My Lords, I assist Modification 1 within the names of the noble Lord, Lord Hacking, the noble Baroness, Girl Scott of Bybrook, and the noble Lord, Lord Jamieson. As talked about beforehand, I’ve an curiosity as a landlord of over twenty years, and as a former renter within the non-public rented sector for some 16 years, I’ve a mixed expertise within the PRS of 40 years.
The modification earlier than your Lordships’ Home would permit a tenant and landlord to mutually agree a hard and fast time period, as we have now simply heard, whereas limiting the owner’s capability to regain possession of a tenanted property. It might additional imply that the owner wouldn’t have the ability to improve the lease over the interval of the mounted time period. Very many tenants would welcome such agreements and the elevated safety it might give them. Beneath the proposed periodic tenancies, after 12 months tenants would don’t have any safety as the owner can search possession on a lot of grounds.
Polls have proven {that a} majority of tenants and landlords need to have mounted phrases, and His Majesty’s Authorities have given no purpose why they assume they know greatest. The arguments towards mutually agreed agreements on mounted tenancies are, frankly, unconvincing and threadbare. They end in extra, not much less, safety for tenants, and fewer likelihood of familial disruption. The Renters’ Rights Invoice rightly cracks down on rogue landlords, improves requirements within the PRS and seeks to make sure a good, workable and sustainable rental market.
Noble Lords might recall my Modification 173 in Committee, which known as for tenants to provide discover not sooner than 4 months after agreeing to an assured tenancy, leading to a minimal tenancy of six quite than two months. Why are the Authorities insisting that six months can be a catastrophe, as beneath immediately’s assured shorthold tenancies, however two months might be a panacea? The end result of completely two-month periodic tenancies might be much less safety for tenants and landlords alike, and better rents.
Whereas I settle for the necessity for flexibility for tenants, I don’t see why a further 4 months needs to be thought to be so unacceptable by the Authorities. Accountable landlords require the understanding of a minimal interval to defray the price of establishing a brand new tenancy. Many of those prices are one-off and can’t be handed on to the tenant beneath the Tenant Charges Act 2019. These cowl issues corresponding to cleansing, inventories, referencing, credit score checks, admin and so forth. A better turnover of tenancies beneath periodic tenancies, and the monetary dangers related to it, will in any other case put up rents. All long-term tenancies might doubtlessly flip into quick tenancies and the owner must issue that into the lease. One other concern of landlords might be if a tenant quits in the midst of winter, when a lot fewer tenants are looking for rental properties. Leases are sometimes seasonal, and longer void durations would be the end result. Once more, this might be mirrored in greater rents.
Ministers argue that it’s extremely unlikely that tenants will transfer out and in of rental properties, in impact turning long-lets into short-let properties. However that’s precisely what is going to occur in lots of circumstances, particularly in coastal resorts and metropolis centres, already stricken by Airbnb and different short-let platforms. Figures produced by Hamptons present that properties being marketed as short-term lets are marketed at costs on common 49% greater than the identical sorts of property for long-term lease. Within the London Borough of Camden, short-lets can price 4 instances greater than long-lets. Deposits for short-let properties are about the identical as these for long-term lease. This could make it cheaper for tenants to simply lease a long-term property for 2 months than safe a brief let for a similar interval.
To recommend that folks is not going to sport the system is naive. Why would short-term tenants volunteer to pay as much as 4 instances the quantity of lease after they can save themselves 1000’s of kilos taking a property marketed for long-term rental for simply two months and even much less? On day one of many tenancy, they are going to have the authorized proper to provide two months’ discover. Two-month interval tenancies will open the floodgates to authorized backdoor quick lets which might be inconceivable to police. It will produce other implications, which we’re already witnessing. Landlords will gravitate more and more to short-let platforms corresponding to Airbnb that are extra worthwhile than lengthy lets and just about unregulated.
With the related abolition of upfront funds, which can make susceptible folks, the self-employed, pensioners and college students—together with overseas college students—unable to show their revenue, why ought to many landlords proceed to take the danger when there’s a extra worthwhile different? In any occasion, solely 7% of tenants pay something up entrance, so I miss out on why that is additionally a problem for HMG. Banning upfront funds, which your Lordships will talk about later, was very a lot a last-minute authorities modification within the different place, and I think it was badly thought via.
All it will end in fewer long-term leases being out there to tenants, much less safety and a profound scarcity of lengthy lets for native folks in vacationer hotspots. It’s already occurring, as folks in Cornwall, Devon and Wales will know.
Nothing within the Invoice will improve the provision of rental property within the PRS which, by some estimates, wants an additional 50,000 leases per 12 months simply to face nonetheless. A six-month minimal tenancy would underpin the viability of the PRS and make sure that extra properties, not fewer, are offered for these tenants who want and desire a long-term house.
These needs to be the place folks want properties; these landlords coming into the market in the mean time are likely to chase greater yields within the north, ignoring the south, the place purchase to let is quickly turning into unprofitable. A six-month minimal mounted tenancy, if mutually agreed, provides all events loads of flexibility. Because the noble Lord, Lord Hacking, talked about, many tenants favor to have even a 12-month mounted tenancy to provide them added safety.
The modification would additionally implement a suggestion by the Levelling Up, Housing and Communities Committee in its report on reform of the PRS in 2023, chaired by the very educated Labour MP, Clive Betts. The advice was
“that tenants be unable to provide two months’ discover to depart till they’ve been in a property for a minimum of 4 months”.
It famous:
“It will give landlords the authorized certainty of a minimum of six months’ lease at the beginning of the tenancy”.
After this era, the tenancy settlement might proceed on a periodic foundation as envisaged by this Invoice.
I concern that, except His Majesty’s Authorities amend the Invoice on mounted phrases and upfront funds, it’s going to make the PRS unstable, unsure, more and more costly and fewer viable, which might be unhealthy for each tenants and landlords. Sadly, His Majesty’s Authorities are exhibiting no signal of introducing the numerous amendments mandatory. Because the noble Lord, Lord Hacking, stated, the Authorities hear however take no discover. As we have now seen within the different place, this doesn’t all the time work out nicely.
On 28 April, the noble Baroness the Minister, who can’t be accused of not listening, advised the Committee:
“We’re dedicated to robustly monitoring and evaluating the influence of our reforms. We retain powers to amend these measures ought to the proof come up that they’re having a big influence on a selected group … We preserve the powers to amend, ought to we have to”.
I hope that His Majesty’s Authorities bear this very a lot in thoughts, earlier than a number of the unintended penalties and regrettable flaws within the Invoice see the sunshine of day. I used to be simply one among 26 Friends who voted towards HS2 in your Lordships’ Home, and it provides me little or no pleasure to say after the occasion “I advised you so”.
