Lord Keen of Elie:

Moved by Lord Keen of Elie

89: Clause 59, page 92, line 18, leave out “£40,000” and insert “£7,000”Member’s explanatory statementThis limits the local housing authority’s power to impose a financial penalty to £7,000.

My Lords, Amendment 89 is to Clause 59 and addresses the question of the penalty proposed in that provision, which is £40,000. Under the amendment, that would revert to the same level of penalty for other provisions in the Bill of £7,000, on the basis that £40,000 is simply excessive.

If we are to have enforcement regarding the various provisions in the Bill, consistency and uniformity are to be welcomed. In the context of a regulatory obligation as contained in Clause 59, it is appropriate that the level of penalty should be £7,000. I beg to move.

My Lords, this group of amendments on the financial penalties raises the very important point of how local authorities are informed of the landlord’s breaches and hence are in a position to impose financial penalties. Without that, there can be no imposition of financial penalties. This issue was raised in our last debate by the noble Baroness, Lady Thornhill, and the noble Lord, Lord Cromwell, relating to police failures.

A major thrust throughout this Bill is to curb—or, rather optimistically, to stop—rogue landlords acting illegally. Therefore, we need to realistically identify the rogue landlords. It may sound trite, but they are rogues who have every intention to exploit the law to their benefit or ignore it altogether. It is no good legislating for financial penalties unless the rogue landlord’s breaches are identified and brought to the notice of local authorities so that financial penalties can be applied.

Under this Bill, commendable new schemes are being set up. First, there is the private rental sector ombudsman scheme. Secondly, there is the private rental sector database scheme. Thirdly, there are the private sector rent payment orders, otherwise known as RPOs. However, each of these schemes relies on the landlord’s breaches being reported. Moreover, if these breaches are reported to the ombudsman, it is doubtful that the ombudsman, in this entirely civil procedure, has any right to report on the landlord’s breaches to the local authorities. The major potential reporter is the wronged tenant, but history shows that wronged tenants are very reluctant, for obvious reasons, to report their landlords. The answer must therefore be to legislate sensibly and to go for measures that will be most effective against rogue landlords but do not penalise ordinary, lawful and honest landlords.

I have to say, politely and respectfully, that this is where this Bill fails. Take the example of the 12-month ban on putting properties back on the market after a failed sale or failed family occupation following evictions on grounds 1 or 1A. The rogue landlord will simply exploit this procedure, fudging dates and taking other steps. This will not provide any effective deterrent to the rogue landlord. Focusing on the wrong that is to be put right—namely, landlords raising the rent after failure of sales or failure of family occupation—my noble friend will remember that I suggested that the much better, more sensible and more directed focus is to ban all rent increases across the market after abortive sales or abortive family occupation.

Since that is a simple, across-the-board provision, rogue landlords would find it much more difficult to act in breach. Noble Lords may remember my example of a landlord having sought and obtained eviction of a tenant in order to put his parents into the property and then one of his parents has a stroke and is unable to enter it. That landlord is then left with the penal result of being unable to put the property on the market for 12 months and to collect much-needed rent. Also, it would mean property unnecessarily being unavailable on the rental market, also for a period of 12 months.

There is not much time, but it is still possible to take a realistic view throughout the Bill to ensure, first, that the proposed measures against rogue landlords are in place and, secondly, that the honest and good landlord is not treated unfairly. I implore my noble friend the Minister to review this, because, as I argue, the focus of the Bill should be on realistic legislation and not unrealistic legislation.

My Lords, fines must be proportionate, yet, as the Bill stands, the threshold for imposing fines on landlords is worryingly low, and the scale of those fines is notably high. This combination is troubling. Setting fines at such significant levels, in some cases representing a substantial portion of a landlord’s rental income, or even exceeding it, risks driving honest, well-meaning landlords out of the market, not because of any wilful negligence but out of fear.

I thank my noble and learned friend Lord Keen of Elie for leading this group from the Back Benches today and bringing two considered amendments to the attention of the House. The group continues the discussions we had in Committee, as we remain unclear on how the scale of the fines has been determined. Frankly, they appear to be arbitrary, with no transparent methodology or rationale behind them, and we would welcome clarification from the Minister on how these amounts were determined and why those particular values were chosen. Without a clear explanation, it is difficult to support their inclusion in the Bill.

Amendments 98 and 99 seek to clarify that fines should be issued only for persistent breaches. Including this in the Bill would provide much-needed reassurance. It would make it clear that significant penalties will not be levied for the first offence. That is especially important when many landlords may not be immediately aware of their new obligations, either those set out in the legislation or those introduced later through regulations. Imagine a landlord renting out a cottage for many years in their village in rural Wales. They are entirely unaware of this Bill and the proceedings of this House. They do not register on any new database, not out of malice but because they simply do not know what is required. Is it right that they should face a steep fine for this? Surely not. That is why “persistently” must be in the Bill—to protect landlords like them and ensure that the legislation is proportionate, fair and enforceable.

Ministers may say that, in practice, individuals such as in the example I have given will not be fined, and that discretion will be used and enforcement will be reasonable, but warm assurances are not enough. We need to ensure that this protection is guaranteed in law, not simply assumed in guidance or left to future interpretation. We need this clarity in the Bill, and without it, the risk remains that well-intentioned landlords—those who may simply be unaware of new requirements—could still find themselves facing disproportionate penalties.

If the Minister cannot accept the premise that we must embed this protection clearly within the legislation, I regret to say that we will be minded to test the opinion of the House.

My Lords, the noble Baroness was so quick to leap up—

I am sorry.

No, I was listening to the debate and trying to get my thoughts in order. I will be very brief because, as I said on the previous group, it is clear that we will oppose anything that lowers the fines.

I am a little bit concerned about some of the attitudes towards local government that are coming out, particularly from the noble Baroness, Lady Scott, from her own experiences. Local authorities have experience and expertise; they employ lawyers and solicitors, and they make sure they apply fair and proportionate responses to enforcement across a range of things and do it with consistency and uniformity. There is almost an infantilisation of local authorities, as if they want to grab lots of money from lovely, well-meaning landlords with one cottage in a little village. I say to the noble Baroness that I do not see that happening.

I see that approach to enforcement across a range of things. Even if we are changing parking rules, for example, we put a little notice on windscreens, saying, “Next week, you will get fined if you park here”. Local authorities have guidance and standards that they like to adhere to. I guess there is the odd rogue local authority, like there is the odd rogue landlord, but I do not like the way we want to have things absolutely pinned down so that local authorities can have no discretion about what they do.

The Bill is bold and radical and has new things in it that have to succeed—the database, for example, has to succeed. If the fine is not enough to deter landlords, it will be ineffective, and one of the tools that makes this transformative will have been taken away from local authorities. We have to trust local authorities. I doubt that many £40,000 fines will happen, and I guess that is why we are also calling for reviews—such things will be part of looking at that.

We certainly need to give local authorities higher financial penalties. I am quietly confident that they will not take them out on the uninformed landlord. There is also something faintly patronising about the idea of uninformed landlords. There is so much information out there and so many landlord lobbying groups that it would be surprising if they were not aware that there had been some changes. If they are astute enough to be a landlord, and a good landlord, they will be astute enough to notice that this big Renters’ Rights Bill might just have some impact on them. We will not vote for any Amendment that reduces the ability of councils to impose higher fines.

My Lords, I support the Amendment, but I want to concentrate on a slightly different aspect, which came up in the Intervention by the noble Lord, Lord Hacking, and remarks made by the noble Baroness, Lady Scott. The noble Lord referred to the fact that rogue landlords will ignore whatever we put in the Bill, and that may well be the case, although I hope he is not accurate on that. The noble Baroness mentioned that there are people in Wales who will never have heard of the Bill but are expected to conform to the provisions in it. My question for the Minister covers both aspects. Can she at some point, whether now or later, tell us about the implementation of the Bill, so that everybody understands how it works and avoids going to court and all the other matters?

My Lords, I thank the noble and learned Lord, Lord Keen of Elie, the noble Lord, Lord Cromwell, and the noble Baroness, Lady Scott of Bybrook, for their amendments. Amendments 89, 92 and 101 would reduce the maximum civil penalties for offences in relation to illegal evictions—

I thank the Minister for thanking me, but I have not spoken to this Amendment.

I think somebody must have assumed that the noble Lord, Lord Cromwell, was going to speak. I apologise for that.

For these reforms to be effective, they must be enforced robustly and fairly. Our approach to civil penalties is fundamental to this. Landlords who commit first-time and minor non-compliance will be subject to civil penalties of up to £7,000. However, for serious and repeat non-compliance, landlords will be subject to civil penalties of up to £40,000. The principle that local authorities can impose civil penalties for housing offences is well established. Since they were introduced in 2017, civil penalties have proved an effective enforcement tool. I agree with the noble Baroness, Lady Thornhill. I do not think we have any need to question the professionalism of local authorities in dealing with these matters. They are more than well versed in exercising legal duties and have legal professionals to support them.

It is important to emphasise that £40,000 will be the maximum, not the norm. Local authorities will need to have a clear rationale for why they have set a civil penalty at a certain level and apply aggravating and mitigating factors. Penalties of up to £40,000 will be available only in respect of landlords who have committed serious or repeat non-compliance. Initial failure to sign up to the database, for example, will carry a penalty of only up to £7,000. However, local authorities will be able to impose a penalty of up to £40,000 if the landlord continues or repeats this conduct after being given an initial, lower penalty.

When considering whether to issue a civil penalty, local authorities are required to issue a notice of intent—a bit like the notice about parking that the noble Baroness, Lady Thornhill, mentioned—allowing time for landlords to make representations. The local authority will need to be satisfied beyond reasonable doubt that the landlord has committed an offence. If the landlord disagrees with the imposition or amount of the penalty, they will be able to appeal to the First- tier Tribunal. This approach to civil penalties ensures efficiency for local authorities, protection for tenants, and fairness for landlords. As noted in Committee, we will also publish new guidance to help local authorities pursue civil penalties with greater consistency and effectiveness.

Amendments 98 and 99 are in the name of the noble Baroness, Lady Scott. She spoke about the scale of fines. We have increased the maximum civil penalties to take account of inflation since the £30,000 and £5,000 maximums were introduced for the similar housing offences that I referred to earlier. We want to ensure that the deterrent value of civil penalties is maintained. As I have stressed before, they are maximum penalty amounts. Local authorities will need to take into account a number of factors, such as the culpability of the landlord and the harm caused to tenants in determining the appropriate level of the civil penalty.

On the point about the single landlord in the depths of the Welsh countryside, and to the point made by the noble Lord, Lord Carrington, housing is devolved in Wales, so it is a different matter altogether in Wales.

Amendments 98 and 99 would require there to be persistent breaches of certain provisions in Clause 83 or persistent offences committed under Clause 93 before the local authority could fine an individual. I appreciate that the noble Baroness is acting in good faith by laying these amendments, but they would have significant negative consequences for the effectiveness of the database. Under these amendments, individuals could avoid penalties for failing to register or knowingly or recklessly providing false information to the database operator, to name two of the relevant provisions, unless they did so persistently over a protracted period. For the database to be useful to users, it is important that as many landlords as possible register with the service. Indeed, as the noble Baroness commented in Committee:

“It is essential that the accuracy, completeness and timeliness of the data be maintained if it is to be a useful resource for both tenants and for landlords”.—[Official Report, 14/5/25; col. 2219.]

I would add local authorities.

I fear that these amendments could discourage registration and reduce the quality of the data recorded by watering down the threshold at which financial penalties will be imposed. Furthermore, it would be unfair to those good landlords—the vast Majority—who comply with the legislative requirements from the outset. It may create an environment where negligent landlords could escape sanction for significant periods of time, and disadvantage the compliant landlords the Bill intends to support.

I recognise that the noble Baroness is trying to protect landlords from being unduly punished. Therefore, I hope she is reassured that the level of fines is the maximum level rather than the standard. Local authorities must also be satisfied beyond reasonable doubt that a requirement under Clause 83 has been breached or an offence under Clause 93 has been committed before they can impose a fine. Moreover, new guidance will be published in due course to help local authorities with consistency and effectiveness.

Finally, Amendments 100 and 102 would reduce the maximum civil penalties for landlords who fail to comply with their responsibilities in relation to the new private rented sector database. Our introduction of the national PRS database is fundamental to enhancing the experience of tenants, improving local authority enforcement and helping landlords understand their legal obligations. It is therefore vital that landlords comply with the requirements to have active entries and accurate information on the database.

The maximum penalties—again, I stress that these are maximums—of £7,000 for less serious breaches and £40,000 for more serious offences apply across the provisions in the Bill. Having a lower penalty regime for non-compliance with the database requirements would reduce the deterrent effect and send the wrong message. It would run counter to our aims for a consistent, robust and proportionate enforcement system for the whole private rented sector. That is not fair on tenants and it is not fair on good landlords either. So, for the reasons I have set out, I ask kindly that the noble and learned Lord, Lord Keen of Elie, considers withdrawing his Amendment.

My Lords, I am obliged to all who have contributed to this aspect of the debate, and to the Minister for her explanation. On the financial provisions and our pursuant Amendments 89, 92 and 101, I will not insist on those amendments. I comment merely that, in my noble friend’s Amendments 98 and 99, it appears to be conceded that what is being addressed is persistent offences by particular rogue landlords. Therefore, it appears to me that the use of that term in the context of Clause 92 would be appropriate. I withdraw Amendment 89.

Amendment 89 withdrawn.

Amendment 90 not moved.

Clause 65: Landlord redress schemes