The Renters (Reform) Bill had its Second Reading in the House of Commons on Monday 23 October 2023. The Bill will deliver the Government’s commitment to a fairer private rental sector. It will remove Section 21 no-fault evictions to provide tenants with greater security and will empower them to challenge poor conditions. Alongside this, we will introduce periodic tenancies allowing either party to end the tenancy when they need to.
My Lords, the banning of Section 21 evictions has been pushed into the long grass, and the insecurity caused by no-fault evictions is having a devastating impact on over 24,000 families a year in this country—a 50% increase on the previous year. The financial burden of £1.6 billion a year on local authorities is overwhelming their ability to deliver other services. Five years have gone by since the Government’s manifesto pledge to ban no-fault evictions, and it now appears that the Prime Minister is too weak among his Back-Benchers to deliver that promise. Why has no work happened to ensure that the courts were fit for purpose to deliver no-fault evictions in those five years? What are the Government going to do to stop those being made homeless by Section 21 from rising to over 30,000 families a year before this gets fixed?
I respectfully disagree with the noble Baroness: we are not kicking this into the long grass. However, this will be the biggest challenge to the private rental sector for over 30 years, and it is vital that we deliver reform in a way that both protects the security of private tenants and retains the confidence of landlords in that new system. This is why Section 21 will be abolished only once we judge sufficient progress has been made to improve the court’s possessions. It is our commitment, in line with recommendations made in the Levelling-up and Regeneration Bill and in recent reports, that we will do this as a matter of priority. I will also draw attention to the new Housing Loss Prevention Advice Service, introduced on 1 August 2023, which will help with those evictions as of now.
My Lords, is it not the problem that the private rented sector in this country is overreliant on the small private landlord, whereas in most other countries it is the financial institutions and the pension funds that invest in private rented property and provide professional management? They do not need Section 21, so what steps are the Government taking to encourage financial institutions in this country to invest in the private rented sector and replace the small private landlord who, in many cases, is anxious to sell up?
We know that the profile of landlords providing homes in the private rental sector has changed over the past 20 years. A wide range of landlords operate in the sector, owning different numbers of properties and focusing on different markets, and they all have a role to play providing secure and decent homes. However, the Government also welcome new institutional investment in the private rental sector and have made a number of interventions to support the Build to Rent sector. Build to Rent boosts housing supply, diversifies the private rental sector and increases the quality and choice for renters in cities and towns across England.
My Lords, does the Minister really understand the effect this is having on individuals? I was a bit late in today because on the way in I met someone in Greenwich—as I was going to get public transport here—who was soaking wet and clearly distressed. He was evicted; he claimed no fault but now cannot afford accommodation. Last night he could not afford the £12 to get into a hostel, so was soaking wet because he had to sleep in the park all night. These are real people who are being damaged, and we now know there are more children who are homeless through this than we have ever known before. The Government need to understand, show the compassion, get on and stop these no-fault evictions.
As the House can imagine, this is a complex area; court reform is really important, but it is also important to understand that the statistics are actually relatively good for the judiciary at this time. We are hearing that, of those that actually have a target here, the Ministry of Justice and His Majesty’s Courts & Tribunals Service already meet the requirement for hearings to be within four to eight weeks of receipt in over 95% of courts. The time it now takes has gone down to seven weeks rather than 25 weeks a year earlier, so things are happening but a lot more can be done.
For those families dependent on housing benefit to pay their rent, the local housing allowance has been frozen since 2020, and that frozen figure is based on 2018 private rental figures. This forces many families into poverty and food banks so they can manage to pay their way. Can the Minister assure the House that the Government will unfreeze the local housing allowance and bring it up to the local housing allowance rate that it should be?
I am afraid I cannot give the noble Baroness that specific assurance. The Government recognise the cost of living pressures that tenants face, and that paying rent is likely to be a tenant’s biggest monthly expense. Some 8 million of the most vulnerable households across the UK will continue to be supported through the next winter by additional cost of living payments.
It is clear to me when I read the Renters (Reform) Bill that it strikes a balance between providing renters the increased security and quality of housing, and ensuring that landlords have the tools to charge a fair rent and reclaim their properties when they need to. It is right that we reform the sector so that it works for both tenants and landlords, but there are definite levels, barriers and bars put in place that mean you must have a genuine reason for reclaiming your property if you are a landlord in the future.
Does the noble Baroness not understand the absolute disappointment and frustration among private tenants? This was promised in the 2019 manifesto that her party won the election on. Here we are now, over four years later, and now she says that the courts must be reformed. It is unacceptable. I know some discussions have gone on, but I do not recall the courts being mentioned until a few weeks ago. It is out of order. Take it back to the department and the Secretary of State. It is totally unacceptable for the Government to oppose this at present.
I understand the noble Lord’s frustration, but we are improving the court system to give landlords confidence that they can regain possession in the minority of cases where the court action is needed. This remains a top priority for both the Department for Levelling Up, Housing and Communities and the Ministry of Justice. Improved access will redress through a new PRS ombudsman that will encourage early dispute resolution so that only cases which need a judgment come to court. This will free up time for the courts to process the most serious cases.
Some of the bad behaviour of the private rental sector comes from the letting agents who look after the properties on behalf of the landlords or investors. These letting agents have no need to have any qualifications, there are no requirements in law, and no regulation. Is the Renters (Reform) Bill going to bring in at long last regulation of property agents so that we get proper qualified people looking after properties and lose some of those bad agents out there, where unnecessary and very often illegal evictions are taking place in their hands?
I do not have a specific answer for the noble Lord. I can tell him that there will be a new private rental property portal, which will help landlords to understand their legal obligations and will help their agents understand that too, but I will ask the department to revert to him in writing.
I declare my interest as set out in the register. Does my noble friend the Minister agree that this postponement of the legislation is actually a welcome idea? Owning residential property is becoming increasingly difficult and unattractive. The Estate Business Group, which is perhaps a group you could argue has long owned property and much rural property, has been recently surveyed: 41% of them are now considering selling those properties. Many of these properties are in attractive rural areas. The unintended consequence of Section 21 is that these houses will be bought by second-home owners and therefore no longer be available for the affordable rental sector.
It is that measure of losing private rental properties that has caused the Government to take a little more caution over the way in which this is being introduced. In particular, we listened to the Housing and Communities Select Committee in its recent report on PRS, which asked for this delay for Section 21 to be abolished only when there was sufficient progress made on that court’s process. We are aware of the balance and are working very carefully with both the rental sector and the private landlords.