Renters’ Rights Bill passes report stage as Lords clash over selective licensing and financial penalties

The Renters’ Rights Bill has passed its report stage in the House of Lords and will now move to third reading in the Lords.

The third reading provides a final opportunity for debate before the bill proceeds to enter the ‘ping pong stage’, where amendments still require approval from the House of Commons before they can become part of the final legislation.

The final report stage debate saw a series of amendments from financial penalties for landlords and selective licensing.

Significant additional responsibilities and costs on landlords

Lord Shipley from the Liberal Democrats tabled an amendment to increase the maximum duration of selective licensing schemes from five to ten years.

Lord Shipley claimed licensing schemes need to be longer to achieve their intended impact: “Local authorities introduced these schemes to bring about large-scale improvements, but those are unlikely to be fully achieved within five years.

“This amendment would allow them to advertise longer-term posts for staff and to include training of new staff in these schemes.”

However, Baroness Scott of Bybrook from the Conservatives pointed out selective licensing schemes can create unintended consequences for landlords and tenants.

She said: “We must recognise that licensing regimes, while in many cases beneficial, can place significant additional responsibilities and costs on landlords. These may include fees, compliance with detailed conditions and administrative burdens, all of which can have a knock-on effect for landlords and tenants alike.”

Baroness Taylor of Stevenage, Parliamentary Under-Secretary of State for Housing, rejected Lord Shipley’s amendment, claiming that five years strikes the right balance for landlords.

She said: “A maximum duration of five years for schemes achieves the right balance. It gives local authorities time to assess the effectiveness of schemes while providing landlords with assurance that they will not be subject to increased regulation for extended periods.

“Where issues in the private rented sector persist after a scheme has ended, a local authority may introduce a new scheme to take further action, provided that the statutory criteria are still met.”

Risks driving landlords out of the market

Elsewhere in the debate, Lord Keen of Elie from the Conservatives tabled an amendment to limit the local housing authority’s power to impose a financial penalty to £7,000 instead of £40,000.

Baroness Scott of Bybrook raised concerns that high financial penalties risk driving landlords out of the sector.

She said: “My Lords, fines must be proportionate, yet, as the Bill stands, the threshold for imposing fines on landlords is worryingly low, and the scale of those fines is notably high. This combination is troubling.

“Setting fines at such significant levels, in some cases representing a substantial portion of a landlord’s rental income, or even exceeding it, risks driving honest, well-meaning landlords out of the market, not because of any wilful negligence but out of fear.”

Financial penalties serve as an effective deterrent

Baroness Scott of Bybrook also tabled an amendment to allow a financial penalty to be imposed only for persistent breaches.

However, Baroness Taylor of Stevenage defended the proposed financial penalties, arguing they serve as an effective deterrent.

She said: “We have increased the maximum civil penalties to take account of inflation since the £30,000 and £5,000 maximums were introduced for the similar housing offences that I referred to earlier. We want to ensure that the deterrent value of civil penalties is maintained.

“As I have stressed before, they are maximum penalty amounts. Local authorities will need to take into account a number of factors, such as the culpability of the landlord and the harm caused to tenants in determining the appropriate level of the civil penalty.”

She adds Baroness Scott of Bybrook’s amendment would potentially hinder the plans under the Renters’ Rights Bill for the PRS database.

“I appreciate that the noble Baroness is acting in good faith by laying these amendments, but they would have significant negative consequences for the effectiveness of the database.

“Under these amendments, individuals could avoid penalties for failing to register or knowingly or recklessly providing false information to the database operator, to name two of the relevant provisions, unless they did so persistently over a protracted period. For the database to be useful to users, it is important that as many landlords as possible register with the service.”

Both amendments were withdrawn, and the third reading in the House of Lords was scheduled for Monday 21 July.