Renters’ Rights Bill
Lord Truscott Excerpts(1 month ago)
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Lord Best (CB)
My Lords, I apologise for leading two groups of amendments in a row.
Amendment 185, in my name and the names of the noble Lords, Lord Truscott and Lord Young of Cookham and the noble Baroness, Lady Thornhill, seeks to add a new clause to the Bill that would require planning consent before assured or shorthold tenancies can be converted into short-term lettings. The definition of “short-term letting” is defined in the Levelling-up and Regeneration Act 2023. These lettings are often referred to as “Airbnb lets”, although several companies handle them.
I note that the amendment would not affect the letting of spare rooms to supplement the family income or temporary use of an owner-occupier’s home, when, for example, they are away on holiday. Instead, the amendment would cover the switching of privately rented properties from ordinary, longer-term lettings for those living and working locally to short-term lets for visitors. This phenomenon is having a serious impact on housing shortages in a number of tourist hotspots. In some places, the loss of PRS lettings has reached critical proportions, from seaside towns to national parks and historic cities. Appallingly, there are many examples of landlords serving notices to quit—thereby evicting tenants—so that long-established renters can be replaced with higher-paying lettings to tourists.
According to AirDNA, which tracks the lettings by Airbnb and similar companies, York saw an increase of nearly 30% in short-term lets in the city between August 2021 and August 2023. York now has more than 2,000 such lets. In Coniston, in the Lake District, 50% of homes are not lived in full-time. In the picturesque town of Salcombe, Devon, it is understood that around 40% of the accommodation now comprises second homes or short-term lettings; I commend the relevant section in the Devon Housing Commission report on that.
The switching phenomenon also has a particular relevance in London: a survey by the property consultants, Savills, found 117,000 homes listed for short-term letting on the Airbnb and Vrbo websites last year in just 12 London boroughs. The survey found that over half were let for more than the 90 days permitted in London and, in the central London boroughs, 40% of the private rented sector was let on a short-term basis. In many other European and American cities, action is being taken to address this problem. Indeed, Wales and Scotland have legislated to reduce the impact of losing homes for locals to rent.
In England, the Levelling-up and Regeneration Act 2023 has provided the basis for a start to be made. The Act requires the Secretary of State to introduce mandatory registration for short-term lets. This measure would provide local authorities with an evidence base on which to decide whether the level of short-term lettings in their area should be restricted. Regulations under the Levelling-up and Regeneration Act would prohibit the use of short-term lets of non-registered properties. Introducing registration would be a good starting point but, so far, no action has been taken.
In February 2024, Michael Gove, then Secretary of State, announced that the Government would be taking this issue to the next stage, using the planning system to control switchovers to short-term lets where the local planning authority deemed this necessary. To inform the details of this new regime, a government consultation considered the introduction of a new use class for planning purposes, enabling local authorities to refuse permission for a change of use from a long-term to a short-term letting. This consultation exercise produced near-unanimous agreement that such action would be an invaluable mechanism to discourage further expansion of the so-called Airbnb sector in specific places. The Government of the day pledged to take this forward at pace. Sadly, no action followed.
The previous Government reformed the tax regime for furnished holiday lets, and this has now come into force. The change removes a strong incentive for flipping properties from long-term to short-term letting, but the Renters’ Rights Bill may mean that more landlords are now being tempted to flip their properties, making the introduction of a new use class, which would enable councils to intervene, the more urgent. Amendment 185 is intended to provide the opportunity for the Government to progress the action needed to amend planning law by creating a new use class for short-term lettings, empowering each local authority to decide whether it is in the interests of their community to permit changes of use from long-term to short-term lets. The Minister for Housing and Planning in the other place, Matthew Pennycook, has demonstrated an appreciation of this issue and has promised to take further action—but when?
If the Minister is not able to accept this amendment, it would be helpful if she could update the Committee on the timetable for introducing first, the short-term lettings registration scheme and, secondly, the legislation to create a new use class for short-term lets. Action is overdue. I beg to move.
Lord Truscott (Non-Afl)
My Lords, as mentioned previously in Committee, I declare my interest as a landlord and former long-term tenant in the private rented sector. I support the amendment from the noble Lord, Lord Best, on short lets requiring planning consent for properties to be converted into short-term lettings. As your Lordships’ House would expect, the noble Lord, Lord Best, has made the case convincingly.
His Majesty’s Government should include this amendment in the Bill, because there is an undoubted link between the reduced availability of long lets, especially for local residents, and the exponential rise in Airbnb and other short-let platforms. A register, while welcome, will mainly chart the huge and expanding nature of this part of the PRS, which is already having such a deleterious effect on the provision of long-term accommodation for locals and their communities. The Minister may say this amendment is not a matter for the Bill, but it is. The Bill will accelerate the trends of short lets and reduce long lets unless amended. By introducing periodic tenancies with a minimum two-month notice period, it will simply introduce another class of short lets protected by law and destabilise the long-term lets market.
The PRS has not grown in the last nine years, as I mentioned previously in Committee. The Bill, by prohibiting upfront rental payments and fixed-term tenancies, will lead to evermore landlords moving to short lets. This trend is completely ignored by the Bill but will follow as surely as night follows day.
Tenants will be able to give two months’ notice on day one under the proposed legislation. Why should they do that? Because long lets are up to four times cheaper than short lets in, for example, the London Borough of Camden. Once tenants move in, the length of their tenancy will be impossible to police. If tenants move out after only a month rather than the minimum two, how will that be monitored and by whom? It will result in widespread short lets by the back door. A tourist could simply move into what was previously a long let, give two months’ notice and save thousands of pounds. It would just take a little fib on the part of the tenant.
A landlord will have no way of knowing a tenant’s real intentions under periodic tenancies, so will put up the rent, assuming that all long lets can become short lets. The distinction between short and long lets will disappear, with implications for rent levels. Neither the prohibition of mutually agreed fixed-term tenancies nor advanced rental payments were in Labour’s election manifesto, so I am at a loss to understand why these two essential measures to provide stability and certainty to the market have become non-negotiable. The majority of tenants want fixed terms, so I fail to see why HMG think they know better than the tenants themselves. Reducing the supply of long lets as ever more landlords gravitate towards more profitable short lets will mean that rents will assuredly go up, not down, and the losers will be the tenants, especially local residents and their sense of community.
The noble Lord, Lord Best, mentioned London and Devon. I have quoted before how some London housing blocks have become over 90% Airbnb or similar short lets. Local residents are squeezed out. Devon is a county I know well; I am a Devonian. The noble Lord, Lord Best, quoted the example of Salcombe, Devon’s answer to Saint-Tropez. Similar cases can be quoted throughout the West Country and Wales, including Cornwall. However, as the noble Lord said, it is not just coastal resorts and historic cities such as Bath, which I also know well, and York, that are affected. Areas around Birmingham have also become short-let hotspots.
Of course, it is not only the UK. Airbnb and the like have reached saturation point in Spain, in cities such as Barcelona and on Tenerife. It has become so bad, with locals priced out of accommodation, that tourists have been assaulted in restaurants and on beaches. As I mentioned, short lets are far more profitable for landlords than long lets. Airbnb and other short-let platforms are becoming increasingly dominated by professional landlords, as regulation is either non-existent or very light-touch.
By way of comparison, long-let residential property is already governed by 170 laws and regulations. The attractions for landlords to move to short lets is obvious and will be enabled by this Bill. Apart from the further regulatory and legal provisions in the Bill, long-let landlords will be asked by HMRC to make quarterly tax returns by April 2026, and new EPC regulations could cost anything up to £15,000 per property. Estate agents must report long-term rentals to HMRC in this country. Airbnb and the like do not, and I suspect that tax evasion is rampant.
Renting out flats or rooms on Airbnb or other short-let platforms undermines long-term rentals, legitimate B&Bs and smaller hotels, all of whom must pay taxes, abide by a host of regulations, employ local people and support local economies. With more and more remote professional landlords, Airbnb does none of that. The idea that Airbnb and other similar platforms allow a few grannies to innocently rent out their spare rooms is far from the true picture.
The impact of short lets is also pernicious. They undermine any sense of community, create nuisance for full-time residents and can be a security risk for blocks of flats, with Airbnbers having raucous parties and coming and going at all hours of the night and day. As the noble Lord, Lord Best, said, research has found that half of London’s 117,000 short holiday lets are being rented out illegally. In Westminster, where over 50% of residents live in rented property, council leader Adam Hug has said that short lets
“can hollow out long-term residents, making neighbours subject to significant noise disruption, fly-tipped waste linked to short-term let properties”.
In 2015, there were fewer than 30,000 short lets in London. This more than doubled throughout 2016, peaking at over 100,000 in 2019. As Tom Copley, Sir Sadiq Khan’s London Deputy Mayor for Housing, said,
“we need to bring those properties back into use as long-term rented properties or long-term properties for people to buy and live in as owner-occupiers”.
This Bill as drafted will legalise ever more short lets, as tenants will be able to legally move out of a property after just two months.
I had experience of an Airbnb rented flat in a block where short lets were banned under the lease. The owner was fully aware of this fact and kept denying the property was rented out on Airbnb, despite the property being advertised openly on the website. Airbnb takes no action in these situations. In our case, it took over two years for the owner to be forced to abandon Airbnb, despite his flat being the only short let in the block. People were coming and going every few days, and wear and tear on the communal areas and concern for security were considerable.
The only action which reined in the current leaseholder was a threat by the excellent managing agent to go to court to get him to forfeit the lease. HMG have previously said this option will be banned, so I wonder how such situations could be resolved in the future. I would retain the nuclear option of forfeiture but exclude it for death and other relatively minor transgressions.
Baroness Hayter of Kentish Town (Lab)
My Lords, I have also put my name to Amendment 203 and I declare a non-financial interest as chair of the Property Institute, which favours regulation of all property agents, as the noble Lord, Lord Best, has said. Amendment 203 is about safety, security and the good management of people’s homes. I think we all agree that residents deserve to be safe in their homes, but in rented accommodation it is impossible for residents to do everything themselves, because the building and the environment are actually owned and managed by the landlord.
The noble Lord, Lord Young, intimated that, in the case of social housing, it actually took the death of Awaab Ishak to bring forward mandatory qualifications for those who manage social property. As he said, however, there is no equivalent for private property, where unqualified and even rogue agents take responsibility for vital parts of the building’s upkeep, its safety, its access, its insurance and its legality. Unlike other professions handling legal and financial transactions, most of which are regulated, there are no mandatory qualifications or any minimum requirements for property agents, even when they are managing the money of assured tenancies. The absence of regulations clearly can lead to the mismanagement of deposits and rents and legal non-compliance, very often through ignorance rather than wickedness.
Managing shared buildings, particularly tall ones, is extremely complicated and demanding, and growing more so. There are a lot of new energy-efficient rules, quite rightly; there are increasing tenant demands for involvement, quite rightly; there is the rising cost of insurance; and there is more focus on legislation on health and safety, particularly after Grenfell. All these are complicated issues that need to be handled by a professional in the private rented sector, which houses, of course, many vulnerable people.
The private rented sector is often the home of people who can least afford to pay for any additional services, and, if they are paying too much in rent, they cannot even heat the property, and that can be because of mismanagement. It should be obvious without, I hope, having to wait for a death in the private rented sector, that all managing agents looking after homes should be properly competent and qualified. It is a job for professionals, not amateurs.
This amendment is a way forward. We are not talking about an expensive thing to run; it is not asking for very much. It asks simply that those who are paid to manage rented properties know what they are doing and have the qualifications to prove it, so that landlords would employ only agents capable of managing homes legally and honestly. Let us not wait for a tragedy: let us do it now. We owe it to all residents to make sure that the state requires those managing their homes to know what they are doing.
Lord Truscott (Non-Afl)
My Lords, I rise to support Amendments 203 and 204, in the name of the noble Lord, Lord Best, and others. I declare my interest as a leaseholder, as well as a landlord and former PRS tenant. Noble Lords supporting these amendments have already made a cast-iron case for requiring property-management agents to have relevant training and qualifications, and for these requirements to be legally enforced.
I have dealt with a number of property management agents. Some have been excellent and others have been appalling. It seems extraordinary to me that property agents who may deal with millions of pounds of property and revenue are currently not required to have any professional qualifications or training whatever. Some agents I have dealt with in the past have no property qualifications and had little or no understanding of property law or lease enforcement. There is no other sector that I am aware of where individuals dealing with such large amounts of money and such valuable assets can be wholly unqualified and virtually unregulated.
Anyone can set themselves up as a property agent, with little or no knowledge of the sector. Many property agents are, of course, very professional, but the rogues and amateurs undermine the reputation of the whole property sector. This must end, as we have heard. For that reason, I wholeheartedly support these two amendments and urge the Minister to accept them.
Baroness Coffey (Con)
My Lords, I oppose this amendment. It is rare that I am out of step with my noble friend Lord Young of Cookham, but I am concerned that overregulation of aspects of employment is—how can I put it?—a solution waiting for an extensive problem. One of the things that these amendments do is to yet again give considerable powers to others to set all sorts of training expectations. Candidly, and certainly in the private market, there are simply too many sectors in which government and Parliament seek to rip away control instead of the individual having that engagement and relationship.
We already have the property redress scheme in place, of which letting agents and people who manage properties have to be a part. Do not get me wrong: there are plenty of landlords who are not necessarily doing what they should, at the moment, but there are already mechanisms to put this in place. I do not believe that qualifications, training schemes or similar will make a particular difference.
I am also conscious of what happened with social housing, particularly some of the significant failures that we sadly saw in aspects of local government and housing associations. There was a feeling that something must be done. I am conscious, however, that that does not mean that we need to paint every letting agent or property manager with the same brush. For me, this is overreach on behalf of Parliament and, again, I would like to see the evidence for why we need to go to this extent and why yet another profession that has minimal regulation today now needs to be heavily regulated.
It is again a barrier that would put up agencies’ costs. This is the reality of having to deal with this sort of regulation: the person who pays is the renter, not the landlord. We have to bear in mind that, with the cost of living challenge that we are facing—still the number one issue for the electorate in this country—we are here tonight considering an amendment that will continue to put costs on people who are trying to pay their rent. This is the sort of economic situation that we need to consider for every regulation where we are adding extra barriers to entry to make sure that we keep in mind the people who want to just get on with their lives and have good relationships. They can change in the private sector; that is much harder for people in the social rented sector but, even then, we may have gone slightly too far. We must continue to consider the economic impact on people in this country with every regulation that we pass in this House.
Renters’ Rights Bill
Lord Truscott Excerpts(1 month, 1 week ago)
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Lord de Clifford (CB)
I am delighted to have added my name to Amendments 127, 129 and 130 in this group. I thank my noble friend Lord Kinnoull for leading on this section with regards to pet insurance and respect his deep knowledge of the insurance market. Amendments 127 and 128 seek to provide an alternative to the pet insurance route for protecting landlords from pet damage, as there is still uncertainty at present as to whether the insurance market will provide a policy that is fit for purpose, as described in the Bill. Amendment 128 would allow for an additional three weeks of deposit to be paid and held. I listened to the Government saying that finding a deposit can be challenging for tenants, especially the low paid. Therefore, these insurance policies, if they can be developed, could be an accessible and appropriate product for tenants.
For some tenants and landlords, the option of paying a three-week deposit could be an alternative, as both parties would know where they stand from the beginning of the tenancy, or when a pet moves into a property. There are further advantages, as the tenant would get their money back if no repairs were required at the end of the tenancy, thereby rewarding tenants for looking after the property. As my noble friend Lord Trees pointed out a minute ago, if tenants pay for an insurance product, they are not rewarded for being good tenants, and the premium paid benefits neither tenant nor landlord. The deposit scheme is allowed in Scotland, so there is some real-life data that can be drawn on to see whether it works for both tenants and landlords. From my noble friend Lord Kinnoull’s experience, it appears to be working.
The deposit option gives flexibility for landlords and tenants in choosing the most appropriate protection for themselves and their circumstances in covering the possible extra costs of housing a pet in a rental property. This is a challenging issue for some landlords and very few currently accept pets. That is why Clause 12 is welcome: it will increase the number of landlords accepting pets—surely giving two methods by which they can protect themselves can only ease the fear and reluctance in accepting a pet.
Amendments 129 and 130, which I also support, would bring clarity on the detail to be included in the proposed insurance products and would clear up some of the confusion with these amendments. Therefore, I hope the Government will listen to these speeches today and consider adding a bit more flexibility to the Bill by accepting these amendments on Report.
Lord Truscott (Non-Afl)
My Lords, I support Amendment 128 and declare my interests as a landlord and a former PRS tenant. I support the amendment of the noble Earl, Lord Kinnoull, on pet deposits. First, I want to state that I am a dog lover and had dogs as pets in my youth. I was, however, horrified by the description by the noble Lord, Lord Trees, at Second Reading of the potential cost and sustained effort required to deal with flea infestation, and there is other damage that cats and dogs in particular can cause. Carpets, for example, may need to be wholly replaced after some pet tenancies, as I have experienced at considerable additional cost, which was not met by the deposit. As your Lordships have heard, insurance products are currently non-existent or very unsatisfactory, so it makes sense, in my view, to introduce a pet deposit scheme which would make the whole process a lot simpler.
The main point I wish to make is that where a lease bans pets, particularly dogs, this should be respected. As we also heard earlier, not all properties are suitable for dogs, especially large dogs. There has been an exponential rise in dog attacks in the country, especially since the pandemic. In total, there were 31,920 dog attacks in England and Wales over the last year alone— 87 a day. Since 2022, 31 people have been killed by dogs, and there were almost 11,000 hospital admissions for dog bites in England between 2023 and 2024. These figures are truly horrific and are growing. I do not claim to be an expert on this rise, but many have put it down to the surge in dog ownership since the pandemic, poor dog training and an inability of inexperienced owners to control their powerful dogs.
If you had been the victim of a dog attack, you would understand why some seek protection in their home environment, especially blocks of flats. My wife was attacked by a dog in our open gardens. Although dogs are banned under the lease, we made an exception to allow a family with a dog. At the time, my wife was wearing a back brace, having recently fractured her spine. I placed myself between the dog and my wife, while the neighbour took five minutes to come outside and struggled to restrain the aggressive dog. Incidentally, it was not a banned breed.
Those five minutes felt like a long time. Although our neighbour was red-faced and apologetic, it was a serious and frightening incident. For months afterwards, my wife had flashbacks, as it could have been a life-altering experience, like the ones you read about in the newspaper or see on television. In conclusion, where dogs are banned under leases, those leases should be upheld, and where dogs are allowed with discretion, that should also be upheld.
Baroness Scott of Bybrook (Con)
My Lords, the matter of pet damage insurance is an extremely important one, as it directly addresses the responsibility of the tenant in conjunction with the increased rights that they may be granted under the Bill.
In all our discussions on this question, we have acknowledged that allowing pets into rented properties brings with it a series of risks. There are risks to health in questions around allergies and dangerous animals, risks of damage to the property and risks to the well-being of neighbours and other tenants.
Given this, we believe it is reasonable to grant the landlord the capacity to require the tenant wishing to bring a pet into their property to have pet damage insurance. I have listened very carefully to the noble Earl, Lord Kinnoull, and I thank him for all the work he has done on this—which I think is really important work—but I am disappointed that there does not yet seem to be a product in the market for this.
However, we have to continue down the insurance route as well as down the route of having deposits. It is important, as is in my amendments, that before this section of the Bill comes into effect, there is a final decision from the Secretary of State on an insurance product that is available. If that is not going to come forward, we will have to relook at the issues that have been brought up by the noble Earl, Lord Kinnoull, in Amendments 127 and 128, which, as we have heard, provide an alternative avenue for redress should any damage be caused. This is a flexible addition to the Bill, and discretion is going to be important, but it is important to give people the option here, whether it be through a deposit or through an insurance product which is on the market in the future.
There is concern over the deposit, because it is there for very specific reasons, and when you add a further reason—damage by pets—the amount of deposit may have to be looked at again. The noble Lord opposite brings up the idea of a pet deposit along with the deposit. The principle behind this is that when you have a right to have a pet, you also have responsibilities for that pet. It is correct that landlords should be permitted the ability to claim redress when their properties are damaged, and tenants should be responsible when choosing to have pets.
It is important that we make sure that there is some form of redress for any damage caused, if the landlord wishes. Some landlords will welcome pets without any further insurance or deposit, but where the landlord wishes it, there must be some way for the tenant to have some form of redress at the beginning of the tenancy, in case there is any issue with their pet’s damage or anything else concerning that pet.
Renters’ Rights Bill
Lord Truscott Excerpts(1 month, 2 weeks ago)
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Lord Truscott (Non-Afl)
My Lords, before I speak to my Amendment 111, I declare an interest as a landlord of over two decades and a former renter in the private rented sector for some 16 years.
As I mentioned before in Committee, the Bill before us has much to commend it. I support ending arbitrary evictions under Section 21, the imposition of a decent homes standard and the imposition of Awaab’s law in the PRS. Renters should not be exploited by the minority of rogue landlords. However, the fact remains that over 80% of tenants have a satisfactory experience in the PRS, and, despite HMG’s unduly negative impact assessment, it is the most popular form of rental tenancy—more popular than council housing or other forms of social housing. Remember, Awaab’s law came about because of the shocking state of some of the social rented housing, and will now rightly be applied to the PRS.
We should not blame the PRS for the failure of housing policy over previous decades and under Governments of all hues. There is a chronic shortage of affordable rental stock, and, where demand exceeds supply, rents inevitably go up, as mentioned by the noble Lord, Lord Thurlow, in a previous group.
More rental homes are needed in the PRS—some estimates say another 50,000 a year, on top of an extra 90,000 social homes, are required, as was outlined previously by the noble Lord, Lord Best. Ministers should ask themselves whether there is anything in this Bill which will increase the supply of affordable rental homes, or whether the best we can hope for is treading water.
It is often quoted that the PRS has doubled in size since the early 2000s, yet it is also a fact that the PRS stopped growing in 2016 when tax changes shifted the business model, and has since been stuck at 5.5 million homes, with the number of landlords buying offset by the number of landlords selling. Now that half of the PRS is owned by 20% of the landlords with the largest portfolios, this trend is accelerating. Many of these larger corporates tend not to house families; they impose the highest rent increases in an inflexible manner and, because they tend to own large, purpose-built flats, are distinct from local communities and smaller properties.
It is the smaller landlord who often has more interest in their tenant and property, embedded in the local community—I think the noble Lord, Lord Hacking, is probably one of them. This may be their only investment, and so they look after it well. Many are known to subsidise or help out their tenants in difficult times—which would be unlikely from a large corporate.
Forget for a moment whether there will be a mass exodus from the PRS because of this Bill, as the effects bed down; according to the ONS, by 2050 there will be 78 million people in this country—some 8 million more than now. Are we ready for that? If we think we have a housing crisis now, in 25 years it could become a major catastrophe. Against that background, anything which makes the current housing crisis worse should be avoided at all costs.
My amendment provides for tenants to pay up to 12 months’ rent in advance, if mutually agreed with the landlord. It provides security for both the tenant and the landlord. As has been said before in your Lordships’ House, thousands of people will be deprived of the opportunity to rent a home if advance payments are banned. As the noble Lord, Lord Jamieson, mentioned just a few moments ago, that includes students—particularly foreign students, on whom our educational institutions rely—who have no credit or banking history in this country. It also includes self-employed people and downsizers, who may have cash but no proof of income. It includes vulnerable people with poor credit histories and county court judgments against them. All these groups often offer rent in advance to prove they can afford to stay in their homes.
If the option of rent in advance is denied, literally thousands of people will be excluded from the rental market, as landlords will feel unable to take the risk of accepting tenants with no apparent source of paying their rent. Guarantors will be unable to give unlimited guarantees under rolling periodic tenancies. Once again, Ministers have a line. The line is that advance rent payments will discriminate against those with limited means. First, most tenants are never asked for advance payments. Landlords frankly prefer longer-term, stable tenants who can prove they have enough to pay the monthly rent. Students, for example, are not always the first choice of landlords, advance payment or not. Secondly, I hate to say it, but we live in a capitalist society. Banning advance payments was also not mentioned in Labour’s election manifesto, so it is within the conventions of this House to ask the Government to think again.
We should allow rental payments in advance because, at the end of the day, this measure will help more tenants than it will hinder.
Lord de Clifford (CB)
I support Amendment 111 and thank the noble Lord, Lord Truscott, for leading on this amendment. I also agree with a lot that was in the speech of the noble Lord, Lord Jamieson. The removal of the right to payment of advance rent will cause more tenants with problems accessing housing to find it even more difficult to get access to their choice as tenants. Currently, 7% of tenants pay advance rent, according to several letting agencies and credit reference agencies. I thank the Minister for her time meeting me on this matter. We have not heard what percentage of landlords are asking for or demanding advance rent.
The Bill targets these rogue, or possibly bad, landlords who are looking for secure rental income from tenants in this high-demand rental market. During our meeting, the Minister suggested that the answer for tenants who currently need to pay advance rent was to seek out a guarantor. Most tenants would prefer not to pay in advance if a guarantor was available or could be found. In my personal experience of being a guarantor for student accommodation for both my children, guarantors are asked for not only rent but other liabilities. Therefore, finding guarantors who will be willing to cover both rent and other liabilities is difficult. Also, guarantors need to prove their income and their assets. For foreign tenants, it will be very difficult to find a guarantor with UK income or assets, and that is one reason that advance rent is needed.
For students who do not have a guarantor, so they need to pay in advance, the suggestion was that universities could provide guarantee services. This would add further burdens to many universities, which are financially under pressure. The final suggestion was to approach a local authority, to ask it to act as a guarantor. I certainly will not challenge the Minister on her knowledge of local authorities, as her service to Stevenage and Herefordshire Councils is outstanding. Sadly, from the comments made in this Chamber and the press, it would seem that local authority services are under severe pressure, so surely the addition of increased requests would be a further burden and demand on limited resources.
Therefore, if you allow advance rent, you will not add further burdens to both local authorities or universities. There are products and companies providing guaranteed services. These services are costly to tenants and a significant percentage of tenants paying in advance have a low income or a poor credit rating, as previously stated. Again, this is not a logical move. Individuals who cannot provide an income source for some reason or are unemployed, who have the funds to pay rent but do not want to access a guarantor, will be disadvantaged in the tenant selection process.
The removal of the payment of advanced rent has great merits, as it addresses a very unwelcome trend in the marketplace for the demanding of large amounts of money, which restricts the number of tenants who can access certain properties. With the Bill as it stands, more tenants will be affected and denied access to a full range of properties. This amendment keeps flexibility for tenants on how their rent is paid. Therefore, I ask the Government to consider this amendment, or have further discussions, before Report.
Renters’ Rights Bill
Lord Truscott Excerpts(1 month, 3 weeks ago)
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Lord Truscott
Member's explanatory statement
This amendment seeks to allow fixed term tenancies of up to 12 months, as an alternative to the abolition of fixed terms.
Lord Truscott (Non-Afl)
My Lords, I come to improve this Bill, not to bury it. In doing so, I declare an interest as a landlord and a former private rented sector tenant of a combined 40 years’ standing. The Bill’s intention is laudable: to provide more security for tenants, to abolish arbitrary evictions under Section 21, to deal with the minority of rogue landlords, to establish an ombudsman and a useful database, and to introduce the decent homes standard and Awaab’s law to the PRS. I support all these measures. However, His Majesty’s Government should beware of the unintended consequences of the application of parts of the Bill, which would lead to less, not more, security for tenants, and higher, not lower, rents.
Before I expand on this, I make no apologies for my amendment. Your Lordships’ House is a revising Chamber; our job is to revise and improve Bills which come from the other place. To broadly paraphrase the late noble Lord and MP Francis Pym, large majorities do not always get things right. Your Lordships’ role is, rightly, to use your collective expertise to point out where a Bill has gone wrong and where it can be bettered.
My amendment argues for fixed-term tenancies of up to 12 months; they could then revert to rolling, periodic tenancies, or another 12-month tenancy could be agreed. This would give tenants more security than the current Bill does, not less. Under the Bill, tenants will have no security after the first 12 months. They could be evicted for a whole host of reasons, including the landlord re-occupying or selling the property. However, if a landlord and tenant were free to agree annual 12-month tenancies, the landlord would not be able to regain possession over this period, so the tenant could have security for many years, renewable annually. This suits both tenants and landlords.
A majority of tenants actually want longer fixed-term tenancies in order to have more security, to allow their children to attend local schools, to be near to work and to build links within a community. So, why are the Government so adamant that fixed-term tenancies should be banned, and assured shorthold tenancies, which normally have a six-month break clause, abolished?
Let me be clear: I opposed the ending of fixed terms and the abolition of ASTs under the last Government and remain consistent in opposing them under this one. I have been at a loss to discover who came up with the idea of moving exclusively to periodic tenancies with two months’ notice. As the noble Lord, Lord Marlesford, who is in his place, said at Second Reading, it is a batty idea. Incidentally, taken together, we have almost 100 years’ experience of the PRS, so we know of what we speak. Another Peer with many years’ professional experience of the PRS asked the Minister in a briefing meeting why the Government were moving to periodic tenancies with no fixed terms and two months’ notice on the tenant’s part—they found it inexplicable.
I thank the Minister for her engagement on the Bill. I am aware of her extensive experience in and leadership of local government. However, the Minister’s lines to take, both here and in the other place, do not hold water. First, there is the often-quoted example of domestic abuse. This is a very serious issue. However, to say that two months’ notice is required if someone is facing domestic abuse is simply not the case. It is the victim who flees, often with no notice at all, and the abuser who stays put, as domestic violence charities will confirm. The abuser will hardly make themselves homeless by giving two months’ notice, so the type of tenancy in these circumstances is irrelevant.
Secondly, the Minister has opined that fixed tenancy must go so tenants are not trapped in unsuitable or hazardous conditions, or if their circumstances change—but this is one of the main points of the Bill. The database should show the history of the property and the landlord, whether it is safe and well-run. A decent homes standard and Awaab’s law will be imposed and regulated. If any landlord is reckless enough to provide substandard accommodation, they can face fines of up to £40,000 and rent repayment orders of up to two years—enough to bankrupt most landlords. If properly regulated, such behaviour would be extremely rash and worthy of action. Very few, indeed, would risk it.
Under current assured shorthold tenancies, as I mentioned, there are usually six-month break clauses, which allow for most changes of circumstances. There is thus no logical reason to abandon fixed-term tenancies. From the tenant’s point of view, it will make their tenancies less secure and more expensive. From the landlord’s point of view, it will increase costs and uncertainty. We have heard before how a lot of the landlord’s costs and time are front-loaded into new tenancies. Landlords will have to factor this, and the fact that a tenant can give notice at any time, into rental prices.
What will this mean in practice? First, if a tenant moves in, they can give notice on day one and move out in two months. You may ask, “Why should they?” At the moment, short lets can be four times more expensive than long lets. For example, anyone moving to a city centre or coastal resort will be able to move to a form of Airbnb at a fraction of the present cost. Rentals for local residents will become even more expensive and rarer than they are already. The line between short lets and long lets will be blurred and, in effect, disappear. Many landlords will gravitate to ultra-short lets, as they are more profitable and virtually unregulated. According to Foxtons, there are already 150 pieces of legislation covering long-let homes but virtually none for Airbnb.
Secondly, those landlords who stay in the dwindling long-let business—and it is a business—may find that tenants move out over the winter, when properties are traditionally harder to let, and will face higher voids as a result. To cover the risk of higher turnover and the expected voids, rents will have to go up.
In answering why fixed terms, even with a break clause, are anathema to the Government, I ask that the Minister does not roll out the same stock answers on domestic violence and flexibility in the case of unsatisfactory accommodation. That is a non-answer. The Norman Lamont MP puppet in “Spitting Image” said, unfairly lampooning the noble Lord, Lord Lamont, “If you repeat things often enough, people will believe it”—but not in this House, I hope. I beg to move.
Lord Northbrook (Con)
I apologise; I failed to declare my interest as a private landlord of rental property in Hampshire.
Lord Truscott (Non-Afl)
My Lords, I thank all noble Lords who have taken part in this debate. Coming back to the point from the noble Lord, Lord Shipley, I am still concerned about the unintended consequences of parts of the Bill. I am not sure the Minister entirely convinced me on that, particularly on issues such as, for example, the move towards ultra-short lets that is taking place before our eyes. Some blocks of flats in London are 90% Airbnb. There is a big shift in the professionalisation of ultra-short lets. That is one impact of ultra-short periodic tenancies of two months that will be more or less impossible to police in large cities and resorts.
The noble Lord, Lord Marlesford, gave us the benefit of his 50 years’ experience in the PRS and expressed similar concerns. The noble Baroness, Lady Scott, and the noble Lord, Lord Shipley, asked the Minister what the rationale behind abolishing ASTs is. We heard some of the familiar arguments but, again, I was not entirely convinced. Domestic abuse is an extremely serious subject but I cannot imagine anyone who is in fear of their life checking their tenancy agreement before fleeing their abuser. I know the Minister mentioned one case, but the domestic abuse charities I spoke to say it is the abused person who flees, more or less at the drop of a hat, and the abuser who stays in situ.
A number of noble Lords expressed their disquiet about the abolition of fixed terms, not just in terms of flexibility—although there is an argument that asks whether we are saying that six months’ flexibility is so awful that we must have two months’ flexibility instead. Under assured shorthold tenancies, people can have a break clause of six months and can move out, which suits most people and has certainly been my experience. I am sure we will come back to this at a later stage.
The noble Lord, Lord Carrington, made some strong points about fixed terms as well, and made a powerful case for a six-month minimum, rather than two months, to give stability to both landlords and tenants. We should think not just about tenants’ rights, which are very important and an important part of the Bill, but about the impact on the market of introducing two-month tenancies. It is undoubtedly the case that, in a number of areas, people occupy what were previously long-term rentals for short-term purposes. We will come on to discuss Airbnb later but, for example, 40% of the properties in the village of Salcombe in Devon are Airbnb or equivalent. If you ask the people of Cornwall, you will find that they are losing a lot of long-term rentals to short-term holidaymakers, and all the rest.
The two are linked. This Bill will be linked to what is already happening to the housing market and what will happen in the future. Once you introduce two-month periodic tenancies, it will be almost impossible to police. How will you know whether someone takes on a tenancy in a city centre—for example, a tourist—stays for a month, not two months, and then moves out? Who will police it? I am concerned that there will be a huge shift to ultra-short tenancies, which will undercut the long-term rental market and impact primarily on people who need long-term rental homes.
We have had a good debate. No doubt the Committee will come back to this issue in future amendments but, for now, I beg leave to withdraw my amendment.
Lord Carrington (CB)
My Lords, I declare my direct interest in the private rented sector with lettings in Buckinghamshire and Lincolnshire. I am pleased to support the amendment from the noble Baroness, Lady Scott, and the noble Lords, Lord Truscott and Lord Jackson, and I congratulate the noble Baroness, Lady Scott, on her damascene conversion following the previous Renters (Reform) Bill. I hope we will achieve the same with the current Minister. I will not repeat their well-argued points in favour of the amendment but will make the following additional points and reiterations.
I approach the PRS from a rural background, where the average length of a tenancy is around seven years. There is little churn, in view of the long-term nature of the accommodation in rural areas. As a result, assured shorthold and fixed-term tenancies are popular. This is somewhat different from the urban PRS to which this Bill is largely directed. I cannot understand why the Government would object to the continuation of the freedom to contract for a fixed term if both parties agree, particularly as it provides flexibility and certainty to both. The landlord gets his guaranteed rent and the tenant can negotiate additional conditions such no rent reviews for a certain period, improvements and security for the term.
In Germany there are two types of tenancy: indefinite and fixed-term. Fixed-term tenancies have move-in and move-out clauses and neither party is obliged to renew. Minimum rental periods in Germany, whether indefinite or fixed, can be up to two years. The German system shows that the assured and fixed-term tenancies can work well together. The ability to contract for a fixed term also has the effect of reducing rental pressure in the overall market as longer-term tenancies act as a natural brake on rising rental costs as there are fewer opportunities to increase the rent.
Another major advantage of retaining fixed-term tenancies is that it gives confidence to buy-to-let lenders and to institutional investors, because mortgage payments are more secure, as is the financial return to the institutional investor. These are the types of landlord we should now be encouraging if the PRS is to grow and the problems of bad individual landlords are to be minimised, because they tend to employ professional management and to produce a better product. I urge the Government to look again at this matter.
Lord Truscott (Non-Afl)
My Lords, it is a pleasure to follow the erudite speech of the noble Lord, Lord Carrington. I remind the Committee of my interest as a long-standing landlord and former tenant in the private rented sector.
Why do the Government insist that they know best when a majority of both tenants and landlords want fixed tenancies? That is a fact. The Minister quoted surveys earlier, but opinions have been sought and that is the case for both tenants and landlords. The Minister has never really explained why the Government think they know more and better than the people primarily affected. Is it a case of groupthink? I support Amendments 9 and 13, proposed by the noble Baroness, Lady Scott of Bybrook. The Government should not, in my view, interfere in an agreement between two or more consenting adults.
Lord Jackson of Peterborough (Con)
My Lords, I support the amendment tabled in the name of my noble friend Lady Scott of Bybrook, to which I have added my name. I will make some general observations. This amendment is helpful because it encourages a mutually agreed arrangement, where appropriate, between landlord and tenant, in order to avoid disruption, delay or litigation where they might otherwise arise, to the mutual benefit of both parties.
The noble Lord, Lord Truscott, is right to say that the wider philosophical argument is that the abolition of fixed terms will provide greater security for tenants and retain flexibility, but it is a surprising one, because a number of key issues undermine it. The abolition of a contract of a particular type in this way is an obvious infringement on the freedom of parties to agree such terms as they wish. On principle, it should be implemented only on the most cogent and urgent grounds, and no such grounds exist across the whole private rented sector.
There are also some situations in which tenants as well as landlords clearly benefit from fixed-term tenancies. Examples are student lets, lets related to fixed-term job postings or projects, and moving to be within a particular school’s catchment area. It obviously does not help tenants in these situations to be prohibited from obtaining the security of a fixed-term let. And landlords who are inflexible in their approach to the term of a tenancy and who are prepared to offer only a fixed term will do so at their own cost, as they will find that there is a smaller pool of potential tenants than for landlords who are flexible in their approach. This market-driven discouragement to fixed-term tenancies already exists and will continue to do so.
The stated aim in this legislation of enabling tenants to leave poor-quality properties is poorly thought through. The first point to make in this regard is that it will usually be apparent to a tenant before moving in whether a property is of poor quality. If a tenant moves in full knowledge of that want of quality, the fairness of allowing them to move out mid-term is not obvious. It may be true that, sadly, tenants often do not have a choice, but if it is, leaving mid-term is unlikely to be an option, for the same reason. It is better to find ways to coerce landlords into making living conditions better. However, such cases can be legislated for by the simple expedient of implying into a lease a warranty that a property is fit for habitation—a test already enshrined in statute in the Defective Premises Act 1972. If a tenant can show that that warranty has been breached, he or she may terminate immediately and leave, free of future liabilities.
In any case, parties can and already often do agree break clauses in fixed-term tenancies. There is no reason why they should not continue to do this, particularly if changes in circumstances, such as a job not working out, can be anticipated. This is also fairer to the landlord, since it alerts the landlord to a possible change in circumstances in advance.
Secondly, although circumstances sometimes change unexpectedly, that is true for both sides and giving tenants free rein in this regard while landlords have none is inherently unfair. In practice, if circumstances change unexpectedly—for example, a tenant loses their job or an income-earning partner ceases to be able to work or passes away unexpectedly—few landlords would be likely to insist on a tenant seeing out their term. It is not in their interest to have a tenant who cannot pay the rent. Most will be prepared to negotiate an early exit in such circumstances and instal a tenant who can. The rare residue of cases where a tenant has suffered a change of circumstances and wishes to leave but a landlord is unwilling to allow them to do so can be met by legislation stopping far short of an outright ban on fixed-term tenancies where hitherto there has been mutual agreement between the parties.
Finally, there is a point to be made about the concept of seeking to protect the rights of tenants in residential tenancies without regard to the wider context of how the legislation impacts on the pool of properties available for tenants. The abolition of fixed-term tenancies means that many landlords in the PRS will prefer not to let at all rather than be limited to letting on a periodic tenancy. Preparing a tenancy for a let involves a considerable amount of time and effort. If tenants can simply come and go on a whim, that time and effort will go unrewarded and fewer people will undertake it. That will reduce the size of the sector and so drive down tenant choice—to the detriment, rather than the benefit, of tenants. Tenant protections are worth obtaining only if the sector remains attractive to both landlords and tenants, as the noble Lord, Lord Empey, said earlier. The proposed abolition of fixed-term tenancies fails to achieve that balance, particularly if there was agreement previously.
Renters’ Rights Bill
Lord Truscott Excerpts(4 months, 1 week ago)
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Lord Truscott (Non-Afl)
My Lords, I congratulate the noble Lord, Lord Wilson of Sedgefield, and the noble Baroness, Lady Brown of Silvertown, on their excellent and passionate maiden speeches. As other noble Lords have said, they were an inspiring couple of maiden speeches.
I declare an interest as a landlord of over two decades and a former renter in the private rented sector for some 16 years. The Bill before your Lordships’ House has much to commend it. I support ending arbitrary evictions under Section 21, and the imposition of a decent homes standard and Awaab’s law in the PRS. Of course, as ever, with these and other elements of the Bill, the devil is in the details and how they are implemented.
On Section 21, as has been noted, the courts will have to be ready to deal with the expected increase in workload. I welcome HMG’s commitment to the digitisation of the court process, but this must be made an urgent priority.
However, my main concern with the Bill is the impact of moving to periodic tenancies only, with a ban on longer terms and upfront payments. Both those measures, as we have heard, will have a significant unintended impact, which will reduce the availability of homes, increase rents and affect the financial viability of the PRS as a whole.
The inability to negotiate upfront payments, as we have heard, will hit the self-employed, foreign students, those with a poor credit history and vulnerable people. It also risks a legal challenge under common contract law. No one has yet satisfactorily explained to me the benefits of moving to periodic tenancies and scrapping assured shorthold tenancies; it seems a solution in search of a problem.
Two reasons have been given by Ministers—and I thank the Minister for her engagement on this Bill: first, to enable those suffering domestic abuse to be able to leave; and, secondly, to enable tenants to leave unsatisfactory properties and give them additional flexibility to perhaps move to a new job or area, both while giving two months’ notice. In the first case, someone suffering domestic abuse is unlikely to give two months’ notice. In fact, charities dealing with abuse have told me that it is the abuser who stays in the home as the victim flees. In the second case, most ASTs, in my experience, have a six-month break clause, allowing enough flexibility for most tenants.
As for unsatisfactory homes in the PRS, that is exactly the reason for the decent homes standard, Awaab’s law, the ombudsman, the database and rent repayment orders. Any bad landlord providing sub-standard accommodation will find themselves subject to up to £40,000 in fines and swingeing rent repayment orders, payable to the local authority or the tenants themselves.
I found the Government’s impact assessment of the PRS very negative. It is, in fact, the most popular form of rental tenure, compared to council or other social housing. I recall being a councillor in Essex, where I represented what was once the largest council estate in Europe, and, believe me, the tenants were not very enamoured of the local council or the housing provided. Later, when I was a renter in the PRS, I moved 10 times in 16 years, but only one of those was a forced move, when my landlords discovered that they could make more money renting to Americans in the summer than to me all year round. In any event, most tenants do not intend to stay in the PRS for life, and many stay in a tenancy for just one year—and that is particularly applicable to students.
I understand the need for security. For five years I worked for a national charity and housing association providing housing for young homeless people and people with mental health issues. The idea was to provide homes and stability for vulnerable people, but two-month periodic tenancies are not the answer. Tenants will have less security, not more, as instead of a one or two-year tenancy, if mutually agreed, landlords will be able to give notice at any time, up to four months if reoccupying or selling their property. Why cannot reasonable people agree a fixed term, with a break clause if required? Incidentally, the majority of tenants want fixed-term tenancies.
Another unintended consequence is that landlords will increase rents, because tenants will be able to move out at short notice and many costs for the landlord are front-loaded, such as cleaning and referencing each time. The risk of voids or vacancies will increase, and landlords will increase rents to cover the added risk.
There may or may not be a mass exodus of landlords from the PRS; some will wait and see, but up to 70% are considering selling up—that is a fact. It is also true that the PRS has doubled in size since 2002. That was an era when buy-to-let mortgages were introduced, money was relatively cheap and baby boomers invested their pensions in the PRS—but those days are over. The issue is not whether there is a mass exodus from the PRS; it is that supply is not keeping up with demand, which will continue to be the case for the foreseeable future.
Even if the Government’s housebuilding target of 1.5 million homes is met, it does not mean that affordable homes will be built where people need them. What is needed is a commitment to build more affordable and social housing in the right places. Build to rent is expanding, but at nowhere near the scale to take up the slack. More regulation of the PRS is welcome, but if the costs associated with it spirals, including the cost of new EPC regulations, investing in the PRS will simply no longer be viable.
Costs have already spiralled for existing landlords, with around 40% of landlords paying double or even up to quadruple for their mortgages. For those new PRS investors that there are, they are increasingly chasing yields of 8% to 9%—impossible in the south but available in the north. That will create a regional imbalance. Some argue that if landlords leave the PRS that will be a good thing, as more property is opened up for first-time buyers. That will happen in many instances, but in many others, landlords will gravitate to ultra-short lets, as we have heard from other noble Lords. They are far more profitable and virtually unregulated; a register will not make a blind bit of difference.
Once purely periodic tenancies are introduced, the line between ultra-short lets and long-term lets will become blurred. In many cities and coastal resorts, long-let availability for local residents will simply disappear. In many apartment blocks, the sense of community will be lost. It is already happening. In some apartment blocks in London, 90% of flats are Airbnb. Even in Camden in London, for example, short lets can be four times more expensive than a long let, and hence much more profitable. Airbnb will try to say that its accommodation is being rented out by old grannies. The fact is that Airbnb and other ultra-short-let platforms are being increasingly dominated by professional landlords, who often avoid tax, as, unlike with estate agents, their rental income is not registered with HMRC. Local communities and all of us suffer as a result.
Landlords: Long-term Rentals
Lord Truscott Excerpts(6 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
I thank the noble Baroness for her Question. The Government value the contribution made by responsible landlords who provide quality homes for tenants. They form a vital part of our housing market. Our Renters’ Rights Bill ensures that landlords have the confidence and support they need to continue to invest in the sector and we do not expect it to have a destabilising effect on the market. We have included provisions in the Bill to make sure that landlords cannot evict tenants simply to turn the property into a short-term let. Landlords and tenants are equally important. Landlords want good tenants. Tenants want good landlords. We hope that the Bill will make things better.
Baroness Thornhill (LD)
I thank the noble Baroness for her reply and sincerely hope that the Government’s aspirations are met, but note that most of the actions are going to be in the future. However, I know that the Minister is only too well aware of the crisis in temporary accommodation that is actually caused by over 110,000 households unable to find any affordable accommodation in the private rented sector, where demand is demonstrably not keeping up with supply. What can be done when those landlords that are leaving the private rented sector precisely because there is a shortage can then relet the same property to their own council at a higher rent? Incredulously, this practice is fuelled by councils and the Home Office bidding against each other for the same property, at considerable cost to the taxpayer.
Baroness Taylor of Stevenage (Lab)
My Lords, of course the noble Baroness is quite right to flag up the issue of the terrible shortage of housing. The answer in the medium to longer term is just to get more housing built, and we are straining every sinew to do just that. In terms of the way that short-term lets work, we know that they can benefit economies through visitor spend and creating employment opportunities for local people. However, we appreciate that excessive concentrations of that in some parts of the country impact availability and affordability. I know that this competition between local authorities and government departments for housing is causing a real problem. We are introducing a registration scheme for short-term lets to protect our communities, abolishing things such as the furnished holiday let tax regime, to remove the tax incentive that short-term let owners have over long-term landlords. We recognise that more needs to be done to level the playing field between short and long-term tenures. Long-term tenures are important, and they need to be affordable long-term tenures.
Lord Truscott (Non-Afl)
My Lords, I declare an interest as a landlord and a former private renter, and I apologise for jumping up a bit early previously. Does the Minister accept that removing tax incentives and reliefs on mortgages for private renters has led to a diminution, in some cases, of the number of properties supplied to the sector, and certainly acted as a disincentive? As a result of that, together with other factors, more landlords are leaving the sector rather than coming in. The question of short lets has been mentioned. Increasing numbers of landlords are moving to platforms such as Airbnb, which are four times more profitable than long lets. Surely, in order to meet the Government’s housing targets, we need more long-term lets in the sector, not fewer.
Baroness Taylor of Stevenage (Lab)
I agree with the noble Lord that we need more long-term lets— I think I made that very clear—but there is no evidence of an exodus from the market. A study from the UK Collaborative Centre for Housing Evidence looked at whether regulation and tax changes over the past 25 years in the UK and internationally had affected private rented sector supply. The report concludes that there is no evidence that that has had an impact. In fact, the PRS has doubled in size since 2002 and is now the second largest housing tenure, with over 11 million people living in the private rented sector.