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Lord Dubs: Having heard the Minister's explanation, but not saying that I am totally convinced by his arguments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 242H not moved.]
Clause 92 [Restriction on recovery of possession on expiry or termination]:
Lord Meston moved Amendment No. 242HA:
The noble Lord said: In moving the amendment I do not wish to pre-empt a wider debate on the question of whether Clause 92 shall stand part of the Bill. I wish to move the amendment briefly.
As today's debate has already revealed, private-sector housing will be further deregulated by the combined effect of Clauses 89 and 92. Assured tenancies entered into on or after the day on which the Act comes into force will be shorthold tenancies unless the landlord serves a notice on the tenant stating that the tenancy is to be a full, assured tenancy instead. Some exceptions are contained in Schedule 4.
Clause 92 is complex to say the least. As drafted, it raises the possibility that shortholds may in future be periodic from the outset rather than commencing with a fixed term of at least six months, as at present. That is
Where the shorthold is followed by a replacement tenancy--one in which the landlord and tenant are the same as under the original tenancy--a possession order may not take effect earlier than six months after the beginning of the original tenancy. Thus, landlords, if they wish, may recover possession by means of the accelerated possession procedure at any time after six months from the grant of a shorthold tenancy, even though there is a so-called "replacement" tenancy.
I suggest that that allows for too prompt repossession and the amendment is designed to ensure that possession orders cannot take effect earlier than six months after the beginning of each tenancy, whether that be an original tenancy or a replacement tenancy. I beg to move.
Lord Mackay of Ardbrecknish: It may be helpful once again if I set out the background to Clause 92 which the amendment moved by the noble Lord, Lord Meston, seeks to change. The noble Lord and I certainly agree about one thing; that is, that Clause 92 is complex. It amends Section 21 of the Housing Act 1988. Section 21 sets out the procedures for a landlord to recover possession when a shorthold tenancy expires at the end of the initial fixed term. The initial fixed term must currently be for a period of at least six months. An amendment is required because Clause 89 of the Bill will remove the requirement for a new shorthold tenancy to have an initial fixed term.
Clause 92 will prevent a court from making an order under Section 21 for possession of a new assured shorthold tenancy until six months after the beginning of the tenancy at the earliest. Where the tenancy is a replacement tenancy, the possession order may not be made so as to take effect until six months after the beginning of the original tenancy. This will ensure that shorthold tenants retain their existing right to a minimum of six months' security of tenure even if their tenancy agreement has no initial fixed term--for example, because it is simply a periodic tenancy--or the initial fixed term is for less than six months.
The amendment of the noble Lord, Lord Meston, intends to provide tenants with greater security by offering a minimum of six months' security at a time for each replacement tenancy. Clause 92 as it stands seeks to replicate tenants' existing security of tenure. It offers a minimum six months' security. Many landlords currently negotiate longer fixed term tenancies. The average completed length of residence of an assured shorthold tenant is about two-and-a-half years. This has advantages for both parties. The tenant has longer security and the landlord retains a good tenant. The last thing a sensible landlord would want to do is to evict a good tenant and incur the hassle and expense of finding a new one who may turn out to be not as good.
Indeed, when a fixed term tenancy comes to an end it is often the case that the landlord will offer a further fixed term rather than a periodic tenancy. Conversely, it
Many landlords have very real fears about not being able to gain possession of their property when they need to. The amendment would compound those fears. It is right that tenants should have a minimum period of security from the beginning of their original tenancy and we consider six months strikes the right balance. However, it would not be right to say that if a replacement tenancy is created, a further six months' security is warranted. This would deter a landlord from creating a replacement tenancy if there is the slightest chance he will need to repossess his property before six months have expired.
With that explanation of the clause and the negative impact of the amendment, I hope that the noble Lord will withdraw the amendment.
Lord Meston: I am grateful to the Minister for his explanation. I need to think quite hard about this matter because, in my mind, it begs the question as regards what is the point of a replacement tenancy. It is a complex area. I wish to reflect and reserve the right to come back at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 93 [Applications for determination of rent: time limit]:
Baroness Hollis of Heigham moved Amendment No. 242J:
The noble Baroness said: All opposition amendments are important but we judge this to be among the more important. It seeks to protect from eviction tenants who are trying to reduce their rent to a figure regarded as a fair market rent by the rent officer. The Bill provides tenants with powers to bring down the rent. However, if they exercised those powers, they could be penalised by the landlord and would not be protected.
Perhaps I may give some background. In the late 1980s, Sir George Young decontrolled private rents saying that housing benefit would take the strain. As a result, as we know, housing benefit increased by something like 200 to 300 per cent. The Treasury then kicked in and sought to control housing benefit, despite the fact that it is supposed to be taking the strain, by limiting it to what the rent officer regarded as the fair market rent, given the needs of the family. If the rent was excessive or the tenant was in over-costly or
The position was toughened by further housing regulation changes which further cap the amount of housing benefit that a tenant may receive after reference to the rent officer. As a result, at present in 40 per cent. of all cases referred to the rent officer, housing benefit covers less than the full rent. On average in London, it is by just less than £20 per week. If someone living in London who is receiving income support wishes to keep his home he must take that £19 and top-slice it off an income support of £45 if he is a single person. That leaves him with something like £26 per week on which to live, even though £45 is regarded as the appropriate figure, as indicated by the amount of income support. Therefore, he has a choice of home and poverty or no home and a little less poverty.
In consequence, local authorities have been encouraging shorthold tenants who find themselves in that position to apply to the rent assessment committee to bring down the rent so that it is closer to what the rent officer said was appropriate. But they dare do that only if they know they will not be visited by eviction as a result; hence this amendment.
The amendment achieves two things. First, it allows shorthold tenants greater flexibility when they seek a determination of the rent. It means that they are not permitted to seek a determination only at the beginning of the tenancy but are able to do so if their circumstances change. For example, they may become unemployed and have to claim housing benefit. They may then find that housing benefit does not cover the full cost of the rent because the rent officer has said that the rent is excessive and well above market value. In the circumstances in which the tenants' conditions have changed they should have the flexibility of being able to seek a rent assessment in the course of that tenancy. That seems only reasonable because circumstances may change and the issue of rent may become more significant.
Secondly, once the rent has been determined by the rent assessment committee, it should not last just for six months because, if so, the tenant will be evicted. It should apply for between one and two years, as the rent assessment committee determines. That is not excessive. It still means that the landlord can raise the rent probably after a year, and at worst two years, in line with inflation. He need be no worse off. But it means that there can be no incentive for the landlord to evict the tenant who has tried to bring down the rent because he knows that the next tenant coming in will still enjoy that same rent. Therefore, the landlord will lose the incentive to evict when the tenant has sought to bring down the rent to what the rent officer has said was a fair rent for housing benefit purposes.
I use a phrase much favoured by the Minister when I say that we believe that this achieves a fair balance. The landlord still receives a fair rent and will know that after a year to two years he can raise the rent in line with inflation and will be no worse off. But it prevents his having the power, first, to exploit the tenant, and,
Page 62, line 42, leave out ("original") and insert ("replacement").
5.30 p.m.
Page 63, line 15, leave out subsections (2) and (3) and insert--
("(2) In subsection (1) after "may" insert "at any time during the original tenancy or any replacement tenancy until such time as the landlord serves a notice under section 13(2)."
(3) In subsection (4) (a) after "application" insert "and, provided there is no change of circumstances, the determined rent shall remain for such period between one and two years as the rent assessment committee shall direct, regardless of any change of tenant or landlord.".").
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