Renters’ Rights Bill

Lord Young of Cookham Excerpts

Thursday 24th April 2025 Lords Chamber

Moved by

[Lord Young of Cookham]

19: Clause 3, page 4, line 4, at end insert—
“(7A) Any regulations made under subsection (7) must make specific provision for shared ownership leases.”Member's explanatory statement
This amendment probes what effect the Secretary of State considers clauses 1 and 2 will have on shared ownership leaseholders who currently rent out their apartments under licences.

[Lord Young of Cookham (Con)]

My Lords, these probing amendments draw attention to the problems already facing many shared owners following the cladding scandal but also problems for them with the provisions in the Bill as it stands. I note that the Government’s impact assessment makes no mention of shared owners who have become accidental landlords.

This form of tenure, shared ownership, occupies the space between owner occupation on the one hand and tenancy on the other, as a shared owner owns part of the property and rents the other bit from a social landlord. Shared owners are individuals who are unable to buy a property on the open market and use a government-backed affordable housing scheme to buy a share of a property, increasing that share as their circumstances improve. So, by definition, they are not well off. The Joseph Rowntree Foundation analysis in 2020 indicated that around 20% of shared owners are in poverty—double the rate for outright or mortgaged home owners—suggesting a demographic that is vulnerable to shocks such as those following the cladding scandal.

To complicate matters, shared owners can simultaneously be both a tenant and a landlord. In its 2025 survey, the Shared Owners’ Network found that 22% of its members are now subletting, with 90% doing so because of the cladding scandal. They have to sublet to move on with their lives, because their properties are not sellable. The Government do not collect data on the number of shared owners who sublet, but the Government recently amended the Homes England Capital Funding Guide to facilitate subletting for shared owners who are trapped—so I expect that the numbers are substantial and are to increase.

Conventional leaseholders have the right to let their property, but shared owners do not. Subletting is seen as an exceptional measure, subject to social landlord and lender approval, with commercial gain from subletting prohibited. Social landlords’ approval remains inconsistent on the ground.

The Bill abolishes fixed-term tenancy and moves all tenants on to periodic tenancies, but shared ownership tenants who sublet cannot give a periodic tenancy. Any permission they get from their social landlord is time-limited and can be withdrawn. Withdrawal often happens when a compliant EWS form becomes available for the building and the social landlord argues that this makes the flat sellable. However, major lenders have agreed only to consider lending on these properties, and often other issues, such as a very high service charge and high insurance, impact mortgageability and the property is not in fact sellable. Where a licence to sublet is not renewed, shared owners are required to evict their tenants, even if they are not able to sell their property.

So how will they cope with the Bill, which, on enactment, converts all tenancies into periodic tenancies? How will any existing agreements interact with the provisions in the Bill that give tenants the right to stay in a property for a minimum of 12 months, when, as I have just explained, consent can be withdrawn by the social landlord before that period has expired?

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Lord, Lord Young of Cookham, for his amendments relating to shared ownership licensing and for his usual clarity and coherence in the way that he proposed them. I also thank the noble Lords, Lord Cromwell and Lord Jamieson, and the noble Baroness, Lady Thornhill, for their contributions to this discussion.

Amendment 19 would require any regulations made under the power in Clause 3 to include provision for shared ownership leases. As noble Lords are aware from our previous debate, the current Clause 3 will be subsumed within part 2 of Schedule 6, but that will still deliver the same effect. I will therefore respond to Amendments 19 and 20 with reference to the fact that these measures will sit elsewhere in the Bill.

As I set out in the discussion on the previous group, the new part 2 of Schedule 6 will ensure that landlords with superior leases can continue to sublet in the future system if they currently have permission to do so. Superior leases or agreements may currently require subletting to be on an assured shorthold or an assured tenancy with a fixed term. Part 2 of Schedule 6 will ensure that, where a sublease transitions into a new periodic assured tenancy, the intermediate landlord will not be in breach of the terms of their superior lease and can continue to sublet under the new system. This will include sectors such as shared ownership and leasehold, where these kinds of restrictions in superior leases are commonplace.

The Government do not believe that Amendment 19 is necessary. It would lead to additional and otherwise unnecessary drafting in any regulations made under this power. The power already requires the Government to specify what sectors the regulations will apply to.

Amendment 20 defines shared ownership for the purposes of Amendment 19. The Government believe this is unnecessary for the same reasons that I just set out for Amendment 19.

Amendment 107 would exempt landlords who are shared owners from Clauses 7 and 8. The effect of these clauses is to prevent unscrupulous landlords using rent increases as a backdoor means of eviction, while ensuring that rents can be increased to reflect market rates, as we have debated previously. Of course, the Government, and I personally, have every sympathy with shared owners who have been affected by building safety issues—such as Stephanie and James, to whom the noble Lord, Lord Young, gave testament—and who, through no fault of their own, are unable to sell their homes. We know that subletting their homes, whether it is accidental or not, is an important way in which shared owners can mitigate the effects of building safety issues.

To respond briefly to the point made by the noble Baroness, Lady Thornhill, my honourable friend Alex Norris is making good progress with the remediation action plan. Both he and the Deputy Prime Minister are determined that the targets set in that plan are achieved, and we are moving that forward. I can assure noble Lords that it is a top priority for the department.

The Government have made it clear that such shared owners should be able to charge up to full market rent when subletting their homes. The Homes England and Greater London Authority capital funding guides have been updated to make this explicit. I believe that the noble Lord, Lord Young, referred to that point. Adherence to this guidance is a condition of receiving grant funding through the affordable homes programme. Moreover, the Government have made clear their expectation that this guidance should apply to all shared owners, regardless of how their home has been delivered, and the department is working with the sector to ensure that this is implemented across the board. As the noble Lord requested, I am very happy to meet before Report to discuss this matter further.

It is therefore unnecessary to exempt these landlords from the important protections that Clauses 7 and 8 provide. These clauses will still allow these landlords to increase the rent in line with market rates, and their subtenants will be protected from egregious rent increases and enjoy the same protections as other assured tenants.

Amendment 143 would exempt landlords who are shared owners from new Sections 16E and 16F of the Housing Act 1988, as inserted by Clause 15. These sections will prevent landlords reletting or remarketing a property if they have used the selling or moving-in grounds for 12 months after the date the relevant notice was served. These sections also set out other prohibited landlord behaviours, such as trying to create fixed-term tenancies. Although we appreciate that landlords’ circumstances may change, new Sections 16E and 16F contain critical protections for tenants. The 12-month restriction will stop unscrupulous landlords using grounds 1 and 1A to evict a tenant with the intention of immediately reletting. It will be unprofitable to evict a tenant simply to increase the rent and it will stop landlords using these grounds as a backdoor Section 21.

We believe that all tenants must benefit from these protections. It would not be right or fair to compromise tenants’ security of tenure simply because of who their landlord is and the circumstances those landlords might find themselves in when selling a property. That said, I am happy to meet again with the noble Lord and anyone else who is interested in this topic before Report, but for now, I ask the noble Lord, Lord Young, to withdraw his amendment.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to all those who took part in the debate: the noble Lord, Lord Cromwell, the noble Baroness, Lady Thornhill, my noble friend Lord Jamieson, and, of course, the Minister, who gave the sympathetic reply that we would all expect.

As I understand it, periodic tenancies will continue to be allowed after the Bill because there is an exemption in another part of the Bill which enables these tenancies, which are not assured tenancies, to continue. Therefore, a shared owner who is subletting will continue to be able to let on fixed-term tenancies or tenancies subject to notice from the social landlord without granting a periodic tenancy.

Where I was disappointed by the Minister’s reply was on the issues I raised about the four-month notice and the 12-month ban on subsequent letting. It simply is not possible for a shared owner, who we have all agreed is somebody on a limited income, to give four months’ notice when an offer is accepted before contracts are exchanged because these sales are particularly vulnerable for all the reasons that I have explained. A shared owner who does not want to have additional financial liabilities would therefore give notice to a tenant only once contracts have been exchanged. Otherwise, they are even more at financial risk. As I understand it, the Minister is inflexible on the exemption I am seeking for the four months’ notice for shared owners.

Likewise, I think the Minister was also, at this stage, resistant to an exemption to the 12-month ban on subsequent letting. A shared owner whose sale falls through, through no fault of the shared owner, is banned—unless we get an amendment—from reletting that property for the next 12 months. How on earth are they going to survive? They have no income and they continue to have all the outgoings.

I am grateful for the Minister’s offer of a meeting, and those are two issues that I will certainly want to pursue. Even if we get all these amendments, shared owners will still be running at a loss, but the long-term solution is either for them to resell the property back to the social landlord, which would solve the problem, or to get ahead with remediation of all these blocks so they can sell these properties on the open market. The first is unlikely and the second will take time, so that brings me back to the point that, in the meantime, we really must take all the pressure off shared owners where we can. I have already indicated two issues on which I will wish to press the Government to think again at the meeting, which I readily accept. In the meantime, I beg leave to withdraw the amendment.

Amendment 19 withdrawn.