What was discussed on the first day of the Lords report stage for the Renters’ Rights Bill? – TNT

My Lords, I support Amendment 1 in the names of the noble Lord, Lord Hacking, the noble Baroness, Lady Scott of Bybrook, and the noble Lord, Lord Jamieson. As mentioned previously, I have an interest as a landlord of over two decades, and as a former renter in the private rented sector for some 16 years, I have a combined experience in the PRS of 40 years.

The amendment before your Lordships’ House would allow a tenant and landlord to mutually agree a fixed term, as we have just heard, while restricting the landlord’s ability to regain possession of a tenanted property. It would further mean that the landlord would not be able to increase the rent over the period of the fixed term. Very many tenants would welcome such agreements and the increased security it would give them. Under the proposed periodic tenancies, after 12 months tenants would have no security as the landlord can seek possession on a number of grounds.

Polls have shown that a majority of tenants and landlords want to have fixed terms, and His Majesty’s Government have given no reason why they think they know best. The arguments against mutually agreed agreements on fixed tenancies are, frankly, unconvincing and threadbare. They result in more, not less, security for tenants, and less chance of familial disruption. The Renters’ Rights Bill rightly cracks down on rogue landlords, improves standards in the PRS and seeks to ensure a fair, workable and sustainable rental market.

Noble Lords may recall my Amendment 173 in Committee, which called for tenants to give notice not earlier than four months after agreeing to an assured tenancy, resulting in a minimum tenancy of six rather than two months. Why are the Government insisting that six months would be a disaster, as under today’s assured shorthold tenancies, but two months will be a panacea? The outcome of exclusively two-month periodic tenancies will be less security for tenants and landlords alike, and higher rents.

While I accept the need for flexibility for tenants, I do not see why an additional four months should be regarded as so unacceptable by the Government. Responsible landlords require the certainty of a minimum period to defray the cost of establishing a new tenancy. Many of these costs are one-off and cannot be passed on to the tenant under the Tenant Fees Act 2019. These cover things such as cleaning, inventories, referencing, credit checks, admin and so forth. A higher turnover of tenancies under periodic tenancies, and the financial risks associated with it, will otherwise put up rents. All long-term tenancies could potentially turn into short tenancies and the landlord will have to factor that into the rent. Another concern of landlords will be if a tenant quits in the middle of winter, when much fewer tenants are seeking rental properties. Rentals are often seasonal, and longer void periods will be the outcome. Again, this will be reflected in higher rents.

Ministers argue that it is highly unlikely that tenants will move in and out of rental properties, in effect turning long-lets into short-let properties. But that is exactly what will happen in many cases, especially in coastal resorts and city centres, already plagued by Airbnb and other short-let platforms. Figures produced by Hamptons show that properties being marketed as short-term lets are advertised at prices on average 49% higher than the same types of property for long-term rent. In the London Borough of Camden, short-lets can cost four times higher than long-lets. Deposits for short-let properties are about the same as those for long-term rent. This would make it cheaper for tenants to just rent a long-term property for two months than secure a short let for the same period.

To suggest that people will not game the system is naive. Why would short-term tenants volunteer to pay up to four times the amount of rent when they can save themselves thousands of pounds taking a property advertised for long-term rental for just two months or even less? On day one of the tenancy, they will have the legal right to give two months’ notice. Two-month period tenancies will open the floodgates to legal backdoor short lets which will be impossible to police. This will have other implications, which we are already witnessing. Landlords will gravitate increasingly to short-let platforms such as Airbnb which are more profitable than long lets and virtually unregulated.

With the associated abolition of upfront payments, which will make vulnerable people, the self-employed, pensioners and students—including foreign students—unable to prove their income, why should many landlords continue to take the risk when there is a more profitable alternative? In any event, only 7% of tenants pay anything up front, so I fail to see why this is also an issue for HMG. Banning upfront payments, which your Lordships will discuss later, was very much a last-minute government amendment in the other place, and I suspect it was badly thought through.

All this will result in fewer long-term rentals being available to tenants, less security and a profound shortage of long lets for local people in tourist hotspots. It is already happening, as people in Cornwall, Devon and Wales will know.

Nothing in the Bill will increase the supply of rental property in the PRS which, by some estimates, needs an extra 50,000 rentals per year just to stand still. A six-month minimum tenancy would underpin the viability of the PRS and ensure that more homes, not fewer, are provided for those tenants who need and want a long-term home.

Those should be where people need homes; those landlords entering the market at the moment tend to chase higher yields in the north, ignoring the south, where buy to let is rapidly becoming unprofitable. A six-month minimum fixed tenancy, if mutually agreed, gives all parties plenty of flexibility. As the noble Lord, Lord Hacking, mentioned, many tenants prefer to have even a 12-month fixed tenancy to give them added security.

The amendment would also implement a recommendation by the Levelling Up, Housing and Communities Committee in its report on reform of the PRS in 2023, chaired by the very knowledgeable Labour MP, Clive Betts. The recommendation was

“that tenants be unable to give two months’ notice to leave until they have been in a property for at least four months”.

It noted:

“This will give landlords the legal certainty of at least six months’ rent at the start of the tenancy”.

After this period, the tenancy agreement could continue on a periodic basis as envisaged by this Bill.

I fear that, unless His Majesty’s Government amend the Bill on fixed terms and upfront payments, it will make the PRS unstable, uncertain, increasingly expensive and less viable, which would be bad for both tenants and landlords. Sadly, His Majesty’s Government are showing no sign of introducing the significant amendments necessary. As the noble Lord, Lord Hacking, said, the Government listen but take no notice. As we have seen in the other place, this does not always work out well.

On 28 April, the noble Baroness the Minister, who cannot be accused of not listening, told the Committee:

“We are committed to robustly monitoring and evaluating the impact of our reforms. We retain powers to amend these measures should the evidence arise that they are having a significant impact on a particular group … We maintain the powers to amend, should we need to”.

I hope that His Majesty’s Government bear this very much in mind, before some of the unintended consequences and regrettable flaws in the Bill see the light of day. I was just one of 26 Peers who voted against HS2 in your Lordships’ House, and it gives me very little pleasure to say after the event “I told you so”.