Renters’ Rights Bill

Lord Hacking Excerpts

Monday 28th April 2025 Lords Chamber

[Baroness Wolf of Dulwich (CB)]

My Lords, Amendment 87 in my name proposes that the Government adopt a screening procedure for rent appeals. It draws on and is prompted by current Scottish practice. The approach works well there and could make a substantial contribution to addressing the growing pressure on court capacity, which we have been discussing.

My amendment does not, in any way, reduce the right of tenants to appeal against a rent increase. I am not sure that it even reduces the incentive to appeal on the off chance, but it certainly reduces the likelihood that the courts will be overwhelmed by appeals and, in particular, appeals that do not succeed and therefore swamp the courts, to the detriment of important and merit-worthy cases.

Under the Government’s current proposals, tenants will enjoy a number of new and important rights: rents cannot be increased as often as at present, for example, and the notice period is increased. Most importantly in the context of this group of amendments, all tenants who wish to challenge what they see as an excessive rent increase have access to an independent tribunal. The tribunal cannot propose an increase that is any higher than the one initially proposed by the landlord; it can endorse the landlord’s proposal, in effect, or rule that a lower rent should be charged. Obviously, these changes will be of great assistance to tenants whose landlords are proposing major increases that are out of line with inflation or the market.

The problem is that, from most tenants’ point of view, appealing against an increase becomes something of a no-brainer. Why on earth would you not? What would you lose? At worst, you get a delay in the date when the increase takes effect. In that situation, the courts are bound to be faced with a tsunami of appeals with which they cannot possibly cope.

As many noble Lords are aware, Scotland reformed its rental legislation quite recently and it therefore provides us with useful indications of how contemporary rental markets respond to various types of change. Some Scottish developments are not very encouraging, as we have heard: there seems to be an ongoing decline in the number of rental properties and a sharp fall in the construction of properties for rent. However, one aspect of the current Scottish regime seems extremely sensible and successful. It does not reduce Scottish tenants’ rights but it does protect their court system.

The first stage in an appeal against a proposed rent increase goes to Rent Service Scotland. Apparently, it takes Rent Service Scotland, on average, just five days to respond. In almost every case, things stop there; very few cases then go on to a tribunal hearing.

The National Residential Landlords Association obtained information under a freedom of information request, which showed that, in the four months from April to July 2024, 928 applications were made to Rent Service Scotland to appeal a proposed rent increase. While there do not seem to be any summary statistics available that show exactly how numbers have evolved and changed over time, the Scottish tribunal is certainly not dealing with anything approaching that number. In fact, only about 30 decisions relating to rent increases were published between August 2024 and March 2025. The full 2023-24 Scottish tribunals report also shows that, while private rental sector cases were the large majority of property cases, they were overwhelmingly to do with evictions, deposits and repairs and not rent appeals.

Obviously, the Scottish situation is very different from ours, notably in adopting rent caps, but it is also obvious that that system is effective in giving tenants and landlords very quick feedback rather than months in limbo. It is also obvious, given the volume of appeals, that without this system the Scottish tribunal would be spending a lot of time and resource on a very large number of cases that were, in effect, a waste of its time.

It would be very easy for us to introduce a similar first-stage process in England. There is a large amount of expertise on rents outside the tribunals and courts. The Valuation Office Agency already gives the Government the valuations and property advice they need to support taxation and benefits. Rent officers set rents for the remaining group of protected tenancies. So, all the basic infrastructure we need is in place.

My amendment therefore proposes that all appeals against rent increases should go in the first instance to the Valuation Office Agency and progress to the First-tier Tribunal only if there is a clear case to answer. Obviously, if the Government chose to embrace the general idea, as I very much hope they will, the details would be in their hands—this is a probing amendment.

To see how important such a screening process could be in protecting our court system from near-complete collapse, it is worth doing a little bit of back-of-the-envelope arithmetic. If appeal rates from private sector tenants in England were at the same level as we currently see in Scotland and they all proceeded to the tribunal, we would end up in England with over 40,000 cases a year. That compares with 909 rent increase cases heard in the year 2023-24. We would be looking at an increase that is more than fortyfold, or 4,000%. As we have heard from noble Lords, it can already take months for the First-tier Tribunal to rule, so how can it possibly respond to this sort of increase? Of course, under the Bill’s provisions, the longer the delays, the greater the incentive is to appeal, so I am afraid that fortyfold might just be the start.

It is no wonder that even very strong supporters of the Bill, such as the Local Government Association, are expressing concerns about the potential impact of the new appeal rights on the capacity of the First-tier Tribunal to make decisions in a timely fashion. This timeliness matters not just because of the direct impact on changes in rents but because our judicial system also needs to deal with other property issues, including anti-social behaviour. It is worth emphasising that anti-social behaviour is not just an issue for landlords; it is at least as much of an issue for surrounding residents, many of whom will be tenants. If you live next to a property which is being used for intensive drug dealing, it is not much consolation to be told that this occurs only with a tiny minority of properties.

We already have very long delays in the court system, as other Lords have pointed out. Those delays seem to be growing and not reducing and we as a Chamber must, for the sake of tenants just as much as landlords, take the potential impact on the courts into account in scrutinising the Bill.

I therefore urge the Government to consider following and learning from the Scottish example and introducing a first-stage screening of rent appeals outside the court system. Is the Minister willing to meet me to discuss that suggestion?

[Lord Hacking (Lab)]

My Lords, my Amendments 88, 91, 94, 97, 100 and 101 appear in this group. Before I speak to the individual amendments, my general observation is that I do not have great enthusiasm about several of them, but they have been put to me and I thought it necessary to have them aired in this Committee.

Amendment 88 would enable landlords to claim costs against the tenant when the landlord succeeded after the tribunal confirmed the rent increase. This follows the normal rule in front of all tribunals and courts in our land of costs following the event, the event being who won the dispute, and the costs therefore have to be picked up by the loser. Having said that, I have a reservation about this amendment, because it could be a deterrent against tenants challenging an increase in rent, which is undesirable.

In speaking to Amendment 91, I will speak also to Amendments 94, 97 and 100. All these amendments seek to establish that the increase in rent should be calculated from the expiry of the landlord’s notice for the increase rather than the date of the tribunal’s decision. I tabled this amendment because there is quite a noticeable delay in decisions of tribunals, which means the landlord does not get his increase in rent until several months later.

Amendment 101 moves to a different subject: that the rent payable on the decision of the tribunal should be paid in equal monthly instalments within six months of the tribunal’s determination—that speaks for itself.

I am just looking at my list of amendments to speak to and I think I have got there; I have completed my comments on all of them. I say again that I do not speak to them with great enthusiasm. I spoke with great enthusiasm on Thursday in supporting Amendment 60 from the noble Lord, Lord Carter of Haslemere, and my own Amendments 165 and 166. Unfortunately, my enthusiasm for these amendments has not so far permeated to my noble friend on the Front Bench, but I hope that they will do later.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I rise with huge enthusiasm for my amendments. Amendment 90 in this group relates to Amendment 89 in the following group, so I will speak just once. I have been told to call them probing amendments; really, I would like to push them to a vote. In fact, I would like the Minister to accept them because I think they are very good. They are similar to probing amendments put down by my colleague Carla Denyer in the other place and aim to ensure that tenants have a way of benefiting from energy efficiency improvements where the Government have given landlords the money to make them.

I would like the Minister to think about who profits from the government subsidy. Are the Government interested only in increasing the profits of landlords or should tenants benefit as well? Triple-glazed windows and wall insulation mean lower energy bills for the tenant, but that makes absolutely no difference to them if the saving is cancelled out by higher rents.

Take, for example, this case study provided by Generation Rent: Maya lives with her husband and children in a home they rent from a private landlord. They had a lot of energy efficiency work done, which was paid for by a government grant. They were eligible for it because they received benefits. However, Maya came to Citizens Advice for help when the landlord asked for a £500 rent increase after her family had been through all the disruption of getting their home upgraded. You can imagine the dust, the dirt, the noise and the general disruption of having workers around all the time.

This increase would have left Maya’s family facing a £900 shortfall between their local housing allowance and their rent, making it absolutely unaffordable for them to stay in their home. Maya tried to negotiate the rent with the landlord but has now been issued with a Section 21 eviction notice. Maya and her husband believe that now the property is in an improved condition, thanks to the grant funding they secured, the landlord wants to find more affluent tenants who will pay a higher rent.

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Moved by

[Lord Hacking]

76: Clause 7, page 9, line 25, at end insert—
“(d) a lease clause prescribing a rent increase in line with the Retail Price Index or the Consumer Price Index two months prior to the date of the rent increase coming into effect, subject to a minimum of 3% and a maximum of 8%;”

[Lord Hacking (Lab)]

My Lords, we are moving to a new subject in the taking of the Bill through Committee. This amendment concerns the process of assessment. I am sorry that so many noble Lords are leaving at this juncture, but I will go on, on the basis that I have been asked to move the amendment. It is directed towards the assessment of rent increases under the open market rent test. What I am seeking to do in this amendment is to limit these rent increases to the retail prices index and the consumer prices index. That merely provides, I suggest, a brake on the assessment of rent, which I hope the noble Baroness, Lady Thornhill, will like—she is nodding, which is very nice to notice—because she was concerned about moving into the open market rent and the unfair impact that could have on tenants’ rents.

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The noble Baroness rightly pointed to the £70 billion we currently spend on housing benefits in this country. I have already set out the broader action that the Government have taken to increase supply. My right honourable friend, who is now the Defence Secretary, ran an outstanding campaign on turning benefits to bricks, which I fully support, and the Government are continuing our work to go down that route as quickly as possible. On that basis, I ask the noble Baroness, Lady Jones, not to press her amendment.

[Lord Hacking (Lab)]

My Lords, I am about to beg leave to withdraw my amendment, but I would like to reply to my noble friend the Minister and thank her very much for her detailed reply. I did not know about the experience in Ottawa, and I would like to consider that further.

I say quite plainly that I was not seeking to set up a rent control; I was seeking to set up guidance on rent increases associated with the RPI or another financial index. The reason for that was expressed well by the noble Lord, Lord Best, who detailed the problems for the renter in having to go through the process of making an appeal to the First-tier Tribunal and all the difficulties in that. If that can be relieved, we would be doing renters a service. I beg leave to withdraw the amendment.

Amendment 76 withdrawn.

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[Lord Jamieson (Con)]

My Lords, I will speak to the group of amendments in the name of my noble friend Lady Scott, relating to payments of rent in advance. The payment of rent in advance can provide a number of significant benefits to tenants. These go beyond avoiding late fees and the demonstration of financial security. Tenants may wish to pay rent in advance for financial planning or even to avoid the worry of monthly payments. Amendments 108, 109, 110, 112, 113 and 114 recognise and affirm the legitimate choice of a tenant to pay rent in advance. I emphasise that this is rooted firmly in mutual agreement. If a tenant does not wish to pay in advance, they are under no obligation to do so, but if a tenant chooses to take this step, if they believe it is in their personal best interest, why should we stand in their way? If a tenant makes a judgment on the basis of their financial circumstances that this is in their best interest, why should it be for the Minister to say, “No, the Government know best”? If a tenant believes their ability to pay may be inhibited by a financial burden coming down the track, they could legitimately plan for the payment now. But, regardless of the reason or even the need, if there is mutual agreement, what is the problem?

I turn to the impact of this on two groups who will be particularly impacted by this change: overseas students and those with poor credit ratings. Tenants with a poor credit rating history will inevitably appear risky—this may be through no fault of their own; they may just not have a rating history—and often this risk is too insurmountable to ignore. By paying up front, tenants can demonstrate responsibility and ultimately improve their chances of securing a rental agreement and the security of a home. In many cases, this proactive step, choosing to pay in advance, is the only practical means by which tenants can build trust, enhance their credibility and demonstrate financial reliability. Will the Minister please set out the impact of this change on those with a less than optimal credit history?

Next, I wish to address the issue of overseas students with no local credit history. The Committee will know that the UK credit rating agencies do not hold information about a person’s financial affairs outside the country, or any foreign credit reports. Therefore, overseas students often require a UK-based guarantor to cover potential property damage or unpaid bills. Where this is not possible, payment in advance can be a solution, and payments are often made for the entire term, or even the entire academic year. Will the Minister set out the expected impact of this change on overseas students, and the number we anticipate losing due to difficulties in securing student accommodation? Alternatively, does she believe that landlords will still have a sufficient incentive to house overseas students, despite their limited credit history? Will she outline what steps the Government are taking to strengthen the enforcement around credit arrears where overseas students are unable to pay? Current mechanisms are often weak, but it is an issue that is far less prevalent when payment is made up front.

I also want to highlight the plight of some of the most vulnerable, where councils have a duty of homelessness prevention. Councils often work with landlords and tenants, offering advanced rental payments, larger deposits and guarantees, which would be hampered by these proposals. Are councils to be banned from paying rent in advance to support some of the most vulnerable in our society? As has been raised earlier, the Home Office plans to offer landlords five-year tenancies to house asylum seekers. Will this involve rent being paid more than one month in advance? I invite the Minister to explain and I appreciate that she has offered to write to noble Lords regarding this. I look forward to that, and to any additional information that she is able to provide.

Finally, I draw the Committee’s attention to Amendment 117 in the name of my noble friend Lady Scott. This amendment requires Ministers to ensure that changes being made to the Tenant Fees Act 2019 are clearly communicated to tenants, letting agents and landlords. These changes involve fines of up to £5,000 for new offences and it is essential that landlords and letting agencies are aware of their new responsibilities. We regard this as a technical but important amendment and I hope that the Minister will see it as a practical and necessary change that can be accepted. This group will consider whether mutually agreed or tenant-requested payment of rent in advance should be permitted to continue. On these Benches, we are clear that it should. Mutual agreement can foster a more stable housing situation, one that recognises the unique benefits that rent in advance may offer certain groups of tenants in securing a home. I hope that the Minister will take note.

[Lord Hacking (Lab)]

My Lords, I entirely support the noble Lord, Lord Jamieson, in his submissions just now. My Amendments 115 and 116 deal with the same problem but from a different perspective.

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If a tenant agrees to pay their first month’s rent in advance of the tenancy beginning and then does not do so, they could risk court action being taken against them by their landlord. This could ultimately lead to the tenant being evicted and receiving a county court judgment to repay the arrears. If enforced, the judgment would be likely to affect the tenant’s ability to rent in the future. To reiterate, landlords remain free to undertake affordability and referencing checks to reassure themselves that tenancies are sustainable. For these reasons, I ask my noble friend not to move his amendments.

[Lord Hacking (Lab)]

My noble friend has replied to my Amendments 115 and 116, but I would be grateful if she could agree to talk further on them, particularly Amendment 116. It is an extraordinary situation how a landlord is not permitted to prevent a tenant moving into a property even though the tenant has not done the basic thing of paying the rent in advance. It is not an excessive amount of rent; in my case, as I explained to my noble friend, it is the rent for the rest of the month—a modest payment. Why on earth can a landlord not say, “You can’t come into the property until you’ve paid your rent”? You always pay rent in advance.

[Baroness Taylor of Stevenage (Lab)]

I would just reiterate the comments I made to my noble friend that, having undertaken a tenancy, gone through the process of vetting and paid the deposit and the holding deposit, it will be a very rare case where the tenant proceeds not to pay their first month’s rent.