Renters’ Rights Bill

Lord Cromwell Excerpts

Monday 28th April 2025 Lords Chamber

[Lord Cromwell (CB)]

My Lords, the noble Lord, Lord Young of Cookham, has again spoken so much sense that it leaves me little to add. I should warn him that in our previous day’s debate I was described as “irritatingly persuasive”, so I hope not to damage his case by supporting it.

There is a real issue here and it does need some serious probing. I am not suggesting that we retain Section 21, but noble Lords have raised at Second Reading and today in Committee, as I am sure others will raise again, the courts simply not being ready to take on the burden that is coming to them. There is no credible timescale to transform the clogged courts and tribunals system. However, my main reason for speaking is to put on record and advise the House that I attended a meeting—with the Minister and other noble Lords, some of whom are present today—with those responsible for the court digitisation, which has been held out as the kind of techno magic that will transform the speed of court processes.

This was illuminating, but it left attendees, a good number of whom have very considerable experience of our legal system, very doubtful about this still-evolving IT system. The view from the people I spoke to was that it would take at least five years to bed in.

[The Earl of Kinnoull (CB)]

My Lords, Amendments 279 and 280 stand in the name of my friend, the noble and learned friend, Lord Etherton. I signed those amendments as well, not with a legal hat on but more with the hat of someone who has been there for the development of a large number of complex IT systems over the years, and has probably contributed to almost every mistake it is possible to make in doing that.

The noble and learned Lord, Lord Etherton, unfortunately cannot be here today, so I am going to make some observations that follow on nicely from what the noble Lord, Lord Cromwell, has just said. I refer the Committee to my register of interests. I am, in my own capacity and to a small extent, a landlord, but in Scotland. I am also trustee of a couple of trusts in Scotland that are renting properties out.

The problem was set out by the noble and learned Lord, Lord Etherton, at Second Reading. I am afraid that, because he is not here, I will use his words very briefly. He said:

“We all know that there will be many more contested possession proceedings by landlords following the enactment of the Bill and the abolition of Section 21 no-fault evictions. It would not be right to abolish no-fault evictions without adequate speed and resources for dealing with the increase in contested proceedings … The Government need to demonstrate that measures have been or will be put in place which will help to secure that court claims by landlords for possession of residential properties will be disposed of in a timely and efficient way”.—[Official Report, 4/2/25; cols. 623-24.]


The meeting to which the noble Lord, Lord Cromwell, has just referred took place on 11 March. There were half a dozen Cross-Bench people there. I am holding the 30-page presentation that was handed out. There were officials there from the Ministry of Justice, in particular from HM Courts & Tribunals Service, and from MHCLG; the Minister was there as well. It was an extremely interesting presentation, and there were two things that came out that I feel I should speak to the Committee about today. The first was about the size of the problem. There is a slide that scopes out the size of the IT system that is involved. This IT system exists today. The noble and learned Lord, Lord Etherton, is very familiar with the IT systems that support the court services, as he was responsible for a large number of them for some years, and he was very much the driver for the half a dozen of us who were there.

That IT system has separate subsystems for case management, hearings management, work allocation, user registration and fee payment—there are others as well. Noble Lords can see just how complex this IT system is. In each of the things I have just mentioned, there would of course be major changes required to the IT system that would need to go through development and be dealt with in a proper way.

After considering the size of the problem, which I certainly assess as pretty big, we went on to discuss their approach to the design and build of the new system. This was in a slide that was extremely clear, and they were pleased to report that the prototype stage had arrived. The prototype stage sounds very hopeful, but in fact this comes before the fifth of the six stages, which is “prepare for build”; the sixth stage is “build and test”. The prototype is literally that—something which comes at a pretty early stage in the development of the IT system. All that comes, of course, before user acceptance testing and actually training up people involved in the court system to use this complex system in an efficient manner. The acid question that was put to the people advising us on this was how long they thought it would take to get to the end of the “build and test” stage. The answer on 11 March was two years.

The people who were briefing us universally gave a very good impression indeed. I have met a lot of IT people, but they seemed to me very steady in every way and have clearly been through this a lot before, so I have no reason to doubt their two-year estimate for getting to the end of the IT build. In speaking to colleagues afterwards, I think they also felt that the people who were presenting it—who were, after all, the people who were actually doing the programming—were of a very high quality.

With no IT system, the presentation explains that there are 110,000 cases a year, and this is without any uplift in the number of cases that one would expect. The uplift referred to earlier in this debate, and by the noble and learned Lord, Lord Etherton, in his Second Reading contribution, was 110,000 cases a year. Let us say that we had only a year and a half of it because things went on, but that would be 165,000 cases clogging up a system that is already under strain, producing delay and, because it is going into the county court system, affecting access to justice for the rest of the county court system as well, one assumes. The amendments that the noble and learned Lord prepared—and I was very much in consultation with him while he was doing it—were aimed at trying to prevent undesirable outcomes.

Can the Minister update us on the progress of the IT system that was presented to us on 11 March? Will she agree to meet further to discuss this issue after Committee?

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[Baroness Taylor of Stevenage (Lab)]

As I said, we are working very closely with our colleagues in the Ministry of Justice and the courts service. The digitisation process is already under way and is already costed, and we are looking at other impacts. If the noble Lord’s view is that they are not clearly set out in the impact statement, I will come back to noble Lords on what they may be.

[Lord Cromwell (CB)]

I just want to come back to the estimated five-year implementation period that the Minister responded to. That arose from conversations with people who have had a lifetime of professional involvement in legal processes, so I would not brush it aside too early. I have been on the sharp end of a number of these sorts of IT projects that get built. If you build anything, you always double the budget and double the time you are told it is going to take; anybody who has built anything knows that—I will not touch on R&R.

The Minister has told us a number of times that the Government are fully focused—a phrase that has been used a number of times. I do not wish to be discourteous, but it sounds like the Government are being fully optimistic, almost to the point of naivety, on this. These are probing amendments. There is a general agreement, including from the Government, that there really is a problem here that needs to be solved. There is no dispute about it being a problem. I urge that, before we get to Report, we need a crisp, specific, clear and credible statement about what exactly will be done to resource this properly, because our current court system is not a model of swiftness and efficiency, and it is hard to see how this will be magically transformed.

[Lord Wolfson of Tredegar (Con)]

I will follow on from that so the Minister can reply to both. I retain a certain fondness for my former department, and I know that the budget of the Ministry of Justice is extremely tight. I have not seen any scope in that budget for the expected increase in the courts’ workload that the Bill will generate. The Minister said she will work very closely with the MoJ, and I know that, when I was an MoJ Minister, that meant that people would work closely with me by telling me that I needed to spend money from my budget on what they wanted. Can I therefore take it that, when she says she will work very closely with the MoJ, what she actually means is that, if the MoJ needs money to do what the Bill requires, it will come from her budget?

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[Lord Carrington (CB)]

My Lords, I declare my interests in the private rented sector, with residential lettings in Buckinghamshire and Lincolnshire.

I have tabled Amendments 96, 98, 99, 103 and 104 to Clause 8, in which the Government seek to create a new right for renters to challenge their annual rent increases. I am most grateful for the support of the noble Lords, Lord Young of Cookham and Lord Howard of Rising, in this group.

I believe there is a strong consensus across your Lordships’ Committee that stands alongside the Government in wishing to prevent unreasonable rent increases being used as a means of eviction through the backdoor. However, I also believe there is a strong consensus that the Government’s drafting of Clause 8 will not work. Indeed, I am deeply concerned that providing a universal right for all renters to challenge all rent increases, in all circumstances and without qualification, will undermine the supply of rental homes and overwhelm our courts.

The Bill seeks to provide renters with mechanisms to ensure redress where their landlord behaves inappropriately, irresponsibly or exploitatively—yet I fear that the current drafting will undermine that intention in practice. At Second Reading we heard examples of poor behaviour by a small minority of landlords, but the response delivered by the Government will impact the whole private rental market, including the great majority of responsible landlords.

The effect of Clause 8 will be to create a right for all 4.5 million of England’s private rental households to challenge their rent increases annually, via the Section 13 process, at no cost and at zero risk. Every single renter will have a right to take their landlord to the First-tier Tribunal if they perceive their rent increase to be “disproportionate” or unreasonably above market rates.

The Government believe that tenants should apply to the tribunal only if they believe a rent increase is above market rents, but I am afraid that will not be the result of this legislation. The legal text of the Bill sets out that a rent increase could not come into force until after the tribunal rules, and explicitly prohibits the court from determining real market rent to be higher than the landlord’s proposal, even if that is a judge’s evidenced assessment.

The result of this drafting is to create an artificial incentive for all 4.5 million renters to submit a challenge to their rent rise, however legitimate, because this would prevent the increase coming into force until the tribunal decides. There is no risk to the tenant in this and it provides a guaranteed delay in when the increase comes into force. Once this is widely understood, renters will exercise their right as a matter of course.

This incentive risks overwhelming our First-tier Tribunal, burdening an already struggling court with hundreds of thousands of cases. This has already been referred to by the noble Baroness, Lady Wolf, who has come up with a sensible solution. The Government want renters in genuine need of redress to have access to the courts, but the queue for justice will be too long for this to prove possible.

Moreover, the risk of this backlog in cases is causing serious concern among professional and responsible landlords in the sector. The prospect of extended delays to increasing rent would make it more difficult for investment institutions and build-to-rent developers to invest in new, high-quality rental homes, undermining the rental housing supply that we want to see. The reality of this backlog would be upward pressure on rents—the opposite of what the Government want to achieve.

The Government themselves have acknowledged their desire to ensure that responsible landlords can increase their rents in line with the market annually, and the Government have rightly ruled out rent controls. However, the system proposed under this Bill will in practice undermine landlords’ ability to secure market rents annually.

The Guardian newspaper recently revealed that a King’s Counsel has assessed the Bill to determine the likelihood of a legal challenge in the European Court of Human Rights. Subsequently, the newspaper City AM published an article outlining this legal opinion, which determined that the Government stand a greater than 50% chance of losing in the ECHR on this aspect of the Bill. I implore the Government to look into this further as a matter of urgency.

My amendments would mitigate the very serious legal risk with the current proposals on rent challenges. It is all very well for the Minister to repeat, as she has in the past, that the Bill is compatible with the ECHR, but that judgment was made before our amendments were tabled and discussions ensued. As a matter of grave responsibility, the Government should consult again with their lawyers now that these issues have been raised.

The amendments to Clause 8 in my name offer a common-sense solution that should reassure all parties. In my amendments, I propose that if a renter’s challenge is unsuccessful, rents should take effect from the date of the Section 13 notice rather than the tribunal’s determination date. I further propose that the court should be able to follow the evidence, empowering the tribunal to raise rents to what it deems to be market rates, even if this is potentially higher than what a landlord originally proposed.

I believe that, taken together, the amendments would deliver a fair result—technical changes that would keep the right to challenge while reducing the artificial jeopardy-free incentive to take landlords to court. These reasonable amendments would also give institutional investors and build-to-rent landlords the confidence to invest in the high-quality new rental homes that our country needs. To address concerns raised by a number of noble Lords at Second Reading about unsuccessful challenges leaving renters with a large bill, my amendment is drafted to mandate landlords to spread any backdating over a 12-month period.

The number of amendments proposed to Clause 8 speak to the widespread concern in this House about the risks of the Government’s current drafting. Whether colleagues support my amendments or those of my colleagues, I believe the Government’s position is unsustainable. A credible plan is needed to address the artificial incentive for every renter to challenge their rent. Otherwise, I fear for serious investment in new rental homes and the functioning of our courts system.

[Lord Cromwell (CB)]

My Lords, I have some sympathy with Amendment 99, concerning the rent rise challenges under Section 13 of the Bill. It is essential that tenants can properly challenge excessive rent increases—but, once again, a fair balance is what we seek.

I slightly take the noble Baroness, Lady Scott, to task for her reference to “consenting adults”. The reason for the Bill arises precisely because of the power differential between landlords and tenants. Some adults are more consenting than others, if I may use that phrase. I am not quite sure that works, but noble Lords will know what I mean.

I support the proposal in Amendment 99 in the name of the noble Lord, Lord Carrington, that the rental increase—only, of course, if agreed by the tribunal—should take effect from the date of a Section 13 notice rather than the date of the tribunal decision. I also agree that, where this creates a rent backlog, you would need a payment plan to set it off over time. I note, however, that there would still be a risk to the landlord in those circumstances: if a tenant uses the tribunal as a speculative delaying tactic, and then if the rent increase is finally approved by the tribunal but the tenant does a flit with the rent arrears unpaid, this will leave the landlord with the unenviable prospect of trying to recover the money due to them from the departed tenant.

In short, the Bill enables—perhaps even invites—speculative challenges to any rent increase requests. I think the noble Lord, Lord Carrington, slightly overeggs it when he says that everyone in the entire country will do that, but perhaps he is doing that to illustrate his point. Either way, as my grandfather used to say, “Don’t complain if people fall for a temptation that you have created”. For the tenant it would make rational, self-interested economic sense to automatically challenge any rent increase, and this abuse of the tribunal process would add to its existing overload of cases and therefore discourage supply. I therefore support the amendment containing provisions in this regard.

There has also been a suggestion, I think in Amendment 98, that the tribunal might set a rent above what was requested by the landlord. I do not support that, for two reasons. First, if a landlord proposes a rent increase, it must be assumed that they consider it to be a satisfactory increase. Secondly, the danger of having the rent set higher than the landlord has requested is often mentioned by tenant groups that I have spoken to as a significant cause for tenants to feel intimidated, thereby preventing challenges to rent increases. The Bill does a lot to rebalance the power in the landlord/tenant relationship, but the issue needs to be re-examined. Making a revised rent payable from the notice date, if necessary with a payment plan for arrears, while at the same time not allowing rent to be increased beyond the landlord’s requested level, would achieve a better balance of rights between landlord and tenant and would prevent abuse of the tribunal system. I therefore hope the Minister will pay heed to this proposal and I look forward to hearing what she has to say.

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In response to the noble Baroness, Lady Kennedy, who spoke about other schemes, I will look at the other schemes that are involved—it is important that we do this—to see what conditions are put on those, and I will respond to noble Lords on that subject. We will carefully monitor the impact of grants in the private rented sector. Importantly, we have reserved the right to make in-flight changes to the schemes, so we will look at them carefully in that regard.

[Lord Cromwell (CB)]

Very briefly, if I may, I rather like this idea—it is great. In the Government’s consideration, will they include where the grant covers only part of the cost and how that can be treated?

[Baroness Taylor of Stevenage (Lab)]

The noble Lord, Lord Cromwell, makes a very relevant point—we will have a look at both things.

Although I appreciate the intention behind Amendment 90, I have concerns about whether it would be practical to attribute a portion of the market rent to energy improvements. We need to think about how we might do this. I hope that the alternative approaches I have outlined and the steps we have taken to allow tenants to challenge egregious rents, for whatever reason the increase has been put on, provide some reassurance. I therefore respectfully ask the noble Baroness, Lady Jones, not to press the amendment.

Amendments 91, 94, 96, 97, 98, 99, 101 and 104 all deal with the backdating of rent increases. I do not agree that tenants should be forced to pay backdated rent. To ensure that tenants are not unexpectedly thrown into debt that could cause further difficulty, the Bill provides that the new rent will apply from the date the tribunal directs, not earlier than the date of determination. We are clear that tenants should submit an application to the tribunal only where they believe that a rent increase is above market rates, and all parties should communicate about the level of rent increases that would be sustainable.

One noble Lord mentioned 1.6 million tenants taking landlords to court. I find that unlikely, to say the least, but we would quickly know. I have already undertaken to noble Lords that we will monitor this very carefully. If that did start to happen, we would certainly know that it was happening and would deal with it immediately. Allowing the backdating of rents risks disadvantaging the most vulnerable tenants—those who may forego challenging a rent increase that is designed purely to force them out of their home.

I turn briefly to each amendment in turn. My noble friend Lord Hacking has spoken to his Amendments 91, 94, and 97. Amendment 91 aims to backdate a rent increase to the date specified in the Section 13 notice. Amendment 94 seeks to backdate a rent increase where the tenant has challenged the relevant notice at tribunal. Amendment 97 is a consequential amendment linked to Amendment 94, which aims to ensure that, where a tenant challenges a rent increase notice at tribunal, any rent increase determined by the tribunal will be backdated to the date on the Section 13 notice. I have already set out why the Government do not agree that tenants should be forced to pay backdated rent. I therefore ask my noble friend not to press these three amendments.

The noble Lord, Lord Young, set out the process as it is now. If it really is as straightforward and simple as he said—I am not arguing with him, and I am sure he has been as diligent as he always is in looking up the facts—surely we would already be swamped with tenants appealing their rent increases, and that is not the case.

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[Baroness Taylor of Stevenage (Lab)]

I accept that it is a dramatic departure, but it is done for a good purpose. We put the provision in the Bill to prevent tenants being penalised for challenging their rent at tribunal by having a backdated increase.

[Lord Cromwell (CB)]

Is the Minister saying that a tribunal that sets a rent at a level which it considers to be right is setting a penal level of rent? She is saying that tenants would be penalised if rent is backdated to the date when it should have occurred. The implication, therefore, is that the tribunal is setting a penal rent. I cannot think that that is what is intended.