PARLIAMENTARY DEBATE
Renters' Rights Bill (First sitting) - 22 October 2024 (Commons/Public Bill Committees)

I declare an interest as a private landlord.

I am a landlord but only of registered social housing.

I am a member of the Acorn community union, which is giving evidence today.

I am a vice-president of the Local Government Association and my husband works for an organisation that has funded the Renters’ Reform Coalition.

I used to work at Shelter, which is giving evidence today.

My husband works for Shelter, which is giving evidence today.

Q Welcome, and thank you very much for attending today. To kick proceedings off, I am interested in hearing your first impressions of the Bill in respect of whether you think there should be a balance between landlords and tenants and whether the current drafting gets that balance right. I would be grateful if you could identify any differences in opinion between professional landlords and those who are sometimes described as accidental landlords—amateur landlords with one or two buy-to-let properties, perhaps for a pension.

Theresa Wallace: I think the Bill has the best intentions, and we support a lot of its changes. However, I believe that as it is currently written there will be unintended consequences, one of which would be more homelessness. It needs some changes. We know that section 21 is going, but we have to accept that it will not solve the issues in the PRS. We have—the English housing survey has quoted this—more than one million tenants in the PRS in receipt of benefit for housing. The majority of those should really be in social housing. If we had those social homes, we would not have the current supply/demand pressures and rent pressures, and we would not have properties lower down in the market that are unfit for purpose and damp and that should not be there in the first place.

One of our problems is that a lot of the Bill will help tenants—renters—once they are in a property, but we have to stop those properties that are not fit for purpose being rented in the first place. I heard a story last week about a lady who is renting further up the country. She is paying £500 a month for a two-bedroom cottage. On the market, it would be worth £750 a month, so she is saving £250. Her property has damp and mould, which she will not be reporting to anybody because that is all she can afford to pay and she has nowhere else to go.

Q Can I bring you back to your opening statement? You said that there were likely unintended consequences from the Bill in its current form, and that one of those unintended consequences would be an increase in homelessness. Could you expand on why you said that?

Theresa Wallace: There are various reasons. We need the private landlord at the moment, no matter what his property is like—a lot of them are in very good condition. Private landlords are very scared about this Bill and a lot of them are exiting. I know some of you might think that there are other places those properties can go, but we need them in the PRS—the tenants need them. We want to keep those landlords. We have institutional investment, but that is a very small percentage—I think it is 2% or 3%—for build-to-rent. Unfortunately, the build-to-rent model does not work financially in the places we need those properties, because of the way their financial model works and margins.

Q I am butting in again—I apologise. You say that private landlords are exiting the market already; what evidence do you have to support that statement?

Theresa Wallace: There is evidence out there. With my agent’s hat on, I can say that we have evidence in the amount of landlords we have lost and the number of people looking at properties compared with before. I gather we have a 12% increase in properties on the market now, which is the highest since 2014, per agent.

Q What impact, if any, is that having on rental asks? If supply is being reduced, what is happening to demand?

Theresa Wallace: Demand is up and supply is down, so that obviously does have an effect. It is not just an effect on rent: it is also an effect on the tenants who can secure the properties in the first place. The Bill is there help the people who are struggling, and in some places those are the people who will be penalised.

Q Ben, you have been patient. Perhaps you could do your best to answer the same question.

Ben Beadle: With pleasure. We are largely supportive of many features in the Bill. There is a lot to be welcomed, and the Minister should take great credit for bringing in these reforms so quickly. One thing the industry has suffered with is the hokey-cokey politics of when we will see the abolition of section 21. Our position has been very clear: we do not oppose the abolition of section 21, providing the alternative is workable and fair, but there are two elements that do not quite strike the balance.

The first element is court reform and the need for landlords to have confidence in it. I appreciate that others might have viewed this as a delaying tactic in the past, but the reality is that we are waiting seven months on average to get possession of our homes, and that is for a fast-track situation with almost no proof needed. When we move to a section 8 ground, that will require more resource and more scrutiny, quite rightly, but without investment in the court system we will not deliver what either renters or landlords need.

In a survey of over 1,400 of our members, 60% of landlords said they were less confident or not at all confident that they will remain a landlord without suitable court reform. That declines to 37% if suitable court reforms are enacted. Our argument has always been that this is about confidence, striking the balance and giving support to responsible landlords, as well as delivering for renters.

The other area we have seen is that landlords will be provided with robust grounds for repossession; I may have missed them, but I do not see the doubling of notice for serious rent arrears or increasing the rent arrears threshold from two to three months as sending the right message or as fair and proportionate. Those tenancies will largely fail, whether it is two months, three months or six months, quite frankly.

What we want to do is avoid rent arrears building in the first place, so we are supportive of something like a pre-action protocol where responsible landlords can help to signpost tenants to manage their arrears. We did that during the pandemic. I worry that not addressing that point will send the wrong message. We have an average of 21 people chasing every home, so whatever nip and tuck we make around here, whether landlords are leaving or not, that is only going to worsen as confidence decreases.

Q You have mentioned confidence twice. In anticipation of the Bill, and now that it has been published, are you able to say what has happened to confidence in the real market for both accidental and commercial landlords?

Ben Beadle: If you consider yourself an accidental amateur landlord, that is arguably part of the problem —I do not think we can have amateur landlords. Having a lettings business is a business. Whether you have one or 10 properties, you need to do it properly, and we try to support all our members with that.

We have been tracking sentiment in the sector for the last 12 years, across our membership, and it is at a record low. Only about 10% of our members are looking at actively investing in the sector, and about a third are looking at disposing of one of their properties or exiting the sector completely. I appreciate that that is sentiment rather than actuals, but we also have to point to the fact that we are seeing such a significant number of section 21s being used where a landlord is selling, and that still has not percolated through to some of the statistics. An average of 21 people applying for a rental property is not going to get better.

Thank you both very much.

Q I have three questions, starting with court improvements. There is a shared understanding between the sector and the Government that ensuring that the Courts and Tribunals Service is prepared for the implementation of the new tenancy regime is essential. You all know that we took issue with the previous Government’s legislation, which made the tenancy regime hostage to unspecified court reforms.

You mentioned investment, and I wanted to press you on precisely the type of improvements you want to see. You know that, together with colleagues in the Ministry of Justice, we are already taking forward improvements towards digitising the court possession process. What are the metrics you want to see in that process as improvements? On the understanding that —I think you will accept this—not every section 21 notice will read across to a section 8, so there will potentially be a bit of an increase, what do we need to see on the section 8 side and the tribunal side to ensure that the system is fit for purpose at the point that we switch it on?

Ben Beadle: I have a couple of things to say on this, Minister. I agree that court reform has been almost like the Colonel’s secret recipe—nobody quite knows what is in it or what it looks like. It is incumbent on us to define what “the courts are ready” means in practice. For us, there are two or three areas that could be improved. First, we are getting many reports of applications that are made to the court actually running out of time because they have not been processed in time. You have the admin part of the sausage factory at the beginning, because it is not so much about the number of judges. I sit as a magistrate and I often sit around waiting for cases to come to me and to be input into the new common platform. There are delays built into the administrative process that cause frustration.

The other issue we have seen is the wait for a bailiff. Once you have patiently waited for your court hearing date and you have possession, that will be what it will be, but waiting for a bailiff can take months in some areas. Sometimes there are really poor excuses—earlier this year, we saw the stab-proof vests not being available. If it is a high-risk area, you need somebody waiting out in the car and somebody on the door. London is predominantly a high-risk area, which is why we see such slow eviction timescales.

Personally, we want to prevent evictions. Landlords do not go around evicting tenants willy-nilly, but when they have a legitimate case, we do expect it to be dealt with expediently. To me, court reform looks like sifting the cases more appropriately and more speedily; digitising that process so you see the ping and the pong of the evidence going backwards and forwards; and, when you get possession, an automatic link to the bailiff, rather than having to reapply. Those are three tangible things. Ultimately, though, it is seven months at the moment, and it needs to be lower.

Your point about sifting is well made. We want to see only cases that require a judgment coming to court.

Ben Beadle: Indeed.

Q What do you think we should look at for options around improved alternative dispute resolution mechanisms?

Ben Beadle: One of the things with section 21 is that you have an accelerated process because it is a matter of fact—if you have served all your relevant documents, it is “Tick, tick, tick. Away you go.” I think there is some merit in using that system for undisputed or very hard cases of mandatory grounds, such as where you have significant rent arrears and, although the landlord has tried, there is no chance of recovering that tenancy—hopefully the landlord has followed our pre-action protocol to signpost tenants where they need to go. There are some elements of the system that could be reused.

The other part is away from the court system and into the first-tier tribunal. We have had extensive discussions with the first-tier tribunal. Not many people challenge their rents at the moment; I think we all accept that. We want tenants to be able to challenge their rent, particularly if it is unfair or subject to a significant increase. But the way the Bill is constructed means there is no barrier, or no disincentive, to challenging your rent, and I do not think it quite strikes the balance. First, the tribunal can only award or downgrade the rent so, as a tenant, I have nothing to lose. Secondly, with the way the implementation is being put across, you run the risk of a real deluge on a system that is, frankly, antiquated—you have to fill out a Word document and email it to all parties.

Q Would you accept the corresponding argument from the other side that there are already very low numbers of tenants taking their cases to tribunal, and that if each of those tenants is looking at potentially one, two or three months’ worth of arrears if they challenge a rent increase and fail, that will act as a powerful disincentive against anyone going to tribunal at all?

Ben Beadle: But that rent will not be applied until the date of the hearing, as I understand it, so although I understand the counter-argument, Minister, the point is that you could actually challenge a rent increase. You serve your two months’ notice; you challenge it; you wait for the tribunal to deal with it; you have your hearing cleared; and the landlord either gets it or the amount gets lowered, but that money is then not backdated.

Q That is useful. So you accept the “not backdating” point. I thought you took issue with the backdating and wanted it at the point of—

Ben Beadle: No, no—well, I take issue with it, in that it is not fair and it is not proportionate in the circumstances, and it will do nothing to help on court reform. That is why we have set out a managed implementation for these things. I totally get your point that it was held hostage previously, but there are some really fundamental points around the court system being on its knees, and I think there is a way of implementing regulations so that that is mitigated. The first-tier tribunal is a classic example of where you could make some nips and tucks to what is set out, to protect the first-tier tribunal from a steep rise in cases because it will not be able to cope.

Q Understood. By the way, there is no dispute on the Government side of the Committee as to the fact that the court system is on its knees after the past 14 years.

I have one last general question, which maybe you could come in on, Theresa. There are broad framework powers in the Bill for both the database and the ombudsman. The database will be critical for landlords in understanding their obligations and demonstrating compliance, and the ombudsman will potentially provide routes to landlord-initiated mediation. As we come to flesh out the detail in secondary legislation, what do you want the database and the ombudsman to do? What is the most critical thing, from a landlord point of view?

Theresa Wallace: I am very supportive of both, and I think we definitely need both. My fear is that the database could end up just being a landlord database, with the landlord’s name, the property details and the address, so that the local authorities know where those landlords are. That is part of it—I completely accept that—but I think that we have a huge opportunity with this landlord database, and so much could be done with it. We really could reach a situation where we could stop properties that are not fit for purpose being let, if the database is built with that end in mind and we can digitally upload certificates. I think that we absolutely need central registers for gas and electric, and we need one standard certificate for each so that they can easily be read digitally to see whether they are in date, whether there are any code 1s and all sorts of things. I think that that would be amazing, but I actually think that we should go a step further.

A long time ago, the Lettings Industry Council came up with a model of a property MOT. Think about how you MOT your car, and it is checked in the background that you have got your tax and your insurance. We could do that with properties. We could have very easy and simple pre-let checks, so that a property is viewed visually. You have energy performance certificate providers that go and do their EPC checks, and you could easily have online or face-to-face training for providers to do a visual check so that you can see if you have damp and mould, slips and trips or other things. I think that it could be done very cost-effectively, and I think that the portal would pay for itself as well as providing local authorities with some income for enforcement. Enforcement is something that we absolutely need, and I know there is not the resource for it.

Thank you.

Q My question is a really simple one. Do you think that rents in the private rented sector are currently fair and affordable?

Theresa Wallace: It is a good question. I think that the demand is what has the effect on rents. I really believe that if we had those million social homes—I know we cannot get them overnight, but we should have a long-term strategy working towards that—you would have no pressures on rents because you would not have this imbalance in the demand and the supply, so rents would not be where they are.

Ben Beadle: Yes is the straightforward answer, for me. The rents that we have seen increased by 8.4% in the year to September. That is high by any measure, and I think, as Theresa says, it is entirely down to a lack of social housing and a lack of new stock coming to the market. It cannot be normal that you get 21 people applying to rent a property. I know the Bill deals with advance rent. As a landlord, I never ask for advance rent, but I get people saying, “I will give you 12 months’ rent up front,” before they have even seen the property. I think this mad market is not normal, and obviously it will not be resolved by this Bill. I say that because—though there are a lot of really good things in it, such as the database and the ombudsman, which we are very supportive of—it tinkers around the edges of the fundamental issue here, which is supply.

I know the Government will address social housing and right to buy, and all those things, and they are absolutely right to do so. At the same time, we do need a vibrant private rented sector. We need that vibrant private rented sector now while we work out what to do with social homes, because there is a massive lead time. What I see at the moment is everybody harking back to the wonders of the ’70s, of social housing and council housing, and looking at that as a really great thing, but we see horrible stories of local authority properties in serious disrepair. We have lower satisfaction in the social sector than we do in the private rented sector. At the same time, we are focusing on making life really difficult for responsible landlords who have good quality accommodation to bring to market. We do not want to dissuade those people from bringing it to the market; we want to encourage them. I think the sequence of this needs to be that the Bill must deliver for responsible landlords and renters, and give them security, but it must also address some fundamental issues about supply.

Q Theresa, I was struck by your remarks about rising homelessness. You will be aware from the public P1E data about causes of homelessness that the end of a tenancy is the leading cause of homelessness at the moment. I would be interested to know more about why you think any changes to that would actually increase homelessness.

Theresa Wallace: At the moment, a very small percentage of landlords actually terminate tenancies and serve section 21 notices. The majority of those landlords are selling, want to move back in or have rent arrears. It all comes down to our lack of supply, and losing more landlords from the sector. I think we will lose more landlords, and we are losing them at the moment—not just because of this Bill, I have to stress; they are leaving for all sorts of reasons. It might be retirement, or it might be the high interest rates that are affecting them. I do not think it is just the Bill, but our biggest issue is landlords leaving the sector when we do not have enough properties for renters.

Q Just so I understand, your argument is that there will be a reduction in supply, and that will cause more homelessness.

Theresa Wallace: I think there is that, and there is also the matter of introducing this Bill on one date. I think that will cause more homelessness because landlords are panicking, so they will serve their section 21s while they can, to get possession of their properties, and they will come out of the market.

If, rather like with the Tenant Fees Act 2019, all new tenancies had to comply and existing tenancies had 12 months to do so, or until the end of their fixed term—that might be sooner—when the Bill came in and landlords saw it working in practice, they might see that things were not as bad as they had feared. Although I understand the reasons behind not wanting two levels, I think that doing it all on one day will have a knock-on effect for tenants. There are tenants who have long-term rents for two or three years, but once this Bill comes in, if they have already had their 12 months, they could suddenly find they have four months’ notice coming their way because their landlord has decided they want to sell or move back in. I do not think we are giving tenants the protection that they thought they had when they secured their tenancy.

Q You said the Bill will increase or reduce confidence, and you talked about the courts. You have not said much about the change to periodic tenancies. In your evidence, you talk about keeping fixed-term tenancies where tenant and landlord agree. What would stop landlords putting every tenancy on a fixed term, and what would be the practical difference of still being able to give two months’ notice yet being in a fixed-term tenancy? How would that be practically different?

Theresa Wallace: Often a tenant has put their children into school, and they do not want to have to move within two, three or four years. It might be a fixed-term job contract for two years, or it might be caring for elderly parents—whatever the reason, it is often the tenants that are asking us for fixed terms. It is not us saying, “You have got to take a fixed term.” If they want a fixed term, we understand the need for flexibility, because circumstances can change, so let them still have their two months’ notice. We would prefer to see minimum terms of four months, but that is not for landlords; that is to stop properties going over to the short-let sector.

I spoke to an agent last year who does short lets as part of their business model, and the average short let was 91 days. I can see we are going to lose properties to short lets; they are going to be paying for long-term rentals at short-let prices. I see that as being an issue.

If a landlord is happy to commit to two years and say, “Look, I don’t want to sell and I don’t want to move back in; I can guarantee you two years,” but the tenant still has their notice period for their flexibility, I do not understand why that is not allowed, because that is in the tenant’s best interest. Now, the landlord can say, “I am not going to sell my property. I don’t need to move back into it. You can have two years on a rolling contract,” and he then might change his mind nine months down the line, and there is nothing to stop that.

Ben Beadle: I wonder whether I can comment from a student perspective, which has not been picked up by the Committee yet. One of the areas that we are very worried about is the cyclical nature of the student housing market. I operate in Uxbridge near Brunel University. As Mr Simmonds well knows, tenants coming in want to have the security that the property is going to be available.

Where I do not think the Bill quite strikes the right balance is that I think it needs to maintain the moratorium period that was brought in under the previous Bill, because that did three things. First, it protected set-up costs for landlords. It costs a lot of money to set up a tenancy. I do not think we are going to see a huge change in behaviour in terms of churn, but I am sure we will see some behaviour change where tenants can give two months’ notice. Having a minimum six-month period—four months plus two—is sensible for that. Secondly, it is sensible from the point of view of not turning the private rented sector into Airbnb via the back door. Nobody wants that. Thirdly, it goes some way to protect the student cycle, which is in the interests of both landlords and tenants.

Q Mr Beadle, reflecting on what you said in respect of the right of the tenant to challenge rent increases, it seems to me, as drafted, that the consequence is that a tenant will always challenge the rent increase, because the worst possible outcome is that they defer having to pay the higher rent until they get the hearing, and the best outcome is that there is no increase. Is that the view of your members?

Ben Beadle: Yes. Straightforwardly, yes it is. Landlords will have to act differently under section 13. I would encourage landlords to speak with their tenants. No one wants to get a section 13 notice through their door as a surprise, so landlords do need to have some soft skills about them and have a sensible chat with their tenants, but yes is the straightforward answer.

Q This is the second time that Parliament has had a go at reforming renters’ rights. Could you tell us how you feel this Bill is different in what it means for tenants, compared to the previous attempt to reform the rented sector?

Tarun Bhakta: First, I would like to thank the Committee for inviting us to give evidence today. To answer your question on how the Bill is different, there are significant changes from the previous version of the Bill. In our view, the previous version was of good intention, but full of aspects that would undermine its core purpose, particularly as the Bill moved forward and changes were introduced, for example to essentially remove periodic tenancies or reintroduce fixed-term tenancies—that minimum period for tenants.

Similarly, there were policies with a lot of shortcomings —ideas such as the no re-letting period after landlords evict a tenant. We have seen in Scotland that one in five landlord sale evictions have not ended up in sale, so there is evidence of abuse in the system. It is really important that there are measures to deter landlords from abusing the new section 8 system, and to catch landlords who are dishonestly evicting tenants. The previous Bill included only a three-month no re-letting period, which would have been much too small a deterrent for landlords seeking to abuse the eviction grounds and evict tenants dishonestly. We are really pleased to see changes in this Bill that go significantly further, such as the 12-month no re-letting period.

There were measures in the previous Bill that we would call half-baked, particularly when it came to notice periods. We know that the most common type of eviction in the new system will be for landlord sale or for landlords moving in. The previous version of the Bill included just two months’ notice, which would have retained and recreated many of the problems that we see in our current private rented sector, where tenants are faced with short notice and unreasoned evictions. We think many of those are avoidable, but we also know that that short notice is not long enough for renters to find a new place to live. There are really positive changes in this Bill in comparison with the previous version. We think it will go a very long way to addressing the needs, but given that we are so early in the Parliament —we welcome the speed at which the Bill is being implemented—it is still important to view this Bill as a work in progress.

In our evidence today, we will pick out two key areas. First, we think the Bill can go further in chapter 3—the discrimination clauses—on improving access to rented homes. Secondly, we think the Government need to take another look at rent increases. Looking at the evidence from tribunal cases, we do not think the current approach in the Bill—to tweak the work of the tribunal, as discussed in the previous panel—will achieve its aim of preventing evictions by the back door, or economic evictions, as they have been called. We think that the evidence that we have heard today on the tribunal today shows that we need to go further there.

Tom MacInnes: We would agree with quite a lot of that. The Bill does improve the position for renters. We agree with the changes around re-letting, but we would say that that is probably only as strong as the enforcement, so we would be interested in looking at that further. We also welcome the longer notice period and the stronger rules on discrimination against families and those receiving benefits. Those are definitely things that we think are improvements.

We may come on to this, but there are other areas in which we might be looking for a couple of improvements. In particular, there was some discussion earlier around the portal and the use of the portal. We think that it could be used for better establishing what the market rent was in an area. If you are talking about in-tenancy rent rises, is that possibly a place where you could agree what actual rents were, rather than past rents? There could be something useful there, but broadly speaking it is a step in the right direction.

Q May I pursue a couple of points, Mr Bhakta, on the difference between things set out in legislation and the use of guidance? I know that you gave evidence previously on this issue, which has come up not just in the context of this Bill. Could you draw the Committee’s attention to your views about how that has an impact in the real world and how it would most effectively be addressed, given the complexity and, sometimes, the timing and flexibility of some of the issues that that is designed to address?

Tarun Bhakta: Yes, I think so. I think you might be referring to talking about the evidence requirements on eviction grounds.

indicated assent.

Tarun Bhakta: It has long been our call that the Bill should specify and set a higher threshold and make that clear, particularly for the landlord sale and the landlord moving in eviction grounds. We also think that the Bill should introduce a post-eviction proceeding.

There are two really important parts to establishing that clarity in the Bill. First, tenants and landlords need absolute clarity about what constitutes a legitimate eviction. We see through our legal services that the decision on whether to challenge an eviction notice in court is an incredibly complex and difficult one for tenants to make. The process of going through the courts to challenge an eviction is time-consuming, costly and very stressful for tenants, so it is about setting out that clarity, particularly in those landlord sale and landlord moving in eviction grounds. Making that threshold clear would provide clarity for tenants to help to make that decision. We believe that that would also have the effect of supporting tenants to understand where an eviction is legitimate and prevent some of those cases from making it to court.

Secondly, the current wording in the Bill is very open. It goes further in Scotland, in our view, and although it is all very well being confident in setting guidance for the courts and hoping that the judges make the right decision in court, tenants need that clarity before we reach the court stage. Also, judges do need some steer; we see some inconsistency in cases between judges, and it is not the case that they will all interpret the law in exactly the same way, so setting that clarity in the legislation is important. We cannot have a situation in which the landlord states that they intend to sell the property and that is case closed: we need more clarity than that.

Q Thank you both for coming to give evidence to the Committee. Can I pick up on two points? The first is on rent increases. The Government have been very open that we have no plans to implement rent controls, and we have been clear about our reasons why. I take the point that you might have a different view, but we will set that to one side for the moment. What are your concerns around how the process in the Bill could be used by landlords as an effective section 21 by the back door? Perhaps we can have a bit of an exchange about this, but why do you think it does not provide that protection against unreasonable, within-tenancy rent increases?

Tarun Bhakta: It is difficult to set that to one side, so you will forgive me if I do not.

Q But how would you improve the provisions in the Bill?

Tarun Bhakta: First, we believe that the Government need to look at the proportions by which rents are increased. Currently, the tribunal is able to access only the eventual rent, whether or not that is a market rent, so in effect it works with a ceiling, rather than looking at the proportions of rent increases. This is really important, because through the tribunal and our services outside the tribunal we see very large proportional rent increases. This is what matters to tenants: they cannot afford large proportional increases in their rent because of that shock, particularly where they are on fixed incomes and receive housing benefit or pensions.

The data at the tribunal is really telling. The average size of a rent increase permitted by the tribunal in the last hundred cases was 23%. The majority of renters tell us that they could not afford a rent increase of more than 10%, yet two thirds of cases in the last 100 cases in the tribunal ended with a rent increase for a tenant of 10% or more.

Q To be clear, that is because the tribunal is saying that the previous rent is so far below what it judges to be the market rent?

Tarun Bhakta: That is exactly right, and 16 of the 100 cases we looked at saw an eventual rent increase of more than 40%. We know, both through our services and through our research, that that is not manageable for tenants. That is the kind of rent increase that pushes tenants out of their homes or into debt. The problem is using a ceiling of market rent to judge the eventual rent increase.

Setting limits on proportional rent increases is commonplace across Europe. I know the Government have said they will not introduce any measure of rent controls, but it is quite unhelpful to lump all rent controls together when there is such a range. Rent controls is not a policy, but a category of policies. It is common across Europe to limit the proportion by which rent can increase during tenancies. The purpose of that is not to bring down rent or tackle affordability in any major way, but to protect people from those disproportionate rent increases that force them out of their homes.

In the tribunal there is evidence of landlords, where they are not able to secure section 21 eviction for whatever reason, turning to rent increases. There are at least four cases in that 100—this is only where the tribunal have provided background notes, which is not very common—where a landlord has clearly sought to evict the tenant and has not been able to, so has turned to a very large rent increase, and all the tribunal has been able to do is permit a large rent increase. In many of those cases we assume the tenants will have had to leave the property.

Q To pick up the point made by the previous witnesses, we took the view, which is quite finely balanced, that the potential disincentives to landlords of losing potentially up to three months’ rent increase—though we want to bring the tribunal process timelines down—could be accommodated by the sector, as opposed to tenants being disincentivised to take the case to tribunal in the first case by having the rent increase kick in from the point that the section 13 notice was served.

You heard the concerns from the previous witnesses about how that would operate and the unfairness of that. With your experience, how would you say the new system would operate? We have been very clear that we want more tenants to take challenges to tribunal, though we do not want the tribunal overwhelmed. What would you say to the charge that the decision the Government have made, to put the point of payment when the tribunal makes its determination, will see a flood of cases come in and all advice groups will tell tenants to take every single rent increase to tribunal?

Tarun Bhakta: We are often accused of plotting to tell everyone to take things to court. We do not think that would be the case. As you say, we want more tenants to be able to challenge their rent increase at tribunal because, particularly in the last couple of years, we have seen extremely large rent increases for tenants during tenancies. The reason we do not think there will be a flood of cases to the tribunal and the reason we would not advise tenants to do that is that, if you look at this evidence, there is very little that the tribunal is able to do at present to address those large rent increases. We would not advise tenants to simply delay the inevitable, because, looking at the data, a large rent increase is somewhat inevitable—it might not be the exact rent increase the landlord asked for in the section 13 notice, but there is strong evidence that the tribunal will permit a very large rent increase.

Q Could you quickly set out to the Committee the process of going to tribunal, for those who are not aware of it? There is sometimes in the commentary this idea that it is incredibly easy, which is put paid to by the very low numbers that go. What is the process? It is onerous in many ways, so am I right that it is a significant jump for tenants to take a case to the tribunal in the first place?

Tarun Bhakta: Yes, absolutely. Before I talk about what the process looks like for tenants, which Tom can maybe add to, we need to understand that, for tenants who do not interact with courts or tribunals or anything like that in their daily lives, going through one of these processes, whether we know it to be arduous or not, sounds and feels scary to tenants. That is really important to understand. The vast majority of tenants do not want to go through these processes. It is not fun—it never has been fun—but there is also the fear of what might happen and of how it might damage the relationship with the landlord. All those things weigh heavy on tenants’ minds. That is a really important factor to consider. The proposals that we have for limiting rent increases would, in effect, do away with the need for tribunal decisions, but for a very rare and small amount of cases.

When it comes to the actual process of tribunal, there is such poor data out there about rents in the wider sector that it is very difficult for tenants to gather that evidence. It is somewhat on them; it is also on the landlord, but it is somewhat on them to gather and provide that evidence. The tribunal will do some of that work, but tenants are expected to, or generally do, provide evidence at the start.

Tom MacInnes: From our perspective, it is basically exactly that: people do not have the time or, really, the capacity to take these things to tribunal, and they often decide that it is not worth it.

To the point about the data available out there about what a reasonable or market rent is, there are so many different sources. Even at an Office for National Statistics level, there is not complete agreement. We really welcome the end to bidding wars, for instance, for new tenancies, but our concern is that an unintended consequence might be that a landlord would put in a very high price to start with and then bring it down, and it is that high price that gets logged and sets the market rate.

For us, the role of the portal is to establish what the actual rents are—a basis that everyone can proceed on together, rather than it being some debated fact. There is a real role there for making that stuff public and known. Then you get two well-informed sides of an argument.

Q One final question, just so that I have understood your concern. Do you question whether the tribunal has the expertise to look at all of the sources of data and evidence that are out there in relation to rents, and to make a fair assessment about market rent?

Tom MacInnes: I do not know whether it is about expertise, but it is simply an observation of what always happens—it tends to end up on the high side. What the rates are is just so contested.

Q When I met your Citizens Advice colleagues in my constituency, they said, “We can give all the advice that you like, but ultimately, the problem is that money out is more than money in.” I have that ringing in my ears, and that inspires this question.

We all know that rents have been increasing out of proportion to incomes over the last few years, creating this growing gap where one or, at this rate, two generations of people risk never being able to afford to get out of the private rented sector. I am really worried about that, especially as that group ages. Do you think the Bill does enough to address the issue of affordability of rents and the long-term and growing problem of those generations of people, moving into old age, permanently trapped in the private rented sector?

Tom MacInnes: We will not go back to the bit about rent rises, but we will talk about some other aspects. The thing that concerns us is asking for enormous amounts of rent up front, so what we want is to have that limited to a month’s rent up front. There are also other issues around guarantors and asking for guarantors, in the next stage along the process. We think that has discriminatory consequences against people who actually can afford it, but cannot point to the evidence of it—people who could afford the rent but do not have anyone in their social circle, if you like, who could back them up for a year or whatever. We would like the instances of relying on guarantors to be reduced. If the issue of perceived affordability changes, the choice for those groups grows; we are looking for that kind of support.

We welcome the end of “No DSS, no benefits”, but we are worried about that coming in in other ways, such as someone not having rich enough friends to back them up. We would like to see that being addressed.

Q As far as I am concerned, you can talk about rent controls.

Tarun Bhakta: We really agree with those points about rent in advance and guarantors, which are particular priorities for Shelter. Particularly through our legal services, we have been one of the foremost organisations supporting tenants to challenge DSS or housing benefit discrimination. We see how slippery that discrimination is. It is very difficult for tenants to understand whether they have experienced it.

To add to what Tom said, we have some evidence that rent-in-advance requests are disproportionately made to housing benefit claimants, but that also applies to older renters, as do guarantor requests. Rent-in-advance and guarantor requests often come together or are linked. A lot of older renters do not have someone in their support network who is willing or able to offer to be a guarantor. The effect of these requests that landlords introduce is to lock people out of the rented sector. Tom said that they are perceived affordability issues. It is that first step into housing, and affordability is strongly relevant to that, but we find that people who can afford the rent are prevented from renting properties because of arbitrary barriers such as rent-in-advance and guarantor requests.

To answer your question more directly, it is fair to say that the Bill does not introduce measures to address affordability in the sector. We think the Government should take a longer look at that and, to go back to my previous answer, take a more reasoned approach to rent controls. Essentially, they should explore the options, particularly where rent increases for sitting tenants are forcing them out of their homes. That undermines the core purpose of this Bill, which is to provide greater security for tenants and help them to avoid homelessness. Beyond that, it is clear that we need much greater provision of social housing and much more adequate housing benefit in order to tackle some of the affordability issues in the private rented sector.

Q The previous panellists believe that the Bill will increase homelessness. My simple question is: do you agree with that assessment of the Bill?

Tom MacInnes: I do not think we would agree with that, no. By way of background, the number of people that Citizens Advice is helping with homelessness has never been higher—we hit a record this summer—so the number of people who are homeless is already incredibly high. The Bill gives more power back to the tenant, so we think it redresses a power balance.

One of the things that we would like to think about to reduce homelessness is the bit that happens at the end of the tenancy. The landlord has to give a four-month notice period, but within that the tenant has to give two—two months within that four. So the tenant is given a deadline, which is shortened, to find another place, and it is often difficult to find another home. We have talked about the affordability issues. There is an issue about potential homelessness at the end of a tenancy that everyone knows is going to end in any case. We would like to see that period reduced, ideally to zero but certainly to one month.

There is also a really good case for a rental waiver—a rent-free period—within the last two months of the four so that people can afford to move out. They must be able to afford the fairly substantial initial costs of moving, and not pay two months’ rent, because there is a homelessness risk right there. No, I do not think the Bill will increase homelessness.

Tarun Bhakta: I have a simple answer followed by a less simple one. No, the Bill will not increase homelessness. We have already heard that the end of assured shorthold tenancies is the leading cause of homelessness. The Bill will eradicate short-notice and no-reason evictions, which many believe are not legitimate and would not meet the bar for eviction under the new system. We are supportive of the way that section 21 and fixed-term tenancies are being abolished and of the implementation approach set out by the Government. We think the Bill will reduce homelessness. I very much agree with Tom that, if and when tenants are served with an eviction notice, the Bill could go further in supporting tenants in access to finding a new rental home. I will come back to the point about rent in advance and guarantors.

Housing benefit claimants are disproportionately at risk of homelessness if they are served with an eviction and they face these additional barriers disproportionately. According to Acorn research, one in five renters claiming housing benefit had been asked for 12 months’ rent in advance in the last three years compared with just 6% of renters not in receipt of housing benefit, which shows how disproportionately the barrier is applied to housing benefit claimants, who are in turn themselves, being on lower income, more at risk of facing homelessness once they are served with an eviction notice. That is one area where we would say the Bill is a work in progress. We could improve that access to new rented homes where tenants are served with an eviction, and that would help people to avoid homelessness if and when they are served an eviction.

Q I have two very brief questions. You will have heard the previous witnesses. Have you seen any evidence of an increase in section 21 evictions since the introduction of the Bill? You will have heard the discussion about fixed-term tenancies and whether they should still be available by agreement between landlord and tenant. Do you have concerns about that? What are your views?

Tarun Bhakta: First, the evidence is that section 21 evictions are increasing. We do not have evidence that that is because the Bill is coming. We heard in the evidence that many landlords will wait and see, and find that being a landlord in the new system is not so bad. That is what the evidence of tenancy reform in Scotland in 2017 showed. The evidence we have does not point to that.

Can you remind me what your second question was?

It was about retaining the option of fixed-term tenancies to two or three years if it were agreed between landlord and tenant.

Tarun Bhakta: No, we would not support that at all. It is an illusion that a fixed-term tenancy is a mutual agreement between tenant and landlord. Tenants expect that that is what they have to do. Tenants most commonly sign—the majority sign—12-month contracts, yet we know that tenants want longer than that. It is just that tenants do not feel that they have the power in the sector to ask for a different length of fixed-term tenancy.

In our services, we see fixed-term tenancies locking tenants into unsuitable properties; maybe repairs were promised and not done, or the property has deteriorated, their circumstances have changed, or the rent has increased and tenants are locked in and liable for the rent during that period—

Q How far do you think the Bill will go to give renters greater security and stability?

Tom MacInnes: We welcome it as an organisation. We think it improves renters’ stability. It gives a bit more power to the renters. There is more that could be done—for example, there is stuff around the two months’ notice only being required after a four-month period. To repeat some previous points, there is a bit about landlords selling their properties and the evidence required. If the evidence landlords needed to provide was increased, we think that there would be a reduction in the misuse of that ground and an increase in stability for renters. We do think the Bill makes a difference and increases stability, and if a change could be made in enforcement, it could do even more.

Q I have two questions, the first of which concerns the role of the insurance industry in the sector. I am sure that many of us have heard from constituents that most landlords’ insurance requires a prospective tenant to pass a credit check. If the tenant fails, the insurance company will not insure that property if it is rented to that individual. I am interested in the view of your members or participants in your organisations about how that issue impacts the availability of rented properties.

Tom Darling: I think you are asking about affordability assessments and the role they play in tenants being able to access rented housing. Is that right?

Q It is not so much about the affordability assessments. When a tenant applies for a property, the agent will usually, as part of the requirements of the landlord’s insurer, put them through a credit check, and if they do not meet the standard that that insurer requires, the insurer will say, “You won’t get insurance if this tenant is occupying the property.” Therefore, that is the end of that discussion. I am interested in the extent to which you have come across that as an issue.

Tom Darling: As regards the Bill, we think that those sorts of affordability checks are acceptable, but we think that measures—as you have heard from previous witnesses—that go beyond that can be discriminatory, and often look to punish tenants and discriminate against tenants on the basis of their income. You heard about rent in advance and guarantors. We would like to see a limit to guarantors that says that, if you pass an affordability check, you should not be asked for a guarantor in addition.

Ben Twomey: We are in an interesting situation where someone could be working in a key worker or essential worker role but there are parts of the country in which it is unaffordable from them to live. They probably would not be able to pass some of these affordability checks to rent privately. That would be fine if there were other options available, but most private renters cannot afford to become a homeowner if we want to and cannot wait the 10-plus years to access social housing if we need to, so the only option is to find a way into private renting—otherwise we find ourselves in temporary accommodation. There are 150,000 children living in temporary accommodation right now. The Bill needs to go further to try to address that, because it speaks to some of the wider Government ambitions around making work pay. It does not really help us if our income increases but it is taken off us by our landlords before it reaches our pocket. Wider affordability questions, which I am sure we will come to, are relevant to the credit checks and the ability to rent privately.

Q I want to ask you briefly about the enforcement regime. It is envisaged that local authorities will be the key enforcers of new rules and regulations. What is your view about the capacity for that and how it should be resourced?

Tom Darling: We think that local authorities should be funded on a per privately rented property basis. We have heard that the Government will set out new burdens funding, but we think that the funding should be allocated according to the size of the private rented sector in that area. I want to be really clear that we support selective licensing and would like to see it enhanced and deepened alongside the new database, and we think that a number of changes made by previous Administrations to the way selective licensing worked made it harder for local authorities to apply for selective licensing schemes. There are some straightforward changes that this Government could make: removing the Secretary of State’s veto over the schemes; allowing local authorities to refer to housing conditions when they are applying for selective licensing; and extending the schemes from five years to 10 years. We think that would work well alongside the database and not in lieu of the database.

Ben Twomey: If I could take the resourcing point and slightly widen it, there was a cost of £1.7 billion in the last year to local authorities for temporary accommodation —for housing people who are no longer in their homes. This Bill will end section 21, which is really welcome, because that is the leading cause of homelessness and ending it will hopefully make some savings for local authorities, as well as bring enormous benefits for tenants, who will be better protected.

There is also a Government cost of local housing allowance, which has been in the billions in the last few years. That is to give benefits to people so that they can afford to privately rent. This Bill could go further with affordability not only to protect people in their own homes but to make the Government change the way they resource the support they provide for people in their homes—moving some of that burden of cost away from the need to pay so much for private renting and towards a better-regulated market, which would put limits on the ability of landlords to raise rents.

Q If I may pursue that final point, do you have any financial modelling about the impact on the homelessness budget that would derive from the Bill?

Ben Twomey: I do not have any with me, but I can take a look at that and write to the Committee.

Q Thank you, gentlemen, for coming to speak to us this morning.

It would not be a Bill Committee evidence session if every interest group was not telling us that it had a way to improve the Bill in some way and from different perspectives. We have heard a lot this morning about the various concerns and how they are being addressed. In general terms, however, particularly given your concerns about the previous Government’s Renters (Reform) Bill, do you think this Bill strikes the right balance and levels the playing field between landlord and tenant?

Tom Darling: I will start by introducing the situation in the private rented sector as it is today. The Resolution Foundation said this year that

“the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.”

The private rented sector is the worst of our ageing housing stock; in fact, it is the worst of the worst. It is the least secure, the worst quality and the most expensive of the housing tenures in this country, and we have the worst of any major country in the world. That is embarrassing and that is what we are talking about here. We need root and branch reform. We are happy that the Government have acknowledged that more significant reforms are required than those that the previous Government put forward, but we still need to see some changes to the Bill to go even further and deal with the scale of the crisis we are dealing with.

Ben Twomey: We are delighted that the Government are pressing on with this work very quickly, and there is a promise in the manifesto to end section 21 immediately—as quickly as we can get this law passed. That is really welcome, as it will protect people from homelessness.

There are also lots of things in the Bill that I have no notes on. For example, the bidding wars legislation seems well-written; it seems like it will make a genuine difference to people like me, who have experienced being invited to bid on homes just because we reached the front of a queue and the landlord realised that they could up the rent. Some of the provisions—including the introduction of Awaab’s law into private renting—are beginning to create more of an even playing field, as you say, for renters compared with other tenures.

I want to take a moment to talk about someone I will call Ayesha from Hertfordshire. She is a schoolteacher and a single parent, and she has been struggling to keep up with the relentless rises in rent that she has faced in recent years. She says, “There are moments when I feel so overwhelmed and exhausted, like I’m carrying the weight of the world on my shoulders. I try to stay strong for my children, but the stress and anxiety are always there, lingering in the background. I just want to provide them with the life they deserve, but with the way things are going I fear that I might not be able to. It’s a lonely, terrifying feeling, and it’s hard not to feel defeated by this constant struggle.”

It is important for people like Ayesha—given what is being said in this Committee, this Government and this Parliament as a whole; every MP in this room promised to end section 21 and, in more words or less, promised a fairer deal for renters—that this Bill takes the opportunity to resolve these issues. Maybe we will come to this, but we believe that that will involve limiting the ability for landlords to raise rents—not raising them to the market rate, but instead limiting them to the level of inflation or wage growth, so that rents begins to match the real, lived experience of people who are renting.

Q Let us come on to that, because the Government obviously will argue that the provisions in the Bill, and how we have overhauled and strengthened it from the perspective of tenants, are designed precisely to help people like Ayesha, who are struggling with the insecure and unfair system that exists. We take no issue with Tom’s analysis of the problem; that is why we designed the Bill in the way that we have.

On rent increases, Ben, I understood that you were effectively talking about a cap—to the level of inflation or wage growth. A previous witness rightly drew our attention to the nuances around different forms of rent control. Given the evidence out there across the world, which I have looked at in great detail, do you not have any concerns about the potential negative impact on supply discouraging investment into the sector? We have heard about the supply challenges, impact on property standards and the very practical concern that if we implement an inflation-linked or wage growth cap, every single landlord in the country will raise rents every year to that cap, whether they would have done so under the current system or the system we propose or not. You must engage with the challenges on the other side from the measures you propose.

Ben Twomey: I am very happy to. The idea of raising to the cap just does not happen in many countries; landlords do not do that. When you have a sitting tenant, I guess there are elements of the risk being reduced once you know that person, and that is not really accounted for when you take on the market rate. There is also an element of knowing the human being in the home, which changes the behaviour of landlords to some extent.

The use of the market rate is flawed, to say the least. It is not real; it is a made-up number. It is not the actual rent, it is not a transaction, and it is not even an agreed rental price, but the advertised price that a landlord has put out there. More than one in five homes advertised on Rightmove in the last year had to be re-advertised at a lower rent before they were actually let. That really skews the figures, because landlords will seek higher rents to begin with, and what is actually agreed by the tenant is very different. Looking at actual rents would be useful, and that should be recorded on the property database.

There is the matter of linkage as well, which relates to the first-tier tribunal if that is going to be used as the mechanism to challenge rent increases. At the moment, if you were looking at the market rate, you would have a lot of confusion. As a tenant or a landlord, you would not necessarily know where you were going to place the rent rise or whether you would come out the other end of the tribunal happy with the result, whereas if you link to inflation or wage growth—whichever is lower—you can place a number on that every year or every month, if you want to. With that number, all renters would be empowered to know their rights. Landlords would not risk going to court, because they would know that they were within the safe amount that they could raise the rent by, and it would become a much clearer process for everybody, rather than an obscure, complex and financially burdensome process for tenants and landlords, and for the Government to implement.

Tom Darling: Can I briefly answer the point around supply? You heard my analysis of the situation in the private rented sector earlier. It is worth saying that since the year 2000, the private rented sector has doubled in size. Those are the outcomes that we are dealing with now. It is the worst tenure in the worst advanced economy, and that is after 20-plus years of investment ploughing into the sector and it growing massively. Right now, we are living the experiment of what happens if you try to cannibalise the existing housing stock and turn it into an ever-increasing private rented sector.

That was under the old system, and we want to transform the system, but I take your point.

Tom Darling: Of course.

Q Given the time we have left, can I move us on? An important element of the Bill that often gets overlooked is rent repayment orders. We had quite a sensitive discussion on this matter under the previous Government’s Renters (Reform) Bill, but my experience has been that enforcement is particularly effective where you have local authorities geared up and tenants able to exercise their rights through rent repayment orders. Can you offer a general comment on whether you think we have gone far enough in trying to expand and strengthen the rent repayment order arrangements under the Bill?

Tom Darling: I am happy to answer that. We were very supportive of the expanded use of rent repayment orders when we worked on the previous Government’s Bill. They are a great opportunity for tenants to avail themselves of the possibility for compensation. Some of the awards that have been increased by the Government would potentially be life-changing amounts of money for most renters. Half of renters have no savings; as a renter and someone who is very much not on the frontlines of this crisis, I try to keep that in mind the whole time. If you are getting a big award in terms of compensation of one or two years of rent repayment, because your landlord has done wrong, that is a potentially life-changing sum of money, so we are very supportive of that.

I think you are right to identify that enforcement works best when the tenant is incentivised to work with the landlord. That works best when the problem is ongoing and the tenant is in situ in the tenancy. One of the problems we have with the new eviction grounds—we have seen this with the poor enforcement of the new tenancy regime in Scotland—is that when the tenant moves on from the tenancy it is hard to motivate them to follow up and check that the eviction was legitimate.

Our concern is that to properly enforce the system, tenants almost need to be motivated by a sort of righteous anger to get back at their landlord. That is one of the reasons why we think post-eviction evidence should be required from the landlord, and potentially no-fault eviction compensation too, where the tenant does not have to pay the last two months of rent before they leave. That way, there will be a broader-based disincentive for landlords to use those grounds. For the vast majority of tenants, after they have been evicted, they just want to move on with their lives, and they are not thinking about their previous landlord or previous home, or checking Rightmove to see whether the landlord has re-let the property and fraudulently used that eviction ground.

Ben Twomey: I completely support the call from Tom for no-fault eviction compensation. That would recognise the harm of no-fault evictions to tenants, which I think every MP here has recognised, and try to disincentive the use of any new grounds of no-fault eviction.

On the rent repayment orders, I will quote the late, great Simon Mullings, a housing expert who gave evidence to the Renters (Reform) Bill Committee, and who would have been here had he not sadly passed away very recently. He talked about an “army” of tenants who could be ready to enforce the legislation. That only works if it is really clear what their rights are and the route to achieving the compensation or repayment of rent is straightforward.

There is another area that could be strengthened. At the moment, if a landlord is not registered with the database or the ombudsman—the redress scheme—they need to have repeat offences before a rent repayment order is available. If I, as a tenant, found that my landlord was not registered, I would have to challenge that, wait for the local authority to make warnings based on what I had said, and then continue to live in the home, feeling probably much less secure than I previously did, without receiving a rent repayment order.

If we want to make sure that landlords are not punished because they were not aware of their obligations, perhaps a smaller rent repayment order would at least give some incentive to a tenant to raise the issue on that first offence. More thought needs to be given to how to stop rent-hike evictions that could happen later, because a rent hike, being an eviction by the back door, could be another way in which I as a tenant or someone else pursuing that would feel insecure, were we to come into conflict with the landlord.

Q It is really interesting to hear your evidence. Thank you for raising Ayesha’s story, because it makes a real difference to us as Committee members. Good landlords and good tenants are welcome in this. What do you see as an opportunity for the people you represent to support the work of the landlord database? What is the best way that we can ensure it affects people such as Ayesha?

Ben Twomey: Relating the database to rent repayment orders would be useful. If there is a way in which tenants or tenant groups can access the database to make sure that landlords are compliant with the database, it would be helpful. Adding the actual rents to that database would be useful, because we would finally get an honest and clear picture of what people are paying in rent. That would start to change the inflated idea that a landlord can stick their finger in the air and charge whatever they like just because it is a new tenancy. We would start to see the patterns appear for when people are in tenancies.

We should also have certain restrictions for evictions. We think eviction notices should be logged on the database. That would give a clearer picture of why people are being evicted, so that measures later down the line can be taken to reduce the number of evictions. It is helpful that in the Bill they will now have to have a reason for eviction, because currently we do not know why landlords are evicting. We know that it coincides far too often with complaints made by a tenant, but we could continue to track that through the database. We think that landlords should be restricted from making evictions or even rent hikes if they have not registered with the database and the redress scheme.

Tom Darling: I would agree with all that. I know that the Government intend to set out what will be on the database in secondary legislation, but I think it would be helpful to have a steer from Ministers throughout this process on what they intend to be on the database.

Q I have a couple of things to ask. First, I would like to hear your views on the arguments that the first panel of witnesses made that assured shorthold tenancy abolitions would remove some security from tenants, particularly students but also people who have longer tenancies.

On your point about the idea of limiting rent increases to wage growth or inflation, how would you respond to the counter-argument that it might lead to landlords setting a much higher baseline rent between tenancies, knowing that they would not necessarily be able to increase the rent as much within a tenancy?

Tom Darling: To take the first point about the lessening of security, similar reforms in Scotland led to an increase in average tenancy length. The idea that abolishing fixed-term tenancies will lead to Airbnb-lite, as we heard earlier, is ridiculous. Clearly, the people proposing that have not been through joining a tenancy recently, because it is an incredibly stressful experience. That is the last thing people would think of to do to go on holiday or to stay for only two months. There has been no evidence of that in Scotland, despite similar reforms in place there, so I would dismiss the idea.

The ability to leave the tenancy to be used in very rare circumstances—for example, where you realise there is some black mould that you did not see, which was being hidden from you when you viewed the property, or you have a serious change in personal circumstances—is an essential protection. It is to be used by tenants in very rare circumstances. Actually, the arguments about that are more about landlords: they would prefer to have the certainty of six months’ rent up front—I am sure they would. We think the Government have the balance right on that particular point at the moment.

Ben Twomey: To add to that quickly, the point made by the letting agents about someone on a two-year fixed-term contract who might find themselves at risk of a form of no-fault eviction by the end of one year is a valid concern. We would welcome support in calling for a longer protective period from no-fault evictions in that case. At the moment, one year is in the Bill, which we welcome as security for renters, but doubling that to two years would be very welcome to make sure that people on such contracts do not find themselves disadvantaged.

To address the point about rent-stabilisation measures, it is important that the vast benefit to potentially millions of private renters is weighed against any potential disadvantages. Millions of renters finding themselves better protected from arbitrary evictions through a rent hike, and from being driven into debt, poverty or homelessness, is an enormous success.

In Scotland, which introduced such measures recently, there has not been an enormous increase in market rents disproportionate to what has happened in England, Wales or indeed Northern Ireland. It was similar tracking of rent inflation with new tenancies. While doing that, we have protected all those people, yet what is happening in the market is similar. One of the ways to solve part of that market problem and to begin to drive down rents is, as has already been said, to build lots of homes at the same time. Some of the most successful rent-cap regimes across Europe are in places with lots of social housing, which takes some of the pressure off the private rented sector.

Q Thank you both for joining us today. It is so important to hear renters’ voices here in Parliament as we discuss this crucial Bill. A simple question from me: do you believe that, as drafted, the Bill will improve the lives of, and make things fairer for, the millions of renters across our country?

Tom Darling: Simply put, yes. We will be pushing in a number of places where we think the Bill should go further and where we do not think the Government have quite got the balance right, but the groups in our coalition have been campaigning for this change since the promise was first made nearly six years ago. We think it will be an important change to our housing system.

Ben Twomey: Yes. Our homes are the foundations of our lives. The Bill will give us some much-needed security and should drive up standards and quality. As I say, we are worried about affordability within that, but the main reason why you as politicians have probably not heard from renters so much as is in the past year or two is that things have got so desperate. We are worried that if there are some improvements to renting, suddenly we will lose our ability to have spaces like this where we can begin to make change. If this is to be a once-in-a-generation opportunity to make that change, we think you should cover all bases and make sure that no one finds themselves homeless, in poverty or in debt because of the fact that they have been forced into private renting.

Q You will notice that I have a rent-affordability theme, but this is probably my last question on that theme. I am aware that the Renters’ Reform Coalition would like to see a national rental affordability commission that looks into options for rent controls. If we reflect on what a previous panellist said about rent controls being not a single thing but an umbrella term for a wide spectrum of possible interventions, Tom, or Ben if you have anything to add, would you like to expand on how a national rental affordability commission might work to figure out what the best solutions would be?

Tom Darling: I think Ben touched on it. The literature shows that different types of rent control have worked best in combination with a bunch of other policy levers, and particularly the supply of social housing. If the Government are continuing to set out that affordability is not the thing they are going to deal with in this Bill, we think it would be sensible to have a national rental affordability commission that could look at all these issues in the round—including all the different policy levers such as local housing allowance, housing benefit, the supply of social housing and different forms of rent controls—to bring down rents relative to wages and make renting more affordable. That feels like a pipe dream at the moment, but it should not be. That should be our aim. If the Government are not going to take forward affordability in this Bill, that sort of commission might be a place where they could look at all the different policy levers which, it should be said, cut across different Departments, and it might be a way to take that forward.

Ben Twomey: On that point, the idea of rent regulation being a scary thing is not new, and it is something that is hammed up by the landlord groups. They obviously want to make as much as profit as they can, but they do not have a right to make profit; they have a right to seek it. In this market, it is so broken because, unlike lots of other types of markets, the landlords can just click their fingers and say, “I’m short £100 this month. I’ll get it off my tenant.” A tenant will usually be forced to pay or have no other options unless they want to leave the home or even become homeless.

It is a very broken market. We used to have regulation in many ways in the country more than 30 years ago. Things have not got better since then, so the trial we have had of not using these measures has not really worked for people. These are all things that a commission could look at, or on which the Bill could take some quite straightforward measures. Similar to the energy price cap, with which we recognise that energy is essential for our homes, our homes are also essential for our homes. We should probably think about some common-sense solutions to that.

Q To continue the theme around rent controls and rent stabilisation, the reforms introduced in Scotland have had lots of benefits, but they introduced rent controls in a way that we are not proposing to through this Bill. Given that you have said we should not worry in any way about rent controls of any form—if I have summarised you correctly—what would your explanation be for the fact that rents have risen faster in Scotland than anywhere else in the UK, including London, since those reforms were introduced?

Tom Darling: I am happy to answer that. Obviously, we have been talking a lot about Scotland, and you will hear later about the “Rent Better” report, which has essentially written the book on it.

That issue is highlighted in the report.

Tom Darling: Yes. Our view would be that where these systems have worked, they have been part of a broader strategy that sets a clear direction for both tenants and landlords. I am sure you will have other landlord organisations here today that will talk about the need for certainty. There definitely has not been that in Scotland. There has been political instability and the chopping and changing of policy every couple of years, essentially—from the 2017 reforms to the pandemic freeze, the rent cap and now moving to a system of between-tenancy rent controls, and the latest political instability. I am sure landlord organisations will tell you that that makes it very difficult to have any certainty about what you are doing with rent levels in the future.

We would argue that if a Government with a big majority early on in their term set a clear direction on what the policy would be, landlords would be able to deal with that. You see that in European countries where there are big landlords who do just fine under systems where there are rent caps.

But you do not dispute that rents have risen faster in Scotland than anywhere else in the UK since those rent controls were introduced—

Q May I ask about the role that the landlord insurance industry plays, particularly in the context of people being able or unable to access accommodation? Reflecting a question put to an earlier witness—if a landlord is insured and the insurer says that to rent the property to the tenant they have to meet a certain standard of credit check, and that that has to be done or they will not insure them if the property is rented to that tenant—do you have a view on how the Bill might address that issue?

Richard Blakeway: That was not the first question I was expecting, but thank you very much. One of the requirements the Bill introduces is for landlords to be on the landlord database, with the checks required on that database, and then for them to join the ombudsman service. Whether or not there is a requirement around that as part of the criteria to be eligible to let properties is a consideration, and then that depends on whether or not they would join the ombudsman service.

In terms of the decisions that any ombudsman in the future might make, if there were issues around insurance—typically those are matters that tend to sit with the courts—or a landlord not facilitating claims around insurance, there might be an issue around whether or not insurance is in place, and that might be something that we then highlight in our decisions, which might be information we should share with the lead enforcement agency under the duty set out in clause 109. You may feel I have not fully answered your question.

Q That is helpful, and it leads me to my next point, which is about the evidence you gave to the Levelling Up, Housing and Communities Committee stressing the need for there to be clarity of jurisdiction. Does this Bill provide that clarity? If not, what improvements need to be made to ensure that clarity is there?

Richard Blakeway: The Bill is obviously quite comprehensive and will make a significant difference as a piece of legislation, but a considerable amount of information will be set out in statutory instruments after the Bill. There are, then, some answers in the Bill and some that will come in future regulations.

Your point about the clarity of jurisdiction between an ombudsman and other actors is fundamental. One of the most important elements to clarify the role of the ombudsman service will be the ombudsman’s scheme. Clause 63 sets out requirements around what should be in the scheme—what must be in the scheme and what could be in the scheme. I would probably encourage there to be more in the choices for Ministers as to what could be in the scheme than in the list of what must be in the scheme, because there will need to be agility, as the ombudsman—whoever is appointed as the ombudsman service—and the other actors start to come together.

The importance of clarity is obviously for individuals to know what route to take if they are seeking redress, and it is also important to make sure that there is real coherence in terms of raising standards and promoting good practice in the rental sector.

I can give a specific example where I think there would be nuance between the ombudsman service and the tribunal, which is around changes to rent. If a section 13 notice were issued, the decision on the rent would be a matter for the courts, and the Bill seeks to change the role of the courts, or the tribunal, in relation to that. But we or whoever was appointed as the ombudsman service could potentially play a role to decide whether a fair process had been gone through rather than the actual level of the rent. That is very similar to what we have today on the social rented sector and service charges, and our role as an ombudsman in the social rented sector and the role of the tribunal.

Q Thank you. May I pursue that last point a little further? One of the issues that has been raised in the evidence so far is about the tenant’s right to challenge rent increases. It is helpful that you have introduced the point about service charges. Clearly, one of the options for a landlord who cannot get the money through a rent increase is to look to secure it through a service charge increase instead. How would you see the current set-up and the set-up proposed by the Bill addressing that kind of issue?

Richard Blakeway: If you look at our current powers, role and approach around charges, we are very clear that we will consider transparency around why those charges are being made and their purpose, we will consider whether the service has been provided and the quality of that service, and we will consider whether an appropriate process was gone through. For example, at the moment we would consider section 20, where significant charges have to go through a process, and ask whether that process was followed. Those are decisions that we make and we can therefore very clearly consider what the requirements are, either set out in statute or under the provider’s own policy. That is the basis on which we would make a judgment.

I think that is a parallel that is relevant in your example in this space. Clearly, if we were seeing evidence that another mechanism was being used to increase the charges on a tenant and that was unclear and potentially unjustified, that could be a point of maladministration where we would uphold a complaint.

Q Richard, thank you for your time this morning. I have put it to other witnesses that, in general, the potential of the database and the ombudsman to make a real difference as part of the new system is often underplayed and I do not think it gets enough attention. You rightly made the point that there is a spectrum between “must” and “could”, but the intention is very clear, on the tenant side, to provide access to services to deal with complaints, and there is potential on the landlord side around landlord-initiated mediation and the role the ombudsman could play there. Can you give us your best sense of how much the new PRS ombudsman could alleviate pressures on other parts of the system, including the courts?

I have a follow-up question; I will ask them in one go, Mr Betts, and leave more time for others. We have been very clear already that the new ombudsman will need to work collaboratively with others to resolve complaints and that will be set out in statutory guidance. What do you think needs to be included in that guidance to ensure, in particular, that the ombudsman is working effectively with local authorities?

Richard Blakeway: Those are really important questions. The Bill introduces a new framework of rights and responsibilities for both landlords and tenants and, as you set out, the ombudsman service—whoever is appointed as the ombudsman—plays a part in that. I would say as an aside very early on that I welcome the Government’s recognition of the strategic benefits of bringing together the social rented sector and the private rented sector, particularly given the common body of existing and new legislation that is tenure blind and speaks to both the private and rented sector, whether that is the existing Landlord and Tenant Act or the potential to extend Awaab’s law and the decent homes standard. I think there is a real benefit to system coherence and the right relationships, as you highlight, and also to making sure that benefits do not unintentionally fall in the wrong place, by appointing the housing ombudsman as the provider of redress.

I think there are three key relationships. There is the lead enforcement body, and working out the role of that body. In particular, looking at clause 109, information sharing between the ombudsman service and the lead enforcement body will be vital, so codifying that role will be important.

There is the tribunal, which we have alluded to. One of the really important pieces of work is to develop, very early on—I would have thought in advance of any statutory instruments—a draft scheme for the ombudsman service, and to collaborate with a number of bodies, including the courts, on what is in the scheme and therefore the decisions that the ombudsman might take, and what is outside it and clearly rests with the courts. I have given the example of section 13. The ombudsman could potentially play a role in looking at aspects of section 13, which might relieve pressure on the courts.

There is then the relationship with local authorities and enforcement. On the database itself, I think there has to be a decision about who owns the database and is going to provide it—whether it sits with the Department or the lead enforcement agency, for example—and the pace at which it could be developed to support the introduction of the redress service.

One of the other areas to consider, where there may be a pressure that emerges in the system—a pressure that I think the legislation recognises but could go further to address and relieve—is enforcement. The Government have rightly indicated that there is concern around compliance with ombudsman remedies. There was a survey in, I think, 2018 that showed 46% of private landlords not complying. At the moment, the Bill includes a kind of last resort to try to enforce compliance, which would be introduced later through statutory instruments. I wonder whether consideration should be given to bringing that forward, so that compliance issues are not having to be directed towards local authorities, and creating pressures there.

I also wonder whether the legislation could go further by, for example, amending clauses 66 and 96 to include rent repayment orders as part of non-compliance with ombudsman decisions. The Bill is rightly clear that if a landlord does not sign up to the ombudsman service then it could be subject to a rent repayment order, but it is silent on whether a landlord that is non-compliant with the ombudsman’s decisions should also be subject to a rent repayment order. I think that if you were to introduce that, that would strengthen compliance and reduce the need to direct things around the system to try to address them.

Q Thank you for joining us today. I am looking at your impressive background: you have clearly done a lot of great work on homelessness and in other areas, whether at City Hall addressing rough sleeping, or on the social impact bond on homelessness. With that lens in mind, do you feel that the Bill will deliver on the Government’s aims to give renters greater security and stability and to reduce the risk of homelessness? Is there anything you want to add along those lines?

Richard Blakeway: First, thank you for recognising that previous work. There are specific things in the Bill that increase the protections for renters and the security of tenure for renters. Those are welcome and important and would prevent the risk of homelessness for some individuals. It also changes the relationship between the resident and the landlord, and addresses an imbalance of power that exists at the moment. In changing the relationship, the importance of redress is fundamental, to ensure that there is not a breakdown in that relationship and that a tenant does not end up living in conditions that are not acceptable. We must also recognise that the role of a redress provider is also to share the experience and the learning that we have through our casework to ensure that landlords can effectively fulfil their obligations and raise standards.

This Bill is not only about increasing security for individuals; it is about a wider shift and change in the role of the private rented sector in this country—a sector that is completely different from the one that was envisaged and started to emerge decades ago. It is different in scale, different in the types of properties, and different in the range of providers. So the real impact of this Bill over time will be a real shift in the landscape of the private rented sector and a raising of standards. It is important that landlords are part of that journey and can affect that in their own actions, and that an ombudsman service is there to help individuals exercise their rights, but also to provide the insight and intelligence to landlords to ensure that they prevent problems that need to go to an ombudsman from occurring.

Q I have three questions, but they are all yes/no, so you can be as brief as you like. First, do you agree with a previous panellist that the landlord licensing rules need to be loosened so that councils can have more discretion and flexibility to apply, for example, landlord licensing across their whole area rather than just bits of it? Secondly, do you think that the potential penalty of £7,000 that local authorities can apply is sufficient to act as a deterrent? Thirdly, do you think that the Bill goes far enough on housing quality, and especially energy efficiency, given that, as we have heard from previous panellists, homes in the UK are some of the worst in Europe on energy efficiency, and the private rented sector is the worst within that?

Richard Blakeway: On licensing, yes.

On the deterrent, yes and no. You have to recognise that the penalties have increased in this Bill, and that is important, but I emphasise my point about the scope and whether, for example, non-compliance with ombudsman decisions should be brought into the scope of that.

On energy efficiency, obviously there are significant measures in here, but it will be important to see what the decent homes standard—I think it is in clause 98—contains in order to judge what the standard of accommodation will look like in the future.