Tag: Renters Reform Bill

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Renters Reform (Bill): finally, but there’s still more to do

By Jamie McGowan

On 15 April 2019 the Government pledged to abolish Section 21 evictions. Four Prime Ministers, three Housing Ministers, and 52,800 Section 21 eviction notices later… the Renters (Reform) Bill 2023 is here. For tenants this is broadly good news, but as Matthew Pennycook, Shadow Minister for Housing & Planning, observed last week[1], “As drafted, the Bill contains numerous loopholes that disreputable landlords can use to exploit tenants and jeopardise their security of tenure.”

The proposed Bill would be the most significant overhaul of the private rented sector in over 40 years. It includes provisions for a landlord database and portal, the establishment of a private rented sector Ombudsman, and restores tribunal reviews of private rents. The Bill proposes to provide a prescribed way for tenants to request a right to keep a pet which a landlord cannot then unreasonably refuse. This might seem like one of the more frivolous points, but there are more households in the UK (62%) with pets, than without, and this will be a welcome development for many.

The Bill has several parliamentary stages to go through and Labour will have ample opportunity to make calls for it to be strengthened. All of the proposals mentioned above will require substantial scrutiny, in particular the operation of the ‘Private Rented Sector Database’ and the Redress Scheme which are certainly worthy of dedicated future blog posts! However, the most significant headlines relate to security of tenure and grounds for possession and this is what I have focused on in this post. I have briefly set out what the Bill does (or enables to be done later by secondary legislation), what it doesn’t do, and what it could (and should) do better.

Possession grounds

So the flagship achievement of the Renters (Reform) Bill, if passed, would of course be the abolition of Section 21 notices. These are currently the most common way in which people become homeless in England. The Bill also simplifies the types of tenancies so that (nearly) all private tenancies will be periodic assured tenancies. It does this by abolishing fixed-term assured and assured shorthold tenancies. Although ‘periodic’ might actually sound like it offers less permanence, what really affects the security afforded by a tenancy is the reasons it can be ended by a landlord. These are known as possession grounds.

It is worth pointing out that abolishing Section 21 would not, as it is widely being reported, mark the end of ‘no fault’ evictions. There will still be grounds for possession which involve no ‘fault’ from a tenant such as a landlord wanting the property back for a family member to live in. It would however, be the end of ‘no reason’ evictions which, notwithstanding the notable loopholes discussed further below, represents a major landmark on the road to a private rented sector that can provide genuine stability for tenants.

Alternative grounds

The Bill preserves, alters and creates a whole raft of alternative possession grounds. Some proposed changes are subtle but their interpretation could prove significant. For example, amending the existing anti-social behaviour ground 14 to apply, not where something is ‘likely to’ cause nuisance or annoyance, as is the case currently, but where behaviour is simply ‘capable of’ doing so.
All of the remaining possession grounds need to be scrutinised carefully to ensure they can only be used for their intended purposes and when it is fair to do so. Here I have addressed the two which appear to be the most open to abuse by landlords in undermining the removal of Section 21s.

Grounds 1 & 1A ‘Landlord requires property’

These are two separate grounds which enable a landlord to recover possession of a rented property because they require it as accommodation for themselves or a close family member (there’s a list) or because they intend to sell. The inclusion of both of these grounds was inevitable but there are big problems with the proposed mechanisms.

The first problem is that the proposals in the Bill would simply require a landlord to demonstrate an ‘intention’ to use the property to live in or sell before they are able to gain possession. It does not stipulate what evidence should be used to demonstrate this. Once possession has been obtained on these grounds, a landlord is prohibited from re-letting the property for three months or could face a fine of up to £5000.

In Scotland, where ‘no reason’ evictions were abolished in 2017, a similar ground has been abused by landlords and research from last year[2] found that nearly one third of landlords who had obtained possession in order to sell the property had not actually done so within a year.

The second main problem is that these are mandatory grounds, which means that if the criteria are met, a judge hearing the case would have no discretion to consider the tenant’s circumstances and a possession order for the property would have to be made. So, for example, even if a tenant could prove that a landlord had relied on this ground to regain possession from multiple successive tenants at the same property, waited three months on each occasion, and then simply re-let the property, a judge would not have the power to decide ‘perhaps this is disingenuous’ and refuse possession.

So the first and most simple improvement which could be made to these grounds is to make them discretionary so that the courts can consider all the circumstances of a case before making an order. It would also be less open to abuse if there were greater up-front evidential requirements, *before* an order could be made. Otherwise we very much risk seeing the same misappropriation of such grounds, as in Scotland.

Grounds 8 & 8A ‘Rent arrears’

Currently, Ground 8 entitles landlords to a possession order if the tenant was in two months’ arrears when notice was served, and remains at two months’ arrears (or more) at the date of the Court hearing. This ground for possession is both modified and extended by the Bill.

The proposed amendment is that any amount of Universal Credit which is owed but not yet paid to a tenant, should be disregarded when calculating the level of rent arrears. This would be a welcome development, although it should be clarified whether those on legacy benefits and in receipt of Housing Benefit are intentionally excluded by this. This overturns the effect of a very disappointing Court of Appeal decision in 2004 that, even though a tenant was in arrears because of Housing Benefit delays, the Court should make a possession order and not adjourn.

Then there is the new mandatory rent arrears Ground 8A. This entitles a landlord to a possession order when a tenant has fallen into eight weeks’ arrears on three separate occasions during the previous three years. Although the same Universal Credit disregard applies, this new ground wouldn’t even allow for the order to be avoided by reducing the arrears by the day of a hearing, as the existing Ground 8 does. This, coupled with the fact that it is mandatory, makes Ground 8A particularly harsh.

Discretionary grounds do not prevent a Court from making a possession order, they simply allow it to consider the right outcome for both landlord and tenant in all the circumstances. Most importantly, discretionary grounds allow the Court to make suspended orders. These provide landlords with nearly all the reassurance of immediate possession, but if the tenant repays the arrears at an agreed rate, they keep their home and the landlord recovers the rent owed. Labour has called for the mandatory Ground 8 to be made discretionary in the past and hopefully these efforts will be resumed in respect of both of these grounds now.

Beyond the Bill

The substantive content of the Bill aside for one moment, there is the small question of how the protections afforded by it will actually be enforced. Councils are expected to do a huge amount of the enforcement legwork, yet local government has seen the biggest cuts of all the public sector over the past 13 years. The fact that Environmental Health budgets have been reduced by over 50% under the Tories limits their ability to use existing powers. For example, DLUHC research[3] from last year found that very few local authorities were utilising ‘Rent Repayment Orders’ (a potentially significant sanction for certain landlord offences), citing constraints on resources as a factor.

Enforcement by individuals through the justice system will also be significantly hampered if nothing is done about the huge backlogs many courts are facing, which last year reached an all-time high for civil cases[4]. Tenants in some areas will also face huge difficulty in accessing a lawyer for advice and representation. Sustained cuts to the level and scope of legal aid have resulted in only 41% of the population having access to a housing legal aid provider[5]. The effectiveness of the Bill will be significantly dampened without wholesale improvements to access to justice and Labour should ensure this point is made.

And finally, as Matthew Pennycook has been quick to point out, there are various other anticipated provisions which are entirely absent from the Bill. A legally-binding Decent Homes Standard for the private rented sector, a ban on landlords refusing to rent to those in receipt of benefits or with children (‘No DSS’ practices), and measures to strengthen councils’ enforcement powers have all been promised. Labour needs to ensure that, if these are not included in the Bill, the Government is kept to the task of bringing these measures in elsewhere and, ideally, in less time than honouring their Section 21 pledge has taken.

Jamie McGowan is a member of the Society of Labour Lawyers, works for a Labour MP, and is a Young Legal Aid Lawyers co-Chair. This blog was supported by contributions from other members of the SLL Housing & Levelling up Group.  

[1]https://twitter.com/mtpennycook/status/1659216248776036352?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet

[2]https://www.scottishhousingnews.com/articles/a-third-of-scottish-landlords-evicting-tenants-to-sell-up-fail-to-make-a-sale

[3] https://www.gov.uk/government/publications/local-authority-enforcement-in-the-private-rented-sector-headline-report/local-authority-enforcement-in-the-private-rented-sector-headline-report#use-of-enforcement-tools-and-powers-to-address-poor-standards-and-conditions-in-the-private-rented-sector

[4] https://www.lawgazette.co.uk/commentary-and-opinion/delays-in-our-civil-courts-have-now-reached-crisis-point/5113664.article

[5] https://www.lawgazette.co.uk/news/laa-fails-to-attract-sufficient-bids-for-housing-legal-aid-contracts/5115133.article

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What does the Queen’s Speech mean for housing?

Despite presenting a large volume of legislation, overall the policy proposals in the Queen’s Speech will do very little to address the underlying causes of our country’s housing crisis.  Labour Housing Group has long argued for systemic change in the supply of genuinely affordable housing (the planning system and housing finance), reform of the benefits system, and regulation of the private rented sector and is campaigning for housing to be set in legislation as a human right. 

The legislation proposed in the Queen’s Speech will not address the challenge of a desperate shortage of genuinely affordable homes, the poor quality and energy inefficiency of all housing stock or the growing problems of homelessness and temporary accommodation.  The legislative programme does not bring forward ideas for the failing social security system which is leaving families having to choose between heating and eating.  I have set out the outline of what is expected in each of the Bills and then highlighted what’s missing.

The Renters Reform Bill is expected to abolish ‘no-fault’ evictions by removing Section 21 of the Housing Act 1988.  We have heard this before and we must hold this Government to their promise to now deliver this.  The Bill also proposes to reform possession grounds for landlords – it is not clear what these will be or how the Bill will tackle the issues with administration of evictions.

The proposal for a legally binding Decent Homes Standard in the Private Rented Sector is certainly welcome but currently lacks detail for how this will be enforced, how the enforcement will be funded and how the works to ensure the Decent Homes Standard will be administered or paid for. Similarly, the introduction of a new Ombudsman for private landlords to resolve disputes could be a positive step forward but experience from the Housing Ombudsman, under-resourced and under-powered and struggling to keep up with the flow of escalated complaints from social landlords, suggests that unless this is properly funded this will create more uncertainty for renters.

The Social Housing Regulation Bill attempts to give more focus on consumer standards. With plans to enable the Regulator to intervene with landlords who are performing poorly on consumer issues there is hope for the many residents who struggle to secure a decent level of repair service from their landlord.  This is a u-turn from the Coalition Government’s abolition  of the Tenants Services Authority in 2010.  The impact of this Bill will only really be felt by tenants once the new powers and functions come through the Social Housing Regulator. Labour Housing Group will work with Labour MPs to make the case that the Social Housing Regulator is properly funded to deliver this expanded role. 

Enabling the Regulator to inspect landlords is encouraging – the tenants that I represent who receive a poor repairs service would welcome the chance to call for an inspection and to see the outcome of that inspection. This Bill still has gaps.  There is no stated role for Local Authorities or Local Councillors who are often the first to hear about the impact of poor consumer standards.

It is also silent on the role of local authorities with housing association disposals – local authorities have a responsibility to assess housing needs for their local areas and planning powers to secure affordable homes but there is no requirement for housing associations or the Social Housing Regulator to consult local authorities on the impact of disposals. Finally, this Bill is a missed opportunity to invest in tenant engagement including a requirement for tenants to be on Housing Association Boards or to have a say on local management decisions.

The Levelling Up and Regeneration Bill promises mostly administrative changes to monitoring levelling up, alongside tinkering at the edges of the planning system. Anyone committed to seeing more affordable homes built will despair at the lack of ambition from this Bill. The idea of organising votes on a street by street basis to determine planning applications will just bring in unnecessary bureaucracy to an under-resourced planning system.

The focus should have been on supporting clear policies which prioritise affordable homes and high-quality design standards.  We await the detail on how the Bill will support local authorities to bring empty premises back into use and support the high street – currently local authorities have broad powers to support regeneration and so it’s difficult to see what more will be added which would have a meaningful impact.

It is positive that the Energy Security Bill proposes to appoint Ofgem as the new regulator for heat networks. I represent residents in new build homes who have no control over their energy prices and no powers to demand transparency over costs or choice of provider.  The appointment should go further and provide clear local involvement for consumers so that they have a say in their energy provider. There is a huge gap in making plans to insulate and retrofit existing homes so that they are more energy efficient.  Only a street by street, block by block programme, with sustained investment from national Government will secure the reduction in energy use that is needed to get to Net Zero.

It’s clear what’s missing from this legislative programme.  The Government has failed to address the issue of short term lets, which is eroding the availability of affordable homes across the country, particularly in London and areas with a growing tourist economy.  The Government’s failure to really grasp this issue and tackle the impact on housing supply and on communities lets down both homeless families and those hoping to join the housing ladder. 

It is unsustainable for short term lets platforms to continue operating in central London without further regulation.  There is a gap where there should be a long term commitment to investment in genuinely affordable council and social housing.  This should be delivered through Government co-ordination of major new housing schemes alongside a sustained funding stream.

Going forward, Labour Housing Group will work with the Labour front bench and Labour MPs to make the case for the strongest possible action within these Bills to address the housing crisis.

<strong>Rachel Blake</strong>
Rachel Blake

Rachel is a Labour and Co-operative Party Councillor in Bow East and is Vice-Chair of the Labour Housing Group.

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Rent controls: a retrospective

For more than 70 years, between the First World War and the late 1980s, the United Kingdom had a system of rent controls for private sector tenants.  The policy was, on almost every metric, a success – argues Nick Bano.

This middle portion of the 20th century stands in stark contrast to the housing conditions of the 21st: unlike today, there was no great housing or homelessness crisis; and the ‘homes fit for heroes’ and mass squatting campaigns of the 1940s and 1950s alleviated the worst of the of the scarcity caused by bomb damage.

In fact, as the brilliant 1939 film Tenants In Revolt shows us, mid-century working class housing campaigners were actively calling for “luxury flats” – a demand that has now become anti-gentrification groups’ ultimate bogeyman.  While today’s campaigners are forced to make insipid calls for the barest essentials of homelessness reduction, tenants under a rent control regime had moved on to demanding luxury.

Potted history: a consensus for rent controls

In 1915, reeling from a powerful rent strike movement in Glasgow that held the wartime government in check, Asquith’s administration passed the Rents and Mortgage Interest Restriction Act.  While it was designed a measure against wartime profiteering, the spirit of the 1915 Act remained in force almost uninterrupted until rent controls were finally dismantled in 1988.  Importantly, the government realised that rent controls have to go hand-in-hand with relatively secure tenancies, to stop landlords from escaping the law by evicting tenants and re-letting at a higher rent.  The 1915 Act therefore introduced security of tenure, too.

The rent control mechanism was immediately recognised as being important, popular and successful.  Just three years later the 1918 Hunter Committee found majority support for rent control among tenants and – strikingly – among landlords, too.  As a consequence, Parliament amended the 1915 Act slightly in 1919, before proper new legislation re-establishing rent controls (the Increase of Rent and Mortgages (Restriction) Act) was passed under Lloyd George’s Liberal-Conservative coalition government in 1920.

Again, Parliamentary inquiries (the Onslow Committee of 1923, the Marley Committee of 1931 and the Ridley Committee of 1937) acknowledged on the broad success of the measures, and recommended the continuation of the rent control scheme (with some adjustments to the mechanics, and an increase in the number and type of de-controlled tenancies).  This slight watering-down was then reversed in 1939, as war loomed again.

After the Second World War rent controls remained in place. They continued to function reasonably well for more than 10 years, even after the Blitz had caused a genuine and serious scarcity of homes.  Neither the 1945 Labour government, nor the Conservative government that followed, abolished them.

The following Tory government, however, seriously weakened the system under the Rent Act 1957: rent controls were abolished for all new tenancies, and some more expensive existing tenancies.  This led to the system of ‘Rachmanism’ – where tenants were bullied out of their homes (or bullied into accepting new rents) – which effectively forms the model of the current oppressive system of ‘shorthold’ tenancies.  A new Labour government in 1964, however, re-introduced rent controls in short order.

The high point came in 1974.  Following yet another glowing report on the functioning of rent controls (by Hugh Francis QC in 1971), a Tory government extended rent controls to furnished as well as non-furnished accommodation.

The destruction of rent controls in 1988

By the mid-1980s the Thatcher government had decided that it wanted to create a housing market that wasn’t restrained by rent stabilisation measures, the disastrous effects of which we are experiencing today.

The genius of the Thatcher regime was that it never actually destroyed rent controls.  They still exist, although the controls are (unsatisfactorily) tied to the market rate: a tenant who disagrees with a proposed new rent is still entitled to complain to a tribunal, and the tribunal will not let the new rent exceed the market value.  But the 1988 Housing Act destroyed security of tenure, which is crucial to the functioning of a rent control system.  Landlords know that they can avoid the rent control measures by simply demand a new rent – any rent they like – and that they can evict the tenant quickly on a ‘no fault’ basis if they can’t or won’t pay the higher rate.  As a result, the formal system of controlled rent increases is almost never used.  Rent control was abolished by the back door.

For the last 30 years we have not just had a lack of effective rent controls.  Instead, because Thatcher’s aim was to generate a profitable housing market, the current system has rising rents by design.

A second, odd effect of the 1988 Act settlement is that rent controls became controversial.  That never used to be the case.  For most of the 20th century, opposition to rent controls was the exclusive domain of landlords, war profiteers and hard-line Tories. But since the 1990s there has been a looming sense that we are all Thatcherites now: that anyone who advocates a return to a long-standing legislative programme (propped up by decades’ worth of inquiries and reports) was somehow radical.

A shrinking private rented sector is a victory

The major effect of the rent control regime was the decimation of the private rented sector.  By the 1980s it had fallen to just 8% of homes in the UK.  This is, for anyone who is not a landlord, a triumph.  Privately rented housing is the least secure and most expensive form of tenure, and anyone who is housed elsewhere is almost certainly better off for it. 

How does this reduction happen?  Rent controls restrain the profitability of landlordism, and some landlords flee the market.  But a reduction in the number of rented homes does not, of course, reduce housing supply: ‘disappearing landlords’ do not cause homes to be knocked down or to be left unoccupied.  As the Bank of England’s John Lewis and Fergus Cumming explain here:

“Some landlords will sell up as letting becomes less lucrative. But at the end of each sales chain is either another landlord or someone who was previously renting. If it’s another landlord, aggregate rental supply and demand are both unchanged, and so are rents. If it’s a new owner occupier, the supply of rented property has shrunk by one, but so has the number of renters. The tightness of the rental market and thus rents are unchanged”.

Even if this happens on a large scale, the glut of supply caused by retreating landlords will necessarily reduce house prices.  It is this policy, rather than the proven failures of help-to-buy, shared ownership and high-end speculative development, that will achieve various governments’ stated aim of increasing home ownership.  The contemporary history of the UK shows this to be correct, and no amount of abstract economic modelling can erase that.

There will always be people who prefer to rent privately, of course, and the market has always catered for them.  But those generous souls who would prefer to pay off a landlord’s mortgage rather than their own presumably make up a figure much closer to the 7% of the population that rented privately in the mid-1980s than the 20% (4.5 million households) forced to rent privately today.

The Renters’ Reform Bill

In 2019 it became both parties’ policy, and then a formal Queen’s Speech commitment, to abolish ‘no fault’ evictions.  In other words, we can expect some form of security of tenure to be restored to private tenants.  As set out above, security of tenure is the missing piece of the still-existing rent control framework (without ‘no fault’ evictions, unless the tenancy agreement has a provision for rent increases, landlords will have little choice but to increase rents by the formal, controlled system of statutory notices).

So the good news is that the Tories – whether they realise it or not – have now reverted to their 20th century position: they are now within the consensus that supports rent controls.  I, for one, welcome them back into the fold.

<strong><span class="has-inline-color has-accent-color">Nick Bano</span></strong>
Nick Bano

Nick Bano is a lawyer and housing activist.

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