Queen’s Speech

Lord Howard of Rising Excerpts

Monday 17th May 2021 Lords Chamber

[Lord Howard of Rising (Con) [V]]

My Lords, I congratulate the noble Lord, Lord Coaker, on—as the noble Lord, Lord McNicol, said—such a heartfelt and moving speech. I also look forward to hearing from the noble Lord, Lord Morse, later. I declare an interest as the owner of rented accommodation and farmland.

Her Majesty’s Government plan to publish a consultation on reforming tenancy law to abolish Section 21 no-fault evictions. It is impossible to do this without introducing rent controls, which historically have never worked and would do immense damage to the rented housing market.

A recent example is Berlin, where controls were introduced in 2020 to maintain rents at 2019 levels for five years. The result was that the number of new rental properties coming on to the market fell by almost half; the scheme is ending after less than two years. There were other factors, but they do not alter the fundamental, which is that freezing rents caused the supply of rented accommodation to dry up.

To state the obvious, landlords let premises in order to get rent; it is preferable to have the income. Landlords ask tenants to leave only with very good reason because replacing a tenant is an expensive and laborious business. You have to advertise the property. There are lawyers’ fees, letting agency fees and fees to check gas and electricity. You must comply with emission rules, and there are almost always redecoration costs. The longer the same tenant stays in place—so avoiding these costs—the greater the benefit to the landlord.

It is blindingly obvious that only a tiny minority of tenants are asked to leave, even by rogue landlords. Removing Section 21 would massively reduce the value of rented properties and be a slap in the face for all those aspiring individuals who have put their savings into rented property—especially those who have taken out a buy-to-let mortgage. Some 90% of all landlords are individuals, nearly half of whom own only one property.

Before the 1988 Act, the average discount for tenanted properties was between 40% and 50% of vacant possession value. At a stroke, by introducing sitting tenancies, the capital value of the present tenanted sector will have nearly halved. In the case of landlords with buy-to-let mortgages, the security for these loans may no longer meet the loan-to-value requirement, with the consequent financial hardship.

Rented premises are well protected by law. If there are problems with the property that the landlord will not deal with, a tenant can complain to the local housing officer, who can compel a landlord to make changes. A gas certificate is needed every year. An electrical installation condition report is required every five years or for each new letting. An energy performance certificate is required. Deposits are now limited to five weeks’ rent, which is unlikely to cover a bad tenant’s damage. Given the massive incentive to prolong tenancies and the continuing drive towards improvements to rented property, it would be counterproductive to introduce a measure that will reduce the availability and quality of rented accommodation and will cause financial hardship for many.

There are many other arguments against the abolition of Section 21, for which there is no time today. I hope that Her Majesty’s Government will think carefully when reviewing the abolition of Section 21.