Renters’ Rights Bill

Lord Young of Cookham Excerpts

Tuesday 1st July 2025 Lords Chamber

[Baroness Eaton (Con)]

My Lords, I declare my interests as a vice-president of the Local Government Association and as the part-owner of a small number of rented properties in West Yorkshire.

I will speak in support of Amendments 29, 34, 35 and 36, which are in the names of the noble Baroness, Lady Wolf, and the noble Lord, Lord Carrington. Your Lordships may recall from my contribution at Second Reading that I am deeply concerned about the impact of this Bill on rented housing supply. I remain concerned about this issue. However, these amendments provide me with the reassurance that I know the rental market is also looking for. The amendments are technical, but sensible and clearly thought through.

If the Government are to get anywhere near reaching their ambitious 1.5 million new homes target, we need to support and give clarity to the responsible institutional build-to-rent landlord sector, which is building thousands of new, high-quality rented homes each year. I know that this part of the rental market supports the Government’s aim to raise standards across the private rented sector. However, with the uncertainty it faces around how much rent it may reasonably receive and how many rent increase challenges it may receive, I worry that its development pipelines will slow or, at worst, completely halt, while it assesses this new landscape where any renter can challenge any increase without any jeopardy.

Amendments 29, 34, 35 and 36 would allow for those providing new, net additional high-quality rental homes to the market to continue to do so without undue impact from Section 13 rent increase challenges. They would allow the institutional landlord sector to continue delivering the net additional rented homes we need without uncertainty. Crucially, the amendments would deter spurious rent increase challenges and allow vulnerable renters the access to justice that they rightly deserve.

I acknowledge the Government’s amendments on Section 13 notices, but they also leave me concerned that, in this place and indeed in the rental market, we and the sector are being asked to place a significant amount of faith in the Government, and the data they have but will not publish, on how many renters might challenge their rent increases. If a renter can save themselves months of rent increase for free and without any jeopardy, why would they not?

I am therefore strongly of the opinion that the amendments in names of the noble Baroness, Lady Wolf, and the noble Lord, Lord Carrington, provide the requisite amount of clarity to the sector, while ensuring renters’ rights are improved. I urge the Government to take them on board to give everyone clarity while improving renters’ rights and access to justice for vulnerable renters.

[Lord Young of Cookham (Con)]

My Lords, I will be very brief. I strongly support Amendment 29 so ably moved by the noble Baroness, Lady Wolf. I recall that, when we debated this in Committee, the noble Baroness got a favourable response from the Front Bench, and it may be that on this amendment the ice is beginning to melt.

I am also struck by the contrast between the certainty that we get with Amendment 36 from the noble Lord, Lord Carrington, and the absence of any clarity and certainty from government Amendments 37 onwards. As the noble Lord, Lord Carter, said, it is normal procedure in law if a rent increase is valid to backdate it from the date that it was due, so the Government are introducing a wholly new concept in law in their Amendment 67, which does not actually take the trick because, as I understand it, they are going to wait until the system is gummed up before they activate the process.

This is simply no way to govern. The Government ought to accept Amendment 36 with its clarity and certainty, rather than this doubtful procedure whereby there remains every incentive to appeal and only when the system becomes even more clogged will the Government intervene. That cannot be good government, and I urge the Minister to think again about Amendment 36 or the other amendment that achieves the same objective in the name of my noble friend Lord Howard of Rising. I just do not think that this takes the trick.

[Baroness Thornhill (LD)]

My Lords, I do not know which amendment to start with really, but I will start with the least contentious. We agree with Amendment 42 that a review is imperative and should definitely happen.

On Amendment 30 from the noble Baroness, Lady Jones, it seems absolutely right to us that, when the taxpayer funds lovely, significant improvements that will raise the value of the landlord’s asset, the tenant in the house should be protected from a rent rise at least during that tenancy. That seems only right and fair.

Amendment 29 from the noble Baroness, Lady Wolf, which I supported in Committee and co-signed, is a sensible amendment that several noble Lords have said they would support. I think she has explained it at length and with clarity, so I need say no more. But anything that acts as a triage system in this process should be looked at seriously.

On the controversial bits, the rent tribunal is clearly causing concern. I say to the Minister that I think there was an invitation in the last speech to look at this again—there will be Third Reading. It seems to me that a lot of work has gone into these amendments that would justify perhaps a little more time and effort than we have now. The Minister has a lot to justify in order to gain support from the House. We are minded to support the Government, but clearly we need answers on the very detailed and sensible proposals put forward today.

What worries us about Amendment 31 is that it risks allowing a tribunal to determine the level of rent increase, which could actually be unaffordable. The idea that a rent tribunal could decide that the rent should be such-and-such would fuel a market in which rents are rising exponentially, more than they have at any other time—the amendment would seem to fuel that further. We certainly do not agree with rent controls, but we believe that some brakes could be put on this; that would seem eminently sensible.

Perhaps I am looking at this through the wrong lens, but I would have thought that a tenant might expect an annual rent rise: “I am in my rented apartment and I am expecting the landlord to put up the rent in a year because I know what’s going on in the area, so I can kind of suss out how much it might be”. But, looking at it from the other way, if we assume all the things that noble Lords have said about everyone applying to the tribunal—Martin Lewis will be saying they should apply and the student unions will be on it—why would a landlord, knowing all that, impose a stupid rent rise if he knows that his tenant can then appeal against it? That should put an instinctive brake on unjustified, unrealistic rises. The system should work with those natural tensions.

We are not happy with it, but we have had conversations and thoughts about the proposal. We would ask the Government to look again at some of the detail. Perhaps with some assurances from the Dispatch Box, we could avoid a load of votes now and at Third Reading because I think that we would want the Minister to look in more detail than I personally, I admit, have done, if that is fair to say.

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[Lord Best (CB)]

My Lords, in moving Amendment 25 in my name and those of the noble Lord, Lord Young of Cookham, and the noble Baroness, Lady Grender, I will also speak to my related Amendments 26 to 28. I declare my interests as a vice-president of the Local Government Association, the Chartered Trading Standards Institute and the Town and Country Planning Association, and a past chair of the Affordable Housing Commission. My wife owns rented property in Dorset.

I fear the Bill still contains a fundamental flaw in its provisions for rent increases. Quite properly, the Bill seeks to ensure that tenants are not subject to huge rent rises, which can have the effect, as the Renters’ Reform Coalition and Shelter have made so clear, of evicting them from the property. But the Bill’s way of solving this problem creates considerable hazards for tenants and landlords alike.

To prevent exorbitant rent increases, the Bill relies on the renter taking their case to the First-tier Tribunal, which will determine a market rent that cannot be exceeded. That arrangement is fraught with difficulty. The first problem with a system dependent on a tribunal’s judgment is that deciding on a market rent is not a science. The outcome of tribunal hearings can be unpredictable and sometimes appear arbitrary. The second drawback is that renters must take on a daunting task. They are likely to fall out with their landlord, on whom they depend for continuing service, and to appear in person they may need to give up a day’s work, incur travel expenses and experience a troublesome and intimidating process. Thirdly, the tribunal’s decision on what is the market rent may still involve a big rent hike, well ahead of rises in incomes, and can thereby present an impossible affordability obstacle for the tenant, which is the very problem the process was intended to avoid.

From the perspective of the landlord, many of your Lordships have been concerned that the tribunal will get clogged up with thousands of time-consuming appeals. I was pleased to hear that the Minister is looking at an amendment to make use of the Valuation Office Agency to weed out appeals that are likely to fail. She is also introducing an amendment that reduces incentives for renters to appeal by enabling the Secretary of State to allow at a later date a backdating of the rent increase that is determined by the tribunal. By making the appeal process more risky, this new measure could deter renters who have a good case for pursuing an appeal. In any case, it is a fallback, a long-stop that might not be introduced for some time, if at all.

More helpfully, Amendments 25 to 27 would provide clarity and security for the renter and the landlord and give confidence to responsible investors. The amendments would mean rent increases being capped on an indexed basis using either CPI or the rise in earnings averaged over the previous three years. The indexation would be limited to three annual increases, after which the landlord could charge a market rent, if necessary determined by using the process of appeal to the First-tier Tribunal. This model surely represents a fair solution to the need for moderation of rent increases without reliance on appeals to the FTT and all the problems that brings.

In returning to this matter on Report, I have added the new Amendment 28, which addresses a criticism of the indexation approach. This amendment tackles the valid objection that there may be exceptional circumstances in which an indexed increase would not be fair to the landlord; for example, the landlord may have spent substantial funds to improve the property which could justify a rent increase that contributes towards the cost. The new amendment enables the landlord—not the tenant—to ask the tribunal to approve the setting of a rent in excess of the otherwise automatic indexation.

The amendments cut out the need for renters to take matters to the tribunal and therefore to enter into a battle with their landlord. Most tenancies do not last more than four years, so for most tenants, the arrangement would mean the certainty of indexation of rent increases, whereas the fickle market might have meant much greater rent increases. I believe this is a far better way of limiting increases than currently in the Bill. It cannot be described as rent control. It is time limited—and not comparable with failed rent control measures in other countries. It is fair to landlords and entirely preferable to the hassle and uncertainties of them being taken to the tribunal. It avoids the clogging-up problem that may mean that the tribunal system is going to be overwhelmed. Here is a package that has real benefit for landlord and tenant alike. With thanks to my co-sponsors, I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I have added my name to the amendment of the noble Lord, Lord Best. I will add a brief footnote to what he has just said. As we heard in the last debate, there has been considerable concern about the capacity of the courts to handle the volume of appeals that will go to the tribunals when the Bill becomes an Act. The backlog has been going up: in the first quarter of 2025, the average time between a landlord submitting a claim and getting possession was over seven months—32.5 weeks, up from 29.8 weeks a year ago.

The Minister uses a different figure—eight weeks—but that covers only getting a possession order, not actually getting the property back. In an earlier debate, the Minister implied that it was actually quite difficult for a tenant to challenge an increase in rent. I respectfully disagree with that. There is a whole range of organisations that will give tenants advice on how to challenge an increase from the landlord.

This Government have made it clear that, unlike the previous Administration, they are not prepared to wait until the necessary reforms to the court processes are in place before they activate the Bill. That is a decision they are perfectly entitled to take, and it will be welcomed by tenants. However, a necessary corollary of that decision should be a process to minimise the chance of the courts being overwhelmed, which would be in the interest of neither tenant nor landlord. That is what Amendment 25 does.

The likelihood of the rent—a market rent when it was fixed—diverging significantly from CPI or RPI over four years is quite small. The certainty that goes with that guarantee will be welcomed, I think, by both tenant and landlord. If, after four years, there is a divergence, as the noble Lord, Lord Best, has explained, the rent can then catch up. As someone who voted for the Housing Act 1988, which abolished rent control, I see no problem with this measure to simply smooth increases over a four-year period. Again, speaking personally, if at the end of the four or five years the courts have shown themselves to be up to speed, with no backlog, I would be happy to see this provision lapse, but in the meantime, I hope the Government will smile on it.

[Lord Cromwell (CB)]

If I may add one note to what the noble Lord has just said, it is very common in commercial contracts to have CPI over a series of periods followed by a reset to market level, in part because CPI may take it up too high and it comes back down to market level. I think that needs to be part of this amendment.

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[Lord Cromwell (CB)]

My Lords, Amendment 58 is in my name. I express my gratitude to the noble Lord, Lord Pannick, who apologises that he is unable to be with us today but who has added his name to the amendment, and of course to the noble Lord, Lord Hacking —and indeed to the Minister and her officials for the time they have taken to discuss the background to this with me.

This amendment is at heart a simple and technical one. The Bill says that if you ask a tenant to leave on the grounds that you are selling the property but then the property fails to sell, as happens in about a third of cases, you are not allowed to rent the property out for a period of 12 months. It simply has to stand empty and impossible to rent out for a year. That means that numerous properties would, for the crime of not selling, be punished by standing empty and unrentable. My amendment does not seek to change the principle or any other element or clause of the Bill. It simply introduces a rational and balanced obligation to stand empty in this way for six months rather than 12. That is all that it does. I will now set out the reasons why.

On financial logic, when I and others suggested that 12 months was too long, the answer given was that 12 months’ lost rent would prevent evil landlords from claiming they were selling simply as a means to eject a tenant and then re-letting the property at a higher rent. The theory was that after the tenant had left, the landlord would jack up the rent to a high level, both to recoup their interim losses and make profits. Let us look at that proposition rationally.

First, if the landlord has a valid claim to increase the rent, the Bill already provides for that. A landlord would simply seek a normal rent increase rather than going to the dramatic and expensive process and risk of requiring a tenant to leave and then hoping to re-let at a much higher rent.

Secondly, in Committee I set out the mathematical calculation behind a six-month void period; noble Lords will be relieved to know that I do not propose to repeat the numerical details here tonight, or those that I provided subsequently in a meeting with the Minister and her officials. However, the numbers demonstrated clearly that the supposedly avaricious landlord, even if having the property empty for only six months, as I propose, rather than 12, would have to put the rent up by a very substantial amount—in excess of 200% or even 300%—to recoup their rental losses. I say nothing of the other costs, including the council tax surcharge bills and the risks of leaving a building empty. Such a huge rent hike would be impossible. The rent asked would be completely uncompetitive against other properties not carrying such an inflated rent level. In short, being obliged to leave a property empty for six months is more than enough of a financial burden and barrier so as to make the strategy so feared by the Minister simply untenable.

Thirdly, it was suggested that those nasty landlords might lie about selling a property or put it on the market at an absurdly high price, presumably in collusion with a disreputable estate agent—there are some, I believe. I therefore draw noble Lords’ attention to the second part of the amendment. This requires the landlord to provide, if necessary, to the local authority or the court hard evidence of marketing, pricing and offers, et cetera. A landlord flouting these requirements would be breaking the law and punishable accordingly. I understand that an agent colluding with them would also be acting contrary to the law. I remind noble Lords that any landlord taking this approach would face not only the legal risk of a false sales process but ending up with the property back on the rental market at an absurd and uncompetitive level of rent and, on top of that, losing six months’ rent.

Turning to other reasons, having made the argument on the rental conspiracy theory advanced in defence of the 12 months of standing empty, I heard that the landlord might have “other reasons” for wanting to get rid of the tenant, such as those that the noble Lord, Lord Hacking, touched upon. Let us examine this argument. Whatever these other reasons might be, the Minister has confirmed that the Bill makes it perfectly clear that the landlord has only four grounds for requiring a tenant to leave: sale, anti-social behaviour, moving in a relative or persistent failure to pay rent. If the landlord cannot demonstrate that one or more of these cases applies—for example, through not providing conclusive evidence of a genuine sales process—that landlord will be in breach of the law as well as having the financial penalty of the months of lost rent. It is a fundamental of the Bill to block any attempts to get around Section 21 by other means. I entirely agree with that. However, as I hope that I have demonstrated, this amendment is no such thing. The “no renting out” mechanism to prevent abuse remains, but the amendment makes it proportionate rather than excessive and heavy-handed.

Standing back from the detail, we are frequently assured that most landlords are good landlords. Perhaps some in this House have friends who are landlords. Perhaps some Members of this House let out property. This provision to leave a property unlet will not apply just to a subset of bad landlords. It will apply to anyone who rents out a property and genuinely wants or needs to sell their property but does not manage to do so. It also, for the same 12 months, deprives the market of rental properties—a market already bedevilled by a lack of available property to rent. That does not help tenants. This is not only unnecessary but manifestly unfair and will actively harm the supply of rental property. The Minister has accepted in a letter to the noble Lord, Lord Hacking, that landlords will lose out, but says that it will be in a small number of circumstances. Where is the evidence for that—or that the six-month penalty is not enough?

I underline that I am no lobbyist for landlords. I have spoken repeatedly in this House about the need to protect the poorest and the most vulnerable tenants who are abused and evicted by genuinely unscrupulous landlords. I have a later amendment seeking to prevent illegal evictions which is specifically on that theme. However, as the Minister has stressed, a successful rental sector is about a balance of rights. The amendment that I am speaking to does not do away with the relevant part of the Bill. It simply reduces the punishment —and it is a punishment—for not managing to sell a property from 12 months to six months. Those six months of costs and no income are, as I have demonstrated previously, more than sufficient punishment to make unworkable the avoidance strategies that so vexed the Minister and to meet the objectives of the Bill.

To be frank, a prohibition on renting out for 12 months is an impractical and disproportionate sledgehammer level of overkill that does not belong in a Bill that creates a set of checks and balances to produce a new, fairer environment for property rental. It also works against its own objective by artificially restricting the availability of property that is available to rent. That is why I feel strongly that this amendment is proportionate and needed. I will listen carefully to what any others and the Minister have to say, but I may need to test the opinion of the House in due course.

[Lord Young of Cookham (Con)]

My Lords, I speak to my Amendment 59. I am grateful to the Minister for the time that she spent with me and a representative of the Shared Owners’ Network after Committee, when we discussed in further detail the problems facing shared ownership leaseholders in blocks that have been blighted by the cladding disaster. This amendment is needed to protect shared owners, who are accidental landlords, from the financial problems that they will face if they are unable to finalise a sale after issuing a ground 1A notice.

Many shared owners, of course, continue to live in the property which they half-bought from the registered social landlord. Many shared owners have simply had to move to get on with their life; they have been unable to sell the property in the meantime, so they have sublet. Shared owners are allowed to sublet—they have to get permission from their RSL to do this—but the rent that they receive from the subletting may not actually be enough to cover their costs, with the mortgage, the rent, the service charge and the insurance charges on a block affected by the cladding disaster. Those costs may well exceed the local market rent.

Many shared owners who have been subletting for a number of years have seen their financial situation considerably weakened, with many effectively losing hundreds of pounds every month as a result of subletting. These are people who employed all the professional people that they should have employed when they bought the property owned by a registered social landlord. They took every precaution available to them and bear no responsibility at all for the problem that has engulfed them.

When we met, although she expressed sympathy for this group, the Minister could not offer any mitigation for the unsustainable costs which a 12-month ban on re-letting would create for these shared owners. This is not a satisfactory outcome for a cohort who qualified for an affordable home because their income was not high enough to buy on the open market; this was their first step on the ladder. The Minister argued that the proposed ban protects tenants, but it fails to protect shared owners who are actually also tenants.

Shared owners face a much riskier sales process with the Bill. They have to give four months’ notice to their tenants, and that means they have no certainty at all that the offer to buy the flat will actually result in an exchange, or indeed a completion. Shared owners have to give the first option to buy their flat back to the registered social landlord so they can find another shared ownership owner, and there are strict qualifications, so they are fishing in a relatively small pool. Prospective buyers need to meet the criteria for shared ownership, and that means that the risk of a failed sale, even at a late stage, is actually much higher for a shared owner, and particularly high if you are selling a flat in a block with unsafe cladding.

Should a sale fall through, as is frequent, particularly for these types of properties, shared owners, like other landlords under the Bill, face the prospect of a 12-month void when they will be banned from re-letting their empty property and forced to cover its costs without any rental income.

These people never planned to become landlords. It was not part of their vision at all. They will have had no ability to plan for this outcome or make provision for extended void periods. This will become completely unaffordable for the vast majority of shared owners who, as I have said, are not as financially resilient as other leaseholders, otherwise they would have bought a property on the open market. They will have to pay for the property they now live in, as well as the property they have been unable to sell.

Of course, they will continue to market their property for sale after the first sale has fallen through, but facing the mounting unmet costs of an empty property will actually put their homes at risk of repossession if they fall into arrears, as is very likely. Also—and this is worse—it puts incredible pressure on them to accept any offer from a buyer as soon as possible, even if the offer is below the RICS pre-sale valuation. If they do that, due to the rules of the scheme, they will have to compensate the registered social landlord for the loss of value on their share, as well as losing out on their own share. So, the unintended consequence of the 12-month ban on re-letting is that it puts shared owners selling a property on the back foot, unable to wait for a suitable offer at a fair market value.

It is just not acceptable to punish shared owners who have had to become accidental landlords, including as a result of the building safety crisis, and have already suffered considerable financial harm. In her correspondence, the Minister explained that shared owners would have the option to ask their provider whether a buyback would be possible rather than leaving the property empty.

This could provide a solution, but it will need the Minister to make some changes, As the Minister knows, buybacks are currently very much at the discretion of the registered provider. At the moment they have only limited access to funding to do this, using either their own funds or recycled capital grant funding.

If the Minister is unable to accept my amendment, will the Government ring-fence some of the dedicated funding to registered providers in its affordable homes programme so that they can swiftly buy back properties from those shared owners who fail to sell after issuing a ground 1A notice? This would enable housing associations to add to the stock of affordable property to rent at well below the cost of a new build and avoid leaving a property empty. If the Minister can neither accept the amendment nor give that guarantee, I am minded to test the opinion of the House at the appropriate time—probably next Monday.