Tenant Fees Bill

Lord Shipley Excerpts

Monday 5th November 2018 Grand Committee

[Baroness Grender (LD)]

In moving Amendment 1, I shall speak also to Amendment 17. First, I thank the Minister and his officials for the discussions held so far and the time spent in advance of Committee. As noble Lords know, the Bill is very welcome and the sooner it is on the statute book the better, but there are a few wrinkles to iron out first. The most substantive change I want to explore will come when we look at default fees in a later group.

Amendment 1 would allow the Secretary of State to make regulations regarding holding deposits to make the process more transparent. This is an attempt to adopt the welcome changes introduced by the Government on Report in the Commons regarding transparency, or greater transparency, on default fees, although more about that—and how we do not need default fees—later. The model, however, is still useful and applies in this respect to holding deposits. There should be a transparency requirement for landlords and agents to set out in writing to a tenant why they have not returned a holding deposit. There is ongoing confusion and a lack of clarity around the circumstances in which landlords or agents may and may not return a holding deposit. The confusion was highlighted at Third Reading in the House of Commons and Members on the government side called for greater clarity at that point.

We would like to see something that explains how landlords and agents will treat a holding deposit and, if they are not returning it, their reasons for this, including any information they believe to have been false or misleading. This will make it possible for tenants to challenge if their holding deposit is withheld unfairly. Equally, understanding exactly why a holding deposit has been withheld should help to prevent tenants applying for properties and repeatedly losing numerous holding deposits for the same reason.

The Minister is already aware of the excellent work done in this area by the noble Lord, Lord Bird, on creditworthiness, but until that change comes into force—or is adopted by the market, as I believe it will be—people with thin files on their financial viability and little evidence to offer of regular payment of rent or council tax are not included and become the most vulnerable to the less scrupulous agents or landlords in terms of holding deposits.

Generation Rent has recently spoken to four privately renting friends who each put down a £180 holding deposit on a property in Bristol with the letting agent Be Streets Ahead. During the week that the holding deposit was down, one of the tenants found that he had a brain tumour that had grown in size and had to move back to his family for hospital treatment. The remaining three tenants were unable to find another sharer to pay the deposit and rent with just a couple of days’ notice and had to withdraw from the tenancy. The letting agent has ignored repeated requests for a refund of the holding deposit on these health grounds. Such health grounds could be included in any secondary legislation, providing grounds for tenants to walk away from the tenancy without losing a holding deposit.

What I have just described is a clear case for regulating the transparency around holding deposits. If anything, this will get worse before the Bill is enacted. Generation Rent believes that letting agencies are worrying about future admin fees and being—shall we say?—more assertive in their use of current rules than previously to make up for any future losses they anticipate. When I met the Minister before the summer, I expressed concerns about the danger of the delay on one of these issues. I wondered if there was any way of offering an incentive—a carrot, perhaps—for the industry to adopt these measures before it came through Parliament. I would still ask him, at this late stage, to consider that, given the scenario I have just described to him. Generation Rent is absolutely convinced, in this case, that the concern about admin fees being lost at a later stage has led to a slightly harsher judgment.

Amendment 17 is of a different nature. It simply poses the question, which I raised with the Minister in advance, as to why tenants are prohibited, or strongly discouraged, from paying multiple deposits by the cap at one week’s rent. I am aware—and have only just managed to read most of it over the weekend, for which many thanks in advance—that there is some guidance about what needs to happen. But we believe it is very unlikely that this guidance will be pursued, unless there is more transparency on what happens with holding deposits. I have read the relevant part of the guidance, but I still think we need something with a little more bite.

I support the other amendments in this group. I would like, in particular, to advance Amendments 1 and 17. While I understand, from meetings with officials, that this is on the issue of tenants from abroad, I am still unable to see why we cannot have more of a level playing field between the tenant putting down the holding deposit and the landlord or agency holding one deposit. I would still like to explore that, and that is why I am proposing these amendments. I beg to move.

[Lord Shipley (LD)]

My Lords, I shall speak to Amendment 18. I remind your Lordships that I am a vice-president of the Local Government Association. I want to say at the outset that, like the Government, our aim is to make renting a home fairer and more affordable. I repeat our support for the Bill in its aim of reducing up-front costs for those seeking to rent a home. We should also remember that the Bill is about protecting tenants from bad landlords, but also about protecting good landlords from bad tenants. Our job in Committee is to assess, line by line, whether the Bill will achieve those objectives and whether it can be improved. The amendments in my name and those of colleagues seek to do that.

Amendment 18 is about whether the figure of seven days for a holding deposit is justified. There is a tendency to draft Bills with round numbers based on weeks, but such a decision requires clear justification that the amount to be paid by a tenant, and received by a landlord, be counted in weeks rather than days. There is a strong case for saying that the costs to the landlord are what should be reimbursed. There is evidence to suggest that such costs would be recouped with a three-day rent payment. I have received advice—as, I guess, other noble Lords have—from Citizens Advice, which supports the three-day period. Its justification is that 14% of tenants are currently charged a returnable holding deposit, at an average cost of £250. Some tenants, however, are paying much more than that. A cap of three days’ rent would help to prevent that.

We also need to recognise that a tenant’s circumstances or budget can change unexpectedly, and they might need to withdraw from renting a property that they originally and genuinely intended to take. This could be for reasons that prove beyond a tenant’s control. For example, there may be an unexpected failure of a credit or reference check. This can cause severe financial hardship for tenants and prevent them being able to access the private rented sector at all. Smaller holding deposits would still have the effect of deterring tenants from taking a large number of properties off the market, while avoiding hitting tenants’ finances unnecessarily. I am grateful to Citizens Advice for its briefing, from which I have quoted.

The question for the Minister is: can the Government explain why the figure of one week appears in the Bill, as opposed to a set number of days? As I said, it is very easy to talk in round numbers, but for some tenants trying to take up a tenancy, how much they will have to pay in cash is very relevant. I very much hope that, as we consider the Bill in Committee, the Minister might be able to explain the basis for one week, as opposed to three days.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, as this is my first contribution to today’s proceedings, I draw the attention of the Grand Committee to my registered interest as a vice-president of the Local Government Association. I thank the noble Lord, Lord Bourne of Aberystwyth, for the letter and the draft guidance, which we received on Friday afternoon. I very much appreciated that: it was good to get the papers and look at them over the weekend.

Amendment 1, moved by the noble Baroness, Lady Grender, and to which the noble Baroness, Lady Thornhill, and I have added our names, raises an important issue for prospective tenants. It seeks to include in the Bill more certainty, and to provide greater fairness and transparency for the person or persons looking for accommodation. They would be provided with more information about how their money is to be treated. I am not against the use of holding deposits in principle, but I want to see real clarity in their operation, and the amendments in this group are a positive step forward.

I am sure the Grand Committee will be repeatedly told today that guidance is sufficient and we do not need to go down the route of regulation. But I am also clear that this is guidance; it is not statutory and, as such, has no legal effect—it is just guidance. Amendment 1 rightly places a requirement on the Secretary of State to set out in regulations the procedure to be followed by a landlord or letting agent when they take a holding deposit, and how the deposit is to be treated in a prescribed way so that it is clear what the prospective tenants should be told. The amendment would also ensure that there is a clear procedure to be followed where it is decided to withhold a deposit, and that evidence must be provided to the person who paid the deposit, setting out the ground on which it is being withheld. The regulations are to be approved using the negative procedure, which is the minimum of burdens for the Government and is the right way forward in this case.

Amendment 17, in the names of the noble Baronesses, Lady Grender and Lady Thornhill, and Amendment 22 in my name, seek to stop the practice of taking multiple deposits from people. I accept that this is referenced in the guidance, and that, as it says, a holding deposit creates a binding conditional contract between tenants and landlord. But if, as a landlord or letting agent, you accept multiple deposits, surely you must be in breach of this binding conditional contract. It can be said in those circumstances that there is no conditional contract whatever.

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[Lord Kennedy of Southwark]

My Lords, Amendment 2 seeks to enable a deposit to be transferred to another landlord or letting agent. This deposit passporting would be of great benefit to tenants and, as far as I can see, would have no detrimental effect on landlords or letting agents. The system would allow for the direct transfer of money between landlords and properties. The consumer group Which? found that 43% of renters have had to use a credit card, loan or overdraft, or borrow from family and friends to fund a deposit—that is terrible. It also found that 31% of renters had to find money for a new deposit before they had been paid back their existing deposit. In effect, this group of renters would, even if only for a short time, have paid two deposits, which is potentially a huge sum of money. That is just not fair, and the Bill does not address this at all. Renting in the private rented sector is stacked against tenants in many respects and this proposal would help tenants with the difficult issue of finding deposits.

I saw an article in the Daily Telegraph—not my usual reading, I must say—which included figures from the Tenancy Deposit Scheme. The article found that the average deposit is £1,180, as much as £3,266 in parts of central London, and around £498 in Lancashire’s Ribble Valley. These are not insignificant sums of money. The system is failing tenants and it could be improved.

Amendments 15 and 16, also in my name and those of the noble Lord, Lord Shipley, and the noble Baroness, Lady Thornhill, seek to put into effect what the Government originally announced: that there would be a four-week tenancy deposit cap. In this case, I stand with the Prime Minister and what she announced last year. It is appalling that the Government have had a change of heart here, and it would be useful if the noble Lord, Lord Bourne, could explain what has happened over the past year and why there has been a change of heart. The evidence shows that opting for this large deposit cap makes it harder for people to rent in the private rented sector, and makes it harder for them to raise money for a deposit, especially when there is no ability to passport deposits.

I am sure we will be told that there is a risk that renters will use their deposit to cover their last month’s rent without the consent or knowledge of the landlord. Citizens Advice—an organisation that we all respect—has done research that found that this happened without prior agreement with the landlord in only 2% of cases. Therefore, in 98% of cases, it did not happen. I am sure we will also be told that this higher figure of a six-week cap is needed to recover landlords’ costs, but again this just does not hold water.

The Deposit Protection Scheme did some analysis and found that over 50% of tenants get their full deposit back and the average deposit return is 75%. That illustrates that the Government were right to set the level at four weeks in the first place, and it is disappointing that they have changed their mind. The majority of renters getting most or all of their deposit back shows me that the four-week limit is the right level, which would still allow for a much higher than average deduction to cover landlords’ legitimate costs while protecting renters from excessive up-front costs. I beg to move.

[Lord Shipley]

My Lords, my name is attached to Amendments 15 and 16 in this group. Amendment 2 is a very reasonable suggestion and I hope the Minister will be able to respond positively to it.

In the previous group I raised how lengths of time are decided. I understand that they are often a judgment. The same issues around the length of time arise in this group. We need to protect both parties—landlord and tenant—and the question is whether six weeks’ rent is a reasonable sum to pay as a refundable deposit or whether some other length of time is more justifiable. There are two issues here. First, in Scotland, it is two months. Scotland has that figure for a reason. Have the Government looked at Scotland’s experience? Secondly, it was announced in the 2017 Queen’s Speech that in England it would be four weeks; that is, half the length of time that applies in Scotland. Differences of this kind for those on low incomes or who are short of savings can matter profoundly.

The Government have now decided that it should be six weeks. It is almost as if this is about splitting the difference between what they said it was going to be—four weeks—and the Scottish experience, which is eight weeks. It needs more rigour than that, should that be the case. Again, I refer to advice from Citizens Advice, which I think is material. The most common amount tenants pay for a refundable deposit is four weeks or one month. Setting the cap higher than four weeks might push up the cost to tenants. To put it another way, setting the cap at six weeks will help only 8% of tenants, according to Citizens Advice. However, a cap of four weeks would save money for almost half of tenants. I do not know what consideration the Government have given to that but I make the point that when it comes to the decision on whether it is four, six or eight weeks—or perhaps five weeks, which was mooted in the House of Commons—we need to be very much clearer about why six weeks has been decided on.

Citizens Advice’s research shows that only 2% of renters use their security deposit to cover their last month’s rent without the landlord’s knowledge or consent. Has the Minister considered the advice from Citizens Advice? If it is only 2% of renters, there is an issue for us to discover. Of course, the point is—and in defence of landlords’ interests—if tenants withhold the last month’s rent, that can lead to a landlord having no protection against the damage done by a tenant who is leaving if they fail to pay the last month’s rent as well. That would be a concern for me. That is one of the reasons why the House of Commons suggested that it should be five weeks, not six.

What I look for in this probing amendment is the evidence base the Government considered on how many weeks would be justifiable. They clearly changed their mind from the Queen’s Speech in 2017 when they announced that it would be four weeks. They have now come out with a figure of six weeks. I would like to understand better the Government’s reasoning for that figure.

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[Lord Shipley]

My Lords, perhaps I may ask the Minister two questions on points I raised earlier. The first is that it is not clear why the Government used the figure of four weeks in the Queen’s Speech last year and what has caused them to change their own decision. Secondly, can the Minister explain the consideration that has been given to the scrutiny by the Housing, Communities and Local Government Committee? Bob Blackman MP drew attention to the committee’s recommendation that the length of deposits should be set at five weeks to avoid the risk that a tenant may refuse to pay the last month’s rent if the limit was set at four weeks. That would avoid some of the financial hardship for tenants that could result from the six-week limit. Have the Government considered in full the pre-legislative scrutiny undertaken in the other place in coming to their decision that it should remain at six weeks despite the clear advice that it should be five weeks?

[Lord Kennedy of Southwark]

On a similar point, we understand that in the Queen’s Speech the Government mentioned a period of four weeks. At one time it seems to have been a manifesto commitment. I am sure that we will be told that it was not, but I would be interested to find out. I understand that the period of four weeks was announced in the Queen’s Speech, but what has happened? The Bill says six weeks. It would help to know the Government’s thinking on that.

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[Lord Kennedy of Southwark]

My Lords, Amendment 3 seeks to shine some light on the whole process for the benefit of landlords, letting agents and tenants. It would place a duty on the Secretary of State to take all reasonable steps to ensure that the new procedures coming into force are properly communicated to everybody concerned. I am sure that we would all agree that proper communication is vital to make legislation effective and ensure that it works. It is imperative that the introduction of the ban is clearly communicated to ensure that landlords and letting agents, as well as tenants, are fully aware of the changes and that this happens immediately. We would put a requirement on the Secretary of State to advise representative bodies, affected groups, local authorities and other bodies that the Secretary of State decides are appropriate. That would include bodies such as Citizens Advice that provide advice services to people.

In the private rented sector, it can be difficult to reach the people who rent, because of the often transient nature of the sector—people probably move around more than in other sectors. There will be groups of tenants who need support. Some, of course, will be very savvy about their rights and responsibilities, but there are other groups of more vulnerable tenants. We must make sure that smaller agents and smaller landlords—some may have only one or two properties—are fully aware of the changes and how they will affect them. It is particularly important that tenants are made aware since they are the people who will alert local authorities to the identities of landlords or letting agents who are not observing the law, charging prohibitive payments or doing other things that would be banned by this legislation. To ensure compliance—I know the Government want to see compliance with their own legislation particularly—we need a clear communication strategy. The Bill will change the law and introduce new criminal offences, with relevant penalties and consequences, so it is important that people are fully aware of the changes. We do not believe it needs to be onerous, but we need something to ensure that it is properly communicated to everyone concerned. I beg to move.

[Lord Shipley]

My Lords, I will briefly express my support for the amendment. It seems to be extremely helpful. Perhaps there could be a discussion about how it would be implemented. I say this because it is one thing for Parliament to pass legislation, but it is another for it to be actually understood in the wider world. For tenants and landlords to understand their rights and responsibilities, it is very important that the publicity is good. A lot of it can be standard wording. It does not have to be originated by every individual. It may need to be amended by individuals, but generally it can be the same. That leads me to remind the Minister of my view that the £500,000 allocated for enforcement—perhaps we will come to that in the next group—is a welcome sum, but probably not enough. Providing the necessary resource for this to work seems to be very important. Ultimately, this should be self-financing. Ensuring that there is the right level of publicity, particularly for tenants, is particularly important.

[The Earl of Lytton]

My Lords, the first part of this amendment is, to put it bluntly, a no-brainer. It is perfectly right and proper that there should be clear and comprehensive information. If I have any reservations, one is a very small item in proposed new subsection (4)(b), which refers to a website. Given that a significant proportion of landlords are individuals with perhaps only one or two properties, they may not have a website. Perhaps a tweak of the wording might be needed there.

On proposed new subsection (6)(a) and (b), there is a duty on the landlord or prospective landlord to,

“have regard to the likely needs and characteristics, in respect of the provision of information, of persons to whom the information in question is to be provided”.

It goes on to refer to the provision of that information,

“otherwise than in the way in which it would normally be provided”.

I scratch my head a bit about this, because I was beginning to try to work out what I, as a landlord in the middle of Sussex, might need to acquaint people with. It seemed to me that one characteristic might be a physical disability and another might be linguistic—those two immediately came to mind. I would be interested if the noble Lord, Lord Kennedy, could actually spell out what he intends from those two provisions. It might be a bit of a hostage to fortune in either providing something unnecessary or having to try to second-guess what the particular characteristics and the method of delivery might need to be in any given instance. That said, in an area where people come from an Asian heritage background, I can see no objection to publishing it in languages other than English. That would be perfectly possible. However, to do it as a generality would be difficult. Therefore, putting this in guidance and providing for what the Secretary of State will do with it might be a hazardous operation.

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[Lord Kennedy of Southwark]

My Lords, Amendments 4 and 5 in my name are concerned with enforcement in respect of the costs involved and how they are covered, and require a report to be laid before Parliament within 12 months of the Bill’s provisions coming into force. The Bill is a bit light—to say the least—on these matters, which are extremely important.

Amendment 4 would require the Secretary of State to reimburse the lead authority for any additional costs incurred in taking on these extra duties. If a local authority is designated as the lead authority and, after taking account of the money received from fines or other work is still out of pocket, what local authority would want its council tax payers to subsidise everybody else? We need a clause that covers that situation.

Amendment 5 would put a new clause in the Bill that would require the Secretary of State to,

“make an assessment of the resources available to … enforcement authorities; and … the lead enforcement authority”.

Proposed new subsection (2) sets out what the report “must consider”. Finally, proposed new subsection (3) says:

“The Secretary of State must lay a report … before each House of Parliament”.


It is essential that the Government provide additional funding to local authorities for enforcing this legislation, otherwise they will be letting down the very people—the private sector tenants—they say they want to help.

Trading standards departments in local authorities will be responsible for enforcing the ban. The noble Lord, Lord Young of Cookham, will be well aware of the evidence given to the Bill Committee considering this legislation in the other place. There have been cuts of over 50% to trading standards staff in some areas. Many areas are experiencing increasing levels of demand and legislation that they are expected to enforce. It is getting more and more difficult to do so. Indeed, trading standards departments are struggling to enforce existing regulations designed to protect renters. Analysis by Generation Rent found that, in 2017, 12% of letting agents did not list their fees on websites as required by the Consumer Rights Act 2015. They were clearly in breach of the legislation but they were still doing that.

It is important to keep in mind that local authorities have also gained additional responsibilities to enforce against rogue landlords and agents from the dreaded Housing and Planning Act 2016. While I obviously welcome the Government’s announcement of a fund of £500,000 for year one to cover the up-front costs of implementation and awareness raising, one-off seed funding is unlikely to cover the full costs and burdens placed on local authorities. That is not a new thing; we have discussed this many times in Grand Committee and in the Chamber.

The Government’s approach seems to be that any penalties will support enforcement functions. That would potentially penalise councils that have raised awareness of the ban with agents. They are less likely to benefit from collecting penalties than where people have not kept up with their obligations. That is no way to fund and deliver such an important piece of legislation. I beg to move.

[Lord Shipley]

My Lords, I am interested to hear the Minister’s response to this. Of the two amendments, Amendment 5 is more important because it would provide an evidence base without which it would be difficult to know whether the £500,000 that the Government are allocating will be sufficient. Amendment 4 would be difficult to implement. How does one understand or agree what a reasonable cost is? You then have to consider things such as overhead recoupment and so on. What is a reasonable sum of money for an enforcement authority to receive? I see a big problem in making a fair assessment of what the additional sums that cannot be recovered through fines or via the Secretary of State might be.

However, the broader issue that the noble Lord, Lord Kennedy, has introduced seems important: is enough money being provided up-front to enable enforcement authorities to get enforcement properly established? We have read some evidence in the press recently that, despite legislation passed in Parliament, local authorities have not always been able to provide the level of enforcement that might be deemed necessary. I am talking in particular about rogue landlords.

I hope the Minister can respond to us on this. I repeat my observation that we need Amendment 5, and I hope the Government will be willing to come back with something on Report that gives some life to it. Amendment 4 might be the consequence of having evidence under Amendment 5. However, for the moment, I hope that the Government will be able to indicate how they respond to funding enforcement overall.

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Moved by

[Lord Shipley]

9: Clause 23, page 15, line 22, leave out subsection (2) and insert—
“(2A) If the lead enforcement authority is the Secretary of State, it is the duty of the lead enforcement authority to issue guidance, in the form of regulations made by statutory instrument, to enforcement authorities about the exercise of their functions under this Act.(2B) If subsection (2A) does not apply, it is the duty of the lead enforcement authority to draft guidance to enforcement authorities about the exercise of their functions under this Act, which the Secretary of State must lay before Parliament in the form of regulations made by statutory instrument.(2C) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.”

[Lord Shipley]

My Lords, this grouping is extremely important. The intentions behind my Amendment 9 and the amendment in the name of the noble Lord, Lord Kennedy, are broadly similar. The Bill says, in the subsection that I seek to delete:

“It is the duty of the lead enforcement authority to issue guidance to enforcement authorities about the exercise of their functions under this Act”.


This is not sufficient. The problem is that if we have only guidance, the likely result will be that too many people will decide not to implement it. In Amendment 9, I seek to change “guidance” to,

“guidance, in the form of regulations made by statutory instrument”.

Proposed new subsection (2C) makes clear that there should be:

“A statutory instrument containing regulations under this section … subject to annulment in pursuance of a resolution of either House of Parliament”.


In other words, it gives power to Parliament to ensure that the regulations are strong enough. The noble Lord, Lord Deben, said a while ago that there are people who do not obey the law. He is right, but I would add that there are even more people who do not obey guidance. In this situation, we need to stiffen up our legislation. I fear that, if we end up passing the Bill, the Act will be difficult to implement because too many people will decide that this is enforced only by guidance that is not strong enough. I am very keen to hear from the Minister what the problem is in converting what is currently proposed guidance into formal regulation giving Parliament the power to agree, or not, with what is proposed. I look forward to hearing the Minister’s response to that question, which to me is very important. I beg to move.

[The Deputy Chairman of Committees (Lord Haskel) (Lab)]

If Amendment 9 is agreed, I cannot call Amendment 10 because of pre-emption.

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[Lord Bourne of Aberystwyth]

My Lords, I suspect that we disagree on this point. There are many occasions when I agree with the noble Lord but on this point I do not.

[Lord Shipley]

My Lords, I have found what the Minister has said helpful but I do not feel that it is satisfactory. I am concerned by the report of the Delegated Powers and Regulatory Reform Committee. It has raised concerns about legislation which is to be supported only through guidance. Paragraph 55 of the report makes it very clear that the committee thinks that the guidance should be subject to parliamentary scrutiny—in this case with the negative procedure.

I hope that there might be an opportunity for us to talk in a little more detail on this issue. My fear is that this Parliament will pass legislation which is not implemented fully because it is not strong enough to be enforced on the ground. I do not think that guidance on its own is sufficient and I would like there to be much firmer regulation. However, I will read Hansard very carefully tomorrow and will possibly hope to meet the Minister before Report to see whether there is any way in which we can build a framework that is stronger than simply guidance. I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

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[Baroness Barran (Con)]

My Lords, this amendment builds on the points raised by my noble friend Lady Jenkin in her speech at Second Reading relating to home share schemes. I am aware that in his summing up of that debate, my noble friend the Minister noted that this is an issue he is keen to resolve. I hope that this amendment will go some way to achieving that.

Clause 25 sets out the meaning of the term “letting agent”. However, as currently drafted the Bill is likely to define home share organisations as letting agencies and to ban them from charging young people who currently pay a contribution towards those organisations’ costs. Although home share is relatively small in this country it helps several hundred older and younger people. It is an approach that I believe has great potential. Indeed, before I joined your Lordships’ House, as the chief executive of SafeLives we developed a partnership with Homeshare, looking to use the scheme to support the victims and the perpetrators of domestic abuse.

My amendment seeks to ensure that home share schemes are explicitly excluded from the definition as it stands. As drafted, it seeks to capture the essence of home share arrangements and to distinguish them from those of commercial letting agents. I have tried to put in the technical aspects of the arrangement; namely, the nature of the instructions from the landlord, the absence of any rent or occupation charge from either the tenant or the home share organisation and the potential contribution by the tenant towards utility costs, as well as, crucially, the purpose of the scheme. The purpose must be quite clear: it is to promote the landlord’s well-being. The amendment also clarifies the meaning of the term “principal home” in line with Section 1 of the Housing Act 1988; “utility costs” which could also potentially include additional council tax; and “well-being” in line with Section 1(2) of the Care Act 2014.

The amendment is needed to ensure that home share can continue to grow in the UK. It helps hundreds of isolated and lonely older people. I have spoken to a number of family members whose parents are supported through home share schemes and they could not praise them enough for the support their parents receive. It also has the potential to help thousands in the future. This is clearly timely given the epidemic of loneliness that we hear so much about facing not only older people. There is increasing evidence that it is an issue for younger people as well. Indeed, without addressing the definition of a letting agent to explicitly exclude home share schemes, their sustainability will be put at risk.

In her speech, my noble friend Lady Jenkin articulated powerfully the scheme’s strengths, highlighting the human benefits to both the landlord and the home sharer, the contribution to the duties of the local authority under the Care Act 2014 and, importantly, the potential for these schemes to be financially sustainable. The quality of the relationship between the two individuals in the home share scheme is crucial to its success. It is specifically for people whose primary motivation is not commercial but who each want to contribute to the other’s life. It is vital to frame an exemption for genuine home share agencies from the prohibition on charging tenants, without creating a loophole for commercial letting agents.

To reiterate, the amendment seeks to exempt from the fees prohibition house-sharing arrangements that meet four tests. The first test is that they have been arranged by an organisation that recruits, vets, supports and, where appropriate, trains people for the purposes of providing support in a shared home environment. The second test is that the individual with the licence to occupy pays no rent. The third test is that they contribute to an agreed level of companionship, care or support. The fourth test is that it happens in the home of an individual who requires that support. To be absolutely clear, in this arrangement the homeowner receives no rent or any payment from the agency.

As I mentioned at the beginning, home share helps hundreds of young and old people in the UK, but if we look at home share as it works in Europe, we see that it has the potential to help thousands more. I hope that this amendment is a step towards making sure that that becomes reality. With that, I beg to move.

[Lord Shipley]

My Lords, very briefly, I spoke at Second Reading on the importance of exempting home-share schemes from the impact of the Bill. It seems to me that the amendment moved by the noble Baroness, Lady Barran, supported by the noble Lord, Lord Kennedy of Southwark, addresses the problem. I hope very much that the Minister is in a receptive mood.

[Lord Kennedy of Southwark]

My Lords, I am happy to have added my name to Amendment 12, proposed by the noble Baroness, Lady Barran. As we have heard, these issues were raised by the noble Baroness, Lady Jenkin of Kennington, at Second Reading.

In moving the amendment, the noble Baroness explained in detail that it would exempt people from being letting agents and being caught by the Bill’s provisions if they meet a number of conditions, as set out. She makes a very fair point. One thing we do not want to do, as is always a risk when passing legislation, is for it to have unintended consequences. This amendment seeks to stop that, so that the good work being done through this scheme—where no rent changes hands, and people give each other mutual support and contribute to utility bills—will not be caught by the legislation. I am happy to support the noble Baroness in finding a way forward to protect the scheme. If the Minister will not accept this amendment, I hope he will give a commitment to the Grand Committee that the Government understand this is an issue and will table their own amendment on Report.