Baroness Kennedy of Cradley (Lab)

My Lords, I declare my interest as a trustee of the Nationwide Foundation. Amendment 61 seeks to address a growing and deeply concerning issue in the private rented sector: the overuse, and often misuse, of guarantor requests. This amendment was expertly moved by my noble friend Lady Lister of Burtersett in Committee, and I thank her for her support today along with that of the noble Baroness, Lady Grender, and the right reverend Prelate the Bishop of Manchester—all of whom have given continued support to addressing the issue of the overuse of guarantors. I am sure that noble Lords across the House will accept that landlords should retain ways to manage financial risk. However, the increasing use of guarantor requests is creating a new form of exclusion, particularly for vulnerable renters. This is what Amendment 61 is about: it is not about banning guarantors altogether but restoring proportionality and fairness in their use. Guarantors have become a significant barrier to housing for many. Recent data from Generation Rent shows that almost 30% of renters who moved in 2023-24 were asked to provide a guarantor. A further survey by Shelter and YouGov showed that over 100,000 private renters per year are blocked from renting a home in the private rented sector due to a guarantor request they cannot fulfil. Meanwhile, only 2.9% of landlords attempted to claim unpaid rent from a guarantor in the last two years, despite an estimated 1.85 million tenants being asked to provide one. Guarantors are therefore becoming commonplace, yet they are rarely needed in practice and often never pursued when payment issues arise. Noble Lords may be asking why. A YouGov survey by Shelter asked the same question. When questioned, 25% of private rental landlords said that they asked for a guarantor because “My letting agent advised me to”. Another 16% said, “I thought it was standard practice”, while 12% said, “I’d heard from other landlords it was a good idea”. Simply put, guarantors are over-requested, largely unused and, worst of all, increasingly serve as a proxy for discrimination. When a tenant can show that they can afford the rent through a standard affordability assessment, the additional requirement of a guarantor becomes both unnecessary and unfair. It many cases, it adds to an already substantial financial burden, alongside the five-week deposit and the first month’s rent in advance. The evidence shows that this practice disproportionately affects people on lower incomes, those without access to financial support networks and groups already at greater risk of housing discrimination: women, single parents, renters with disabilities and black and Bangladeshi households are all significantly more likely to be asked for a guarantor. A renter with a disability is 20 % more likely to face such a request, and a black renter is 66% more likely. These figures cannot be anomalies; they are a pattern. In Committee, we heard from my noble friend Lady Lister of Burtersett about older renters securing their pensions, being asked intrusive questions and then being required to provide a guarantor. From the noble Baroness, Lady Grender, we heard of a self-employed single mother being asked for a guarantor even though she was earning £45,000 a year—well above the UK median income. Too many renters simply do not have someone in their network who can act as a guarantor. Unless this issue is addressed, we risk entrenching a two-tier system in the rental market: one for those with access to wealth and another for those without. The justification for these requirements often rests on an overstated fear of rent arrears, yet government figures show that only 2% of private renters were in arrears in 2023-24, and the English Housing Survey puts it at 5%. Of course, that is not negligible, but it does not warrant such widespread and disproportionate use of guarantors. There is an eviction ground for rent arrears, which is the primary backstop for when tenants fail to pay their rent. Moreover, Amendment 61 aligns with the National Residential Landlords Association’s own guidance that guarantors should be requested only when a tenant cannot fully demonstrate that they can afford the rent. This amendment strikes a balance, allowing landlords to use guarantors when genuinely necessary, while protecting tenants from unjust exclusion. It is supported by a wide range of voices: Shelter, Independent Age, UNISON, Renters’ Reform Coalition, the Mayor of London and others. It is also worth noting that this amendment not only calls for legislative clarity but invites the Government to go a little further by introducing national guidance on fair and proportionate tenant referencing. Such a move would help standardise best practice and prevent local variation from undermining equality in the rental market. In summary, this amendment is proportionate and reasonable and would not remove a landlord’s right to safeguard their interest, but it would ensure the right is exercised in a way that is just, consistent and in keeping with the spirit of the Bill. I hope that my noble friend Lady Taylor of Stevenage is minded to accept this amendment, but if that is not the case, I ask my noble friend four final critical questions. With guarantor requests increasingly becoming standard process, rather than when they are needed, will the Government issue guidance to landlords on when to request a guarantor? Will the Government look at what support they can provide for people who are at risk of homelessness because they cannot find a guarantor? Will the issue of guarantors be examined in detail as part of the post-Bill implementation work? Will my noble friend commit to working on these issues with Shelter, the Renters’ Reform Coalition, noble Lords in this House and many others on these issues, to find other ways to support the growing number of renters being locked out of the PRS because of the overuse of guarantors? Without this amendment or government action to address the issue of guarantors, the Bill’s measures to tackle discrimination risk being undermined by the very practices it seeks to reform. I beg to move.