Renters (Reform) Bill - Second Reading

– in the House of Lords at 4:00 pm on 15 May 2024.

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Baroness Swinburne:

Moved by Baroness Swinburne

That the Bill be now read a second time.

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

My Lords, I thank those Peers who have already taken an interest in this Bill and those who have worked to improve the private rented sector over many years. The Renters (Reform) Bill brings forward the most significant changes to the sector in 30 years.

For England’s 11 million tenants, representing some 4.6 million private rented sector households, the Bill provides the robust protections needed to increase security and standards, helping people to put down roots in their communities, keep jobs and build careers in their local areas. We are also supporting England’s 2 million landlords and recognising the importance of privately rented homes to our economy. The Bill will give good landlords the confidence to let their properties, equipping them with the tools needed to charge a fair rent and reclaim their properties when they need to, while driving out rogue and bad actors who undercut the majority. The Government have worked closely with those across the sector and across political parties to ensure that our measures strike the right balance. I will now move to the specific content of the Bill and outline the ways in which, when taken together, this package of reforms will support responsible landlords and tenants alike.

The measure that noble Lords will be most familiar with is the abolition of Section 21 evictions. We know that the threat of a Section 21 eviction can make tenants feel very insecure in their homes, with good reason. Unexpected evictions can cause real financial difficulty and interrupt employment and schooling for parents and children. By removing Section 21, we are helping tenants to feel settled and to challenge poor practices if their landlord is not meeting their basic responsibilities. We recognise that the vast majority of landlords provide an excellent service. In the absence of Section 21, it is important that they have the confidence that they can get their properties back. That is why, alongside abolishing Section 21, we will strengthen Section 8 possession grounds.

Landlords will be able to get their properties back if their circumstances change—for example, when they are selling or moving into their property. We are also protecting landlords and expediting their ability to evict those who disrupt neighbourhoods through the evils of anti-social behaviour, as well as introducing new grounds for persistent rent arrears. To protect tenants where there are more complex circumstances, such as a breach of tenancy conditions, the grounds will remain discretionary so that judges can consider whether it is reasonable to evict them.

After listening to concerns from the sector, we have also made changes to protect the functioning of the student market by introducing a new ground for possession to ensure that student landlords can continue to offer tenancies which align with the academic year.

To further protect people from homelessness, as well as abolishing Section 21, we will make sure that tenants still have certainty that a homelessness prevention duty will be owed when a valid Section 8 possession notice is served. This means that vulnerable households will continue to receive support while the threat of homelessness remains.

The strengthened grounds are fair, comprehensive and efficient. It is reasonable for landlords to regain their property when they need to, but they should rightly give tenants a specific reason for ending a tenancy rather than securing possession simply to avoid the responsibilities of being a good landlord.

We are also simplifying the tenancy system by abolishing fixed-term tenancies and moving to a system of periodic tenancies. Fixed terms lock in both tenants and landlords, even when their circumstances change, on a property of poor quality. Much has been said and written about fixed terms, and not always accurately. It is important to acknowledge that under a fixed term, tenants cannot end the tenancy and landlords cannot evict them using Section 21. However, at the end of a fixed-term contract, a tenancy does not automatically end, and to regain possession a landlord still needs to issue a notice and apply to the court if the tenant does not leave. In the new system, after the minimum six-month initial period at the start of a new tenancy, either party will be able to end the tenancy when they need to.

The Government are also exploring potential exemptions to the minimum six-month initial period where it is absolutely necessary for the tenant to end the tenancy early. This could include, for example, where a tenant has died, instances of domestic abuse or where a landlord has not remedied a serious health hazard such as severe damp or mould. We remain committed to abolishing Section 21 as quickly as possible. However, we should be clear that delivering a smooth transition to the new system is essential so that tenants understand their rights and landlords have the confidence to remain and invest in this important sector. That is why we have committed to ensuring that county courts are ready to deal with our tenancy reforms so that landlords and tenants can benefit from a modern, efficient possession system. To ensure the courts are ready, we will work with the Lord Chancellor to assess the readiness of the county courts ahead of abolishing Section 21 for existing tenancies.

To help illustrate this, it may be helpful for me to explain what needs to happen to prepare for the new tenancy system. Following Royal Assent, a raft of secondary legislation is needed to switch on the Section 21 ban, alongside important consequential amendments to other legislation. Guidance is being developed so that the sector is fully prepared for the new system. Court rules and systems need updating to reflect these new rules, and we have already committed to aligning changes to the tenancy system with improvements in the courts. We are working closely with the Ministry of Justice and His Majesty’s Courts & Tribunals Service to digitise the county court possession system, and we are investing some £11 million this year to design this new digital system. Other target areas for improvement include the prioritisation of certain serious cases such as anti-social behaviour and improving bailiff enforcement by enhancing recruitment and retention practices. We will also provide early legal advice and better signposting for tenants.

Although we know that a majority of landlords provide an excellent service for their tenants, the Government are committed to providing tenants with free and easy access to redress where their complaint has not been dealt with as it should be by their landlord. That is why the Bill allows for a new private rented sector landlord ombudsman. The ombudsman will have strong powers to support tenants, including being able to compel unscrupulous landlords to take or cease action and issue an apology or an explanation, and to award compensation where needed. For the vast majority of landlords who provide a quality service, the ombudsman will have the power to protect them by dismissing vexatious, malicious or unfounded complaints. It also means that fewer cases will need to be dealt with in the courts, further reducing burdens on the judicial system.

In the other place, we set out that the Government’s preferred provider for this service is the existing Housing Ombudsman, which already provides redress for the social rented sector. Although no final decision has been made, the Housing Ombudsman is uniquely placed to deliver a single streamlined service for both social and private tenants.

Home should be where we feel comfortable and safe but, for some tenants, the rooms and homes they live in, the stairs they climb and the air they breathe can be a clear and present danger. To improve quality and drive up standards, we are introducing a decent homes standard in the private rented sector for the first time. This will ensure that all tenants have access to the safe and decent homes they deserve. It will also support the Government’s aim to reduce the number of non-decent homes by 50% by 2030. We know that the vast majority of landlords already provide decent housing and a good service for their tenants. The decent homes standard will help good landlords by simplifying and clarifying requirements, while providing local councils with effective and proportionate enforcement powers to deal with the minority—I stress that it is a minority—who do not meet their obligations. It is imperative that we get the new standard right, ensuring that it is proportionate and fair. We are working closely with the sector to co-design it and make sure the balance is right between landlords and tenants. We will set out our proposals in due course.

The Bill will also introduce a new property portal, which will set out landlords’ responsibilities clearly in one place and support tenants to make more informed choices. It will also support local authorities by providing them with the information and tools they need to support enforcement and drive out the bad actors from the private rented sector. To ensure the new property portal works with existing requirements, we will review how it interacts with selective and HMO licensing. This includes how we can reduce administrative burdens and make the system more effective for landlords, tenants and local authorities.

Blanket bans on letting to families with children or people who receive benefits have no place in a fair and modern housing market. People are much more than their benefit status, and no two families are identical. Everyone in the private rented sector is entitled to access a safe and decent home, and landlords should consider prospective tenants on their individual basis. That is why the Bill will also ensure that no family is unjustly discriminated against when looking for a place to live. We are making it illegal for landlords and agents to have blanket bans on renting to people who receive benefits or to families with children. The Bill will address overt discriminatory practices, such as “No DSS” adverts, and indirect practices designed to intentionally prevent someone entering a tenancy. Working with the devolved Administrations, we intend to extend these measures to Wales and Scotland, further protecting vulnerable tenants from discrimination.

Everyone has the right to make the house they rent into a home and, for many, pets are part of that, which is why we are making sure that private landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home. We will give tenants the right to challenge unreasonable refusals. We know that some landlords are concerned about potential damage caused by pets, so landlords will be allowed to require insurance covering pet damage. This will provide landlords with reassurance that any damage caused by a pet can be taken care of, with the responsibility for damage caused by a pet falling explicitly to the tenant.

All the changes I have set out today must be underpinned by a robust, proportionate and effective enforcement framework. That is why we are extending councils’ powers to collect and retain revenue for future enforcement work from financial penalties against landlords who flout the rules. Local authorities will be able to issues fines of up to £30,000 in the most serious cases, with the alternative of a criminal prosecution. We are also introducing enhanced investigatory powers that will make it easier for local councils to obtain financial information from bad landlords when seeking to build a case against them for suspected abuse.

We understand that supporting local authorities to deliver these functions is critical. That is why we will ensure that additional burdens created by the new system are fully funded and that local councils are able to keep the revenue they receive from civil penalties ring-fenced for further enforcement activity.

I hope we can bring to scrutiny of this Bill a shared perspective that, when it works best, the private rental sector can deliver both a stable home and a healthy return for investors. The Bill seeks to support these aims by providing a comprehensive, balanced package of measures that will meet the needs of the sector for the 21st century. The Bill will give tenants the protections and security they need to feel truly at home in their communities, and give landlords the confidence that, if they do the right thing, they can be rewarded for providing those very homes. I beg to move.

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government) 4:15, 15 May 2024

My Lords, I am grateful for the opportunity to open this debate for the Opposition. I thank the Minister for her comprehensive introduction, and for all the time she has taken in meeting us prior to the Bill coming to the House.

Given the expectations generated among renters that the Bill will make improvements to their situation, it is of considerable regret that the Government have dragged their heels in getting it through the other place. The Bill finished its Commons Committee stage last November, but did not return for Report until last month. In the meantime, the concessions made considerably watered down the initial potential. However, as the Bill delivers some improvements, it is not our intention to hold things up any further.

It is also very regrettable that the Government appear to have put the priorities of some grumpy Back-Bench MPs—I do not blame them for being grumpy—before the needs of millions of aspirational renters, people who simply want the secure, affordable and comfortable home that they have every right to expect. For a fifth of UK households—over 4.6 million people—who live in private rented housing in England, this Bill held out a great deal of promise that they would see much-needed fundamental reforms of the sector. As the Local Government Association put it:

“We have argued for the Bill to go further in supporting tenants’ rights and providing stronger regulatory and enforcement powers, and for government to ensure sufficient funding” for councils to enforce these measures. However, during the Commons stages, concessions were made on a number of these key measures, and the Bill no longer lives up to its stated intention of creating a fairer and more secure private rented sector. That is from the LGA’s briefing. I apologise—I should have declared my interest as a vice-president of the LGA.

I thank the many organisations that have sent through briefings, met with us, and expressed their concerns about the Bill. There are too many to mention them all, but I particularly thank the LGA, the Renters Reform Coalition, Generation Rent, the National Residential Landlords Association, Shelter, Crisis, Citizens Advice, London Councils, Universities UK, Battersea Dogs & Cats Home, and the Law Society for keeping us informed of their campaigns and for their views on the Bill.

Unfortunately, and at the risk of my sounding like a stuck record on legislation I have dealt with in your Lordships’ House, the reforms that the Bill delivers come hand in hand with a missed opportunity to improve the situation of the UK’s growing band of renters. Of course some elements of the Bill are very welcome; it changes possession grounds, introduces compulsory periodic tenancies, extends the decent homes standard, and introduces a new ombudsman and a property portal, as well as introducing the very important right for tenants to keep a pet. We very much welcome the Minister’s comments about blanket bans; she is absolutely correct in saying that they have no place in a modern housing system.

However, other key elements have been watered down in the Commons. Absolutely critical, and of fundamental importance, are the barriers put in place to delay the commencement of the abolition of the punitive and much-abused Section 21 no-fault evictions. Recent figures show that more than 80,000 households have been threatened with homelessness and had to approach their local authority for support following a Section 21 eviction notice, since the Government’s 2019 pledge to end them. As the charity Crisis tells us, this equates to 52 households a day being threatened with homelessness.

In my time as a councillor, I saw the dreadful impact of that on families. Having to move on short notice is incredibly expensive; the Renters Reform Coalition estimates that each move costs around £1,700—that is quite a low estimate. These moves disrupt employment and education, and shatter connection with communities and family support.

Indeed, it has a particular impact on vulnerable children. Imagine spending months trying to get your child with special needs into a suitable school and then being evicted from the home near that school. It also takes a terrible toll on people’s health and mental health, with parents often feeling guilty that they are not able to provide the stability they know would benefit their children. There is a very significant economic cost of this as families present as homeless to their local council. The cost of temporary and emergency accommodation has risen to £1.74 billion and consumes around 30% to 40% of net revenue budgets for some local authorities.

It is surely time for a definitive ban on Section 21 no-fault evictions, but recent amendments made in the other place just kick the can down the road. The Bill now requires the Lord Chancellor to publish an assessment on the readiness of the courts. Of course the court system must work effectively to get decisions made in a timely way for the benefit of both tenants and landlords but, with that pledge having been made five years ago, why was this work not already under way or even thought about until the final stages of the Bill? We are now left with an indefinite timeline for court reform and, although the Minister has today given us some indication of the necessary steps, there is no clear route map to say what needs to change and how it will be done and funded, and families are left with sword of Damocles-like evictions still hanging over them. The Secretary of State repeated his pledge this weekend that this court reform would be completed before the general election. Will the Minister say which general election he was referring to? It is shameful that the Government did not have the courage to face down Back Benchers in the Commons on this and put their concerns over the trauma of eviction faced by private renters. We will try again with amendments to enact a ban on Section 21 evictions on Royal Assent of the Bill, although I suspect this too will have to wait for a Labour Government.

We have significant concerns about the introduction of what could represent a tenant trap in the Bill. One of the key purposes of this legislation was to bring the UK more into line with the longer-term tenancies enjoyed in most other parts of Europe by creating open-ended tenancies. In Germany, for example, the average length of a tenancy is 11 years compared with just over two years in the UK. We welcome these more flexible tenancy proposals but, in a move which runs completely counter to this flexibility, the Bill now extends the right to move out from within two months’ notice from the start of the tenancy to six months. This could lead to some real issues in certain circumstances—for example, if a property has been mis-sold and the renter finds themselves living in a property not fit for purpose, whether through damp and mould or other maintenance issues. Being trapped in this way for six months could be extremely damaging to their health or that of their family. Yes, there are consumer protections, but these are difficult to enforce and may not be enacted as quickly as would be necessary.

Noble Lords know that I have a particular passion for supporting victims and survivors of domestic abuse, and indeed set up our local organisation, Survivors Against Domestic Abuse. It is of great concern therefore that victims and survivors may find themselves trapped in a property in a dangerous situation, potentially even with their abuser, because of the six months’ notice period. We are also concerned that there may be other vulnerabilities, such as mental health issues, which make it inappropriate to force this fixed period on certain tenants. Does the Minister feel that there may be some scope to amend the Bill to allow for those exceptions? Domestic abuse and support charities are also very concerned that the vague definition of anti-social behaviour as a ground for eviction could lead to people being evicted on ASB grounds while still undergoing their trauma.

We have outstanding concerns about why the Government have not used the opportunity of this Bill to extend the provisions of Awaab’s law to the private rented sector. It seems nonsensical that protective provisions introduced for the social rented sector to give tenants more power to have issues such as damp and mould rectified are not available to those in private rented properties—or in Army properties, which were debated earlier today in your Lordships’ House. My noble friend Lord Khan has detailed knowledge of them and will say more later in the debate.

Like many noble Lords, I have been lobbied heavily by student bodies regarding the provision to exempt landlords of student properties from the move away from fixed-term tenancies. We understand the purpose of that but, as Universities UK has pointed out, there may be significant unintended consequences. I quote Universities UK:

“We note the government’s amendment which would see landlords serving notice between 1 June and 30 September. This is welcome as it would not be in the interest of students if landlords could evict tenants at any point in the year. However, given the increased diversity of how and when courses are delivered there will be some courses which are inappropriate for this model. The government should consult with the sector to identify where this is the case and what amendments can be made”.

Students and professionals in higher education have made the point strongly to me that there may be students who cannot live at home—care leavers, for example—and need longer tenancies than an academic year. If this measure is too rigid, it may cause significant problems for those whose study pattern is different from the traditional undergraduate pattern. Can the Minister outline what discussions have taken place or will take place with the sector in this regard?

On the appointment of the ombudsman, I know that my noble friend Lady Warwick has questions about whether there will be a process to appoint the most appropriate body. I look forward to hearing the Minister’s response on that.

We welcome the pet-friendly provisions in the Bill, including those that prevent the unreasonable refusal of pet requests from tenants. I have seen from personal experience the great health and social benefits that pet ownership can bring, and for those who live alone or who have other vulnerabilities it can be extraordinarily life-enhancing. Passing the legislation would mark a significant step forward for renters across the country who have pets, as well as those who aspire to do so. However, pet charities and organisations, including Battersea Dogs & Cats Home and Cats Protection, have asked for some strengthening of the Bill—for example, shortening the time limit within which landlords must respond to a written pet request from the current 42 days to 28 days, and giving a presumption of acceptance if no response to a legitimate request is forthcoming. I hope the Minister will give due consideration to amendments in that regard.

We have no intention of holding up the Bill as it will put in place some provisions that will improve things for renters, but we wanted to see a much more fundamental reform and have called for that for many years. Regardless of whether you are a home owner, leaseholder or tenant, we believe that everyone has the right to a decent, safe, secure and affordable home. Hopefully, a Labour Government will soon be able to build on the foundations put in place by the Bill. In the meantime, I look forward to the debate today and to hearing the Government’s response.

Photo of Baroness Pinnock Baroness Pinnock Liberal Democrat Lords Spokesperson (Levelling Up, Communities and Local Government) 4:27, 15 May 2024

My Lords, I remind the House of my relevant interests as a councillor, a vice-president of the Local Government Association and an accidental landlord. I too thank all the groups that have provided informative briefings on a wide range of issues, which I and my colleague, my noble friend Lady Thornhill, have found immensely useful.

There is much in the Bill that we support. Legislation that rebalances the rights and responsibilities of landlords and tenants in the private rented sector is long overdue. However, the context in which the Bill is being debated is important. Much has changed in the rental sector since the Housing Act 1988. The private rented sector has continued to grow, with, according to the latest figures from the ONS, 5 million households renting from a private landlord—the equivalent of 20% of the housing market—whereas 17%, or 4.2 million households, are renting in the social housing sector.

The private rented sector has doubled since 2002. The stark fact is that for many households, especially families with children, private rent is the only option. Even 20 years ago, the first choice for families on low incomes would be social housing. Rents in social housing are within the local housing allowance, and there is a much higher degree of security. That is not to deny that some social housing fails to be of a decent standard, and that some social landlords neglect the needs of their tenants. However, the right-to-buy legislation without the right-to-build replacement housing has resulted in a large reduction in social housing, putting the most vulnerable households at risk of homelessness or leaving them with limited, or often no, choice as to where to live.

The solution to this fundamental problem is not provided by the Bill. What is needed is a substantial increase in the number of homes for social rent being built every year. This is not “affordable housing”—the vast majority of homes provided through that route are not for social rent. The Government have a much-vaunted principle of choice for consumers but tenants needing housing at a social rent are not given that choice. Can the Minister explain why the Government deny the choice of housing at a social rent to so many families in need?

I will be more positive now. Many of the changes in the Bill are positive, although they do not go far enough, as my noble friend Lady Thornhill will demonstrate. The key change must be the abolition of Section 21 eviction notices—without delay. The disruption to family life by the constant need to find another rental property is not considered anywhere near enough by the Bill. Children having to change schools on a regular basis because of the insecurity of tenure must be a thing of the past. Ending Section 21 and implementing the decent homes standard are key to the Bill.

Apart from the fundamental policy changes that the Bill offers, there are inevitably consequences for areas of housing provision that may not be fully recognised by the Bill as it stands. My colleague in the other place, Helen Morgan MP, raised the issue of decent housing standards being required for military accommodation. The Government gave her a commitment that they would table an amendment to do so. On these Benches, we look forward to that amendment from the Government in Committee.

Student accommodation is the first issue I want to raise. On Report in the Commons, the Government introduced new provisions regarding student accommodation, as the Minister outlined. This has the effect of enabling landlords of student accommodation to ensure that student tenancies end with the academic year. I ought to say, perhaps, that I am vice-chair of the council of the University of Huddersfield. I know that many courses start in January and many, particularly master’s degree courses, last 15 months. Many students, particularly international ones, need permanence in their accommodation. I would like to hear from the Minister what protections there are for these students. Can she explain the reasons for expecting students to pay six months in advance for accommodation?

I turn now to what I hope are the unintended consequences of the Bill. With regard to social housing, the National Housing Federation raised concerns in its briefing about the impact of ground 1B, rent to buy, in the possession orders because in its current form it prohibits social landlords from converting rent-to-buy properties into social or affordable rented homes. Perhaps the Minister can consider concerns from the sector on this and on ground 6 where social landlords are redeveloping properties. I am sure that we can overcome these issues but I think they are very important to social landlords.

In its helpful briefing, the Domestic Abuse Housing Alliance seeks remedies for specific concerns regarding the use of the repossession order at ground 14, where safeguards are especially needed for the victims of domestic abuse; and ground 8A regarding rent arrears, where women in controlling relationships may not have the financial oversight of domestic bills and fall foul of that particular reason for repossession.

Finally, there are 10 clauses which give new statutory responsibilities to local housing authorities. For these reforms to be effective, it is vital that enforcement powers are clearly defined and able to be implemented; therein lies the crux of the challenge for government. Councils are experiencing very significant financial pressure—local authority external auditors are regularly making that case. The Bill gives councils the right to retain financial penalties but, quite obviously, that will be inadequate to fund the enforcement teams necessary. The Minister rightly pointed out that the new burdens agreement between government and local authorities is to fully fund new duties. However, in practice that rarely occurs in full, so the Bill relies on strong enforcement; the powers are there, but currently not the means. I really look forward to the Minister reflecting on that, because the whole of the Bill depends on enforcement powers being effective.

It is good that the Bill is tackling some of the long- standing injustices in the sector. However, to be the sea-change Bill that was promised, it needs to put consideration of individuals and families at its very heart —and on that important test, currently the Bill fails.

Photo of Lord Best Lord Best Crossbench 4:37, 15 May 2024

My Lords, I draw attention to my housing and property interests as on the register. This Second Reading provides an opportunity to review the current state of the PRS—the private rented sector—and to consider the impact on this sector of the Renters (Reform) Bill. Does the Bill address the key problems facing renters and, if so, will it fix those problems?

Let us take a quick look at the private rented sector today. By the late 1980s, the PRS accounted for only some 9% of the nation’s homes. Then, in the early years of this century, the sector dramatically doubled in size to around 20% of the stock, and it achieved this growth without building virtually any new homes.

Two factors propelled this extraordinary turnaround. First, the Housing Act 1988 removed rent controls and security of tenure for new shorthold lettings. This created a profitable opportunity, enhanced by low-interest buy-to-let mortgages for investors: today, there are 2.3 million private landlords. Despite tax and regulatory changes to dampen this phenomenon and the recent interest rate hikes, the PRS has continued to sustain its new-found size, bolstered by the shortages that have pushed up prices and rents.

The second big change, which has led to today’s dependency on the PRS, was the demise of council housebuilding. At its peak, local councils regularly accounted for some 150,000 to 200,000 new homes built in a single year. The housing associations have only ever built a fraction of these numbers. Along with council house sales under the right to buy, now approaching 2 million homes sold, the social housing sector—that is, councils plus housing associations—has suffered a huge decline. It has gone from around 34% of the country’s housing stock to just 17% today. Those who would have looked to the social housing sector in the past must now turn to private renting instead.

Has this switch from social housing to private renting been a success? Although PRS rents are higher and security is lower, the PRS has provided a satisfactory home for many. But the switch has not helped with the nation’s biggest housing problem: supply. There are simply not enough homes to go around. Building new homes has not kept pace with increases in households. PRS landlords do not build new homes, with the exception of a valuable but modest program of build-to-rent and purpose-built student accommodation; rather, private landlords have inevitably outbid others, particularly first-time buyers, to acquire existing properties. Critics argue that this has inflated house prices and led directly to a reduced number of people being able to become home owners. We are left with acute housing shortages, which only a big expansion of social housing can fix.

However, the Bill does try to address other serious criticisms of the private rented sector. These criticisms are, put simply, that landlords can—and some do—take advantage of the acute housing shortages and lack of options; and that the power imbalance between landlord and tenant means that renters have had to put up with rents that absorb half their incomes, with poor conditions and appalling service, all because they have nowhere else to go. Underpinning this imbalance is the constant threat—whether articulated or not—of retaliatory eviction, whereby the landlord can get rid of a complaining tenant through the notorious Section 21 no-fault eviction route.

The Bill takes some important steps to correct the landlord-tenant imbalance. It does not have much to say about the affordability of rents, because it is a fundamental characteristic of a private rented sector that rents are set by the market. As economists frequently tell us, tough rent controls could lead to an exodus of landlords. While a gentle reduction in the size of an overextended PRS could rebalance the sectors, too many landlords exiting the market at the same time because of controls on rents would create chaos. However, the Bill does seek to block rent increases in excess of market levels, to stymy an underhand way of forcing a tenant out when no legitimate grounds exist.

On other matters, the Bill has some valuable ingredients. Landlords will have to meet a set of decent standards, which will be established to address poor conditions such as cold and mould. Renters will all have access to a new ombudsman who will handle complaints and will be able to levy quite serious fines for incompetence and bad behaviour. As in Scotland, Wales and Northern Ireland, a register will be available online: a property portal will be maintained of all PRS properties, covering their compliance with legal requirements, to enable prospective tenants to check for health and safety features, and so on. The Bill will also make it more difficult for landlords to refuse a tenancy for those with a pet.

All these changes empower tenants in helpful ways. However, there are modest changes, which your Lordships’ scrutiny may achieve, that would amend the Bill for the better. There is also a desperate need for energetic enforcement. In addition, renters need a good online advice service to explain all their rights and responsibilities —one is being developed by the TDS Charitable Foundation.

However, a cloud hangs over what was the centrepiece of the Bill: the fundamental issue of renters’ security—their consumer protection against arbitrary evictions. As well as particular concerns about lettings to students, there are at least three further issues here. First, new grounds for possession will allow landlords to get the property back for a family member’s occupation or their own, or because they are selling. This means, perhaps inevitably, that any private sector tenant could still be evicted through no fault of their own. These are understandable grounds for repossession because a sector based on private investment has to enable the investor to sell up at some point, but could this change be made less sudden and less painful?

Secondly, the new measures to speed up the gaining of possession in arrears cases introduce some tough changes that may have gone a step too far. This needs exploring.

Thirdly, the biggest problem with the Bill is not content but implementation. The all-important ending of no-fault Section 21 evictions is now to be delayed until such time as the Lord Chancellor reports that the county courts are likely to process cases speedily. This could take a long time and, with no fixed date and no backstop for triggering the end of Section 21, the central plank of the Bill is missing.

In conclusion, the doubling of the size of the private rented sector and the halving of the social housing sector has exacerbated shortages and led to some cases of poor performance and exploitation of tenants. The Renters (Reform) Bill introduces some welcome measures, for which the Government deserve full credit, to redress the landlord/tenant imbalance. But last-minute government amendments to delay the ending of no-fault evictions for an indefinite period have led to anger and frustration from tenants’ representatives, such as Generation Rent and the Renters Reform Coalition. Perhaps the Minister can head off a Lords rebellion on this issue by indicating a willingness to address this concern, alongside more modest changes to a Bill that is worth having but could be much better.

Photo of The Bishop of Chelmsford The Bishop of Chelmsford Bishop 4:46, 15 May 2024

My Lords, it is a pleasure to follow the noble Lord, Lord Best, from whose wisdom and experience I have personally gained such a lot. I am grateful for his contribution today. I declare my interest as the Church of England’s lead bishop for housing. Also, as I am in clergy-tied housing myself, my retirement house is currently let to a long-term tenant.

My starting place is that good homes are the building blocks of strong communities. Bad homes threaten mental and physical well-being, hinder personal and economic development, and compromise safety. Everyone needs a good home so that we have a good society where people can flourish. As others have said, there is much to welcome in the Bill. Private renting is the most insecure and expensive tenure, and it requires significant reform. I am pleased that the decent homes standard will be applied to the private rented sector for the first time. I am also pleased that the Government have tabled amendments to prohibit landlords and letting agencies from discriminating against families with children and people in receipt of benefits. I will seek more details on how this will work in practice.

I have three children, all of whom are young adults. Without a significant shake-up of the entire housing market, it is likely that they will struggle ever to buy their own property. With more than 11 million people renting privately, they are not alone, and young people face particular difficulties in switching to home ownership or social rent. With some notable exceptions, young people are not particularly well represented in either House, which might be one reason the Bill has taken so long to reach us. I am determined to speak up for them as the Bill progresses. Those 11 million, including my three children, know how important it is to improve the private rented sector. The old phrase that we are a “nation of home owners” is now outdated. We are a nation in which many people are in the private rented sector for long periods, if not permanently.

So there is much to commend in the Bill. However, I am concerned that it has lost some of its most important measures during its passage through Parliament so far. As drafted, the Bill will not provide a significantly better private rented sector. The most well-publicised reversal is the delay in abolishing Section 21 evictions, and I add my voice to the calls of other Peers for the Government to set out a series of tests for the courts, or a timeline, for abolition. Without this, I fear that this reform will be delayed indefinitely.

This Bill provides us with an opportunity to make significant reforms to one tenure, but the private rented sector houses only around 20% of the population. We need to think bigger to fix our housing crisis. Nothing short of a long-term strategy which considers all tenures as interconnected parts of a whole system will do. A few weeks ago, I was pleased to launch a report from Homes For All, which set out a vision for England’s housing system and the need for a long-term strategy—and I am grateful to the Minister for being there. I commend the report and its ambitious proposals to all noble Lords who have an interest in fixing the UK’s housing crisis. I am grateful to those noble Lords who have supported it, including the late and much mourned Lord Stunell.

A vision for better housing which delivers for everyone requires a set of values that we can all support. The Archbishops’ Commission on Housing, Church and Community set out five values that should underpin good housing. It said that housing should always be safe, secure, sociable, sustainable and satisfying. As it stands, the private rented sector is often unsafe, insecure, unsociable, unsustainable and unsatisfying—and it is frequently the most expensive tenure for tenants. I shall be assessing the quality of this Bill against the five values outlined by the commission.

Achieving these five goals may require a certain amount of sacrifice. To reverse pervasive issues of low quality and high costs, a new balance must be struck between the needs of landlords and renters. This might involve some sacrifices if we are to reform the tenure meaningfully. The needs of landlords and renters are often presented as being in opposition but, in reality, the vast majority of landlords demonstrate a duty of care in line with legal obligations, and the vast majority of tenants treat their homes with respect. We need both groups to come together to make this tenure work.

To turn to specifics, a sense of security is vital for renters. I would like to see the notice period for tenants extended from two to four months, which would provide more time for them to find a new home or for local authorities to offer homelessness prevention support. At the other end of the tenancy, there are questions to ask about the newly introduced six-month tenancy commitment for renters. If the Government will not commit to removing it altogether, will they set out the extenuating circumstances that would allow tenants to serve notice earlier, such as the death of a resident or a serious hazard in the property.

Judges should have more discretion to consider extenuating circumstances when assessing Section 8 evictions. Repeated non-payment of rent can be for a huge number of reasons, some of which will not persist beyond just a few months. Judges should be able to use their discretion about whether they issue an eviction notice on those grounds. We also know, and have heard already, that domestic abuse is often misreported as anti-social behaviour. Given those sensitivities, why has the threshold for a Section 8 eviction been lowered to

“capable of causing a nuisance”?

That framing is extremely broad and will inevitably capture behaviours that should not count as anti-social behaviour.

One other issue that I would like to raise affects providers of retirement housing for clergy, including the Church of England’s pensions board. I should declare I am part of the Church of England’s pension scheme, but I am unlikely to turn to it for housing in retirement. However, many members of the clergy enter retirement without owning a home. It is then that pensions boards or similar schemes are able to step in to provide affordable and assured housing for them in later life. Some changes will be needed to this Bill to ensure that the Church’s model of provision is still financially viable. I have set these out in a little more detail in a letter to the Minister, and I look forward to corresponding further on the matter.

Finally, the Bill presents us with the first opportunity in a generation to make our most expensive and insecure housing tenure fit for purpose. Will we take the opportunity or will we squander it? I hope that this House and the other place will work constructively to pass legislation that protects renters, reassures landlords and ensures that everyone has access to good housing that is safe, secure, sociable, sustainable and satisfying.

Photo of Lord Frost Lord Frost Minister of State (Cabinet Office) 4:54, 15 May 2024

My Lords, I begin by thanking my noble friend the Minister for her comprehensive opening statement and for the time that she has already devoted to discussing the provisions of this Bill privately.

I think that I am the first speaker in this debate not to have to declare a relevant interest. I do not have any institutional housing interests, social, private or any other. I own one house and I live in it. If I do have an interest—and it is the reason that I speak today in this debate—it is the interest in living in a country that one day has a minimally functioning housing market. Unfortunately, we do not have that in this country. That should be the starting point for discussing the Bill.

We have an utterly dysfunctional housing market. We have far too little supply, as has already been noted. We last met the 300,000 building target in 1977 and, if we had been building at the same rate as the French over the past few years, we would have 4 million more houses than we do now. It is therefore not surprising that house prices are at nine times incomes—a historic high. Most policy has focused on Help to Buy schemes rather than expanding the supply.

Ideally, we would want a policy approach that involved building more houses of all kinds by liberalising planning, expanding supply in the rental market and, meanwhile, trying to make the market that we have work better and reducing the dysfunction. In fact, we are seeing that housebuilding is falling further. Last year, we built only 189,000 houses and, in the first quarter of this year, we are building at a rate of only about 100,000. There has been an attack on private landlords through the tax regime and the rental sector is shrinking. That, plus anticipation of the measures in this Bill, is taking private rental property off the market. It is therefore no surprise that, while sale prices for houses are flat, we are seeing rental prices in the private sector accelerate by 9%.

Now we have this Bill. I have philosophical concerns—that I think it is fundamentally unconservative, speaking as a Conservative politician—and I have practical concerns; namely, that it ties up and restricts the market still further and the practical effect will be to make things worse, not better. I regret that I must speak in these terms of a Bill that my own Government are bringing forward, but I think it is extremely problematic. If we want to help people—as has been said—into safe, secure, sound housing and reliable tenancies, we need to produce a better housing market and not distort it still further.

I have four specific concerns that I will briefly outline: first, the nature of the Government’s manifesto commitment and, secondly, its extent; thirdly, the restrictions that the Bill brings in on the use of property; and, fourthly, its developing complexity.

First, on the nature of the manifesto commitment that the Conservative Party and this Government made, I entirely accept that we committed to abolishing no-fault evictions—Section 21 evictions—but we also set in the manifesto a

“target of 300,000 homes a year by the mid-2020s”, which has not been met, and promised to

“make the planning system simpler for the public and small builders”, which also has not been met. We made an effort in the early years of this Government; it got blocked and, since then, we have given up the attempt.

These two things go together: one liberalises supply; the other constrains the market. I wish we had focused only on building houses and reforming the planning system, but at least together, there is some sort of balance. Now, we have dropped the commitment to build more houses and liberalise the system, but we are pushing though the provisions that tie up the market still further. This will only damage housing affordability further.

My second point concerns the extent of the manifesto commitment. As I said, we committed to abolish no-fault evictions. We did not commit to end fixed-term tenancies, and they are not the same thing. Section 21 is a way, among other things, of ensuring that landlords can reliably get possession, after the first 12 months in an AST, at two months’ notice. If we abolish Section 21, another way of providing some certainty for landlords that they could get their property back would be to leave open the option of agreeing another fixed-term tenancy, for another year or whatever. The Bill removes that option. It scraps fixed-term tenancies entirely and makes every tenancy rolling, bringing in the possibility that landlords will have to go to court much more often to recover their property. I repeat: one commitment is in the manifesto and another is not. That is why my honourable friend Anthony Mangnall MP tabled Amendment 10 in the Commons providing for the maintenance of fixed-term tenancies, and I am ready to table it again to ensure that we can have some debate on the subject and so that the Government can explain why they have expanded their commitment to take in fixed-term tenancies.

My third concern is philosophical. The Bill takes another step away from normally understood property rights. Even if both parties want to, they cannot agree a fixed-term tenancy; it is illegal. A landlord may no longer choose who they want to rent to. Landlords must accept pets. They cannot simply recover their own property but must persuade the courts—the state—that they have a justifiable reason for doing so. We are already too far down the road, as a Government and as a country, of accepting that people enjoy property rights only at state whim, and only in line with the purposes of the state. I am afraid that the Bill takes us a step further down that road.

My final concern is practical. Looking at the way the Bill has evolved in the Commons, I cannot avoid the impression that, in their heart, the Government know it is a bad Bill and are trying to mitigate it, under pressure. They have realised, for example, that the redress schemes, the decent homes standard and the PRS database, all of which may be good things in themselves, will reduce flexibility and push up costs. The Government have realised the risk that restrictions on long-term lets might bring in a shift to short-term ones, so they have brought in some rules to cover that situation too—though I note that these too will now require further mitigations to deal with special circumstances.

Of course, as has been noted, the Government have had to accept that the court system is not ready to deal with the abolition of Section 21 in full, and they have had to delay its introduction, so we are not even getting credit from our political opponents for the one thing that was supposed to be the purpose of the Bill in the first place. Everything that has happened in the Commons has brought in complexity, cost and delay to the system, and these are the very things that will drive more landlords out of the market, push up prices further and make the market even more dysfunctional than it is now.

To conclude, and I am sorry to conclude in this way —noble Lords will know that it is with great reluctance that I criticise the policy of my own Government—it is a poor Bill and I do not think it is getting any better as it proceeds through the Commons and through this House. It is inevitably going to make the private rented sector smaller and more expensive. It is pursued from the best of motives, but its consequences will be that housing supply shrinks and the cost of housing goes up. It will generate more social problems rather than mitigate them. I am sorry that the Government are pursuing it, but I hope that it will still be possible in Committee to improve on some of the fundamental points that I have mentioned, and in particular to retain fixed-term tenancies as an option. I hope some noble Lords will join me in that effort.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 5:04, 15 May 2024

My Lords, I declare my interest as chair of the Property Ombudsman. I warmly welcome the Bill. I am sure the Minister is well aware of the large number of organisations from which we have all had briefings. The Bill has taken a long time to get here, and expectations are riding high.

That is not surprising. Since 2001, the number of families forced to rent privately has doubled. High housing costs both cause and worsen poverty. The number of family homes available to social rent has reduced dramatically. For households on low incomes, this has significantly worsened living standards. The Bill needs to be seen in that context. We must not miss the opportunity to tackle long-standing issues of unfair eviction, rent increases and access to dispute resolution.

A number of issues will be raised in this debate from organisations such as Shelter, Crisis, Marie Curie and others, which I hope to be able to support in Committee. Today I will say a few words about Section 21 —in effect, the centrepiece of this legislation. I will then look briefly at some points that affect social housing providers and the property portal, the front door that will be crucial to enabling enforcement, then focus my main attention on the new PRS landlord ombudsman.

There is now some real doubt about when Section 21 evictions will actually be abolished. This part of the Bill has near-universal support, and tenants and landlords need certainty. The Government have said that it would be wrong to introduce it before the courts are ready, but have not defined what ready means or how we—or they—will know. It is five years since the Government made this commitment, yet there is still no progress. I hope the Minister will take the opportunity to give the House, as well as landlords and tenants, the certainty they need, by providing a plan for court reform and a timetable for when the abolition will come into effect.

The Bill largely concentrates on the private rented sector, but it will also have an impact on social housing providers, particularly where they use assured tenancies. The Government responded to some of these points on Commons Report and introduced amendments, but these themselves are likely to have unintended consequences, which I hope the Minister will be ready to consider. I refer to the new rent-to-buy ground 1B, introduced in the Commons as Amendment 158, and ground 6. The noble Baroness, Lady Pinnock, has given the House the details of these and I will not repeat them, but this has been raised by the National Housing Federation and I am sure it would welcome a meeting with the Minister to discuss the technical detail.

Next, I would like to mention the new portal. The Government have recognised the need for local authorities to have information about PRS properties in their area, for landlords to be clear about their responsibilities, and for tenants to know where to go for help if their landlord fails to put right a problem. The TDS Charitable Foundation’s survey work raises serious concerns about the ability of tenants to enforce the new rights that the Bill will give them. It is developing a new “My Housing Issue” gateway or portal, to which the noble Lord, Lord Best, referred, which will act as a signposting service. I understand that it will identify for tenants the correct route to solve their problems, encourage an early resolution of disputes and provide relevant information about housing rights and options. I certainly encourage the Minister to look at this in relation to the new portal; it may be very helpful.

I now turn to my main concern: the way the new PRS ombudsman will be selected. The new ombudsman will play a vital role in delivering the Government’s objectives to improve experience in the sector for tenants and landlords alike. I declared my interest as chair of the board with responsibility for the Property Ombudsman. TPO deals with complaints and requests for assistance from private sector tenants of the 39,000 property agents who subscribe to this service. The new ombudsman will provide that service for PRS tenants whose landlords do not use an agent. This has been a huge gap in redress, as my ombudsman knows all too well from the thousands of requests for help that we have to refer elsewhere or to the courts.

We should not underestimate the scale of the new regulatory role proposed. The latest data from HMRC states that there are almost 2.4 million incorporated private landlords in England, with almost half owning only one property. Moreover, local authorities, which are responsible for investigating poor housing standards and taking enforcement action against rogue landlords, are overstretched, as we know. At the same time, many tenants struggle to enforce their rights through the courts, not least because, as the Law Society notes, 44% of people in England and Wales do not have access to housing legal aid providers in their local authority area.

The scale of, and challenges for, an ombudsman for this part of the private rented sector will be completely different from those presented, for example, in the social housing sector. Given the size of the task, it seems right that the Government have said they have yet to decide how the new position will be filled and supported. Clearly, this requires an open competition among the existing bodies in this field, to determine which might provide the best service.

However, the Minister made clear today that their preference is for the Housing Ombudsman, which covers the social rented sector, to have its remit extended to cover private sector landlords. I find that quite confusing because, although the decision about who should operate the service looks like a foregone conclusion, the Government have been at great pains to explain that no decisions have yet been made about whom to appoint to run the service. Indeed, the Housing Ombudsman has indicated that he is undertaking preparatory work, funded by the Government, to investigate how the PRS ombudsman could work and how it should be funded.

In a Written Question I put to the Minister some weeks ago, asking for the extent of the support provided to the Housing Ombudsman and the terms under which it was provided, the Government declined to provide that information. I can tell her that the gossip in the sector is that it is about half a million pounds. That does not bode very well for fair, open and transparent processes. Given what the Minister said about the Government’s preferred option, has she considered that TPO has uniquely detailed knowledge and experience in the private rented sector and is certainly well placed to be considered to deal with complaints for the landlord part of the sector?

This is my main point: in making important appointments for this role, it is imperative that the Government follow a clear and transparent procurement exercise, not least to ensure the best value for the taxpayer. Given that, can the Minister confirm that the Government will publish clear criteria setting out how they expect the new PRS ombudsman to operate and ensure that they fully consider all potential providers of the service? I reiterate that I broadly welcome the Bill as a chance to empower tenants to call out bad practice in the private rented sector, while supporting the vast majority of private landlords who do the right thing.

Photo of Lord Etherton Lord Etherton Crossbench 5:12, 15 May 2024

My Lords, I declare at the outset that, although I do not own any property in the private rented sector, my husband owns a number of such properties. I am grateful to the Minister and the Bill team for engaging with me on some of the issues that I will raise in this debate.

Like others, I warmly welcome the Bill’s additional protection for tenants. But, in judging the overall merits of the Bill, it is necessary to have regard to the state of the PRS and the possibility of unintended consequences. In that respect, I will elaborate to some extent on the description of the PRS given by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Best.

Paragraph 8 of the Explanatory Notes states that

“4.6 million households (c 11 million people) … rent from a private landlord”, representing 19% of the entire housing market. According to a DLUHC publication in June 2022, it appears that this includes some

“1.3 million households with children and” nearly 400,000 households with people over 65. The crucial importance of the PRS is highlighted by the fact that there is a shortage of about 1 million homes. In excess of one in five households in England—and one in four in London—rely on the PRS for accommodation.

Who are the landlords of the PRS housing? According to figures given by the Department for Communities and Local Government in 2010, 89% of landlords in England were private individuals, and 98% of these owned fewer than 10 properties. In 2019, the successor housing department indicated that 45% of private landlords, representing 21% of tenancies, owned a single property—the noble Baroness, Lady Warwick of Undercliffe, alluded to that—and a further 38% of landlords, representing 31% of tenancies, owned between two and four rental properties. What does that show? First, the PRS plays an absolutely crucial role in the provision of accommodation; secondly, the overwhelming majority of landlords in the PRS are private individuals; and, thirdly, nearly 50% of them own a single property for let and some 83% own four or fewer properties for let.

All this is important background for the Bill. It demonstrates the need for an extremely careful balance between, on the one hand, protecting tenants in the PRS from bad landlords and giving them appropriate redress in the case of landlords’ defaults, and, on the other hand, not imposing on the many small investor landlords standards and obligations that drive them from the sector. Does the Bill achieve that balance? I ask the Minister what steps have been taken by the department to obtain data on the possible number of private landlords who are likely to leave the market because of fears arising from the Bill. In the absence of such data, I consider that in some respects the Bill does not achieve the right balance and runs a high risk of driving many small investors from the sector. I will focus briefly on four areas.

First, local housing authorities are given powers in some cases to impose a fine on a landlord of up to £30,000. Those are cases where the local authority is satisfied beyond reasonable doubt that the landlord has committed an offence under the Bill, and instead of prosecuting the landlord, the local housing authority can impose such a fine. The reality is that, because of financial constraints, the local housing authority will usually wish to impose the fine itself rather than pursue the matter by way of prosecution in the criminal courts.

I do not consider that it is appropriate for a local authority official to act as judge and jury in relation to a criminal offence, enabling the local housing authority to impose a fine of as much as £30,000 on small investors in the PRS. I have no objection to the court deciding on whatever fine it wishes, but it is not appropriate for a local authority employee to impose fines of this size. For them to do so will result in litigation as to whether the criminal standard of proof has been satisfied and whether the amount of the fine is appropriate. It will lead to a lack of consistency across the country in the amount of fine for any particular infringement. I suggest that, if an offence has been committed and the local housing authority is not willing to limit the fine to £5,000, it should be left to the court to decide whether an offence has been committed and what is the appropriate remedy. It must be remembered that the rental return on many of these rented properties, particularly those owned by a single investor, is relatively modest. Even a small fine will push the investment into an unprofitable one.

Secondly, the standard of proof that is required in the case of a fine by a local housing authority under the Bill is inconsistent. For example, in some places— I will not elaborate today—the local housing authority may impose a financial penalty of up to £5,000, whether or not an offence has been committed, provided the authority is satisfied beyond reasonable doubt of the matters constituting the offence. In other cases, one in particular, it can impose a penalty of up to £5,000 if satisfied on a balance of probabilities that the landlord has breached certain provisions in the Act. There is no obvious reason for such differing standards of proof for the same £5,000 level of fine.

Also, the standard of proof should always be beyond reasonable doubt. Anything less than that, which depends upon probabilities assessed by a local authority employee, will undoubtedly give rise to dispute and appeals.

Fourthly and finally, in relation to two offences under the Bill, the landlord can be liable only if his or her mental state is one of knowledge or recklessness as to the relevant facts. The mental state of recklessness in criminal law is an extremely difficult one and has given rise to case law. It is something less than intention but more blameworthy than carelessness. In broad terms, recklessness will arise if the accused consciously—that is, looking at the matter subjectively—takes an unjustified risk. Such difficult concepts should play no part in this legislation, which will mostly affect landlords who own one or at most relatively few homes. It certainly should not be left to a local authority which wishes to impose a fine of up to £30,000 to reach its own conclusion on the application of recklessness in criminal law. The only state of mind which should be capable of giving rise to an offence under the Bill is intention—actual knowledge or an actual intention of the landlord to do the matters comprising the ingredients of the offence. This is clear, easy to understand and fair. At the end of the day, that is the test of good legislation.

Photo of Lord Truscott Lord Truscott Non-affiliated 5:23, 15 May 2024

My Lords, I declare an interest as a landlord of almost 30 years and before that as a renter in the private rented sector, so I have seen the private rented sector from both sides of the fence. It has been a long time coming, but this Bill is welcome. I support the creation of an ombudsman for the private rented sector and the application of a decent homes standard. There are some rogue landlords and action needs to be taken against them. The fact is that 81% of private renters are satisfied, according to the English Housing Survey.

Some seek to blame the current housing crisis on landlords, but I think that is a little unfair. The issue with rising rents and lack of supply is a failure of government housing policy over a long period, a point that the noble Lord, Lord Frost, mentioned earlier. His Majesty’s Government have repeatedly failed to meet their housing targets of 300,000 new homes per year—a point made by the noble Lord. As the noble Lord, Lord Best, pointed out in the recent debate on affordable housing, an estimated additional 90,000 social rented homes need to be built every year, partly to offset the 1.5 million social homes sold under the right to buy. The Government are nowhere near to achieving this.

It is also estimated that an additional 50,000 private rented homes are needed to help fill the gap, yet that does not look feasible. It is undeniable that renters are having a tough time, with sharply increasing rents. While I wholeheartedly agree that tenants’ rights should be protected, let us also look at this from the landlords’ perspective so that we have a balanced debate.

We must be wary of unintended consequences—a point referred to by the noble Baronesses, Lady Pinnock and Lady Warwick of Undercliffe. I am reminded, in that context, of a documentary that I saw about Chairman Mao’s response when told that sparrows were damaging China’s crops. He ordered all sparrows to be killed—millions of them. The next year, locusts, which were previously kept in check by the sparrows, destroyed all the crops, leading to the great Chinese famine of 1958 to 1962 that killed up to 30 million people. The documentary was a brilliant piece of anti- communist propaganda, but it showed in colours how policies must be properly thought through.

Due to the macroeconomic climate, landlords are being seriously squeezed. Some 1.7 million landlords have buy-to-let mortgages, and some face a tripling or quadrupling of their mortgage interest because of interest rate hikes. Over the last year, the number of landlords defaulting on their mortgages has doubled. Landlord profits are at their lowest for 14 years. According to recent research, approximately one-third of landlords plan to retire or exit the buy-to-let market altogether, and over a quarter are considering selling more than one rental property. There are some new entrants to the market, but these are not enough to meet private rental demand.

This crisis in the PRS has been building for years and can be dated back to the then Chancellor George Osborne’s decision in 2015 to end mortgage tax relief. As a result, the private rented sector, unlike any other business, is taxed on turnover rather than profit. Some saw this as the City’s attempt to destroy the PRS as a viable and rival form of investment. However, the PRS survived during buoyant times, but it is now in serious trouble. In parts of the country, investing in rental property just does not add up. Capital values are so high, and rentals so relatively low, that the return on capital, even without a mortgage, is less than 2%. The noble Lord, Lord Etherton, referred to most landlords owning only one or two properties: they are, in a way, small-scale investors, but the returns for many of them are very low. With tax and voids, a landlord may end up paying a tenant to rent from them in parts of the country. It is simply better to put the money in a bank. Even those with properties bought many years ago, with no mortgage, would be better off putting their money elsewhere.

One former Housing Minister told me that, if landlords sold off their properties, it would be good for the market and first-time buyers. Landlords generally do not want to sell off their properties, but some will have to in the current circumstances. Others will move their properties to Airbnb or similar ultra-short-let platforms, which make better returns for landlords but result in fewer long-term homes for residents and less student accommodation in cities and resorts. These ultra-short lets create a growing black hole of lost long-term rental property, including a growing black market in the rental sector. The headline in yesterday’s Evening Standard summed it up: “London’s Airbnb Wild West: capital ‘hollowed out’ by short-term lets eroding the private rental market”.

In some blocks of flats in the capital, 90% of the flats are Airbnb or similar ultra-short lets. Last year in London, between July and September alone, 455,000 stays were booked in short-term lets. It was found that more than a fifth had previously been long lets—so you can see the shift away from long lets to ultra-short-term lets. That means fewer homes available for London residents, and fewer B&B and hotel bookings. It reduces the supply of long-term lets, pushes up rents and forces tenants out to the suburbs and beyond.

The same is happening in many of our cities and resorts. If we want to provide more long-term rentals, Airbnb and other ultra-short let platforms need to be properly regulated and restricted. Incidentally, that is why I support the amendment to the Bill which provides for tenants to stay for at least six months initially. Purely short-term tenancies would be a disaster. Most banks require six-month minimum tenancies to lend in the first place. Long-term tenancies should be allowed when all parties agree—in that sense, I also agree with the noble Lord, Lord Frost. This can provide more security, not less, for both parties.

Regulation of the private rented sector is welcome to rein in poor landlords—of course it is. According to Foxtons, there are already over 150 pieces of legislation governing letting a property. When a landlord lets a property, they have to ensure there is an annual gas safety certificate, a portable electric appliance certificate and an energy performance certificate. In addition to the letting agent’s letting fees, often payable in advance, the landlord has to pay a tenancy paperwork charge, a professional cleaning charge, charges for tenant reference checks and tenant right-to-rent checks, and an annual TDS deposit check charge. Then there are insurance and service charges, which the landlord pays—plus they need to make good any damage or wear and tear to the flat not covered by the deposit or insurance. This can all come to several thousand pounds or more. The idea that this could happen every couple of months would simply mean landlords would further increase rents to cover this and repeated voids.

HMRC is currently piloting quarterly returns for landlords, who normally have just one or two flats as their pension, as I mentioned. This fails to take into account the nature of letting: many costs are up-front in the first few months, and then there can be a period of a couple of quarters of full rental, followed by a later period of voids and no rent. Landlords will potentially be changing tax brackets every quarter and chasing tax refunds at the end of the financial year.

While I am in favour of an ombudsman scheme and property portal, I am concerned that the fee for this would be yet another burden on landlords. Similarly, some local authorities are charging landlords to license their rental properties, which can result in landlords becoming local authority milch cows and increasing rents for tenants. In the light of all the reforms in the Bill to bring the PRS up to standard, which I welcome, selective licensing should be abolished.

With the right to request a pet, I hope that the Minister will reconfirm that, where these are banned under the lease or accepted at the discretion of the RTM or RMC, this will be maintained. Dogs can be a nuisance, particularly in blocks of flats, and even dangerous; we have seen a dramatic increase in dog attacks across the country.

On Section 21 no-fault evictions, I agree that these should go, but only when courts are ready. Landlords must have the ability to sell their property, move back into it or deal with significant rent arrears or anti-social behaviour in a timely manner. As the Law Society mentioned,

“without investment for housing, legal aid and the courts, the bill will not achieve its aims and may lead to an increase in backlogs and landlords and tenants alike will be unable to enforce their legal rights”.

I welcome that the Housing Minister in the other place said the Government were taking significant steps to ensure that the county court system would be ready to deal with the expected rise in possession-related caseload once Section 21 had been abolished.

His Majesty’s Government are investing £1.2 million in His Majesty’s Courts and Tribunals Service to deliver a better end-to-end online possession process. But I ask the Minister a question that a lot of noble Lords have asked: when will this system be ready and up and running? It is clearly of crucial importance.

There will be much to discuss as the Bill progresses. I suggest that we focus on the practical application of the Bill and avoid unintended consequences. Some have argued that, instead of sorting out the housing sector and focusing on providing more affordable homes, we should instead try to shore up renters at the expense of landlords. For example, there is the idea of a rent cap. That is fine, but will His Majesty’s Government or local authorities cap mortgages, service charges, and insurance and maintenance costs? If landlords default on their mortgages or are otherwise driven from the housing market, there will no security for tenants at all.

In the past, rises in capital values have enabled landlords to subsidise tenants, but this is not the case today. In Scotland, rent controls have not worked out well. Scotland has the shortest time for rental listings in the UK: properties are listed for just 15 days on average before being snapped up. There is an acute shortage of long-term rentals.

We need to make homes affordable again, by building and providing more homes, stemming the massive rise in ultra-short lets, and making home purchases attainable once more, especially for young people. I take the point made by the right reverend Prelate the Bishop of Chelmsford about the housing plight of young people. In its remit, the Bank of England should consider the state of the economy as a whole, not just the rate of inflation, and never forget the aspirations of British people to be part of our property-owning democracy.

Photo of Lord Adonis Lord Adonis Labour 5:35, 15 May 2024

My Lords, I will address the fundamental change that the Bill makes, which is to Section 21 evictions. Although there is a difference between the two sides of the House on this issue in terms of what will happen, and Ministers have rightly been asked what their timescale is, the Minister set out some measures that will be taken. She mentioned one or two figures but did not give any timescale as to when the courts would be ready. None the less, given what my noble friend on the Front Bench said, it is pretty clear what will happen: by the time the Bill is enacted, and we have had a general election and probably a change of Government, the Government will not have brought this Section 21 abolition into play, but the next Government will do so, so we will get the change.

However—and this goes to the fundamental issues that have been raised about the PRS—the question then, given that we are likely to see the abolition of Section 21, probably within the next year to 18 months, or however quickly legislation can be brought in by the next Government, is what will happen in the courts in respect of the new requirements for eviction, and the new burdens there will be with Section 8 procedures, anti-social behaviour requirements, and so on. What will happen to see that the courts interact with the private rented sector in a way that does not stymie supply and lead to another generation of seriously dissatisfied and maltreated tenants?

The House needs to understand the scale of the issue here. The backlog in the county courts, which deal with these issues at the moment, is not minor. On the latest figures, published at the end of last year, the average time taken to go to trial in the county court is over a year—52.3 weeks—for small claims, and 78.2 weeks in respect of multi/fast-track claims, which will encompass quite a number of those envisaged under the Bill. Compared with 2019, that is 15.7 weeks longer for small claims, and 19.1 weeks longer for multi-track claims, so it is no exaggeration to say that the county court system has, in effect, broken down in dealing with housing cases at the moment. Unless that can be rectified—it appears it will be rectified on the basis of introducing the new regime, not before the new regime can be brought in—we will get a crisis in the management of the private rented sector, which needs to be addressed.

Apart from some fairly unconvincing measures so far for improving the county court system, we do not have any answers to this. The Minister referred to digitisation; well, as a habitué of these schemes in government, I think the idea that a nationwide county court digitisation scheme will produce dramatic improvements any decade soon is probably remote, but it will certainly not do so in the next few years. The sums of money the Minister referred to—I think it was £12 million—in her opening statement are trifling in this respect.

Therefore, I scouted around for the best course of dealing with these issues, if we do not want to see a crisis in the private rented sector as we bring in the new regime and while we have a problem in the court system. The best solution I have come across, scouting all of those that have been put forward over the last 10 years or so, is bringing in a dedicated housing court: a streamlined judicial process focusing specifically on housing cases—eviction, anti-social behaviour and enforcement measures.

It turns out that this has been considered seriously. There was a consultation on it in 2018. The case for it, which was put forward by the Government at the time, seems to me still to be compelling. The consultation looked at the problems with the current system and at streamlining redress schemes and considered the options for doing so. Paragraph 10 of the call for evidence stated:

“The government wants to explore whether a specialist Housing Court could make it easier for all users of court and tribunal services to resolve disputes, reduce delays and to secure justice in housing cases. The potential of establishing a Housing Court has been raised by some members of the judiciary. Presently, housing cases are heard in a range of settings. The First-tier Tribunal (Property Chamber) deals with a variety of specialised housing and property disputes. However other housing cases, including possession cases and claims for disrepair and dilapidations, are heard in the county court … The processes and procedures involved can often be confusing for tenants, landlords and property owners in leasehold cases”.

That was the Government’s view in 2018 when there were far shorter queues in the county courts for dealing with these issues, so should we be considering a more radical answer to this problem of judicial overload if we are going to see, as we clearly are going to see under this new regime, a great onus on the speedy resolution of housing cases? A Select Committee of the other place recommended a dedicated housing court at the same time as the Government were consulting on it. Clive Betts, the chair of that Select Committee, said that

“many more tenants may go to court over landlords refusing to do repairs, because they will no longer fear retaliatory evictions under Section 21, so we could see an escalation in the number of cases. A dedicated housing court that can bring together the various different parts of the judiciary that deal with these issues at the moment and set in place clear and expeditious timelines for dealing with these cases seems to me to be an option well worth exploring. I say this to my noble friend on the Front Bench as well because we will have to deal with exactly the same issues in a year’s time.

The noble Lord, Lord Frost, set the wider context, which is a massive undersupply of new homes in both the private sector and the public sector. I think he said that 1978 was the last year when we got anywhere remotely close to the 300,000 a year target, which went back to Harold Macmillan when he was Housing Minister after 1951. Actually, it is only in the 1960s that there were more than 300,000 new homes being built per year across a whole decade, which is a crucial thing to understand about the last phase of significant housebuilding in line with projected demand. The noble Lord said that if we had continued at the rate that the French have built since the late 1970s there would be 4 million new homes. The French now have 12 million more homes than we have, population-adjusted, so there is a huge supply problem. When you go back to the 1960s, when more than 300,000 homes were being built, with a peak in 1967 when 400,000 new homes were built, developments were almost equally balanced between the private sector and the state. It was the huge effort on the part of local authorities and new town corporations which produced a big surge in housebuilding in the 1960s.

We cannot get away from the fact that, if we are going to see a return to the levels of home building that are required to meet demand, and to get to or exceed the 300,000 figure, then not only will we need planning reform that incentivises the private sector to build but we will have to fundamentally change the role of the state. The state is going to have to become a major property developer again for the first time since the demise of council housebuilding in the 1970s. That means hugely empowering local authorities; it means looking at the case for significant urban extensions on the model of the new town corporations, which did so much of the building in the 1960s and 1970s; and it means a readiness to make significant new public investments, which would also mean harnessing the potential of pension funds and others with big concentrations of capital to undertake these investments.

My final point is that the peak year for home building since the Second World War was 1967, which was also the year when Milton Keynes, the largest of the new towns, was established. There is a clear connection between those two events, which demonstrated the mentality of a state that was prepared to take the responsibility for significant home building at scale in new communities. That level of ambition is going to be fundamental in dealing with the housing crisis. It is the only way that we will deal with the underlying issue of supply, which is what is leading to the pressures that we are debating today.

Photo of The Earl of Lytton The Earl of Lytton Crossbench 5:46, 15 May 2024

My Lords, it is a pleasure to speak in this debate. I have interests to declare as a chartered surveyor and a small-scale private rented sector landlord, both of some 50-plus years’ standing.

I welcome the Bill, which contains much good, for no other reason than that I hope it consolidates the good and prevents a small proportion of bad actors from providing a reason for criticism and discord. I thank the Minister for her willingness to engage, although I remind her that I sent her a list of questions beforehand that are not covered in what I have to say, and I hope she will be able to answer them.

The test will be whether the Bill results in more choice, supply and competition, with better outcomes for renters, while providing a balance of flexibility, opportunity and returns for lessors. The Minister said much about existing standards by landlords but nothing about ensuring good behaviour by tenants, and I suggest that we need both. There would be little purpose in giving renters a better deal if overall supply failed to grow or even shrank, so a polarised critique of supply side is rather unhelpful.

Current PRS market dynamics are opaque at best; the statistics are not sufficiently granular to enable cause or immediate effect to be established. Recent research by Savills, generally considered a reliable sector source, shows a modest but potentially significant decline in rental stock, but the reasons remain unclear. Some suggest that highly geared buy-to-let investors are put off by poor returns due to higher interest rates and fiscal changes. Even the Bank of England, in its note on that subsector, admits that it cannot definitively establish cause and effect. There are too many variations in circumstances and aspirations to reach a pan-sector conclusion.

I am particularly interested in an excellent piece on right to buy in the latest House magazine by the noble Lord, Lord Bird. I know of no focused research into lessor views other than that of the CLA, of which I am a member, and that only in the rural context, where it suggests that its member lessors are spooked. Poor yields and higher risks discourage new entrants—that must be obvious—and it is safe to say that the private rented sector, with its costs of entry, exit and interim returns, competes with other investment opportunities here at home or anywhere else in the world. There is nothing special that mandates investor participation in the PRS or that it must match unmet need for a place to live. The impact assessment suggests a ready replacement of departing lessors, but without evidence or research into that—and I find none—I conclude that the policy enters unknown territory. So far, not so good.

It is a common ground here that there are currently large numbers of people wanting to rent and far too few available properties. It is likely demand is rising because of severe social housing shortages, and because getting on the housing ladder has become so expensive—this despite those already having mortgages and in occupation having lower debt servicing costs compared with equivalent rental payments. However, I must say at this point that that is a bit like comparing apples and pears. More broadly, I consider that this is due to other government policies impacting on a sector that has become more volatile over the years. Such policies are characterised by the word “buy”—right to buy, help to buy, buy to let—and other fiscal prompts and exhortations to build, build, build, which cannot keep up. Stoking demand which necessitates housebuilding rates never achieved without council housebuilding—a point made by the noble Lord, Lord Adonis—is at best unwise. Relying on affordable housing on the back of market sales while selling off existing social housing at a discount is equally questionable, however popular that might be.

Near where I live, new market housing totally unaffordable to the locals is being offered to Far East buyers. We need a new model altogether for providing housing that the nation can afford, and to take some of the heat out of the PRS demand sector. My fear is that we are tinkering with the fallout from much bigger historic decisions about commoditisation of the roof over one’s head, stretching back to the Thatcher era. We have little or no idea what the effects of this Bill will be. The intention seems simply to accommodate demand. On supply, for which it has obvious implications, if it does not foster an increase then the policy will simply fail.

In turning to some of the Bill’s specific provisions, I will keep clear of the Section 21 question for a moment but simply remind your Lordships that the exit route under the Housing Act 1988 from the 25-year impasse of rent control and security of tenure created in the 1960s was to free up and revitalise the PRS through something called a shorthold tenancy. Superimposing longer-term aspirations of some renters on an essentially short-term model designed to give mobility both of occupation and investor finance may be a tactical error. Proper provision should be made in parallel for longer-term lettings. Measures which now make things less flexible inevitably alter supply-side dynamics. Demanding higher levels of competence and compliance raises fears of added cost and risk. These may increase rents, as we have already heard, especially if quality improves and/or the numbers of available properties, or of lessors, shrink.

On the exceptions in the Bill, I note the points made by the CLA that carving out an exemption for agricultural and forestry workers fails to address the wider diversified rural business need, where parks, gardens, hotels, food processing and the like also involve providing staff with accommodation. Dealing with the normal turnover in staff housing needs has to be considered further.

A promise that Section 8 terminations will not be caught up in a severely underresourced court system— I am grateful to other noble Lords who have pointed this out—does not remove the suggestion of a process less certain and more contestable, protracted and costly. In the market, you cannot achieve vacant possession value if there is a tenant in place as it prevents immediate occupation by a purchaser. For a lessor intending to sell, this can impede choice of the moment to enter the market—a market characterised by seasonal fluctuations, with political and financial sector volatility. It is how markets work and how investors react.

As to blanket bans, I totally accept that unfair discrimination is completely unconscionable. A prudent lessor who already has responsibility for checking a renter is entitled to be in the UK—which I always thought to be a UK Border Force task until this Government decreed otherwise—should not object to complying with standards many already observe, or to acting with proper probity. These are likely no more onerous than the scrutiny that they themselves apply to would-be renters. However, I would venture to suggest that deliberate misrepresentations by either party to the other should have consequences, and merit access either way—from a landlord or a tenant point of view—to dispute resolution.

The renter should be no less fit for purpose and conduct than the lessor and the description of the property. Logically, the renter’s net income should be sufficient to pay the rent and outgoings and meet living expenses, as a minimum. After all, if the renter subsequently finds that they cannot afford the heating costs, the property and the renter’s health are both at risk. I remind your Lordships that the majority of PRS lessors are not big corporates but, as we have heard, private individuals who are just as entitled to the reasonable use and enjoyment of their assets as the renter is to quiet enjoyment of a residence that may or may not be their only home. Professionally, over the years, I have encountered both poor renters and rubbish landlords.

On decent homes, I agree with the principle although I have yet to see a revised standard. Arguably, quite a lot of PRS properties are of older construction and may be difficult to upgrade to anywhere near modern thermal standards. If this becomes a fitness issue, there will be failed properties that become uneconomic to rent and will go on to the freehold sale market. The Bill is silent, however, on what happens if a property cannot be upgraded without the tenant moving out. That needs clarification.

I accept some of the generality of the claim that terminations of tenancies are a major source of homelessness, but it rather overlooks the practice of local authorities insisting on an eviction order before acting by stepping in themselves, thus exacerbating an already difficult situation and making even reasonable lessors look like ogres. I hope the Bill will improve that, but if the view is that it is the role of the PRS to underwrite social support and be a safety net for those who would otherwise be homeless, then that needs a better and upfront justification.

There is provision for possession on grounds of redevelopment, but I am unsure what this means in practice. If a lessor has a project substantially to convert, remodel or otherwise carry out major works—it might be a developer assembling a site—with a view to eventual sale or re-letting but in the meantime decides they wish to let short term, do the Government consider that reasonable or would they rather that such properties were held vacant? It is a waste of a resource if you cannot let short term.

That is where I have concerns about the elimination of the fixed-term lease. It quite obviously suits lots of people if they are on secondment or whatever it happens to be—they may be away on a job or know that something is going to happen—that they can enter into a fixed-term contract. It is perfectly legitimate for a renter to decide they want only that. What is it about adults that we cannot trust them to freely contract in a market environment? I find that really strange. Clearly, there must be some safeguards against misuse, but I really do not see what the problem is. I would like to know what would happen to a sublet flat in a block requiring a decant for fire safety remediation, a matter that I have raised on many occasions in this House. Will frustration of that renter’s contract apply?

Other noble Lords have said that the private rented sector has a fundamental and pivotal role in housing provision. Much ultimately depends on whether there is political consensus on the measures in the Bill or whether the Opposition would wish to go further. It is unlikely that the availability of homes to rent will be improved until this is settled, possibly at some stage after the next general election. Much doubt and uncertainty are generated by this political fog. If there is an identifiable, serious decline in the availability of homes to rent, that will be a significant part of the reason. The language we use, therefore, has considerable significance for how things turn out.

Photo of Lord Marlesford Lord Marlesford Conservative 5:59, 15 May 2024

My Lords, I declare my interests in the register as a Suffolk farmer with rented residential properties.

I will focus primarily on the rural implications of the Bill. I start from the premise that it is the role of the state to protect tenants—as it is to protect consumers, investors, savers, employees and everyone else—from abuse or exploitation. Of course, there are bad landlords, and they should be firmly and severely dealt with, but I am with the noble Earl, Lord Lytton, and the noble Lord, Lord Frost, in that I do not accept that to allow tenants and landlords to enter into mutually agreed contracts is wrong.

During the 1960s and right into the late 1980s, rural housing was subject to severe constraints on both tenancies and rents. Rents set by rent officers were extremely low, often providing zero return on capital, and cash flow was so fragile that there was no surplus to finance the proper maintenance—let alone improvement and modernisation—of rural dwellings. Farmers were advised to sell all the housing they did not need for their own employees. The supply of affordable housing accommodation withered and its condition deteriorated.

As mechanisation advanced, farmers found themselves with a surplus of housing. The big leap forward came with the introduction of the assured shorthold tenancy in 1988. John MacGregor was then the Secretary of State for Agriculture and Nick Ridley was the Secretary of State for the Environment. The AST gave security by mutual agreement to both tenants and landlords for initial fixed terms of six, 12 or 24 months, with annual rent reviews and the ability to continue leases on a rolling two-monthly basis. The AST has worked very well for 36 years. It has greatly reduced the proportion of inadequate rural housing, yet Clause 1 of the Bill abolishes AST. This is inexplicable. Section 21 of course needs reform—no legislation that could be described as no-fault eviction can survive—but that does not justify throwing the baby out with the bathwater.

Significantly, the Government seem to have recognised the folly by modifying the Bill in the Commons to allow a fixed term of six months. If that is legitimate, why not 12 months, with the continuation of a two-monthly basis? There are market forces the Government do not seem to understand. The long and troubled journey of the Bill through the other place has already become a deterrent to the supply of affordable housing. Supplying housing for rent is now a key diversification for farmers, at a time when agriculture in Britain and elsewhere is in crisis due to falling yields and prices; it is a very relevant factor.

Affordable housing needs a clear definition. Traditional government guidance that rents should be no higher than 30% of gross tenant income is a valid test. Wise landlords would apply clear financial tests in selecting tenants. Landlords cannot be expected to subsidise tenants whose job insecurity—of whom there are many—makes them vulnerable to being unable to fulfil their rental obligations. The Work Foundation at Lancaster University claims that in 2023 1.4 million people were in severely insecure work and were living in privately rented accommodation. This is why it is better to subsidise tenants rather than houses. That is the role of housing benefit. To subsidise rents would mean that changes in tenants’ circumstances would result in tenants getting either more or less than they needed. This has profound implications for public finances.

Rents are a return on capital. Housing supply in the private rented sector depends on adequate rents. It is unlikely that a gross rental return of much less than 3%, from which the costs of maintenance and administration have to be deducted before arriving at any taxable profit, will produce much more housing for letting.

The Bill proposes an ombudsman to adjudicate between tenants and landlords. This may be a sound idea, provided that it is not a signal for the return of the rent officer. There is no justification for also retaining the First-tier Tribunal system in addition to the ombudsman. Membership of the ombudsman scheme will be mandatory for private landlords; I hope the Minister will offer some guide on the expected cost to landlords. The ombudsman will collect a great deal of information about both landlords and tenants. Surprisingly, the privacy implications have not been spelled out, and this aspect does not seem to have been raised in another place. We will have to deal with this in Committee. It would be quite wrong to publicise details of all individual leases. There can be no obligation on landlords to make such information public. Provided market rents are not exceeded, landlords should be entitled, at their discretion, to offer lower rents to particular people for good reason.

My overall concern is that the Bill has not been properly prepared or fully debated before it came to your Lordships’ House. It is crucial that this important and potentially useful legislation should not be enacted with details of crucial aspects of its administration left to secondary legislation at a later date—we simply cannot legislate like that. That would mean regression from increasing private sector supply of good housing and fair rents to the bad old days of bureaucratic domination. An overall consequence could be the taxpayer having to finance an increasing supply of housing for rent, with little hope of the resources to do so. Frankly, the problem I see with the Bill is that it is a superficial political solution to a tough economic and migration challenge.

Photo of Lord Thurlow Lord Thurlow Crossbench 6:07, 15 May 2024

My Lords, I declare my conflicts: I am a former chartered surveyor and I have buy-to-let properties, as declared and set out in the register. I began research on the Bill by trying to establish its primary purpose—what is its core objective? I know it sounds obvious, but I was not convinced; it is not clear. It was revealed as a 2019 manifesto pledge and relates to key proposals from the 2022 private sector rental report, but there is no real indication of the underlying purpose.

However, there is much good in it: the key measures to abolish Section 21, new grounds for repossession, amending rent increase provisions, the ombudsman, blanket bans, pets and other key measures. All these are interesting, helpful and, for the most part, constructive, but there is no real underlying core purpose, and none of these things needs a new Bill, particularly bearing in mind the shortage of parliamentary time. They could have been accommodated in the concurrent debates we are having on the leasehold and freehold Bill or even in the levelling-up Bill last year. I believe the real root of this should be, and indeed lies in, the shortage of housing and, in this case, of properties to rent, as we have heard particularly eloquently from the noble Lords, Lord Frost and Lord Adonis, and the noble Earl, Lord Lytton.

There have been numerous attempts by successive Governments to deal with housing supply—we all know that. Some imaginative ideas have been proposed to attract private finance into it, and the measure whereby Section 106 agreements were attached to planning conditions for the larger developments was quite successful. But the sale of council housing goes on, and we seem no nearer to reaching anything like the levels of new housing required to provide a sustainable balance between supply and demand. The noble Lord, Lord Frost, in his comments could not have made this clearer.

There is no point in expecting the Treasury, or the taxpayer by any other means, to finance the level of development required to meet the necessary demand. We have heard some impressive statistics. If we look back and reflect on the housing market after the Second World War, we see that tens of thousands of residential units were owned freehold by City institutions. This was an ideal scenario; they were socially responsible landlords, who invested in residential properties to meet their obligations to customers, and they were largely made up of life insurance companies and others. It is the perfect formula for housing supply: it does not involve the Treasury but comes from the private sector and is socially responsible. However, this pattern of responsible ownership was shattered by the Rent Acts in the post-war era. Rent controls arrived, and probably necessarily so, but with a sledgehammer rather than with negotiation by the City institutions.

The result was disaster for the sector. Tens of thousands of units were sold, or dumped, by the City institutions. I spoke to some of them in the early days of my career, and they explained the reasons for it. It was an avoidable tragedy for society as a whole. City investment was lost, and low-income tenants found themselves at the mercy of private landlords, many of whom were ruthless or simply uninterested in looking after their properties. The era of tenant exploitation, exemplified as some of us will remember by tales of Rachman, had begun in earnest. We must recreate an institutional market in social housing—and we can.

The long-term problem is not about rental levels; the market does that. The long-term problem is shortage of housing for rent. It is about supply and demand. Capping rentals is a catastrophic solution. The SNP-led Government in Scotland have done this; they have done the market testing for us. So many landlords have abandoned the market that one nationwide letting agency has closed its renting department permanently—and it represents an entire region of Scotland.

We can fix this problem by attracting private investment, particularly institutional investment. I am convinced that it can be done. There are examples, such as the Legal & General insurance company, which tried with great purpose and financial commitment recently not only to invest in rented housing but to build modular homes, keeping down the costs, removing layers of the development process and enabling an economic return from affordable rents. It built a factory to construct prefabrication and showed the commitment that the challenge requires. It invested millions of pounds—but I believe that it has given up on the project, sadly. I shall inquire as to why, but I suspect that the challenges were simply too great. The political commitment has been lacking.

We have heard that, when the ASTs was introduced, it was hugely successful in bringing private capital into the rental market. Initially, the private sector responded cautiously; the doubt was about whether it could trust in long-term stability and long-term freedom from political interference. The bruises of the Rent Acts have a long tail. However, ASTs have worked, as we have heard, and now the private sector is responsible for thousands of units. Sadly, the number is declining. Successive Governments have interfered, with the removal of mortgage interest as a legitimate cost, for example. Any AST landlord with a reliable tenant would not dream of serving a Section 21 notice; it is the unscrupulous few who neglect their properties and squeeze the last penny of rent from their tenants against the threat of eviction who spoil the system for everyone else. They should be the focus of this Bill and of government attention—and indeed they have their place in this Bill.

The free market must be allowed to operate with private capital. Now, the rout of private investor-owners continues, as we have heard, and more and more are selling up. The ASTs probably never replaced the provision of those early City institutions, but it was a good attempt, until political interference spotted a tempting opportunity to use it as a source of revenue. What a political mistake. The taxpayer now houses thousands of council house waiting list families and others in hotels, at public expense.

It is not all bad, however. A key positive is the reference to penalties and forfeiture to penalise bad landlords, but this is subject to a process managed by local authorities. That is a logical choice, I agree, but we all know that local authorities are strapped for cash. They are pruning their meagre resources and will have little chance of effective intervention. Without significant further central government funding, it will fail; proposals that it should be self-financing ring hollow, certainly in the early years.

Perhaps the most loudly trumpeted feature of this Bill is the abolition of Section 21. However, the government amendments have effectively delayed this by years; it may never happen under this Government.

As I explained at the beginning, the Bill at its heart should be encouraging the provision of more rental housing. We are tinkering with the details surrounding the challenge, but even the effectiveness of the tinkering has been diluted in the other place through its tsunami of amendments. We need to accelerate the supply pipeline as a priority. Wholesale investment by City institutions is required. The residential rental market needs to become an accepted, accredited investment sector in the eyes of these investors. It can be done. It has been done before. It was done 30 years ago—long after the Second World War—with shared ownership. The Government must work with these organisations and the advisory fraternity which understands it to create an investment product that will be sustainable to all parties and provide the hundreds of thousands of homes we need. It can be done.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green 6:17, 15 May 2024

My Lords, I think I have received more briefings on this Bill than on any other Bill in the nearly 11 years I have been here. It is clearly a very important issue. It hits a vast number of people, but often especially the poorest in society. It is a human right to have shelter, and we are apparently failing on that.

It would be wrong of me to pick out a particular briefing—but I will. The briefing from the Renters’ Reform Coalition was excellent and starts by saying:

“The private rented sector in England is characterised by poor standards, a lack of affordability, discrimination and insecurity”.

That is a very fair summary, but it is obviously very worrying. In the 2019 Conservative Party manifesto, there was a promise to make a “better deal” for renters, but this Bill probably does not solve the problems.

I grew up in a council house on an amazing estate in the days when working-class communities took pride in their environment and neighbourhoods, and the NHS took care of us and kept us healthy. We felt incredibly lucky. We did not own our own house, we did not have a car—when I was very young, we did not have a phone or a fridge—but we had a huge garden and a relatively car-free street to play in. It was a good life. My parents just thought they had won the lottery—which did not exist at the time.

However, then Thatcher happened along, with deindustrialisation and the right to buy. All the well-built and desirable council housing was sold and resold. In my home town of Brighton, 86% of the right-to-buy social housing is now relet by private landlords. That means that most of our £23 billion housing benefit bill goes straight into private hands: a big subsidy payment going from taxpayers straight to those who can afford to own and sometimes rent out multiple homes.

I completely understand why my old neighbours bought their homes at bargain discounts and resold them to get themselves a retirement plan, but the scandal is that Thatcher effectively stopped councils recycling and reusing the funds to build more homes. Some noble Lords have agreed that supply is the problem, although we might have different ideas about how to solve that problem. The Thatcherites hated social housing, and that legacy has resulted in a largely privatised housing market. Since 2020, rents have risen by 28%. Over 200,000 people have been served no-fault eviction notices in that same period, as landlord businesses aim to squeeze more money from their properties, and 1.2 million people are on local authority waiting lists. What many people feel, at the mercy of private landlords, is failure and frustration. So, what are the solutions?

The Renters (Reform) Bill is the smallest of steps; it must be tougher in order to be fairer. We need rent controls, first of all. The Mayor of London has asked for these powers and Greens at all levels of government will fight to give him them. Local mayors and local authorities know their areas and understand the local housing market. This Government should give them the power to make that choice.

Secondly, we Greens would lengthen the notice periods for rent increases and stop landlords using spurious grounds to evict people.

Thirdly, we will support all the amendments that aim to make life easier for student renters. I declare an interest here, as I now have grandchildren who are starting out in the world as students, so they clearly have a vested interest in this.

Above all, we would end the right to buy council properties and start to rebuild social housing. Our dream is to return to the days when we were spending as much taxpayer money building homes as we currently do on housing benefit. Because the more social homes we have, the less we will be filling the pockets of landlord businesses with taxpayers’ money. This includes buying back the supply, with local, regional and national schemes to bring properties back under the ownership of local government. It is estimated that in many coastal towns, up to a fifth of the housing is empty. We must bring those communities back to life.

The cross-party London Assembly Housing Committee, when chaired by the Green Party’s Siân Berry, assessed that there are around 6,000 to 8,000 affordable homes in London that could be immediately added to the social housing mix. These do not have to be built from scratch, because they are empty homes that already exist. There are a lot of empty properties all over the country sitting in investment portfolios—so-called ghost flats—that should be actual homes for actual people. We can amend the Renters (Reform) Bill to turn it into legislation that will really help people, but it is a small step compared to the building of new social housing, buying back the supply, and rent controls. Those are the policies that will have the biggest impact on the housing market and reduce rents in the private sector. I really hope that the Government will accept some of the amendments that will be coming forward.

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour 6:23, 15 May 2024

My Lords, I am grateful to the Minister for last week’s very helpful drop-in briefing session, which was particularly helpful for those of us who cannot claim expertise in housing law. I come to the issue from my long-standing concern about poverty. A growing proportion of those in poverty live in the private rented sector, and as many as 46% of children living in the sector are in poverty after taking account of housing costs. The failure to uprate local housing allowance annually as a matter of course does not help, especially at a time of spiralling rents, which the Bill will do little to curb. Issues of affordability and security are of particular importance to those whose housing options are limited by lack of money, or by vulnerable circumstances such as those stemming from domestic abuse or disability. For all too many, homelessness is then the outcome.

I would therefore like to be able to welcome the Bill, and indeed there are some welcome provisions, including the expansion of the homelessness prevention duty, and the creation of a decent homes standard for the PRS. Nevertheless, the 20 leading housing organisations which make up the Renters Reform Coalition are clear that it fails to achieve the White Paper’s promise of quality, affordability and fairness, and comes from the Commons watered down and fundamentally weakened. Their concerns are echoed in most of the many other briefings received, for which I am grateful.

I applaud the aim articulated by the Minister at our briefing to create a fairer balance of power between landlords and tenants. However, according to the coalition, the Bill

“preserves the central power imbalance at the root of why renting in England is in crisis”.

Moreover, as the National Residential Landlords Association stresses, quoting the Law Society, without investment in housing legal aid

“the Bill will not achieve its aims”, and neither tenants nor landlords may be able to enforce their legal rights, a point raised too by Crisis and the Large Agents Representation Group. To enforce their rights, tenants first need clearer information, as the TDS Charitable Foundation argues. If local authorities are to deploy their enforcement powers effectively, they need adequate resources to do so.

To put it charitably, the indefinite pause on the abolition of Section 21 is disappointing to say the least, and increases the vulnerability faced by, for example, older tenants, renters with children, and domestic abuse survivors. Justice challenges the idea that the courts are not ready. I hope that at a minimum, we might be able to subject total abolition to a clearer timeline.

However, I was also struck by the coalition’s plea to us to focus on the inadequacies of the new tenancy system proposed by the Bill. In particular, it is concerned that first, the notice period remains at only two months, despite over 100 council leaders urging an increase to four months, and the Government’s initial highlighting of the short eviction notice period as an important factor in why reform is needed. Secondly, the coalition is concerned that the period of protection against eviction under grounds 1 and 1A remains at six months rather than the two years proposed in the Government’s original 2019 consultation. This will not provide the greater security promised. Its third concern is the lack of strong legal safeguards to prevent abuse of the new grounds for eviction. In addition, my inbox has been flooded by emails from students who fear that their exclusion from the Bill’s safeguards will mean, among other things, that they will in effect remain subject to Section 21-type evictions in all but name.

One provision that I warmly welcome is making illegal the introduction of a blanket ban on renting to tenants in receipt of social security benefits or with children, which will widen the protection that already exists in theory for those with protected characteristics. However, if the Government’s aim that

“no family is discriminated against” is to be achieved, I hope that they will consider amendments put forward by Shelter to ensure that landlords cannot indirectly discriminate against social security claimants by making a new tenancy unaffordable. This is all the more important given the provision in the data protection Bill that could mean landlords’ bank accounts being made open to scrutiny if the LHA is paid directly to them, thereby making them even more reluctant to rent to tenants on social security. I am pleased to see the noble Viscount, Lord Younger, in his place as I make that point. The amendments would place a limit on rent in advance, restrict the scenarios under which a landlord could legitimately require a guarantor, and remove the requirement to prove intent to discriminate.

In addition, reflecting the principle enunciated earlier by the Minister, Justice recommends that the provision should be extended to prevent blanket bans on other groups which have experienced discrimination, such as prison leavers and non-UK passport holders. The latter, I would suggest, points to the abolition of right-to-rent checks.

Another group particularly vulnerable to the power imbalance that exists between landlords and tenants is disabled people. Disability Rights UK, Inclusion London and many other groups have raised concerns about the proposed change to the definition of anti-social behaviour as grounds for eviction. As we have heard, instead of

“conduct causing or likely to cause a nuisance or annoyance”, the Bill proposes to define it as behaviour “capable of causing” nuisance or annoyance to a person, and so hearsay evidence will become admissible. They fear that the new wording could be open to interpretation in such a way as to cover some behaviour of, for example, neurodiverse people and those with learning disabilities or experiencing mental distress. The admissibility of hearsay evidence could open disabled people up to potential abuse, harassment or even extortion.

The briefing also raises concerns about the implications of the new wording for those experiencing domestic abuse, as do Generation Rent and the Domestic Abuse Housing Alliance—DAHA. The former points out:

“Victims and survivors of domestic abuse are more likely than other tenants to have ASB complaints made against them”.

Given the considerable concern, can the Minister please explain the justification for the new wording? As the “capable of causing” formulation is being removed today from the Criminal Justice Bill, will she undertake to reconsider its usage here in this Bill?

Two other main issues have been raised in relation to domestic abuse victims and survivors. One concerns what has been dubbed the “tenant trap”, introduced by the government amendment that means that tenants cannot end a contract during the tenancy’s first six months, as we have already heard. It was welcome that the Minister in the Commons confirmed that there will be an exemption for domestic abuse victims and survivors, as the Minister here mentioned in her opening remarks, but we do not yet know what it will be. Can she tell us more, including whether the exemption will be included in the Bill itself? It is important that it is. Can she assuage the anxiety of DAHA that it will require tenants taking court action, which is likely to take too much time and money for it to be an effective remedy for those who have good reason to leave a property before six months?

The other issue relates to the new repeated rent arrears ground for eviction. Both Generation Rent and DAHA warn that victims and survivors of domestic abuse are particularly likely to be in rent arrears, especially if they have been and/or continue to be subject to economic abuse. Moreover, because this ground for eviction is mandatory, judges will not be able to use their discretion where, for instance, the arrears can be linked to abuse. I hope that the Minister will be willing to take another look at that issue. We cannot have a Bill which purports to offer greater housing security threatening even greater insecurity for those in vulnerable circumstances, such as domestic abuse survivors.

Another group of renters who face especially vulnerable circumstances is those living with a tenant who has died. Surely the idea that the death of a tenant can constitute grounds for eviction is unconscionable, when we think of what the bereaved survivor will be going through. Marie Curie argues that the Bill offers an opportunity to bolster protections and rights for grieving private renters, but that, in its current form, it would actually make the situation of bereaved renters worse. I hope that the Minister can also take a look at that.

In conclusion, on Report in the Commons, the Minister referred to his willingness to

“listen to suggestions for how we can improve the Bill

Unfortunately, in too many cases, that listening has resulted not in improving but in weakening the Bill, so that it neither provides tenants with the security originally promised nor adequately tackles what the impact assessment calls the “systemic issues” that underpin their poor experience. It would be a real shame if the improvements the Bill does contain are overshadowed by the clauses that take us backwards. I hope that we will be able to make changes in line with the Government’s original intention to strengthen tenants’ security and achieve a fairer balance of power between tenants and landlords.

Photo of Lord Carrington Lord Carrington Lord Great Chamberlain 6:33, 15 May 2024

My Lords, I declare my interests in the rural private rental sector, as set out in the register. I thank the Minister for her time in briefing me, as well as all the organisations that have also sent me such excellent briefs. I thank all noble Lords who have iterated many of the points that I will make.

I welcome this Bill, including the removal of the sometimes misused Section 21 for the ending of tenancies. The Bill attempts to balance the interests of tenants and landlords, to both improve the letting experience of tenants and to secure the future of the PRS through protecting the possession rights of landlords. The Bill deals with a wide spectrum of industry interests and characteristics, and is principally demand-driven. Sadly, it is unable to address the underlying supply problem of insufficient housing, which has a direct effect on the availability and cost of rental properties—points made by the noble Earl, Lord Lytton, and many others. In the five or more years that we have been waiting for the Bill, the supply of rental accommodation has worsened. Hamptons has calculated that there were 43% fewer homes available for tenants to rent in the first 10 months of 2023 compared to the same period in 2015.

Leaving aside the supply of housing, another major challenge facing the Bill is the perceived inadequacy of the court system, which, of course, is not under the control of DLUHC. I would be most grateful if the Minister could assure us that the two ministries involved are united in their efforts to make the necessary reforms.

The abolition of Section 21, under which some unfair evictions have taken place, involves the reform of the court system and the efficiency and timeliness of procedures under Section 8. Although Section 21 notices are now referred to as no-fault evictions, they are typically used for justifiable reasons, including rent arrears, anti-social behaviour, or landlords needing to sell or move back into a property. It is the unjustifiable reasons, such a landlord seeking to up the rent or failing to properly maintain a property, that have brought it into disrepute. Currently, Section 21 is being used as a substitute for other methods to secure possession because it is easier and quicker. Its abolition will add to the court’s workload under Section 8.

The loss of Section 21 notices means the loss of the ability to issue accelerated possession proceedings. There is therefore a practical fear on the part of landlords that, without reform, the courts will be even more overwhelmed and will not be able to deal with cases in a reasonable time. This is a major reason for landlords exiting the sector.

The Government are now committed to abolishing Section 21, but only when reforms are made to the court system, including the need to increase resources and ensure a timelier resolution of justified possession cases. In addition, in order to secure fairness for both tenants and landlords, a properly functioning justice system is essential. This involves access to and funding for housing and legal aid, as well as the courts. Landlords and tenants need to be able to enforce their legal rights in a timely and efficient manner.

Reviews, reports and surveys are all part of the reform process, but there is an absence of published information on the metrics of improvement. This all resembles the age-old question: how long is a piece of string? Please can the Minister give us a timeline, and even consider a drop-dead date, for the abolition of Section 21? What are the parameters for an improved court system?

My other concern is the proposal to make all tenancies assured periodic tenancies. With the abolition of Section 21, there is no need to abolish fixed-term tenancies or assured shorthold tenancies. The Government, by accepting the minimum term of six months, whereby a tenant can serve two months’ notice at the end of the first four-month period, concede the importance of securing landlord and lender confidence to make private renting financially viable. The problem is that, for some tenants and landlords, six months is too short, bearing in mind the favourable terms that can be negotiated under these agreements.

Last year, the cross-party Levelling Up, Housing and Communities Committee agreed a strange statement, indicating that

“fixed-term tenancies should remain available where both parties want them, but … given the current shortage of private rental properties, this would likely result in tenants having fixed terms forced on them”.

This is plain wrong. No one is forcing a fixed term on anyone. A landlord cannot and should not be held responsible and suffer for a lack of housing supply that is out of his control. That would be a very good reason for exiting the business, whereas, conversely, the continuation of fixed terms for a year or more would stop more landlords exiting the private sector.

As other noble Lords have said, fixed-term tenancies suit many landlords and private renters, and have the attraction of solid security of tenure that allows the landlord to gain possession in mid-term only in the case of anti-social behaviour and non-payment of rent. If a landlord fails to adhere to his obligations, including the proposed decent homes standard, the tenant should be able to terminate the tenancy with the advice and support of the local authority. This could also be dealt with by amendment to Section 30 of the Housing Act 1988.

Since the late 1980s, ASTs have worked well for most tenants and landlords. They are based on the freedom of contract between consenting parties. The average tenancy length in the most recent English housing survey was 4.3 years. Allowing tenants to fix a longer period that suits them is in a tenant’s best interest—surely a vote of confidence in the system. There is a place for them in the new world, albeit as an option open to both parties if they wish to fix a term rather than accept the new norm of periodic tenancies. At the end of the fixed term, the tenancy would revert to being a periodic tenancy, but surely there should be an option for the landlord and tenant, if they agree, to opt out of this periodic tenancy and agree a further fixed term.

At Third Reading in the other place, as referred to by the noble Lord, Lord Frost, several Members raised the abolition of ASTs leading to some landlords moving to short-term lets and the holiday-let market. The amendment of the MP for Totness asked for a fixed-term tenancy option, but it was not called, although it had secured 50 signatures of support, as well as a powerful speech at the end of the debate from Sir Christopher Chope regretting the move away from privity of contract. He also warned of the potential loss of housing available to rent and the likely increased cost.

My third major concern with this legislation is much the same as that of the noble Earl, Lord Lytton, but I am pleased to say that the Government have largely accepted that it is a problem: that is, the housing of agricultural and other workers in the rural context, where housing, particularly affordable housing, may be in short supply. Access to affordable accommodation is a key part of rural employment, and we should remember that 85% of rural businesses are not farming or forestry. In Schedule 1 to the Bill there are listed the various grounds for possession, which partly cover my concern, but I will be supporting various amendments to strengthen these clauses, which are so important in the rural economy.

I welcome much that is in the Bill, from the new decent homes standard to the creation of a private rental property portal and an ombudsman scheme that will, I hope, resolve matters that might otherwise go to court. However, student letting requires more amendment, including measures to allow flexibility for students to alter accommodation arrangements during the academic year.

This Bill has many of the right ingredients for reform of the PRS, but there is room for sensible refinement to enable both landlords and tenants to be comfortable at the same time as ensuring that the supply of housing for rent is not threatened but encouraged. In parallel, government should concentrate on housing supply, particularly in the social and affordable sectors, as mentioned by many other noble Lords.

Photo of Baroness Lawlor Baroness Lawlor Conservative 6:45, 15 May 2024

My Lords, it is a pleasure to follow the noble Lord, Lord Carrington, and I thank my noble friend the Minister for her helpful introduction to take us through the Bill. Before speaking, I should declare my interest as in the register of interests; I am and have been a landlord, as well as a tenant and a leaseholder. I am not confident that this Bill will do what paragraph 1 of the Explanatory Notes says it aims to do, which is

“to ensure private renters have access to a secure and decent home and that landlords retain the confidence to repossess their properties where they have good reason to”.

I think we all agree with this very important aim; the Government are right to want it, but I am not sure that the Bill is the best method for achieving it. Rather, it will make for uncertainty in a number of ways. Here are some of them: the ending of assured fixed-term tenancies under the 1988 Act; the ending of no-fault evictions under Section 21 yet the introduction of alternative provision for landlords to repossess their properties when the Bill says they have good reason to do so; and the provision for a two-stage transition period for these arrangements—the second stage uncertain, to be fixed by the Secretary of State once the arrangements for the courts have been changed to accommodate the new system.

Other problems have been discussed by noble Lords. The noble and learned Lord, Lord Etherton, spoke about the powers granted to local authorities to impose fines of £30,000—powers which I agree, and I urge your Lordships to think along the same lines, are properly for the courts to impose. The noble Lord, Lord Marlesford, discussed the implications for privacy around the data that will be collected on individuals. The noble Lord, Lord Adonis, talked about pressure on the courts, as did the noble Lord, Lord Carrington, and others. The noble Lord, Lord Truscott, spoke about the costs for private landlords.

Like the noble Lord, Lord Marlesford, the noble Earl, Lord Lytton, and my noble friend Lord Frost, I am particularly concerned about ending assured fixed-term leases. I will focus on what I see as the most problematic and unsettling proposal in the Bill: the abolition of assured fixed-term tenancies under the 1988 Act, which lays down that tenancies can be periodic, renewable after the rent period—typically a month—or fixed-term. We have heard today about some of the lengths of tenancy which are already in use and popular. This arrangement gives both landlord and tenant the security of knowing how long their letting is for and the option to propose and agree a variation to reflect wishes and circumstances, including renewal. Instead, the Bill proposes that in future all tenants will be on a single system of periodic tenancies, which are little more than a rolling tenancy of a month where tenants give notice of leaving and landlords cannot provide any notice of ending the lease other than on the stipulated “reasonable grounds” set out in the legislation. This is conceived in the Bill as part of a package, along with abolishing no-fault evictions. The overall aim is said to be to give greater security to the tenant to deal with problematic landlords who use no-fault evictions to end the tenancies. I understand that was a manifesto commitment by the Conservative Government, but getting rid of fixed-term tenancies was not, and, as other noble Lords pointed out, it is unnecessary to do so given the aims of this Bill. Yes, there are bad landlords, and the problem can and should be addressed, but you do not need to overturn the arrangements under settled law to address the problem of shameful properties let in appalling conditions.

I disagree with the Secretary of State, who told the House of Commons that this is a Conservative measure in the tradition of measures introduced by Conservative Prime Ministers. Previous measures were based on the principles of common law and the protections that it offers both parties, while improving on how they operated. Labour’s Rent Act 1977 did not permit no-fault eviction, but subsequent Conservative measures did. The Housing Act 1988 introduced the concept of the assured shorthold tenancy only when complex notice procedures were followed, while the Housing Act 1996 introduced amendments to make the assured shorthold tenancy the default option unless the parties agreed to the tenancy. I am grateful here to iHowz and Andrew Butler KC, who made available to Parliament an analysis of the background and have provided a more nuanced proposal than that provided in the Bill.

We have seen the extension of the private rental sector to account for one in five households. It seems rather silly, to put it mildly, to end the arrangements on which the private rental sector is based and has succeeded so well, and mushroomed, since the 1980s.

In a free society, the less interference there is by the state in people making contracts with each other the better, rather than politicising transactions in an area that should be a politics-free zone under the principles and protections of settled law. Yes, there should be regulation against unfair contracts. People should be able to enter into a contract with full knowledge of what they are taking on—each party, tenant and landlord. Entering an agreement with each other with full knowledge, openly, protected by law, should be for them to decide. Tenants should be able to stipulate their conditions, and so should landlords, and an agreement met. I agree that fixed-term tenancies should be an option for landlord and tenant alike.

Our think tank has been a commercial tenant. We have been on the receiving end of a request—not an obligation—to end a lease early, and the landlord made a generous offer of a rent-free period of a few months which gave us a cushion on which to perhaps find a more expensive property, have confidence and sort out problems before the lease would have otherwise come to an end. Indeed, during the pandemic, when the service charges amounted to more than the cost of the lease per annum, I asked a landlord whether we could leave because of our not-for-profit status being charitably funded. In both cases, these requests were met with due consideration by the tenant and the landlord —I being the tenant and the landlord making an offer on another occasion—and without any interference or bureaucracy on the part of the courts. This is how it should be when we enter into a transaction in this country: two parties under the rule of law.

I hope that we can amend this measure to leave in place fixed-term assured tenancies so that landlords and tenants alike will have the option of the certainty, if they want it, of a fixed-term lease, and that the security that the Bill aims for can be achieved by compensation clauses; for instance, by giving tenants a rent-free period in the case of a no-fault eviction. Such arrangements leave in place the clarity of contractual arrangements, rather than replacing them with a cocktail of written statements, responsibilities, letters, property portals and an ombudsman, the individual parts of which will become opaque under the bureaucracy that will surely follow in the Bill’s wake—that is, unless, with your Lordships’ help, we can ensure the real security at which the Bill aims.

Photo of Baroness Boycott Baroness Boycott Crossbench 6:55, 15 May 2024

My Lords, I declare my interests, in particular my interest with Peers for the Planet, which probably provides a clue as to what I will talk about in, and contribute to, this debate—energy efficiency in the private rental sector. I have much enjoyed other noble Lords’ contributions; it has been incredibly interesting. I totally agree with the noble Baroness, Lady Jones: I have had more things coming into my inbox about this debate than about pretty much anything I can remember. Noble Lords have dealt with all the points I agree with, but I will make a few specific points about the environmental effectiveness of the PRS.

Energy efficiency improvements always contribute to better living conditions, as well as tackling emissions from home heating: that is a crucial part of meeting our climate commitments. By improving air temperature, humidity levels and air quality, energy efficiency can help address multiple physical and mental health issues: we have heard a lot about that this afternoon. It can also help reduce fuel poverty by reducing energy demand, and therefore landlords—good for them—can increase the value of their properties; it is a win-win.

However, this is an area where the Government are seriously delaying action. This is particularly disappointing when the CCC highlighted in its last progress report to Parliament that the Government was “off track” in relation to energy efficiency measures in all buildings, with progress in the private sector remaining “slow”. Government policy in this area has been piecemeal and consultation subject to delay. Plans for all tenancies to meet EPC band C by 2028 followed a consultation that ended in January 2021. There has been no response from the Government since then; that is a long time. Instead, in September last year, the Prime Minister “scrapped” the plan on the basis of the financial pressures it could place on landlords—despite evidence, from numerous corners, of the financial and wider benefits for renters, as well as potential benefits for so many landlords, in the form of property value increase and tenant demand, if there is a clear and supportive plan in place.

On the other hand, this Bill offers the Government a real opportunity to reconsider their approach and inject ambition back into making the private rented sector more energy efficient. Indeed, their own 2022 White Paper on making the PRS fairer recognised the impact of poor-quality housing on renters’ health and well-being—which we have heard a lot about today—and their educational attainment, as well as the impact on energy bills and the pressures on low-income renters, and the burden we know it causes on public spending. It also recognised:

“To meet our net zero target, we need to have largely eliminated emissions from our housing stock by 2050”.

This is an important part of it.

I believe that businesses and good landlords would support the Government delivering on their commitments, if they are given the confidence, long-term policy certainty and support they need. Following the Prime Minister’s row-back last September, the National Residential Landlords Association—one of the many groups emailing—said that the Government’s delay in responding to their consultation meant

“there was never any hope of meeting the originally proposed deadlines”, and that it

“wants to see properties as energy efficient as possible, but the sector needs certainty about how and when”.

The UK Sustainable Investment and Finance Association, a finance and investment community of over 300 members managing £19 trillion in assets, also lamented the “stop-start nature of policymaking”, and that the Prime Minister’s announcements had removed the “clear targets” that would give investors confidence. More broadly, hundreds of leading businesses and professional organisations from within the built environment have expressed their concern over the decision to delay or weaken green policies, and disagree with the

“narrative that delaying climate action would reduce costs to households”— that is something we have debunked in this Chamber many times. They said:

“The longer we delay and the more we see stop-start piecemeal policy … the harder and more expensive the task becomes”.

They have also asked for a national retrofit strategy, which will ultimately pay dividends in tax returns.

The Bill offers the Government an opportunity to respond positively but, as I have mentioned, it is not just about business but about the impact on households, including vulnerable ones, and the question of fairness around delaying action. As the Bill’s Explanatory Notes say, the PRS increasingly provides homes for families and older tenants.

The decision to delay energy efficiency improvements has led to additional costs on fuel bills. Analysis by ECIU showed that, if minimum energy efficiency standards had already been in place, private renters could have saved more than £400 million in total, or £140 per home, in gas bills over the last winter. That is a lot of money if you are on universal credit. Generation Rent research shows that fuel poverty has fallen by only 4% for private renters since 2010. This is compared with 35% for owner-occupiers and 54% for council tenants. If we introduce energy efficiency measures to bring a home up to EPC band C, we could take households completely out of fuel poverty.

Citizens Advice has reported the widespread problems of damp, mould and cold, driven by the really poor energy efficiency of some privately rented homes. Some 31% of renters said they were unable to heat their home to a comfortable temperature. That rises to 45% of people with disabilities. That is awful. By its analysis, upgrading all homes could prevent 670,000 children developing asthma and 6,000 winter deaths per year. This must be something we all want.

In the other place, the Housing Secretary said that improvements needed to be balanced against the costs to individual landlords and tenants. There will be costs, but there are solutions for providing support and incentives to make the investment for landlords much more attractive. As business has said, the sooner the Government commit to a proper plan in the PRS and for all housing, the sooner the costs will come down and we will be closer to decarbonising our housing sector.

Photo of Lord Hacking Lord Hacking Labour 7:01, 15 May 2024

My Lords, I should begin with a short disclosure that my wife and I have in the next-door house under our ownership five one-bedroom flats, which are occupied by tenants whom we do our very best to look after well.

I do not often speak in your Lordships’ House, but in recent times I have found myself always at the bottom of the speakers’ list. I had higher hopes for this debate— I see that the noble Lord, Cromwell, takes bottom place and I am one away from that—because I was next to the noble Lord, Lord Frost, in the earlier draft of the list of speakers. He has kept his place and I have tumbled down to the bottom.

However, speaking late in a debate does give one the opportunity to refer to earlier speakers, and I do so most willingly. I thank the Minister for her excellent introduction, with which I found myself largely in agreement. I also take the opportunity to thank my noble friend Lady Taylor of Stevenage for her opening speech on behalf of my party. I particularly agreed with her comments on the impact of the changes in the many amendments that were moved in the House of Commons, and also with her comment that the Government have ended up just “kicking the can down the road”. I also agreed with her reference to the need for fundamental reform.

I am not going to go through all the speakers. I could do, because there were excellent speeches to comment on, but I will just refer to the noble Lord, Lord Best. His description of the switch of social housing to PRS was quite excellent. I am sure we are all grateful to him for his brilliant analysis of the current status of the landlord/tenant market.

I turn to the complexity problem. This is not the first Bill that inflicts much complexity on us and then on the users of our Bills. If only our parliamentary draftsmen could remind themselves of the Occupiers’ Liability Act 1957, which sets out in the simplest and clearest terms the liabilities of all occupiers of land.

What about this Bill? Its size is colossal. It is 194 pages long, containing 140 clauses and six complex schedules. In mastering this torrent of proposed legislation, we have had the benefit of excellent briefings from the Law Society, Justice and, most of all, our Library staff in their excellent briefing paper. Therefore, should we not remind ourselves, as we can remind ourselves in other Bills, that this Bill is directed to the fundamental right of all our citizens in the private rented sector to have the security of a decent home and to pay a fair rent, while likewise enabling landlords to provide just that?

I will return later to the great importance of such ordinary citizens having proper access and an understanding of the provisions of the Bill, but for now I will speak about when I first became aware of the relationship between landlord and tenant in the private rented sector. I was a young barrister in the 1960s when we were operating under the old rent Acts, where there was security of tenure and protection from unaffordable rent increases. It was in the terms of those Acts that no eviction could be made without cause.

There was one interesting provision in the old rent Acts that enabled a landlord to move a tenant from one property to another on the grounds of offering suitable alternative accommodation. That has not reappeared in this Bill. I criticise that not, but it is a rather nice memory.

I remind the House that under the old Acts the rents were controlled by the rent tribunals. What went wrong was that the rent was too low for landlords to invest in their properties, and many were in shocking condition. That was brought home to me in the 1980s, when my wife and I moved into a square in London then dominated by rent-protected properties, and we learned some appalling things. I will refer to two of them. There were two spinster ladies, I think well into their 80s, next door to us. They had no hot water in their rented property, nor indeed any heat provided except perhaps from the electric fire. They had a bath but no hot water to go into it. So they bought a washing machine and put it through all its motions without putting in any detergent, and when the hot water exited from the washing machine they had some water in the bath in which they could bathe themselves. We also learned in the square of a top-floor tenant who had no supply of electricity, and his only form of getting light into his flat was using a gas supply.

We should therefore be aware of what happened in this Bill’s long journey through the House of Commons. This was referred to by my noble friend Lady Taylor of Stevenage, but let us look at it in a little more detail. In Committee the Government tabled 183 amendments, including 52 new clauses and one new schedule. Well, bravo—but has the balance, as my noble friend suggested, been disturbed? My party tabled 81 amendments in the other place but they were all rejected. Those amendments were non-political, dealing with such things as proposed rent levels, notice-to-quit periods and financial penalties for landlords in breach. There are other examples that I could give.

On Report the Government excelled themselves even more. They moved 225 amendments, 24 new clauses and one further new schedule. Bravo again, but was the Bill improved? My noble friend Lady Taylor suggests the very opposite. Once again, all my party’s amendments were rejected. I have to say that the treatment of the legislature during the passage of the Bill through the House of Commons was most shoddy. As is the custom in this House, the Government can expect constructive amendments from all quarters. May all our amendments be properly treated.

The creation of the obligatory requirement for landlords to enter into the ombudsman scheme, the setting up of a digital property portal and the application of the decent homes standard are all most welcome, but they will all be defeated unless the court system can promptly deal with eviction or possession cases. Also, unless housing legal aid is massively increased to the levels that I remember in the 1960s, tenants will be forced to appear in the county courts as litigants in person to deal with the complexities of the provisions of this Bill. This is a burden on the judiciary and a cause of delay in the courts transacting this business. I look towards the Minister: may the Government in this House listen to us on the Back Benches and be willing to consider our amendments and judge them on their merit.

Photo of Lord Cromwell Lord Cromwell Crossbench 7:11, 15 May 2024

My Lords, I am neither a landlord nor a tenant, I have managed properties in the past and I have a property qualification. All four of my children were tenants during their student days and remain as tenants at the start of their professional lives. I have also had extensive briefings from both landlords and tenants and their respective representative bodies, providing their perspectives and their chosen statistics.

As the last Back-Bench speaker today, I will not re-run all the statistics because most of them have already been cited, so I hope that will be appreciated. I am also not going to namecheck everybody, but we have had, I think we can agree, a diverse but fascinating set of speeches. I congratulate all those involved—forgive me if I do not namecheck them.

There are some emotive issues here. For a tenant, the property they rent may become emotionally their home. For the landlord, the property is often their most valuable asset—they paid for it and they maintain it. It is their source of income or pension, and renting it out also means taking on costs, regulations and the risks of placing it into the hands of strangers. Into this sensitive environment have come terms such as “no-fault evictions” and “kicking people out on the street”, even stating paradoxically that landlords actually create homelessness. There have been distressing anecdotes—and I underline this—from both tenants and landlords.

In recent days I have heard a good deal of pantomime stereotypes, and I really hope we can set these aside and address the underlying issues. There certainly are some rogue landlords—albeit that the Government assure us they are a small minority—who provide substandard accommodation and treat their tenants badly. I support those aspects of the Bill that are helpful in addressing that minority. But I add a note of caution, as others have, about enforcement.

The Bill will not touch the rogues unless it is enforced vigorously against some nasty, elusive and, in some cases, dangerous people. The Minister, in very kindly meeting me with her officials yesterday, for which I thank her again, advised that fines levied by local authorities would fund enforcement. I remain sceptical, not least because local authorities are already so strapped for cash. I welcome the requirement to have a written agreement; I suggest that it should automatically include, as an annexe, an inventory of contents and condition, as the lack of one of these frequently leads to disputes later on. I also support the register portal idea, provided that it is better than the Companies House register, which we discussed in some detail during the economic crime Bill and where there are many companies registered to an “M. Mouse”, et cetera.

In acknowledging that there are bad landlords, however, we should also accept that there are bad tenants who will play the system and abuse the landlord-tenant relationship. There are also market and other factors beyond the control of landlords and tenants. The underlying issue is a simple one that many speakers have addressed: lack of supply. A recent debate in this House referred to a shortfall of more than 1 million homes and many speakers have also touched on this today. Private landlords were encouraged, in particular under the Housing Act 1988, to reduce this gap between supply and demand but the difference between them remains stark. The Bill is presented as achieving a better deal for tenants, not through increasing the supply but rather by altering the landlord-tenant relationship, primarily perhaps by reducing the rights of landlords. It begs a simple but fundamental question to the Minister: will the Bill lead to an increase in the supply of rental accommodation?

Section 21 notices are at the heart of the debate around the Bill. Introduced as an incentive for the provision of accommodation by private landlords, they have enabled an increase in the private rented sector, as many speakers have covered. This is based largely on landlords having the confidence that they could recover their property when they required to do so. To lose sight of this confidence—the understanding that, even if they never use it, landlords know that they can get their property back through serving a notice—is to put the sustained supply of rental accommodation at risk.

Tenant representative bodies tag these notices as no-fault evictions, but we should also remember that tenants can and do—to coin a phrase—make no-fault departures should they, without needing to give any reason, decide to move out on just one or two months’ notice. This leaves the landlord with costs and no income until a new tenant is in place, and quite possibly a lengthy overhanging dispute; for example, about the deposits of tenants who are now departed and possibly even out of the country. The Bill would mean that tenants can leave on short notice and without a reason, while landlords would be able to recover what is, after all, their property only on limited and specific grounds. That does not feel equitable to me.

An underlying concern for tenant representatives about Section 21 is that once the initial tenancy period—a security that the Bill seeks to reduce or remove, as others have said—is over, a Section 21 notice can be used should the landlord want their property back. In some cases, it is to seek—or, if noble Lords wish to use emotive language, to extort—an increased level of rent. As regards wanting their property back, the landlord can do so, and the Bill reasonably supports this, if they wish to sell the property or make it available for a family member. As regards raising the rent, I believe there is a point here. I would support rental movements being limited to inflationary increases but, again, supply and demand are relevant. A landlord cannot expect to succeed in renting out a property for more than the market rent. To bring the rate down, we need more supply rather than fewer landlords.

The underlying concern for landlords, apart from the psychological aspect of restriction on their ownership rights, is that to recover their property is going to mean going to court. It has been put to me that a landlord would perhaps have to go to court anyway, if a tenant refused to leave under the current Section 21 notice provisions. I contest that: given the clear simplicity of the Section 21 notice, the great majority of tenants accept its validity.

Speaking to landlords in recent months, I have learned about a couple of reality checks that we need to think about. First, Section 21 notices are already being served by landlords who want to get their properties back and avoid the drawn-out, adversarial and expensive legal processes in due course to recover their property. Secondly, landlords are becoming far more risk averse, and tell me they will continue to be, as to which people they might rent to. As one landlord put it to me starkly, “After this Bill, I will never rent to a family again”.

Speaking to those who say that they represent tenants, I have been struck by how sanguine they seem to be about the impact of the Bill on rental accommodation. They tell me that they assume landlords will sell up, perhaps to a first-time buyer, a local authority or another private landlord—although that seems a circular expectation. Not only is this dismissive of those who provide rental accommodation, it is a pure gamble. Depending on which statistics you choose, some say that there will be a decrease in rental accommodation—this is borne out by the discussions I have just referred to—and others say that there will be no impact. I find that hard to believe. In any event, no one is saying that there will be any increase in the availability of rental property, which is what we are all seeking to achieve.

Given the risks and costs involved for landlords by the removal of Section 21, what mitigation does the Bill provide? It has a, yet to be created, swift and fair court system, which is perhaps even cost-free. There seems to be no objective metric, as many have mentioned, for the Lord Chancellor to deem that the county courts will be working sufficiently well. I hope that we can address this in later stages of the Bill. Court hearings on property matters are already increasing. By definition, a great increase in such cases will be inevitable as all tenancies are now being ended under Section 8. These will be cases brought by tenants and by landlords.

This swift judicial process is a fantasy, and it is strictly for the birds. Speaking of birds, it was the noble Lord, Lord Bird, who warned us some months ago that the last time the Government meddled with the rental sector the supply shrank. I think the noble Lord, Lord Bird, knows more than many in this House about homelessness. In short, making responsible landlords recover their property via legal action will reverse the expansion of rental accommodation, and rogue landlords will probably continue to enforce their will via less formal methods.

I turn to the question of initial fixed terms. We are told that tenants need security of tenure so that they can put their children into school, develop a sense of community and hold down a local job—all of which makes complete sense, at least in some cases. But its logic must surely therefore support long initial terms, and not their abandonment by making them legally void beyond six months, as the Bill does. Tenants and landlords can both benefit from longer fixed terms. Both get continuity, less frictional cost and less disruption. Tenants will also benefit where landlords offer rental discounts or property enhancements to tenants wishing to enter longer-term agreements. I have seen that in practice.

I was struck by the repeated comments on this from tenants. One simply said to me: “There is absolutely no way I would be willing to sign up for less than a one-year fixed initial term. I do not want the prospect of having at last found a place I can afford and having to move on in a shorter period than that”. A tenant such as this—there are many—who wants to be sure that they have security for longer than six months is prevented by the Bill from obtaining it. The circumstances in which the landlord can remove them—to sell the property or provide it to a family member—would be limited, but beyond six months the tenant has no protection should the landlord serve a notice to that effect. The problem presented to me is that a tenant may get “trapped”—this has been referred to by some speakers—for a fixed initial period in a property that is not what they were led to believe.

I do see that issue, but two points occur to me. First, this is a caveat to both parties when signing up. After all, the landlord may find themselves trapped with a bad tenant. Secondly, a correctly drafted tenancy document provides for either party to quit in the event of contract breaches by the other. A long agreed fixed term is still escapable—if that is the right word. A system where tenant and landlord lose the ability to agree a tenancy for any period over six months of secure occupancy seems perverse. It is a further disincentive to the supply of accommodation.

Landlords face the risk of tenants changing every few months, with the associated costs and delays of repair, redecoration, reletting and disputes over deposits. I have not mentioned tenants bringing in livestock, but this could also be a feature if they are seeking insurance payments for damage by the tenants’ assorted livestock, which landlords would not now be able to refuse to allow to be kept on the property. In that situation, landlords would probably have to seek higher rents to cover the associated costs of tenant turnover.

However superficially well intentioned the Bill is, it satisfies neither tenants nor landlords. Both need certainty —certainty of tenure balanced with certainty of recovery—but none of this is attainable without certainty of supply, which is the core issue that we must return to. Although the elements of the Bill that deal with standards of accommodation and portal registration are largely to be welcomed, its approach to landlord and tenant relationships will deplete supply and exacerbate the problems that it seeks to solve. I am most grateful for noble Lords’ indulging me going on at such length.

Photo of Baroness Thornhill Baroness Thornhill Liberal Democrat Lords Spokesperson (Housing) 7:25, 15 May 2024

I declare my interest as a member of the cohort of Local Government Association vice-presidents. This has been an interesting, informed and wide-ranging debate. Noble Lords have shown their different expertise, in the time-honoured tradition of this Chamber. It is clear that the Bill has given us all food for thought and that we will have our work cut out during its passage. It is also clear that noble Lords have some serious concerns and that views are somewhat polarised.

The state of the private rented sector was clearly outlined by the noble Lords, Lord Best and Lord Truscott, and the noble and learned Lord, Lord Etherton, so noble Lords will be pleased to know that I will not go into detail. But the bottom line is clear: there is a significant shortfall in the availability of homes for private rent. Rightmove data—nobody has quoted this, so I will go with it—tells us that the number of available rental properties is 26% below 2019 levels, and the number of people looking for a rental home is 54% above 2019 levels. Staggeringly, some 50,000 properties are needed to bring the supply back up to pre-pandemic levels. Yet, at the same time, agents are receiving three times as many inquiries about every home available to rent. This leads to a rationing of a scarce and precious resource, which one agent described to me recently as a “beauty parade”. Landlords can now pick the best tenants—and we all know who they are and, more importantly, who they are not.

As my noble friend Lady Pinnock and the noble Lord, Lord Best, said passionately, the real issue at the heart of this shortage is the lack of homes for social rent. What is noticeable about all the charities lobbying us about the Bill is their commendable protection of the most vulnerable in society: the elderly, those suffering domestic abuse, families on low incomes and those who need additional support to get and keep their lives on track, as well as, lately, students, who clearly feel that the Bill turns them into second-rate tenants denied the rights of other tenants. Excepting students, 10 or 15 years ago all those groups of people would have been living in social housing, with a landlord who would give them not only stability through security of tenure but additional support if needed.

Let us turn to the detail of the Bill. This is a selective gallop around the course to show our areas of concern on these Benches, and where we will be working across the House to try to persuade the Government to make some changes. To the Minister I would say, while I acknowledge that there are good aspects, and some very good aspects, I shall not be mentioning those.

The big one is the non-abolition of Section 21, which is the cruellest and biggest disappointment in the Bill for some of us, for sure. So much has already been said most ably by the right reverend Prelate the Bishop of Chelmsford, the noble Baroness, Lady Taylor, and others. We know that Citizens Advice has seen significant increases in those seeking help with Section 21 evictions and facing homelessness, and that the numbers being served Section 21 notices have risen. We know that the number of families in temporary accommodation is rising month on month, and that those costs are spiralling, causing serious issues with the budgets of some councils. Of course, this has ultimately led to an increase in the number of homeless people on our streets. On what basis is that delay truly justified? We will be seeking to ensure that the Government put a date for ending Section 21 in the Bill, which should be no later than six months after Royal Assent. That is optimistic, you might say. Perhaps, but there is hope. We welcome the Labour Party’s announcement that it would introduce this on its first day in government.

The new tenancy regime was broadly welcomed by all stakeholders when the Bill was introduced in the other place, but I note today that the debate on the abolition of fixed-term tenancies will certainly exercise us in Committee. However, we have concerns about the government amendment whereby tenants cannot give notice until they have been in the property for four months. We understand that landlords will want to know that they get six months from each tenancy and, as the noble Lord opposite said, that tenants will want security. But things happen and circumstances change, and sometimes the property is not all that it should be.

It is worth pointing out that the present market conditions and the stresses of finding and funding a tenancy mean that a tenant will not usually give notice unless something is seriously wrong, either with the property or with themselves or their family. Most renters want that security of tenure, so they do not want to move unless forced to, as it costs them, as the noble Baroness, Lady Taylor, said, around £1,700, according to figures from Generation Rent. We believe that it should be possible to make compassionate exceptions in cases of fleeing domestic violence, or illness or death, for example, as mentioned by several noble Lords. I was heartened by the Minister’s comments in her introduction.

In lieu of the abolition of Section 21, Section 8 will contain the grounds for terminating a tenancy, and those grounds have been extended in the Bill. We have concerns, particularly about grounds 1 and 1A, and landlords evicting a tenant if they wish to move one of their family into the home or sell it. Both are entirely reasonable scenarios, but the Bill as it stands means that a tenant can be out after six months. We would seek to extend that period, I hope to a year. We are concerned that these two grounds will be used in much the same way as Section 21, because of the very low burden of proof on the landlord. Who do we think will be checking that the home is sold, or that a family member has moved in? What will be in place to prevent landlords gaming the system? We will support amendments requiring landlords to prove the use of those grounds. We note that the Bill provides for a three-month ban on landlords letting the property following the use of these grounds, but that simply is not long enough to disincentivise its use.

Whether the Government will agree to a longer protected period or not, we believe that the notice period for eviction under grounds 1 and 1A should be extended to at least four months to give a little more time to sort a new place to live. Shelter has said that, under the present circumstances, it takes 40% of renters with families longer than two months to find a home. We fear that, without this extension, even more renters will be forced into homelessness—so the burden on councils increases, not to mention the very human cost. I remind the House of the letters signed by more than 100 council leaders asking for a similar extension period because of the rising costs of temporary accommodation and the lack of suitable properties. We hope the Government will think again on this.

Unfortunately, the dire situation in the courts, as very well amplified by the noble Lord, Lord Adonis, has led to this back-pedalling. It is true that the length of time a landlord currently waits to get a court hearing varies, with the mean time being seven months. We agree that this is far too long, but we do not accept that this should lead to a delay in abolishing Section 21; rather, the Government must and should be investing in the courts and, in particular, housing legal aid. The situation regarding access to legal aid is particularly poor in rural areas. The Law Society has drawn attention to this, stating that almost 44% of the population of England and Wales do not have a housing legal aid provider in their area.

We are concerned that, while the Bill seeks to introduce stronger powers to evict anti-social tenants who are persistently disruptive—we completely agree with that—the definitions are not suitably defined and appear too subjective or open to abuse. There are also serious issues regarding victims of domestic abuse where such abuse is regularly mistaken and reported as ASB. These need to be listened to and taken seriously. We cannot just ignore the unintended consequences of this Bill on such a group—remembering that, on average, two women a week are killed by a former or current partner. On this, I agree with much of what the noble Baroness, Lady Lister of Burtersett, said in her excellent contribution.

It is good to see that the Bill will make it illegal to have blanket bans on renting to tenants on benefits and those with children. Let me say to the noble Lord opposite, I do not see what is in this Bill that could possibly make a landlord not want to rent to a family. Perhaps he can explain it to me afterwards.

Photo of Lord Cromwell Lord Cromwell Crossbench

I would be happy to speak to the noble Baroness afterwards.

Photo of Baroness Thornhill Baroness Thornhill Liberal Democrat Lords Spokesperson (Housing)

This will hopefully end that discrimination towards—yet again—the most vulnerable.

We would, however, urge the Government to look at several other practices where discrimination occurs. If a landlord insists on several months’ rent up front—and they do—that disadvantages many people for obvious reasons. Likewise, on the use of a guarantor, not everyone has family or friends willing or able to act as a guarantor. Both these measures in effect marginalise the less well off.

On rent rises, we feel that the Bill does not go far enough. The proposed annual limit of one rent rise is positive, but it still gives no guarantee as to how much the rent could rise, and the process to challenge an unfair rent rise is complex and lengthy. I was concerned by the statement that tenants could find themselves in a position where the First-tier Tribunal could say that the rent is worth more. That felt like a bit of a veiled threat that this would act as a deterrent to challenge a rent rise. Surely, to link increases to CPI or median wage growth would be fairer and transparent, and would obviate the need to appeal to the First-tier Tribunal at all.

We cannot escape the fact that the real issue is lack of supply. We know that much supply has been lost to short-term lets, which was expanded on very well by the noble Lord, Lord Truscott. There are no incentives in this Bill for landlords to return to long-term rentals—as opposed to the damaging overprovision, in some areas such as Cornwall, Cumbria and other tourist spots, of the more lucrative Airbnb. These should include making the playing field level between the two tenures using taxation, regulation and health and safety requirements.

There is much more to say and time to say it in detail at later stages, but I end by reinforcing the words from my noble friend Lady Pinnock and others regarding the role of local authorities in making this Bill work. As things stand now, they cannot do the job that we or they want them to do. These additional demands will only make things worse. The fact that the Bill—at last—expects the private rented sector to meet the decent homes standard and has given some additional powers to councils will come to nothing without the resources to do the job properly. Likewise, extending the homeless duty on councils sounds admirable, but some councils are barely coping now.

Finally, we do not feel that the Bill as it stands has rebalanced the relationship between landlord and tenant. It still feels to us like the landlords have the upper hand, which is perhaps why, in their briefing, they wish to see the Bill passed as soon as possible, and why the Renters Reform Coalition has branded it a failure.

Photo of Lord Khan of Burnley Lord Khan of Burnley Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government) 7:40, 15 May 2024

My Lords, it is a pleasure to close this Second Reading debate for the Opposition, and I thank all noble Lords who have participated at this stage of the Bill. The expertise, skills and knowledge on this subject in your Lordships’ House have been demonstrated in a most eloquent manner, and I agree with the noble Lord, Lord Cromwell, that it has been a fantastic and diverse debate. I also pay tribute to all the campaign groups and organisations that have campaigned consistently on the Bill. I thank all of them for their very helpful briefings, and I agree with the noble Baroness, Lady Jones of Moulsecoomb, that I have never had this number of briefings on any Bill I have worked on in your Lordships’ House.

On these Benches, we welcome the Bill. As the noble Lord, Lord Best, said, this is an improvement, with steps to redress the landlord and tenant imbalance. As my noble friend Lady Lister rightly said, it achieves a fairer balance between landlord and tenant while increasing tenant security. In fact, I actually welcome much of what the Minister said in her opening remarks. However, the point has to be made that, unfortunately, three Prime Ministers and 10 Housing Ministers later, and five years since committing to abolish Section 21, nearly 85,000 households have been threatened with homelessness by a no-fault eviction. The Government’s dither and delay have had a catastrophic effect on families across the nation.

I want also to turn to a point made by my noble friend Lord Hacking—I apologise that he was not at the top of the list; nevertheless, he made some very important points. There were 225 amendments and 24 new clauses tabled in Committee in the Commons, and 183 amendments and 52 new clauses tabled on Report. The amendments and new clauses were actually lengthier than the Bill when it started out, which I think is cause for concern. We are seeing too many Bills coming here with huge numbers of amendments tabled in Committee and on Report.

Renters are at the sharp edge of the current housing crisis and urgently need the protections and support in the Bill. We will be pleased to finally see the abolition of Section 21, whenever that actually happens—let me repeat, “whenever that abolition actually happens”, a point made by noble Lords across this House. Since October 2023, the Government have stated that they

“will not commence the abolition of section 21 until stronger possession grounds and a new court process is in place”.

The Bill as drafted already provided for a two-stage commencement process for the introduction of the new regime, with precise dates for new and existing tenancies to transition to be determined by the Secretary of State. However, the government amendment on Report in the other place was very widely drawn, with no time limits or obligations on the Secretary of State to enact the ban on no-fault evictions, regardless of the outcome of the Lord Chancellor’s assessment. This would effectively allow the Government to stall on the enactment of the ban indefinitely. As the noble Lord, Lord Thurlow, said, this could happen in a year, in 18 months or not happen at all. Landlords and tenants should be given certainty about precisely when the Government’s manifesto commitment to abolish Section 21 no-fault evictions will be enacted. As my noble friend Lady Taylor of Stevenage said in her opening speech, we will bring forward an amendment to ensure that Section 21 of the Housing Act 1988 will be repealed on the day the Bill receives Royal Assent.

We also welcome the simplification of tenancies, which will give renters more flexibility and more rights. It is right that periodic tenancies should become the norm. For too long, renters have lacked basic power and control over one of the fundamentals of life, their home. Tenants have struggled to challenge unfair treatment without undergoing lengthy and expensive court proceedings, a point made very eloquently by my noble friend Lord Adonis.

Hence, we welcome the creation of a new ombudsman who has the potential to be an essential part of the redress system. I agree with my noble friend Lady Warwick of Undercliffe on the need for the proper steps to ensure that there is a fair process for the procurement of the new private sector ombudsman. If this ombudsman is given the proper teeth and resources, they will have an important role to play in levelling the playing field.

The tragic death of two year-old Awaab Ishak, caused by the damp and mould in his home, shocked the whole nation. With our support, the Government introduced Awaab’s law in the social housing sector, and they were right to do so. But the problem of debilitating damp and mould, and landlords who fail to investigate such hazards and make the necessary repairs, is not confined to social rented homes. A Citizens Advice report published last year made it clear that the private rented sector has

“widespread problems with damp, mould and cold, driven by the poor energy efficiency of privately rented homes”.

The report went on to evidence the fact that 1.6 million children in England currently live in cold, damp or mouldy privately rented homes.

According to the English Housing Survey, 23% of homes in the private rented sector do not meet the decent homes standard. That is around 1 million homes. This compares with 13% of owner-occupied and 10% of social rented homes. In the face of such a pervasive problem, we can think of no justification whatever for restricting Awaab’s law purely to the social housing sector. We hope that the Government will agree and accept the same law for the private rented sector, because we can think of no reason whatever why they would resist doing so.

In the other place, in relation to the issue of safe and decent homes, Minister Jacob Young said it would be dealt with through enforcement by local housing authorities as well as the private rented sector ombudsman, and that the Government considered that this was of no interest to tenants. We are not convinced by the Government’s response. How have the Government determined that there is no interest in Awaab’s law among tenants in the private rented sector? Have the Government consulted with them?

If anything, there is a stronger case for applying Awaab’s law in the private rented sector. Things are worse in the private rented sector, as illustrated by the Citizens Advice statistics I have just read out. We will come back to this at a later stage in the Bill. If the measures are appropriate for the social rented sector, they should be appropriate for the private rented sector. Does the Minister accept that conditions in the private rented sector are far worse than in either the social rented or owner-occupied sectors, with 1.6 million children living in cold, damp or mouldy homes? If so, why does she not support tougher measures to compel landlords to rectify these problems?

I further ask the Minister to tell us what estimates the Government have made of the number of households likely to be threatened with homelessness by a Section 21 notice, from now until the time when the Lord Chancellor completes his assessment of the courts. Is the Minister concerned that the new, more vague definition of anti-social behaviour could lead to victims of domestic abuse being evicted on anti-social behaviour grounds while undergoing the trauma of abuse? This point was made by my noble friend Lady Lister, as well as by the noble Baroness, Lady Thornhill. My noble friend asked for justification for the wording; I look forward to seeing what response the Minister will give.

There have been a number of excellent contributions, but I want to pinpoint the interesting historical significance that the noble Lord, Lord Best, provided us with. The noble Lord outlined that, in the 1980s, the private rented sector was 9% of the nation’s rented homes. In the 2000s, that became 20%. Some 2.3 million private landlords are still looking to this Bill to ensure that their life gets better. The noble Lord talked about the demise of council house building, and how social housing has gone from 34% to 17% of the sector. The noble Lord also reminded the House that there has been a doubling of the private rented sector, and a halving of the social housing sector. At the heart of what he said—the very centrepiece of the Bill—is the lack of housing: there has not been enough housing built.

I was delighted to hear from the noble Lord, Lord Frost, who also made this very important point. In fact, he outlined that the target of 300,000 was last met in 1977. I liked the fact that he talked about reforming planning and building 300,000 houses per year; he sounded like he was reading the Labour Party manifesto for the next general election. I understand the point that we need to create better housing. There is a dysfunctional housing market, as the noble Lord stipulated, and the Government are consistently missing the housing targets.

The Bill is an important step forward. Supporting renters at the sharp edge of the cost of living crisis is very important, so we should all support this. On these Benches, we will work constructively throughout the passage of the Bill. This is a vital piece of legislation, because it seeks to provide greater security and stability for renters. This matters, because housing instability destroys wealth creation, damages life chances, restricts educational prospects and harms health. It is not just about policies; it is about people and their dreams, fears and aspirations. We need to build a system that uplifts everyone, regardless of their housing situation—a point that the right reverend Prelate the Bishop of Chelmsford made in terms of “safe, secure and sustainable”.

On these Benches, we strongly support fundamental reform of the private rented sector and have called for it for many years. Regardless of whether they are a home owner, leaseholder or tenant, everyone has the basic right to a decent, safe, secure and affordable home. Much more needs to be done to decisively level the playing field between landlords and tenants, and a Labour Government will seek to truly strengthen protections for private renters, so that they finally get the long-term security and better rights and conditions that they deserve. We look forward to working with noble Lords across the House to strengthen this much-delayed Bill and commit to a future where renters are empowered and their rights protected, and where housing stability is not a privilege but a fundamental right. We need to build a fairer, more compassionate housing sector that truly serves the people. I look forward to the Minister’s response.

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 7:51, 15 May 2024

My Lords, it is a pleasure to close this debate and to reflect on the thoughtful contributions that we have heard. I should first perhaps disclose that I have been a very happy tenant for many years, with successive landlords who have welcomed my dog, cat and children—so, for me, the private rental sector plays a valuable role, and the Bill’s intention is to make the system work better for both landlords and tenants.

I am grateful for the diverse, wide-ranging and sometimes contradictory contributions that have been made today, and I will attempt to address the points raised in turn—although they may not be in order, because my papers seem to have got a little jumbled.

I turn first to the abolition of Section 21 and court reform, raised by the noble Baroness, Lady Taylor of Stevenage. She raised the issue of Section 21 being abolished immediately following Royal Assent. Our priority remains ending Section 21 as soon as reasonably possible. As these are the largest changes to the private rental sector in over 30 years, it is critical that we introduce them in a way that both protects tenants’ security and retains landlords’ confidence in the new system. As I stated in my opening remarks, there is a raft of secondary legislation that will be required to achieve that; therefore, it cannot be done at Royal Assent.

The reforms in the Bill will need to be supported by a robust and efficient court system for possession. While the vast majority of tenancies end without any need for court action, an effective and efficient court system must be available for landlords and tenants who need it. We are committed to ensuring that the reforms in the Bill are appropriately supported in the courts. We have already invested £1.2 million in the Courts and Tribunals Service to deliver a new end-to-end online possession process. On top of that, this financial year we are investing a further £11 million to deliver the digital architecture for a new, fully digitised system going forward.

The analogue system is being worked on now to help process the new Section 8 possessions on new contracts as soon as possible. The digitisation of the processes will follow as soon as possible for the existing contracts, provided that the Lord Chancellor’s court assessment suggests that the system can cope. The noble Lord, Lord Carrington, and other noble Lords asked about this; I will attempt to supply a visual chart for setting out indicative timelines for the Section 21 phases and the total abolition as we discuss this over the coming weeks.

With regard to abolishing the fixed terms, noble Lords raised concerns about the shift to periodic tenancies and the removal of bilaterally agreed fixed-term contracts, and we have had two sides of the House completely disagreeing on how this should be carried out. As noble Lords suggested, we have introduced a restriction on the tenant giving notice to leave within the first six months. That will ensure that landlords have a sufficient guarantee of rent and enough notice to find new tenants, and will stop tenants using rented properties as short-term lets. After six months, tenants will be able to serve two months’ notice at any point, which is a significant improvement in flexibility compared with the current system. Of course, we expect many to stay for the long term.

Photo of Lord Cromwell Lord Cromwell Crossbench

I think the tenant can serve notice after four months but they leave after six months. Can the Minister confirm that that is correct?

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I will check that but my notes tell me that it is six months before they can serve their notice.

I reassure the House that we are exploring potential exemptions to this six-month period in extreme circumstances, such as where there are serious health hazards, the death of a tenant, for victims of domestic abuse, and other such important issues. We will bring these forward as the Bill progresses.

With regard to domestic violence, as many noble Lords raised, we recognise that domestic abuse can be interpreted as anti-social behaviour by neighbours—for example, frequent shouting and intolerable noise. It would be wrong to evict victims, which is why it is important that the judicial discretion is used in ground 14 eviction cases. To consider eviction would be a reasonable step in these circumstances.

Many noble Lords raised the issue of a longer notice period for possession grounds, and powerful arguments for that have been made today. However, we believe that the notice periods for the grounds are set at a length which balances the needs of both tenants and landlords. They give tenants time to find a new home while ensuring that landlords can manage their assets when they need to.

Noble Lords have called specifically for tenants to be protected from the moving and selling ground for a longer period at the start of their tenancy, and we are already protecting tenants’ security by ensuring that landlords will not be able to use these grounds in the first six months of a tenancy. We believe that six months strikes the right balance between improving security and, of course, allowing landlords to continue to feel confident in the market.

The Government are committed to preventing homelessness before it occurs. The Bill will help to do that by abolishing Section 21 evictions, giving tenants greater security of tenure and, we hope, reducing the risk of homelessness. We are also providing total support of £108 billion over 2022-25—an average of £3,800 per UK household—to help households with the high cost of living. This includes increasing the local housing allowance to the 30th percentile of market rents from April, which will mean that 1.6 million low-income households will be around £800 a year better off on average in 2024-25, and over 740,000 have been prevented from becoming homeless or supported into settled accommodation since 2018 through the Homelessness Reduction Act. Between 2022 and 2025, we are investing over £1.2 billion into the homelessness prevention grant, which funds local authorities to work with landlords to prevent evictions and offer alternative sources of accommodation.

With regard to Awaab’s law, I am grateful for this being raised. We agree that no tenant should have to live in dangerous housing conditions. We are taking steps to ensure that hazards in rented homes are dealt with, but how we achieve this needs to take into account the differences between the private and social rented sectors.

Awaab’s law was developed for the social housing sector, in which landlords manage large portfolios of usually between 1,000 and 10,000 properties, and have dedicated repairs and maintenance teams. We believe that it is not the right approach for the private rental sector, in which 82% of landlords have fewer than five properties. Instead, we are strengthening enforcement against hazards in private rented homes. Local councils will be able to issue immediate fines of up to £5,000 if a dangerous hazard is present in a privately rented property and the landlord has failed to take reasonably practical steps to address it. We are also introducing the decent homes standard in the private rental sector for the first time, providing local councils with enforcement powers to require landlords to remedy failures to meet requirements.

Photo of Lord Khan of Burnley Lord Khan of Burnley Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

We had all these enforcement measures in the social rental sector but we still brought in Awaab’s law. The argument is for enforcement and the decent homes standards, but in the social housing sector we had all the support mechanisms in place—I understand the difference between large social housing and houses for couples or mum-and-dad families—so why the differentiation? Why could we not have Awaab’s law? The Minister says that this is a different situation, but there is still the opportunity to enforce and fine social housing landlords, so why differentiate?

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

The difference, as I have just alluded to, is between one person having to get external maintenance people in, and so be at the mercy of their agenda, and maintenance crews that can be sent to those areas that need prioritising. I have a huge number of questions to get through, so I apologise for being abrupt.

Many noble Lords raised concerns about the impact of reforms on the student market. Since introducing the Bill, we have heard from across the sector that, as originally drafted, the Bill would have interrupted the student housing market, reducing the supply of vital properties in university towns and cities. We have listened to these concerns and have introduced a new ground for possession which will allow landlords renting to students to seek possession ahead of each new academic year, facilitating the yearly cycle of short-term student tenancies. The ground has been carefully designed to balance the needs of both landlords and students. It will apply to any property that is let to full-time students, as long as the landlord gives prior notice to tenants at the start of the tenancy that the ground will apply.

Regarding different dates being used rather than the traditional academic year, there is nothing to stop landlords renting properties in January to students starting their studies at that time. Most students will continue to move in line with the traditional academic year. This ground provides a backstop for the majority of students studying from September. The alternative would be to allow the ground to be used at any point in the year, which would give tenants no certainty.

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

I asked whether the Minister would talk to the universities sector about this. It has made very strong representations and knows far more about this than I do, and noble Lords around the Chamber have mentioned that as well. Will the Minister please meet the universities sector to understand properly its concerns before we go much further with the Bill?

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I assure the noble Baroness that those discussions are already ongoing. The department is in intense discussions with that sector, and has been since the introduction of the Bill in the other place.

Regarding MoD accommodation, as a result of discussions in the other place we are looking to apply the decent homes standard to homes for service personnel and their families. Service personnel and their families deserve homes that are safe and decent, just like everybody else. While 96% of service family accommodation already meets the decent homes standard, it is right that we explore whether we can put in further safeguards on housing quality for this sector. However, there are features in service accommodation that mean that we must consider carefully the approach that will work best in practice. This includes the fact that significant proportions of this accommodation are located on secure military sites. The department is therefore working closely with the Ministry of Defence and local authorities to urgently explore these matters and work out how this can be done.

The noble Baroness, Lady Pinnock, and others raised local authority funding. We are fully aware that local authorities need to prioritise taking enforcement action against criminal landlords and that it is essential to the effective implementation of the reforms. We are taking steps to facilitate and resource action against landlords who flout the rules. The new property portal will support local authorities in their enforcement action. It will provide information sources to enable local authorities to take action, and we are extending ring-fenced penalties to support a “polluter pays” approach. We will also ensure that net additional costs that may fall on local authorities are fully funded, and we have already taken action to support local authorities now. Our pathfinder programme has allocated £14 million to test innovative ways to create sustainable enforcement teams that can be shared across all local authorities. In addition, our healthy homes project provides funding for local authorities to test ways of increasing the compliance of landlords in tackling damp and mould.

On pet notice periods, while I appreciate that tenants will want their requests answered as quickly as possible, 28 days seems to be too short, following discussions. A landlord could be on holiday or there may be other reasons why they have not responded within a 28-day period. Therefore, we suggest that 48 days gives reasonable time for landlords but prevents them delaying indefinitely.

Regarding affordability, the local housing allowance and rent increases, some noble Lords rightly highlighted concerns about the affordability of housing; others expressed their concern about being able to charge market rates—I will try to try cover both of those points. We recognise the cost of living pressures that tenants face and that paying rent is likely to be a tenant’s biggest monthly expense. The Government are investing £1.2 billion in restoring local housing allowances, and raising them, and that significant investment means many of these low-income households will gain a significant amount of money to help them towards their rental costs. For those most in need, discretionary housing payments are available to help meet housing costs, and the household support fund has been extended to March 2024 to help with the cost of essentials. I will check those dates for the House—I just said March 2024 and we are beyond that, so I will check and make sure we correct it.

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I thank noble Lords.

Some noble Lords were concerned that the Bill restricts landlords’ ability to charge a market rent. I will be very clear: this Government do not believe in rent controls, unlike the noble Baroness, Lady Jones. Nothing in this Bill prevents landlords increasing rents to the market rate each year or dictates what rent they can charge at the start of a tenancy. Tenants can appeal above-market-rate increases to the First-tier Tribunal, which will make an objective assessment and determine whether to raise, or indeed lower, the proposed rent. The noble Lord, Lord Marlesford, referred to the First-tier Tribunal—I think he wanted it to go. We are working closely with the Ministry of Justice and the judiciary to assess the impact on the First-tier Tribunal of this new Bill. We anticipate that the reforms will lead to an increase in cases, but we will ensure that the tribunal has the capacity to deal with these cases.

Regarding overall supply, noble Lords asked what measures in the Bill will mean for supply in the private rental sector. I will try to reassure noble Lords—if not today, maybe as we go through the Bill—including the noble Lords, Lord Frost and Lord Carrington, and the noble and learned Lord, Lord Etherton, that there is no evidence to suggest that a fairer private rental sector for tenants and landlords will lead to a reduction in supply. The statistics I have from the department suggest that the sector doubled in size from 2004, peaking in 2016, and has remained roughly stable since then; we will continue to monitor the impacts. New costs to landlords are expected to amount to a tiny fraction of average annual rents, at approximately £10 per landlord in England. We are by no means complacent and recognise the vital role that good landlords play in providing homes for millions of people across the country. That is why the Bill requires the department to provide an annual update to Parliament on the state of the private rented sector, to include stock, size and location of properties.

With regards to social housing supply, noble Lords have heard me talk at this Dispatch Box, on a number of occasions, about the affordable homes programme of £11.5 billion. I will not rehearse those arguments today in the interests of time, but they underpin the supply part of the equation. Since 2010, there have been an additional 482,000 affordable homes for rent, of which 172,600 are for social rent.

On retired clergy, the right reverend Prelate the Bishop of Chelmsford raised concerns that the Church of England Pensions Board will no longer be able to evict existing tenants to house retired clergy. The way this has been achieved until now is through the use of Section 21, which we are abolishing. Ground 5 allows landlords to evict tenants from properties which are usually held to allow ministers of religion to perform their duties when needed again for that purpose. She is therefore correct that the ground will not apply in situations where they wish to house retired clergy. We have carefully considered the needs of tenants and religious organisations when reviewing the grounds for possession, and we believe that the ground balances the unique needs of the sector—ensuring that religious ministers can occupy properties where needed to carry out their duties—with the rights of existing tenants.

I will write to the noble Baronesses, Lady Pinnock and Lady Warwick, about the ground 1B impact on social landlords and how we will select the administrator for the PRS ombudsman. I bow to the experience of ombudsmen of the noble Baroness, Lady Warwick, which is much greater than mine, but I can tell her that the Bill allows for government either to select a scheme through an open competition or to appoint a provider to deliver a designated scheme. To reiterate, we have not made a final decision on what is happening, and we are not ruling out the possibility of delivering this through alternative provision. Our priority is choosing a provider that offers a high-quality, value-for-money service. I will seek the clarification that she has asked for and will revert with more detail on the process being used as discussions continue on the Bill.

On the cost of the ombudsman, which the noble Lord, Lord Marlesford, raised, it is right that the landlords pay for this scheme. It is in line with common practice for funding other redress schemes, including for social landlords, who pay some £5.75 per unit for membership of the Housing Ombudsman scheme. We will ensure that the fee for private rental is proportionate and good value.

On portal offences, local authorities will have a duty to enforce where landlords fail to comply with their portal obligations. Tenants who become aware that a landlord is, for example, not registered on the portal or has provided inaccurate information can contact their local authority so that they can take the appropriate enforcement action.

I reassure the noble Lord, Lord Truscott, that we recognise the importance of having a healthy supply of private rented homes at affordable prices in all parts of the country, which is why we are taking decisive steps to stop short-term lets undermining the supply of long-term homes for local people. This includes abolishing the furnished holiday lettings tax regime, introducing a national mandatory register of short-term lets, and introducing a new planning use class for short-term lets.

On the suggestion by the noble Lord, Lord Adonis, that we should introduce a specialist housing court, we do not think that this is the best way to improve the court process for possession. This view is shared by the judiciary, which responded to our call for evidence. A new housing court would not address the concerns raised by landlords, such as the timeliness and complexity of the processes. We are committed to reforming the court system instead. Indeed, the majority of tenancies end without ever going to court. For those that do, where court reform is necessary, we will make sure that the system is working. The new system will have great new training for the analogue system to do the immediate new contracts, followed by digitisation. I am a lot more optimistic that new, large digitisation projects can now be delivered on time, and I am confident that we will be able to scope and deliver this as quickly as needed.

If it is okay with the House, I will continue, as there is not much left. On the portal duplicating the work of selective licensing, unlike the property portal, selective licensing schemes aim to target specific local issues by enabling more intensive, proactive enforcement strategies. The two are therefore complementary and do not prevent each other from working.

The question from the noble and learned Lord, Lord Etherton, was very detailed and, I am sure, very precise. I will write to him on it once my department’s legal experts have had time to consider his points—otherwise, I am in danger of stepping into waters that I cannot.

With regard to the comments on guarantors, we recognise that some tenants have difficulties in meeting such requirements. The use of guarantors and upfront rent can give landlords confidence to rent to individuals they might otherwise not choose to, but we will continue to carefully monitor both practices, to ensure that they are not having an adverse effect on the market. We have already committed to limiting upfront rent through the Tenant Fees Act if necessary.

With regard to the death of a tenant, we are extending the period for ground 7 to be used. The Government are aware that tenants who have been living in a property for a while may reasonably believe that they have a right to remain living there, which is why we have introduced an extension from 12 to 24 months to help resolve cases where disputes might arise, particularly for grieving tenants.

With regard to legal aid, which was mentioned by the noble Baronesses, Lady Thornhill and Lady Lister, the Ministry of Justice is investing an additional £10 million a year in housing legal aid through the non-means-tested Housing Loss Prevention Advice Service—HLPAS—to give people the best chance of keeping their home when they fall into difficult financial times. Through this scheme, tenants can receive free, non-means-tested advice as soon as they receive written notice that their landlord is seeking possession of their home. The MoJ is funding a panel of specialist legal advisors to provide grant funding for the recruitment of trainee solicitors to support that endeavour. Free on-the-day legal help will continue to be available when a tenant is facing the loss of their home at a possession hearing in the county court.

It is true that private landlords must meet existing minimum efficiency standards—the MEES regulations—which are set at EPC E. Although we will not tighten that requirement, as we have in the social sector, we will work with landlords. We are currently investing some £6 billion this Parliament and a further £6 billion to 2028 on making buildings cleaner and warmer; this is in addition to the £5 billion that will be delivered through the energy company obligation, ECO4, and the Great British insulation scheme up until March 2026. Landlords can and should participate in these schemes to upgrade their properties.

In conclusion, I thank all noble Lords—

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour

My Lords, I do not wish to prolong this. In relation to the comments that the Minister made on ongoing discussions about the role of the landlord ombudsman, could she undertake to ensure that the following is taken into account? The Cabinet Office guidance makes clear the importance of avoiding

“multiple redress schemes within individual industry sectors”, and goes on to note that this is best achieved

“by utilising existing Ombudsman schemes”.

I hope she will take that into account, or ensure that it is taken into account.

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I will take that into account, but I also extend an invitation to the noble Baroness to meet my team to discuss this in more detail.

Photo of Lord Cromwell Lord Cromwell Crossbench

Just before the Minister sits down, I have a very simple and short question; it is the one I raised right at the beginning of my contribution. Is it the Government’s view that this Bill will increase the availability of rental accommodation, or not?

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

As a quick answer, I cannot give the noble Lord that clarification. The intention here is to improve the quality of private rental sector stock, improve tenants’ rights and make sure that landlords have the ability to get back their property when they require it. With regard to the numbers, I will go back to officials in the department and ask for an assessment of whether they think that it will increase the supply. They tell me they do not think it will decrease the supply; I will now go back and ask whether it might increase it.

Photo of Lord Cromwell Lord Cromwell Crossbench

I thank the Minister for that very worthy answer; these are very worthy objectives. I think the answer she is giving me is: “No, it’s not going to increase”, but I appreciate that she is not quite vocalising that. I think all the indications are that it will decrease it, but we shall see.

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

As I said, there will be an annual report, which will monitor in detail the impact of the Bill, and going forward we will have the data in granular detail as a result of the private rented property portal, once it is established.

Photo of Lord Frost Lord Frost Minister of State (Cabinet Office)

I apologise. I too do not want to prolong this, but I and a number of noble Lords mentioned concern about the abolition of fixed-term tenancies. The Minister mentioned that briefly at the start of her summing up. Will she undertake to set out in a little more detail—not now, but on a future occasion or in writing—the Government’s reasoning as to why it is necessary to abolish fixed-term tenancies, as well as Section 21, as an option?

Photo of Baroness Swinburne Baroness Swinburne Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I undertake to do that. I invite all Peers who would like to do so to come to discuss these things in detail over the course of the passage of the Bill. I will put further dates forward ahead of Committee, so please make use of them. I am available to have those discussions throughout.

I believe the Renters (Reform) Bill honours the Government’s 2019 manifesto commitment to create a private rented sector that works for everyone and to level up housing policy in this country. The reforms in the Bill will give tenants greater security in their homes for generations to come. The Bill will also support landlords, ensuring that they have the confidence to invest—to invest more, we hope—in the private rented sector in England. I look forward to working with noble Lords during the passage of this important Bill.

Bill read a second time.