Leasehold and Freehold Reform Bill (Third sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 18th January 2024 Public Bill Committees

[The Chair]

Before we start hearing from the witnesses, do any Members wish to make declarations of interest in connection with this Bill?

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

My wife is the joint chief executive of the Law Commission, whose work on leasehold reform we have regularly touched upon.

[Mike Amesbury (Weaver Vale) (Lab)]

I am a member of the all-party parliamentary group on leasehold and commonhold reform.

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[The Chair]

Thank you for coming here and helping us with our deliberations.

[Matthew Pennycook]

Q Thank you all for coming in this morning to give evidence. I will perhaps return to Ms Higgins and Mr Smytherman if we have time in the session, but could I start with two questions to you, Ms Phillips, on shared ownership?

First, the Bill makes provision for the treatment of intermediate leases in a number of areas, but it does not contain, as far as I can read, any measures to directly resolve many of the challenges that shared owners face. Could you give us your general views on the Bill from a shared-ownership perspective? What is missing? What might we look to include if we could?

Secondly, the Government tabled more than 80 pages of complex amendments to their own Bill yesterday. Among those were amendments that would exclude certain shared-ownership leases from enfranchisement and make the new valuation method for calculating the premium payable for shared owners non-mandatory. If you have had a chance to look at those—you may not have—could you give us your views on those specific amendments? We know that enfranchisement for shared owners is expensive—it is challenging—but, none the less, is it a regret, from your point of view, that these amendments have been tabled?

Sue Phillips: I will start with yesterday’s amendments. I have had a look at them and I have called around legal experts, and, of course, it is far too short notice for a legal expert to comment, let alone a lay person like me. Therefore, I will concentrate in my evidence on what I would like to see in the Bill; I cannot comment on the degree to which those amendments will achieve those things, so I just want to make it clear that I cannot comment specifically on the amendments.

In terms of the Bill generally, obviously it is aimed at leaseholders. Shared owners are a very specific subset of leaseholders. They generally face additional problems over and above the problems faced by leaseholders. They have fewer rights and protections under law. They face additional burdens. They also have fewer protections under consumer protection, including new build codes. Therefore, they are generally disadvantaged. As it stands, the Bill does not represent a better deal for shared owners. That is partly because of the issue you referenced. Shared owners are sometimes, not always, in very complex ownership arrangements. There are problems for leaseholders generally, but there you have the additional party of a housing association in the mix. I could talk for half an hour on this; I will try to be very concise.

I will just pick out one example, which relates to the fact that shared owners do not have a statutory right to lease extension. If they did, they would have a right to a 90-year extension. In the absence of that right, some shared owners are in complex arrangements where their landlord is a sub-lessee with only a short interest in the lease themselves, so is actually incapable of offering the equivalent to the benefit that a leaseholder would get under the statutory route. That is unless you go through a process of extending all the leases, and all those costs are passed on to the shared owner. There is a real problem there that is not addressed in the Bill as it stands, in my understanding.

[Matthew Pennycook]

Q Have you explored any quick fixes for what we might look to persuade the Government to incorporate?

Sue Phillips: The problem with looking for quick fixes is that shared ownership is so complex, you run a risk of creating unanticipated consequences. Those particular questions are better directed at a lawyer or a legal expert, which I hope you will do this afternoon, when you have legal experts presenting their views on this Bill.

[The Chair]

Does anyone have anything to add? Do not feel that you have to; I am not putting you on the spot.

Ms Paula Higgins: There is one thing I would add. I am so pleased that Sue is here; she has done amazing work on shared ownership. I am not a legal expert, but I wonder whether you will be hearing from people from the retirement housing sector as well. That is a very complicated form of tenure, with exit fees and whatnot. Can they actually have the same rights to challenge fees and things like that? I am not sure if that is covered in some of your evidence sessions, but retirement housing is notoriously known for quite scandalous fees and charges.

Bob Smytherman: Certainly, we have seen a massive increase in shared ownership memberships coming to us for membership of residents’ associations. Obviously, we are helping them through that. In terms of quick wins, I really hope the Government will finally implement an independent statutory regulator for property managers. That would be a really quick win to help leaseholders. It is very disappointing that we have not got there yet, so I really hope there will be an independent regulator for these management companies that hold large amounts of leaseholders’ money.

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[The Chair]

If anyone has not asked a question and wants to come in, please just indicate. Matt, Barry and Andy want to come back, so I come to you, Matt.

[Matthew Pennycook]

Q Two quick questions while I have got you here—on slightly different subjects. The first relates to the purchasing of a lease initially. In its 2018 consultation on implementing reforms to the leasehold system, the Government committed to requiring freeholders and managing agents to provide leasehold information at the point of sale within a defined time limit and a maximum cost. That is not in the Bill; would you welcome that being incorporated?

My second question is on the service charge provisions—clauses 26 to 30. In principle they might work very well; there is lots of detail to come through regulations. However, are there any specific ways in which you would like to see those service charge clauses tightened?

Ms Paula Higgins: We really welcome standardisation and having standard forms. That is what we, as the HomeOwners Alliance, when we get more than 4 million people coming to our website, can present and say, “These are the questions you can ask.” I really welcome that and having everything aligned so that it is similar. I am sure that we will go on to estate charges and people on freehold estates. Sorry—what was the first question?

[Matthew Pennycook]

Q Just on whether we should require freeholders to have standardised information at the point of purchase.

Ms Paula Higgins: Even though estate agents are supposed to provide basic up-front information, when we did our report on leasehold, half of the estate agents on things we were looking at were not even providing the information that the property was leasehold or freehold. We know that work is going on, and that estate agents are supposed to provide up-front information—we understand that there is the BASPI form—but the reality is that it is not happening. They are not regulated; they don’t know what their obligations are.

This is the other piece, particularly with managing agents, as you mentioned before. We need to have better regulation of managing agents, developers, and of housing associations that are promoting shared ownership, to ensure that they are giving the right up-front information and to ensure that in blocks—as you said you did, Bob—you do the LP form right away. We know that there is lots of delay there. That is one of the reasons why buying and selling leasehold properties takes so much longer. So we really welcomed having that up-front information. That is through the BASPI form, and it is probably through the regulation and management—having regulation of estate agents and managing agents, which is another piece of the pie that I think would be really welcomed in the Bill. I would welcome it if it were put in the Bill.

[Matthew Pennycook]

Q Do you want to say anything on service charges?

Ms Paula Higgins: On service charges, I think it is about being transparent. Some of the provisions in the Bill are about having proper annual accounts, so a lot of it is about trying to get that information. I have not looked at the detail of all the clauses there, but it is about people being able to get that information. That is why you need to have regulation of managing agents—to be able to provide that information properly.

[The Chair]

Q Sue Phillips, I think you wanted to say something.

Sue Phillips: Yes, on information at the point of sale. That is a little bit more complicated for shared owners. They are often directed towards the lease, but the lease is of course silent on the issue of 100% liability for service charges, so there is an issue there. They are often directed towards the key information document. I welcome the changes to the key information document in recent times, but I think they really do not go far enough. I would direct you to a report that I wrote last year about the 2016 to 2021 key information document, which goes into detail on improvements that I think should be made.

It is important to flag up that we need to look at not just content, but understandability in format. I have previously suggested that I think it would be useful to benchmark with other sectors, such as the pensions sector, on the understandability of issues relating to risk as well as benefit, and how to ensure that that content is communicated in a way that people do actually understand.

I will make a final point: a lot of shared ownership marketing presents itself as education about the model, which I think can be problematic, particularly because housing associations and their marketing teams are very up front about the idea that their marketing promotes the benefits. But it is important that people understand the risks and hazards as well as the benefits. So we need to look very closely at exactly where shared owners get their information at the point of sale, and where improvements could be made across all those areas.

Bob Smytherman: I think we would certainly welcome improvements in the conveyancing process. One of the things that our members certainly see is that they can get the information from a very specialist leasehold lawyer, which is obviously really helpful, but as in all sectors there are conveyancers out there where people google “conveyance” and think, “Oh, that is just a standard lease.” Of course, we all know that there is no such thing as a standard lease—their contracts are all very different. I know that about four or five years ago the Leasehold Advisory Service did some work around standardisation of information, so anything that we can do to prescribe that would be really helpful.

On the issue of service charges, there is absolutely one word, isn’t there—“transparency”? All the disputes that we see around service charges are where managing agents hide things because there is no statutory regulator, or where landlords kick accounts into the long grass because they don’t have to produce them. Having a prescribed way to be completely transparent about service charges is really important.

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[The Chair]

We can see you, so if you want to come in on any question, gesticulate and you will hopefully catch my eye. That goes for both of you.

[Matthew Pennycook]

Q Thank you for your time, gentlemen. We have half an hour, but I would love to get in three specific questions, so I encourage you to be as brief as you can while answering.

The first question is on commonhold. Professor Steven, you have published extensively on the Scottish experience of commonhold legislation; Professor Hodges, I believe that you are a member of the Commonhold Council. On Tuesday, we heard from Professor Hopkins of the Law Commission that there are risks associated with a partial implementation of the Law Commission’s recommendations on commonhold. Do you agree with that, and if you do, are there any sensible steps we might take via amendments to the Bill to pave the way for commonhold in the future—for example, share of freehold in flats?

Professor Hodges: I think that was for Professor Steven.

Professor Steven: I am reluctant to answer that in any detail, because I am really not an expert on English land law. May I say something briefly about the Scottish perspective? The difference goes all the way back to 1290, when Edward I, in England, said, “You cannot have feudal grants of property.” Leasehold therefore had to be used, particularly for flats, because of the desire to impose obligations in relation to maintenance and contributions to maintenance. In Scotland, feudal grants were not banned until 2004, which means that flats and other properties were sold that way. We do not have leasehold in the way that you do. Existing feudal holdings were converted into outright ownership in 2004. We also had legislation on long leases that took effect in 2015, which also converted into ownership. The context is quite different.

[Matthew Pennycook]

Q In that case, I will move over to Professor Hodges, in the interests of time, if that is okay.

Professor Steven: Absolutely, and I can see you now.

Professor Hodges: I am very supportive of all the work that the Law Commission has done on commonhold, and we discussed it two or three years ago. I would do it, and this is part of a wider discussion that I expect we will get on to shortly. It is about change management. At the moment, it is rather like the point mentioned by the three previous witnesses. Property law moves terribly slowly—for heaven’s sake, just get on with it. We have the agents, the tenants and the landlords. What we are doing is saying, “Well, do this. Then do that. Then do that. Then do that.” We know where we need to get to, and that would be a very good system if we can get there. They need to train and do all sorts of things. You want to take out repetition or unnecessary cost in doing several things at once. It really is a change management point. We know where we want to get to—just do it basically.

[Matthew Pennycook]

Q Unless they confound us, the Government have been very clear that they are not going to do a commonhold package. Would share of freehold be a good interim step?

Professor Hodges: It is the obvious thing to do, isn’t it? But I would go further.

[Matthew Pennycook]

Q That is all I was looking for. My second question relates to non-litigation costs. The Government, when they published the Bill, claimed that it protected all leaseholders from non-litigation costs. However, clause 12 allows those costs to be passed on, either as they are or at a prescribed rate, in cases of low-value claims. That was because the Law Commission said that the shorter the expired term, the greater the risk for leaseholders in not extending but buying out their lease. This is a point about litigation in some senses, but do you think that, because of the difficulties of challenging a claim to that prescribed sum, leaseholders will be deterred from initiating the process of extending their lease or acquiring their freehold, if they still face, even at a prescribed rate, essentially non-litigation costs as part of claims?

Professor Hodges: Quite possibly, and this is a generic point about access to justice and simplifying dispute resolution. I think the answer to that is to move towards an integrated system, which actually the tribunal and several of the ombudsmen have been working on in the past year in relation to service charges. There are too many places where disputes can go. If we simplify that to an integrated system that supports decision making—part of the answer is clarity and transparency in regulation—but if you support that, things move much more quickly. It has always been the case that, for example, courts are slow. They are a very careful process and therefore you need experts and lawyers, and it takes money—it costs. Whereas, with tribunals and improvement, ombudsmen are free and they move quickly. Getting a modernisation of that system is the answer to this basically. That is not there yet, but it is absolutely within sight and achievable.

[Matthew Pennycook]

If you do not have anything to add Professor Stephen, I will move on to my third question.

Professor Steven: Please move on.

[Matthew Pennycook]

Q My last question relates to ground rents. Clause 21 gives effect to schedule 7, which provides leaseholders with a right to permanently replace their ground rent with a peppercorn, without extending their lease. However, the Government are proposing to apply it only to those with very long leases, so 150 years left or more. The rationale is, as per the Law Commission, that the shorter the unexpired term, the greater the likelihood of disadvantage. Do you have any thoughts on why the Government have chosen that 150-year limit? The Law Commission said 250 years. Do you think it is right, in principle, that someone with a 120-year lease, who may wish to extinguish their ground rent but not extend, is prohibited from doing so on the basis of the Bill, as it stands?

Professor Hodges: I think that it is outside my competence to know the background. My answer would be: just move to commonhold.

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[The Chair]

Professor Steven, do you have anything to add to that?

Professor Steven: I do not.

[Matthew Pennycook]

Q I am trying to adjust my questions to your areas of expertise, but I am trying to focus on the Bill rather than abstract discussions about regulatory systems and what we might want. I have a specific question that follows on from Mr Amesbury’s question. Part 4 of the Bill provides for a new regulatory regime for private and mixed-use estates. Do you think that that is a good idea in principle? We in the House—particularly Mr Fuller and a specific set of Members in whose constituencies this is a very real issue—have been talking for years about a separate management regime. Do you think it is a good idea in principle to establish a completely separate stand-alone regulatory regime for estate management, or should we look instead to incorporate it in the existing system? Essentially, these people are all paying into the same pot, so should they not be covered by the same regulatory system?

Professor Hodges: I think there is an enormous missed opportunity for simplifying across social housing, private and so on. In particular, I would introduce the regulation of property agents working group reforms immediately. Almost everyone wants them, as far as I can see, and it would be easy to do, because you would just cut and paste the relevant regulatory bits from the recently enacted Building Safety Act 2022 and put them in for private managing agents.

As I said in the paper that I sent to you—I gather that Andrew Bulmer was talking about this two days ago here—there are three very good reasons why you need the regulation of property agents, each of which stands up on its own. There are obvious risks if you do not put that building block in place, because things are going to go wrong and there will be detriment to tenants and landlords.

[Matthew Pennycook]

Q To be clear, I agree with you on managing agents; I am talking about the regulation of private estates. The Bill provides for a new regulatory regime for private estates, which are not currently regulated. It is separate from the service charge regime. I am just wondering whether your simplification point works in this case too.

Professor Hodges: Everyone should be in and under the same regime—absolutely everyone in the system.

Professor Steven: I do not have a strong view on this.

[Barry Gardiner]

Q Professor Hodges, my colleague Richard Fuller sought to make a point about caveat emptor to you. Is it your experience that the inequity of power and information between developers or freeholders and the potential purchaser—the leaseholder—is so great that caveat emptor is inappropriate and that you need the power of regulation to sort out that inequity? I think it was the Law Commission that concluded that

“any financial gain for the landlord”—

or freeholder—

“will be at the expense of the leaseholder…Their interests are diametrically opposed, and consensus will be impossible to achieve.”

Professor Hodges: In any consumer or property—certainly social housing—dispute system, there is an obvious imbalance of power. People do not have the money to do things. I have chaired the Post Office Horizon compensation board advising Ministers in the past few weeks. The whole reason why Parliament needs to step in is to correct a massive imbalance of power. Private litigation did not work, or it only half worked. There have been many stories about people being traumatised, and not just unable to enforce their rights. That is why we have invented things like legal aid, Citizens Advice and an ombudsman, and we are still moving—we are still improving that one—because of the ongoing imbalance of power between the little people and larger organisations.

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[The Chair]

Q We will now hear oral evidence from Paul Broadhead, the head of mortgage policy at the Building Societies Association. We have until 1 pm for this session. Could the witness introduce himself for the record, please?

Paul Broadhead: Good afternoon. I am Paul Broadhead, the head of mortgages and housing at the Building Societies Association, which represents all UK building societies and seven of the larger credit unions.

[Matthew Pennycook]

Q Thank you, Mr Broadhead, for coming to give us evidence. I have a very specific question about something that was briefly raised on Tuesday but that has not been explored in real depth. I have seen, as other Members may have, a noticeable rise in RPI-linked ground rent provisions in the wake of the implementation of the Leasehold Reform (Ground Rent) Act 2022—although they may not be connected. You will be aware that such terms could be considered onerous in certain circumstances. They would appear to be the result of specific mortgage lender policies, and somewhat at odds with the UK Finance position. What is your view on that trend and its causes and consequences? Specifically, how will the ground rent provisions in the Bill, namely the peppercorn 990-year lease extensions under clauses 7 and 8, the peppercorn variation under clause 21 and, potentially, complete abolition of ground rents on existing leases, impact on that trend? Will they mean that RPI-linked ground rent provisions are a thing of the past if this Bill is implemented?

Paul Broadhead: Yes, on the RPI, we have seen an increasing trend. I think that started when mortgage lenders changed their policies in terms of the escalating of ground rents—the doubling every five, 10 or 20 years, or whatever it might be. Mortgage lenders have started looking much more closely at the trends in ground rents to make sure that you can predict the affordability and fairness of those rents. You are absolutely right: the RPI change has followed on from many mortgage lenders moving to prevent the doubling of ground rents. We need to make sure we keep an eye on that and to make sure that they are fair and just.

[Matthew Pennycook]

They can be far more punitive.

Paul Broadhead: They can be, absolutely, with where RPI is. It is really difficult to predict. Some ground rents can grow very rapidly, which puts people in financial difficulty. From the lenders’ perspective, when underwriting a mortgage, they need to consider whether the mortgage is affordable on the face of it not only today, but in the future, and to take account of any foreseeable increases in expenditure. That is one of the areas they will take into account.

In terms of the peppercorn ground rent, yes, I do believe that that will resolve this going forward. The important thing to consider is that there is still a separate consultation, which just closed yesterday, on capping ground rent for existing leaseholders. It is really important that that is brought forward to prevent this two-tier system from developing.

[Barry Gardiner]

Q Mr Broadhead, I do not know how long you have been working in your present capacity, but I suspect it is since 1984. In 1984, your organisation’s report “Leaseholds—Time for a change?” said that the “leasehold system is incompatible with home ownership” and that an Englishman’s leasehold home “is his landlord’s castle”. I thought that was a very elegant way of expressing what many of us think. Is that still your organisation’s view?

Paul Broadhead: You are absolutely right. We have been advocating for the reform of leasehold since 1984. As you kindly point out, it was not me that made that comment at the time.

Leasehold and Freehold Reform Bill (Fourth sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 18th January 2024 Public Bill Committees

[The Chair]

Thank you.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Q281 Chair, may I just declare, for reasons of completeness, that my wife is the joint chief executive of the Law Commission, whose work we continue to cite on a regular basis?

Gentlemen, thank you for coming in to give evidence to us. I have two questions. First, in the 2020 update report on leasehold housing that the CMA published, you recommended reforms to

“the system of redress for leaseholders, to make it simpler and less costly for them to contest permission fees and service charges they think are unreasonable or excessive”.

What are your views on whether you think the Bill achieves that? If not, what needs to be incorporated to ensure that it does?

My second question is on the recommendations you also made on measures to address the assured tenancy trap, whereby leaseholders who pay ground rents in excess of £1,000 in London and £250 across the rest of the country

“risk having their home repossessed for non-payment”.

Again, does the Bill address that? If not, how specifically should we seek to improve it in that respect?

Simon Jones: I will deal with the second one first. Yes, we think that the proposals in the Bill at the moment will make a big difference. We thought that there were a number of ways to go about helping people: you could have created a duration threshold for leases, as in the current proposal—that works. You could have raised the threshold for rent. That, too, would work, although we would have been less in favour of it, because over time it would be less effective. Or you could have completely removed the provisions from the Housing Act. The approach that the Department has taken seems sensible.

[Matthew Pennycook]

Q Is that both recommendations, or just the second?

Simon Jones: That is on the second point. There are a number of ways to do it, but the problem was that there was no minimum length of lease that was not subject to the assured tenancy provisions. That just looked like an oversight, frankly, but that is going to be fixed. That seems like a positive step forward to us.

On redress, the problem that everybody told us about is that you can give leaseholders all the rights that you can, but that does not really help them if they cannot exercise them quickly, cheaply and efficiently. One of the problems—as you know, a big complaint people had—was that leases often had provisions that enabled landlords to recover the costs of litigation from the tenant, regardless of whether the landlord won or lost. That was a big problem, but that has been fixed.

[Matthew Pennycook]

Q May I press you on that? I asked a different witness about that this morning. The Government are saying that with low-value claims, the cost can be passed on, but that leaseholders would have to pay either that or a prescribed sum. I wondered, because we are talking about redress, given the challenges of going to the tribunal, will those leaseholders just end up paying the minimum prescribed amount for enfranchisement?

Simon Jones: I think that the proposal in the Bill is a positive change, but is it really all the change that could be made? This is quite difficult. The tribunal system exists to help leaseholders, but it is still complicated and expensive, and it is not local. Many of the disputes that we have are about costs.

For example, let us say you are a tenant and you have a service charge, but you think it is expensive. You will incur time and expense in trying to challenge it. What you want is probably something that is local, where the panel understands the costs in that area—for painting a stairwell or changing lights, that kind of thing. What we had in mind when we wrote the report was perhaps finding a way to use more local courts to provide more summary-type justice for people, through people who probably know more about what it costs in the local area to do something.

The other problem for consumers is that they do not understand what evidence is required to bring a challenge. I think that came through quite strongly for us. You cannot fix that with legislation, but it is another important point to bear in mind when thinking about how to help consumers help themselves.

[Matthew Pennycook]

Q Is it fair to say that with this legislation, we should look, where possible, to remove instances of where a leaseholder has to go to tribunal at all? In other words, if we said, “No leaseholder should be liable for a non-litigation cost in any circumstances”, on that particular point none of them would have to go to tribunal. Should we look to reduce the scope for tribunal use generally?

Simon Jones: If the purpose of all this is that the incentive for managing agents or landlords—whoever is responsible—is not to overcharge, then cost rules that encourage them to be more careful with the charges that they make ought to be advantageous.

[The Chair]

I remind the Committee that we have only another 10 minutes or so left on this session.

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[The Chair]

Thank you. I remind the Committee that we have until 3.10 pm for this session.

[Matthew Pennycook]

Q Gentlemen, in our evidence sessions so far, we have had very wide-ranging discussions —let me put it that way—not just about the principle of the Bill but about property rights, the functioning of market capitalism and liberal democracy, and everything but. As the shadow Minister for the Bill, I would like to use your expertise to focus on what is actually in the Bill and how we might improve it, so my first question is a very specific one on clause 12. I think I put it more to Mr Freedman than to Mr Rainey because of that Law Society briefing. It relates to valuation, which is one of the more complex matters that the Bill deals with.

The Law Society has expressed concern that the provisions in clause 12 designed to protect most but not all leaseholders from non-litigation costs that landlords may incur when responding to an enfranchisement or lease extension claim may cause issues, because under the proposed new valuation method, the price payable may be below full open market value. Could you clarify why you believe that to be the case? The standard valuation method in schedule 5 provides for a market value element. Why does the Law Society believe that it does not represent full open market values?

Philip Freedman: This started with the Law Society’s recommendation to the Law Commission that one thing that might save costs for leaseholders was if they did not have to pay the landlord’s costs on a collective enfranchisement or lease extension. We put forward the view that if the enfranchisement price is market value, then each side should bear its own costs. If you were to buy a house, you would not pay the seller’s costs; each party would pay their own costs. That is what happens in the market. We said that in the context of enfranchisement being at market value. The Law Commission took that on board, and its report very clearly says that its recommendation that each side should pay some costs and tenants should not have to pay the landlord’s costs—

[Matthew Pennycook]

Q My question is: why do you not think that the valuation method in here is full market value?

Philip Freedman: Because the suggested notional capping of ground rent at 0.1%, in many cases, where it applies, will reduce the purchase price below what it is in the open market at the moment. At the moment, in the open market, the ground rent stated in the lease is payable. We are aware that there are proposals for retrospective legislation, as one might call it, to interfere with existing leases and to say that the ground rent should be capped at a certain amount, but at the moment those rents are lawful, and those rents are therefore reflected in the price that someone would pay to buy the flow of ground rent. Therefore, if you assessed the purchase price for the enfranchisement as if the ground rent were capped and would not be as much as it actually would, then you would be reducing the purchase price to below the market price.

[Matthew Pennycook]

Q That is very clear and very useful.

I have a second question, relating to clause 59, which concerns regulation of remedies for arrears of rentcharges. Do you agree with my view that the Government are trying to fix a historical law that is essentially beyond repair? Should we be looking to abolish section 121 of the Law of Property Act 1925?

Philip Freedman: I think yes. I had to draft some rentcharge provisions many years ago, when we were acting for clients who were selling some industrial buildings on a new estate. They wanted to sell them freehold. There was no commonhold at that time and the issue of enforcing positive covenants was difficult. We came up with the suggestion that the rentcharges legislation should be used to allow an estate company to collect service charges, maintain drainage systems and so forth. It was agreed that the Law of Property Act gave excessive remedies to landlords for non-payment. I am all in favour of limiting the remedies so that, if someone does not pay for something, they can be sued for it, just as with the amendment in relation to forfeiture. It seems to me—this is my personal view—that limiting forfeiture, as you have proposed doing through your amendment, is the right thing to do, although I do have three points to make on that.

[Matthew Pennycook]

Q I will quickly come to that, but do have anything to add in relation to clause 59, Mr Rainey?

Philip Rainey: I agree that forfeiture for non-payment of a rentcharge on an estate, which is usually a relatively small sum of money, is a sledgehammer to crack a nut. I would be in favour of replacing section 121 rather than repealing it, so that there is a coherent and measured set of remedies for rentcharges. That is bearing in mind, as Philip just said, that a lot of the estate rentcharges covered by that legislation have nothing to do with residential; they are quite common on industrial estates. That is one of the unintended consequences that might occur if you were simply to repeal section 121.

[Matthew Pennycook]

Q That is extremely useful. I wish that we had you both for more than half an hour.

I have one quick final question on the abolition of forfeiture. Would you agree that we should do away with forfeiture entirely—it sounds like you do—on the grounds that it is a wholly disproportionate response to the breach of a lease? If so, what should we replace it with? Is suing for a debt—as happens with any other debt—and an injunction if the breach relates to conduct a sufficient response or, if we abolish forfeiture, should we be looking to replace it with some other system of recompense?

Philip Freedman: My view is that there are three aspects of the proposed abolition of forfeiture for leasehold dwellings that we should look at. One is that it should apply to individual leases of single dwellings, rather like the ground rent abolition; it should not apply to leases of multiple dwellings, such as a lease of 50 flats to some lettings company, which is a commercial enterprise, effectively. It should apply to leases of individual dwellings granted at a premium.

The other thing is that the threat of forfeiture is over the top in relation to financial debt—arrears of rent, service charges or whatever. You can sue for those. There may be refinements in relation to suing, but basically you can sue for them. But if a tenant has knocked down walls that they should not have, caused a nuisance or annoyance to other tenants in the building, or used the property for some unlawful purpose, then the remedy would be to threaten an injunction, as you have indicated. An injunction is a difficult remedy to enforce: it is very costly and it is at the discretion of the court—there are all sort of hurdles about injunctions. If, in the residential sector, the first-tier tribunal was given the power and jurisdiction to order parties to a lease to comply with the terms of the lease, free from the constraints of existing law in relation to injunctions, then one could avoid the need for forfeiture. Removing forfeiture for financial payments and damages is fine, but for other breaches it presents a problem.

The only other point is that we need to look at section 153 of the 1925 Act, which is the right for tenants, if they have a very long lease, do not pay any ground rent—it is a peppercorn—and are not susceptible to forfeiture, to enlarge into the freehold. That is a whole area of unclear law. It is not clear what the effect would be if you had one tenant in a block who declares that he now owns the freehold; it would be very unclear whether the management of the block would be affected. I think these things need to be addressed if one is going along that line with regard to forfeiture.

Philip Rainey: Because I appreciate that we have limited time to answer, the only thing I would add is that forfeiture is arguably, again, a sledgehammer to crack a nut, but so can be an injunction: the remedy for breach of an injunction is essentially committal to prison. The prospect of not being able to forfeit and instead there being rafts of committal applications to fill up the jails with people who are, for whatever reason, refusing to comply with some kind of covenant—that is very annoying, but ultimately they should not be in prison—is also unattractive.

Ultimately, there needs to be some sort of measured method of removing a problem tenant from a block. We very much concentrate on the position of landlords against tenants, but one very difficult tenant in a block can ruin life for everybody else. The Law Commission proposed a replacement scheme, and I suggest that that should be dusted off and looked at. A lot of the objections to it come from the commercial sector, so bring it into force for residential leasehold first.

[Matthew Pennycook]

That is all extremely helpful. Thank you very much.

[Richard Fuller]

Q Our previous witness, Mr Vitali, talked about potential concerns about the effect of regulation on people’s understanding of property rights. Do you have any significant concerns about how the Bill affects property rights? If you do, what should we do about them?

Philip Rainey: In a sense, that is a conceptual question.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from our seventh panel. Jack Spearman is chair of leasehold reform at the Residential Freehold Association. For this session, we have until 3.30 pm. Could the witness please introduce himself for the record?

Jack Spearman: Good afternoon. My name is Jack Spearman. I am from the Residential Freehold Association. We are a representative organisation for the UK’s largest professional freeholders. Our members represent, or have management over, about 1 million leasehold properties in England and Wales. I chair the British Property Federation’s committee on leasehold reform. I am also a director at Long Harbour, which is a regulated investment manager, and we have invested in residential freeholds.

[Matthew Pennycook]

Q Mr Spearman, thank you for coming to give evidence to us. The Government’s 2017 consultation on tackling unfair practices in the leasehold market, which I think attracted more than 6,000 responses, found that freeholders regularly price-gouge leaseholders on service charges, ground rents, lease extensions and freehold acquisitions, as well as making arbitrary and unjust rules about what leaseholders can and cannot do with their homes. Is it not the case that many, if not all, of your members routinely engage in rent-seeking behaviour by gouging leaseholders as a matter of course and that the concerns of the RFA about the Bill are almost entirely related in various ways to how it might frustrate them or prohibit them from doing so?

Jack Spearman: Each lease will set out the terms of what can and cannot happen under that lease, so when people talk about changing terms, you have to be quite careful about what you are actually saying. The rent is set as a rent and a review is set as a review, so you cannot just change rent arbitrarily—the same as for service charge and many other things. I think what you are talking about is some of the aspects that are frustrating, whether it enfranchisement or lease extensions. It will probably surprise a number of you that our members do support a large number of the measures in the Bill, including a number of the amendments that you have put forward in Committee.

[Matthew Pennycook]

Q Okay. I may come back to some other specific issues if we have time, but specifically on insurance, the Financial Conduct Authority’s report of September last year on insurance for multi-occupancy buildings found evidence of high commission rates and poor practice, which were

“not consistent with driving fair value to the customer”.

It also found that the mean absolute value of commissions more than doubled between 2016 and 2021 for managing agents and freeholders of buildings with fire safety defects. Is it not fair to say that, again, many, if not all, of your members have benefited hugely from soaring buildings insurance premiums over recent years, so do you think the Government are entirely justified in seeking by means of clause 31 to limit their ability to charge insurance costs?

Jack Spearman: In terms of insurance premiums, they have generally all risen, for a number of reasons that you will be aware of, whether that is cost inflation, inflation generally or insurance premium tax. Let us not forget that the Government benefit from a lot of these things, and they are all rising at the same time.

What I would say is that there is merit in making sure that people who are actually providing services to administer the insurance work have some form of compensation for what they are doing. If the insurance premium was to double because there is an issue with cladding, why should someone take the benefit of that? The same could be said for remediation projects, for example, where VAT is paid. But, yes, I agree that a measured form of that would be helpful. The problem with the Bill currently is that it leaves all of that to secondary legislation, as you know. It would be helpful to see the primary legislation set out how that might work, and that is one of our recommendations.

Clearly, our members do a lot of work on insurance, whether that is administering claims, dealing with inquiries or sending out invoices to collect the insurance premium over hundreds of people—it is a job that someone has to do. It could be risk management, so telling the insurer what is on the building. You would be amazed to see how many insurers that our members deal with offer to insure a building without knowing what is on it. When we tell them what is on it and what is in it, a very different type of cover can be offered. So there is value, contrary to what people will say, although I do accept, clearly, that, like in any system, there are bad practices.

[Matthew Pennycook]

Q Just briefly while we are on that, have you got any sense of whether your members are complying, or are prepared to comply, with the new FCA rules that are coming into force at the end of this month with regard to the right to request to see the insurance?

Jack Spearman: Again, our members have always been of the view that the insurance is for the benefit of leaseholders. They provide the cover, and they provide the certificates; it is something that we have all been doing for a large number of years. So, yes, we do, and those that do not will obviously have to anyway under the FCA regulations.

[Andy Carter]

Q Thank you very much for your written submission to us. You say in there: “The RFA has serious concerns that the Government’s proposals to cap ground rent will lead to significant cost to the UK taxpayer…and have…negative consequences for leaseholders” What are the costs for UK taxpayers of this piece of legislation?

Jack Spearman: One of the key and largest impacts of this Bill has not even been considered yet, because it has not been introduced. Some form of restriction on ground rent is going to be introduced at some point as an amendment. You are being asked to scrutinise a piece of primary legislation that does not have a number of impacts in it—for example, setting capitalisation rates, deferment rates and dealing with ground itself. So you are scrutinising something that is incomplete, and the impact of which none of us here know.

Going to the taxpayer point, the Government say that no compensation will be paid, but unfortunately they also know that that is probably not going to be compliant with the European convention on human rights. Compensation is going to have to be paid, and it is either paid by the taxpayer or the leaseholder. That is what we mean by that.

--- Later in debate ---

[Andy Carter]

Q That is very helpful. Thank you very much. Do you have any views on the requirements for regulation of building managers?

Giles Grover: I have a lot of views on that area. Part of the issue was that under the Building Safety Act there were building safety managers in place with certain duties. At the last minute, that legislation was moved away from, but those duties still exist. A lot of the high-rise buildings that have registered with the Building Safety Regulator are facing enormous costs of compliance, and there are real fears about the work that will need to be done. We are seeing bills land on our doorstep all over again. I got one—thankfully, I am a residential management company director and can challenge it more—with an estimate of £500 a year extra per leaseholder to comply with the Building Safety Regulator if we had not moved away from some of the strange costs that were in there.

I have seen that for other buildings: leaseholders who have just got the freehold have suddenly got a demand saying, “You are also going to have to pay for compliance with building safety.” It is very worrying and strange that the innocent leaseholders we are meant to be protecting are now going to have to pay, but just in a slightly different way, to ensure the safety of the buildings that should have been made safe and should be maintained. Fire doors are another example that I could really get into, but I only have 20 minutes so I will hand back to you.

[Matthew Pennycook]

Q Giles, thank you for giving up your time to come and speak to us. I want to follow up on Mike’s and Andy’s questions. You may have said everything you can say about what you would like the legislation to do, but if you have some more detail it would be useful.

Mike and I tabled new clauses 27 and 28 to address some of the “in principle” issues we have been pushing for a long time on—qualifying and non-qualifying leaseholders and building height. Specifically, in terms of what the Government might feasibly bring forward, what is your experience from cases across the country of the operational elements of the Building Safety Act that are not working effectively? I am just trying to get from you a more realistic sense of what you might expect the Government to bring forward, in terms of extending this Bill to ensure the Building Safety Act operates as intended. What tweaks to the Building Safety Act are required, in as much detail as you can in the time you have?

Giles Grover: One of the major tweaks is on an issue we were first made aware of in November 2022 due to the residents of a building in Greater Manchester being forced to pay for interim measures. The council is now paying for those interim measures but it has been told that it cannot recover them through the Building Safety Act because the legislation is not in place. That is a simple one that could help.

You could ensure that resident management companies and right to manage companies can raise the legal costs where they might be needed in respect of building safety and relevant defects. There are some wider elements that are already in the Bill, in terms of stopping freeholders re-charging their legal fees. Our concern is whether that will protect non-qualifying leaseholders who are still being forced to pay fees.

This is where I can get into the specifics. I am no lawyer as such—you have had a lot of very intelligent people on before me—but I say this from the campaigning aspect of it. We need to see a fair bit more detail about exactly what happens when a freeholder is avoiding their liabilities and not giving a landlord certificate within the stated time period. The Government may tell us, “Oh, don’t worry. That means they can’t pass the costs on,” but theoretically I cannot sell my flat without that certificate because the conveyancer is asking for it, so why not have an express duty for them to provide it? To be completely frank, the whole landlord certificate/leaseholder certificate process is an absolute quagmire and a nightmare on the ground. I would personally prefer it if the Government did away with that.

There are lots of issues like that. There are points about court-appointed managers, which cannot be the accountable person, which seems quite strange to me. We have been told that there is another route through the Building Safety Regulator, but that would require the special measures manager legislation to be enforced. There are issues with shared owners in complex tenures where you have a housing association as the head leaseholder. Will they be protected from all costs? Will they have the same rights as all leaseholders?

Philosophically, the simplistic approach should be that you have the full protection. New clauses 27 and 28 would be a massive relief. It is then a case of whether legislation is needed or whether you can use the current measures. With the developer scheme, where it is for over 11-metre buildings—could that be extended to under 11-metre buildings? The cladding safety scheme is now for mid-rise buildings; could that be extended for low-rise buildings? Could the cladding safety scheme be extended to become a building safety scheme?

For a lot of this the pushback will be, “There is not enough money,” but there is money out there. There is money that can be got from industry. There are further parties, such as construction product manufacturers and providers, and the Secretary of State said they would make them pay two years ago; they have not paid yet. There are a lot more parties that could be brought into the pool. So operationally there is more they could do by saying, “We’ve got seven different funding schemes;” —or however many it is—“where is the oversight of all of them? Who is talking to each other? Are these regulators? How does DLUHC talk to the recovery strategy unit? Are they talking to the Building Safety Regulator? Is Homes England involved? The local regulators now have new money to take action; are they taking action?”

So, arguably, a lot of it is already in place; but what is needed is the comprehensive oversight and the proper grip to say, “Right: all these buildings—10,000 of them—are going to get fixed. This is how—this is where the money is coming from. Cladding costs are here. Non-cladding costs will come from there.” What you really need to do is put the money up front, recover it. The Government say that their leaseholder protections mean that the majority of leaseholders won’t have to pay. If they have got the confidence in their legislation then they can take over the burden from leaseholders.

[Barry Gardiner]

Q First, may I declare an interest? I am not sure whether it is necessary, but our witness Mr Grover participated in a documentary that I am making about leaseholds, so we have a knowledge of each other. First, Mr Grover, thank you for all the campaigning that you and your colleagues in End Our Cladding Scandal have done; it has been magnificent over the past few years.

You raised the issue, in response to Matthew Pennycook’s questions, of section 24 of the Landlord and Tenant Act 1987 and applying for an officer of the court to be installed to do the works and turn around a building. Clearly, it would be something much to be wished, for many people who found themselves involved a building safety issue, if they were able to do that. Related to that, I know you are aware of the Building Safety Act 2022 ban on section 24 managers being the accountable person.

This is a matter we have discussed with a number of witnesses such as yourself. Are you aware that at one development, the management control regarding safety and remediation was given back to a freeholder who was the one who took, the tribunal found, £1.6 million in insurance commissions unreasonably? They will now be handed £20 million because of that BSA anomaly, by the Government. So the very people who could not be trusted with money are now being given £20 million to remedy the defects that they were responsible for in that building.

Giles Grover: I am very aware of it. I have watched some of the sessions, and I was made aware of it last year by one of the leaseholders at that building. I have looked into this. I have had various conversations with various lawyers. It still just seems bizarre that the manager who has been appointed by the court cannot be the accountable person. I am just a simple man: I do not understand why that cannot happen—why the Government, or the judge, based upon the legislation that is out there, think it is a reasonable or positive outcome for that money to go back to that rogue landlord, shall we say. I do not get it, to be honest.

Long-term Plan for Housing

Matthew Pennycook Excerpts

Tuesday 19th December 2023 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I thank the Minister for advance sight of his statement. Nothing screams long-term housing plan quite like a statement from the 16th Housing Minister since 2010 outlining the fourth set of changes to the national planning policy framework in as many years. As ever with this Government, the reality in no way matches the rhetoric, as we see with the headline announcements made to the press—not this House—over the past 24 hours. Not only are they seemingly at odds with the Government’s stated wish to give local communities more of a say about the placement of new developments; the truth is that the ink will barely be dry on outline plans for the proposed expansion of Cambridge by the time the general election is called. The punitive and nakedly political interventions that Ministers are working up for London ahead of the mayoral election will, likewise, do nothing in practice to resolve the constraints that they themselves have imposed on house building in the capital, not least by leaving industry completely in the dark when it comes to second staircase regulations for tall buildings, at a cost of thousands of new homes.

When it comes to meaningful support for small and medium-sized house builders, the Government have been talking, literally for years, about the various ways in which they need greater support while presiding over their continued decline. Far from unlocking a new generation of home building, as the Secretary of State has claimed, the detailed changes being made to the NPPF today will almost certainly further suppress collapsing house building rates. Let us be clear: although there have been minor tweaks, the changes being made are those that the Government, in their weakness, promised the so-called “Planning Concern Group” of Tory Back Benchers they would enact back in December last year in order to stave off a rebellion on the Levelling-up and Regeneration Bill. That is precisely why the members of that group are so pleased with the ”compromise” they have secured today.

I have a number of detailed questions for the Minister, starting with the impact of these changes on overall housing supply. Whether it is the softening of land supply requirements or the listing of various local characteristics that would justify a deviation from the now only advisory standard method, can he confirm that the changes made to the NPPF, taken together, will give those local authorities that wish to take advantage of it the freedom to plan for less housing than their nominal local targets imply? If he disputes that that will be their effect, what technical evidence can he provide to demonstrate that these changes can be reconciled with a boost to housing delivery?

I turn to the Government’s 300,000 annual housing target, which the Secretary of State recommitted himself to today. How on earth does the Minister imagine that the changes that have been made to the rules around plan making will help the Government finally meet that target, particularly given that the arbitrary 35% urban uplift has been retained but the requirement for local planning authorities to try to meet it out of area in co-operation with their neighbours if they cannot do so alone has been removed? Can the Minister finally provide a convincing explanation of how and when the Government’s 300,000 homes a year target will be met? Or is it the case that it remains alive in name only, abandoned in practice even if not formally abolished?

Let me turn to local plan coverage. In many ways, the revised NPPF speaks to a planning framework that does not actually exist, because under this Government we have a local plan-led system in which only a minority of local authorities have up-to-date plans. According to the most recent figures, just 33% have local plans that have been adopted or reviewed within the past five years and only 10 new plans have been submitted for examination this year—in part, this is because of the chilling effect of the Government’s December 2022 concession. Yet only now, in the dying days of this Government, are Ministers seemingly getting a bit more serious about intervening to drive up coverage.

In The Times today, the Secretary of State announced a new three-month deadline for up-to-date local plans to be submitted. Will the Minister outline the thinking behind that timeframe and tell us what happens if multiple local authorities fail to meet the new March deadline? In his Times interview, the Secretary of State suggested that local authorities that miss that deadline will have development forced on them and their powers to delay applications removed. Can the Minister tell us precisely how that would be achieved? The Secretary of State also suggested that recalcitrant councils will be stripped of their planning responsibilities. Can the Minister tell us who will take them on, given that the Planning Inspectorate clearly does not have the capacity to do so?

Finally, although it is the Government’s contention that the changes made today will boost local plan coverage, surely the Minister recognises that even if that is ultimately their effect, it will be at the cost of overall housing supply because it will entail the enactment of numerous plans that will not meet the needs of local communities in full. In short, isn’t the truth of the matter that today’s changes entail a deliberate shift from a plan-led system focused on making at least some attempt to meet housing need, to one geared toward providing only what the politics of any given area allow, with all the implications that entails for the housing crisis and economic growth?

[Lee Rowley]

I thank the Opposition spokesperson for his comments, which I will address in turn. He started by saying that this is the fourth time we have updated the guidance in the last few years. If his criticism is that we are willing to listen, be flexible and adaptable, and recognise the differences between his constituency of Greenwich and Woolwich and the constituencies of Government Back Benchers, then he is correct. We are willing to be flexible and adaptable, but we also recognise that we need to build more homes; we just want to ensure that they are built in the right places, which is exactly what today’s update seeks to do.

The difference between my party and that of the Opposition spokesperson is that we recognise the nuance in the discussion. Within the NPPF, we are trying to accommodate the fact that different areas and parts of the country have to be approached in different ways. While the policies of the hon. Gentleman’s party move backwards and forwards on different days of the week, we will continue to ensure that we build more homes—in the right place, with the right infrastructure and with the support of the community. In the long run, that will ensure that we make progress on housing in general.

The hon. Gentleman asked a question about freedom to plan. The housing needs assessment will be made by all councils, but councils can make a case if there is an exceptional circumstance that applies in their local area. If that were not possible, there would be no exceptions for any council, local authority or community anywhere, which would be completely unnuanced. However, on a macro level it remains the case that we will seek to build more houses. When councils have plans in place, they tend to deliver more houses than when such plans are not in place, so if we can get more plans in place, we will have the opportunity to build more homes that have the consent and support of the community in which they will be built.

The hon. Gentleman asked about urban uplift and the removal of co-operation with neighbours. We uplifted the targets and expectations on the basis that those houses would go into cities and would not be exported into the countryside near cities, because the whole point was to acknowledge the infrastructure in those cities. There are schools in London that are closing because insufficient numbers of children are using them. We do not want to export housing elsewhere; we want to use that infrastructure—including transport links and educational establishments—as was intended when it was built.

This is not about whether we believe in a plan-led system or not—we clearly do. It is about the fact that this Government are getting on with the hard job of striking a balance, recognising the nuance and ensuring that more progress is being made, versus the Opposition stating that they want to build houses, but then voting against that happening in relation to nutrient neutrality. If they put their money where their mouth was and did what they say they will do, they would have the ability to stand up and make such arguments consistently. They do not and, as a result, I will not listen to them.

Leasehold and Freehold Reform Bill

Matthew Pennycook Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I start by declaring an interest: my wife is the joint chief executive of the Law Commission, whose work I intend to cite in my remarks.

It is a pleasure to close this Second Reading debate for the Opposition, and I thank all right hon. and hon. Members who have participated in it. I echo what so many others have said and add my own tribute to all the individuals and organisations who have campaigned for so long for reform in this area.

As a number of contributors to the debate have pointed out, we have waited a long time for this Bill. It was just under six years ago that the then Secretary of State, the right hon. Member for Bromsgrove (Sajid Javid), announced that the Government intended to introduce a series of measures to end unfair and abusive practices within the leasehold system, including—I quote here from a Government press release in December 2017—

“legislating to prevent the sale of new build leasehold houses”.

That 2017 announcement was developed three years later, during the tenure of the right hon. Member for Newark (Robert Jenrick) as Secretary of State. In a written ministerial statement dated 11 January 2021, he announced

“seminal two-part legislation to implement leasehold and commonhold reforms in this Parliament”.

The first part of that two-part legislative agenda duly followed, in the form of the Leasehold Reform (Ground Rent) Act 2022. Although we—and in particular the shadow Minister for homelessness and building safety, my hon. Friend the Member for Weaver Vale (Mike Amesbury)—pressed Ministers to use that Act to implement further reform, we nonetheless supported the Government in passing it. In the 17 months since the Act came into force, successive Ministers have made all manner of extravagant promises about what the second part of the “seminal two-part legislation” would entail. Indeed, the current Secretary of State, in an interview with The Sunday Times in January this year, even went so far as to declare, without qualification, that he intended to abolish the leasehold system in its entirety.

Leaseholders across the country, whose daily lives are often made miserable by the unjust and discriminatory practices that our archaic leasehold system facilitates, took Tory Ministers at their word. They expected the second part of the promised two-part legislative agenda to live up to the weighty promises made by the Government. They have been badly let down. Having waited so long and had their expectations raised so high, they are understandably disappointed at the limited Bill that we are considering today. And it is a limited Bill, and no amount of bravado from the Secretary of State can alter that fact. They are also perplexed, as we are, that legislation that the Government claimed would end leaseholds on newly built houses in England and Wales does not actually contain any provision to end such leaseholds.

When the Minister responds to the debate, he will no doubt attempt to brush that criticism aside, as he did in oral questions last week, on the grounds that it is entirely normal for key provisions of a Bill to be added in Committee. Sadly, as my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) mentioned in opening the debate, it is common practice for this Government, and this Secretary of State in particular, to significantly expand the size and scope of Bills by incorporating swathes of Government amendments in Committee and on Report in a way that limits the ability of hon. Members to ensure that full scrutiny takes place. However, the Minister is fooling no one in attempting to suggest that the omission from the legislation of key provisions was always the Government’s intent.

I remind the House, as my hon. Friend the Member for City of Chester (Samantha Dixon) did, that the right hon. Member for Bromsgrove committed the Government to legislating to prevent the sale of new build leasehold houses nearly six years ago. The Government have no excuse whatsoever for failing to include in the Bill the provisions necessary to enact that commitment in order for the House to consider them properly today. That they failed to do so no doubt owes more to hurried drafting, and to the wrangling between the Department and No. 10 that has taken place over recent months in respect of this Bill, than to any considered design. However, for all the confusion that surrounded it, the legislation before us has answered one important question: how ambitious do the Government wish to be when it comes to leasehold reform? Because this unambitious piece of legislation makes it clear that proponents of caution and restraint have won out over those who want to lay claim to a legacy of bold reform in this area.

That criticism cannot simply be brushed aside as carping on the part of the Opposition. The Government’s poverty of ambition has real implications for leaseholders being routinely gouged by freeholders under the present system. Take flats, which are the overwhelming majority of new leasehold properties being created and the source of most of the leasehold-related complaints that I receive from constituents. The Government’s stated solution for them, as made clear by Baroness Penn in the other place just last week, is reinvigorating commonhold, yet the Minister of State made it clear on Monday that the Government do not intend to incorporate into this Bill any provisions whatsoever relating to commonhold, despite the clear commitment they made in 2021. Instead, it remains part of their “long-term approach”. In other words, the Government’s offer to swathes of leaseholders across the country is jam tomorrow.

The hon. Member for Redditch (Rachel Maclean), known affectionately as No. 15 on these Benches, gave the game away. She said that all the work has already been done on commonhold, so it is not a matter of complexity; it is a political choice on the Government’s part not to introduce commonhold provisions in this legislation. What is so galling about the position that Ministers have adopted is that there is clearly widespread support across the House for the more ambitious leasehold reform that could have been incorporated into the Bill, and this debate has demonstrated it. However, in the dying days of this Government, we are where we are.

While we deeply regret the Bill’s lack of ambition, we have no intention of voting against Second Reading this evening. We support the intent of the provisions in the legislation before us and the principle of the Bill as a whole. The measures it contains will give homeowners in England and Wales some greater rights, powers and protections over their homes. That is not to say that we do not have concerns about the efficacy of some of them; we do, and we will seek to strengthen the Bill in a number of ways in Committee. For example, we believe that clauses 12 and 13, which are intended to protect leaseholders from covering the legal and valuation costs associated with lease extensions, require tightening if we are to prevent, in practice, freeholders recovering litigation and non-litigation costs. To take another example, we believe that clause 23, which seeks to replace the existing costs regime for right to manage claims, is flawed and needs overhauling if it is to protect, in practice, RTM companies from cost claims by landlords.

We also believe that this limited Bill can be improved in ways that will give future leaseholders more control over their future. For example, we think there is an iron-strong case for adding to the Bill provisions that would abolish forfeiture for leases entirely and replace it with a more equitable means for freeholders to recover costs in a dispute that does not involve a windfall. I was pleased by the signal that the Secretary of State gave on that front in opening the debate. To take another example, we think there is merit in adding to the Bill provisions that would ensure that leases on new flats include a requirement to establish and operate a residents’ management company responsible for all service charge matters and associated works, with each leaseholder given a share.

We will seek to convince the Government of the merits of those and other measures when we go into Committee in the new year, and we will engage constructively with the Government if they decide to introduce other bold measures into the Bill at that stage—for example, if Ministers are minded to implement the Law Commission’s proposals on the right to manage, covering both flats and houses.

However, we recognise that there is only so much that we can do with the legislation before us. Given the paucity of the Bill’s ambition and the fact that it does not contain so many of the commitments that successive Secretaries of State have made, not least in relation to the promised widespread introduction of the commonhold tenure, it is clear that it will now fall to a Labour Government to fundamentally and comprehensively reform the leasehold system, including the reinvigoration of commonhold to such an extent that it will become the default and ultimately render leasehold obsolete.

We are pleased that the Bill will progress today. It will provide some limited relief to leaseholders. We will seek to improve it with a view to extracting from the Government any extra measures that further empower leaseholders and disturb the historical iniquity on which the present system rests. Leaseholders across the country who remain at the mercy of arcane and discriminatory practices, to their detriment and to the benefit of freeholders, rightly expect nothing less. But leaseholders across the country expected so much more from the Government. We are clear that, in due course, Labour will have to finish the job and enact all the Law Commission’s recommendations on enfranchisement, right to manage and commonhold in full. We are determined to do so.

--- Later in debate ---

[Matthew Pennycook]

The Minister touched on building safety. In the briefing notes on the Bill that accompanied the King’s Speech, under the heading “Improving leaseholders’ consumer rights”, reference was made to:

“Building on the legislation brought forward by the Building Safety Act 2022”.

Is it the Government’s intention to incorporate building safety measures in the Bill?

[Lee Rowley]

We are looking at what may be possible. We recognise that, while the Secretary of State for Levelling Up, Housing and Communities has brought forward a very solid prospectus, tweaks can always be made. We see real momentum in this area. I know that that is not good enough for buildings that have not yet had their remediation or for leaseholders who are hugely frustrated by the inability or unwillingness of freeholders to make progress, but we have made significant changes and steps forward in the last year or so, and we are committed to doing more in the coming months.

I am grateful to the hon. Member for North Shropshire for meeting me earlier to talk about specific points about assets. We will look at those points and come back to her.

I can confirm to my right hon. Friend the Member for Aldridge-Brownhills that we intend to tackle ground rents. I am grateful to her for highlighting exceptions in leasehold houses. We intend that to be a very narrow element. She sought an example. One example I can give is that of National Trust land where freeholds cannot be sold and a small number of leasehold homes may therefore be required.

The hon. Member for Liverpool, West Derby talked about his disappointment with, I believe, the consultation on ground rents. We must consult on that because we must ensure that we are listening and that we take a decision based on the broad range of evidence in front of us, to ensure that it is legally sound when the decision is made. He encourages me to speak to the Law Commission. I can tell him that I have spoken to the Law Commission probably more regularly than any other external organisation outside the Department in the past three or four weeks.

The hon. Members for Walthamstow, for Battersea and for Brentford and Isleworth are seeking to push a narrative—if I may say that very gently to them, with the best of intentions—that this is not a significant intervention with regard to flats. I gently encourage them to continue to engage with the Bill. They will see long and cheap extensions, easier enfranchisement, service charge transparency, easier redress, lease extensions, standard forms, annual reports and many, many other significant measures that will have salience for those living in flats.

Before I conclude, I would like to thank the hon. Member for Greenwich and Woolwich (Matthew Pennycook) for his constructive comments. I look forward to meeting him in Committee to talk about them more. While I may disappoint the right hon. Member for East Ham, I would like to turn to some of the comments made from the Opposition Front Bench.

The right hon. Member for Ashton-under-Lyne (Angela Rayner), despite acknowledging that the Government have brought forward important legislation, despite confirming that Labour would not be opposing it and despite advancing the most enthusiastic compliment I have ever heard her give a Conservative—that the Secretary of State has reached the lofty heights of being a “functional cog”; heavy praise indeed!—showed that, as ever, she deals in rhetoric rather than reality, and in politics rather than policy. She called the Bill “empty”. This is a Bill with 65 clauses, eight schedules and 133 pages, and there are 67 pages of explanatory notes. Given its comprehensive reform of enfranchisement and extensions, its comprehensive reform of redress, and its comprehensive reform of service charges, estate management and valuation, that is a funny definition of “empty”.

Oral Answers to Questions

Matthew Pennycook Excerpts

Monday 4th December 2023 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the shadow Minister.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

As you will no doubt be aware, Madam Deputy Speaker, the Government’s Leasehold and Freehold Reform Bill, designed to ban the sale of new leasehold houses, does not actually contain any provisions to ban the sale of new leasehold houses, because the Department apparently did not have time to draft them before publication. If and when the Government rectify their mistake and add the necessary provisions, will they incorporate measures to reinvigorate commonhold by making it accessible and available to both prospective homebuyers and existing leaseholders? If not, why not?

[Lee Rowley]

As has been outlined, we intend to bring forward further changes to the Bill during the process, as Opposition Members know is normal, because they have sat in the same Committees that we have. We are not proposing to change leasehold to commonhold under the Bill, but that remains part of our long-term approach and we would like to see further reforms as soon as we are able to.

Renters (Reform) Bill (Ninth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 28th November 2023 Public Bill Committees

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I beg to move amendment 170, in clause 19, page 24, line 29, after “only if” insert

“both at the date of the service of the notice and the date of the hearing”.

This amendment would ensure that landlords must protect deposits with an authorised scheme and provide prescribed information in connection with it before a notice for possession is served rather than doing so, or repaying a deposit, at any time up to a court making an order for possession.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 171, in clause 19, page 24, line 33, after “only if” insert

“both at the date of the service of the notice and the date of the hearing”.

This amendment would ensure that landlords must protect deposits with an authorised scheme and provide prescribed information in connection with it before a notice for possession is served rather than doing so, or repaying a deposit, at any time up to a court making an order for possession.

Amendment 172, in clause 19, page 24, line 40, after “only if” insert

“both at the date of the service of the notice and the date of the hearing”.

This amendment would ensure that landlords must protect deposits with an authorised scheme and provide prescribed information in connection with it before a notice for possession is served rather than doing so, or repaying a deposit, at any time up to a court making an order for possession.

Clause stand part.

[Matthew Pennycook]

It is a pleasure to continue our proceedings with you in the Chair, Mr Gray.

Clause 19 makes a number of amendments to chapter 4 of part 6 of the Housing Act 2004, the effect of which is to ensure that the requirement for landlords and letting agents to place deposits in a Government-approved tenancy deposit protection scheme is maintained in relation to new assured tenancies and tenancies that were assured shorthold tenancies immediately before the extended application date. Currently, any section 21 notice served on a tenant may be invalid if the deposit requirements are not adhered to, but the clause will ensure that, if landlords take a deposit and do not fulfil the relevant statutory requirements, they cannot be awarded a possession order on any of the grounds set out in the amended schedule 2 to the Housing Act 1988.

On the surface, the clause appears simply to apply the existing tenancy deposit requirements to the new tenancy system that will apply whenever chapter 1 of part 1 of the Bill comes into force. However, there is an important difference between the requirements, which speaks to our wider concern about future landlord compliance with the regulatory obligations that have developed around section 21 notices over the course of the 35 years in which the present tenancy system has been in place. We will explore those wider concerns in more detail when we debate our amendment 176 to clause 34.

With regard to tenancy deposit requirements, the main difference between how the relevant protection rules apply to the existing system and how the Government propose that they will apply to the new one is that, under the Bill, they must be adhered to before a court will award possession, rather than, as now, when a notice is served. Put simply, instead of the landlord having to protect a deposit within 30 days of receipt and provide the prescribed information about how that will be achieved before the notice is served, the Bill will allow them to do either of those, or return the deposit, at any time up to the court hearing date.

From a tenant’s perspective, that situation strikes us as a less stringent application of the requirements than we currently have in relation to assured shorthold tenancies. Taken together, amendments 170 to 172 would ensure that landlords must protect deposits with an authorised scheme and provide prescribed information in connection with it before a notice for possession is served rather than doing so, or repaying a deposit, at any time up to a court making an order for possession. I hope that the Minister will consider accepting the amendments.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

It is a pleasure to see you in the Chair again, Mr Gray. I thank the hon. Gentleman for tabling amendments 170 to 172, which seek to change the requirement that landlords must comply with the deposit protection rules before a court can order possession. The amendments would require landlords to comply with the deposit protection rules both before serving a tenant with notice and at the time of the possession hearing. If those conditions are not met, courts could not make a possession order.

The Bill already protects tenants from landlords who are not complying with existing tenancy deposit rules, because clause 19 requires landlords to comply with deposit protection rules before a court may make an order for possession. That will impact only on those landlords who are not complying with existing tenancy deposit rules. If the landlord has stored the deposit correctly in one of the prescribed schemes and has complied with all the applicable rules, the measures in the clause will not hinder or delay the possession process. Landlords will also be able to rectify the problem before the case reaches the court, ensuring that those provisions will not trip them up if they have made an honest mistake. Because we recognise that some possession cases are too critical to delay, that will not apply to the grounds relating to antisocial behaviour.

The aim of our measures in clause 19 is therefore not to prevent or frustrate possession, but to ensure that tenancy deposits are protected for the benefit of the tenant. The hon. Member’s amendments would simply act as another administrative trap that good-faith landlords could fall into. The Bill already ensures that deposits will be protected, while giving landlords sufficient time to comply with the rules before the case reaches the court. I therefore ask the hon. Member to withdraw his amendment.

--- Later in debate ---

[Matthew Pennycook]

I welcome the Minister’s response. What I remain unclear about—if he wishes to clarify this, I will happily allow him to intervene—is whether, in the Government’s view, the change is a less stringent application of the requirements that currently apply to assured shorthold tenancies. That is all we are seeking to probe, and if the Minister can reassure me on that point I will withdraw the amendment.

[Jacob Young]

The existing possession restrictions have made the possession process more complex for all parties, and we do not feel that they are an effective way to ensure that tenants are living in safe and decent homes during a tenancy. That is part of the reason for the changes.

[Matthew Pennycook]

I do not know about other members of the Committee, but from the reasons that the Minister stated, I take it that the change is a less stringent application. I will not press the amendment to a vote at this point, but we may return to this issue, and we will discuss another amendment that we have relating to preconditions and requirements of the Bill around section 21 notices. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 ordered to stand part of the Bill.

Clause 20 ordered to stand part of the Bill.

Schedule 2

Consequential amendments relating to Chapter 1 of Part 1

Amendment made: 60, in schedule 2, page 77, line 13, at end insert—

“7A In section 39 (statutory tenants: succession) omit subsection (7).

7B In section 45 (interpretation of Part 1), in subsection (2) omit ‘Subject to paragraph 11 of Schedule 2 to this Act,’.

7C In Schedule 2 (grounds for possession), omit Part 4.

7D In Schedule 4 (statutory tenants: succession), in Part 3, omit paragraph 15.”—(Jacob Young.)

This amendment makes changes to the 1988 Act which are consequential on the changes to the regime for prior notice for some grounds for possession.

Schedule 2, as amended, agreed to.

Clause 21 ordered to stand part of the Bill.

Clause 22

Penalties for unlawful eviction or harassment of occupier

Amendment made: 61, in clause 22, page 28, line 4, at end insert—

“(10) In this section and Schedule A1, ‘local housing authority’ means a district council, a county council in England for an area for which there is no district council, a London borough council, the Common Council of the City of London or the Council of the Isles of Scilly.”—(Jacob Young.)

This amendment defines “local housing authority” for the purposes of section 1A of, and Schedule A1 to, the Protection from Eviction Act 1977.

Clause 22, as amended, ordered to stand part of the Bill.

Clause 23

Meaning of “residential landlord”

[Matthew Pennycook]

I beg to move amendment 173, in clause 23, page 31, line 29, at end insert—

“(c) an agreement to which the Mobile Homes Act 1983 applies; or

(d) any licence of a dwelling”.

This amendment would extend the definition of residential landlord to include park home operators, private providers of purpose-built student accommodation, and property guardian companies.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 62 to 64.

Clause stand part.

Government amendment 70.

[Matthew Pennycook]

Part 2 of the Bill concerns landlord redress schemes and the private rented sector database. We welcome part 2 and the Government’s intention to use its clauses to bring the private rented sector within the purview of an ombudsman and to establish a new property portal, including a database of residential landlords and privately rented properties in England. As the Committee will know, two letting agent redress schemes already exist, but the case for bringing all private landlords within the scope of one, irrespective of whether they use an agent to provide management services on their behalf, is compelling and has existed for some time.

The Government first announced their intention to explore options for improving redress in the housing market in late 2017, and in 2019 committed themselves to extending mandatory membership of a redress scheme to all private landlords through primary legislation. Much like the abolition of section 21, a statutory single private rental ombudsman has been a long time in the making. There are myriad issues with the ombudsman that lie outside the scope of the Bill, not least how the Government will address its role within what is already a complicated landscape of redress and dispute resolution; there are already multiple redress schemes and tenants already have recourse to local authorities, the first-tier tribunal, a deposit protection scheme and ultimately to the courts.

However, we support the principle of bringing the private rented sector within the scope of a single ombudsman. If the ombudsman covering the private rented sector, whoever it ultimately is, makes full use of the powers available to it and is well-resourced, and if the potential for confusion and perverse incentives that might result from multiple schemes is addressed, that should ensure that tenants’ complaints can be properly investigated and disputes can be resolved in a timely, more informal manner. That would help to ease the pressure on local authorities and the courts.

In contrast to the proposal for an ombudsman covering the private rented sector, the commitment to introduce a new digital property portal was made only last year in the White Paper. Nevertheless, we strongly support it. Indeed, I would go so far as to say—I have done so on previous occasions—that we believe a well-designed, resourced and properly enforced portal has the potential to utterly transform the private rented sector and the experience of tenants within it. 

We want the Bill to deliver a property portal that makes it easier for landlords to understand and demonstrate compliance with their existing obligations and evolving regulations; which empowers tenants by rendering transparent the rental history of landlords; and which enables landlords to be held to account by those they are renting to. We also want the property portal to help local authorities with enforcement against non-compliant landlords and to monitor and crack down on the minority of rogues in the sector.

We are concerned that chapter 2 of part 2 of the Bill, which deals with landlord redress schemes, is arguably too prescriptive, and that chapter 3 of part 2, which deals with the private rented sector database, are not nearly prescriptive enough. Fundamental to the operation of both measures is the question of which tenancies fall within their scope. As a means to probe the Minister on this issue, we tabled amendment 173, which would extend the definition of residential landlord to include park home operators, private providers of purpose-built student accommodation and property guardian companies. Each of those was explicitly referenced in the White Paper with regard to the schemes. I will make some brief comments on each to explore how the Government might define the scope of the private rented sector database and landlord redress scheme provisions via regulations in due course.

When it comes to residential park home operators, the Government’s October 2018 review of the legislation in this area found that some site operators

“continue to take unfair advantage of residents, most of whom are elderly and on low incomes.”

Furthermore, the Government said in their 2019 report, “Strengthening Consumer Redress in the Housing Market”:

“Currently, if a site operator fails to meet their contractual obligations a resident has little recourse except via the First-tier Tribunal, and those who rent directly from the site operator also lack access to redress. We are satisfied that there is a gap in redress services for park home residents and are committed to extending mandatory membership of a redress scheme to all residential park home site operators.”

When it comes to purpose-built student accommodation, the 2019 report also stated:

“Responses highlighted a gap in redress provision amongst students living in purpose-built student accommodation run by private companies.”

While the majority of such private companies have signed up to a code of practice administered by Unipol, the Government nevertheless made clear that private providers of purpose-built student accommodation, as opposed to educational establishments that provide student accommodation, should come within the scope of a redress scheme. When it comes to property guardians, recent reports in the press have highlighted rising instances of misconduct on the part of some property guardian companies that operate through licences to occupy rather than tenancies, which provide significantly fewer protections.

Research conducted by Sheffield Hallam University, commissioned by the Department and published last year, found that most property guardians

“reported very poor conditions, with properties frequently described as deteriorating and susceptible to adverse weather conditions. Local authorities also reported poor conditions in properties they had inspected. Persistent issues with damp and mould were very commonly reported, including damp from flooding, faulty plumbing and leaking roofs.”

That research also found that local authority enforcement teams are not routinely reviewing, inspecting or enforcing standards in guardian properties. There would therefore appear prima facie to be a strong case for including property guardians as well as park home sites and purpose-built student accommodation within the scope of the ombudsman and property portal as a means of increasing enforcement action and driving up standards.

It may well be the case that the Government fully intend to include each of those within the scope of the ombudsman and the private rented sector database in chapters 2 and 3 of part 2 when they introduce the relevant regulations and to provide access to redress for residents living in each type of accommodation, but we would appreciate a degree of clarity from the Government so that we can understand how extensive the operation of both schemes should be. I look forward to the Minister’s response.

[Jacob Young]

I thank the hon. Member for moving amendment 173, which proposes to expand the scope of the mandatory landlord redress scheme, which I will now refer to as the ombudsman, and the database, which I will now refer to as the portal. Specifically, the amendment would expand the ombudsman and portal to include park homes and dwellings occupied under licence, such as private purpose-built student accommodation and buildings occupied under property guardianship schemes.

Clause 23 sets out the tenancies that will fall within the scope of the ombudsman and the portal. It currently provides that they will capture assured and regulated tenancies, which make up the great majority of residential tenancy agreements in England, so under the clause the majority of landlords of private tenancies in England will initially need to be registered with the ombudsman and the portal.

We want to ensure that the introduction of the ombudsman and the portal is as smooth as possible, so tenants and landlords will need to have clarity over their rights and responsibilities. The issues that affect students, property guardians and park home owners can often be quite different from those faced by the majority of those in the private rented sector. Given those differences, it is reasonable to first apply the ombudsman membership requirements to the majority of private landlords. That will mean that all initial landlord members will be subject to the same expectations. We can then consider expanding the remit of the ombudsman to more specialised accommodation.

The clause also gives the Secretary of State the power to make regulations to amend the definitions and change the letting arrangements that would be captured by the requirements. We intend to use the regulations to potentially include different types of letting arrangements in future. I assure the hon. Member that we will continue to engage with the sector, and that we have the flexibility to determine the best course of action following such engagement. I therefore ask him to withdraw the amendment.

I turn to Government amendments 62 to 64. The current definition of “dwelling” would potentially preclude shared accommodation from being brought into scope. The amendments change the definition of “dwelling” that could be used in future so that shared accommodation may be included. In addition, clause 23 provides clarity on the meanings of private “residential landlord”, “relevant tenancy” and “dwelling” for the purposes of determining which tenancies are within the ambit of the private landlord ombudsman and the portal. Ministers will be able to make regulations to allow for divergence between the scope of the ombudsman and the portal. That will ensure that each scheme can retain full autonomy and operate independently in the future.

[Matthew Pennycook]

That was a very helpful clarification from the Minister. I take it from his answer that, although the Government are quite rightly focused on bringing assured and regulated tenancies within the scope of the ombudsman and the portal to cover the majority of private landlords, they are open to considering how their remit and scope may expand in the future to cover important other types of tenancy, as I have described. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 62, in clause 23, page 32, line 5, leave out from second “building” to “it” in line 6.

This amendment removes words that are no longer needed as a result of Amendment 64.

Amendment 63, in clause 23, page 32, line 7, leave out

“so occupied or intended to be so occupied”.

This amendment removes words that are no longer needed as a result of Amendment 64.

Amendment 64, in clause 23, page 32, line 8, at end insert—

“(ia) so that it includes a building or part of a building, and anything for the time being included in the meaning of “dwelling” by virtue of sub-paragraph (i), which is occupied or intended to be occupied as a dwelling that is not a separate dwelling,”.—(Jacob Young.)

This amendment allows the power to amend the definition of "dwelling" that applies for the purposes of Part 2 of the Bill to be used so as to add to that definition places that are not occupied as a separate dwelling. This will enable the power to be exercised to bring shared living accommodation within the definition of "dwelling".

Clause 23, as amended, ordered to stand part of the Bill.

Clause 24

Landlord redress schemes

[Matthew Pennycook]

I beg to move amendment 174, in clause 24, page 32, line 27, leave out “may” and insert “must”.

This amendment would impose a duty on the government to require residential landlords as defined in clause 23 to join a landlord redress scheme.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 196, in clause 25, page 34, line 17, at end insert—

“(ba) providing that complaints about deposits held in tenancy deposit schemes under Chapter 4 of Part 6 of the Housing Act 2004 (tenancy deposit schemes) may be made under the scheme,”.

This amendment would ensure that where there is a dispute regarding deposits this can be submitted to the ombudsperson for redress rather than just to the private schemes themselves.

Clause 25 stand part.

[Matthew Pennycook]

Amendment 24 is a simple and straightforward measure that is designed purely to ensure that the Bill guarantees that the private rented sector will be brought within the purview of an ombudsman. The Opposition are slightly concerned by the deliberate choice of the phrase “may make regulations” rather than “must make regulations” in subsection (1) of the clause, not least because it has been four years since the Government committed to extending mandatory membership of a redress scheme to all private landlords through primary legislation. We would be content to withdraw the amendment if we receive firm assurances that the Government will, at the earliest possible opportunity, bring the private rented sector within the remit of an ombudsman and if the Minister provides further detail about the Government’s intentions in that regard.

Turning to clause 25, the Minister will know that all other ombudsman-level redress schemes that have been set up in recent decades, including the new homes ombudsman, the legal ombudsman, the housing ombudsman and the pensions ombudsman, have all been clearly defined in statute as the only bodies responsible for ombudsman-level redress operating within the relevant sector. That is because the Government think it important to avoid having multiple redress schemes in individual industry sectors. As the relevant Cabinet Office guidance sets out, multiple redress schemes should be avoided because they may

“confuse consumers and may introduce uneven practices in investigation and redress”.

The Government have made it clear since the publication of the White Paper that they intend to introduce a new single ombudsman that all private landlords must join, yet clause 25 and others in this chapter deliberately refer to “redress schemes”, rather than a single ombudsman. Clause 25(6)(a) specifically makes clear that the regulations that the Secretary of State may introduce under clause 24 can provide for a number of redress schemes to be approved or designated.

--- Later in debate ---

[Jacob Young]

Amendment 174 would legally oblige the Government to make regulations requiring residential landlords to be members of a landlord redress scheme, rather than giving the Government the discretion to do so. The Government are committed to requiring private landlords to be members of an ombudsman, and a binding obligation is not required on the face of the Bill. We have taken powers in the Bill to allow the Government to ensure that the ombudsman is introduced in the most effective way, and with the appropriate sequencing.

Amendment 196 would require the ombudsman to handle complaints about tenancy deposits. It would be unwise to list in the Bill specific issues that the ombudsman can or cannot look at. The ombudsman would need the flexibility to consider any complaint duly made, but also to direct a tenant elsewhere if more appropriate. As tenancy deposit schemes already provide free alternative dispute resolution, the ombudsman may decide that the case is better handled elsewhere, but it will ultimately depend on the circumstances of each case. The ombudsman will have the final say on jurisdiction, subject to any agreement with other bodies.

We have made provision under clause 25 to enable the ombudsman to publish a Secretary of State-approved code of practice, which would clarify what the ombudsman expects of its landlord members. The ombudsman scheme will also provide more clarity about the circumstances in which a complaint will or will not be considered. I therefore ask the hon. Member for Brighton, Kemptown not to press his amendment.

As discussed, clause 24 provides the Secretary of State with powers to set up a mandatory redress scheme, which all private residential landlords of a relevant tenancy in England will need to join. We intend for the scheme to be an ombudsman service, and will look to require former landlords, as well as current and prospective landlords, to remain members after their relevant tenancies have ended, for a time specified in secondary regulations.

Members have asked for clarity about who the new PRS landlord ombudsman will be. No new ombudsman can be selected until after regulations have been laid following Royal Assent, but we can show the direction of travel. We have listened to the debates and the evidence given to this Committee, and our preferred approach at this time is for the existing housing ombudsman service to administer redress for both private and social tenants. As an established public body already delivering redress for social tenants, the housing ombudsman is uniquely positioned to deliver the private sector landlord redress scheme. Having one provider for all social and private renting tenants would provide streamlined and simple-to-use redress services for complainants.

To be clear, we are not ruling out the possibility of delivering through a different provider; we are still in the early stages of designing this new service. We now intend to explore how best to deliver on our ambition for a high-quality, streamlined and cross-tenure redress service.

To address the point that the hon. Member for Greenwich and Woolwich made about multiple redress schemes, the intention is to approve a single ombudsman scheme that all private landlords will be required to join. However, allowing for multiple schemes in legislation offers the Government flexibility, should the demand for redress prove too much for a single provider to handle effectively. I hope, on that basis, that the hon. Member will withdraw his amendment.

[Matthew Pennycook]

That is useful clarification from the Minister. Based on the assurances he has given, I do not intend to press amendment 174 to a Division. I understand fully, with the caveats that he has just given, what he is saying about a single ombudsman. We would welcome the Government’s preferred approach—for the housing ombudsman to take on responsibility for the private rented sector. The Landlord and Tenant Act 1985 does not distinguish between tenures, and we think that the ombudsman is probably best placed to provide that service and to do so quickly.

I would push back slightly against what the Minister said about how the clause is drafted, purely because, in a sense, it diverges from precedent. Most other Bills that we have looked at are very clear about establishing a single body and not being too prescriptive about how it operates. The Government have taken a different approach here. The Minister has given as one reason for doing so that the ombudsman might be overwhelmed by demand. Our response would be that we should ensure that the ombudsman that is given responsibility is properly resourced and adequately supported to do its job, rather than contemplate setting up additional redress schemes. However, it has been useful to hear the Government’s response, so we will not push the issue any further at this stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 ordered to stand part of the Bill.

Clause 25 ordered to stand part of the Bill.

Clause 26

Financial penalties

[Matthew Pennycook]

I beg to move amendment 165, in clause 26, page 36, line 21, leave out “£5,000” and insert “£30,000”.

This amendment would increase the maximum financial penalty that local authorities could impose on a person if it is satisfied beyond reasonable doubt that they have breached the requirement in Clause 24 to be a member of an approved or designated redress scheme or in instances where a property has been marketed where the landlord is not yet a member of a landlord redress scheme.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 166, in clause 26, page 36, line 22, leave out “£30,000” and insert “£60,000”.

This amendment would increase the maximum financial penalty that a local housing authority may impose on a person as an alternative to prosecution, if it is satisfied beyond reasonable doubt that an offence under clause 27 has been committed.

Clause stand part.

--- Later in debate ---

[Matthew Pennycook]

In precisely the same way that amendments 163 and 164, which we debated previously, sought to raise the maximum financial penalty that local authorities could levy where the provisions in clauses 9 or 10 were contravened or an offence committed, amendments 165 and 166 seek to raise the maximum financial penalty in respect of breaches relating to the requirements in clause 24 to be a member of an approved or designated redress scheme—that is, the ombudsman.

If the ombudsman is to cover all private landlords who rent out property in England, as I think every member of the Committee would wish, the penalty for not complying with mandatory membership must be sufficiently severe to act as a deterrent. We have tabled these amendments because we remain unconvinced that a £5,000 fine for a breach and a £30,000 fine as an alternative to prosecution will deter the minority of unscrupulous landlords who wish to evade regulation from failing to join. We urge the Government once again to reconsider.

[Jacob Young]

As the hon. Gentleman has mentioned, we discussed related points in earlier debates. His amendments 165 and 166 relate to the requirement for landlords to be members of the Government-approved redress scheme, which we intend to run as an ombudsman service, and a ban on marketing a property where a landlord is not registered with such a scheme. Our proposed fine regime is fair and proportionate. A £5,000 fine will be enough to deter non-compliance for most, yet fines of up to £30,000 are also possible if non-compliance continues. The legislation allows for fines to be imposed repeatedly every 28 days after a penalty notice has been issued. For repeat breaches, local housing authorities can also pursue prosecution through the court, which carries an unlimited fine. This escalating procedure gives our new ombudsman the necessary teeth for maximum compliance without making the fines unnecessarily excessive. I therefore ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

I will withdraw the amendment, as I made clear, but there is a point of difference here. We do not believe these fines will be enough. I take on board, as I have previously, the Minister’s point that repeat fines can be levied. For us, these fines are important because of their deterrent effect in cautioning landlords away from ever contemplating a breach or repeat offences. The maximum fine level also has implications for enforcement more generally, which we will debate in due course. In this instance we are probing the Government on the maximum levels, so I do not intend to push the amendment to a Division.

[The Chair]

On a slight technicality, the Member is seeking the leave of the Committee to withdraw the amendment. Other members of the Committee may press it to a Division if they wish to, although in this case they do not.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

Clause 27

Offences

--- Later in debate ---

[Matthew Pennycook]

I will speak to new clause 57. I will state up front that we welcome the Government amendments to clause 27 and in this area to toughen the sanctions on landlords who display the types of behaviour the Minister has just set out. As I indicated last week when we debated amendments 163 and 164 and the financial penalties that local authorities could levy for breaches and offences under clauses 9 and 10, we believe that rent repayment orders should be a more significant feature of the Bill as a means to aid enforcement of the new tenancy system; to ensure compliance with the requirements to be a member of the ombudsman and maintain an active landlord database entry; and to fairly compensate tenants for losses incurred due to a failure on the part of landlords to comply with the duties and obligations provided for in the Bill.

As the Committee will know, rent repayment orders were introduced by the Housing Act 2004, and were hugely expanded via section 40 of the Housing and Planning Act 2016. They allow the occupier of a property—usually a tenant—and local authorities to apply to the first-tier tribunal for an order that a landlord or his or her agent should repay rent of up to a maximum of 12 months—although the Minister has just made it clear that, in certain circumstances, the Government propose to lengthen that period to 24 months. Rent repayment orders are an accessible, informal and relatively straightforward means by which tenants can obtain redress in the form of financial compensation without having to rely on another body in instances where a landlord or his or her agent has committed, beyond reasonable doubt, an offence that relates to the occupation or letting of a property.

As Simon Mullings, the co-chair of the Housing Law Practitioners Association, argued in the evidence he gave to the Committee on 16 November:

“Rent repayment orders create, as I have said before to officials in DLUHC, an army of motivated enforcers, because you have tenants who are motivated to enforce housing standards to do with houses in multiple occupancy, conditions and all sorts of things.”––[Official Report, Renters (Reform) Public Bill Committee, 16 November 2023; c. 114, Q146.]

We know that rent repayment orders are already being utilised on a scale the dwarfs the use of other enforcement tools. In London, for example, the available data suggests that more properties were subject to a rent repayment order in the years 2020, 2021 and 2022 than civil penalties and criminal convictions relating to licensing in the same period.

The Bill as originally drafted allowed for rent repayment orders to be made only where a landlord had committed an offence under clause 27(9) relating to continuing or repeat breaches after a penalty had been imposed. As the Minister has made clear, Government new clause 19 adds a series of offences under clause 48 concerning the provision of false or misleading information to the private rented sector database and continuing or repeat breaches. We welcome that.

Separately, Government new clause 21 provides that a rent repayment order can be made against a superior landlord, thereby overriding the judgment made in the recent case of Rakusen v. Jepsen and others, which was heard by the Supreme Court. We welcome its incorporation into the Bill. We take the Government’s decision to table it as a clear indication that they view rent repayment orders as a practical and accessible means of enforcement by tenants or occupiers.

However, we want the Government to go further and extend the tribunal’s ability to make rent repayment orders for the following: first, a breach of new sections 16D and 16E of the Housing Act 1988, relating to the duty on landlords and contractors to give a statement of terms and other information, and the no-let prohibition in respect of grounds 1 and 1A; secondly, a failure to register with the ombudsman, as required by clause 24 of the Bill; and thirdly, a failure to keep an entry on the database up to date and to comply with all the relevant requirements of clause 39.

[Lloyd Russell-Moyle]

Despite my reservations about having three different deposit schemes, one of the reasons that the deposit scheme compliance is so high is because it comes with an element of rent repayment orders. The likelihood of local authorities being able to chase that up is next to zero. The likelihood of tenants being able to do that is extremely high.

[Matthew Pennycook]

My hon. Friend makes a very good point, which pre-empts one that I am about to make. We think that rent repayment orders can and do provide an incentive for landlords in these areas.

We believe, specifically when it comes to new clause 57, that allowing the tribunal to make rent repayment orders for these additional specific breaches would provide an additional incentive for landlords to comply with the relevant duties, requirements and prohibitions, and enable wronged tenants to be compensated for any losses incurred. Extending rent repayment orders to the relevant requirements of clause 39, for example, would be a powerful stimulus for landlord portal registration, because it would become the norm for tenants to check whether their landlord or prospective landlord was compliant.

Conversely, if the entitlement to apply for a rent repayment order were to apply to the relevant requirements of clause 39, it would provide tenants with a compelling reason to visit the portal, to learn about their rights and access information and resources they might not otherwise come across until the point they had a serious complaint or were engaged in a dispute with a landlord. This example also illustrates how an extension of rent repayment orders could alleviate some of the burdens that would otherwise fall on local authorities as the only mechanism to enforce, by means of financial penalties and criminal offences, a number of the breaches in the Bill to which they currently do not apply.

In the scenario I have outlined, tenants incentivised by the potential to apply an RRO to a landlord who was not compliant would act as an intelligence-gathering mechanism for local authorities, helping them to identify unregistered properties that they might otherwise struggle to locate and register. Put simply, as Dr Henry Dawson said to the Committee in the evidence session on 14 November:

“Using rent repayment orders incentivises tenants to keep an eye on landlords.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 60, Q74.]

The Minister may assure me that the regulations to come may provide for rent repayment orders in relation to clauses 24 and 39(3). If that is the case, we would welcome it, but I would much prefer him to accept the new clause and expand the use of rent repayment orders in the Bill to encourage compliance and give tenants the means to secure, for themselves, redress for poorly behaving landlords. I look forward to the Minister’s response.

[Jacob Young]

The purpose of rent repayment orders is to provide an effective means through which tenants can hold criminal landlords to account and receive due remedy. Extending rent repayment orders to cover non-criminal civil breaches would mean landlords could be ordered to pay up to two years’ worth of rent for a relatively minor non-compliance. We think that this would be disproportionate. We think that scarce court time should be focused on dealing with serious offences rather than more minor breaches. For first and minor non-compliance, with provisions in the Bill there will be several means of redress and enforcement, including the ombudsman and civil penalties of up to £5,000, but I am happy to continue this conversation with the hon. Member for Greenwich and Woolwich further.

[Matthew Pennycook]

I welcome the Minister’s response. There may be a difference of principle here, in that we feel quite strongly, actually, that rent repayment orders should be extended to non-criminal civil breaches of requirements set out in the Bill. I take the Minister’s point about this being an excessive response to landlord non-compliance for first or minor breaches. I say to him that perhaps the Government could explore a grace period as the schemes are being introduced, where landlords are not caught within an extended rent repayment order scheme, or some sort of get-out from first or minor offences.

We are trying to address a way, once the scheme is bedded in and landlords—without committing a criminal offence—are regularly not complying with mandatory membership of the ombudsman or registering with a portal, for landlords to be further incentivised, so that tenants are aware of their rights and hold their landlords to account. This may be an issue that we will come back to, but I very much welcome the Minister’s assurance that we will continue the dialogue on this point.

Amendment 65 agreed to.

Clause 27, as amended, ordered to stand part of the Bill.

Clause 28 ordered to stand part of the Bill.

Clause 29

Guidance for scheme administrator and local housing authority

Amendment made: 66, in clause 29, page 39, line 4, leave out “in England”.—(Jacob Young.)

This amendment leaves out words which have no legal effect because a “local housing authority” as defined by clause 57(1) could not be situated outside of England.

Question proposed, That the clause, as amended, stand part of the Bill.

[Jacob Young]

Clause 29 allows the Secretary of State to issue or approve guidance on effective working between local councils and the ombudsman, who will run the only approved or designated landlord redress scheme. Both must have regard to any guidance published under provisions in this clause. We have designed the guidance alongside local councils and the ombudsman. Local councils and the ombudsman will have different but complementary roles and responsibilities in the private rented sector. We intend for the guidance to provide clarity on a range of situations where communication and co-operation between councils and the ombudsman would be advantageous or necessary. We also want it to set out roles and responsibilities for when a tenant complains about a problem that both the ombudsman and local councils can help to resolve.

[Matthew Pennycook]

We agree that the new or expanded ombudsman, with responsibility for dealing with complaints from tenants in the private rented sector, will have to work effectively with local authorities given the latter’s enforcement role. When the new ombudsman has been established, a complaint from a tenant concerning the breach of a regulatory threshold will be able to be made either directly to the ombudsman or to the local authority that would have the power to take enforcement action to bring the landlord in question into compliance with the said regulations, and if they fail to do so, to sanction them. There is therefore a clear risk not only that the role of the ombudsman vis-à-vis local authorities is not clearly delineated, but that tenants themselves will be confused about which body it is appropriate to approach in any given circumstance.

This issue was raised during the progress of the Social Housing (Regulation) Act 2023 because there is a general issue about how the ombudsman relates to local authorities. Given the Minister’s indication that the Government’s preferred approach is to have that ombudsman take on a responsibility for the private rented sector, I think—if anything—this point becomes more pertinent. The Government acknowledge, as is clearly stated in the explanatory notes accompanying the Bill, that the new ombudsman and local authorities must have “complementary but separate roles.” I put this point to the housing ombudsman, Richard Blakeway, in one of our evidence sessions two weeks ago. He replied that

“that is a really important point, because there is a risk of duplication between the role of a council and the role of an ombudsman. Again, there is a lack of clarity for residents—tenants—about which route to take. An ombudsman does not operate in isolation—it will not operate in a bubble—so the relationship between the ombudsman and the courts will be critical, as well as the ombudsman discharging its own functions.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 28, Q28.]

It is crucial that guidance on how local authorities and the ombudsman will work together to resolve complaints, including how they share information and how each signpost to the other where appropriate, is fit for purpose. The clause allows for such guidance to be published, and I would be grateful if the Minister, either now or in writing, could perhaps give us a little more insight into how the Government will ensure that the roles of the two are separate but complementary, as the Government have indicated they must be.

[Jacob Young]

Redress and enforcement achieve different but complementary outcomes. Local councils enforce regulatory standards. Ombudsman schemes are not enforcement or regulatory bodies but instead protect consumer rights by providing redress, in this case where a landlord has failed to adequately deal with a legitimate complaint. Where the complaint from a tenant concerns the breach of a regulatory threshold, local councils may take enforcement actions to bring the landlord or property into compliance with the regulations and use their discretion to sanction landlords. In such circumstances, tenants will be able to complain to both the council and the ombudsman. The local council will address the regulatory breach and the ombudsman will provide redress for the tenant. I hope that that reassures the hon. Gentleman.

Question put and agreed to.

Clause 29, as amended, accordingly ordered to stand part of the Bill.

Clause 30

Interpretation of Chapter 2

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Matthew Pennycook]

The clause removes the jurisdiction of the housing ombudsman service over private residential landlords and the private rented sector housing activities of social housing providers. I simply want to ask the Minister, given his announcement today about the housing ombudsman being the Government’s preferred provider of private rented sector redress, whether the provisions of this clause are still necessary, as the Government have made it clear that they intend the existing ombudsman to extend its remit to cover the private rented sector. Will the Government review the clause in the light of that announcement?

[Jacob Young]

Any social housing redress scheme approved under the Housing Act 1996 provides redress services for the private rented tenancies of social landlords. An approved social redress scheme can also provide redress to tenants of private landlords who choose to join voluntarily. Currently, only one approved social housing redress scheme is administered by the housing ombudsman service.

Once brought into force, the clause will remove the private rented sector activities from the general jurisdiction of any approved social housing scheme. The clause will also stop any social housing redress scheme accepting relevant private landlords as voluntary members in relation to their private sector interests. However, the clause allows a social housing redress scheme to retain some jurisdiction over private rented sector activities if agreed with the Secretary of State. It does not prevent one organisation, such as the housing ombudsman, from administering both social and private redress schemes through a single, joined-up service. The clause will ensure that tenants who complain under the joined-up service are treated in exactly the same way as others who rent in the same sector.

The Bill provides a mechanism to bring the clause into force, but only once the new private rented sector ombudsman scheme is established. That will prevent disruption to members of existing schemes and avoid gaps in redress for tenants. If the hon. Member for Greenwich and Woolwich has further questions, I am happy to write to him.

Question put and agreed to.

Clause 31 accordingly ordered to stand part of the Bill.

Clause 32

The database

[Matthew Pennycook]

I beg to move amendment 175, in clause 32, page 40, line 18, at end insert—

“(ba) details, which may include copies, of all notices seeking possession served by the residential landlord in respect of each dwelling of which he is the landlord, and”.

This amendment would require the database to record details of notices of possession served by a landlord in respect of each dwelling of which they are the landlord.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 33 stand part.

[Matthew Pennycook]

In the debate on our amendment 173 to clause 23, I remarked on the concern among Opposition members of the Committee that, in contrast to chapter 2 of part 2 concerning the ombudsman, chapter 3 of part 2 concerning the private rented sector database is not nearly prescriptive enough.

To be clear, when it comes to establishing a private rented sector database and developing the new digital property portal service that it will support, we do not wish to tie the Government’s hands too tightly. We believe it is right that much of the detail is put in regulation at a later date: how the database will be operated and overseen; how entries are verified, corrected and removed; what the registration fees are and how they will be collected; and how information on the database is shared with third parties. However, we also believe that certain requirements of the functioning of the portal should be placed on the face of the Bill.

In our view, such requirements should include one for landlords to submit key information on their history and for that information to be publicly available so that tenants may make informed decisions when entering into a tenancy agreement and hold their landlord to account. Key information might include details of past enforcement action taken against a landlord or an agent representing them; any rent repayment, banning or management orders made against them; rent levels for the property over time in the form of past section 13 notices; and details of notices of possession served to previous tenants.

Amendment 175 would add to the Bill a requirement for

“the database to record details of notices of possession”

—as one example—

“served by a landlord in respect of each”

of their dwellings let. As I said, we feel strongly that the Bill should be amended to guarantee a minimum set of expectations for the database and the new digital property portal service; the amendment would go some way to ensuring that is the case. I look forward to hearing the Minister’s thoughts on it.

[Jacob Young]

Clause 32 provides for the establishment and operation of the portal, as we have been discussing. With access to a comprehensive and standardised dataset on private rented sectors across England, local authorities will be best equipped to develop and implement their enforcement strategies. By requiring landlords to undertake a registration process, as provided by clause 34—which I will turn to in due course—the portal will help them to meet standards within the private rented sector by making them aware of their legal requirements.

With legislative backing and clear duties on users, a portal with entries for private landlords and dwellings will support a much richer understanding of the private rented sector and assist the Government in developing targeted policy. As such, the portal will be key to the successful implementation and enforcement of the wider reforms legislated for in the Bill.

Clause 33 sets out who can be the portal operator; a role required to create and maintain a working database of private landlords and their properties. The operator can appointed by the Secretary of State or a person arranged by the Secretary of State. The Government envisage the portal will be centrally co-ordinated by a single operator. Our legislation allows for the portal to be operated by the Department or to arrange for an alternative, such as a public body, to take on that responsibility.

I thank the hon. Gentleman for his Amendment 175. This would require landlords to record their use of possession grounds, under section 8 of the Housing Act 1988, on the property portal. To ensure the portal maintains the flexibility to meet the future needs of the sector, it is necessary that we use regulations to prescribe the information it collects, rather than including these in the Bill.

We intend for the portal to be a source of basic information about properties and their health and safety compliance. This legislation also allows for the ability to record tenancy-related issues, such as details of possession notices. We will consider the matter of recorded possession notices on the portal ahead of passing regulations, and carefully consider the balance of benefits and burden on landlords and local authorities when deciding what information to record. We will continue to work with stakeholders to assess the merits of information requirements, ahead of introducing any regulations. I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

That is a helpful response. I took from it that the Government are considering including a history of past possession notices granted to a landlord. That is very welcome.

We tabled this amendment because it gets to the heart of how the new portal will operate. It could be a source of very basic information about a property, and whether it is strictly compliant with health and safety standards. We would hope the Government—the noises the Minister has made indicate they might—will take a more expansive view of how the property portal might work. Namely, that it will give tenants, as consumers, real power, because of the transparency and the amount of information recorded, to be able to know whether the tenancy agreement they are prospectively entering into is good for them, and whether the landlord is a good-faith landlord—as we know the majority are—or potentially an unscrupulous landlord. I welcome the indications the Minister has given, and look forward to debating—whether between us, or with other Ministers—the regulations in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Clause 33 ordered to stand part of the Bill.

Clause 34

Making entries in the database

[Lloyd Russell-Moyle]

I beg to move amendment 202, in clause 34, page 41, line 33, at end insert—

“(2A) The regulations must provide for information or documents to be provided relating to disputes and their resolution under deposit protection schemes under Chapter 4 of Part 6 of the Housing Act 2004 (tenancy deposit schemes).”

This amendment would require regulations made by the Secretary of State to require the provision of information relating to dispute resolution for deposit protection schemes.

Amendments 202 and 176 both seek to ensure that certain things are included in this property portal. We have just heard from the Minister that he intends to set out in regulations the lists of what needs to be included. I think it is important that we have confirmation that these are the things that the Minister is considering.

My amendment 202 proposes that disputes and outcomes of the deposit protection scheme be included in the property portal. It is so important that tenants know whether their landlord is routinely in dispute over the deposit. I am not talking about situations in which the tenant agrees that there was damage, and there is no dispute about the deposit deduction; I mean those in which a tenant disputes the damage. The tenant should be able to see whether there are regular disputes and whether the outcome is in the landlord’s favour—the landlord might actually be pretty good—or in the tenant’s. The recording of disputes would also allow us to start to develop case law on deposit disputes and their outcomes.

I also support amendment 176—

--- Later in debate ---

[Lloyd Russell-Moyle]

As I take it, the Minister has agreed that he will consider including disputes. That is a separate point from whether they are part of the ombudsperson; it is about whether their own processes and outcomes are being recorded properly. I will not push the amendment to a vote, but I do hope that the Minister will keep us in touch with his thinking as matters progress.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 176, in clause 34, page 41, line 33, at end insert—

“(3A) The regulations must provide for the following information or documents to be provided to the database operator as part of the process of creating entries on the database—

(a) an address, telephone number and email address for the residential landlord;

(b) an address, telephone number and email address for all managing agents engaged by the residential landlord;

(c) details of every dwelling that is being let by the residential landlord;

(d) evidence that the residential landlord has supplied a copy of the ‘How To Rent’ booklet to each relevant tenant;

(e) the rent that is currently being charged in respect of every dwelling that is being let by the residential landlord;

(f) details of any enforcement action that a local housing authority in England has taken against the residential landlord;

(g) details of any banning orders that have been made against the residential landlord pursuant to Chapter 2 of Part 2 of the Housing and Planning Act 2016;

(h) in respect of every dwelling that is being let by the residential landlord, copies of the documents required by:

(i) Regulation 6(5) of the Energy Performance of Buildings (England and Wales) Regulations 2012;

(ii) Paragraph(s) 6 and/or 7 of Regulation 36 of the Gas Safety (Installation and Use) Regulations 1998;

(iii) Regulation 3 of the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020;

(iv) Regulation 4 of the Smoke and Carbon Monoxide Alarm (England) Regulations 2015;

(i) details of whether the dwelling house is required to be licenced under Part 2 (Houses in Multiple Occupation) or Part 3 (Selective Licensing) of the Housing Act 2004”

This amendment would ensure that a number of the regulatory obligations that built up around section 21 notices are maintained by means of the database following the removal of section 21 of the Housing Act 1988.

We discussed, in relation to amendment 175, the fact that we believe that certain requirements relating to the functioning of the portal should be placed in the Bill. In speaking to amendments 170 to 172 to clause 19 in relation to deposit protection, I briefly touched on the fact that a number of regulatory obligations that have developed around section 21 notices over the 35 years for which the present system has been in place will fall away when it is abolished at the point at which chapter 1 of part 1 of the Bill comes into force.

The preconditions and requirements that have built up around section 21 notices, which presently prevent landlords from using the no-fault eviction process unless they can show compliance, include providing copies of gas safety certificates; providing copies of energy performance certificates; providing copies to each tenant of the ever-evolving how-to-rent booklet; and showing evidence of complying with the licensing requirements for houses in multiple occupation. There are no provisions in the Bill to ensure that landlords will have to continue to meet these and other regulatory obligations as a precondition of operating under the new tenancy system.

We fear that that will leave under-resourced local authorities—or tenants themselves, through the pursuit of civil claims—as the only means of enforcing these important statutory duties. We believe that compliance should instead be achieved by making it mandatory for landlords to submit the relevant information and proof of compliance to the database operator as part of the process of creating entries on the database. Amendment 176 would ensure that that is the case in respect of a wide range of existing regulatory obligations. We urge the Minister to accept it.

[Jacob Young]

I thank the hon. Member for moving amendment 176, which would require certain information to be recorded on the property portal. I very much agree with the sentiment of it; we already intend to record much of that information on the portal. Alongside basic personal and property details, we intend to require landlords to supply evidence that health and safety standards are being met within their rental property. This is likely to include the selected information that landlords are currently legally obliged to provide to tenants, such as gas safety certificates.

To ensure that the portal maintains the flexibility to meet the future needs of the sector, it is necessary that the information it collects be specified in regulations, rather than in the Bill. I therefore ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

I very much welcome the Minister’s response and his statement that “much of” that information will be included on the portal. However, I want to press home why we think this is important. These are not add-ons that we might seek to include in the portal; they are existing preconditions and regulatory obligations that have developed around section 21, and surely they cannot fall away under the new tenancy regime. I welcome what the Minister said, but I urge him to ensure that all the preconditions and obligations that exist around section 21 are a mandatory requirement as part of the portal process.

[Lloyd Russell-Moyle]

It is also important that everything be recorded in one place, not only for tenants but for landlords, who will not have to fill in a plethora of information in different places about the EPC, gas safety and so on. It will make it easier for everyone if the Government get it right. It is so important that they be clear early on, so that we are not in a rush at the last moment.

[Matthew Pennycook]

My hon. Friend’s point is well made. There is the potential—hopefully the Government recognise it—to reduce the burden on landlords by ensuring that there is a clear set of requirements associated with registration on the portal that do not exist around the serving of a notice, as they do currently. We hope that the Government will take our points on board and bring all these preconditions within the scope of the portal in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 ordered to stand part of the Bill.

Clause 35

Requirement to keep active entries up-to-date

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 36 to 38 stand part.

[Jacob Young]

I commend the clauses to the Committee. I am interested to hear the thoughts of the hon. Member for Greenwich and Woolwich.

[Matthew Pennycook]

I have two brief questions for the Minister in relation to this group of clauses. I am more than happy for him to write to me on these points, as they are quite niche.

First, the powers under clause 38 will be used to set fees in relation to registration on the database. Clause 38(5) allows for all or part of the amount received in fees to be paid to local housing authorities or into the Consolidated Fund. Is the implication of the inclusion of this provision in the Bill that the Government expect there to be a surplus from fees collected by the database? If so, why do the Government not believe, given that they are the relevant enforcement body, that any available funds should be allocated to local authorities alone rather than central Government?

Secondly, we take it from the nature of the charging regime that the Government hope the database will be financially self-sufficient. However, the work needed to maintain and verify entries on the database will be onerous, and the start-up costs could be significant. Can the Minister provide any detail at this stage as to what the Government expect the resourcing requirements of the database to be? Can he provide assurances as to how its implementation and running costs will be met?

[Jacob Young]

In answer to the hon. Member’s question about landlords having to pay to join the service, we intend to fund the service through fees charged to private landlords when they register on the portal. We will take steps to ensure that these costs remain reasonable, proportionate and sustainable. The new service will bring substantial benefits to landlords as well as tenants, providing a single source of information about their legal responsibilities and helping them to showcase their compliance. It will also support local councils to enforce against unscrupulous landlords, who undercut the responsible majority.

On resourcing for local authorities, the information recorded on the portal will save local authorities time when enforcing health and safety standards in the PRS. Our research has shown that locating landlords and properties takes up a significant proportion of local authorities’ resources. Additionally, we are undertaking a new burdens assessment and will ensure that additional burdens created by the new system are fully funded.

Question agreed to.

Clause 35 accordingly ordered to stand part of the Bill.

Clauses 36 to 42 ordered to stand part of the Bill.

Clause 43

Access to the database

--- Later in debate ---

[Lloyd Russell-Moyle]

It might be understandable if, for example, the landlord’s day of birth was redacted on Companies House but the month and year were shown. If we had no national insurance numbers, but we had a contactable address where that person could be found—not necessarily their home address, but a non-PO box address—that might, again, be acceptable.

The Government need to be clear in their intention that this is about privacy grounds only where necessary for the safety and functioning of a landlord, and not about withholding information that would be useful for the tenant in reaching out to the landlord. I will withdraw the amendment, but I expect the Minister to provide some more details in writing about what will be excluded.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 43 ordered to stand part of the Bill.

Clauses 44 to 46 ordered to stand part of the Bill.

Clause 47

Financial penalties

[Matthew Pennycook]

I beg to move amendment 167, in clause 47, page 50, line 36, leave out “£5,000” and insert “£30,000”.

This amendment would increase the maximum financial penalty that local authorities could impose on a person for breach of a requirement imposed by clause 39.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 168, in clause 47, page 51, line 1, leave out “£30,000” and insert “£60,000”.

This amendment would increase the maximum financial penalty that local authorities could impose on a person for committing an offence under section 48.

Clause stand part.

[Matthew Pennycook]

Amendments 167 and 168 would raise the maximum financial penalty that local authorities can levy when there has been a breach of a requirement imposed by clause 39 for private landlords to be registered on the database before they can market, advertise or let associated dwellings, or an offence has been committed under clause 48.

I intend to speak to the amendments only briefly, as we have already debated the issue of maximum financial penalties on two occasions. Suffice it to say that the Opposition remain of the view that the Government should reconsider the proposed maximum limits of £5,000 and £30,000 respectively, on the grounds that fines of up to those levels are unlikely to act as an effective deterrent. I come back to this point briefly because it has a direct bearing on the ability of local authorities to finance enforcement activity, an issue that we will debate shortly in relation to clauses 58 to 61. That is why the Local Government Association supports the amendments.

I remind the Minister that the amendments would bring the maximum financial penalties in line with others that can be issued by enforcement authorities against landlords who breach the legislation, for example in respect of the Leasehold Reform (Ground Rent) Act 2022.

I do not want to press the point, and I do not necessarily expect a response from the Minister, but we urge the Government to reconsider.

[Jacob Young]

I thank the hon. Gentleman for tabling the amendments. As he says, we have discussed these points a few times.

Our proposed fines regime is fair and proportionate. Fines of up to £30,000 are possible if non-compliance continues. The legislation allows fines to be imposed repeatedly every 28 days; and for repeat offences, local housing authorities can pursue prosecution through the courts, which carries an unlimited fine. This escalating procedure will give local authorities the ability to effectively enforce the requirements of the new property portal, without fines being excessive. The Department will issue guidance to local authorities to help them to make use of the new fine-setting powers. I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 ordered to stand part of the Bill.

Clause 48

Offences

--- Later in debate ---

[Jacob Young]

Blanket bans on letting to families with children or people who receive benefits have no place in our modern housing market. We agree that landlords and agents must not discriminate on that basis, and should fairly consider individual prospective tenants. Our package of amendments and new clauses prohibits landlords from discriminating against families with children or people who receive benefits in England and Wales. The blanket ban measures respond to calls for additional safeguards for some of the most vulnerable renters, while confirming that landlords can ensure that a tenancy is affordable, and that they retain the final say on whom they let to.

[Matthew Pennycook]

Clause 52 simply provides local authorities with the power to impose financial penalties on those who do not meet the requirements of the private rented sector database, as set out in clause 39, or an offence relating to it, as set out in clause 48.

The large group of Government amendments and new clauses that we are considering with this clause add proposed new chapter 2A to part 1 of the Bill. It includes several new clauses, commenced by regulations made by the Secretary of State, that seek to prohibit discriminatory practices associated with children and benefits status in relation to the grant of tenancies, as the Minister made clear. Incidentally, proposed new chapter 2B will provide for the same clauses to apply in Wales, pending commencement by order of Welsh Ministers.

Without question, we welcome the intent behind the amendments and new clauses. As I am sure the Minister can see, we have consistently expressed concern since the Bill’s publication that the commitment in the White Paper to ban so-called “No DSS” or “No kids” practices was not on the face of the Bill. The Government deserve credit, as they do for deciding to extend a decent homes standard to the private rented sector and for seeking to make these important changes through this Bill rather than separate future legislation.

The case for prohibiting “No DSS” and “No kids” practices is indisputable. All renters should be treated fairly in their search for a safe, secure, decent, and affordable place to call home, regardless of whether they are in receipt of benefits or their family circumstances. Yet in addition to the various informal barriers to renting privately that we know exist, some of which we debated when considering advanced rent payments in relation to clause 5, there is incontrovertible evidence that some landlords and agents acting on behalf of landlords actively discourage, or even prevent, people in receipt of benefits or with children from renting their properties.

We know that some landlords refuse to allow benefit claimants to even view an affordable property or to consider them as a potential tenant, and prospective renters across the country will be familiar with messages in property adverts such as “No DSS”, “No benefits”, “Working households preferred” or “Professional tenants only”. The scale of this discrimination is almost certainly significant. Successive YouGov surveys of private landlords in England have made clear not only that a comfortable majority of them prefer not to rent to people in receipt of benefits but that a significant minority operate an outright ban. Outright bans on renters with children may be less prevalent, but they are still extremely commonplace. The result is that hundreds of thousands of families have been unable to rent a home that they wanted and could afford, simply due to their benefit status or because they have children.

As we have touched on numerous times during the Committee’s proceedings, the number of such families in the PRS has increased markedly over recent decades, with woefully inadequate social housing supply and rising house prices making private renting the only option for many families, including working families with children. Of course, such discrimination does not affect all people equally. The reality, particularly in hot, competitive rental markets, is that women, disabled households and people of colour will be disproportionately affected by it. For example, we know that the overwhelming majority of single parents receiving housing benefit are female. I grew up in one of those households; the challenges they face daily are considerable enough without having to navigate discriminatory and potentially unlawful policies in the private letting industry.

Whether they are the result of landlords’ misperceptions, of frustrations with the workings of the benefit system or of ill-informed advice from letting agents, blanket bans of the kind in question are simply unacceptable. They are not only unacceptable but almost certainly already unlawful by virtue of the premises provisions in the Equality Act 2010, which provide for a prohibition against discrimination in letting, managing or disposing of premises. However, although a number of court rulings have confirmed that rejecting tenancy applications because of an applicant’s benefit status or family circumstances is a breach of the 2010 Act, proving discrimination is incredibly difficult. As a result, despite the growing body of case law, “No DSS” and “No kids” practices remain widespread.

The Government amendments in this group perfectly demonstrate the nature of the problem. They specify discriminatory practices that are already unlawful under part 4 of the Equality Act 2010. Indeed, Government new clauses 8 and 9 even mirror the language of the Equality Act—“provision, criterion or practice”—in relation to discriminatory practices, yet they do nothing to clarify that the various practices are henceforth always to be deemed discriminatory. As such, although we welcome the motivation behind the Government amendments in attempting to provide for a strict prohibition of such practices, we are concerned that they will not achieve that objective, because, although they will have the effect of removing terms discriminating against benefit claimants and families with children from contracts, they will not prevent the underlying discrimination from occurring in practice.

What we propose, by way of our new clause 61, is that the weaknesses of the various Government amendments in question are resolved by ensuring that the underlying conduct is clearly unlawful by making it a breach of the Equality Act 2010. Our new clause is aimed at prohibiting indirect discrimination and discrimination arising from disability, by giving the Secretary of State the power to define, by regulation, what behaviour is, for the purposes of part 4 of the 2010 Act, considered to be unlawful discrimination unless the person accused of discriminating can prove the contrary. It would remove, for example, the need for a female prospective private renter to prove that a “No DSS” blanket ban had a disproportionate impact on her as a woman. It would mean that, in any court proceedings, the first threshold stage would always be passed unless the landlord in question could convince the court that the ban had no discriminatory impact—which, of course, would never happen.

By forcing landlords to prove that some objective justification exists for refusing to rent to people in receipt of benefits or with children in order to advertise or market a property on the basis of a “No DSS” or “No kids” ban, our amendment would have the effect of ensuring that such discriminatory practices were finally banned in practice, because the number of privately rented properties where there could be such an objective justification is tiny.

I hope the Minister will respond to this amendment in the spirit in which it is intended—namely, as a constructive means of compelling the Government to consider whether their proposed new chapter 2A to part 1 of the Act may fall short in practice. I look forward to the Minister’s response.

[Jacob Young]

I am grateful to the hon. Member for tabling new clause 61. As I set out earlier, we agree that blanket bans against letting to families with children or to people who receive benefits have no place in our modern housing market. That is why our amendments to the Renters (Reform) Bill make express provisions to ensure that landlords and agents cannot discriminate on that basis.

Our measures take direct action to address blanket ban practices in the private rented sector, and our targeted approach tackles both overt and indirect practices. We have designed our enforcement approach with the tenants that are most vulnerable to this type of discriminatory practice in mind, and we understand that their priority is finding a safe and secure home in the private rented sector. Unlike the provisions in the Equality Act 2010, we are giving local councils investigatory and enforcement powers to tackle unlawful blanket ban practices. Tenants will not have to shoulder the burden of taking their complaint to court; local councils will be enabled to take swift and effective enforcement action. We think that it is right that prohibitions on blanket bans in the private rented sector are part of the Renters (Reform) Bill and that they are incorporated into the enforcement framework, rather than the Equality Act 2010.

I say to the hon. Gentleman that we are of one mind when trying to stop these blanket bans, so I am happy to have further conversations with him to that effect. I therefore ask him to withdraw his amendment.

[Matthew Pennycook]

I absolutely agree with the Minister that we are of one mind in wanting to ensure that these blanket bans are prohibited: he is right that they have no place in our modern housing market. However, we remain concerned—I do not think that the Minister addressed the specifics of our new clause—that the Government’s amendments will not achieve that objective. As I said, although they will have the effect of removing, from contracts, terms discriminating against benefits claimants and families with children, they will not, in practice, prevent that underlying discrimination from occurring.

We feel very strongly about this issue. If the Government do not get this right and these practices are not abandoned, we will have to return with a future piece of legislation to ensure that they are prohibited in practice. For that reason, we will seek to press the new clause to a Division at the appropriate time.

Amendment 71 agreed to.

Clause 52, as amended, ordered to stand part of the Bill.

Ordered,

That clause 52 be transferred to the end of line 30 on page 57.—(Jacob Young.)

This amendment is consequential on Amendment 71 which expands clause 52 so that it is no longer limited to penalties under Part 2 of the Bill. This amendment moves clause 52 into Part 3 of the Bill (enforcement authorities). Part 3 is expected to be added to so as to include other provision about enforcement generally. Clause 52 is expected to form its first Chapter.

Schedule 3

Financial Penalties

Amendments made: 72, in schedule 3, page 78, line 8, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 73, in schedule 3, page 80, line 20, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 74, in schedule 3, page 80, line 25, after “section” insert “(Financial penalties),”.

This amendment is consequential on Amendment 71.

Amendment 75, in schedule 3, page 80, line 33, at end insert—

“(ca) the activities of a superior landlord in relation to such a tenancy,”.—(Jacob Young.)

This amendment ensures that the proceeds of financial penalties imposed under clauses 26 and 47 can be applied towards meeting enforcement costs relating to superior landlords as well as immediate landlords.

Schedule 3, as amended, agreed to.

Clause 58

Enforcement by local housing authorities: general duty

[Jacob Young]

I beg to move amendment 76, in clause 58, page 57, line 35, after second “of” insert “, or an offence under,”.

This amendment ensures that the duty in clause 58(1) does not prevent a local housing authority from taking enforcement action in respect of an offence under the landlord legislation which occurs outside of its area.

[Jacob Young]

I am interested to hear the thoughts of the hon. Member for Greenwich and Woolwich.

[Matthew Pennycook]

Part 3 of the Bill concerns the enforcement authorities, and clause 58 is the key clause. It imposes a new duty on local authorities to enforce, by means of financial penalties or by instituting offence proceedings, prohibitions of the landlord legislation in their areas. Subsection (4) sets out the definition of “landlord legislation”, referring to sections 1 and 1A of the Protection from Eviction Act 1977 and chapter 1 of part 1 of the Housing Act 1988. Neither of those are new, obviously, but local authorities have never had a duty to enforce them before, and the 1977 Act will require a different approach from the police to unlawful evictions. It also refers to the whole of part 2 of the Bill—all the prohibitions relating to the ombudsman and the property portal. By any definition, that constitutes a significant array of new regulatory and enforcement responsibilities for local authorities to meet.

Various proposals in the Bill could, if they work well, make local authority enforcement of prohibitions of the landlord legislation in their areas easier. The new ombudsman has the potential, for example, to provide an alternative route for dispute resolution and a distinct and effective route to redress when it comes to breaches of prohibitions relating to the misuse of possession grounds and for not providing a written statement of terms, thus ensuring that local authorities are not the only enforcement body for such contraventions. Similarly, the new private rented sector database has the potential, for example, to allow local authorities to far more easily identify poor-quality and non-compliant properties and who owns them, thus addressing a key barrier for local authorities when it comes to enforcing standards.

--- Later in debate ---

[Ms Buck]

My hon. Friend is absolutely right to talk about the variation in performance between local authorities. Enforcement in some of them definitely reflects a variation in interest and concern. Does he also recognise that there is also a fundamental issue of resource capacity for enforcement in local government? As this largely discretionary service is being squeezed by the pressures on local authorities, requiring extra duties from local authorities without resources is a recipe for inaction.

[Matthew Pennycook]

My hon. Friend’s point is extremely well made. As I have commented already, there is an issue about which local authorities prioritise these services, but precisely because they are a discretionary service, there is an issue of resources and funding. That is the second of the points I wish to put to the Minister.

In assessing why the approach of so many local authorities to enforcement is inherently reactive, one cannot escape the issue of capacity and capabilities. Not only are councils across the country under huge financial pressure at present but many are struggling, and indeed have struggled for some time, to recruit experienced officers to carry out enforcement activity. Yet the White Paper was entirely silent on the challenge of local authority resourcing and staffing. The provisions in the Bill that enable local authorities to keep the proceeds of financial penalties to reinvest in enforcement activity are welcome. However, the funds that will raise—not least because the Government have chosen to cap financial penalties at £5,000 and £30,000 respectively—are unlikely to provide the initial funding required to implement the new system, and even in the medium to long term will almost certainly not cover the costs of all the new regulatory and enforcement responsibilities that clause 58 will require local authorities to meet.

The White Paper committed the Government to conducting a new burdens assessment into the reform proposals it set out, assessing their impact on local government, and, where necessary, fully funding the net additional cost of all new burdens placed on local councils. I would be grateful, therefore, if the Minister can give us today a clear commitment on resources. Specifically, can he tell us whether the commitment to a new burdens assessment will be honoured and, if so, when it will be published?

[Jacob Young]

It is under way now.

[Matthew Pennycook]

Can the Minister also give us a clearer view of the Government’s view of the future of selective licensing following the Bill’s enactment, given that such schemes are crucial sources of local authority funding in a number of areas? I look forward to the Minister’s response to those points.

[Jacob Young]

I am grateful to the hon. Member for Greenwich and Woolwich for speaking to his amendments, and to the hon. Member for Westminster North for her comments. We expect the vast majority of landlords to do the right thing and meet their new legal responsibilities but, as ever, a minority will fail to do so. The Government are committed to supporting local authorities and taking proactive enforcement against this minority of landlords.

Clause 58 will place a new duty on every local housing authority in England to enforce the new measures in their area. When considering enforcement, local authorities will be able to use a civil penalty as an alternative to a criminal prosecution for an offence, allowing them to decide the most effective method of enforcement in each case.

Government amendments 78, 81 and 82 will extend the power in clause 58, though not the duty, to enforce the landlord legislation to county councils in two-tier areas in England. While local housing authorities have a duty to enforce the landlord legislation in their areas under clause 58, there may be some instances where breaches and offences are better pursued by the authority responsible for trading standards. For example, in relation to advertising a property to rent, county councils also have this responsibility. In this Bill, we make a distinction between less serious breaches of the legislation and more serious offences. Government amendments 76, 83, 84 and 85 strengthen clause 58 to ensure that the ability of a local housing authority to take enforcement action outside its local area extends to offences as well as breaches.

Clause 59 will further support effective enforcement by ensuring that the local authorities are fully aware of the enforcement action in their areas that is going to be taken by a different authority, and of the final results of such action. This will facilitate local authorities to take cross-border enforcement action, and deliver greater efficiency and enable local authorities to provide the most complete case to the courts.

Clause 60 will allow the Secretary of State to appoint a lead enforcement authority for the purpose of provisions in the landlord legislation, which includes many of the provisions in this Bill. We plan to carefully consider whether having a lead enforcement authority for any of the provisions in the landlord legislation will be beneficial. We plan to engage with local authorities and other stakeholders to establish this.

Clause 61 sets out the various duties and powers of a lead enforcement authority. The principal duty is to oversee the operation and effective enforcement. This includes the duty to provide advice to local authorities about the operation of the legislation and may include information relevant to the enforcement of specific cases.

Government amendments 86 to 91 will ensure that a lead enforcement authority’s duties and powers provided in the Bill to help local housing authorities are extended to county councils in England that are not local housing authorities. Government amendments 92, 93 and 95 ensure that county councils in England that are not local housing authorities are required, when requested, to report to a lead enforcement authority, in the same way that a local housing authority is on the exercise of its functions. New clause 22 will ensure that enforcement action is not duplicated when those county councils that are not also local housing authorities take enforcement action in relation to landlord legislation. Government amendment 77 ensures that new provisions of the new clause 22 are referenced in clause 58, which is the clause that encloses the duty to enforce on local housing authorities.

Finally, new clause 23 will place a duty on local authorities to supply data to the Secretary of State in relation to the exercise of their functions—I believe that point was mentioned by the hon. Member for Greenwich and Woolwich—under part 2 of this Bill, and other relevant legislation as and when it is requested. In order to evaluate the impact of our reforms and understand the action that local authorities are taking against the minority of landlords who flout the rules, it is vital that the Secretary of State is able to seek regular and robust data from local authorities. My officials will work with local authorities to agree a data reporting framework that is rational, proportionate and helpful to both local and central Government, and in line with other similar data collections. With their input, we will undertake a new burdens assessment and fully fund any additional costs generated to fulfil this duty. I hope that addresses the points raised in Committee.

Amendment 76 agreed to.

Amendments made: 77, in clause 58, page 57, line 38, after first “authority)” insert—

“, (Enforcement by county councils which are not local housing authorities: duty to notify)(3) (enforcement by county council in England which is not a local housing authority)”.

This amendment is consequential on NC22.

Amendment 78, in clause 58, page 57, line 38, at end insert—

“(3A) A county council in England which is not a local housing authority may—

(a) enforce the landlord legislation;

(b) for that purpose, exercise any powers that a local housing authority may exercise for the purposes of enforcing that legislation.”

This amendment confers a power to enforce the landlord legislation on county councils in England which are not local housing authorities and for that purpose enables such councils to exercise powers equivalent to local housing authorities.

Amendment 79, in clause 58, page 58, leave out lines 1 to 3.

This amendment removes the definition of “local housing authority” for the purposes of Part 3 of the Bill. It is consequential on Amendment 107 which inserts a definition of “local housing authority” for the purposes of the Bill as a whole.

Amendment 80, in clause 58, page 58, line 4, at end insert—

“(za) Chapter 2A of Part 1 of this Act,”.

This amendment adds the new Chapter expected to be formed of new clauses relating to discriminatory practices in relation to the grant of tenancies to the definition of “the landlord legislation” in clause 58.

Amendment 81, in clause 58, page 58, line 9, leave out “a local housing authority”.

This amendment is consequential on Amendment 78.

Amendment 82, in clause 58, page 58, line 10, leave out “that authority”.—(Jacob Young.)

This amendment is consequential on Amendment 78.

Clause 58, as amended, ordered to stand part of the Bill. 

Clause 59

Enforcement by local housing authorities: duty to notify

Amendments made: 83, in clause 59, page 58, line 16, after second “of” insert “, or an offence under,”.

This amendment ensures that a local housing authority notifies another local housing authority if it proposes to take enforcement action in respect of an offence under the landlord legislation which occurs in the area of that other authority.

Amendment 84, in clause 59, page 58, line 23, after “breach” insert “or offence”.

This amendment is consequential on Amendment 83.

Amendment 85, in clause 59, page 58, line 27, after “breach” insert “or offence”.—(Jacob Young.)

This amendment clarifies that a financial penalty imposed under the landlord legislation may also relate to an offence under that legislation.

Clause 59, as amended, ordered to stand part of the Bill.

Clause 60 ordered to stand part of the Bill.

Clause 61

General duties and powers of lead enforcement authority

Amendments made: 86, in clause 61, page 59, line 30, leave out “local housing” and insert “relevant local”.

This amendment requires a lead enforcement authority to provide information and advice to county councils in England which are not local housing authorities.

Amendment 87, in clause 61, page 59, line 35, leave out “local housing” and insert “relevant local”.

This amendment provides for a lead enforcement authority to disclose information to county councils in England which are not local housing authorities for certain purposes.

Amendment 88, in clause 61, page 60, line 1, leave out “local housing” and insert “relevant local”.

This amendment provides for a lead enforcement authority to issue guidance to county councils in England which are not local housing authorities.

Amendment 89, in clause 61, page 60, line 4, leave out “Local housing” and insert “Relevant local”.

This amendment requires county councils in England which are not local housing authorities to have regard to guidance issued by a lead enforcement authority under subsection (4) of clause 61.

Amendment 90, in clause 61, page 60, line 14, leave out “local housing” and insert “relevant local”.

The amendment provides for a direction given under subsection (7) of clause 61 to relate to county councils in England which are not local housing authorities.

Amendment 91, in clause 61, page 60, line 16, at end insert—

“‘relevant local authority’ means—

(a) a local housing authority, or

(b) a county council in England which is not a local housing authority;”.—(Jacob Young.)

The amendment defines “relevant local authority” for the purposes of clause 61.

Clause 61, as amended, ordered to stand part of the Bill.

Clause 62

Enforcement by the lead enforcement authority

Amendments made: 92, in clause 62, page 61, line 1, leave out “local housing” and insert “relevant local”.

This amendment requires a county council in England which is not a local housing authority to report at the request of a lead enforcement authority on the exercise of the county council’s functions under the provisions for which the lead enforcement authority is responsible.

Amendment 93, in clause 62, page 61, line 3, leave out “local housing” and insert “relevant local”.

This amendment is consequential on Amendment 92.

Amendment 94, in clause 62, page 61, line 5, at end insert—

“(7) The powers of a local housing authority referred to in subsection (1)(b) include the power to authorise persons to exercise powers of officers under sections (Power of local housing authority to require information from relevant person) to (Investigatory powers: interpretation) (see section (Investigatory powers: interpretation)(2)).

(8) Section (Suspected residential tenancy: entry without warrant)(7) is to be read, in relation to an officer of a lead enforcement authority, as if—

(a) the reference to a deputy chief officer whose duties relate to a purpose within subsection (1)(b) of that section were a reference to—

(i) a person who is employed by, or acts on the instructions of, the body which is the lead enforcement authority and has overall responsibility for the exercise of the functions of that body in that capacity (‘the head of the lead enforcement authority’), or

(ii) a person who is employed by, or acts on the instructions of, the lead enforcement authority, and has been authorised by the head of the lead enforcement authority to give special authorisations within the meaning of section (Suspected residential tenancy: entry without warrant), and

(b) paragraph (b)(ii) were omitted.”

This amendment is consequential on other new clauses which provide for investigatory powers of local housing authorities. It deals with how the references to officers of a local housing authority are to apply in the case where the powers of a local housing authority are to be exercised by a lead enforcement authority.

Amendment 95, in clause 62, page 61, line 5, at end insert—

“(9) In this section ‘relevant local authority’ has the same meaning as in section 61.”—(Jacob Young.)

This amendment defines “relevant local authority” for the purposes of clause 62.

Ordered, That further consideration be now adjourned. —(Mr Mohindra.)

Renters (Reform) Bill (Tenth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 28th November 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

It is a pleasure to see you in the Chair, Ms Fovargue.

Everyone deserves to live in a safe and decent home. It is completely unacceptable in this day and age that people are forced to live in homes that do not meet basic standards of decency. There is already a decent homes standard for social housing that has been successful in improving housing conditions. Since the standard was last updated in 2006, the level of non-decency in social housing has fallen from 29% to 10%, but there is no equivalent standard for the private rented sector, and homes in that sector are more likely to be non-decent.

Of the 4.6 million households that rent privately, 23% live in properties that would fail the decent homes standard that currently applies to social housing. That is around 1 million homes. That is why we committed in the levelling-up White Paper to halving the number of non-decent rented homes by 2030 and, in the “Fairer Private Rented Sector” White Paper, to introducing a legally binding decent homes standard in the private rented sector for the first time. It is also why we have tabled the Government amendments, which will allow Ministers to set a new standard to apply the private rented sector and for it to be enforced.

It is imperative that we get the content of the new standard right and that we ensure that it is both proportionate and fair. We are working closely with a range of stakeholders to co-design the standard and make sure the balance is right for landlords and tenants. For most PRS properties, our expectation is that the landlord will not need to do any additional work to meet the decent homes standard beyond what is needed to meet existing requirements and keep their properties in a good state of repair. We will provide further details on our proposals for the standard in due course.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to continue our deliberations with you in the Chair, Ms Fovargue.

Clause 63 is a short and straightforward clause that would require the Secretary of State to prepare a report that sets out the Government’s policy on safety and quality standards in relation to supported housing and temporary accommodation and to publish it within one year of the day on which the measure comes into force. The group of Government amendments we are considering with the clause, which are intended to replace it entirely, will extend part 1 of the Housing Act 2004, which relates to housing conditions, to cover temporary accommodation, and provide for regulations to specify new requirements that will form part of a decent homes standard that applies to temporary accommodation, supported exempt accommodation and rented property more generally. We welcome both the intent and the design of the amendments.

The private rented sector is manifestly failing to provide safe and secure homes for all those who live in it. We fully accept that the absolute number and proportion of poor-quality private rented homes continues to fall—albeit steadily rather than drastically—as part of a half-century, if not longer, of improvement in housing standards. However, it remains the case that some of the worst standards in housing are to be found in the private rented sector. It should be a source of real shame for the Government that after they have been in office for 13 years, an estimated one in four homes in the private rented sector—the Minister made it clear that that equates to around a million properties—do not meet the decent homes standard, and one in 10 has a category 1 hazard that poses a risk of serious harm.

For the considerable number of private tenants who are forced to live in substandard properties—those who wake up every day to mould, vermin or dangerous hazards—what should be a place of refuge and comfort is instead a source of, at best, daily unease and, at worst, torment and misery. More must be done to bear down decisively on this problem. Measures designed to drive up standards in the sector should be enacted as a matter of urgency.

As I made clear during the debate on clause 52, the Government deserve appropriate credit for seeking to introduce a decent homes standard that covers the private rented sector through this Bill rather than through separate future legislation. We believe that Government new clause 20, new schedule 1 and the related amendments are well drafted and that they have the potential to tackle the blight of poor-quality homes in local communities and ensure that renters have safer and better homes to live in; however, I would like to take this opportunity to put to the Minister several questions about those provisions.

My first question concerns enforcement. A decent homes standard that covers the social rented sector has been in place since 2001, yet we know that far too many social tenants still live in damp, cold and mouldy properties that harm their health and their life chances. Indeed, that was one of the chief reasons why the Government felt it necessary to enact the Social Housing (Regulation) Act 2023. That demonstrates that over the 22 years of the decent homes standard’s existence, although it has led to some improvements it has not been enforceable in the social rented sector. That experience suggests that introducing a decent homes standard covering the private rented sector will not achieve its objectives unless it is properly enforced.

Given that the Government intend, by means of new schedule 1, which amends part 1 of the Housing Act 2004, for enforcement of the new standard in the PRS to be undertaken using the same powers as the regime for the housing health and safety rating system, it should be a relatively straightforward matter for local authorities. However, local authorities’ ability to do so successfully depends in practice on their capacity and capabilities. As we debated just prior to the break, in relation to clauses 58 to 61, a great many authorities are struggling when it comes to resources and skills. Will the Minister provide more detail on what steps, if any, the Government intend to take, in addition to the various proposals in the Bill, to ensure that local authorities can appropriately enforce the application of the decent homes standard to the private rented sector where it is not already being met?

My second issue concerns the nature of the standard itself. The Government consulted on the introduction and enforcement of a decent homes standard in the private rented sector in England late last year, and the responses to that consultation obviously fed into the Government amendments we are considering. However, the Government have also committed themselves to a more fundamental review of the standard at some unspecified point in the future. Will the Minister confirm whether that commitment remains in place? If so, will he give us some idea of when that more fundamental review, presumably across both the social rented and private rented sectors, might begin?

The third issue relates to the current enforcement regime for the housing health and safety rating system. The regime is primary means by which local authorities can tackle poor property conditions and compel prompt action from landlords who do not fulfil their responsibilities to provide homes free from dangerously hazardous conditions. We take it from the Government amendments that while the new decent homes standard for the private rented sector will be located in part 1 of the Housing Act 2004, it will not necessarily be the same thing as the HHSRS, which is also in part 1 of that Act. We will presumably need to wait for secondary legislation to work out how, if at all, the decent homes standard and the HHSRS differ, but their workings will need to complement each other.

In answer to a written question that I tabled on 2 May, the then Housing Minister confirmed that a review of the HHSRS, including the statutory operating and enforcement guidance, was under way. Given the obvious implications of that answer for the functioning of the new decent homes standard introduced by this group of Government amendments, will the Minister tell us whether that review has concluded, as the decent homes consultation suggested? If it has, when did it conclude, when will the results be published, and does it remain the Government’s view that any changes will require further legislation? The status and outcome of the review of the HHSRS and its associated statutory, operating and enforcement guidance are important because that guidance is applied when local authorities consider using their statutory powers to remedy defective housing conditions, including and especially damp and mould.

That brings me to our new clause 60. When the Social Housing (Regulation) Act 2023 was on Report, the Government tabled and passed, with our support, amendments designed to force social landlords to investigate and fix damp and mould-related health hazards within specified timeframes, with the threat of legal challenge if they do not, owing to the insertion of an implied covenant into tenancy agreements. The provisions were termed Awaab’s law because they were a direct response to the untimely death of two-year-old Awaab Ishak from respiratory arrest, as a result of prolonged exposure to mould in the rented Rochdale Boroughwide Housing property in which he and his family lived. Although enactment of the new requirements is dependent on secondary legislation, with the consultation having closed last week we are hopeful that the necessary statutory instrument will soon be forthcoming. We look forward to its enactment so that social landlords who continue to drag their feet over dangerous damp and mould will face the full force of the law.

New clause 60 would simply extend Awaab’s law to the private rented sector by amending the relevant section of the Landlord and Tenant Act 1985, and the reasoning behind that is straightforward. The Government were right to introduce Awaab’s law in the social housing sector, but the problem of debilitating damp and mould, and landlords who fail to investigate such hazards and make necessary repairs, is not confined to social rented homes.

A Citizens Advice report published in February made it clear that the private rented sector has widespread problems with damp, mould and cold, driven by the poor energy efficiency of privately rented homes—an issue that we are minded to raise later in the Bill’s proceedings. The report went on to evidence the fact that 1.6 million children in England currently live in cold, damp or mouldy privately rented homes. In the face of such a pervasive problem, we can think of no justification whatsoever for restricting Awaab’s law purely to the social housing sector. We hope that the Government will agree and accept new clause 60, because we can think of no reason whatsoever why they would resist doing so.

Before I conclude, I want to touch briefly on a final issue in relation to this group of amendments. We welcome the inclusion of supported exempt accommodation in a decent homes standard and part 1 of the Housing Act 2004. We believe that will resolve an issue of concern that we flagged in the Social Housing (Regulation) Bill Committee—namely, the loophole that exists, and is being exploited by unscrupulous providers, as a result of non-profit-making providers of supported exempt accommodation being able to let properties at market rents that are eligible for housing benefit support, on the basis that “more than minimal” care, support or supervision is being provided, without those properties coming within the scope of consumer regulation.

The inclusion of temporary accommodation is also welcome, but it is slightly more problematic, because local authorities are responsible both for enforcing part 1 of the Housing Act 2004 and for procuring sufficient temporary accommodation to meet their duty to prevent and relieve homelessness. As such, while there may not be a legal conflict of interest, there is certainly a potential practical conflict of interest, as local authorities will be forced to weigh the case for any potential enforcement action, outside the scope of the contract in question, against the need to retain private landlords as an ongoing source of desperately needed temporary accommodation. It is for precisely that reason that we tried to convince the Government, in the Social Housing (Regulation) Bill Committee, to have temporary accommodation regulated by a third party, such as the Regulator of Social Housing.

The Government amendments will undoubtedly help to improve the quality of some temporary accommodation, and the inclusion of temporary accommodation in a decent homes standard and part 1 of the Housing Act 2004 is to be welcomed for that reason. However, we encourage the Government to consider whether they might go further. For example—here, I again commend my hon. Friend the Member for Westminster North for her Homes (Fitness for Human Habitation) Act 2018—could the Government extend section 9A of the Landlord and Tenant Act 1985 to also cover properties occupied under licences as homelessness temporary accommodation? I would welcome the Minister’s thoughts on that, and I look forward to his response to new clause 60 and all the other issues that I have raised regarding this group of amendments.

[Jacob Young]

Let me address the hon. Gentleman’s point about local authorities and their ability to enforce. We will establish a new duty on landlords to ensure that their properties meet the decent homes standard. For landlords who fail to take reasonably practicable steps to keep their properties free of serious hazard, local councils will be able to issue fines of up to £5,000. That will encourage those landlords who do not already do so to proactively manage their properties, which will allow local councils to target their enforcement more effectively on a small minority of irresponsible and criminal landlords.

We will also explore requiring landlords to register compliance with the decent homes standard on the property portal. That will support local councils in identifying non-decent properties to target through their enforcement activity. As I have already said in response to different parts of the Bill, we will also do a full new burdens assessment for local authorities, and where there is a new burden, they will be resourced to fund that.

On the hon. Gentleman’s questions about the HHSRS review, the simple answer is that we will publish that in due course. Secondary legislation obviously needs to coincide with that, so I do not have anything further to add at this point. However, I am happy to write to him in further detail on that. Similarly, I will commit to writing to him on on the DHS review too.

--- Later in debate ---

[Matthew Pennycook]

I welcome that response from the Minister. With regard to Government amendments, I thank him for what he said about the HHSRS and the more fundamental review of the decent homes standard across both tenures. If he has any further detail on that, I would welcome it. I particularly welcome the implied suggestion that the registration of a decent homes standard, when it is forthcoming, will form part of what is required for landlords to submit on the portal. That is a very good idea, and in that way we could help to drive up standards by making it part of the general information that needs to be submitted as part of registration with the database. That is very welcome.

On Awaab’s law and new clause 60, I have to say to the Minister that he gave a particularly unconvincing answer. I entirely understand that when it comes to standards, the Government’s focus is on the measures in the Bill. We all want to see local authorities able to enforce properly, and we all want to see the ombudsman provide a mechanism for redress. However, I still fail to understand—I do not think the Minister responded to this point—why the Government believe that Awaab’s law is appropriate for the social rented sector, but not for the private rented sector.

[Jacob Young]

rose—

[Matthew Pennycook]

I will just make this point. The Minister said that the Government do not think it is of interest to tenants; I would be very interested to know what surveys the Government have done of tenants to find out their views on this matter, because I am certainly not aware of any such evidence. I think it would be of real interest to tenants if their landlords could be forced to respond within specific timeframes to sufficiently serious cases of damp and mould, as Awaab’s law provides for the social rented sector, with the threat of legal challenge as a stock response. I am happy to give way, but I find the Minister’s arguments on this point quite unconvincing. If these measures are appropriate for the social rented sector, with all the other measures in place in that sector, they should be appropriate for the private rented sector.

[Jacob Young]

I simply say to the hon. Gentleman that there is an obvious difference between a large social housing sector landlord, which has maintenance teams that can quickly act to address an issue, and an individual landlord, who may have only one or two properties, and may not have a wealth of skill behind them to address such issues in the timeframes that we hope to set out for social landlords. As I said, local authorities can request timely changes to properties.

[Matthew Pennycook]

I thank the Minister for that answer. I fully accept that there is a difference between a large registered social landlord, and a mum-and-dad landlord, who might own only one or two buy-to-let properties. However, we should not therefore say that it is acceptable for the kinds of cases that Awaab’s law would cover, if extended to the private sector, to go on unchallenged. I am not satisfied that there are existing powers to challenge those cases. If there were such powers in the social rented sector, the Government would not have needed to bring forward Awaab’s law. Actually, if the Government were properly resourcing local authorities to enforce, Awaab’s law might not be necessary, but the Government deemed it necessary in the social rented sector.

As the Bill demonstrates, the difference between the private rented sector and the social sector will break down to some extent, whether as a result of the ombudsman, who will cover both sectors, or other measures. We think the law should cover both sectors, and I find the Minister’s response unconvincing. I will press new clause 60 to a Division.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

It is worth pointing out that the Minister himself said that the condition of the housing stock in the private rented sector was now considered to be worse than the condition of the housing stock in the social rented sector. Surely the Minister should therefore argue that we need tougher regulation, because regulation is failing more badly in the private sector than in the social sector, but he seems not to have followed through on his argument.

[Matthew Pennycook]

My hon. Friend is right. We know that standards in the social rented sector are inadequate; that is why the Government brought forward their recent legislation, which we supported. Things are worse in the private rented sector. I quoted the Citizens Advice statistic: 1.6 million children are in damp, mouldy or cold homes. If anything, there is a stronger case for Awaab’s law applying to the private rented sector than to the social, but the Minister is trying to have it both ways, for the obvious reason that the Government do not want to accept our new clause. I encourage them to go away and think. We will press the new clause to a vote. If the measures are good enough for the social rented sector, surely they are good enough for tenants in the private rented sector; I have seen no evidence that those tenants are not interested in the tougher powers that Awaab’s law would provide.

Finally, I would welcome any further detail from the Minister on whether there is a need to go further on licensed temporary accommodation properties.

Question put and negatived.

Clause 63 accordingly disagreed to.

Clause 54

Crown application

Amendments made: 97, in clause 54, page 55, line 15, leave out “(4), this Part” and insert “(4D), this Act”.

This amendment provides for a default rule which will have the effect that, subject to any specific provision about them, the new clauses which make freestanding provision in the Bill will bind the Crown. This is intended to mean that the Crown will be bound by the new clauses containing prohibitions on discriminatory practices in relation to tenancies and (subject to exceptions in Amendment 98 for powers of entry) the new investigatory powers.

Amendment 98, in clause 54, page 55, line 30, at end insert—

“(4A) Sections (Business premises: entry without warrant), (Requirements where occupiers are on business premises entered without warrant), (Business premises: warrant authorising entry), (Business premises: entry under warrant), (Power to require production of documents following entry), (Power to seize documents following entry), (Access to seized documents), (Appeal against detention of documents), (Suspected residential tenancy: entry without warrant), (Requirements where occupiers are on residential premises entered without warrant), (Suspected residential tenancy: warrant authorising entry), (Suspected residential tenancy: entry under warrant) and (Powers of accompanying persons) do not bind the Crown.

(4B) Nothing in section (Offences) makes the Crown criminally liable.

(4C) The High Court may declare unlawful any act or omission for which the Crown would be criminally liable under section (Offences) but for subsection (4B).

(4D) An amendment or repeal made by this Act binds the Crown to the extent that the provision amended or repealed binds the Crown (but in the case of an amendment of the 1988 Act, this is subject to the amendments made by section 13).”

This amendment provides that the new clauses conferring powers of entry do not bind the Crown. It also provides that the offences applying in relation to the new clauses about requiring information do not make the Crown criminally liable (but can lead to a declaration of unlawfulness) and deals with Crown application of amendments made by the Bill to other legislation.

Amendment 99, in clause 54, page 55, line 31, leave out

“Subsection (2) does not affect”

and insert

“Nothing in this section affects”.—(Jacob Young.)

This amendment is consequential on Amendment 98.

Clause 54, as amended, ordered to stand part of the Bill.

Ordered,

That clause 54 be transferred to the end of line 30 on page 61. —(Jacob Young.)

This amendment is consequential on Amendment 97. It moves clause 54 into Part 5 of the Bill (general provisions). This is necessary because once clause 54 deals with the application to the Crown of new provisions added to the Bill, it will no longer relate only to Part 2, and therefore needs to be moved out of that Part.

Clause 55

Application to Parliament

Amendments made: 100, in clause 55, page 55, line 36, leave out “this Part” and insert

“Part 2 (and Part 3 so far as relating to Part 2)”.

This amendment is consequential on the motion to transfer clause 55. It also makes it clear that the general provisions about enforcement action in Part 3 of the Bill apply in relation to any tenancies and licences referred to in clause 55.

Amendment 101, in clause 55, page 56, line 16, at end insert—

“(2) The following provisions do not apply in relation to premises that are occupied for the purposes of either House of Parliament—

(a) Chapter 2A of Part 1;

(b) sections (Power of local housing authority to require information from relevant person), (Business premises: entry without warrant), (Requirements where occupiers are on business premises entered without warrant), (Business premises: warrant authorising entry), (Business premises: entry under warrant), (Power to require production of documents following entry), (Power to seize documents following entry), (Access to seized documents), (Appeal against detention of documents), (Suspected residential tenancy: entry without warrant), (Requirements where occupiers are on residential premises entered without warrant), (Suspected residential tenancy: warrant authorising entry), (Suspected residential tenancy: entry under warrant) and (Powers of accompanying persons).

(3) Nothing in section (Offences) makes the Corporate Officer of the House of Commons or the Corporate Officer of the House of Lords criminally liable.

(4) The High Court may declare unlawful any act or omission for which the Corporate Officer of the House of Commons or the Corporate Officer of the House of Lords would be criminally liable under section (Offences) but for subsection (3).

(5) Nothing in this section affects the criminal liability of relevant members of the House of Lords staff or of the House of Commons staff (as defined by sections 194 and 195 of the Employment Rights Act 1996).”—(Jacob Young.)

This amendment provides that the new Chapter containing prohibitions on discriminatory practices in relation to tenancies and the new clauses on investigatory powers (except the power to require information from any person) do not apply in relation to premises occupied for the purposes of Parliament. It also provides that nothing in NC41 makes the Corporate Officers of the Houses criminally liable (though there can be a declaration of unlawfulness).

Clause 55, as amended, ordered to stand part of the Bill.

Ordered,

That clause 55 be transferred to the end of line 30 on page 61. —(Jacob Young.)

This amendment is consequential on Amendment 101. It moves clause 55 into Part 5 of the Bill (general provisions). This is necessary because once clause 55 deals with the application to Parliament of the new clauses relating to discriminatory practices and to investigatory powers, it will no longer relate only to Part 2 of the Bill.

Clause 56

Regulations

Amendments made: 102, in clause 56, page 56, line 18, leave out “Part” and insert “Act”.

This amendment provides for the provisions about regulations in clause 56(1) to apply in relation to regulations under the new clauses expected to be added to the Bill.

Amendment 103, in clause 56, page 56, line 28, leave out “Part” and insert “Act”.

This amendment provides for the provision for regulations to be made by statutory instrument to cover all the regulations under the Bill.

Amendment 104, in clause 56, page 56, line 29, after “section” insert

“(Power of the Secretary of State to amend Chapter 2A to protect persons of other descriptions),”.

This amendment provides for regulations under the new clause inserted by NC15 to be subject to affirmative procedure in Parliament.

Amendment 105, in clause 56, page 56, line 33, leave out “Part” and insert

“Act made by the Secretary of State”.

This amendment provides for a default rule that all regulations made by the Secretary of State under the Bill are to be subject to negative procedure in Parliament. The reference to the Secretary of State is included because under other amendments there are regulation-making powers for the Welsh Ministers which are to be subject to procedure in Senedd Cymru rather than Parliament.

Amendment 106, in clause 56, page 56, line 35, at end insert—

“(6) This section does not apply to regulations under section (Power of Welsh Ministers to make consequential provision) or this Part.”—(Jacob Young.)

This amendment is consequential on the motion to transfer clause 56. It ensures that, once clause 56 is moved into Part 5 of the Bill by that amendment, the clause will apply only to the substantive regulation-making powers under the Bill and not to any regulations made under the general powers in Part 5 (Part 5 already contains specific provision about procedure etc in relation to the general powers).

Clause 56, as amended, ordered to stand part of the Bill.

Ordered,

That clause 56 be transferred to the end of line 30 on page 61. —(Jacob Young.)

This amendment is consequential on Amendments 102, 103, 104 and 105. It moves clause 56 into Part 5 of the Bill (general provisions). This is necessary because once clause 56 deals with regulations under provisions outside of Part 2 of the Bill, it will no longer relate only to that Part.

Clause 64

Meaning of “the 1988 Act”

Amendment made: 107, in clause 64, page 61, line 30, after first “Act” insert—

“‘local housing authority’ means a district council, a county council in England for an area for which there is no district council, a London borough council, the Common Council of the City of London or the Council of the Isles of Scilly;”.—(Jacob Young.)

This amendment inserts a definition of “local housing authority” for the purposes of the Bill as a whole.

Clause 64, as amended, ordered to stand part of the Bill.

Clause 65

Power to make consequential provision

Amendments made: 108, in clause 65, page 62, line 1, at end insert—

“(2A) The power to make regulations under this section includes power to make—

(a) supplementary, incidental, transitional or saving provision;

(b) different provision for different purposes.”

This amendment allows regulations made by the Secretary of State containing provision that is consequential on the Bill to include supplementary or incidental provision and to make different provision for different purposes.

Amendment 109, in clause 65, page 62, line 2, leave out from “power”, in the first place, to “for” in line 3 and insert—

“under subsection (2A)(a) to make transitional provision includes power to provide”.—(Jacob Young.)

This amendment is consequential on Amendment 108.

Clause 65, as amended, ordered to stand part of the Bill.

Clause 66 ordered to stand part of the Bill.

Clause 67

Commencement and application

[Matthew Pennycook]

I beg to move amendment 169, in clause 67, page 62, line 21, at end insert—

“, save that section 2(b) comes into force on the day on which this Act is passed only to the extent that it repeals section 21 of the Housing Act 1988; such repeal will not affect the validity of any notices served under that provision on or before the day on which this Act is passed and the provisions of that section will continue to apply to any claims issued in respect of such a notice”.

This amendment would ensure that the abolition of section 21 evictions would come into force on Royal Assent, with saving provisions for any notices served before that date.

In opening the Committee’s fifth sitting for the Opposition, I set out in exhaustive detail our concerns about the huge uncertainty that surrounds the implementation of chapter 1 of part 1 of the Bill as a result of the Government’s recent decision to tie the implementation of the new tenancy system directly to ill-defined court improvements. As I argued, because of the Government’s last-minute change of approach, private tenants have no idea when the new tenancy system will come into force. They do not even know what constitutes the requisite progress on court reform that Ministers deem necessary before the new system comes into force.

At that point in our proceedings, I put three questions to the Minister. First, do the Government believe that the county court system for resolving most disputes between landlords and tenants is performing so badly that reform is a necessary precondition of bringing chapter 1 of part 1 into force? Secondly, if the Government’s view is that reform of the court system is absolutely necessary prior to chapter 1 coming into force, what is the precise nature of the improvements that are deemed to be required? Thirdly, what is the Government’s implementation timeline for those court improvements? The Minister’s terse response to the clause 1 stand part debate provided no convincing answers whatsoever to those questions; indeed, he failed to respond to almost all the detailed and cogent points of concern raised by Opposition Members in that debate. I hope that he will take the opportunity to respond to them in debate on this amendment, and thus provide the Committee with the assurances that were sought, but not secured, earlier in our proceedings.

Toward the end of the debate on clause 1 stand part, I put a question to the Minister about clause 67. I asked why the two-stage transition process that the clause provides for, with precise starting dates for new and existing tenancies to be determined by the Secretary of State, does not afford the Government enough time to make the necessary improvements to the courts. The Minister’s reply was:

“We will come on to that point when we discuss clause 67.”––[Official Report, Renters (Reform) Public Bill Committee, 21 November 2023; c. 159.]

Well, here we are, Minister, and we would still like to know not only why the Government believe that court reform is a necessary precondition of enacting chapter 1 of part 1, what improvements they believe are necessary, and the timeline for their implementation, but why the two-stage transition process that this clause facilitates is not sufficient to get the job done. We really do deserve some answers from the Government today.

I remind the Committee that clause 67 would give the Government an incredible amount of leeway on when the new system comes into force. It allows Ministers to determine an initial implementation date at any point after Royal Assent, after which all new tenancies will be periodic and governed by the new rules, and also to determine a second implementation date, which must be at least 12 months after the first, after which all existing tenancies will transition to the new rules. Although we want firm assurances that the two-stage process will not be postponed indefinitely pending unspecified court improvements, we take the view that the proposed two-stage process is the right approach. It would clearly not be sensible to enact the whole of chapter 1 of part 1 immediately on Royal Assent. Additional time will be required for, for example, new prescribed forms for the new grounds for possession.

However, landlords and tenants need certainty about precisely when the Government’s manifesto commitment to abolish section 21 no-fault evictions will be enacted. Amendment 169 seeks to provide that certainty. It would ensure that section 21 of the Housing Act 1988 was repealed on the day that the Bill received Royal Assent, with saving provisions for any notices served before that date, so that they remain valid and of lawful effect. By ensuring that section 21 is repealed on the day the Act is formally approved, we would prevent a significant amount of hardship, and the risk of private tenants being made homeless. We urge the Government to accept the amendment.

I want to press the Minister on a final point that I raised about clause 67 during our clause 2 stand part debate. As is clearly specified in guidance published by the Government, they propose a minimum period of 12 months between the first and second implementation dates, but there is no maximum period, so the Bill would allow for all new tenancies to become periodic, but then there could be an extensive period—perhaps even an indefinite one—before existing tenancies transitioned to the new rules.

We believe that the Bill should specify a maximum, as well as a minimum, amount of time between the first and second implementation dates. The Minister agreed to write to me on that issue, but unless I have missed some correspondence, that has not been directly addressed in any of the letters I have received thus far. I would be grateful if he could give me a commitment today that the Government will revisit this issue before Report. Otherwise, we will be minded to return to it then.

[Jacob Young]

On the hon. Gentleman’s final point, I fully accept his desire for a maximum period. The reason we have not set a maximum is to give us as much flexibility as possible. There is no real incentive for a landlord today to try to get around the system. Were a landlord to introduce a new three-year fixed-term tenancy agreement to try to game the system and avoid the six or 12-month time limit, that would simply block the landlord, and they would not be able to use the powers that section 21 affords them currently. That would be restrictive to that landlord as well as to the tenant, so we do not see a situation where a landlord would try to subvert the rule.

[Matthew Pennycook]

That is an interesting point. Let me probe the Minister on it. There is no maximum period for the implementation of the second date—in other words, there is no period by which the Government have to have brought forward the date when all existing tenancies are converted. Is he saying that between the first implementation date and the second, when all existing tenancies remain as is, other measures in the Bill will apply to them? That is the logic of his argument about landlords not gaming the system. I do not think we are talking about landlords gaming the system; we are talking about the Government having too much leeway to postpone the conversion of existing tenancies to the new system.

[Jacob Young]

The vast majority of fixed-term tenancies will be a 12-month agreement, so they would naturally roll on to being a periodic tenancy at the end of that fixed-term agreement. It is unrealistic to expect there to be tenancy agreements that are longer than three years, so they would all naturally convert to this new system anyway. We want to create a gradual process for all tenancies to join the new system; otherwise, it would cause confusion and perhaps overload the portal. If that does not satisfy the hon. Gentleman, I am happy to write to him setting that out further.

On amendment 169, I understand that the hon. Gentleman’s intention is to gain more clarity on the timeline for implementation of our reforms. However, the amendment would mean that on the day of Royal Assent, section 21 would be removed immediately. There would be no transition period; no time, once the final detail of the legislation was known, to make sure the courts were ready for the changes; and no time for the sector to prepare.

As we have said a number of times in Committee, these are the most significant reforms of the private rented sector in 30 years, and it is critical that we get them right. I am as wedded to ensuring that section 21 is abolished at the earliest opportunity as the hon. Member is, in order to provide vital security for tenants, but we have to ensure that the system is ready.

It might be helpful for me to explain how we are improving the courts, and what needs to happen to prepare the courts for the new tenancy system. Court rules and systems need updating to reflect the new law; there is no way that this can be avoided. Furthermore, we have already fully committed to a digital system that will make the court process more efficient and fit for the modern age. Let me reassure the Committee that we are doing as much as possible before the legislative process concludes. The design phase of our possession process digitisation project is under way, and has more than £1 million of funding. That will pave the way for the development and build of a new digital service.

We are also working to tackle concerns about bailiff delays, including by providing for automated payments for debtors. That will reduce the need for doorstep visits, so that bailiffs can prioritise possession enforcement. We are going further with the Ministry of Justice and His Majesty’s Courts and Tribunals Service in exploring improvements to bailiff recruitment and retention policies; we touched on that. It would simply be a waste of taxpayers’ money to spend millions of pounds building a new system when we do not have certainty on the legislation underpinning it. That is why we will set out more details and implementation dates in due course.

Let me be clear that this is not a delaying tactic. There are 2.4 million landlords. Urban and rural landlords, their representatives and business tell us that they have concerns about delays in the courts. We cannot simply ignore that. We have always been clear that implementation would be phased, so that the sector has time to adjust, and we committed to giving notice of the implementation dates in the White Paper last year.

[Jacob Young]

Of course it is, and I entirely accept the hon. Gentleman’s point. However, every one of the 11 million renters in this country has a landlord. We have had representations from all the organisations representing the 2.4 million landlords in this country saying that they are concerned about the courts. Trying to introduce a new system and overriding the concerns of landlords would be unwise.

[Matthew Pennycook]

The Minister says that this is not a delaying tactic. I take him at his word. Will he therefore explain why the two-stage transition process provided for by the clause does not provide the Government with enough time to make the necessary improvements? He said that the improvements are already under way, and that huge progress is being made in a number of areas. Why is that not enough time for him to say, “By the second implementation date, we will have got the courts to where they need to be, and we can give tenants the assurance that the new system will be in place at that point”?

[Jacob Young]

As I have outlined, we need to give time for the courts to improve. We need to give them the space to do that. I do not think that the measures in the Bill mentioned by the hon. Gentleman are adequate to do that. However, if there is another mechanism for us to ensure that the courts are prepared before the implementation of the Bill, I am happy to discuss that with him further. I remind all hon. Members that this is the biggest change to the sector in a generation; it is important that we take the time to get it right. The Government are ensuring that we have a smooth transition to the new system, and I therefore ask the hon. Gentleman to withdraw his amendment.

[Matthew Pennycook]

I thank the Minister for that response. That is probably the most detail we have had on what the Government see as the necessary court improvements, but, to be frank, it is not enough detail. There are no metrics in there by which we can measure the reform that he talked about.

The Minister mentioned that the Government want the reforms introduced at the earliest possible opportunity. We have heard that they are targeting bailiff delays, processes and the new digital system. I take it from his response that the implementation of an entirely new digital system relating to possession grounds is a prerequisite to enacting part 1 of chapter 1. However, there is still too much uncertainty about what constitutes a necessary reform, and we are not convinced that the two-stage transition process provided for by the Bill does not afford the Government enough time to get the courts to a point at which we can introduce the new system. Indeed, in the evidence sessions, we heard different points of view on whether we had not better introduce the measures in the Bill and then see how the courts respond to the new system before phasing it in, so we remain unconvinced.

There is a fundamental point of difference between us on the abolition of section 21. We are deeply concerned about the number of people put at risk of homelessness while the Government have delayed bringing the legislation forward. We are deeply concerned about the additional people who will be at risk of homelessness, and who will be made homeless, while the Government get on with court improvements that, frankly, should already have been delivered, so that the Bill could be ready to go. We very much feel that tenants and landlords need certainty about precisely when section 21 will be abolished, so I will press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

Brought up, and read the First time.

[Matthew Pennycook]

I beg to move, That the clause be read a Second time.

I was going to apologise to the Committee for the slightly obscure nature of my new clause, but after all that, I think it is the Minister who should be apologising for tabling so many Government new clauses to the Government’s own Bill. Perhaps he will do so when he stands up.

New clause 53 is very consciously a probing amendment, in so far as it seeks to ascertain whether there are any safeguards against what we believe might constitute a potential loophole in Bill that could be exploited by unscrupulous landlords.

Clause 14 sets out rules about the period of notice that a tenant can be required to provide when they wish to end an assured tenancy. Specifically, it provides that a tenant’s notice to quit relating to an assured tenancy must be given not less than two months before the date on which the notice is to take effect. That two-month period is intended, rightly, to provide landlords with sufficient time to re-let the property as required. However, the two-month default period of notice can be set aside where both parties agree as much in writing, whether in the tenancy agreement or in a separate document.

There may be entirely legitimate reasons for individual landlords and tenants to agree a shorter notice period. However, we are concerned that some tenants might find themselves informally pressured to agree a shorter notice period in writing as a precondition of being granted a tenancy. For many landlords, there will be absolutely no incentive to agree a shorter notice period than the two-month default; after all, they are likely to need much of that time, if not all, to re-let their property. However, it is entirely conceivable that unscrupulous landlords, particularly in hot rental markets, would have every incentive to get a sitting tenant out as quickly as possible after the point at which that tenant had given a notice to quit, because they will have no trouble in rapidly re-letting their property, probably at a far higher rent level.

We are therefore worried that the freedom for landlords and tenants to agree notice periods shorter than two months in writing could be used to the detriment of tenants—particularly vulnerable tenants, who in all likelihood will not be aware that two months is the default period and who might come under considerable pressure from their landlord to agree to a shorter period. New clause 53 seeks to protect such tenants by simply requiring the court to authorise any agreement in writing that provides for a notice period shorter than the two-month default. I look forward to the Minister’s response.

[Jacob Young]

I apologise to members of the Committee for how long it took to get through all those new clauses. However, I do not apologise for the new clauses themselves, because they strengthen the Bill and give additional rights to tenants and landlords under it. I am very proud that we have been able to add them.

I thank the hon. Gentleman for moving new clause 53, which would prevent landlords and tenants from agreeing contract clauses that override statutory provisions protecting tenants’ rights unless a court has preauthorised it.

Subsection (1) is an unnecessary provision. It is already the case that contractual clauses cannot affect statutory rights unless legislation expressly so allows. This is a long-standing principle of our legal system.

Subsection (2) would give the courts the power to authorise the waiver of tenants’ statutory rights under the Bill. That could have unintended consequences. More importantly, subsection (2) would weaken tenants’ rights. It would allow a judge to authorise the waiver of the rights that the Bill grants them. We do not think that this is appropriate or required.

[Matthew Pennycook]

I note the Minister’s criticism of the new clause as drafted, but does he recognise the point it seeks to raise: the concern that vulnerable tenants might come under pressure from a landlord to agree in writing to a shorter notice period that they may not necessarily want but that comes as a precondition of the tenancy? Notwithstanding his concerns about our new clause, will the Government give some more thought to whether it is a potential weakness of the Bill and how that might be addressed?

[Jacob Young]

I am happy to give the matter more thought in conversation with the Opposition. We intend to give tenants as much information as possible about their rights. That has been discussed at numerous points during the Committee’s consideration. I hope he will consider that assurance sufficient to withdraw his new clause.

[Matthew Pennycook]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 56

Extending discretion of court in possession claims

“(1) The Housing Act 1988 is amended as follows.

(2) In Section 9 subsection (6)(a), after ‘Schedule 2 to this Act’ insert ‘, except for grounds 6A, 8 and 8A,’”.—(Matthew Pennycook.)

This new clause would extend the discretion of the court to adjourn proceedings, and stay, suspend or postpone any orders made, to cases where possession is sought under grounds 6, 8, and 8A.

Brought up, and read the First time.

[Matthew Pennycook]

I beg to move, That the clause be read a Second time.

In considering the replacement possession regime that the Bill will introduce, we have been at pains to convince the Government that the courts should be given a greater measure of discretion than the Bill currently provides for. Whether it is through allowing for a very limited amount of discretion in relation to mandatory grounds 1, 1A and 6A so that judges could consider whether the tenant would suffer greater hardship as a result of the possession order being granted, or through seeking to make new ground 8A entirely discretionary rather than mandatory, we believe in principle that we should be putting more trust in the judgment of the court to determine whether to make an award, taking into account all the circumstances that are pertinent in any given case.

In the Committee’s proceedings, we have deliberately not made the case for every possession ground to be discretionary. We take the view that there are some limited circumstances in which it is appropriate for landlords to have the certainty of a mandatory ground to regain possession of their property. However, as things stand, we do not believe that the Government have the balance right when it comes to the amount of discretion that the courts have been afforded in relation to the new possession regime.

New clause 56 is a final attempt to convince the Government to incorporate an additional element of discretion into the new system. It would extend the discretion of the court to adjourn proceedings and to stay, suspend or postpone any orders made to cases where possession is sought under grounds 6, 8 and 8A. In so doing, it would give the courts appropriate flexibility to cater for the circumstances where the ground is already made out, but either it is right to give the tenant more time or there is a way to resolve the dispute that does not involve the tenant losing his or her home.

Currently, for all mandatory grounds for possession, once the ground is made out, the court has no choice but to make an order, and it takes effect 14 days after the date on which it is made. Judges have a limited ability to postpone an order, but only up to six weeks from the date made and only where there would otherwise be exceptional hardship as a result. In short, the court has extremely limited flexibility.

Yet there might be extremely compelling circumstances in relation to individual ground 6 possession proceedings, where a judge might want to make an order that takes effect at a date later than six weeks thence. Take, for example, circumstances in which a landlord could not start to develop until two or three months after the hearing. A judge with the discretion provided for by new clause 56 could postpone the order until around the time at which the development could begin, giving the tenant more time to find a new home and providing the landlord with additional rent or income.

Similarly, in individual ground 8 and 8A possession proceedings, the courts currently have no flexibility to make an order suspended. Providing them with that discretion, as new clause 56 would, would allow judges to suspend an order upon terms that might allow for the outstanding arrears to be repaid under an agreed realistic payment plan, and within a timely manner.

The court could not make such a suspended order on a whim or with the mere hope of repayment without any evidence to provide reasonable reassurance that the rent would be repaid, as Liz Davies KC made plain in her evidence to the Committee on 16 November. By providing the courts with the discretion to suspend an order made in those circumstances, we would be helping both tenant and landlord: the tenant because they get to remain in their home rather than be evicted with four weeks’ notice, and the landlord because the arrears owed would have been paid off. If the tenant were to break the terms, then the landlord would still have the right to arrange for bailiffs to start the eviction process.

New clause 56 would simply give the courts the opportunity to exercise a measure of discretion in circumstances in which they were convinced that that was the right course of action, rather than constraining them, as the Bill currently proposes, in relation to mandatory possession grounds. As James Prestwich of the Chartered Institute of Housing said in evidence to the Committee two weeks ago:

“It is important that we are able to trust judges to make informed decisions based on the evidence of the case”.––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 74.]

That is all that this new clause seeks, in relation to a discrete number of mandatory grounds for possession. I do not hold out much hope, but I hope that the Minister will consider accepting it.

[Jacob Young]

I thank the hon. Member for moving new clause 56, which would allow the courts to adjourn a possession claim, stay or suspend enforcement of a possession order, or delay the enforcement of an order made under ground 6A, 8 or 8A.

Ground 6A covers situations in which evicting the tenants is the only way for the landlord to comply with enforcement measures such as banning orders; we have already discussed that issue at length earlier in our debates. Delaying enforcement action will therefore mean that the tenant continues to live in an unsafe or overcrowded property, or that the landlord fails to comply with the law. That is not an acceptable situation for either party.

Nor is it fair to ask landlords to bear significant arrears for longer, as applying the new clause to grounds 8 or 8A might. These mandatory grounds already set a high bar for eviction. Asking landlords to bear the cost of significant arrears for longer puts them under unsustainable financial pressure. The Government believe that the new clause strikes an unfair balance that will ultimately hurt tenants. I therefore ask the hon. Member to withdraw the motion.

[Matthew Pennycook]

I thank the Minister for his response. I do not intend to labour the point at any length, as we have discussed the matter on a number of occasions. I think that there is a clear difference of principle as to the amount of discretion that the courts are afforded regarding mandatory possession grounds. We think that they require a bit more flexibility to be able to exercise their judgment when there are compelling circumstances. The Government clearly do not, but I think we may return to the issue at a later stage. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 57

Extension of rent repayment orders

“(1) In Section 40(3) of the Housing and Planning Act 2016, at end of table insert—

--- Later in debate ---

[Jacob Young]

Ms Fovargue, I would like to put on record my thanks to you and the other Chairs of this Bill Committee; to all the Clerks and parliamentary staff; and to the many other people who have worked hard on this Bill, including all my officials and my private office, who have had to get up to date with this Bill in a matter of weeks.

I thank all members of the Committee, including Opposition Members, for their constructive dialogue. We have had some robust debate on several measures, but I hope we can all agree that these are important reforms—the first in a generation—for landlords and tenants. I look forward to further engagement with all hon. Members as the Bill progresses through its remaining stages.

[Matthew Pennycook]

Ms Fovargue, may I take the opportunity to put on record our thanks to you and your colleagues in the Chair for overseeing our proceedings? I also thank our exemplary Clerks for all their assistance; the Doorkeepers and Hansard reporters for facilitating the Committee’s work; and officials in the Department and our own staff for the support that they have provided. Finally, I thank the Minister—as well as the occasional Government Back Bencher who has defied the orders of the hon. Member for South West Hertfordshire and contributed to our debate. [Laughter.] There has been the odd robust exchange, but none has been uncivil, and we appreciate the spirit in which consideration of the Bill has taken place.

Question put and agreed to. 

Bill, as amended, accordingly to be reported.

Renters (Reform) Bill (Seventh sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 23rd November 2023 Public Bill Committees

[The Chair]

I remind the Committee that with this we are discussing the following:

Amendment 153, in schedule 1, page 74, line 20, leave out paragraph 22.

This amendment would remove the new ground for possession for repeated rent arrears.

Amendment 154, in schedule 1, page 74, line 22, leave out “three” and insert “one”.

This amendment would limit the period to demonstrate repeated serious rent arrears to one year.

Amendment 155, in schedule 1, page 74, line 25, leave out “a day” and insert “two weeks”.

This amendment would extend the period during which at least two months’ rent was unpaid from a day to two weeks.

Amendment 156, in schedule 1, page 74, line 28, leave out “a day” and insert “two weeks”.

This amendment would extend the period during which at least two months’ rent was unpaid from a day to two weeks.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to continue our line-by-line consideration of the Bill with you in the Chair, Mr Paisley. As you said, we adjourned on Tuesday with the Minister having responded to amendments 180, 153, 154, 155 and 156. That response, which you did not have the pleasure of hearing, was deeply unsatisfactory. It amounted to little more, I have to say, than an unsubstantiated assertion of the Government’s position that new mandatory ground 8A is required to support landlords in all instances of a tenant falling into serious arrears, and to prevent tenants from repeatedly paying down a small amount of arrears to frustrate existing ground 8 possession proceedings.

In moving amendment 180 and speaking to the other amendments in the group, I advanced three arguments as to why the Government’s position is flawed. First, there are already robust mechanisms in place, namely discretionary grounds 10 and 11, to deal with the very small minority of problem tenants who attempt to game ground 8, and courts use them. Secondly, new ground 8A can be gamed in much the same way as the Government believe existing ground 8 is being gamed, and ground 8A will have the added flaw of actively discouraging tenants from paying off a third set of arrears because they know that they will inevitably lose their home. Thirdly, all the evidence suggests that the number of people seeking to game ground 8 is vanishingly small, if not non-existent.

The Minister did not provide a rebuttal to any of those arguments. There was no response from him to our argument that new ground 8A can be gamed in much the same way as ground 8, and that it will have an impact on landlords as a result of incentivising tenants to avoid paying their third set of arrears. There was no response to the point that all the evidence suggests that the number of tenants gaming ground 8 is vanishingly small. After we heard extensive expert testimony last week supporting our arguments, the Government essentially said on Tuesday, “We dismiss the evidence. We think we know better.” To say that their position is unconvincing would be a gross understatement. I say to the Minister that he is going to have to do better on some of these very controversial clauses on Report.

We are extremely concerned about the implications of leaving new ground 8A in the Bill. We believe that it will lead to a great many vulnerable tenants being evicted unfairly. These are tenants who, I remind the Committee, will be struggling financially. Many will be in crisis and will desperately require debt advice and support, but we know they will have been trying to do the right thing because they will have made previous attempts to pay off their arrears in full. As I argued in our last sitting, the idea that we are talking about a bunch of people familiar enough with ground 8 in schedule 2 of the Housing Act 1988 to sit down and work out how they can game it is frankly insulting.

This is a punitive and draconian measure that will cause great hardship without providing the additional certainty that the Minister claimed it would. It is not necessary to tackle the genuine instances of persistent arrears or the rare instance of a problem tenant seeking to deliberately avoid ground 8 action. On that basis, we intend to press to a vote both amendment 153, which seeks to remove new ground 8A from the Bill entirely, and, if that fails, amendment 180, which seeks to make the ground discretionary. We will certainly be returning to the issue at a later stage.

[The Chair]

Just to clarify, I will put the Question on amendment 180 first.

Question put, That the amendment be made.

--- Later in debate ---

[Helen Morgan]

It is a pleasure to see you in the Chair, Mr Paisley. I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

I tabled these amendments to reflect my general concerns about the potential for abuse of ground 14, the discretionary ground for eviction on the basis of antisocial behaviour. We heard, both on Second Reading and in last week’s evidence sessions, about concerns that ground 14 could be used to evict a tenant who is a victim of domestic abuse or is suffering with mental ill health or a physical condition that could cause annoyance to surrounding neighbours.

We also heard last week from Liz Davies KC, in our fourth sitting, that the threshold is being lowered by a very small margin. She said that it was difficult to see circumstances in which behaviour would not meet the threshold of “likely to cause”, but would meet the threshold of “capable of causing”. She outlined that, in her experience, courts use the existing discretionary ground wisely, to rightly allow possession where there is a flagrant problem with antisocial behaviour. We have no reason to believe that courts will not continue to do so. I am therefore a bit perplexed as to why the Government have tried to slightly lower the bar for eviction. Further to our recent discussions of other amendments, I am concerned that it is to allow landlords to exploit the clause as a route to an easier eviction.

Amendment 130 would maintain the existing definition, which, as we heard last week, should be sufficient for landlords to evict where antisocial behaviour is a genuine problem. Unless the Minister can provide some reassurance that the changed terms will not lead to an increased number of evictions, I intend to press amendment 130 to a vote.

Amendment 131 reinforces that point. Literally interpreted, the legislation does not specify whether or not a visitor exhibiting antisocial behaviour is regularly attending the property. Clearly tenants should be protected from eviction where there has been a single or very intermittent problem. Indeed, a regular antisocial visitor may not be welcome at the property; they may be regularly attending to intimidate or cause distress to the tenant.

I have a piece of casework in which the tenants of a property, through no fault of their own, have been subjected to intimidation and verbal abuse by a member of the community who lives elsewhere. I do not doubt that that causes nuisance and annoyance for other residents, but it would be grossly unfair to evict those tenants. In all likelihood, it would not resolve the problem in the long term either; it would just shift it to a different place in the same town.

I will not press amendment 131 to a vote, because ground 14 is discretionary and we should trust the judgment of the court as to whether an eviction is appropriate in each individual case. However, as we have heard of instances where unreasonable evictions have taken place, I would welcome an assurance from the Government that there will be safeguards and guidance in place to prevent the innocent from being evicted by an unscrupulous landlord under ground 14.

[Matthew Pennycook]

I rise to speak to amendment 158 and new clause 55, which stand in my name and in the name of my hon. Friends.

It is a pleasure to follow the hon. Member for North Shropshire. Both her amendments to schedule 1, in relation to the proposed revision of existing ground 14, are welcome. Indeed, we tabled an identical amendment to her amendment 130, but it was not selected, on the basis that it was an exact duplicate—that is a lesson for the whole Committee on the importance of tabling amendments in a timely fashion. If the hon. Lady presses her amendment 130 to a vote, we will certainly support it.

As the hon. Lady set out, paragraph 23 of schedule 1 to the Bill will widen ground 14 of schedule 2 to the Housing Act 1988 to include behaviours

“capable of causing nuisance or annoyance”,

as opposed to the existing language, which merely refers to

“likely to cause nuisance or annoyance”.

We are pleased that the Government are not proposing to make existing ground 14 mandatory, as some had feared prior to the publication of the Bill earlier this year. The court will therefore still have discretion to judge whether it is reasonable and proportionate to evict a tenant for the behaviour in question.

--- Later in debate ---

[Matthew Pennycook]

The Minister must have been listening to a different balance of the totality of the evidence from what I heard. I heard significant criticism of this proposed change by the Government. He still has not given me an example of the types of behaviour that would not fall under the existing definition, but that would be covered by the expanded one. I think that is because the change is driven more by the politics of what is required to get the Bill through than by any empirical evidence that such a change is required to deal with instances in which landlords cannot recover their properties from tenants who cause antisocial behaviour.

[Helen Morgan]

We heard extensively from the representative of Grainger plc about antisocial behaviour. I felt that her evidence demonstrated clearly that the existing grounds were adequate for tenants to be evicted under such circumstances. Does the hon. Gentleman agree?

[Matthew Pennycook]

I think that is a worthwhile intervention. I heard the evidence from Grainger and others highlighting concerns about this ground, so the Government are just wrong if their position is that expert opinion out in the country is that there is no problem whatever with the proposed change to ground 14.

We agree with the hon. Member for North Shropshire that the Government should remove paragraph 23 of schedule 1 and leave ground 14 with the current “likely to cause” wording. However, if they resist doing so, we urge the Minister to at least consider clarifying, as I have asked him to, what kind of behaviour is and is not capable of causing nuisance or annoyance so that county courts can better exercise their discretion about whether eviction is reasonable and proportionate in any given circumstance once the Bill has come into force. Let us be clear: the Government’s eleventh-hour new clause 1 does not do that. Indeed, it is not clear what on earth they are trying to achieve with it. As with so much of what the Government have tabled fairly late, we suspect it is more a product of rushed thinking than anything else.

New clause 1 would make it a requirement for the court to consider, in particular, the effects of antisocial behaviour on other tenants of the same house in multiple occupation, but that is already the case. Judges already have to consider the impact of behaviours that could be categorised as antisocial on others, so why do the Government feel the need to specify that they are required to do so via this amendment, purely in relation to HMOs? I would be grateful if the Minister could provide us with a reason. Will he also explain why the Government do not believe this provision needs to cover, say, a house under part 3 of the Housing Act 2004 or a rented property that is not covered by parts 2 or 3 of that Act?

The new clause also provides for the court to take into account as a factor in its determination

“whether the person against whom the order is sought has co-operated with any attempt by the landlord to encourage the conduct to cease.”

Again, when considering antisocial behaviour, the courts can already consider, and frequently do, what efforts the tenant has made to co-operate—for example, what the tenant’s response has been when a landlord has tried to contact them to press them to bring the offending behaviour to an end.

Of course, that presumes that the landlord has tried to contact the tenant, but that highlights a more fundamental problem with the new clause. At present, there is no duty on landlords to prevent or take steps to stop antisocial behaviour on the part of their tenants. I am thinking of the extensive case law reviewed in the recent Poole Borough Council v. GN judgment. Is the new clause an attempt to impose such a requirement surreptitiously? If it is, I wonder what the National Residential Landlords Association and other landlord organisations will have to say about it. The problem is that it is not clear at all, and we fear that fact exposes the Government to the possibility of litigation.

If the new clause is not an attempt to impose a requirement for landlords to take steps to stop antisocial behaviour on the part of their tenants, should we instead take it to imply that landlords now have to at least reasonably co-operate with a tenant to limit antisocial behaviour? If it does not imply that, what is the point of it? If landlords do not have to do anything to encourage antisocial behaviour to cease or do anything about it, whether a tenant can “co-operate” is reliant on the whim of the landlord in question and whether they decide to ask the tenant to stop.

Put simply, we question whether the new clause will have any practical effect, and we would appreciate it if the Minister could explain the thinking behind it, particularly because, like the many other last-minute Government amendments to the Bill, there is no detail about it in the explanatory notes. Even if the Minister just reads his box notes into the record, I would welcome the clarification. That would at least give us a sense of the Government’s thinking.

Leaving aside the deficiencies of new clause 1, we remain of the view that if the Government are intent on widening ground 14 to cover behaviour likely to cause nuisance or annoyance, they must at least clarify what kind of behaviours they believe will be included in that definition. New clause 55 would place a duty on the Government to produce detailed guidance on precisely what constitutes antisocial behaviour for the purpose of assisting landlords and the courts to determine when ground 14 conditions have been fulfilled under the revised terms that the Government are proposing. Specifically, it requires the said guidance to define how antisocial behaviour differs from nuisance and annoyance caused by incidents of domestic violence, mental health crisis and behaviour resulting from adults or children with autism spectrum disorders or learning difficulties. Amendment 158 would, in turn, require landlords seeking possession on the basis of amended ground 14 to have regard to the guidance that the Government would be obliged to produce.

Taken together, we believe that new clause 55 and amendment 158 would at least provide the extremely vulnerable tenants we fear might fall foul of amended ground 14 with a further degree of protection beyond the discretion that the courts will still be able to apply. I look forward to the Minister’s response.

[Ms Karen Buck (Westminster North) (Lab)]

I want to press the Minister on his thinking and on the motivations for widening ground 14 in respect of antisocial behaviour. I support the hon. Member for North Shropshire and my hon. Friend the Member for Greenwich and Woolwich.

There is a continuing theme of the Government looking at this world as they want it to be, rather than at the rather messier reality. In respect of private tenancies, it is a world that they have quite deliberately created. No one likes being exposed to any form of antisocial behaviour or inconvenience. Some antisocial behaviour can literally ruin lives. Many of us will have dealt with casework relating to harassment; stalking; deliberate making of noise at antisocial hours; people running small businesses in flats, which can create noise; behaviour arising from the often illegal use of accommodation for short lets; people stealing post; and abuse, including homophobic and racist abuse. All those things can occur, and they can be extremely damaging to people’s lives.

One of the problems, which my hon. Friend addressed, is that these things are often not dealt with not because the threshold is too high for such cases, but because, in many instances, it is extremely difficult to gather the evidence. People are often extremely reluctant to act as witnesses and support evidence, and a lot of evidence is one-on-one and, to some extent, highly subjective.

Managing antisocial behaviour requires landlords to be part of the solution, and it is completely right that we are encouraging the consideration of that. Social landlords spend considerable time and resource trying to do that, with varying degrees of effectiveness, but in the private rented sector—with honourable exceptions—that often simply does not happen. The reduction in the threshold that the Government are proposing will make it even easier for landlords to choose to go down an eviction route or to hold the threat of eviction over the heads of households, in such a way that they themselves do not have to take a great deal of responsibility.

The Government must anticipate consequences from their change to the definition, or one would like to think that they would not have done it, but we need the Minister to spell those consequences out. Obviously, we must expect that more people will risk eviction for behaviour that is below the current threshold; that is a consequence almost by definition. In how many instances do the Government think that is likely to apply? Who might be affected by it, and under what circumstances not currently covered by legislation? What will happen to people who are at risk of eviction with a lower threshold?

--- Later in debate ---

The proposed change will affect people with children, as my hon. Friend the Member for Greenwich and Woolwich mentioned. A woman wrote to me recently saying, “My neighbours are complaining about the noise of the kids—too much noise, running around. I am in a block with no other children, so my neighbours are now complaining and the landlord is complaining, but what can I do about it? They are 20-month-old twins. I should not have to deal with complaints about children making noise.” Under the Minister’s proposals, just having little babies running around could be enough to trigger—

[Matthew Pennycook]

My hon. Friend makes a good point, which we have made in connection with other grounds for possession, and I think it is worth putting on the record again. Lots of these notices that will be given will not go to court. We cannot rely on the courts’ discretion in all these instances. The tenant that my hon. Friend mentioned could be served with a notice, might not know the recourse that she has and might feel she has to go. The threat of the expanded ground will be enough in most instances.

[Ms Buck]

I absolutely agree. The sword of Damocles is hanging over the heads of lots of people just living a fairly ordinary life. Families with special needs children are a particularly high-risk category. A woman and her representative came to me recently to say that her current property is unsuitable. She lives with her non-verbal autistic 19-year-old son, and they have occupied the property for over 20 years. As her son has grown older, he has displayed more challenging behaviours, in line with those often associated with autism. The family has been subject to several complaints from neighbours in relation to the noise being made, but the mum states that it is near-impossible to have full control over her son, due to his increasing support needs.

There is one other category the Minister needs to address, which is what we do about families who have already been evicted from social housing. Clearly, families cannot be on the street. Getting landlords to provide accommodation to households in those cases is essential, but already extremely difficult.

--- Later in debate ---

[Jacob Young]

With respect to the hon. Gentleman’s question, he mentioned whether a victim of domestic abuse would fall short of these grounds. I would say to him that that is exactly what a judge is there to determine—whether it is reasonable to grant possession to the landlord in those circumstances. I think that I have addressed that in my remarks. I hope that this provides some reassurance and that hon. Members will withdraw their amendments.

To further bolster landlords’ confidence in being able to regain their properties in cases of antisocial behaviour, Government new clause 1 expands the matters a judge must consider, as I outlined previously, when making a discretionary antisocial behaviour eviction. It ensures that the court must also consider specific issues that have been of concern to the sector. First, the new clause asks judges to give regard to whether the perpetrator has engaged with measures to resolve their antisocial behaviour, making it easier for landlords to evict non-compliant tenants.

[Matthew Pennycook]

I asked the Minister a very specific question about this new clause, to which I would be really grateful for an answer. Does new clause 1 in any way imply or direct landlords, by a new requirement, to proactively engage with their tenants to resolve the behaviour, rather than just putting the onus on tenants to do so, and therefore, in instances where the landlord will not engage, leave that tenant in an impossible situation, one might say?

[Jacob Young]

I do not believe that it does, but I will write to the hon. Gentleman to clarify. Turning back to what I was saying, it asks judges to give particular regard to the effect of antisocial behaviour on other tenants within houses of multiple occupation, which the hon. Gentleman had mentioned.

--- Later in debate ---

[Jacob Young]

We are not discussing 5A right now, but I will write to the hon. Gentleman to clarify that point.

As I was saying on houses in multiple occupation, this measure will make it easier to evict perpetrators who are having a severe impact on those living in close proximity with them day to day. I therefore commend Government new clause 1 to the Committee.

[Matthew Pennycook]

I will say two things to the Minister, because I think that was a helpful answer, although his officials are going to be doing a lot of writing over the coming days and weeks. It was helpful in two ways: it is welcome to hear an assurance that we expect guidance before these measures come into force, and that the working group has been set up to that end.

This is where the private rented sector is very different from the social rented sector, where registered providers operate. Registered providers often have trained antisocial behaviour teams who are equipped and trained with the tools—injunction powers and others—to remedy antisocial behaviour before eviction action has to take place. They are trained to distinguish between antisocial behaviour and things such as the domestic violence instances that we are worried about, and to take safeguarding action to protect tenants from either eviction or criminalisation. The private rented sector has none of that. I do very much think we need guidance in this area, so I welcome the Minister’s clarification in that regard. On that basis, I am happy to not to push new clause 55 to a vote.

However, what I am still concerned about, and why we will support the hon. Member for North Shropshire if she pushes her amendment to a vote, is that in some ways it does not matter what the guidance says if the definition of what constitutes antisocial behaviour is very broad and the change from “likely” to “capable” is made. That still concerns us a great deal. The Minister has not given me an example—I only want one—of a kind of behaviour that would be “capable of causing” antisocial behaviour without falling under the existing “likely to”. I do not think he has any such behaviour in mind; I do not think the officials have any idea, either.

I think the Minister gave the game away, intentionally or otherwise, that this power is to be used to make it easier for landlords to threaten tenants in the first instance, and most will not go to court, and then to be able to evict tenants. As he said, the behaviour in question does not have to have caused or be likely to have caused antisocial behaviour in any given instance. It will enable an argument on the basis that there is a pattern of behaviour that now meets the reduced threshold.

None of the evidence I listened to last week suggested that that was necessary. I remember—one good example—that Timothy Douglas from Propertymark could not understand the difference between “likely” to cause and “capable” of causing, and the need for the change in this instance. He did call for guidance—absolutely. However, none of the evidence I heard supported the change, apart from evidence from some landlords, who, of course, are going to say that they welcome a widened power. They do not have to deal with the consequences. It is local authorities and society that will have to do that.

I know this is not the Minister’s brief, but he really should know whether tenants, if evicted under these grounds, will be made intentionally homeless. I suggest that it is almost certain that they will be. We are talking about an easier way to make people homeless, and we will all pick up the costs in various ways. This will impact some incredibly vulnerable tenants. We therefore think that this measure needs to be removed from the Bill. Again, we will certainly return to the issue at a later stage.

[Helen Morgan]

I welcome the support from Opposition Members, who, I think, have summed up the issue very well. There is an increased threat of eviction even if these cases are not taken to court, because the threat of having notice served in the first place is very frightening for people who do not necessarily have the legal ability to follow that through and oppose it.

--- Later in debate ---

Form of notice of proceedings for possession

[Matthew Pennycook]

I beg to move amendment 177, in clause 4, page 3, line 34, at the beginning insert—

“(1) In section 8 of the 1988 Act, after subsection (2) insert—

‘(2A) A notice under this section must include reference to the unique identifiers allocated to each person and dwelling-house with an entry on the database in accordance with section 41 of the Renters (Reform) Act 2023 (Allocation of unique identifiers).’”

This amendment would require landlords to be registered on the database to serve grounds for possession notices.

We will debate at some length the provisions in the Bill that will establish a private rented sector database when we consider chapter 3 of part 2 in detail, so I do not intend to dwell on our view of the Bill’s database provisions more generally, or how they might be improved. We will have sufficient time to do so in due course. Suffice it to say that we take it as given that the Government wish to see, as we do, as many existing and prospective residential landlords registering themselves and their properties on the property portal that the database will support.

We acknowledge that the Bill already contains provisions designed to ensure that registration rates are high. These include the financial penalties that local authorities can impose, assuming that they have the capacity and capability to do so, on people who, for example, do not meet the requirements in relation to marketing, advertising and letting set out in clause 39. However, we believe that the Government should seek to make it virtually impossible for a residential landlord to operate without registering themselves and their property on the database by ensuring that every single process that the Bill covers bites on them in that regard.

Amendment 177 seeks to contribute to that objective by inserting into section 8 of the Housing Act 1988 a new subsection that would compel landlords to be registered on the database in order to serve grounds for possession notices by requiring them to add to any possession notice served the unique identifier that they will be allocated on registering. Requiring landlords to append a unique identifier to a possession notice, and thus denying landlords not registered with the database the opportunity for a court to make an award of possession, would be an important means of ensuring maximum compliance with the proposed portal and properly regulating the new system to the benefit of both landlords and tenants. For those reasons, I hope the Minister will look favourably on the amendment.

[Jacob Young]

I thank the hon. Gentleman for moving amendment 177, which would require landlords to have registered on the property portal before serving a tenant with a valid notice for possession under section 8 of the Housing Act 1988. The property portal will play a crucial role in helping landlords to understand their legal obligations and will give tenants the information they need to make informed choices before starting a tenancy. Our view is that the enforcement mechanisms in the Bill, including the mandatory duty on landlords to be on the portal and the ability of local authorities to find those, will prevent abuse. However, I note the hon. Member’s concerns, and if there are further measures we can take to ensure that all landlords are on the portal, we will explore them further.

[Matthew Pennycook]

I welcome the Minister’s response and his commitment to look further at this matter. Although the mandatory duty is welcome, we have real concerns about the ability of local authorities to properly investigate and enforce. We will come back to those concerns, because they relate to a number of areas in the Bill. I therefore hope that the Minister goes away and thinks about every—

[Eddie Hughes (Walsall North) (Con)]

There is form in this area: a landlord cannot evict their tenants if the property does not have an energy performance certificate. It seems like an interesting proposal.

[Matthew Pennycook]

I very much welcome the hon. Gentleman’s intervention. I have covered all bases in our set of amendments. We will come to the preconditions and requirements that have developed around section 21 that fall away under the Bill; they are a concern. The hon. Gentleman is right: to serve a section 21 notice, a number of regulatory obligations must be met.

[Lloyd Russell-Moyle]

Another advantage of doing it through the property portal is that it helps to speed up the digitalisation process that the Government are so keen on with the courts. The portal would retain the information that the courts need.

[Matthew Pennycook]

Absolutely, and it is one of several ways that we think that, with some reasonable, common-sense amendments, we can strengthen the Bill so that every part of it works together. I hope that the Government will go away and think about the other ways in which we can ensure maximum landlord compliance with the portal. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 ordered to stand part of the Bill.

Clause 5

Statutory procedure for increases of rent

[Lloyd Russell-Moyle]

I beg to move amendment 200, in clause 5, page 5, line 17, at end insert—

“(4F) It shall be an implied term of every assured tenancy to which this section applies that percentage increase between the existing rent and any new rent specified in a notice given under subsection (2) shall not exceed whichever is the lesser of—

(a) the percentage increase in the rate of inflation (calculated by reference to the Consumer Prices Index) since the date on which the existing rent took effect; or

(b) the percentage increase in median wages in the local authority area in which the dwelling-house is situated, calculated over a three-year period ending on the date on which the notice was served.”

This amendment specifies that the annual increase in rent requested by a landlord may not exceed the lesser of either the Consumer Prices Index or wage growth in the relevant local authority area.

Renters (Reform) Bill (Eighth sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 23rd November 2023 Public Bill Committees

[The Chair]

I remind the Committee that with this it will be convenient to discuss the following:

Amendment 159, in clause 5, page 6, line 23, at end insert—

“13B Recovery of rent

(1) Any increased rent which is paid otherwise than in accordance with section 13 or section 13A is recoverable from the landlord by the tenant as a debt claim in the courts.

(2) The Secretary of State may, by regulations, provide for such claims to be recoverable by proceedings in the First-Tier Tribunal, rather than the courts.”

This amendment would ensure that in instances where a private landlord increases the rent without issuing a section 13 or section 13A notice the tenant can seek to recover costs through a debt claim in the court. It also provides the government with the power by regulation for such claims to be recoverable by tribunal.

Clause stand part.

Amendment 201, in clause 6, page 7, line 3, leave out paragraphs (b), (c) and (d) and insert—

“(b) leave out from ‘shall determine the rent’ to end of subsection and insert ‘in accordance with subsection 13(4F)’.”

This amendment would require a tribunal to determine an appropriate rent in accordance with proposed subsection 13(4F).

Amendment 197, in clause 6, page 7, line 13, at end insert—

“(3A) After subsection (1) insert—

‘(1A) In making a determination under this section, the appropriate tribunal must have regard to the original rent agreed with the tenant and subsequent changes in—

(a) Local Housing Allowance;

(b) the average rent within the broad rental market area as assessed by the Valuation Office Agency or as listed in the Property Portal;

(c) the consumer price index; and

(d) median income growth.’”

This amendment would allow the tribunal to take into account not only new rents in the market but current rents in existing tenancies, changes in wages, inflation, and local housing allowance when making a determination.

Amendment 198, in clause 6, page 7, line 25, at end insert—

“(5A) After subsection (5) insert—

‘(5A) Where a notice under section 13(2) has been referred to the appropriate tribunal, then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) applies, to the addition of the appropriate amount in respect of rates) shall be the same or below the original rent and the increase in consumer price index or medium income growth, whichever is lower over the period since the tenancy started.’”

This amendment would limit tribunals to an upper cap of CPI or medium income growth, whichever is lower, for rent increases.

Amendment 199, in clause 6, page 7, line 25, at end insert—

“(5A) After subsection (5) insert—

‘(5A) Where a notice under section 13(2) has been referred to the appropriate tribunal, then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) applies, to the addition of the appropriate amount in respect of rates) shall be set using the statutory guidance on in-tenancy rent increases laid before Parliament by the Secretary of State.’”

Amendment 199 and NC66 would require the Secretary of State to issue guidance to tribunals on the determination of in-tenancy rent increases, and require tribunals to take such guidance into account when making determinations.

Amendment 160, in clause 6, page 7, line 27, at end insert—

“(7A) After subsection (8) insert—

‘(8A) Where a notice under section 13(2) has been referred to the appropriate tribunal then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) above applies, to the addition of the appropriate amount in respect of rates) shall be the same or below the rent specified in the section 13 notice and the rent as determined by the tribunal shall only become payable once the decision of the tribunal has become final.

(8B) A decision becomes final only on the latest of—

(a) the determination of any appeal;

(b) if earlier, on the expiry of the time for bringing a subsequent appeal (if any); or

(c) by its being abandoned or otherwise ceasing to have effect.’”

This amendment would ensure that where a rent assessment is carried out by a tribunal, the rent subsequently determined by that tribunal cannot be higher than that originally requested by a landlord in a section 13 notice.

Amendment 190, in clause 6, page 7, line 38, at end insert—

“(c) no more than the rent proposed by the landlord in the notice served on the tenant under section 13 of the 1988 Act.”

This amendment would mean that the rent payable after a tribunal determination can be no higher than the rent initially proposed by the landlord in the notice served on the tenant.

Amendment 161, in clause 6, page 8, line 20, at end insert—

“which must be no earlier than two months following the date of determination”.

This amendment would ensure that in cases of undue hardship tenants would have a minimum of two months from the date of determination before a new rent became payable.

Amendment 162, in clause 6, page 8, line 21, leave out subsection (4) and insert—

“(4) A date specified under subsection (3)(b) must be no earlier than the date on which the determination becomes final, with a decision only becoming final on the latest of—

(a) the determination of any appeal;

(b) if earlier, on the expiry of the time for bringing a subsequent appeal (if any); or

(c) by its being abandoned or otherwise ceasing to have effect.”

This amendment would remove the requirement for a date determined by a court for rent to become payable in cases of undue hardship to not be later than the date of the determination.

Clause 6 stand part.

New clause 58—Requirement to state the amount of rent when advertising residential premises—

“(1) A landlord must not advertise or otherwise offer a tenancy of residential premises unless the amount of rent is stated in the advertisement or offer.

(2) A letting agent acting on behalf of a landlord must not advertise or otherwise offer a tenancy of residential premises unless the amount of rent is stated in the advertisement or offer.”

This new clause would require landlords or persons acting on their behalf to state the proposed rent payable in the advertisement for the premises.

New clause 59—Not inviting or encouraging bids for rent—

“(1) A landlord must not invite or encourage a prospective tenant or any other person to offer to pay an amount of rent for residential premises that exceeds the amount of rent stated as part of the advertisement or offer of the premises as required by section [requirement to state the amount of rent when advertising residential premises].

(2) A letting agent acting on behalf of a landlord must not invite or encourage a prospective tenant or any other person to offer to pay an amount of rent for residential premises that exceeds the amount of rent stated as part of the advertisement or offer of the premises as required by section [requirement to state the amount of rent when advertising residential premises].

(3) Subsection (1) does not prohibit a prospective tenant or other person from offering to pay an amount that exceeds the stated amount of rent.”

This new clause would prevent landlords or persons acting on their behalf from inviting or encouraging bids that exceed the amount stated as part of the advertisement or offer of the premises.

New clause 62—Limit on amount of rent that a residential landlord can request in advance—

“In Schedule 1 to the Tenant Fees Act 2019, after paragraph 1(8) insert—

‘(9) Where rent is payable in advance, the maximum that may be charged is equivalent to the amount specified in paragraph 2(3).’”

This new clause would ensure that the maximum amount of rent that could be lawfully requested by a residential landlord in advance of a tenancy commencing would be 5 weeks’ rent for tenancies of less than £50,000 per annum and to 6 weeks’ rent for tenancies over £50,000 per annum.

New clause 66—Rent increase regulations—

“The Secretary of State must lay before Parliament, from time to time, guidance for tribunals on the determination of in-tenancy rent increases under a section 13(2) notice, such guidance shall include reference to Local Housing Allowance, average rents as assessed by the Valuation Office Agency or published on the Property Portal, consumer price index and median income growth.”

Amendment 199 and NC66 would require the Secretary of State to issue guidance to tribunals on the determination of in-tenancy rent increases, and require tribunals to take such guidance into account when making determinations.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

I rise to speak to amendment 159 and others tabled in my name and the names of my hon. Friends. I thank my hon. Friend the Member for Brighton, Kemptown for tabling the six amendments that he moved and spoke to this morning. They raise a number of important issues and it is right that the Committee and the Government carefully consider them.

As we have heard, clauses 5 and 6 set out the process for rent increases under the new tenancy system and how any such increase can be challenged by tenants. Under the existing assured tenancy regime, a landlord can only increase the rent during a fixed-term assured shorthold tenancy by including a rent review clause in the tenancy agreement. Rent review clauses of this kind are used by landlords to increase rent levels during fixed-term tenancies, but it is far more common for landlords to offer a new fixed-term tenancy at a higher rent when the old one is coming to an end, or to seek to increase the amount of rent payable once a tenant has fallen into a periodic tenancy with no specific end date.

The rents on periodic assured shorthold tenancies can be increased by the landlord serving notice under section 13 of the Housing Act 1988. However, although formal section 13 increases can take place only once a year, under the current system assured shorthold tenants can still be asked by their landlords either to agree informally or to formally sign a new agreement accepting a higher rent level, and there is no limit whatsoever on how high rents can rise by either method.

In theory, the tenant does not have to agree to a rent increase proposed informally or formally via a new agreement, and they can refer increases to a first-tier tribunal on grounds of reasonableness, yet all the available evidence suggests that only an incredibly small proportion of privately renting households do so. An analysis by Generation Rent of market rent assessments undertaken by the first-tier tribunal indicated that only 341 such cases were heard between January 2019 and August 2021. Bearing in mind that there are approximately 4.4 million privately renting households in England alone, it is a miniscule proportion.

The reason why so few tenants determine to make use of the tribunal process under the existing tenancy regime is obvious. If a tenant refuses a rent increase either informally or formally via a new agreement, or successfully challenges a rent increase at tribunal, a landlord can take immediate steps to end their tenancy, most obviously by issuing a no-fault section 21 notice.

With the introduction of the new tenancy system, the ability of landlords to compel tenants to accept rent rises by means of the latent threat of a section 21 notice will obviously be removed. Although there will remain the threat of spurious eviction by means of the remaining de facto no-fault grounds for possession that we discussed at length in previous debates, the new system will be an improvement on the current situation faced by private tenants when it comes to rent increases.

By amending section 13 of the 1988 Act, clause 5 will ensure that issuing a section 13 notice will henceforth be the only valid way that a private landlord—except those of a relevant low-cost tenancy, as specified in the Bill—can increase the rent, and landlords will therefore be able to increase the amount of rent charged only once per year. Supplemented by the provisions in subsection (4), which will increase the notice period for a rent rise from one month to two months, the changes will create more predictability and give tenants more certainty about future rent increases. On that basis, we welcome them.

However, we remain seriously concerned that the provisions in the clauses are not robust enough to prevent unaffordable rent increases from being used as default eviction notices for the purpose of retaliation against complaints, or simply because a landlord wants to try to secure a rent level that is far in excess of what they can reasonably expect from a sitting tenant.

We have consistently raised concerns about this issue since the White Paper was published in the summer of 2022. As I argued in response to a statement accompanying the release of the White Paper that was made by the then Under-Secretary of State at the Department, the hon. Member for Walsall North—he may remember—it is problematic that the Government did not include in the reform package any robust means of redress for tenants facing unreasonable rent rises. Our view remains as set out in that exchange last year—namely, that a one-year rent increase limit, the removal of rent review clauses, and vague assurances about giving tenants the confidence to challenge unjustified increases at tribunal are not enough.

With the scrapping of section 21, the risk of economic evictions by means of extortionate within-tenancy rent hikes will increase markedly. The Government acknowledge that tenants need protection against what they term “back-door eviction” by such means. However, we believe that the Bill as it stands does not protect tenants sufficiently from such economic evictions, and that it needs to be strengthened accordingly in several ways.

In the White Paper, the Government committed to preventing

“the Tribunal increasing rent beyond the amount landlords initially asked for when they proposed a rent increase.”

We believe that that was an entirely sensible proposal. An obvious need under the new tenancy system is to ensure that all tenants are fully aware that they can submit an application to the first-tier tribunal to challenge a rent amount in the first six months of a tenancy or following the issuing of a section 13 notice. Equally as important is that the tribunal process operates in a way that gives them the confidence to do so.

The Bill allows for a situation in which tenants who are handed section 13 notices with what they consider to be completely unreasonable rent increases might apply to the tribunal to challenge the increase, only to see the rent level rise higher. That will act as a powerful deterrent to tenants making such applications. As a consequence, the Bill risks emboldening landlords to press for unaffordable rent increases in the knowledge that tribunal challenges will remain vanishingly rare, as they are now.

The Government’s explicit intent might well be to deter a proportion of tenants from challenging section 13 rent increases. After all, with 4.4 million households now renting privately in England, even a minor uptick in applications to the tribunal will place it under enormous pressure. Without additional resourcing and support, that could lead to extensive delays. Ultimately, however, it is for the Government to ensure that the first-tier tribunal can cope with the implications of the new tenancy regime that they are introducing, not for tenants to have to stomach unreasonable rent rises because there is a chance that they will not do so.

On a point of principle, we believe that the tribunal should only ever be able to increase the rent increase requested in the section 13 notice issued, or to award a rent amount lower than it. Amendment 160 would ensure that that would be the case by specifying that where a rent assessment is carried out by a tribunal, the rent subsequently determined by the tribunal cannot be higher than that originally requested by a landlord in the section 13 notice. We believe that that change, which would ensure that the tribunal process was in line with the commitments made by the Government in their White Paper, and reasonable and proportionate. I urge the Minister to accept it.

We also take the view that the Bill needs to include greater protection for tenants who would suffer undue hardship as a result of a section 13 rent increase. Once the provisions in the Bill are finally enacted, a considerable number of tenants—in particular those in hot rental markets where rent levels increase rapidly—will without doubt be unable to afford an increase in rent as set out in a section 13 notice. Many will simply give notice and leave the property without taking the matter any further.

A significant proportion of those who attempt by means of the tribunal a challenge of a rent increase perceived to be unreasonable, in an effort to secure a rent lower than proposed in the section 13 notice, but fail, will ultimately leave the property. That would even be the case if the Government accept amendment 160 and the tribunal cannot increase the amount further. We believe that those who would experience undue hardship as a result, such as tenants at risk of becoming homeless, because they have to leave what has become an unaffordable, should be afforded a little more time—it is only a little more time—to try to secure a property that they can afford.

Taken together, amendments 161 and 162 would achieve that aim by changing the point at which the rent increase becomes payable from the date at which the tribunal makes a determination to two months after that date. The effect of that pair of amendments would simply be to give vulnerable tenants a reasonable period of time in which to make new arrangements as a result of a rent rise that was unaffordable for them. We hope that the Government can see the merit of accepting the amendments and will give them serious consideration.

We also believe that three other important changes to the Bill are required in relation to rent. The first concerns section 13 notices. As I remarked earlier, the clause amends this section of the 1988 Act so that from the date of commencement it will be the only valid way in which a private landlord, except those of a relevant low-cost tenancy, can increase the rent, once per year. In practice, however, we know that, particularly at the lower end of the private rented market and in the unregulated shadow rental market, a great many landlords will inevitably increase rent levels without issuing a formal section 13 or 13A notice. Amendment 159 would ensure that in instances where they might, a tenant would have the right to seek to recover costs through a debt claim in the court. It would also provide the Government with the power by regulation to have such claims recoverable by tribunal, if Ministers felt that was a more appropriate body to determine such claims.

The second issue concerns rent requested in advance of a tenancy’s commencement. In the White Paper, the Government committed to introducing a power to prohibit the amount of rent that landlords can ask for in advance, and we supported that proposal. We will come to discuss measures aimed at discriminatory practices in relation to the granting of tenancies when we debate the various Government amendments that are to form new chapter 2A of part 1 of the Bill. However, irrespective of how effective those groups of amendments might ultimately be—we have our doubts, which we will set out in due course—blanket prohibitions are not a silver bullet for discriminatory practices in the private rented sector.

A number of informal barriers to renting privately are regularly faced by large numbers of tenants. They include requests that renters appoint a high-earning guarantor—an issue to which I hope we can return in a future sitting—and asking renters for multiple months of rent in advance. According to research carried out by Shelter, a staggering 59% of tenants reported being asked to pay rent in advance when attempting to secure a property the last time they moved; some were even asked to pay in excess of six months’ rent up front. Tenants reported taking out unsecured loans, using their credit cards or going significantly into their overdrafts to make the advance payments. One in 10 of those surveyed reported being denied a property for which they could afford the monthly rent simply because they were unable to pool together the sizeable advance rent payment that the landlord requested.

It is true that clause 1 defines a rental period as one month—a change from the current situation in which periods of a periodic tenancy can be of any length. One reading of the Bill might suggest that a single rental period is all that a landlord will be able to request under the new tenancy regime. If that is the case, I would be grateful if the Minister confirmed as much and detailed precisely how clause 1 would prevent landlords from requesting multiple rent payments in advance. Nothing that we can see in the Bill would prevent a landlord from requesting several rent payments at one time before a tenancy was signed.

We believe that the solution is new clause 62, which would ensure that the maximum amount that could be lawfully requested by a residential landlord in advance of a tenancy would be five weeks’ rent for tenancies of less than £50,000 per annum and six weeks’ rent for tenancies of over £50,000 per annum.

The third and final change that we believe is required relates to rental bidding wars—the product of soaring demand and inefficient supply which is, I admit, to a large extent concentrated in our cities and larger towns. The phenomenon involves multiple tenants competing fiercely for individual private lets. Landlords and the agents acting on their behalf, overwhelmed by applicants, now regularly play prospective renters off against each other, with some offering to pay months of rent up front as a lump sum, to sign longer tenancy agreements or to agree to rent levels far in excess of the advertised monthly rate.

Under the new tenancy system, long-term fixed-term tenancy agreements will not exist. We hope the Government will accept our new clause 62 or introduce an amendment of their own, as they promised in the White Paper, to prohibit landlords from asking for rent in advance. That leaves competitive bidding wars in respect of monthly rental periods as the only means by which this inherently inflationary phenomenon could continue—a phenomenon that the unscrupulous can undoubtedly use to discriminate against certain types of tenants and, even where no such discrimination occurs, pushes many to the limit of what they can afford financially.

Taken together, new clauses 58 and 59 would effectively prohibit bidding wars for private rented properties by requiring landlords or persons acting on their behalf to state the proposed rent, based on an estimate of the property’s market rate, in the advertisement for the premises. That should prevent landlords from inviting or encouraging bids that exceed the amount stated.

The new clauses are based on legislation introduced in New Zealand and Australia, the former having banned the practice entirely in February 2021 and the latter having seen it prohibited in most states—including, most recently, New South Wales in December last year and South Australia in June this year. We hope the Minister will give the new clauses due consideration. I look forward to his thoughts about them and about other five amendments in this group.

[Nickie Aiken (Cities of London and Westminster) (Con)]

I thank the shadow Minister, who had some very reasonable thoughts about this issue, for his speech.

Currently, I am dealing with an example of what I believe to be the worst behaviour by a corporate landlord that I have ever come across in 18 years as a councillor or Member of Parliament. I am talking about rent increases. AXA Insurance, which now owns Dolphin Square in Pimlico in my constituency, is carrying out a major refurbishment of that estate; that is understandable. However, it is now asking tenants, some who have been there for many years, to move out of flats that it wants to refurbish and into others. But, if they do move out and into another flat, their tenancy breaks, and they have to take out a new tenancy, which includes a 40% increase in rent.

--- Later in debate ---

[Jacob Young]

Yes, I do.

New clause 62 seeks to align the maximum amount of rent in advance that landlords can charge tenants with the limits set on security deposits by the Tenant Fees Act 2019. Although I understand the reasoning behind the new clause, to link the two on an arbitrary basis would not be an efficient means to achieve its intended effect. It would mean that any changes to one would directly affect the other.

As the Committee will be aware, and as the hon. Member for Greenwich and Woolwich mentioned, the Government committed to introduce a similar power to limit rent in advance as part of our White Paper. We have concluded, however, that no such additional power is needed, as it is already possible to limit rent in advance using the power in section 3 of the Tenant Fees Act 2019. Before deciding to use that power, which would significantly infringe on the business interests and financial freedoms of private landlords, it is vital that we gather strong evidence of need and undertake a thorough impact assessment.

Furthermore, rent in advance can be beneficial in a variety of situations. For example, it can be employed to balance a financial risk when a prospective tenant could not otherwise pass a reference or affordability check. Above all, it is vital that landlords retain the ability to ensure a sustainable tenancy for both parties. We have made it clear that asking for a large amount of rent in advance should not be the norm.

On new clause 66, we will update the guidance to ensure that tribunal users have the confidence and information they need to engage with it effectively. This includes helping parties to understand how they can provide evidence of comparable rent. Our reforms strike a balance between the landlord’s ability to increase rent in line with the market and protecting tenants from back-door evictions through excessive rent hikes.

[Matthew Pennycook]

Forgive me if I missed it, but I do not think the Minister addressed the argument that underpins amendment 160. Why did the Government commit in their White Paper to limit the tribunal to determining a rent increase in line with or below the section 13 notice, instead of giving the tribunal the power to increase notice? If a landlord asks for a certain amount of rent and the tribunal determines that that is the amount to be paid, surely a tenant should not suffer by seeing the rate increased. Does the Minister not worry, as we do, that the Government’s approach will have a chilling effect on the confidence that tenants have in taking such cases to the tribunal?

[Jacob Young]

I understand the argument that the hon. Gentleman is trying to make, but we have listened to concerns and think it is fair that the tribunal is not limited when determining the market rent. This will mean that the tribunal has the freedom to make full and fair decisions, and can continue to determine the market rent of property.

--- Later in debate ---

[Lloyd Russell-Moyle]

They could, so why not? It would be expected if a property was marketed at a certain price for that to be the accepted price. If someone puts a section 13 down, it is a form of marketing what this property is now worth. The Minister is quite right that it is wrong to engage in unfair advertising practices. A section 13 is a form of advertising to a sitting tenant, to say, “I’m advertising that this is the rent that I now want.” To then change their mind via a tribunal is, in my view, unfair. I think the Minister probably gets that point, but I wonder whether it might be possible to change it through regulation, and advice to the courts and the tribunals. These things need to be considered, and the same goes for widening the scope of what the tribunals could push. I will not push my amendments now, but I hope the Minister will genuinely think about how we can increase the scope of what the courts can consider, so that rents are not always inflated up to the very highest level, but are fair for all our communities.

[Matthew Pennycook]

There were some points of interest raised in this debate that we will certainly come back to—I will check the transcript in relation to a couple of them—but I do not think they satisfy us sufficiently not to press these amendments.

On new clauses 58 and 59, I took the Minister to imply that bidding wars could fall under the category of false, misleading or essentially unfair practices—I think he mentioned dishonesty. I do not think he has given us a cast-iron commitment that bidding wars of any kind constitute an unfair practice. If they do, and the Government know that, why are they not taking action to stamp them out? Lots of people in cities and towns across the country, and certainly in my constituency, are being impacted financially by bidding wars. In some areas, they are extremely intense, and people end up paying huge amounts more than were initially advertised.

I agree with the Minister that advance rent should not be the norm. It seems to be somewhat the norm in many parts of the country. I am interested that he says there is a potential means of addressing this via the Tenant Fees Act 2019. It sounded to me like it may take quite a long time for the Government to bring forward any proposals in that regard. We will certainly not see advance rent stamped out any time soon. The Minister did not address my point on undue hardship. I absolutely realise—it was part of my remarks—that under the Government’s proposals, when a tribunal determines the rent, it will kick in from the point of determination. We think that vulnerable residents need a little more time to adjust and move out if they simply cannot afford those rents.

Finally, on the tribunal awarding rent levels in excess of what is asked for, I think the Government have got it wrong. The Minister referenced unspecified interests that the Government had heard lobbying from—I think he said, “We’d heard concerns.” Who from? I do not know. We can all take a guess who from. There were proposals in the White Paper, this being one of them, that we thought extremely sensible. He is right that some landlords may, having been told by the tribunal that they can increase the rent level even further than asked for, be good-natured enough to charge only the initial rate, but I cannot think that many of them would. They are, after all, running businesses. We need a measure—we will no doubt return to this at a later stage—to ensure that the rent level that the landlord asked for via section 13 is the maximum. In many cases it may reduce, but it should be the maximum that a landlord can ask for. On that basis, I am afraid that we will press our amendments 160 and 161 to a vote.

[Jacob Young]

I want to be absolutely clear: the Government’s position is that bidding wars are not illegal.

[Matthew Pennycook]

That was my understanding as well, so I am not sure what the Minister was saying about false, misleading or unfair practices. If that does not apply to bidding wars, it applies to something completely separate from what we are talking about, so he has convinced me that new clauses 58 and 59 are even more necessary than I thought. I thought there was a glimmer of hope there, but there clearly is not. We will press all our amendments to a vote.

[Lloyd Russell-Moyle]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6

Challenging amount or increase of rent

Amendment proposed: 160, in clause 6, page 7, line 27, at end insert—

“(7A) After subsection (8) insert—

‘(8A) Where a notice under section 13(2) has been referred to the appropriate tribunal then, unless the landlord and the tenant otherwise agree, the rent determined by the appropriate tribunal (subject, in a case where subsection (5) above applies, to the addition of the appropriate amount in respect of rates) shall be the same or below the rent specified in the section 13 notice and the rent as determined by the tribunal shall only become payable once the decision of the tribunal has become final.

(8B) A decision becomes final only on the latest of—

(a) the determination of any appeal;

(b) if earlier, on the expiry of the time for bringing a subsequent appeal (if any); or

(c) by its being abandoned or otherwise ceasing to have effect.’”—(Matthew Pennycook.)

This amendment would ensure that where a rent assessment is carried out by a tribunal, the rent subsequently determined by that tribunal cannot be higher than that originally requested by a landlord in a section 13 notice.

--- Later in debate ---

Right to request permission to keep a pet

[Matthew Pennycook]

I beg to move amendment 183, in clause 7, page 8, line 36, leave out “42nd” and insert “14th”.

This amendment would ensure a landlord gives or refuses consent in writing within 14 days of the request being made.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 182, in clause 7, page 8, line 37, at and insert—

“(d) the landlord may not review or withdraw consent once given.”

This amendment ensures that a tenant may keep a pet for the duration of their tenancy once consent has been given.

Amendment 184, in clause 7, page 9, line 2, leave out “42nd” and insert “14th”.

This amendment would ensure that where a request for further information is made on or before the 14th day after the tenant’s request, the landlord may delay giving or refusing consent for a further 7 days if that information is provided.

Amendment 185, in clause 7, page 9, line 15, leave out “42nd” and insert “14th”.

This amendment would ensure that where a request for the consent of a superior landlord on or before the 14th day after the tenant’s request, the landlord may delay giving or refusing consent for a further 7 days if that information is provided.

Amendment 186, in clause 7, page 9, line 16, leave out “7th” and insert “14th”.

Amendment 187, in clause 7, page 9, line 18, at end insert—

“(3A) Where the consent of a superior landlord is required for the purposes of subsection (3), the superior landlord must give or refuse consent on or before the 14th day after the date of the request from the landlord.”

These amendments require a superior landlord to give or refuse consent within 14 days of a request being received.

Amendment 181, in clause 7, page 9, line 27, at end insert—

“(7) The Secretary of State must, within 180 days of the day on which this Act is passed, publish guidance on what constitutes a reasonable ground for refusal of consent to keep a pet for the purposes of this section.”

This amendment would require the Government to publish guidance on what qualifies as a reasonable ground of refusal for a tenant to keep a pet.

Clause stand part.

Clause 8 stand part.

New clause 63—Prohibition of discrimination relating to pet ownership—

“(1) In relation to a dwelling that is to be let on a relevant tenancy, a relevant person must not, on the basis that a pet would be kept by a person at the dwelling if the dwelling were the person’s home—

(a) prevent the person from—

(i) enquiring whether the dwelling is available for let,

(ii) accessing information about the dwelling,

(iii) viewing the dwelling in order to consider whether to seek to rent it, or

(iv) entering into a tenancy of the dwelling, or

(b) apply a provision, criterion or practice in order to make people who keep a pet at the dwelling, if it were their home, less likely to enter into a tenancy of the dwelling than people who would not.

(2) Subsection (1) does not apply if—

(a) the relevant person can show that the conduct is a proportionate means of achieving a legitimate aim, or

(b) the relevant person can show that the prospective landlord of the dwelling, or a person who would be a superior landlord in relation to the dwelling, is insured under a contract of insurance—

(i) to which section (Terms in insurance contracts relating to pet ownership) does not apply, and

(ii) which contains a term which makes provision (however expressed) requiring the insured to prohibit a tenant under a relevant tenancy from keeping a pet at the dwelling, and the conduct is a means of preventing the insured from breaching that term.

(3) Conduct does not breach the prohibition in subsection (1) if it consists only of—

(a) one or more of the following things done by a person who does nothing in relation to the dwelling that is not mentioned in this paragraph—

(i) publishing advertisements or disseminating information;

(ii) providing a means by which a prospective landlord can communicate directly with a prospective tenant;

(iii) providing a means by which a prospective tenant can communicate directly with a prospective landlord, or

(b) things of a description, or things done by a person of a description, specified for the purposes of this section in regulations made by the Secretary of State.”

This new clause would prohibit landlords and those who act on their behalf or purport to do so from adopting certain discriminatory practices which make it harder for people who have pets to obtain a relevant tenancy.

New clause 64—Terms in insurance contracts relating to pet ownership—

“(1) A term of a contract of insurance to which this section applies is of no effect so far as the term makes provision (however expressed) requiring the insured to prohibit a tenant under a relevant tenancy or regulated tenancy from keeping a pet at the dwelling.

(2) This section applies to contracts of insurance which were entered into or whose duration was extended on or after the day on which this section comes into force.”

This new clause provides for terms of an insurance contract to be ineffective so far as they would prohibit a tenant from keeping a pet.

[Matthew Pennycook]

Clause 7 will add new provisions to the 1988 Act to strengthen the rights of tenants to keep a pet in their home, including a new legal obligation for landlords to consider requests to keep a pet while providing a route for them to refuse such requests when they can give a reasonable justification for why it would not be suitable. The clause also allows landlords to require insurance to cover pet damage.

We welcome the clause. As many of us know, pets are wonderful companions, and keeping them results in a host of benefits, not only for pet owners but for society. While it may be going too far to ascribe to them the status of a public health intervention, it is not in dispute that pets can help to relieve loneliness, boost physical activity, decrease stress and anxiety and, as I know from my own experience as the owner of a puppy called Clem, bring real comfort and joy to young children. We are therefore extremely pleased that the Government have delivered on the commitment they made in the White Paper to take steps to ensure that landlords cannot unreasonably withhold consent when a tenant requests to have a pet in their home.

We also welcome the fact that the Government have explicitly recognised the link between overly restrictive conditions on pets in the private rented sector and the number of animals either left on the street or given up to shelters each year. We know that such steps are required because there is extensive evidence that a significant proportion of landlords do not let to tenants with pets. Figures from the English private landlord survey 2021, which were quoted in the Government’s White Paper, suggest that nearly half of all landlords are unwilling to let to tenants with pets. The fact that so many landlords do not accept pets is not just an inconvenience for private tenants who own them; due to the constrained supply of properties in the private rented sector, it is also a significant contributory factor to the number of animals given up each year. It is telling that, last year, 10% of people who contacted the Dogs Trust with a view to rehoming their dog cited their reason for doing so as issues with accommodation, including being unable to find somewhere to live that was pet-friendly.

However, while we welcome the intent of clause 7, we are concerned that these provisions are not yet robust enough to ensure that the new “right to request” process will operate fairly and effectively in practice to prevent prospective tenants with pets from being disadvantaged at the point that they seek to secure a new periodic tenancy. The amendments to clause 7 that we have tabled in this group are an attempt to ensure that responsible pet owners can, as the White Paper promised, truly feel like their house is their home. We are pleased to have the support of both Battersea Dogs & Cats Home and the Dogs Trust in tabling them.

Amendments 183 to 187 seek to reduce the period in which a landlord can consider a request made to keep a pet from 42 days to 14 days, with the ability to extend by a further 14 days should a superior landlord need to be consulted. We do not believe that the Bill, which currently would give landlords up to six weeks to determine whether to provide or refuse consent to keep a pet, is fair on tenants, particularly those who might already have pets and would presumably, absent a family member or friend temporarily housing them, have to cover the potentially significant costs of putting them in boarding kennels or catteries.

We have also taken seriously the concerns that Battersea Dogs & Cats Home has put to us about the possible impact of the proposed 42-day consideration period on rescue organisations. Its entirely justified fear is that if there are six weeks of uncertainty about whether tenants can live with their pets in a newly secured privately rented home, there is a real risk that a considerable number of animals could be surrendered to rescue organisations, thereby putting significant additional strain on those organisations. Battersea Dogs & Cats Home has also highlighted another potential impact of the lengthy proposed period: private tenants looking to rehome an animal from a rescue centre or shelter in a newly secured privately rented home may find themselves unable to do so in a timeframe that the shelter can accommodate.

It is not clear to us why the Government believe that landlords will need up to six weeks to arrive at a decision on a request to keep a pet. If the Minister can provide a justification for why the Government chose 42 days as the period in which a landlord can consider such a request, we would be grateful to learn of it. In all honesty, we struggle to conceive of why any good-faith landlord would need such a lengthy period to make such a decision. It is our belief that a 14-day limit will allow tenants to better plan for pet ownership if they wish to acquire a new pet and make life easier for those who already own them. We hope that the Government will consider accepting these amendments.

Amendment 181 simply seeks to require the Government to address the present lack of clarity on what constitutes a reasonable ground for refusal. Subsection (4) of proposed new section 16B of the 1988 Act states that the

“circumstances in which it is reasonable for a landlord to refuse consent include”

those in which a pet being kept would breach an existing agreement with a superior landlord. Yet aside from the circumstances set out in paragraphs (a) and (b) of subsection (4), the Bill is silent on what would constitute a reasonable refusal in those circumstances. Are we to take it that paragraph (1)(b) of proposed new section 16A, which provides that consent to keep a pet is

“not to be unreasonably refused by the landlord”,

applies in all circumstances other than those in paragraphs (a) and (b) of subsection (4)? In short, can private tenants who wish to own or already own a pet now be confident that a landlord cannot reasonably refuse a request to keep a pet, unless accepting such a request would breach an agreement with a superior landlord? Or do the Government intend for there to be a greater range of circumstances that could provide legitimate grounds for a reasonable refusal?

I hope the Minister will accept that this is not simply Opposition nit-picking over specific subsections of legislation, because the answer to that question is key to how the provisions will operate in practice. Tenants need to know whether the right to request to keep a pet must be accepted in all but the most extenuating circumstances, or whether there is a broader range of situations where landlords can legitimately refuse. In an attempt to clarify the present ambiguity, our amendment 181 would require the Government to publish guidance on what qualifies as a reasonable ground of refusal for a tenant to keep a pet. We hope the Government will give it serious consideration.

Another area where we believe the Bill would benefit from greater clarification is the nature of the consent once given. Our amendment 182 would ensure that, once given, landlord consent for a tenant to keep a pet cannot be reviewed or withdrawn. That would provide tenants with far greater confidence that, once a consent had been awarded, the landlord could not change their mind, and that they would be able to live with their pet for the duration of the tenancy as a result. We hope the Government will look favourably upon amendment 182, but even if the Minister does not ultimately accept it, we hope that he will provide some reassurance today that, once a consent is given, it cannot be withdrawn or revoked.

Turning to new clauses 63 and 64, as I touched on at the outset of my remarks, not only do we believe that changes are required to clause 7 to ensure that it operates fairly and effectively in practice, but we are concerned about the risk of prospective tenants with pets being disadvantaged at the point that they are seeking to secure a new periodic tenancy. As drafted, the clause applies only to existing tenancies and not prospective ones.

Given that we know that a significant proportion of landlords, perhaps even a majority of them, do not allow pets, we are concerned that any restriction may mean that landlords who do not wish to have a pet in their property, but who are unable to reasonably refuse a right to request from a sitting tenant, may instead seek to screen out tenants who are existing or prospective pet owners. New clauses 63 and 64 would prevent landlords from discriminating in that fashion, thereby ensuring that those with pets can move between properties as freely as those without. We hope that the Government will consider our new clauses carefully and, if they are not minded to accept them, will at least consider what might be done by way of statutory guidance, for example, to ensure that existing or prospective pet owners seeking to agree a new tenancy are not discriminated against.

Before I conclude, I want to touch briefly on how and whether tenants will be able to seek a review of a decision to give or refuse consent by a landlord. The White Paper stated that the Government would

“legislate to ensure landlords do not unreasonably withhold consent…with the tenant able to challenge a decision”,

yet there are no provisions in the Bill to deliver upon that commitment. The only reference to any kind of challenge to non-fulfilment of a landlord’s responsibilities under these provisions is to be found at subsection (5) of proposed new section 16B, which states:

“In proceedings in which a tenant alleges that the landlord has breached the implied term created by section 16A, the court may order specific performance of the obligation.”

If that is indeed the only means of redress available to tenants who have a request for a pet refused, it would be disappointing and, we believe, contrary to what was implied in the White Paper. I would be grateful if the Minister confirmed whether that is the only means of potential redress in the case of a refusal and, if so, whether the Government are at least considering alternative means of non-statutory redress, for example via appeals to the new ombudsman.

I hope that Minister will take these amendments in the spirit in which they are intended, namely as a constructive attempt to ensure that clause 7 works fairly and effectively in practice and that there is no discrimination against pet owners once the new system is in place. I look forward to hearing his response.

[Craig Tracey (North Warwickshire) (Con)]

I want to make a brief contribution on clause 8, to satisfy my inner insurance nerd and get some clarification. I declare an interest as chair of the insurance and financial services all-party parliamentary group. My understanding from speaking to officials and the Minister—I thank them for their time—is that the clause is intended to allow either landlords or tenants to obtain insurance to cover damage by pets, with the cost then being passed on where it is obtained by the landlord.

The explanatory notes state:

“Clause 8 amends section 1(4) of the Tenant Fees Act 2019 to allow landlords to require a tenant keeping a pet to enter into a contract with an insurance company to cover pet damage.”

That suggests that it is very much about only tenants obtaining that cover. As somebody with a background in insurance, I am very pro insurance contracts. The more people who can take them out, the better, but I have concerns about this measure and how it could be interpreted.

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[Craig Tracey]

Yes, there is, but there are still some problems, which I will explain now. Even if the market does respond, that cover is not available now, so it might not be available from day one. It might respond in future—the hon. Member is right—but that leads me on to insurable interest. Usually, someone insures only something that they own. If they insure somebody else’s property, they have the potential to make a claim on it and that money goes to them as the policyholder, and they are not obliged to pass it on to the property owner. For that reason most insurance contracts are tied around an insurable interest, which is an important point because what we are trying to do here is cover the landlord’s property.

There could be an instance where a policy is taken out, a dog chews through a cable or something like that, and the tenant claims for it, but does not pass the money on. I will come to how we get round that. Also, Shelter mentioned that—there was a conversation over the weekend with the British Insurance Brokers’ Association —when financial shocks come, insurance products are normally one of the first things to be cancelled. So there is a worry for the landlord that the tenant might take the cover out at the start of the term, but there is nothing to say that that continues through the whole life of the tenancy and that the payments are made and maintained.

The third point is about the ability of a tenant to obtain cover, anyway. There are various barriers that might leave people unable to take out an insurance policy. There might be previous convictions or a previous claims history, or it might just down to the postcode and the particular area. Often such barriers would exclude some of the most vulnerable people who would benefit most from the cover.

The simplest solution is for the landlords to take responsibility for the policy covering their buildings insurance. It is their cover and they can make sure that the correct cover is in place and that there is not an onerous excess on the policy that might exclude payments coming out. They can make sure the cover is in force.

[Matthew Pennycook]

A point has just struck me. We heard from several advocacy organisations and charities that were sceptical about the need for this provision. Their concern was primarily about the impact on the finances of tenants, particularly vulnerable tenants, in the current cost of living crisis. Does the hon. Gentleman worry that if landlords have to take out insurance, they might pass on unreasonable and inflated costs in addition to the insurance policy? How would we verify that only the cost of the policy was being passed on?

[Craig Tracey]

My understanding from officials is that only the cost of the additional cover would be passed on. There is always potential for what the hon. Gentleman describes, though, so we do need to prevent it, because we want only the additional cost passed on. However, it comes back to the point that the landlord seems to be the best placed to take out that cover. It gets rid of a lot of the issues and means that the cover could start from day one.

I understand what the amendment is designed to do, but we need a bit more clarity. We do not want the unintended consequences that I have mentioned to prevent people from having a pet in their home, and the lack of insurance being blamed for that being the case.

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[Jacob Young]

That is certainly a role the ombudsman can play, which brings me on to the point raised by the hon. Member for Greenwich and Woolwich as to whether a tenant requesting a pet could challenge the landlord’s decision. We feel that the ombudsman could play a role in that ahead of any court proceedings.

On new clause 64, tabled by the hon. Member for Greenwich and Woolwich, it would be unusual for an insurance policy to explicitly ban pets as a condition of insurance. It is much more likely that pet damage simply would not be covered. We are grateful to the hon. Gentleman for raising that matter, and we will consider whether further action is necessary in relation to the new clause.

On amendment 181, we must ensure that the Government are able to work flexibly with stakeholders and properly align our planned guidance with implementation. I am happy to commit on the record today to guidance being issued, but it is vital that the Government are not constrained by the imposition of an arbitrary deadline. In the light of those points, I kindly ask the hon. Member for Greenwich and Woolwich to withdraw the amendment.

[Matthew Pennycook]

I will not press the amendment to a vote. I welcome the clarification from the Minister about guidance being forthcoming and in a number of other areas. I think all our concerns could be addressed if we had greater clarity on what constitutes a reasonable refusal and the circumstances in which a landlord could draw upon that. As I said to the Minister, all I can see in the Bill is proposed new section 16A(1)(b) of the Housing Act 1988, which says thats

“such consent is not to be unreasonably refused by the landlord.”

We need to know whether there is only a very narrow set of circumstances where that can be drawn on by landlords, or a wider range. The 42-day period does not matter in some ways if tenants have robust assurance on the reasonable implied period. There will also be far fewer ombudsman cases if there is only a narrow range of grounds on which a pet can be refused. I urge the Minister to write to us, perhaps before Report stage, to give us a bit of clarification around the circumstances in which landlords can reasonably refuse that request. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

Clause 9

Duty to give statement of terms and other information

Question proposed, That the clause stand part of the Bill.

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[Jacob Young]

The Government are committed to ensuring that tenants and landlords are aware of their rights and responsibilities. Government new clause 3 will replace clause 9 and insert a new duty requiring landlords to provide tenants with a written statement setting out certain terms of their tenancy. Having terms in a written agreement or statement can help to avoid disputes. If things go wrong, they can provide effective evidence to resolve disputes, and they can provide valuable evidence if the landlord needs to evict an irresponsible tenant. Details of what must be included in the written statement will be set out in regulations made by the Secretary of State, and may include such information as the tenancy start date, rent level and landlord’s address, as well as the basic rights and responsibilities of both parties.

We know that the vast majority of good landlords already put tenancy terms in writing, and we want to formalise that good practice. For those landlords, we intend that there will be little practical difference between this new duty and the tenancy agreement that they already provide. Landlords will need to specify when certain grounds may be used to evict the tenant. These are predominantly specialist grounds, such as where the property is used for a specific purpose or connected to the tenant’s employment.

New clause 3 will help to ensure that all tenants and landlords, as well as those working for the landlord, are aware of their rights and obligations. I commend it to the Committee in place of clause 9.

[Matthew Pennycook]

Clause 9 would insert proposed new section 16D into the 1988 Act. It places a duty on landlords to provide the tenant, as the Minister made clear, with a written statement of terms and information on or before the first day of a tenancy. Landlords must state in the written statement of terms where they may wish to make use of any of the prior notice grounds 1B, 2ZA, 2ZB, 4, 5 to 5G or 18. Given that prior notice is currently required for use of possession ground 1, but the Government propose to remove that requirement from the new ground 1, may I press the Minister again to explain precisely why the Government believe that that change is necessary?

I would like to make some brief comments about Government new clause 3 and put a number of questions to the Minister about it. These are complex questions, so I have no issue with the Minister writing to me at a later date rather than answering now. New clause 3 replaces clause 9, thereby applying the provisions of the clause to landlords’ contractors as well as landlords; carving out certain tenancies by implication; and modifying specific provisions for certain tenancies. Leaving aside quite how the Government got themselves in the situation where they are replacing entire clauses in Committee, I would be grateful if the Minister clarified why the Government have alighted on applying these provisions to “contractors”, given that the standard term, both in plain English and in statute, is “agent”?

A whole series of further questions arises from the new clause. What is the definition of a contractor? Does it have to be a written contract? What happens if the information is not provided? Did the Government consider whether a rent repayment order might be appropriate in the circumstances, or whether a court should be given the power to order that it be provided? What if the contractor excludes liability for providing the material in question, given that we know that that happens in other instances, for example with letting agents excluding liability to tell the landlord about any relevant licensing schemes? I would appreciate any insight that the Minister can offer today into any of those points. As I say, I am more than happy to accept a written response to my detailed questions, if necessary.

[Jacob Young]

On the hon. Gentleman’s question about prior notice, we are making it a requirement of the new mandatory written statement of terms that landlords must warn their tenants where they may wish to rely on a certain grounds at the outset of the tenancy. If the landlord fails to comply with the mandatory written statement of terms, the tenant can seek redress and local authorities may issue fines.

[Matthew Pennycook]

But that does not apply to ground 1, does it? I am trying to understand the Government’s thinking on why they have removed the prior notice requirement on ground 1.

[Jacob Young]

I shall write to the hon. Gentleman on that point and on the other questions that he raised.

Question put and negatived.

Clause 9 accordingly disagreed to.

Clause 10

Other duties of landlords and former landlords

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[Helen Morgan]

Once again, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests, on which there are two jointly owned properties: a residential property and a holiday let.

During our evidence sessions, we heard that experience in Scotland has shown that grounds 1 and 1A are open to abuse by landlords who are simply looking to re-market their property either at a higher rent or to a different tenant who will not complain about serious defects in the property. We heard about a pretty horrifying case in which a rat and maggot-infested property was simply re-marketed three months later. Clearly, the time in which the property could not be re-marketed was not enough of a deterrent to prevent abuse of such a clause. Amendments 132 and 133 therefore seek to extend from three to six months the period before which a property can be re-marketed.

In our debates over the past couple of days, I have spoken at length about the need to ensure the maintenance of balance between tenants and landlords, so that landlords are not driven from the market, which would exacerbate the chronic shortage of rental property in the whole UK and the decline in the size of the private rented sector in rural parts. I do not think that these amendments would have an impact on that balance. Any landlord who is seeking repossession under ground 1 or 1A and is acting in good faith has no intention of re-marketing the property at the point at which they seek repossession. Extending the period beyond which it can be re-marketed should not influence their decision in any way.

We understand that people’s circumstances can change, sometimes very suddenly. I think six months is a reasonable length of time both to provide a deterrent to abuse of grounds 1 and 1A and to provide fairness for landlords who have acted in good faith but have suffered an unexpected change in circumstances. I would be grateful if the Minister commented on the steps needed to prevent the recurrence of the situation in Scotland that we heard about and, ultimately, to support the lengthening of the period.

Amendments 134 and 135 seek to address the problem facing many tourist areas that properties for private rent are being flipped into holiday lets or Airbnb-style holiday homes. Members of all parties who represent tourist hotspots have raised the issue in the main Chamber, and there is broad consensus that the over-supply of holiday accommodation is having a hugely detrimental effect on those areas.

There needs to be some holiday accommodation, but the balance of holiday and private rented sector accommodation is very important for those areas, because over-supply of holiday accommodation hollows out communities. It has led to a situation in which the workers needed for the tourist industry to thrive have nowhere to live, so hotels and restaurants are unable to operate at full capacity. That is bad for the local economy, as well as for people who cannot find anywhere to live in the area.

Meanwhile, in rural areas, the private rented sector is shrinking rapidly. Local families and people working in essential services, such as care workers, teachers and nurses, are being driven away. The sector is completely out of balance. My understanding of the legislation is that landlords seeking repossession under ground 1 or 1A must not re-market the property as a residential let within a three-month period; I would prefer six months. There is no provision for holiday let-style marketing, because those properties do not require tenancy agreements.

My amendments recognise that problem by adding holiday letting to the three-month, or ideally six-month, moratorium on re-marketing once ground 1 or 1A has been used to regain possession. I think that that is a pretty uncontroversial addition to the Bill; I very much hope that Government Members support me when I press amendments 134 and 135 to a vote.

[Matthew Pennycook]

I rise to speak to amendments 140 to 142. It is a pleasure to follow the hon. Member for North Shropshire. We agree fully with the spirit behind amendments 132 to amendments 135, and we will support the hon. Lady when she presses either amendment 134 or amendment 135, regarding short-term lets, to a vote. They highlight a valid concern.

As we made clear during an earlier debate on mandatory possession grounds 1 and 1A when considering clause 3, we believe that there is a clear risk that these de facto no-fault grounds for eviction could be abused in several ways by unscrupulous landlords. As a result, we are convinced of the need to amend the Bill to provide tenants with greater protection against their misuse. However, we do not believe that the hon. Lady’s proposal to extend the no-let provisions in clause 10 from three to six months for both standard periodic and short-term lets is sufficient, for reasons I will go on to explain.

We are once again considering mandatory possession grounds 1 and 1A because clause 10 would insert proposed new section 16E into the 1988 Act, prohibiting certain actions by landlords or former landlords, including re-letting or re-marketing a property or authorising an agent to market the property within three months of obtaining possession on those grounds.

We take no issue with the prohibitions that the clause provides for. It is obviously right that the Bill seeks to prevent landlords letting a fixed-term tenancy; serving an incorrect form of possession notice; failing to give prior notice where required; specifying a ground for possession that the landlord is not entitled to use; and issuing a notice for possession proceedings within the proposed six-month protected period that applies to grounds 1, 1A and 6. We also welcome the clause’s explicit prohibition of the re-letting or re-marketing of a property obtained by means of issuing a ground 1 or 1A notice, and the fact that clause 11 provides for financial penalties and offences for a breach of that prohibition.

As I remarked to the Minister in a previous debate, the fact that the Government have introduced that prohibition highlights that they clearly accept that amended ground 1 and new ground 1A could be used as a form of section 21 by the back door. However, we are absolutely convinced that a three-month no-let period is simply not sufficient to deter and prevent abuse of the kind we fear will occur if the two possession grounds in question remain unchanged. We take that view because of our understanding of the English rental market.

Three months of lost income, which is what any unscrupulous landlord who deliberately abuses mandatory possession grounds 1 and 1A in order to evict a tenant will incur, may act as a significant disincentive for some buy-to-let landlords, particularly those with highly geared large portfolios who have seen their rental yields reduced by rising interest rates and the restriction of mortgage interest tax relief as a result of tax changes under section 24 of the Finance Act 2015.

However, a significant proportion of landlords do not have a mortgage; they own their property outright. A recent survey carried out by Shelter suggested that well over half of all landlords come under that category. For landlords who are mortgage-free or have a mortgage but can absorb extended void periods, a three-month no-let prohibition, which could ultimately see them losing only one month of rental income if the tenant serves out the two-month minimum notice period that applies to grounds 1 and 1A, is not a particularly strong deterrent against abuse.

We believe that the no-let prohibition provided for by clause 10 in respect of mandatory possession grounds 1 and 1A must increase from three months to 12 months. That would ensure, taking into account the full minimum notice period, that any landlord not legitimately using the landlord circumstances grounds to occupy or sell the property would lose 10 months of rent—a financial penalty that we think would be sufficient to deter and prevent such misuse. Amendments 140 and 141 would provide for that 12-month no-let period. I urge the Minister to reflect further on the issue and to accept the amendments.

Amendment 142 seeks to address a distinct but related issue with the no-let prohibitions provided for by clause 10 in relation to grounds 1 and 1A. Proposed new section 16E(5) provides that the prohibition is applicable only if the tenant surrenders the property as a result of a notice having been served, without an order for possession being made. To put it another way, the proposed three-month no-let ban will be applicable only in instances where a tenant has left a property voluntarily without court proceedings, not where a court has issued an order. That is genuinely inexplicable, from our point of view.

Is it the Government’s view that where a ground 1 or 1A notice is served and the tenant wishes to contest it, the no-let prohibited period would, in effect, run throughout the possession proceedings, so that if they take three months or more, the period will have been deemed to have already expired prior to any order being issued? Is that the reason? If so, we would welcome clarification. Otherwise, we cannot understand why the prohibition does not apply where a court has issued an order. The Minister must provide a detailed explanation of the rationale behind the Government’s decision, because we cannot understand why it is equitable to apply the prohibition only to instances where a tenant has left a property without court proceedings, vis-à-vis having challenged them by taking the matter to court.

We are also concerned that the decision to do so will prevent tenants themselves from seeking redress in instances where they have good reason to believe that grounds 1 and 1A have been misused. It stands to reason that tenants who have challenged their eviction in court are inherently more likely to suspect that they are being wrongfully evicted and to be willing and able to pursue their landlord if they are abusing the grounds subsequent to losing their home.

To reiterate a point I made in an earlier debate, it is almost certain that a minority of unscrupulous landlords will abuse grounds 1 and 1A to unfairly evict tenants they perceive as problematic, and will then proceed to re-let those properties in short order. As things stand, if and when they do so the courts will be able to do nothing. Indeed, how will they even know what happened subsequent to a ground 1 or 1A possession case? The obvious mechanism to ensure that grounds 1 and 1A are used legitimately in each instance is to require landlords to evidence and verify prior and subsequent to a notice being issued, but the Government rejected our amendments 138 and 139 out of hand.

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[Jacob Young]

I will not give way again.

Amendments 132, 133, 140 and 141 seek to extend the three-month period to six or 12 months. That would be excessive and keep good properties sitting empty if a landlord’s circumstances changed. It is quite possible that a landlord might not be able to sell and might subsequently need to re-let. Amendment 142 would extend the no-let period to cases where the landlord has gone through the court process to obtain a repossession order. We feel that that restriction is unnecessary, as such a landlord will have proved to the court that their intentions are genuine.

Amendments 134 and 135 look to restrict a landlord from letting their property as a short-term let, as the hon. Member for North Shropshire said. It may be reasonable for a landlord to offer a property as a short-term or holiday let within the three months, for example if there is a long gap before a sale completes. However, I have heard her comments and those of the hon. Member for Greenwich and Woolwich, and I know that that is an issue in places such as Cornwall and Devon. I commit to working with the hon. Member for North Shropshire and others to address those points.

If a landlord tries to abuse the system, there are financial repercussions for breaches and offences. We are giving local councils powers to fine landlords up to £5,000 for minor breaches and up to £30,000 for serious offences. The Government think the amendments would cause unreasonable cost to landlords whose sale or plans to move into a property may have fallen through, through no fault of their own.

Turning to Government new clauses 4 and 5, I am grateful to the hon. Member for Greenwich and Woolwich for his questions and confirm that I will write to him on those points. The new clauses replace clause 10, retaining the policy intent in the original drafting but updating it to better reflect its intention. We are clear that any attempt to misuse the grounds will not be tolerated. That is why the Government new clauses prohibit landlords from re-letting or re-marketing a property for three months after using the moving and selling grounds, and why we are prohibiting landlords from authorising a letting agent to re-market the property on their behalf. The three-month period represents a significant cost to landlords and will deter misuse. I therefore commend new clauses 4 and 5, which will replace clause 10, to the Committee and ask hon. Members to withdraw their amendments.

[Matthew Pennycook]

I thank the Minister for that answer. On the length of the no-let period, I think there is just a genuine principled disagreement between the two sides of the Committee about whether the proposed three months will act as a deterrent. In all honesty, because this is a completely new system—although we have the Scottish experience to draw on—we have no evidence on either side to prove that that is the case, but we genuinely fear that three months is not enough to prevent misuse. I will therefore press amendment 140 to a vote.

On amendment 142, I will go back and check the transcript, but I am not convinced that I understood the Minister’s reasoning when he talked about the court knowing that the landlord’s intentions were genuine simply because, at the point of the notice’s being served, the re-let prohibitions apply. I still do not understand why the prohibition on re-letting should not apply in instances where the court has awarded possession. We still want the landlord not to re-let in that period under either scenario, so we cannot understand why one would be exempt and not the other.

[Jacob Young]

To reiterate my point, amendment 142 would extend the no-let period to cases where the landlord has gone to court to obtain a repossession order. We think that restriction is unnecessary because, if a landlord has gone to court and the judge has granted the possession order, the landlord has proved that their intentions are genuine on those grounds. That is why we feel the amendment is unnecessary.

[Matthew Pennycook]

I follow the Minister’s argument, but, under those circumstances, the no-let prohibition should apply from that point under that scenario, just as it would at the point when a notice is served.

[Jacob Young]

The hon. Gentleman’s argument would suggest that a landlord wanting to move into a property within five months would serve notice on their tenant, the tenant would have two months in the property and could then take the landlord to court because they wanted evidence, which could take six months—and he is suggesting an additional three months on top of that. Does he not see that that would be unfair to a landlord, in a genuine case?

[Matthew Pennycook]

No, I genuinely do not. In a case where a tenant has felt so strongly that they are potentially being evicted unlawfully that they have taken the matter all the way to the court, it is right that the no-let period should apply from the point that the award is granted. Again, that may be a point of genuine disagreement, but we will press amendment 142 to a vote.

[Helen Morgan]

I thank the hon. Member for Greenwich and Woolwich for his comments. I am in general agreement with his point about needing to extend the period beyond which a property can be re-marketed, although my view is that 12 months is excessive. If a landlord’s circumstances have changed—for example, if they repossess their house to sell it because they are facing financial hardship but are unable to sell and need to re-let it—12 months is punitive.

--- Later in debate ---

[Jacob Young]

As I made clear when I spoke on clause 10, the Government will not tolerate any abuse of the new system. Clauses 11 and 12 give local housing authorities the power to fine the minority of landlords who break the rules, as well as introducing new financial penalties and criminal offences for repeated wrongdoing. Clause 13 provides that those criminal offences do not bind the Crown, although it will be possible for councils to issue fines to private landlords. Under that new provision, local housing authorities will be able to fine landlords and former landlords up to a maximum of £5,000 for less serious and initial breaches of the new tenancy system, including failing to follow process when evicting a tenant and trying to offer a fixed-term tenancy. To be clear, £5,000 is the maximum that a landlord can be fined, rather than the norm.

We expect local authorities to be reasonable, and we are issuing guidance that they must have regard to when issuing fines. We are exploring a national framework for setting fines to ensure a consistent approach. This will ensure that penalties are proportionate to the severity of the breach of conduct, and that local authorities impose them accordingly. If landlords deliberately and seriously flout the new rules, local housing authorities will be able to fine them up to £30,000, or choose to prosecute them, including for re-letting or re-marketing a property within three months of using possession grounds for sale and occupation, or knowingly or recklessly misusing a ground for eviction. Repeated breaches will also be met with those higher fines.

Amendments 163 and 164, tabled by the hon. Member for Greenwich and Woolwich, would increase the maximum fine for initial or less serious breaches from £5,000 to £30,000, and the potential fine for repeated breaches and serious offences from £30,000 to £60,000. I would like to reassure him that multiple fines can be issued where a landlord has committed more than one breach. We will issue guidance to support councillors in making enforcement decisions, but we think that the maximum fines that the amendments would introduce are disproportionate to the severity of the breach or offence. The fines proposed by the hon. Member are out of step with other housing enforcement, such as the existing measures for breaches and offences under the Tenant Fees Act 2019 and the Housing Act 2004. Given the substantial fines that can already be levied repeatedly under the legislation, I ask him not to press his amendments to a Division.

The Government amendments extend the prohibited activities to those acting on a landlord’s behalf. That means that local housing authorities can impose penalties on all relevant persons who breach the rules, not just landlords. That includes those with formal relationships, such as letting agents, and more informal relationships. The amendments apply the penalties to those people.

The Government amendments also further strengthen rules against landlords and agents. Instead of demonstrating that a tenant left a property as a result of receiving an improper notice, local authorities will simply have to prove that a tenant left within three months after receiving the notice. That will make it easier for local authorities to take action against the minority of landlords who break the law.

I commend the Government amendments to the Committee and ask the hon. Member for Greenwich and Woolwich to withdraw his amendments.

[Matthew Pennycook]

I rise to speak to amendments 163 and 164. As the Minister has just set out, clause 11 inserts four new sections into the Housing Act 1988, setting out the financial penalties and offences he has referred to for breaches of the prohibitions in clause 10, including those relating to mandatory grounds 1 and 1A, which we have just discussed, and for not providing for a written statement of terms, as required by clause 9.

Clause 11 raises for the first time the crucial issue of enforcement, which arises in relation to a number of the prohibitions and requirements in the Bill, including those I just mentioned. It is obviously preferable to ensure that there are sufficient incentives in place to encourage landlords to comply with the various requirements in the Bill, and that abuse of possession grounds is identified before eviction takes place. It is, however, inevitable that some landlords will fail to comply with the requirements in the Bill, including the requirement to provide a written statement of terms and conditions to the tenant on or before the first day of a tenancy, and that there will be misuse of possession grounds 1 and 1A that are identified after an eviction has taken place.

The Government are currently proposing two means by which redress might be secured in those circumstances. First, they are proposing to enable the new ombudsman to award compensation to the wronged tenant. Secondly, as the Minister made clear, they are giving local authorities the power to impose financial penalties if the relevant authority is satisfied beyond reasonable doubt that a landlord or former landlord has contravened provisions contained in clauses 9 or 10, or if a landlord or former landlord is guilty of an offence but is not prosecuted.

I note and welcome the Minister’s comments, in terms of the Government’s intention to look at developing a national framework that might ensure that those fines are properly co-ordinated across the country. We will come on to consider whether those two means of redress could be supplemented by others when we address the issue of whether tenants themselves should be allowed to seek compensation for an abuse of possession grounds by means of a rent repayment order, as provided for by our new clause 57.

Amendments 163 and 164 are probing amendments that are designed to facilitate a debate on whether the amounts that the Government have chosen as the maximum financial penalties that a local authority can impose—namely £5,000 for a contravention and £30,000 for an serious offence—are sufficient. Notwithstanding the point that the Minister has just made—and it is useful to have clarification that multiple fines can be levied—we are concerned that the maximum levels are insufficient.

It is our contention that the type of unscrupulous landlord that might seek to abuse ground 1 or 1A to evict a tenant who has made a legitimate complaint—the rectification of which, if it is a serious hazard, may cost them tens of thousands of pounds—is unlikely to be deterred by the prospect of a fine of £5,000 or less. That is assuming that the local authority has the capacity and capability to investigate and enforce it. The Minister was also very clear that £5,000 is the maximum; the Government do not wish for it to be the norm. Similarly, a fine of £30,000—or less—for an offence strikes us as far too low to act as a serious deterrent.

Amendments 163 and 164 would raise the maximum financial penalty that local authorities could levy from £5,000 to £30,000 in instances where the provisions contained in clauses 9 or 10 were contravened, and from £30,000 to £60,000 where an offence has been committed. We have proposed those higher figures, very deliberately, on the basis that £30,000 mirrors the current maximum financial penalty for housing offences, and by doubling the maximum financial penalty for an offence to reflect the severity of that outcome. I hope that the Minister might go away and reconsider whether the maximum levels that the Government have chosen are sufficient to act as the deterrent that I think we both absolutely wish to see.

Clause 12, which is grouped with these amendments, requires a local housing authority to issue a notice of intent before imposing a financial penalty on a person under two of the new sections—16F and 16H—inserted into the 1988 Act by clause 11. It requires them to do so within six months of collecting sufficient evidence or, if the conduct is continuing, during the period that it continues within or within six months of it ending.

The clause further specifies that after a landlord has been issued with a notice of intent as required, a landlord will have the opportunity to make representations to the authority, which will then decide whether to issue the fine. What is more, even after an authority has heard representations and has still decided to impose a financial penalty, clause 12 gives the sanctioned party a right to appeal to the tribunal.

I ask the Minister—particularly in the light of the Government’s having resisted our efforts to strengthen the Bill to ensure that the replacement possession regime cannot be so easily abused—why the Government have provided landlords, who, let us remember, a local authority is satisfied beyond reasonable doubt have contravened provisions contained in clauses 9 or 10, with a series of opportunities to evade a financial penalty.

[Jacob Young]

I am grateful to the hon. Member. I did not quite catch his question, so, if it is fine with him, I will write to him on that point. I apologise, because I did not quite follow it.

--- Later in debate ---

[Jacob Young]

I know that the Opposition have a few questions about the clause, so I will allow them.

[Matthew Pennycook]

I bridle slightly at the use of the word “allow”. [Laughter.] I have two questions for the Minister in relation to this clause. Under the provisions of the Housing Act 1988, landlords of assured tenancies are currently required to pay the tenant’s reasonable moving expenses when they are awarded possession under ground 6, relating to redevelopment, or ground 9, where suitable alternative accommodation is available. This clause restricts that requirement solely to registered providers of social housing.

The Bill’s explanatory notes simply state:

“When the Bill takes effect, all landlords will use assured tenancies, so this provision is necessary to ensure only private registered providers of social housing are required to pay removal expenses.”

From our point of view, that does not explain why the Government believe it is necessary to remove the existing requirement for landlords to pay the tenant’s reasonable moving expenses in instances where possession has been gained under grounds 6 or 9. I would be grateful if the Minister could respond to the following questions: first, why do the Government no longer believe it is reasonable to pay for a tenant’s removal costs in cases under ground 6, where substantial redevelopment cannot take place with the tenant in situ, or ground 9, where suitable alternative accommodation has been identified? Secondly, why do the Government believe it remains appropriate for providers of social housing to cover those costs, if it is now judged inappropriate that private landlords should have to do so?

[Jacob Young]

I am grateful to the hon. Gentleman for his questions. We think it is an unfair burden to ask private landlords to pay for removal costs, which prevent them from redeveloping and ensuring that good-quality housing stock is available on the market. The purpose of the current requirement is to ensure that social tenants are paid moving costs when a social landlord is using grounds that help them to manage their stock—that is, redeveloping a property and moving tenants into suitable alternative accommodation. It would be unfair to place that burden on private landlords if it were applied to them and widened to include all no-fault grounds: for example, a landlord might find themselves in financial difficulties and need to sell or move into a property. I hope that answers the hon. Gentleman’s questions, but if he wants to reply, he can do so.

[Matthew Pennycook]

I am still not clear why it is deemed appropriate under those two specific grounds for assured tenancies—as is currently the case—but not under the new system. However, I am not going to press the matter any further.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18

Accommodation for homeless people: duties of local authority

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 178, in schedule 2, page 77, line 17, leave out “omit subsection (5)” and insert—

“for subsection (5) substitute—

‘(5) A person is also threatened with homelessness if—

(a) a valid notice has been given to the person under section 8 of the Housing Act 1988 in respect of the only accommodation the person has that is available for the person’s occupation, and

(b) that notice will expire within 56 days.’”

This amendment would maintain the homelessness prevention duty owed by local authorities to persons who have received a notice to vacate a property and would extend it to notices for possession issued under section 8 of the Housing Act 1988.

Amendment 179, in schedule 2, page 77, line 26, leave out “omit subsection (6)” and insert—

“for subsection (6) substitute—

‘(6) But the authority may not give notice to the applicant under subsection (5) on the basis that the circumstances in subsection (8)(b) apply if a valid notice has been given to the applicant under section 8 of the Housing Act 1988 that—

(a) will expire within 56 days or has expired, and

(b) is in respect of the only accommodation that is available for the applicant’s occupation.’”

This amendment would ensure that the homelessness prevention duty owed by a local authority cannot end whilst a valid notice under section 8 of the Housing Act 1988 has been issued in respect of the only accommodation available to that person.

Government new clause 7—Accommodation for homeless people under section 199A of the Housing Act 1996.

Renters (Reform) Bill (Fifth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 21st November 2023 Public Bill Committees

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Jacob Young)]

May I join you, Mr Gray, in thanking members of the Committee for their engagement with the Bill so far?

My view is that the Bill delivers a better deal for renters and for landlords. As hon. Members are aware, however, we must tread lightly. This is a fine balancing act. Go too far one way, and good landlords will find it harder to operate and exit the market; go too far the other way, and the Bill will not give renters the protections we all seek against bad actors in the private rented sector. As we delve into the Bill, I ask all hon. Members to consider the impact of proposed amendments on that delicate balance.

Everyone has the right to a secure and decent home, whether they own it or are among the 11 million people living in the private rented sector; that is the guiding principle of the entire Bill. Clause 1 will remove fixed terms. It provides that tenancies will be periodic in future: under the clause, the tenancy will roll from period to period. Any term in a contract that includes a fixed term will not be enforceable.

The clause also has limits on how long a rental period can be. That is to prevent unscrupulous landlords from emulating fixed terms by introducing longer periods to contracts. Fixed terms lock tenants into contracts, meaning that they may not be able to end their tenancy before the end of the term and move to another property when they need to, for example to take a new job or when a landlord fails to maintain basic standards or repair a property. The changes will also give landlords more flexibility: they may end the tenancy when they need to, under specified grounds that are covered in later clauses, rather than waiting for the end of the fixed term.

Government new clause 2 will require landlords to refund rent in advance where the tenancy has ended earlier than the duration already paid for. That applies regardless of how the tenancy came to an end. It will ensure that rogue landlords do not try to lock tenants in with large up-front payments.

Government new clause 6 will deliver a technical change to council tax rules in the light of the abolition of fixed-term assured tenancies. It will ensure that tenants who hold assured tenancies are liable for council tax until the end of their tenancy agreement. In particular, tenants will remain liable for council tax when they have served notice to end their tenancy but leave the property before the notice period has ended. That will ensure that liability for council tax does not pass back to the landlord until the tenancy has formally ended. I commend the clause to the Committee.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a real pleasure to begin our line-by-line consideration with you in the Chair, Mr Gray. It is a genuine privilege to serve on a Committee with such evident expertise in the subject matter. It is my sincere hope that we can draw constructively on it all in the days ahead to improve this long-overdue but welcome piece of legislation.

As the Opposition argued on Second Reading, the case for fundamentally reforming the private rented sector—including by making all assured tenancies periodic in future, as clause 1 seeks to do—is watertight. As the Minister implied, regardless of whether someone is a homeowner, a leaseholder or a tenant, everyone has a basic right to a decent, safe, secure and affordable home. However, millions of people presently renting privately live day in, day out with the knowledge that they could be uprooted with little notice and minimal justification, if any. The lack of certainty and security inherent in renting privately today results not only in an ever-present anxiety about the prospect of losing one’s home and often one’s community, but—for those at the lower end of the private rented market, who have little or no purchasing power and who all the evidence suggests are increasingly concentrated geographically—in a willingness to put up with often appalling conditions for fear that a complaint will lead to an instant retaliatory eviction.

This House last legislated to fundamentally alter the relationship between landlords and tenants in 1988, when I was just six years old. The Minister may have been even younger.

[Jacob Young]

I wasn’t born!

[Matthew Pennycook]

Well, that just makes my point that the sector should have been overhauled a long time ago. The fact that it has changed beyond recognition over recent decades and now houses not just the young and the mobile, but many older people and families with children, for whom having greater security and certainty is essential to a flourishing life, renders urgent the need to transform how it is regulated and to level decisively the playing field between landlords and tenants.

This Bill is a good starting point to that end. We are glad that after a very long wait, it is finally progressing. However, we are determined to see it strengthened in a number of areas so that it truly delivers for tenants. In this Committee and the remaining stages, we will seek to work constructively with the Government to see this legislation enacted, but we also expect Ministers to give serious and thoughtful consideration to the arguments we intend to make about how its defects and deficiencies might be addressed.

Part 1 of the Bill seeks to amend the assured tenancy regime introduced by the Housing Act 1988. In the nearly 35 years since that Act came into force in January 1989, with some limited exceptions, all new private sector tenancies in England and Wales have been either assured or assured shorthold tenancies, with the latter becoming the default PRS tenancy following the implementation of the Housing Act 1996. As the Committee will know, assured tenancies can be either periodic or fixed, but the vast majority of ASTs are fixed.

Clause 1 will insert a new section 4A before section 5 of the 1988 Act, thereby providing, as the Minister made clear, that all future assured tenancies will be periodic and open-ended, and that they can no longer have fixed terms. That change will empower tenants by giving them more flexibility to end tenancies where and when they want or need to, including when landlords are not meeting their responsibilities and obligations or in instances in which the property that they have moved into is not as advertised. We support it.

We take no issue with Government new clause 2. Although we are not convinced that it is strictly necessary, given how the Apportionment Act 1870 applies to rent paid in advance, we believe that it is a worthwhile amendment none the less, to the extent that it makes express provision for that.

We believe that Government new clause 6 is a necessary change to how council tax works, given that the Bill abolishes fixed-term tenancies. However, in the sense that its effect will be to render a tenancy that

“is or was previously an assured tenancy within the meaning of the Housing Act 1988”

a “material interest” for the purposes of this Bill, we would be grateful if the Minister provided some clarification. Could he tell us the effect of the proposed change in circumstances in which a tenant used to have an assured tenancy but, after this part of the Bill comes into force, now does not because of circumstances that are out of their control? Let us say, to take an extreme example, that a tenant died prior to the end of their assured tenancy, and the relevant provisions came into force. Would their estate be forced to pay the council tax liability as a consequence of the new clause?

We understand the Government’s intention with regard to the new clause, which is to manage the transition between the two tenancy regimes when it comes to council tax. However, we are a little concerned that, as drafted, the new clause may be unnecessarily broad and may create some problematic outcomes. The explanatory statement accompanying the new clause suggests that it may have another purpose altogether—namely, to make people liable if they leave a tenancy without giving notice—but that raises the obvious question of how the Valuation Office Agency and the relevant local authority are meant to know that, and how the local authority might ever hope to find the tenant who is liable. Could the Minister tell us whether the Government have discussed the matter at all with either the Valuation Office Agency or the Local Government Association?

Lastly in connection with this new clause, is there not a risk that unscrupulous landlords may game this provision by claiming that there is still a tenant in situ who should settle the council tax liability, rather than the landlord doing so? Our concern is that the provision could be abused along those lines and that local authority revenue would suffer as a result. I would appreciate some reassurance and clarification on those points in the Minister’s response.

With or without the incorporation of Government new clause 2 and new clause 6—after clause 6 and before clause 20 respectively—huge uncertainty now surrounds the implementation of clause 1, and the rest of chapter 1 of part 1, as a result of the Government’s recent decision to tie implementation of the new system directly to court improvements. Whatever the motivation behind that—renters will no doubt have reached their own conclusions—the decision has significant implications for when clause 1 and the other clauses in this chapter become operational. We need answers today, so that those whose lives stand to be affected are clear as to what they are.

Clause 67, “Commencement and application”, gives the Secretary of State the power by regulations to appoint a day when chapter 1 of part 1, including clause 1, comes into force. In other words, the Bill has always given Ministers discretion as to precisely when the new system becomes operational—a matter that we will debate more extensively in a future sitting when we come to clause 67 itself and our amendment 169 to it.

The Government were previously clear that there would be a two-stage transition to the new tenancy system, with precise starting dates for new and existing tenancies to be determined by the Secretary of State, and that a package of wide-ranging court reforms was to accompany the legislation, but at no point prior to the response issued on 20 October this year to the Select Committee on Levelling Up, Housing and Communities did the Government indicate that the new system’s implementation was directly dependent on such reforms. As things stand, because of the Government’s last-minute change of approach, not only do tenants have no idea when the new tenancy system will come into force, but they do not even know what constitutes the requisite progress in respect of court reform that Ministers now deem is necessary before it does.

There are three distinct questions to which the Government have so far failed to provide adequate answers. First, is the county court system for resolving most disputes between landlords and tenants performing so badly that reform is a necessary precondition of bringing this clause and others in this chapter into force?

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

We heard from many representations on the county court part of the process that the county court system was performing adequately. Does that not make one suspicious that there are other motivations for kicking this into the long grass?

[Matthew Pennycook]

I will come on to our view of precisely how the county court system is operating, but I think it would be fair to say that we do not necessarily buy the Government’s argument that it is performing so badly that we need to tie implementation of this clause and others in this chapter to it. It could certainly do with improvement, but if it needs improvement, we need to know what that improvement is. That is an argument that I will come on to make in due course.

The second of my three questions to the Government relates to the point that my hon. Friend has just raised: if the court system requires improvement to ensure that landlords can quickly regain possession of their property if a tenant refuses to move out, what is the precise nature of the improvements that are required? Thirdly, how can we measure progress on delivering those improvements so that tenants have certainty about when the new system might come into force?

I will start with my first question. With apologies, Mr Gray, I intend to spend some considerable time on this point, because it is central to when the clause and the rest of the chapter come into force.

If one examines the evidence, it is clear that the possession claims system is one of the faster and better-administered parts of the civil justice system. As housing expert Giles Peaker put it when giving evidence to the Committee on Thursday, it is “well honed”. As Simon Mullings, co-chair of the Housing Law Practitioners Association, stated in the same session:

“What we have at the moment is an extremely good network of county courts, with a very evolved set of civil procedure rules that deal with possession claims very well.” ––[Official Report, Renters (Reform) Public Bill Committee, 16 November 2023; c. 111, Q141.]

The data seems to bear that out. It makes it clear that the various stages of possession and litigation are back to where they were pre-pandemic, and that non-accelerated possessions are not taking significantly longer than the relevant guidelines stipulate. As Giles Peaker argued,

“the current time from issue to a possession order under the accelerated possession proceedings—an ‘on the papers’ process, without a hearing—is roughly the same as under the section 8 process with an initial hearing. There is no great time lag for the section 8 process as opposed to accelerated possession proceedings.”––[Official Report, Renters (Reform) Public Bill Committee, 16 November 2023; c. 111, Q141.]

One of the more robust defences of the adequacies of the present system that I have heard came from the sixth of the seven housing and planning Ministers that I have shadowed in my two years in this role. On Second Reading, the hon. Member for Redditch (Rachel Maclean) argued:

“It is important to note at this point that the vast majority of possession claims do not end up in the courts—only something like 1% of claims go through the courts... The courts have already made huge improvements. It is worth saying that over 95% of hearings are listed within four to eight weeks of receipt, and of course the ombudsman will encourage the early dispute resolution process, taking a lot of claims out of the courts and freeing up court time for more complex processes.”—[Official Report, 23 October 2023; Vol. 738, c. 695.]

We also heard expert testimony last week that called into question the suggested impact of the Bill on the courts. For example, it was disputed whether the reforms in the Bill would increase the number of contested cases. Giles Peaker persuasively argued that there was likely to be an increase in the number of initial hearings, but that we are unlikely to see an increase in the number of contested hearings.

To the extent that concern was raised about capacity within the system, several witnesses argued that it still did not justify postponing the enactment of chapter 1 of part 1. Indeed, the head of justice at the Law Society, Richard Miller, argued in relation to plans for digitisation that it would be sensible to see the new tenancy system put in place first so that we can properly understand what a new digital system needs to achieve in respect of the Bill.

Every part of the civil justice system would benefit from improvement, but we would argue that, to date, the Government have failed to demonstrate that the county court system for resolving landlord and tenant disputes is failing to the degree that it is imperative to further delay the long-overdue reforms to tenancies in the Bill. I would be grateful if the Minister set out very clearly why the Government believe the possession of claims system is so woefully inadequate that the enactment of clause 1 and the other clauses in chapter 1 must be postponed.

I turn to the second of my questions. If we accept that the county court system as it relates to housing cases could be improved—probably no one here would dispute that, even if we might debate the extent of the improvement required—how are the Government defining improvement? To put it another way, what is the precise nature of the improvements that Ministers believe are required before we finally abolish section 21 of the 1988 Act and reform the tenancy system, as clause 1 and other clauses in chapter 1 will do?

Let us examine and interrogate what the Government have said about this. Their 20 October response to the Select Committee stated:

“We will align the abolition of section 21 and new possession grounds with court improvements, including end-to-end digitisation of the process.”

Will the Minister tell us precisely what is meant by end-to-end digitisation of the process? Precisely what process did that statement refer to? Was it a reference to just the court possession action process, or to civil and family court and tribunal processes more generally? Further detail was seemingly provided in the briefing notes that accompanied the King’s Speech on 7 November:

“We will align the abolition of section 21 with reform of the courts. We are starting work on this now, with an initial commitment of £1.2 million to begin designing a new digital system for possessions. As work progresses, we will engage landlords and tenants to ensure the new system supports an efficient and straightforward possession system for all parties.”

[Lloyd Russell-Moyle]

Did we not hear in evidence that the key for this to work was the property portal? Delaying the implementation of these measures until after court reform would therefore seem to be the wrong way around. Surely the property portal and ombudsman need to be up and running, and then we can see what pressure is on the courts, and we can also integrate the property portal into the digitalisation of the process.

[Matthew Pennycook]

I thank my hon. Friend for that intervention. It is a point well made, and I think the same point was made by Richard Miller of the Law Society. If this Bill works as intended, there are a number of provisions in it that should relieve the burden on the courts. We all want to see that happen. However, to the extent that the courts do need to act in possession cases, we need to know precisely what the Government mean by the “improvements” that they have been referring to over recent months.

That King’s Speech briefing note would suggest that the required improvements relate only to the court possession action process. However, it is not clear whether the proposed new digital system for possessions is the only improvement that Ministers believe needs to be delivered before the new tenancy system can be introduced, and if so—this is crucial—by what date that new system will be operational.

Can the Minister tell us more about the new digital system for possessions that the King’s Speech briefing note referred to? Specifically, can he tell us whether its introduction is the sole determinant of when the new tenancy system can come into force? Can he also outline when the Government expect work on that new digital system to be completed by the Government and rolled out for use by landlords, given that it appears—on the basis of the King’s Speech briefing note—to have only just commenced?

The White Paper “A fairer private rented sector”, which the Government published in June 2022, set out the Government’s intention, working in partnership with the Ministry of Justice and HM Courts and Tribunals Service, to

“introduce a package of wide-ranging court reforms”.

Those went beyond purely the court possession action process that I have just been speaking to. It was suggested in the White Paper that the package would include steps to address county court bailiff capacity, a lack of adequate advice about court and tribunal processes, a lack of prioritisation of cases and the strengthening and embedding of mediation services for landlords and renters—issues that many of our witnesses in last week’s evidence sessions referred to.

Many of those issues were also identified in the Government’s response to the Select Committee as “target areas for improvement”. What is not clear is whether the implementation of the new tenancy system, and this clause, is dependent on Ministers judging that sufficient progress has been made in relation to each of those target areas for improvement, or whether it is dependent, as I have suggested, solely on improvements in the court possession process.

Can the Minister tell us clearly which one it is? Will the new tenancy system be introduced only when improvements have been made in all the target areas specified, or is the implementation date linked solely to improvements in the court possession process? If it is the former, what are the criteria by which the Government will determine when sufficient improvements have been made in each of the listed target areas for improvement? Those of us on the Opposition side of the Committee, and many of the millions of tenants following our proceedings, need answers to those questions. As we debate the Bill today, we do not know precisely what reform of the courts is required for the new tenancy system to be enacted.

I turn to my third question. Because we have no real sense of precisely what the Government mean by court improvements, and therefore no metrics by which they might be measured, we have no idea whether and when they might be achieved. The concern in that regard should be obvious. Having been assured repeatedly by Ministers that the passage of this Bill will see a new tenancy system introduced and the threat of section 21 evictions finally removed, tenants have no assurances, let alone a guarantee, that the Government have not, in effect, given themselves the means to defer—perhaps indefinitely—the implementation of these long-promised changes.

As I referenced in my response to my hon. Friend the Member for Brighton, Kemptown, we accept that the court system needs to be improved so that, when landlords or tenants escalate a dispute, they can have confidence that it will be determined in an efficient and timely manner. However, since they committed themselves to abolishing section 21 evictions, the Government have had more than four and a half years to make significant improvements to the system to support tenants and good-faith landlords, and they have not succeeded in doing so.

[Mike Amesbury (Weaver Vale) (Lab)]

On that four-and-a-half-years point, can my hon. Friend clarify how many people have been evicted through no-fault eviction since 2019, when abolition was originally promised?

[Matthew Pennycook]

That is a very good point. Every month that the Government delayed tabling the Bill, many thousands of tenants were put at risk of homelessness by a section 21 eviction. I cannot remember the precise figure, but I think the last Government data release showed that just under 80,000 tenants had been put at risk of homelessness as the result of a section 21 notice since the Government first committed to abolishing section 21. And we are talking not just about those 80,000, but about however many tens of thousands more will be put at risk of eviction while the Government delay the enactment of the provisions on the basis of court reforms.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Does my hon. Friend agree that this issue is putting huge strains on local authorities, which are being forced to pick up so many homeless families at a time when social housing unit availability is at its lowest and it is difficult to find any form of temporary accommodation that is half-decent?

[Matthew Pennycook]

I thank my hon. Friend for that well-made point. A related and incredibly important issue is the supply of genuinely affordable housing, and the Government have failed woefully to build enough social rented homes in this country to meet housing need. She is absolutely right that local authorities are picking up the burden for this failure and the failure in the courts. My local authority—like hers, I am sure—is now sending people in need of temporary accommodation as far as Dartford or north Kent, and even further in some cases. Those people are struggling to retain a foothold in the community they live in and value, and in the schools that their children go to. Frankly, that is unacceptable. We need an end to section 21 as soon as possible.

[Lloyd Russell-Moyle]

My hon. Friend talked about the insecurity for tenants if the measure is not implemented in time, but does he also think that if it is not clear when it will be implemented, there could be adverse effects on the wider rented sector market? We know that people game the system; if it is not clear when the measure will be implemented, the danger is that people can run rings around both tenants and the public sector.

[Matthew Pennycook]

My hon. Friend is right: a protracted delay in implementing this clause and the others in chapter 1 could lead landlords to look at how they can best abuse the system before the new one is introduced. Equally importantly, it could provide a real problem for good-faith landlords who are trying to do the right thing. If a landlord who is affected by high interest rates and section 24 tax changes is wondering whether they can stay in the market and continue to provide private lets, how does it help to have hanging over their head an undetermined date, based on an unspecified set of metrics, for when a new system will come into force?

As I was saying, the Government have had more than four and a half years to improve the court system. They have not succeeded. If they had, then, as the former Housing Minister—the hon. Member for Redditch—claimed, they would have had no justification for delaying the enactment of this clause and the others on the grounds that the system is failing to such an extent that landlords have no confidence in it. The truth is that the Government’s record on court reforms is as woeful as their record on social rented housing. In a damning report published this summer, the Public Accounts Committee made it clear that, seven years into the courts and tribunals reform programme, HMCTS

“is once again behind on delivering critical reforms to its services. Overall, despite an increase in budget, the programme is set to deliver less than originally planned, at a time when the reforms are even more vital to help reduce extensive court backlogs.”

[The Chair]

Order. I indicated to the hon. Gentleman that I was content with a reasonably wide-ranging, Second Reading-type debate on clause 1 stand part, but we are now going well beyond the scope of the clause. Perhaps he might like to return to it.

[Matthew Pennycook]

I am bringing my remarks to a close. The degree of progress in improving the courts is pertinent to the debate, given that the Government have linked the implementation of the clause directly to it. When it comes to digitisation, which the Government have flagged as one of the target areas for improvement and on which the implementation of this clause relies, the Government have made agonisingly slow progress. As Mr Miller from the Law Society argued in his evidence to the Committee last week, the project to digitise private family law was announced in 2020 and was scheduled to be completed in December 2022. Yet the issue is ongoing and the roll-out has not yet been completed.

Given the Government’s record on court reform, how can tenants, looking for clause 1 and other clauses in chapter 1 to be enacted as soon as possible, have any confidence that sufficient progress will now be made in even the limited number of areas identified by the Government? As I have remarked, the inefficiency of the court system is a huge problem and action must be taken to address its lack of capacity so that possession claims can be expedited. The end of no-fault evictions cannot be made dependent on an unspecified degree of future progress subjectively determined by Ministers.

On Second Reading, we asked for clear commitments from the then Housing Minister on metrics and timescales that would give renters a degree of certainty about when the new tenancy system would be introduced. None was forthcoming. There is a huge amount of confusion, and genuine concern, about this issue. In the absence of any assurances to the contrary, the conclusion that has been reached by many tenants, and those who represent them and defend their interests, is that the Government have reached for a spurious excuse in order to delay the implementation of some of the most fundamental reforms in this legislation, under pressure from the landlord lobby and discontented Members on their own Back Benches.

I have spent some time on this clause stand part debate, but that is because of its importance to millions of tenants in England and Wales. We will return to this issue again when we debate clause 67, but given that the Government have made it operational on clause 1 and the rest of chapter 1 is dependent on those unspecified reports, we would appreciate it if the Minister took the opportunity in this debate to clarify precisely what the Government’s intentions are and set a clear timeline for when the new periodic tenancies provided for by this clause, as well as the rest of the new tenancy system, will come into force.

--- Later in debate ---

[Matthew Pennycook]

Can the Minister tell us clearly why the two-stage transition process set out in clause 67 does not afford the Government enough time to make the necessary improvements?

[Jacob Young]

We will come on to that point when we discuss clause 67. I want to address some of the points that have been raised, particularly the question about bailiffs. HMCTS has already begun making improvements at the bailiff stage, including automated payments for debtors, to reduce the need for doorstep visits in those cases. We are also improving guidance to increase awareness of each party’s rights and responsibilities.

The hon. Member for North Shropshire spoke about the concern raised in evidence about longer fixed-term tenancies. I completely understand the hon. Lady’s position. I understand the genuine concern that she and the people giving evidence have. Our fear, which was rightly identified by the hon. Member for Brighton, Kemptown, is that to include any fixed-term tenancies creates a loophole. We are certain about abolishing section 21, so we do not believe that having a fixed-term tenancy will provide any security to the tenant. It could, in fact, lock a tenant into a property that they would be unable to get out of, even if the property was of poor quality, because the term of their tenancy was fixed. I hope that the hon. Member for North Shropshire can accept that.

I will write to the hon. Member for Brighton, Kemptown other Committee members specifically on the points raised by the Opposition on new clause 6. I am pleased that there is a consensus on clause 1. We all want to see this measure implemented. I commend it to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Abolition of assured shorthold tenancies

Question proposed, That the clause stand part of the Bill.

[Jacob Young]

Clause 2 removes the assured shorthold tenancy regime entirely, including section 21 evictions, meaning that in future all tenancies will be assured. Ending these section 21 no-fault evictions will provide tenants with more security and the knowledge that their home is theirs until they choose to leave, or the landlord has a valid reason for possession. It will allow tenants and their families to put down roots, providing them with the stability that we know is a prerequisite for achievement.

Government new clause 18 deals with property abandonment. The Housing and Planning Act 2016 introduced provisions that would allow a landlord of an assured shorthold tenancy to recover possession without a court order if the tenant had abandoned the property, owes more than two months’ rent and the landlord has served three warning notices. Those provisions were never brought into force and we consider they are inconsistent with the intentions of the Bill to provide greater security. Removal of the provisions will help prevent landlords from ending a tenancy without a court order where a property appears to have been empty for a long period. It is possible that, on occasion, a property may appear to have been abandoned, but the tenant is in hospital or caring for relatives. Instead, landlords will need to use one of the specified grounds.

[Matthew Pennycook]

Let me start by making it clear that the Opposition welcome Government new clause 18. Although I have not been in Parliament long compared with other Members, I have been here long enough to remember sitting on the Bill Committee for the Housing and Planning Act 2016. Part 3 of that Act, which this new clause repeals, was always a foolish provision, and has rightly never been brought into force. We believe it is right that we rid ourselves of what might be termed statutory dead wood.

Clause 2 will remove section 21 of the Housing Act 1988 and, as the Minister made clear, will abolish assured shorthold tenancies and remove mechanisms by which assured social housing tenants can currently be offered ASTs—for example, as starter tenancies—or be downgraded to an AST as a result of antisocial behaviour. The provisions in this clause, as well as those in clause 1, will be brought into force on a date specified by regulations made by the Secretary of State under clause 67. It is appropriate to raise a very specific issue on this clause. We have just discussed court improvements at length. I know that is not the Minister’s brief, and that this is his first Bill, but I have to say to him that his answers on court reform were not adequate. At some point, the Government will have to explain specifically what improvements they wish to see enacted and on what timeline they will be brought into force. Leaving that aside, can the Minister provide further details on precisely how the Government intend to phase in the provisions in this clause? What consideration, if any, has been given to preventing unintended consequences arising from the proposed staged implementation?

The guidance on tenancy reform that the Government published alongside the Bill on 17 May said:

“We will provide at least six months’ notice of our first implementation date after which all new tenancies will be periodic and governed by the new rules”—

that is when they will introduce Part 1, Chapter 1. It continued:

“The date of this will be dependent on when Royal Assent is received”.

I take that to mean that, at some point in the future, a Government Minister will hopefully determine that the court system is, in the their eyes, finally ready to implement the new system—although there is nothing in the Bill to ensure that will happen. He or she would then presumably announce that the first implementation date—that is, the date when all new periodic tenancies come into force—will be six months hence.

I would like the Minister to confirm whether my understanding of how the Government expect the process to develop is correct. If so, can he respond to the concern—the flip side of my hon. Friend the Member for Mitcham and Morden’s point on a rush to section 21 evictions—that this may create a clear incentive for landlords to offer new tenants a lengthy fixed-term assured tenancy before the new system comes into effect?

If the safeguard in the Government’s mind is that all existing tenancies will transition to the new system on the second implementation date, can the Minister provide any reassurance that the period between the first and second implementation dates will not be overly long? I raise the point because the guidance makes explicit reference to a minimum period between the first and second dates, but does not specify a maximum period after which the second date would have to come into effect. As the Bill stands, it could enable a scenario where all new tenancies become periodic, but there is an extensive period of time where all existing fixed tenancies remain as such. It could be an indefinite period, there is nothing in this Bill to put any time limit on it at all. I look forward to hearing whether the Minister can provide any reassurances in relation to that concern. If he cannot, we may look to table another amendment to account for this loophole, whether it is intended or unintended.

[Jacob Young]

I thank the hon. Member for his support. He asked about the first and second dates. He is entirely right on the first date—it is six months. The second date is 12 months. I hope that gives him reassurance.

[Matthew Pennycook]

Just to clarify: as I understand it, 12 months is the minimum. Is the Minister saying that there is a maximum? If not, will the Government consider introducing a maximum? I see the officials shaking their heads. There is no maximum in the Bill. We could have a system where, six months after Royal Assent, all new tenancies become periodic and all existing tenancies could remain fixed indefinitely. What is there in the Bill to prevent an incentive for landlords to rush before the first implementation date to hand out fixed tenancies across the board for very extended periods of time to circumvent the measures in the law?

[Jacob Young]

Ultimately, we want to bring in these measures as quickly as we can. The system will be in place soon. What I will do to give the hon. Gentleman the assurances he desires is to write to him further. We can agree on that principle and if changes are needed to the Bill, I am happy to consider them.

[Jacob Young]

I appreciate the hon. Gentleman’s concern about this point. As I mentioned earlier, I think we will discuss this issue when we debate clause 67, so we can have that debate then.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Changes to grounds for possession

[Matthew Pennycook]

I beg to move amendment 145, in clause 3, page 2, line 32, at end insert—

“(aa) after subsection (5) insert—

‘(5ZA) The court shall not make an order for possession under Ground 1 if the court is satisfied that, having regard to all the circumstances of the case, greater hardship would be caused by granting the order than by refusing to grant it.’”

This amendment would extend the greater hardship provisions to new Ground 1 (occupation by landlord or family).

[The Chair]

With this it will be convenient to discuss the following:

Amendment 146, in clause 3, page 2, line 32, at end insert—

“(aa) after subsection (5) insert—

‘(5ZA) The court shall not make an order for possession under Ground 1A if the court is satisfied that, having regard to all the circumstances of the case, greater hardship would be caused by granting the order than by refusing to grant it.’”

This amendment would extend the greater hardship provisions to new Ground 1A (new grounds for sale of a dwelling-house).

Amendment 150, in clause 3, page 2, line 32, at end insert—

“(aa) After subsection (5) insert—

‘(5ZA) The court shall not make an order for possession under Ground 6A if the court is satisfied that, having regard to all the circumstances of the case, greater hardship would be caused by granting the order than by refusing to grant it.’”

This amendment would extend the greater hardship provisions to Ground 6A (ground for possession to allow compliance with enforcement action).

[Matthew Pennycook]

Clause 3 amends the grounds for possession in schedule 2 to the 1988 Act, by means of the changes set out in schedule 1 to the Bill, which we will debate separately later today. Taken together, amendments 145, 146 and 150 would extend “greater hardship” provisions to three of the mandatory grounds set out in amended schedule 2 to the 1988 Act, namely grounds 1, 1A and 6A.

Ideally, we would have debated these amendments as the last amendments to clause 3, because they are very much our fall-back position if we cannot convince the Government to accept the other changes that we propose to the clause. In due course, we will debate our concerns about several of the revised or new possession grounds provided for by the Bill that can still be fairly categorised as de facto “no fault”. These include grounds 1, 1A and 6A.

In cases where a landlord has proved a discretionary possession ground, a judge must decide whether it is reasonable to make the possession order. In reaching their decision, a judge can consider not just the reason for the possession claim, but anything relevant to the case, including the tenant’s conduct and the likely consequences of eviction for the individual or individuals in question. They can also consider whether the tenant has tried to put things right since the claim was issued. If the judge is not satisfied that it is reasonable to award possession in these discretionary cases, they can dismiss the claim all together. In contrast, if a landlord proceeds on a mandatory ground—I remind the Committee again that proposed new grounds 1, 1A and 6A are mandatory—the judge must make an order, if the landlord has proved their case.

The amendments would give the court very limited discretion, in relation to mandatory grounds 1, 1A and 6A, to consider whether the tenant would suffer greater hardship as a result of the possession order being granted.

[Shaun Bailey]

I appreciate that the hon. Gentleman has tabled further amendments on the evidential burden, but does he not appreciate my concern that there is perhaps a little bit of a floodgate situation around appeals on this issue? Notwithstanding his comments about the judicial system and the court system, I am conscious that we may have a scenario where judges’ decisions are challenged and we end up with a backlog. As a result, what the amendment tries to do would either be delayed, or would end up in a system of appeal after appeal, because clearly the result would be down to a judge’s subjective decision, based on the evidence in front of them at the time.

[Matthew Pennycook]

I thank the hon. Member for his intervention. Perhaps I have not explained myself clearly. These amendments do not provide for an appeals process. As I have tried to make clear, when it comes to a discretionary possession ground, judges can weigh up the evidence. That is not the case for a mandatory ground. The amendment provides for not an appeal process, but discretion for the court and the judge to consider whether their decision would cause greater hardship to the tenant. I will come on to explain how that would work.

[Shaun Bailey]

To clarify my point, I am aware that the amendment is not about an appeals process. However, as the hon. Gentleman will know, an application for appeal can be made against any judge’s decision, and that application can be granted by the superior courts, so the process is not immune from appeal; decisions can be taken to appeal. That is a right, which would be granted, and it could be achieved through another part of the system. I just wanted to clarify my position on that point.

[Matthew Pennycook]

It is an interesting debate, but not particularly pertinent to the amendments. It is not my understanding that a mandatory possession ground order can be appealed. If it can, then I think that the instances in which it can are vanishingly small. However, that is not what these amendments seek to do. They purely seek to protect very vulnerable tenants who might suffer great hardship as a result of the court’s decision.

The starting point for the court would remain that the landlord in question has proved his or her intention to either occupy the property under ground 1 or sell it under ground 1A, or the need to respond to enforcement action under ground 6A. In other words, the presumption would be that a possession order will be made, and in most cases it would be. However, the amendments would provide tenants with the opportunity to demonstrate to the court—not at appeal, but at a hearing of the court—that their eviction on any of the three grounds in question would lead to hardship greater than that of the landlord or, in the case of amended ground 1, potentially the landlord’s family. If the judge determined that the hardships each party is likely to experience were the same, under these amendments, the tenants would not succeed, and the possession order would still be made. However, if the tenant could prove to a court that they or a member of their household would suffer greater hardship than the landlord or the landlord’s family if a possession order were made, the court could refuse to make the possession order.

--- Later in debate ---

[Jacob Young]

I thank hon. Members for their contributions. I thank the hon. Member for Greenwich and Woolwich for his amendments 145, 146 and 150. As has been discussed, the amendments look to make grounds 1, 1A and 6A discretionary.

[Matthew Pennycook]

To clarify, the amendments do not seek to make those grounds discretionary in any case. We accept that they are mandatory. We believe that the amendments would allow those mandatory grounds to be used in almost every case, unless great hardship would result from them. They do not make those three possession grounds discretionary.

[Jacob Young]

However, judges would be required to assess whether possession would cause greater hardship than not. We think that would count as making the grounds discretionary.

The changes would add significant uncertainty to the system. It is right that landlords should have confidence in the process, and can manage their properties, including when they want to move into or sell a property. The uncertainty that the amendments would cause means that landlords may simply choose not to rent their properties in the first place if they know that they may want to move into or sell a property in future. That would reduce the vital supply of homes in the private rented sector. In the case of ground 6A, on enforcement compliance, if possession is not granted, the landlord would continue to be in breach of their obligations, and could face fines and other penalties. Given the adverse consequences that the amendments would cause, I hope that the hon. Member will withdraw them.

[Matthew Pennycook]

I am disappointed by the Minister’s response. I welcome the clarification he gave. The amendments would introduce a limited amount of discretion. We would argue that they do not make the grounds discretionary—it is a point of debate—but introduce a limited amount of discretion into the system. However, we trust judges in county courts to make these decisions in most cases. The amendments would put the burden on the tenant to prove great hardship, and make the presumption that the mandatory ground award will be issued in most cases.

I will bring the Minister back to some of the hypothetical scenarios I gave. We absolutely agree with the Government that landlords need robust possession grounds to take their properties back. In one of my hypothetical examples, the Bill would allow a terminally ill cancer patient to be evicted and put at risk of homelessness, just because the landlord wished to sell. They may have no need to sell; they might own eight properties and wish to sell one or two of them. In limited circumstances and cases, we should give the judges a bit of discretion. Otherwise, some very vulnerable and in-need tenants will evicted through these means.

I am disappointed that the Government have not accepted the amendments. I hope that they go away and think about them, but I will not push them to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 149, in clause 3, page 2, line 32, at end insert—

“(aa) After subsection (5) insert—

‘(5ZA) The court shall not make an order for possession under Ground 6A if the court considers that it is not just and equitable to do so, having regard to alternative courses of action available to the landlord or the local housing authority, which may include—

(a) a management order under Part 4 of the Housing Act 2004;

(b) in relation to paragraphs (b) and (f) of Ground 6A, other measures which are more appropriate for reducing the extent of overcrowding or the number of households in the dwelling-house, as the case may be;

(c) in relation to paragraph (c) of Ground 6A, the provision of suitable alternative accommodation for the tenant, whether under section 39 of the Land Compensation Act 1973 or otherwise; and

(d) in relation to paragraphs (d) and (e), other means of enforcement available to the local housing authority in respect of the landlord’s default;

and having regard to all the circumstances, including whether the situation has occurred as a result of an act or default of the landlord.’”

This amendment would permit a court to refuse to make a possession order under Ground 6A where a more appropriate course of action exists.

One of the changes made to schedule 2 to the 1988 Act by the clause, as we briefly discussed, is the introduction of a new ground for possession to allow compliance with an enforcement action. The new mandatory ground 6A will require the court to award possession if a landlord seeking possession needs to end a tenancy because enforcement action has been taken against the landlord, and it would be unlawful for them to maintain the tenancy.

The relevant enforcement actions (a) to (f) are set out on page 73 of the Bill. They include situations where a landlord has been issued with

“a banning order under section 16 of the Housing and Planning Act 2016…an improvement notice under section 11 or 12 of the Housing Act 2004”

and

“a prohibition order under section 20 or 21 of the Housing Act 2004”.

We take no issue with the fact that the Bill introduces the new mandatory power. Clearly there are circumstances in which landlords will require possession of a property in order to comply with enforcement action.

We wrestled with what should be the minimum notice period that applies to the new ground, given that it feels somewhat perverse to provide for a mechanism by which possession can be gained quickly when the reason for the possession being granted is that the landlord has fallen foul of an obligation under housing health and safety legislation, particularly if it resulted in a banning or prohibition order. As we will come to discuss, we ultimately determined to argue in amendment 136 for a four-month minimum notice period in relation to ground 6A, because in all the situations set out on page 73 of the Bill, the tenant will be evicted because of neglect or default on the part of the landlord. In other words, it is a de facto no-fault ground for eviction that will punish tenants and put them at risk of homelessness because of bad practice on the part of a landlord, particularly as there is no requirement for the landlord to provide suitable alternative accommodation.

Amendment 149 seeks to provide tenants with a measure of protection in such circumstances—this touches directly on the point the Minister made on the previous group of amendments—by giving the court the power to consider whether the relevant enforcement can be met by means other than the eviction of the sitting tenant or tenants, including through a management order under the Housing Act 2004 or the provision of alternative accommodation. If the court judges that the enforcement objectives can be met by other means, the amendment would give the court the power to refuse to make a possession order on the grounds that it is not just and equitable to do so in the circumstances, given that there are other means of ensuring that the enforcement action is complied with.

We believe that the amendment would provide tenants with stronger protection in circumstances where they are victims of poor practice on the part of a landlord. Importantly, it would also ensure that tenants have an incentive to seek enforcement action through their local authority if their home is in a very poor condition or is non-compliant with HMO licensing schemes. That would address the fact that, as things stand, the introduction of the new mandatory no-fault ground with only two months’ notice is likely to actively discourage tenants from doing so. I hope the Minister will give the amendment serious consideration.

[Lloyd Russell-Moyle]

Following on from the debate on the last group of amendments, I want to add my concern about ground 6A. Where there are issues with fire or flood, landlords are often expected to find alternative accommodation before a house is vacated, but there is no such provision when enforcement action has to be taken. There is a real worry that a landlord who has multiple properties that are perfectly fit for habitation might seek to punish tenants who have pushed for enforcement, rather than moving them into those properties. That seems wrong, so it is important to require the courts to go through a checklist of other options that the landlord has to consider before they get to ground 6A.

The amendment also provides a checklist for landlords. They can go down it and say, “Okay, I need to comply with enforcement action. Have I considered these things?” It also allows the local authority to consider other courses that they could pursue, such as management orders. We do not want tenants punished. Although revenge evictions are illegal, we know that they happen time and again, because there are loopholes in the law. Closing those loopholes is important, and a statement from the Minister on the matter might suffice.

--- Later in debate ---

[Jacob Young]

I should be clear that the landlords who are subject to enforcement action are the rogues; they are the people we are trying to root out of the system through the Bill. They are unlikely to be able to provide the suitable alternative accommodation that the hon. Member mentioned. If things get to this stage, they are that bad. We therefore do not feel that we can accept amendment 149, and I hope that the hon. Member for Greenwich and Woolwich will withdraw it.

[Matthew Pennycook]

I have been on enough Bill Committees to know that the Minister has been sent out with explicit instructions to resist amendments—we all understand that—but the Government will have to grapple with the Bill’s weaknesses regarding how the new possession grounds will affect tenants who are not at fault. They could clearly be affected by a landlord’s using ground 6A—a ground that I find perverse, because it allows for possession where the landlord is at fault.

The Minister gave the game away when he said that 6A can be used only when it is the only way that the landlord can comply with an enforcement order. Well, we could leave it to the court to make that determination under the amendment. If possession is the only way that the landlord can comply with an enforcement order, the court will grant the possession order, but there will be cases in which it is not the only way, and the Minister said that he encourages local authorities to explore those other means. I would say that, in those circumstances, encouragement is not enough. We need some provision to ensure that all alternatives are completely exhausted before this very severe mandatory ground—we are talking about eviction and potential homelessness—is brought into force.

[Jacob Young]

I take the hon. Gentleman’s point on board, but as I have outlined, these are landlords who are subject to enforcement action. Does he accept that such landlords should not be operating in the private rented sector anyway, and that this ground allows us to root out those bad landlords?

[Matthew Pennycook]

I think the Minister has to be very careful on that point. It depends on what the enforcement action is, and on the degree to which the landlord is at fault. The enforcement action could relate to a breach under the housing health and safety rating system that merely needs to be rectified before the landlord can continue to rent as an appropriate and good-faith landlord; or it could relate to a very severe enforcement ground, as the Minister described. I come back to the point I made when moving the amendment: there are other enforcement powers that could deal with those types of landlords. I gave the example of a management order under the 2004 Act. There are ways that local authorities could enforce that do not require a mandatory possession ground order to be awarded. All we are saying is: give the courts the discretion to decide that.

If the Government are not minded to give the courts that discretion, there are other ways that the clause might be changed. The local authority might be required to have first exhausted other grounds before the landlord can issue a 6A notice. Let us find a way of protecting tenants who are not at fault from being evicted by landlords. In this situation, landlords, not tenants, are to blame, and they could abuse this new mandatory ground in ways that will have detrimental consequences for tenants.

I hope that the Minister has taken that point on board. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendments 138, 139, 143 and 144—

[The Chair]

Order. Technically, the hon. Gentleman is moving only amendment 138; the other amendments are merely being debated.

[Matthew Pennycook]

I welcome that clarification, Mr Gray.

[The Chair]

I am a stickler. I told you I was a stickler.

--- Later in debate ---

[Matthew Pennycook]

I like having a stickler in the Chair. I prefer it to having a non-stickler.

I beg to move amendment 138, in clause 3, page 3, line 3, at end insert—

“(5C) (a) Where the court makes an order for possession on Grounds 1 or 1A in Schedule 2 to this Act (whether with or without other grounds), the order shall include a provision requiring the landlord to file evidence at court and to serve the same on the tenant, any other defendant, and the local housing authority for the district where the dwelling is located no later than sixteen weeks from the date of the order.

(b) The evidence referred to in paragraph (a) must—

(i) give details of the state of occupation of the dwelling-house since the date of the order,

(ii) give details of the progress of any sale of the dwelling-house, and

(iii) be verified by a statement of truth signed by the landlord.”

This amendment would require a landlord to evidence the progress toward occupation or sale of a property obtained under grounds of possession 1 or 1A no later than 16 weeks after the date of the order and to verify this by a statement of truth.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 139, in clause 3, page 3, line 4, at end insert—

“(2A) After section 7 of the 1988 Act insert—

‘7A Evidential requirements for Grounds 1 and 1A

(1) The court shall not make an order for possession on Grounds 1 or 1A in Schedule 2 to this Act unless the landlord has complied with the relevant provisions of subsections (2) to (4).

(2) Where the landlord relies on Grounds 1 or 1A, the claim must be supported by evidence which is verified by a statement of truth signed by the landlord.

(3) Where the landlord relies on Ground 1 and the dwelling-house is required by a member of the landlord’s family as defined in paragraphs 2(b) to (d) of that Ground, the claim must also be supported by evidence which is verified by a statement of truth signed by that family member.

(4) Where the landlord relies on Ground 1A, the evidence referred to in subsection (2) must include a letter of engagement from a solicitor or estate agent concerning the sale of the dwelling-house.’”

This amendment would require a landlord seeking possession of a property on the Grounds of occupation or selling to evidence and verify in advance via a statement of truth.

Amendment 143, in schedule 1, page 65, line 10, leave out “6 months” and insert “2 years”.

Amendments 143 and 144 would prohibit evictions under grounds 1 and 1A within two years of the beginning of a tenancy.

Amendment 192, in schedule 1, page 65, line 10, after “6 months” insert

“or 6 months have elapsed since rent was last increased”.

This amendment would prohibit evictions under Ground 1 within 6 months of each rent increase giving periodic protection at each rent renewal.

Amendment 203, in schedule 1, page 65, line 29, at end insert new unnumbered paragraph—

“Where this ground is used no rent will be due in the final two months of the tenancy.”

This amendment would ensure when a no-fault eviction on Ground 1 is used tenants would not pay rent for the final two months of the tenancy.

Government amendments 2 to 3.

Amendment 144, in schedule 1, page 66, line 6, leave out “6 months” and insert “2 years”.

Amendments 143 and 144 would prohibit evictions under grounds 1 and 1A within two years of the beginning of a tenancy.

Amendment 193, in schedule 1, page 66, line 6, after “6 months” insert

“or 6 months have elapsed since rent was last increased”.

This amendment would prohibit evictions under Ground 1A within 6 months of each rent increase giving periodic protection at each rent renewal.

Government amendments 4 and 5.

Amendment 194, in schedule 1, page 66, line 23, at end insert—

“(e) the landlord has offered to sell the property to the current tenant at the same value at which the landlord intends to list the property for public sale and the tenant has informed the landlord within four weeks of receiving the offer from the landlord that the tenant does not intend to buy the property at this value.”

This amendment would require landlords wishing to issue a notice for possession on the basis of Ground 1A to offer the current tenants the right to buy the property at the intended listing value before it goes onto the market.

Amendment 204, in schedule 1, page 66, line 24, at end insert new unnumbered paragraph—

“Where this ground is used no rent will be due in the final two months of the tenancy.”

This amendment would ensure when a no-fault eviction on Ground 1A is used tenants would not pay rent for the final two months of the tenancy.

[Matthew Pennycook]

As we have already discussed, clause 3 amends the grounds for possession in schedule 2 to the Housing Act 1988, by means of the changes set out in schedule 1 to the Bill. Paragraph 2 of schedule 1 sets out revisions to the existing mandatory ground 1. Under the existing ground 1, a court is required to award possession of a property if the landlord requires it to live in as their “only or principal home” or if they have previously lived in it on either basis. Under ground 1 as amended by the Bill, a court is required to award possession if the landlord requires the property for use as their only or principal home, but also if they require it for such use for members of their immediate family, for their spouse or civil partner or for a person with whom they live

“as if they were married or in a civil partnership”,

or for that person’s immediate family, such as the child or parent of a partner in those terms. Under the existing ground 1, landlords are required to provide tenants with prior notice that the ground may be used. This requirement is absent from ground 1 as amended by the Bill.

In turn, paragraph 3 of schedule 1 inserts a new mandatory ground 1A into schedule 2 to the 1988 Housing Act. Under this new ground, a court would be required to award possession, with limited exceptions, if the landlord intends to sell the property. We believe very strongly that there is a clear risk that both of these de facto no-fault grounds for eviction could be abused in several ways by unscrupulous landlords. I want to be very clear that we believe that only a minority of landlords are unscrupulous and may act in these terms.

In her evidence last week, Samantha Stewart, chief executive of the Nationwide Foundation, provided us with the example of just how these grounds are being abused in the Scottish context. She gave an example of a renter named Luke, who lived in a property with rats and maggots falling out of the ceiling. The landlord refused to act on the complaint but was eventually forced to do so by the Scottish tribunal. Shortly afterward, however, Luke was served an eviction notice using the new landlord circumstance possession grounds. As soon as the prohibited re-let period was up, they moved a new tenant in.

The risk of these grounds being abused is clearly not a point of difference between us and the Government. Ministers clearly accept that amended ground 1 and new ground 1A could be used as a form of section 21 by the backdoor, because the Bill contains provision to attempt to prohibit their misuse by preventing landlords from re-letting or re-marketing a property, or authorising an agent to do so on their behalf, within three months of obtaining possession on either ground. We will debate the adequacy of those no-let provisions when we get to clause 10 and press our amendment 140 to extend the proposed period, but it is enough to know at this stage that the Government felt it necessary to include such safeguards in the Bill. We can take it as given that their decision to do so is evidence of a clear understanding that there is potential risk of abuse along the lines I described.

In addition to strengthening the no-let provisions in the Bill, we believe tenants require protection from the misuse of grounds 1 and 1A in two other important respects. First, we believe there needs to be a greater burden of proof placed on landlords who issue their tenants notices seeking possession on either of these grounds. As the Bill is drafted, at any point after the protected period is ended a landlord can simply issue their tenant with a mandatory ground 1 or 1A notice, and a county court would be required to award them possession. When it comes to expanded ground 1, there is no requirement for the landlord to evidence whether they actually require the use of the property for themselves; or, if they do not, which family member or members or person connected to them does.

Similarly, when it comes to new ground 1A, there is no requirement for the landlord to evidence that they are trying in good faith to sell a property after possession has been awarded. The risk to tenants should be obvious: six months after the start of a tenancy, when the protected period ends, a model tenant who is not at fault in any way—but who, for example, complains about damp and mould in a property—could be evicted with just two months’ notice using these grounds, without any need for the landlord to verify through evidence that they are using these landlord circumstances legitimately.

As the chief executive of the Legal Action Group and chair of the Renters’ Reform Coalition, Sue James, argued in her evidence last week, there is no indication at present that landlords will have to provide much, if anything, in the way of evidence. Although the Government have made noises to that effect, as things stand we do not know what that evidence might consist of.

The case for requiring landlords to provide evidence is obvious. As Samantha Stewart argued in her evidence,

“landlords using grounds 1 and 1A—moving in and selling—should be required to provide adequate and appropriate evidence”.––[Official Report, Renters (Reform) Public Bill Committee, 16 November 2023; c. 127, Q170.]

Amendments 138 and 139 are designed to address that deficiency by requiring relevant evidence to be submitted both prior to an eviction and after one has taken place. Amendment 139 would require a landlord seeking possession on the grounds of occupation or selling to evidence and verify that they are doing so in advance of a possession order via a statement of truth or, in the case of sale, by means of a letter of engagement from a solicitor or estate agent. That mirrors provisions in the Private Housing (Tenancies) (Scotland) Act 2016, which require the landlord to provide specific evidence proving his or her intention to sell.

Amendment 138 would require a landlord to evidence progress towards occupation or sale of a property obtained under grounds 1 and 1A no later than 16 weeks after the date of the order, and to submit that to the court and—most importantly, because they will be the enforcement bodies under the Bill—local authorities.

The clear benefit of amending the Bill to include those evidential requirements in respect of grounds 1 and 1A would be their deterrent effect—the consequences to any landlord of being found guilty of lying to a court, in terms of litigation and potential liability for damages. At present, after an eviction takes place on either of those grounds, either because of the tenant leaving voluntarily or the court issuing a possession award, the Government are proposing only two means of redress: local authority enforcement action or a compensation award, issued by the new ombudsman. The Bill provides only a framework for the new landlord redress scheme, so the ombudsman is still largely an unknown quantity, and there are well-known issues, attested to in the evidence that several witnesses gave last week, about the efficacy of local authority enforcement.

We believe that rent repayment orders have a role to play, but those evidential requirements and the deterrent effect they would have on unscrupulous landlords seeking to abuse grounds 1 and 1A would strengthen the Bill and ensure that tenants are better protected. We urge the Government to give them due consideration.

Secondly, we believe that the proposed protected period of six months during which a tenant cannot be evicted under either of these grounds is insufficient. The explanatory notes accompanying the Bill state that the protections mirror those that tenants currently receive. That is true, but the current protections, as Liz Davies KC made clear in her evidence to the Committee, reflect the assured shorthold tenancy regime, which the Bill is abolishing. The decision to mirror the current protected period also fails to take into account the fact that ground 1A is a new mandatory ground, and that ground 1 has been amended such that the previous requirement to serve a notice that it may be relied upon prior to the start of the tenancy has been removed. As the Bill is drafted, a landlord can let a property to a tenant, provide them with no prior notice whatsoever that they may in future wish to rely on either ground 1 or 1A, and then serve them with a notice at four months.

We believe that any landlord likely to use ground 1 or 1A in good faith will have some prior awareness that they or a family member may need the property for use at some point in the coming years, or that they may wish to sell it in the near future. As such, and because the Government have chosen to remove the prior notice requirement that currently applies to ground 1, we believe that there is a strong case for extending the protected period with respect to grounds 1 and 1A from six months to two years, allowing landlords to first serve notice under either of them 22 months after a tenancy begins. Taken together, amendments 143 and 144 would extend the proposed protected periods accordingly.

These four amendments, while retaining mandatory grounds 1 and 1A as the Bill proposes, would go a long way to preventing and deterring abuse of the kind that we fear will occur fairly regularly if these possession grounds remain unchanged. I look forward to hearing the Minister’s response to them as well as further information about the four Government clauses.

[Ms Buck]

I rise briefly to speak in support of the amendments, which seek to address two key themes. One is that tenants start disproportionately from a position of lack of power, and a large minority of tenants are in a position where they are limited by their access to advice and representation and a lack of alternative accommodation. They are frequently unable, without stronger legislative protection, to exercise their rights against the landlords who abuse their role.