Renters' Rights Bill (Eighth sitting)

Rachel Blake Excerpts

Committee stage
Tuesday 5th November 2024 Public Bill Committees

[Carla Denyer]

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

Thank you for your forbearance, Sir Roger, as I have proposed quite a few new clauses this afternoon, but this is the last one from me. New clause 11 proposes setting a control on the amount that a stated or advertised rent can be. A control would be set by an independent living rent body, taking account of the property’s size and quality, as well as local incomes, location and other criteria that the body sees fit to include. Local flexibility will be vital.

We have a generation of people who will never be able to earn enough to have a mortgage, and who cannot even afford their rents now. New clause 11 recognises that and aims to bring some urgently needed fairness and balance to a private rented landscape that has become grossly distorted. Giving an independent body the power to set a ceiling for new rents is similar to models of new rent regulation in Germany and Spain.

I have tabled new clause 11 to probe the Minister, and I want to be clear from the outset that I am acutely aware that this is a complex policy area and that there is no silver bullet for the terrible problem of sky-high rents in the private rented sector. I know that I will be challenged in this debate, and I welcome that; there is a vital discussion to be had to ensure that unintended consequences are avoided, and I do not dismiss the importance of that. At the same time, I hope that we recognise the significance of the debate over what we do about the affordability of rents.

I put it to the Committee that we need to consider rent controls both within and between tenancies, because unaffordable private rents are hurting people and hurting our economy. Key workers are forced out of cities and out of the communities that they have made their home. Average rents in inner London, as those of us who are newly elected MPs and getting flats in inner London are very aware, are rather high. In fact, they are 106% of a teaching assistant’s salary.

The average rent in my constituency of Bristol Central has hit nearly £1,800 a month. If a 21-year-old living in Bristol rents a single room today at the average rate, they will have put £80,000 into their landlord’s bank account by the time they reach their 30th birthday. Rising rents in Bristol forced renter Anny, her key worker partner Alex and their four-month-old baby to move city completely, and to move away from their support network when they needed it most.

Private renters spend a disproportionate amount of their income—an average of 33%—on housing costs, compared with just 10% for mortgage holders, and a shocking one in five renters spends more than half of their income on rent. That has a knock-on effect on the economy. Renters are giving more and more of their wages to landlords. Many cannot make ends meet and are ending up homeless, and those who can just about afford not to become homeless are certainly not able to save anything like the eye-watering sums needed to get on the housing ladder.

Private renters have less disposable income, and therefore less buying power, in the local economy, too. Research by the Women’s Budget Group and Positive Money UK found that high private rents disproportionately impact the spending power of women and black, Asian and minority ethnic households. The knock-on costs to the taxpayer are high, too, through spending on housing benefit and temporary accommodation.

I know that the Minister has already made it clear that he will not accept the solution proposed in new clause 11, but I hope that he will at least accept that private rents are much too high relative to incomes and tell us how the Government plan to address that crisis in the here and now.

For two reasons, I am concerned that changes to the tribunal do not go far enough to address high rents, as the Bill stands. First, as discussed previously, most tenants will not use the tribunal system, because they do not have the time and energy to navigate it. Secondly, even if every tenant did so, it would not result in rents coming down overall, in relation to incomes. The tribunal panel judges only whether a rent rise is fair based on the price of new rentals of a similar size in the area, and the prices of new rentals have outstripped inflation consistently. Rental index data from the Deposit Protection Service backs that up. It found that rents outstripped inflation by a third last year, and Rightmove reports show that asking rents outside of London have risen 60% since 2020, far outstripping inflation or wage growth.

During our evidence sessions and previous discussions in Committee, we heard the important point that rent controls are not simply one thing; they are a category of policies. In an earlier sitting, we discussed in-tenancy rent controls, to stop rogue landlords hiking rents in order to kick people out, in lieu of using section 21. That is one thing, but the new clause goes further by aiming to address the unaffordable level that private rents have reached and rent hikes between tenancies.

I expect that the Minister will mention social housing. I agree that increasing the social housing supply is critical; however, the private rented sector is in an affordability crisis now, and it will take huge amounts of effort and time to increase the social housing supply at the scale and pace needed to have any impact on private rents. Models from Generation Rent and other economists predict that building 1.5 million homes over this Parliament will decrease the rent burden by just over 1%. More social rented homes are essential, but the cost of private renting is so distorted—the market is failing so badly—that we need Ministers to step in and treat rent affordability as the acute housing emergency that it is.

I am sure the Minister will also use the example in Scotland as a reason not to have rent controls here. I would strongly caution against that, though, because the data on whether rents have increased overall in Scotland are shaky, as we heard in the evidence sessions, and, if there have been increases, the data on whether they are anything to do with rent controls are even more so—if necessary, I am happy to go into that in more detail in the debate.

I imagine that the Minister will also highlight the potential unintended consequences on the supply side and the possibility that landlords will leave the sector. However, it is not enough simply to assert that any form of rent control—remember that this is a whole category of options—will break the private rented sector or cause lots of landlords to leave. That needs to be interrogated, with proper consideration given to the contrary case that rent caps would provide a clear and stable regime for rent rises for landlords, so that they know how much they can raise the rent by and plan for the future.

I encourage the Government and the Committee to look to European countries where rent caps co-exist with large private rented sectors, such as in Germany, where more than half the population rents privately and where they also have in-tenancy rent caps. In particular, I draw the Committee’s attention to comments by the chief executive officer of Greystar, one of the world’s biggest landlords, who said recently that rent controls need not stop big investors from funding new homes:

“You do not have to have the windfall of a year of 14 per cent rent increases in order to have a viable investment product…We operate in a lot of markets around the world where rent control does exist.”

The argument against rent controls is that they will break the private rented sector, but it is already broken, with immediate and severe consequences right now, for all the reasons we heard about in the evidence sessions. However, we need to talk about the risks attached to any policy of in-tenancy and between-tenancy rent controls. Any system to introduce them needs to be carefully designed and built—I acknowledge that, and I know that point will be made to me in a moment. Some robust work already exists on the kind of principles we should consider in designing a workable system, and my new clause 11 is just one suggestion.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

The hon. Lady might be coming on to the impact of the criteria in the new clause, but I am concerned that the market could respond to them by drawing investors into just one location that was already a serious hotspot. It would be helpful to understand more about why they might help.

[Carla Denyer]

Will the hon. Member clarify what she means by “drawing into” in that context?

[Rachel Blake]

I was referring to the suggestion that the proposed independent living rent body would start setting rents under subsection (2) based on the property size, quality, local incomes and location. Given the constrained market that would establish, surely it might reduce availability even further.

[Carla Denyer]

The hon. Member is correct that I was coming to that, but I thank her for asking anyway—I do welcome a debate. There is some robust work on what rent controls can look like and, without wishing to give any spoilers about the organisations that provided us with evidence, I understand that more is coming. I draw the Committee’s attention to work done in 2019 by the New Economics Foundation, which looked at how we might arrive at a rent control system in London. It set out six key building blocks all about how to transition carefully and gradually from the current market free-for-all to a controlled system, and there are some lessons to be learned there about how we address supply issues.

Renters' Rights Bill (Fifth sitting)

Rachel Blake Excerpts

Committee stage
Thursday 31st October 2024 Public Bill Committees

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Does the hon. Lady think that the ombudsman could play a greater role in determining outcomes? Her point on the damage that discrimination can do was well made, but the Bill may be able to address that discrimination in other ways.

[Carla Denyer]

I thank the hon. Lady for her question, which I will come to in a moment. I have considered the role of the ombudsman, but the point of amendment 78 is predominantly to incentivise tenants to engage with the enforcement of the local housing authority.

Given the seriousness and scale of discrimination, bold measures are required. Though I welcome the Bill’s intention to stamp out discrimination, the reforms will only be as effective as the enforcement that underpins them. Under the legislation, local authorities will remain dependent on prospective tenants reporting a breach in the first instance. Let us bear in mind that we are discussing discrimination before somebody becomes a tenant—it is discrimination in the advertising of a property—so the prospective tenant may well not have an incentive for pursuing it. Local authorities will be dependent on tenants reporting the breach in the first instance, maintaining a potentially lengthy co-operation with the local authority and assisting the inquiry all the way to its conclusion.

That is a real burden. A tenant who has been refused a tenancy will likely still be contending with the extremely pressing issue of where they are going to live—they may have just been served an eviction notice or they may have had to move out of their accommodation quickly for another reason. They are unlikely to have the time or energy to volunteer their services for free to the local authority in exchange for no benefit.

I want to address a point that the Minister made against the amendment. In the circumstances I mentioned, the chance of tenants falsely or speculatively submitting a complaint is pretty slim, because they will have pressures on their time. If the prospective tenant were to get a cut of the amount received by the local housing authority, that would be a good incentive for them to report discrimination to the local authority, and discriminatory landlords would begin to be rooted out.

--- Later in debate ---

[Carla Denyer]

I will plough on, because I was indeed going to come to that issue.

First, however, I will address one of the Minister’s other points on the convergence of penalty and compensation principles. I understand his purpose in pointing out that these are not normally combined, but there is a precedent. Sharing the proceeds of a civil penalty between public bodies and the person on the end of the wrongdoing is a departure from the norm but, as I understand it, under section 214 of the Housing Act 2004, if a landlord has failed to comply with the tenancy deposit protection regulations, a court can award a tenant a sum of between one and three times the deposit they paid.

While there is no question in that legislation of sharing an award with the local authority, it is nevertheless an example of the convergence of penalty and compensation principles in a single move. Although deposit protection rules do not give us a blueprint for the proposal I put forward in amendments 78 and 79, they demonstrate that an acknowledgment elsewhere in housing law of the importance, proportionality and justification of restitution for tenants, which also serves as a form of deterrent and admonition for rule breaking, all in one go.

The Minister may be aware that I tabled an amendment to increase civil penalties for exactly the reason that he has highlighted: if the local authority is to share the proceeds with the tenant, the total amount should be higher to ensure that it covers the cost of the local authority taking on the enforcement. That amendment was not selected for debate, so I will not shoehorn in my comments on the subject, but since the Minister specifically asked me about it, I will make the case for increasing the total civil penalty. I proposed that it be increased to £15,000 so as to not harm the local authority’s ability to undertake enforcement activity, as well as to properly reflect the time and expertise involved in the local authority pursuing such cases. I think that addresses the concerns the Minister raised.

In conclusion, the tenant is the linchpin upon which a discrimination case such as this depends. On that basis, I believe that some form of financial compensation for the person on the end of the illegal treatment is fair and proportionate. They can pursue a case with the housing ombudsman case as well, and there is an argument for taking into account whether the tenant has received something through the housing ombudsman in determining what they receive in my proposed scheme, or vice versa, but the function of the two tools is different.

[Rachel Blake]

Will the hon. Lady give way?

[Carla Denyer]

I am seconds away from finishing my point, so I will give way shortly. My amendments 78 and 79 are designed to ensure that the ambition to eradicate discrimination in the private rented sector is realised, by giving tenants incentives to take the step of reporting and aiding investigations. I ask the Minister to consider that because, to put it bluntly, I am not sure that a public information campaign from councils will incentivise tenants as he suggested.

--- Later in debate ---

[Rachel Blake]

Does the hon. Lady acknowledge that her description of some kind of arrangement between the ombudsman and her proposed scheme would be incredibly burdensome, complicated and opaque for tenants? It would not necessarily deliver the type of justice she described.

[Carla Denyer]

A number of the organisations that gave evidence suggested something along those lines, and they had looked into the viability of both mechanisms existing in parallel. I do not have the exact chapter and verse of what they said in my head; we can look at that in Hansard.

Renters' Rights Bill (Fourth sitting)

Rachel Blake Excerpts

Committee stage
Tuesday 29th October 2024 Public Bill Committees

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Does the hon. Member agree that further work might come through on the way the tribunal operates and how it could operate in future under the Bill, and that the changes to how the tribunal functions might help to deal with the issues addressed by the amendment?

[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.

Renters' Rights Bill (First sitting)

Rachel Blake Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Carla Denyer (Bristol Central) (Green)]

I am a member of the Acorn community union, which is giving evidence today.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I am a vice-president of the Local Government Association and my husband works for an organisation that has funded the Renters’ Reform Coalition.

[Claire Hazelgrove (Filton and Bradley Stoke) (Lab)]

I used to work at Shelter, which is giving evidence today.

--- Later in debate ---

[Carla Denyer]

Q My question is a really simple one. Do you think that rents in the private rented sector are currently fair and affordable?

Theresa Wallace: It is a good question. I think that the demand is what has the effect on rents. I really believe that if we had those million social homes—I know we cannot get them overnight, but we should have a long-term strategy working towards that—you would have no pressures on rents because you would not have this imbalance in the demand and the supply, so rents would not be where they are.

Ben Beadle: Yes is the straightforward answer, for me. The rents that we have seen increased by 8.4% in the year to September. That is high by any measure, and I think, as Theresa says, it is entirely down to a lack of social housing and a lack of new stock coming to the market. It cannot be normal that you get 21 people applying to rent a property. I know the Bill deals with advance rent. As a landlord, I never ask for advance rent, but I get people saying, “I will give you 12 months’ rent up front,” before they have even seen the property. I think this mad market is not normal, and obviously it will not be resolved by this Bill. I say that because—though there are a lot of really good things in it, such as the database and the ombudsman, which we are very supportive of—it tinkers around the edges of the fundamental issue here, which is supply.

I know the Government will address social housing and right to buy, and all those things, and they are absolutely right to do so. At the same time, we do need a vibrant private rented sector. We need that vibrant private rented sector now while we work out what to do with social homes, because there is a massive lead time. What I see at the moment is everybody harking back to the wonders of the ’70s, of social housing and council housing, and looking at that as a really great thing, but we see horrible stories of local authority properties in serious disrepair. We have lower satisfaction in the social sector than we do in the private rented sector. At the same time, we are focusing on making life really difficult for responsible landlords who have good quality accommodation to bring to market. We do not want to dissuade those people from bringing it to the market; we want to encourage them. I think the sequence of this needs to be that the Bill must deliver for responsible landlords and renters, and give them security, but it must also address some fundamental issues about supply.

[Rachel Blake]

Q Theresa, I was struck by your remarks about rising homelessness. You will be aware from the public P1E data about causes of homelessness that the end of a tenancy is the leading cause of homelessness at the moment. I would be interested to know more about why you think any changes to that would actually increase homelessness.

Theresa Wallace: At the moment, a very small percentage of landlords actually terminate tenancies and serve section 21 notices. The majority of those landlords are selling, want to move back in or have rent arrears. It all comes down to our lack of supply, and losing more landlords from the sector. I think we will lose more landlords, and we are losing them at the moment—not just because of this Bill, I have to stress; they are leaving for all sorts of reasons. It might be retirement, or it might be the high interest rates that are affecting them. I do not think it is just the Bill, but our biggest issue is landlords leaving the sector when we do not have enough properties for renters.

[Rachel Blake]

Q Just so I understand, your argument is that there will be a reduction in supply, and that will cause more homelessness.

Theresa Wallace: I think there is that, and there is also the matter of introducing this Bill on one date. I think that will cause more homelessness because landlords are panicking, so they will serve their section 21s while they can, to get possession of their properties, and they will come out of the market.

If, rather like with the Tenant Fees Act 2019, all new tenancies had to comply and existing tenancies had 12 months to do so, or until the end of their fixed term—that might be sooner—when the Bill came in and landlords saw it working in practice, they might see that things were not as bad as they had feared. Although I understand the reasons behind not wanting two levels, I think that doing it all on one day will have a knock-on effect for tenants. There are tenants who have long-term rents for two or three years, but once this Bill comes in, if they have already had their 12 months, they could suddenly find they have four months’ notice coming their way because their landlord has decided they want to sell or move back in. I do not think we are giving tenants the protection that they thought they had when they secured their tenancy.

[Mr Amos]

Q You said the Bill will increase or reduce confidence, and you talked about the courts. You have not said much about the change to periodic tenancies. In your evidence, you talk about keeping fixed-term tenancies where tenant and landlord agree. What would stop landlords putting every tenancy on a fixed term, and what would be the practical difference of still being able to give two months’ notice yet being in a fixed-term tenancy? How would that be practically different?

Theresa Wallace: Often a tenant has put their children into school, and they do not want to have to move within two, three or four years. It might be a fixed-term job contract for two years, or it might be caring for elderly parents—whatever the reason, it is often the tenants that are asking us for fixed terms. It is not us saying, “You have got to take a fixed term.” If they want a fixed term, we understand the need for flexibility, because circumstances can change, so let them still have their two months’ notice. We would prefer to see minimum terms of four months, but that is not for landlords; that is to stop properties going over to the short-let sector.

I spoke to an agent last year who does short lets as part of their business model, and the average short let was 91 days. I can see we are going to lose properties to short lets; they are going to be paying for long-term rentals at short-let prices. I see that as being an issue.

If a landlord is happy to commit to two years and say, “Look, I don’t want to sell and I don’t want to move back in; I can guarantee you two years,” but the tenant still has their notice period for their flexibility, I do not understand why that is not allowed, because that is in the tenant’s best interest. Now, the landlord can say, “I am not going to sell my property. I don’t need to move back into it. You can have two years on a rolling contract,” and he then might change his mind nine months down the line, and there is nothing to stop that.

Ben Beadle: I wonder whether I can comment from a student perspective, which has not been picked up by the Committee yet. One of the areas that we are very worried about is the cyclical nature of the student housing market. I operate in Uxbridge near Brunel University. As Mr Simmonds well knows, tenants coming in want to have the security that the property is going to be available.

Where I do not think the Bill quite strikes the right balance is that I think it needs to maintain the moratorium period that was brought in under the previous Bill, because that did three things. First, it protected set-up costs for landlords. It costs a lot of money to set up a tenancy. I do not think we are going to see a huge change in behaviour in terms of churn, but I am sure we will see some behaviour change where tenants can give two months’ notice. Having a minimum six-month period—four months plus two—is sensible for that. Secondly, it is sensible from the point of view of not turning the private rented sector into Airbnb via the back door. Nobody wants that. Thirdly, it goes some way to protect the student cycle, which is in the interests of both landlords and tenants.

Renters' Rights Bill (Second sitting)

Rachel Blake Excerpts

Committee stage
Tuesday 22nd October 2024 Public Bill Committees

[Jerome Mayhew]

Q Just on that, every landlord—or the vast majority of landlords—increases the rent annually to take account of inflation and other issues. Is that not right?

Justin Bates KC: There is a famous housing benefit case, which the Commission on Social Security likes to remind us of, that says that Rachman is not the only model of landlord. It is entirely possible not to do that, or to agree sub-ones. Remember that the private rented sector is so difficult to pin down as a single, homogeneous beast. A landlord who lets to someone who is predominantly reliant on welfare benefits to pay their rent will not hike it beyond the inflation rate of the benefit, because all they would be doing is creating a situation in which the tenant cannot pay.

I do not think you are wrong to raise that spectre; I just struggle with how we identify how likely that is to play out, and what the numbers will be in any given period. I do not think, for my part, that we can safely assume that every landlord will go as high as humanly possible, or that everyone will be defended, but on your broad point that there will be a delay, yes, that must be right.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Q I want to ask about condition and the decent homes standard. Will you elaborate on how you think that bringing the decent homes standard into the private rented sector can most effectively be enforced? What might you anticipate going forward from the way that the Bill is drafted?

Giles Peaker: What is envisaged is it being enforced by local authorities, and the powers of the local authorities appear to be great. The question, as with existing powers for local authority housing enforcement, is the very variable performance—or the extremely variable performance—between local authorities. Whether one wants to impose a duty on local authorities, rather than a power, would be an interesting question; I strongly suspect that funding demands would follow on from that. But the powers are there and could be very effective; it is a question of the will to utilise them.

We do not yet know what the contents of the proposed decent homes standard will be. It would be good to see a unified standard across social and private tenancies—there is no reason why there should be any distinction between the two kinds of accommodation. The social housing side, as I understand it, will be enforced by the social housing regulator, which is a slightly different situation, but the same standard would apply. Tenants, as it stands, will not be able to enforce the specific standard except by complaint to the local authority.

[Rachel Blake]

Q You rightly highlighted that tenants will rely on local authorities to pursue enforcement and that there is a very variable standard among local authorities for doing so, although you mentioned that tenants would not be able to take enforcement action themselves. You have alluded to a possible duty—that is a question that you have thrown out there—but what other alternatives might there be?

Giles Peaker: Tenants will have their existing rights under the Homes (Fitness for Human Habitation) Act 2019 amendments to the Landlord and Tenant Act 1985. Quite how far that will overlap with the decent homes standard—well, we will have to see what is in the decent homes standard. There will certainly be some degree of overlap, I imagine, through the presence of housing, health and safety rating system hazards, so there would still be a route for tenants to take action on specific hazards, but it will not necessarily enforce decent homes, full stop.

Justin Bates KC: For my part, I think that by far the better tenant-empowerment repairing provisions of this legislation are the extension of Awaab’s law to the private sector. If you get the details of secondary legislation right, that could be a real game changer, because that will be enforceable by tenants through private law proceedings in the county court. If you set sufficiently robust—fair, but robust—timescales, you will do a lot of lawyers out of work, which would be an excellent thing. Look at that.

[Carla Denyer (Bristol Central) (Green)]

This is my first time on a Public Bill Committee, Sir Christopher, so I might make a mistake with process. May I briefly point Jerome at the answers provided in written evidence and in earlier verbal evidence, which I felt answered the question already? In terms of, “Surely, won’t all tenants do it?”, I think we heard a clear answer that, for the vast majority of the population, anything to do with courts is a terrifying and bureaucratically faffy process that they will not want to engage with. On “Won’t landlords just max it out”—

--- Later in debate ---

[Jerome Mayhew]

Q What has happened with that? If the level is £10,000, does that feel about right to you? Should it be higher or lower, or should there be an improvement in another way?

Judicaelle Hammond: I am afraid that the answer, which is probably for another day, is that it depends. For example, it depends where you are in the country and what kind of rents you are going to be able to charge. I was talking to a member this morning who said, “There is no way I can put the rents up. The people who are paying for it will not be able to cope with an increase in order to recoup that.” We need to look at that carefully and have either a ramp-up system or a different system for exemption, or indeed better or more suitable technology, which might well be coming. My plea on that would be: let us use the time we have before the standards are tightened to improve things like the energy performance certificate methodology and look at alternative technologies as well.

[Rachel Blake]

Q I want to come back to what the Minister said about condition and the introduction of the decent homes standard into the private rented sector. I want to understand this. I think you were saying there is an in-principle objection to the standard but a recognition that the actual standard has not been published. At the moment, the position you would take is to rely on the housing health and safety rating system and the homes fit for human habitation provision. My experience, and I am sure that of many representatives, is that it is difficult to drive up the quality of homes with the HHSRS due to how long it takes to force landlords to acknowledge where they are failing on a particular hazard. Could you elaborate on why you think relying on HHSRS, or even the homes fit for human habitation provision, would be more effective than the decent homes standard both for consumers—tenants—and for landlords in terms of the condition of their assets?

Judicaelle Hammond: It is a question of finding ways quickly to improve things, and using the current regulations. Again, I am not here to ask you questions, but I am really curious about the barriers that you see. If this was enforced properly, you would find ways of doing it. For us, it is a question of asking, “Well, there is legislation already. Why don’t we use it?”

On the decent homes standard, it is less an objection in principle. It is more about taking what we have at the moment and applying it without thought or adaptation to the private rented sector, where some of the conditions might be different. For example—going back to my argument about the availability of trades, maintenance staff, and so on—if you have a large portfolio, that might be doable, but if you do not, you really are in a different position.

[Rachel Blake]

Q Let us take heating—

[The Chair]

Order. I am going to bring in Jacob Collier because we are running out of time.

[The Chair]

Rachel, you have half a minute for a quick question.

[Rachel Blake]

Q Let us take heating as a hazard. What do you think the effective enforcement of heating, or cold, as a hazard would be?

Judicaelle Hammond: Sorry, I really cannot give you a proper answer because it would depend on the circumstances.

[The Chair]

Thank you, everybody. Thank you for coming along and giving us a bit of your experience and knowledge. We will move on to the next panel.

Examination of Witness

Anna Evans gave evidence.

Renters’ Rights Bill

Rachel Blake Excerpts

Wednesday 9th October 2024 Commons Chamber

[Mrs Badenoch]

I have not seen that specific report, but I have seen others that indicate that this is happening. We have to be careful. I appreciate that the Government want to make renting more secure and affordable, and we want to do that too, but this Bill will have the opposite effect, as we have seen in Scotland. As this Government will find out over the course of this Parliament, they cannot buck the market.

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

Does the Secretary of State recall why the previous Government failed to introduce such measures, as they intended?

[Mrs Badenoch]

Yes, I do recall. The reason why our Bill did not get through is that we recognised its flaws. That is what I mean when I say that I worry about the Secretary of State, because the bright young things in Downing Street who have sent her out with this Bill do not care if it fails. They will take the credit today, but she will get the blame tomorrow, and tenants will get bad regulation, shortages and higher prices, as we have seen in Scotland. Those higher prices will be paid by tenants, especially young people and the less well off.

--- Later in debate ---

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I declare an interest in that my husband works for an organisation that has allocated some funding to the Renters Reform Coalition. I would like to associate myself with the remarks by my hon. Friends the Members for Mitcham and Morden (Dame Siobhain McDonagh), for Barking (Nesil Caliskan) and for Vauxhall and Camberwell Green (Florence Eshalomi) about the experience of so many Londoners living in the private rented sector.

I warmly welcome this Bill, which will improve the lives of millions of people. I also commend the ministerial team for the speed with which they have brought it forward after years of prevarication and delay by the Conservatives. I am deeply concerned that the amendment moved by the Opposition reveals no understanding of the state of the private rented sector and thoroughly lacks contrition about the state of the courts that the Conservative Government have left us with. Do they really not understand the impact of their previous decisions?

Across the UK, about 19% of households rent their homes from a private landlord. In the Cities of London and Westminster, that rises to over 45% of households, or over 27,000 people. Many of the renters I have spoken to do live happily in well-maintained and modern buildings, but too many of them live in homes riddled with damp and mould, and face disproportionate and out-of-the-blue rent hikes. That goes to the heart of the matter: the security of your home should not depend on who owns it. This Bill will go a long way to changing that. I welcome the measures on ending section 21 no-fault evictions, bringing an end to bidding wars and strengthening rights for pet owners. I believe these measures really will stabilise the market and reduce homelessness.

I would like to focus on the ombudsman service for the private rented sector. One of the key issues in the private rented sector has been the long-standing imbalance of power that means tenants are unable to secure action from their landlords. The ombudsman will have powers to compel landlords to issue an apology, provide information, take remedial action and pay compensation. It is positive that tenants will be able to access the ombudsman service without the need for a referral. However, there is work to do to ensure that it is clear where the responsibilities lie between the new ombudsman service and other existing bodies. The ombudsman will need to establish itself within a current landscape that is complex, as councils, the police, trading standards and the courts all have a role.

I welcome the wording in clause 104, which establishes the duties of local authorities in enforcing landlord legislation. As the new ombudsman service is set up, information sharing with local authorities will be key to empowering them to enforce its decisions. I believe that the ombudsman service should also be accountable to Parliament and to the public. Almost a third of regulators were not scrutinised by Parliament from 2019 to 2024, which simply is not good enough. A formal timetable should therefore be established for the new ombudsman to be reviewed by the Housing, Communities and Local Government Committee.

Renters should also have clear information on where and how they can seek redress. The Department should publish guidance for renters about lodging complaints, and information on complaints should be shared with other relevant bodies, including the police and councils. The wording of clause 63 is currently open to interpretation as to who will carry out the redress scheme, and I urge the Secretary of State to consider merging this service with the existing housing ombudsman.

The success of this Bill will of course depend on the ability of local authorities to enforce it. Residents of the Cities of London and Westminster, from the west end to Dolphin square, are likely to benefit from this, which I strongly welcome. Burdens should be lowered to enable local authorities to regulate without the interference of national Governments. I know that, along with strong support for the measures in this Bill, many in the House will join me in supporting this Government’s mission to build 1.5 million new homes during this Parliament.

--- Later in debate ---

[David Simmonds]

My hon. Friend represents Dumfries and Galloway and therefore knows a great deal about the impact that these measures have, because he has seen at first hand the impact on his constituents. I agree with him entirely, and it is important to draw out his point that they will have an impact not simply on those who are private renters in the traditional sense; this is part of a wider rental market, as many Members have noted, which includes everything from temporary accommodation to short-term lets, which is to a degree an unregulated market into which some landlords are moving. There will be a huge impact on students across our university towns. The private rented sector is used by local authorities to find accommodation for those in social housing need, and the social rented sector and our housing associations will be impacted too. Of course, there will be a degree of impact on owner-occupation as well.

Reflecting on the speeches of Members, it is clear, as the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi) said in her contribution, that we are increasingly reaching many of the key milestones in our lives later on, including acquiring our first home as an owner, having our children and getting our settled career. That is one of the reasons why we in the Opposition party, as we did in government previously, recognise the importance of getting things right in the private rented sector, because it will represent an increasing proportion of tenure in our country in future.

I will try to draw together a number of the points made—I appreciate that the Minister will do the same for the points made by his colleagues; I will endeavour to do my best for those on the Opposition side. As well as the points made in the introduction by my right hon. Friend the Member for North West Essex, my hon. Friend the Member for South West Devon (Rebecca Smith) shared the experience of being a local authority cabinet member in a part of our country with a combination of high-density modern housing in cities and surrounding rural areas, something more characteristic in the market of the United Kingdom than is the case in London, where my own constituency is located. Indeed, the hon. Member for Walthamstow (Ms Creasy) spoke of similar experiences.

That illustrated a point that some scoff at: landlords exiting the private rented market means not that the bricks and mortar disappear, but that the home is no longer available to the private rented market. It may be available to owner occupiers, it may be available to short-term lets, and it may be converted into other types of accommodation, but it represents a net reduction in the supply of private rented homes in that location. It is absolutely correct to draw attention to the impact of that on our communities.

[Rachel Blake]

You make the point that you think the property might change into home ownership or another form of tenure. What evidence do you have that the property would not remain in the private sector under a different type of landlord? The argument that you and other Conservative Members continually make is that—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I remind the hon. Lady that when she says “you,” she is addressing me. I have not made any points in this debate.

[Rachel Blake]

The argument that has been made by those on the Opposition Benches is that private rented homes are at risk of being lost to the sector, but that does not really stand up if other landlords purchase those homes.

Short-term Lets: Regulation

Rachel Blake Excerpts

Thursday 12th September 2024 Westminster Hall

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I beg to move,

That this House has considered the regulation of short-term lets.

It is an honour and a genuine privilege to serve under your chairship, Mrs Harris. The issue of short-term lets is an acute one for my Cities of London and Westminster constituents, so I am pleased to have the opportunity to raise it today and to discuss it with colleagues from across the House and across the country, and I look forward to the discussion with the Minister.

We need to improve the regulation of short-term lets in this country, from constituencies such as mine in central London to Truro and Falmouth in Cornwall, East Thanet in Kent, Morecambe in the north-west, and in cities like York—represented so ably by my hon. Friends today—where the demand for short-term accommodation is so high and the housing crisis so acute. Every place has its story to tell—I look forward to hearing them this afternoon—about how short-term lets are changing communities, sometimes for the better, but rarely in a way that is without challenges. We can see from the range of places represented that any solution has to be a national framework with power in local communities to decide on certain elements.

[Alison Hume (Scarborough and Whitby) (Lab)]

Scarborough and Whitby are understandably popular destinations for holidays and short breaks, but the impact of short-term holiday lets is forcing people out of the towns. Today there are only seven homes available to rent on Rightmove in the Whitby area, while there are 300 properties on short-term let platforms. Does my hon. Friend agree that the Government need to move at pace to introduce licensing and new planning powers for councils?

[Rachel Blake]

I agree, and the work that my hon. Friend has done to research the impact on the private rented sector is really helpful. I hope that we will continue that work together.

If I may relate this debate to wider business in the House, it is incredibly welcome to be conducting this debate the day after the introduction of the Renters’ Rights Bill. I warmly welcome the Minister here, and I congratulate her and the wider team on the speed with which they have brought forward legislation that will improve the lives of millions of people.

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I congratulate my hon. Friend on securing this important debate. She highlighted the Renters’ Rights Bill, which is a welcome piece of legislation. We want to give security to renters. Is it not right that as well as security for renters, we should also have security and high safety standards for tenants in short-term lets, and people who actually pay their business rates and VAT as part of their operation?

[Rachel Blake]

I am glad that my hon. Friend raises that issue, which is twofold. First, it is about a level playing field with other types of business. Secondly, it is about safety for the consumer. I hope that we will have a chance to explore those issues.

There are 27,798 private renters in the Cities of London and Westminster, all of whom will be better off thanks to this Government. The Renters’ Rights Bill demonstrates that the Government are taking the housing crisis seriously, and I look forward to working with my hon. Friend and other colleagues on it as it makes progress through the House.

I think we would largely agree that platforms like Airbnb are not inherently a bad thing. I imagine that many in this room use Airbnb or similar services when we go on holiday, but we cannot deny that this has changed from being a peer-to-peer marketplace to something much broader. What started out as a way to make additional income from a spare room has become a significant cause of the decline in the number of homes available for local residents.

[Noah Law (St Austell and Newquay) (Lab)]

I thank my hon. Friend for securing this debate, which is crucial to the Cornish hospitality industry and housing landscape. Does she agree that while there is a need to establish a truly level playing field, for different kinds of holiday accommodation, including furnished holiday lets, we need to ensure that we support those local bona fide holiday businesses to continue to operate, lest we risk them flooding on to the market as more institutionalised Airbnbs or, even worse, second homes that are not well utilised?

[Rachel Blake]

I agree about the issue of the different types of places and different types of tourism and holiday accommodation. The experience in the centre of London is driven by technology. Previously, the ability to let out a room or even a whole home was much less, but in areas that have longer-standing tourist let economies—such as my hon. Friend’s area and those of other colleagues—we have found that there are different challenges. I believe that those can be discussed through the progression of the regulation of the sector. I thank him for raising that important topic.

[Andrew George (St Ives) (LD)]

Does the hon. Lady agree that this is about the politics of justice, not the politics of envy? It is not just an issue of the taxation of furnished lets. There has been an industrial movement of properties—second homes—going from being registered for council tax to being registered for business rates, and people then apply for small business rate relief and pay nothing at all. Against that, we do not get the investment in affordable homes for local people. In Cornwall alone, £500 million of taxpayers’ money has gone into the pockets of holiday let providers, while those specifically created, for planning reasons, with planning restrictions are outside that—

--- Later in debate ---

[Rachel Blake]

I thank the hon. Gentleman for that helpful intervention and for elaborating on that point. I definitely believe in the politics of justice over the politics of envy. Technology has industrialised this sector, so we need to come up with a policy framework that reflects the scale of the changed situation.

Having large numbers of whole short-term lets in relatively small geographical areas, and on an increasingly commercial basis, as we have discussed, hollows out communities. It causes waste management issues and gives rise to concerns about community safety, and it depresses the availability of homes in the private rented sector.

I will discuss the impact on housing supply and then come on to the environmental impacts. One of the issues with this topic is that in some areas, there is a lack of concrete data, at least in part because of the lack of regulation. That means that much of the information comes from the experience of housing teams in local authorities and what data can be scraped from the relevant platforms. According to detailed work by Westminster city council, around 13,000 properties are listed as available for short-term let in Westminster. Over 20% of the housing stock in the west end ward are short-term lets and, at the time of the census, 30,000 properties in Westminster had no full-time residents. We have that information only because of the hard work of Westminster council’s environmental health officers and others.

One in every 85 homes in the capital is available for short-term let on some basis for an undetermined number of nights each year. That is a problem in itself. As Claire Colomb, professor of urban studies and planning at University College London, noted:

“London is one of the least regulated European cities”

when it comes to short-term lets. Even Airbnb has been calling for a registration system for years, and the Short Term Accommodation Association agrees with the need for a national administered registration scheme.

Allowing short-term lets to proliferate without regulation is a potential challenge to growth. That may sound counterintuitive, but the variety of accommodation options in the tourism industry means that they are not on a level playing field, as we have discussed. Hotels, traditional bed and breakfasts, and hostels have to abide by safety regulations, which short-term lets, for example, simply do not.

Where we do not lack statistics, though, is in housing need. The latest homelessness figures show the highest ever number of families in temporary accommodation in London: 65,280. In March this year, over 3,000 households were in temporary accommodation in Westminster alone. I am sure that that is borne out in the inboxes of all Members here.

Every day I hear from a new family struggling to stay on an even keel after they have had to move to temporary accommodation away from school and their support networks. Just this week, I heard from a mother who has been moved to Dagenham, over 12 miles from her daughter’s school, where she also works as a teaching assistant. She is realistic about how long they are likely to be in temporary accommodation and knows the state of the London private rented market, so to prevent her son from having to commute for four hours a day and to try to make sure that he has friends locally, she would like to move him to a school in Dagenham, but without childcare support that means giving up her job. Families across London and across the country have to make that kind of decision every day, and it is not good enough. It is creating incredible pressure on our wider system and local authority finances due to the rising costs of supporting households in temporary accommodation—London councils estimate the cost to be £90 million every month—and it is all because there are simply not enough affordable homes for people.

Many of these pressures are directly attributable to the failures of the last 14 years, whether it is austerity eating into the resilience of our public services or the failure to reform the planning system to give local places more control over what is happening in their communities. In government, Labour banned the long-term use of bed and breakfasts for homeless provision, and between 2005 and 2010 the number of households in temporary accommodation halved. The national affordable homes programme got Britain building between 2008 and 2011, and the Mayor of London has started building the highest number of council homes since the 1970s. Even in opposition, Labour MPs such as Karen Buck, the former Member for Westminster North—parts of which are now in my constituency—improved housing standards through the Homes (Fitness for Human Habitation) Act 2018.

The proliferation of short-term lets of whole homes is making the availability of private rented homes much worse. Of course, London is a proudly international city, and we need to make sure that flexible accommodation options are available for visitors, but we will remain a thriving international city only if we ensure that sufficient housing is available for Londoners. Whole homes rented out consistently as short-term lets—again, I am not talking about residents who go on holiday and list their homes while they are away—are making it much more difficult for communities to stick together.

I was contacted by a constituent, Jayne, who summarised the situation well when she wrote that

“when I first moved here twenty-five years ago, I had neighbours. Now I am concerned about the security of our building because of the constant turnover of strangers”.

In strong communities, such as the ones that we all represent and the neighbourhoods of the Cities of London and Westminster, neighbours are the ones who watch our kids when we go for a job interview and who help us to book a GP appointment. It is these communities that are at risk if we do not take action now to regulate short-term lets. As a proud Labour and Co-operative Member of Parliament, I believe that the answer lies in community power, creating local assets and businesses that are owned—in the realest sense of the word—by the people who use and rely on them. What would it look like if, instead of a tourism sector that stretches the resilience of communities, we built one that created opportunities?

As well as hollowing out communities, there are environmental challenges in the growth of short-term lets in the Cities of London and Westminster. Waste management and noise are consistent issues. There is almost no way for councils to enforce against them, not least because they do not have access to the resources to do that, so any policy on enforcement action comes at the cost of council tax payers, rather than those creating the problems in the first instance. That is one of the consequences of an under-regulated market.

Local authority environmental services teams are working tirelessly on these issues, but they can enforce against only those they actually catch red-handed in breach of the rules. That makes it very challenging for short-term lets, as the visitor is gone in a matter of days, and it is difficult to establish a responsible and accountable person for those listings. That is why a registration scheme needs to ensure that there is not only a unique property reference number, but a single point of contact responsible for the property. Frequently, the noise from short-term let flats is intolerably loud at very unsocial hours and unbearable for long-term residents, and it should be avoidable.

The lack of clear and consistent regulation means that enforcement capability sits with organisations and individuals who are not incentivised to enforce, while those who want to enforce are often those without the resources. A private landlord whose tenant is using their property as a short-term let is not incentivised to enforce against a breach of lease—although they might choose to—unless it is causing them any direct inconvenience. They would rather avoid reletting the property. The same goes for freeholders whose leaseholders are sub-letting on a short-term basis, whereas resident management organisations and the council, which of course want to enforce wherever possible, lack either the resources or legal recourse.

However, there are solutions. I believe that we must create a compulsory registration scheme that captures each individual property, using a unique property reference number; ensure that platforms are sharing data, as part of that scheme, on the number of nights for which each property, identified by its unique property reference number, is listed on their sites; ensure that the registration fee is reasonable and proportionate so as not to drive out the small or individual hosts in the market; ensure that where whole-home accommodation is consistently being let out on a short-term basis, there are in place commercial measures, including a named, verified and accountable individual, gas safety certificates, commercial waste contracts where necessary, and appropriate insurance; and give local authorities the power to prosecute those accountable individuals for antisocial and illegal activity, such as fly-tipping. I simply do not believe that that would be overly onerous.

Proposals to manage short-term lets through the planning system are welcome in theory, but the proposals by the previous Government were not suitable for this context. These proposals were a new use class and associated permitted development rights. A new use class for short-term lets not used as a sole or main home is not problematic in theory. The issue comes with the proposal to automatically reclassify existing dedicated short-term lets into this use class without planning permission. This, as the Local Government Association has pointed out, would be at odds with the premise and purpose of creating a new use class for short-term lets, and would give local authorities no say in their location, size and quality.

There are practical solutions to all these challenges. I urge my hon. Friend the Minister, when she, along with colleagues from the Department for Culture, Media and Sport, considers this issue, to ensure that there is a robust national registration scheme, with data input from the platforms, as I mentioned, and that applications for short-term lets that exceed 90 days per year are dealt with under the normal planning application process for a change of use, rather than our automatically entrenching the current unsustainable situation. Local authorities must have enough resources—probably from revenue raised from the registration scheme—to enforce the rules.

Those suggestions learn the lessons of attempts to regulate short-term lets in other major cities, where they have benefited from the data and information available. I firmly believe that we should use all the powers at our disposal to address the housing crisis. Although I know that dealing with short-term lets is just a small part of solving the problem in places such as mine, in the Cities of London and Westminster, it could improve people’s lives, strengthen our communities and at least ease the desperate need for housing in the private rented sector, so today I urge the Minister to prioritise this. I would be grateful if she outlined a timeline for Government action on bringing forward a national registration scheme and considering and consulting on the future regulation of short-term lets through the planning system.

[Several hon. Members rose—]

--- Later in debate ---

[Rachel Blake]

It has been a real honour to hear the stories of different places across our country. It has been a real privilege to serve under your chairship, Mrs Harris; to be joined by my immediate neighbour and very old friend the Minister, who represents Bethnal Green and Stepney, and by other immediate neighbours, my hon. Friends the Members for Kensington and Bayswater (Joe Powell) and for Vauxhall and Camberwell Green (Florence Eshalomi); and to hear contributions from Members who represent Devon, Kent, Lancashire, Cornwall, Leicestershire, Yorkshire, Sussex and Cumbria. We have been transported to the beautiful landscapes of Morecambe and the lakes, but we have also heard about some of the damage that short-term lets are doing to our communities and how challenging it is to take the action that we need.

I have particularly reflected on the following themes: the risks of depopulation and badly managed tourism, what is happening to the market and the challenges of enforcement in such a complex environment. This debate has clarified how important a localist, devolved approach will be. We have heard compelling and thoughtful contributions on the differences between the self-catered holiday let sector and traditional bed and breakfasts and hostels, and the risks there are to depopulation and otherwise thriving tourism industries if we get this wrong. We heard about the scale of the market impact, properties where rents could be as much as three times lower than the income from short-term lets, and just what that is doing to distort local housing markets.

I am struck by the challenge of effective enforcement and the fact that we have such a complex environment in which private landlords are unable to take action on their tenants. The urgent need for leasehold reform means we can get clarity and ensure we take action by delivering on the Renters’ Rights Bill. I am heartened that we can move forward on this issue. Hearing the Government’s commitment to make progress with a registration scheme is encouraging.

We need to think more about a licensing scheme. I shared some details about a unique property reference number and the importance of making sure that we have data available. I also welcome the idea of a toolkit. I foresee an opportunity with the devolution Bill and the publication of the national planning policy framework to make real progress on this issue to protect all our communities and contribute to tackling the long-term homelessness crisis in this country.

Question put and agreed to.

Resolved,

That this House has considered the regulation of short-term lets.