Renters’ Rights Bill Debate
Full Debate: Read Full DebateLord Fuller
Main Page: Lord Fuller (Conservative - Life peer)Department Debates - View all Lord Fuller's debates with the Ministry of Housing, Communities and Local Government
(3 days, 23 hours ago)
Lords ChamberMy Lords, in my Second Reading speech, I drew attention to the role played by high housing costs in driving poverty. I was thus pleased to add my name to Amendment 114, tabled by the noble Baroness, Lady Grender, although I am supportive also of the other amendments in this group and hope that what I have to say will add to the case for them too.
Evidence from the Joseph Rowntree Foundation illustrates the extent to which high rents in the private sector are associated with poverty. Shockingly, it points out that around
“half of private renters were only in poverty after their housing costs were factored in”.
Two more reports specifically on child poverty, published this year, reinforce the point. The first, by IPPR, argues that:
“Housing costs are core to understanding child poverty”.
It notes that the number of children counted as in poverty is about a third higher when housing costs are factored into the measure, and that the private rented sector has become increasingly significant in the lives of children.
The second report was co-published by IPPR together with CPAG—of which I am honorary president—and Changing Realities, which involves people with lived experience of poverty. The report observed that rent increases are
“stressful for families to manage, and … the Renters’ Rights Bill as currently drafted will continue to enable large increases in rent … providing they are deemed to reflect ‘market rents’”—
a point made by the noble Lord, Lord Best. It suggests that this
“risks exposing tenants to sudden and unaffordable hikes in housing costs, undermining the Bill’s stated aim of providing greater security and fairness for renters”.
The report quotes one tenant:
“I’m getting really worried about my rent going up this year. It keeps rising every year yet the local housing allowance is frozen for this year! … It’s frightening”.
Both reports underline how the situation is aggravated by freezes in the local housing allowance and by the operation of the benefit cap, which hits larger families and/ or those paying higher rents in particular. As the amendment states, any review of rent affordability must include in its remit the effectiveness of policy interventions to improve affordability relative to incomes. I would argue that this would need to include policies on the incomes side, which are making it impossible for some families to meet their rent commitments alongside other essentials.
This seems to me a very modest amendment that would complement the Government’s welcome commitment to an ambitious child poverty strategy. I know that the Child Poverty Taskforce is aware of the importance of housing to the strategy, but it is unrealistic to expect it to carry out the thorough review of rent affordability proposed in the amendment.
I hope, therefore, that my noble friend will be able to give a more positive response than the one she gave in Committee, which I found rather disappointing. What is needed is something more robust and holistic than the regular monitoring to which she referred, important though that might be. A review of this kind would be in the spirit of the Bill and would help to ensure that its impact is not blunted by the continued damage created by excessively high rents in the private sector.
My Lords, I rise briefly to try to understand what the definition of rent is if we are going to control rents or somehow curtail them or attenuate the increases.
One can see the base rate just by googling property websites. It is a good idea to get a feel for the cost of a basic, low-cost, unfurnished property in the worst part of town, but that is not necessarily the market price, which is determined by a number of factors: the property may be furnished; it may be serviced accommodation; there may be porterage; there may be other benefits— I am not going to go as far as swimming pools and gyms, but I know they are available in some circumstances. Parking would be another one. All these different elements have different cost pressures and inflationary increases, which may be determined by factors outside the landlord’s control. A property that has inclusive parking may become significantly more valuable, one could anticipate, if the local council applies permits on the streets around it.
I am tempted to support Amendment 25, but I am reluctant to do so because at the moment all these extras are rolled into the single price. The logical conclusion of where this debate is going is that we will get menu pricing, rather as we see on low-cost airlines. There may be an attractive flight—£5.99 to fly to Spain or whatever—but by the time you add in the baggage, the booking fee and everything else, it rolls up to a significantly higher value. My noble friend Lord Young of Cookham made the point that the risk of the price going up over the four-year period may be somewhat attenuated, but those extras amounting to what I would call the landed price, or total cost of ownership, could vary accordingly.
Another significant point that we need to take into account is that there may be Section 20 repairs or improvements, particularly in the case of furnished accommodation where the landlord is prepared to improve and upgrade the fixed furnishings, such as tables and chairs and possibly soft furnishings as well. All of this complicates what is a rolled-up figure at the moment. The logical conclusion is that all those extras are going to be disaggregated and obfuscated, so it is going be harder to compare for the potential tenant. But it is going to be essential for the landlord to obfuscate in this way in the circumstance of a First-tier Tribunal appeal, which is really concerned with the underlying rent—that £5.99 figure. It is very difficult.
I have a huge amount of sympathy with the amendment of the noble Lord, Lord Best, but I cannot support it because I think the logical conclusion of it will be that we will get a fragmentation of the landed rent so that the tail wags the dog. The landlord will be so focused on restricting the base rate that those other things will get lost.
My Lords, we have concerns about a number of amendments in this group on the basis that they are unduly prescriptive and risk the introduction of what could be regarded as, in effect, a form of rent control.
The amendments in the name of the noble Lord, Lord Best, seek to protect the tribunal from being overloaded due to the Bill. While we agree that there is significant risk of overload, we have concerns about how the arrangements would function. In particular, we do not feel able to support a system that ties rental increases to CPI. CPI is a generalised index that reflects the prices of bread, fuel, clothing and so forth, but not rental market dynamics. What happens in areas where market rents are falling but inflation is high, or where incomes are stagnant while CPI rises? This approach uses a national economic measure to benchmark against a highly localised rental market, and the result would almost certainly be a distorted rental market. That said, we share the concerns of the noble Lord, Lord Best, about the impact of the Bill on tribunals’ backlogs, which we discussed at length in Committee.
Amendment 114 in the name of the noble Baroness, Lady Grender, raises some important points. There is no doubt that rent affordability is a serious issue, and the amendment rightly draws attention to a range of important factors: the regional disparities in rental costs, the strain of high rents placed on household finances and the need to understand how effectively the First-tier Tribunal is working in practice. However, I must also sound a note of realism. We do not need another report for its own sake. We need actual change that improves the lives of renters and restores fairness to a housing system that too often feels stacked against ordinary people. If this review is to go ahead, it must not become just another document left to gather dust on the shelves of the department—it must lead to action. I urge the Minister to use this opportunity to outline how the Government will respond to the concerns raised by the noble Baroness in her amendment, which we agree are all points which matter in this debate.
My Lords, it feels as if we are going back to Amendment 1 at the start of this debate and the theme of that essential freedom to contract between consenting parties, which had support on both sides of the House from the noble Lords, Lord Hacking and Lord Truscott, and others. Amendment 43 is a practical solution and an optional one. It provides a route for an otherwise unrentable tenant to find a tenancy and it is a practical expression of good faith. We have had some examples of where the freedom—it is a freedom and not an obligation—to offer up to six months’ rent in advance can be helpful.
My noble friend Lady Scott mentioned the case of students, especially foreign students. Foreign students often want to secure accommodation before they get on the plane to come to this country. At that point, they may not even have a UK bank account. They certainly will not have references or a track record. The only practicable way they can secure a tenancy with that impaired record is to pay in advance.
Earlier today, we spoke about the potential abuses in holiday hotspots, where somebody may say, “I am going to stay for a whole year”, as they contract in June, whereas in fact they immediately give notice to quit after the August bank holiday. The noble Lord, Lord Truscott, who is not in his place, told the House that the differential between the Airbnb rate and the year-round rate is something like 49%. This is a way for somebody who was sincere about entering into a long-term arrangement for, say, six months—but it would not have to be exactly six months—with a potential landlord to demonstrate that they were not just the carpetbagging, holiday-hotspot people. They could pay in advance and that would be helpful.
My noble friend mentioned those with an impaired record. It would be possible to have a guarantor who stumped up for those people with a weak covenant strength. For those who have cash—I appreciate that not everybody does—coming to an accommodation with the landlord for paying up front sometimes results in considerably less rent, and in those cases both landlord and tenant benefit considerably.
Amendment 43 would help both the landlord and tenant to come to an arrangement to their mutual advantage. I know it is not for everybody, but without this provision the unrentables will remain unrented. The Bill’s objective, as we have heard from the Minister, is to get people into safe, secure, good accommodation, and for a small number of people the amendment would provide the otherwise unprovidable. I support it entirely.
My Lords, I very much support Amendments 43 and 45, tabled by the noble Baroness, Lady Scott, and supported by the noble Lord, Lord Jamieson. I can give a practical example of this. A very nice couple from Chile wanted to rent one of our flats. They had no credit record at all here in England so there was no way to check that. There was no efficient way to check the previous landlord, which is the other step that a landlord normally takes to ascertain whether these are suitable tenants to go into the property. They had the money. Both of them were coming to work in London for a year for an academic purpose. Enabling them to pay some money in advance—I have forgotten whether it was six months or more—was therefore a sensible compromise. They turned out to be delightful tenants and highly reliable, and we were delighted to have them in our house.
I also want to speak to Amendment 46. It is to protect landlords when a tenant has signed up to take the property on a certain date but has failed to pay either the first month’s rent in advance or the deposit. I suggest that it would be entirely wrong, because the tenancy agreement had been signed and so forth, if the landlord were then obliged to take that tenant into the property. Remember that a landlord cannot chase unpaid rent for three months, and then there is the delay in getting a hearing in the county court, so that would be onerous for the landlord to deal with. Moreover, if the tenant has not paid either the first month’s rent or the deposit in advance, he probably does not have the money available, and the high probability is that the landlord will have to suffer that tenant in his property for three or four months without any payment at all.
I therefore thought it would be sensible to make it quite plain—my amendment starts:
“For the avoidance of doubt”—
that the landlord does not have to give the tenant keys to the property or allow them to get into it when the tenant has not paid. I added a further bit to the amendment to enable the landlord, if the tenant fails to pay the first month’s rent or the deposit for a further 28 days, to take the next step of having the lease annulled. That is to make it plain in the Bill what the position of the landlord is after having entered into an agreement with a tenant who then does not pay either the first month’s rent or the deposit.