Contribution
My Lords, I shall speak strongly in favour of Amendment 1. I declare my interests as I rent properties in Norwich and commercial properties in Great Yarmouth through a directorship.
We live in a free-market economy, which is underpinned by the law of contract, a codified agreement between consenting counterparties. Of course, we must have safeguards and regulatory guard-rails to ensure that one party does not hold the other over a barrel, but the freedom of contract so that mutual needs can be codified and agreed is a fundamental part of the way in which we live and is one of the reasons why we have so many learned friends in this place.
I want to give some examples, from my experience as a landlord, of the type of persons who value the ability to customise the standard contract to suit themselves by entering into a fixed term. It is not the majority, but it is a significant proportion that cannot just be wished away. They include: employees on a fixed-term employment contract engaged in a particular project; students, singly or more commonly in groups, who want to secure their ideal house in advance and are able to do so only if the current occupants are sure to vacate in the summer; the busy doctor, who gets passed around the hospitals each August; and the foreign person, who is used to the concept of fixed terms in their own country and cannot understand what business it is of the state to interfere in these private arrangements. Those tenants value contract certainty so that they can focus on their work and generate wealth for our nation.
I like this amendment because it gives an additional benefit to the tenant: not just the fixed tenancy but the fixed rent. That seems a fair compromise, not least because the landlord does not need to price uncertainty into the contract—the uncertainty of a void. As a landlord I value certainty, even at the expense of locking out rent rises, because if I know there will not be a void, I can give a better price and everybody wins. I cannot see what is wrong with that.
The Government boast a commitment to
“transform the experience of private renting”.
They are doing that all right; they are making it harder for a significant minority to meet their reasonable needs. There are so many unintended consequences—the noble Lords, Lord Hacking and Lord Truscott, mentioned some of them. For a moment I thought I was going to be on my own, but I am delighted to see that there is cross-party consensus on the importance of this amendment.
I too was thinking about the abuse in holiday hotspots, where it is common ground that we want to encourage year-round occupation of homes in these coastal areas—although not the second council tax that appears to be emerging alongside. I fear the unintended consequences of this Bill. Let us contemplate a tenancy in Cornwall, taking on in June. The proposed tenant says, “Yes, I’m going to stay for a whole year”, but in the event they leave just after the August bank holiday. The problem is that by giving two months’ notice, it is a clear abuse; and to counter that abuse, landlords will factor in the risk of the vacancy. So they will jack up rents, and the person who genuinely does want to stay for the whole year is disadvantaged. Of course, they may wish to show good faith by paying in advance, but that will be discarded as well. I just cannot see how this helps anyone.
I will talk about students in more detail later, but I am concerned that we are going to seriously disrupt the student market, not just for their convenience. Often in freshers’ week—I saw it in my own experience when I was younger—friendship groups get rammed together and pretty quickly decide they want to go into a house together, and why not? Halls do not suit anybody. The purpose of the fixed tenancy is the discipline that binds them all together. They are not related—at least not when they start; I have been in houses where that does happen—but you get a situation where one person may want to quit half way through, and it reverses the obligation. Rather than that person being forced to find another student to take his or her place, it becomes the obligation of all his former friends to undertake that core activity. The responsibility is flipped, and I do not think that is good either.
There are so many other things I could say, but this is a good amendment. It does not wreck the Bill but enhances it. It works with the grain of the way a significant minority of people, consenting adults, wish to conduct their affairs and come to a sensible contract for those it suits. I agree strongly with what the noble Lord, Lord Hacking, said. There are limits to where the state should interfere; it should allow free citizens to exercise the choices that they should be entitled to make. This amendment deserves our full support.