Renters' Rights Bill

Supplementary written evidence submitted by Michael Crofts BSC(Hons), ARICS (retired) (RRB33)

Today I watched the morning and afternoon committee hearings and I was impressed by the grasp of the issues shown by members of the committee. I am particularly impressed by the Minister who I think is doing his best to make sure this bill improves the PRS despite the impossibility of achieving lower rents for tenants due to the shortage of housing in the UK.

I know the committee must be flooded with paper but I hope the following may be of practical use.

1. Grounds 1 (occupation) and 1A (sale) – evidence of intention

1. Mr. Giles Peaker expressed concern about the wording of grounds 1 and 1A in schedule 2 of the 1988 Act as amended by the bill, because these grounds are based on a landlord's intention. Mr. Peaker questioned whether this was sufficiently robust.

2. The Minister replied that the government's thinking has been 'Let's trust judges', and 'It's not the usual practice for the government to force the courts to consider certain types of evidence'. But he also asked where the government might go to try and influence courts to look at certain types or categories of evidence to ensure the grounds are being used appropriately and I can answer that question from my experience.

3. This issue has arisen over the last 70 years in the implementation of section 30 of the Landlord & Tenant Act 1954 which deals with landlords' opposition to tenants' requests for renewal of business leases. The grounds for opposition in subsections 30(f) and (g) apply where the landlord intends to demolish or reconstruct, or occupy for its own business. The 1954 Act does not direct the court to require any particular evidence of intention. The sort of evidence of intention which the courts expect to see is well known and lawyers are able to advise landlords whether they have enough and the right sort of evidence to succeed in opposition under these grounds. I am confident the same will happen when this bill passes and the courts consider applications on ground 1 or 1A.

4. I support the proposal that there should be a rent-free period of 2 months granted to the tenant when a landlord relies (and succeeds) in obtaining possession on ground 1 or 1A.

2. Section 30

1. Justin Bates KC criticised s.30 of the bill and proposed an alternative solution to the problems it was presumably drafted to solve.

2. He is right. It is a loophole. I was astonished to see it in the bill. I was planning to use it myself. Now that the government is aware of it I'd better not.

3. Guarantors and rent insurance

1. Tarun Bhakta of Shelter suggested that the requirement for guarantors or rent insurance excludes some people from the PRS. I agree, but the only reason we ask for guarantors is when we do not have 100% confidence in the tenant's ability to pay the rent.

2. My wife & I do not insure rents but we apply the same criteria as the insurers to assess the risk of tenant default, and we will not accept tenants who we think might default. We are not a charity.

3. In our small portfolio of 4 properties we regard three tenants as being, in the jargon, "good covenants" and we do not have guarantors for them. We insisted on the fourth tenant providing a guarantor because she is subject to an Individual Voluntary Arrangement - ie: she became insolvent previously. If we are not allowed to ask for guarantors, and we are somehow forced to accept tenants who we don't entirely trust, then we will sell.

4. Database

1. The Minister said today that he welcomed discussion of matters which will eventually be settled by secondary legislation, and one of these is the database.

2. Evidence was given today [1] that there is inadequate information about actual (as opposed to asking) rents, and this hampers the tribunal's determination of applications under s.14.

3. I agree. For many years I dealt with rent reviews of both commercial and residential properties. Collecting comparable evidence was difficult and time-consuming. It depended on goodwill between networks of agents and the evidence was sometimes unreliable. In the PRS there is no such network and while individual letting agents have knowledge of the rents achieved on their new lettings there is no general information available. Most landlords pitch asking rents at a level based on other asking rents seen online and this may be contributing to rent inflation.

4. If the database were to include details of actual rents being paid together with information about the property it might help tenants evaluate asking rents, and it might make decisions on s.14 applications easier. I suppose that HMRC might also like to see that information.

5. If rental evidence were to be included on the database there would also have to be a description of the property. This ought to allow scope for information to be entered about unusual and peculiar features beyond a pre-determined "tick box" checklist.

6. Liz Davies KC referred to uncertainty about what information on the database might be available to the public. She said, 'Having the information, when we know what it is, publicly available is extremely important because it holds landlords to account.' I understand this but I repeat what I said in my first submission - it is vital that the public does not have access to landlords' names and home addresses. This would make us an even more tempting target for scammers and those who object to private ownership of rented houses. As landlords my wife and I will accept most of the changes proposed by the Renters' Rights Bill, but we are well past retirement age and we are very worried about public access to our names and our home address.

22 October 2024