Matthew Pennycook gave evidence.

Minister, would you introduce yourself very briefly, please?

Matthew Pennycook:

Yes. I am Matthew Pennycook and I am the Minister of State for Housing and Planning.

Q I think that today has been a very illuminating opportunity and I would like to ask you, Minister, to share your thinking around three points that have been raised that I think are quite striking.

The first question is simply this: what advice have you received so far and what are the plans in respect of the interaction with the Homelessness Reduction Act 2017? That is the point I was asking Councillor Hug about—the Homelessness Reduction Act creating that opportunity for local authorities to act as a guarantor to pay deposits, including rent in advance, to secure a property that would not otherwise be available to that tenant. I ask that question in the light of some of the evidence that we have heard about the impact of guarantors and deposits within the Bill, which I appreciate is not yet a settled matter.

Secondly, I invite you to share your thoughts on enforcement authorities, which my hon. Friend the Member for South West Devon highlighted, which are referred to in chapter two. I have an idea why this might be the case, but the Bill creates a specific measure, in clause 104(4), that says:

“A county council in England which is not a local housing authority may—

(a) enforce the landlord legislation;”—

The joy of local government: the Minister will know that county councils are not housing authorities, so it would perhaps be helpful if you could set out the Government’s thinking around that, and say how any advice or engagement may have taken place already with local Government to determine the way forward on that.

Matthew Pennycook:

Did you say three or two questions?

There are three questions, but I have forgotten the third one, so I will ask you those two questions and then find the third question and come back with it, if I may.

Matthew Pennycook:

Let me take those two questions forward.

The point that I took from Councillor Hug was a very specific one about the trigger for homelessness prevention duties under the Bill. Currently the trigger is a section 21 notice; once the new system is in place, it will be a section 8 notice. In theory, that broadens the scope of the duty, if you like, and therefore we will consider new burdens funding for local authorities as a result, because it could increase the costs to them.

On the specific point about county courts, I want to make sure that I have understood the hon. Gentleman properly. I think it might be better if I write to him with the specifics, but I would assume that his question is linked to the fact that in many cases we need to look to assign a lead enforcement authority in particular parts of the country, because of the specific arrangements of governance in particular areas. However, I am more than happy to write to him with further detail on the point about counties.

Q Thank you; I suspect that that is exactly the issue.

I have a final point. A number of the witnesses today have made a point that clarity about what is permissive versus what is required is a significant issue for their organisations. In particular, we heard about that in respect of the ombudsman, the tribunal and the courts.

I am interested in hearing your thoughts about how this process evolves, and your degree of openness about bringing a higher degree of clarity, either through a greater degree of transparency about what may well find its way into the guidance given to those different organisations, or through those areas that you feel are more appropriate to becoming part of the Bill and then the Act itself.

Matthew Pennycook:

On the database and the ombudsman, through this Bill we broadly mirror the provisions in the previous Government’s Bill, in the sense that the powers in the Bill are broad framework powers. A lot of the detail will come forward in secondary legislation.

There was a debate when we considered the previous Bill, which I think we will return to because it is a worthwhile one, about what prescriptive requirements, if any, you put in the Bill for either the database or the ombudsman. In general, my sense is there is a lot of value in putting most, if not all, of that detail into secondary legislation in a way that allows us to ensure over time that the database and the ombudsman evolve properly with changes to the sector, so you would not want to get too prescriptive. But we can tease out in the debates—I hope we do; we have today—the type of thing we expect the ombudsman to do, and the full range. The Housing Ombudsman made clear that there is a “must” and a “could” on the ombudsman side. Similarly, there is a skimmed and a full-fat version of what you might include on the database.

As I have said, some of my contributions indicate that I think the database in particular could be an incredibly powerful tool. We should therefore be thinking through what we might include on it that would help tenants to assess who is a good landlord and who they should be comfortable signing a tenancy agreement with, and give local authorities the relevant information they need to bear down properly on disreputable and particularly criminal landlords. I am happy to be relatively open about that. We can be, and I hope are, fairly open in some of the debates about the type of things we and our constituents might like to see in secondary legislation.

Q I am a younger Member of the House. My generation feel that we are locked into renting, with many people unable to save in order to get on the housing ladder. How do you see the Bill making renting more stable and affordable, so that young people can build up the savings we need?

Matthew Pennycook:

That is a good question. Like a lot of the debates we have had today, it is slightly out of the scope of the Bill, but you are right to ask it in the sense that the Bill is one part of the Government’s agenda for changing the housing system. There are lots of things we have to do on the home ownership side. You will know from our manifesto that we are committed to a permanent and more comprehensive mortgage guarantee scheme and a first dibs for first-time buyers scheme. In general, the Bill will hopefully empower renters by giving them greater protections, rights and security so that they can stay in their homes longer, build lives in their communities, avoid the risk of homelessness and, in many cases, by bearing down on unreasonable within-tenancy rent hikes, have the opportunity to save, which many do not have at the moment.

In answer to your question very specifically, the Bill is part of a wider agenda and touches on the supply issues we have debated. The Bill is not our answer to affordability in the private rented sector, and it cannot be. There are things that go beyond the scope of the Bill. However, in terms of the security, stability and certainty it provides for private renters, who are mainly at the top end of the market but would have, under better circumstances, the chance to save and buy a first home, the Bill will help in a number of ways.

Q I want to ask about service personnel housing, which I raised in the debate on Second Reading. I will go on to ask about the danger of more properties becoming short-term holiday lets—Airbnb-type things; I have a genuinely open mind on that, and I am interested in the Minister’s views on it.

On service personnel housing, I think the Minister’s position from the debate on Second Reading was that the Ministry of Defence is looking at it and different circumstances may apply, which would mean that a different form of decent homes standard would be needed. If the decent homes standard is yet to be published, and could potentially be less onerous than the one for the social housing sector, could it not also be applied to MOD housing so that our serving personnel get decent housing?

Matthew Pennycook:

I do not think there is a huge amount I could add to what I said on Second Reading. We think there are particular characteristics of MOD accommodation that make it difficult to translate the approach we have in mind for driving up standards in the private rented sector and to align that with a wider push on the social housing sector. The MOD are taking forward that work. Yes, there are conversations between officials and Ministers about the crossover, how we might align standards and what the difference is, but I think it is for MOD to take that forward. We think there are good reasons to treat it slightly separately. I can address the short-term lets point, if you would like.

With your permission, Sir Christopher, I want to come back on that point.

Quickly.

Q We seem to be talking about different decent homes standards. We have the social housing sector one, and we are talking about consulting on one for the private rented sector. Is it not the case that the MOD can have one suitable to its needs?

Matthew Pennycook:

If I have understood you correctly, you are putting to me: why is MOD accommodation not coming within the consultation on a new decent homes standard for both sectors?

I am putting to you that the MOD could have its own decent homes standards.

Matthew Pennycook:

The MOD is taking forward standards for its accommodation, and it will do that as the Department responsible for that accommodation. It sits outside this legislation, and we had the same debate on the previous Bill. It is an important issue, but it sits outside the scope of this legislation.

Q Is my hon. Friend certain that the Bill, as drafted, provides enough protections against huge advance rent requests?

Matthew Pennycook:

It is a very good question, and we have touched on this issue, as well as guarantors. I am happy to give the Committee a sense of my thinking, because I have reflected further on the matter in the light of concerns that have been put to us by not only external stakeholders but several hon. Members in the Second Reading debate on 9 October.

As I made clear in that debate, the Government have long recognised that demands for extortionate rent in advance place a considerable financial strain on tenants and can exclude certain groups from renting altogether. We are very clear that the practice of landlords demanding large amounts of rent in advance must be prohibited. Although it might be argued that the interaction of the new rent periods in clause 1, which are a month or 28 days, and the existing provisions of the Tenant Fees Act 2019, relating to prohibited payments, provide a measure of protection against requests for large amounts of advance rent, I am increasingly of the view, speaking candidly, that there is a strong case for putting this matter beyond doubt. I am giving careful consideration as to how best that might be achieved in the course of the Bill’s passage.

Q One of the topics that has come up several times today is whether grounds for possession should all be discretionary, or whether some should be mandatory and some discretionary. I understand that, when the previous Renters (Reform) Bill was going through, you were in favour of them all being discretionary.

Matthew Pennycook:

That is not correct.

Okay, then this is an invitation for you to talk us through your rationale, because that was my understanding. While I am at it, if there is anything where your mind has changed since the previous Bill, could you briefly talk us through why?

Matthew Pennycook:

It is important to give context for the debates on the previous Bill and why, in certain circumstances, we were probing the Minister on making grounds discretionary rather than mandatory, and whether we were pressing the then Minister on additional protections for tenants relating to some of those grounds. The rationale for that was ensuring that the grounds, if they were mandatory, would not be abused. I suppose where my thinking has changed on many of them—I will continue to think on whether we have done enough on specific grounds for possession to protect tenants against abuse—is that the other actions we have taken in the Bill provide the protection we need.

I will give an example. On grounds 1 and 1A, where the previous protected period was smaller and the previous re-let period was much smaller—three months, not the 12 that we are proposing—in our view there was clear scope for abuse there. In many parts of the country, particularly hot rental markets—including London, and I am sure it is the same in Bristol—landlords are quite willing to suffer three-month void periods because the rents are so high. In a sense, if that is your re-let period on those mandatory grounds, you can get rid of what you consider a problem tenant, such as one who has complained perhaps entirely appropriately about damp, mould and other hazards. If you wait the three-month void period, then re-let, you have effectively recreated section 21 by the back door.

I think we have dealt with the abuse, which is from memory where we were probing the Minister about the discretionary or mandatory distinction. We have provided protections in other ways in the majority of cases. I am giving consideration, as I say, to some of the grounds and whether we have quite got sufficient protections in place. I think Justin Bates KC, for example, raised ground 6A, where action is rightly taken against the landlord whose practices need bearing down on, but the tenant should not suffer in that regard.

Q I am sure the Minister will agree that we have heard some illuminating evidence today from excellent panellists. I am wondering what he sees as the key takeaways for the Bill.

Matthew Pennycook:

I welcome that question; it is an open one, and I will have to think on my feet in my response. I think a number of the debates will run through the Bill. Supply is one of those. I am clear that we do not want an exodus of landlords from the sector, but I have seen absolutely no evidence of that. It is a threat that has been bandied about for many years now, ever since the previous Government announced their intention to abolish section 21 no-fault notices.

The size of the private rented sector has doubled since the early 2000s. There has been an outflux of smaller landlords, particularly overgeared buy-to-let landlords, which is mainly a result of the section 24 tax changes that George Osborne introduced in 2015, explicitly to slow the growth of the private rented sector. So there has been an exit of certain types of landlord from the sector, but we have certainly not seen an exodus.

The feedback I have had from landlords over recent months and in the previous Parliament is that the most damaging thing for many was the uncertainty about whether reform was coming through in any form. That is why we felt we needed to act quickly. In general, good landlords have absolutely nothing to fear from the new system. We think it provides a framework in which they can continue to invest and operate.

Another point that has been prevalent in the debate is protections for renters against unreasonable within-tenancy rent hikes. In designing the Bill, I have been clear where we have overhauled and strengthened its provisions to strike that balance. We do not want to do anything that could potentially make things much more difficult for tenants, which is why the Government are not advocating rent controls in the Bill. The Scottish experience is instructive of what can happen as an unintended consequence, and we think there would be an impact on supply, quality and standards, as evidence around the world shows.

In many cases there is a judgment call on students and other possession grounds, and it is is a fine balance as to whether we have got it right in the Bill. But there are competing pressures and disincentives in a system—I am being incredibly candid with the Committee here—that has not been overhauled for 30 years. Lots of the speculation about how the tribunal will operate, and how many section 8 cases will go there, is in some ways all completely speculative. We have a sense of what we want to see and how to address the risks, but until the system is properly bedded in, I do not think anyone will know what we have to do in the design to ensure that we have the balance right and will not therefore see the tribunal overwhelmed.

We want to see more people to go to the tribunal. We want section 8 cases to go through the courts more efficiently. We absolutely concede the need for court improvements, and we are working closely with the MOJ on those—I have given some examples in response to the question about what we are taking forward. There is a balance that needs to be struck, and I think we struck the right balance in overhauling the Bill in the specific ways we have, while keeping—I gave the Conservative party the credit for this at the time—the sensible provisions that were in the previous Bill, which we think need to remain at the core of the legislation.

Q I have a quick question. One of the things that came up with several witnesses was the issue of parity between privately rented social housing and housing associations, in particular with the increasing standards. That came through particularly strongly on the rural piece. Great things have been done to decarbonise social housing stock, which brings up standards. If such a measure is to be rolled out within three months of Royal Assent or whatever, will the Budget next week include any grounds or capacity in future funding for that parity, especially for those rural homes that are harder to upgrade, given their nature?

Matthew Pennycook:

Specifically on rural housing, we have to think through how the decent homes standard will deal with particular challenges in certain types of stock in certain parts of the country. As a point of principle, what we will try to do in the decent homes standard consultation is to take a view on how that should apply across both sectors. Broadly, that is my instinct across the board.

It is the same with regards to the ombudsman. There is a strong case—our preferred option as things stand, although no final decision has been made—for the Housing Ombudsman Service to take on the role of the PRS ombudsman. There is a good case for a streamlined cross-tenure service. Broadly, we want the same standards to apply across the board.

Funding is another example of where there are things that the Bill touches on, but that are not within the scope of the Bill—the minimum energy efficiency standard, for example, has been mentioned a couple of times. That, however, is a Department for Energy Security and Net Zero consultation, which we launched this year. There is also a wider package around the warm homes plan, further details of which will come forward in due course, but that does not sit within my Department either. It is not necessarily part of the Bill, although decent homes will have to account for those changes, such as those on the MEES front.

Thank you, Minister. That brings us to the end of the evidence session. I thank all Members for participating in what has been a very constructive exchange of views.

Ordered, That further consideration be now adjourned. —(Gen Kitchen.)

Adjourned till Tuesday 29 October at twenty-five minutes past Nine o’clock.

RRB 01 Dr Edward Kirton-Darling and associates (on Rent Repayment Orders)

RRB 02 Dr Edward Kirton-Darling and associates (suggested amendments)

RRB 03 Laura Delow

RRB 04 Jim Dickinson

RRB 05 Richard Bate

RRB 06 Leonie Cooke

RRB 07 Michael Zell-Davis

RRB 08 Citizens Advice

RRB 09 Unipol Student Homes

RRB 10 Sarah Galloway

RRB 11 Dogs Trust

RRB 12 Reapit

RRB 13 RSPCA

RRB 14 ACORN the Union

RRB 15 Training for Professionals

RRB 16 The Lettings Industry Council

RRB 17 a PRS Landlord from the North West

RRB 18 Alex Shinder

RRB 19 Michael Crofts BSC(Hons), ARICS (retired)

RRB 20 Ian Stern

RRB 21 Maureen Roscoeto

RRB 22 Tony Wilson

RRB 23 Get Living

RRB 24 The Property Institute

RRB 25 London Councils

RRB 26 James Scollard

RRB 27 Renters’ Reform Coalition

RRB 28 Mars Petcare UK and Battersea Dogs & Cats Home

RRB 29 University of Manchester Students’ Union

RRB 30 Generation Rent