Renters' Rights Bill (Seventh sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[Matthew Pennycook]

The clauses cover financial assistance provided by the Secretary of State to the PRS ombudsman and database, rent repayment orders and the interpretation of part 2.

On clause 95, we intend the private rented sector database and ombudsman to be self-funded through landlords’ registration or membership fees. However, clause 95 gives the Secretary of State the ability to give financial assistance to a person carrying out functions related to the PRS ombudsman or database provisions. Assistance will be granted in the event of an emergency, unforeseen circumstances or to cover enforcement shortfalls in particular circumstances.

Clause 96 concerns rent repayment orders. As members of the Committee will know, an RRO is an order made in the first-tier tribunal requiring a landlord to repay a specified amount of rent, either to the tenant or to the local housing authority, for a range of specified offences. The amount owed under an RRO is enforceable as if it were a debt in the county court. To grant an RRO, it is not necessary for the landlord or agent to have been convicted, but a tribunal must be satisfied beyond reasonable doubt that one of the offences has been committed. Presently, an RRO can require the repayment of a maximum sum of 12 months’ rent.

Rent repayment orders were introduced by the Housing Act 2004 and extended through section 40 of the Housing and Planning Act 2016 to cover a wider range of offences. RROs are an accessible, informal and relatively straightforward means by which tenants can obtain redress in the form of financial compensation, without having to rely on another body in instances where a landlord or his or her agent has committed an offence. For that reason—as you know better than anyone, Mr Betts—they have proved an extremely effective means for tenants and local authorities to hold to account landlords who fail to meet their obligations. RROs empower tenants to take effective action against unscrupulous landlords, but they also act as a powerful deterrent to errant landlords.

The previous Government’s Renters (Reform) Bill brought a number of continuing or repeat breaches or offences within the purview of rent repayment orders. In our view, it did not go far enough. We made the case at the time—ultimately without success, it must be said —that RROs should be a more significant feature of the Bill. I am therefore pleased that our Renters’ Rights Bill significantly expands rent repayment orders.

At this point, it would be remiss of me not to pay tribute to the late Simon Mullings, who unexpectedly died recently while on holiday in Scotland. Spike, as he was known by many, was a real enlarger of life and a real force for good in the sector, helping a great many families in need. His work on RROs, not least in the Rakusen v. Jepsen case, which went to the UK Supreme Court, and the exchanges we had in relation to the Renters (Reform) Bill in the last Parliament heavily influenced our approach to the legislation before us. He is sorely missed, and I thought it was right for me to make special mention of him, given how he has influenced the clauses we are discussing.

Clause 96 makes a series of important measures that strengthen rent repayment orders. First, it expands rent repayment orders to new offences across the Bill, including those in relation to tenancy reform, the ombudsman and the database. That ensures robust tenant-led enforcement of the new measures and supports better compliance with the new system. Secondly, the clause ensures that for all the listed offences, the tribunal must issue the maximum rent repayment order amount where the landlord has been convicted of, or received a financial penalty for, that offence or has committed the same offence previously. The intention is that rent repayment orders will provide an even stronger deterrent against offending and reoffending. Finally, clause 96 makes it easier for tenants and local authorities to apply for rent repayment orders, by doubling the maximum period in which an application can be made from the current 12 months to two years.

Clause 97 explains what activities constitute marketing a property to let and what comprises letting agency work. Landlords, letting agents and other persons will be prohibited from marketing residential properties to let, unless the landlord has registered with the private rented sector database and ombudsman scheme. Renters will benefit from knowing that a landlord has registered with the database, and tenants should be able to seek redress for issues that occur during the pre-letting period. We will retain the flexibility to narrow the definition of letting agency work by regulations in the future, if that is needed.

I commend the clauses to the Committee.

Question put and agreed to.

Clause 95 accordingly ordered to stand part of the Bill.

Clauses 96 and 97 ordered to stand part of the Bill.

Clause 98

Decent homes standard

[Mr Gideon Amos (Taunton and Wellington) (LD)]

I beg to move amendment 72, in clause 98, page 117, line 20, at end insert—

“(ia) the availability of which is secured by the Secretary of State under paragraph 9 of Schedule 10 of the Immigration Act 2016, or sections 4 or 95 of the Immigration and Asylum Act 1999;

(ib) that is provided by the Ministry of Defence for use by service personnel; or”.

This amendment would extend the Decent Homes Standard to accommodation provided to people on immigration bail and to that provided by the Ministry of Defence to service personnel.

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[Mr Amos]

It is a pleasure to serve under your chairmanship, Mr Betts, particularly as I know your expertise in this policy area. Amendment 72 would apply the proposed decent homes standard both to accommodation for refugees and people seeking asylum, and to accommodation provided by the Ministry of Defence for serving personnel. As I stated on Second Reading, it would be perverse, now that we have a decent homes standard for social housing and this Bill proposes a decent homes standard for the private rented sector, to leave our serving military personnel as one of the only groups not benefiting from decent living accommodation.

In debate on the Renters (Reform) Bill, my hon. Friend the Member for Twickenham (Munira Wilson), speaking on behalf of our hon. Friend the Member for North Shropshire (Helen Morgan), spoke about RAF Shawbury and Tern Hill barracks in north Shropshire, where the service accommodation was plagued by black mould, rat infestations and chronic overcrowding, meaning that individuals who have put their lives on the line for our country are not necessarily guaranteed a warm and safe place to live in return. I agree with the words of my hon. Friend the Member for Twickenham:

“That is no way to treat people who have put their lives on the line to serve this country…they deserve better.”—[Official Report, 24 April 2024; Vol. 748, c. 1004.]

I am grateful to the Minister for advising the House on Second Reading of this Bill that

“the MOD is reviewing its target standards so that we can drive up the quality of that accommodation separately from the Bill.”—[Official Report, 9 October 2024; Vol. 754, c. 412.],

but this is a long-running issue, and no doubt any Government at any time on any day in any month would say that they were “reviewing” the situation. Frankly, that is not going far enough.

Next week, of course, we will be commemorating those who sacrificed everything for our country. It would be appropriate, would it not, for the Government to take the opportunity under this Bill to commit to giving service personnel a decent homes standard for the public buildings in which they live? I have to say that the Government’s current position is a bit disappointing. I hope that the Minister will update that position, the more so because it falls short of the position taken by the previous Conservative Government, which is something of a surprise from where I am on the Liberal Democrat Benches. I hope very much that the Minister will update the position.

As the hon. Member for Ruislip, Northwood and Pinner will no doubt remember, the former Minister and then Member for Redcar, Jacob Young, in response to the equivalent amendment proposed to the Renters (Reform) Bill by my hon. Friends, made the commitment on Report that the Conservative Government would

“ensure that service accommodation meets the decent homes standard”.

However, he also said:

“Service…accommodation has unique features…including a significant portion being located on secure military sites where there will be issues around security and access for inspections.”

Therefore, like the Minister today, he recognised the unique challenges. However, he said that with

“the appropriate monitoring and reporting arrangements”,

the Government

“intend to ensure that service accommodation meets the decent homes standard”.—[Official Report, 24 April 2024; Vol. 748, c. 1029.]

Can it really be the case that the new Government are backtracking on the commitment of the last Government when it comes to decent homes for our serving military personnel? I certainly hope not.

In earlier sittings, this Minister emphasised that the exact nature of the standard would be subject to consultation, and clause 98(4) makes provision for exactly that consultation. I do not suggest that private rented housing would necessarily have poorer standards than the decent homes standard that applies to social housing. However, it is clear in clause 98 that the Government intend to develop a distinct standard appropriate to the private rented sector. What greater opportunity is there for the clause to ensure that the Government also develop a distinct decent homes standard that would be appropriate for the MOD conditions described earlier?

Finally, there is no doubt that tenants taking refuge here from war or other disasters in their own countries, who are awaiting determination of their asylum applications and many of whom have served our military and British forces in theatres of war such as Afghanistan, should also be in decent homes. Incidentally, the Liberal Democrats believe that asylum seekers should be working for that accommodation, so that they can earn for themselves and pay for it, but that does not take away from the fact that those families should not be in poor accommodation and should have decent homes.

I strongly urge the Minister, and the Committee as a whole, to recognise that the Bill provides a legislative opportunity, one that may not come again in this Parliament, to do right by those who should have decent homes. I urge the Committee to support the amendment and finally bring a long-running campaign to a successful conclusion, such that military accommodation will meet the decent homes standard.

[Matthew Pennycook]

We now move to part 3 of the Bill, concerning the decent homes standard. As members of the Committee will be aware, the private rented sector has the worst conditions of any housing tenure. More than one in five privately rented homes fail to meet the current decent homes standard, which sets a minimum standard for social housing. That equates to around a million homes. We are determined to tackle the blight of poor-quality homes and to ensure that tenants have the safe and decent homes they deserve. To do that, we will apply a decent homes standard to privately rented homes for the first time.

Clause 98 allows regulations to be made setting out the decent homes standard requirements that private rented homes must meet. As the hon. Member for Taunton and Wellington just mentioned, the Government will be consulting on the content of that standard, and we will set out the details of our proposals in due course. We want as many private rented sector tenants as possible to benefit from the decent homes standard. It will therefore apply to the vast majority of privately rented dwellings and houses in multiple occupation that are let under tenancies, as well as privately rented supported housing occupied both under tenancies and licences.

It is our intention that as much privately rented temporary homelessness accommodation as possible is covered by the decent homes standard too, but we need to avoid reducing the supply of such housing. Clause 98 therefore allows, following a consultation, temporary accommodation to be brought within scope of the standard through regulations. We are committed to engaging with the sector to assess the potential impacts and to ensure that our approach strikes the right balance.

Schedule 4 establishes a robust but proportionate enforcement framework for the decent homes standard. Local councils already have a wide range of powers to take action when properties contain hazards. Schedule 4 will allow those enforcement powers also to be used where private rented homes fail to meet decent homes standard requirements. It also gives councils a new power to issue financial penalties of up to £7,000 where the most dangerous hazards are found, as well as taking other enforcement action. That will provide a strong incentive for landlords to ensure that their properties are safe.

In most instances, the landlord who lets out the property to the tenants will be responsible for ensuring that it meets the decent homes standard. To reflect that, the schedule provides that the landlord will be subject to enforcement by default. However, some circumstances are more complex, such as leasehold properties and where rent-to-rent arrangements are being used. The schedule gives councils the flexibility in such situations to take enforcement action against the appropriate person. The schedule also allows for the fact that there will be legitimate reasons why some properties will not be able to meet all elements of the standard—for example, if a property is a listed building and consent to make alterations has been refused. Local councils will be able to take a pragmatic approach to enforcement in such cases. We will publish statutory guidance to support them in dealing with such issues in a way that is fair for both tenants and landlords.

We have tabled a number of minor Government amendments to ensure that clause 98 and schedule 4 work as intended. It is important that local authorities can take enforcement action against the person responsible for failures to meet quality standards. The amendments will ensure that the appropriate person can always be subject to enforcement action in respect of health and safety hazards in temporary homelessness accommodation.

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[Matthew Pennycook]

I will respond briefly, partly because a number of the issues raised are outside my ministerial responsibility. I commit to replying in writing to the points raised in relation to the responsibilities of the Home Office and the Department for Education, to give the Committee more clarity. Some of those details will come out when we consult. Everyone is assuming that we are talking about the decent homes standard as if it exists—it does not exist. We need to consult on what those specific standards will be and introduce the regulations.

The powers we have given ourselves in the measures will ensure that the standard can be extended to temporary accommodation, and to other types of housing provision where needed. I will happily come back on the point that the hon. Member for Bristol Central raised about the provision of asylum accommodation.

[Mr Amos]

The hon. Member for Ruislip, Northwood and Pinner believes that the commitment from the last Government that the decent homes standard will be applied to Ministry of Defence housing still stands, but the Minister says that the decent homes standard will not apply to MOD homes and instead that the MOD has it under review.

[Mr Amos]

That is not consistent with what Jacob Young said in 2023, as recorded in Hansard, namely that the intention was to extend the decent homes standard to cover Ministry of Defence accommodation. That is the intention of the amendment. That is why I tabled it and why my hon. Friend the Member for North Shropshire tabled it in the last parliamentary Session. We are hearing that someone in the MOD has it under review. At the moment, that is not a huge reassurance. The whole subject of MOD housing and the need for serving personnel to benefit from it has been omitted.

The Minister mentioned the difficulty of enforcing the decent homes standard because MOD accommodation is behind the wire, but according to him we know that 96% of MOD accommodation would meet the standard. That work has been done, surveys have been carried out and the information is being freely exchanged, so clearly it is not that difficult to inspect the accommodation and understand what standard it meets. All accommodation on MOD bases can be easily accessed with the permission of the officer commanding the base. All sorts of inspections are carried out on MOD bases.

I accept that the Government are supportive of the principle of improving the standard of asylum seeker accommodation, but as with MOD housing, the fact that it is under review is not much of an assurance. I therefore will not withdraw the amendment.

[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.

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[Matthew Pennycook]

We have been in office for a little over 120 days, so the hon. Gentleman will forgive us for not publishing information about every action that we are taking. I will make him this offer: I will take his point away to MOD Ministers who we are in conversation with, and if I cannot give him further assurances through written correspondence about the process that the MOD intends to take forward, including in response to his specific point about timelines, he is more than welcome to push the amendment at a later stage. However, at this stage I urge him to accept that we think there are good reasons why this is not the legislative vehicle to take the amendment forward. The objective is shared; from our point of view, this is about the means by which it is most appropriately achieved.

[Mr Amos]

Given the assurance that the Minister has generously given, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 24, in clause 98, page 118, line 27, at end insert—

“(ba) a building or part of a building constructed or adapted for use as a house in multiple occupation if—

(i) it is for the time being only occupied by persons who form a single household, and

(ii) the accommodation which those persons occupy is let under a relevant tenancy or is supported exempt accommodation,

except where the accommodation which those persons occupy is social housing and the landlord under the tenancy, or the provider of the supported exempt accommodation, is a registered provider of social housing,”.

This expands the definition of “qualifying residential premises”—and therefore expands the scope of the power in new section 2A inserted by this clause—so as to catch HMO accommodation which is occupied by only one household (and therefore does not count as an HMO because it is not actually in multiple occupation).

Amendment 25, in clause 98, page 118, line 34, after “(b)” insert “, (ba)”.—(Matthew Pennycook.)

This is consequential on Amendment 24.

Clause 98, as amended, ordered to stand part of the Bill.

Schedule 4

Decent homes standard

Amendments made: 26, in schedule 4, page 186, line 4, leave out sub-paragraph (3) and insert—

“(3) After subsection (8) insert—

‘9) But unoccupied HMO accommodation is “qualifying residential premises” for the purposes of this Part only to the extent provided for by section 2B(1)(ba).’”

This is consequential on Amendment 24.

Amendment 27, in schedule 4, page 202, line 5, leave out from second “premises” to “, and” in line 6 and insert “other than—

(i) homelessness accommodation (see paragraph B1), or

(ii) common parts (see paragraph 4)”.

This excludes homelessness accommodation from the scope of the new paragraph A1. Instead it is dealt with by the new paragraph B1 inserted by Amendment 29. (Common parts are already excluded from new paragraph A1.)

Amendment 28, in schedule 4, page 202, line 11, leave out from beginning to second “the” in line 13 and insert—

“(1A) Sub-paragraph (2) applies in relation to the premises if they are—

(a) a dwelling or HMO let under a relevant tenancy,

(b) an HMO where at least one unit of accommodation which forms part of the HMO is let under a relevant tenancy, or

(c) a building or a part of a building constructed or adapted for use as a house in multiple occupation if—

(i) it is for the time being only occupied by persons who form a single household, and

(ii) the accommodation which those persons occupy is let under a relevant tenancy.”

This is consequential on Amendment 24.

Amendment 29, in schedule 4, page 202, line 31, leave out paragraph (b) and insert—

“(4) In this paragraph—

“common parts” means common parts that are qualifying residential premises by virtue of section 2B(1)(d);

“homelessness accommodation” means accommodation in England—

(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and

(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).

Service of improvement notices: homelessness accommodation (whether or not it is qualifying residential premises)

(1) This paragraph applies where the specified premises in the case of an improvement notice are homelessness accommodation (which has the same meaning here as in paragraph A1).

(2) The notice must be served on any person—

(a) who has an estate or interest in the premises, and

(b) who, in the opinion of the local housing authority, ought to take the action specified in the notice.

(3) This paragraph applies instead of paragraph 1, 2 or 3 (in a case where that paragraph would otherwise apply to the improvement notice).”

The definitions are consequential on Amendment 27. The new paragraph B1 provides for the service of all improvement notices relating to homelessness accommodation (and replaces the current provision which only catches notices about requirements under regulations under section 2A).

Amendment 30, in schedule 4, page 203, line 5, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.

This is consequential on Amendment 24.

Amendment 31, in schedule 4, page 203, line 8, at end insert “or

(c) are a building or a part of a building constructed or adapted for use as a house in multiple occupation—

(i) that is for the time being only occupied by persons who form a single household, and

(ii) where the accommodation which those persons occupy is let under a relevant tenancy,”.

This is consequential on Amendment 24.

Amendment 32, in schedule 4, page 203, line 12, after “tenancy.” insert—

“(2B) Where—

(a) sub-paragraph (2A) does not apply in relation to the specified premises,

(b) the specified premises consist of or include the whole or any part of a building containing homelessness accommodation, and

(c) the person providing the homelessness accommodation—

(i) is a tenant of that accommodation under a tenancy which has an unexpired term of 3 years or less (the “short tenancy”), and

(ii) accordingly is not an owner in relation to the homelessness accommodation (see section 262(7)(b)),

the authority must also serve copies of the order on any person who, to their knowledge, is a tenant under the short tenancy, a landlord under the short tenancy, or a superior landlord in relation to the short tenancy, and who is not otherwise required to be served with a copy of the notice under this paragraph.

(2C) In sub-paragraph (2B) “homelessness accommodation” means accommodation in England—

(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and

(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).”

This requires copies of a prohibition notice to be given where homelessness accommodation is provided by a person who is a tenant of the accommodation under a lease with an unexpired term of 3 years or less.

Amendment 33, in schedule 4, page 203, line 13, leave out “after “(2)” insert “or (2A)”” and insert “for “sub-paragraph (2)” substitute “this paragraph””.

This is consequential on Amendment 32.

Amendment 34, in schedule 4, page 203, line 28, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.

This is consequential on Amendment 24.

Amendment 35, in schedule 4, page 203, line 31, at end insert “or

(c) are a building or a part of a building constructed or adapted for use as a house in multiple occupation—

(i) that is for the time being only occupied by persons who form a single household, and

(ii) where the accommodation which those persons occupy is let under a relevant tenancy,”.

This is consequential on Amendment 24.

Amendment 36, in schedule 4, page 203, line 35, after “tenancy.” insert—

“(2B) Where—

(a) sub-paragraph (2A) does not apply in relation to the specified premises,

(b) the specified premises consist of or include the whole or any part of a building containing homelessness accommodation, and

(c) the person providing the homelessness accommodation—

(i) is a tenant of that accommodation under a tenancy which has an unexpired term of 3 years or less (the “short tenancy”), and

(ii) accordingly is not an owner in relation to the homelessness accommodation (see section 262(7)(b)),

the authority must also serve copies of the order on any person who, to their knowledge, is a tenant under the short tenancy, a landlord under the short tenancy, or a superior landlord in relation to the short tenancy, and who is not otherwise required to be served with a copy of the notice under this paragraph.

(2C) In sub-paragraph (2B) “homelessness accommodation” means accommodation in England—

(a) the availability of which is secured under Part 7 of the Housing Act 1996 (homelessness), and

(b) which is residential premises, whether by virtue of paragraph (e) or another paragraph of section 1(4).”

This requires copies of a prohibition notice to be given where homelessness accommodation is provided by a person who is a tenant of the accommodation under a lease with an unexpired term of 3 years or less.

Amendment 37, in schedule 4, page 203, line 36, leave out “or (2A)” and insert “, (2A) or (2B)”.

This is consequential on Amendment 36.

Amendment 38, in schedule 4, page 203, line 37, leave out “after “(2)” insert “, (2A)”” and insert “for “sub-paragraph (2) or (3)” substitute “this paragraph””.

This is consequential on Amendment 36.

Amendment 39, in schedule 4, page 204, line 4, leave out “let under a relevant tenancy, or” and insert “a dwelling or HMO let under a relevant tenancy,”.

This is consequential on Amendment 24.

Amendment 40, in schedule 4, page 204, line 7, at end insert “or

(iii) are a building or a part of a building constructed or adapted for use as a house in multiple occupation that is for the time being only occupied by persons who form a single household and where the accommodation which those persons occupy is let under a relevant tenancy,”.—(Matthew Pennycook.)

This is consequential on Amendment 24.

Schedule 4, as amended, agreed to.

Clause 99

Financial penalties

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

[The Chair]

With this it will be convenient to consider schedule 5.

Renters' Rights Bill (Eighth sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[Mr Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve under your chairmanship, Sir Roger. I add the support of the Liberal Democrats for the intent of the new clause. Clearly, tenants should not be penalised for having to move frequently, and we are interested in the Minister’s response on the subject.

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

It is a pleasure to serve with you in the Chair, Sir Roger. I thank the hon. Member for Bristol Central for moving the new clause tabled by my hon. Friend the Member for Walthamstow (Ms Creasy), and I thank the shadow Minister and the hon. Member for Taunton and Wellington for their contributions.

The Government absolutely agree that unwanted private rental moves are not only stressful but extremely expensive in terms of both the unrecoverable costs associated with moving home and the significant up-front costs of moving into a new property, including tenancy deposits. That is why one of the Bill’s main objectives is to remove the threat of arbitrary evictions and increase tenant security.

Under the new tenancy system a small proportion of tenants will still find themselves evicted through no fault of their own in circumstances where the landlord has good reason to regain possession of the property—for example, if the landlord or a close family member wishes to live in it as their only or principal home. I therefore recognise the worthy intentions behind the new clause—namely, to ensure that tenants’ credit scores are not adversely affected by unwanted moves resulting from the use of such possession grounds.

However, I am not convinced that the new clause, which would require the FCA to issue guidance on how possession orders specifically should be reflected in an individual’s credit score, is necessary, because tenants’ credit scores are not adversely affected by evictions under ground 8 possessions. Credit reference agencies do not receive information about possession orders from the courts, and as a result possession orders are not recorded on people’s credit reports and do not negatively affect their credit scores.

I acknowledge that there is a distinct, but related, issue in respect of the impact on credit scores of changes of address in general, on which it is worth noting two things. First, the methodology that underpins credit scores is not uniform across different credit reference agencies. Experian, TransUnion and Equifax, for example, each have their own distinctive approaches to credit scores, including in how they reflect changes of address. Secondly, almost all lenders review a person’s credit report when assessing an application for credit, and a change of address would still be recorded on those reports.

Whether it is feasible and sensible to seek to have the FCA attempt to ensure that credit reference agencies treat moves resulting from the use of certain possession grounds set out in schedule 1 differently from changes of address more generally is an entirely valid question, albeit one somewhat distinct from that posed by the specific wording of the new clause. As things stand, I am not entirely convinced that it would be, but I will happily seek to ensure that Treasury Ministers engage directly with the FCA on this matter, including on the review cited by the hon. Member for Bristol Central. However, for the reasons I have stated, I will not be able to accept the new clause and ask the hon. Lady to withdraw it.

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[Mr Amos]

Will the Minister comment on whether, and how soon, the Government are likely to introduce a use class, which the previous Government committed to?

[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.

Renters' Rights Bill (Sixth sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Thursday 31st October 2024 Public Bill Committees

[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.

[Mr Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Harris. The shadow Minister’s amendment refers to agents, such as managing agents, and their redress schemes. Managing agents are often also letting agents—they are the same kinds of companies. Can the Minister comment on the case for regulating those agents, for which this Bill provides an excellent opportunity? Members of the other place who are experts in housing have spoken to me about the need to do that. The Liberal Democrats would certainly support such a move, and I would be grateful if the Minister commented on it.

[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.

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[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.

[Mr Amos]

Clause 75 deals with the making of the database, and I want to raise the importance of its content. Had I been quicker off the mark and more used to the procedures, there would be an amendment before the Committee that I would speak in favour of, but it is absent—time ran away.

Will the Minister comment on the importance and potential real value of the database, depending on the information that it carries? The Liberal Democrats want to see the Bill include: the accessibility of the property for disabled people; whether enforcement action has been taken against the landlord; the energy performance certificate rating of the property, so that people have some idea of how expensive it will be to heat and live in; and, crucially, the rent that was paid in the first tenancy.

As I said the other day, we firmly believe that market rents are often inaccurately described and arrived at, by virtue of looking at advertisements. I appreciated the points the Minister made the other day in response, but none the less it remains the case. As I also said the other day, we believe that the cost of interest is the bigger driver of landlords’ costs, rather than inflation, and it should be a better proxy for limiting rent increases. Even without that, a database with the actual rents paid could be an enormously powerful tool for both renters and landlords, as well as the market generally. More information makes for a better marketplace and will hopefully improve the lot of landlords and tenants. We particularly wish to see all those features in the register and believe that would enhance the market.

The other day, in relation to whether the Bank of England rate was a relevant proxy for landlords’ costs, the shadow Minister said that the commercial interest paid by landlords was more important, but there is a relationship between the Bank of England base rate and the commercial rates of interest paid. It is the key driver of commercial rates of interest.

My main point is that having on the register the rent, including the level of the last increase in rent, would be a really important and powerful indicator. We wish to press for the details I have outlined to be on the register. If I had been quicker off the mark, there would be an amendment before the Committee.

[Matthew Pennycook]

I will say two quick things. I remember probing the previous Minister about this issue during the debate on the previous Government’s Bill, because I thought it was worth teasing out. In general, we did not want to be too prescriptive with what is on the face on the Bill in terms of the frameworks, because we need to strike a balance between the primary legislation and the flexibility for the details of the database to be developed in secondary legislation, so that we can respond to any evolutions in the sector and technology. We do not want to be too prescriptive on the face of the Bill.

In response to the call from the hon. Member for Taunton and Wellington for particular data to be included on the database, I draw his attention to my previous comments, which I think I made in the third or fourth sitting, about the potential for rents to be included. I am extremely sympathetic to that. Other information could potentially go on the database that might show patterns of behaviour on the part of landlords that would inform tenants’ choices. At a minimum, we want the database to include information about private landlords, the homes they rent out and how those homes are managed. I want debate with hon. Members about what goes on the database, but all the detail, as I am sure the hon. Gentleman will appreciate, will come forward in secondary legislation. At that point, the hon. Gentleman or his colleagues will be able to have a further debate and discussion on those matters.

[Mr Amos]

I am new to the procedures of Parliament, but I understand that some regulations are more easy to debate than others. Is the Minister saying that it will be possible for Liberal Democrat Members to debate the regulations when they come forward?

[Matthew Pennycook]

I am making no specific commitment, but such is the significance of the regulations—they will provide all the detail for how the service will work in future—it would not be a cursory debate.

Question put and agreed to.

Clause 73 accordingly ordered to stand part of the Bill.

Clauses 74 to 83 ordered to stand part of the Bill.

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

Renters' Rights Bill (Third sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[Matthew Pennycook]

I will be brief, as this clause is simple and straightforward. It ensures that leaseholders can continue to sub-let under the new regime where they currently have permission to do so.

Leaseholder arrangements may currently require any sub-let to be on an assured shorthold or an assured tenancy with a fixed or minimum term. The clause will enable existing sub-leases to continue under the new tenancy system once assured shorthold tenancies and fixed terms are abolished. This will ensure that leaseholders and their superior landlords are not unduly affected by the reforms and that previously agreed arrangements can continue. It will not grant rights to leaseholders to sub-let for holiday or rental accommodation unless they were able to do so before the Bill took effect. I commend the clause to the Committee.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Changes to grounds for possession

[Mr Gideon Amos (Taunton and Wellington) (LD)]

I beg to move amendment 77, in schedule 1, page 155, line 6, at end insert—

“(1A) In the heading of Part 1, omit ‘must’ and insert ‘may’.

(1B) Omit the heading of Part II.”

This amendment would make all grounds for repossession discretionary.

[Mr Amos]

It is a pleasure to serve under your chairmanship, Sir Christopher. The intention of this amendment is to make all grounds for eviction discretionary for the court. As the Committee heard from experts during oral evidence, many in the sector are concerned that none of the grounds will be discretionary.

There are a range of circumstances in which discretion would be advisable in deciding eviction cases. The tenant may be terminally ill—a cancer patient, for example—and I understand that that example was considered during the last Parliament in relation to the previous Bill. The court would have no discretion to enable a stay of eviction in that case. The tenant could have caring responsibilities, perhaps for a disabled person. Again, there would be no discretion to vary the terms of the eviction.

There could be undue hardship caused if the tenant was unable to stay for a given period. Perhaps the tenant had already arranged to move and arranged new accommodation, but that was not available on the timescale in the Bill; in that case, there would again be no discretion. The tenant might have an impending examination to sit or a work commitment that was vital to their career. Again, there would be no discretion for the courts. The tenant may be a disabled person and need extra time or support to arrange the physical burden of moving home.

In a previous discussion, the Minister talked about the importance of taking the personal circumstances of tenants into account, and that is the intent behind this amendment. The courts will not be able to take personal circumstances into account because there will be no discretion on the terms of eviction.

Parties are especially concerned about this issue in relation to grounds 1 and 1A, which concern eviction for repossession by the landlord or their family or for the sale of the property. We heard from Liz Davies KC during oral evidence that, in many cases, a tenant could have done nothing wrong but would still be subject to eviction without any discretion for the courts to vary the terms of that.

Even if the Government do not accept the amendment, I argue that there should be discretion for the courts, if not in every case of eviction, at least in exceptional circumstances. I urge the Government to take that on board in the spirit in which I have moved this amendment.

[Matthew Pennycook]

I thank the hon. Gentleman for tabling these amendments, which allow us to have this debate. In my view—I think this is shared across the House —landlords must have robust and clear grounds for possession where there is good reason for them to take their property back. I hope that he will appreciate the steps the Government have already taken to ensure that the grounds are fair to both parties. We have overhauled the previous Government’s Renters (Reform) Bill to provide additional protections for tenants, including longer notice periods, a longer protected period and a higher rent arrears threshold. We have also scrapped the previous Government’s harmful proposals to introduce a new ground for repeat rent arrears, and we have reduced the discretionary antisocial behaviour threshold to behaviour “capable” of causing nuisance or annoyance.

However, amendments 73, 74 and 77, which would make all grounds discretionary, are a step too far. Indeed, I never argued for all grounds to be discretionary when we considered the previous Government’s Bill. Making all grounds discretionary would mean that landlords have no certainty that they would be awarded possession even if the grounds were otherwise met. That includes in situations of serious antisocial behaviour—where the tenant has been convinced of a serious criminal offence or has broken an injunction put in place to stop their behaviour. Landlords wanting to sell or move into their property could be prevented from doing so, and specialist sectors, such as temporary and supported accommodation, would not be able to guarantee regaining possession in order to house new individuals who require their support.

I assure the hon. Member that there are still many discretionary grounds in the Bill and that judges will have discretion in less clear cases or where possession may not always be reasonable, despite the ground having been met. It is absolutely right that judges have discretion where possession takes place in those circumstances, and that includes smaller breaches of a tenancy agreement or low levels of rent arrears. I believe the steps that we have taken to protect tenants provide sufficient protections against unfair evictions. On that basis, I ask the hon. Member not to press his amendments.

[Carla Denyer (Bristol Central) (Green)]

I would like to speak in favour of the amendment and to bring the Minister’s attention to the evidence we received from experts, which highlighted the fact that discretionary grounds do not make it impossible for the court to award possession. In fact, in many cases, especially ones involving antisocial behaviour, it is reasonable to assume that the courts would apply a high threshold for where to exercise discretion. Nevertheless, that does not negate the principle that there may be extremely exceptional circumstances in which discretion is needed. The Government completely tying the hands of the courts so that they are unable to consider those extenuating circumstances is counterproductive.

[Mr Amos]

I accept what the Minister says about the Bill’s intent and that there are very limited circumstances in which discretion would be available. It is disappointing, though, that it is not recognised that courts require more discretion than is given. The Bill would provide discretion only in those very limited circumstances.

[Matthew Pennycook]

Perhaps I can reassure the hon. Gentleman. The mandatory grounds for possession are very limited and specific—for example, grounds 1 and 1A, where the landlord has a clear intention to move back into the property or move a family member in or to sell the property, and they have to evidence that with the court. I ask hon. Members to consider—this was put to me many times in the evidence sessions—the challenges that our courts face and the burden that this legislation places on them. Making every ground discretionary, irrespective of how reasonable it is for a landlord in those grounds 1 and 1A circumstances, for example, to take back their property quickly, risks overburdening the courts. As I say, many of the grounds remain discretionary. However, we think that there is a good reason why a certain number of mandatory grounds are in a different bracket from the discretionary one.

[Mr Amos]

I hear what the Minister says. The case was made forcefully by witnesses in oral evidence that the discretionary grounds for eviction are far too limited and that we need to see further discretion given to the courts. This would not prevent evictions continuing or the courts from making the decisions in accordance with the Bill’s provisions, and it would provide discretion to the courts. I urge the Government to consider widening the categories of discretion for the courts in evictions. I hope that the Government will consider that issue during the passage of the Bill, and I am happy to withdraw the amendment on that basis.

--- Later in debate ---

[Mr Amos]

The amendment’s purpose is to require the evidence to be provided by landlords on grounds 1 and 1A, in the case of occupying the home or selling the property, to be clearly stated in the Bill, so that it is clear what evidence needs to be provided and the test is clearly stated. The Government have indicated that the evidence required will be contained in guidance, but it would significantly reassure Members in this House and in the other place if we could see the evidential test for landlords to gain possession. The amendment sets out the need for a statement of truth and suggests that a letter of engagement from a solicitor in the sale of a property is the kind of evidence that should be in the Bill. I believe the amendment is self-explanatory in that regard.

[Matthew Pennycook]

While I appreciate the sentiments behind the amendments—indeed, as a shadow Minister, I probed the previous Government on this point when discussing the previous Bill—on reflection, I do not think they are the right approach for the following reason, which relates to the previous debate. We have overhauled the Bill in a number of ways to strengthen protections for tenants, and we must be careful about tipping the balance too far the other way and penalising good landlords, who, in certain circumstances, have a right to certainty that they will get their property back and that this will move through the courts in an orderly fashion.

Amendment 68 is an attempt to deter abuse of grounds 1 and 1A, which is an honourable intention. It seeks to require landlords to present further evidence that they have fulfilled the grounds after the possession order has been granted. It does not detail what should happen if a landlord does not present the evidence. Furthermore, it will have no impact on cases that do not make it to court. Where a landlord has obtained a possession order through the courts, they will already have presented evidence to a court to satisfy a judge of their intent to meet the grounds. The amendment would also place an additional burden on courts, which would need to set up new processes to deal with the evidence, taking time away from progressing possession claims.

The hon. Member for Taunton and Wellington asked me to consider whether grounds that are currently mandatory should be discretionary, and I thought very carefully about which grounds should be discretionary and which mandatory when developing and overhauling this piece of legislation over recent months. On the basis of that reflection, I have concluded that increasing the prohibition on remarketing and reletting a property after using these grounds, including in cases that do not reach court, is a better mechanism for preventing abuse than adding requirements for evidence. This will allow a tenant to take action if they see, for example, their property advertised online following eviction.

Amendment 69 seeks to put into legislation prescribed evidential requirements for grounds 1 and 1A. We just had a discussion about how we should trust judges and their judgment on these matters. I believe that judges are best placed to consider and determine the evidence before them on these mandatory grounds. Setting an enhanced evidence threshold may mean that judges are less likely to consider wider evidence, and it could inadvertently lower the threshold where an eviction is ordered. It is right that judges have the discretion to respond to the evidence provided on a case-by-case basis. That is what the Bill provides for, and I therefore ask the hon. Member to withdraw his amendment.

--- Later in debate ---

[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.

[Mr Amos]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[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.

[Mr Amos]

Amendments 70 and 71 would align the two weeks’ notice for students in HMOs with the two weeks’ notice that the Bill provides that students would have in purpose-built student accommodation. All the points that the Minister has made in relation to the short-term notice period apply to the Bill because that is the Government’s intent in relation to purpose-built student accommodation. The amendments would simply align those properties under HMO ownership with those that are university or purpose-built student accommodation.

Landlords of HMO accommodation are likely to be smaller businesses than universities. Under the provisions in the Bill, universities would enjoy much greater flexibility on eviction than much smaller landlords, who would suffer as a result.

My concern is that there would be a reduction in the amount of student accommodation because of those very different terms on which HMO landlords would be able to let their properties to students compared with other tenants. Any reduction in the availability of supply of student accommodation, particularly in university towns, would have a serious impact on family housing, which is of course often occupied by students, much to the chagrin of residents who are looking for family homes.

It is vitally important that an unintended consequence of the Bill is not the reduction in supply of student accommodation. That is why we seek alignment with what the Bill provides for purpose-built student accommodation.

I urge the Government to consider reducing, if not to two weeks, then to two months, the grounds for eviction in other student accommodation, so that it is more closely aligned with the provisions that the Bill makes for the majority of student accommodation. I urge the Government to consider that and I will not press the amendment.

--- Later in debate ---

[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.

--- Later in debate ---

[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

[Mr Amos]

I beg to move amendment 76, in clause 7, page 8, line 31, leave out from “determination” to the end of line 36 and insert—

“(4AA) Where the rent for a particular period of the tenancy is to be greater than the rent for the previous period by virtue of a notice, determination or agreement mentioned in subsection (4A), the rent may not be greater than the rent for the previous period increased by the Bank of England Base Rate.

(4AB) Any provision relating to an assured tenancy to which this section applies is of no effect so far as it provides—

(a) that the rent for a particular period of the tenancy must or may be greater than the rent for the previous period otherwise than by virtue of a notice, determination or agreement mentioned in subsection (4A), or

(b) that the rent for a particular period of the tenancy, where greater than the rent for the previous period by virtue of a notice, determination or agreement mentioned in subsection (4A), must or may be greater than the rent for the previous period increased by the Bank of England Base Rate.”

This amendment would mean that the maximum rent increase can only be an increase in line with the Bank of England Base Rate.

Renters' Rights Bill (Fourth sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[Mr Amos]

I would be delighted if that were the case. We would welcome anything that reduced the risk of extremely steep rent increases for tenants—I think Members on both sides of the Committee would want to see that. This amendment would limit increases to the Bank of England base rate. I stress that this would apply to within-tenancy increases only. However, I accept the points that the Government have made and I am willing to withdraw the amendment.

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

It is a pleasure to serve with you in the Chair, Dame Caroline. I just thought I would offer a few more thoughts to try to further reassure the hon. Gentleman. As I made clear, we absolutely share his objective of limiting unreasonable within-tenancy rent increases, not least given the potential for that type of rent hike to act as an effective section 21 by the back door. On his specific point, the Government’s view is that linking rents to the Bank of England’s base rate would constitute a form of rent control. We may have a principled disagreement about whether rent controls are appropriate, but we are not convinced that they should be introduced, given the risks that I have set out.

I thought it would be helpful to touch on how the tribunal determines market rents, because I got the sense from the hon. Gentleman previously that he expected the tribunal to look purely at advertised rents. The tribunal has a high degree of expertise. It is composed of judges and industry experts. To determine the market rate, the first-tier tribunal can consider a wide range of evidence, such as the price of similar properties being advertised online, as he said, and also evidence submitted from both parties justifying or arguing against the rent increase. This could include statistics on changes to local rents and examples of the rent achieved by other properties—for example, the rent that neighbours are paying. The tribunal will be able to use its local expertise, including visiting a property if necessary. We think that the tribunal has the necessary expertise and understanding to take into account different factors that are forming market rates and to determine whether the rent that is being proposed reflects that.

To touch on the point made by my hon. Friend the Member for Cities of London and Westminster, the Government are exploring whether the database could play a role in providing data on rents. That would be in addition to data about the ownership and standard of private rented sector properties. We are considering the feasibility of recording a wider range of data to support more informed rental experiences.

Our approach will take into account the balance of benefits and burdens for different users, and we will look at how data can best be collected to minimise requirements for private landlords to submit information. We will stipulate those requirements in the regulations, but I hope that that gives the hon. Gentleman a bit more reassurance that the tribunal is not simply looking at advertised rents in making its determinations.

--- Later in debate ---

[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.

[Mr Amos]

I rise to speak to amendment 75 which, as the Minister said, would require the Secretary of State to consult on the adequacy of the existing resources for the tribunal system and on any further need for resources to deal with rent reviews established in the Bill. It is the same for the courts: sufficient judges and resources to ensure that the justice system works and does not seize up are vital to the supply of landlords bringing properties on to the rental market.

The Liberal Democrats know that most landlords and tenants are not going to rush to the courts unreasonably, and we do not support the use of court funding as a reason to delay the ending of no-fault evictions and the introduction of the Bill, as happened in the previous Parliament. As I have made clear several times, it is urgent that no-fault evictions are brought to an end. However, that does not mean that the courts and tribunal system is not seriously underfunded; it clearly is. I know the Minister is concerned about this—he mentioned some ongoing review work, and also spoke about it on Second Reading in response to my intervention—but we really need to go further. We need to come up with something concrete that is clear that putting resources into the courts and tribunals system will be taken seriously and will happen.

The mutually-owned Nationwide building society, which funds much of the accommodation we are talking about, has made its support for the Bill conditional on increased funding for the courts and tribunals. It says:

“In these situations, good landlords need to be confident they are able to gain possession of the property”—

I appreciate this relates more to courts than tribunals—and that once

“the situation has reached a point where a court is involved it is reasonable to expect that this process should be as quick and efficient as possible. This is not the case with the current…system which needs additional funding and resources to operate effectively”.

--- Later in debate ---

[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.

[Mr Amos]

Will the Minister let me put on the record the fact that during the coalition Government from 2010 to 2015, whole Government Departments, including the Education and Health Departments, were protected and ringfenced against cuts? That bears absolutely no relation to what happened after the cuts were let loose in 2015.

[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.

--- Later in debate ---

[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.

[Mr Amos]

I wonder whether the Minister would help me with an issue that is somewhat related to agricultural tenancies. In fact, it is a different kind of tied tenancy that has been raised with me by constituents, where the notice period required to be given for Church of England ministers—

[The Chair]

I am afraid that is out of scope of the clause we are discussing.

Oral Answers to Questions

Debate between Matthew Pennycook and Gideon Amos

Monday 28th October 2024 Commons Chamber

[Matthew Pennycook]

I thank the hon. Gentleman for his question. I have not had the opportunity to visit the site, but I intend to do so in the future, along with the other new homes accelerator sites. On the point of principle, to meet housing demand and housing need in England, every area of the country must play its part. The site in question is currently being promoted in both the Harborough local plan and the Oadby and Wigston local plan, as it crosses the boundary of both local authorities. Although I appreciate that it does face a number of planning and enabling challenges, the Government believe that it nevertheless has the potential to make a significant contribution to housing supply in Leicestershire.

[Mr Gideon Amos (Taunton and Wellington) (LD)]

4. What steps she is taking with Cabinet colleagues to ensure that every property has access to either gigabit broadband or a 4G or 5G mobile signal.

Renters' Rights Bill (Second sitting)

Debate between Matthew Pennycook and Gideon Amos

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Matthew Pennycook]

Q Any more for any more? Liz Davies KC: I have two points. It is excellent that you have prevented bidding wars. Clause 4, I think, is about advance rent, and we were just discussing this outside. You cannot prevent bidding wars without also having a limit on advance rent of one month, because otherwise, you have outlawed bidding wars but the landlord will then be happily prepared to let to the tenant who is robust enough to be able to offer six months’ rent in advance, rather than one month’s rent. You get back to tenants’ financial circumstances in bidding—so that point is about advance rent.

The other point is smaller and more technical, and is on the subject of homelessness. Because you are taking out assured shorthold tenancies from the homelessness regime, which allows local authorities to find people private rented sector tenancies, and you have done a lot of drafting amendments to take out the words “assured shorthold”, you have also taken out a mechanism in the Housing Act 1996 that currently allows a homeless family—where they are given an assured shorthold tenancy and that ends within two years—to reapply as homeless and where they do not have to show a priority need. It helps to deal with the revolving door of homelessness, potentially in the private rented sector. You have abolished that—I imagine inadvertently, because you are taking out the words relating to assured shortholds. However, I would suggest that you try to get that back in, so that in the more unusual cases—once this Bill has gone through—if a homeless person is given an assured tenancy in the private rented sector and it comes to an end within two years, they will be able to come back to the homelessness authority. It is section 195A of the Housing Act 1996.

[Mr Gideon Amos (Taunton and Wellington) (LD)]

Q You said earlier that the first-tier tribunal is working better, but did you really answer the question of whether you feel the Bill will increase pressure on the tribunal and the courts, and whether they are ready for it? Have you seen any evidence of an increase in funding, given this impending legislation?

Justin Bates KC: I want to be careful not to speak for the first-tier tribunal judges. Parliament has provided additional funding for the FTT in anticipation, not of this Bill, but of other areas. Those of you who worked on the Building Safety Act 2022 will know that you gave new powers to the FTT over unsafe buildings. Funding came along with that, because new building safety judges have been appointed. For obvious reasons, I am not privy to all the spending decisions, but as a regular attendee of the tribunal, I can see that money must have been provided. Whether you provide more money for this Bill is, frankly, miles above my pay grade.

On the increased workload, it is very difficult to say. It is plausible that there may not be that much of an increase in workload, because people can still agree what the new rent will be. If they agree it, there is no need to go anywhere near the tribunal. If I were pushed, my informed guess would be that there will be an increase in the first few years, because there always is whenever the law changes, and that it will settle down after a while, but I cannot properly comment on the minutiae of how you fund the FTT.

--- Later in debate ---

[Matthew Pennycook]

Thank you.

[Mr Amos]

Q You mentioned the planning system earlier. Do you see any risk, because of the perceived unattractiveness of the new system, that there will be an increase in short-term holiday letting? The Liberal Democrats want to see the use class brought forward for holiday lets. Would you support that in terms of controlling it in rural areas, so that councils and communities can control the amount of Airbnb-type short-term holiday lets in their areas?

Judicaelle Hammond: We recognise that is an issue in some areas of the country that are honeypots. If the proposals that were consulted on are implemented effectively, we see a need for them.

On your question about whether some properties would become holiday lets, I think if you had asked me a year ago, I might have said yes. There are other pressures on the holiday let market that make this increasingly unlikely. We hear from members that they are planning on selling full stop, which would probably be selling to people who want to be on the housing ladder rather than to people who want to take over their business of being private rented sector housing providers. That is a real issue and concern for us.

--- Later in debate ---

[Matthew Pennycook]

Q Their yields are quite generous as they are, compared with what is normal.

Victoria Tolmie-Loverseed: I do not have a tiny violin for landlords, but I am just saying what we think is likely to happen. It is a commercial operation and landlords need to cover their costs, and we think that if landlords perceive more risk they will seek to put up rents.

Your previous witness talked about the situation in Scotland. One of the things we would really like the Government to do before going much further is an impact assessment on the student market, particularly looking at Scotland, because the evidence there about student homelessness as a result of the tenure changes is compelling. The Government in Scotland have a committee looking at how they can tackle the issue of student homelessness, and I think that is a bit of a warning for us all that we could very well be in that place in a couple of years’ time if we do not think about the student market, its particular characteristics and what it needs.

[Mr Amos]

Q I have raised this already, but you seem to be suggesting that to extend the exemption you would have a special student tenancy. Is that right? Could you clarify if you would like to see that in the Bill? If not, if the Government were not willing to create a new tenancy, how would you draw the line in terms of bringing in all student accommodation?

Victoria Tolmie-Loverseed: I think there are alternative options. There was discussion on the previous Bill about creating an accreditation scheme or some sort of certification for landlords in the off-street sector. That is worth considering if a landlord is part of a quality mark and might be able to offer fixed-term tenancies similar to PBSA. There would certainly be some benefits to that, and you would offer students a quality product with landlords who are accountable to somebody but can have certainty in their business planning, which would be beneficial. I also think that ground 4A should be amended and extended to all student properties.

--- Later in debate ---

[Matthew Pennycook]

No, not investors. You made a point about tenants.

Timothy Douglas: Yes, but that is the crux of it. Unfortunately, if you push too far on the fixed-term tenancy option, the grounds are not robust enough for landlords. Unfortunately, they do not know how long the tenant is going to be in situ. They cannot plan their investment, and they do not know the return on their rent. It is a mutual agreement. We are not saying that it is one or the other. We are saying retain it as an option. Why are we legislating to reduce choice and flexibility?

Agents are telling me up and down the country that that is what tenants want. The leading letting agent in London, which manages 65,000 tenancies, says that fixed-term contracts are popular within the private-rented sector. Many tenants opted for tenancies between one and three years, with the average first term lasting 23 months. At the end of the initial term, 65% of tenants choose to renew. Only 1% of tenancies are ended early by landlords; 5% are ended by tenants. People know where they stand and where they are going to be. It is an option that should be included in the legislation. We have talked today about students as well. It would solve all the problems in the student market.

We are tinkering there with issues that just do not exist. Retain fixed-term tenancies for all, or at least within the student market, or extend ground 4A to one or more sharers. You are tying yourselves in knots in so many ways.

[Mr Amos]

Q We covered extending the grounds to more than three sharers in the previous evidence session, and I think everyone knows where I stand on that. If you are right that the biggest effect of the move away from fixed-term tenancies is on investment into the build-to-rent, or corporate, sector that you are talking about, and if the Bill were to allow fixed-term tenancies—perhaps the first tenancy of a build-to-rent new build—would that help the sector up from delivering 15,000 units to 30,000 more units?

Timothy Douglas: I was actually saying that fixed terms should be retained regardless of landlords.

Renters’ Rights Bill

Debate between Matthew Pennycook and Gideon Amos

Wednesday 9th October 2024 Commons Chamber

[Matthew Pennycook]

No. The right hon. Member has had her time.

We strongly refute the central contention in the reasoned amendment that the Bill fails to provide security and affordability for private renters or to respect the property rights of landlords and that it

“will reduce the supply of housing in the private rented sector”.

The Bill strikes the right balance between the interests of landlords and tenants. While we acknowledge that it will take time for the sector, including build to rent providers, to adjust to a significant change in regulation, we do not believe that this legislation will have a harmful impact on future rental supply—which, by the way, we are taking steps to boost, not least by providing more opportunities for investment in a growing build to rent sector. The reasoned amendment is weak and disingenuous. I urge colleagues to vote it down when we arrive in the Lobby in a few minutes.

Let me turn to a set of specific issues referred to in the reasoned amendment and raised by a number of hon. Members in the debate: namely, tenancy reform, fixed-term tenancies and court improvements. The move to a new single system of periodic tenancies is at the heart of the Bill. The introduction of the new tenancy regime will see the end of fixed-term tenancies and the long-overdue abolition of section 21 no-fault evictions. As a result, tenants will enjoy greater stability and security, and landlords will benefit from clear and expanded possession grounds to evict tenants in circumstances where that is justified and reasonable.

To avoid confusion and to ensure that renters on existing tenancies do not have to wait even longer for the threat of arbitrary evictions to be lifted, we intend to apply the new system to all tenancies in a single stage. We will appoint the commencement date by regulations at an appropriate interval after Royal Assent. Our intention is to give the sector as much notice as possible.

A number of hon. Members mentioned fixed-term tenancies. I want to be clear that it is the Government’s firm view that there is no place for fixed terms in the future assured tenancy system. Fixed terms mean that renters are obliged to pay rent regardless of whether a property is up to standard, and they reduce renters’ flexibility to move when they need to. It is right that the Bill ensures that all tenancies will be periodic in future, ending the injustice of tenants being trapped paying rent for substandard properties.

Good landlords have nothing to fear from this change, either. Tenants simply do not move houses unless it is absolutely necessary. When they do leave, they will be required to provide two months’ notice, giving landlords sufficient time to find new tenants. Nor will the PRS become an Airbnb-lite, as some have suggested. Tenants will still have to pay up to five weeks’ deposit, complete referencing checks and commit for at least two months. Locking tenants in for longer with fixed-term tenancies would mean people being unable to leave dangerous situations and being trapped in situations, for example, of domestic abuse. We are not prepared to accept that.

Ensuring that the Courts and Tribunals Service is prepared for the implementation of the new system is essential. I take on board the challenge that many hon. Members, including Opposition Front Benchers, put to us in that regard. In considering the potential impact of the Bill on the county courts, it is however important to bear in mind that most tenancies end without court action being needed. It would also plainly be wrong to assume that all evictions that presently occur following a section 21 notice will in future require court proceedings under section 8 grounds.

One of the main effects of the Bill will be to reduce the number of arbitrary evictions that take place. That said, we recognise that landlords need a reliable and efficient county court system to ensure that they can quickly reclaim their properties when appropriate, and that we need a well-functioning tribunal process to resolve disputes in a timely manner. We agree that improvements to the courts and tribunals are needed to ensure that the new system functions effectively. As my right hon. Friend the Deputy Prime Minister said at the outset of the debate, we are working closely with colleagues in the Ministry of Justice to ensure that they are made, and exploring options for improved alternative dispute resolution so that only cases that need a judgment come to court.

[Mr Amos]

Does that mean there will be more funding for the courts?

[Matthew Pennycook]

I will bring forward further detail as the Bill progresses, but those conversations with Ministry of Justice colleagues are ongoing, and they are constructive. We want to get to a place where the system is ready to take the new tenancy provisions forward. We will not act precipitously, and what we are not prepared to do—this is the most important point on courts—is make the necessary and long-overdue transformation of the private rented sector contingent on an unspecified degree of future court improvements subjectively determined by Ministers, as the last Government proposed in their Bill. We are determined to move quickly to give renters the long-term security, rights and protections they deserve.

A number of hon. Members raised the issue of standards, and many shared horrific stories of tenants trapped in substandard properties. It is essential, in the Government’s view, that we take decisive action to tackle the blight of poor-quality, privately rented housing and to ensure landlords are required to take swift action to respond to serious hazards.

Oral Answers to Questions

Debate between Matthew Pennycook and Gideon Amos

Monday 2nd September 2024 Commons Chamber

[Mr Gideon Amos (Taunton and Wellington) (LD)]

Over 10,000 people, many of whom are in really desperate conditions, are on the housing waiting list in Taunton and Wellington and in Somerset as a whole. Will the Secretary of State allow councils to borrow at low interest rates to build the council houses that we need across the country, and support councils such as Somerset council, which is pioneering the first council houses for a generation in some parts of the county?

[Matthew Pennycook]

As I made clear in response to a previous question, we understand very much the pressure that local authorities are under and the pressure on their housing revenue accounts. We are reviewing our position and will make further announcements in due course.