Renters' Rights Bill

Written evidence submitted by the Large Agents’ Representation Group to The Renters’ Rights Public Bill Committee (RRB32).

1.0 About LARG

1.1 The Large Agents' Representation Group (LARG) comprises the largest letting and estate agents in London and the South East. Its members are: Chestertons, Hamptons, Kinleigh Folkard and Hayward, Knight Frank LLP, and Savills (UK) Ltd.

1.2 Collectively these firms are responsible for a substantial amount of activity in the letting sector, particularly in the largest market in London and the South East, with over 100,000 active tenancies under management between them at any one time, as well as the countless tenancies that they arrange but do not manage.

2.0 Executive Summary

2.1 We agree with the Government’s core objectives for reform of the private rented sector , namely that tenants should have housing of a decent standard, that they should have greater stability and should feel confident to challenge the practices of the small minority of landlords and agents who bring the sector into disrepute.

2.2 Given that there is a severe supply crisis in the private rented sector, with demand for private rented housing massively outstripping supply, it is important that responsible landlords feel that there remains a long-term value in staying within the sector to maintain the desperately needed supply of properties to rent.

2.3 The sector will need sufficient time to prepare for the system replacing Section 21. A point that the Housing Minister rightly alluded to at Second Reading. Given this, we are calling for the Government to begin now the work consulting the sector on the property work that will be required to ensure a smooth transition to the new system.

2.4 Ending Section 21 repossessions will lead to more possession cases needing to be considered by a court system which is failing both tenants and landlords. Current possession claims are taking around 7 months to process through the courts and tenants are struggling to access the legal aid support they need.

2.5 The Housing Minister has pledged to ensure the courts are "ready" for the impact of the changes, but clarity is needed about what the Government believes the system being "ready" means in practice for both tenants and landlords.

2.6 We welcome the Bill’s provision to develop a new database of private rented properties and landlords. In designing it, the Government needs to make it easy for responsible landlords to demonstrate compliance with all their obligations, and for tenants to identify properties that meet all the legal requirements.

2.7 The Government has rightly proposed new repossession ground 4a to ensure that landlords renting to students in ‘off-street’ accommodation can be assured of vacant possession in order to rent properties out at the start of each academic year. However, this will not be applicable to one- and two-bedroom properties. This is despite around a third of all houses/flats in the student market consisting of one- and two-bedroom properties. Ground 4a should therefore be applied to all types of off-street student housing.

2.8 The Bill extends the amount of rent a tenant can build before a landlord can begin proceedings to repossess a property from 2 to 3 months. Rather than allowing arrears to grow further, with the damage that could cause for the tenant with regards to their credit score, we believe the 2 month period should be retained, but with an obligation on landlords and agents to work with tenants to help resolve rent arrears problems at the first sign of them developing. The degree to which landlords and agents genuinely seek to engage and support the tenant should be taken into account by the courts.

2.9 Where landlords use the planned ground to repossess a property to sell it, the Bill includes a ban on re-letting the property for 12 months where it is used. This is to prevent the ground being abused. However, there are cases where landlords make every effort to sell a property but the transaction falls through as due to no fault of their own. Figures suggest that as much a 35% of all house sales fell through last year.

2.10 In such circumstances, and given the extent of the housing crisis, the Bill should be amended to ensure that where landlord property sales fall through, they should be able to bring the property back into use as soon as possible. This will prevent homes for private rent remaining needlessly empty.

2.11 The Bill states that when fixed term tenancies end, renters can give notice to leave a property where they give written notification to a landlord, without specifying what that looks like. It means that tenants could serve notice simply by sending a WhatsApp or social media message to a landlord or letting agent, which can sometimes be difficult to validify. We are calling for the Bill to give the Secretary of State the power to specify the way in which tenants should be required to give notice.

2.12 The Bill permits local authority officers to enter any rental business without a warrant and without any belief that an offence is being committed, and then to inspect or seize documents found there. The right to enter without a warrant and without any belief that an offence is being committed is a substantial power and one which is not normally available in other contexts. There should be a requirement that the officer only seeks entry in pursuit of a reasonable belief that an offence has been committed.

3.0 Rental Reform Needs to Work for All

3.1 We agree with the Government’s core objectives for reform of the private rented sector , namely that tenants should have housing of a decent standard, that they should have greater stability and should feel confident to challenge the practices of those landlords and agents who bring the sector into disrepute.

3.2 Likewise, we concur with the Government ’s acknowledge ment that landlords need to have adequate rights of re-possession where they have good cause to do so , and we support efforts to improve enforcement of the wide range of powers already available to tackle rogue and criminal landlords.

3.3 The Bill is being considered against the backdrop of a chronic shortage of homes for private rent to meet demand.

3.4 The latest data from Zoopla suggests that there are an average of 21 tenants and prospective tenants chasing every available home to rent [1] . This is more than double pre-pandemic levels. Just this month, Tina Paillet, President of the Royal Institution of Chartered Surveyors noted that RICS latest survey results "continue to highlight the pressures on renters, with demand consistently outstripping supply." [2]

3.5 Apart from denying tenants the choices they deserve about where to live and driving up rents, the mismatch between supply and demand is making it more difficult for tenants to hold rogue and criminal landlords to account, given the lack of alternative accommodation for them to move into.

3.6 In light of this, it is more important than ever that reforms to the rental sector ensure that responsible landlords feel there remains long-term value in staying within the sector, whilst also meeting the Government’s objectives. The two are not at odds with each other.

3.7 To ensure the confidence of responsible landlords, the regulatory changes envisaged in the Bill need to be workable, fair to all, proportionate and introduced in such a way that the sector has sufficient time to prepare and adjust to them.

3.8 Whilst we welcome the Government’s commitment to supporting responsible

landlords, and its efforts to ensure landlords can regain possession of their properties effectively where they have good cause, a number of further changes are needed to the Bill to ensure the entire reform package works.

4.0 Ensuring a Smooth Transition to the New System

4.1 The changes contained within the Bill represent the most significant overhaul of the sector for over 30 years.

4.2 The biggest barrier to overcome will be how the changes are implemented to ensure a smooth and seamless transition to the system replacing Section 21.

4.3 We welcome the Housing Minister’s commitment at Second Reading that the Government’s intention "is to give the sector as much notice as possible" in respect of implementation of the Bill. The sector will need as much time as possible to undertake the preparatory work that will be involved in changing all private rented tenancies.

4.4 Practically, there are only a handful of firms in the country who will be able to undertake the work needed to help update tenancy agreements for 4.6 million households. Other preparatory work will need to include:

· Reviewing and, if needed, ending any subletting arrangements.

· Ensuring all necessary secondary legislation and guidance is published.

· Insurance and mortgage providers adjusting their policies and rates and updating systems.

· Solicitors getting to grips with the new possession requirements.

· Courts adapting procedures for an influx of in-person hearings.

· Training to be provided for property professionals.

· Landlords, agents, tenants and councils getting up to speed on the new procedures and agents updating internal processes, documents, CRM systems and IT systems.

4.5 Given the Government desire to progress with implementation of the end of Section

21 as swiftly as possible, we are urging it to consult with the sector now, so that it has a clearer idea of what will be required of it and can begin working towards this, rather than only being able to start making the changes needed after Royal Assent.

5.0 Preventing the Justice System Becoming Overwhelmed

5.1 The courts system is already facing huge backlogs. Ending Section 21 will put an even

greater strain on the courts which will need to consider and process all possession cases where landlords have good cause, known as the ‘Section 8’ process. The LUHC Select Committee warned last year that the courts and tribunal system would be "overwhelmed" without reform [3] .

5.2 Government data suggests that it takes the courts an average of just over seven

months to process Section 8 possession cases, from a case being accepted to the property being repossessed [4] . This includes cases related to anti-social behavior and serious rent arrears. In reality, the time is much longer given it excludes the time it takes between a landlord submitting papers to the courts and them being accepted, which the Government does not routinely measure.

5.3 Renters too struggle to access the help they need when cases go to court. According to the Law Society almost 44% of people in England and Wales have no housing legal aid provider in their area [5] .

5.4 Speaking recently to LBC Radio, the Housing Minister pledged that the Government is working "to ensure that the court system is ready at the point that the new system comes into effect." [6] Whilst we recognise that improving the courts will not be a pre-condition of Section 21 ending, at the very least we call on the Government to:

· Define what it believes the court system being "ready" looks like for renters and landlords.

· Commit to seeing waiting times falling when it comes to the courts considering and processing legitimate possession cases.

· Improving court and tribunal staff recruitment and access to legal aid support for renters.

6.0 Ensuring the Database of Private Rented Housing Works

6.1 We welcome the Bill’s provision to develop a new database of private rented properties and landlords. In designing it, the Government needs to make it easy for responsible landlords to demonstrate compliance with all their obligations, and for tenants to identify properties that meet all the legal requirements. To assist with this:

· Gas and electrical safety certificates should be fully digitised to easily integrate with the database.

· Letting agents should be able to upload all required information to the database on behalf of the landlords they work for.

· The database should avoid duplicating the information sought and held for various landlord licensing schemes.

· The database should make it easy for landlords to apply for licenses from local authorities without having to re-enter the same data.

 

7.0 Protecting the Student Housing Market

7 .1 According to the Higher Education Statistics Agency, 31 % of students lived in privately rented properties that were not purpose built in 20 22/23 [7] .

7 .2 Given the nature of the academic year and the student housing market, private

tenan cies are typically agreed months in advance of the start of a new year of study , before the current ten ants have moved out.

7 .3 Whilst the Bill allows Purpose Built Student Accommodation (PBSA) to continue with

fixed term tenancy agreements, this will not be allowed for ‘off-street’ student housing. Instead, it propose s a new ground for possession (4a) to enable landlords to secure vacant possession , so they can be assured that properties will be available to rent at the start of each year.

7 .4 Whilst we welcome the new ground for possession , we are concerned that , as it stands, it will only apply to houses of multiple occupation (HMOs) with three or more people living in them. It will not be possible to use the ground for one- and two-bedroom student properties . According to the accommodation search engine, accommodationforstudents.com, around a third (32%) of all house and flat listings on the platform consist of one- and two-bedroom properties [8] . That is a considerable proportion of student housing where landlords will have no certainty that properties will be available to rent out at the start of each academic term.

7 .5 In view of this, we are calling for ground 4a to be extended to included one- and two-bedroom properties with the following amendment:

In Schedule 1, page 160, line 13, after the second instance of "HMO" insert "or is occupied by no one else other than one or two students".

7.6 In addition, the way the end of S ection 21 is implemented will be especially important in the student housing market. It is vital that landlords renting properties to students do not find themselves u nable to bring an existing student tenancy to an end for the start of the academic year starting in autumn 2025 owing to Section 21 having gone without the ability to use ground 4a until a new tenancy agreement is created.

8.0 Preventing Rent Arrears

8.1 As a result of the Bill, landlords will need to wait until rent arrears amount to 3 months’ worth of rent before being able to start proceedings to repossess a property , up from 2 months at present. The notice period to tenants will also increase from 2 to 4 weeks.

8.2 That means responsible landlords face the prospect of arrears having to amount to four months of rent before being able to begin the process of making a claim to the courts , with all the subsequent waits as outlined in section 5 of this submission . It means landlords could be faced with having to see upwards of a years’ worth of lost rent before being able to regain a property. That is not "levelling the playing field" between responsible landlords and tenants , as the Bill sets out to do .

8.3 Rather than allowing rent arrears to grow, with all the implications that could have on a tenant ’ s credit score, we believe more should be done to focus on address ing rent arrears as soon as they begin to develop. As such , we are calling for the following:

· The Government to work with the courts and the sector more widely to require landlords, and agents acting on their behalf, to follow a ‘Pre-Action Protocol’ at the first sign of a tenant building rent arrears. This would place an obligation on them to work with the tenant to help them address their rent arrears, such as through ensuring they are receiving the benefits they might be entitled to , agreeing rent re-payment plans , or supporting them to access suitable debt advice services. This should be supported by access to suitable mediation where needed.

· Local Ho u sing Allowance rates to remain pegged to at least the 30 th percentile for the duration of this Parliament.

· T he amount of arrears a tenant would need to build before a landlord could serve notice to repossess a property to remain at 2 months . Whilst this would be a mandatory ground, we do not believe it should be available to a landlord where the courts decided that:

o The landlord, or agent on their behalf, had failed to meaningfully , and in good faith, engage in early discussions with their tenant.

o Where a landlord or agent had refused a reasonable suggest ion by the tenant, or a representative on their behalf, as to how they could repay their rent arrears.

This could be achieved with the following amendment :

In Schedule 1, page 170, line 4, omit sub-clauses 1(a) and 1(b)

· Where a tenant did not abide by the terms of any agreement via the Pre-Action Protocol , the landlord should then have recourse to an accelerated procedure to repossess their property through the courts if needed.

8.4 In addition to the above, the Bill introduces a condition that if a tenant’s arrears are only because a Universal Credit payment that they are entitled to has not yet been paid, they cannot be evicted . The Government needs to clarify how a landlord will know if arrears are due to a Universal Credit payment having not been made.

9.0 Reletting a Property That Cannot be Sold

9.1 Where landlords use the planned ground to repossess a property to sell it, the Bill includes a ban on re-letting the property for the following 12 months. This is to prevent the ground being abused.

9.2 However, there are cases where landlords make every effort to sell a property but the transaction falls through due to no fault of their own. Figures suggest that as many a s 35% of all house sales last year fell through [9] .

9.3 In such circumstances, and given the extent of the housing crisis, the Bill should be amended to ensure that where landlord property sales fall through, they should be able to bring the property back into use as soon as possible. It would serve no one’s interest to add to the already high number of empty homes.

9.4 In view of the above, we propose the following amendment:

In clause 13, page 19, line 15, at the end of the line add

",or

(iii) the dwelling-house has been available for purchase on the open market at a fair market price for not less than three months and the landlord has not been able to complete a purchase for the dwelling-house."

10.0 Means of Tenants Giving Notice

10.1 Clause 20 of the Bill states that when fixed term tenancies end, renters can give notice to leave a property where they give written notification to a landlord, without specifying what that looks like. It means that tenants could serve notice simply by sending a WhatsApp or social media message to a landlord or letting agent, which can sometimes be difficult to validify .

10.2 We are calling for the Bill to give the Secretary of State the power to specify the way in which tenants should be required to give notice. This could be achieved with the following amendment:

Clause 20, page 32, line 4, delete sub-clauses (1) and (2) and replace with:

"(1) A tenant may give notice in writing to quit premises let under an assured tenancy on paper, by email, or by any other method that the Secretary of State may prescribe in regulations made for that purpose and any provision which seeks to restrict a tenant to using any specific method of giving notice in writing is of no effect."

11.0 Warrantless Access to Lettings Businesses

11.1 The Bill permits local authority officers to enter any rental business without a warrant and without any belief that an offence is being committed , and then to inspect or seize documents found there.

11.2 The right to enter without a warrant and without any belief that an offence is being committed is a substantial power and one which is not normally available in other contexts. The following amendment would require that the officer is pursuing entry in pursuit of a reasonable belief that an offence has been committed :

Clause 115, page 132, line 25, insert at end of line:

"and

(c) the officer reasonable believes that the business may have information about or be involved in the commission of an offence related to private sector residential accommodation."

October 2024