Contribution
My Lords, before I speak to my Amendment 111, I declare an interest as a landlord of over two decades and a former renter in the private rented sector for some 16 years.
As I mentioned before in Committee, the Bill before us has much to commend it. I support ending arbitrary evictions under Section 21, the imposition of a decent homes standard and the imposition of Awaab’s law in the PRS. Renters should not be exploited by the minority of rogue landlords. However, the fact remains that over 80% of tenants have a satisfactory experience in the PRS, and, despite HMG’s unduly negative impact assessment, it is the most popular form of rental tenancy—more popular than council housing or other forms of social housing. Remember, Awaab’s law came about because of the shocking state of some of the social rented housing, and will now rightly be applied to the PRS.
We should not blame the PRS for the failure of housing policy over previous decades and under Governments of all hues. There is a chronic shortage of affordable rental stock, and, where demand exceeds supply, rents inevitably go up, as mentioned by the noble Lord, Lord Thurlow, in a previous group.
More rental homes are needed in the PRS—some estimates say another 50,000 a year, on top of an extra 90,000 social homes, are required, as was outlined previously by the noble Lord, Lord Best. Ministers should ask themselves whether there is anything in this Bill which will increase the supply of affordable rental homes, or whether the best we can hope for is treading water.
It is often quoted that the PRS has doubled in size since the early 2000s, yet it is also a fact that the PRS stopped growing in 2016 when tax changes shifted the business model, and has since been stuck at 5.5 million homes, with the number of landlords buying offset by the number of landlords selling. Now that half of the PRS is owned by 20% of the landlords with the largest portfolios, this trend is accelerating. Many of these larger corporates tend not to house families; they impose the highest rent increases in an inflexible manner and, because they tend to own large, purpose-built flats, are distinct from local communities and smaller properties.
It is the smaller landlord who often has more interest in their tenant and property, embedded in the local community—I think the noble Lord, Lord Hacking, is probably one of them. This may be their only investment, and so they look after it well. Many are known to subsidise or help out their tenants in difficult times—which would be unlikely from a large corporate.
Forget for a moment whether there will be a mass exodus from the PRS because of this Bill, as the effects bed down; according to the ONS, by 2050 there will be 78 million people in this country—some 8 million more than now. Are we ready for that? If we think we have a housing crisis now, in 25 years it could become a major catastrophe. Against that background, anything which makes the current housing crisis worse should be avoided at all costs.
My amendment provides for tenants to pay up to 12 months’ rent in advance, if mutually agreed with the landlord. It provides security for both the tenant and the landlord. As has been said before in your Lordships’ House, thousands of people will be deprived of the opportunity to rent a home if advance payments are banned. As the noble Lord, Lord Jamieson, mentioned just a few moments ago, that includes students—particularly foreign students, on whom our educational institutions rely—who have no credit or banking history in this country. It also includes self-employed people and downsizers, who may have cash but no proof of income. It includes vulnerable people with poor credit histories and county court judgments against them. All these groups often offer rent in advance to prove they can afford to stay in their homes.
If the option of rent in advance is denied, literally thousands of people will be excluded from the rental market, as landlords will feel unable to take the risk of accepting tenants with no apparent source of paying their rent. Guarantors will be unable to give unlimited guarantees under rolling periodic tenancies. Once again, Ministers have a line. The line is that advance rent payments will discriminate against those with limited means. First, most tenants are never asked for advance payments. Landlords frankly prefer longer-term, stable tenants who can prove they have enough to pay the monthly rent. Students, for example, are not always the first choice of landlords, advance payment or not. Secondly, I hate to say it, but we live in a capitalist society. Banning advance payments was also not mentioned in Labour’s election manifesto, so it is within the conventions of this House to ask the Government to think again.
We should allow rental payments in advance because, at the end of the day, this measure will help more tenants than it will hinder.