Renters (Reform) Bill (Ninth sitting)

Lloyd Russell-Moyle Excerpts

Committee stage
Tuesday 28th November 2023 Public Bill Committees

However, rather than limiting the Secretary of State’s powers to approval of the scheme, this clause provides them with powers to direct the operation of the ombudsman in all manner of areas, including fee setting, the time allowed for complaints to be resolved, the circumstances in which complaints may be rejected, the types of sanction available for redress, and the general enforcement decisions made under the scheme. My question to the Minister is simply why do the Government believe that a different approach from the norm is necessary in the case of the new ombudsman with responsibility for the private rented sector?

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

I rise to support my hon. Friend the Member for Greenwich and Woolwich and to speak to amendment 196, which stands in my name.

Amendment 196 aims to include deposits as an area that the ombudsperson can overview, and it touches on my hon. Friend’s point. The deposit schemes are three in number, which causes great problems for many constituents. Most believe that they will never get their deposit back, because they know that their landlords can run rings around the respective deposit schemes.

The outcomes of deposit scheme disputes are not published; they are secret. There is no precedent set when a scheme determines that a particular action puts someone at fault, and there is no cross-referencing between schemes. A constituent could be treated in one way under one scheme and a completely different way under another, even though the scenarios are exactly the same. It is a complete mess, and most other countries have one deposit protection scheme. I am not proposing that—that is outside the scope of the Bill—although I would love the Minister to look seriously at this when the deposit scheme licences come up. The New South Wales model is much more efficient and involves one scheme, the profits of which are rather large and pay for all legal aid in New South Wales. Early estimates of what would happen in Britain show that the amount raised would far exceed the cuts made to housing legal aid previously. There would be some real wins if the Minister got to grips with that.

My amendment 196 would at least allow for an appeal process. If someone does not believe that the deposit schemes have come to a fair and just conclusion, they can go to the ombudsperson for determination—that is important, because the ombudsperson’s deliberations would be public, which would allow the schemes to take into account what they were each doing—just as we would have to go through a local council complaints system, but can then go to the Local Government and Social Care Ombudsman if we feel there is a problem.

I would expect most complaints to still be resolved within the deposit schemes. However, where there is disagreement and the threshold of going to court is too high, and where maladministration, which is the main part of an ombudsperson’s remit, can also be identified, the ombudsperson can redress that and then publish their findings, and we can ensure harmonisation in the deposit system, which does not currently exist.

If we do not explicitly identify deposit schemes as falling within scope, there is a danger that the anomalies in the deposit system will never be addressed. I therefore hope that the Minister will give me some reassurance that there is an intention to address these problems with deposit schemes, where judgments are sealed and there is no idea of the outcome. It is also important, in relation to the property portal, for residents to know whether the landlord routinely—or every time—keeps the deposit. That would show a pattern of behaviour, which would be important information for tenants. Bringing it within the purview of this Bill is therefore also important.

[Jacob Young]

Amendment 174 would legally oblige the Government to make regulations requiring residential landlords to be members of a landlord redress scheme, rather than giving the Government the discretion to do so. The Government are committed to requiring private landlords to be members of an ombudsman, and a binding obligation is not required on the face of the Bill. We have taken powers in the Bill to allow the Government to ensure that the ombudsman is introduced in the most effective way, and with the appropriate sequencing.

Amendment 196 would require the ombudsman to handle complaints about tenancy deposits. It would be unwise to list in the Bill specific issues that the ombudsman can or cannot look at. The ombudsman would need the flexibility to consider any complaint duly made, but also to direct a tenant elsewhere if more appropriate. As tenancy deposit schemes already provide free alternative dispute resolution, the ombudsman may decide that the case is better handled elsewhere, but it will ultimately depend on the circumstances of each case. The ombudsman will have the final say on jurisdiction, subject to any agreement with other bodies.

We have made provision under clause 25 to enable the ombudsman to publish a Secretary of State-approved code of practice, which would clarify what the ombudsman expects of its landlord members. The ombudsman scheme will also provide more clarity about the circumstances in which a complaint will or will not be considered. I therefore ask the hon. Member for Brighton, Kemptown not to press his amendment.

As discussed, clause 24 provides the Secretary of State with powers to set up a mandatory redress scheme, which all private residential landlords of a relevant tenancy in England will need to join. We intend for the scheme to be an ombudsman service, and will look to require former landlords, as well as current and prospective landlords, to remain members after their relevant tenancies have ended, for a time specified in secondary regulations.

Members have asked for clarity about who the new PRS landlord ombudsman will be. No new ombudsman can be selected until after regulations have been laid following Royal Assent, but we can show the direction of travel. We have listened to the debates and the evidence given to this Committee, and our preferred approach at this time is for the existing housing ombudsman service to administer redress for both private and social tenants. As an established public body already delivering redress for social tenants, the housing ombudsman is uniquely positioned to deliver the private sector landlord redress scheme. Having one provider for all social and private renting tenants would provide streamlined and simple-to-use redress services for complainants.

To be clear, we are not ruling out the possibility of delivering through a different provider; we are still in the early stages of designing this new service. We now intend to explore how best to deliver on our ambition for a high-quality, streamlined and cross-tenure redress service.

To address the point that the hon. Member for Greenwich and Woolwich made about multiple redress schemes, the intention is to approve a single ombudsman scheme that all private landlords will be required to join. However, allowing for multiple schemes in legislation offers the Government flexibility, should the demand for redress prove too much for a single provider to handle effectively. I hope, on that basis, that the hon. Member will withdraw his amendment.

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[Matthew Pennycook]

I will speak to new clause 57. I will state up front that we welcome the Government amendments to clause 27 and in this area to toughen the sanctions on landlords who display the types of behaviour the Minister has just set out. As I indicated last week when we debated amendments 163 and 164 and the financial penalties that local authorities could levy for breaches and offences under clauses 9 and 10, we believe that rent repayment orders should be a more significant feature of the Bill as a means to aid enforcement of the new tenancy system; to ensure compliance with the requirements to be a member of the ombudsman and maintain an active landlord database entry; and to fairly compensate tenants for losses incurred due to a failure on the part of landlords to comply with the duties and obligations provided for in the Bill.

As the Committee will know, rent repayment orders were introduced by the Housing Act 2004, and were hugely expanded via section 40 of the Housing and Planning Act 2016. They allow the occupier of a property—usually a tenant—and local authorities to apply to the first-tier tribunal for an order that a landlord or his or her agent should repay rent of up to a maximum of 12 months—although the Minister has just made it clear that, in certain circumstances, the Government propose to lengthen that period to 24 months. Rent repayment orders are an accessible, informal and relatively straightforward means by which tenants can obtain redress in the form of financial compensation without having to rely on another body in instances where a landlord or his or her agent has committed, beyond reasonable doubt, an offence that relates to the occupation or letting of a property.

As Simon Mullings, the co-chair of the Housing Law Practitioners Association, argued in the evidence he gave to the Committee on 16 November:

“Rent repayment orders create, as I have said before to officials in DLUHC, an army of motivated enforcers, because you have tenants who are motivated to enforce housing standards to do with houses in multiple occupancy, conditions and all sorts of things.”––[Official Report, Renters (Reform) Public Bill Committee, 16 November 2023; c. 114, Q146.]

We know that rent repayment orders are already being utilised on a scale the dwarfs the use of other enforcement tools. In London, for example, the available data suggests that more properties were subject to a rent repayment order in the years 2020, 2021 and 2022 than civil penalties and criminal convictions relating to licensing in the same period.

The Bill as originally drafted allowed for rent repayment orders to be made only where a landlord had committed an offence under clause 27(9) relating to continuing or repeat breaches after a penalty had been imposed. As the Minister has made clear, Government new clause 19 adds a series of offences under clause 48 concerning the provision of false or misleading information to the private rented sector database and continuing or repeat breaches. We welcome that.

Separately, Government new clause 21 provides that a rent repayment order can be made against a superior landlord, thereby overriding the judgment made in the recent case of Rakusen v. Jepsen and others, which was heard by the Supreme Court. We welcome its incorporation into the Bill. We take the Government’s decision to table it as a clear indication that they view rent repayment orders as a practical and accessible means of enforcement by tenants or occupiers.

However, we want the Government to go further and extend the tribunal’s ability to make rent repayment orders for the following: first, a breach of new sections 16D and 16E of the Housing Act 1988, relating to the duty on landlords and contractors to give a statement of terms and other information, and the no-let prohibition in respect of grounds 1 and 1A; secondly, a failure to register with the ombudsman, as required by clause 24 of the Bill; and thirdly, a failure to keep an entry on the database up to date and to comply with all the relevant requirements of clause 39.

[Lloyd Russell-Moyle]

Despite my reservations about having three different deposit schemes, one of the reasons that the deposit scheme compliance is so high is because it comes with an element of rent repayment orders. The likelihood of local authorities being able to chase that up is next to zero. The likelihood of tenants being able to do that is extremely high.

[Matthew Pennycook]

My hon. Friend makes a very good point, which pre-empts one that I am about to make. We think that rent repayment orders can and do provide an incentive for landlords in these areas.

We believe, specifically when it comes to new clause 57, that allowing the tribunal to make rent repayment orders for these additional specific breaches would provide an additional incentive for landlords to comply with the relevant duties, requirements and prohibitions, and enable wronged tenants to be compensated for any losses incurred. Extending rent repayment orders to the relevant requirements of clause 39, for example, would be a powerful stimulus for landlord portal registration, because it would become the norm for tenants to check whether their landlord or prospective landlord was compliant.

Conversely, if the entitlement to apply for a rent repayment order were to apply to the relevant requirements of clause 39, it would provide tenants with a compelling reason to visit the portal, to learn about their rights and access information and resources they might not otherwise come across until the point they had a serious complaint or were engaged in a dispute with a landlord. This example also illustrates how an extension of rent repayment orders could alleviate some of the burdens that would otherwise fall on local authorities as the only mechanism to enforce, by means of financial penalties and criminal offences, a number of the breaches in the Bill to which they currently do not apply.

In the scenario I have outlined, tenants incentivised by the potential to apply an RRO to a landlord who was not compliant would act as an intelligence-gathering mechanism for local authorities, helping them to identify unregistered properties that they might otherwise struggle to locate and register. Put simply, as Dr Henry Dawson said to the Committee in the evidence session on 14 November:

“Using rent repayment orders incentivises tenants to keep an eye on landlords.”––[Official Report, Renters (Reform) Public Bill Committee, 14 November 2023; c. 60, Q74.]

The Minister may assure me that the regulations to come may provide for rent repayment orders in relation to clauses 24 and 39(3). If that is the case, we would welcome it, but I would much prefer him to accept the new clause and expand the use of rent repayment orders in the Bill to encourage compliance and give tenants the means to secure, for themselves, redress for poorly behaving landlords. I look forward to the Minister’s response.

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[Matthew Pennycook]

That is a helpful response. I took from it that the Government are considering including a history of past possession notices granted to a landlord. That is very welcome.

We tabled this amendment because it gets to the heart of how the new portal will operate. It could be a source of very basic information about a property, and whether it is strictly compliant with health and safety standards. We would hope the Government—the noises the Minister has made indicate they might—will take a more expansive view of how the property portal might work. Namely, that it will give tenants, as consumers, real power, because of the transparency and the amount of information recorded, to be able to know whether the tenancy agreement they are prospectively entering into is good for them, and whether the landlord is a good-faith landlord—as we know the majority are—or potentially an unscrupulous landlord. I welcome the indications the Minister has given, and look forward to debating—whether between us, or with other Ministers—the regulations in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Clause 33 ordered to stand part of the Bill.

Clause 34

Making entries in the database

[Lloyd Russell-Moyle]

I beg to move amendment 202, in clause 34, page 41, line 33, at end insert—

“(2A) The regulations must provide for information or documents to be provided relating to disputes and their resolution under deposit protection schemes under Chapter 4 of Part 6 of the Housing Act 2004 (tenancy deposit schemes).”

This amendment would require regulations made by the Secretary of State to require the provision of information relating to dispute resolution for deposit protection schemes.

Amendments 202 and 176 both seek to ensure that certain things are included in this property portal. We have just heard from the Minister that he intends to set out in regulations the lists of what needs to be included. I think it is important that we have confirmation that these are the things that the Minister is considering.

My amendment 202 proposes that disputes and outcomes of the deposit protection scheme be included in the property portal. It is so important that tenants know whether their landlord is routinely in dispute over the deposit. I am not talking about situations in which the tenant agrees that there was damage, and there is no dispute about the deposit deduction; I mean those in which a tenant disputes the damage. The tenant should be able to see whether there are regular disputes and whether the outcome is in the landlord’s favour—the landlord might actually be pretty good—or in the tenant’s. The recording of disputes would also allow us to start to develop case law on deposit disputes and their outcomes.

I also support amendment 176—

[The Chair]

Order. That amendment is in the next group.

[Lloyd Russell-Moyle]

In that case, I will leave it there.

[Jacob Young]

I thank the hon. Member for moving amendment 202. As I have said in response to earlier amendments, we will consider these points and others ahead of the regulations on what information is to be recorded on the portal. Our aim is to create a database that is future-proofed and responsive to the needs of the sector now and in future. Tenancy deposit schemes already provide free alternative dispute resolution with respect to deposit deductions. As I say, we will take all the hon. Member’s points and others into consideration when developing the portal and the regulations.

[Lloyd Russell-Moyle]

As I take it, the Minister has agreed that he will consider including disputes. That is a separate point from whether they are part of the ombudsperson; it is about whether their own processes and outcomes are being recorded properly. I will not push the amendment to a vote, but I do hope that the Minister will keep us in touch with his thinking as matters progress.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 176, in clause 34, page 41, line 33, at end insert—

“(3A) The regulations must provide for the following information or documents to be provided to the database operator as part of the process of creating entries on the database—

(a) an address, telephone number and email address for the residential landlord;

(b) an address, telephone number and email address for all managing agents engaged by the residential landlord;

(c) details of every dwelling that is being let by the residential landlord;

(d) evidence that the residential landlord has supplied a copy of the ‘How To Rent’ booklet to each relevant tenant;

(e) the rent that is currently being charged in respect of every dwelling that is being let by the residential landlord;

(f) details of any enforcement action that a local housing authority in England has taken against the residential landlord;

(g) details of any banning orders that have been made against the residential landlord pursuant to Chapter 2 of Part 2 of the Housing and Planning Act 2016;

(h) in respect of every dwelling that is being let by the residential landlord, copies of the documents required by:

(i) Regulation 6(5) of the Energy Performance of Buildings (England and Wales) Regulations 2012;

(ii) Paragraph(s) 6 and/or 7 of Regulation 36 of the Gas Safety (Installation and Use) Regulations 1998;

(iii) Regulation 3 of the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020;

(iv) Regulation 4 of the Smoke and Carbon Monoxide Alarm (England) Regulations 2015;

(i) details of whether the dwelling house is required to be licenced under Part 2 (Houses in Multiple Occupation) or Part 3 (Selective Licensing) of the Housing Act 2004”

This amendment would ensure that a number of the regulatory obligations that built up around section 21 notices are maintained by means of the database following the removal of section 21 of the Housing Act 1988.

We discussed, in relation to amendment 175, the fact that we believe that certain requirements relating to the functioning of the portal should be placed in the Bill. In speaking to amendments 170 to 172 to clause 19 in relation to deposit protection, I briefly touched on the fact that a number of regulatory obligations that have developed around section 21 notices over the 35 years for which the present system has been in place will fall away when it is abolished at the point at which chapter 1 of part 1 of the Bill comes into force.

The preconditions and requirements that have built up around section 21 notices, which presently prevent landlords from using the no-fault eviction process unless they can show compliance, include providing copies of gas safety certificates; providing copies of energy performance certificates; providing copies to each tenant of the ever-evolving how-to-rent booklet; and showing evidence of complying with the licensing requirements for houses in multiple occupation. There are no provisions in the Bill to ensure that landlords will have to continue to meet these and other regulatory obligations as a precondition of operating under the new tenancy system.

We fear that that will leave under-resourced local authorities—or tenants themselves, through the pursuit of civil claims—as the only means of enforcing these important statutory duties. We believe that compliance should instead be achieved by making it mandatory for landlords to submit the relevant information and proof of compliance to the database operator as part of the process of creating entries on the database. Amendment 176 would ensure that that is the case in respect of a wide range of existing regulatory obligations. We urge the Minister to accept it.

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[Lloyd Russell-Moyle]

It is also important that everything be recorded in one place, not only for tenants but for landlords, who will not have to fill in a plethora of information in different places about the EPC, gas safety and so on. It will make it easier for everyone if the Government get it right. It is so important that they be clear early on, so that we are not in a rush at the last moment.

[Matthew Pennycook]

My hon. Friend’s point is well made. There is the potential—hopefully the Government recognise it—to reduce the burden on landlords by ensuring that there is a clear set of requirements associated with registration on the portal that do not exist around the serving of a notice, as they do currently. We hope that the Government will take our points on board and bring all these preconditions within the scope of the portal in due course. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 ordered to stand part of the Bill.

Clause 35

Requirement to keep active entries up-to-date

Question proposed, That the clause stand part of the Bill.

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[Jacob Young]

In answer to the hon. Member’s question about landlords having to pay to join the service, we intend to fund the service through fees charged to private landlords when they register on the portal. We will take steps to ensure that these costs remain reasonable, proportionate and sustainable. The new service will bring substantial benefits to landlords as well as tenants, providing a single source of information about their legal responsibilities and helping them to showcase their compliance. It will also support local councils to enforce against unscrupulous landlords, who undercut the responsible majority.

On resourcing for local authorities, the information recorded on the portal will save local authorities time when enforcing health and safety standards in the PRS. Our research has shown that locating landlords and properties takes up a significant proportion of local authorities’ resources. Additionally, we are undertaking a new burdens assessment and will ensure that additional burdens created by the new system are fully funded.

Question agreed to.

Clause 35 accordingly ordered to stand part of the Bill.

Clauses 36 to 42 ordered to stand part of the Bill.

Clause 43

Access to the database

[Lloyd Russell-Moyle]

I beg to move amendment 195, in clause 43, page 48, line 32, at end insert—

“(f) tenants and prospective tenants of a relevant property and all other properties linked to the unique identifier of the landlord with whom they are proposing to or have signed a tenancy agreement.”

This amendment would ensure that tenants and prospective tenants have access to information held in the database relating to the landlord of the relevant property.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 44 and 45 stand part.

[Lloyd Russell-Moyle]

The Bill contains a list of organisations and agencies that will have access to the portal. Tenants are not included in that list. I hope that that is because they have access through some other means, or that the Minister will stand up and say, “Don’t worry, you’ve missed it—it’s in x, y and z.” But my reading is that there is no presumption that tenants and presumptive tenants will have full access to all the information about the house they are moving into and its landlord.

We have heard in evidence that it is important that tenants have the information before they sign a contract. Any effective free market has to be based on the knowledge of the person who is making a choice to purchase something. The tenant is clearly one such person, so the tenant needs to know the background of the person and the quality of the house before they sign.

It might be that the Government plan for such information to be public—that would mitigate the need for the amendment—but I worry that some information will be public and some redacted, particularly information on house prices, former house prices and rental prices. That kind of information should be made available to the tenant. Tenants and prospective tenants should have full, unredacted information about the house and the landlord of the property that they are in or want to be in. I seek reassurances from the Minister on the matter.

[Jacob Young]

I thank the hon. Gentleman for his amendment, which relates to the publicly available information on the property portal. One of our core objectives is to enhance the information available to tenants so that they can make more informed choices and have a better renting experience. As I have said, we are carefully considering what information will be available to tenants via the portal, but it is likely to include information about property standards. We also intend to publish information about certain relevant offences committed by landlords. As I have set out, we believe that outlining what information is available to tenants through regulations will allow us to respond to changes in the market and to remain sensitive to landlords’ privacy rights. We have the power to amend what information is accessible by tenants in the future if doing so would benefit the operation of the sector.

[Lloyd Russell-Moyle]

The Minister is talking about what he expects will be available to tenants. Could he outline what he expects might not be available to tenants, so that I can understand his thinking on the other side?

[Jacob Young]

Specifically on the question of a landlord’s privacy, there will be some information that is relevant for a local authority to know about a landlord but not necessarily relevant for a tenant to know about a landlord. As I say, such things are best set out in regulations.

[Lloyd Russell-Moyle]

Can the Minister give examples of what that information would be? That would help to flesh out what we are talking about.

[Jacob Young]

I am not in a position to give an example today. If an example comes to mind, I shall write to the hon. Gentleman with it.

[Jacob Young]

I reject the suggestion that the Committee is being asked to approve the clause in the dark. Obviously, any regulations will come before the House will be debated at that time. These things could breach someone’s human rights or affect their ability to protect their own data, therefore it is right that we properly consider them once we know what the portal actually looks like, and we have information recorded on it and so on.

I encourage the hon. Member for Brighton, Kemptown to withdraw his amendment. A landlord’s national insurance number or date of birth, for example, is key information that should remain private to a landlord and is not necessarily for tenants’ viewing. I respect the hon. Member’s points and the issues that he raised; as I say, we will consider them fully when we come to make regulations after Royal Assent.

[Lloyd Russell-Moyle]

It might be understandable if, for example, the landlord’s day of birth was redacted on Companies House but the month and year were shown. If we had no national insurance numbers, but we had a contactable address where that person could be found—not necessarily their home address, but a non-PO box address—that might, again, be acceptable.

The Government need to be clear in their intention that this is about privacy grounds only where necessary for the safety and functioning of a landlord, and not about withholding information that would be useful for the tenant in reaching out to the landlord. I will withdraw the amendment, but I expect the Minister to provide some more details in writing about what will be excluded.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 43 ordered to stand part of the Bill.

Clauses 44 to 46 ordered to stand part of the Bill.

Clause 47

Financial penalties

[Matthew Pennycook]

I beg to move amendment 167, in clause 47, page 50, line 36, leave out “£5,000” and insert “£30,000”.

This amendment would increase the maximum financial penalty that local authorities could impose on a person for breach of a requirement imposed by clause 39.