Lord Shipley:

Moved by Lord Shipley

68: Clause 27, page 42, line 31, leave out from “tenancy,” to “being” in line 33 and insert “no notice of proceedings for possession under section 8 of the Housing Act 1988 (notice of proceedings for possession) may be given at a time when the deposit is not”Member’s explanatory statementThis Amendment and others in the name of Lord Shipley seek to prevent a landlord from serving a notice (under section 8 of the Housing Act 1988) to seek possession of a property where a tenancy deposit has not been properly protected or the relevant statutory requirements in relation to the deposit have not been complied with.

My Lords, in moving Amendment 68 I will speak to Amendments 69 to 71. This issue was not raised in Committee but it is sufficiently important—again I thank Citizens Advice for raising it—to be discussed on Report. I assure the Minister that I do not wish to press these amendments to a vote, but I hope the Minister might be willing to take away the questions raised in this group to assess whether further amendments are needed at Third Reading.

The amendments in this group

“seek to prevent a landlord from serving a notice (under section 8 of the Housing Act 1988) to seek possession of a property where a tenancy deposit has not been properly protected or the relevant statutory requirements in relation to the deposit have not been complied with”.

Citizens Advice has advised me that the tenancy deposit protection scheme will be significantly weakened if it remains the case in the Bill that landlords will not need to protect tenants’ deposits prior to serving notice, and that this would be a departure from the current position. Reverting to the requirement that a landlord must be compliant at the point that notice is served would give far greater certainty and avoid wasted court time in cases where a tenant may not have known up until the last minute whether a valid defence existed. The tenant may believe that they have a defence, because the deposit has been taken and not protected, but then find that the landlord protects or returns the deposit to them at the very last minute, potentially on the morning of the court hearing. That makes it very difficult for tenants to make informed decisions about defending a claim.

The Bill says:

“Where a tenancy deposit has been paid in connection with an assured tenancy, the court may make an order for possession of the dwelling-house let on the assured tenancy only if the tenancy deposit is being held in accordance with an authorised scheme”.

My Amendment 68 would amend this to say that where a deposit has been paid in connection with an assured tenancy,

“no notice of proceedings for possession under section 8 of the Housing Act 1988 (notice of proceedings for possession) may be given at a time when the deposit is not” being held.

Over 600 clients every month ask Citizens Advice for help with tenancy deposit return issues of various kinds, and things will only worsen if the protections are weakened. I hope the Minister will be able to reassure the House that deposit protection will be strengthened during the passage of the Bill and that no notice of proceedings for possession may be given at a time when the deposit is not being held in accordance with an authorised scheme.

My Lords, I thank the noble Lord, Lord Shipley, for bringing this group of amendments to the attention of the House. However, we do not believe that these amendments are necessary. Tenants already have clear rights and remedies when it comes to deposit protection. A tenant can easily check online whether their deposit has been lodged in a government-approved protection scheme. If it has not been properly protected and the issue remains unresolved, the tenant has the right to take the landlord to court.

In such cases, the court may order the landlord to return or protect the deposit, and may even award the tenant three times the value of that deposit as compensation. These are significant penalties and they serve as a strong incentive for landlords to comply with the law. Given that eviction proceedings are already subject to considerable safeguards and restrictions, we are not convinced that removing Section 8 grounds in these circumstances is either proportionate or necessary.

In particular, we must ensure that where a genuine error has been made and later rectified, especially where there is no actual harm or financial loss to the tenant, landlords are not barred from recovering possession of their property. To do so would seem unjust. A more flexible and proportionate approach would promote better compliance while avoiding unnecessary hardship or deterrence to good-faith landlords.

Although we fully understand the intentions behind these amendments, having heard the reasoning of the noble Lord, Lord Shipley, we believe that existing protections for tenants are robust and that further restrictions of this kind risk being disproportionate.

My Lords, I am once again grateful to the noble Lord, Lord Shipley, for raising these points, as well as to Citizens Advice for discussing them directly with our department, and to the noble Baroness, Lady Scott, for her comments. Although I have great sympathy with the intention of Amendments 68 to 71, Clause 27 already ensures that deposits will be protected at the time of the possession hearing, which we think is a more proportionate approach.

Landlords have until the court hearing to comply with deposit protection rules. This ensures that landlords can still gain possession when it is reasonable, while ensuring that the tenant’s deposit is protected before the tenancy ends. I also note that this approach is far stronger than current restrictions, which prevent only the use of Section 21, and not Section 8, if the deposit is not protected.

However, I believe the noble Lord’s approach goes too far. Most notably, if a landlord had failed to protect a deposit within 30 days of receiving it, they would be permanently prevented from serving notice for possession on any ground except anti-social behaviour. Let me be clear: such a landlord should have complied with the law—of course they should—but there are other, more proportionate, mechanisms available to enforce that compliance, including an ability for a court to award tenants up to three times the amount of the deposit if it was not protected properly.

In conclusion, the Bill balances tenant protection with the need for legitimate possession cases to proceed. I therefore ask the noble Lord to withdraw his Amendment.

My Lords, I am grateful for the Minister’s reply but it has extended the doubts that I have had about this, because it is still not clear to me why the Bill is weakening the current safeguards.

It is not clear why a valid defence cannot be assured for a tenant who has to go to court when the court case may not be necessary—in other words, they do not know whether the landlord has managed a tenancy deposit scheme correctly on their behalf. Citizens Advice has produced a strong case here, and it is not clear why the current safeguards are not being continued. I am advised that the tenancy deposit protection scheme will be significantly weakened if it remains the case in the Bill that landlords will not need to protect tenants’ deposits prior to serving notice. That is a departure from the current position. If that is required to happen in future, it will simply encourage wasted court time.

I shall withdraw the Amendment and not move the other three, but I hope that the Minister and the Government will look very carefully at this issue because otherwise, I fear that tenants will not be properly protected by the tenancy deposit scheme. I beg leave to withdraw the amendment.

Amendment 68 withdrawn.

Amendments 69 to 71 not moved.

Amendment 72 not moved.

Schedule 2: Amendments relating to Chapter 1 of Part 1