Housing and Planning Bill

Lord McKenzie of Luton Excerpts

Tuesday 1st March 2016 Lords Chamber

[Baroness Evans of Bowes Park]

I will go through the process, which contains checks and balances which will ensure that a tenant has genuinely abandoned the property.

The landlord can recover a property only where warning notices have been served on the tenant, with a copy of the first and second warning notice sent care of any guarantor. The first warning notice could not in practice be served unless there were at least four consecutive weeks’ rent unpaid. The second warning notice can be served only when at least eight consecutive weeks’ rent is unpaid. It must be given at least two weeks and no more than four weeks after the first warning notice. Each warning notice must state that the landlord believes the premises to have been abandoned, that the tenant or named occupier must respond in writing—which could be by email—before a specified date, which must be at least eight weeks after the first warning notice is given, if the premises have not been abandoned, and that the landlord proposes to bring the tenancy to an end if neither the tenant nor a named occupier responds in writing before that date.

Following service of the second warning notice, where the tenant has failed to respond, the landlord must then put a third and final notice on the door of the property at least five days before the end of the warning period. That notice must state that unless the tenant or the named occupier responds in writing within five days—as I said, that could include email—the landlord will bring the tenancy to an end and repossess the property. The Secretary of State will prescribe the content of the final warning notice. This requirement was added in Committee in the other place to add a further safeguard to the process. Finally, if a tenancy has been brought to an end using the abandonment procedure, where a tenant had a good reason for failing to respond to the warning notices, they may apply to the county court for an order reinstating the tenancy.

I hope from this explanation that it is clear that landlords will continue to have to go through a lengthy and detailed process before they can regard a property as being abandoned. In addition to a requirement that at least eight consecutive weeks’ rent remains unpaid, they must serve a series of warning notices on a tenant and, when applicable, any other named occupiers. We believe that it would be an unnecessary burden on local authorities to impose an additional requirement that a local housing authority must also confirm that a property has in its view been abandoned. It may be difficult to determine whether this is the case or not, and requiring it to do so could place it in a difficult position. It would also be likely to introduce further substantial delay into the process of recovering an abandoned property, depriving the landlord of income and a family of the chance to occupy a property sitting empty.

It is already effectively the case that in the Bill the minimum period before a landlord can recover an abandoned property would be 12 weeks, as I have outlined. The clauses are carefully drafted but complex and, subject to Royal Assent, the department will issue guidance to landlords to help them to understand the new process. Amendments 35 and 36 would also replace the current provision in Clause 57, which specifies that a second warning notice must be served at least two weeks and no more than four weeks after service of the first warning notice. We have sought to strike the right balance between ensuring that tenants are given adequate notice, that the landlord believes that the property may have been abandoned, and to respond if they have not, in fact, abandoned the property, while also ensuring that landlords do not have to wait an unreasonable amount of time before being able to recover the property. Requiring that the second warning notice is served at least four weeks and no more than eight weeks after service of the first warning notice would add further delay and deprive the landlord of an income and another family of the chance to occupy the property when it is sitting empty.

[Lord McKenzie of Luton (Lab)]

This is my first foray into this Bill, and I draw attention to my interests in the register. Clause 57(6) says:

“The first warning notice may be given even if the unpaid rent condition is not yet met”.

On what basis can the landlord assume that the unpaid rent condition is eventually going to be met?

[Baroness Evans of Bowes Park]

The first warning notice would not in practice be able to be served unless four consecutive weeks’ rent is unpaid, and the second warning notice may be served only when at least eight consecutive weeks is unpaid. So there are specific timescales for which there is unpaid rent. I am not sure whether that fully answers the question; if it does not, perhaps I can come back to noble Lords.

[Lord McKenzie of Luton]

I would be grateful if the Minister could do so because, on the face of it, the provision seems odd. The unpaid rent condition has to be met for the abandonment provisions to proceed. Obviously, the concern is that warning notices may come thick and fast without the chance of the tenant to have due consideration. The basis on which that first warning notice can be given if the unpaid rent condition is not met is somewhat bemusing. Could the Minister, if she cannot say more today, write to us on that?

[Baroness Evans of Bowes Park]

Yes, I am happy to clarify. I have talked about a lot of notices and warnings; perhaps it would be better to put it in writing so that it is clear.

--- Later in debate ---

[Lord Kennedy of Southwark]

That would be very helpful. In this short debate we have highlighted a few issues with this section of the Bill so can I suggest that it might be welcome if a few noble Lords got together with the Minister to discuss some of them? There are issues which are not clear and could cause problems. The last thing we want is to get something on the statute book that causes everybody confusion.

[Lord McKenzie of Luton]

I have one further question. If the rent condition is initially not met but then there is a payment which starts the process again, where does that leave the warning notices that have been issued? Will they remain in place for a possible second bout of the application of these provisions?

[Baroness Evans of Bowes Park]

I am happy to agree to meet with noble Lords interested in this area so perhaps they could list all their questions and we will try to respond to them when we meet in due course.

--- Later in debate ---

[Lord Kennedy of Southwark]

I am grateful to the noble Baroness, Lady Grender, for proposing that this whole part should be abandoned. I support that suggestion. I will not go through the points I made in the previous debate, but I may have a few points when the Minister responds. The removal of the oversight of the courts, as referred to by the noble Baroness, is of particular concern, and the provision that the third warning notice should be fixed in a “conspicuous” place is very weak and offers very little protection to the vulnerable tenant. The Government have not made the case for these clauses, or that these changes are needed or necessary. The Government need to think again over the procedure and the risks involved, as other noble Lords said in the debate.

[Lord McKenzie of Luton]

My Lords, I agree with those who say that these provisions should be recast. I want to pick up on the third warning needing to be,

“given by fixing it to some conspicuous part of the premises to which the tenancy relates”.

Conspicuous to whom? Is it the tenant, the whole world, the community that passes by the front door? It seems to me that giving notice to somebody by nailing something to their front door is almost medieval. You can imagine that somebody will put the notice up, the mobile phone will come out and a photograph will be taken but half an hour later it could be ripped off and be nowhere in view—certainly nowhere in view of the tenant. It seems an incredibly archaic approach. I think the whole thing should be recast but that particular provision jars immensely.

[Baroness Evans of Bowes Park]

My Lords, I thank all noble Lords who have contributed to this debate on Part 3 of the Bill. The noble Lord, Lord Kerslake, said that numbers may be small, but these provisions are nevertheless important to good and reputable landlords whose properties are abandoned by tenants who have stopped paying rent. As we have tried to make clear, we want to find a balance between protecting good landlords and good tenants. Presently, when abandonment happens a landlord can go in and change the locks. However, that involves taking a huge risk, since if the tenant has not abandoned the property the landlord could be liable to prosecution for unlawful eviction and be subject to claims for damages in the civil courts. As a result, many landlords do not take the risk and instead take possession proceedings in the county court.

However, before they are able to commence court action they must bring the tenancy to an end by serving a Section 21 notice giving the tenant two months’ notice, and when they have made the application it can be two or three further months before they get a court order enabling them to repossess the property. In the mean time they receive no rental income for a property which is standing empty, and often will still need to meet their mortgage payments. The landlord will also incur costs in taking court proceedings. As I have said, abandonment may not be a widespread problem but it is estimated that it costs landlords around £5 million a year in legal fees, missed rent and time.

When a person surrenders a property they contact their landlord and hand in their keys, but in this instance we are talking about when a person abandons a property and disappears and stops paying rent. It is a different situation. That is why we think the provisions in Part 3 provide for a simpler and cheaper method for recovering property where the former tenant has permanently left owing arrears of rent that have continued to accrue since the first warning notice was given.

I also make clear that any landlord who abuses this process by not giving tenants proper warning and takes repossession of the property knowing that it has not been abandoned will be liable to be prosecuted for unlawful eviction under the Protection from Eviction Act 1977. As we have also tried to make clear, this is not intended as a route to remove a tenant in arrears. This is about abandoned properties. A tenant will also be able to bring a claim for damages through the civil courts where the landlord has not followed the procedure as set out in legislation. The provisions are not a charter for landlords—

--- Later in debate ---

[Baroness Evans of Bowes Park]

As I have explained, the rationale behind this is to attempt to provide balance and fairness for both tenants and landlords.

[Lord McKenzie of Luton]

Will the Minister help me on one other point, please? On the reference to rent not being paid, or rent being unpaid, what happens if a tenant, in struggling to pay the rent, pays an amount on account? Does that count as the rent being unpaid for a week, or a month? How is that dealt with? The Minister has used the expression that someone has effectively given up on paying the rent. There could be many instances where people are struggling to pay the rent, doing the best that they can, and making partial payments. If that is what they do, would that preclude the operation of these provisions?

[Baroness Evans of Bowes Park]

Obviously, there will be a dialogue between tenant and landlord, and arrangements between the two may be made. As I said earlier, if some payment of rent is made and if a process had been started, it would have to start again from scratch.

[Lord McKenzie of Luton]

I understand that if the rent is paid in full you go back to square 1. But if the rent is only partly paid, what is the position? Our concern here, as many people have said, is about unscrupulous landlords who will use these provisions for a perverse effect. If somebody has only part-paid the rent that would give them the opportunity of doing so.

[Baroness Evans of Bowes Park]

In terms of part-payment of rent, if any rent is being paid, the process would be ended. It is about abandoning a property—no rent being paid. It is not about part-payment.

[Lord McKenzie of Luton]

So, a pound off the rent would secure the position.

[Baroness Evans of Bowes Park]

There would be a balanced view on this. As I have tried to set out, where payment is being made, that is not abandonment of a property. As I have said to noble Lords, we are happy to discuss this in further detail to, I hope, allay concerns.