Cost of Living: Private rented sector

Rachel Maclean Excerpts

Tuesday 18th July 2023 Westminster Hall

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

It is a great pleasure to serve under your chairmanship, Dr Huq, and to respond to the debate on behalf of the Government. As is traditional, I thank the hon. Member for Stretford and Urmston (Andrew Western) for securing the debate on this important issue, which matters to all of us, including those of us who serve in the Government. He spoke passionately on behalf of his constituents, as did the other Members who have spoken, and I will come on to their contributions before I conclude my remarks.

The hon. Gentleman’s concerns reflect my determination to make sure that the Government deliver a strong, functioning private rented sector. As has been reflected during the course of the debate, private rented accommodation is the second largest housing sector in England, providing homes for 4.6 million households and an estimated 11 million tenants. It plays a vital role in supporting people to study away from home, explore new locations or move to find work, which is why we are ensuring that tenants have the security they need and enjoy a positive experience of renting a home.

As has been alluded to, the Government recently introduced the Renters (Reform) Bill to Parliament. The Bill will help change the landscape of the private rented sector. It is the most significant reform to the private rented sector for a generation, and it will deliver on the Government’s commitment to a better deal for renters. The Bill will make a fairer, more secure and higher quality private rented sector, fit for the 21st century. It will end section 21 “no fault” evictions and move to periodic tenancies, allowing landlords and tenants to end tenancies when they need to. This means that tenants can rent decent, secure homes and put down roots in their communities, while being empowered to challenge poor practice without worrying about retaliatory eviction, or they can leave if the landlord fails to meet their basic responsibilities.

However, we know that the overwhelming majority of landlords provide a good service, and we recognise that good landlords play a vital role in providing decent homes for millions of people across the country. That is why we will introduce comprehensive, fair and efficient grounds to ensure that landlords have confidence that they can regain possession of their property when it is reasonable to do so. We also want to simplify the system for both tenants and landlords, which is why all rent increases will take place via one mechanism. We will allow rent increases once per year in periodic tenancies and increase the notice that landlords must give to two months, giving tenants more time to plan and to seek advice. That will create a fairer system that allows both parties to negotiate rents effectively, while protecting security of tenure. I want to be clear: this Government do not support rent controls. Some Members asked me to set out our position on that. We recognise, however, that most people want to buy their own home one day. We are therefore firmly committed to helping generation rent to become generation buy.

We are working towards delivering on our commitment of 300,000 homes a year. Despite all the doom and gloom that may be reported, we are making strong progress. There is always more to do, but it is important to recognise that annual housing supply is up 10% compared with the previous year, with more than 232,000 net additional homes delivered in 2021-22. That is the third highest yearly rate for the past 30 years. We have also announced £10 billion of investment in housing supply since the start of the Parliament, and the Government are on track to deliver thousands of affordable homes to rent and buy across the country through our £11.5 billion affordable homes programme. A large number of those are for social rent.

I want to address the—if I may put it this way—nonsense stated by a couple of contributors to this debate, who said that money has been handed back to the Treasury. That is simply not the case. The money referred to was re-profiled, which is a normal part of Government accounting —[Interruption.] Opposition Members might want to listen and find out how Government funding and finance work. That money will be recycled and refocused into the 2016 to 2023 affordable homes programme. I hope that we will hear no more of that kind of comment.

A healthy housing market thrives on having a range of tenures. That is why we have launched the £1.5 billion levelling-up home building fund, which provides loans and takes out equity in house builders that would otherwise struggle to access finance. The Government have made a range of interventions to support the sector over the past decade. The construction of new Build to Rent homes will play an important part in helping to ease demand pressures in the private rented sector and is already providing thousands of much-needed new quality homes.

We know that right now meeting immediate housing costs is a huge struggle for some people, and that a higher proportion of income is being spent on rent by those on lower incomes in particular. In April 2020, therefore, we raised local housing allowance rates—a significant investment of almost £1 billion—and that increase has been maintained since then. Where tenants are unable to meet their housing costs and need further support, discretionary housing payments are available from local councils. Since 2011, the Government have provided almost £1.6 billion in discretionary housing payment funding to local authorities. For those who need additional support, the Government are providing another £1 billion of funding—including any Barnett impact, as colleagues from the devolved nations have spoken today—to extend the household support fund in England into the next financial year, bringing total funding to £2.5 billion.

[Beth Winter]

Will the Minister give way?

[Rachel Maclean]

I will not give way, if the hon. Lady does not mind, because I have a lot to get on the record.

Cost of living pressures go beyond housing costs, and that is why we have taken decisive action to support households, totalling £94 billion or £3,300 per household on average, across 2022-23 and 2023-24. We uprated benefits and state pension by 10.1% in April. For 2023-24, the Government are providing additional means-tested cost of living payments of up to £900. We also provided significant support for households with their energy bills, covering about half of a typical household energy bill this past winter. I utterly reject comments to suggest that the Government are not interested in helping people on low incomes. I have set out how we are doing just that with billions of pounds of taxpayers’ money.

I will touch on the Members who have spoken. I thank the hon. Members for Pontypridd (Alex Davies-Jones), for Cynon Valley (Beth Winter), for Barnsley East (Stephanie Peacock), for Birmingham, Erdington (Mrs Hamilton) and for Leicester East (Claudia Webbe), the Front Benchers of the SNP and the official Opposition, the hon. Members for Glasgow South West (Chris Stephens) and for Greenwich and Woolwich (Matthew Pennycook), and my hon. Friend the Member for Christchurch (Sir Christopher Chope).

[Sir Christopher Chope]

Will the Minister give way?

[Rachel Maclean]

I am about to refer to my hon. Friend’s comments, if he will allow me, so he can come back to me after that. He asked about the RPC and the impact assessment. I agree with him that this is about supply, and I assure him that the number of PRS properties increased by 11,000 in 2022 compared with the previous year. The data from UK Finance shows that the number of buy-to-let landlords reached a record high at the end of last year. There is no evidence that private rented landlords are leaving the market. Our Bill is fair to decent landlords, and the RPC has estimated the net cost to landlords to be just £10 per property. The committee has given the Bill a green rating, and I do not think £10 per property is a significant sum that is going to force landlords to leave the market.

[Sir Christopher Chope]

rose—

[Rachel Maclean]

If my hon. Friend wants to challenge me further, I will allow him.

[Sir Christopher Chope]

I want to ask the Minister about her aspiration to move from generation rent to generation buy. When does she expect the Government to deliver the voluntary right to buy for housing association tenants, which was first promised in 2015?

[Rachel Maclean]

I refer my hon. Friend to my earlier remarks, which set out that we are building record numbers of houses both to buy and for rent. We will make further announcements on that point in due course.

I gently remind the other Members who have spoken that all of them, I think, represent areas that have Labour-run councils, or else represent areas in the devolved nations. Their own councils have considerable powers, funding and tools, especially in enforcement, to tackle a lot of the issues that have been raised in their casework.

I was struck by the complaint made by the hon. Member for Birmingham, Erdington about the way her own city council, which is run by the Labour party, is allowing HMOs to be delivered. I suggest that she takes that up with her own Labour-run council—likewise for the hon. Member for Stretford and Urmston, whose constituency is of course part of the Greater Manchester Combined Authority, which is run by Labour Mayor Andy Burnham, who has considerable powers, influence and devolved funding from the central Government.

[Beth Winter]

rose—

[Rachel Maclean]

I briefly give way to the hon. Lady, who has been very persistent.

[Beth Winter]

Is the Minister aware that the devolved nations have been underfunded by billions of pounds? Going back to the point that the Minister made earlier, the local housing allowance is a reserved matter, and it has been frozen since 2020, since which time we have had a cost of living crisis. People are struggling. My question, though, relates to the report by the Levelling Up, Housing and Communities Committee, which stated:

“If the Government believes the PRS is the right place for those on the lowest incomes, it should…make sure housing benefit…covers benefit recipients’ housing costs.”

The Committee is still awaiting a response from the Government. When will the Government respond?

[Dr Rupa Huq (in the Chair)]

Order. We need to allow the Minister to respond and Andrew Western to wind up the debate.

[Rachel Maclean]

I am afraid that I do not agree with the premise of the hon. Lady’s question, which is that the devolved nations have been underfunded. Her Government in Wales is led by the Labour party, and it is up to them to deliver housing for people who live in Wales. I suggest that she address her comments to their door.

We recognise the struggles that renters have faced in recent months, which is why we have taken decisive action to offer vital support where it is desperately needed. More importantly, we are making the most significant change to the private rented sector in over 30 years to provide the stability and security that renters need, as well as continuing to build new affordable homes so that many more people can own their own home. I therefore look forward to working with Members from across the House to achieve that goal, which we all share. I thank all Members who have contributed.

[Andrew Western]

I thank all colleagues who have taken the time to contribute to what has been an important and insightful debate into an issue that affects all our constituents very acutely. I will not speak to all the contributions from Opposition colleagues, but they have all accurately reflected the plight of private renters, both in terms of the impact of the cost of living crisis on their living standards and ability to pay for basics such as food, energy and rent, and in terms of the condition of the properties that many constituents have to live in. Many constituents are unable to afford to move and terrified to challenge their landlords on the need for repair.

I want to spend rather longer, though, on the comments of the hon. Member for Christchurch (Sir Christopher Chope). He is absolutely right to state that we need additional supply in the housing market. He seemed to suggest that I had not referenced that when I set out the need to scrap the Town and Country Planning Act 1990 to build, build, build, to utilise the green belt, and to drive up housing supply in a way that delivers significantly more affordable and social homes. None the less, we agree on that point. I stress that because it was probably the only part of his contribution I agree with. He will appreciate that I am not in a position to comment on many of the changes made 40 years ago in the 1980s; sadly, I was not born until 1985. However, it is certainly the case that the interventions made back then have done nothing to ease the terrible situation for those at the sharp end of private rent, who are experiencing this cost of living crisis, often on very low incomes.

I also object to the suggestion that immigration, or indeed any form of demand issue, is driving the housing crisis. It is simply a fact that the biggest driver of demand for private rent is the 307,000 young people looking to move out of their parents’ homes in 2022, which was caused by many of them staying at home for longer during covid, as well as the impacts on their employment during that time and so on. Although that is the biggest aspect of demand, it is important to remember that the housing crisis is always fundamentally about supply.

I am sure the hon. Member for Christchurch will be aware of this, given that he has already subjected us to one history lesson. If I point to the history of house building in this country, we have not been building enough homes for the past near 70 years. In some of those years we had net migration out of the country, so to suggest that immigration is a driver of the housing crisis does not bear any alignment with the evidence before us. It was wholly unsurprising to hear that the hon. Gentleman stands against the Renters (Reform) Bill—not only from his contribution today, but from the significant delay in bringing the Bill forward for both First and Second Reading. We know now that it is the Tory Back Benchers who have caused significant delay to this important legislation.

I thank the hon. Member for Glasgow South West (Chris Stephens) for his comments. I am not going to speak to the merits of the system that has been brought forward in Scotland, other than to note the significant difference between the interventionist approach there and the inertia from the Government here in bringing forward their proposals.

Again, I thank the Opposition spokesperson, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), who was absolutely correct to highlight the ONS data showing that private renters are five times more likely to be struggling, and that 2.5 million of them are struggling to pay their rent. I know he understands that, which is why he is pressing so hard for the Renters (Reform) Bill to come forward, as he did today.

In many ways, the Minister echoed that desire to see the legislation come forward, which leaves one wondering why there has been such a delay. I appreciate that we have had a number of Housing Ministers over the past few years; I can only hope that she is still in the job on Monday. The issue with that many changes, and with the number of Prime Ministers over the past few years, is that this legislation has been kicked down the road time and again. When people are in desperate need and struggling to pay their rent, that is simply not good enough.

I was interested by what the Minister said about the £1.9 billion not actually being clawed back, but reprofiled. I am sure that will be of great reassurance to the many people struggling to get on the housing ladder and to access social and affordable property, not least because the Minister promised that the money will be available from 2026. How wonderful!

[Rachel Maclean]

I did not say that.

[Andrew Western]

I believe that the Minister said it was from 2026 to 2030.

--- Later in debate ---

[Rachel Maclean]

What I said was that the programme is from 2016 to 2023. It is already delivering affordable housing. I will send the hon. Gentleman a copy of my speech, and he will find it in Hansard.

[Andrew Western]

I am grateful for that and I apologise if I misheard the Minister. However, the fundamental point is that there is still much work to do. Yes, we need to see the Renters (Reform) Bill come through urgently. We also desperately need to see the support package that is being brought forward to stop mortgage holders being evicted extended to renters. Of course, we also need to build, build, build social and affordable homes in a way that gets them back to the second largest form of tenure in this country, giving the housing security that people desperately need.

Question put and agreed to.

Resolved,

That this House has considered the cost of living and the private rented sector.