Renters' Rights Bill (Second sitting)

Michael Wheeler Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[The Chair]

We are going to have to go on to the next question, because we are running short of time. I call Michael Wheeler, who has been waiting.

[Michael Wheeler (Worsley and Eccles) (Lab)]

Q Thank you, Sir Christopher. I appreciate that Suzannah was asking to come in, and my question is actually for her, so this might give her an opportunity to respond. It is a slightly broad question: what concerns might housing associations have around the Bill? Could any aspects of it be constructively improved to address those concerns?

Suzannah Young: Thank you for your question. As I said, we welcome the Bill, and we support the Government’s ambition to give greater rights and protections to people renting their homes, and to value the contributions made by responsible landlords who provide quality homes. We do think it is crucial that the details of the legislation do not have unintended consequences for housing associations and for people living in social housing. We would like to ensure that the changes do not impact housing associations’ ability to provide decent, safe, secure and affordable homes for people who need them most. It is clear that care has been taken in drafting the Bill to minimise the impacts on social housing and tenants of social housing, and we are grateful for the engagement on these issues from MHCLG so far.

However, there remain a few areas that we feel need ironing out to avoid impacting the ability of our housing association members to deliver housing in what is a challenging environment, while still keeping rents affordable. Those specifically relate to the changes to rent increases, with ground 1 being the rent to buy ground and ground 6 being the redevelopment ground. First, we would like to see the proposals around rent increases made clearer or changed to make absolutely certain that they retain social landlords’ ability to increase rent in a harmonised way, which is to avoid impacts on the supply of social housing and to ensure fair rent levels for neighbours and the ability to deliver repairs, maintenance and services to tenants. That is because, as I mentioned earlier, all rental income is reinvested into providing those services. So any loss of rent would have an impact on tenants who receive those services, and repairs and maintenance.

We would also like to see ground 1B extended to apply when the home is converted to another rental product, which is not currently in the ground. That would be in order to help housing associations to meet local housing need where there is no demand for rent to buy or purchase. We would like housing associations to have access to ground 6 in all cases, so that they can carry out essential works that are of benefit to tenants.

We will follow up with more detail in our written evidence, and we would be happy to meet any members of the Committee if they would like to discuss any of these points in more detail.

[The Chair]

Thank you very much, and I thank all the panel for the evidence that they have provided to us. I am sorry that we do not have any discretion, but we now have to move on to the next panel.

Examination of Witnesses

Councillor Adam Hug and Dr Henry Dawson gave evidence.

--- Later in debate ---

[Carla Denyer]

Okay, then this is an invitation for you to talk us through your rationale, because that was my understanding. While I am at it, if there is anything where your mind has changed since the previous Bill, could you briefly talk us through why?

Matthew Pennycook: It is important to give context for the debates on the previous Bill and why, in certain circumstances, we were probing the Minister on making grounds discretionary rather than mandatory, and whether we were pressing the then Minister on additional protections for tenants relating to some of those grounds. The rationale for that was ensuring that the grounds, if they were mandatory, would not be abused. I suppose where my thinking has changed on many of them—I will continue to think on whether we have done enough on specific grounds for possession to protect tenants against abuse—is that the other actions we have taken in the Bill provide the protection we need.

I will give an example. On grounds 1 and 1A, where the previous protected period was smaller and the previous re-let period was much smaller—three months, not the 12 that we are proposing—in our view there was clear scope for abuse there. In many parts of the country, particularly hot rental markets—including London, and I am sure it is the same in Bristol—landlords are quite willing to suffer three-month void periods because the rents are so high. In a sense, if that is your re-let period on those mandatory grounds, you can get rid of what you consider a problem tenant, such as one who has complained perhaps entirely appropriately about damp, mould and other hazards. If you wait the three-month void period, then re-let, you have effectively recreated section 21 by the back door.

I think we have dealt with the abuse, which is from memory where we were probing the Minister about the discretionary or mandatory distinction. We have provided protections in other ways in the majority of cases. I am giving consideration, as I say, to some of the grounds and whether we have quite got sufficient protections in place. I think Justin Bates KC, for example, raised ground 6A, where action is rightly taken against the landlord whose practices need bearing down on, but the tenant should not suffer in that regard.

[Michael Wheeler]

Q I am sure the Minister will agree that we have heard some illuminating evidence today from excellent panellists. I am wondering what he sees as the key takeaways for the Bill.

Matthew Pennycook: I welcome that question; it is an open one, and I will have to think on my feet in my response. I think a number of the debates will run through the Bill. Supply is one of those. I am clear that we do not want an exodus of landlords from the sector, but I have seen absolutely no evidence of that. It is a threat that has been bandied about for many years now, ever since the previous Government announced their intention to abolish section 21 no-fault notices.

The size of the private rented sector has doubled since the early 2000s. There has been an outflux of smaller landlords, particularly overgeared buy-to-let landlords, which is mainly a result of the section 24 tax changes that George Osborne introduced in 2015, explicitly to slow the growth of the private rented sector. So there has been an exit of certain types of landlord from the sector, but we have certainly not seen an exodus.

The feedback I have had from landlords over recent months and in the previous Parliament is that the most damaging thing for many was the uncertainty about whether reform was coming through in any form. That is why we felt we needed to act quickly. In general, good landlords have absolutely nothing to fear from the new system. We think it provides a framework in which they can continue to invest and operate.

Another point that has been prevalent in the debate is protections for renters against unreasonable within-tenancy rent hikes. In designing the Bill, I have been clear where we have overhauled and strengthened its provisions to strike that balance. We do not want to do anything that could potentially make things much more difficult for tenants, which is why the Government are not advocating rent controls in the Bill. The Scottish experience is instructive of what can happen as an unintended consequence, and we think there would be an impact on supply, quality and standards, as evidence around the world shows.

In many cases there is a judgment call on students and other possession grounds, and it is is a fine balance as to whether we have got it right in the Bill. But there are competing pressures and disincentives in a system—I am being incredibly candid with the Committee here—that has not been overhauled for 30 years. Lots of the speculation about how the tribunal will operate, and how many section 8 cases will go there, is in some ways all completely speculative. We have a sense of what we want to see and how to address the risks, but until the system is properly bedded in, I do not think anyone will know what we have to do in the design to ensure that we have the balance right and will not therefore see the tribunal overwhelmed.

We want to see more people to go to the tribunal. We want section 8 cases to go through the courts more efficiently. We absolutely concede the need for court improvements, and we are working closely with the MOJ on those—I have given some examples in response to the question about what we are taking forward. There is a balance that needs to be struck, and I think we struck the right balance in overhauling the Bill in the specific ways we have, while keeping—I gave the Conservative party the credit for this at the time—the sensible provisions that were in the previous Bill, which we think need to remain at the core of the legislation.

[Rebecca Smith]

Q I have a quick question. One of the things that came up with several witnesses was the issue of parity between privately rented social housing and housing associations, in particular with the increasing standards. That came through particularly strongly on the rural piece. Great things have been done to decarbonise social housing stock, which brings up standards. If such a measure is to be rolled out within three months of Royal Assent or whatever, will the Budget next week include any grounds or capacity in future funding for that parity, especially for those rural homes that are harder to upgrade, given their nature?

Matthew Pennycook: Specifically on rural housing, we have to think through how the decent homes standard will deal with particular challenges in certain types of stock in certain parts of the country. As a point of principle, what we will try to do in the decent homes standard consultation is to take a view on how that should apply across both sectors. Broadly, that is my instinct across the board.

It is the same with regards to the ombudsman. There is a strong case—our preferred option as things stand, although no final decision has been made—for the Housing Ombudsman Service to take on the role of the PRS ombudsman. There is a good case for a streamlined cross-tenure service. Broadly, we want the same standards to apply across the board.

Funding is another example of where there are things that the Bill touches on, but that are not within the scope of the Bill—the minimum energy efficiency standard, for example, has been mentioned a couple of times. That, however, is a Department for Energy Security and Net Zero consultation, which we launched this year. There is also a wider package around the warm homes plan, further details of which will come forward in due course, but that does not sit within my Department either. It is not necessarily part of the Bill, although decent homes will have to account for those changes, such as those on the MEES front.