Renters’ Rights Bill

Tuesday 1st July 2025 Lords Chamber

Report (1st Day) (Continued)

19:56

Clause 6: Statutory procedure for increases of rent

Amendment 24

Moved by

[Lord Jamieson]

24: Clause 6, page 8, leave out lines 11 and 12
Member’s explanatory statement
This amendment prevents the Secretary of State from expanding the definition of “relevant low-cost tenancy” by regulations.

[Lord Jamieson (Con)]

My Lords, I thank the Minister for taking the time to meet my noble friend Lady Scott and me to discuss the contents of the government amendments in this group. We are grateful that she has returned to the House with what has been referred to as a “break glass” provision, finally acknowledging that the Government’s policy may indeed lead to a significant backlog in the tribunal system.

However, on these Benches we struggle to understand why the Government, having recognised the problem, have not sought to take proactive steps to prevent such a backlog in the first place. Waiting until the system is overwhelmed before acting is not good policy. It also cannot be right that rent determinations made by tribunals can result only in the rent being revised downward. This creates a clear and perverse incentive. There is no risk to bringing a case if the rent cannot go up and can only go down. Why not try your luck? You may as well. It encourages unnecessary and speculative tribunal claims.

That is why I thank the noble Lord, Lord Carrington, and my noble friend Lord Howard of Rising for their consistent work on this issue and for the thoughtful amendments they have tabled. Both noble Lords have highlighted the problem with clarity. The current system gives tenants an incentive to challenge rent, knowing that they have nothing to lose. We would therefore support Amendment 31 should my noble friend decide to press it to a vote. It would correct the imbalance by allowing for rent to be revised upwards as well as downwards, restoring fairness to the process.

Amendment 42, which stands in my name, would require the Secretary of State to conduct a formal review of the tribunal system responsible for rent determinations. We on these Benches recognise the potential for tribunal backlogs that the “break glass” amendment is supposed to address, but we do not believe that will be the case. Hence, we believe that a comprehensive review is necessary to help us understand the true pressure being placed on the system and how best to mitigate it.

I am grateful to the noble Baroness, Lady Wolf of Dulwich, for recognising the overburdening of the tribunal system with Amendment 29, but it would add an additional filtering step rather than seek to reduce the incentive to go in the first place, especially when there is no downside to doing so, which we think would be the more appropriate way of addressing the issue.

Finally, I will say a word on Amendment 24, which concerns preventing the Secretary of State expanding the definition of a relevant low-cost tenancy by regulation. This is important because such a power, if exercised without scrutiny, could significantly broaden the Bill’s scope in unintended ways. It is vital that any change to this definition comes before Parliament not simply through ministerial discretion. From these Benches we look forward to hearing from noble Lords across the House on these issues. I beg to move.

20:00

[Baroness Wolf of Dulwich (CB)]

My Lords, I shall speak to Amendment 29 in my name and in that of the noble Baroness, Lady Thornhill, but before doing so I will thank the Minister, as so many other noble Lords have done, for the courteous way in which she has discussed this issue with me. My amendment seeks to provide for a pre-appeal assessment process to filter out appeals that have no prospect of success and thus avoid overburdening the tribunals. Its specific and highly practical suggestion is that the Government should take advantage of the technical expertise available to them through the Valuation Office Agency. Rent appeals should progress to the courts only if the Valuation Office Agency considers that they have a chance of success.

It seems appropriate to be making this suggestion on the 100th anniversary of the Rating and Valuation Act 1925, which ensured consistency of property ratings across the country by the use of professional valuation officers. I commend this Act to noble Lords. Reading it is quite possible because it is a relatively brief piece of legislation written in language that a normal person can understand. But the main reason I am commending it is that it set up a decentralised but uniform system which gave people across the country consistent decisions on a regular and predictable timescale, with clarity on who was making those decisions and how they could be contacted. This sort of clarity and consistency is surely what we would like for all tenants and all landlords, but the current drafting of the Bill, which loads more work on to a tribunal system that we know is overloaded, is not in a position to deliver this.

As I explained in Committee, my proposal was prompted by current Scottish practice. It does not in any way reduce the right of tenants to appeal against a rent increase, and I am not sure that it even reduces the incentive to appeal on the off-chance, but it does reduce the likelihood that the courts will be overwhelmed very soon by appeals, in particular by appeals which do not succeed and which swamp the courts, to the detriment of important and merit-worthy cases.

Under the Government’s current proposals, tenants will enjoy a number of new and important rights. Rents cannot be increased as often as at present, for example. Most importantly in the context of this group of amendments, tenants who wish to challenge what they see as an excessive rent increase have access to an independent tribunal. The tribunal cannot propose an increase that is any higher than the one initially proposed by the landlord, as the noble Lord, Lord Jamieson, has already pointed out. It can endorse the landlord’s proposal or rule that a lower rent should be charged. Obviously, these charges are of great assistance when landlords are proposing major increases that are out of line with inflation or the market, but, equally obviously, they will encourage a very large number of appeals which are lodged on the off-chance, and I do not think there is any doubt that this would be disastrous. In the other place during the Public Bill Committee, Minister Pennycook observed:

“There is no dispute on the Government side of the Committee as to the fact that the court system is on its knees”.—[Official Report, Commons, Renters’ Rights Bill Committee, 22/10/24; col. 9.]


He added “after the past 14 years” but the relevant point here is that the court system is on its knees.

As first introduced, the Bill provided that the tenant who appealed against a rent increase where the tribunal found this was allowable would pay the increase only from the date of the tribunal decision, which could be many months on. This clearly hugely increased the incentive to appeal, and I think it would also have been seen as massively unfair by any tenant who accepted an increase without appealing and then saw a fellow tenant getting months at a lower rate. So, I was very pleased that the Government recognised this risk and I look forward to the Minister explaining how the government amendments will work in practice.

However, I do not think this is enough to head off tribunal overload, which is why I have retabled my amendment. There will still, for many people, be a sense that they have nothing to lose by appealing. If I were an officer in a student union, for example, and I was asked my opinion, I would have to say that appealing remains something of a no-brainer. I would have to say the same if I was on a radio programme or an online forum. Why would you not? I therefore remain convinced that, in the absence of some sort of prior screening of the type that I have suggested, the courts will be overwhelmed.

In Scotland, the first stage in any appeal goes to Rent Service Scotland. Apparently, on average, it takes just five days to respond and most things stop there; very few cases go further. Obviously, the Scottish situation is very different from ours, but it is also obvious that, when it comes to providing tenants and landlords with quick feedback rather than months in limbo, it is very effective. It is also obvious, given the volumes that Rent Service Scotland deals with, that without this prior system there would be a very large number of cases which were effectively a waste of time.

It would be very easy for us to introduce a similar first-stage process in England. There is a large amount of expertise on rents outside the tribunals and the courts. The Valuation Office Agency already gives the Government valuations and property advice that they need to support taxation and benefits. Rents in social housing are tightly regulated. Registered providers must comply with the Regulator of Social Housing’s rent standard or rent settlement, which is effectively set by the Government, and its annual increases would be an obvious and simple yardstick to use when evaluating whether appeals should go on. Rent officers also still set rents for the remaining group of protected tenancies, so the basic infrastructure is there.

To see what we are facing, I think, as I thought in Committee, that a bit of back-of-an-envelope arithmetic is in order. The Government do not think there will be a huge growth in open appeals. If appeals from private sector tenants tracked the levels going to Rent Service Scotland and they all proceeded to the tribunal, we would end up with another 40,000 cases a year. That compares with 909 cases heard by the tribunals under current legislation in England, so that would be a fortyfold increase. But suppose that it was only a quarter of that level; that would still be a tenfold increase, with 10,000 extra cases a year hitting First-tier Tribunals that are under enormous strain. We hear a lot in the press about pressures and backlogs in criminal courts, but the statistics for the tribunals are at least as grim. In the year 2024-25, the open case load total—excluding immigration and asylum—rose to 745,000, which is an increase of 14% in the course of a single year.

The Minister was kind enough to discuss my amendment with me following Committee and to recognise that a provision for initial screening could be helpful if tribunals were indeed overwhelmed. In the absence of any government amendment to that effect, I look forward to hearing from her about the Government’s current thinking. I also highlight the enormous importance of reviewing the impact on the judicial system, which we will return to later on Report.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I shall speak to Amendment 30 in my name. I take the point made by the noble Baroness, Lady Wolf of Dulwich, that it is good to have something easy to read. I would say that this amendment is very easy to read: it would amend the Housing Act 1988 so that, when determining rents, tribunals must disregard any improvements funded by government grants for a two-year period.

The amendment, which I feel strongly about, is designed to help renters and the Government. It aims to improve upon a good policy that creates warmer homes and cheaper bills. The climate benefits from the warmer home grant, as do landlords, so why not guarantee that tenants get cheaper bills without a rent rise for a couple of years?

I met the Minister last week. She is very generous with her time, and I was grateful for her comments, but I still do not see the problem with passing the amendment. There are complexities, and the tribunals would have to sort out any details if the property owner added some of their own money along with the taxpayer money, but tribunals make far more difficult calculations every week. I have also heard privately from several people just how difficult it is with tribunals, but that is the sort of thing that must be fixed. They really cannot be allowed to wallow and not be the tribunals that they need to be.

The important thing for me in this amendment is that taxpayer-funded improvements are not used as an excuse to raise rents, and we need the force of law backing that up. Although the guidance is slightly more explicit, it will get ignored and that will discredit a good policy. Generation Rent recently did a poll of renters, asking them about their support for the Government’s policies in this area. There was a net support increase from plus 14% to plus 55% when renters were presented with a scenario where the Government would protect them from rent increases. I do not want to suggest that the Government should be run by opinion polls, but it is wonderful when you can do something that is right, does not cost any extra money and leads to a 41% jump in the popularity of that policy—and also, hopefully, the popularity of the Government.

I had hoped the Government would put this forward as their own idea in some form or another. I have been told privately that it is not nuanced enough, and that is possibly a fault of my nature, but I think it is a good amendment and hope that the Government will give it due attention.

[Lord Howard of Rising (Con)]

My Lords, I shall speak to Amendments 31 to 33 in my name. I declare an interest as a landlord of rented properties.

When I pointed out in Committee that the Bill as drafted would create a conservative 1 million applicants to the rent tribunals, the Minister commented that that was

“unlikely, to say the least”.—[Official Report, 28/4/25; col. 1045.]

In a recent letter from her, recognition was given that there is an inherent uncertainty about the volume of rent challenges. The proposed new delegated power to backdate rent increases acknowledges the potential difficulties. Welcome as that proposal is, it does not start to address the fundamental problem. At best, it will provide some temporary window dressing. The Government might recognise that the system may be overwhelmed, as the noble Baroness, Lady Wolf, pointed out very cogently, but promoting appeals to the rent tribunal in the first place is the crux of the problem when the Bill still provides that the tribunal can only confirm or reduce the rent, not raise it. That creates a no-lose situation for tenants.

Amendment 31 addresses the most fundamental of the structural flaws. It would remove this restriction that the tribunal may only reduce or uphold a proposed rent, not increase it. If a tribunal can only confirm or lower a rent and never raise it, that is a one-way ratchet. As my noble friend Lord Jamieson pointed out, if things can only get better, what possible reason is there not to try it on? There will be no loss, and until and if the Secretary of State regulates to backdate rent increases—and how speedy that will be with two Government departments having to consult over it is noble Lords’ own guess—there will be a decent delay in any increase being implemented. It becomes a virtual necessity for a tenant to challenge.

Amendment 32 would ensure that in the event the tribunal determines that the rent initially agreed was too high, landlords are not retrospectively liable for backdated repayments to tenants of an agreed rent. This is simply a matter of fairness and legal certainty: if a tenant has freely agreed a rent at the outset of a tenancy, it should not be open to the tribunal to rewrite an agreement and impose retrospective liability on the landlord. It would set a worrying precedent.

20:15

Amendment 33 would ensure that any rent increase upheld by the tribunal may take effect from the date originally set out in the landlord’s notice, not merely from the date of the tribunal’s determination, unless to do so would cause undue hardship to the tenant. This retains protection for vulnerable tenants, while removing the automatic procedural advantage currently afforded to any tenant who appeals. As drafted, the Bill all but guarantees delay as a consequence of referral; again, reinforcing the incentive to appeal every rent increase as a matter of course.

This group of amendments forms a coherent and necessary package of reforms. They would not undermine the right of tenants to challenge increases; that right is preserved in full. What these amendments would do is avoid a situation where there is an incentive for tenants to challenge increases, regardless of the likelihood of success.

In Committee, I made the point to the Minister that rent tribunals do not allow rents to go above the current market rate. This cap would mean that market rates are never able to rise. The response was that

“nothing in our reform stops or limits a landlord from charging the market rate”.—[Official Report, 28/4/25; col. 1075.]

If the rent tribunal on day one caps any rent increase to the market rate, then the market rate can never go up above that rate, decided on day one, because any proposed increase would be capped at this level; that is, the market rate. That is fine initially, but given time and inflation, it is an unreal situation. To say that a landlord can charge the market rent is going round in circles. I would be grateful if the Minister could help me with this.

[Lord Carrington (CB)]

My Lords, I shall speak to Amendment 34 and the associated Amendments 35, 36 and 40 in my name and kindly supported by the noble Lord, Lord Hacking. First, I thank the Minister, the noble Baroness, Lady Taylor, for her ongoing engagement with me and other noble Lords and Baronesses throughout the steps that this important Bill has taken thus far. My amendments concern a vital part of the Bill: the right of renters to challenge annual rent increases.

There remains strong consensus across this House and in the other place that stands with the Government in ensuring that unreasonable and exploitative rent increases are avoided. Such increases should not be used in this way across the private rented sector as a means of eviction through the back door. However, despite the Government’s own recent amendments, which I will turn to in due course, I remain strongly of the opinion that the Government’s current drafting of Clause 7 will not work, even with the new failsafe mechanism that has been added in the name of the noble Baroness, Lady Taylor.

It remains the case that under the current wording of the Bill, renters will have a universal right to challenge any and every rent increase they receive, in all circumstances and without qualification. Moreover, increases that the First-tier Tribunal agrees will come into effect only once the tribunal has given its ruling. This wording continues to have the very real and dangerous potential to undermine the supply of new rental homes in England and, at the same time, overwhelm the courts.

The Government believe that renters will apply to the tribunal only if they believe that a rent increase is above market rents. Like others, I am afraid that will not be the result of this legislation. The legal text of the Bill still sets out that a rent increase could not come into force until after the tribunal rules. The result of this drafting is to create an artificial incentive for all renters—all 4.5 million of them—to submit a challenge to a proposed increase in rent from their landlord, however legitimate. This would prevent the increase coming into force until the tribunal decides. There is no risk to the renter in this, as it provides a guaranteed delay. Once this is widely understood, as was pointed out by the noble Baroness, Lady Wolf, renters will exercise their right as a matter of course. Indeed, I expect a celebrity such as Martin Lewis would immediately note the opportunity to delay rent increases as a money-saving tactic for renters.

This incentive also risks the efficacy of the First-tier Tribunal by burdening an already struggling court with thousands of cases. This would result in those in real need waiting potentially months longer for access to justice from exploitative landlords. The Government rightly want renters in genuine need of redress to have access to the court, but the queue for justice will be too long for this to prove realistic.

My amendments seek to ensure that if a rent increase is challenged, but the increase is upheld by the tribunal, the rent increase becomes effective from the original date of the Section 13 notice. This important detail removes the incentive for spurious challenges that are being used only as a delaying tactic by renters who are challenging their rent increase because they simply want to delay payment of it. By removing this incentive, only those renters with real cause and who are being exploited, and are therefore likely to get the support of the tribunal’s decision, will challenge rent increases. These are the very people who should be at the front of the queue when it comes to these sorts of challenges.

I turn to the amounts of money we are looking at when it comes to rent increases. I want to explain how my amendments, while deterring spurious challenges, also support renters who challenge their rent but with whom the tribunal is not in agreement. The Office for National Statistics notes that the average rent per month in the United Kingdom, in the 12 months to April 2025, was £1,339. The average rent increase across the UK in the same 12-month period was 7%. Therefore, if we were to take 7% as a marker for the rent increase in the next 12 months, we would be looking at the average rent across the UK increasing by around £93 per month.

Now, £93 can be a good deal of money to many across the country, particularly as the cost of living crisis continues. This pressure on household finances has not been overlooked in my amendments, which cover the concerns of the Minister and others that renters may be put under undue financial pressure if they are unsuccessful in their rent challenges and are required to pay back large lump sums of backdated rent at once.

Under the Bill, every renter from the time it is implemented would have the ability to challenge and delay the £93 per month annual increase without needing to provide a reason, be it financial or otherwise, as to why they are challenging that increase. However, if the tribunal, when it eventually gets to each and every challenge, judges in the landlord’s favour, my amendments would ensure that instead of that renter needing to pay their landlord a backdated amount of rent immediately, a 12-month payment plan would be put in place. This means that if it took six months for the challenge to be reviewed by the courts and a decision made, the renter would not need to find the extra rent immediately but would need only to find the extra £46.50 each month over the next 12 months to pay their landlord in backdated rent. This seems entirely reasonable, and I hope the inclusion of this amendment has been carefully considered by the Minister.

I now turn to the Government’s assessment that renters will apply to the tribunal only if they believe a rent increase is above market rents. The Government are placing a great faith in this opinion and have commissioned a new burdens assessment and justice impact test, which is referred to many times throughout the Bill’s impact assessment, from November last year. However, we have not been able to review or scrutinise these two important documents, as they have not been published. Were we able to see and scrutinise them in this place, many of us may be reassured by the Government’s current opinion on levels of renters who will challenge their rent, but while the Government restrict access to these documents, we must rely on what the Bill says and our understanding of renters and the PRS as it stands in a time when household finances are tight and there is every incentive to delay a rent increase.

The Government have tabled a fail-safe amendment to Clause 7, but again there is a lack of detail here too. In Amendment 37 in the name of the Minister, the noble Baroness, Lady Taylor, we are not given clarity around when such a power would be used and what the trigger for this would be. What level of caseload would the tribunal need to face before the Government were to step in and introduce backdating? Therefore, while I applaud the Government for considering Clause 7 and tabling this amendment, I fear it will do nothing to reassure the sector. It is also interesting to note that in the event of the introduction of the fail-safe mechanism, rents will be charged from the date of the Section 13 notice—quite a reversal of policy from the tribunal decision date. If we had the detail around when such a statutory instrument would be enacted, we might be able to agree with the Government on the amendment, but as it stands, sadly I cannot.

To sum up, taken together, I believe that Amendments 34, 35, 36 and 40 in my name would deliver a fair result. They are technical changes that keep the vital rights of renters to challenge from being exploited, while reducing the artificial, jeopardy-free incentive to take any and all landlords to court for reasonable increases in line with the market. The amendment giving protection to renters who lose their challenge with the 12-month payment plan should also be strongly considered by Government.

[Lord Hacking (Lab)]

My Lords, I put my name to Amendments 34 and 35 from the noble Lord, Lord Carrington. The noble Lord has given such a precise and detailed reasoning for all those amendments that there is nothing I can really add to what he said, but I would just like to remind the House—particularly my noble friend the Minister—of the point I made earlier when I was speaking about Amendment 1 of all the amendments before us on Report; that is, the value to the House of having the expertise that the noble Lord, Lord Carrington, presents in supporting his argument. Indeed, I ask for particular attention from my noble friend the Minister to the points he raised relating to her amendments, which are also before us in this group. If she does nothing else, I hope my noble friend will take careful note of the improvements that the noble Lord, Lord Carrington, suggests should be made to her own amendments.

[Lord Carter of Haslemere (CB)]

My Lords, I strongly support the amendments tabled by the noble Lord, Lord Carrington, which have been supported by the noble Lord, Lord—

[Lord Hacking (Lab)]

Lord Hacking.

[Lord Carter of Haslemere (CB)]

I beg your pardon.

[Lord Hacking (Lab)]

I am easily forgotten.

[Lord Carter of Haslemere (CB)]

Not at all.

It is not just obviously fair that the tribunal should be required to backdate the rent; it would also remove the incentive for tenants to challenge every rent increase, come what may. Landlords who increase rent to market value should not be penalised by being unable to backdate that rent to the date of increase where there is an unsuccessful challenge. Otherwise, it makes a mockery of the tribunal process, which is there to determine the legal right of the landlord to increase the rent to the amount proposed. If that right is upheld by the tribunal, like other legal rights that are litigated successfully in our civil courts, it should be upheld from when it arose, with a remedy backdated accordingly. That is how our civil justice system works. For example, if I successfully make a claim against a defendant for negligence, nuisance or breach of contract, damages will generally be assessed from the date the claim arose. That is how justice is meant to work. It should be no different here. The correct market rent, upheld by the tribunal, should be backdated to the date of the original increase.

20:30

The Minister’s Amendment 37, which gives the Secretary of State a power to enable the tribunal to backdate the rent, does not achieve that. In the words of her letter of 25 June to all Peers, the power to backdate rent will be used only if the Lord Chancellor and the Secretary of State consider it

“absolutely necessary to avoid lengthy delays for genuine cases to be heard”.

That suggests that landlords will get a just outcome only if it is “absolutely necessary”. That is not likely to sustain tenancies, if that is really the Government’s aim.

[Baroness Eaton (Con)]

My Lords, I declare my interests as a vice-president of the Local Government Association and as the part-owner of a small number of rented properties in West Yorkshire.

I will speak in support of Amendments 29, 34, 35 and 36, which are in the names of the noble Baroness, Lady Wolf, and the noble Lord, Lord Carrington. Your Lordships may recall from my contribution at Second Reading that I am deeply concerned about the impact of this Bill on rented housing supply. I remain concerned about this issue. However, these amendments provide me with the reassurance that I know the rental market is also looking for. The amendments are technical, but sensible and clearly thought through.

If the Government are to get anywhere near reaching their ambitious 1.5 million new homes target, we need to support and give clarity to the responsible institutional build-to-rent landlord sector, which is building thousands of new, high-quality rented homes each year. I know that this part of the rental market supports the Government’s aim to raise standards across the private rented sector. However, with the uncertainty it faces around how much rent it may reasonably receive and how many rent increase challenges it may receive, I worry that its development pipelines will slow or, at worst, completely halt, while it assesses this new landscape where any renter can challenge any increase without any jeopardy.

Amendments 29, 34, 35 and 36 would allow for those providing new, net additional high-quality rental homes to the market to continue to do so without undue impact from Section 13 rent increase challenges. They would allow the institutional landlord sector to continue delivering the net additional rented homes we need without uncertainty. Crucially, the amendments would deter spurious rent increase challenges and allow vulnerable renters the access to justice that they rightly deserve.

I acknowledge the Government’s amendments on Section 13 notices, but they also leave me concerned that, in this place and indeed in the rental market, we and the sector are being asked to place a significant amount of faith in the Government, and the data they have but will not publish, on how many renters might challenge their rent increases. If a renter can save themselves months of rent increase for free and without any jeopardy, why would they not?

I am therefore strongly of the opinion that the amendments in names of the noble Baroness, Lady Wolf, and the noble Lord, Lord Carrington, provide the requisite amount of clarity to the sector, while ensuring renters’ rights are improved. I urge the Government to take them on board to give everyone clarity while improving renters’ rights and access to justice for vulnerable renters.

[Lord Young of Cookham (Con)]

My Lords, I will be very brief. I strongly support Amendment 29 so ably moved by the noble Baroness, Lady Wolf. I recall that, when we debated this in Committee, the noble Baroness got a favourable response from the Front Bench, and it may be that on this amendment the ice is beginning to melt.

I am also struck by the contrast between the certainty that we get with Amendment 36 from the noble Lord, Lord Carrington, and the absence of any clarity and certainty from government Amendments 37 onwards. As the noble Lord, Lord Carter, said, it is normal procedure in law if a rent increase is valid to backdate it from the date that it was due, so the Government are introducing a wholly new concept in law in their Amendment 67, which does not actually take the trick because, as I understand it, they are going to wait until the system is gummed up before they activate the process.

This is simply no way to govern. The Government ought to accept Amendment 36 with its clarity and certainty, rather than this doubtful procedure whereby there remains every incentive to appeal and only when the system becomes even more clogged will the Government intervene. That cannot be good government, and I urge the Minister to think again about Amendment 36 or the other amendment that achieves the same objective in the name of my noble friend Lord Howard of Rising. I just do not think that this takes the trick.

[Baroness Thornhill (LD)]

My Lords, I do not know which amendment to start with really, but I will start with the least contentious. We agree with Amendment 42 that a review is imperative and should definitely happen.

On Amendment 30 from the noble Baroness, Lady Jones, it seems absolutely right to us that, when the taxpayer funds lovely, significant improvements that will raise the value of the landlord’s asset, the tenant in the house should be protected from a rent rise at least during that tenancy. That seems only right and fair.

Amendment 29 from the noble Baroness, Lady Wolf, which I supported in Committee and co-signed, is a sensible amendment that several noble Lords have said they would support. I think she has explained it at length and with clarity, so I need say no more. But anything that acts as a triage system in this process should be looked at seriously.

On the controversial bits, the rent tribunal is clearly causing concern. I say to the Minister that I think there was an invitation in the last speech to look at this again—there will be Third Reading. It seems to me that a lot of work has gone into these amendments that would justify perhaps a little more time and effort than we have now. The Minister has a lot to justify in order to gain support from the House. We are minded to support the Government, but clearly we need answers on the very detailed and sensible proposals put forward today.

What worries us about Amendment 31 is that it risks allowing a tribunal to determine the level of rent increase, which could actually be unaffordable. The idea that a rent tribunal could decide that the rent should be such-and-such would fuel a market in which rents are rising exponentially, more than they have at any other time—the amendment would seem to fuel that further. We certainly do not agree with rent controls, but we believe that some brakes could be put on this; that would seem eminently sensible.

Perhaps I am looking at this through the wrong lens, but I would have thought that a tenant might expect an annual rent rise: “I am in my rented apartment and I am expecting the landlord to put up the rent in a year because I know what’s going on in the area, so I can kind of suss out how much it might be”. But, looking at it from the other way, if we assume all the things that noble Lords have said about everyone applying to the tribunal—Martin Lewis will be saying they should apply and the student unions will be on it—why would a landlord, knowing all that, impose a stupid rent rise if he knows that his tenant can then appeal against it? That should put an instinctive brake on unjustified, unrealistic rises. The system should work with those natural tensions.

We are not happy with it, but we have had conversations and thoughts about the proposal. We would ask the Government to look again at some of the detail. Perhaps with some assurances from the Dispatch Box, we could avoid a load of votes now and at Third Reading because I think that we would want the Minister to look in more detail than I personally, I admit, have done, if that is fair to say.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, I thank the noble Baronesses, Lady Scott, Lady Wolf and Lady Jones, and the noble Lords, Lord Carrington and Lord Howard, for their amendments on rent increases and the tribunals, as well as the noble Lords, Lord Hacking and Lord Carter, and the noble Baronesses, Lady Eaton and Lady Thornhill, for their contributions to the debate.

Government Amendment 37 will enable the Secretary of State to make regulations to change the date from which tenants are required to pay a new rent in instances where the First-tier Tribunal has set one following a challenge to a proposed rent increase. Government Amendments 38 and 39 are consequential to that.

Our Government were elected on the clear manifesto promise to empower tenants to challenge unreasonable rent increases. It is essential that we deliver on this commitment, not only to protect tenants from undue financial pressure but to prevent rent hikes being used as a form of backdoor eviction once Section 21 notices have been abolished.

During the Bill’s passage, the House has debated at length the capacity of the justice system to enable the smooth implementation of reforms in the Bill. This is particularly the case on the subject of rent increase challenges, in relation to which noble Lords have expressed very serious concerns that strengthening tenants’ rights might lead to the First-tier Tribunal being overwhelmed by a sharp increase in challenges.

Set against that concern, we have heard powerful testimony from many tenant groups that private renters, many of whom are struggling to juggle family life, multiple jobs and financial challenges, are unlikely to spend what little time they have navigating the justice system unless they have a compelling reason to do so. Given the cost and effort that challenging a rent increase at tribunal would require, as well as the risk it poses to a tenant/landlord relationship, there is good reason to doubt that a significant number of tenants will bring rent increase challenges that have little prospect of success—who knows what will happen if Martin Lewis gets involved, but we will wait and see.

We also know that the majority of landlords act responsibly, and we do not expect that many will seek to serve unreasonable rent increases given that this will increase the likelihood of a tenant challenging them at tribunal, as the noble Baroness, Lady Thornhill, said. If landlords do not impose egregious rent increases, they will not get taken to tribunal. We recognise, however, that there is inherent uncertainty as to the volume of rent increase challenges that will be brought when the new tenancy system comes into force.

The noble Baroness, Lady Wolf, mentioned the system in Scotland; as she will know, the changes made there are very different from the ones that we are proposing.

As the House will know, we are already working very closely with the Ministry of Justice to make sure that the justice system is well prepared for our reforms. In the Property Chamber, work is progressing to increase capacity, as well as reviewing resource and working practices in readiness for any increase in demand.

20:45

However, having listened carefully to the concerns expressed by a number of your Lordships, the Government have decided to put in place a proportionate safeguard for use in circumstances where it has become clear that the tribunal system is on course to be overwhelmed. This safeguard involves the creation of a new power that would enable the Secretary of State to make regulations to change the date from which tenants are required to pay a new rent in instances where the First-tier Tribunal has set one following a challenge to a proposed rent increase; in other words, it would enable the backdating of rent increases following determinations by the tribunal in respect of new rent amounts.

The Secretary of State will specify by regulation the date from which the new rent should be paid, provided that this is no earlier than the date first proposed by the landlord in the Section 13 notice given by the landlord. I make it clear that it is the Government’s intention not to make use of this new power unless and until the First-tier Tribunal is at risk of being overwhelmed by that sharp increase in challenges and it became necessary to avoid lengthy delays for genuine cases to be heard. I heard the points about the numbers involved. I think it will just be determined by continual monitoring to see how the process is working. This change will be subject to the affirmative procedure to allow appropriate parliamentary scrutiny.

On Amendment 29, more fundamentally, the Government have given considerable thought during the passage of the Bill to whether the tribunal is the appropriate body to determine all rent increase challenges. I am particularly grateful to the noble Baroness, Lady Wolf, for her constructive engagement on this matter. After careful consideration of the points made by noble Lords, and after reviewing the experience of similar reforms in Scotland, we have concluded that there is a compelling case for the use of an alternative body or mechanism to make initial rent determinations. This would ensure the long-term sustainability of the system, relieving pressure on the tribunal, and has the potential to deliver longer-term savings, contributing to more efficient state delivery.

Within such a system, we know that some judicial function will continue to be necessary in relation to a small proportion of challenges to ensure that landlords and tenants have appropriate access to justice, which they always must have. We therefore intend to establish such an alternative body or mechanism as quickly as possible, subject to completing a full viability assessment of this, and we will confirm final details of this in due course. In exploring this, we will carefully consider the arguments put forward by the House.

I am sympathetic to the intent of Amendment 29, tabled by the noble Baroness, Lady Wolf. I am concerned, however, that the amendment in its current format would not achieve its desired result. It would require the VOA to take up this function immediately, alongside its existing responsibilities, without fully assessing the viability of this proposal or how it would work in practice. That risks creating an inoperable system or one which does not achieve a fair result for landlords or tenants. I am sure noble Lords will agree that this is too important a matter on which to take such a risk, given the potentially damaging effects on access to justice for tenants and landlords. With this in mind, I ask that the noble Baroness, Lady Wolf, does not move her amendment. As I said, we are minded to create a mechanism, but not the VOA, which she spoke of.

[Baroness Wolf of Dulwich (CB)]

Since I cannot withdraw my amendment, I thank the Minister very much for this constructive engagement, and I will not move it.

[Baroness Taylor of Stevenage (Lab)]

I am grateful to the noble Baroness.

Regarding Amendment 24, at present private registered providers of social housing can grant secure or assured tenancies. The majority of these are let at social rents. Social rents are regulated by the social housing regulator. The definition of “relevant low-cost tenancy” in the Bill reflects these arrangements. If the Government or the social housing sector were to change how rent is determined or regulated, this power would enable the Secretary of State to make technical amendments to reflect this or other changing circumstances. As the power relates only to the definition of relevant low-cost tenancies, I assure your Lordships that the Secretary of State will not be able to use this power to change the legislation to affect market-rate tenancies. Based on this, I ask the noble Baroness, Lady Scott, to withdraw this amendment.

Turning to Amendment 30, I thank the noble Baroness, Lady Jones, for her engagement on this issue. The Government fully support efforts to improve the energy efficiency of homes in the private rented sector, particularly where tenants are proactive in accessing support through government-backed schemes. The amendment as drafted would mean that any increase in value arising from these improvements would be disregarded, even if it was funded partly by public money. Therefore, if landlords have made sizeable investments themselves in improving the energy efficiency of their properties without government grants, under this amendment they would not be able to increase rent to reflect those improvements.

The tribunal has experts, such as surveyors, who will assess what the landlord could expect to receive if re-letting the property on the open market. Both landlords and tenants will have the opportunity to submit evidence on whether or not they think that the rent increase is justified. The tribunal already ignores any improvements to the property made by the tenant, to avoid inflating the rent. However, it is likely to be more challenging in practice for the tribunal to differentiate rent levels based on whether energy-efficiency upgrades were funded through specific grant schemes—particularly where the tenant was not directly responsible for the work. This may complicate the tribunal process.

We recognise that it is very important that means-tested energy-efficiency grant schemes are used to benefit tenants. That is why, for the warm homes local grant, which was launched in April, the Department for Energy Security and Net Zero has set a clear expectation that landlords should declare that they do not intend to raise rents as a direct result of the upgrades being made. In Committee, the noble Baroness, Lady Jones, rightly highlighted the importance of ensuring that landlords do not profit unduly from government-funded improvements and that the value of these schemes should flow primarily to tenants, given the impact on many people living in poverty, and the threat of eviction. We have carefully considered these points and believe that the measures already being introduced strike the right balance.

In conclusion, the landlord declaration, introduced and overseen by DESNZ through the warm homes local grant, will include a commitment from landlords not to increase rents as a result of improvements made using the grant funding. I hope that this offers the noble Baroness, Lady Jones, reassurance that the Government are taking this issue seriously. For those reasons, I respectfully ask her not to move her amendment.

The noble Lord, Lord Howard, has proposed two amendments to the process for challenging rents at the tribunal within the first six months of the tenancy. On Amendment 31, the ability to challenge rent in the first six months of the tenancy is a vital safety valve, ensuring that tenants cannot continue to be ripped off if they have been pressured into an unfair rent. Landlords who have agreed a fair market price have nothing to fear from this mechanism. This amendment would exacerbate the worry that tenants already face about going to a tribunal to enforce their rights. Tenants will not challenge rents if they risk being worse off following a tribunal ruling. The Bill encourages tenants to engage the tribunal when they have legitimate concerns. By reinforcing the rights of tenants to do so, we are disincentivising the minority of landlords from pressurising tenants into unfair rents at the beginning of a tenancy. The way for landlords to avoid this is to make sure that their rents are fair at the start of the tenancy.

On Amendment 32, the Government are clear that tenants should submit an application to the tribunal during the first six months of their tenancy only where they believe that their rent is above market rates or that they have been pressured into an unjustified initial rent. In the first instance, we strongly encourage landlords and tenants to communicate about what adjustments to rent might be reasonable. The noble Lord asked how a tribunal determines a fair rent. To determine the market rate, the First-tier Tribunal considers a wide range of evidence, such as the price of similar properties being advertised online and evidence submitted from both parties justifying or arguing against the rent increase.

The First-tier Tribunal has experts who are experienced in understanding the different factors that result in the market rate and determining whether the rent is reflective of this. The First-tier Tribunal is best placed to do this in the new tenancy system. It is also worth noting that tribunals have had the power to adjudicate rent levels in line with the market rent since the Housing Act 1988, and since then the market rate has continued to increase. However, if the rent is challenged and the tribunal determines that a rent exceeds the open market rate, it is right that the tribunal can backdate the lower rent to the date of the tenant’s challenge and that the landlord repay the difference to the tenant. I therefore ask the noble Lord, Lord Howard, not to press his amendments.

I turn now to Amendments 33 to 36 and 40. The Government recognise that some tenants may avoid challenging unreasonable rent increases out of fear that they will be saddled with significant amounts of backdating, which they will be unable to afford. By removing the ability of the tribunals to backdate a rent increase, tenants, particularly vulnerable tenants, will be empowered to challenge what they believe to be an above market rate rent increase. This reduces the risk of an unreasonable rent increase causing a tenant financial hardship, or even being used to force someone out of their home. This is a really important measure to encourage people to challenge unreasonable rent increases.

Amendments 34 to 36 and 40 in particular may only heighten the risk of vulnerable tenants feeling unable to challenge an above market rent increase. We know that tenants and landlords are usually eager to maintain a positive relationship and will not bring the other to court or tribunal without good reason. As such, I ask the noble Lords, Lord Carrington and Lord Howard, not to press these amendments.

I turn finally to Amendment 42. The tribunal has over 30 years’ experience in making determinations of unfair rent increases, having carried out this function since the Housing Act 1988. We have full confidence in the tribunal’s ability to carry out this function in a fair way. I appreciate the need for the justice system to be ready for our reforms and for landlords and tenants to access justice in a timely way. We are working in partnership with the Ministry of Justice to assess the impact of our reforms on the tribunal and to lessen these wherever possible. This close collaboration has been ongoing for a number of years and in a great amount of detail.

The amendment we have tabled to our rent increase measures shows that we are listening to the concerns of the sector and this House about tribunal workloads. It puts in place a safeguard in case it is needed. We will already be collecting extensive data to assess the impact of these reforms. As set out in the impact assessment for the Bill, and in debate, we have committed to monitor and evaluate our reform programme. We will use a range of sources to support this. Existing datasets will be used, and new data will be collected. We are committed to publishing the evaluation findings at the two and five-year points after the Bill’s implementation.

I will respond to the request from the noble Lord, Lord Carrington, about the justice impact test. The justice impact test we are undertaking with the Ministry of Justice will identify additional burdens on the justice system, but they are internal government documents and are not published. The test is ongoing and regularly reviewed to ensure that it reflects any changes to legislation as the Bill continues its journey through Parliament. We are fully focused on making sure the justice system is prepared for changes to court case load and procedures that will be required for our reforms. We are working with the Ministry of Justice and HM Courts & Tribunals Service to that effect, including investing additional court and tribunal capacity to handle any extra hearings generated.

In this context and in the context of the review that I have already outlined, both in the course of discussing these amendments and earlier today, I do not think it is necessary to commit to undertake any further review. On that basis, I hope that the noble Baroness will agree to withdraw her amendment.

[Lord Jamieson (Con)]

My Lords, I thank the Minister for her reply and for setting out the Government’s amendments. However, we remain disappointed that the so-called “break glass” power is reactive in nature and fails to address the underlying incentives that drive unnecessary cases. Noble Lords across the House have raised the risk of the tribunal system being overwhelmed. Although I listened carefully to the Minister’s comments on mechanisms, there are no firm proposals. Therefore, on that basis, we will support my noble friend Lord Howard of Rising on Amendment 31 if he is minded to push it to the vote.

As the noble Lord, Lord Carrington, has raised, and we requested in Committee, the Government have failed to publish the justice impact test. I heard the Minister’s comments, but I asked her to publish it before Report given its importance and the concern across the House about the impact of the Bill on the justice system.

Amendment 42 seeks a review of the impact on the tribunal system. As we have another amendment later, reviewing the impact on the justice system in its entirety, we will not press this amendment now.

Serious concerns remain about the Secretary of State’s discretion to expand the definition of low-cost tenancies. I urge the Government to reflect carefully on the breadth of the powers they are granting. That said, I will withdraw this amendment.

Amendment 24 withdrawn.

21:00

Amendment 25

Moved by

[Lord Best]

25: Clause 6, page 8, line 18, at end insert—
“(4F) It shall be an implied term of every assured tenancy to which this section applies that for a period of four years from the commencement of the tenancy the percentage increase between the existing rent and any new rent specified in a notice given under subsection (2) must not exceed whichever is the lesser of—(a) the percentage of the rate of inflation calculated by reference to the consumer price index since the date on which the existing rent took effect, or (b) the percentage increase in median national earnings calculated over a three-year period by the UK Statistics Authority, ending on the date on which the notice was served.”Member’s explanatory statement
This amendment provides for in-tenancy rent increases to be index-linked on the basis of CPI or increases in national annual earnings. This seeks to avoid the uncertainties for a period of up to four years of rents being determined at unknown – and potentially unaffordable – market levels.

[Lord Best (CB)]

My Lords, in moving Amendment 25 in my name and those of the noble Lord, Lord Young of Cookham, and the noble Baroness, Lady Grender, I will also speak to my related Amendments 26 to 28. I declare my interests as a vice-president of the Local Government Association, the Chartered Trading Standards Institute and the Town and Country Planning Association, and a past chair of the Affordable Housing Commission. My wife owns rented property in Dorset.

I fear the Bill still contains a fundamental flaw in its provisions for rent increases. Quite properly, the Bill seeks to ensure that tenants are not subject to huge rent rises, which can have the effect, as the Renters’ Reform Coalition and Shelter have made so clear, of evicting them from the property. But the Bill’s way of solving this problem creates considerable hazards for tenants and landlords alike.

To prevent exorbitant rent increases, the Bill relies on the renter taking their case to the First-tier Tribunal, which will determine a market rent that cannot be exceeded. That arrangement is fraught with difficulty. The first problem with a system dependent on a tribunal’s judgment is that deciding on a market rent is not a science. The outcome of tribunal hearings can be unpredictable and sometimes appear arbitrary. The second drawback is that renters must take on a daunting task. They are likely to fall out with their landlord, on whom they depend for continuing service, and to appear in person they may need to give up a day’s work, incur travel expenses and experience a troublesome and intimidating process. Thirdly, the tribunal’s decision on what is the market rent may still involve a big rent hike, well ahead of rises in incomes, and can thereby present an impossible affordability obstacle for the tenant, which is the very problem the process was intended to avoid.

From the perspective of the landlord, many of your Lordships have been concerned that the tribunal will get clogged up with thousands of time-consuming appeals. I was pleased to hear that the Minister is looking at an amendment to make use of the Valuation Office Agency to weed out appeals that are likely to fail. She is also introducing an amendment that reduces incentives for renters to appeal by enabling the Secretary of State to allow at a later date a backdating of the rent increase that is determined by the tribunal. By making the appeal process more risky, this new measure could deter renters who have a good case for pursuing an appeal. In any case, it is a fallback, a long-stop that might not be introduced for some time, if at all.

More helpfully, Amendments 25 to 27 would provide clarity and security for the renter and the landlord and give confidence to responsible investors. The amendments would mean rent increases being capped on an indexed basis using either CPI or the rise in earnings averaged over the previous three years. The indexation would be limited to three annual increases, after which the landlord could charge a market rent, if necessary determined by using the process of appeal to the First-tier Tribunal. This model surely represents a fair solution to the need for moderation of rent increases without reliance on appeals to the FTT and all the problems that brings.

In returning to this matter on Report, I have added the new Amendment 28, which addresses a criticism of the indexation approach. This amendment tackles the valid objection that there may be exceptional circumstances in which an indexed increase would not be fair to the landlord; for example, the landlord may have spent substantial funds to improve the property which could justify a rent increase that contributes towards the cost. The new amendment enables the landlord—not the tenant—to ask the tribunal to approve the setting of a rent in excess of the otherwise automatic indexation.

The amendments cut out the need for renters to take matters to the tribunal and therefore to enter into a battle with their landlord. Most tenancies do not last more than four years, so for most tenants, the arrangement would mean the certainty of indexation of rent increases, whereas the fickle market might have meant much greater rent increases. I believe this is a far better way of limiting increases than currently in the Bill. It cannot be described as rent control. It is time limited—and not comparable with failed rent control measures in other countries. It is fair to landlords and entirely preferable to the hassle and uncertainties of them being taken to the tribunal. It avoids the clogging-up problem that may mean that the tribunal system is going to be overwhelmed. Here is a package that has real benefit for landlord and tenant alike. With thanks to my co-sponsors, I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I have added my name to the amendment of the noble Lord, Lord Best. I will add a brief footnote to what he has just said. As we heard in the last debate, there has been considerable concern about the capacity of the courts to handle the volume of appeals that will go to the tribunals when the Bill becomes an Act. The backlog has been going up: in the first quarter of 2025, the average time between a landlord submitting a claim and getting possession was over seven months—32.5 weeks, up from 29.8 weeks a year ago.

The Minister uses a different figure—eight weeks—but that covers only getting a possession order, not actually getting the property back. In an earlier debate, the Minister implied that it was actually quite difficult for a tenant to challenge an increase in rent. I respectfully disagree with that. There is a whole range of organisations that will give tenants advice on how to challenge an increase from the landlord.

This Government have made it clear that, unlike the previous Administration, they are not prepared to wait until the necessary reforms to the court processes are in place before they activate the Bill. That is a decision they are perfectly entitled to take, and it will be welcomed by tenants. However, a necessary corollary of that decision should be a process to minimise the chance of the courts being overwhelmed, which would be in the interest of neither tenant nor landlord. That is what Amendment 25 does.

The likelihood of the rent—a market rent when it was fixed—diverging significantly from CPI or RPI over four years is quite small. The certainty that goes with that guarantee will be welcomed, I think, by both tenant and landlord. If, after four years, there is a divergence, as the noble Lord, Lord Best, has explained, the rent can then catch up. As someone who voted for the Housing Act 1988, which abolished rent control, I see no problem with this measure to simply smooth increases over a four-year period. Again, speaking personally, if at the end of the four or five years the courts have shown themselves to be up to speed, with no backlog, I would be happy to see this provision lapse, but in the meantime, I hope the Government will smile on it.

[Lord Cromwell (CB)]

If I may add one note to what the noble Lord has just said, it is very common in commercial contracts to have CPI over a series of periods followed by a reset to market level, in part because CPI may take it up too high and it comes back down to market level. I think that needs to be part of this amendment.

[Baroness Grender (LD)]

My Lords, we support the amendments in this group concerning rent affordability, a matter that strikes at the heart of the lived reality of millions of tenants. We welcome the long-overdue commitment to abolishing Section 21 no-fault evictions but, as Shelter rightly said in a release only this week:

“For every day the government doesn’t pass this bill, another 70 households will be threatened with homelessness because no fault evictions are being kept on life support for no good reason”.


I hope that we will soon get some reassurances about when this key measure will begin, to overcome some of the rumours in the media of late about it being delayed.

We also welcome all the work to fix the issue of the supply of decent homes across all tenures, but private rent inflation is persistently outpacing both wage growth and general inflation. According to the latest data—we heard some of it from the noble Lord, Lord Carrington, earlier—average rents in England rose by 7.1% in the 12 months to May 2025. Meanwhile, wages continue to grow more slowly than rents, with the most recent data showing annual growth of 5.2%. Rents have outstripped wages every month for nearly two years; that is, since September 2023. Over the past three years, the average annual rent has increased by £2,650, rising from £12,800 to £15,450, a 21% increase, compared with—for all the owner-occupiers here—just a 4% growth in house prices over the same period. This relentless rise is not just a statistical anomaly. It is a driver of poverty, hardship and, in some—way too many—cases, homelessness.

Amendment 25, tabled by the noble Lord, Lord Best, and supported by me and the noble Lord, Lord Young of Cookham, proposes a mechanism to smooth in-tenancy rent increases by limiting them to the lower of wage growth or inflation. The Bill currently restricts rent increases to once per year and allows tenants to challenge above-market rents at the First-tier Tribunal, as we heard in the previous group. However, “market rent” is often calculated based on arbitrary information, such as advertised rents for new tenancies, figures that will inevitably and typically be inflated and do not reflect the actual rents paid by sitting tenants. This methodology leaves tenants exposed to rent hike evictions—Section 21 in all but name—undermining the very security that the Bill purports to deliver.

Tenants on lower incomes will be particularly exposed. For the many renters who have no alternative but to rent, the cheapest places they can find at market rent are already, by definition, unaffordable. The tribunal process will help, but not fix, this problem, and certainly not soon. Generation Rent’s analysis found that while 73% of tenants who challenge a rent increase through the tribunal succeed in reducing the proposed rent, the average increase awarded is still 14%, and only a small minority of cases result in annualised increases below wage or rent inflation. The process is also onerous and complex, deterring many tenants from pursuing it at all.

Smoothing in-tenancy rent increases is therefore not just a technical fix but a vital safeguard during this period of transition. It will provide tenants with the predictability and stability needed to budget and to remain in their homes, free from the constant threat of unaffordable rent hikes. For landlords, it offers an indexed yield without the administrative burden and uncertainty of tribunal proceedings.

I ask in particular that the Opposition Front Bench and the Government Front Bench resist the temptation and lure to comment on these proposals as rent controls. That would suggest that the years of knowledge and experience of the noble Lords, Lord Young and Lord Best, have rendered them somehow incapable of being able to understand the difference between rent control and something else. This proposal is fundamentally different. It is time limited. It applies only to in-tenancy increases. It does not set market-wide caps. It is designed to stabilise rents for existing tenants, not to distort the market or stifle investment.

Beyond these immediate protections, we must look to the medium term while we wait for the much-needed and long-awaited additional supply of homes. That is why I have tabled Amendment 114, requiring the Secretary of State to conduct a comprehensive review of rent affordability with the express aim of establishing a national rental affordability commission. I thank the noble Baroness, Lady Lister, for her support and the Renters’ Reform Coalition for their work on this issue. The coalition has found that nearly one-third of private renters—an estimated 3.8 million people—always or often struggle to afford essentials such as groceries due to the amount that they spend on rent, and nearly one in 10 have sold or pawned personal items to be able to afford to rent.

21:15

While the Bill’s focus on security of tenure and housing quality is welcome, it does not currently address the fundamental issue of cost, which is the No. 1 issue for most private renters when surveyed. Incremental tweaks to the tribunal system will not resolve the scale of the affordability crisis that we have today. A national commission would be equipped to analyse the full complexity of that crisis: the interplay of supply and demand; the role of the local housing allowance; the chronic shortage of social housing; the effects of different rent stabilisation measures in comparator nations; and the impact of fiscal policy on the sector. While increasing the supply of affordable homes is essential, the reality is that such measures will take years to affect rents; we need urgent, evidence-based interventions now.

The economic case for action is compelling. Research commissioned by the Mayor of London shows that a 1% increase in housing affordability in London alone could generate an additional £7.3 billion in economic output over the next decade—would not the Chancellor of the Exchequer love that right now? Enhanced affordability not only improves household well-being but boosts productivity, supports job creation and reduces the financial strain on public services at a time when one in 50 Londoners is experiencing homelessness.

The amendments before us—the proposal from the noble Lord, Lord Best, for rent smoothing and my own call for a comprehensive affordability review—are not mere embellishments; they are essential to ensuring that the Renters’ Rights Bill delivers on its promise of security, fairness and genuine affordability. Without them, we risk replacing one set of insecurities with another and failing the very people that the Bill is meant to protect.

[Baroness Lister of Burtersett (Lab)]

My Lords, in my Second Reading speech, I drew attention to the role played by high housing costs in driving poverty. I was thus pleased to add my name to Amendment 114, tabled by the noble Baroness, Lady Grender, although I am supportive also of the other amendments in this group and hope that what I have to say will add to the case for them too.

Evidence from the Joseph Rowntree Foundation illustrates the extent to which high rents in the private sector are associated with poverty. Shockingly, it points out that around

“half of private renters were only in poverty after their housing costs were factored in”.

Two more reports specifically on child poverty, published this year, reinforce the point. The first, by IPPR, argues that:

“Housing costs are core to understanding child poverty”.


It notes that the number of children counted as in poverty is about a third higher when housing costs are factored into the measure, and that the private rented sector has become increasingly significant in the lives of children.

The second report was co-published by IPPR together with CPAG—of which I am honorary president—and Changing Realities, which involves people with lived experience of poverty. The report observed that rent increases are

“stressful for families to manage, and … the Renters’ Rights Bill as currently drafted will continue to enable large increases in rent … providing they are deemed to reflect ‘market rents’”—

a point made by the noble Lord, Lord Best. It suggests that this

“risks exposing tenants to sudden and unaffordable hikes in housing costs, undermining the Bill’s stated aim of providing greater security and fairness for renters”.

The report quotes one tenant:

“I’m getting really worried about my rent going up this year. It keeps rising every year yet the local housing allowance is frozen for this year! … It’s frightening”.


Both reports underline how the situation is aggravated by freezes in the local housing allowance and by the operation of the benefit cap, which hits larger families and/ or those paying higher rents in particular. As the amendment states, any review of rent affordability must include in its remit the effectiveness of policy interventions to improve affordability relative to incomes. I would argue that this would need to include policies on the incomes side, which are making it impossible for some families to meet their rent commitments alongside other essentials.

This seems to me a very modest amendment that would complement the Government’s welcome commitment to an ambitious child poverty strategy. I know that the Child Poverty Taskforce is aware of the importance of housing to the strategy, but it is unrealistic to expect it to carry out the thorough review of rent affordability proposed in the amendment.

I hope, therefore, that my noble friend will be able to give a more positive response than the one she gave in Committee, which I found rather disappointing. What is needed is something more robust and holistic than the regular monitoring to which she referred, important though that might be. A review of this kind would be in the spirit of the Bill and would help to ensure that its impact is not blunted by the continued damage created by excessively high rents in the private sector.

[Lord Fuller (Con)]

My Lords, I rise briefly to try to understand what the definition of rent is if we are going to control rents or somehow curtail them or attenuate the increases.

One can see the base rate just by googling property websites. It is a good idea to get a feel for the cost of a basic, low-cost, unfurnished property in the worst part of town, but that is not necessarily the market price, which is determined by a number of factors: the property may be furnished; it may be serviced accommodation; there may be porterage; there may be other benefits— I am not going to go as far as swimming pools and gyms, but I know they are available in some circumstances. Parking would be another one. All these different elements have different cost pressures and inflationary increases, which may be determined by factors outside the landlord’s control. A property that has inclusive parking may become significantly more valuable, one could anticipate, if the local council applies permits on the streets around it.

I am tempted to support Amendment 25, but I am reluctant to do so because at the moment all these extras are rolled into the single price. The logical conclusion of where this debate is going is that we will get menu pricing, rather as we see on low-cost airlines. There may be an attractive flight—£5.99 to fly to Spain or whatever—but by the time you add in the baggage, the booking fee and everything else, it rolls up to a significantly higher value. My noble friend Lord Young of Cookham made the point that the risk of the price going up over the four-year period may be somewhat attenuated, but those extras amounting to what I would call the landed price, or total cost of ownership, could vary accordingly.

Another significant point that we need to take into account is that there may be Section 20 repairs or improvements, particularly in the case of furnished accommodation where the landlord is prepared to improve and upgrade the fixed furnishings, such as tables and chairs and possibly soft furnishings as well. All of this complicates what is a rolled-up figure at the moment. The logical conclusion is that all those extras are going to be disaggregated and obfuscated, so it is going be harder to compare for the potential tenant. But it is going to be essential for the landlord to obfuscate in this way in the circumstance of a First-tier Tribunal appeal, which is really concerned with the underlying rent—that £5.99 figure. It is very difficult.

I have a huge amount of sympathy with the amendment of the noble Lord, Lord Best, but I cannot support it because I think the logical conclusion of it will be that we will get a fragmentation of the landed rent so that the tail wags the dog. The landlord will be so focused on restricting the base rate that those other things will get lost.

[Lord Jamieson (Con)]

My Lords, we have concerns about a number of amendments in this group on the basis that they are unduly prescriptive and risk the introduction of what could be regarded as, in effect, a form of rent control.

The amendments in the name of the noble Lord, Lord Best, seek to protect the tribunal from being overloaded due to the Bill. While we agree that there is significant risk of overload, we have concerns about how the arrangements would function. In particular, we do not feel able to support a system that ties rental increases to CPI. CPI is a generalised index that reflects the prices of bread, fuel, clothing and so forth, but not rental market dynamics. What happens in areas where market rents are falling but inflation is high, or where incomes are stagnant while CPI rises? This approach uses a national economic measure to benchmark against a highly localised rental market, and the result would almost certainly be a distorted rental market. That said, we share the concerns of the noble Lord, Lord Best, about the impact of the Bill on tribunals’ backlogs, which we discussed at length in Committee.

Amendment 114 in the name of the noble Baroness, Lady Grender, raises some important points. There is no doubt that rent affordability is a serious issue, and the amendment rightly draws attention to a range of important factors: the regional disparities in rental costs, the strain of high rents placed on household finances and the need to understand how effectively the First-tier Tribunal is working in practice. However, I must also sound a note of realism. We do not need another report for its own sake. We need actual change that improves the lives of renters and restores fairness to a housing system that too often feels stacked against ordinary people. If this review is to go ahead, it must not become just another document left to gather dust on the shelves of the department—it must lead to action. I urge the Minister to use this opportunity to outline how the Government will respond to the concerns raised by the noble Baroness in her amendment, which we agree are all points which matter in this debate.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Lord, Lord Best, and the noble Baroness, Lady Grender, for their amendments relating to rent affordability and rent controls, and the noble Lords, Lord Young, Lord Fuller and Lord Jamieson, and the noble Baroness, Lady Lister, for speaking in this discussion. I have the deepest respect for the noble Lords, Lord Best and Lord Young, and their experience, and for the noble Baroness, Lady Grender, who has vast experience in this area too. I am grateful for their contributions.

I do not intend to revisit the detailed discussions we had in Committee. They were detailed and informed deliberations, and I know how strongly some noble Lords and tenant groups feel about helping those who struggle to pay high rents. I absolutely understand the pressure that rents put on the budgets of individuals and families. To come back to the points that we made earlier in the debate, obviously the solution to this is to create a lot more social and affordable housing, but I realise that is not going to happen overnight.

However, I must reiterate the Government’s concern that rent controls, as proposed, would risk reducing housing supply, discouraging investment and ultimately lowering property standards. In the case of Amendment 25, the most relevant international comparator is Ontario, an example that I also cited in Committee. I am afraid that the Ontario model, whereby rent increases are capped according to a measure of inflation, has not led to desirable outcomes. In fact, analysis suggests that the result has been higher rents for new tenants.

In respect of the experience in Scotland, a recent Nationwide Foundation report by the Indigo House Group found that rent control measures had not protected the majority of private rented sector tenants against excessive rent increases or against high advertised market rents, considering average advertised rents in the system as a whole. The measures in Scotland do not appear to have impacted rental price growth, because Scotland has consistently been one of the regions in the UK with the highest growth in asking rents. For example, according to Zoopla, in the year to January 2024, when the rent freeze was in place, Scotland was the only UK region with a double-digit annual rent growth, at 11.6%.

21:30

I am also wary of inadvertently incentivising landlords to raise rents each year to the level of a cap, when they may otherwise not have done so. The most recent data from the English Private Landlord Survey, published in December last year, tells us that 44% of landlords who renewed or extended a tenancy did not increase the rent when they extended that tenancy. There is a risk that in setting a cap we may, albeit inadvertently, be setting a target for this group of landlords and making things harder for renters.

If the House will allow me, I will give a brief example to illustrate this point. In the year to May 2025, rents in the city of Bristol fell by 1.1%, while the CPI rate for the UK in the year to May 2025 was 3.4% and the percentage increase in median national earnings calculated over the three-year period 2022 to 2024 in the UK was 6.7%. This means that a CPI or earnings-linked increase could inflate rents beyond local market conditions, increasing affordability pressures for tenants and not steadying them. This example highlights the risk of applying strict, one-size-fits-all rent controls. Regional disparities in both housing and labour markets demand a more flexible and locally responsive approach. That is why the Bill allows landlords to adjust rents annually in line with current market conditions. In doing so, it delivers a strengthening of rent regulation in the broader context of the system as a whole, including security of tenure, better enforcement and quality standards.

Amendment 26, the second of the amendments in the name of the noble Lord, Lord Best, would create an unequal system where tenants were treated differently based on the length of time they had lived in a property. Those with longer tenancies would face an unfair choice: accept the increase or move out. Such an outcome represents a limitation on the rights of specific tenants and the Government cannot endorse it.

On the noble Lord’s third amendment, Amendment 27, as I have already made clear, this Government cannot support proposals that would discourage tenants from challenging rent increases. However, I recognise the concerns regarding the tribunals’ ability to manage rent appeals, which we have talked about a lot already this evening. I reassure noble Lords that our work will continue in that regard. In addition, I hope that the noble Lord is reassured by the amendment we have tabled, which I have already explained in detail.

Turning to Amendment 28 in the name of the noble Lord, Lord Best, I must express some concern regarding this amendment, which could result in tenants initially securing an affordable home, with the reassurance of the amendment to cap increases for a four-year period, only to find it rendered unaffordable due to subsequent enhancements. Moreover, it must be noted that the amendment leaves it up to the tribunal to determine whether exceptional circumstances apply in each case. Rather than reducing the burden on our court system, we fear this would create significant additional work for it. It must be stressed that the amendment would afford landlords the right to challenge the tribunal’s decisions while denying tenants the same opportunity to recourse. This is just not an acceptable outcome, and I hope that on the basis of these points, the noble Lord, Lord Best, will not press these amendments to a vote.

I also thank the noble Baroness, Lady Grender, for Amendment 114, recognising that this is a development on the amendment she brought forward in Committee. I will not repeat the details I set out then and have explained again today the Government’s commitment to thorough monitoring. However, I think it will be helpful to reiterate the extent to which the Government will monitor and evaluate this process. We will publish our evaluation reports on GOV.UK in line with the publication policy we set out in our evaluation strategy and make them available to Parliament. Copies will be deposited in the Libraries of both Houses of Parliament as soon as they are published. We are committed to carrying out that robust evaluation and disseminating its findings widely.

Furthermore, we will continue to track developments across the rental sector, using a broad set of data sources, and work closely with colleagues in other departments to monitor the pressures on low-income renters. This ongoing analysis allows us to identify and address unintended consequences or emerging challenges in a timely manner.

Therefore, while I wholeheartedly share the noble Baroness’s determination to review how this legislation is working and support the struggling tenants whom we are all concerned about, I do not believe a separate review of rent affordability, mandated by law, is necessary or proportionate, and I ask her not to press her amendment.

[Lord Best (CB)]

My Lords, I am very grateful to noble Lords for their support for my set of amendments, including the noble Lord, Lord Young of Cookham, who made the point that the First-tier Tribunal already faces a backlog and there is the danger that it will get a lot worse in the future. I am grateful to the noble Lord, Lord Cromwell, for his inside knowledge that, in the business world, indexation is relatively common as a way of stabilising increases over time. Of course, the market rate may go down when it resumes, in comparison with what has happened on an index basis, so rents could go down at the end of a four-year period.

I am grateful to the noble Baroness, Lady Grender, who made the point that renters will still be exposed, after this Bill is passed, to much greater insecurity and uncertainty from potential rent increases. We are seeing increases at the moment of 14%, which is miles above inflation. This is very unsettling for tenants and the stability of an index system would be infinitely preferable. I support the noble Baroness’s own Amendment 114, which proposes a government commission on affordable housing. This would match the voluntary sector-supported commission, which I had the honour of chairing a couple of years ago, ready for review. That was supported by the noble Baroness, Lady Lister, who pointed out how housing costs increase almost exponentially the number of children and families in poverty—it is housing costs “wot done it” very often, by creating poverty.

The noble Lord, Lord Fuller, is yet to be convinced of the merits of my case. It is true that there could be complications, but any other system is more complicated and difficult than the one that we propose. I am sad to say that the noble Lord, Lord Jamieson, compared this to rent control—“Oh, not again!” We thought we were at pains to point out that something that hits the market level on a regular basis cannot be called rent control—it is not control of the marketplace—but I thank him for his contribution.

I am afraid I have not convinced the Minister, despite her great generosity in having meetings outside the Chamber. I am grateful to her for listening attentively to the case I make. It has not been sufficient to win her over. I can only say that there is now, on the record, an alternative to the Bill’s formula, and if that proves as unsatisfactory as I suspect it will be, maybe this amendment’s time will come. In the meantime, I beg leave to withdraw the amendment.

Amendment 25 withdrawn.

Clause 7: Challenging amount or increase of rent

Amendments 26 to 29 not moved.

Amendment 30

Tabled by

[Baroness Jones of Moulsecoomb]

30: Clause 7, page 10, line 21, at end insert—
“(4A) In subsection (2)(b) at end insert— “(iii) any increase in the quality of the dwelling attributable to improvements made to upgrade the minimum energy efficiency that were not funded by the landlord but government or ECO grants, either in part or in sum, made within the previous two years.””Member’s explanatory statement
This amendment would amend the Housing Act 1988 so that when determining rents tribunals must disregard any improvements funded by government grants, for a two year period.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I note what the Minister says about the Government taking it seriously and I accept that there is a move, for example in the warm home local grants, to put in a clear expectation, but that is not compulsory. Guidance is not compulsory. Landlords do not need to do it; they can completely ignore it. It is not okay that tenants have to suffer the noise, dirt and disruption of improvements and then do not actually benefit at all financially and have rent rises immediately. I am not precious about how it is done: it could be in the grant conditions. I imagine there are all sorts of ways of actually making this happen, so that tenants can have some benefit without increased costs.

I thank the Liberal Democrats for being prepared to support this amendment, but—although I bitterly resent saying it—I will not move the amendment.

Amendment 30 not moved.

Amendments 31 to 33 not moved.

Amendment 34

Moved by

[Lord Carrington]

34: Clause 7, page 11, line 35, leave out from “if” to end of line 36 and insert “the tribunal determines that the proposed rent is equal to or lower than the open-market rent, or”

[Lord Carrington (CB)]

My Lords, I very much thank the Minister for her answers to my various questions. However, I also point out that her agreement to work on the amendment from the noble Baroness, Lady Wolf, is an extremely positive step and I look forward to the results of that.

However, with considerable sadness, I am very disappointed by the lack of clarity on Amendment 37. The drafting of that amendment is so vague, with the judgments being called only when absolutely necessary and when significant, et cetera, and there being no data to back this whole thing up, that I want to pursue my amendment, because my Amendment 34, together with associated Amendments 35, 36 and 40, all provide great clarity to this particular issue. They are, in a sense, technical amendments: they are not in any other way political.

In Amendment 36, I propose this 12-month delayed payment for any rent increases that the tribunal comes up with, so I recognise these financial pressures, and we have done something to try and ameliorate them. On that basis, I would like to test the opinion of the House.

21:42

Division 5

Ayes: 45

Noes: 126

21:52

Amendments 35 and 36 not moved.

Amendments 37 to 39

Moved by

[Baroness Taylor of Stevenage]

37: Clause 7, page 12, line 10, at end insert—
“(5A) The Secretary of State may by regulations make provision so as to substitute, in relation to relevant tenancies, a different date as the effective date.(5B) The effective date may not be earlier than the beginning of the new period specified in the notice served on the tenant under section 13(2) or 13A(2).(5C) Regulations under subsection (5A)—(a) may amend this section;(b) may make different provision for different purposes;(c) may make supplemental, consequential, incidental, transitional, transitory or saving provision;(d) are to be made by statutory instrument.(5D) A statutory instrument containing regulations under subsection (5A) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”Member’s explanatory statement
This amendment enables the Secretary of State to amend the Housing Act 1988 so as to substitute a different date from which new rent is payable. The substituted date must not be earlier than the date specified in the notice of the new rent given by the landlord. The new date will only apply to applications to challenge the rent made on or after the date on which the regulations come into force.

38: Clause 7, page 12, line 13, at end insert—
““the effective date” means a date for the time being specified in subsection (3)(b) as the date from which the rent payable takes effect;”Member’s explanatory statement
This amendment is consequential on the amendment tabled in my name inserting a new regulation-making power into the Housing Act 1988 in relation to the effective date for proposed new rent.

39: Clause 7, page 12, line 17, at end insert—
““relevant tenancies” means tenancies in relation to which an application under section 14(A3) is made on or after the date on which the regulations under subsection (5A) come into force.”Member’s explanatory statement
This amendment is consequential on the amendment tabled in my name inserting a new regulation-making power into the Housing Act 1988 in relation to the effective date for proposed new rent.

Amendments 37 to 39 agreed.

Amendment 40 not moved.

Amendment 41

Moved by

[Lord Hacking]

41: After Clause 7, insert the following new Clause—
“Restrictions on rent increaseWhen a landlord has obtained possession of a property pursuant to Schedule 2 of the Housing Act 1988 (as amended by Schedule 1 of this Act) on either—(a) Ground 1 (occupation by landlord or family), or(b) Ground 1A (sale of dwelling house),and the landlord is unable to place a family member in the property or sell the property and is putting the property again into the letting market, the landlord is prohibited from raising the rent of the property for a period of 12 months from the date of the notice to quit as served on the original tenant.”

[Lord Hacking (Lab)]

My Lords, I will explain how this amendment came about and be more definitive. It relates to the proposal in the Bill—I think it is in Clause 7—that when a landlord has obtained possession principally on the grounds of a proposed sale of the dwelling and then withdraws from the sale and wants to put the property straight on to the market, he is prevented from doing so for a period of 12 months. The noble Lord, Lord Cromwell, supported by the noble Lord, Lord Pannick, moved an amendment in Committee to reduce that period from 12 months to six months. I will leave it to the noble Lord, Lord Cromwell, to develop the argument again because he has tabled Amendment 58 in this group. Basically, the noble Lords argued that 12 months was oppressive and far too long, and that there would be a sufficient deterrence against the rogue landlord seeking to put the property on the market for the purpose of raising the rent.

I did not move an amendment in Committee on this subject, but I thought about it and I decided to write a letter to the Minister, which I did on 19 May. My proposal was much simpler: that there should be a prohibition on all landlords raising the rent when, following putting the property on for sale that did not go forward, seeking to let it out again. I really thought that that was a very sensible amendment; I had hoped that my noble friend would congratulate me and say what a good solution I had provided.

The immediate advantages of my proposal were that, first, it dealt directly with the problem of the rogue landlord raising the rent. That, as my amendment proposes, will be forbidden. It would also have the advantage that the landlord would not be penalised for a long period; he could immediately put the property on the letting market and then collect rent. The other great advantage was that the property would be on the market and there would not be an absence of a property on the market, which is always regrettable. It would therefore help to house people who needed rented property.

Unfortunately, my noble friend did not congratulate me on this proposal as set out in my letter. She expressed caution regarding other tenant/landlord situations, such as a landlord getting fed up with a tenant constantly asking for repairs to the property. Another example she gave, which was rather simpler, was that the landlord had got to the point where he did not like the tenant. We must remember that, in either of those situations, the landlord has to enter into a ruse, either pretending that he wants to sell the property or possibly finding a phantom member of his family who does not exist so that he could get possession under the alternative of placing a member of his family in that house.

I am asking the House to measure up the difference between the advantage of imposing a ban on any rent increase and the advantages that I have just outlined of having the property immediately on the market, with the landlord being able to collect his rent as soon as the property is rented. We have to balance that because the measure in the Bill will affect every landlord—the good and the bad. We should have a balance between that and the extraordinary. After all, a landlord cannot successfully evict a tenant just because he dislikes him. Equally, when he is fed up with a tenant who constantly asks for repairs, he cannot bring an action for eviction just because the tenant is pestering him. In both those situations, he has to enter into a ruse.

I am suggesting that the proper balance is to look at the market as a whole—everybody in the market is affected by these measures. Therefore, to release everybody else in the market from the measure proposed serves it. So it is a balance, and I suggest that that balance goes to the market and not to the particular circumstances of a landlord disliking his tenant or getting fed up with a number of requests for repairs. I beg to move.

22:00

[Lord Cromwell (CB)]

My Lords, Amendment 58 is in my name. I express my gratitude to the noble Lord, Lord Pannick, who apologises that he is unable to be with us today but who has added his name to the amendment, and of course to the noble Lord, Lord Hacking —and indeed to the Minister and her officials for the time they have taken to discuss the background to this with me.

This amendment is at heart a simple and technical one. The Bill says that if you ask a tenant to leave on the grounds that you are selling the property but then the property fails to sell, as happens in about a third of cases, you are not allowed to rent the property out for a period of 12 months. It simply has to stand empty and impossible to rent out for a year. That means that numerous properties would, for the crime of not selling, be punished by standing empty and unrentable. My amendment does not seek to change the principle or any other element or clause of the Bill. It simply introduces a rational and balanced obligation to stand empty in this way for six months rather than 12. That is all that it does. I will now set out the reasons why.

On financial logic, when I and others suggested that 12 months was too long, the answer given was that 12 months’ lost rent would prevent evil landlords from claiming they were selling simply as a means to eject a tenant and then re-letting the property at a higher rent. The theory was that after the tenant had left, the landlord would jack up the rent to a high level, both to recoup their interim losses and make profits. Let us look at that proposition rationally.

First, if the landlord has a valid claim to increase the rent, the Bill already provides for that. A landlord would simply seek a normal rent increase rather than going to the dramatic and expensive process and risk of requiring a tenant to leave and then hoping to re-let at a much higher rent.

Secondly, in Committee I set out the mathematical calculation behind a six-month void period; noble Lords will be relieved to know that I do not propose to repeat the numerical details here tonight, or those that I provided subsequently in a meeting with the Minister and her officials. However, the numbers demonstrated clearly that the supposedly avaricious landlord, even if having the property empty for only six months, as I propose, rather than 12, would have to put the rent up by a very substantial amount—in excess of 200% or even 300%—to recoup their rental losses. I say nothing of the other costs, including the council tax surcharge bills and the risks of leaving a building empty. Such a huge rent hike would be impossible. The rent asked would be completely uncompetitive against other properties not carrying such an inflated rent level. In short, being obliged to leave a property empty for six months is more than enough of a financial burden and barrier so as to make the strategy so feared by the Minister simply untenable.

Thirdly, it was suggested that those nasty landlords might lie about selling a property or put it on the market at an absurdly high price, presumably in collusion with a disreputable estate agent—there are some, I believe. I therefore draw noble Lords’ attention to the second part of the amendment. This requires the landlord to provide, if necessary, to the local authority or the court hard evidence of marketing, pricing and offers, et cetera. A landlord flouting these requirements would be breaking the law and punishable accordingly. I understand that an agent colluding with them would also be acting contrary to the law. I remind noble Lords that any landlord taking this approach would face not only the legal risk of a false sales process but ending up with the property back on the rental market at an absurd and uncompetitive level of rent and, on top of that, losing six months’ rent.

Turning to other reasons, having made the argument on the rental conspiracy theory advanced in defence of the 12 months of standing empty, I heard that the landlord might have “other reasons” for wanting to get rid of the tenant, such as those that the noble Lord, Lord Hacking, touched upon. Let us examine this argument. Whatever these other reasons might be, the Minister has confirmed that the Bill makes it perfectly clear that the landlord has only four grounds for requiring a tenant to leave: sale, anti-social behaviour, moving in a relative or persistent failure to pay rent. If the landlord cannot demonstrate that one or more of these cases applies—for example, through not providing conclusive evidence of a genuine sales process—that landlord will be in breach of the law as well as having the financial penalty of the months of lost rent. It is a fundamental of the Bill to block any attempts to get around Section 21 by other means. I entirely agree with that. However, as I hope that I have demonstrated, this amendment is no such thing. The “no renting out” mechanism to prevent abuse remains, but the amendment makes it proportionate rather than excessive and heavy-handed.

Standing back from the detail, we are frequently assured that most landlords are good landlords. Perhaps some in this House have friends who are landlords. Perhaps some Members of this House let out property. This provision to leave a property unlet will not apply just to a subset of bad landlords. It will apply to anyone who rents out a property and genuinely wants or needs to sell their property but does not manage to do so. It also, for the same 12 months, deprives the market of rental properties—a market already bedevilled by a lack of available property to rent. That does not help tenants. This is not only unnecessary but manifestly unfair and will actively harm the supply of rental property. The Minister has accepted in a letter to the noble Lord, Lord Hacking, that landlords will lose out, but says that it will be in a small number of circumstances. Where is the evidence for that—or that the six-month penalty is not enough?

I underline that I am no lobbyist for landlords. I have spoken repeatedly in this House about the need to protect the poorest and the most vulnerable tenants who are abused and evicted by genuinely unscrupulous landlords. I have a later amendment seeking to prevent illegal evictions which is specifically on that theme. However, as the Minister has stressed, a successful rental sector is about a balance of rights. The amendment that I am speaking to does not do away with the relevant part of the Bill. It simply reduces the punishment —and it is a punishment—for not managing to sell a property from 12 months to six months. Those six months of costs and no income are, as I have demonstrated previously, more than sufficient punishment to make unworkable the avoidance strategies that so vexed the Minister and to meet the objectives of the Bill.

To be frank, a prohibition on renting out for 12 months is an impractical and disproportionate sledgehammer level of overkill that does not belong in a Bill that creates a set of checks and balances to produce a new, fairer environment for property rental. It also works against its own objective by artificially restricting the availability of property that is available to rent. That is why I feel strongly that this amendment is proportionate and needed. I will listen carefully to what any others and the Minister have to say, but I may need to test the opinion of the House in due course.

[Lord Young of Cookham (Con)]

My Lords, I speak to my Amendment 59. I am grateful to the Minister for the time that she spent with me and a representative of the Shared Owners’ Network after Committee, when we discussed in further detail the problems facing shared ownership leaseholders in blocks that have been blighted by the cladding disaster. This amendment is needed to protect shared owners, who are accidental landlords, from the financial problems that they will face if they are unable to finalise a sale after issuing a ground 1A notice.

Many shared owners, of course, continue to live in the property which they half-bought from the registered social landlord. Many shared owners have simply had to move to get on with their life; they have been unable to sell the property in the meantime, so they have sublet. Shared owners are allowed to sublet—they have to get permission from their RSL to do this—but the rent that they receive from the subletting may not actually be enough to cover their costs, with the mortgage, the rent, the service charge and the insurance charges on a block affected by the cladding disaster. Those costs may well exceed the local market rent.

Many shared owners who have been subletting for a number of years have seen their financial situation considerably weakened, with many effectively losing hundreds of pounds every month as a result of subletting. These are people who employed all the professional people that they should have employed when they bought the property owned by a registered social landlord. They took every precaution available to them and bear no responsibility at all for the problem that has engulfed them.

When we met, although she expressed sympathy for this group, the Minister could not offer any mitigation for the unsustainable costs which a 12-month ban on re-letting would create for these shared owners. This is not a satisfactory outcome for a cohort who qualified for an affordable home because their income was not high enough to buy on the open market; this was their first step on the ladder. The Minister argued that the proposed ban protects tenants, but it fails to protect shared owners who are actually also tenants.

Shared owners face a much riskier sales process with the Bill. They have to give four months’ notice to their tenants, and that means they have no certainty at all that the offer to buy the flat will actually result in an exchange, or indeed a completion. Shared owners have to give the first option to buy their flat back to the registered social landlord so they can find another shared ownership owner, and there are strict qualifications, so they are fishing in a relatively small pool. Prospective buyers need to meet the criteria for shared ownership, and that means that the risk of a failed sale, even at a late stage, is actually much higher for a shared owner, and particularly high if you are selling a flat in a block with unsafe cladding.

Should a sale fall through, as is frequent, particularly for these types of properties, shared owners, like other landlords under the Bill, face the prospect of a 12-month void when they will be banned from re-letting their empty property and forced to cover its costs without any rental income.

These people never planned to become landlords. It was not part of their vision at all. They will have had no ability to plan for this outcome or make provision for extended void periods. This will become completely unaffordable for the vast majority of shared owners who, as I have said, are not as financially resilient as other leaseholders, otherwise they would have bought a property on the open market. They will have to pay for the property they now live in, as well as the property they have been unable to sell.

Of course, they will continue to market their property for sale after the first sale has fallen through, but facing the mounting unmet costs of an empty property will actually put their homes at risk of repossession if they fall into arrears, as is very likely. Also—and this is worse—it puts incredible pressure on them to accept any offer from a buyer as soon as possible, even if the offer is below the RICS pre-sale valuation. If they do that, due to the rules of the scheme, they will have to compensate the registered social landlord for the loss of value on their share, as well as losing out on their own share. So, the unintended consequence of the 12-month ban on re-letting is that it puts shared owners selling a property on the back foot, unable to wait for a suitable offer at a fair market value.

It is just not acceptable to punish shared owners who have had to become accidental landlords, including as a result of the building safety crisis, and have already suffered considerable financial harm. In her correspondence, the Minister explained that shared owners would have the option to ask their provider whether a buyback would be possible rather than leaving the property empty.

This could provide a solution, but it will need the Minister to make some changes, As the Minister knows, buybacks are currently very much at the discretion of the registered provider. At the moment they have only limited access to funding to do this, using either their own funds or recycled capital grant funding.

If the Minister is unable to accept my amendment, will the Government ring-fence some of the dedicated funding to registered providers in its affordable homes programme so that they can swiftly buy back properties from those shared owners who fail to sell after issuing a ground 1A notice? This would enable housing associations to add to the stock of affordable property to rent at well below the cost of a new build and avoid leaving a property empty. If the Minister can neither accept the amendment nor give that guarantee, I am minded to test the opinion of the House at the appropriate time—probably next Monday.

22:15

I briefly raise a subsidiary issue. Shared owners also need clarity on how the Bill will affect the current licence to sublet regime. Unlike other landlords, shared owners have only a time-limited licence to sublet, and such a licence usually names their tenant. If there is a requirement for them to get a new licence every time there is a new tenant—and the Shared Owners’ Network says that the typical cost of a new licence to sublet is approximately £1,000—a high turnover of tenants would lead to further unacceptable costs for shared owners.

The Minister helpfully clarified that fixed-term licences to sublet that are in place when the Bill is commenced will become open ended, and that all related fixed-term tenancies will become periodic. However, the Minister has not set out what type of licence to sublet will be offered to shared owners in the future, and at what cost. Can the Minister clarify—if not now, in a letter?

[Baroness Thornhill (LD)]

My Lords, the three amendments here are interesting. The noble Baroness is well aware that we share the same concerns as the noble Lord, Lord Young of Cookham, regarding shared owners. I was allowed to gatecrash their meeting. I admit that it was eye-opening for me. I was aware of the issues around shared ownership, but I was shocked at the costs incurred and the amounts of money lost, which the noble Lord has amplified superbly. I hope the noble Baroness can give us some way forward on this and other issues that seriously affect shared owners—accidental landlords who are trapped in the situations the noble Lord has accurately described and see no way out. The “What can I do?” was quite revealing. It is no surprise that we will support Amendment 59.

We know that the not-able-to-sell situation applies to thousands of shared owners—far greater numbers than, I suspect, Amendment 58 from the noble Lord, Lord Cromwell, applies to. This is yet another area in the Bill where we do not know the numbers. We do not know how many homes will be affected. I have to pay credit to the noble Lord because Amendment 58 has been patiently worked on and lobbied for by the noble Lord, Lord Cromwell. I completely understand where he is coming from but perhaps do not agree that the detriment to the relatively few landlords who find they cannot sell their property is worth the abuses that might occur if prohibition on re-letting is reduced to six months rather than 12 as in the Bill. Perhaps this is an area for some compromise.

I have a simple question, and I am sure somebody will tell me I am wrong. If I genuinely wanted to sell my property and realise my capital for whatever reason, given the amount of time to evict, I would probably not serve notice to my tenant until I had sold my property. I can serve the notice; the process of selling, conveyancing and everything else carries on; the tenant leaves at the appropriate time; the buyers exchange contracts and we say, “You can’t move in until that time”. I do not see how that would be unachievable. I am sure somebody will tell me why that would not be the case. I certainly would not evict them before I put it on the market or had some sense of the market or of how things were. As I said in Committee, a letting agent said to me, “All houses will sell, Dorothy. It just depends on the price”.

Amendment 41, moved by the noble Lord, Lord Hacking, is clearly designed to act as a disincentive to landlords trying to abuse this ground, but maybe if the landlord is genuine, it is just a little too draconian. We broadly agree that the Bill has got this right, as far as we can tell.

[Lord Jamieson (Con)]

My Lords, I rise to speak to this group of amendments and to offer my full support to my noble friend Lord Young of Cookham. Amendment 59 addresses a significant gap in the Bill by providing a vital exemption for shared ownership leaseholders from certain provisions within Clause 14. Shared ownership is an important tenure model that enables many people to take their first step on to the housing ladder, yet it is not without its challenges, particularly when sales fall through, as my noble friend has highlighted. Amendment 59 is a sensible and necessary provision that recognises the realities faced by shared ownership landlords. Protecting this group helps to maintain confidence in shared ownership and prevents unintended consequences that could undermine the Bill’s original intent. If my noble friend Lord Young of Cookham is minded to test the opinion of the House, the Opposition will support him without hesitation.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank my noble friend Lord Hacking and the noble Lords, Lord Cromwell and Lord Young, for their amendments and their engagement on these issues. I also thank the noble Baroness, Lady Thornhill, and the noble Lord, Lord Jamieson.

On Amendment 58, we want to strengthen tenant security and prevent abuse of ground 1A. A 12-month no re-let period will act as a deterrent to unscrupulous landlords who want to evict tenants so that they can let to a new tenant for more rent or because the tenants are asking for repairs that the landlord does not want to do. We understand this is a strict measure, and it is meant to be. It is intended to ensure that only landlords who genuinely wish to sell their property will wish to use that ground and to deter from using it landlords looking to evict a tenant in order to re-let at a higher rent or to a different tenant. Not only will landlords have to forgo rental income for 12 months after using ground 1A but should they be found to be misusing the ground, they could be fined up to £40,000. It is right that we have these strong tenant protections in place.

This amendment would also bring significant complexity to the system, and I struggle to see how it would work in practice. It would allow the courts to require evidence that the dwelling had been on the open market for six months and that no suitable offers had been received, but it is unclear how the courts would become involved. Additionally, it could place undue burdens on courts which may have to follow up on any ground 1A evictions to check whether the landlord had tried to sell for six months and whether they had received any suitable offers. The court would also have to determine what a suitable offer was, which would be another undue burden. The no re-let rule is a clear and simple rule that would not benefit from further complexity. I believe this amendment would open the no re-let period to abuse, reducing tenant security and contradicting the aims of this Bill.

As the noble Baroness, Lady Thornhill, indicated, if a landlord is genuinely planning to sell a property, they can market it to gauge interest before upending the tenant’s life by evicting them. This would be more effective for all parties than evicting as soon as they decide to sell and only then putting it on the market and waiting for suitable offers. For all these reasons, I ask the noble Lord, Lord Cromwell, not to press this amendment.

On Amendment 41, I understand from our helpful discussions that my noble friend Lord Hacking’s intent here is to remove the period during which a landlord cannot re-let the property after using grounds 1 and 1A and instead prevent the rent being increased in the new tenancy. While this amendment addresses one of the goals of the no re-let period by making it unprofitable for landlords to abuse the moving and selling grounds, it does not address the other key reason to prevent abuse. Even if an unscrupulous landlord could not profit from abusing the grounds, they could still, under my noble friend’s proposals, use these grounds with no intention of moving in or selling to pursue retaliatory evictions. This means abusing the grounds to get rid of a tenant who had done nothing wrong but whom, for example, the landlord simply did not like or who they considered raised too many issues with the property.

These abuses of the system are exactly what the 12-month no re-let period aims to prevent. In the current system, under Section 21, we hear all too often of tenants afraid to ask for repairs because the landlord has made it clear that they will evict them if they do. Under my noble friend’s proposal, this could still happen. The opening up of the grounds to abuse must be resisted. The 12-month no re-let period is a strong disincentive for landlords to abuse the grounds, and I believe that it strikes the right balance. As such, I ask my noble friend not to push his amendment to a Division.

I turn now to Amendment 59. I am grateful to the noble Lord, Lord Young, for his engagement on this issue and for introducing me to the Shared Owners’ Network. These clauses implement critical protections for tenants. If a landlord has used the selling or moving-in ground, they will not be able to re-let or market a property for 12 months. That period starts from the date of possession proceedings, as specified in their Section 8 notice to the tenant. These clauses also include other important prohibited landlord behaviours.

The Government are aware that some shared owners with building safety issues are facing very difficult circumstances through no fault of their own. The Shared Owners’ Network has provided invaluable insight into this issue. We are continuing to engage with it to determine how best to support these shared owners. We will have a dialogue with the registered providers as well. I am grateful to the noble Lord for his suggestion in that regard. To respond to another of his comments, I will clarify the licence points to him in writing.

However, I do not agree that, by helping in one area, other blameless tenants should have reduced security of tenure or be exposed to the risk of wrongful eviction just because of who their landlord is. We have to get the balance right somehow, to support those who find themselves in this awful position but not at the expense of other tenants. We will continue to work on that. All assured tenants must benefit from the new system.

I therefore ask the noble Lord, Lord Young, not to press this amendment.

[Lord Hacking (Lab)]

My Lords, my Amendment 41 was the first in line in this group. I still think that it was a good amendment and would have produced all of the right results without creating sorrow for the market of the full 12-month waiting period.

It is now very late in the evening. I am not going to press for a Division. I nevertheless argue that my amendment was the best of the three.

Amendment 41 withdrawn.

Amendment 42 not moved.

Clause 8: Prohibition of rent in advance after lease entered into (except initial rent)

Amendment 43

Moved by

[Baroness Scott of Bybrook]

43: Clause 8, page 12, line 23, after “for” insert “more than six months”
Member's explanatory statement
This amendment would allow a person to mutually agree a tenancy with a landlord which requires them to pay up to six months of rent in advance.

[Baroness Scott of Bybrook (Con)]

My Lords, the payment of rent in advance can provide significant benefits to tenants that go beyond simply avoiding late fees or demonstrating financial security. Many tenants choose to pay rent in advance for financial planning, to ease the stress of monthly payments or to manage upcoming financial burdens. Amendment 43 in this group recognises and affirms this choice, firmly rooted in mutual agreement between tenant and landlord.

We did consider introducing a 12-month period proposal at Committee stage. However, in a spirit of compromise, and having listened carefully to the views expressed in Committee, we have instead brought forward a six-month proposal. We hope that the Government will recognise this as a reasonable and constructive step, and we hope that noble Lords can support this.

If a tenant does not wish to pay rent in advance, they would be under no obligation to do so. However, there are particular groups who would benefit from this flexibility, including overseas students and those with poor or limited credit histories. Many tenants with lower credit ratings face barriers to securing housing that are often no fault of their own. By paying rent in advance, these individuals could demonstrate responsibility and financial reliability, improving their chances of obtaining a tenancy.

Similarly, overseas students often lack a UK credit history and therefore require UK-based guarantors, which is not always possible. For those students, paying rent up front for a term or even an entire academic year is a practicality and a common solution. I ask the Minister to clarify what impact these amendments might have on overseas students’ ability to secure accommodation and whether the landlord will maintain incentives to rent to those tenants despite their limited credit history.

22:30

Amendment 45 seeks to limit the Secretary of State’s powers under Clause 8 to expand rather than narrow the definition of permissible rent payments. This safeguard is crucial to preventing future regulations that might unduly restrict tenants’ or landlords’ choices regarding rent in advance. By restricting the Secretary of State’s powers in this way, Amendment 45 promotes certainty and stability in the rental market, giving all parties confidence that mutually agreed rent payment arrangements, such as paying rent in advance, will remain lawful and accessible. This is a proportionate and pragmatic measure that respects the diversity of the rental sector where one size rarely fits all and where flexibility is often essential to securing and maintaining tenancies. It also supports innovation in rent payment options, which can benefit both tenants seeking to manage their finances and landlords aiming to maintain a steady rental income.

These amendments promote a balanced approach that recognises the diverse needs of tenants and landlords alike. Mutual agreement on rent in advance can foster stability and greater security in tenancies, especially for vulnerable groups. I beg to move.

[Lord Fuller (Con)]

My Lords, it feels as if we are going back to Amendment 1 at the start of this debate and the theme of that essential freedom to contract between consenting parties, which had support on both sides of the House from the noble Lords, Lord Hacking and Lord Truscott, and others. Amendment 43 is a practical solution and an optional one. It provides a route for an otherwise unrentable tenant to find a tenancy and it is a practical expression of good faith. We have had some examples of where the freedom—it is a freedom and not an obligation—to offer up to six months’ rent in advance can be helpful.

My noble friend Lady Scott mentioned the case of students, especially foreign students. Foreign students often want to secure accommodation before they get on the plane to come to this country. At that point, they may not even have a UK bank account. They certainly will not have references or a track record. The only practicable way they can secure a tenancy with that impaired record is to pay in advance.

Earlier today, we spoke about the potential abuses in holiday hotspots, where somebody may say, “I am going to stay for a whole year”, as they contract in June, whereas in fact they immediately give notice to quit after the August bank holiday. The noble Lord, Lord Truscott, who is not in his place, told the House that the differential between the Airbnb rate and the year-round rate is something like 49%. This is a way for somebody who was sincere about entering into a long-term arrangement for, say, six months—but it would not have to be exactly six months—with a potential landlord to demonstrate that they were not just the carpetbagging, holiday-hotspot people. They could pay in advance and that would be helpful.

My noble friend mentioned those with an impaired record. It would be possible to have a guarantor who stumped up for those people with a weak covenant strength. For those who have cash—I appreciate that not everybody does—coming to an accommodation with the landlord for paying up front sometimes results in considerably less rent, and in those cases both landlord and tenant benefit considerably.

Amendment 43 would help both the landlord and tenant to come to an arrangement to their mutual advantage. I know it is not for everybody, but without this provision the unrentables will remain unrented. The Bill’s objective, as we have heard from the Minister, is to get people into safe, secure, good accommodation, and for a small number of people the amendment would provide the otherwise unprovidable. I support it entirely.

[Lord Hacking (Lab)]

My Lords, I very much support Amendments 43 and 45, tabled by the noble Baroness, Lady Scott, and supported by the noble Lord, Lord Jamieson. I can give a practical example of this. A very nice couple from Chile wanted to rent one of our flats. They had no credit record at all here in England so there was no way to check that. There was no efficient way to check the previous landlord, which is the other step that a landlord normally takes to ascertain whether these are suitable tenants to go into the property. They had the money. Both of them were coming to work in London for a year for an academic purpose. Enabling them to pay some money in advance—I have forgotten whether it was six months or more—was therefore a sensible compromise. They turned out to be delightful tenants and highly reliable, and we were delighted to have them in our house.

I also want to speak to Amendment 46. It is to protect landlords when a tenant has signed up to take the property on a certain date but has failed to pay either the first month’s rent in advance or the deposit. I suggest that it would be entirely wrong, because the tenancy agreement had been signed and so forth, if the landlord were then obliged to take that tenant into the property. Remember that a landlord cannot chase unpaid rent for three months, and then there is the delay in getting a hearing in the county court, so that would be onerous for the landlord to deal with. Moreover, if the tenant has not paid either the first month’s rent or the deposit in advance, he probably does not have the money available, and the high probability is that the landlord will have to suffer that tenant in his property for three or four months without any payment at all.

I therefore thought it would be sensible to make it quite plain—my amendment starts:

“For the avoidance of doubt”—


that the landlord does not have to give the tenant keys to the property or allow them to get into it when the tenant has not paid. I added a further bit to the amendment to enable the landlord, if the tenant fails to pay the first month’s rent or the deposit for a further 28 days, to take the next step of having the lease annulled. That is to make it plain in the Bill what the position of the landlord is after having entered into an agreement with a tenant who then does not pay either the first month’s rent or the deposit.

[Lord Carrington (CB)]

I support the indefatigable and noble Lord, Lord Hacking, in his Amendment 46. I find it plainly obvious that rent needs to be paid before occupation. I can find preciously few examples of anyone paying for goods and services after they are contracted or consumed. An obvious example is a railway ticket or an air ticket. No one goes to the cinema and pays after the performance or takes a litre of milk at Tesco and then pays after drinking it: it is just not acceptable.

Participating in the private rented sector, as either landlord or tenant, is a serious business. The landlord has made a major investment and may have a mortgage to service, among other costs. A tenant is looking for a safe and secure tenancy which incorporates decent home standards: he is well aware of the financial obligation. Without this amendment, the landlord would be laid open to the possibility of four months with no rent and a longer eviction process under Section 8, possibly taking seven months or so. The position of a landlord is a commercial business, not a public service. I urge the Minister to accept this rather obvious amendment.

[Baroness Thornhill (LD)]

My Lords, in view of the time, I will speak briefly to Amendment 43. I could simply say the first sentence: “We are strongly opposed to rent in advance because it is discriminatory”.

This amendment is being framed as a cosy option where tenants and landlords can reach a mutual agreement as to whether or not they will do this. No, I do not believe that. If allowed, it will become, as now, a requirement. In effect, it will become a bidding war by any other name, and landlords have their pick of tenants: Zoopla has just reported that there are between 20 and 25 punters for each property and at least 20 requests to view each property. Landlords can pick, it is a beauty parade, so they can choose the tenants who have the money to give them six months’ rent up front against those who just do not have those advantages. But those same people can still afford to pay the rent and would still make good tenants.

We are opposed to anything that prices out poor renters in hot rental market areas. We refute the argument being discussed by landlord groups that this is an option for niche circumstances that allows people to access housing; for example, as was said, where people might struggle with credit checks. If you are struggling with credit checks, it is highly unlikely that you will be able to pay six months’ rent in advance. In a very modest property in Watford, six months in advance is between £6,000 and £8,000. That is a lot of money.

We know that landlords and letting agents often use it as a barrier to reject tenants relying on universal credit or housing benefit, preventing them accepting a tenancy, which means that only those with savings or family support to draw on will comply, which those on low incomes are less likely to have. Shelter tells us that six in 10 renters have been asked for it and over 800,000 people in one of its surveys say they were not able to secure a property because of the demand for rent in advance. The Bill aims to prevent discrimination against renters on benefits. This amendment would allow it by the back door.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the noble Baroness, Lady Scott, and my noble friend Lord Hacking for their amendments on rent in advance, and the noble Lord, Lord Carrington, and the noble Baroness, Lady Thornhill, for speaking.

The Government have been very clear in their view that the charging of rent in advance is unfair. I have not heard anything this evening that has changed my mind on that. Therefore, we cannot accept Amendment 43, tabled by the noble Baroness, Lady Scott. Six months’ rent is a significant amount of money. For some renters, this will be their entire savings, which were perhaps carefully built up with the ambition of being put towards a deposit on a first home. For many others, it will be an amount of savings which is simply unreachable.

I recognise that it is the noble Baroness’s intention for it to be possible to request large amounts of rent in advance only where this has been previously agreed by the tenant and landlord. However, we must consider what this means in practice. It would allow a landlord, at the pre-letting stage, to insist on a tenancy agreement which would permit them to require up to six months’ rent in advance. In hot rental markets, we could expect such clauses to become simply a fact of renting. This could leave tenants with the “choice” of stretching their finances to the limit or facing homelessness.

22:45

It would not be right to create a scenario, however inadvertently, whereby tenants have no option but to push their finances to breaking point to secure a tenancy. Instead, under the measures currently in the Bill, tenants will be free to pay their rent prior to the agreed due date once a tenancy has begun should they wish to do so, although landlords will be unable to require this. This strikes the optimal balance of protecting tenants while maintaining their flexibility to pay in-tenancy rent in advance, should it suit their personal circumstances. For this reason, I ask the noble Baroness to withdraw her amendment.

On Amendment 45, I reassure the House that the Government have no plans to alter the rent in advance measures contained in this Bill. This power, however, allows the Government to respond to any future changes within the private rented sector that may make it necessary to do so. These may include changes of certain types of tenure, or the possible unanticipated introduction of new types of tenancy. Similarly, changes to the supply and demand balance may impact the extent to which affordability is a barrier to entering the private rented sector. In these and any other unanticipated changes to the sector, the full use of this power would enable the Secretary of State to ensure that the general prohibition on rent in advance continues to apply as intended.

I reassure the House that regulations made under this power will be subject to the affirmative procedure. This will make sure that there is appropriate parliamentary scrutiny of any changes. However, restricting the use of this power—allowing it only to expand rather than tighten descriptions of rent in advance to which the general prohibition does not apply—risks limiting the Government’s ability to protect tenants from unfair rent in advance requirements. I therefore ask the noble Baroness, Lady Scott, not to press her amendment.

My noble friend Lord Hacking spoke to his amendment and raised his concerns that a tenant, having agreed to, and entered into, a tenancy, could subsequently fail to pay the initial rent or tenancy deposit as agreed. In relation to deposits, landlords or letting agents will continue to be able to require payment of a tenancy deposit before the signing of the tenancy agreement. It is therefore unnecessary to place in law the ability of a landlord not to grant a tenancy occupation before the tenancy deposit is received. Landlords will remain free to delay the signing of a tenancy until such time as the tenancy deposit has been paid.

The amendment also raises an issue in relation to the risk of tenants entering into the tenancy and subsequently failing to pay their first month’s rent as agreed. Were a tenant not to pay the initial rent and to continue to accrue arrears once occupying the property, they risk potential eviction. This could in turn have an impact on their future ability to provide the references needed to attain future housing.

In addition, for a tenant to have reached the stage of entering into a tenancy agreement, they will likely have already paid a holding deposit of up to one week’s rent and a tenancy deposit of five or six weeks’ rent. If the initial rent were not to be paid, a landlord would retain these deposits. They provide a risk mitigation for landlords facing unpaid rent and are a strong indicator that the tenant, having already made these payments, is willing and able to pay their monthly rent.

The Government are of the view that our reforms on rent in advance strike the right balance. They give the landlord the confidence necessary to let to tenants while protecting tenants from requests for large amounts of rent in advance. Once a tenancy has been entered into, a landlord is free to request up to the first month’s rent before the tenancy start date. A tenant will also be free to pay any amount of rent from this point, should it suit their circumstances. For those reasons, we feel that the amendment is unnecessary.

I turn to government Amendment 44, which introduces a small technical clarification to the drafting of Clause 8. As such, I do not need to take up too much of the House’s time. It provides that any terms in a tenancy agreement that require a payment of rent before it is due are of no effect. This amendment clarifies that this provision applies only to assured tenancies entered into after commencement. I commend Amendment 44 to the House.

[Baroness Scott of Bybrook (Con)]

My Lords, allowing tenants, where mutually agreed, to pay rent in advance of up to six months provides an important option for many, particularly those who may face barriers such as a poor credit history, overseas students without a UK credit record or those who simply wish to manage their finances proactively. This choice should be respected and preserved, not restricted by over-prescriptive regulations.

Housing is a personal and often complex matter, and we acknowledge the complexity of balancing landlord protections with tenants’ rights, particularly regarding initial payments such as deposits and the first month’s rent. However, it demands legislation that is flexible enough to accommodate different circumstances without sacrificing fairness and stability.

I know the hour is late but we believe that this is an important amendment for the freedom and flexibilities that tenants require in this sector. I would therefore like to test the opinion of the House on my Amendment 43.

22:50

Division 6

Ayes: 23

Noes: 103

23:00

Amendment 44

Moved by

[Baroness Taylor of Stevenage]

44: Clause 8, page 12, line 24, at end insert—
“(za) to a tenancy entered into before the commencement date (which has the same meaning as in section 146(3) of the Renters’ Rights Act 2025),”Member’s explanatory statement
In line with the original policy intention, this amendment ensures that existing leases (those entered into before the commencement of Chapter 1 of Part 1) will fall outside the scope of the new section 4B.

Amendment 44 agreed.

Amendment 45 not moved.

Clause 9: Prohibition of rent in advance before lease entered into

Amendment 46 not moved.

Consideration on Report adjourned.