My Lords, I am neither a landlord nor a tenant, I have managed properties in the past and I have a property qualification. All four of my children were tenants during their student days and remain as tenants at the start of their professional lives. I have also had extensive briefings from both landlords and tenants and their respective representative bodies, providing their perspectives and their chosen statistics.
As the last Back-Bench speaker today, I will not re-run all the statistics because most of them have already been cited, so I hope that will be appreciated. I am also not going to namecheck everybody, but we have had, I think we can agree, a diverse but fascinating set of speeches. I congratulate all those involved—forgive me if I do not namecheck them.
There are some emotive issues here. For a tenant, the property they rent may become emotionally their home. For the landlord, the property is often their most valuable asset—they paid for it and they maintain it.
It is their source of income or pension, and renting it out also means taking on costs, regulations and the risks of placing it into the hands of strangers. Into this sensitive environment have come terms such as “no-fault evictions” and “kicking people out on the street”, even stating paradoxically that landlords actually create homelessness. There have been distressing anecdotes—and I underline this—from both tenants and landlords.
In recent days I have heard a good deal of pantomime stereotypes, and I really hope we can set these aside and address the underlying issues. There certainly are some rogue landlords—albeit that the Government assure us they are a small minority—who provide substandard accommodation and treat their tenants badly. I support those aspects of the Bill that are helpful in addressing that minority. But I add a note of caution, as others have, about enforcement.
The Bill will not touch the rogues unless it is enforced vigorously against some nasty, elusive and, in some cases, dangerous people. The Minister, in very kindly meeting me with her officials yesterday, for which I thank her again, advised that fines levied by local authorities would fund enforcement. I remain sceptical, not least because local authorities are already so strapped for cash. I welcome the requirement to have a written agreement; I suggest that it should automatically include, as an annexe, an inventory of contents and condition, as the lack of one of these frequently leads to disputes later on. I also support the register portal idea, provided that it is better than the Companies House register, which we discussed in some detail during the economic crime Bill and where there are many companies registered to an “M. Mouse”, et cetera.
In acknowledging that there are bad landlords, however, we should also accept that there are bad tenants who will play the system and abuse the landlord-tenant relationship. There are also market and other factors beyond the control of landlords and tenants. The underlying issue is a simple one that many speakers have addressed: lack of supply. A recent debate in this House referred to a shortfall of more than 1 million homes and many speakers have also touched on this today. Private landlords were encouraged, in particular under the Housing Act 1988, to reduce this gap between supply and demand but the difference between them remains stark. The Bill is presented as achieving a better deal for tenants, not through increasing the supply but rather by altering the landlord-tenant relationship, primarily perhaps by reducing the rights of landlords. It begs a simple but fundamental question to the Minister: will the Bill lead to an increase in the supply of rental accommodation?
Section 21 notices are at the heart of the debate around the Bill. Introduced as an incentive for the provision of accommodation by private landlords, they have enabled an increase in the private rented sector, as many speakers have covered. This is based largely on landlords having the confidence that they could recover their property when they required to do so. To lose sight of this confidence—the understanding that, even if they never use it, landlords know that they can get their property back through serving a notice—is to put the sustained supply of rental accommodation at risk.
Tenant representative bodies tag these notices as no-fault evictions, but we should also remember that tenants can and do—to coin a phrase—make no-fault departures should they, without needing to give any reason, decide to move out on just one or two months’ notice. This leaves the landlord with costs and no income until a new tenant is in place, and quite possibly a lengthy overhanging dispute; for example, about the deposits of tenants who are now departed and possibly even out of the country. The Bill would mean that tenants can leave on short notice and without a reason, while landlords would be able to recover what is, after all, their property only on limited and specific grounds. That does not feel equitable to me.
An underlying concern for tenant representatives about Section 21 is that once the initial tenancy period—a security that the Bill seeks to reduce or remove, as others have said—is over, a Section 21 notice can be used should the landlord want their property back. In some cases, it is to seek—or, if noble Lords wish to use emotive language, to extort—an increased level of rent. As regards wanting their property back, the landlord can do so, and the Bill reasonably supports this, if they wish to sell the property or make it available for a family member. As regards raising the rent, I believe there is a point here. I would support rental movements being limited to inflationary increases but, again, supply and demand are relevant. A landlord cannot expect to succeed in renting out a property for more than the market rent. To bring the rate down, we need more supply rather than fewer landlords.
The underlying concern for landlords, apart from the psychological aspect of restriction on their ownership rights, is that to recover their property is going to mean going to court. It has been put to me that a landlord would perhaps have to go to court anyway, if a tenant refused to leave under the current Section 21 notice provisions. I contest that: given the clear simplicity of the Section 21 notice, the great majority of tenants accept its validity.
Speaking to landlords in recent months, I have learned about a couple of reality checks that we need to think about. First, Section 21 notices are already being served by landlords who want to get their properties back and avoid the drawn-out, adversarial and expensive legal processes in due course to recover their property. Secondly, landlords are becoming far more risk averse, and tell me they will continue to be, as to which people they might rent to. As one landlord put it to me starkly, “After this Bill, I will never rent to a family again”.
Speaking to those who say that they represent tenants, I have been struck by how sanguine they seem to be about the impact of the Bill on rental accommodation. They tell me that they assume landlords will sell up, perhaps to a first-time buyer, a local authority or another private landlord—although that seems a circular expectation. Not only is this dismissive of those who provide rental accommodation, it is a pure gamble. Depending on which statistics you choose, some say that there will be a decrease in rental accommodation—this is borne out by the discussions I have just referred to—and others say that there will be no impact. I find that hard to believe. In any event,
no one is saying that there will be any increase in the availability of rental property, which is what we are all seeking to achieve.
Given the risks and costs involved for landlords by the removal of Section 21, what mitigation does the Bill provide? It has a, yet to be created, swift and fair court system, which is perhaps even cost-free. There seems to be no objective metric, as many have mentioned, for the Lord Chancellor to deem that the county courts will be working sufficiently well. I hope that we can address this in later stages of the Bill. Court hearings on property matters are already increasing. By definition, a great increase in such cases will be inevitable as all tenancies are now being ended under Section 8. These will be cases brought by tenants and by landlords.
This swift judicial process is a fantasy, and it is strictly for the birds. Speaking of birds, it was the noble Lord, Lord Bird, who warned us some months ago that the last time the Government meddled with the rental sector the supply shrank. I think the noble Lord, Lord Bird, knows more than many in this House about homelessness. In short, making responsible landlords recover their property via legal action will reverse the expansion of rental accommodation, and rogue landlords will probably continue to enforce their will via less formal methods.
I turn to the question of initial fixed terms. We are told that tenants need security of tenure so that they can put their children into school, develop a sense of community and hold down a local job—all of which makes complete sense, at least in some cases. But its logic must surely therefore support long initial terms, and not their abandonment by making them legally void beyond six months, as the Bill does. Tenants and landlords can both benefit from longer fixed terms. Both get continuity, less frictional cost and less disruption. Tenants will also benefit where landlords offer rental discounts or property enhancements to tenants wishing to enter longer-term agreements. I have seen that in practice.
I was struck by the repeated comments on this from tenants. One simply said to me: “There is absolutely no way I would be willing to sign up for less than a one-year fixed initial term. I do not want the prospect of having at last found a place I can afford and having to move on in a shorter period than that”. A tenant such as this—there are many—who wants to be sure that they have security for longer than six months is prevented by the Bill from obtaining it. The circumstances in which the landlord can remove them—to sell the property or provide it to a family member—would be limited, but beyond six months the tenant has no protection should the landlord serve a notice to that effect. The problem presented to me is that a tenant may get “trapped”—this has been referred to by some speakers—for a fixed initial period in a property that is not what they were led to believe.
I do see that issue, but two points occur to me. First, this is a caveat to both parties when signing up. After all, the landlord may find themselves trapped with a bad tenant. Secondly, a correctly drafted tenancy document provides for either party to quit in the event of contract breaches by the other. A long agreed fixed term is still escapable—if that is the right word. A system
where tenant and landlord lose the ability to agree a tenancy for any period over six months of secure occupancy seems perverse. It is a further disincentive to the supply of accommodation.
Landlords face the risk of tenants changing every few months, with the associated costs and delays of repair, redecoration, reletting and disputes over deposits. I have not mentioned tenants bringing in livestock, but this could also be a feature if they are seeking insurance payments for damage by the tenants’ assorted livestock, which landlords would not now be able to refuse to allow to be kept on the property. In that situation, landlords would probably have to seek higher rents to cover the associated costs of tenant turnover.
However superficially well intentioned the Bill is, it satisfies neither tenants nor landlords. Both need certainty —certainty of tenure balanced with certainty of recovery—but none of this is attainable without certainty of supply, which is the core issue that we must return to. Although the elements of the Bill that deal with standards of accommodation and portal registration are largely to be welcomed, its approach to landlord and tenant relationships will deplete supply and exacerbate the problems that it seeks to solve. I am most grateful for noble Lords’ indulging me going on at such length.
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