Renters’ Rights Bill

Lord Truscott Excerpts

Tuesday 22nd April 2025 Lords Chamber

Moved by

[Lord Truscott]

2: Clause 1, page 1, line 11, after second “tenancy” insert “of longer than 12 months”
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.

--- Later in debate ---

[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.

Amendment 2 withdrawn.

--- Later in debate ---

[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.