24: Clause 4, page 5, line 22, at end insert—
“(5ZB) The court may not make an order for possession of a dwelling-house on Ground 6B (whether or not an order is also sought on any other ground) where the landlord has not complied with section 11A of this Act.”Member's explanatory statement
This amendment would make possession under ground 6B contingent on compensation being paid, rather than compensation being dependent on court proceedings.
My Lords, I declare an interest as chair of the Property Ombudsman, TPO, for the private rented sector. I have two amendments in this group, Amendments 24 and 30. Both relate to repossession under ground 6B. Their intention is to make possession on that ground contingent on compensation being paid, rather than being dependent on court proceedings. I am grateful for the very helpful briefing on this matter to the National Renters Alliance and specifically to Safer Renting, a renter advocacy service operated by the social action charity Cambridge House.
Ground 6B provides landlords with a route to vacant possession, evicting the renter in the process, to give the landlord the possibility of avoiding a range of sanctions that could be imposed or taken by a local authority when breaches have occurred. As I understand it, the purpose is to protect renters from poor landlord practice—for example, poor housing conditions—while enabling landlords to comply with enforcement action. However, it gives the non-compliant landlord grounds for possession of the property in cases where renter wrongdoing may not have occurred, yet resulting in potential homelessness for the renter. An amendment was made to the Bill in another place to give the court the option of ordering the landlord to pay to the tenant such sum as appears sufficient as compensation for damage or loss sustained by that tenant as a result of the order for possession.
This is a welcome addition to the Bill. The intention of that amendment is to compensate the renter appropriately for the damages of possession. However, Safer Renting, whose staff are experts in supporting renters to access redress, believes that the mechanism for doing so via a court order has significant complications. Under the current proposal, any compensation ordered by the court may not be paid to the renter before their eviction. If compensation is not paid before the eviction, renters may be left to foot the bill for any relocation or legal expenses out of their own pockets.
My Lords, we welcome the Government’s commitment to rebalancing the relationship between landlords and tenants, and the abolition of Section 21, but we must ensure that the protections afforded to tenants are as robust as possible if the Bill is truly to deliver for the people who find themselves on the front line of this housing crisis. The Bill introduces new mandatory eviction grounds. Although we understand that the intention is to provide clear routes for landlords to regain property, making grounds mandatory removes the courts’ vital ability to act as a backstop and consider the individual circumstances of the tenant. It is important to test this issue in Committee, which is why we tabled Amendment 31.
Although most repossessions will be able to proceed without a hitch under the new Act, ensuring that exceptional cases have a discretionary element is critical—a discretionary element that the Labour Front Bench argued for with some vigour in the previous Parliament. Indeed, the Renters’ Reform Coalition argue that the lack of discretion is one of the most significant shortcomings in the Bill. The Renters’ Reform Coalition comprises some of the leading charities that work tirelessly on the issues of tenancy, homelessness and housing, including Shelter, which I used to work for. I thank the coalition for its work on this amendment and its support on this issue.
It is not difficult to imagine situations where compelling reasons for refusing immediate possession should exist. For instance, a tenant or a member of their family may have a serious terminal illness such as cancer, with a very limited life expectancy, a severe disability, or caring responsibilities for a disabled person, meaning they will necessarily need a longer period to find the most suitable accommodation. In the previous Parliament, the shadow Housing Minister, Matthew Pennycook, provided us with a useful hypothetical example, in which a terminally ill cancer patient could be evicted and at risk of homelessness because the landlord wishes to sell—a landlord, in this hypothetical scenario, with a portfolio of, say, eight houses and no compelling need to sell. In that scenario, he argued, a judge should have discretion.
My Lords, my Amendments 35 and 71 both aim to help people who rent. I declare an interest as someone who rents a two-bedroom flat.
I have tabled Amendment 35 because I am worried that the Government’s good policy will actually end up penalising the very people that it is aiming to help. I hope the Minister will go away from here thinking, “The Green Party had quite a good idea on that, and how nice it is to have them on our side for once”.
The Government are doing the right thing for the climate and for people in putting in higher energy efficiency standards—that is a given—and doing the right thing for landlords with grants to help them meet those standards. However, the only people who do not get a guaranteed better life are the poor tenants who have to put up with the work, dust, noise and inconvenience of the energy improvements being done, with the possibility that their rent will be going up as their energy costs go down. Amendment 35 is an attempt to give tenants a guarantee that they will also get some direct benefit from the drive for net zero with two years of lower energy bills, without that saving being cancelled out by a landlord focusing on profiting from a government grant. I think this is a sensible amendment and I hope it will find favour with the Minister.
Amendment 71 aims to shift the debate firmly on to the needs of the tenant and to discourage landlords from constantly changing their minds about letting out their properties. It builds on the Government’s welcome attempt to get rid of no-fault evictions by adding a new clause to the eviction process that gives the tenant a one-month financial head start. With all the costs involved with moving—the deposit and moving costs—it can be a long, drawn-out process, and, for many tenants who are self-employed or on zero-hours contracts, time is literally money and moving is a time-consuming business.
My Lords, I rather like the look of Amendments 26 and 27 from the noble Baroness, Lady Thornhill, and look forward to hearing her describe them. They also relate to my Amendment 142, which I will now speak to.
The Bill restricts a landlord to four instances where they can recover their property and require a tenant to leave. One of these is if the landlord is selling the property. The purpose of this amendment is to ensure that, where a landlord seeks to sell a property under the new ground 1A but fails to do so, the property is made available again on the rental market without unnecessary delay.
The Bill requires that the property is on the market for sale for at least 12 months before, if no sale is forthcoming, it can be re-let. Market statistics show that typically about 20% of rental properties taken off the rental market do not sell and come back to the rental market. Savills puts the figure higher, at 33%. According to Hamptons, on average properties come back as available to rent after about 90 days, or three months. Where properties do sell, Zoopla figures indicate that the period between first marketing and completion is typically six months. This amendment responds to these facts and reduces to six months the period when the property is required to be unavailable to rent.
I move from the market facts to the Government’s approach. I am very grateful to the Minister for the opportunity that we had to discuss this and the understanding I obtained of the Government’s thinking. I understand that the Government’s concern is that landlords seeking to increase the rent might claim the property is on the market as a means to obtain vacant possession, apparently expecting much higher rent thereafter. They would leave it standing empty for, say, six months with no rental income, and then re-let it not just at a higher rent but at one that would both recover the rent lost in that six-month period and obtain a higher ongoing rent. The assertion is that making the required period 12 months would make such assumed motivation and behaviour unworkable economically.
3:45 pm
Secondly, the landlord wanting to re-let would have to offer the property back to the previous tenant on the same terms and at the same rent. I accept that a tenant might likely have found an alternative or temporary accommodation in the meantime, but this requirement is nevertheless a further disincentive for any landlords to seek to play the system. It would also make largely impossible the rent escalation tactics the Government are anxious about.
In conclusion, I understand and sympathise with the Government’s wish to prevent abuse of the ability of a landlord to ask a tenant to leave. However, not only does the data suggest that 12 months is unnecessarily long for these properties to be held as unavailable for tenants to rent, but the market economics indicate that a landlord would simply find their property unrentable at the well above market rates necessary to achieve the possible abuse the Government are anxious about. If a property is really being rented out below market rates, the landlord would be within their rights simply to seek a rent increase.
Requiring properties to stand empty for 12 months is a punitive and unnecessary intervention in both the residential sales and rental markets. It also incurs a number of other risks, including crime, and will further contract the supply of properties in what is already a very undersupplied sector. Making the period six months would easily achieve the Government’s objective, as I hope I have demonstrated, and be less distortive and destructive of the residential lettings and sales markets. I look forward to the Minister’s response.
My Lords, I declare my interest as a landlord of a residential property. I will speak to Amendments 60 and 61 in this group. I am grateful to the National Residential Landlords Association for very helpful discussions. These amendments would benefit both tenants and landlords.
The first amendment would keep the threshold for mandatory repossession by landlords at two months of rent arrears, rather than increasing it to three months, as proposed in the Bill. The second would continue to permit rent arrears arising from non-payment of universal credit to be taken into account as a ground for repossession.
One might think that my motivation behind these amendments is purely to support landlords but, as I said at Second Reading, I am keen to support tenants as much as landlords in improving the current system, since they are two sides of the same coin, and one cannot exist without the other. This is a golden thread running through this entire Bill.
As the noble Baroness, Lady Scott, said on the first day of Committee, there must be “balance” in the Bill. Any weighting of the scales in favour of one—while it might be well motivated—risks being counterproductive and detrimental to both. This is amply demonstrated by the Bill proposing to increase the threshold for rent arrears to three months before enforcement action can be taken.
Tenants in arrears will struggle to recover financially, making it harder for them to access housing in the future. The arrears are likely to mount up well beyond the three-month threshold. For example, if one adds on the one-month notice period, plus the average seven months for a court to process a Section 8 possession application, the tenant could end up having to leave the property with nearly 12 months’ arrears. Is that really a good outcome for tenants?
My Lords, I rise to support Amendment 60 of the noble Lord, Lord Carter of Haslemere, and will speak to my Amendments 165 and 166. But, before I do, I have two apologies to give to the House. The first apology relates to my failure to speak at Second Reading, although I did speak at the Second Reading of the last Government’s Renters (Reform) Bill. The reason I was unable to speak at Second Reading is that I was, unfortunately, in and out of St Thomas’ Hospital, which looked after me very well, but I was unable to come to the House at the time of the Second Reading of the Bill.
My second apology is for my absence on Tuesday of this week, the first day of Committee on the Bill. My wife had booked a short Easter holiday on the Isle of Wight, not expecting the House to be sitting immediately after Easter Monday. Rightly or wrongly, I took the favour of the family rather than the first day of Committee. I think my noble friend the Minister has forgiven me for this—at least I hope she has. Happily, however, my noble friend Lady Warwick of Undercliffe, who sits behind me, agreed to be in the House for the first Committee day and to move any of my amendments should they be called. Even more happily, none was.
I should declare interests which are recorded in the register. My wife and I are the landlords of five sets of tenants in one-bedroom flats in the house next door to our own. While we as landlords and our tenants will be subject to the new provisions contained in this Bill, there is nothing contentious relating to our five tenants—or to ourselves—that I will be raising during the passage of this Bill.
Amendment 60, tabled by the noble Lord, Lord Carter of Haslemere, which I support, has been grouped among a variety of amendments relating to orders for possession. Most of them have little contact one with the other, but they are all grouped together in this same list. That certainly applies to my Amendments 165 and 166.
My Lords, I declare my direct interest in the private rented sector, with cottage lettings in Buckinghamshire and Lincolnshire, together with farming and agricultural lettings. I am also a member of the National Farmers’ Union and the Country Land and Business Association, which have a direct interest in Amendment 63, on which I shall speak and for which I am grateful for the support of the noble Earl, Lord Leicester, and the noble Lord, Lord Roborough, who sadly is not able to be here today.
Before I turn to Amendment 63, I am also very pleased to be able to support Amendment 60 in the names of my noble friend Lord Carter of Haslemere and the noble Lord, Lord Hacking. I certainly will not repeat everything that has been said, but I shall make just one further point: it is relevant to note that Paragon, a bank that specialises in the private rented sector, commissioned a survey of landlords on the proposals in the Bill and the result was that 71% of landlords put the extended time, from two months to three months, as their top concern.
On Amendment 63, the Bill does not contain provisions to allow the repossession of a residential property if there is to be a change of usage. For example, if a landlord wanted to use the land for office space or commercial or retail usage, the amendment would allow them to seek possession of a dwelling house where it was intended that the use of that property, or the land on which it was situated, would be changed to non-residential and there was permission from the relevant authorities to do so. There are a number of Bills, reviews and reports in motion which cover farm diversification, which the Government are keen to encourage in the light of falling profitability in farming as subsidies are withdrawn or concentrated on environmental activities and concerns. Farmers are therefore looking carefully at their assets to see whether they can be put to more profitable usage. Obviously, this can involve the farmstead house and buildings rather than just stand-alone farm buildings. The Planning and Infrastructure Bill is relevant in this context, together with the Rural England Prosperity Fund, which specifically targets facilities and building conversions that help rural businesses to diversify.
My Lords, I support my noble friend Lord Cromwell’s Amendment 142. I declare an interest in that my wife owns rental properties. I agree with what the noble Lord says about the mischief of Clause 15. It is very easy to imagine circumstances in which the owner of a property decides, in good faith, to sell it and the tenant therefore has to leave. The landlord then places the property for sale on the market but finds that, for whatever reason, after four or six months they cannot sell it. Clause 15 would prevent the landlord for 12 months from again leasing out the property. It would do so however well-intentioned the conduct of the owner of the property and however reasonable the new tenancy agreement, and even if the new lease is to the same tenant as the old one, on the same terms, including as to rent.
I entirely understand the Government’s wish to prevent landlords from abusing their rights, but the breadth of this restriction is, to my mind, plainly disproportionate to the feared mischief. This is not only unfair on the landlord; it will inevitably have an adverse effect on the housing stock available for rental purposes.
I appreciate that Ministers have stated that this Bill is compatible with the European Convention on Human Rights, but it seems to me very doubtful indeed that this clause complies with Article 1 of the first protocol to the convention, on the right to property. The European Court of Human Rights and our domestic courts have explained that the right to property requires a fair balance between the interests of property owners and those of the community in general. I cannot see how a blanket provision which penalises a landlord by preventing them from renting out their property, for a period of 12 months, however bona fide their conduct or however fair the terms of the lease, could possibly be said to respect a fair balance.
The mischief which the Government seek to prevent requires a more tailored response. I hope the Minister will be able to say, in response to the concerns that have been expressed by my noble friend Lord Cromwell and myself, that she will be prepared to meet with us to discuss ways of making this clause more proportionate by recognising an exception for landlords who have acted in good faith and responsibly.
My Lords, Amendment 64 in my name is in regard to the family. I thank the noble Baronesses, Lady Bowles of Berkhamsted and Lady Neville-Rolfe, for their support for this amendment. The Bill allows a landlord to take possession of a property for a family reason. This is a small extension to the number of reasons for which a landlord could take possession of a property. That reason is that a property is to be used by a carer for a family member who requires full-time care.
The amendment clearly sets out that the property needs to be in close proximity to the landlord’s family home and be used by the carer. The reason for the close proximity is so that the carer can attend not only on a daily basis but, more importantly, be available to attend in emergencies, quickly and efficiently. These can be on a regular occurrence in some cases. The types of properties that I have in mind are: annexes on homes; a flat in a block of flats where the landlord’s primary residence is located; properties in less urban areas, such as rural villages, hamlets and remote farms; and small property clusters where properties are in short supply.
I appreciate that tenants would be forced to leave a property, but this amendment does not seem to shorten the four months’ notice period. The Bill allows some landlords the opportunity to gain possession for an employee or a worker for agricultural purposes under ground 5A in Schedule 1. I have assumed that the reason why this exemption has been included is that agricultural workers need a property close to their place of work due to the nature of the work, and at all times of day. The need of a carer is similar to that of the agricultural worker: they need to be close to the patient and could be on call and work unsociable hours.
Most landlords’ and tenants’ relations are generally good, and most likely, the landlord would make the tenant aware that the tenancy could be terminated if a property needs to be for a carer. To leave a property is an unsettling upheaval for a tenant and their family, but they would be given four months’ notice. If there is good communication between parties, everybody lives in the knowledge that this could be a possible outcome and plan accordingly.
20 of 219 shown
This is wholly inappropriate and leaves the renter in an extremely perilous position. It is surely contrary to natural justice. Ground 6B would mean that the renter is evicted from their home, forced into finding alternative accommodation—potentially at a higher rate—or faces homelessness. The renter is burdened by the highly stressful situation of having to find a new private tenancy. The renter is likely to be forced to pay for a new deposit in the intermediary period before the possession and the compensation payment, which they may not be able to afford. The renter’s housing move-on is at the mercy of the court system for their compensation—a court system with extreme backlogs and under extreme pressure. This is likely to cause a prolonged period of uncertainty and stress. The renter must find legal representation, potentially at prohibitively high costs, and is expected to take on the additional burden of pursuing an unscrupulous landlord for unpaid compensation. By making the possession contingent on compensation paid up front, the renter does not suffer these consequences and is fairly compensated for any stress and burden experienced.
There are further considerations if a renter is evicted. Renters in priority need must be placed in temporary accommodation and rehoused by the council, at substantial cost to the individual local authority and the public purse. This is further complicated by the prospect that a mandatory ground for eviction could financially disincentivise councils from pursuing the necessary enforcement action against the non-compliant landlord, contradicting the local authorities’ enforcement strategy as the costs of rehousing are passed on to the local authority. This is during a period in which local authorities are spending £2.3 billion on temporary accommodation housing more than 120,000 households, and many councils are in severe financial trouble.
In addition, with deposits now averaging around £1,218, the cost of a new deposit is potentially a major prohibitor to finding new accommodation quickly. Should the landlord fail to return the renter’s deposit on their vacating the property, the renter would be expected to find an additional cash sum likely to be over £1,000. This is highly prohibitive for most renters and leaves them either in potentially dire financial straits or unable to afford access to a new home.
A recent survey by the property company Reposit showed that, of 1,000 renters surveyed, nearly half—48%—had to borrow money to afford a deposit. By ensuring that compensation for possession is paid prior to the possession order, renters will be able to move properties more seamlessly and not face potentially prohibitive financial burdens or barriers.
As the Bill is currently presented, for the renter to access compensation they must rely on the landlord, who has already broken the law, to comply with the court order to pay compensation. There is no guarantee that any compensation ordered by the court will be paid to the renter. In this event, the renter must take the landlord to court. The courts, as I have said, are currently under record backlogs, with most recent data suggesting that the wait time for a small claims hearing is 54 weeks—more than a year. This is an egregious length of time to wait to receive the necessary and appropriate compensation for a vacant possession through a landlord’s non-compliance.
Legal representation is also a major financial barrier that may prevent renters from attempting to claim compensation. Vacant possessions are typically ordered on poor-quality housing where the rent is lower; therefore, the income of the renter is also likely to be lower. It is logical to assume that the majority of renters who receive a possession order will not have the funds to support a legal claim against the landlord for the compensation that they are due. This would be a significant injustice; I hope it can be prevented.
Although some renters would be able to access legal aid funding, the majority and an increasing proportion would not. Legal aid cuts have resulted in 34% fewer legal aid funded possessions proceedings since the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012—according to analysis from Safer Renting.
Furthermore, compensation is not always paid by criminal landlords, even following a court order, as Safer Renting has witnessed in a high number of cases. Safer Renting’s data reveals that, in instances where award for a rent repayment order has been given against a landlord, with the proper status and assets, only 40% of landlords have complied with the order to pay the renter. When the order has been made against an intermediary landlord, compliance with the order drops even further to just 5%. This is contrary to natural justice and the intentions of Parliament in bringing forward the Bill.
I hope my noble friend the Minister will consider how, without compensation paid prior to the possession of the home, renters—particularly those on low or no income—will find the necessary funds to pay for a deposit on a new home while they await a court order. What estimate do the Government make of the additional costs that local authorities in England will incur in cases where priority-need renters are evicted from their homes and placed into temporary accommodation? Will legal aid be made available to renters to enforce compensation orders made by the court under the existing provision for representation in relation to possession proceedings? If so, what is the Government’s calculation of how much extra this will cost? Finally, can the Minister say whether there is an appropriate timeframe for a renter to receive compensation following their eviction?
I hope I have shown that my amendments would deliver a fairer and more just outcome for the renter, where the landlord has acted unscrupulously or without compliance. I beg to move.
Mandatory grounds, such as grounds 2ZB and 2ZC, which cover possession when a superior lease ends, prevent the court taking these profoundly human factors into account. Making all grounds discretionary would offer a vital layer of protection. It would allow the courts the potential to act as a backstop, consider all factors and potentially propose alternative courses of action to avoid a damaging eviction.
Obviously, some will argue that this cannot be done on the grounds of backlogs in the courts. Reforms in Scotland, where grounds for possession were made discretionary in October 2022, have shown little evidence of significantly worsening court backlogs. Indeed, if backlogs in courts, or in any institution right now, were applied to every piece of legislation that comes before us as a rationale for not proceeding or making a decision, we would be very hampered indeed as a legislative body.
We all know that the reality and likelihood of tenants taking up this course of action, just like the First-tier Tribunal, will be minimal, but the existence of the discretionary approach would ensure that an all-important safety net is in place for the worst possible cases. This amendment would remove “must” and insert “may” in the relevant heading of part 1 of Schedule 1, and omit the heading of part 2. This would provide the courts with the flexibility needed to consider the specific context of each case. I understand that the Housing Minister, Matthew Pennycook, in the House of Commons has countered that this is “a step too far” and would remove “certainty” for landlords, but we disagree—or rather, we agree with his original arguments, which are no different from mine today.
Should the Government remain resistant to making all grounds fully discretionary, can we please explore, between now and Report, robust mechanisms to prevent evictions that would cause severe hardship? As a fallback position, we advocate strongly for the introduction of a mandatory hardship test that courts must apply when considering possession orders under any mandatory grounds. This test would require the court to explicitly weigh the potential severity of the hardship caused to the tenant, considering factors such as health, disability, how many children there are, access to alternative accommodation and the impact on the ability to maintain employment or education, against the landlord’s stated reason for seeking possession. This hardship test would ensure that the most vulnerable tenants are not rendered homeless or forced into the inadequate temporary accommodation that we have heard described by the noble Baroness, Lady Warwick, simply because a mandatory ground is technically met without consideration of the dire circumstances in which the tenant finds themselves. It would provide a necessary safety net, ensuring that, while good landlords could regain their property for legitimate reasons, the system does not blindly facilitate deeply unfair and harmful evictions.
We must listen to the voices of those who live with the constant fear of losing their home. We owe it to future generations to get this bit right. This amendment would strengthen the Bill to ensure that security, fairness and compassion are at its heart by making grounds discretionary—or, at the very least, by introducing a mandatory hardship test.
I hope that passing this legislation will create a new era of stability for those in the private rental market. A whole generation of young people has had to suffer from an overheated rental market, which was firmly loaded in favour of investors and those with the money to buy properties. This legislation does not actually solve that problem, because only the Government building hundreds of thousands of social homes could probably do that, but I welcome the start the Bill is making and I hope the Minister will consider the needs of tenants even more in this way.
I have struggled without success to find a period as long as 12 months credible for this purpose. So I ask the Minister: if the current rent on a property is for some reason set below the market rate, would it not be possible for the landlord simply to seek an increase to the market level in the normal way, rather than going through the convoluted processes and expense involved in removing the tenant, putting the property on the market and then re-letting it? If the rent is close to the market rate, it is surely unrealistic to expect that a landlord would be able to leave the property empty for six months, with ongoing costs but full loss of income, and then rent it out again at an uncompetitive rate, well above the market rate, in order, as the Government’s thinking seems to be, to recover six months of losses and then settle at what would be, I repeat, by definition, an uncompetitively high rent. I just do not see how that would have a chance of working.
To give a quick numerical example, a landlord receiving £2,500 a month in rent who puts the property on the market and receives no rent for just six months would, after leaving aside any other costs incurred in departing the tenant and marketing the property, lose at least £15,000 of rental income. To recover this over the subsequent six months and raise a base rental amount to, say, £3,000 per month compared with the £2,500, which for our evil, rapacious landlord is a pretty modest increase of £500, would mean seeking to rent out the property at £5,500 a month—a 220% rent increase over just a six-month period. If Mr Rapacious wanted to recover his losses faster, say in one quarter—three months—the rent would have to go up to £8,000 a month, a 320% increase in rent over just six months.
I must therefore say to the Minister that just six months off the market is easily more than enough to make evicting a tenant simply to achieve a rent increase a highly implausible strategy. Requiring it to be off the market for a full 12 months is not only unnecessary but a distorted intervention that simply reduces the availability of rental accommodation.
Finally, I draw to noble Lords’ attention the two provisions included in the amendment. First, the property would have to have been demonstrably available to purchase on the open market at a fair market price with no suitable offers received and, importantly, the tenant and the courts could require evidence of these points and would be able to decide whether the landlord had made genuine attempts to sell. Amendments 26 and 27, which are coming up shortly, I believe, are also very helpful in this area.
In addition, responsible landlords will become more risk averse, prioritising tenants who can clearly prove their ability to sustain a tenancy in the long term. This will be particularly damaging for vulnerable tenants, including those in receipt of local housing allowance, especially as support for housing costs has been frozen from April this year. Moreover, allowing rent arrears to climb to three months before enforcement action can be taken risks intimidating good landlords into leaving the sector.
A landlord is not a charity, and some depend entirely on the rent to pay mortgages or for their daily living costs. If good landlords are intimidated into selling up because it is too difficult to enforce rent arrears, tenants will very often have nowhere to live. According to Savills, up to 1 million more homes for private rent will be needed by 2031 to meet growing demand. We must keep good landlords in the sector to avoid making tenants homeless. Again, these are two sides of the same coin, and one cannot exist without the other.
My first amendment would keep the threshold for enforcement action at two months’ rent arrears. I accept that, if we are going to keep the existing threshold, landlords should be required to do more to help their tenants. For example, there could be a duty on landlords, at the first sign of arrears, to seek meaningful engagement with the tenant to prevent further debt, and to show in any subsequent possession proceedings that they had done that, or at least tried to do that. During the Covid-19 pandemic, the National Residential Landlords Association produced some very highly regarded golden rules showing how this and other types of landlord-tenant engagement could work; for example, by the landlord pointing the tenant to a relevant advisory service, such as Citizens Advice and/or the debt charity StepChange. Such measures would improve the status quo while avoiding the damaging effects of moving to a three-month arrears threshold.
I turn to my second amendment. It makes no sense whatever to disregard for enforcement purposes rent arrears arising from the fact that the tenant has not received an award of universal credit under Part 1 of the Welfare Reform Act 2012. This is for two reasons. First, it is unjustifiable to penalise landlords for non-payment of universal credit to the tenant. Why should the landlord suffer if the non-payment of universal credit is the fault of the tenant, or if the universal credit system has broken down in some way?
Secondly, unlike in the social sector, private landlords are not allowed to know, under GDPR rules, whether a tenant is in receipt of universal credit. As such, they have no idea whether rent arrears are due to a non-payment of universal credit, especially if a tenant has multiple sources of income. Disregarding non-payment of universal credit is therefore wholly unworkable since, if the landlord does not know whether rent arrears are due to non-payment of universal credit, the Bill has the effect that they may try to take enforcement action that proves to be pointless, which is surely the last thing that this new system needs.
The upshot is that landlords will be more cautious about taking on tenants on universal credit, contrary to the commendable ethos of the Bill as a whole. I ask the Minister to consider these amendments very carefully and to bear in mind the need for balance and my suggested mitigations so as to keep the status quo, having regard to the need for real evenness of handling on both sides of the landlord/tenant coin.
I shall say a general word before I go on to the specific argument concerning these amendments. This Bill is, most rightly, directed to redress the balance between the landlord and the tenant in the private rented sector. This is very right, because since the Housing Act 1988, the balance has swung far too far towards the landlords—particularly rogue landlords—which has caused great distress to many innocent tenants. However, we must be sure now that we are getting the right balance between landlords and tenants. Yes, there are rogue landlords, but there are also rogue tenants.
Originally, in Schedule 1 to the Housing Act 1988, notices for possession for arrears of rent would not become effective until the rent was overdue for 13 weeks, relating to weekly or fortnightly rentals, or three months, relating to monthly rentals. This was altered in some subsequent legislation, and this Bill now seeks to go back to the provisions of the 1988 Act. What is the reason for this? I would be grateful if my noble friend the Minister could address it. What is the evidence that shorter periods of eight weeks and two months had been causing any problems?
We need to look at the practical side. The maximum deposit that a landlord is now permitted to collect is calculated against five weeks of rent. The effect is that the landlord is covered for the first failure of paying rent but is not covered during the subsequent two months of non-paid rent. More than that, it will take up to two more months before the landlord is able to get a hearing in the county court for possession and unpaid rent. This means that the landlord will be without rent for at least four months. Even if the landlord succeeds in getting an order for possession and an order for the unpaid rent, the chances are that he will never get back the unpaid rent. The question that I put to the House, and indeed to my noble friend the Minister, is whether this is fair and balanced.
I turn to Amendments 165 and 166, which are directed to the time in which the landlord is not permitted to put the property on the market when he has gained possession on the grounds of family need or other need specified in ground 1 or 1A of the Housing Act 1988. I adopt all that the noble Lord, Lord Cromwell, said in his argument that this period under which the landlord is not permitted to put the property on the market—a period of 12 months—is quite excessive and quite wrong. I need not repeat the noble Lord’s arguments.
The Minister was very kind to see many of us in meetings before Committee. I had the privilege of a meeting with her, at which she explained that there is an abuse by some rogue landlords in using the instrument to remove a tenant from the property, let us say, for members of his family or other persons as specified in ground 1A of the 1988 Act. She described the 12 months as a deterrent against this abuse—a means, so my noble friend said, for the rogue landlord to raise the rent. What about the genuine situation of a landlord getting possession of the accommodation, say on family grounds, to accommodate grandparents, and then one of the grandparents has a severe stroke which prevents both of them taking up the accommodation? Why should the landlord then be left with the property when he was genuinely seeking to accommodate members of his own family for 12 months? The question is: is it fair or right that the landlord is prevented for a whole year from letting out his property? That is a matter that I again address to my noble friend the Minister.
In addition, we have the land use framework and a farming road map to look forward to, and it has also been announced that the noble Baroness, Lady Batters, will chair a report on profitability in farming and this will include diversification. This amendment assists in enabling this diversification, if the necessary planning permission has been granted. I am thoroughly aware that the Minister is keen not to reduce the housing stock. However, although it is possible that the proposed diversification will affect only agricultural buildings, there may be a more comprehensive development involving a farmhouse or other residential building, particularly if they are closely located to the diversification site. I therefore hope that the Minister will include this amendment as a sensible ground for possession, one which would assist in the development of the rural economy.
Financially, if you own an appropriate property, this is the most practical way a landlord or their family can provide the most cost-effective accommodation for a long-term carer, and when the family is facing a high demand on its finances. Only a limited number of landlords will use this possession right, but if needed, it would be welcomed by the family, as it would give flexibility in times of sadness and when time requires the need for it.
I thank the Minister for her engagement on the Bill and for our short discussion on the amendment. I note the Minister’s suggestions that alternatives could be found to house a carer, but my response is that to find a property in the correct location and which is suitable for a carer would be extremely difficult in this current high-demand rental marketplace.
The second suggestion was that the tenant has the right to a secure home. The other side of that debate would be: would it not be a reasonable case that the landlord has a right to gain possession of their own assets for the benefit of their well-being or a family member’s own caring needs?
Properties are owned for many purposes: in some cases, for financial reasons, like investments, and to provide regular income or pension funds. It may be available to rent during a job relocation or as a future residence in a desired location. All these landlords who own such properties could gain possession under the Bill when needed. However, if the property owner who may wish to use a property for a legitimate family reason, to care for a family member, cannot gain access to the property at the time of need, then this amendment seeks to rectify this.
In summing up the group beginning Amendment 10 in Tuesday’s Committee, the Minister said that those amendments did not meet
“the bar to overrule the general principle that private renters should have secure homes”.—[Official Report, 22/4/25; col. 615.]
I believe that a long-term carer of somebody crosses that bar to enable possession for a family.