Renters' Rights Bill (Sixth sitting)

The Committee consisted of the following Members:

Chairs: Sir Christopher Chope, Mr Clive Betts, Dame Caroline Dinenage, † Carolyn Harris

† Amos, Mr Gideon (Taunton and Wellington) (LD)

† Blake, Rachel (Cities of London and Westminster) (Lab/Co-op)

† Carling, Sam (North West Cambridgeshire) (Lab)

† Collier, Jacob (Burton and Uttoxeter) (Lab)

† Denyer, Carla (Bristol Central) (Green)

† Hazelgrove, Claire (Filton and Bradley Stoke) (Lab)

† Khan, Naushabah (Gillingham and Rainham) (Lab)

† Kitchen, Gen (Wellingborough and Rushden) (Lab)

† McEvoy, Lola (Darlington) (Lab)

† Mayhew, Jerome (Broadland and Fakenham) (Con)

Naismith, Connor (Crewe and Nantwich) (Lab)

† Pennycook, Matthew (Minister for Housing and Planning)

† Simmonds, David (Ruislip, Northwood and Pinner) (Con)

Slade, Vikki (Mid Dorset and North Poole) (LD)

† Smith, Rebecca (South West Devon) (Con)

† Uppal, Harpreet (Huddersfield) (Lab)

† Wheeler, Michael (Worsley and Eccles) (Lab)

Sarah Thatcher, Simon Armitage, Leoni Kurt, Committee Clerks

† attended the Committee

Public Bill Committee

[Carolyn Harris in the Chair]

Renters’ Rights Bill

Clause 55

Requirement to state rent and to avoid rental bidding

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider clause 56 stand part.

It is an absolute pleasure—I genuinely mean that—to continue our proceedings with you in the Chair, Mrs Harris.

The clause will end the unfair practice of pitting renters against each other in bidding wars. Many members of the Committee will have come across that as councillors and as Members, and they do not need me to tell them about the severe impact on renters. Those of us who represent constituencies with particularly hot rental markets are all too familiar with the common story: a prospective tenant arranges a viewing and turns up in person, only to find themselves being asked to compete with other tenants on the spot. Their experience is not that of a viewing, but of a kerbside auction. The impact on renters of the practice is clear.

In other cases, the growth of social media and other platforms allows this practice to occur without prospective tenants even being in the same place. Renters who have applied for a property may find themselves being added to a WhatsApp group and asked to submit offers in front of each other. Again, the detrimental impact of that practice on renters cannot be overstated.

Rental bidding restricts tenants’ ability to make an informed choice about one of the most financially significant decisions they face. It is clearly an unfair practice, and one that, thankfully, only a minority of landlords make use of. The clause will end the practice for good. It will require landlords and letting agents to state a proposed rent in any written advertisement or offer. Landlords and letting agents will then be prohibited from asking for, encouraging or accepting bids above that price. That will improve the experience of prospective tenants across England and provide clarity to all involved in the lettings process.

I turn to clause 56, which sets the enforcement framework for breaches of the rental bidding measures set out in the previous clause. Once enacted, clause 56 will give local housing authorities the power to impose a financial penalty of up to £7,000 on persons who are in breach of the prohibitions. In addition, local authorities will be able to issue multiple civil penalties to any landlord or letting agent who repeatedly breaches the requirements set out in clause 55. In line with the new burdens doctrine, we will fully fund the cost of all additional duties on local government from enforcing the rental bidding prohibition. With that, I commend the clauses to the Committee.

I echo the Minister’s comments about it being a pleasure to serve with you in the Chair, Mrs Harris.

I will not take too long on this point. The measure has been the subject of some controversy. Clearly, there is a philosophical question about the ability of the owner of an asset to gain the best possible market return, but the Government are determined on the matter. I will, however, make some practical points.

The first is about how to address the situation where the property in question is the asset of an organisation whose directors have a fiduciary duty to maximise the return on it, as is common in the case of pension funds, investment trusts or other bodies that may invest in property. Clearly, there is an obligation in law on the directors to seek the maximum possible return, but this legislation will prohibit them from undertaking any form of bidding process.

The second is about a situation where an intermediary sits between the tenant and the owner of the property. Clauses 55 and 56 set out what is meant by a prospective landlord but, in pursuit of their fiduciary duty, the ultimate owners of an asset might seek bids from a prospective managing agent or other intermediary party. They might bid to secure the maximum possible rent on that group of properties, in turn letting them out individually to tenants at a higher level of rent. Both those situations potentially create a degree of conflict.

I agree entirely with the point about the egregious practices of some landlords. It seems to me, however, that we must consider the situations that I have highlighted so that the legislation does not inadvertently lead to trustees and directors of pension funds that invest in property being in breach of their duties, or to the establishment of a get-out by means of a managing agent who sits between the property owner and the tenant.

I thank the shadow Minister for those well-made questions. This is a specific problem that we are trying to target, and the majority of landlords do not engage in rental bidding. We are trying to stamp out the egregious practice of a minority of landlords who exploit the fact that, particularly in hot rental markets, there is a lack of supply vis-à-vis demand. Tenants can be pitted against each other in ways that ensure the rent of a tenancy escalates to a point beyond which many of them can afford, or which, if they can afford it, puts incredible financial strain on them.

Once these provisions are in force, we think landlords will—in much the same way as the tribunal might—determine what the market rent is in a given area and what they can expect to receive from their property, and then advertise the rent at that price. I have been asked how that would work. Will landlords not advertise a price below what they could otherwise expect? We cannot have it both ways. If a landlord can expect a certain price through a competition, that suggests that tenants can pay a slightly higher price and bid up. We expect landlords to look at the market price in a given area and advertise the property at that rent, and these provisions will ensure that they cannot encourage or invite bids over that amount.

On the specific cases that the shadow Minister raises, I would not expect organisations of the type he lists to be in breach of their fiduciary duties as a result of these provisions. I understand his point about intermediary agents, particularly in groups of property where they might look to get the best deal on any of those things. I will come back to him on that specific point in writing, because I understand the need to work through those hard edge cases, but we think that only a very small minority of landlords will be affected. This is not the usual practice across every part of the country. His points were well made, and I will come back to them.

I beg to move amendment 44, in clause 57, page 79, line 31, after “section 1” insert—

“—

in subsection (4)(a), omit ‘the prescribed sum’ and insert ‘£60,000’;

(b)”.

With this it will be convenient to discuss clause stand part.

I am sure we are all aware of the risk that the abolition of section 21 may lead to a rise in illegal evictions. The Renters’ Rights Bill needs measures to protect against that, and that is the purpose of amendment 44. Across the country, a segment of private landlords evade the courts and attempt to evict tenants themselves by taking actions that include changing locks, disposing of belongings, and even cutting off electricity and water supply and harassing tenants. Many illegal evictions take place in the shadow market, where landlords and letting agents deliberately breach the law to maximise rental profits. Many renters in the shadow market are on lower incomes in marginal employment, and they are unfamiliar with their rights.

In 2019, there were just 30 prosecutions of offences under the Protection from Eviction Act 1977 in the whole of England and Wales. Such a low prosecution rate allows criminal landlords to act with impunity. When sentencing, magistrates are also very lenient; fines of less than £1,000, community service and conditional discharge are common penalties for such behaviour. If the maximum fine is £40,000—as it currently is in the Bill—because of the nature of civil penalty notices, it is unlikely that the fine will ever reach that maximum unless the offence is particularly violent. So—and here is the rub—landlords may still take a calculated risk that they can save money by unlawfully evicting tenants, given the abolition of section 21. Even where illegal eviction is not violent, it is still a horrific crime, so it is appropriate that fines reflect that. I therefore propose a maximum fine of £60,000, to give space for appropriate fines to reflect the criminality and harm caused within that range.

The change would help to ensure that, for rogue landlords, illegal eviction is not the path of least resistance, as I fear it could otherwise be. Increasing the maximum will also give a strong indication to the courts that this is not just a technical breach, and that will hopefully therefore have a knock-on effect on sentences issued upon conviction.

As we move to the final set of clauses in part 1, we cover several miscellaneous issues. As we have heard, clause 57 concerns unlawful eviction and harassment of an occupier.

The Bill clarifies and expands grounds for possession so that landlords can take their property back when there is good reason for them to do so. Landlords must always follow correct court procedures to legally evict a tenant. There is no excuse for those who seek to gain possession in an unlawful way.

The Government are clear that illegal eviction, which can include harassing individuals to leave their home, is a criminal offence, and those who flout the rules and deprive tenants of a home in this way must be punished accordingly. Clause 57 amends the Protection from Eviction Act 1977 to strengthen local authorities’ powers to do so if they are satisfied beyond reasonable doubt that a person has committed such an offence.

At present, local authorities can only prosecute offenders. That can be a lengthy process, and the fines imposed can be low. Although local authorities will still be able to prosecute after these provisions come into force, for the first time they will be able to issue a financial penalty on landlords who evict their tenants illegally in lieu of such a prosecution. That fine will be up to £40,000. It will be an alternative route to criminal prosecution, and it may often be simpler and more cost-efficient for local authorities.

The schedule that accompanies this clause sets out the procedure that authorities must follow regarding financial penalties. That includes information on handling the imposition of financial penalties, appeals and enforcement, and how to use the proceeds of the penalties.

The provisions will ensure that local councils consistently punish the most egregious offences, while allowing them to take the context of individual cases into account. By strengthening the enforcement framework, we will deter unscrupulous landlords from flouting the rules, drive out bad actors from the sector and improve protections for tenants.

I beg to ask leave to withdraw the amendment.

Clause 58

Abandoned premises under assured shorthold tenancies

Question proposed, That the clause stand part of the Bill.

One of the key objectives of the Bill is to give tenants greater security in their homes. It is imperative that landlords cannot evict their tenants without a valid ground for possession, and we want to ensure that none can circumvent the requirements of the Bill in respect of seeking possession. Part 3 of the Housing and Planning Act 2016 permits the landlord to recover abandoned properties let under an assured shorthold tenancy without a court order, provided that the tenant or tenants in question are in rent arrears and three warning notices have been served without receiving a response.

Although the Government recognise that genuine abandonment can cause problems not just for landlords but for the wider community, we do not believe that these historic provisions should remain on the statute book. They were criticised at the time of their introduction —I recall this, Mrs Harris; it was one of the first Bill Committees I sat on as a relatively new Member back in the 2015 to 2017 Parliament—for being a rogue landlords’ charter. It is not surprising that, as with a number of provisions of the 2016 Act, they were never brought into force.

Clause 58 repeals part 3 of the 2016 Act. As a result, where tenants abandon properties, landlords will need to demonstrate that they have a valid ground for possession under schedule 2 to the Housing Act 1988, as amended by this Bill. In unequivocal cases, implied surrender may also apply, such as when keys have been returned that the landlord has accepted, even if no notice has been provided. It is likely that when properties are abandoned, tenants are not paying rent, so the rent arrears grounds are available. Landlords may also be able to seek possession for breach of the tenancy agreement, if the agreement prohibits the property from being left unoccupied for long periods, or even the deterioration of property grounds. It is right that tenants have access to justice when they are at risk of losing their homes. Clause 58 ensures that provisions are removed from the statute book to make it coherent.

I beg to move amendment 22, in clause 59, page 84, line 23, leave out from “in” to end of line 25 and insert “section 13(1A), (1AA) or (1AB);”.

With this it will be convenient to discuss the following:

Clause stand part.

Clause 60 stand part.

The death of two-year-old Awaab Ishak, as many Members will know, was caused by prolonged exposure to mould in his social rented home in Greater Manchester. It was an avoidable tragedy that shames us as a nation, and it should never be repeated. I had the privilege of meeting Awaab’s family. Following a campaign by them, the Manchester Evening News and Shelter, the previous Government legislated to introduce Awaab’s law for social housing tenancies. I must credit the previous Government and the former Secretary of State, the then right hon. Member for Surrey Heath, for introducing that legislation. It was absolutely the right thing to do. We supported it in opposition, but it was only a welcome first step. This Government are clear that we need to go further and ensure that no tenant is forced to live in a home that places their health and safety at risk. That is why, in our manifesto, we committed to extending and applying Awaab’s law to the private rented sector.

Clause 59 will extend Awaab’s law to tenancies in the private rented sector. It will allow us to set legal requirements about how private landlords must tackle hazards in their properties, including setting clear timescales for repairs. It will ensure that those living in privately rented homes are empowered to challenge dangerous conditions, and that landlords cannot ignore their complaints. We recognise that there are important differences between private and social landlords, such as the average size of property portfolios, so we plan to consult on the detail of how we will apply Awaab’s law to the private rented sector. That will allow us to ensure that our approach works effectively for the sector, and that it is fair and proportionate for both tenants and landlords.

Clause 60 allows Awaab’s law to be applied to accommodation occupied under licence. A licence to occupy is used rather than a tenancy in certain circumstances, mainly for short-term arrangements or where there is no exclusive right of occupation. In general, it would be disproportionate to apply Awaab’s law to accommodation occupied under licence, such as when homeowners have a lodger staying in a spare room. However, there are cases where it may be appropriate to do so. For example, some temporary homelessness accommodation and supported housing is occupied under licence. We should explore whether vulnerable tenants of such accommodation should be subject to the protections provided by Awaab’s law as part of the consultation to which I have referred. Clause 60 will therefore allow us, as part of that wider consultation, to consider and consult on what types of accommodation occupied under licence should be in scope. It will then allow regulations to be made to bring such accommodation within scope.

This measure was introduced by the previous Government. We supported it then, and we support it in opposition. Will the Minister reassure me that, as part of the consultation, he will include large public sector landlords, particularly the Ministry of Defence and the NHS? They have significant numbers of people in employment-related accommodation, and we are all aware that there has been a history of issues such as those that this legislation is specifically designed to tackle.

I hope I can give the shadow Minister some reassurance in that regard, taking Ministry of Defence accommodation as an example. Colleagues in the Ministry of Defence are clear that they want to mirror the same level of standards as we intend to apply across the sector, but the approach that we are taking through this Bill is not necessarily appropriate for the unique circumstances that surround Ministry of Defence accommodation. That is a good example of where a Department is taking forward its own work on standards separate from this Bill. I will get the shadow Minister a full written response that sets out exactly how such accommodation, which is not necessarily within the scope of this clause, aligns with not only Awaab’s law but the decent homes standard more generally.

Clause 61

Meaning of “residential landlord”

Question proposed, That the clause stand part of the Bill.

We move on to part 2 of the Bill, which concerns landlord redress schemes and the private rented sector database. Clause 61 sets out the meaning of “residential landlord”, “relevant tenancy” and “dwelling” for the purpose of defining which tenancies fall within the scope of that database and ombudsman service.

Most private rented sector tenants have assured or regulated tenancies, and those arrangements are covered under this clause. Certain other tenures and dwellings are excluded by clause 61. That is because some tenures, such as licences, provide tenants with very different rights from assured tenancies, while some dwellings, such as non-permanent structures, are subject to different standards requirements from typical PRS properties. Landlords of social housing will also be excluded from the requirements.

We are aware that the private rented sector is dynamic and continues to evolve, and that is why we have included a power in this clause to amend the definition of “residential landlord”, “relevant tenancy” and “dwelling”. That power is required so that the legislation can keep pace with changes in the sector. It will give us the flexibility to extend landlord redress and the database to further tenures or dwellings, if that proves necessary. I commend the clause to the Committee.

Clause 62

Landlord redress schemes

I beg to move amendment 65, in clause 62, page 89, line 25, after “residential landlord” insert—

“, whose property is not managed by an agent who is a member of an independent redress scheme approved by the Secretary of State,”.

With this it will be convenient to discuss the following:

Government amendment 23.

Clause stand part.

Clauses 63 to 71 stand part.

Schedule 3.

Clause 72 stand part.

We move on to the chapter on landlord redress schemes. The Opposition agree on the need for effective measures, but we need to make sure that those measures are functional in practice.

The private rented sector has lagged behind other housing tenures when it comes to access to redress. For example, tenants in social housing have long been able to escalate complaints through the housing ombudsman’s social landlord redress scheme. Private tenants have had, in comparison, severely limited options for resolving issues, in spite of the fact that they suffer from poorer housing standards on average. I believe that once tenants no longer have the threat of section 21 evictions hanging over them, they will finally feel able to challenge poor practice from landlords at the disreputable end of the market without the fear of retaliatory evictions.

The Bill introduces a new mandatory landlord ombudsman service, which will give tenants free access to redress if their landlord fails to resolve a legitimate complaint. The landlord ombudsman scheme will be a non-adversarial route for escalating complaints, and it will empower tenants to challenge landlords who provide a poor level of service or who behave inappropriately. The ombudsman will benefit landlords who are committed to providing a decent home and a good service. It will give them access to an impartial decision maker to resolve complaints in the quickest and most cost-effective way. This will help to maintain landlord-tenant relationships and therefore, we hope, sustain tenancies for longer.

Clause 62 allows the Secretary of State to make regulations to require landlords, as defined under clause 61, to be members of the private rented sector landlord ombudsman. The provisions in clause 62 will allow prospective, current and former tenants to raise complaints to the ombudsman. This is because things can go wrong for tenants at any point in the rental process, so tenants should be able to seek redress for issues that occur during the pre-letting period or at the end of a tenancy.

Clause 62 will allow the ombudsman to provide voluntary services as well as mandatory redress, which could include mediation services. As I think I said in the evidence sessions last week and on Second Reading, we are exploring options for introducing landlord-initiated mediation to complement the landlord ombudsman service. That is another example of how we are trying to take pressure off the courts and tribunals system.

Clauses 64 and 65 will give local councils the powers to take action against landlords who fail to join, or against anyone who markets a PRS property where the landlord is not registered. That will include civil penalties for initial breaches and potential criminal prosecution for continuing or repeat breaches.

Clause 64 gives local authorities the power to penalise landlords by imposing financial penalties on those who fail to join the ombudsman. Penalties can also be imposed on individuals who market a property when the landlord is not a member. That will include civil penalties of up to £7,000 for initial breaches, and up to £40,000 or criminal prosecution for continuing or repeated breaches. The fines can be imposed if the local authority is satisfied beyond reasonable doubt that regulatory requirements have been breached.

Clause 65 sets out the circumstances in which an offence is committed for failure to adhere to the redress scheme membership requirements, which will be set out in regulations under clause 62. That includes the requirement for the landlord to be a member of the ombudsman when a property is marketed for let. Landlords who continually or repeatedly fail to sign up to the ombudsman, and individuals or businesses who persistently market a property when the landlord is not a member, will be denying tenants access to redress and therefore should, in our view, be liable for criminal offences. The clause therefore provides for local authorities to be able to pursue criminal convictions as an alternative to imposing the fines provided for in clause 64. If a landlord is convicted of an offence under clause 65, an unlimited fine can be imposed.

Those provisions should be sufficient to deter people from breaching the redress requirements. If someone persistently continues to break the law, however, it is only right that local councils can take further, more stringent action. Tenants will also be able to seek a rent repayment order against landlords who commit an offence by continually breaching the requirement to be a member of the ombudsman scheme. That is provided for in clause 96, which we will debate in due course. Local authorities will have discretion over the levels of fines they impose, and that will support consistency. Clause 64 allows the Secretary of State to issue guidance to local councils on issuing penalties.

In addition to the robust enforcement provisions in clauses 64 and 65, clause 66 gives the Secretary of State the power to make regulations that would allow the administrator of the ombudsman to apply to the court or a tribunal for a redress decision to be enforced as if it were a court order. We can make regulations under this power if significant numbers of landlords refuse to comply with ombudsman decisions, in spite of the risk of being expelled and facing enforcement action. Furthermore, clause 66 rightly includes a requirement for the Government to consult with landlord and tenant representatives before exercising the power.

The Government are keen to ensure that the new ombudsman service will fit into the existing landscape of redress, regulation and enforcement. That will ensure that the new service is as effective as possible from launch, by being complementary rather than duplicative. That is why clauses 68, 70 and 71, and schedule 3, are drafted to support the service to work collaboratively with other relevant organisations.

Local authorities currently enforce regulations in the PRS, as we have discussed, often in response to tenant complaints. We intend for the ombudsman and local authorities to support each other, and that was a point we delved into at the evidence session with the chair of the Housing Ombudsman Service, Richard Blakeway.

Clause 68 allows the Secretary of State to issue or approve guidance on co-operation between local authorities and the new ombudsman. Local authorities and the ombudsman must both have regard to such guidance. Using the provisions in clause 68, we intend to publish guidance that will clarify the respective roles of each in situations where there may be an overlap in their remits. We have been engaging with local councils to understand their needs, and that work will feed into the final guidance.

I am afraid, Mrs Harris, that I have some way to go on this group of clauses. Clause 70 makes changes to the Housing Act 1996, which established mandatory redress for social housing tenants. In pursuit of a streamlined service, clause 70 ensures that private landlords who have voluntarily joined a scheme for social housing are instead required to join the new scheme for their private landlord activities. That will not prevent one organisation from providing both social and private redress, but it will ensure that all private landlords are members of one scheme.

Clause 70 also allows the Government to appoint one person to the role of social and private rented sector ombudsman if the final decision is taken to deliver through the Housing Ombudsman Service. It does that by enabling the Secretary of State to publicly appoint the ombudsman for social housing redress under a body corporate structure, which the service may adopt under the Housing Act 1996. We will set out in regulations that the Secretary of State must also have the power to appoint the ombudsman for private rented sector redress. That would give the Government substantial oversight over the ombudsman and provide for effective and strategic leadership over a large, cross-tenure service.

Clause 71 inserts schedule 3, which makes legislative amendments to allow the private landlord ombudsman to co-operate and share information with the Local Government and Social Care Ombudsman, the Housing Ombudsman Service and the Building Safety Regulator. It is imperative for the new ombudsman to work effectively, where necessary, with those bodies, which are responsible for redress and regulation connected to the private rented sector. Schedule 3 provides the legislative basis for joint investigations and information sharing to facilitate that. It also makes some minor consequential amendments.

Clause 72 closes a gap between the remits of the Local Government and Social Care Ombudsman and the Housing Ombudsman Service. As things stand, members of the public who wish to complain about how their local council has acted in its capacity as a social housing landlord, but who are not tenants of the local council, cannot bring their complaints to either redress body. That issue typically affects the neighbours of social tenants and leaves them with nowhere to turn when things go wrong, and we seek to address it. The clause will allow those complaints to be brought to the Local Government and Social Care Ombudsman, and it will provide greater access to justice for that group of residents.

Amendment 65, which was tabled by the shadow Minister, would mean that landlords were longer required to be a member of the new landlord ombudsman scheme if they had a managing agent who was a member of an independent redress scheme approved by the Secretary of State. In our view, that would contradict the Government’s intention for tenants in the private rented sector to have access to landlord redress through a single ombudsman service. The fact that a landlord employs a managing agent does not mean that tenants do not need to be able to seek redress from their landlord. Many significant issues relating to housing quality or the treatment of tenants are the responsibility of the landlord, not the managing agent. As an example, structural issues with a building that give rise to damp and mould would typically be a landlord’s responsibility, and access to agent redress would not provide a satisfactory solution.

I understand that hon. Members may have concerns about proliferating redress routes for different issues. The Government have listened to the calls from stakeholders and the Select Committee to make the redress landscape as coherent as possible. With that in mind, although no final decision has been made, I announced on Second Reading that we remain of the view that the existing Housing Ombudsman Service is best placed to deliver the new PRS redress service, providing streamlined, cross-tenure redress.

Amendment 65 would contradict that aim by excluding some private tenants from access to landlord redress. It would create confusion about the different but complementary purposes of landlord and agent redress, and that would make it more challenging for tenants to know where to raise their complaints. I am confident that that was not the shadow Minister’s intention in tabling his amendment, but it would create inconsistencies in tenants’ access to redress, depending on the landlord’s business model. It would give rise to new sources of complexity and unfairness across the sector and open loopholes for unscrupulous landlords and agents to exploit. The Government remain committed to requiring all landlords in the PRS to be members of the new ombudsman scheme. I therefore respectfully ask the shadow Minister to withdraw his amendment.

It has been helpful to hear from the Minister in detail on those points. The intention of amendment 65 was to avoid a risk of double jeopardy for a landlord if they had a managing agent who was a member of the redress scheme, but if they were also required separately to be a member of the redress scheme by virtue of the fact that they were a landlord. The Minister has set out how he intends to deal with that in regulation.

I ask the Minister to clarify something—perhaps not today, but in due course. He mentioned examples of where damp and mould would be considered a landlord issue as opposed to a managing agent issue. We are all aware that certain blocks, which may be owned by an absentee landlord or someone who works abroad, are let and managed entirely by an agent who handles the day-to-day responsibility in return for payment and under a contract. We do not wish to exclude completely the possibility of redress through the agent, where the agent has been explicitly given responsibility for dealing with such things, by saying that that will always be a matter for the landlord. Will the Minister write to me to explain how that issue—most of us have seen it from time to time in our constituencies—will be dealt with, should it arise in practice?

I am more than happy to write to the shadow Minister to clarify that. If I have understood him properly, there are certain issues that we think are the landlord’s responsibility, and that is why our approach is the right one. To address his point directly, I will happily set out in some detail in written correspondence how that will operate when landlords are completely absent for the process, and the managing agent’s role in that situation vis-à-vis the new redress scheme.

It is a pleasure to serve under your chairmanship, Mrs Harris. The shadow Minister’s amendment refers to agents, such as managing agents, and their redress schemes. Managing agents are often also letting agents—they are the same kinds of companies. Can the Minister comment on the case for regulating those agents, for which this Bill provides an excellent opportunity? Members of the other place who are experts in housing have spoken to me about the need to do that. The Liberal Democrats would certainly support such a move, and I would be grateful if the Minister commented on it.

I suspect I know the noble Lord that the hon. Gentleman refers to. I have had many extensive conversations with the noble Lord about the matter, and I will continue to engage with him. We supported the implementation of the Lord Best review in opposition. We took the view that the Bill was not the appropriate place to consider those measures, but we intend to set out our approach to the regulation of managing agents, letting agents and estate agents in due course. If the hon. Gentleman wants a specific comment from me, I refer him to the answer I gave in oral questions a few a days ago on this point in response to one of his colleagues. We understand the necessity for regulation in this area, and I hope to have further discussions with him and others in due course.

I beg to ask leave to withdraw the amendment.

Amendment made: 23, in clause 62, page 90, line 16, at end insert—

“(4A) Regulations under subsection (1) may require a person—

(a) to provide relevant property information to the administrator of a landlord redress scheme, on applying to become a member of the scheme;

(b) at any time after becoming a member of a landlord redress scheme, to notify the administrator of the scheme of any change to relevant property information previously provided by the person as soon as reasonably practicable, or within a period, as specified in the regulations.

(4B) For the purposes of subsection (4A), ‘relevant property information’ means such information as may be specified in the regulations relating to—

(a) any residential tenancy under which the person is the residential landlord;

(b) any dwelling which is proposed to be marketed for the purpose of creating a residential tenancy under which the person will be the residential landlord.”—(Matthew Pennycook.)

With this it will be convenient to discuss the following:

Clauses 74 to 83 stand part.

Clause 87 stand part.

I turn to the private rented sector database provisions. Clauses 73 to 83 and clause 87 set the framework for establishing a database and the functions required for its operation and maintenance. The database has the potential to be transformative in the regulation of the sector, and I know there is a huge amount of interest across the Committee in that regard. The database will record the details of private landlords and their properties that are currently, or will be, let as a residential tenancy.

Clause 73 introduces the legal basis for the database to be created and maintained. The database will allow local authorities to build up a detailed picture of the private rented sector in their areas. It will support improvements in health and safety standards by increasing the intelligence available to local authorities. Landlords will be required to register on the database. The registration process will ensure that landlords are aware of their legal obligations and allow them to demonstrate their compliance.

Renters will be able to use the publicly available information to understand more about a landlord or a rental property. That information will increase renters’ confidence when deciding whether to rent a property. The information on the private rented sector database will support the Government in developing a richer understanding of the sector to inform future policy. The database will be key to the successful implementation and enforcement of the wider reforms legislated for in the Bill.

Clause 74 provides information about the database operator, which will operate and maintain the database. It specifies that the database operator will be either the Secretary of State or a body appointed by the Secretary of State. We intend the operator to be a public body rather than a commercial or private organisation. The clause will allow the Government to prescribe the features and functionality that the database operator will need to include on the database. We will allow the database operator to enter into contracts and agreements with other organisations to facilitate its operation. The provision in the clause for regulations to be made provides flexibility that we believe is crucial for operating a digital service. It will give the operator the ability to adapt how the database works based on user experience, technological advancements and evolving needs of the sector.

Clause 75 deals with the registration process. It allows the Government to lay regulations that will specify how landlord and property entries must be made in the database. Using regulations to set out the registration process will ensure that entries can be adapted and remain responsive to the sector. Landlords will be expected to register on the database and upload certain information. We expect that to include basic details about PRS landlords and their properties, including gas and electrical safety certificates, and confirmation that properties meet the decent homes standard. We are also exploring using the database to collect a range of tenancy-related data. These datasets will provide useful intelligence to local authorities and provide more information to renters when choosing a property.

We know that many landlords employ property agents to act on their behalf when managing a property. To accommodate that, we are examining whether a property agent could complete some elements of the registration on behalf of the landlord. We are creating a forward-looking digital platform that will be able to link up with advancements in technology and draw from any relevant datasets that are digitised in the future. We will create an offline method for registering on the database in circumstances where that is necessary.

Clause 76 allows regulations to be created that will ensure that active landlord and property entries remain up to date. Following the passage of secondary legislation, landlords will need to keep their entries on the database up to date by uploading compliance information when it expires and updating any personal details, such as their address, that have changed. For the database to be useful for local authority enforcement teams and tenants, the information it contains on landlords and their properties must be up to date. Clause 76 operates in conjunction with other clauses in the Bill, including clause 77.

Clause 77 contains a power to make regulations that will define the criteria for an entry on the database to be active or live, and when it would become inactive. To keep the information on the database accurate, entries that no longer meet the criteria for an active entry will become inactive. For example, if a landlord does not renew an entry after the initial registration has expired, then the entry will become inactive after a 28-day grace period. Once the specific criteria set out in the regulations are met, an inactive entry can become active once more. Entries will also cease to be active if the landlord or the property is no longer required to have an entry on the database, such as if the landlord sells the property. This both protects individuals’ privacy and ensures that the database remains a source of accurate information.

We intend that inactive entries will be archived for five years, so that they are traceable if a landlord is found to be marketing, advertising or letting a property with an entry that has lapsed or been removed from the database. Regulations are required because there are a range of scenarios that will be addressed, including how renewals will work for landlords with multiple properties registered at different times. We are designing the database to ensure that the renewal process is simple and as streamlined as possible for landlords.

Clause 78 allows for regulations to provide for the additional authentication of information supplied in database entries. While some processes may be automated, this regulation-making power may be used to enhance the integrity of the database, by subjecting some entries to further verification. It provides the Government with the power to require local authorities or others to verify landlord and property entries. To make best use of resources, we intend for only a quota of entries to be subjected to the verification process. It will allow for fraudulent documents to be detected and action taken against those who have provided incorrect information. The clause also allows for entries that are inaccurate to be removed from the database, for example if a landlord has registered in error. That will ensure that any inaccurate details about landlords are not accessed by local authorities or the public. Furthermore, it will help to maintain an accurate dataset for the private rented sector in England.

Clause 79 allows the Secretary of State or the database operator to use regulations to charge a fee to landlords for registering on the database. That will prevent its running costs from becoming a burden on the taxpayer. The fee will be set at a reasonable level and the database operator would not be expected to profit from the registration fee. Regulations will specify how the fee is to be calculated. The regulations will also permit landlords to be charged more than the renewal fee if their entry becomes inactive and is reactivated. For example, a landlord may be liable for an additional late fee. The clause allows the fee set by the database operator to be amended to reflect the costs involved in operating the database and to provide flexibility for other factors. The Secretary of State can direct that some or all of the fees received by the database operator be paid to local authorities or into the consolidated fund—pre-empting a question from the shadow Minister.

Clause 80 requires that a landlord and rental property is registered on the database before a person can market the property for rent. It also ensures that advertisements for rental properties must include unique identifiers, which are allocated to the property and the landlord by the database operator. Mandating that rental properties and landlords are registered before property is advertised will enable renters to make informed choices about where to rent. We will not penalise third-party advertising platforms for hosting adverts for unregistered properties; the responsibility for such listings will rest with the person who uploaded them.

Clause 81 allows the Government to take steps to protect tenants by holding criminal landlords to account. It places local housing authorities under a duty to make entries on the database in respect of people who are subject to a relevant banning order, or fines or convictions deriving from relevant banning order offences. Including information about relevant landlord offences will enhance the intelligence available to local authorities, enabling them to develop more effective enforcement strategies and to intervene before non-compliance turns into criminality. In addition, the data will give renters more information about the suitability of a landlord. To maintain the integrity of the database and to provide tenants with accurate information, the clause mandates local authorities to upload all relevant offences. It also sets out that local authorities have the power to record offences that are enforced by other agencies, such as the police.

Clause 81 also provides the power to use regulations to further extend the range of action recorded on the database, which could include improvement notices and other housing offences. That would allow local authorities to adopt a more co-ordinated approach to addressing housing problems. In combination, these provisions will allow local authorities to create a comprehensive repository of relevant offences and financial penalties. By using regulations to specify which offences will be recorded, we can adapt to evolving practices and the needs of the sector. Equally, the Government remain dedicated to safeguarding the privacy of landlords—a concern that some have raised with the Government. Any offence information shared publicly will be shared without compromising landlords’ data privacy rights.

Clause 82 mandates that each landlord and property record in the database be assigned a unique identifier, which will ensure that the database stores information accurately and can be easily maintained. The identifiers will be used in conjunction with unique property reference numbers to create an accurate dataset where each property and landlord entry is distinguishable from others. Using unique identifiers will ensure that local authorities and tenants can easily navigate the database and identify entries accurately.

Clause 83 lists the other duties that the database operator must perform, such as duties to support the effectiveness of the database for all users and to enable the Government to monitor the database’s performance. To ensure accessibility for all users, the database operator must provide alternative methods for landlords who cannot or do not wish to manage their registrations online. The clause also specifies that the database operator must create a method for people to report unregistered landlords or properties. The operator must also publish advice and information to residential landlords and tenants about their rights and responsibilities concerning the database.

Moving on to clause 87, the data collected in the database will serve as a crucial resource for local authorities and Government agencies, as I said. However, to maintain its effectiveness, the information must remain current and applicable to the private rented sector. To safeguard landlord privacy, the Government have established a clear data retention policy, which ensures that personal information contained in landlord and property entries is retained only for as long as is needed for effective enforcement. The clause mandates that the database operator removes from the database landlord and property entries that remain inactive for a period of five consecutive years.

The success of our enforcement efforts hinges on the accuracy and completeness of the database. By providing a repository of current and reliable information on private rented sector offences, we can empower local authorities to develop targeted strategies, to collaborate effectively and to address malpractice before it becomes criminality. I thank the Committee members for their forbearance and I commend the clauses to them.

I have a few questions and would be grateful for the Minister’s response. In this chapter of the Bill, the regulations will clearly do a lot of the heavy lifting on what the database is like and what the tenant and landlord experience will be. First, how will the proposed database interact with the existing selective licensing schemes that a number of local authorities have in place? In the regulations, will the Government draw on the learning from the existing schemes to inform the database’s operation? It is not entirely clear how it will interact, given the different regimes in Wales and Scotland that the Minister has announced. Again, I do not necessarily expect him to answer those questions straightaway, but it would be helpful to know, particularly given that a different enforcement regime will apply in Wales.

It is also not entirely clear what the Government’s thinking is about the geographical extent of the database and the way in which it will be designed. Given that designated local authorities will be enforcement bodies, will it operate in the same way as, for example, existing children’s social care databases? Will it be maintained by individual local authorities, but in a connected way so that we can extract data from it? Will there be a single national database or an England-wide database? I appreciate that the answers to some of those questions will result from the process of engaging with the market on who the provider will be. We know, from examples where such policies have been successful or gone badly wrong, that there are significant risks to the effectiveness of the Bill if we do not get this right. It would be helpful if the Minister could address those points, either now or later in writing.

I am grateful for the opportunity to provide some clarification, particularly on selective licensing, because I know that is a source of interest to many Members.

The Government are clear that selective licensing and the private rented sector database have different purposes. The database is not designed to replace selective licensing. Unlike the database, selective licensing schemes aim to target specific local issues in specific local geographies by enabling more intensive practical enforcement strategies. We believe that selective licensing is a valuable tool when used appropriately and combined with other measures. It enables local authorities to drive better outcomes for local residents, tenants and responsible landlords.

What is important, and what we are committed to doing, is ensuring that the use of selective licensing complements and is aligned with the new private rented sector database. There is some important work to do, which we are already engaged in, to refine the way the two systems will work together once they are both in force.

The shadow Minister asked me a reasonable question about the geographical extent of the database. I will come back to him on that specific point, particularly in respect of how it interacts with the rental discrimination provisions in the Bill, given our previous discussions on their application in Wales and Scotland.

Clause 75 deals with the making of the database, and I want to raise the importance of its content. Had I been quicker off the mark and more used to the procedures, there would be an amendment before the Committee that I would speak in favour of, but it is absent—time ran away.

Will the Minister comment on the importance and potential real value of the database, depending on the information that it carries? The Liberal Democrats want to see the Bill include: the accessibility of the property for disabled people; whether enforcement action has been taken against the landlord; the energy performance certificate rating of the property, so that people have some idea of how expensive it will be to heat and live in; and, crucially, the rent that was paid in the first tenancy.

As I said the other day, we firmly believe that market rents are often inaccurately described and arrived at, by virtue of looking at advertisements. I appreciated the points the Minister made the other day in response, but none the less it remains the case. As I also said the other day, we believe that the cost of interest is the bigger driver of landlords’ costs, rather than inflation, and it should be a better proxy for limiting rent increases. Even without that, a database with the actual rents paid could be an enormously powerful tool for both renters and landlords, as well as the market generally. More information makes for a better marketplace and will hopefully improve the lot of landlords and tenants. We particularly wish to see all those features in the register and believe that would enhance the market.

The other day, in relation to whether the Bank of England rate was a relevant proxy for landlords’ costs, the shadow Minister said that the commercial interest paid by landlords was more important, but there is a relationship between the Bank of England base rate and the commercial rates of interest paid. It is the key driver of commercial rates of interest.

My main point is that having on the register the rent, including the level of the last increase in rent, would be a really important and powerful indicator. We wish to press for the details I have outlined to be on the register. If I had been quicker off the mark, there would be an amendment before the Committee.

I will say two quick things. I remember probing the previous Minister about this issue during the debate on the previous Government’s Bill, because I thought it was worth teasing out. In general, we did not want to be too prescriptive with what is on the face on the Bill in terms of the frameworks, because we need to strike a balance between the primary legislation and the flexibility for the details of the database to be developed in secondary legislation, so that we can respond to any evolutions in the sector and technology. We do not want to be too prescriptive on the face of the Bill.

In response to the call from the hon. Member for Taunton and Wellington for particular data to be included on the database, I draw his attention to my previous comments, which I think I made in the third or fourth sitting, about the potential for rents to be included. I am extremely sympathetic to that. Other information could potentially go on the database that might show patterns of behaviour on the part of landlords that would inform tenants’ choices. At a minimum, we want the database to include information about private landlords, the homes they rent out and how those homes are managed. I want debate with hon. Members about what goes on the database, but all the detail, as I am sure the hon. Gentleman will appreciate, will come forward in secondary legislation. At that point, the hon. Gentleman or his colleagues will be able to have a further debate and discussion on those matters.

I am new to the procedures of Parliament, but I understand that some regulations are more easy to debate than others. Is the Minister saying that it will be possible for Liberal Democrat Members to debate the regulations when they come forward?

I am making no specific commitment, but such is the significance of the regulations—they will provide all the detail for how the service will work in future—it would not be a cursory debate.

Ordered, That further consideration be now adjourned. —(Gen Kitchen.)

Written evidence reported to the House

RRB 64 Maxine Fothergill, Managing Director of Amax Estates & Property Services, Trainer for London Landlords Accreditation Scheme, and Portfolio Landlord

RRB 65 Nottingham Students Partnership on behalf of the University of Nottingham Students’ Union (UoNSU) and Nottingham Trent Students’ Union (NTSU)

RRB 66 UNISON

RRB 67 Olan Homes

RRB 68 Susan Osborne

RRB 69 Roy Wearing

RRB 70 Mandy Mills

RRB 71 Aster Group

RRB 72 London Councils (further submission - Asylum Accommodation)

RRB 73 Cats Protection

RRB 74 Hibiscus Initiatives

RRB 75 National Housing Federation

RRB 76 David and Manuela Yeandle