In relation to the guidance, I will also look at the point about a draft agreement being seen before the agreement is entered into. That is reasonable. In general, I am very happy for noble Lords to engage in the guidance. We can organise a briefing on it and take on board any points that they wish to make.

However, it is important to state that the cap of one week’s rent represents an innovation and an improvement on the status quo. Currently, there is no prescribed limit. The Government’s 2017 consultation on banning letting fees asked tenants for a breakdown of the fees charged at their most recent letting. Similarly, it asked agents for a breakdown of the fees that they charged. The responses to the consultation were not necessarily a representative sample but they gave us a flavour of the level of holding deposits currently charged. Tenants said that they were charged a mean average of £370 as a holding deposit and agents said that they charged a mean average of £214. Currently, a website run by Generation Rent called lettingfees.co.uk has also compared letting fees as displayed on the websites of 1,088 agents across the United Kingdom. It found that, of 23 agents who declare that they currently charge a holding deposit, the average charged is £341. Between 1 April 2017 and 31 March 2018, the average monthly rent in England was £675, working out at £156 per week. That is what would be charged as an average. A cap of one week’s rent will help to improve affordability for tenants, while ensuring that landlords are not unfairly penalised should the tenancy not proceed for reasons within the tenant’s control.

Secondly, I will address Amendments 1 and 21, which seek to encourage greater transparency for tenants in how the holding deposit is treated. I appreciate the valuable points raised and the importance for tenants of understanding how their deposit is handled and why it may not be returned. That is entirely fair. I want to minimise the need for secondary legislation. The noble Lord, Lord Best, quite reasonably pointed out the down side of bringing forward regulations. I should say that it is not usual in this type of situation, despite what the DPRRC says. I have checked this with similar, although admittedly only parallel, legislation; of course, there is no legislation that is identical. If one looks at the Local Government and Public Involvement in Health Act 2007, the Local Government Act 2003, the Planning Act 2008 and the Small Business, Enterprise and Employment Act 2015—across a range of legislation, which I am happy to share with noble Lords—it has been usual for this to go in guidance rather than regulations. The noble Lord is absolutely right that not only would that sacrifice a degree of flexibility, it would slow this down materially—by how long it is difficult to say, given all the legislation currently going through, whatever the circumstances of deal versus no deal. Noble Lords will be aware of the considerable pressure on the legislative programme.

[Lord Kennedy of Southwark]

On the point about slowing the legislation down, the Bill will come into force. Most of the provisions will be enacted on a day to be determined by the Secretary of State through a statutory instrument. Even if the Bill goes on to the statute book, we will have to wait for a further period for many of these provisions to become law, and even then only by regulation. The Bill will not all come into force immediately. Some parts will but quite a lot, including the provisions on deposits, will come into force at a later date. It could be weeks or months after the Bill comes into force before anything actually happens. We will have to have a debate in the House on those provisions first.

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[Lord Bourne of Aberystwyth]

The noble Lord is right up to a point. That is the case but, obviously, it would be extended if we are considering other things. It would take it into another realm if we choose to debate at length the considerable guidance, which he will have seen. I accept that, but of course it would take longer because there would be more to debate.

I think I have dealt with the point about guidance over regulations. The other point raised quite rightly by the noble Lord, Lord Best, concerned when the deposit is lost. That is set out in the guidance and we will be happy to engage with noble Lords further if there are further points they wish to make.

I pay tribute to the work of the noble Baroness, Lady Grender, in this area. She fairly outlined the point about multiple holding deposits for landlords. She will know my view, given previously, that this is not fair and I remain very much of the view that what is sauce for the goose should be sauce for the gander. We are taking legal advice on this point because I am convinced that it would be a breach of contract for a landlord to take multiple deposits. He would potentially be in breach of multiple contracts except the one. We will look at the issue further and I am happy to come back to this point on Report.

My noble friend Lady Gardner and the noble Earl, Lord Lytton, spoke about the danger of the level of the deposit being curtailed excessively. The Government are keen to reach a fair judgment on this. People should be recompensed only for their losses and we should not go beyond that. That is entirely fair. On the other hand, they should not be penalised where a loss has been brought about by the actions of the tenant. It seeks to get that level right.

Some fair points have been made. Additionally, we are seeking to introduce a guideline here, and it may become an accepted guideline in many cases, but this is not an obligatory measure. If people want the holding deposit to be lower, they can make it so. The level of the actual deposit in Scotland is set at eight weeks, but there is evidence that it is not being adopted as the norm. That is the upper limit and so would be the case here. Three days is much too low, and we think a week fairly represents the likely loss in many cases. This is a considerable step forward.

With that, I thank all noble Lords for engaging and for the welcome generally, given the point made from the Front Benches by the noble Lords, Lord Shipley and Lord Kennedy. As I say, I am happy to engage on those specific points—on the content of the guidance and on the multiple deposits—ahead of Report. With that, I ask the noble Lords to withdraw their amendment.

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[Baroness Grender]

May I contribute to that question by saying that it has already been done with regard to default? Can the Minister explain the difference between that and the holding deposit, in terms of being specific about transparency in regulations?

[Lord Bourne of Aberystwyth]

My Lords, those are two very separate points. On guidance versus regulations, the noble Lord will be aware—not least because I have just said so—that these parallel matters have been dealt with in guidance on many pieces of legislation, under successive Governments of all colours. It is a judgment, but we feel that guidance is appropriate.

The point on the default fees—although this is still being discussed—is a matter of judgment, and it is the judgment we have made. As the noble Baroness will be aware, there are points in the guidance on the default fees—it is not all in the legislation; some of it is in the legislation, some in the guidance. There is also a substantial amount about the default fees in the guidance; it is not all in the legislation.

[Baroness Grender]

I thank the Minister, especially for agreeing to take a look at multiple holdings. I look forward to working with him and his team on the guidance. There is some guidance, and the noble Earl, Lord Lytton, will be very relieved to hear that there is a suggestion in it that a tenant might produce a typo, but no suggestion that any landlord would do so. I am using a small example of something I have spotted already in the drafting. I very much appreciate that the guidance is a draft at the moment, and therefore I thank the noble Lord for the opportunity to sit down and work through the guidance to make sure that there is parity between tenants and landlords. There seem to be one or two disparities that I have already picked up from my brief reading of it over the weekend. That, in a way, is why I still want to pursue—and I am very happy to discuss with officials and the Minister—the possibility of getting some regulations to introduce transparency in holding deposits. I look forward to those discussions, but it may be that we will need to pursue this further on Report, depending on those discussions. With that, I beg leave to withdraw this amendment.

[Lord Kennedy of Southwark]

On the guidance, I accept the noble Lord’s point that it is a question of judgment and that he can point to other legislation where guidance is provided for in regulations. But does he accept that if it is guidance rather than regulations, that guidance is weaker because it does not have statutory back-up? That is the point I am making. The Bill addresses tenants’ fees, which we all agree are a problem. If the Government continue with the choice they are making at the moment, what they are offering people is weaker than if it was put in regulations. My other point is that if something does not happen on deposit fees—perhaps in regulations—this will be totally ignored.

[Lord Bourne of Aberystwyth]

My Lords, I am not sure that I do accept that. It is different in nature: some things are better in guidance, because of greater flexibility, and some things are better in regulations. So while I do not accept the general proposition, I accept that some things are better in regulations, but I do not accept that these are those things.

Amendment 1 withdrawn.

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[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lords who have participated in this debate. In particular, I thank the noble Lord, Lord Shipley, for moving Amendment 9 and the noble Lord, Lord Kennedy, for speaking to his Amendment 10.

I have listened carefully to the concerns about the level of the deposit cap and I understand them. However, there is a balance that must be struck between providing tenants with greater affordability and ensuring that landlords have adequate financial security for their assets—points just touched on by my noble friend Lady Gardner. For that reason, I cannot agree that the cap should be lowered to four weeks’ rent. As we have heard, a cap at four weeks’ rent might encourage tenants to forgo their final month’s rent. Even the CAB statistics—which, as the noble Lord, Lord Best, said quite fairly was a survey of tenants—put the number of tenants doing so at 2%. Therefore, there is still an issue there. I remind noble Lords that this is setting an upper limit; it is not setting a norm. Indeed, there is no evidence to suggest that the eight-week period in Scotland has become very much the norm; it is regarded as an upper limit. I will shortly come to reasons why the upper limit of six weeks might be needed, and I take on board the very fair points that the noble Lord, Lord Shipley, made about the need for that.

The Housing, Communities and Local Government Select Committee also recognised the risk when it looked at this issue. It is worth mentioning that final month’s deposit. Using data from the tenancy deposit protection scheme, our best estimate is that if deposits were capped at six weeks’ rent, approximately 1.4% of landlords taking deposits would see a median loss of £89 per tenancy that they would not have been subjected to otherwise. These costs would be borne by landlords—those who currently require tenants to pay more than six week’s rent in deposit—at the end of the tenancy when the deposit does not fully cover their claim.

In contrast, a cap of four weeks’ or one month’s rent would lead to a loss for 5.2% of landlords of £200 on average. That is based on deposit scheme figures. As a result, landlords may be less willing to absorb increased costs because of the number and size of deposits affected by a four-week cap. Tenants could therefore see greater increases in rent, which would decrease the overall net benefit of the legislation. Also, as I have touched on previously, lowering the deposit cap to four weeks’ rent could hurt pet owners, those who live abroad and those with a poorer financial history. These groups often pay a higher than average deposit to provide landlords with the assurance they need, so they are worth bearing in mind.

I believe that the cap of six weeks’ rent provides the additional financial security and flexibility that landlords need, which is integral to retaining investment and supply in the private rented sector and benefits tenants. Like other noble Lords, I recognise that good landlords and good tenants are in the great majority, but the cap seeks to preserve that balance. I reiterate that the cap of six weeks’ rent is an upper limit. Data from the tenancy deposit protection scheme informs us that most landlords request a deposit of around four to five weeks’ rent. That is in the great bulk of cases but, as I have indicated, in some cases it may be appropriate to go higher and not going higher may make it difficult for people with pets, for example, to get tenancies. I would put it no higher than that. I remind noble Lords that Scotland has capped tenancy deposits at no more than eight weeks’ rent and there is no evidence to suggest that deposits have risen to meet that cap. It is an upper limit, not the norm.

We will also use the guidance to encourage landlords to consider on a case-by-case basis when to take a tenancy deposit and the appropriate level of that deposit. It is also important to remember that unlike letting fees, which are non-refundable, the deposit is retained by the landlord only in instances where the tenant breaches their obligations under, or in connection with, the tenancy. The deposit is the tenant’s money and landlords must provide appropriate evidence where they believe that they are entitled to retain any of that deposit. I therefore suggest that it is the appropriate level.

More broadly, on the fair points made by the noble Lord, Lord Kennedy, particularly about passporting, I want to ensure that tenancy deposits work for both landlords and tenants. That is why we established recently a working group to look at the merits of innovative and more affordable approaches to tenancy deposits. This includes deposit passporting, where a deposit can be transferred from one tenancy to another, as proposed by Amendment 2. Members of the working group include landlord and tenant representatives and the three tenancy deposit protection schemes. So far, the group has met three times and is due to report its findings next spring. I will happily provide noble Lords with updates as things progress. That is all the information we have at the moment but if I can provide more information ahead of Report, I will do so.

Many things in relation to passporting still need to be considered. The key concern here is ensuring that landlords can still recover any damages at the end of a tenancy. A great deal of technical complexity would need to be examined, both on the percentage that is passported and on when, and how, liability for providing a tenant with the relevant prescribed information about how their deposit is protected should be passed from one landlord to another. I am sure noble Lords will agree that we need to do this properly. As I said, I am keen to ensure that we do it but the report from the relevant working group is not due until the spring. However, I will write to noble Lords to provide more information about the working group ahead of Report, in so far as we have more information. I will be happy to provide noble Lords with an update once the working group has reported its findings in the spring. In the light of those assurances, I hope that the amendments in this group will not be pressed.

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[Lord Kennedy of Southwark]

On a similar point, we understand that in the Queen’s Speech the Government mentioned a period of four weeks. At one time it seems to have been a manifesto commitment. I am sure that we will be told that it was not, but I would be interested to find out. I understand that the period of four weeks was announced in the Queen’s Speech, but what has happened? The Bill says six weeks. It would help to know the Government’s thinking on that.

[Lord Bourne of Aberystwyth]

I thank noble Lords for those points. The consideration was around the notion of an upper limit, not a norm. As I say, there are difficult cases where a four-week limit may not be appropriate. I have outlined some of those and we have to think about the consequences for tenants. It was that which motivated the reconsideration.

On the point made by the noble Lord, Lord Shipley, about Bob Blackman in the Housing, Communities and Local Government Committee, it is true that different periods were talked about—of four, five, six and eight weeks, as we have already rehearsed—but it is important to note that this was not pressed to a vote in the other place. We have considered the element of flexibility. We are not mandating that it has to be eight weeks; that is far from the case. The evidence from Scotland is that it has not gone to eight weeks; rather it has not really budged. However, it gives flexibility, and that has influenced us. We cover in the guidance the point that we do not expect it to reflect anything other than the loss on the deposit.

[The Earl of Lytton]

My Lords, in connection with what was mentioned earlier about tenants who do not have a particularly good track record or who come from abroad, perhaps I may pick up on one point. One of the bones of contention is that the tenant pays a not insubstantial deposit and it is held by and on behalf of the landlord. Is there not an opportunity to have a third-party deposit holder who, in effect, would hold the money and provide a guarantee of the tenant’s performance so that it does not become a bone of contention for students, those from abroad and people with no track record? Could we break that particular logjam so that it is not seen as the landlord accruing a sum of money and hanging on to it as a sort of financial bludgeon? Could this be defused in some way? Perhaps the working group could look into the possibility of something along these lines.

[Lord Bourne of Aberystwyth]

My Lords, I am happy to pass that on to the working group, but one has to be careful what one wishes for. As we know, there are all sorts of issues around deposit protection and to disturb the existing relationship may well be dangerous. However, I will ensure that the message is passed back to the group so that it can consider it if appropriate.

[Lord Kennedy of Southwark]

I want to come back to deposits. I accept that it is not easy to sort out, but a tenant in the private sector who is seeking to move will have paid, even on the average figures, £1,200 and will need another deposit of a similar value. As I mentioned, Which? found that 43% of people were using credit cards or loans to get this extra deposit. A lot of people in the private rented sector will be on lower incomes. If they end up borrowing money on their credit card to fund the deposit because they cannot get their previous deposit back, that is not a good place for anyone to be. A credit card is an expensive way of borrowing money for a short period. We need somehow to address that issue and I wonder what the Minister can say about it.

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will know that I have a lot of sympathy with that point, not only in this context but for people being forced to use credit cards or loans where that is not appropriate. I could not agree more with him on that, so it is important that we get this right. That is what we are seeking to do. He will be aware, just from the discussion today, that there are different views even in the Committee about the levels. We are seeking to get this right, to reimburse the loan and to provide for passporting on a sensible basis, but we have to ensure that we are being fair to the tenants and the landlords while, at the same time, not killing the tenancy market, which is an important part of the offer to people. However, I take his general point, which is entirely fair.

[Lord Kennedy of Southwark]

In the Queen’s Speech, the cap was announced as four weeks. The Government have looked at this and taken soundings and they say that four to five weeks are needed, so why have they picked six weeks?

[Lord Bourne of Aberystwyth]

My Lords, it is good to see the noble Lord being so supportive of the Queen’s Speech, on this occasion at least. I suspect a little bit of mischief in his new-found support for the Conservative Government. Nevertheless, on the particular point, as I have tried to address, we have looked at the level and, on consideration, decided that we would establish an upper limit but not a norm. That is the thinking behind the more mature reflection. I absolutely accept that this is a question of getting it right.

[Lord Kennedy of Southwark]

I thank the noble Lord for that. I will leave it there and seek to withdraw the amendment, but it is fair to say that I am likely to bring the issue back on Report, as I think that six weeks is too much—I will be looking at four or five weeks and hoping that we can persuade the Government on this. Until then, I beg leave to withdraw the amendment.

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[Lord Best]

I would like to offer a word of support for the intent behind this proposed new clause. Perhaps the best organisations to get the message out to tenants and prospective tenants are the new websites—or not so new anymore—such as Zoopla and Rightmove. So many people looking for somewhere to rent now do so online. Those agencies have the power to reach nearly everybody with the important information contained in this provision.

[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who participated in the discussion on Amendment 3. I will seek to deal with the points made. The first and entirely reasonable point raised was from the noble Lord, Lord Kennedy, and was echoed by other noble Lords. I am committed to ensuring that tenants, landlords and agents understand their rights and responsibilities under the legislation. As the noble Lord, Lord Shipley, rightly said, it is not just a question of the law being passed; it needs to be the case that people understand the rights and obligations that follow therefrom.

That is why my officials have been working hard with key stakeholder groups to produce comprehensive consumer guidance to support implementation. However, I do not agree that it is necessary to mandate that in the Bill, as we have discussed and as we will look at again. I have shared draft versions of the guidance for tenants, landlords and agents with noble Lords, and I hope they found them informative and detailed. Once again, I state that we are happy to engage on that if it is helpful to noble Lords. I hope noble Lords agree that the guidance provides important information on the points suggested by the amendment, including the date on which the provisions will come into force, information about what is prohibited and permitted, and information about where tenants can access help and advice.

We intend to share this guidance with tenants and tenant groups in advance of the legislation coming into force and as soon as possible after Royal Assent. We will seek to ensure that tenants, landlords and agents are aware of this guidance, including through online publication and promotion through our media channels, and by using smaller groups, as the noble Earl mentioned. I am grateful to the noble Lord, Lord Best, for mentioning Zoopla and Rightmove; Purplebricks is another one. Those and others are groups we can engage with to make sure that we get the relevant message across. We will also encourage landlords and agents to make tenants aware of the guidance, using our existing relationships with stakeholder groups to do so.

The noble Baroness, Lady Gardner of Parkes, asked about seeking to enforce the provisions of tenancies through this legislation. That is not something we are seeking to do here. It is a contractual matter and short-term tenancy agreements are, I think, beyond the scope of the Bill. However, I do know of the noble Baroness’s concern and, as she is aware, I engage with the short-term tenancy association on a frequent basis to see how we can carry things forward.

I think that deals with the points made by noble Lords and will, I hope, allay concerns ahead of Report. On that basis, I respectfully ask the noble Lord if he will withdraw the amendment.

[Lord Kennedy of Southwark]

I thank the Minister for that. I hope he can help us with a couple of points. He said earlier that in many cases there are good tenants and good landlords, all acting reasonably and responsibly. In that sense, the Bill is not for them. We are dealing with the rogue landlords or bad tenants, as well as people who are uninformed. If you are a landlord with lots of properties you will probably have systems in place to ensure that you are informed properly. I worry that the landlord of one or two properties will—intentionally or unintentionally—not notice the legislation and will seek to carry on charging their tenants prohibitive payments and generally abuse them. What are we doing to ensure that there can be no doubt that these people know their responsibilities in terms of the law? That is what my amendment was trying to do: to ensure the people are clear on that. What is going to happen when the Act becomes law so that we can be absolutely confident that people know this? We disagree on the guidance. It is not statutory; it is just guidance, and does not have the backing of the law. What are we going to do to ensure that those landlords are in no doubt? Just leaving it to the CAB and other groups to inform people is not good enough —we all know that these groups are under huge pressure, as are local authority departments. That is my worry: the small tenants and small landlords. Can the Minister help us on that?

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[Lord Bourne of Aberystwyth]

My Lords, I am very happy to. On the point made by the noble Lord—in relation not just to responsibilities, in fairness, but to the rights of tenants and landlords—this is to get the full message across. We want to get the full impact of the law across to tenants, landlords and agents, as the noble Lord, Lord Shipley, said. To pick up the point about small agents and landlords who are in a different position, we have to act through the landlord associations, the portals and the means outlined by the noble Lord, Lord Best. As I said, I am happy to engage on the guidance ahead of Report. If noble Lords think they have other ways that we could be getting this message across, which is in everybody’s interests, I am more than happy to look at those.

[Lord Kennedy of Southwark]

Obviously, at this stage I will withdraw the amendment. I just want to address the points made by the noble Earl, Lord Lytton. I take his point about proposed new subsection (4)(b) but we are moving into more of a digital age and it is important to have that. Equally, proposed new subsection (6) may not be worded very well but it was my attempt to ensure that in certain parts of the country people get the information in a way that they are able to digest and can be fully informed of their rights. Perhaps I need to look at that when I look at this issue. I cannot say that I am happy with the Minister’s response but I will leave it there for now. We may return to this on Report. I beg leave to withdraw the amendment.

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[Lord Bourne of Aberystwyth]

My Lords, first, I thank all noble Lords who participated in the debate, and the noble Baroness, Lady Hayter, and the noble Lord, Lord Palmer of Childs Hill, for all the work they have done and continue to do in this area. As they will be aware—indeed, the noble Baroness was fair and set it out—I became aware of this problem only in the middle of last week. Since then we have met and, I think, moved things forward. I repeat that we will go away and look at this and carry on our engagement with the noble Baroness, ARLA and RICS. That remains the position. I want to reassure myself that we are being fair to all tenants over the protection of deposits. If that is the case, I will be reassured, but I want to go away and make sure that it is.

To reassure the noble Lord, Lord Palmer of Childs Hill, in so far as money is held in custodial deposits, these will fall outside this cap and will not need insurance. I think I made this point when we met. We are taking this forward. In particular, we will not require the double deposits. That is entirely wrong. I can give that reassurance: we will not need cover for that.

[Lord Palmer of Childs Hill]

The Minister is emphasising the point that if the money held by these large organisations is in custodial deposits, there is no need for insurance. Therefore, this large sum is not necessary. I thank him.

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[Lord Bourne of Aberystwyth]

My Lords, I am absolutely clear on that. The cap that we are talking about will not be appropriate in that regard. As I say, I have only just become aware of this. It is a significant issue. I am very happy to engage with the noble Baroness, who probably understands these things better than anyone else in your Lordships’ House, and to carry on the discussion with RICS. I hope on that basis she will withdraw her opposition to Clause 21 standing part.

[Baroness Hayter of Kentish Town]

I thank the Minister. I think he has said more than in our meeting. In our meeting, he said that he would look at the double insurance. Today he has gone a little further and stated that this CMP scheme will not have to cover already protected deposits. That is a large part of it, for which the organisations will be grateful. The other part—the level of coverage—is still important. I know that the Government are well aware of this. I know this is very different from the space industry but a similar discussion happened on the Space Industry Bill, recognising that unlimited issues simply cannot be insured, and the Government agreed to move on that.

For the moment, I will not divide the Committee on whether the clause should stand part of the Bill. However, a tiny word of warning: client money protection is mentioned in the Bill, which means that amendments will be in scope when it comes to Report. On that basis, I shall not oppose Clause 21 standing part of the Bill.

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[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lords who have participated in the consideration of enforcement authorities and the guidance, which we have supported so far. I am very grateful for their engagement on this part of the Bill. I am also grateful to the Delegated Powers and Regulatory Reform Committee for its general scrutiny of the Bill.

I acknowledge the views expressed by the noble Lords, Lord Kennedy and Lord Shipley, on the enforcement guidance, but I maintain that it is not necessary, and indeed somewhat unusual, for such guidance to be subject to parliamentary scrutiny. I have already outlined some parallel examples where guidance has been given just as guidance on legislation under successive Governments in this century—the Local Government Act 2003, the Planning Act 2008 and the Small Business, Enterprise and Employment Act 2015, to cite just three. There are many instances in statute and I argue that this is commonplace.

However, to give the reassurance that the noble Lord, Lord Kennedy, in particular asked about, we are still engaging with key stakeholders and enforcement authorities, as we have been doing throughout. Like the noble Lord, Lord Shipley, he very fairly talked about my having shared drafts of the guidance ahead of Committee, and indeed I have offered—and offer again—to engage with noble Lords ahead of Report on the content of the guidance. We are working on it with key stakeholders, representative organisations and enforcement authorities, and, as I said, I am very willing to engage with noble Lords on it too.

I have indicated that there would be a delay if we were to seek to put this in regulations, and I think it would also sacrifice a degree of flexibility. However, on the basis of what I hope noble Lords will agree is my openness in offering not just to share the guidance, which we have done, but to share in engagement on the guidance, I hope that at this stage the noble Lord will feel able to withdraw his amendment.

[Lord Kennedy of Southwark]

Does the noble Lord accept that such guidance, compared with regulations, has less force behind it?

[Lord Bourne of Aberystwyth]

The noble Lord has made that point before. I think it is a case of what is appropriate. I absolutely agree that some things are appropriately put in regulations, but others are appropriately put in guidance. We have both: we have some things in the legislation and others in guidance. I would argue that what we have in the guidance is appropriate for the way that we are proceeding.

[Lord Kennedy of Southwark]

I accept that the noble Lord believes that this is appropriate. However, my point is that you can have both but what the Government have chosen is of less value compared with having it in regulations.

[Lord Bourne of Aberystwyth]

My Lords, I suspect that we disagree on this point. There are many occasions when I agree with the noble Lord but on this point I do not.

[Lord Shipley]

My Lords, I have found what the Minister has said helpful but I do not feel that it is satisfactory. I am concerned by the report of the Delegated Powers and Regulatory Reform Committee. It has raised concerns about legislation which is to be supported only through guidance. Paragraph 55 of the report makes it very clear that the committee thinks that the guidance should be subject to parliamentary scrutiny—in this case with the negative procedure.

I hope that there might be an opportunity for us to talk in a little more detail on this issue. My fear is that this Parliament will pass legislation which is not implemented fully because it is not strong enough to be enforced on the ground. I do not think that guidance on its own is sufficient and I would like there to be much firmer regulation. However, I will read Hansard very carefully tomorrow and will possibly hope to meet the Minister before Report to see whether there is any way in which we can build a framework that is stronger than simply guidance. I beg leave to withdraw the amendment.

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[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords for this amendment, in particular my noble friend Lady Barran. I worked with her when she was involved in SafeLives and I know about the excellent work of that organisation with Homeshare on some issues. I also pay tribute to the work of my noble friend Lady Jenkin, who is currently in Myanmar or Bangladesh dealing with refugee issues.

The House came together on this issue at Second Reading—quite rightly. It is clear that we all support the valuable work done by home-share organisations in matching an older person with low-level support needs with a younger person in housing need. It is an admirable arrangement and I quite understand that the organisation does not want this to be characterised as rent. That is not the nature of the relationship. Again, the House was clear about that.

In a normal situation, the younger person will provide help with tasks, typically cleaning, shopping and gardening, and of course friendship and companionship in return for low-cost accommodation. It is a key policy challenge, which Homeshare supports for the country as a whole, helping an ageing population live in their own homes for longer and addressing issues of loneliness. In short, it is a good. At the same time, it helps a younger person in housing need find an affordable and safe home—something that is a key priority for my department and for the Government as a whole.

I am sure that the matching of two sets of needs through a single project is laudable and something that should be encouraged to grow. Home-share schemes provide ongoing support and reassurance to both householders and home sharers to ensure that the arrangement is beneficial to both. Unless we act, this would fall foul of the legislation, as has been pointed out; it is an unintended consequence. We will continue to work on that and I will undertake to come back to it on Report. I am more than happy to do that, although there is still work to be done. However, I am sure that we can take this forward.

I have listened carefully to the concerns expressed by noble Lords. As I indicated at Second Reading, I am extremely sympathetic to them and we will do something on this. We will return to the matter on Report. With those reassurances, I hope that my noble friend will feel able to withdraw her amendment.

[Lord Kennedy of Southwark]

My Lords, can I be absolutely clear on what the Minister is saying? He will bring back on Report or perhaps at Third Reading an amendment that will deal with this issue.

[Lord Bourne of Aberystwyth]

My Lords, I hope to engage with noble Lords ahead of that to discuss the way forward, but I am keen that we should deal with this. I have indicated that it is not appropriate to deal with it by private arrangements with the organisation because I do not think that that would satisfy its legitimate desire to ensure that this is not a tenancy-type agreement.

[Baroness Barran]

I thank my noble friend the Minister for his reassuring comments and warm reflections on the work of Homeshare. I believe that he said that it is a good thing, in the spirit of 1066 And All That. In that spirit, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Kennedy of Southwark]

My Lords, Amendment 23, moved by the noble Baroness, Lady Grender, has my full support. It would remove default fees from the Bill. I share the concerns expressed here today that this provision could be used as a vehicle for unscrupulous landlords and letting agents to recoup lost income resulting from the ban. We cannot allow this loophole to go unchallenged. I also agree with the comments of the noble Lord, Lord Best; if something can be got around, someone will usually be smart enough to work it out and get around it. We should always be aware of that; it is very important to stop that.

In the Bill, the Government seek to limit default charges and fees to costs that are “reasonably incurred”, which must be evidenced in writing. However, this will prevent landlords and agents including unfair terms in tenancy agreements and trying to charge unreasonable amounts. Of course, we will come back to this issue of what is reasonable; we have come back to the issue of guidance many times. In responding to the debate, can the noble Lord explain how he believes that tenants will be protected from this unfair practice? How does the legislation, as it is framed now, protect people from ingenious people looking to get round almost anything? How can we be confident that the Bill is watertight?

Amendment 24, in the names of the noble Baronesses, Lady Grender and Lady Thornhill, and my Amendment 25 seek to make provision for default fees to be more transparent if they remain in the Bill and, as drafted in my amendment, to be detailed in regulations setting out what is a permitted payment in this regard. This would provide a clearer, legal definition of default fees. That would prevent abuse, protect tenants, ensure that tenants understand what they could be charged for and increase confidence in challenging illegal, prohibited fees. In contrast to guidance, regulations would act as a deterrent and give tenants a statutory basis from which to challenge prohibited fees. The late payment of rent and lost keys are the most commonly cited examples; in each scenario, the purpose of the fee would be clear to the tenant, which would limit the opportunity for exploitation.

I take on board the points made by the noble Earl, Lord Lytton. If we were all reasonable people, we would not need legislation at all; unfortunately, there are good and bad tenants and there are good and bad landlords. Often, we have to legislate for the worst excesses in all cases, and that is partly what we are trying to do here. However, I accept that the noble Earl has made some fair points—I am not suggesting that that is not the case. I look forward to hearing what the noble Lord, Lord Bourne, has to say on these matters.

[Lord Bourne of Aberystwyth]

My Lords, I thank all noble Lords who participated in the debate on this important section of the Bill. To echo the point made by the noble Lord, Lord Kennedy, this is about dealing with the small minority of tenants and landlords. I accept that the vast majority will not need the encouragement we are giving. That said, there is a difficult issue involved, as outlined quite fairly by the noble Baroness, Lady Grender. However, I take a slightly different view on it, so let me outline where I am. I am of course happy to carry on discussing this ahead of Report, so that we can get to a sensible position on it.

There are situations where it is quite reasonable that a landlord should be able to claim from the tenant for doing something that is perhaps the tenant’s obligation but which the landlord has taken up. We have heard some examples and there will be others that we have not thought of—I do not suppose anybody except the noble Earl had thought about condensation until today, but we are now aware that that situation perhaps needs to be covered. We are not necessarily going to be able to think of an exhaustive list, but the list we are looking at does not relate to damage.

It is not appropriate that a replacement key should come out of the deposit; the deposit is there to counteract damage that is done. That would be true of a locksmith coming in as well. How will that be shown to be a reasonable cost? It has to be evidenced in writing: for example, with the receipt from Timpson. I do not think anybody could reasonably object to that. It is entirely right. There is a whole jurisprudence on reasonableness, and I can happily supply it all to the noble Lord, Lord Kennedy—it runs to volumes and volumes in the law of negligence and elsewhere, as the noble Lord, Lord Beecham, will certainly be aware. This is an area in which there is substantial jurisprudence. We can give some examples but giving an exhaustive definition will take some time.

I share the view of the noble Lord, Lord Best, that it would not be appropriate to evict a tenant or to say that that has to happen in this type of situation. I think that a landlord would be very happy to renew a tenancy if he was able to claim in relation to lost keys and a locksmith being called out, and there is no reason why he should not be able to do that.

I am very keen to look at this issue ahead of Report to see how we can perhaps tighten it up, as I accept that there might be a need to do that. However, there are legitimate situations where it is not unreasonable for the landlord, during the currency of the lease—not at the end of the lease, when the deposit will kick in—to be able to claim for the cost of work that has been done. It is no more and no less than that. I recognise that we want to stop any potential abuse by the small minority of landlords whom we all have in our sights, but I hope that the noble Baroness will accept that there are legitimate situations that we can look at ahead of Report while trying to isolate the cases where there is abuse. With that assurance, I respectfully ask her to withdraw the amendment.

[Baroness Grender]

I thank the Minister very much for that reply. I would of course welcome the opportunity to work with him and officials to try to tighten up this provision. This area goes to the very heart of where we all started out, so I see getting this right as absolutely fundamental. I am more than happy to work with the Minister on this and, with that prospect in mind, I beg leave to withdraw my amendment.