Private Rented Sector

Lord Greenhalgh Excerpts

Monday 20th June 2022 Lords Chamber

[Baroness Thornhill (LD)]

I say to the Minister that there is general support across all sectors for these reforms in the White Paper, which we too broadly agree with. In fact, I agree with so much of what the noble Baroness, Lady Hayman, has said that I could just say, “#MeToo” and sit down—but I am not going to. I will not go through the proposals and rationales for each point in the White Paper, because I believe that there will be opportunities to do that later. I want to stress our key points that we would seek a chance to influence and explore.

First, we are disappointed by the speed at which this has gone. We are now only going into consultations and pilots, not legislation—at a time when homelessness and evictions are set to rise. Does the Minister have any timelines or milestones for us?

Our greatest area of support for these reforms—and, paradoxically, of concern—is around evictions. We totally applaud the ban on no-fault evictions, but ask whether any lessons have been learned from Scotland about the application in reality of the new grounds for eviction. How tightly are they drawn, and how have they measured success? Let us take one example which the noble Baroness mentioned: eviction because the landlord wishes to sell the home. How will that be proved and dealt with, or are the Government considering recourse, as happens in Ireland?

We know that revenge evictions are more common than we might like and hope that the decent homes standard and the annual rent rise will discourage such evictions, as do the Government. But even after a year, a tenant can still be priced out of a flat by an unreasonable, excessive rise in rent that they can ill afford. Have the Government considered encouraging rent rises only in between tenancies—a practice that many good landlords already do? Given that the cost of living crisis will not be short lived, what, if anything, will the Government do to curb excessive rent rises, or will it all be left to the market? Why have the Government yet again decided to freeze the local housing allowance?

The Government’s commitment to extending a legally binding decent homes standard to the sector is a potential game-changer, but only if there is enough capacity in the system to monitor and enforce it. Local authorities are definitely down on capacity and funding. What reassurances can the Minister give us that there will be capacity and resources within the system to enforce this standard—a vital part of the reforms?

Regarding capacity, the proposal for a private sector ombudsman is a good one. After all, there is one for the social housing sector. But we know that the social housing ombudsman is under pressure due to capacity issues already, so how will this one be any different? After years of stressed budgets and the demands of the pandemic, will the Government use one of the pilot schemes to review the available capacity of all the partners whom they will need on board to make sure these reforms work, and look at how their roles effectively all knit together?

Finally, there is a legitimate concern in the sector that these changes will force landlords out of the system at a time when we need more, not fewer. Is there a danger of unintended consequences? There is some anecdotal evidence that this is happening in areas popular with tourists, such as Cornwall, the Lake District and Edinburgh. Homes once for long-term let are now seen on more lucrative Airbnb sites. Consequently, locals are priced out of the housing market due to second home owners and they are unable to rent due to a lack of supply. Do the Government recognise this as an issue? If so, are there any possibilities of looking at ways to incentivise landlords to stick with longer-term lettings? There will be time to go into detail in the future, but hopefully not too far in the future.

[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, I thank the Opposition and Liberal Democrat Front Benches for a constructive critique of this important Statement. There is a recognition on all sides of the House that the private rented sector is the most expensive, least secure and lowest quality of all housing tenures. A fifth of renters are paying a third of their income to live in substandard accommodation, which is completely unacceptable. I think that is why the chief executive of Shelter described the proposals around the 12-point plan as a game-changer for the 11 million private renters in England.

This White Paper really is the biggest set of reforms in a generation. It seeks to ensure that tenants have access to safe and decent homes; to increase security and stability by abolishing Section 21, which I know is supported by the vast majority of people in this Chamber—I have not come across anyone who is against that; to improve dispute resolution but, importantly, ensure that there is better compliance and robust enforcement; and to improve the renting experience for private rented sector tenants.

I turn to some of the points raised in this short debate. The noble Baroness, Lady Thornhill, raised enforcement of the decent homes standard, which is a centre point of the reform programme. We will consult on applying the decent homes standard to the private rented sector shortly and carry out a number of pilot schemes across the country to explore different ways of enforcing the standards, because it is important that we do not have the decent homes standard just defined but with an inability to enforce.

The noble Baroness, Lady Thornhill, also wanted to know why these reforms have taken so long to come forward. It is a legitimate question, but we have had a global pandemic and in the last couple of years we have been focused on supporting tenants during the pandemic with longer notice periods, a ban on bailiff evictions and unprecedented financial support. We have made the very clear commitment to bring forward this renters reform Bill in the third Session, and this White Paper is an important part of getting this right. This is a once-in-a-generation opportunity to get these reforms right.

The noble Baroness, Lady Hayman, quite rightly wanted to know how these new reforms would be enforced. I have talked about the pilots, but equally the property portal will make sure that local authorities have the information they need to enforce the standards so that we are not relying, as we currently are, on tenants coming forward to point out when there is an issue.

The noble Baronesses, Lady Thornhill and Lady Hayman, both raised the cost of living issue. The Government do not support rent controls. When this was introduced in the 1970s, we saw a disincentive and a private rented sector that did not get the quality of housing and investment that we needed. That is why we feel that focusing on allowing an increase in rents only once a year and ending rent review clauses are ways of ensuring that we get a more reasonable approach to rent increases.

The noble Baroness, Lady Thornhill, raised an interesting question around the burdens on landlords and whether we are going to get the unintended consequence of more Airbnbs and fewer people wanting to let. The English Housing Survey says that we are seeing some landlords leaving but an equal number coming in, so there is no evidence from the survey yet of an exodus of landlords. It is important that we think about landlords in these reforms, though, and that is why we have strengthened the repossession grounds for landlords, including in cases of serious anti-social behaviour and persistent arrears, and for landlords who wish to move back to their property.

I think there was a strong element of a briefing from Generation Rent in some of the questions from the noble Baroness, Lady Hayman. Certainly, I am aware of the issues raised by the noble Baroness, Lady Kennedy, about the no-fault moving and selling grounds, wanting to extend that to 24 months and not seeing a Section 21, if you like, by the back door.

As a Government we feel that it is important to protect tenants, and that is why we are limiting the use of moving and selling grounds in the first six months of a tenancy. To mitigate any abuse, we are also restricting landlords from remarketing or reletting the property for three months when they use these grounds. It is about getting a balance between landlord and tenant.

Overall, it is fair to say that there is a fair wind behind these reforms. It is important, as they say, to get things done and better late than never.

[Baroness Kennedy of Cradley (Non-Afl)]

My Lords, I declare my interest as director of Generation Rent. The White Paper is welcome. It is serious and ambitious. If the detail of the words follows through to the legislation in the end, it will make significant difference to renters’ lives.

As the Minister said, the centrepiece of the reform is to end Section 21 and give renters a secure and stable home. Insecurity of tenure is the biggest issue for renters, which is why I feel that when we look at the White Paper and the mandatory no-fault grounds, there is a need to strengthen those grounds. I would like to hear a little more from the Minister about how the Government will ensure that those mandatory no-fault grounds will be strengthened to ensure they are not abused by unscrupulous landlords and give renters the security that this legislation is designed to do.

Does the Minister agree that if you are given a no-fault ground for eviction, you have a family and your kids are at the local school, you do not want to move in term time, you do not want to move over the winter and you would need longer than two months in which to make that move under no-fault grounds? It is also expensive, as the Government have acknowledged in the White Paper, so compensation should be given to renters for no-fault grounds. It should be longer than a two-month notice period and increased to four months.

[Lord Greenhalgh (Con)]

My Lords, the noble Baroness asks a difficult question. However, I have been encouraged, whenever I cannot directly answer a question, to say that my honourable friend the Minister in the other place will be conducting a drop-in session on 12 July between 11.30 am and 12.30 pm in Room W3, off Westminster Hall. Doing my best as someone who is not the lead Minister for private rental reform, as the noble Baroness realises, I can say that it is about the architecture. The important way of ensuring that landlords are not gaming the system around no-fault evictions is to have transparency through the property portal, so we collect all the available data rather than just relying on renters essentially having to get themselves legal representation and raise the issues themselves. Therefore the property portal is key. We also need to ensure that we get an ombudsman with teeth, with the right powers, and to ensure that the local authorities are resourced in the right way to step in if necessary as well. It is around getting that architecture which will turn the rhetoric into reality.

[Viscount Stansgate (Lab)]

My Lords, in the light of the Minister’s previous answer, do I take it that the Government have undertaken a study of the potential effect of the growth of Airbnb on the proposals outlined in this White Paper? If it was felt that that was adversely affecting the rented sector, what action might the Government be minded to take?

[Lord Greenhalgh (Con)]

I am not aware that we have undertaken a specific study on the impact of Airbnb on the private rented sector. However, we have a clear mission within the levelling-up White Paper to reduce the number of non-decent homes by 50% and therefore see equality of supply. We are looking at whether there is an erosion in the private rented sector through the annual English Housing Survey, which gives some indication of whether there is a need to dig deeper. So far, all indications are that the sector is robust; 4.4 million households are renting privately and it seems to work well. However, we are keeping that matter under review.

[The Lord Bishop of St Albans]

My Lords, I welcome many of the reforms. However, have Her Majesty’s Government made any sort of formal economic assessment as to whether these protections will do anything to address the higher costs of private rented accommodation, which can so often drive people to social housing? If not, can they assure this House that there will be sufficient affordable social accommodation for those who really need it?

[Lord Greenhalgh (Con)]

There are two parts to how the right reverend Prelate has put the question. The first is that we need to make sure that there is enough supply of social housing, otherwise people who should be in social housing rather than in private housing lose out. There is a real commitment in the affordable homes programme to deliver far more social rented homes: 32,000, which is double the amount of social rented homes in this period than in the previous one. On the cost of living, the best thing is to take action now, and there have been quite a few measures. Some are universal but some are aimed at pensioners; there is a separate one-off payment of £300 to 8 million pensioner households, and obviously there are the measures around people who require support around the costs of essentials. The Government have stepped in where there need to be specific measures, as well as universal measures around fuel bills. Equally, however, the right reverend Prelate is right that we need to ensure that we continue to build more homes and especially ensure that there are more social homes.

[Baroness Bennett of Manor Castle (GP)]

My Lords, tenants’ groups and campaigners say that they need three layers of foundation to give everyone the secure and stable home that they need. The first is decent structural condition, maintenance and repairs, and the second is not to be evicted unfairly. As other questioners have said, this White Paper makes considerable progress on both those areas. However, the third key part of the foundation according to renters’ groups is to have a home that you can afford. The Minister said that the Government were looking at rent controls and pointed back to the kind of rent controls that we had in the 1970s. However, are the Government prepared to consider different, more flexible, smarter forms of rent control? In Scotland, the Green Tenants’ Rights Minister is looking at ways in which rent controls can deliver what people actually need, which is rental costs that are not more than 25% of their income. Another way of looking at this might be that powers for rent control are given to mayors, like the Mayor of London and other regional and city mayors around the country. That would be a way of experimenting and working. How can the Government ensure that people can afford to rent, which is an essential foundation?

--- Later in debate ---

[Lord Greenhalgh (Con)]

I am sure the Government are happy to look at ideas. We have had ideas from Wales, Scotland and Ireland that I am sure the policy officials can look at and advise Ministers on. We have to recognise that there are often unintended consequences on supply if you tinker too much in the private rented market and try to control rent levels. We heard from the noble Baroness, Lady Thornhill, that you might find it more lucrative to use Airbnb than to have longer term rents. I think that what the noble Baroness, Lady Bennett, is really saying is that to tackle the affordability crisis we need a fair amount of taxpayer subsidised housing, whether that is affordable rent or social rent. We recognise that as a Government. Not every person can own their own home or afford market rents. That is why we need a steady supply of affordable housing available around the country. We need communities of mixed tenure to allow households with different incomes to live cheek by jowl. That is good social policy and something that the Government certainly support.

[Baroness Thornhill (LD)]

In that case, may I ask why the Government have frozen the local housing allowance, which was the question I asked, if they have what sounds like a very sincere commitment to social housing? Following what the right reverend Prelate the Bishop of St Albans said, I was thinking that the people we are really concerned about, with the grottiest landlords and flats and the worst deals, in the past would have been in the social housing sector being looked after by good councils and housing associations. We are really trying to play catch up but let us not kid ourselves; it is a huge task that we have.

[Lord Greenhalgh (Con)]

It is fair to say that we raised the local housing allowance and maintained that raise. What the noble Baroness is saying is that we have not increased it further. Let us give the Government credit for having raised it in the first place and having maintained it. The reality is that it goes back to getting the balance of tenures right. We have far too many people who cannot afford to live in market-rate accommodation and therefore they need taxpayer support. The housing benefit bill has effectively ballooned from when I was first a council leader from around £7 billion to around £30 billion, I think—or at least, that is what the projections are. That is completely unsustainable. We need more affordable housing and social housing to mitigate the unintended consequences of getting the taxpayer to fund these very high-cost homes for people who cannot afford to live in them. That is why there is a need to look at other ways of answering that point.

[Baroness Bennett of Manor Castle (GP)]

I join the noble Baroness, Lady Thornhill, on the Minister’s celebration of social and genuinely affordable housing. In that case, why are we looking at extending the right to buy instead of ending that great privatisation of social and affordable housing?

[Lord Greenhalgh (Con)]

I can answer that very sincerely, having been a local authority leader in an area where one-third of the housing was social housing. It had very high levels of council and housing association housing. I start with a definition that social housing should be a springboard to home ownership, for those who want it to be. It should not just be a destination. The issue is that once you have got the receipt, it gets pocketed by the Treasury and not reinvested in social housing—something that the noble Baroness, Lady Thornhill, has raised before now. The Government are putting more flexibility in and allowing more money to go back into supply. There are strong arguments that all that money should go back in; therefore, you allow mobility and fluidity and create a springboard for those people who can afford to own their own homes. That is a great thing, which should be available to both council tenants and housing association tenants.