Renters' Rights Bill

Written evidence submitted by The National Housing Federation (NHF) to The Renters’ Rights Public Bill Committee (RRB75)

Summary

 

The National Housing Federation (NHF)   supports the government’s ambition to give greater rights and protections to renters and to value the contribution made by responsible landlords , through the Renters’ Rights Bill. While mainly aimed at reforming the Private Rented Sector (PRS), the Bill will affect housing associations because they use assured tenancies. Housing associations provide homes for people in housing need , including people with high support needs. With government support over the last thirty years , housing associations have developed new homes for people whose need is not met by the private market . T he legislation must not have any unintended consequences for housing associations and their tenants .

T his has clearly been understood and care been taken in drafting the Bill to minimise impacts on social housing and social housing tenants , and the NHF is grateful for the engagement with these issues from M HCLG , however t here remain some areas that will impact on housing associations’ ability to provide decent, secure, affordable homes for people who need it most . These relate to:

· Changes to rent increases.

· Referral of social sector rent increases to the FTT.

· Ground 1B – Rent to Buy.

· Ground 6 – Redevelopment.

Our asks are:

· Make the propos als around rent increases clearer or change them , to retain Registered Providers ’ ability to increase rents in a harmonised way.

· Remove the option to refer social housing rents to the FTT , to avoid overwhelming the FTT with rent challenges it cannot determine.

· Extend Ground 1B to apply when the provider converts the social rented home to another rental product , and amend the definition of "Rent to Buy Agreement".

· Make Ground 6 available to Registered providers in all cases , clarify whether a "superior landlord" can be a Registered provider and introduce a ground to facilitate moves back out of alternative accommodation .

Introduction

 

1 The NHF is the voice of England’s housing associations – not-for-profit social landlords. Our members believe everyone should be able to live in a good - quality home they can afford , and provide 2.7 million homes for six million people w ith greater social or health needs than the general population.

2 Housing associations deliver housing types not found in the PRS, for people on low incomes, people needing high levels of support, people in crisis and people needing short-term or emergency accommodation. Most housing association homes are already let on secure periodic tenancies with no fixed term and housing associations are regulated, responsible landlords. 

3 The Renters’ Right s Bill focuses on private landlords but there are areas that affect housing associations because they use assured tenancies as set out in the 1988 Housing Act .

4 The NHF supports the government’s ambition to give greater rights and protections to people renting their homes and to value the contribution made by responsible landlords who provide quality homes , and is grateful for the engagement from the government on the reforms.

5 C are has clearly been taken in drafting the Bill to minimise negative impacts on social housing and social housing tenants , h owever, we still have concerns about some aspects of the Bill that will affect housing associations’ ability to operate effectively and provide decent, secure, affordable homes for people who need them most . These relate to the changes to rent increases, Ground 1B – Rent to Buy, and Ground 6 – Redevelopment.

6 Our asks are:

7 Make the proposals around rent increases clearer or change them ( clarifying the use of ‘may’ and that the agreement covers all increases and using ‘rent period’ not ‘tenancy period’ ) , to retain Registered providers ’ ability to increase rents in a harmonised way , to avoid impacts on the supply of social housing, transparent and easily understood rent levels for neighbours and the ability of social landlords to deliver repairs and maintenance and services to tenants.  

8 Remove the option to refer social housing rents to the FTT , to avoid overwhelming the FTT with rent challenges it cannot determine , as the FTT may only assess a market rent .

9 Extend Ground 1B to apply when the provider converts the social rented home to another rental product , to help meet local housing need , and amend the definition of "Rent to Buy Agreement" so it accurate ly reflect s the Rent to Buy product.

10 Make Ground 6 available to Registered providers in all cases , clarify whether a "superior landlord" can be a Registered provider and introduce a possession ground to facilitate moves out of alternative accommodation into a redeveloped property , so Registered providers can carry out essential works that benefit tenants .

11 It is vital the government ensure these remaining points are resolved and the legislation does not undermine housing associations’ ability to continue to provide homes for their tenants , particularly at a time when social housing landlords face a range of other significant challenges.

12 A note on terminology: " Registered Providers " means Registered Providers of social housing, who are social landlords as defined by the Bill .

Areas of concern

 

Changes to rent increases

13 Housing associations are not-for-profit social landlords. They invest any income back into the development and maintenance of the homes they provide and supporting residents and communities.

14 H ousing association s rel y on rental income for repairs and maintenance, to deliver essential services to residents, and to maintain the financial strength of the sector so it can deliver much-needed social homes . Public grant covers less than 50% of the cost of delivering new homes.

15 Registered providers’ rents are tightly regulated. The Regulator of Social Housing sets the requirements for how registered providers must set and increase rents in line with the government’s Policy Statement on Rents for Social Housing .

16 This policy recognises the need for a stable financial environment to support the delivery of homes. The government looks to the Registered provider sector to make the best possible use of its resources to help provide the homes the country needs.

17 Most housing association tenants live in a home provided by a large-scale landlord – 40% of housing association tenants live in homes provided by the largest 20 housing associations.

18 For reasons of fairness, administrative efficiency, alignment with benefits and utility rates increases , and business certainty to provide repairs, maintenance and services, Registered providers increase all tenants’ rent on the same day (usually in April). Changing tenants’ rent s at different times would mean neighbours would have different rent levels for the same type of home and tenancy, which would create unfairness. It would also mean significant extra costs: planned-for budgets would not be met , jeopardising development and tenant services . Business planning is on an annual basis and is informed by expected annual rent at a uniform level. Rents co ntribute to the cost of delivering homes, by recuperating the capital costs and paying for the ongoing borrowing costs (as public grant does not cover the full cost of development).

19 The Bill helpfully acknowledges this and attempts to provide a mechanism by which Registered providers can still increase rents uniformly across their social housing stock . However, more needs to be done to make sure the new legislation does not inadvertently cause out-of-sync rents in another way .

20 Registered Providers will be permitted to specify the rent increase process via a term in the tenancy or a notice of increase (section 13A notice). Retaining Registered Providers’ ability to use a clause in the tenancy agreement to increase rents provides Registered Providers with a practical method for increasing rents on the same day for all of their tenants.

21 T he option to use a clause in tenancy agreements should be made clearer in the Bill. The Explanatory Notes clarify that contractual clause increases can be used (paragraph 96) but the Bill at s.1 3 A(2) says "For the purpose of securing an increase in rent under a tenancy … the landlord may serve on the tenant a notice …’ . This reflects the wording for PRS tenancies (s.13(2)), where the word ‘may’ is used in its mandatory sense; i.e. the only way the landlord can increase rent is through the s.13 process. In contrast, where it applies to relevant low-cost tenancies (s.13A(2)), ‘may’ is used in a permissive sense; i.e. the landlord can use a s.13A notice, but can also use a clause in the tenancy agreement. The wording should be changed to make it clearer that a Registered provider can serve a notice of rent increase but can also instead use a clause in the tenancy.

22 The Bill (at Section 13A(6)) provides for this method of increase by agreement between landlord and tenant. However, it doesn ’ t make clear whether each increase must be ‘agreed’ or a mechanism for increase in the tenancy agreement covers all increases. The Explanatory Notes suggest the tenancy agreement covers all increases, but the wording in s.13A(6) is not the same as the exclusion of tenancies containing a contractual term for increases in the current legislation (s.13(1)(b) of the Housing Act 1988). The current s.13(1) says:

(1) This section applies to-

b. a statutory periodic tenancy other than one which, by virtue of paragraph 11 or paragraph 12 in Part I of Schedule 1 to this Act, cannot for the time being be an assured tenancy; and

c. any other periodic tenancy which is an assured tenancy, other than one in relation to which there is a provision, for the time being binding on the tenant, under which the rent for a particular period of the tenancy will or may be greater than the rent for an earlier period.

23 A court considering the interpretation of s.13A(6) could assume that Parliament was aware of the current s.13(1)(b) and could find that by using different phras ing in s.13A(6), Parliament intended th e new provision to have a different meaning.

24 The provisions granting social landlords the ability to use a clause in the tenancy agreement to increase rent should be made clearer – clarifying the use of ‘may’ and that the agreement covers all increases .

25 The Bill says new rents must be introduced at the start of a tenancy period (s.13A(2)), as in the current s.13 and proposed revision of s.13 to apply to the PRS .

26 Tenancy periods relate to the day of the week or month a tenancy starts (rather than when the rent is due ). Tenancy start days will vary across a Registered Provider’s homes, which could run to tens of thousands, or more, so the administrative and financial burden of increasing rents on different days is significant. IT systems may not accommodat e increases on different days. Therefore, manual adjustments have to be made.

27 I f Registered providers get the implementation date wrong, the notice is invalid, and the rent may not be increased. Given the low and regulated rents operated by Registered Providers, and the regulated environment they operate in, requiring rent increases to be implemented at the start of a new tenancy period, rather than rental period, is impractical , unnecessary and fraught with risk. There is no risk that Registered providers will falsify the date. The risks are that Registered providers will see increased costs that will have to be met by reducing investment in homes and services.

28 Section 4A says that rent periods and tenancy periods must be the same length, but crucially does not state that they must start on the same day. Section 5(3) causes related problems, because the periodic tenancy starts immediately on the expiry of the fixed-term tenancy. That may not be on the same date as the day on which rent is paid. Using the two phrases, ‘rent period’ and ‘tenancy period’ exacerbates this problem.

29 The Bill should specify that n ew rents should be implemented at the start of rent periods (not tenancy periods). This will make the administration of rent increases more efficient and less likely to disadvantage tenants in the event of an error (different rents from neighbours, Registered provider business plan impacted and less able to provide services to tenants).

30 This is important because it will impact existing tenancies without a rent increase clause in the tenancy agreement , and when fixed-term tenancies are converted to periodic tenancies on Commencement, s.13A will automatically be implied, so there will be no option of using a clause in the tenancy agreement unless a new tenancy agreement is signed.

31 In the Bill, t he date the new rent will take effect is: the date specified in the notice; the start of the next tenancy period after an FTT de terminat ion; or, if the F TT considers the increase would cause undue hardship, two months after the F TT determination , whichever is later. Where a tenant challenges an increase, the FTT determination will not happen before the start of the new financial year or with a further two-month delay decided by the FTT. This creates significant risk for Registered Providers.

32 Social r ent increases are already regulated (and rents must stay below market rent), and the FTT may only assess a market rent, so c hallenging a social rent would d elay a rent increase which will later be approved. T his will mean that the rent for that tenant will be out of sync with April increases, and will mean that the Registered Provider will then need to increase 52 weeks after the last increase for that tenant (which could be any time throughout the year) or miss an increase to maintain the annual April increase pattern the following year, and therefore lose revenue. Having to manually increase a few tenants’ rent on a different day from all other tenants will be administratively unworkable. If rent increases are not implemented for months, t he consequence of lost revenue is the Registered provider will be less able to provide services to tenants and deliver new social housing.

33 For these reasons, i t is unhelpful to expect tenants to challenge social rents before the First Tier Tribunal (FTT). It will also take away the FTT’s capacity to determine PRS rents and service charges challenges .

34 The government should make the proposals around rent increases clearer or change them ( clarifying the use of ‘may’ and that the agreement covers all increases and using ‘rent period’ not ‘tenancy period’ ), to retain Registered providers’ ability to increase rents in a harmonised way, to avoid impacts on the supply of social housing, transparent and easily understood rent levels for neighbours and the ability of social landlords to deliver repairs and maintenance and services to tenants.

Ground 1B – Rent to Buy

36 Ground 1B is a new ground that requires a court to grant possession when a Registered provider is selling a property rented under a Rent to Buy agreement , or when the Registered provider grants a lease of more than 21 years , or gives a Rent to Buy tenancy to another applicant.

37 However, if there is no market demand for sale or another Rent to Buy agreement, a Registered provider may convert the home to an affordable or market rent tenancy , to meet demand for those types of housing . This is to make best use of stock to meet housing need, to meet requirements in the Capital Funding Guide according to which grant was awarded, and planning conditions. [1]   This is not currently in the Ground.

38 Sometimes it is necessary to convert the tenancy to an affordable or market rent tenancy to avoid a tenant who doesn’t need affordable housing staying in a reduced rent tenancy indefinitely or the property remaining void when it could be used as a social or market rent tenancy (during a housing crisis).

39 Existing Rent to Buy tenancies will have been built using Homes England or GLA capital grant under the conditions in the Capital Funding Guide. If the conditions are not followed, the Registered provider may have to pay the grant back, meaning less funding to develop and maintain social housing overall. If the legislation/Capital Funding Guide were to be changed, Homes England would be in a situation where it would have awarded grant to products that otherwise wouldn’t have been approved. 

40 S106 planning conditions may state that on a site there must be a certain number of Rent to Buy/affordable homes, and if a tenant stays in a Rent to Buy home with no intention of buying and it’s im possible to convert the home to another product , the Registered provider could be in breach of planning conditions. 

41 Allowing conversion would also protect a tenant where their circumstances had unexpectedly changed, preventing them from purchasing the property at the end of the agreement as planned. T he tenant is still unlikely to be able to meet their housing needs on the open market so allowing the option to convert the home to an affordable rent gives Registered providers the flexibility to protect them from an unnecessary move and/or wait for alternative affordable accommodation. 

42 Not having access to Ground 1B to convert the home would mean this product, that is supported by government through the Affordable Homes Programme , the Regulator of Social Housing, Local Authorities, the GLA and Homes England , would not be able to operate as intended and in line with what the capital grant was awarded for and wouldn’t meet housing need .

43 The wording of the ground also in accurately reflect s the definition of Rent to Buy.  We recommend an amendment that ensures the wording for the definition of "Rent to Buy Agreement" at sub-paragraph (b) is an accurate reflection of the Rent to Buy product. This should be worded as follows: "(b) allows the tenant to rent the dwelling house for a period stated in the agreement, which is not less than 5 years or, for dwelling houses in Greater London, 10 years from the beginning of the tenancy so as to enable the tenant to save for a deposit and, over time, purchase their first home." 

44 Ground 1B should be extended to apply when the provider converts the social rented home to another rental product , to help meet local housing need .

45 We propose amending the definition of "Rent to Buy Agreement" to make sure it is an accurate reflection of the Rent to Buy product.  

Ground 6 – Redevelopment

46 Registered providers want to and are required to improve their stock, for building safety, energy efficiency, decarboni s ation and regeneration reasons – all these have benefits for tenants, including healthy homes and lower bills. Usually , housing associations use dialogue with tenants to support them into another home while theirs is being redeveloped, but sometimes it is difficult to gain access to properties needing redevelopment and this can hold up essential works that are of benefit to tenants.

 

47 Ground 6 is a ground for possession if a landlord need s to demolish and reconstruct, or redevelop all or parts of the property. The Bill currently allows private landlords access to the ground. Registered providers only have access to the ground if a superior landlord wishes to redevelop and if the letting is not via a local authority nomination. As most lettings are via a local authority nomination, redevelopment will be restricted if possession can’t be sought.

48 H aving no means to end a tenancy in alternative (decant) accommodation could also increase the risk of taking on this type of arrangement and therefore make it difficult to source . Decant accommodation is usually temporary. It will be more difficult to find accommodation as it would have to be available long term or indefinitely and there is a shortage of social housing.   

49 Without access to Ground 6, Registered providers’ ability to complete improvement works will be reduced. If works were urgent and no alternative accommodation could be found because of the restrictions on possession making it hard to source, the resulting option could be temporary accommodation for homeless households, which can be of lower quality.

50 It is unlikely to need to be used often but we suggest Registered provider s be able to access Ground 6 in all cases to avoid lengthy holdups to essential works.

51 It should be clarified whether a "superior landlord" can be a Registered provider .

52 We also suggest a ground for possession to facilitate moves out of alternative accommodation into redeveloped propert ies . Again, this is unlikely to be needed often but will make it easier to source alternative accommodation in the first place and make it easier for people to be moved if works are needed in the original home.

53 We understand work is ongoing on this and look forward to seeing the required changes being made.

Key changes needed

 

54 Changes to rent increases

55 Make the proposals around rent increases clearer or change them (clarifying the use of ‘may’ and that the agreement covers all increases and using ‘rent period’ not ‘tenancy period’), to retain Registered providers’ ability to increase rents in a harmonised way, to avoid impacts on the supply of social housing, transparent and easily understood rent levels for neighbours and the ability of social landlords to deliver repairs and maintenance and services to tenants.

56 Referral of social sector rent increases to the FTT

57 Remove the option to refer social housing rents to the FTT, to avoid overwhelming the FTT with rent challenges it cannot determine, as the FTT may only assess a market rent.

58 Ground 1B – Rent to Buy

Extend the ground to where the provider converts the social rented home to another rental product , to help meet local housing need, and amend the definition of "Rent to Buy Agreement" to make sure it accurate ly reflect s the Rent to Buy product. 

59 Ground 6 – Redevelopment

Make the ground available to Registered providers in all cases , clarify whether a "superior landlord" can be a Registered provider and introduce a possession ground to facilitate moves out of alternative accommodation into a redeveloped property , so Registered providers can carry out essential works that benefit tenants.

October 2024