Renters (Reform) Bill

Lord Carrington Excerpts

2nd reading
Wednesday 15th May 2024 Lords Chamber

[Lord Carrington (CB)]

My Lords, I declare my interests in the rural private rental sector, as set out in the register. I thank the Minister for her time in briefing me, as well as all the organisations that have also sent me such excellent briefs. I thank all noble Lords who have iterated many of the points that I will make.

I welcome this Bill, including the removal of the sometimes misused Section 21 for the ending of tenancies. The Bill attempts to balance the interests of tenants and landlords, to both improve the letting experience of tenants and to secure the future of the PRS through protecting the possession rights of landlords. The Bill deals with a wide spectrum of industry interests and characteristics, and is principally demand-driven. Sadly, it is unable to address the underlying supply problem of insufficient housing, which has a direct effect on the availability and cost of rental properties—points made by the noble Earl, Lord Lytton, and many others. In the five or more years that we have been waiting for the Bill, the supply of rental accommodation has worsened. Hamptons has calculated that there were 43% fewer homes available for tenants to rent in the first 10 months of 2023 compared to the same period in 2015.

Leaving aside the supply of housing, another major challenge facing the Bill is the perceived inadequacy of the court system, which, of course, is not under the control of DLUHC. I would be most grateful if the Minister could assure us that the two ministries involved are united in their efforts to make the necessary reforms.

The abolition of Section 21, under which some unfair evictions have taken place, involves the reform of the court system and the efficiency and timeliness of procedures under Section 8. Although Section 21 notices are now referred to as no-fault evictions, they are typically used for justifiable reasons, including rent arrears, anti-social behaviour, or landlords needing to sell or move back into a property. It is the unjustifiable reasons, such a landlord seeking to up the rent or failing to properly maintain a property, that have brought it into disrepute. Currently, Section 21 is being used as a substitute for other methods to secure possession because it is easier and quicker. Its abolition will add to the court’s workload under Section 8.

The loss of Section 21 notices means the loss of the ability to issue accelerated possession proceedings. There is therefore a practical fear on the part of landlords that, without reform, the courts will be even more overwhelmed and will not be able to deal with cases in a reasonable time. This is a major reason for landlords exiting the sector.

The Government are now committed to abolishing Section 21, but only when reforms are made to the court system, including the need to increase resources and ensure a timelier resolution of justified possession cases. In addition, in order to secure fairness for both tenants and landlords, a properly functioning justice system is essential. This involves access to and funding for housing and legal aid, as well as the courts. Landlords and tenants need to be able to enforce their legal rights in a timely and efficient manner.

Reviews, reports and surveys are all part of the reform process, but there is an absence of published information on the metrics of improvement. This all resembles the age-old question: how long is a piece of string? Please can the Minister give us a timeline, and even consider a drop-dead date, for the abolition of Section 21? What are the parameters for an improved court system?

My other concern is the proposal to make all tenancies assured periodic tenancies. With the abolition of Section 21, there is no need to abolish fixed-term tenancies or assured shorthold tenancies. The Government, by accepting the minimum term of six months, whereby a tenant can serve two months’ notice at the end of the first four-month period, concede the importance of securing landlord and lender confidence to make private renting financially viable. The problem is that, for some tenants and landlords, six months is too short, bearing in mind the favourable terms that can be negotiated under these agreements.

Last year, the cross-party Levelling Up, Housing and Communities Committee agreed a strange statement, indicating that

“fixed-term tenancies should remain available where both parties want them, but … given the current shortage of private rental properties, this would likely result in tenants having fixed terms forced on them”.

This is plain wrong. No one is forcing a fixed term on anyone. A landlord cannot and should not be held responsible and suffer for a lack of housing supply that is out of his control. That would be a very good reason for exiting the business, whereas, conversely, the continuation of fixed terms for a year or more would stop more landlords exiting the private sector.

As other noble Lords have said, fixed-term tenancies suit many landlords and private renters, and have the attraction of solid security of tenure that allows the landlord to gain possession in mid-term only in the case of anti-social behaviour and non-payment of rent. If a landlord fails to adhere to his obligations, including the proposed decent homes standard, the tenant should be able to terminate the tenancy with the advice and support of the local authority. This could also be dealt with by amendment to Section 30 of the Housing Act 1988.

Since the late 1980s, ASTs have worked well for most tenants and landlords. They are based on the freedom of contract between consenting parties. The average tenancy length in the most recent English housing survey was 4.3 years. Allowing tenants to fix a longer period that suits them is in a tenant’s best interest—surely a vote of confidence in the system. There is a place for them in the new world, albeit as an option open to both parties if they wish to fix a term rather than accept the new norm of periodic tenancies. At the end of the fixed term, the tenancy would revert to being a periodic tenancy, but surely there should be an option for the landlord and tenant, if they agree, to opt out of this periodic tenancy and agree a further fixed term.

At Third Reading in the other place, as referred to by the noble Lord, Lord Frost, several Members raised the abolition of ASTs leading to some landlords moving to short-term lets and the holiday-let market. The amendment of the MP for Totness asked for a fixed-term tenancy option, but it was not called, although it had secured 50 signatures of support, as well as a powerful speech at the end of the debate from Sir Christopher Chope regretting the move away from privity of contract. He also warned of the potential loss of housing available to rent and the likely increased cost.

My third major concern with this legislation is much the same as that of the noble Earl, Lord Lytton, but I am pleased to say that the Government have largely accepted that it is a problem: that is, the housing of agricultural and other workers in the rural context, where housing, particularly affordable housing, may be in short supply. Access to affordable accommodation is a key part of rural employment, and we should remember that 85% of rural businesses are not farming or forestry. In Schedule 1 to the Bill there are listed the various grounds for possession, which partly cover my concern, but I will be supporting various amendments to strengthen these clauses, which are so important in the rural economy.

I welcome much that is in the Bill, from the new decent homes standard to the creation of a private rental property portal and an ombudsman scheme that will, I hope, resolve matters that might otherwise go to court. However, student letting requires more amendment, including measures to allow flexibility for students to alter accommodation arrangements during the academic year.

This Bill has many of the right ingredients for reform of the PRS, but there is room for sensible refinement to enable both landlords and tenants to be comfortable at the same time as ensuring that the supply of housing for rent is not threatened but encouraged. In parallel, government should concentrate on housing supply, particularly in the social and affordable sectors, as mentioned by many other noble Lords.