Council Tax

Debate between Matthew Pennycook and David Simmonds

Thursday 14th November 2024 Commons Chamber

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

(Urgent question): To ask the Secretary of State for Housing, Communities and Local Government if she will make a statement on the Government’s policy on council tax referendum thresholds in 2025-26.

[The Minister for Housing and Planning (Matthew Pennycook)]

Since the 2012-13 financial year, local authorities, fire authorities, and police and crime commissioners have been required to determine whether the amount of council tax they plan to raise is excessive. The Secretary of State sets thresholds on excessiveness and knows the referendum principles for different classes of authority. Since 2016-17, those thresholds have also included a social care precept, providing higher thresholds for authorities with social care responsibilities.

Decisions on the council tax levels to set, or whether to hold a referendum to go beyond the referendum principles, sit with councils. But the Government have been clear that we expect the threshold to be maintained at the current level, set by the previous Government. The Office for Budget Responsibility forecast of the last Government assumed that council tax would increase by a 3% core, plus an additional 2% for local authorities with adult social care responsibilities for the entirety of the forecast period. We will set out further details in the local government finance settlement in the new year.

Beyond that, we are determined to support local government and undo the mess that has been created over the past 14 years. That is why at the Budget we announced over £4 billion in new local government funding, including an additional £1.3 billion in the local government finance settlement. That, as the hon. Gentleman will be well aware, has been warmly welcomed by the sector.

[David Simmonds]

Council tax funds about £20.5 billion of expenditure in England on social care, which is 61% of all council funding. It is therefore of huge interest to our constituents. The Prime Minister and Ministers have repeatedly told the House that we need to wait for the spending review and the local government finance settlement to know what will happen with the referendum limit, including at the Dispatch Box yesterday when the Prime Minister told my right hon. Friend the Leader of the Opposition to wait. Shortly afterwards, the press were told that the 5% limit would remain in place.

Answers to parliamentary questions show that the Government are expecting spending power to increase by £3.7 billion, funded by grants of £1.3 billion. That demonstrates that the Chancellor’s Budget has opened up a £2.4 billion black hole in council finances. In addition to that, the County Councils Network has highlighted its concerns that although we have not yet had a formal statement in the House, there are proposals to change the way in which funding is allocated, further depriving local authorities in urban, suburban and rural areas of the funding that they need.

I would like to put two questions to the Minister. First, will he promise the House that funding allocations through the grant mechanism will follow the cost pressures on local authorities and not any other form of indexation or formula, to ensure that places facing the highest costs receive the funding that they need? Next, while nobody would want to see the referendum limits scrapped simply to bail out central Government, the announcement of the 5% constrains local authorities when it comes to their fundraising. Will the Minister tell the House whether it will be our high streets through increased business rates or whether significant cuts to other council services will be needed to fill the Government’s £2.4 billion black hole?

[Matthew Pennycook]

I thank the hon. Gentleman for his questions. Let me take them in turn. The Government are committed to a fair funding settlement for local government. We will set out further details in the usual way in the upcoming local government finance settlement, which will be presented to Parliament.

On the £2.4 billion figure, I am afraid that we simply do not recognise it. I assume that the hon. Gentleman, in his calculations, failed to take account of the over £300 million raised from business rates and £300 million in additional new houses coming along. Yes, it is right that £1.8 billion will be raised through council tax in 2025-26, but, as I made clear, that is because the Government are clear that we are maintaining the previous Government’s policy on council tax, in line with the OBR forecast made in March 2024.

The question for the Opposition is: are they saying that the cap should be abolished, as the Conservative Local Government Association group’s “Rebuilding the Road to Victory” document called for all caps to be removed, or are they saying that the limit should be reduced, which would be contrary to the policy in place when the now Leader of the Opposition was the local government Minister?

Renters' Rights Bill (Seventh sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to continue our proceedings with you in the Chair, Mr Betts. We now turn to clauses 84 to 86, which deal with access to the data collected on the database and the circumstances in which that may be shared.

Let me start by speaking to clause 84. One of the central objectives of the database is to provide tenants and prospective tenants with the data to allow them to make informed decisions about which landlords to rent from. For that reason, the clause gives the Government a regulation-making power to make certain information on the database visible to the public.

For the database to be a success, it is crucial that tenants have access to key information about a landlord and a rental property. The information that the Government plan to make available to the public will include details of the landlord, details of other parties involved in the management or ownership of the property, and information about the rental property. The Government also intend to use the database to make landlords’ unspent housing-related offences or penalties visible to the public. Tenants will be able to make a judgment about whether to rent from a landlord, and good landlords will be distinguished from the minority of landlords who commit offences.

Information about spent offences will continue to remain visible to local authorities until those offences must be removed from the database, as described under clause 87. That will help local authorities to devise their enforcement approaches. However, spent offences will not be visible to the public. The Government will make information from the database public only if that is necessary and proportionate to meeting the aims of the database. We are committed to providing tenants with the information they need to make sound decisions about renting, but we are determined to respect landlords’ rights to privacy and to follow data protection and human rights legislation.

The clause also gives authorities such as local housing authorities, which have an interest in enforcing property standards, unlimited access to the information on the database. That will ensure they have access to the data necessary for them to carry out their enforcement activities.

Clause 85 outlines circumstances in which restricted data may be shared. The database will contain information that could be useful to various third parties. Although it could be useful, it remains essential that the information is protected in such a way as to respect the privacy of landlords and to ensure that the data is disclosed only for the intended purpose. Under clause 84, access to information will already be possible for relevant enforcement authorities, and regulations made under clause 85 can be used to extend that access to restricted information to other important third parties. That could be another Department or other third parties, such as the police service and the fire service.

The Government remain committed to protecting the privacy of landlords, as I said, and will ensure that any data disclosed is disclosed only for the specific purposes outlined in clause 85 and in full compliance with data protection legislation. The clause contains limitations to ensure that restricted information is disclosed to third parties only when necessary—for example, to help to fulfil statutory requirements and functions, or to facilitate compliance with the rule of law.

The Government have yet to confirm which organisations will have access to that information. We believe that certain elements of the information contained in the database may be useful to other Departments and other external agencies, as I said. Should the database operator or other persons breach the restricted data disclosure restrictions imposed by clause 85, they could be guilty of an offence punishable by a fine.

Clause 86 outlines the circumstances in which data can be used by certain public bodies that are granted access. The clause restricts the use of database information by those bodies to housing-specific functions. I will list the agencies in turn, for the benefit of the Committee: local housing authorities may use information from the database only in relation to their functions concerning housing, residential landlords and residential tenancies; local weights and measures authorities will be able to use the information from the database only for purposes related to their enforcement of housing standards; the mayoral combined authorities and the Greater London Authority may use information only in connection to their housing-related functions; and, if the Government nominate a lead enforcement authority—we will discuss that in more detail in respect of a later clause—it will be allowed to use information from the database only in relation to its functions as a lead enforcement authority, and the provision of the landlord legislation for which it is responsible.

Clause 86 will mean that although those agencies will have access to the information collected by the database, they will be able to use the data only where necessary and connected to their work related to housing. That will provide for better intelligence gathering on the private rented sector, enhancing enforcement activities and driving up standards, while also ensuring the privacy of landlords. I commend the clauses to the Committee.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve under your chairmanship, Mr Betts. We spent some time on the use of the database in the previous Committee sitting, and the Opposition are satisfied with the Government’s direction of travel.

I have a question for the Minister in respect of his comments about those who will have access to the data and the purposes for which it is used. He spoke specifically about local authorities having the ability to access the data only for the performance of their housing functions. Predictive analytics are in quite widespread use in local authorities, largely based on the gathering of data from a number of sources—for example, the Ofsted databases that contain indicators relating to children, which might include the potential for a household to be made homeless, which would then trigger a requirement for a local authority to intervene.

It would be helpful if the Minister could clarify, perhaps in writing subsequent to this morning’s sitting, how housing functions will be defined so as not to inhibit the entirely commendable use of predictive analytics to identify households where there might be a risk that would trigger the local authority to intervene. How would that interact where elements of the service were provided by, for example, children’s trusts as a third party to the local authority, in order to ensure that the good work that is already being done to prevent households with children or vulnerable people from becoming homeless, and then requiring the intervention of a local authority, continues, and so that earlier intervention can forestall the level of risk?

[Matthew Pennycook]

I thank the shadow Minister for that question. To reassure him, any access to restricted information that is not displayed publicly through the database must be shown to facilitate compliance with a legal requirement, a rule of law or, as I said, the performance of a specific statutory function. I understand and recognise his point—namely, what are the limits? What is the definition of what a housing function is? What are the limits of what that applies to where statutory services are—I hope I have taken the shadow Minister’s meaning correctly—not strictly housing related but shade into housing-related issues? I will happily provide him some specific detail on that point through correspondence.

Question put and agreed to.

Clause 84 accordingly ordered to stand part of the Bill.

Clauses 85 to 87 ordered to stand part of the Bill.

Clause 88

Restriction on gaining possession

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

[Matthew Pennycook]

Clauses 88, 89 and 90 introduce a restriction on repossession for unregistered properties and new offences and financial penalties in relation to the database.

Clause 88 prohibits landlords from gaining a possession order for a property unless they have registered themselves and their property on the database. A comprehensive record is essential for the database to be of use to tenants —in the way I described in relation to the previous clauses—and to local authorities and central Government. This approach will incentivise landlords to register on the database, thereby empowering renters to make informed choices about where they live. However, the Government recognise the importance of tackling antisocial behaviour. It will therefore be possible for a possession order to be granted under grounds 7A or 14 if the matter relates to antisocial behaviour, even if a landlord and their property are not registered on the database.

The Government can, through regulations, amend the person to whom or circumstances in which the restriction on granting a possession order applies. This will allow the legislation to evolve to match the changing needs of the database and ensure that the possession restriction targets the right landlords.

Clause 89 allows local authorities to levy financial penalties on individuals who fail to comply with the database provisions. A transformative database will equip local authorities and tenants with the intelligence needed to make informed choices in the private rented sector. A strong enforcement framework will be crucial in maintaining the database’s integrity and ensuring that it serves its intended purpose. The clause grants local authorities powers to tailor penalties for non-compliance, and outlines a transparent and proportionate system for increasing penalties in cases where initial measures fail to achieve such compliance.

Clause 89 also allows local authorities to impose fines of up to £7,000 on persons who breach the restrictions in clause 80 regarding the marketing, advertising or letting of properties. Repeat offenders who commit similar breaches within five years, or continue to engage in unlawful behaviour, may face fines of up to £40,000, under clause 90. To further safeguard the integrity of the database, local housing authorities will have the power to impose fines of up to £40,000 on anyone who knowingly or recklessly submits false or misleading information to the database operator. Those fine levels will act as a powerful deterrent for landlords and agents, thereby ensuring high levels of compliance with the database provisions. The Secretary of State can amend the level of fines to reflect inflation; this power will ensure the continued effectiveness and relevance of our enforcement measures.

We understand that the database is a new service for local authorities, and we are designing the service to be as streamlined as possible. Our research indicates that a dependable source of information on the private rented sector will improve the efficiency of local authority enforcement practices. The clause mandates local authorities to have regard to guidance on financial penalties issued by the Secretary of State. The power will enable the Government to assist local authorities to fulfil their new responsibilities.

The success of the private rented sector database hinges on landlords and property agents fulfilling their new duties. Clause 90 will establish new offences for continued or repeated breaches of the requirements relating to the restrictions on the marketing, advertising and letting of a property imposed by clause 80. Those who continually or repeatedly breach the requirements within a five-year period are liable to an unlimited fine, following a successful prosecution.

Furthermore, clause 90 will establish a new offence where a person knowingly or recklessly provides false or misleading information to the database operator. Again, those who breach that requirement will face an unlimited fine on conviction. To ensure accountability in the private rented sector, we have extended liability for the offences to include corporate bodies. That will deter non-compliance and promote responsible behaviour among corporate entities and their representatives.

To combat these illegal practices, the Government will make regulations under the Housing and Planning Act 2016 to categorise the new offences established under clause 90 as banning order offences, which must be recorded on the database. As a result, depending on the decision of the local housing authority, landlords, agents or others convicted of such offences may be subject to a banning order.

The stringent penalties outlined in the clause will serve as a powerful disincentive for those who do not comply with the requirements of the database. By ensuring greater compliance, we will equip local authorities and tenants with essential information, while also enabling reputable landlords to differentiate themselves from those who do not, or refuse to, meet the required standards.

[David Simmonds]

Again, the Opposition support the measures, and I welcome the Minister’s words in introducing them.

On the restrictions around gaining possession, I have a brief question concerning the potential interaction between the database and planning law—for example, where a landlord has been registered and is letting a property that has not been authorised in planning terms. That is quite common on caravan sites, where the land might be illegally occupied, with a complex set of transactions leading up to that situation. The most vulnerable individuals and households are often accommodated in that type of property, which is sometimes of very poor quality. A local authority, therefore, needs to go down the appropriate enforcement path, in planning terms, to end the potentially illegal or unlawful use of that land.

Because planning law permits unlawful use to be rendered lawful by the seeking of retrospective permission, there is a potential risk to a tenant occupying such a property, if the local authority undertakes different courses of enforcement action simultaneously against a banned bad landlord and against a landowner or developer who has created a property that is not fit for occupation but is part of a rented-out property portfolio. I would like confirmation that those circumstances have been considered. Constituents of mine have been in that situation. I do not want to find that the most vulnerable and marginal households cannot benefit from the rights that the legislation intends to create.

[Matthew Pennycook]

I thank the shadow Minister for that question. I will give him the opportunity to clarify, if he feels that would be helpful. If I have understood him correctly, he is asking what would happen where there is an unauthorised development and potential planning enforcement in place, but the landlord is required under the new system to register with the database. Would they essentially be allowed to register with the database and comply with the requirements in the Bill, were they subject to a form of planning enforcement?

[David Simmonds]

Yes.

[Matthew Pennycook]

I will take that away and write to the shadow Minister. It is a good, detailed, specific question. We need to consider how various elements of local authority enforcement action relate to the Bill and how the Bill interacts with other requirements.

--- Later in debate ---

[Matthew Pennycook]

I am more than happy to include that in my correspondence with the Committee.

[David Simmonds]

I am grateful to the Minister for his response. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) held a Westminster Hall debate on the topic of unauthorised development, but there are also issues with authorised development in places where there may be conflicts in planning law. For example, somebody occupying a caravan or temporary structure on land where they are subject to planning enforcement, but where they have a legal contract with a landlord, is in an especially vulnerable position. We want to ensure that they are not at risk of having their rights taken away as a result of ambiguities in the legislation. I am grateful to the Minister for looking into that.

[Matthew Pennycook]

Let me, hopefully, bring the exchanges on this matter to a close. I have taken away from this a very valid point. Under the provisions in the clause, if landlords correct a matter of non-compliance, vis-à-vis the requirements in the Bill, the possession process will be allowed to continue. Hon. Members have asked a reasonable question about whether, in circumstances where planning enforcement is still a live issue, it impacts in any way, and that can also apply in respect of HMOs. I commit to coming back to the Committee with fulsome detail on the subject.

Question put and agreed to.

Clause 88 accordingly ordered to stand part of the Bill.

Clauses 89 and 90 ordered to stand part of the Bill.

Clause 91

Power to direct database operator and local housing authorities

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

[Matthew Pennycook]

Clauses 91 to 94 deal with the power to direct the database operator, amendments to the Housing and Planning Act 2016, provisions for joint landlords and the interpretation of chapter 3.

The Government are aware that in order to achieve the aims of the database—to raise standards in the sector—we may need to direct the database operator or local authorities in respect of how they carry out certain functions in relation to the database. Clause 91 allows the Government to give the database operator or local housing authority instructions on how they exercise their functions. This may include giving instructions to local housing authorities on how to investigate and enforce property standards. The power will provide an agile database that can respond to the changing needs of the sector.

To ensure that local authorities can build a complete picture of enforcement activities, it is essential that banning orders and banning offences are recorded in one location. Clause 92 will require local authorities to record banning orders and banning order offences in respect of landlords on the private rented sector database once it has come into force. The clause amends section 28 of the Housing and Planning Act 2016 to signpost people to the new PRS database established under the Bill.

The purpose of clause 93 is simply to ensure that we have the ability to streamline the process for joint landlords in order, where possible, to avoid the duplication of entries. We anticipate creating a single sign-up process for joint landlords, with one lead landlord registering on behalf of others.

To help the understanding and aid the interpretation of the proposed legislation concerning the database, clause 94 defines certain key terms used in the legislation, or signposts readers to definitions elsewhere. Those terms are “database”, “lead enforcement authority”, “the landlord legislation”, “relevant banning order”, “relevant banning order offence” and “unique identifier”. I hope the Committee will have no issue with these simple, straightforward clauses.

[David Simmonds]

Once again, we support the clauses, but I have a question for the Minister. A little later, we will debate the allocated enforcement authority—which local authority has the power to undertake the enforcement. It will be a challenge for areas of England with two-tier councils where the housing authority is the district council, because the county council also has certain responsibilities that it must fulfil. For example, under the Children Act 1989, the county council has a duty to house somebody who is at risk of homelessness even if they have no recourse to public funds, because of the risk to children of being made homeless. Were the council not able to access the database because it was not the enforcement authority for that area, it would not be able to undertake the same level of due diligence.

I want the Committee to be confident that when the allocation of powers and duties is undertaken, the process will be sufficiently comprehensive for all the parts of the local government system that could have duties triggered under various parts of this legislation to have equality of access to the database to enable them to discharge their functions properly.

--- Later in debate ---

[Matthew Pennycook]

Unless the hon. Gentleman is pressing his amendment simply to make a political point, I ask him gently: what outcomes are we seeking? He wants to bring MOD accommodation up to the decent homes standard. I have made it very clear to him that the MOD has been benchmarking minimum housing standards to the decent homes standard since 2016, and the shadow Minister has made the same point. The MOD inspects its properties. It knows what that standard is. It reports that 96% of its accommodation meets that standard.

The MOD also has a higher standard, the MOD-developed decent homes-plus standard, to which it benchmarks its accommodation. It found that 84.4% of its accommodation meets that standard. So we know that the MOD is already inspecting and monitoring its standards. The MOD has made it very clear under the present Government that it is reviewing how it takes forward those standards and—this is important to the point about outcomes—that in driving up standards in its accommodation, it is seeking an equivalent standard that we will introduce for the private sector through the Bill.

I gently say to the hon. Gentleman that we share the same objective; it is about how that is achieved. I have tried to give him the reassurance that the MOD is not just brushing off the review; it is absolutely committed to driving up standards through its particular route, given some of the challenges it faces. I have a barracks in my constituency, and it is not that easy for local authority enforcement officers to just make an appointment to visit it and inspect. It is for the MOD to take this forward, and it is absolutely committed to doing so. If the hon. Gentleman’s point is simply about how we achieve the same objective, I am very confident that the MOD should be the one to do it through the specific route it has outlined, rather than by bringing military accommodation into the Bill, which could have all manner of unintended consequences.

[David Simmonds]

The Minister said earlier that there is a requirement for a consultation on the decent homes standard. It is important to recognise that a decent homes standard already exists, and in fact has existed since the previous Labour Government, which introduced it for social housing. The MOD is benchmarking its accommodation to that existing social housing decent homes standard, which includes things such as the state of repair of the property and its thermal insulation—the property needs to be sufficiently warm for safe occupation. Those criteria already exist and are already in use. Where there is an element of doubt is on the specific decent homes standard that the new Government would apply to the private rented sector. But there is already a decent homes standard, which is in use in the Ministry of Defence now.

[Matthew Pennycook]

I give way to the hon. Member for Taunton and Wellington.

--- Later in debate ---

[Matthew Pennycook]

We expect that the vast majority of landlords will do the right thing and meet their new legal responsibilities, but there will be a minority who fail to do so. That is why, for this package of reforms to be effective and achieve its aims, consistent and effective enforcement by local authorities is absolutely necessary.

Clause 104 places a duty on every local housing authority in England to enforce the new measures in their areas. We expect local authorities to take a proactive approach to enforcing these reforms and give this area the priority that it deserves. Equally, we want councils to have flexibility and take action in a way that best addresses local problems and priorities. The duty is broadly framed to allow that to happen.

We recognise that different types of enforcement will be more suited to different cases. When considering enforcement, local authorities will be able to issue a civil penalty as an alternative to criminal prosecution for an offence, allowing them to decide the most effective method of enforcement in each case. Clause 104 also empowers county councils that are not local housing authorities to take enforcement action, and it enables local authorities to take enforcement action outside their own local authority areas.

Clauses 105 and 106 set out the notification requirements where local authorities take enforcement action outside their own boundaries, or where a county council that is not a local housing authority takes enforcement action.

Clause 107 places a duty on local authorities to supply information to the Secretary of State, as required, on the exercise of their functions under the measures created or amended by the Bill. Regular and robust data from local authorities will be vital to understanding the impact of our reforms and the action taken by local authorities. We 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 similar data collections.

Clause 108 allows the Secretary of State to appoint a lead enforcement authority for the purposes of any provisions in the landlord legislation, which include many of the provisions in the Bill.

Clauses 109 and 110 outline the functions of the lead enforcement authority, which include: overseeing the operation of the provisions in the legislation for which it is responsible; providing guidance, advice and information to local authorities; and, where necessary, enforcing the provisions. We are carefully considering whether having a lead enforcement authority for any of the provisions in the landlord legislation will be beneficial, and we will continue to engage with local authorities and other stakeholders to shape our plans. I commend the clauses to the Committee.

[David Simmonds]

Although the Opposition are supportive of the clauses, it is important to clarify a few things. First, the aim of clause 104 is clearly to ensure that a very high standard is met in the private rented sector. Many local authorities will take action themselves to ensure that the standard is met in a property—particularly in respect of social housing—if the landlord fails to do so. The powers under this legislation do not go as far as that; they extend to imposing a financial penalty or instituting proceedings against a person for that offence. Renters may expect that the local authority will effectively take possession of a property to remedy a problem giving rise to a breach—for example, a breach of the decent homes standard at the property—and it is important to recognise their expectations.

I will ask the Minister a question about clause 110. Local authorities will generally find it more efficient to enforce the decent homes standard as a single function, rather than having separate private rented sector and social housing functions, both of which effectively do the same work. The financing of the social housing element would normally come through the housing revenue account, which, like a number of other local authority revenue accounts, is ringfenced—something I know you are familiar with, Mr Betts—meaning that resources raised through that account cannot be applied to another purpose. Clearly, we would not wish to allow a degree of inefficiency to creep in by creating duplication.

It would be helpful if the Minister could say whether the guidance provided to local authorities will clarify that there is no objection, in respect of the private rented sector, to a sharing of services that are funded partially through the housing revenue account and partially through the regime introduced by the legislation. I know that this issue has been significant in different types of funding provided to local authorities for particular functions.

[Matthew Pennycook]

I will be fairly brief, because I am more than happy to go away and check whether this is an error on my part rather than that of the shadow Minister, but we have to be very clear which provisions in the Bill these enforcement powers relate to. Clause 104 sets out that every local housing authority has a duty to enforce the landlord legislation in its area, which covers chapters 3 and 6 of part 1 of the Bill, part 2 of the Bill, sections 1 and 1A of the Protection from Eviction Act 1977, and chapter 1 of part 1 of the Housing Act 1988.

We will consult on it, so further detail will come forward, but, to put it simply, enforcement of the decent homes standard will come via a different track. Nothing in the enforcement provisions will interfere in the housing health and safety rating system, or the enforcement of Awaab’s law or the decent homes standard to come.

I am more than happy to go away and check, and I will write to the shadow Minister if I have misunderstood his question. To reassure him, though, I think we are talking about enforcement against specific parts of landlord legislation under the Bill.

Question put and agreed to.

Clause 104 accordingly ordered to stand part of the Bill.

Clauses 105 to 110 ordered to stand part of the Bill.

Clause 111

Power of local housing authority to require information from relevant person

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

--- Later in debate ---

[Matthew Pennycook]

I turn to part 5, on general provisions.

Clause 134 sets out the meaning of three terms used in the Bill: “lease”, “local housing authority” and “the 1988 Act”. Clause 135 sets out the Bill’s application to the Crown. Clause 136 sets out its application to Parliament.

Clause 137 clarifies various aspects of powers to make secondary legislation under the Bill. In particular, it contains a power to make consequential, supplementary, incidental, transitional or saving provision. It also clarifies which powers in the Bill will be subject to the affirmative or the negative procedure where exercised.

Clause 138 contains a power that will allow the Welsh Ministers to make consequential amendments arising from part 1 of the Bill. Clause 139 contains a power that will allow the Scottish Ministers to make consequential amendments arising as a result of chapter 5 of part 1 of the Bill, which makes provision to address rental discrimination in Scotland.

Clause 140 will give the Secretary of State the power to make consequential amendments arising from the Bill, such as by removing now defunct terms from other legislation. This is necessary to ensure that existing legislation continues to function as intended once the Bill has passed into law.

Clause 141 provides that the Bill’s extent, for the most part, is England and Wales. Housing is within the devolved legislative competence of the legislature in Wales, and in practice the application of the majority of the clauses will be to England only. A small number of changes will apply in England and Wales to address remaining aspects of the tenancy system in Wales that are still dependent on English law. Chapter 4 of part 1 applies the rental discrimination measure in Wales. Similarly, chapter 5 of part 1 extends only to Scotland and applies the rental discrimination measure in Scotland. I commend the clauses to the Committee.

Question put and agreed to.

Clause 134 accordingly ordered to stand part of the Bill.

Clauses 135 to 141 ordered to stand part of the Bill.

Clause 142

Commencement

[David Simmonds]

I beg to move amendment 45, in clause 142, page 150, line 26, leave out from “subject to” to end of line 27 and insert—

“—

(a) the publication of an economic impact assessment in relation to the bill, which must include the impact of abolishing fixed term assured tenancies on the student housing market; and

(b) subsections (2) to (6).”

[David Simmonds]

Amendments 45 and 64 would require the Government to give broader consideration to the economic assessment required to understand the full implications of the Bill. A lot of the evidence that we have heard on the Bill, and on the Renters (Reform) Bill in the last Parliament, concerns impact on supply, especially on the supply of accommodation for particular categories of tenant. Those categories include people in the student housing market, to which both amendments refer.

We are all aware that for local authorities and other public bodies such as transport authorities, the ability to predict and plan the need for student accommodation in particular locations is very significant. Transport for London and other transport authorities in major cities plan bus routes and other public transport based on the need for students to get to and from the places where they receive their education. The same is true in respect of retirement homes and so on.

This is a matter not merely of general political interest, but of practical interest for the public bodies whose responsibilities will be affected by the Bill. Although we recognise that a substantial amount of the Bill was already envisaged under the previous Government and has been through a significant process of scrutiny, we do not fully understand what the impact will be on supply, particularly on the supply of homes required by students. We have heard a great deal of evidence about the economic significance of students for our towns and cities, as well as for our university sector. The Opposition regard that as very important. I am interested to hear what the Minister has to say about our amendments and the clauses to which they relate.

[Matthew Pennycook]

I will speak briefly to the clauses in the group and then discuss the shadow Minister’s two amendments.

Clause 142 provides how and when the provisions in the Bill will be brought into force. This Government have made it clear on multiple occasions that we are determined to end the scourge of section 21 evictions as soon as possible. I think it has now been more than five years since the previous Government promised private renters across the country that section 21 evictions would be abolished. Renters have waited far too long for a Government to take action. We are determined to act for them to end the insecurity that they face, including the risk of homelessness, and—this is a point I have tried to stress throughout our discussions—to give good landlords certainty about what change means.

The clause provides the mechanism for ending section 21 once and for all for private tenancies. The new tenancy system for the private rented sector that is set out in chapter 1 of part 1 will come into force in a single stage for all assured tenancies. On that date, the new tenancy system will apply to all private tenancies. Existing tenancies will convert to the new system; any new tenancies signed on or after that date will also be governed by the new rules. This will give all private tenants the same security immediately: that will be the effect of clause 142(8). I reassure the Committee that we will work closely with all parts of the sector to ensure a smooth transition to the new system and that we are committed to providing sufficient notice ahead of implementation.

Beyond tenancy reform, the clause sets out how and when other provisions in the Bill will be brought into force. Some provisions, such as the investigatory powers in part 4, will come into force automatically two months after Royal Assent.

Clause 143 provides that the commencement of chapter 1 of part 1 will not have an impact on the continuation of existing tenancies. The Bill will apply to those tenancies, but they will not be treated as new tenancies. For example, although the landlord will not be able to use a section 21 notice in relation to such tenancies, the protected period during which the moving and selling grounds cannot be used will count from when the tenancy first began.

Schedule 6 will ensure a smooth conversion for existing tenancies to the new tenancy system by making specific provision to avoid unnecessary cliff edges, for example by maintaining the validity of rent increases and notices served prior to implementation. This will ensure that landlords and tenants are clear about which legal framework applies before and after the transition.

Clause 144 provides clarity about what happens when a fixed-term assured tenancy expires and becomes a statutory periodic tenancy. This will ensure that the periodic tenancy will be treated as continuous, meaning that any provisions in the Bill that apply from when the tenancy began will count from the beginning of the original tenancy rather than from when the statutory periodic tenancy arose.

Clause 145 will give the Secretary of State the power to make regulations that have transitional or saving provision in connection with the coming into force of any provision of the Bill. It will give powers to Welsh and Scottish Ministers to make transitional or saving provision in connection with the coming into force of chapters 4 and 5 respectively of part 1, which apply the rental discrimination measures in Wales and Scotland. The clause will also give the Secretary of State power to make provision concerning pre-application instruments that the Secretary of State considers will not operate effectively as a result of the Bill. It is standard and appropriate for the Secretary of State to have the power to make transitional or saving provisions; this is important to facilitate an orderly implementation of the new regime and to ensure that agreements and private legal instruments that were entered into prior to the Bill continue to operate as intended under the new regime.

Clause 146, as I think is self-evident, provides that the short title of the Act will be the Renters’ Rights Act 2024.

I turn to the shadow Minister’s amendments 45 and 64. Amendment 45, as he made clear, would require the publication of an economic impact assessment for the Bill, including an assessment of the impact of abolishing fixed-term assured tenancies on the student housing market, before its provisions are commenced. Amendment 64 would do the same, but would also make the publication of any assessment by the Lord Chancellor of the operation of possession proceedings for rented properties a prerequisite for commencing the provisions of the Bill.

I say gently to the shadow Minister that I have tried this trick before in a previous role, and I do not for one second condemn him for doing so, but we are committed to robustly monitoring and evaluating the private rented sector reform programme and the implications of the Bill. Our approach builds on the Department’s existing long-term housing sector monitoring work, and we will conduct our processes, impact and value-for-money evaluation in line with the Department’s published evaluation strategy. We will publish the evaluation findings in a timely manner that is consistent with our policy for the publication of research. Further data on the operation of possession proceedings for rented properties, to which amendment 64 refers, is already published and will continue to be published quarterly by the Ministry of Justice.

We are committed to ending the scourge of section 21. The sector and particularly tenants have waited too long for these changes to come into effect. We are therefore not minded to tie implementation to any additional requirements of the type that the shadow Minister mentions. I do not begrudge his trying, but I ask him to withdraw his amendment.

[David Simmonds]

I will have to accept the Minister’s gentle rebuff, but we have heard from the housing sector and from student organisations that these are very important issues. We recently debated rough sleeping in Westminster Hall; one challenge that emerged is that we did not count the number of rough sleepers until 2010, so it is very hard fully to understand what was going on. That is a lesson in the importance of doing the research and having impact assessments: they are a key part of the evidence that the Committee needs to consider to understand the direction of travel and whether it will do the job intended. However, I take the Minister’s point.

[Matthew Pennycook]

May I briefly intervene? I do not want to deprive the hon. Member for Broadland and Fakenham of an answer to his question about clause 124. I am told that the power is in place for very limited exceptions, in particular where an agent might face aggression from an occupier of a property and is therefore unable to show identification. The powers mirror the provisions in the Consumer Rights Act 2015 that apply to trading standards officers. It is a very limited exception for those circumstances. I hope that that provides some clarification and reassurance.

[David Simmonds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 142 ordered to stand part of the Bill.

Clause 143 ordered to stand part of the Bill.

Schedule 6 agreed to.

Clauses 144 to 146 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Gen Kitchen.)

Renters' Rights Bill (Eighth sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[Matthew Pennycook]

I will come to the specific proposals under consideration for short-term lets and holiday lets. The use class was consulted on as one of a number of measures that the previous Government introduced. I will touch on that specific point shortly.

I will preface this with a point that I think all Committee members appreciate. The Government are very alive to the fact that there are many parts of the country—coastal, rural and some urban constituencies—where excessive concentrations of short-term lets and holiday homes are having detrimental impacts, not least on the ability of local people to buy their own homes or, in many cases now, rent their own homes. I have stated this on many occasions in the House since being appointed, but I will say it again: that is the reason why we will progress with abolishing the furnished holiday lets tax regime, and with the introduction of a registration scheme for short-term lets. That will give local authorities access to valuable data on them.

Those measures were committed to by the previous Government, and we will take them forward. However, as I said a number of times in the previous Parliament, we do not think they go far enough and we are considering what additional powers we might give to local authorities to enable them to better respond to the pressures they face as a result of the excessive concentrations of short-term lets and holiday homes. I hope to say more on that in due course.

In respect of this Bill, we are committed to robustly monitoring and evaluating the impact of our reform programme in line with the Government’s evaluation strategy. However, setting an arbitrary deadline in law for this work is unnecessary and may detract from our efforts in that regard. On that basis, I encourage Members not to press their new clauses.

[David Simmonds]

Given the Minister’s response, I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 4

Assessment of operation of possession process

“(1) The Lord Chancellor must prepare an assessment of the operation of the process by which—

(a) on applications made by landlords, the county court is able to make orders for the possession of dwellings in England that are let under assured and regulated tenancies, and

(b) such orders are enforced.

(2) The Lord Chancellor must publish the assessment at such time, and in such manner, as the Lord Chancellor thinks appropriate.

(3) In this section—

‘assured tenancy’ means an assured tenancy within the meaning of the 1988 Act;

‘dwelling’ means a building or part of a building which is occupied or intended to be occupied as a separate dwelling;

‘regulated tenancy’ means a regulated tenancy within the meaning of the Rent Act 1977.”—(David Simmonds.)

Brought up, and read the First time.

[David Simmonds]

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

At risk of rehearsing the debate we have already had, the new clause seeks to address the assessment of the possessions process. In evidence to the Committee a degree of concern was expressed on the part of landlords that the backlog in the courts may make it difficult to secure possession when that is necessary. Governments of all parties, including the previous Government, have put in place measures seeking to address that. We know that they are beginning to bear fruit, but it is important in maintaining the confidence of landlords both to come to the market and to remain in the market that they know it is possible to secure a court hearing, should one be necessary to gain access to the property. The new clause seeks to ensure that an assessment of that process is carried out.

[Matthew Pennycook]

New clause 4 would require the Lord Chancellor to prepare an assessment of the operation of the process by which the county court is able to make possession orders for rented properties and by which such orders are enforced. The assessment would be published at such time and in such a manner as the Lord Chancellor saw fit.

Hon. Members who followed the debates in the last Parliament will recall that the previous Government introduced a similar clause to their own Renters (Reform) Bill in the late stages of that Bill’s progress, via a Government amendment, together with a clause that prevented the Secretary of State from laying regulations to bring tenancy reforms into force for existing tenancies until after the Lord Chancellor’s amendment had been published. This Government have been clear that we will not follow a similar approach. We do not consider it reasonable that the implementation of our reforms should be constrained by such an assessment, not least an assessment of the kind proposed in the new clause, which is extremely broad and undefined.

The hon. Member for Ruislip, Northwood and Pinner tabled amendment 64, which would delay commencement until the Lord Chancellor has carried out and published the proposed assessment. I reaffirm that we have no intention of delaying these urgent and necessary reforms while awaiting an unnecessary assessment of the possession process against what is an unspecific metric. We will instead move ahead with tenancy reform as quickly as possible, but in conjunction with an extensive parallel workstream with colleagues from the Ministry of Justice and His Majesty’s Courts and Tribunals Service to ensure that the courts are ready at the point of implementation.

In any case, the assessment required by new clause 4 is entirely unnecessary and unhelpful, because data on the operation of possession proceedings for rented properties is already published by the Ministry of Justice on a quarterly basis, and will continue to be. Court rules specify that possession claims requiring a hearing should be listed between four weeks and eight weeks of receipt.

The Committee may be interested to know that figures for April to June 2024 show that claim to order median timeliness is 8.1 weeks, suggesting that—I am not necessarily attributing this to the shadow Minister—some of the more alarmist statements about the readiness of the county court system may have more to do with fundamental opposition to the abolition of section 21 and the current tenancy regime than they are an impartial assessment of court performance.

The proposed assessment would provide no obvious additional insight or benefit to any interested parties, in our view, and would merely detract from the vital work of the courts and tribunals by subjecting them to a nugatory additional process. All our focus is on ensuring that HMCTS is ready to stand up the new system at the point of commencement, and that should be our focus in the coming weeks and months. On that basis, I kindly ask the hon. Gentleman to withdraw his new clause.

--- Later in debate ---

[Matthew Pennycook]

As we have heard, new clause 5 seeks to abolish selective licensing. This would remove the ability of local authorities to set up a selective licensing scheme of any size in their area. In contrast, new clause 9 seeks to extend selective and additional licensing of houses in multiple occupation by allowing local authorities to increase the maximum duration of schemes from five to 10 years. It also seeks to allow local authorities to use licence conditions under selective licensing to improve housing conditions, as the hon. Member for Bristol Central made clear.

This Government support selective licensing. It allows local authorities to proactively and more intensively target specific issues in private rented properties, where it is needed most. That includes tackling poor housing conditions and antisocial behaviour. If we abolish selective licensing, local authorities will lose a crucial tool in taking effective enforcement action against landlords who flout the rules. However, I take the shadow Minister’s point, and I reiterate that it is important that the selective licensing system, and the system introduced by the Bill, operate effectively alongside each other. That is very much our intention.

However, we recognise that licensing imposes a burden on landlords. Correspondingly, we think a maximum duration of five years for discretionary licence schemes strikes the right balance for the following reasons. It gives local authorities time to realise improvements while ensuring that landlords are not by default subject to increased regulation for prolonged periods. Of course, licensing in any given area may be part of a longer-term strategy. That is why, where a scheme has expired and there is still a case for licensing, local authorities may simply introduce a new scheme to drive further improvements. The duration that the hon. Member for Bristol Central is seeking selective licensing schemes to cover can be achieved in any given local authority area, if the local authority simply extends matters through a new scheme. We think that a five-year timeframe gives an opportunity to review the effectiveness of individual discretionary licensing schemes and ensure that they are proportionate in achieving their aims.

The broad intention of the hon. Lady’s new clause is to improve housing conditions. Let me be clear again that every private renter, not just those in licensed properties, has the right to a good-quality home. That is why, through the Bill, we are introducing a decent homes standard and applying Awaab’s law to the sector to tackle the blight of poor-quality homes.

Our reforms will establish a level playing field across the sector, ensuring that all renters and local authorities, not just those in areas with licensing schemes, can challenge and enforce against dangerous conditions. I will not address the hon. Lady’s specific point on the Secretary of State’s veto, because it is somewhat outside the scope of the Bill, but I take that on board. On the chartered institute, I will say nothing more at this stage other than that we will continue to review the use of selective licensing as we develop the database and other measures in the Bill. On that basis, I ask the hon. Members not to press their new clauses.

[David Simmonds]

We remain a little concerned that where selective licensing schemes are in operation alongside the measures introduced by the legislation, a degree of ambiguity and potential confusion is created, especially for some landlords who may seek to evade responsibility. Two schemes of a similar nature will be in place, with potentially different fees and standards in operation. However, I accept the numbers on the Committee, so I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

--- Later in debate ---

[Matthew Pennycook]

May I take this opportunity, Sir Roger, to put on the record my thanks to you and to the other Chairs of the Bill Committee? Several Committee members are new to the process, and you and the other Chairs have done an incredibly effective job, with patience and generosity, of helping everyone to navigate the process.

I thank our exemplary Clerks, the Hansard Reporters, and the Doorkeepers for overseeing our proceedings. I also thank my officials and private office team, who have supported me and worked tirelessly over a short time to bring forward the Bill that we have debated in recent weeks.

Finally, I thank all hon. Members, including the shadow Minister, the hon. Member for Taunton and Wellington and the hon. Member for Bristol Central for the spirited and constructive dialogue we have had. I value all the contributions and the challenges that have been made. I know that we are united in wanting to deliver the best legislation that we can for all our constituents.

As we end this stage of scrutiny and prepare for Report stage, I hope we can all agree that these important reforms will finally provide certainty for the sector and deliver meaningful change to millions of renters and landlords. I look forward to further engagement with all hon. Members as the Bill progresses through its remaining stages.

[David Simmonds]

I share the Minister’s sentiments. I will pay him the highest compliment that I can: at times, he could have been a Conservative in the way he addressed the issues that I raised. I add my thanks to the officials, as I know that the Minister’s swift responses would not have been possible without their diligent work behind the scenes; I am enormously grateful that issues have been dealt with in such detail. I also add my thanks to Committee members for their sensible and sound contributions. I am sure the debate will continue, but we have carried out an efficient piece of work.

Renters' Rights Bill (Fifth sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Thursday 31st October 2024 Public Bill Committees

[Matthew Pennycook]

It is an absolute pleasure, Mr Betts, to continue our consideration of the Bill with you in the Chair, not least because you will have extensive knowledge of what we are talking about as we proceed through the clauses.

Before we proceed to the substantive matter, I draw the Committee’s attention to the letter that I sent the Chair this morning, responding to the various technical questions put to me in the previous sitting. I hope that Members find my responses useful. I look forward to continuing this co-operative approach as we debate the remaining clauses.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

I put on the record my thanks to the Minister for the prompt and detailed response to the points made. We had a brief discussion this morning about a small omission involving, for example, school caretakers or NHS staff who are provided with accommodation on site as part of their employment. I am grateful that the Minister has undertaken to respond to that, too, in due course.

--- Later in debate ---

[David Simmonds]

The Opposition broadly support the clauses. I have some questions for the Minister, which are matters not of amendment but of clarification.

Clause 35 deals with tenancies where there may be restrictions on children either visiting or living in a property. There has been a significant increase in the number of retirement communities across the UK, and it is quite common for them to set out a condition— for example, that occupiers must be aged over 55. That housing supply is important, especially to encourage people who are under-occupying family homes to choose to move later in life to a retirement property that is designed and built specifically for that purpose. I seek assurance from the Government that while the clause effectively nullifies any restrictions on the ability for children to live in a property, bespoke retirement communities, constructed specifically with the needs of older people in mind, will not find it a problematic provision.

We support the Government’s position in clause 40, on taking income into account. It is clear that the purpose behind the previous voluntary codes, introduced under previous Conservative Governments, and under Labour Governments with the support of the Conservative Opposition, was to bear down on the practice of restricting benefit tenants from accessing private rented property. However, as the Minister clearly said, there is a requirement for referencing checks to be undertaken. Clause 40 specifically says that there will be no prohibition on taking income into account. There is clearly a risk of a loophole in the clause, given that the Bill does not clearly specify what is meant by referencing checks.

Landlords can use insurance to cover the risk of a loss of income where a tenant defaults on a rental payment. If the insurer says, “We consider the risk of anybody on benefits to be too high,” the landlord may say, “We do not directly discriminate, but our referencing check will always decline to provide insurance for an individual in those circumstances.” There is potentially the risk that benefit claimants will fall between two stools. Universal credit is flexible and provides a top-up on a person’s rental income, so they may eligible to receive the benefit but fall outside it for a period of time. We need to ensure that that is fully taken into account. I ask the Minister to clarify the position, perhaps in writing.

Finally, I have some points relating to the interaction of all the clauses. I previously raised the issue of people who have no recourse to public funds. They are not eligible to receive benefits but may be the beneficiary of an obligation on a local authority to provide support—for example, under the Children Act 1989 or previous housing legislation. It would be helpful to understand how the clauses will apply to that group of individuals. They are likely to be creditworthy and to apply for private rental on the basis that they have a job and an income. They are not eligible for the state benefits listed in the examples of benefits that are included. We therefore need to ensure that, so far as the Government intend, they fall within the ambit of the Bill.

There is a similar issue for care leavers, about which the Minister said he has received representations. The Children (Leaving Care) Act 2000 creates a set of obligations on local authorities to secure appropriate accommodation for care leavers as they enter adulthood. Although I understand the Government’s decision not to bring a specific category of care leavers within the scope of the legislation, those who are the beneficiaries of that obligation on behalf of somebody else will find themselves discriminated against not because of rights arising from their personal circumstances but because of the obligation to somebody else—in this case, that a statutory authority has to provide support for them.

Finally, we support the Government’s position on the amendments. Although I have complete sympathy with the point being raised, as the Minister does, there is clearly a risk that what is intended to be a matter of criminal law—discrimination against an individual, whereby a court can make an order for compensation—is mixed up with a civil penalty that is designed to ensure that landlords pay appropriately.

The Minister is correct, but he may need to provide total clarity for the sake of parliamentary proceedings that a local authority will use that civil penalty in the same way as would apply if it were dealing with an issue of fly-tipping, littering or environmental nuisance, as opposed to having to prove to a criminal standard that discrimination is taking place. As those two things are different, they need to be handled differently in the way that the legislation addresses them, as my hon. Friend the Member for Broadland and Fakenham alluded to.

[Matthew Pennycook]

Let me address that group of questions, which are well understood and well made. I will respond to each in turn.

I think the shadow Minister may have got the clause wrong, because clause 35 deals specifically with superior leases and ensuring they are not enforceable. However, I take his point about what is usually older people’s bespoke accommodation. I am sure that we would all welcome children visiting those sorts of accommodation. I will provide a specific written answer to confirm this position, but I would expect a provider to argue that refusing tenants living with children in such a block would be a proportionate means of achieving a legitimate aim and would therefore be appropriately accommodated within the legislation.

On clause 40, the Bill will allow landlords to check if a tenant has sufficient income to ensure that they can afford to pay for a tenancy and it is sustainable. The shadow Minister made the point again, as he did in the evidence sessions, about insurance and referencing checks. I will give him a specific answer as to whether particular referencing checks or insurance products will, as a matter of course—I think this was his point—rule out universal credit applicants as tenants who can afford to pay. I do not necessarily think that that should be the case, but if it is, I will give it due consideration.

[David Simmonds]

It is helpful to have this conversation with regard to insurance that covers the loss of rent and insurance that specifically requires the prohibition of a child living with tenants, as referred to by clause 35. Our concern is that although the Bill’s intention is to create a clear situation where there is no discrimination against a tenant with children who would be living with them or visiting them at the property, there is a risk of ambiguity if a landlord finds, for example, that they cannot gain any insurance or that the cost of insurance is prohibitive. They would then argue that they simply could not meet their obligations as a landlord if they were to allow tenants with children who live at or visit the property. We need to therefore bring clarity so that we do not leave a loophole through the insurance market that effectively nullifies the intended impact of the legislation.

[Matthew Pennycook]

I appreciate and understand that point, and the shadow Minister is right to say that we need to bring the requisite level of clarity in this area. He has asked a series of questions in Committee on insurance products more generally and I will attempt to give him a more comprehensive answer in writing so that we can draw a line under some of his concerns.

The shadow Minister asked specifically about no recourse to public funds and care leavers, which again is a specific subset of issues that he is right to raise. I will come back to him on those as well.

On civil penalties and whether they can be proved, we have taken a different approach in the Bill from Scotland and Wales where the situation is different. While they seek to enforce discriminatory provisions through a criminal offence, we have deliberately taken the civil route because of the lower burden of proof required for local authorities, and the ease with which they will therefore be able to take enforcement action against cases of discrimination where they have sufficient evidence.

--- Later in debate ---

[Carla Denyer]

I will follow up with the Minister on the details.

[David Simmonds]

Not that they need it, but the Government have our support in their stance on this issue.

The hon. Member for Bristol Central raises an important point. From my experience in local authorities, I know it is often extremely complicated when they seek to allocate or judge issues of compensation on civil penalties. For example, similar legislation applies in respect of environmental nuisance, and we know it is incredibly difficult to identify who has been a victim, how to quantify the level of harm they have suffered and then how to allocate an appropriate level of compensation.

Given the good will the Minister has shown on the issue, I hope there is scope for some further discussion to ensure that if there is a pattern of egregious behaviour by a specific landlord who is clearly discriminating against particular groups of people—we recognise that particularly in London there is often a high level of demand, and a tenant may visit a dozen or more properties to secure a tenancy—there is a means of providing some form of restitution for the waste of that person’s time as a result of that discrimination.

[Matthew Pennycook]

Can I make a further point, which I have made before but is clearly not registering? This is where we need to take a step back and look at which different parts of the Bill do what. The ombudsman can review each complaint on a case-by-case basis. Complaints can be about discrimination and the ombudsman has the powers to put things right, including by ordering the landlord to pay compensation or correct the behaviour in question. It is not that we do not think there is a case for the suggestion—we will come to the significantly strengthened rent repayment orders that we have included in the Bill—but that this is not the place for it. Clause 39 is a quite simple provision to allow local authorities to issue fines for breaches and to be able to keep that money to fund further enforcement activity. For that reason, we cannot support the amendments.

Question put and agreed to.

Clause 32 accordingly ordered to stand part of the Bill.

Clauses 33 to 41 ordered to stand part of the Bill.

--- Later in debate ---

[Matthew Pennycook]

I will be brief on this group of clauses, which simply provide for rental discrimination powers and prohibitions in Wales that mirror those in England, with minor adjustments made in order to fit them into existing housing offence enforcement procedures. The measures are broadly equivalent to chapter 3 of the Bill for England, which we have just discussed at length, with adjustments made to align with the existing Welsh enforcement framework.

As I have already mentioned, Wales is taking a criminal enforcement approach, while the same conduct is a civil breach in England. That reflects the private rented sector enforcement regime in Wales, where criminal offences are in line with other housing legislation. I commend the clauses to the Committee.

[David Simmonds]

As the Minister has outlined, this is a fairly straightforward translation. First, I presume the measures will require a legislative consent motion on the part of the Welsh Government, and ask the Minister to clarify that.

Secondly, in respect of the proceeds of the fines, it is clearly envisaged in England that it will be the local authority that carries out enforcement and that the revenue from the fines will finance that. If it is a criminal matter in Wales—a criminal enforcement regime—will the same rules apply? We briefly debated the issue of whether fines in a criminal matter would go into the consolidated fund, as is currently the case with criminal penalties, or directly to the local authority, in order to finance the enforcement regime; will the Minister clarify how the matter will be dealt with in Wales?

[Matthew Pennycook]

I thank the shadow Minister for those questions. There is a simple answer to the first: yes, it requires a legislative consent motion on the part of the Senedd to bring the measures into effect.

On the approach in Wales more broadly, as I said, it reflects the established private rented sector enforcement regime in Wales. There are a number of differences. The Welsh Government, and the Scottish Government, take the criminal offence path, rather than the civil one. What that means—this is one of the reasons why we determined to go with the civil offence approach in England—is that fines are capped at £1,000 in the Welsh and Scottish contexts, whereas under the approach in the Bill we can levy £7,000, and do so repeatedly if breaches are continuous and ongoing. That is why that is reflected.

On the consolidated fund point, as it applies to the Welsh Government, I am afraid I do not have the answer. I will more than happily get an answer to the hon. Gentleman in writing.

[David Simmonds]

What the Minister said in respect of the consolidated fund is very helpful. I posed the question because, under the Bill, we will create responsibilities for the local authority to be the enforcement body, which as I understand it will apply in Wales as well, but the decision to take the criminal route is a matter for the Senedd, which is not the local authority. Indeed, there is some tension in the relationship between the Senedd and local authorities. Clearly, if the income is going into a consolidated fund or to the Senedd, the risk is that the enforcement body given the duty under this legislation will not receive any of the financial income raised through enforcement action. I ask so that we are completely clear about where the legislation will stand in Wales once passed.

[Matthew Pennycook]

I understand that point and will get the shadow Minister a precise answer in writing. It is important for the Committee and the public to have clarity on precisely all the ways in which the enforcement is, and in some cases is not, aligned in the Welsh and English contexts. I will come back to him on that point.

Question put and agreed to.

Clause 42 accordingly ordered to stand part of the Bill.

Clauses 43 to 48 ordered to stand part of the Bill.

Clause 49

Discrimination relating to children or benefits status

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

Renters' Rights Bill (Sixth sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Thursday 31st October 2024 Public Bill Committees

[The Minister for Housing and Planning (Matthew Pennycook)]

It is an absolute pleasure—I genuinely mean that—to continue our proceedings with you in the Chair, Mrs Harris.

The clause will end the unfair practice of pitting renters against each other in bidding wars. Many members of the Committee will have come across that as councillors and as Members, and they do not need me to tell them about the severe impact on renters. Those of us who represent constituencies with particularly hot rental markets are all too familiar with the common story: a prospective tenant arranges a viewing and turns up in person, only to find themselves being asked to compete with other tenants on the spot. Their experience is not that of a viewing, but of a kerbside auction. The impact on renters of the practice is clear.

In other cases, the growth of social media and other platforms allows this practice to occur without prospective tenants even being in the same place. Renters who have applied for a property may find themselves being added to a WhatsApp group and asked to submit offers in front of each other. Again, the detrimental impact of that practice on renters cannot be overstated.

Rental bidding restricts tenants’ ability to make an informed choice about one of the most financially significant decisions they face. It is clearly an unfair practice, and one that, thankfully, only a minority of landlords make use of. The clause will end the practice for good. It will require landlords and letting agents to state a proposed rent in any written advertisement or offer. Landlords and letting agents will then be prohibited from asking for, encouraging or accepting bids above that price. That will improve the experience of prospective tenants across England and provide clarity to all involved in the lettings process.

I turn to clause 56, which sets the enforcement framework for breaches of the rental bidding measures set out in the previous clause. Once enacted, clause 56 will give local housing authorities the power to impose a financial penalty of up to £7,000 on persons who are in breach of the prohibitions. In addition, local authorities will be able to issue multiple civil penalties to any landlord or letting agent who repeatedly breaches the requirements set out in clause 55. In line with the new burdens doctrine, we will fully fund the cost of all additional duties on local government from enforcing the rental bidding prohibition. With that, I commend the clauses to the Committee.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

I echo the Minister’s comments about it being a pleasure to serve with you in the Chair, Mrs Harris.

I will not take too long on this point. The measure has been the subject of some controversy. Clearly, there is a philosophical question about the ability of the owner of an asset to gain the best possible market return, but the Government are determined on the matter. I will, however, make some practical points.

The first is about how to address the situation where the property in question is the asset of an organisation whose directors have a fiduciary duty to maximise the return on it, as is common in the case of pension funds, investment trusts or other bodies that may invest in property. Clearly, there is an obligation in law on the directors to seek the maximum possible return, but this legislation will prohibit them from undertaking any form of bidding process.

The second is about a situation where an intermediary sits between the tenant and the owner of the property. Clauses 55 and 56 set out what is meant by a prospective landlord but, in pursuit of their fiduciary duty, the ultimate owners of an asset might seek bids from a prospective managing agent or other intermediary party. They might bid to secure the maximum possible rent on that group of properties, in turn letting them out individually to tenants at a higher level of rent. Both those situations potentially create a degree of conflict.

I agree entirely with the point about the egregious practices of some landlords. It seems to me, however, that we must consider the situations that I have highlighted so that the legislation does not inadvertently lead to trustees and directors of pension funds that invest in property being in breach of their duties, or to the establishment of a get-out by means of a managing agent who sits between the property owner and the tenant.

[Matthew Pennycook]

I thank the shadow Minister for those well-made questions. This is a specific problem that we are trying to target, and the majority of landlords do not engage in rental bidding. We are trying to stamp out the egregious practice of a minority of landlords who exploit the fact that, particularly in hot rental markets, there is a lack of supply vis-à-vis demand. Tenants can be pitted against each other in ways that ensure the rent of a tenancy escalates to a point beyond which many of them can afford, or which, if they can afford it, puts incredible financial strain on them.

Once these provisions are in force, we think landlords will—in much the same way as the tribunal might—determine what the market rent is in a given area and what they can expect to receive from their property, and then advertise the rent at that price. I have been asked how that would work. Will landlords not advertise a price below what they could otherwise expect? We cannot have it both ways. If a landlord can expect a certain price through a competition, that suggests that tenants can pay a slightly higher price and bid up. We expect landlords to look at the market price in a given area and advertise the property at that rent, and these provisions will ensure that they cannot encourage or invite bids over that amount.

On the specific cases that the shadow Minister raises, I would not expect organisations of the type he lists to be in breach of their fiduciary duties as a result of these provisions. I understand his point about intermediary agents, particularly in groups of property where they might look to get the best deal on any of those things. I will come back to him on that specific point in writing, because I understand the need to work through those hard edge cases, but we think that only a very small minority of landlords will be affected. This is not the usual practice across every part of the country. His points were well made, and I will come back to them.

Question put and agreed to.

Clause 55 accordingly ordered to stand part of the Bill.

Clause 56 ordered to stand part of the Bill.

Clause 57

Penalties for unlawful eviction or harassment of occupier

--- Later in debate ---

[Matthew Pennycook]

The death of two-year-old Awaab Ishak, as many Members will know, was caused by prolonged exposure to mould in his social rented home in Greater Manchester. It was an avoidable tragedy that shames us as a nation, and it should never be repeated. I had the privilege of meeting Awaab’s family. Following a campaign by them, the Manchester Evening News and Shelter, the previous Government legislated to introduce Awaab’s law for social housing tenancies. I must credit the previous Government and the former Secretary of State, the then right hon. Member for Surrey Heath, for introducing that legislation. It was absolutely the right thing to do. We supported it in opposition, but it was only a welcome first step. This Government are clear that we need to go further and ensure that no tenant is forced to live in a home that places their health and safety at risk. That is why, in our manifesto, we committed to extending and applying Awaab’s law to the private rented sector.

Clause 59 will extend Awaab’s law to tenancies in the private rented sector. It will allow us to set legal requirements about how private landlords must tackle hazards in their properties, including setting clear timescales for repairs. It will ensure that those living in privately rented homes are empowered to challenge dangerous conditions, and that landlords cannot ignore their complaints. We recognise that there are important differences between private and social landlords, such as the average size of property portfolios, so we plan to consult on the detail of how we will apply Awaab’s law to the private rented sector. That will allow us to ensure that our approach works effectively for the sector, and that it is fair and proportionate for both tenants and landlords.

Clause 60 allows Awaab’s law to be applied to accommodation occupied under licence. A licence to occupy is used rather than a tenancy in certain circumstances, mainly for short-term arrangements or where there is no exclusive right of occupation. In general, it would be disproportionate to apply Awaab’s law to accommodation occupied under licence, such as when homeowners have a lodger staying in a spare room. However, there are cases where it may be appropriate to do so. For example, some temporary homelessness accommodation and supported housing is occupied under licence. We should explore whether vulnerable tenants of such accommodation should be subject to the protections provided by Awaab’s law as part of the consultation to which I have referred. Clause 60 will therefore allow us, as part of that wider consultation, to consider and consult on what types of accommodation occupied under licence should be in scope. It will then allow regulations to be made to bring such accommodation within scope.

Government amendment 22 is a minor and technical amendment that will ensure that Awaab’s law continues to apply to social rented properties let by private registered providers under tenancies of more than seven years. It is simple and straightforward.

[David Simmonds]

This measure was introduced by the previous Government. We supported it then, and we support it in opposition. Will the Minister reassure me that, as part of the consultation, he will include large public sector landlords, particularly the Ministry of Defence and the NHS? They have significant numbers of people in employment-related accommodation, and we are all aware that there has been a history of issues such as those that this legislation is specifically designed to tackle.

[Matthew Pennycook]

I hope I can give the shadow Minister some reassurance in that regard, taking Ministry of Defence accommodation as an example. Colleagues in the Ministry of Defence are clear that they want to mirror the same level of standards as we intend to apply across the sector, but the approach that we are taking through this Bill is not necessarily appropriate for the unique circumstances that surround Ministry of Defence accommodation. That is a good example of where a Department is taking forward its own work on standards separate from this Bill. I will get the shadow Minister a full written response that sets out exactly how such accommodation, which is not necessarily within the scope of this clause, aligns with not only Awaab’s law but the decent homes standard more generally.

Amendment 22 agreed to.

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

Clause 60 ordered to stand part of the Bill.

Clause 61

Meaning of “residential landlord”

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

[Matthew Pennycook]

We move on to part 2 of the Bill, which concerns landlord redress schemes and the private rented sector database. Clause 61 sets out the meaning of “residential landlord”, “relevant tenancy” and “dwelling” for the purpose of defining which tenancies fall within the scope of that database and ombudsman service.

Most private rented sector tenants have assured or regulated tenancies, and those arrangements are covered under this clause. Certain other tenures and dwellings are excluded by clause 61. That is because some tenures, such as licences, provide tenants with very different rights from assured tenancies, while some dwellings, such as non-permanent structures, are subject to different standards requirements from typical PRS properties. Landlords of social housing will also be excluded from the requirements.

We are aware that the private rented sector is dynamic and continues to evolve, and that is why we have included a power in this clause to amend the definition of “residential landlord”, “relevant tenancy” and “dwelling”. That power is required so that the legislation can keep pace with changes in the sector. It will give us the flexibility to extend landlord redress and the database to further tenures or dwellings, if that proves necessary. I commend the clause to the Committee.

Question put and agreed to.

Clause 61 accordingly ordered to stand part of the Bill.

Clause 62

Landlord redress schemes

[David Simmonds]

I beg to move amendment 65, in clause 62, page 89, line 25, after “residential landlord” insert—

“, whose property is not managed by an agent who is a member of an independent redress scheme approved by the Secretary of State,”.

This amendment would only require a residential landlord to be a member of the landlord redress scheme introduced by Clause 62 if their tenant does not already have access to one by virtue of the landlord using an agent who is a member of another approved independent redress scheme.

--- Later in debate ---

[David Simmonds]

We move on to the chapter on landlord redress schemes. The Opposition agree on the need for effective measures, but we need to make sure that those measures are functional in practice.

[Matthew Pennycook]

The private rented sector has lagged behind other housing tenures when it comes to access to redress. For example, tenants in social housing have long been able to escalate complaints through the housing ombudsman’s social landlord redress scheme. Private tenants have had, in comparison, severely limited options for resolving issues, in spite of the fact that they suffer from poorer housing standards on average. I believe that once tenants no longer have the threat of section 21 evictions hanging over them, they will finally feel able to challenge poor practice from landlords at the disreputable end of the market without the fear of retaliatory evictions.

The Bill introduces a new mandatory landlord ombudsman service, which will give tenants free access to redress if their landlord fails to resolve a legitimate complaint. The landlord ombudsman scheme will be a non-adversarial route for escalating complaints, and it will empower tenants to challenge landlords who provide a poor level of service or who behave inappropriately. The ombudsman will benefit landlords who are committed to providing a decent home and a good service. It will give them access to an impartial decision maker to resolve complaints in the quickest and most cost-effective way. This will help to maintain landlord-tenant relationships and therefore, we hope, sustain tenancies for longer.

Clause 62 allows the Secretary of State to make regulations to require landlords, as defined under clause 61, to be members of the private rented sector landlord ombudsman. The provisions in clause 62 will allow prospective, current and former tenants to raise complaints to the ombudsman. This is because things can go wrong for tenants at any point in the rental process, so tenants should be able to seek redress for issues that occur during the pre-letting period or at the end of a tenancy.

Clause 62 will allow the ombudsman to provide voluntary services as well as mandatory redress, which could include mediation services. As I think I said in the evidence sessions last week and on Second Reading, we are exploring options for introducing landlord-initiated mediation to complement the landlord ombudsman service. That is another example of how we are trying to take pressure off the courts and tribunals system.

Government amendment 23 to clause 62 will enable us to require landlords to register all their properties with the landlord ombudsman and keep that information up to date. That was always the intention, and the amendment clarifies that in the legislation. If a landlord chooses not to provide the correct information, they will be liable for enforcement as set out in clauses 64 and 65. That will ensure that landlords pay the correct fee, where fees are based on the size of their property portfolio.

Clause 63 allows the Secretary of State to set out in regulations the conditions that a private rented sector redress scheme must meet before it is approved or designated by Government. By putting conditions in regulations, we will set the framework for a high-quality redress service that can adapt to an ever-changing housing market. For example, to be approved, the scheme must include provision about accepting tenant complaints and requiring landlords to put things right. That could be achieved by making a repair or paying compensation. We will ensure that the ombudsman’s decisions are enforceable by requiring the scheme to set out a route of expulsion. That means that if a landlord does not comply with a redress order, they could be expelled from the scheme and liable for local authority enforcement.

The clause allows the Secretary of State to set out in regulations how a scheme will be approved or designated. In pursuit of a simple and effective user journey, we will set out in regulations in due course that only one scheme will be operational at any one time. It is crucial that the ombudsman is supported by a robust enforcement regime, so that all landlords understand the importance of abiding by the requirements to join the scheme and tenants can get the resolution that they deserve.

--- Later in debate ---

[David Simmonds]

It has been helpful to hear from the Minister in detail on those points. The intention of amendment 65 was to avoid a risk of double jeopardy for a landlord if they had a managing agent who was a member of the redress scheme, but if they were also required separately to be a member of the redress scheme by virtue of the fact that they were a landlord. The Minister has set out how he intends to deal with that in regulation.

I ask the Minister to clarify something—perhaps not today, but in due course. He mentioned examples of where damp and mould would be considered a landlord issue as opposed to a managing agent issue. We are all aware that certain blocks, which may be owned by an absentee landlord or someone who works abroad, are let and managed entirely by an agent who handles the day-to-day responsibility in return for payment and under a contract. We do not wish to exclude completely the possibility of redress through the agent, where the agent has been explicitly given responsibility for dealing with such things, by saying that that will always be a matter for the landlord. Will the Minister write to me to explain how that issue—most of us have seen it from time to time in our constituencies—will be dealt with, should it arise in practice?

[Matthew Pennycook]

I am more than happy to write to the shadow Minister to clarify that. If I have understood him properly, there are certain issues that we think are the landlord’s responsibility, and that is why our approach is the right one. To address his point directly, I will happily set out in some detail in written correspondence how that will operate when landlords are completely absent for the process, and the managing agent’s role in that situation vis-à-vis the new redress scheme.

[Matthew Pennycook]

I suspect I know the noble Lord that the hon. Gentleman refers to. I have had many extensive conversations with the noble Lord about the matter, and I will continue to engage with him. We supported the implementation of the Lord Best review in opposition. We took the view that the Bill was not the appropriate place to consider those measures, but we intend to set out our approach to the regulation of managing agents, letting agents and estate agents in due course. If the hon. Gentleman wants a specific comment from me, I refer him to the answer I gave in oral questions a few a days ago on this point in response to one of his colleagues. We understand the necessity for regulation in this area, and I hope to have further discussions with him and others in due course.

[David Simmonds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 23, in clause 62, page 90, line 16, at end insert—

“(4A) Regulations under subsection (1) may require a person—

(a) to provide relevant property information to the administrator of a landlord redress scheme, on applying to become a member of the scheme;

(b) at any time after becoming a member of a landlord redress scheme, to notify the administrator of the scheme of any change to relevant property information previously provided by the person as soon as reasonably practicable, or within a period, as specified in the regulations.

(4B) For the purposes of subsection (4A), ‘relevant property information’ means such information as may be specified in the regulations relating to—

(a) any residential tenancy under which the person is the residential landlord;

(b) any dwelling which is proposed to be marketed for the purpose of creating a residential tenancy under which the person will be the residential landlord.”—(Matthew Pennycook.)

This enables regulations made under clause 62 (landlord redress schemes) to require a person on applying to join a landlord redress scheme to provide certain information about residential tenancies of which they are the landlord, or dwellings that will be marketed for the purpose of becoming residential tenancies of which they will be the landlord. There is also a separate duty to notify the scheme administrator of any changes to such information.

Clause 62, as amended, ordered to stand part of the Bill.

Clauses 63 to 71 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 72 ordered to stand part of the Bill.

Clause 73

The database

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

[The Chair]

With this it will be convenient to discuss the following:

Clauses 74 to 83 stand part.

Clause 87 stand part.

--- Later in debate ---

[David Simmonds]

I have a few questions and would be grateful for the Minister’s response. In this chapter of the Bill, the regulations will clearly do a lot of the heavy lifting on what the database is like and what the tenant and landlord experience will be. First, how will the proposed database interact with the existing selective licensing schemes that a number of local authorities have in place? In the regulations, will the Government draw on the learning from the existing schemes to inform the database’s operation? It is not entirely clear how it will interact, given the different regimes in Wales and Scotland that the Minister has announced. Again, I do not necessarily expect him to answer those questions straightaway, but it would be helpful to know, particularly given that a different enforcement regime will apply in Wales.

It is also not entirely clear what the Government’s thinking is about the geographical extent of the database and the way in which it will be designed. Given that designated local authorities will be enforcement bodies, will it operate in the same way as, for example, existing children’s social care databases? Will it be maintained by individual local authorities, but in a connected way so that we can extract data from it? Will there be a single national database or an England-wide database? I appreciate that the answers to some of those questions will result from the process of engaging with the market on who the provider will be. We know, from examples where such policies have been successful or gone badly wrong, that there are significant risks to the effectiveness of the Bill if we do not get this right. It would be helpful if the Minister could address those points, either now or later in writing.

[Matthew Pennycook]

I am grateful for the opportunity to provide some clarification, particularly on selective licensing, because I know that is a source of interest to many Members.

The Government are clear that selective licensing and the private rented sector database have different purposes. The database is not designed to replace selective licensing. Unlike the database, selective licensing schemes aim to target specific local issues in specific local geographies by enabling more intensive practical enforcement strategies. We believe that selective licensing is a valuable tool when used appropriately and combined with other measures. It enables local authorities to drive better outcomes for local residents, tenants and responsible landlords.

What is important, and what we are committed to doing, is ensuring that the use of selective licensing complements and is aligned with the new private rented sector database. There is some important work to do, which we are already engaged in, to refine the way the two systems will work together once they are both in force.

The shadow Minister asked me a reasonable question about the geographical extent of the database. I will come back to him on that specific point, particularly in respect of how it interacts with the rental discrimination provisions in the Bill, given our previous discussions on their application in Wales and Scotland.

Renters' Rights Bill (Third sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[David Simmonds]

It is a pleasure to serve under your chairmanship, Sir Christopher. I hope the Committee will forgive me; this is the first time I have served on a Public Bill Committee as a shadow Minister. I think it is the Minister’s first time as well. I am sure we will crave your indulgence as we go forward to make sure that the Committee runs efficiently and effectively.

Amendments 48 and 54 aim to address a number of issues, relating to the situation students face when securing appropriate accommodation, that were raised both in our oral evidence sessions and in evidence that several organisations submitted to the Committee for consideration. In summary, the amendments aim to ensure a carve-out— as previously considered in deliberations on the Renters (Reform) Bill—so that not just purpose-built student accommodation but student lets more generally fall outside the direct scope of the measures in the legislation.

There are in the evidence a number of examples of how the Bill will affect the ability of students to access the accommodation that they require while they are at their place of study. International students are a significant part of our UK university financial infrastructure, and the ability for them to secure, often from another country, appropriate accommodation in advance, for a fixed period of time, and sometimes for groups of students, is extremely important, not only to them, to meet their housing needs, but to the university because of the fees they contribute.

We heard representations about the impact on students of the need to take properties off the market to make them available to rent again, which occurs largely around the time of examinations, because of the annual cycle of student accommodation. Student organisations expressed a deal of concern, particularly in the context of student mental health—a significant issue that universities are concerned about—that the pressure created would be considerable if people are required to seek new accommodation at the same time as studying for examinations. We need to ensure that the student market retains the degree of flexibility that enables student landlords to address that issue.

The Bill has a broader interaction with areas where there are student communities. Most of us will know, either from our constituencies or nearby, that where there are universities, student communities have grown up and become established and there are landlords that specifically serve that market. Accommodation that may historically have been family homes has been converted specifically for student use, with landlords who specialise in that market.

We would not wish to see that supply of student accommodation significantly diminished because, given the changes in the Bill, it may become more profitable for a landlord to make a property available to the local authority for temporary accommodation, or simply to move it entirely into a different area of the private rented market. Where there is an established market for student accommodation that is vital for the local economy and for the university, we want to make sure that that is preserved.

Finally, there is the article 4 direction issue. Because of the proliferation of houses in multiple occupation in areas proximate to universities, many local authorities have introduced controls with a view to ensuring that an appropriate supply of student accommodation remains, without other types of houses in multiple occupation springing up. That is despite the fact that the physical nature of the accommodation would lend itself to a number of different uses in that market. Ensuring a carve-out would help to guarantee the long-term supply of student accommodation, so that young people who study can secure the accommodation they need at an affordable price.

I hope I have summarised the Opposition’s thinking in tabling the amendments and look forward to hearing what the Minister has to say.

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the Chair, Sir Christopher. Before I respond to amendments 48 and 54, tabled in the name of the shadow Minister, I put on the record my thanks to the witnesses who gave up their time last week to give evidence to the Committee and inform our deliberations.

It is agreeable to serve opposite the shadow Minister. He and I are of different political persuasions and, although I hope to persuade him otherwise, I fear we may not be of the same mind regarding some aspects of this legislation. He is, however, a sincere and thoughtful individual, and I know that, even when we disagree strongly in the sittings ahead, the debate will be measured and reasonable. The same applies to other Opposition spokespeople.

As the shadow Minister clearly set out, amendment 48 seeks to amend the new section 4A that clause 1 inserts into the Housing Act 1988, to provide an exemption from the single system of periodic tenancies for those who meet the student test in new ground 4A, set out in schedule 1—that is, all full-time students, irrespective of their living arrangements. The effect would be to require such students—even those who may be the sole occupant of a rented property—to continue to have fixed terms, denying them the benefits of the new tenancy system introduced by the Bill.

The shadow Minister made the case for the amendment on the basis that we require a carve-out for the student sector. I would argue that we have introduced in the Bill a limited carve-out in the form of ground 4A ground for possession. That will ensure that non-typical students can enjoy the benefits of the new tenancy system, as well as typical students, within the limited confines of that ground for possession. It should ensure that landlords can maintain the cyclical nature of that market. As I said in the evidence sessions, I suspect that that ground for possession may be used only in limited circumstances. There is no evidence to suggest that tenants overstay their tenancies en masse. We think that limited carve-out provides what is needed to maintain the unique business model in the student sector.

Amendment 54 would have the same effect for all tenants, ostensibly on a voluntary basis, providing as it does for fixed terms in circumstances where a landlord and a tenant mutually agree to them, on the basis of possession grounds 1, 1A and 6, and rent increases under section 13 are suspended for the duration.

I am afraid I cannot accept either amendment. The Government have been clear that there is no place for fixed terms of any kind in the new tenancy regime that the Bill introduces. Fixed terms mean that tenants are locked into tenancy agreements and do not have the freedom to move should their personal circumstances require that—for example, if they want to take up a job in another part of the country or if a relationship breaks down. Fixed terms also mean that tenants must pay rent regardless of whether the property is fit to live in, reducing the incentive for unscrupulous landlords to complete repairs. As a point of principle, the Government will not deny any type of tenant, including full-time students, the rights and protections afforded to them under the new tenancy system the Bill introduces.

I also find the argument that fixed-term tenancies are more beneficial to both parties than rolling periodic tenancies utterly unconvincing. In circumstances where a responsible landlord and a good tenant have a mutual wish to sustain a tenancy over a defined period without a rent increase—the conditions that underpin the rationale for amendment 54—fixed-term tenancies would provide no clear advantages beyond those that both parties will already enjoy under periodic tenancies, as introduced by the Bill.

If the shadow Minister’s argument is instead that the benefit of fixed terms is that they ensure that a tenancy is sustained, even in the event of either party having good reason to end it—for example, if the landlord wanted to sell the property, or if a tenant wanted to buy and move into a first home—that simply exposes the unnecessary restrictions that fixed terms would impose in those circumstances, locking in either party against their interests.

Finally, I want to make it clear that amendment 54 would leave the new tenancy system open to abuse. In my view, it overlooks the power imbalance between landlords and tenants. In hot rental markets across the country the mismatch between supply and demand is acute, and one could easily imagine circumstances in which a disreputable landlord says to a tenant that the only way they are going to get the tenancy, which they may be desperately in need of, is if they take on a fixed-term tenancy. Tenants could feel forced to take on a fixed-term tenancy, perhaps without even knowing the condition of the property. I accept that the two sides of the Committee may have a legitimate and sincerely held difference of opinion on fixed-term tenancies, but I urge the shadow Minister to withdraw the amendment.

On the purpose and effect of clauses 1 and 2, the single system of periodic tenancies is at the heart of the legislation, and these clauses are key to its operation. Clause 1 provides that in future all assured tenancies will be periodic and can no longer have fixed terms. Any terms of an assured tenancy providing for the duration of the periodic tenancy to be different to the rent period—in other words, fixed terms—will be prohibited and legally unenforceable, and the tenancy will instead be a periodic tenancy. The clause also ensures that the tenancy’s periods will be the same duration as the period for which the rent is paid. Terms of a tenancy that state that the duration of the tenancy is different from the rent period will have no legal effect.

Clause 1 also limits the length of the rent period of an assured tenancy, stipulating that it must either be monthly or no more than 28 days long. Terms in a tenancy agreement that try to create a longer tenancy period will, again, be of no legal effect. Instead, the tenancy has effect as if it provided for monthly periods, with rent payable on the first day of each period. It is important to note that tenancies will be able to have periods of less than a month—which is an important feature for the social sector, where rent is more likely to be paid weekly or fortnightly—but it will not be possible to have a tenancy period of longer than one month, ensuring that disreputable or rogue landlords cannot seek to abuse the clause by demanding long rent periods to recreate fixed terms.

The new tenancy system introduced by clauses 1 and 2 —and others in chapter 1 of part 1 of the Bill—will provide tenants with greater security and stability and empower them to challenge bad practice without fear of retaliatory eviction. As long as they provide the required notice, they will be able to end the tenancy at any point. Landlords will also benefit, through more straightforward regulation, clearer and expanded possession grounds, and the requirement for tenants to provide two months’ notice, which will ensure that landlords can recoup the cost of finding a new tenant and avoid lengthy void periods.

I appreciate that some landlords and groups are concerned that tenants will misuse rolling periodic tenancies as short-term or holiday lets. That concern was expressed on Second Reading and that also arose in the oral evidence. Although I understand the general apprehension and anxiety that surrounds such a significant change to the regulation of the private rented sector, those concerns are unfounded. The notion that tenants will routinely pay up to five weeks’ deposit, complete referencing checks and commit for at least two months, simply to secure a short-term or holiday let, has always struck me as improbable to say the least. As I argued on Second Reading, tenants simply do not move home unless it is absolutely necessary. Under the new tenancy system, when they do leave, they will be required to provide two months’ notice, giving landlords sufficient time to find new tenants.

Clause 2 removes the provisions of the Housing Act 1988 that established assured shorthold tenancies, so that such tenancies cannot be created in the future. The clause also removes section 21 of the 1988 Act. In addition, it removes section 6A of that Act, which provided the mechanism by which private registered providers of social housing could apply to a court to demote tenants from an assured to an assured shorthold tenancy if they committed antisocial behaviour. The change is being made because ASTs will no longer exist once the new single system of periodic tenancies has come into force.

As a result of the assured shorthold tenancy regime, and the ever-present threat of arbitrary eviction via a section 21 notice, millions of people in England live day in, day out with the knowledge that they and their families could be uprooted from their home with little notice and minimal justification. We know that a significant minority of them are forced to live in substandard properties for fear that a complaint would lead to a retaliatory eviction.

The insecurity embedded in the current system fails both tenants looking for a stable home for their families and responsible landlords who are undercut by the minority of unscrupulous landlords willing to exploit and mistreat them. A single system of periodic tenancies will provide greater security for tenants, while retaining the important flexibility that privately rented accommodation offers. It will mean that tenants can stay in their homes for longer, build lives in their communities, save—with fewer unwanted moves—and avoid the risk of homelessness.

Removing section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases. It will also incentivise landlords to engage and resolve legitimate issues of concern, given that they will be able to regain possession of a property only where there is good reason, using the clear and expanded possession grounds set out in schedule 1. With a single tenancy structure, both parties will also better understand their rights and responsibilities.

Far too many tenants are evicted from a private tenancy each year without due cause, which is why so-called no-fault section 21 notices are a leading cause of homelessness in England. As I argued on Second Reading, this broken system can no longer be tolerated, not least because the private rented sector now houses not just the young and mobile, but growing numbers of older people and families with children, for whom greater security and certainty is essential for a flourishing life. To ensure that private renters get a fair deal, we need to transform how the sector is regulated and level the playing field between landlord and tenant.

This Government will succeed where the previous Government failed, by finally modernising regulation of the sector and abolishing arbitrary evictions. I commend both clauses to the Committee.

--- Later in debate ---

[David Simmonds]

Again, I agree with the Government on this matter. A lot of residential property transactions are undertaken by licensed conveyancers rather than by solicitors. That is a much more affordable and efficient option, often done on a fixed-fee basis, and that is particularly relevant to smaller landlords. Introducing a requirement that a solicitor must be used would be unduly onerous and would inhibit the number of transactions in the market.

[Matthew Pennycook]

I wish to provide further reassurance to the hon. Member for Taunton and Wellington, because I fear that we are dancing on the head of a pin here. Under the provisions in the Bill, judges will have to consider evidence to justify the use of mandatory grounds 1 and 1A. When I gave evidence to the Committee, I provided examples of the types of evidence that judges may require. It is up to individual judges to ask for that evidence and to make a decision on the basis of what is put in front of them. We trust judges to do that. With regard to the hon. Gentleman’s amendment, I do not accept the idea that judges are not looking at evidence and not ensuring that the use of these grounds is properly justified. That is misplaced, so I am glad he has indicated that he will withdraw the amendment.

--- Later in debate ---

[David Simmonds]

These amendments relate similarly to the issue of notice periods for grounds for sale. It is important to recognise that a very significant part of our housing supply continues to come from the private rented sector—in particular, from the buy-to-let market. Drawing on my experience as a financial adviser, one of the key issues for lenders in advancing buy-to-let mortgages arises because of the risks associated with them—in essence, people are much more likely to pay their mortgage payments on their own home than when they are borrowing to secure a home for investment purposes—so there is a risk premium, or a rating, on the mortgage interest. Consequently, a significant supply of finance is required to support the development of the buy-to-let market.

The introduction of significant restrictions on the length of notice periods will mean that when there is a default on those payments and they are not being made, it will be more difficult for the possession for the purposes of sale and the settlement of the outstanding debt to the bank to be progressed. That could have a chilling effect on the ability to secure finance and, in turn, an impact on the supply of properties available to those needing to secure a home in the private rented sector.

Once again, it is part of a broader, small “p”, philosophical and political argument. We are very much of the view that securing the maximum possible supply is very important, and we need to strike the correct balance so that we do not see a chilling effect having the unintended consequence of a reduction in supply.

[Matthew Pennycook]

As the hon. Gentleman has just made clear, amendments 56 and 57 seek to reduce the notice period for the selling ground 1A from four months to two months. The Government believe that the notice period for tenants being evicted through no fault of their own should be four months, to give them adequate time to find new accommodation. An eviction notice can turn a family’s life upside down, and four months means they will not be forced to move during a school term. I draw the Committee’s attention to the remarks I made previously about the changing nature of the private rented system and the fact that more older people and families now live in it compared with the situation in the late ’80s, when the system was introduced.

Selling a property is often a long-term decision that involves significant planning on the part of landlords. We do not believe that landlords are likely to need to evict tenants with only two months’ notice, given the time it takes to secure a sale. They also have the option of selling with tenants in situ.

Amendments 70 and 71 were tabled by the hon. Member for Taunton and Wellington. They would make an extreme change that would reduce the notice period for the new student ground 4A to a mere two weeks from the current four months.

The Government believe that students are just as deserving of adequate notice as other tenants. The purpose of the student ground is to try to balance security of tenure with the need to preserve the annual cycle of typical student tenancies. These amendments do not assist the ground in that purpose at all. Student landlords plan their business models long term around the academic year, and after our reforms will factor the four-month notice into their planning.

There is no circumstance where a competent student landlord would suddenly need to evict tenants in line with the academic year with only two weeks’ notice. Indeed, currently they have to give two months’ notice under section 21. The hon. Gentleman’s amendment is a retrograde step vis-à-vis the current iniquitous arrangements that we are trying to undo.

Students often lack the capital to organise a move at short notice. A two-week notice period means it is likely they are given notice to leave during the summer break when they might be working, or even during their exams. We believe that it is right that they have four months’ notice to organise their move.

I therefore ask the hon. Members not to press their amendments.

--- Later in debate ---

[Matthew Pennycook]

I will consider that matter further. To be candid with the Committee, some judgments on provisions relating to student accommodation are finely balanced. We are trying to strike a balance between giving student tenants the right level of security while maintaining that annual cyclical nature of student accommodation.

As the hon. Gentleman knows, we are treating purpose-built student accommodation differently from that of students living in the general PRS. We recognise the limited market for such accommodation. Regarding students in the general PRS, I am reluctant to accept the hon. Gentleman’s advice. Student landlords will adapt to the system and factor the four-month notice period into their business models. I am happy, however, to reflect further on the arguments he made.

[David Simmonds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 1, in clause 4, page 7, line 6, at end insert—

“(5) After section 11 of the 1988 Act insert—

‘11A Possession on ground 6A: compensation of tenant

(1) This section applies where a court makes an order for possession of a dwelling-house let on an assured tenancy on Ground 6A in Schedule 2 to this Act (whether or not the order is also made on any other ground).

(2) The court may order the landlord to pay to the tenant such sum as appears sufficient as compensation for damage or loss sustained by that tenant as a result of the order for possession.

(3) In deciding whether to make an order under this section, and what compensation to order, the court must (in particular) take into account the circumstances which led to Ground 6A being available as a ground for making an order for possession (including any conduct by the tenant which caused or contributed to Ground 6A being available).’”

This gives the court power to order the landlord to pay compensation to the tenant where possession is obtained on Ground 6A (failure of premises to comply with planning requirements etc).

--- Later in debate ---

[David Simmonds]

The Opposition supports the vast majority of these measures. We all recognise situations where a landlord is in breach of planning regulations, resulting in a property being overcrowded and potentially being turned into an HMO without the appropriate licence and so on, which can bedevil our constituents. It seems appropriate to take these steps to raise the stakes for landlords who seek to behave in that manner and drive them out of the market.

[Matthew Pennycook]

I do not have much to add to what I have already said. I commend the clause to the Committee.

Amendment 1 agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Schedule 1

Changes to grounds for possession

--- Later in debate ---

[David Simmonds]

I shall do my best. It may be that, although seeking to comply with the rule of speaking to the Chair, I need to turn around more regularly to address the Committee. The point I was making is that while we have a lot of sympathy with the points made by the hon. Member for Bristol Central, given that the changing nature of the UK rental market will result in these becoming more significant issues, we believe the issue of notice periods needs to be addressed through amendment 58.

[Matthew Pennycook]

As the hon. Member for Bristol Central has set out, amendments 42 and 43 seek to extend the protected period for the moving in and selling grounds to two years. Amendment 58, in contrast, seeks to remove the protected period for the selling ground entirely. We believe that the Bill strikes the right balance in this area.

The hon. Member for Bristol Central is right that during debate on the Renters (Reform) Bill, I probed the then-Government on increasing protections for tenants beyond the six months they had proposed. I did so given the relative lack of security that that Bill afforded to tenants, which we have improved on. I reflected very carefully on this point in the development of the Bill. Viewed in the context of the many strengths and protections that we have introduced to benefit tenants, I feel that a one-year protection period against the main landlord circumstances ground—this is not a general period of protection that applies to any arbitrary eviction, but is specific to grounds 1 and 1A—strikes the right balance between tenant security and ensuring that landlords can respond to genuine changes in their circumstances.

The shadow Minister highlighted the thinking that has led to me coming down to one year, instead of remaining with two. A two-year protected period for the moving and selling grounds is, I fear, too long. It would prevent landlords from being able to respond to changes in circumstances, and therefore harm confidence in the sector and risk decreasing supply. In some circumstances, landlords may only be able to let their property for a year—for example, if they temporarily moved abroad—and a longer period may therefore remove valuable supply from the market.

Most importantly, I was convinced that a one-year protected period would deter abuse from disreputable landlords seeking to circumvent the protections in place. The one-year protected period mirrors the typical one-year fixed-term tenancy. We think it strikes the right balance, but I am more than happy to give further consideration to the points made by the hon. Member for Bristol Central. I sympathise with and understand the significant costs borne by tenants from repeated moves. I understand, as I hope I have made clear in the debate so far, the need for stability and security, but we think that in this particular area, the one-year protected period is appropriate.

--- Later in debate ---

[Matthew Pennycook]

I will begin by discussing Government amendments 2, 3, 4, 5 and 9. Rent-to-buy tenancies help prospective homeowners to get on the housing ladder. New possession ground 1B will allow social landlords to take possession in specified circumstances, to ensure that rent-to-buy schemes can continue to function in the future assured regime. Landlords must be able to take possession in all the necessary circumstances. The amendments therefore widen ground 1B, so that landlords can simply grant another assured tenancy, without its having to be on a rent-to-buy scheme. That will ensure maximum flexibility for social landlords to meet the demands of local housing markets. However, the period of the existing rent-to-buy tenancy will need to have expired and the sitting tenant must have been offered the opportunity to purchase the property, in line with the contract. This means that it will never be a surprise for the rent-to-buy tenant if the tenancy is ended. The amendments also clarify the definition of “market rent” in possession grounds 1B and 5H, to ensure clarity and consistency.

I will now discuss Government amendments 6 to 8. New ground 6A will allow landlords to evict their tenants when eviction is necessary to comply with enforcement action. We have already debated this matter in relation to a previous Government amendment. For example, if a property were overcrowded or the landlord had received a banning order, new ground 6A would apply. The amendments ensure that the new ground also covers situations in which a tenant’s occupation needs to be brought to an end in order to comply with planning enforcement action. For example, where an industrial unit has been converted to residential use without planning permission, a local planning authority may issue an enforcement notice requiring the residential use to cease.

If planning enforcement were not included in ground 6A, there would be no guarantee that the landlord could evict the tenant in those circumstances. That would risk undermining the planning system’s ability to enforce effectively against unauthorised development. That could result in poor outcomes for residents, the community and surrounding businesses. This measure will ensure that landlords are not left in legal limbo, where the only way to comply with planning enforcement action is for a tenant to cease to occupy a dwelling, and ensures that the tenancy itself can be brought to an end appropriately. We are also bringing forward an amendment to ensure that tenants are fairly compensated when they are evicted under ground 6A, ensuring that the measures are balanced.

Amendment 2 agreed to.

Amendments made: 3, in schedule 1, page 157, leave out line 30.

This leaves the definition of “market rent” out of Ground 1B, as it is superseded by Amendment 4.

Amendment 4, in schedule 1, page 157, line 33, after “rent” insert

“(and here “rent” and “market rent” include any amount payable by way of service charge)”.

This ensures that any service charge is taken into account in both the rent and the market rent (when determining whether the rent is higher than 80% of the market rent).

Amendment 5, in schedule 1, page 165, line 18, leave out from “than” to “, and” in line 22 and insert

“80% of market rent (and here “rent” and “market rent” include any amount payable by way of service charge)”.—(Matthew Pennycook.)

This replaces the term “affordable rent” with a reference to rent that is no more than 80% of the market rent.

[David Simmonds]

I beg to move amendment 60, in schedule 1, page 168, line 26, at end insert—

“20A After Ground 6 insert—

“Ground 6ZA

The landlord or superior landlord who is seeking possession intends to undertake such works as are necessary to ensure that the property meets the standards set out by regulations under section 2A of the Housing Act 2004 and the intended work cannot reasonably be carried out without the tenant giving up possession of the dwelling-house because—

(a) the tenant is not willing to agree to such a variation of the terms of the tenancy as would give such access and other facilities as would permit the intended work to be carried out, or

(b) the nature of the intended work is such that no such variation is practicable, or

(c) the tenant is not willing to accept an assured tenancy of such part only of the dwelling-house (in this sub-paragraph referred to as “the reduced part”) as would leave in the possession of his landlord so much of the dwelling-house as would be reasonable to enable the intended work to be carried out and, where appropriate, as would give such access and other facilities over the reduced part as would permit the intended work to be carried out, or

(d) the nature of the intended work is such that such a tenancy is not practicable.””

I have realised, in the course of debate, that the Minister has the benefit of being a bit closer to the overhead microphones than I am, so I will do my best to direct my remarks in a skywards manner, Sir Christopher.

The amendment seeks to bring in additional grounds for possession, and it is partly on the basis of evidence that we are aware of as a Committee and which stems from the social sector, where we know that there are many examples of landlords, including local authorities, that have to go to enormous lengths to access a property to carry out basic maintenance—often, in the case of local authorities, at no cost to the tenant, who is a council tenant—and to ensure that minimum safety standards, for example gas inspections, electrical safety inspections and remedial works to deal with issues such as damp and mould, are applied. We know that there has been extensive debate and consideration of evidence in relation to Awaab’s law and the need to ensure that properties meet the decent homes standard. Therefore the aim of this proposal is to ensure, where it is necessary for a landlord to recover the property in order for those works to be carried out and the tenant does not wish to co-operate, that there is provision in the Bill to achieve that.

[Matthew Pennycook]

As the shadow Minister just made clear, amendment 60 would introduce a new mandatory ground for possession—6ZA—into schedule 2 of the Housing Act 1988. It would allow landlords to evict when they need to undertake works to meet the decent homes standard introduced by the Bill and those works cannot be completed without evicting the tenant. The objective that the hon. Gentleman seeks is reasonable and appropriate, but the Government do not believe that the ground is needed. I expect that the vast majority of works to meet decency requirements could be completed with the tenant in situ. Landlords may also undertake more substantial works between tenancies.

The proposed new ground is also unnecessary in the light of ground 6. The Bill’s revised ground 6 already permits a landlord to evict a tenant when they wish to undertake substantial redevelopment work that cannot be done with the tenant in situ. I am therefore reluctant to introduce a new ground that is not strictly needed, given what is in place in the Bill. However, I hope I have provided the Committee with sufficient reassurance that landlords will not be left unable to comply with the new decency requirements, as I say, in circumstances where the tenant must move out.

[David Simmonds]

I want to probe the Minister a bit on the point about substantial redevelopment. We are aware that to remedy issues of damp, for example, it is not uncommon for a landlord to need to remove all the plaster and potentially take out the flooring or ceiling for a lengthy period of dehumidification. Following that, extensive works would need to be undertaken to ensure that the damp does not reoccur. Those works being completed does not represent redevelopment of the property by, for example, building an extension or adding an additional floor, but leave the property substantially the same as before. It therefore does not seem to us that it would meet the test of redevelopment envisaged in the Bill.

The argument we are advancing is that in examples that may represent a significant risk to the health or safety of the tenant but the tenant does not wish to move, we need those additional grounds to be absolutely clear that that is a reasonable basis on which a landlord can seek to regain their property, so that they can carry out those works.

[Matthew Pennycook]

I thank the shadow Minister for that intervention, and I understand the point he makes. If it is acceptable to him, I will write to him with the technical detail about what substantial development entails. As I say, in most cases where substantial development is not taking place, works to ensure that homes come up to the new decent homes standard will be able to take place in situ. On the specific hard-edged case he mentions—that is, where the health and safety of a tenant is put at risk by the works required to take place or the conditions that the works are intended to remedy—I point him to provisions in the Bill like the extension of Awaab’s law, which will ensure that landlords have to respond to such hazards in a defined timescale and make accommodation for the tenant to move out in such circumstances. What I am reluctant to do here is to introduce a new ground that would have a substantial impact on tenants. They would have to leave the property and find new accommodation, and they might be owed a homelessness duty in those circumstances. That is a huge amount of disruption.

As I say, we think the existing provisions in the Bill do the job, but on the point he makes, which is a well-made one, as to precisely what the definition is and where the boundary lies between substantial and non-substantial redevelopment works, I will write to him with some more technical detail. I therefore ask the hon. Member to withdraw his amendment.

[David Simmonds]

On the basis of those assurances, I will withdraw the amendment. Clearly, we will have the opportunity to return to this debate later on. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 6, in schedule 1, page 168, line 30, leave out “situations has occurred” and insert “applies”.

This changes the opening wording so that it works better with the provision which follows.

Amendment 7, in schedule 1, page 169, line 30, at end insert—

“(g) compliance with a planning enforcement notice or injunction would be, or is, incompatible with continued occupation of the dwelling-house by the tenant.”

This enables the landlord to obtain possession where planning enforcement action has been taken and compliance with that action would be incompatible with continued occupation under the tenancy.

Amendment 8, in schedule 1, page 169, line 37, at end insert—

““planning enforcement notice or injunction” means—

(a) an enforcement notice issued under section 172 or 182 of the TCPA 1990 that has taken effect,

(b) a breach of condition notice served under section 187A of the TCPA 1990,

(c) an injunction granted under section 187B of the TCPA 1990,

(d) a listed building enforcement notice issued under section 38, 45 or 46 of the P(LBCA)A 1990 that has taken effect, or

(e) an injunction granted under section 44A of the P(LBCA)A 1990;

“P(LBCA)A 1990” means the Planning (Listed Building and Conservation Areas) Act 1990;

“TCPA 1990” means the Town and Country Planning Act 1990;” .—(Matthew Pennycook.)

This defines the term “planning enforcement notice or injunction” which is used in Amendment 7.

--- Later in debate ---

[Matthew Pennycook]

Taken together, amendments 62 and 63 seek to remove the requirement for a tenant to meet the arrears threshold for mandatory eviction at the date of hearing. Instead, they would allow a tenant to be evicted only if they met the threshold at the date of the notice and had any arrears at all remaining at the date of their hearing. I am sure we all agree we should encourage tenants in financial difficulty to pay off their arrears, but we believe the amendments would act as a significant disincentive to even try to do so, as it would mandate eviction of a tenant who has done the right thing and tried to pay off their arrears.

I understand that, with the amendments, the hon. Gentleman is most likely trying to address the perceived problem of tenants gaming the system by paying off a nominal amount of arrears, placing them just below the threshold at the date of hearing, and thus frustrating a landlord’s attempt to evict the tenants. That was the rationale that underpinned new ground 8A in the previous Government’s legislation. However, this is not a problem recognised as occurring frequently, if at all, by me or by those who advise tenants going through the eviction process—in fact, it is hard to find cases of people trying to extensively game that system.

The previous Government’s solution to this problem was ground 8A, which we consider to be punitive. Similarly to these amendments, ground 8A would have punished tenants who did the right thing in trying to pay off their arrears. While we understand how frustrating rent arrears can be for landlords, we have to accept that most tenants act in good faith when trying to pay off their arrears, and they should be encouraged to do so. I hope hon. Members agree that we should encourage the right behaviour in tenants who are trying to bring down their rent arrears.

The amendments would therefore be fundamentally unfair and, most importantly, create the wrong incentives. I therefore ask the shadow Minister to withdraw amendment 62.

[David Simmonds]

I managed to make the dubious mistake of making the wrong points when I moved the amendment, but the Minister has brought us back to exactly the points I omitted to make. Concerns remain, particularly where there may be delays in accessing the courts to get a decision, either because of a lack of capacity—as we know, that remains a problem—or because of future resourcing issues in the new world that this Bill seeks to introduce, in which a number of routes will be open in the event of a dispute.

The Opposition remain concerned about the risk that those who wished to could seek to game the system. Most Members of Parliament will have had constituents who have been affected by tenants who failed to pay the rent. Those constituents may be accidental landlords renting out the property of a deceased relative while waiting for probate, and they may find that someone is occupying their property and perhaps sub-letting it for cash without passing that money on, leaving them in an incredibly difficult position. We want to ensure that people who behave in that way cannot continue to game the system. Having acknowledged the Minister’s points, however, I am happy to withdraw the amendment.

[Matthew Pennycook]

In addition to the points I made previously, I briefly draw the shadow Minister’s attention to the fact that ground 8 will remain mandatory, and discretionary grounds will also be available when arrears do not meet the mandatory threshold, such as in cases of repeated late payment. We think the courts have the necessary provisions to be able to take action on rent arrears. What we find particularly objectionable in the amendment is that it would mean that anyone with any amount of arrears at the hearing would be subject to mandatory eviction. We think that that goes too far, so I am glad that the shadow Minister has agreed to withdraw the amendment.

[David Simmonds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[David Simmonds]

I beg to move amendment 59, in schedule 1, page 170, line 13, at end insert—

“23A After Ground 8 insert—

‘Ground 8A

The landlord who is seeking possession, or, in the case of joint landlords seeking possession for at least one of them, requires the dwelling-house for the purposes of providing care to—

(a) a person under the age of 18;

(b) a person who has a disability under section 6 of the Equality Act 2010; or

(c) a person who requires personal care on the grounds of age, illness or injury.’”

I will not repeat at length the comments I made when I previously introduced amendment 59 in error. The amendment relates to the grounds for use when a landlord needs to put a carer into a property. It seeks to ensure that the required flexibility is available where the needs of a cared-for person must be put first.

[Matthew Pennycook]

As the shadow Minister has just made clear, amendment 59 seeks to introduce a new ground for possession into schedule 2 of the 1988 Act to allow landlords to evict tenants when they wish to use the property for the purposes of providing care. Although I appreciate the sentiment behind the shadow Minister’s proposals, I do not believe that this ground is needed. Ground 1, which is a mandatory ground, allows a landlord to move in close family members. That includes children, grandchildren, parents, grandparents and siblings. It could be used if the landlord wished to obtain possession to provide care for close family members.

This relates to a point that we have just discussed. We think that a two-year protected period might lead to such cases being prohibitive for landlords who need to make use of the grounds. We think the existing ground 1 is likely to cover the vast majority of cases of the kind that the shadow Minister seeks to help, without increasing the complexity in the system. I therefore ask him to withdraw the amendment.

[David Simmonds]

Each new Bill is an opportunity to consider as widely as possible the issues that our constituents may face. A property that has been adapted for occupation by someone with care needs may have been rented out by, for example, a military family who need to move to a placement abroad. They may find that they cannot access the property on their return, when it is essential that they are able to do so in order for those facilities to be available. We think it is reasonable to raise such situations.

Recognising the points that have been made, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[David Simmonds]

I beg to move amendment 61, in schedule 1, page 170, line 13, at end insert—

“23A In Ground 14, in each of paragraphs (a) and (aa), for ‘likely to cause’ substitute ‘capable of causing’”.

Amendment 61 seeks to broaden out the debate on the opportunity for a landlord to seek possession on grounds where antisocial behaviour on the part of the occupant is a factor. We have considered this quite extensively in Committee, but it is clear that it remains a significant issue in some cases. As I have said, most of us will have had experience, as constituency Members of Parliament, of matters arising from the antisocial behaviour of tenants. We will be aware of the enormous frustration, at both the landlord and the community level, at the inability to tackle that effectively under the current system. We want to ensure that those powers are as strong and as flexible as possible.

[Matthew Pennycook]

Amendment 61 seeks to expand the discretionary antisocial behaviour ground to include behaviour “capable” of causing nuisance or annoyance. Members may recall that this was proposed in the previous Government’s Renters (Reform) Bill. When in Opposition, we strongly opposed the change, because it had the potential to significantly reduce security of tenure and, most importantly, put vulnerable tenants at risk of eviction. I remain concerned that it would leave tenants open to eviction, even when their behaviour was not causing any problems.

A huge range of behaviours are “capable” of causing a nuisance or annoyance. I was tempted to say that some of the behaviour of my children, on occasion, is more than capable of causing nuisance or annoyance. We can all agree that such a subjective term potentially includes a huge range of behaviours, and it would not be fair for someone to lose their home on the basis of some of them. For example, a baby crying frequently is capable of causing another tenant annoyance. In those cases, and there are many others that I could cite, it would be fundamentally wrong to put a family at risk of eviction because of that. Worse still—this is a point I recall very clearly from the discussions I had with domestic violence charities at the time of the previous legislation—we heard from many organisations that represent victims of domestic abuse that sometimes such abuse can be mistaken for antisocial behaviour, because of loud noises, banging or disruption in the property next door. The amendment increases the risk that tenants in such a situation could be evicted.

I understand that the shadow Minister wants to ensure that landlords have confidence that they can evict tenants who engage in genuine antisocial behaviour. That is an honourable aim, but there are already measures in the Bill to address that, including reducing notice periods so that landlords can make a claim to the court immediately when using the antisocial behaviour grounds, as we have discussed. We have also made changes to section 9A of the Housing Act 1988 to include amendments to ensure that the court considers the particular impact of antisocial behaviour on victims living with perpetrators in HMOs, which was a specific concern raised by the sector. We will also encourage the use of mediation and other tools by ensuring that judges take into account whether a tenant has engaged with attempts to resolve their behaviour, making it easier to evict perpetrators who do not engage.

For the reasons that I have set out, we believe that lowering the threshold from “likely” to “capable of” causing nuisance or annoyance could have extremely damaging consequences, and I do not believe it is in the spirit of what the Bill is trying to achieve. I therefore ask the hon. Member to withdraw his amendment.

[Mr Amos]

I rise to support the Government on this issue, as Liberal Democrats did in the context of the Renters (Reform) Bill in the previous Parliament. To my mind, introducing a definition of antisocial behaviour that is simply about what is “capable” of causing annoyance and disturbance is tantamount to an authoritarian approach. When the Minister talks about crying babies, I cannot help being reminded that my own crying baby was complained about by the next-door neighbour when I was in rented accommodation. She does not cry so much now—she is 32. The very idea that anything capable of causing annoyance should be regarded as formally antisocial behaviour in law is an extreme concept, and it is an extremely good thing that this new Bill has left such thinking behind. This amendment should not be accepted.

[David Simmonds]

I will withdraw the amendment, because again the numbers are against me. It is important to recognise as we consider it, however, that there are examples—loud music is one—that might not within the definition of “likely” to cause nuisance or annoyance, but potentially would fall within our proposed definition.

I hope that the Minister and the Government will consider this issue. We know that a children’s party—I speak as a guilty individual in this regard—can be a very noisy occasion that generally takes place in the middle of the day for a brief period of time, whereas playing loud music for one’s own freedom of enjoyment all day and night may cause significant issues. Most of us, as Members of Parliament, have seen examples of behaviour that of itself and on an individual, case-by-case basis would not cause a nuisance, but that can cause significant upset to neighbours when repeated. That can range from the environmental impact of an activity such as servicing cars or maintaining vehicles to things such as loud music, and people can do those things at times of the day and night that are antisocial in the context in which the home is located. It is important that the Government give further consideration to the matter, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 9, in schedule 1, page 172, leave out lines 29 to 32.—(Matthew Pennycook.)

This is in consequence of Amendment 5.

Question proposed, That the schedule, as amended, be the First schedule to the Bill.

[Matthew Pennycook]

I beg the indulgence of the Committee to spend a little time setting out the Government’s position on this schedule, because it is a key part of the Bill. As we have discussed, the Bill reforms the grounds for possession to ensure that tenants have greater security in their homes and, importantly, that good landlords can regain a property when necessary. Without section 21 and the threat of arbitrary evictions, tenants will have that greater security in their homes. Landlords will have to use one of the defined grounds for possession in schedule 2 to the Housing Act 1988, as amended, when they need to evict a tenant. They will be able to repossess their property only when it is reasonable to do so.

Schedule 1 inserts new grounds and amends existing ones, ensuring that landlords have robust grounds for possession when there is good reason to take their property back. As we have discussed, that includes repossessing to sell, to move in or if their tenant engages in antisocial behaviour or falls into rent arrears. Although many of the grounds are broadly similar to those in the previous Government’s Bill, we have made some important changes that we believe ensure a fairer balance in the sector. There are three main types of ground: those relating to a change in the landlord’s circumstances, those to allow specialist sectors to operate and those where the tenant has not met their obligations. I will not cover each in detail here, but I will give a brief overview of some of the key provisions.

--- Later in debate ---

[Matthew Pennycook]

I thank the hon. Gentleman for that reasonable question. He and many others in the House have significant concerns about the impact of excessive concentrations of short-term and holiday lets in particular parts of the country. A landlord who has moved a family member back in under the mandatory grounds that he cites would not be able to re-let the property for 12 months and would be penalised if they attempted to do so. It was a three-month void period in the previous Government’s Bill, and we thought that it would not have acted as a serious disincentive. I frequently encounter landlords who can comfortably wear a three-month void because of the levels of rent that they charge, and I am sure that is the case in many other parts of the country. We think that a 12-month no re-let period will provide the necessary protection to ensure landlords are not incentivised, and do not feel able, to abuse the mandatory grounds for possession.

[David Simmonds]

The Minister has given a helpful and comprehensive overview of the matters that we have debated so far. Although we clearly have a different opinion about how to strike the correct balance, I accept that he is acting in good faith and, to a great degree, in line with the points previously made and the content of the Renters (Reform) Bill. The key issue we remain concerned about is the impact that all these regulations will have on supply. We all know that we have a constrained private rented sector, with areas in which significant numbers of people are chasing properties. We need to ensure that properties remain of a decent standard, at an affordable price, and in sufficiently ample supply. We have debated those concerns, and I hope that we can continue to deal with this Bill in the same co-operative and constructive spirit.

Schedule 1, as amended, agreed to.

Clause 5

Possession for anti-social behaviour: relevant factors

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

[Matthew Pennycook]

It is always better to resolve issues without resorting to eviction, but we recognise that when tenants are committing antisocial behaviour and it is impacting on neighbours, housemates and communities, it is sometimes necessary. In these cases, landlords need to have confidence that they can gain possession of their property quickly. The clause expands the matters that judges are directed to consider when deciding whether to award possession under the discretionary antisocial behaviour ground. We are making the change because we recognised landlords’ concerns about evicting antisocial tenants without section 21, and it is important that judges consider pertinent factors to ensure eviction can happen when it is right to do that.

Judges will take all relevant factors into account when determining whether to evict under these grounds, because they are discretionary, but under the current legislation, they are also guided to explicitly consider the impact of antisocial behaviour on victims. Clause 5 ensures that judges must also have regard to the question of whether the perpetrator has engaged with measures to resolve their behaviour. This will serve two purposes: making it more likely that landlords work with tenants to resolve poor behaviour, and making it easier to evict those tenants who do not engage. The change will contribute towards increasing the amount of dispute resolutions short of eviction in the private rented sector.

The clause also asks judges to give regard to the impact of antisocial behaviour on other tenants within houses of multiple occupation. Antisocial behaviour within house-shares can have a severe impact on those who live in close proximity. The clause will make it easier to evict perpetrators, which was a specific concern raised with us by a number of external stakeholders. Fellow tenants are the worst-affected victims of antisocial behaviour within HMOs, and landlords were concerned about their ability to evict perpetrators without section 21 notices. The clause ensures that courts can consider these factors.

[David Simmonds]

The Opposition welcome the points made in this debate. We want the following issue to be addressed. If it is expected that a dispute resolution process will be undertaken or that some form of external mediation will be accessed, there needs to be sufficient capacity to ensure that that happens in a timely manner. We do not have an example of a case in which someone who is evicted on grounds of antisocial behaviour is expected to endure a considerable period of time in order for mediation to take place, following which grounds for possession might then be sought. We need to make sure that the process is done swiftly and effectively, but we support the concept behind it.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Form of notice of proceedings for possession

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

[Matthew Pennycook]

Clause 6 provides for regulations that will allow the Secretary of State to publish the form to be used when landlords serve notice of intention to begin possession proceedings. It is crucial that the information landlords are required to provide reflects current law. This gives tenants the best opportunity to enforce their rights and seek appropriate support. The clause will allow regulations to be made so that we can update the forms at speed and respond to changing circumstances. It is a simple and straightforward clause.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Statutory procedure for increases of rent

Renters' Rights Bill (Fourth sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[David Simmonds]

My hon. Friend raises an extremely good point. As he outlined, this is very much about perverse incentives. We do not want to create a situation in the market where it is always in the interests of the tenant to push this to the tribunal. We need to make sure that that point is effectively addressed, and the amendments seek to do that.

[Matthew Pennycook]

Clause 8 amends section 14 of the Housing Act 1988, and the amended sections set out the circumstances in which a tenant can submit an application to the tribunal to challenge the rent amount either in the first six months of a tenancy or following a section 13 rent increase notice. Amendments 50 to 53 seek to alter the process for challenging initial rents and rent increases at the tribunal.

I must stress that, in the first instance, under this new system, the Government strongly encourage landlords and tenants to communicate early about what adjustments to rent are sustainable for both parties. Where an agreement cannot be reached, the Government are clear that tenants should submit an application to the tribunal only where they believe that a rent increase is above market rates. Such rises may represent an attempt by the landlord to exploit a tenant who simply wishes to remain in their home, or they may be an underhanded attempt to remove a tenant without pursuing the very clear possession grounds laid out in schedule 1. That is why we think clause 8 is so important.

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[Matthew Pennycook]

I completely understand the hon. Gentleman’s point, but let me give him a bit more insight into my thinking. I recognise his point that there are incentives that operate in both directions. There is no wholly perfect, win-win solution. We have taken this decision partly because it was in our manifesto to protect renters from unreasonable within-tenancy rent rises, and also because we believe that landlords will adjust around the point in the annual cycle when they serve the section 13 notice to account for the period of time it will take for the tribunal to make a determination.

The hon. Gentleman is right that if the tribunal determines that the rent increase is reasonable, a landlord may have missed out on a short period of the rent increase—not the whole rent, but the rent increase. We want to bring down the time of tribunal determinations so that it is a very short process. I will be very clear about this: we took the view that it was better that tenants were not, by facing the prospect of significant arrears, disincentivised from taking any cases to tribunal to challenge what could be, on a number of occasions, completely unreasonable within-tenancy rent increases. We felt that that is of more benefit than ensuring that they would face significant arrears at every point, which would be too harmful to their ability to challenge, given that we have not introduced rent controls—rent stabilisation—of the kind that other parties are calling for. To address the hon. Gentleman’s point specifically, my expectation is that landlords will adjust around the point that the section 13 notice is served.

The whole system should operate in a way that, hopefully, incentivises landlords not to propose unreasonable rent hikes that might be challenged. There is a clear incentive for landlords and tenants to come to an agreement—we know this will happen in a good number of cases—on what a sustainable rent increase is that reflects the market conditions. The hon. Gentleman is more than welcome to intervene on me again if he wants, but I will just develop my argument a bit further in relation to some of the amendments.

The shadow Minister proposes that a tribunal should be able to increase the rent above the current rent payable if the rent is challenged in the first six months of the tenancy and, where a later rent increase is challenged, that the tribunal should be able to set the rent higher than what the landlord asked for. We believe that these amendments would exacerbate the worry that tenants already face in going to a tribunal to challenge their landlord. Tenants will not challenge rents if they risk being in an even worse position following a tribunal ruling. That is the sort of perverse incentive that we believe would pertain on the part of tenants if the amendment was taken forward.

As a slight challenge to Conservative Members opposite, the shadow Minister and the hon. Member for Broadland and Fakenham, their party once recognised this point. The proposed approach in the previous Government’s White Paper, “A fairer private rented sector”, is the one that we have taken in this Bill—namely, that the tribunal cannot increase the rent beyond what the landlord asked for. It is slightly disappointing to see hon. Members rescind that previous approach, which we think is appropriate.

The Bill encourages tenants to engage with the tribunal when they have legitimate concerns. By reinforcing the rights of tenants to do so, we are disincentivising the minority of landlords who may be tempted to hike rents beyond what is reasonable. The shadow Minister’s amendments not only remove these important measures but put tenants at real risk of losing their home, undermining security of tenure, which is obviously a key principle of the Bill. I therefore ask the shadow Minister to withdraw his amendment.

[David Simmonds]

I am grateful to the Minister for talking through the Government’s thinking, and for his points about the debates on the previous Bill. The Opposition remain concerned that the envisaged process, whereby there will be an online application for a modest fee, will make it almost invariably in the interest of the tenant to challenge, because there is no negative outcome for them regardless. A great deal will rest on an issue we will deal with later on: the capacity of tribunals to make decisions quickly. I am mindful, however, of the numbers on the Committee, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[David Simmonds]

Amendment 47 relates to an issue that was briefly aired in the previous debate: the capacity and ability of tribunals to deal effectively with the workload that is likely to come their way once the Bill has made its passage through Parliament.

I understand that for a new Government there is a great deal of desire to bring forward legislation to address things that may be manifesto issues, but there has also been criticism of the risk. We have seen a lack of impact assessments that would enable us as Members of Parliament to consider properly the likely impacts of the legislation, and what resources will be required to mitigate those impacts. That issue ran through the previous debate on the ability of tribunals to make timely and efficient decisions so that both landlords and tenants are treated justly. It will also run through other debates, such as that on local authorities’ capacity to enforce effectively so that both tenants’ and landlords’ rights are protected in practice, notwithstanding what the legislation says.

Amendment 47 is designed to address the issue and ensure that the Competition and Markets Authority, which has a much wider remit in looking at how regulators and markets interact, can examine this issue and, having considered the impact of the legislation, provide us with some evidence that would then inform our thinking about the timing and operation of these facets of the Bill.

[Matthew Pennycook]

Before I speak to clause 8 and respond to the amendments, it might be worth my making it clear to the shadow Minister that the Government submitted an impact assessment for the Bill to the Regulatory Policy Committee on 16 September 2024, and we will publish that in due course. In line with usual practice, the Government will always consider the impact of any policies when taking legislation through Parliament.

As I set out in the debate on the previous group of amendments, clause 8 amends section 14 of the Housing Act 1988. It stipulates when a tenant can submit an application to the first-tier tribunal. They may do so to challenge the rent amount in the first six months of a tenancy or following a section 13 rent increase. When a tenant brings an application to the tribunal, the tribunal will both assess what the landlord could expect to receive if the property was re-let on the open market and determine the rent. The tribunal has, as I have noted, experts who are experienced in understanding the different factors that influence the market rate, which include the rent for similar properties in the area, the quality of fixings or the proximity to amenities.

For too long tenants have feared challenging a rent increase at the first-tier tribunal. We will end that by ensuring that the tenant will not pay more than what the landlord asks for following a tribunal determination. We are going further: we will end the practice of backdating rent increases, to stop tenants being thrust into debt. To protect the most vulnerable tenants, in cases of undue hardship the tribunal will be able to delay the start of the rent increase for up to two months from the date of determination. That puts tenants in a stronger position to challenge rents through the first-tier tribunal.

It is important to note that tenants are often scared to engage with the judicial process, so we hope that the measures I have outlined will give them more confidence to do so. Although we anticipate that there will be an increase in cases, we do not accept the frankly scaremongering assertions we have heard about the tribunal being completely overwhelmed, or about tenants risking a deterioration in the critical relationship with their landlord by challenging every single rent increase that is given to them. Nor did we hear, when they gave evidence to the Committee last week, that the groups that support tenants would recommend such action. Engaging the tribunal requires effort and time, and we believe that tenants will do so only where they have legitimate concerns, such as when a within-tenancy rent increase is unreasonable. We will continue to work with the Ministry of Justice, His Majesty’s Courts and Tribunals Service and the judiciary to ensure that the tribunal has the capacity to deal with any increase in cases.

Taken together with the measures in clause 7, the provisions in clause 8 will ensure that tenants always have a right of appeal and will prevent rent increases from being used to evict them. Rent increases outside the statutory process, such as in rent review clauses, will be outlawed. We believe the measures will ensure that all parties are clearer on their rights and responsibilities and will empower private rented sector tenants to challenge unreasonable rent increases.

Amendment 46 is drafted to prevent the Bill from coming into force until a review is published on the impact of clause 8 on the tribunals responsible for the determination of rent. The review would be provided for by amendment 47. The Government are committed to ending the scourge of section 21 as quickly as possible and have also committed to empowering private rented sector tenants to challenge unreasonable rent increases, thereby stopping unscrupulous landlords from using them as a back-door means of eviction. The sector has waited far too long for these changes, so we will not tie implementation to any arbitrary requirements, as the previous Government determined to do in the previous Parliament. As I said, we are working closely with the Ministry of Justice and HMTCS to make sure that the justice system is prepared for any changes to case load and the procedures that will be required for our reforms.

Amendment 47 would introduce a legal requirement for the Government to publish a review of the impact of the reforms to rents in clause 8 on tribunals and their ability to manage any increase in the volume of applications that challenge the amount of rent payable. As I have made clear—I will put it on the record again—we are working closely with colleagues in the Ministry of Justice and HMTCS to make sure that the justice system is prepared for the Bill’s implementation, which will come at a single point at the point of commencement. In Committee last week, we heard of the growing role of the first-tier tribunals and we heard—it is important to note this—praise for their handling of cases. We seek to build on that good practice.

We currently have no plans to consult the Competition and Markets Authority on whether any action is necessary to ensure that our reforms in clause 8 do not have a distorting effect on the market. I say respectfully to the shadow Minister that I have seen no credible evidence of that and, to be candid, I think the CMA has far better things to do with its time. The tribunal’s decision reflects market conditions rather than distorting them, so we do not think it realistic that the tribunal could affect market prices. The tribunal is also likely to determine rents for an extremely small proportion of the total rental market. We will of course continue to monitor the impact of the reforms on the market in the normal way.

Finally, amendment 75 would require the Secretary of State to launch a consultation to seek views on whether tribunals that are responsible for the determination of rent currently have adequate resource, and whether they will require further resources due to the rent reforms in the Bill. Given the ongoing work I have outlined, we do not think that launching a consultation at this time is required, and making a commitment to do so on the face of the Bill would be wholly unnecessary. I therefore ask Members not to press their amendments to a vote.

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[David Simmonds]

One of the benefits of having been in government is that I have had the opportunity to consider many of these issues from the inside. We on the Opposition Benches remain concerned that it will be challenging to deliver the necessary level of capacity to provide the efficient service that tribunals need, and are expected, to provide for the benefit of both tenants and landlords. However, recognising that it is a game of numbers, I am happy to withdraw amendment 47.

[Matthew Pennycook]

Briefly, on the capacity of the Courts and Tribunals Service to effectively implement the new system, at the risk of repeating my extensive comments on Second Reading, it is worth trying to provide Committee members with some reassurance. First, at the risk of injecting a somewhat partisan note into the Committee, I agree entirely that our courts are in a terrible state after 14 years—I say 14 years because I am afraid the coalition Government had a hand in it—and we absolutely believe that improvements to HMCTS are needed to ensure that the new systems function effectively.

As I said, we are working closely with colleagues in government to ensure that improvements are made, as well as the exploring options for, for example, improved alternative dispute resolution so that only those cases that need a judgment come to court. There are a number of improvements we might make to take some strain off the courts, and those are the ones we are exploring.

[Matthew Pennycook]

But not the Ministry of Justice, I say gently to the hon. Gentleman.

Nevertheless, I want to reassure colleagues on the substantive point. We have chosen to implement the new tenancy system in a single stage. The commencement date will be made clear in due course, but we will ensure that the Courts and Tribunals Service is prepared for the implementation of the new system. That is essential, and a huge amount of work is going on to ensure that that will be the case.

[David Simmonds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clause 9

Repayment of rent paid in advance

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

[The Chair]

With this it will be convenient to discuss new clause 6—Limit on rent to be requested in advance of tenancy—

“In the 1988 Act, after section 14ZB (inserted by section 8 of this Act) insert—

‘14ZBA Maximum rent to be paid in advance

No rent may be requested or received in advance of any period of the tenancy which exceeds the rent for one month of the tenancy.’”

This amendment would impose a limit of one month’s rent on the amount of rent which can be asked for or paid in advance of a tenancy.

[Matthew Pennycook]

I will be relatively brief because this clause serves a specific function, but I will focus on what it achieves. I am aware that the wider issue of rent in advance concerns a number of hon. Members—indeed, it featured in our discussions during the oral evidence sessions last week, on which I will say more shortly.

The clause will require landlords to refund a tenant for any rent they have paid in advance, where the tenancy has ended earlier than the period for which a tenant has paid. That serves a practical purpose—for example, if the tenant has paid for the month that they are in occupation and the tenancy is ended by the landlord two weeks into that month, the clause allows the tenant to reclaim the additional two weeks’ rent.

On the issue of rent in advance more broadly—which also pertains to new clause 6, to which I think the hon. Member for Taunton and Wellington will speak shortly—as I stated when I gave evidence to the Committee on Tuesday, Government Members have long recognised that demands for extortionate amounts of rent in advance put financial strain on tenants and can exclude certain groups from renting altogether. We are clear that the practice of landlords requesting large amounts of rent in advance must be prohibited.

Although it might be argued that the interaction of the new rent periods provided for by clause 1 and the existing provisions of the Tenant Fees Act 2019 relating to prohibited payments provide a measure of protection against requests for large amounts of advance rent, I accept that there is a strong case for putting the matter beyond doubt. As I made clear to the Committee, I am giving careful consideration as to how best that might be achieved.

Let me briefly address new clause 6, which seeks to limit the amount of rent in advance that can be paid prior to a tenancy period to no more than one month’s rent. Many of us will have heard anecdotal stories of the pressures placed on renters through demands for rent in advance, and it is for similar reasons that we have taken steps in the Bill to tackle rental bidding. I heard the evidence from last week, and we are looking at the matter carefully to ensure that we put the matter beyond doubt on the face of the Bill.

[David Simmonds]

I am grateful to the Minister for what he said about looking at this area in detail. We raised, and discussed in some detail, the issue of how those with a poor credit history, or people who wish to secure a property for a fixed period—for example, international students—would be dealt with under the measures. We know that there are already limitations on the level of deposit that can be requested, but, particularly for those with a poor credit history, the ability to offer a larger sum of rent in advance can be a means of accessing a home in the private rented sector when they would otherwise not be able to access a home at all.

I am grateful to the Government for considering that particular group of people, who are in many cases extremely vulnerable tenants and often fall outside eligibility for support from the local authority under homeless duties, particularly if they have a job and an income. We need to make sure that we do not create a situation in which, inadvertently, a particular group of prospective tenants is effectively pushed out of the market. I am glad that the Government are taking that issue on board and considering how best it can work.

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[Matthew Pennycook]

We believe the rental market works better when all tenants are clear on their rights and obligations. That prevents misunderstandings and means that both parties know what to expect. Without clarity about their rights, tenants may be unable to take advantage of the new rights that the Bill will give them. That is why it is critical that tenants understand what they are signing up to from the outset. Landlords benefit from clarity too. By being clear on rights and responsibilities at the beginning of a tenancy, responsible landlords can more easily comply with the new rules and ensure that they are providing a good service to their tenants.

That is why clause 12 requires landlords to provide tenants with a written statement setting out the terms of the tenancy. This includes a requirement to state where the landlord might wish to recover possession on certain prior-notice grounds. We will set out in secondary legislation details of what must be included in the written statement, but we expect that it might include details such as the rent, contact details for the landlord, and basic rights and responsibilities that apply to both parties. It is worth pointing out that most landlords already do that, and this requirement will ensure that good practice is extended across the sector. In time, this will lead to fewer disputes and help ensure that both parties comply with the law.

Turning to clause 13, the Government will have zero tolerance for any attempts by unscrupulous landlords to evade the new tenancy system. While the majority of landlords are good and do right by their tenants, we know that there are some who will seek to evade the new laws. That is why we are strengthening the enforcement regime to identify and fine unscrupulous landlords, drive out bad actors from the sector, and protect tenants from back-door evictions. Driving out bad actors is to the benefit of good landlords and tenants alike.

All landlords must be aware of their legal obligations and operate accordingly. I know that landlords can fall into the practice of renting out a property through many different—sometimes sad—circumstances. That is, of course, where the term “accidental landlord” comes from. Many of those landlords are good people doing their best, but that cannot be an excuse for the tenant suffering, and it is not an excuse for landlords not to understand their legal obligations. If a tenant is renting a home, it should not make a difference who their landlord is. Everyone has the right to a safe, decent and secure home.

Let me be clear: the law is not accidental and must be followed. If it is not, then the Bill sets out a robust enforcement framework. With a new tenancy system coming into force, we must ensure that landlords always use the correct procedures when gaining possession and evicting a tenant. The prohibited behaviours outlined in clause 13—for example, purporting to bring a tenancy to an end by service of a notice to quit or orally, by phoning a tenant to tell them that they need to leave the property by a certain date—reflect this responsibility.

In opposition, I was clear that we had a number of reservations about the enforcement measures in the previous Government’s Renters (Reform) Bill. As a result, we have worked hard to close any potential loopholes that a small minority of unscrupulous landlords may seek to exploit. We have taken action in a number of areas. For example, we have increased the restriction on re-marketing or re-letting the property after the use of grounds 1 or 1A to 12 months. That is a significant increase, and is necessary to avoid the grounds being used to effect back-door eviction. It will make it unprofitable to evict a tenant simply to increase the rent, and will stop landlords using the grounds as a back-door section 21. It will allow tenants to enjoy protection from no-fault eviction, while ensuring that there are comprehensive possession grounds in place so that a landlord can get their property back.

Clause 14 clarifies that the duties of landlords set out in new sections 16D and 16E of the Housing Act 1988 can be fulfilled or contravened by someone acting on their behalf. Many landlords will use the services of a letting agent, for example, and that is a sensible means of meeting their obligations, such as to provide a written statement of terms. For most landlords, the clause will make compliance easier. For example, if someone acting on behalf of the landlord issued a written statement of terms to the tenant, that would meet the landlord’s duty to provide the statement. However, landlords should not be able to absolve themselves of legal responsibility for providing a safe and secure home simply by appointing an agent. The clause ensures that landlords retain overall responsibility for complying with the law.

Government amendments 10 and 11 are merely consequential provisions. They qualify the new duty to provide a written statement of terms where a demoted tenancy is transferred to a new landlord. In such circumstances, the new landlord will have 28 days from the date that they become the landlord to comply with the requirement to provide a written statement of terms, instead of having to do so before the tenancy was entered into, which they obviously would not be able to do. We do not expect that circumstance to arise often in practice, but the amendments ensure that the law will operate effectively if the situation occurs.

[David Simmonds]

The Opposition broadly welcome the work the Government are doing in this area. Bringing clarity to the process is very important. In our work as constituency Members of Parliament, we will all have seen many cases where a lack of clarity on whether a notice has been properly served, or on whether a tenant or landlord fully understands their responsibilities and duties, is at the heart of a dispute or difficult situation. I have a brief question for the Minister, but I wanted to be clear on the record that bringing this level of clarity is important.

The enforcement process that the Minister referred to rests on a number of different organisations. Principally, the Bill envisages local authorities as the agent of enforcement. The fire brigades are a significant part of determining the suitability and safety of properties, and they bring prosecutions in the magistrates court when they find properties that have been occupied and rented to tenants but are clearly not safe on grounds that give them the power to prosecute. What consultations has the Minister undertaken with fire brigades about those prosecutions and the evidence that emerges from them about the circumstances of tenants found in such conditions? Those tenants are often among the most vulnerable, and they may not even have a written tenancy agreement, never mind a good understanding of their rights or a landlord who understands their duties and responsibilities.

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[David Simmonds]

In practice, the measures contained in this section of the Bill will probably be the most important for our constituents who are tenants. Their ability to secure enforcement, where there is a breach of the legislation, will be critical. The Minister will know that the Opposition have shared concerns about ensuring that the resource from the enforcement regime will be sufficient to be self-sustaining. It strikes me that the enforcement regime, as set out, is very similar to that which already exists for local authorities in respect of environmental crime, such as fly-tipping, where it is assumed that the proceeds from fines and costs will be sufficient. Most of us will recognise that, in reality, that is rarely the case—carrying out that enforcement action always represents a cost to the council tax payer. Although it is not a matter for legislation, it would be helpful to understand how the Government intend to engage with local authorities to understand the cost of these new burdens fully and use the new burdens doctrine to ensure that they are appropriately resourced.

As the Minister has said, there is a point at which enforcement action outside criminal prosecution is taken, and there is a stage at which criminal prosecution may be the only available option. With other types of enforcement, many local authorities find that the push towards criminal prosecution is necessary to bring an end to the antisocial behaviour that is causing the problem in the first place. The challenge is that the proceeds of any fine resulting from criminal prosecution go into the consolidated fund of central Government expenditure, rather than accruing to the local authority. Even if there is not an award of costs, the largest part of that resource, which in theory is available to sustain the system, in fact goes into a different Government pot for other uses. It would be helpful if the Minister indicated what process of engagement and consultation the Government envisage they will take with local authorities. That must be designed to ensure that the resources derived from enforcement find their way to the sharp end of it, so that in practice, in the real world, it makes the difference that we hope it will.

[Matthew Pennycook]

I completely agree with the shadow Minister that many of the provisions in the Bill will not work as intended without robust local authority enforcement. We have increased the fines from the levels in the previous Government’s Bill to £7,000 and £40,000. It is also worth noting that those fines can be issued repeatedly—they are not a one-off—if landlords continue to breach the relevant provisions.

More generally on local authority resourcing, I make two points. First, it is important to note that many of the provisions in the Bill will not need to be enforced immediately. They will come into play one or two years down the line, so not every measure in the Bill that needs enforcement will require it from the date of Royal Assent. We have made it clear in previous debates that although we think that fines are part of the answer—we want the “polluter pays” principle to be at the heart of the Bill—we recognise that in many cases, they alone will not be enough. That is why I have set out that in accordance with the new burdens doctrine, we will ensure that additional burdens on local authorities that result from our reforms are fully funded.

The shadow Minister made an interesting point, as he has done several times today, that challenges me to go away and think about the final destination of fines from criminal prosecutions. I will take that away and give it serious consideration. We are in agreement that we need to ensure that where local authorities enforce breaches of the provisions set out in this Bill, those funds should come to local authorities. I will come back to him on the point he raises about the consolidated fund, if he is amenable to me doing so.

[David Simmonds]

The Minister’s response prompts me to ask a further question. I am grateful to him for undertaking to write back on the consolidated fund. In other enforcement regimes modelled on this system that provide scope to issue significant fines, there is a common pattern of local authorities outsourcing the responsibility to third-party enforcement agencies. We see that with littering, environmental crime and all manner of areas of local authority duty. Essentially, business makes a pitch, and if they receive the delegated authority to act on behalf of the council in the performance of its duties, they will enter into a profit share agreement. In the case of parking regimes, historically, for each parking ticket that was issued, some money went to the company and some money to the local authority.

That creates a risk—this was mirrored in the earlier debate—of perverse incentives. At local authority level, the incentive could be to pursue the landlords who are easiest to deal with and most likely to yield financial restitution to contribute to the bottom line of the business undertaking the work. That could result in a scarcity of resources to deal with the more difficult and intractable cases, and the most vulnerable tenants.

Have the Government thought about how, in their engagement with local authorities, they will seek to ensure that the regime is enforced equally? Local authorities have an understandable desire to outsource. Particularly in built-up urban areas where there may be a high density of rogue landlords, how can we ensure that the process will not result in extremely vulnerable people falling outside the enforcement regime because it simply is not profitable to pursue it in other parts of the country?

[Matthew Pennycook]

I thank the shadow Minister for that thoughtful point. To be entirely open, it is not one that I have considered. I think it is a fair challenge, and I will go away and give some thought to how we can ensure that local authorities look at all breaches in the round and apply the same approach to each, rather than targeting the low-hanging fruit. To provide reassurance on the concern about good landlords being caught up in the process, I repeat that the process allows landlords to make representations to local housing authorities and the first-tier tribunal if they think that that has happened.

The other point, which we will debate in quite extensive detail, is that enforcement by local authorities is not the only means that the Bill provides of tackling rogue landlords and breaches. I draw the shadow Minister’s attention to the significant strengthening of rent repayment orders, which offers an alternative, tenant-led enforcement mechanism. As I think I said in my evidence to the Committee last week, across the country—in local authority terms, enforcement is a real postcode lottery—the most effective thing I have seen is where well-resourced and effective local authority enforcement is complemented by tenants taking action with rent repayment orders. When the two work in tandem, it can be of real benefit in driving bad landlords out of the sector. I will give further consideration to the shadow Minister’s specific, well-made point.

[Matthew Pennycook]

If I have understood the hon. Lady correctly, and if she is amenable to it, I will fold this point into the written response that I have already promised her, but multiple fines can be levied for breaches. If a landlord in a particular part of the country with multiple properties is in repeated breach over that portfolio of properties, local authorities will be able to levy fines on more than one occasion, so it is not a £7,000 limit in the first instance, or £40,000 for more serious cases, per landlord. Again, I will expand on it in a written response, but I think the database can do some work here in terms of landlords in a particular area registering all their properties. I think it will become apparent quite quickly—it depends on how we use the database—if particular landlords show a pattern of behaviour whereby they are not treating their tenants appropriately. Let me come back to the hon. Lady in more detail as part of the response that I have already committed to.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clauses 16 to 18 ordered to stand part of the Bill.

Clause 19

Notices to quit by tenants under assured tenancies: timing

[David Simmonds]

I beg to move amendment 49, in clause 19, page 31, line 19, leave out from “substitute–” to end of line 34 and insert—

“‘(b) it satisfies—

(i) subsection (1ZA), if it is given by a tenant in relation to premises let under an assured tenancy, or

(ii) subsection (1ZC) in any other case; but in relation to landlords under assured tenancies see section 5(1) of the Housing Act 1988 (notice to quit by landlord is of no effect).’

(3) After subsection (1) insert—

‘(1ZA) A notice to quit satisfies this subsection if—

(a) it is given not less than—

(i) any length of time before the date on which the notice is to take effect, not exceeding two months, that the landlord has agreed to in writing, or

(ii) in the absence of agreement under sub-paragraph (i), two months before the date on which the notice is to take effect, and

(b) it is in relation to premises let under a repeat tenancy or, if it is in relation to premises let under any other assured tenancy, it is to take effect—

(i) no earlier than any time, within the period of six months beginning with the day on which the terms of the tenancy provide for the tenancy to begin, that the landlord has agreed to in writing, or

(ii) in the absence of agreement under sub-paragraph (i), on or after the last day of the period mentioned in that sub-paragraph.

(1ZB) In subsection (1ZA)(b) “repeat tenancy” means an assured tenancy under which the tenant becomes entitled to possession of the premises within the period of one month beginning with the day after the last day of a previous assured tenancy—

(a) under which the same premises were let, and

(b) which was between the same parties.

(1ZC) A notice to quit satisfies this subsection if it is given not less than four weeks before the date on which it is to take effect.’”

--- Later in debate ---

[David Simmonds]

I would like to ask the Minister, not at this stage but in due course, to provide a little bit more detail. In his response to these amendments, he referred to what sounds like an asymmetric process in the expectations of how notices would be given. It would be a requirement for a landlord to put a notice of any kind to the tenant in writing, but the tenant would be able to give notice by means of a text message. It seems very clear that that situation could give rise to disputes about whether information or notices were properly served in both directions. I urge the Government to ensure that, as the Bill makes progress, there is sufficient symmetry. For example, when disputes arise that might go before the courts or the tribunal, there needs to be real clarity, by way of an audit trail of what has been said to each party.

[Matthew Pennycook]

I thank the shadow Minister for that. I will undertake to provide him with more detail on the specific point he has made, which is noted and understood, either at an appropriate point in our further consideration of the Bill or in writing.

[David Simmonds]

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.

Clause 21

Limitation on obligation to pay removal expenses

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

[Matthew Pennycook]

Section 11 of the Housing Act 1988 currently requires landlords of assured tenancies, who have been awarded possession under the redevelopment ground 6 or suitable alternative accommodation ground 9, to pay the tenant reasonable moving expenses. These grounds are mostly used by social landlords, who use assured tenancies and do not have access to section 21 no-fault evictions. The grounds support social landlords to manage their stock, ensuring that social housing is good quality and remains available for those who need it.

Clause 21 amends section 11(1) of the 1988 Act to ensure that only private registered providers of social housing will be required to pay removal expenses for grounds 6 and 9, once all tenancies become assured tenancies. We think it is unlikely that private landlords will regularly use grounds 6 and 9. However, on the rare occasions that they need to use them, they will not be required to pay removal expenses, ensuring that they are able to manage their assets in a reasonable way. I commend the clause to the Committee.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Assured agricultural occupancies: grounds for possession

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

[Matthew Pennycook]

As Committee members may be aware, qualifying agricultural workers are automatically entitled to an assured agricultural occupancy, which offers enhanced security of tenure to those who qualify. Tenants under AAOs cannot be evicted using section 21 or if their employment by the landlord comes to an end. Clause 22 makes consequential changes to AAOs to reflect the new tenancy system. That includes preventing landlords from evicting AAO tenants under the employment ground, now 5C, as well as ground 5A and the new superior landlord grounds. Those grounds cover circumstances where tenants under AAOs cannot currently be evicted, but they are being amended or introduced by the Bill and may pose a risk to their security in the new system. The clause will maintain the status quo.

Clause 23 seeks to replicate the existing mechanism in the Housing Act 1988 that allows landlords of qualifying agricultural workers to opt out of providing assured agricultural occupancies. They can issue assured shorthold tenancies instead, as long as they inform the tenant from the outset. We understand that many landlords make use of the opt-out, as it provides more flexibility for the agricultural sector and helps to maintain the supply of rural housing for workers. The clause therefore replaces the existing opt-out in a way that will be compatible with the new tenancy regime once ASTs are abolished, giving landlords access to the full range of new possession grounds.

I hope that both clauses are uncontroversial, and I commend them to the Committee.

[David Simmonds]

I can assure the Minister that we do not want to push these clauses to a vote. I am grateful to him for his explanation. It is important to recognise that agricultural workers are one category of tenant who often have different sets of circumstances, as their access to a home is connected to their job. School caretakers are another common example; it is not unusual for there to be a property on the school site that the post holder has the right to occupy.

It has become increasingly common, rather than going down the route of creating a tenancy from the outset, for the employment contract to have a side agreement of a licence to occupy, so the home is made available to the individual not as part of a tenancy agreement, but as part of a licence to occupy connected to their role. I would like the Minister to illuminate the Committee with the Government’s thinking on that issue.

There is a second issue. As has been described to us by a number of representatives from rural businesses, it is quite common for landlords to ask a tenant to vacate a particular property because its location or its facilities are directly connected with a role that they formerly did, and to offer them another like or equivalent property on the same estate. Traditionally, that has been a way of ensuring that, for example, farm workers who retire from a role in the care of animals where they had to be on the site 24 hours a day, and therefore cease to carry out that function, can be moved to another property on the estate without having to go through an extremely complicated and bureaucratic process. That process may not be good for the landlord, who has an urgent need for a worker on site to look after the animals, or for the tenant, who may have expectations about how their new accommodation will be secured, particularly at the point of retirement.

I would be grateful if the Minister could illuminate the Committee with the Government’s thinking on how that issue could be effectively addressed, so that we can take the matter into full consideration for those rural communities where it is particularly important.

[Matthew Pennycook]

I thank the shadow Minister for his points. If I have understood him correctly, I fear that those matters are slightly outside the scope of these clauses. I reiterate that we understand that many agricultural landlords use the opt-out to provide ASTs to their tenants instead, and that opt-out is retained by clause 23. We do, however, think that AAOs are a crucial part of the tenancy system, and we do not want to reduce their security by abolishing them outright and bringing these tenants into the wider assured tenancy system. I will take on board the points the shadow Minister made and come back to him in writing, if he will allow me; they raise a number of matters pertaining to housing that may or may not be in the scope of the Bill and these clauses. I think it is probably better if I come back to him in writing, given how specific and somewhat technical they are.

--- Later in debate ---

[Matthew Pennycook]

The Bill will remove fixed tenancies and section 21 evictions, as we have discussed at length. These changes mean that we also need to amend part 7 of the Housing Act 1996 to ensure that councils’ statutory homelessness duties align with the new system. Clause 24 makes three changes to homelessness legislation to ensure that is the case.

First, clause 24 makes changes to how local authorities discharge their main housing duty. One of the ways in which local authorities may currently bring their main housing duty, which is a duty to secure settled accommodation, to an end, is by making an offer to a tenant of a suitable private rented sector tenancy with a fixed term of at least 12 months. With the removal of fixed-term tenancies, section 193 of the Housing Act 1996 is amended to instead refer to an assured tenancy.

Secondly, the clause amends sections 193(1A) and 193C of the Housing Act 1996, which concern the consequences when a person owed either the prevention or relief duty deliberately and unreasonably fails to co-operate with the local housing authority. If the local housing authority is satisfied that the applicant is homeless, is eligible for assistance, has a priority need, and is not intentionally homeless, then the applicant is still owed a duty to be accommodated. This duty, however, is currently a lesser one than the main housing duty. The lesser duty is to offer a fixed-term tenancy of at least six months as opposed to the period of at least 12 months that is required under the main duty. With the repeal of fixed-term tenancies, the lesser offer is redundant, and is removed by the clause.

Thirdly, subsection (4) of clause 24 repeals section 195A of the Housing Act 1996, which is the duty in homelessness legislation to offer accommodation following re-application after a private sector offer, known more commonly as the re-application duty. The re-application duty was introduced, alongside the introduction of private rented sector offers, as a means to end the main homelessness duty. It was introduced to respond to concerns that due to the short-term nature of assured shorthold tenancies, applicants who accepted a private rented sector offer may become homeless again within two years, and no longer have priority need.

The increased security of tenure and removal of section 21 evictions means that the re-application duty will no longer be relevant. The change will streamline the management of re-approaches and ensure that all applications will be treated according to their current circumstances at the point of approaching. There will no differential treatment between those placed in either private rented or social housing accommodation. The clause makes necessary and reasonable changes to the homelessness legislation as a consequence of the tenancy reform that we are introducing. I commend it to the Committee.

[David Simmonds]

The Homelessness Reduction Act 2017 was the main vehicle for ensuring that the homelessness duty might be addressed through an offer in the private rented sector. That was a means of ensuring that people who are not able to immediately access the kind of accommodation they need through the local authority can instead secure it in the private sector, and it has, to an extent, been very successful.

I want to ask the Minister what consultations are being undertaken across the Government to ensure alignment between parts of Government that have different responsibilities and duties, particularly in respect of notices that might fall within the scope of this Bill. I am thinking, in particular, of young people leaving the care system, who may be accommodated under section 20 by the local authority because of their risk of homelessness. In addition, when asylum seekers are placed in accommodation by the Home Office, there is a move-on period; the Home Office-owned legislation may result in their needing to access accommodation, so they may fall within the scope of this Bill. What consultation is being undertaken to ensure that those notice periods are aligned? I have to acknowledge that that was an issue for the previous Government—particularly in respect of asylum seekers, for whom the homelessness duty set out a different period from the Home Office’s move-on period, so individuals found themselves falling between those periods and were therefore unable to access the support they needed to find accommodation through their local authority.

[Matthew Pennycook]

I thank the shadow Minister for that point. I hope he will be satisfied with the following answer: extensive engagement has taken place between Departments in developing this Bill as it pertains to areas that cross departmental responsibilities. Again, given the extremely technical nature of his question—particularly in relation to asylum accommodation, which is not within my area of responsibility—I will come back to him in writing.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Tenancy deposit requirements

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

[Matthew Pennycook]

Clause 25 will maintain important deposit protections so that tenants can be confident that their money is being handled safely. Landlords will be required to comply with deposit protection rules before a court can make an order for possession under section 8 of the Housing Act 1988. That will apply only if the landlord has failed to store the deposit in one of the prescribed schemes or comply with the applicable rules.

The clause also makes consequential amendments to the Housing Act 2004 to ensure that deposit protection rules continue to apply in the future once assured shorthold tenancies are abolished. Deposits taken for existing assured shorthold tenancies will still need to be protected after the new system has come into force. Deposits taken for assured tenancies created after commencement will also need to be protected. This is an extremely straightforward and simple clause, and I look forward to the extremely technical question that the shadow Minister will put to me on it.

[David Simmonds]

The Minister will be delighted to know that I do not have a detailed, technical question to ask him on this clause, but I am sure that if he gives me some time, I will be able to come up with one.

--- Later in debate ---

[Matthew Pennycook]

Clause 26 amends the Tenant Fees Act 2019 to ensure that its provisions remain applicable and relevant to the tenancy reforms in the Bill. In particular, it removes the provision that prevents a landlord from serving a section 21 notice where they are in receipt of a prohibited payment from a tenant. Removing that provision is necessary, given that section 21 notices will be abolished. There will remain strong enforcement mechanisms in the Tenant Fees Act, including offences for landlords who require payments from tenants that are prohibited under that Act. That will ensure that under the new system tenants will continue to be protected from unfair and prohibited payments that were previously outlawed.

Clause 27 amends council tax rules to clarify council tax liability once fixed-term assured tenancies are abolished. That will ensure that assured tenants remain liable for council tax until the end of their tenancy agreement. That will include where they have served notice to end the tenancy but leave the property before the notice period has ended. In that instance, the liability will not fall to the landlord until the tenancy has ended. I commend clauses 26 and 27 to the Committee.

[David Simmonds]

I would be grateful if the Minister shared the Government’s thinking on the interaction between this issue of liability for council tax and the legal duties on local authorities to collect it, where they have an obligation to ensure that, as part of the efficient delivery of public services, they maximise the level of council tax collected. I understand the purpose of what the Minister has just described. I would try to ensure that, in situations where there may be an end to the tenancy, we do not create a situation both where the liability is difficult to assign and there is potentially an issue of who needs to be pursued for that council tax. Clearly, it is important to ensure that local authorities with a separate set of legal obligations in that respect are fully sighted on what the impact of this may be, and on the performance of their duties.

[Matthew Pennycook]

To reassure the shadow Minister on the general matter, there has again been extensive engagement with local authorities on the development of this Bill. I think he referred to clause 27, and it is our view that tenants should obviously be responsible for council tax payments until the tenancy has formally ended. When a tenant serves notice, the tenancy does not end until the notice period has expired, even if the tenant leaves the property before then. This measure will not change anything for most tenants, but clarifies where they will be liable for council tax until the end of the notice period, including where they have served notice to end the tenancy but leave the property earlier. It simply ensures that council tax remains aligned with other household costs, such as rent and bills. I hope that reassures the shadow Minister, but if not, I am more than happy to pick it up at a future point or in writing.

[David Simmonds]

That goes a long way in providing the necessary assurance. It is necessary for there to be clarity, for example, where a contract includes not just the rent but council tax within a single payment to the landlord, who will then be paying the council tax on behalf of the tenant, as happens under some rental contracts. We do not want to create a situation where the local authority is pursuing a tenant for the council tax at that point, because the tenancy has ended and the tenant argues that they have already made that payment to the landlord and it has not been passed on. I simply wanted to ensure that, in the performance and function of the collection fund, which I know is high level and a very important part of the Department’s overall calculation of the level of local government finance, we are not at risk of creating any potential loopholes.

[Matthew Pennycook]

That has usefully clarified the point that the shadow Minister is driving at. Local authorities are well-experienced in the administration of council tax, including determining who is liable. For example, they have powers to require residents, owners or managing agents to provide information to help establish liability, and where that is not complied with, they can impose a penalty. We will work closely with the local authority sector when implementing the new system to ensure that the new rules are well-understood, but we think local authorities have sufficient powers to determine liability for council tax in any particular circumstance.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clause 27 ordered to stand part of the Bill.

Clause 28

Other amendments

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

--- Later in debate ---

[Matthew Pennycook]

With this clause, we turn to chapter 2 of part 1, which deals with tenancies that cannot be assured tenancies. The clause excludes from the assured tenancy regime fixed-term leases of more than seven years, which is particularly relevant for leasehold homeowners and those who purchased via shared ownership, who can sometimes be legally considered tenants under the assured regime despite having purchased their property. The clause will therefore exclude entirely such fixed-term leases and any others over seven years in length from the assured regime, thereby supporting the continued operation of shared ownership and providing additional security to shared ownership homeowners by exempting them from the grounds for eviction in the Housing Act 1988. It will also exclude leaseholders from the assured tenancy system, finally closing the so-called tenancy trap. It is unjustifiable, in the Government’s view, that leaseholders who have purchased their homes can face repossession for rent arrears through the assured tenancy regime. The exemption will therefore ensure they are protected.

I am grateful to stakeholders for raising concerns with me over the ways the clause could be undermined or abused. Let me be clear: we will not tolerate attempts to get around the abolition of section 21 by abusing this clause. I am therefore considering whether any action is needed to ensure that the system operates as intended, and that no abuse of the system can take place.

Clause 31 rectifies an omission to ensure that, as is the case for other specified sections where local authorities have an interim duty or discretion to provide temporary accommodation, a tenancy granted pursuant to section 199A of the Housing Act 1996 cannot become an assured tenancy. This will allow the private landlord to regain possession of their property once the local authority’s duty to provide it by way of interim accommodation ceases.

[David Simmonds]

From our constituency work, many of us will be aware that when an individual has a “no recourse to public funds” condition because of their immigration status, although they may be employed in the UK and potentially in the public sector, the local authority has no duty to house that individual. That, however, may be compromised if, for example, there are children in the household, where duties under the Children Act 1989 and the National Assistance Act 1948 are triggered and the local authority effectively has a responsibility by another route. Although the individual may occupy a private rented sector property that has been procured for them by the local authority under those duties, they do not have any rights to public funds to pay for it, and therefore fall into a slightly ambiguous position with respect to this Bill. Some clarity would be helpful, especially given that there is a significant market of landlords, many of them directly contracted with the Home Office, who specifically provide accommodation for people who find themselves in a NRPF situation.

Renters' Rights Bill (First sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[David Simmonds]

indicated assent.

Tarun Bhakta: It has long been our call that the Bill should specify and set a higher threshold and make that clear, particularly for the landlord sale and the landlord moving in eviction grounds. We also think that the Bill should introduce a post-eviction proceeding.

There are two really important parts to establishing that clarity in the Bill. First, tenants and landlords need absolute clarity about what constitutes a legitimate eviction. We see through our legal services that the decision on whether to challenge an eviction notice in court is an incredibly complex and difficult one for tenants to make. The process of going through the courts to challenge an eviction is time-consuming, costly and very stressful for tenants, so it is about setting out that clarity, particularly in those landlord sale and landlord moving in eviction grounds. Making that threshold clear would provide clarity for tenants to help to make that decision. We believe that that would also have the effect of supporting tenants to understand where an eviction is legitimate and prevent some of those cases from making it to court.

Secondly, the current wording in the Bill is very open. It goes further in Scotland, in our view, and although it is all very well being confident in setting guidance for the courts and hoping that the judges make the right decision in court, tenants need that clarity before we reach the court stage. Also, judges do need some steer; we see some inconsistency in cases between judges, and it is not the case that they will all interpret the law in exactly the same way, so setting that clarity in the legislation is important. We cannot have a situation in which the landlord states that they intend to sell the property and that is case closed: we need more clarity than that.

[Matthew Pennycook]

Q Thank you both for coming to give evidence to the Committee. Can I pick up on two points? The first is on rent increases. The Government have been very open that we have no plans to implement rent controls, and we have been clear about our reasons why. I take the point that you might have a different view, but we will set that to one side for the moment. What are your concerns around how the process in the Bill could be used by landlords as an effective section 21 by the back door? Perhaps we can have a bit of an exchange about this, but why do you think it does not provide that protection against unreasonable, within-tenancy rent increases?

Tarun Bhakta: It is difficult to set that to one side, so you will forgive me if I do not.

--- Later in debate ---

[David Simmonds]

Q If I may pursue that final point, do you have any financial modelling about the impact on the homelessness budget that would derive from the Bill?

Ben Twomey: I do not have any with me, but I can take a look at that and write to the Committee.

[Matthew Pennycook]

Q Thank you, gentlemen, for coming to speak to us this morning.

It would not be a Bill Committee evidence session if every interest group was not telling us that it had a way to improve the Bill in some way and from different perspectives. We have heard a lot this morning about the various concerns and how they are being addressed. In general terms, however, particularly given your concerns about the previous Government’s Renters (Reform) Bill, do you think this Bill strikes the right balance and levels the playing field between landlord and tenant?

Tom Darling: I will start by introducing the situation in the private rented sector as it is today. The Resolution Foundation said this year that

“the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.”

The private rented sector is the worst of our ageing housing stock; in fact, it is the worst of the worst. It is the least secure, the worst quality and the most expensive of the housing tenures in this country, and we have the worst of any major country in the world. That is embarrassing and that is what we are talking about here. We need root and branch reform. We are happy that the Government have acknowledged that more significant reforms are required than those that the previous Government put forward, but we still need to see some changes to the Bill to go even further and deal with the scale of the crisis we are dealing with.

Ben Twomey: We are delighted that the Government are pressing on with this work very quickly, and there is a promise in the manifesto to end section 21 immediately—as quickly as we can get this law passed. That is really welcome, as it will protect people from homelessness.

There are also lots of things in the Bill that I have no notes on. For example, the bidding wars legislation seems well-written; it seems like it will make a genuine difference to people like me, who have experienced being invited to bid on homes just because we reached the front of a queue and the landlord realised that they could up the rent. Some of the provisions—including the introduction of Awaab’s law into private renting—are beginning to create more of an even playing field, as you say, for renters compared with other tenures.

I want to take a moment to talk about someone I will call Ayesha from Hertfordshire. She is a schoolteacher and a single parent, and she has been struggling to keep up with the relentless rises in rent that she has faced in recent years. She says, “There are moments when I feel so overwhelmed and exhausted, like I’m carrying the weight of the world on my shoulders. I try to stay strong for my children, but the stress and anxiety are always there, lingering in the background. I just want to provide them with the life they deserve, but with the way things are going I fear that I might not be able to. It’s a lonely, terrifying feeling, and it’s hard not to feel defeated by this constant struggle.”

It is important for people like Ayesha—given what is being said in this Committee, this Government and this Parliament as a whole; every MP in this room promised to end section 21 and, in more words or less, promised a fairer deal for renters—that this Bill takes the opportunity to resolve these issues. Maybe we will come to this, but we believe that that will involve limiting the ability for landlords to raise rents—not raising them to the market rate, but instead limiting them to the level of inflation or wage growth, so that rents begins to match the real, lived experience of people who are renting.

--- Later in debate ---

[David Simmonds]

Q Thank you. May I pursue that last point a little further? One of the issues that has been raised in the evidence so far is about the tenant’s right to challenge rent increases. It is helpful that you have introduced the point about service charges. Clearly, one of the options for a landlord who cannot get the money through a rent increase is to look to secure it through a service charge increase instead. How would you see the current set-up and the set-up proposed by the Bill addressing that kind of issue?

Richard Blakeway: If you look at our current powers, role and approach around charges, we are very clear that we will consider transparency around why those charges are being made and their purpose, we will consider whether the service has been provided and the quality of that service, and we will consider whether an appropriate process was gone through. For example, at the moment we would consider section 20, where significant charges have to go through a process, and ask whether that process was followed. Those are decisions that we make and we can therefore very clearly consider what the requirements are, either set out in statute or under the provider’s own policy. That is the basis on which we would make a judgment.

I think that is a parallel that is relevant in your example in this space. Clearly, if we were seeing evidence that another mechanism was being used to increase the charges on a tenant and that was unclear and potentially unjustified, that could be a point of maladministration where we would uphold a complaint.

[Matthew Pennycook]

Q Richard, thank you for your time this morning. I have put it to other witnesses that, in general, the potential of the database and the ombudsman to make a real difference as part of the new system is often underplayed and I do not think it gets enough attention. You rightly made the point that there is a spectrum between “must” and “could”, but the intention is very clear, on the tenant side, to provide access to services to deal with complaints, and there is potential on the landlord side around landlord-initiated mediation and the role the ombudsman could play there. Can you give us your best sense of how much the new PRS ombudsman could alleviate pressures on other parts of the system, including the courts?

I have a follow-up question; I will ask them in one go, Mr Betts, and leave more time for others. We have been very clear already that the new ombudsman will need to work collaboratively with others to resolve complaints and that will be set out in statutory guidance. What do you think needs to be included in that guidance to ensure, in particular, that the ombudsman is working effectively with local authorities?

Richard Blakeway: Those are really important questions. The Bill introduces a new framework of rights and responsibilities for both landlords and tenants and, as you set out, the ombudsman service—whoever is appointed as the ombudsman—plays a part in that. I would say as an aside very early on that I welcome the Government’s recognition of the strategic benefits of bringing together the social rented sector and the private rented sector, particularly given the common body of existing and new legislation that is tenure blind and speaks to both the private and rented sector, whether that is the existing Landlord and Tenant Act or the potential to extend Awaab’s law and the decent homes standard. I think there is a real benefit to system coherence and the right relationships, as you highlight, and also to making sure that benefits do not unintentionally fall in the wrong place, by appointing the housing ombudsman as the provider of redress.

I think there are three key relationships. There is the lead enforcement body, and working out the role of that body. In particular, looking at clause 109, information sharing between the ombudsman service and the lead enforcement body will be vital, so codifying that role will be important.

There is the tribunal, which we have alluded to. One of the really important pieces of work is to develop, very early on—I would have thought in advance of any statutory instruments—a draft scheme for the ombudsman service, and to collaborate with a number of bodies, including the courts, on what is in the scheme and therefore the decisions that the ombudsman might take, and what is outside it and clearly rests with the courts. I have given the example of section 13. The ombudsman could potentially play a role in looking at aspects of section 13, which might relieve pressure on the courts.

There is then the relationship with local authorities and enforcement. On the database itself, I think there has to be a decision about who owns the database and is going to provide it—whether it sits with the Department or the lead enforcement agency, for example—and the pace at which it could be developed to support the introduction of the redress service.

One of the other areas to consider, where there may be a pressure that emerges in the system—a pressure that I think the legislation recognises but could go further to address and relieve—is enforcement. The Government have rightly indicated that there is concern around compliance with ombudsman remedies. There was a survey in, I think, 2018 that showed 46% of private landlords not complying. At the moment, the Bill includes a kind of last resort to try to enforce compliance, which would be introduced later through statutory instruments. I wonder whether consideration should be given to bringing that forward, so that compliance issues are not having to be directed towards local authorities, and creating pressures there.

I also wonder whether the legislation could go further by, for example, amending clauses 66 and 96 to include rent repayment orders as part of non-compliance with ombudsman decisions. The Bill is rightly clear that if a landlord does not sign up to the ombudsman service then it could be subject to a rent repayment order, but it is silent on whether a landlord that is non-compliant with the ombudsman’s decisions should also be subject to a rent repayment order. I think that if you were to introduce that, that would strengthen compliance and reduce the need to direct things around the system to try to address them.

Renters' Rights Bill (Second sitting)

Debate between Matthew Pennycook and David Simmonds

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[David Simmonds]

Q Thank you. That is a really helpful point. Are the terms of the new possession grounds introduced by the Bill reasonable for both tenants and landlords? In summary, do you feel that the Bill gets the balance right?

Liz Davies KC: I am concerned about mandatory grounds 1 and 1A. Clearly, they bring an end to no-reason evictions, with the end of section 21, but they are still no-fault evictions as far as the tenant is concerned. It is helpful that the period will be one year and that there is four months’ notice, rather than the two months’ notice in the previous version of this Bill, the Renters (Reform) Bill. But I am concerned that the balance is not right.

Mainly, I am concerned about the idea of a court being faced with mandatory grounds when the tenant has done nothing wrong, and there may be incredibly compelling circumstances about the tenant but the court cannot look at them; it has absolutely no remit and no jurisdiction. So the tenant might say—I am sorry to have to say this—“Myself or a member of the household has a very serious terminal illness. To ask me to move within four weeks or two weeks, or what have you, is going to have an appalling effect on that.” They might say, “We have a very severe disability and so it will take us longer than other people to find somewhere to live.”

My preference would be to make all grounds discretionary, because I think that does provide the balance. But even if Parliament were to reject that view, it seems to me that courts ought to have the opportunity, in exceptional circumstances, to look at the tenant circumstances and to either reject a possession order, or have the flexibility to make a possession order that is suspended for a certain period of time—postponed for a certain period of time. It seems to me wrong in principle that a court cannot consider any circumstances of the tenant, whatever they are. That is my concern on 1 and 1A, and I think Justin will speak about 6A.

Justin Bates KC: Can I ask you to also look very carefully at ground 6A when it comes to scrutiny? Ground 6A is the new ground for possession, where the landlord needs possession, because they are on the banned landlord database or because they are operating an overcrowded house in multiple occupation—the landlord is effectively a criminal landlord and needs possession to deal with the consequences of their criminality. Presently, that is a mandatory ground for possession. I understand why, because I can see that there is a difficulty with one arm of the state saying, “You are breaking the law and you will keep breaking the law if we don’t act, and we won’t allow you to get people out.”

Can I flag two concerns? First, there is a concern among those in frontline tenant services that it will act as a disincentive to people reporting their rogue landlords, because if you report your rogue landlord to the local authority and it then puts them on the banning order list, you face a mandatory ground for possession.

Secondly, it strikes me as odd that a tenant who has done nothing wrong—save had the misfortune to have a criminal landlord—is required to move with no compensation and no provision of suitable alternative accommodation and so on. I can understand why we need 6A. I understand that we do not want to leave people committing crimes because a judge will not give a possession order, but it strikes me that you could look at some sort of compensation scheme. If you were minded to do so, the model is section 34 of the Housing Act 2004, which already gives the tribunal the power to order compensation when people have to leave because of prohibition orders. You could steal lots of the language from section 34, put it into ground 6A, and you would have much less scope for the unfairness that seems to me to be evident.

Giles Peaker: On the broader question of whether a balance is struck, I think it is a political decision as to where the balance falls, but broadly there is one. I do have specific concerns about 1 and 1A, as well as those raised by Liz, which are in terms of the evidencing of a mandatory ground. If the ground is the landlord wants to sell, or the landlord wants to move in or move in a family member, what standard of evidence is required for them to demonstrate that? In terms of the current wording, it would probably be enough to simply express an intention to do so. My sense is that there needs to be at least a level of formality—a signed declaration of truth on a statement or a particulars claim signed by the landlord—in terms of bringing possession proceedings on the back of that.

But there is also what follows on from that, and I think this issue has come up in Scotland, where there is a similar sort of provision. If a landlord re-lets a property within the 12 months proposed, the potential enforcement is great: it is a criminal breach, with a prospective civil penalty, and a prospective rent repayment order application by the former tenants. That is all great. The question is how you get from the possession order being made to action on the breach. As it stands, it appears that the only way in which that could possibly happen is if the ex-tenants realise that the property has been re-let—heaven knows how, and heaven knows where they will be in the country by that point—and then notify the local authority, which can take enforcement action. It strikes me that there should be some kind of recording that that ground has been used—a landlord database might be a place for that. The local authority can be aware that that ground has been used, and if it becomes aware of a re-letting, the full enforcement apparatus can kick in.

[The Minister for Housing and Planning (Matthew Pennycook)]

Q Thank you all for coming to give us your expert opinion. I have two questions, one specific and one general. First, to follow up on grounds 1 and 1A, I understand the general push for all grounds to be discretionary, but we took a view that these should be mandatory, in terms of getting that balance right. But I very much hear the points being made about evidential requirements.

Could I ask you to draw out a bit further how you expect this to work? In a sense, when we talk about discretionary grounds, we are always told, “Let’s trust judges”—that was certainly the case with the previous Bill. In a sense, what we intend to do here is trust judges’ judgment on whether those grounds have been used appropriately, and we would expect the type of evidence that they look at to include things like a letter instructing solicitors or an affidavit. But do you not expect the courts to operate in that way on the basis of the Bill? Do you expect them to act in a more light-touch way, as you have suggested? It is not usual practice for Governments to force the courts to consider certain types of evidence, and if that is the case—if you accept that—where do we go to try to influence the courts to look at certain categories of evidence, to ensure that these grounds are being used appropriately?

Giles Peaker: In terms of how you can specify things, to some degree, it is a question of wording. Grounds 1 and 1A are expressed as an intention, and if the intention is there, the ground is made out. If a landlord has written to the court to say, “I intend to sell”, it seems quite difficult for the court to go behind that, unless the tenant has evidence to the contrary. So partly it is around language. Intention—settled intention—needs looking at. But with different wording, a different evidential requirement may well follow—so potentially, as you say, the landlord would have to evidence engagement with an estate agent or a solicitor on a sale, or would need evidence from the relative who was intending to move in, to the same effect.

--- Later in debate ---

[David Simmonds]

Q I have one final question. I would like to explore the specifically rural and agricultural aspect of this. I know it is common in rural areas for properties to have things like agricultural worker conditions on their occupation and for properties to be provided with a licence to occupy rather than through a tenancy in the traditional sense, because the accommodation is connected with the work that the person does at that specific location. What is your view of how the Bill will impact or deal with those types of situations?

Judicaelle Hammond: We are grateful to the Government for the new ground 5A, which deals with incoming agricultural workers. That will help—no question about that. And we are grateful for the new ground 5C, which is a ground to get property back because a job has ended, where the property was limited to the employment.

There are a couple of other grounds that are not covered at the moment and would be needed for rural businesses. The vast majority of rural businesses are not linked to farming or agriculture, but there might still be times when—we hear this from our members all the time—the provision of accommodation is necessary to attract or retain people, particularly when there is nothing else around. They could be in a really remote rural area or it could be because, for example, the person in that job needs to be on call, which would apply to security, caretakers or vets. Or it could be for people working antisocial hours in hospitality, for example, or at a wedding venue, where there is no longer public transport available at the time they are meant to finish or they need to start really early to set up before the wave of tourists come—and so on.

Increasing and expanding ground 5A to include service occupancies in very defined circumstances would be really helpful. To avoid abuse, there are definitions of what that could cover in other legislation that could be referred to. That is the main ground.

The second ground that is needed for agricultural workers is a new ground for what is known as suitable alternative accommodation. Some categories of agricultural workers have protected tenancies under existing legislation—the Rent (Agriculture) Act 1976—and assured agricultural occupants are also protected under the Housing Act 1988. For example, you might have a retired dairyman or indeed their widow who is still in the main dairy. You need to recruit somebody to replace that dairyman. If you have more than one property, it would be useful to have a ground to get it back, in order to then move the retired dairyman or the widow in that property. Obviously, if you have only one property, it is game over, but in the case that you have a small portfolio, it would be really useful to have that, because you have a legal obligation to rehome that person but you need the property in which they currently are.

[Matthew Pennycook]

Q In response to the previous Government’s White Paper, “A fairer private rented sector”, you questioned whether we should look to introduce a decent homes standard to the private rented sector. Is that still your view and, if so, could you elaborate on why?

Judicaelle Hammond: Yes, sure. I think it needs updating because it was designed for problems in the social sector. It might or might not be applicable to the private rented sector. It also does not deal very well with older properties, which is the vast bulk of what our members have. To judge the private rented sector against the decent homes standard as it currently is would be, I think, misleading, and it would have all sorts of unintended consequences. For example, in small cottages in rural areas, there are typically very small kitchens and so on. They would not necessarily fit, and it would destroy the character if you were to change that—

--- Later in debate ---

[David Simmonds]

Q Final question: what are the main consequences you expect from the Bill for residential landlords and tenants in the private rented sector?

Anna Evans: For tenants, the positives are a new foundation of rights and there should be more legal security. Tenants in Scotland enjoy open-ended tenancy and specific grounds for eviction, and there are longer notice periods. It is gradually moving to more of a contractual, rather than a subjective, relationship.

I should say, though, that there are very considerable differences in satisfaction between the general population of private rented tenants and the lower end, where lower income tenants or those who are more vulnerable are still disadvantaged. That is because of the overriding demand-supply imbalance. There is a fear among tenants about challenging, if they know that there are very few affordable alternatives on the market.

For landlords, I would say that they are generally settled with the private residential tenancy now—it has been in place for over five years, and they can see the consistency in practice and greater clarity in rights and responsibilities. Clearly, it is less flexible, but the difficulties that landlords have in Scotland are to do with subsequent legislation, and in particular, rent control.

[Matthew Pennycook]

Q Perhaps I can just check this, because I am not entirely clear: did your organisation author the Nationwide Foundation report?

Anna Evans: Yes.

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[David Simmonds]

Q Briefly, there is another subset of a broader issue around things like the decent homes standard. We have heard from various sources of evidence that there is a need to ensure that property owners have the time and necessary support to achieve that. We know in the rest of the UK housing stock that that can be a challenge due to the physical nature of it. What are your views as to how the Bill addresses that issue?

Timothy Douglas: From Propertymark’s point of view, we want to see warm, decent homes. The agent can actually be a layer of enforcement, whether they instruct the landlord to take on that property or not, as well as mortgage providers. Unlike social housing, which is designed to specific specifications, the property redress scheme comprises a range of property without specification. The decent homes standard was argued about in the previous Session. It was consulted on by the last Government. There were numerous working groups with the last Government and, yes, it is going to be consulted on again.

From Propertymark’s point of view for the private rented sector, we have to link up with local authority assessments. We have to focus on fit-for-purpose. I know that local authorities—certainly a local authority in the midlands—will, without fail, change all the boilers every five years in their housing stock. I am sorry, but private rented landlords do not have the money to do that, and the social rented sector has received billions of pounds in eco funding as well. If we are to get that parity between the private and social rented sector, the private rented sector needs to see that funding come forward, certainly in the thermal comfort space—cool in the summer, warm in the winter. Why, for the 18 different archetypes of property across the country, are we going for a one-size-fits-all energy efficiency target? That is going to nullify older properties in England and Wales where the regulations extend and rural properties. Let us simplify the HHSRS as well. There are existing levers that we need.

Finally, on this point about extending decent homes and Awaab’s law, we welcome these steps as long as we get them right for the uniqueness of the private rented sector. In the Social Housing (Regulation) Act 2023, which was passed in the last Parliament, there is a requirement for all property managers in the social rented sector to be qualified. We think that should be extended to the private rented sector to all letting agents as well. If we can get that code of practice in place through adjudication and redress, we can qualify our letting agents. We get parity, drive up standards and help enforcement. That would certainly go a long way towards the decent homes standard and Awaab’s law being implemented in this sector.

[Matthew Pennycook]

Q Melanie, can I address a specific question to you about suppliers? There has been a lot of discussion today about the mismatch between supply and demand. We have touched on the provisions in the Bill about how tenants can challenge within-tenancy rent increases and so on. In terms of overhauling the private rented sector, the Bill is part of a wider transformation of the housing system that we want to carry out. There is absolutely a chunk of private renters, particularly in the bottom half of the market, who should be in social rented housing, and we want to build more of that, but we also want to grow future supply in the PRS. What do you think the Bill will do specifically to build-to-rent providers? Do you think they will accommodate themselves to these changes? Are there lingering concerns that you think will impact on investment in that future supply and professionalising the private rented sector as we grow it?

Melanie Leech: The first thing to say, as you know, is that institutional investment into the build-to-rent sector specifically is a growing part of the housing supply mix. It is bringing in genuinely additional investment, because it is the type of investment that does not typically invest in build to sell—you have people wanting to use large amounts of capital to generate secure income streams so that they can match against pension liabilities, insurance liabilities and so on. Probably the key word in that is “secure”. Anything that damages investors’ confidence that the income they will get from their investment is at risk will undermine our potential to unlock investment into homes and the rental sector. Currently, the peak year for build-to-rent delivery was 15,000 homes. We think that you can double that to 30,000 homes, with the right conditions, and some of my members would go further and say that you can double that again. We are looking at an investment stream that could be a very significant part of helping to deliver the Government’s aspirations to build more homes.

What I have already talked about, in terms of the ability of the courts to cope with the reforms, is an important indicator of confidence. Investors will look at that and think, “This changes the basis on which I have invested. It makes it more difficult for me to manage the property efficiently.” I think the issues around rent determination also have that potential, so there is nervousness around needing to use section 13 and rent increases. There is a suspicion that tenants have nothing to lose by challenging any rent increase, so it is about getting the framework right around how we define what an unreasonable rent increase might be and how we manage those cases that might come before tribunals. There are some issues around that that we would like to see more clarity around and redressed.

In general, we are really supportive, because in the part of the market that I represent the decent homes standard already would not cause us an issue in terms of implementation and so on. We are trying to raise standards in the private rented sector, and we are raising standards in the private rented sector, but the key thing is to implement the reforms in a way that does not undermine investor confidence, so that we do not inhibit the supply of homes.

--- Later in debate ---

[David Simmonds]

Q Can we move on to licensing schemes? I know there has been much debate in the local government world about them, and I have seen at first hand their operation in London. Would you be able to say a bit about the barriers that exist at the moment to the implementation of licensing schemes? Do you think the Bill sufficiently addresses those barriers?

Cllr Adam Hug: No, we do not think it does. The key thing for us is that you have the current selective licensing mechanisms, but councils face bureaucratic hurdles in terms of getting the Secretary of State’s sign-off for large schemes that wish to go down that route. In terms of ensuring decisions are made at the right level, in line with the Government’s commitment to devolution, we think that for selective licensing to really fulfil its potential we must ensure there is no longer a need for the Secretary of State’s sign-off.

Obviously, that sort of licensing can improve standards in the sector, help councils to recruit environmental health officers, beef up the function and make sure we are playing a proactive role in helping manage the private rented sector in a local area. Different councils have used it, but at the moment it is hamstrung by the bureaucratic hurdle of getting it up to the Secretary of State. Obviously, we have a Secretary of State who is probably more minded to support the use of such schemes than was the case in the past, but it still creates an unnecessary hurdle and a delay when councils could just get on and use these licensing schemes that are desperately needed.

Dr Henry Dawson: May I add some responses? At the moment, we have a maximum five-year duration for discretionary licensing schemes. Once the schemes have been brought into force, it takes a certain amount of time to create the partnerships with other organisations, such as waste and street scene departments, police and antisocial behaviour teams, and antisocial behaviour schemes within the council, other charities and NHS-related bodies. They usually take between one and three years to mature.

Local authorities are also required to entice enough staff to be able to immediately provide a strong inspectorate to run these schemes. That can be anything from five to 50 staff, depending on the size of the scheme. We find that the five-year duration of schemes is a significant impediment, so it would be much more welcome to see something like a 10-year timeframe. That would permit us to train up new staff through the existing one or three-year qualifications. It would also allow these partnerships to mature so we see some of the true benefits of the schemes.

The other thing is that a large private rented sector is required; that is a point that a local authority has to prove when it is setting up one of these selective licensing schemes. We see that as an unnecessary hurdle to their introduction. They are part of a package of measures to address a range of problems associated with housing conditions, crime and antisocial behaviour across an area, and we see that as being an unnecessary impediment to their execution. It is one more thing that the local authority has to prove.

Finally, discretionary schemes, and particularly selective licensing, are one of the few things that provide access to properties. Even though the legislation has been changed, with some regulations to expand the use of selective licensing to include dealing with poor housing conditions, under the Housing Act 2004 we are unable to enforce conditions relating to the condition and contents of a property. We can only change those in HMO licensing conditions; we cannot change them in selective licensing conditions. Therefore, this is the first opportunity that we have really had, with a piece of primary legislation, to amend the Housing Act 2004 to provide parity in what local authority environmental health officers can require in the conditions and contents of properties through selective licensing, in addition to HMO licensing.

[Matthew Pennycook]

Q Could I follow up on the point about local authority enforcement? The Bill introduces an effective, consistent and proportionate framework for enforcement, but we have to ensure that local authorities can enforce in practice, and we know that there is variation across the country in their ability to do so. There is also the wider context about resourcing of local government over the recent period. We are clear that we want to primarily target along the “polluter pays” principle, with bad landlords covering the cost of their own enforcement.

You mentioned the fines—£7,000 for first or minor compliance issues, and £40,000 for more serious ones— and they can be levied repeatedly. I just want to get a sense of how much of the cost of enforcement you think those fines can account for. We recognise that it will not be enough, and that the new burdens principle will have to operate, but have you got a sense of it in terms of, as you say, how many cases are resolved before it reaches that point? What will be the willingness under the new system to levy these kinds of fines, and what proportion of the enforcement costs do you think, on average, local authorities might see those fines account for?

Dr Henry Dawson: Thank you for your question, Minister. At the moment, we have the use of civil penalty notices, and I would defer to a report by the National Residential Landlords Association to provide a summary of their use over the period between 2001 and 2003. We see that approximately £12 million was given in penalties over that period, and around £6 million of that was recorded as collected through penalties over that period.

It is also worth noting that these civil penalty notices are intended to be an alternative to a prosecution through the courts; they are not intended to be a revenue generator. The licensing fees, the ombudsman fee and the database fees are where we can generate the revenue at the front end. These civil penalty notices are being used as a final, ultimate punishment for some of the worst offenders. Yes, we can administer £7,000 for the initial offence and £40,000 for ongoing offenders, but they really are intended to be a deterrent, as opposed to a source of revenue.

The majority—maybe 90%—of a local authority’s work is carried out through informal advice giving, with people ringing up and asking for guidance in what is a very complex legislative environment. That is certainly something that landlords and letting agents would like to have more of. We serve formal legal notices, but it is only when we have gone through a whole series of informal approaches that we move to a formal approach through a legal notice and, ultimately, a prosecution or penalty notice. Therefore, really, we are looking at maybe 5%—to pluck a figure out of the air—which is a tiny proportion of what we have got across the country, and probably the only national figures we have on this are those that have been pulled together by the NRLA.

--- Later in debate ---

[David Simmonds]

Q Anny, I would like to ask about your view on the enforcement regime. Do you feel that what has been outlined in the Bill and how it is likely to be reflected in the real world will be sufficiently robust both to deter rogue landlords from bad practices and to ensure that tenants are able to both enforce their rights and act in accordance with the law?

Anny Cullum: We are pleased to see stricter measures and penalties for landlords laid out in the Bill, and we are particularly happy that new burdens funding will be available to councils to enact them. However, our experience as a tenants’ union is that often councils are so overstretched trying to do the things that they already have to do that tenants are waiting months before getting the support they need. Often their landlords have been given very informal notices and long timescales to get things done, which is no good for a tenant living in a dangerous home.

A great thing about this Bill is that section 21s will be banned. Something that we have seen a lot—we had a member in Sheffield go through this recently—is a local authority coming in and investigating poor conditions in a home, giving an informal notice to the landlord, and the landlord then issuing a section 21; the tenant basically has to pay for the fact that they dared to complain. We are really pleased that that will end, but we think there should be more funding for local authorities, not just extra burden funding for the new things, but for the stuff that they already have to do.

Our union really supports landlord licensing. We have done campaigns in this area in 11 different places around the country. It is incredibly popular with our members; it came out as one of our top motions at our recent conference. If done well, landlord licensing can be self-funding, and—this is a great thing to think about—it gives councils the ability to inspect homes without the tenant having to raise the issue themselves, so you can find out about bad practice and malpractice without the tenant feeling at risk of complaining. Obviously, they will have fewer risks once this legislation comes through, but it will take a long time for tenants to feel comfortable raising their voices, which our organisation tries to help them to do.

We really support the points made by colleagues in the Chartered Institute of Environmental Health. We have campaigned in a lot of places for city-wide landlord licensing, as it is something that our members really care about, but a lot of councils have told us that they are not willing to take the risk of trying to implement wider licensing schemes, because they can be turned down by the Secretary of State. They have said that the work you need to do to put that application in is quite labour-intensive, and they do not want to risk doing all that work for it not to come to fruition. In the spirit of devolution and supporting local authorities to do the job they should be doing, give them back powers to license as much of the city as they want, increase the term to up to 10 years, and do away with the bureaucratic hurdles and the evidence gathering they need to do to get the wider licensing schemes.

[Matthew Pennycook]

Q Given the time, I will ask you a more general question. Do you think—it sounds like you do—that the Bill broadly strikes the right balance and properly delivers for renters? Are there any omissions, things you would like us to address or parts of the Bill you think we need to look at more carefully?

Anny Cullum: One area our Members feel particularly strongly about that could be strengthened in the Bill to ensure that it delivers the change we all want to see is measures against illegal evictions. It will be wonderful when section 21 is banned, but we know that there are lots of landlords who issue section 21 eviction notices in response to tenants complaining, because they do not want to maintain their properties. For that unscrupulous group, we are worried that illegal evictions might take the place of section 21 evictions once section 21s are banned. We feel that the Bill could go further to make sure that this is not an easy option for them to take.

Hardly any cases of illegal eviction ever make it to court. Safer Renting data showed that there were 26 prosecutions in 2022—the year we have the most recent data for—but it knew about 9,000 cases of illegal eviction. Even when illegal evictions get to court, the fines are £1,000. That is less than my monthly rent. It is not a deterrent for the average landlord. We would like to suggest some changes to make sure that this is not used as a back door to get around the legislation.

We would like to see local councils given a statutory duty and the funding to investigate all cases of illegal eviction. Recently we had a member in Leeds whose landlord kept issuing false eviction notices—ones that he could not go to his local council to ask for support with, so he stayed there. The landlord used many different underhand ways to try to force him out, including sending men with knives to cut the wires in his house so that he did not have any electricity. He has been on the phone for hours to his council and the police, and they have not been very helpful. We want to see those bodies empowered with both the duties and the money to act for tenants.

Police forces need more training. I have supported tenants who landlords have tried to intimidate out of their house. The police do not seem to know that this is a criminal offence or that they have the ability to act on it, so it would be good if there was training on that. We would also like it to be made easier for people and councils to take these criminal cases forward. It can be quite hard to meet the evidence threshold needed to get a rent repayment order, so we would like to see changes there, which I have laid out in our written evidence. We would also like the civil penalty notices that councils can use to be raised to up to £60,000. I know that sounds high, but being forced out of your home with your family is a horrendous thing to happen to anyone. We want to ensure that this is treated with the seriousness that it deserves.

Illegals eviction is one area that my members asked me to speak about. I have also spoken about landlord licensing. A further issue is rent in advance. We are overjoyed that this Bill will end bidding wars, which is something we have campaigned for in different places across the country. We have tried to get agents themselves to pledge not to do it and then mystery shopped them to make sure that they are not. But if you allow agents and landlords at the start of a tenancy to ask, “How many months up front can you give me? Someone else said they could give me a year”, that is another form of bidding war, just at a different point of the process.

We conducted some research at the start of this month and found that benefit claimants were three times more likely to be asked for a year’s rent up front than people not claiming benefits. We are pleased that the Government are keen to crack down on discrimination in the private rented sector against people on low incomes, but this is one way that it is happening and we feel that the Bill could do more on that issue. I have two more areas that my members want me to speak to, if that is okay.

Oral Answers to Questions

Debate between Matthew Pennycook and David Simmonds

Monday 2nd September 2024 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

We share the ambition of seeing a big increase in the supply of housing, and of social housing in particular. Given that there are around 1.4 million new homes with planning consent already granted in this country, what process led the Government to prioritising the removal of green-belt protections rather than building the homes for which our councils have already given consent?

[Matthew Pennycook]

What I would say to the hon. Gentleman is that we are doing both. We are making changes to the national planning policy framework to encourage the release of the right kind of lower-quality grey belt land within the green belt, and we are taking action to ensure that those sites across the country that have received consent but which are stalled or are not being built at the pace required, are moved along with additional support from the centre.

[David Simmonds]

The previous Government made new measures available to local authorities to encourage borrowing against the housing revenue account to enable the creation of new council housing. What measures do the Government have in mind to increase the take-up of this approach by our local authorities?

[Matthew Pennycook]

We are committed to working with councils, including with the signatories of the recent report on securing the future of council housing, to address the many challenges they are facing, including in connection with the housing revenue account headroom as many of them are feeling lots of pressure on that front. As a first step, we have given councils more flexibility to increase the delivery of council homes using right-to-buy receipts, and allocated an additional £450 million to councils to secure homes for families at risk of homelessness. We will set out plans at the next fiscal event to give councils and housing associations the rent stability they need to borrow and invest in new and existing homes.