King’s Speech

Lord Truscott Excerpts

Thursday 9th November 2023 Lords Chamber

[Lord Truscott (Non-Afl)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Bull, and her thoughtful and thought-provoking speech. I also agreed with the noble Baroness, Lady Deech, on her powerful speech about the Holocaust Bill. I support a Holocaust memorial and learning centre, but the current proposals reflect the fact that it is the wrong location and the wrong design, at an exorbitant cost of £139 million.

I am here in your Lordships’ House today to speak about housing. In that case, I need to declare an interest in that I have been a landlord in the private rented sector since the 1990s and before that I was a renter in the private rented sector up until my mid-30s. I have seen renting from both sides of the fence.

I welcome His Majesty’s Government’s determination in the gracious Speech to proceed with both the Renters (Reform) Bill and the leasehold and freehold Bill. Both are long overdue, in my view. However, in almost 30 years of being a private landlord, I have never known the situation facing both landlords and private renters to be so bad. We are moving towards an inheritocracy, where only those who inherit will own property and wealth. Social inequality will increase as a result. Better to tax unearned inherited wealth, rather than everyone else, to provide the housing that is so badly needed.

One of the fundamental problems we have heard today in your Lordships’ House is the shortage of property to rent. The Government thus urgently need to increase the supply of socially rented housing to make it affordable for people, as the noble Lord, Lord Howarth of Newport, said earlier today. It is a simple question of demand and supply. When demand outstrips supply, prices, or in this case rents, go up. There are of course other contributing factors; recent rises in mortgage rates mean landlords with buy-to-let mortgages—and there are 1.7 million of them—have seen their mortgages triple or even quadruple. In that event, it is not surprising to see rents in some cases go up by 30% to 40%. There are other factors; tax changes have meant that buy-to-let landlords are the only business owners I know to be taxed on their turnover, rather than profits. Increasing regulation, often necessary, has nevertheless meant costs have been piled on landlords, which they pass on to their tenants.

Let us look at these private landlords. Profits are at their lowest for 14 years. Over the last year, the level of landlords defaulting on their mortgages has doubled, so arrears have been building up. Most landlords just have one or two properties, which they have worked hard to buy, to provide for them in their old age. In the past, property capital growth has enabled landlords to cross-subsidise tenants in lean times, but this is no longer the case.

On the specifics of the Bills, I welcome the abolition of Section 21, so giving security to tenants. But His Majesty’s Government should be careful of the unintended consequences of introducing periodic tenancies to replace assured shorthold tenancies. In city centres and resort areas, short-term tenancies and increased use of Airbnb-type ultra-short tenancies will mean less property is available to local residents and students, not more, as the noble Lord, Lord Best, already mentioned. It does seem bizarre to me that His Majesty’s Government will outlaw longer tenancies, so guaranteeing more security of tenure when both parties want it.

I am glad that pets, particularly dogs, will be banned when the lease forbids them. That should remain at the discretion of the landlord. Dogs may be appropriate in houses, but in flats they can cause nuisance and even be dangerous. We have seen a massive increase in dangerous dog attacks and fatalities in recent years; my wife and I were on the receiving end of one in our own garden from tenants who had a dog in breach of the lease. I would not recommend the experience.

In terms of the leasehold Bill, I welcome His Majesty’s Government’s intention to abolish the feudal and archaic leasehold system, as the noble Lord, Lord Young of Cookham, referred to previously. For centuries, freeholders and their agents have had a licence to fleece leaseholders, with little or no chance of redress. In particular, I agree leaseholders should be given greater rights to self-manage, ending the opportunity for freeholders and their agents to exploit vulnerable leaseholders with excessive service and other charges.

It is time that lease extensions and valuations were made more transparent, quicker, cheaper and easier, rather than the theatrical system we have today, which is designed to benefit everyone except the leaseholder. The opaque lease extension system in place, its absurd marriage value and other calculations mean leaseholders have little or no control over the process or the cost.

It is regrettable, as the noble Lord, Lord Best, has mentioned on numerous occasions in the past, that property management agents remain wholly unregulated. What other body sometimes dealing with millions of pounds is totally unregulated and requires no professional qualifications and standards whatsoever? On balance, His Majesty’s Government should be supported in reforming the private rented sector and leasehold. They should be awarded six out of 10, but need to do better still.

[Lord Shinkwin (Con)]

My Lords—