Tenant Fees Bill

2nd reading (Hansard): House of Lords
Wednesday 10th October 2018 Lords Chamber

Second Reading

15:50

Moved by

[Lord Bourne of Aberystwyth]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this Bill takes forward essential measures to promote fairness and affordability in the private lettings market by banning unfair fees charged to tenants and capping tenancy deposits—a significant move by the Government to protect consumers in the private rented sector and a commitment made in the Government’s manifesto.

It is a Bill that should be welcomed by all across this House. I echo the sentiments of the other place that it will make the market more transparent and will save tenants, especially young people and families, hundreds of pounds. Government amendments made in the other place reflect the debate there and have ensured that the Bill will firmly deliver on this intention.

The Bill’s measures have also been informed by consultation with the sector and through the scrutiny of the Housing, Communities and Local Government Select Committee. In line with the Secretary of State’s comments, I extend my thanks to all those who have made invaluable contributions to this process. We can all agree that this engagement has ensured that the Bill will be even more effective in delivering on its promise to protect tenants from unfair charges.

I am pleased that the Bill is now before the House. It is an integral part of the Government’s broader reform to create a housing market that works for everyone. I have been moved by the extensive support for banning unfair fees, and I am grateful for the work that the noble Baroness, Lady Grender, has done previously to raise this issue. That is why I am happy that we are taking the decisive action to bring forward this change.

The housing market is changing. The proportion of households living in privately rented homes has doubled over the past 20 years. This accounts for a fifth of all households in England—approximately 4.7 million households. While this has brought new challenges, we have been consistently clear that whether you rent or own your home, you deserve to have a safe, secure and affordable place to call your own. Banning unfair tenant fees and removing rogue operators is another step that the Government are taking to make this happen. It is abundantly clear that tenants need greater protection from such abuse and poor service. To that end, we have given local authorities greater tools to crack down on poor practice in the sector. In April, we introduced banning orders and a database of rogue landlords and agents. We are backing a Bill in the other place which will enable tenants to take their landlords to court if the properties that they rent do not meet minimum standards of fitness for human habitation. We have also committed to mandatory electrical safety checks every five years and are working to bring these regulations into force as soon as possible, subject to parliamentary timetabling.

However, we know that this is only part of the problem. We want to give tenants greater confidence that they can complain about problems with their home without the fear of eviction. In June, we published our new and updated “how to” guides, including for the first time a How to Let guide for landlords to help ensure that tenants and landlords alike are aware of their rights and responsibilities.

Today is World Homelessness Day. This offers an important opportunity to consider the insecurity facing some private renters. My department recently consulted on overcoming the barriers to landlords offering longer and more secure tenancies in the private rented sector. That consultation received more than 8,000 responses, which we are currently analysing and will respond to shortly. The volume of responses demonstrates the importance of a good quality and secure rented home, which the Government are committed to delivering.

We also know that we need to make housing more affordable. That is why my department is focused on building many more houses in the places where people want to live. Since 2010, we have delivered 378,000 affordable homes in England, including 273,000 for rent, and I am confident that the Government’s ambitious housebuilding programme will deliver the transformations required in the years to come. It is also important that we help people now. That is what the Tenant Fees Bill will help to achieve. It will ensure that tenants will no longer be stung by hidden costs, saving renters an estimated £240 million within the first year alone.

These costs include unfair letting fees, with tenants facing bills for hundreds of pounds for simple things such as reference checks. We know that such services can be acquired on the market for a small fee, but the Government’s 2017 consultation found that tenants have to pay an average of £137 for a reference check. Then they are hit by fees for drawing up a tenancy agreement, for inventory checks and even for just picking up keys for their property. This, I should underline, is all alongside their deposit and the first month’s rent up front. It does not stop there. There are fees on renewal, and fees when they leave the property. Tenants often have little choice but to pay excessive and unjustified charges time and time again. They are stripped of their power to negotiate these fees as agents are appointed by landlords, some of whom use tenant fees to subsidise artificially low rates charged to landlords or grossly exaggerate the market value of such services.

We are not just talking about rogue landlords and agents here—we know that well-known high street chains are charging both tenants and landlords for the same services. These charges create a further financial barrier in a system which is stacked against tenants, many of whom are trying to save to buy their own home. It is a problem right across the country. That is why we must intervene to create a level playing field. A ban on unfair fees ensures that whoever contracts the service—in this case the landlord—pays for that service. This is integral to a fair market and, more plainly, it is common sense. Some agents and landlords already operate successful business models without charging fees to tenants. Under the ban, tenants will be better placed to shop around for a property that fits their budget, safe in the knowledge that the price they see is the price they will pay.

This Bill also protects tenants from paying unreasonably high deposits. We are capping deposits at six weeks’ rent. I should stress that this is an upper limit and not a recommendation. We expect landlords to find an appropriate level on a case-by-case basis and we will provide guidance to this effect. There has been no law on the maximum amount of a deposit previously. In Scotland, tenancy deposits are capped at eight weeks’ rent and there is no evidence to suggest that deposits have increased to meet this cap. A cap of six weeks’ rent offers a balance of greater protection to tenants while giving landlords the flexibility to accept higher risk tenants such as pet owners or those currently living abroad. It also gives landlords adequate financial security. This is vital to maintain investment and supply in the sector. More broadly, we want to ensure that tenancy deposits work for both tenants and landlords. That is why we have recently established a working group within the department looking at the merits of innovative and more affordable approaches to tenancy deposits—such as deposit passporting, where a deposit can be transferred from one tenancy to another. It is anticipated that this will report in the spring of 2019.

Let me be clear: this Bill is not an attack on good agents and landlords. We value the important services they provide. Letting agents who represent good value for money for landlords will continue to thrive because they will no longer be undercut by those who rely on overcharging and double-charging fees to sustain their business. We have also committed to regulation to improve standards in the sector and drive out rogue operators. At the moment, anyone can set themselves up as a property agent regardless of their background, skills or experience. Many agents take a professional approach and sign up to standards of practice through membership of a professional body. But others do not, and a lack of minimum standards has allowed unscrupulous agents to enter the sector—exploiting both tenants and landlords. We are committed to introducing minimum training standards and a code of practice. We are establishing a working group that will be chaired by the noble Lord, Lord Best, and we will provide further details on the membership and terms of reference of this group in the next few days. I will ensure that I write to noble Lords who are participating in the debate and place a copy in the Library.

We are also requiring agents to join a client money protection scheme, and I thank the noble Lord, Lord Palmer—who is not in his place at present—and the noble Baroness, Lady Hayter, for their considerable work in this area. Mandatory client money protection will ensure that each and every agent is providing landlords and tenants with the financial protection that they want and deserve.

The key provisions of the Bill apply to assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing. Clauses 1 and 2 ban landlords and agents from requiring the tenants and licensees of privately rented housing in England, including persons acting on their behalf or guaranteeing their rent, to make any payments in connection with a tenancy. Some key exceptions to the ban, as detailed in Schedule 1, are classed as “permitted payments”. These include the payment of rent, a refundable deposit capped at six weeks’ rent, and a holding deposit capped at one week’s rent. Landlords and agents will also be able to charge a tenant for payments associated with early termination or varying a tenancy where these are requested by the tenant. Other permitted payments include any reasonable costs made in connection with the tenant defaulting on a requirement under the tenancy and payments in respect of utilities, communication services and council tax. In the Bill, the term “in connection with a tenancy” refers to any payments required by the landlord or agent throughout a tenancy. This is an important point. We have ensured that this protection extends to all stages of the lettings process so that tenants are not hit with hidden charges further down the line. We brought forward amendments to this effect in the Commons on Report.

We heard the concerns that the provision permitting landlords and agents to charge a fee in the event of a tenant’s default could, as previously drafted, represent a loophole. There was agreement to the principle that it is only right that agents and landlords should not have to foot the bill owing to a fault of the tenant. However, we also want to make sure that such a provision is not abused. The amendments made in the other place will ensure that landlords and agents will now be proactively required to demonstrate through written evidence that their charges are reasonable, such as in the form of receipts and invoices. We firmly believe that this increases the protections for tenants and minimises the risk of abuse.

The legislation also prevents tenants from being required to contract the services of a third party. Again, this has been included in the Bill to ensure that landlords and agents are not able to circumvent the ban by requiring tenants to pay fees by other means. However, we have ensured that tenants are free to contract agents and pay for additional support with setting up a tenancy should they choose to do so, provided that the agent does not also work on behalf of the landlord. This may be the case, for example, where they are relocating or live abroad.

The legislation proposes amendments to the transparency requirements in the Consumer Rights Act 2015 which require an agent to display information about their fees and membership of redress and client money protection schemes prominently in their office and on their website. The Bill will extend these transparency requirements to online property portals, since many tenants use them to find a home. The Bill will require letting agents to display the name of their client money protection scheme rather than simply whether they are a member of such a scheme. These amendments are vital to ensure that existing legislation remains fit for purpose in the context of today’s market. We intend to provide separate consumer guidance on how the ban will affect landlords and tenants. We are currently working with industry groups to get this right and will share a version with the House during the passage of the Bill. As soon as the guidance is available, I will ensure that it is placed in the Library and that noble Lords receive a copy.

The Bill proposes a number of enforcement measures that offer a strong deterrent to irresponsible agents and landlords, and in doing so, protect tenants. We introduced amendments in the Commons to further strengthen the enforcement provisions and ensure that where things go wrong, tenants will have proper access to redress. First and foremost, the Bill places a duty on trading standards authorities to enforce the ban. Trading standards authorities do a good job of enforcing current regulations on letting agents. With their existing local knowledge of the industry, they are the clear choice to enforce the ban on letting fees. District councils will also have the power to enforce the ban, if they choose to do so. We want to encourage joint working across different tiers of local authorities, bringing together local housing authorities’ experience of enforcing housing legislation and trading standards’ experience of enforcing fair trading.

The Bill makes provision for a lead enforcement authority to provide oversight, guidance and support with the enforcement of requirements on letting agents. This includes the ban on letting fees and related provisions. This approach is one that has worked well in the estate agency sector. The lead enforcement authority will be the Secretary of State or a local trading standards officer who is appointed to the role. The lead enforcement authority will be responsible for issuing guidance to which all local enforcement authorities must have regard when enforcing the legislation. This guidance is still being finalised to reflect ongoing engagement with local authorities and the journey of the Bill through this House. I will share a draft with noble Lords before Committee stage.

Secondly, the Bill makes provision to enable tenants and other relevant people to recover their unlawfully charged fees. The Bill will encourage this as a ban. which is much easier to understand than the existing transparency requirements. In addition, landlords will be prevented from recovering their property via the Section 21 Housing Act 1988 procedure until they have repaid any unlawfully charged fees or unlawfully retained holding deposits. In terms of sanctions, landlords and agents will be liable for a financial penalty or prosecution for each individual breach of the ban that they commit. An initial breach of the fees ban will usually be a civil offence with a financial penalty of up to £5,000. Where a further breach is committed within five years, this will amount to a criminal offence and be liable to a fine. In such a case, local authorities will have discretion whether to prosecute or impose a financial penalty. They may impose a financial penalty of up to £30,000 as an alternative to prosecution and the penalty. We consider that this will act as a serious deterrent to prolific offenders. Local authorities will be able to retain the funds raised through financial penalties, with that money reserved for future local housing enforcement.

We also intend to provide up to £500,000 additional funding in year one of the policy to support implementation and awareness raising. My department engaged with over 160 local authorities at five summer events better to understand their resourcing needs, including how they intend to enforce the Bill, and will use this knowledge to ensure that we make the best use of the additional funding.

These important measures are above all intended to promote fairness. This Government will always stand against injustice. We recognise the need to rebalance the relationship between tenants, landlords and agents. By banning fees for tenants and capping deposits, we are delivering on our commitment to make renting fairer, more transparent and more affordable. It will make a real difference to millions of tenants across the country, especially for young people and families, and to the millions who will call the private rented sector home in the future. I beg to move.

16:07

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, first, I draw the attention of the House to my relevant interest as a vice-president of the Local Government Association. Secondly, I welcome the Bill, which seeks to ban landlords’ and letting agents’ fees. It is something that the Labour Party has called for repeatedly and it delivers on a pledge that the Government made some time ago. It has taken a while to get this far. The private rented sector is a significant part of our housing tenure and an important part of the housing supply available to people. It has grown significantly and it is right that we should put legislation in place to protect people from unfair fees or practices in the private rented sector.

I rented in the private sector when I was in my 20s, having grown up in a council property with my parents, and I have been an owner-occupier for many years since. My involvement with the private rented sector was relatively short, but for millions of people and millions of families it could be the only type of accommodation they ever know. There are many excellent private landlords and letting agents who do a good job. Like lots of legislation, however, the Bill seeks to deal with unfairness, where the balance is unfairly loaded against the private renter, with fees being charged with little or no evidence of what they are for, of whether they are value for money or of any reasonable basis for how those fees were decided, and fees charged by landlords as well as letting agents.

The Bill seeks to ban landlords’ and letting agents’ fees, and most other up-front fees, by prohibiting what landlords and their agents can require a tenant to pay. As the noble Lord, Lord Bourne, has told us, the ban covers shorthold tenancies, tenancies of student accommodation and licences. Looking at the list of what can be charged for, I have an immediate concern that the Government have left the back door open and that, despite good intentions, the Bill runs the risk of not achieving all the Government want to achieve. I propose to go through the Bill and highlight those areas where I have concerns, and which I will be raising in Committee and on Report. The noble Lord, Lord Bourne, is someone I have huge respect for, as I do for the noble Lord, Lord Young of Cookham. In all our dealings, both noble Lords are courteous. I am sure they will listen carefully to the points raised around the House during our deliberations. I hope we will be able to persuade the Government that some areas of the Bill will require amendment. If not, and I am still not convinced by the arguments put forward by the Government, I will divide the House on Report stage a number of times.

Turning to the Bill and the issues that I have concerns about, what can be charged for? As the noble Lord told us, there is obviously rent. The Bill also includes a refundable tenancy deposit, capped at no more than six weeks’ rent. It is disappointing that it has been set at six weeks. This runs the risk of becoming the norm. I would prefer it to be set at four weeks, which is the level at which I believe the Prime Minister first indicated it would be set when announcing the policy some years ago. It also includes a refundable holding deposit, capped at no more than one week’s rent. I fully accept that a holding deposit should be paid, but this is set far too high. It should be capped at, say, three days’ rent or even £50—whichever is higher. At the same time, I would also like the tenant to be provided with a copy of the draft tenancy agreement, so that they can see in writing what they will be asked to sign. They can then raise issues with the landlord and/or the letting agent, while other processes are taking place. It is important for there to be full transparency on the part of the landlord or the letting agent over how they intend to treat a holding deposit, setting out clearly in writing, when the deposit is not returned to the prospective renter, the full reasons for the deposit not being returned. This will enable the renter to be more easily able to challenge the decision if they believe it is unfair.

We then have the ability for certain payments on assignment, novation or variation of a tenancy when requested by the tenant to be capped at £50, or reasonable costs incurred if that is higher. This provision appears open to abuse. How will reasonable costs be determined? What is the protection from the risk that the £50 becomes the minimum figure charged, and that tenants will pay much higher charges? I would appreciate it if the noble Lord could address that in his reply to the debate.

Payments associated with early termination of the tenancy when requested by the tenants, payments in respect of utilities, such as communication services and council tax, and payments in the event of a default of the tenant, such as replacing a lost key or late payment of a fine, are to be limited to the landlord or agent’s reasonably incurred costs, which must be evidenced in writing. This is another provision that I fear will be open to abuse. The Bill fails to protect tenants from unscrupulous practices where, in effect, the fees lost by landlords and agents will find their way back, being recouped through this provision. If the noble Lord, Lord Bourne, disagrees with me on this point, can he explain to me how the Bill in its present form guards against that? To guard against it, you have to go further than we have at present and clearly define matters, maybe in secondary legislation, saying what the Government mean and how it will apply. Secondary legislation will give the Government flexibility to amend regulations as necessary and give greater protection to tenants.

I am pleased to see the Bill dealing with enforcement and that for the first year at least some funding has been provided by the Government—although I am not convinced that it is at the right level. Trading standards, like other parts of local government, are under extreme financial pressure. The risk with inadequately funded extra requirements is that it will not be possible for the authority to deliver what is expected of it. I am not convinced that funding this work through fines levied in the future is the right model to develop a system that serves tenants, landlords and letting agents well. Perhaps the Minister can say a little about the thinking behind this when he replies to the debate.

I welcome the proposal to designate a lead enforcement agency. The Local Government Association’s suggestion that National Trading Standards should provide this function is well made and should be considered carefully by the Government when they make their final decision. Enforcement functions will be delivered by local weights and measures authorities. The local district council may also enforce provisions in the Bill if it so wishes. Can the Minister explain why the Government decided to construct the enforcement regime in this way? Is there a risk of confusion or duplication, particularly in the context of my earlier remarks about local government resources?

Where a ban is breached, tenants are entitled to a refund of illegal fees. The local authority can impose a financial penalty on the landlord or letting agent of up to £5,000 for a first offence with a further breach resulting in a fine of up to £30,000 or prosecution. In Committee, I will probe whether these fees are set at the right level. The tenant can apply to the First-tier tribunal for the recovery of illegal payments but is not entitled to any compensation. Why can the local authority not be empowered to recover the illegal payments on behalf of the tenant, in addition to imposing a fine, before passing the illegal payment back to the tenant? That would avoid the need to go to a tribunal in the first place and leave the landlord with the option of challenging the decision in the tribunal. It would be a real help to tenants.

Perhaps we should go even further with a compensation payment to the tenant who has been subjected to this abuse. It is not unusual in this country to award compensation to victims, in addition to levying a fine on an offender. If you have been ripped off and made to pay an illegal payment, you are a victim and it is not unreasonable to receive some element of compensation. That is certainly better than leaving the tenant who has been charged an illegal fee to go to the First-tier tribunal to recover the money taken from them illegally.

It is great that there is a provision in the Bill requiring fees to be published on third-party websites. My only question is: how prominently will they have to be displayed? I ask this because I am aware that companies over a certain size are required to have links to their modern slavery statements on their websites, but it is fair to say that they are not always the easiest thing to find. I want an assurance from the Government that there will be some sort of provision to ensure that they are put in a prominent place on the site. I support the provisions on client money protection schemes.

In conclusion, I look forward to Committee, where I will probe further, with a series of amendments that seek to engage the Government on the issues I have raised. I welcome the Bill. From my remarks, however, noble Lords will see that it can and should be significantly improved for private sector tenants. They are an increasing group of people who deserve regulations and legislation that afford them reasonable protection.

16:18

[Baroness Grender (LD)]

My Lords, as the Minister said, today is World Homeless Day. It therefore seems fitting that we are discussing the Bill. The loss of a private tenancy remains the biggest cause of homelessness. One in six households now rents privately; that includes more than 1 million families with children. It is in that context, looking out for people on low incomes who have no choice but to rent, that we should view this Tenant Fees Bill. I thank the Minister for his kind words, the regular meetings and updates, his ability to listen and the great care he shows for this subject.

I was delighted when the Chancellor announced in the Autumn Budget in 2016, while my Private Member’s Bill on this issue was still in progress here, that he would crack down on lettings fees, but I profoundly regret that the delays to this Bill caused by those higher up the Government food chain have resulted in yet more families being put into temporary homes or debt because they could not afford the prohibitive up-front fees. Shelter’s most recent survey of private renters showed that the average costs of moving were £1,400.

Our party is fully in support, but in this place it is our duty to ensure that the legislation is right. We will do that. We must ensure that there are no loopholes to be exploited by unscrupulous lettings agencies that have tenants with no choice but to use them. So if there is any fuss from the business managers on the other side of the House because of delays to get this Bill right, they would do well to remember that they hold responsibility for the delay of three years or more from announcement to implementation—that is, three more years of tenants, as the Government found in their own research, being exploited and charged arbitrary amounts, such as a reference check of anything from £30 to £220, or a tenancy renewal costing anything from £35 to £150. Shelter states that over the past five years alone tenants have paid more than £678 million in unfair fees, so when the landlords suggest that the legislation will cost them £82 million, I would look at it in that context.

When landlords also suggest that this will lead to a rise in rent I ask them to consider the following three points. First, there was no evidence of rent rises when the system was changed in Scotland. Secondly, if someone is on such a prohibitively low income that they are driven into debt by arbitrary up-front costs from lettings agents, they would rather spread that payment over a 12-month period than have to pay it up front. Thirdly, there is evidence that lettings agencies have been one of the drivers of pushing up rentals by prompting landlords to do just that.

My hope, as we scrutinise this Bill, is that we keep uppermost in our minds those very families on low incomes. The school cook, the teaching assistant—real examples that I have described when we have previously discussed this issue—are doing the right thing by looking for lower more affordable rent, but cannot afford to move to a cheaper rent and become homeless because of up-front costs.

One of the other guiding principles should be who the customer of the lettings agents is—who can call the shots and shop around for a better deal. It is of course the landlord, as this Bill sets out, and they are the ones who should pay. There are suggestions that this will jeopardise an industry, but I urge anyone making that argument to take a look at a newcomer into the sector that, in a short period, has become the largest lettings agency in England and Wales—OpenRent.co.uk, which supports this Bill. Incidentally, it also charges a flat fee to landlords, so it is entirely possible to grow and thrive in the market without the use of fees from tenants. I spoke to OpenRent today; it has only just conducted a YouGov survey in September, as yet to be published. The general public and tenants are overwhelmingly in support of the Bill and this change at 70% and 81% respectively, but the most compelling part of the survey is that 64% of landlords also support this policy. That begs the question: why are those who represent landlords lobbying against this Bill when most landlords want to do the right thing?

If we accept that the customer of the lettings agency is the landlord, I suggest that we need to examine whether the suggested default fees in the Bill are in danger of being overkill. The changes that the Government made in the other place to tighten the definitions, on the limit on the amount, the planned guidance regarding the type and reasonableness of fees—although we might want to look at whether that needs to be in the legislation rather than in guidance—and the change to introduce a paper trail are welcome, but this part of the Bill remains open to exploitation as a loophole. I question whether these default fees are necessary at all and will want to examine this in Committee.

One of the failures of previous attempts at transparency has been how limited tenants’ knowledge can be of their rights in this part of the law, and the law dealing with unscrupulous lettings agencies. If there is clarity in the law that literally no additional fee goes to a lettings agency, it would be much easier to enforce and explain. We already have two current pieces of legislation that I believe cover the default issue. I thank the Minister for our discussions yesterday and for the possibility, at least, of taking a look at this.

First, to deal with keys, security devices and late rent payment fines, I think that everyone involved in this debate would ask the Minister if there are other examples: so far they seem to have been absent from any of the debates that have taken place. What is the list of issues, and what is the estimate for these defaults? In other words, how often will this part of the Bill actually need to be used? If the answer is that the level of likely use of this default is minimal and can be covered by current legislation, then I suggest that this particular section is a sledgehammer to crack a nut.

In the Housing Act 2004 there is a system for deposit protection, and Schedule 10 sets out the role of the deposit protection scheme. This includes arbitration between landlord and tenant: under this law, if a key needs to be replaced, the lettings agency can charge the landlord. The landlord has access to the deposit and can use that money, unless it is disputed by the tenant, in which case arbitration and ultimately the county court can make a judgment. In the most severe cases of rent arrears or damages, the landlord can recover their property under Section 8 of the Housing Act 1988. Does this legislation cover the areas where the Bill has introduced a default fee?

As for the cap on tenancy deposits, I appreciate that the rental sector is a very wide market, covering everyone from people on very low incomes to those with money to burn. I hope that the policy leans towards those who we all know should not be in the private rental sector but in social rents, a problem that cannot be solved immediately. For that reason I will want to look in Committee at getting the security deposit number of weeks down. We should note that the HCLG Select Committee, which did the pre-legislative scrutiny, recommended that it should be five weeks. The suggested six weeks would mean that renters in England will still have to find an average of more than £1,100—or £1,800 in London. Citizens Advice currently estimates that six weeks will help only 8% of renters. Does the Minister agree with that figure?

On the cap on holding deposits, as I discussed with the Minister yesterday I would welcome the extension of the transparency and use of paper trails introduced on Report to the clauses on defaults to be applied to holding deposits too. I would also like to explore the issue raised by Generation Rent that while tenants are prohibited from putting down holding deposits on multiple properties, landlords and agents are not prohibited from taking holding deposits from multiple tenants for the same property. I will also want to look at a reduction in the number of days. Citizens Advice published a survey yesterday showing that more than half of renters surveyed were shown a tenancy agreement only after they had paid a holding deposit or the equivalent. How can they negotiate terms when they are not allowed to look at the paperwork until they have put some money down, whereupon they are too invested to pull out?

The funding of £500,000 for the first year of the legislation is welcome, but I will ask for further detail in Committee of what plans there are to ensure that tenants know that lettings fees have been banned. Of course, I suggest to the Minister that it would be easier to put that message across if they were banned outright and the default loophole not introduced. Tonight, as I bed down on a cardboard box next to my noble friend Lady Suttie to recognise World Homeless Day at a sleep-out organised by Depaul, a charity that supports young homeless people, I will be greatly encouraged that the Bill has finally arrived. It goes some way to preventing people on low incomes from tipping into homelessness and I really look forward to seeing it on the statute book as soon as we have given it the necessary scrutiny and removed some of the loopholes that impact on people who are in the private sector and on low incomes.

16:29

[Baroness Hayter of Kentish Town (Lab)]

My Lords, the Government have been on a very welcome journey with regard to the private rented sector. First, and following pressure in this House, they required all letting agents to belong to an alternative dispute or ombudsman scheme. Then, again following pressure in your Lordships’ House, they moved on client money protection. That was followed, as the Minister reported, by compulsory five-yearly electrical checks in rented accommodation, something that we started pushing for in the Consumer Rights Bill. Now, albeit after a delay—but, again, following pressure in this House—they have banned dual fee charging by letting agents; in other words, tenants cannot be charged by an agent which already represents the landlord. Furthermore, I have only just heard—maybe I missed it before—the very welcome announcement of what we are going to put on the broad shoulders of the noble Lord, Lord Best: the requirement on letting agents for training and codes. We now need only the right to a habitable property and we might actually have a really good private rented sector.

The Bill is good in itself. It will save tenants hundreds of pounds just when they are trying to put together the money for a deposit and to move, which alone can cost up to £1,000. Although the average letting agent charge to tenants—in addition to what they have charged the landlord—is £300, one in seven pays up to £500. It is good that the Bill puts an end to that but it is also important for the housing market because any such money extracted unfairly as fees is lost to both the tenant and the landlord, sucking some £240 million a year out of the housing sector. That money could be better used by landlords to improve homes rather than spent by letting agents, which generate no new properties.

I am sad to see ARLA, which represents letting agents, still arguing against the Bill, claiming that it will harm the private rented sector. In fact, it will do the opposite, partly, as I have said, by keeping funds within housing, rather than with agents, but also, vitally, by increasing tenant trust in the private rented sector. David Cox, the chief executive of ARLA, really ought to know that distrust in agents is not just apocryphal. It is based on hard evidence. He should also recognise, as I have long argued to him and his members, that the inherent conflict of interest within tenant fees is unethical and unprofessional. No service provider should have both parties to a transaction as clients. It cannot owe a duty of care to both. Charging both for the same service—letting a property—gives letting agents a dual responsibility which they simply cannot meet. Arguing on behalf of the landlord that rent should go up, or be paid on a certain day, can hardly be done by the same person arguing on behalf of the tenant that until a bathroom is fixed the rent is not due. Who is the client at that point? This is particularly important following the Consumer Rights Act. We have to be clear: who is the consumer in the transaction and therefore who gets the rights contained in that Act?

When we argued for a ban on the fees charged to tenants in your Lordships’ House, Ministers claimed that making agents’ fees transparent would be sufficient to drive down prices, as consumers could shop around. We sought at that point to explain that in fact tenants cannot shop around; only landlords can. If a tenant wants a particular property, they have to deal with the agent selected by the landlord and have no negotiating power at all over the fees charged, nor the quality of service provided. They cannot swap agents. So I greatly welcome the Bill and wish it a speedy path on to the statute book for the sake of millions of tenants, about whom we have just heard from the noble Baroness, Lady Grender.

Changes will obviously be needed as the Bill goes through in Committee. But following the very constructive way that Ministers have dealt with us over those earlier issues, we have every confidence that the Government will accept our amendments in Committee, particularly on default fees which, without protection, could be exploited, as the noble Baroness, Lady Grender, has again just noted. There is also the issue of the size of the cap on deposits, as mentioned by the noble Baroness and my noble friend Lord Kennedy.

We will also seek reassurance that proper enforcement will take place, with more meaningful penalties for those who flout the law. As my noble friend Lord Kennedy said, trading standards departments are highly stretched at the moment, with far too few assets, so we will look to the Government to ensure that the penalties due back into the enforcement system will be sufficient to enable action to be taken wherever tenants are being ripped off. Sufficient levels of fines are anyway essential to act as a deterrent to bad behaviour.

I will make one further point about how the Bill demonstrates the value of regulation. I am afraid that I had to watch the coalition Government abolish the National Consumer Council, which took away a source of thoughtful advice on when regulation is necessary to protect consumers. I have also had to witness, whether in relation to Brexit or more generally, the endless mantra from this Government and some of their supporters that red tape or regulation is bad for business. Not only is that not true; it ignores the interest and well-being of consumers who, without appropriate protection, are vulnerable to shoddy goods, rip-off merchants and poor service. I particularly welcome the Bill’s acknowledgement that this large group of consumers, who we have heard about, need legal protection to get a fair deal.

I wish the Minister well with the Bill and all strength to his arm in persuading others back at the ranch—or up the food chain, which I think was the term just used—that he be given the freedom to respond positively to the amendments we will table. We will be happy to give him all the credit for the movement that he makes.

16:38

[Lord Best (CB)]

My Lords, I am very pleased to follow the noble Baroness, Lady Hayter, who has done such great work in this field. I declare my interests in lettings and letting agents: my wife and I own rental property, managed by a reputable firm of letting agents; for eight years, until last year, I chaired the council of the Property Ombudsman, which handles complaints about property agents; I am a vice-president of the Chartered Trading Standards Institute, which has enforcement powers for property agents, and of the Local Government Association. I co-chair the Home Office’s right to rent consultative panel and have recently been very pleased to accept an invitation from the Minister for Housing and Homelessness, as mentioned by the Minister today, to chair a working group to advise government on the regulation of property agents. In these various capacities, I greatly welcome this Bill and a number of other welcome measures where legislation is needed to catch up with the phenomenon of the extraordinary growth of the private rented sector.

At later stages, we will no doubt consider some of the Bill’s finer points of detail—as highlighted by Shelter, Citizens Advice, Generation Rent, the LGA and others—and there may be some modest amendments to the Bill which we can pursue, but in this Second Reading debate I will stick to the big picture and the reasons why this legislation is definitely good news. In the light of some criticism of the Bill in the other place, I want to address two broad questions: first, what exactly is the market failure here? We pay fees for many services and we shop around for the best deal, so what is so different about letting agents charging fees to tenants? Secondly, will a ban on fees overcome the alleged market failure, or could it have unfortunate side-effects?

A spin-off from the astonishing growth of the PRS, which now numbers some 2.3 million landlords, is the growth in the lettings industry. Many firms provide an excellent service to both landlords and tenants, but the rapid expansion of the sector has also meant a proliferation of unregulated new letting agents, often with no qualifications or training. In order to secure a share of the market, agents need to attract local landlords, and a way to do this is by undercutting the fees charged to landlords by rival firms. This may sound like healthy competition and good news for landlords. However, it has changed the basis on which private sector lettings are handled. In order to make their profits, despite cutting fees to landlords, many agents have charged the tenant instead. The trouble is that, unlike landlords, tenants cannot shop around for another agent; they must go through the agent chosen by the landlord if they want to have the house or flat, and then they must pay any extra fees which that agent demands.

We will all have our stories of tenants with no option but to pay rip-off fees to agents alongside big deposits and many weeks’ rent in advance. This can lead to tenants borrowing the money needed, incurring expensive credit card debts or, worse, having to go to loan sharks. In securing references, credit checks and right-to-rent checks, a letting agent is acting for the landlord. The agent cannot simultaneously act for the tenant. My intern showed me the list of agent fees for her flat: each of the three sharers had to pay £275 up front to the agent: a total tenant letting fee of £825 for the agent on top of the fees charged by that agent to the landlord. When she moved out and her sister took her place after a few months, the agent required £250 for early termination from her and another £275 from her sister: total fees of £525 for the most minimal input by the agent and not a day’s rent lost, but the tenants—the consumers in these circumstances—cannot exercise any choice in the matter.

The problem here goes deeper. If the agent’s profits depend on charging fees to incoming tenants, the agent is incentivised to bring in new tenants as often as possible, rather than to encourage the landlord to grant longer tenancies or to renew tenancies. This creates insecurity and disruption to the lives of tenants, who are forced to keep moving around and paying more fees when short, fixed-term tenancies end, and the ending of tenancies is now the most common precursor to homelessness. Yet, while high turnover may be good for agents, it is most unlikely to be in the best interests of landlords. Every changeover costs them money in lost rent, redecorating and so on. Banning the charging of tenant fees, as envisaged by this Bill would, therefore, be helpful for landlords as well as for tenants by removing this trigger for some agents to act against the interests of their landlord clients.

I turn to my second question: could a ban have downsides or untoward consequences? It is said that, if agents can no longer extract fees from tenants, they will have to charge more to landlords, and landlords in turn will then instruct agents to raise rents. I have several responses to that. First, rents are set by the market, not the whim of landlords or agents. The experience in Scotland when a ban on fees was imposed was for rents to rise by no more than in the rest of the UK. Secondly, not all landlords use agents to manage their properties; perhaps only 40% pay for a full management service, so a ban would by no means affect all landlords, and the market for rents is made by the whole sector. Thirdly, some reputable agents charge tenants only nominal fees so they will be able to absorb the loss of these without noticeably increasing their charges to landlords. Fourthly, some landlords will gain financially from greater stability in their lettings once there is no incentive for agents to move tenants on, so they will be better off even if management fees rise. Finally, if rents rise—by £2 per week, for example, according to one guesstimate—it could still be better for tenants since they would be spared the up-front charges that they must currently find, often by borrowing on expensive terms. One other effect of the ban is certainly likely to emerge: a number of the here-today-gone-tomorrow letting agents that have appeared on our high streets are likely to go out of business. Those that make their money mostly from tenant fees will not survive. Frankly, that is no bad thing.

I conclude that the Bill’s provisions are very necessary to correct an inherent market failure and that the dangers of untoward, unintended consequences are negligible. When we move to the details of the Bill there may be more to say about enforcement of the legislation, although I know the Ministry of Housing, Communities and Local Government has worked very hard to close loopholes and prevent avoidance and evasion of the new measures. At this stage, I warmly welcome the intent and the content of the Bill. I applaud the noble Baroness, Lady Grender, for first raising the matter in your Lordships’ House, and I congratulate the Secretary of State and his housing Ministers on bringing it forward.

16:47

[Baroness Gardner of Parkes (Con)]

My Lords, I declare my interests as listed in the register. I will say at the outset that I shall make a few comments that the noble Earl, Lord Lytton, passed on to me because he was not able to stay for this debate. He is very well informed on this subject, as all noble Lords will be aware.

I think that there has to be an understanding. I strongly support the idea that no agent should be able to charge both sides and make a double killing; that is almost immoral, and it is certainly very much against the tenants if they have to pay twice. But the noble Earl made the point that not all tenants are pleasant, honest or good, and we must not be carried away with the idea that all landlords are bad and all tenants are good. That is not the way that things are. This is about a transaction between adults. These are the points that he was making.

The noble Earl says that there is a huge amount of advice available to renters. Funnily enough, I have not found that myself; I found that the amount of advice for renters is not perhaps as adequate as it could be. The inequalities in bargaining power and opportunities for exploitation are very high in areas of very high value or deprived locations, and they are not necessarily representative of the entire market. Checking out tenant credentials is a repetitive activity and, because of the significant liabilities in relation to some of these, such as the right to rent, they add to the cost, which needs to be met somehow. It is true that references have to be taken up and nationality has to be proved, along with the right to be in the country; quite a lot of things come up with that. I hope the noble Earl will join in at later stages of the Bill because I believe that he has a considerable part to play.

I know that everyone is well aware of the interest I have in short-term lettings—holiday lets—and the damage that that is doing to ordinary tenants. Recently the Mayor of London made a statement about the damage that it has done and how the huge loss of rental properties is very much against tenants’ interests. People want properties available to rent, and for them to be reasonable to live in and enjoy. I have quoted before about the block in which I have had an interest in properties for many years, with long-term tenants of over five years in one and four years in the other. I am lucky to have them, because we have had all these terrible tenancies, totally illegally. People have been letting on short holiday lets, although that is strictly banned in the leases they have. These people are terrorising others in the block. One particular lady in her 90s is abused all the time. Rotting food is left everywhere around the building.

It is quite incredible that it is so bad now because power has been taken away from local authorities. When I have asked Questions for Written Answer about whether the Government would encourage local authorities to apply to have control in these matters again, the answer has always been a definite no. The Government are just not interested. They should be interested, because if local authorities had a right to register properties, there would be a safer position for lots of people. I do not think that it is fair.

To mention in passing, because it has been a long battle and is another very important point regarding the landlords’ situation: you cannot really ask people to abide by a lease for short lets for Airbnb. I spoke to the Minister when he was going to have a meeting with Airbnb. He said it told him that it asks people whether they have a right to sublet. But I asked Airbnb the same question, and it told me it does not, although it had said yes to the Minister. What is the truth? Only by some external authority being able to take over, such as local authorities if they were willing, is there going to be anyone checking on these things. At long last, under the right to manage scheme, you can only obtain—what is the word? Reclaiming the property. I am sure that everyone knows the word.

[Lord Bourne of Aberystwyth]

Repossession.

[Baroness Gardner of Parkes]

That is it. I hope Hansard was able to take that down. You can only do that if you are the head lessee or the freeholder. If you have set up your right to manage, there is a legal link missing which does not authorise you to recover the property for compensation if it has been mishandled. The woman who owns the places that are being let illegally—three or four blocks, one is normally a brothel and the other three are Airbnbs or something similar—has had herself certified under the Mental Health Act, so during that time no one was able to repossess anything.

Now the Court of Protection has appointed someone to take over, and it is all under way. As soon as these people put out the illegal people, they smashed all the windows and external structures in the brothel, which is in the basement, and the other places are being attacked on other floors. This is very disturbing. If you were a tenant living in that flat, you would be very worried about your personal safety, and would think, “Is what I’m paying fair?”, for a place that is just being allowed to do whatever it wants because there are no suitable controls.

Again, I make a plea to the Minister that it should be possible for local authorities that wish to do so to be able to return to the short-let licensing which they had in the past. That would protect long-term residents in a block, and the Mayor of London is absolutely right to say that these short lets have reduced the number of properties available in London. It is therefore quite right that people should be checked in all these financial ways. However, I recall clearly when I used to let the basement of the first house I ever lived in and Harold Wilson’s Government brought in a complete freezing of rents. That was ineffective, and worked so badly that after a while it had to be removed again. When that happened, everything went through the ceiling overnight. So it is far better to have a housing market that develops in a more normal way and works out for people in a fair way on both sides. I commend the noble Baroness, Lady Grender, for what she has done on this. It is an important but small part of a huge problem that the Government should be allowing local authorities to get on with.

I have one comment about the Written Answer I received the other day. The latest problem is commercial waste. People who come on holiday lets put out rubbish at the end, on any old day they feel like. The Answer I received said that this was commercial waste. If it is commercial, only the council can arrange to collect it—but how can it arrange to collect the rubbish fee if it has no idea who is to pay it, and when that person has vanished? This is a new problem, and apparently it is occurring all over London; waste is building up because it is just thrown out on any old day you happen to leave the place. I have said more than enough; I just wanted to give noble Lords a feeling of my views. I will look to see if there is anywhere I can add a little to the Bill.

16:57

[Lord Strasburger (LD)]

My Lords, returning to the Bill, I start by drawing the House’s attention to my declaration of interests in the register, specifically to the fact that I own 11 investment properties, either solely or jointly with my wife, and have done for something like the last 20 years. I also have a shareholding in a small letting agent in Bath. I am therefore in a position perhaps to bring a slightly different perspective to proceedings.

Speaking for myself and for the letting agency, I strive hard to be a caring and ethical landlord, and I have tenants who have been in place for 10 years or more. I insist on the same standards from the agency, Reside Bath. We do not charge landlords and tenants for the same service, and we are positioned very much at the top of the scale for quality of service and integrity. That is the raison d’être of the business. Our mantra is that a happy tenant is a good tenant; it is very much in the interests of the landlord that the tenant is happy and will look after the property. Almost every single unsolicited review of the agency on Google by tenants—there are many—has five stars. I wanted to set the standards a little. I will therefore put the perspective of a reputable part of the letting industry to the House today.

Landlords and letting agencies are relentlessly pilloried in the press and by politicians. They are convenient scapegoats for a broken housing market, caused by there being too few properties, particularly properties for social rent, and big barriers to entry for first-time buyers. The lack of social housing means that a lot of less well-off tenants have been forced into the private sector, where they should not be. They should be properly cared for, with good housing at rents they can afford.

Most agents do a decent job and most landlords are sensible and fair. The private rental market meets an important need for those who do not qualify for social housing, or cannot get it, and those who cannot buy their own homes. I fully accept that there is a minority of rogue landlords and rogue agents. A member of my close family was a victim of such a rogue agency in London not long ago, which indulged in the most appalling and illegal behaviour. I do not stand here defending rogue agents in any way. I favour strong accreditation rules to stamp the rogues out—which this Bill will not do. But it is fair to say that this is a two-way street; there are some awful tenants too, and I have had my share of them.

I would like to defend the six-week deposit. Some tenants who pay monthly are in the habit of not paying their last month’s rent. They assume it will be taken out of the deposit. If the deposit was only four weeks, it would not cover the rent; if five weeks, it would cover the rent, but with virtually nothing left to give the landlord any defence against genuine—I stress genuine—dilapidations to the property, for which the tenant is responsible. Six weeks is a balanced number that is fair to both tenant and landlord.

From the industry side of the fence, the Bill seems to imply that all tenant fees are unfair and exploitative. While the Minister referred to unfair fees, the Bill bans all fees, whether fair or unfair. Most tenant fees recover real costs that agencies incur. I accept that some agents abuse tenants’ fees and charge for completely imaginary services and costs. That practice would be better covered by a cap on tenant fees rather than an outright ban.

What will be the consequence of a total ban on fees? The rental marketplace is very mature and efficient; every action leads to a reaction. Things vary in different parts of the country, but landlords mostly pay for the ongoing management of the property and tenant during the tenancy. The tenant fees usually cover the costs incurred at the beginning and end of the tenancy—for example, marketing costs, company viewings, creating the tenancy agreement and end of tenancy negotiations about dilapidations. All this really does cost money, which agents cannot absorb. The agency market is highly competitive and margins are very tight. Agents cannot absorb the loss of revenue caused by a ban on tenant fees, so the costs will be passed on to landlords. I have talked to a lot of agents and they are all planning to do that. Landlords will then try to recover this new cost through higher rents. I accept the argument that rents are to a large extent set by the market, but evidence from the Scottish example is not clear. Depending on who you believe, rents increased by between 0% and 5%, but I accept that it is an art, not a science.

Also, in trying to recover these extra costs, some landlords will try to trim their maintenance costs, and that will have obvious consequences for the quality of accommodation. It is very hard to quantify this but there will definitely be upward pressure on rents and downward pressure on standards. It is worth noting that this is the latest of many assaults on the viability of landlords’ business models. Gone are the days when buy to let was a lucrative alternative to saving for your pension. A few years ago, George Osborne mounted a double tax raid on landlords, the last part of which is only just coming into effect. He increased stamp duty on property purchases for landlords and others, and he scrapped—in a phased way; it is just finishing now—the tax relief on interest. That means that landlords pay tax based on revenue, not profit, unlike every other business, and so can end up paying tax even if they make a loss.

Noble Lords could not expect me to stand here and make a speech without mentioning Brexit, which is a factor in this. In the unlikely event that the Government can cobble together some sort of deal that they can get through the House of Commons, there is a risk to the housing market and to the price of houses. The Governor of the Bank of England forecast to the Cabinet that property prices could fall by 30% to 35% after Brexit, and that could mean negative equity and large-scale bankruptcies for landlords. For some landlords, taking over the costs currently covered by tenant fees might be the last of a large number of straws. Some will choose to sell, some will go out of business and new entrants will be deterred. I cannot put a figure on this but there are likely to be fewer landlords, and fewer landlords means few properties to rent, which means higher rents and less choice for tenants.

In summary, the law of unintended consequences applies here and I believe that the Bill misses the real target. Tenants will get a short-term gain but they might incur the long-term pain, currently unquantifiable, of higher rents, less availability and possibly lower property standards. I would have preferred a strict cap on tenant fees and compulsory accreditation of all letting agents at a very high standard.

Having said that, I will go along with the Bill and any Bill that improves the standards of the rental market. I and my letting agency business will make the best of it for all concerned, especially our tenants, and will try to mitigate the downsides.

17:08

[Baroness Jenkin of Kennington (Con)]

My Lords, I declare an interest in that I let rooms in my home in London, motivated mainly by the fact that accommodation in London is very expensive and I think it is unfair of those of us who have extra space not to use it. However, I have never used an agency and hope never to have to do so.

On top of increasing rents, tenants often face an arcane list of fees: administrative fees, credit check fees, tenancy renewal fees, referencing costs—and the list goes on. Therefore, I support the Bill in its intention to make renting fairer, more transparent and perhaps even more affordable for tenants. Getting this right will improve life for millions of people, including many young people from what is sometimes termed Generation Rent.

However, even well-framed legislation can risk unintended consequences, and it is the Bill’s potential impact on the home share sector to which I draw your Lordships’ attention. Home share is a global movement, but it has for many years remained stubbornly small in the UK. With an investment of more than £2 million from the Big Lottery Fund and the Lloyds Bank Foundation for England and Wales, this has finally started to change. The growing number of small home share agencies in the UK are at a crossroads, with the opportunity to become a major force to reduce loneliness among both older and younger people, as well as to provide affordable housing and a good start in life to young people and others. It is an arrangement which involves housing, but whose primary purpose is to set up a mutually supportive relationship across the generational divide.

Home share is a system whereby someone who needs help or companionship to continue to live independently in their own home is matched with someone who has a housing need and can provide a little support. Householders are often older people who have a few support needs or have become isolated or anxious about living alone. Home sharers are often younger people—students or key public service workers—who cannot afford housing where they work but are happy to provide an agreed low level of help or companionship. One thing which motivates me is finding a resource which meets a need and putting the two together, which is why I am such a fan of home share. Home sharers help out and pay no rent. There is a national network for the UK’s home share schemes, supported by the charity, Shared Lives Plus.

Home share is a widely supported concept. A short film produced by the BBC to mark Tracey Crouch’s new role as the world’s first Minister for Loneliness showed how Florence, 95, and Alexandra, 27, support each other by living together in Florence’s home. In the film, Florence talks about the crushing effect of loneliness after the death of her husband, the fear of something happening to her and no one knowing, or of being “bored to tears” and the emptiness in a life which had previously been active. Alexandra also talked about loneliness and said of living with Florence: “I have a new friend and somewhere that is really homely. I can feel safe and not isolated in a big city”.

This film has been watched 25 million times on social media. Councils are now investing in home share, with others exploring how to support independent home share organisations to support more older people. Paul Ellis, the cabinet member for adult care and health at Wandsworth Council said:

“This is a common-sense approach that tackled two problems at once in a creative way. Loneliness is a hidden problem in our communities, and as well as providing more homes, this scheme will provide companionship and bring different generations together”.


Parliament clearly does not intend to create red tape or financial challenge for such a valuable model, but there is a risk that home share schemes will be captured by the definition of letting agent used in the Bill, because the younger home sharer has a licence to occupy provided by the older person. The home share agency carefully selects older participants who need support, sometimes because they have the very early stages of dementia, but sometimes just because they are isolated and worried about living alone. Younger participants are also carefully selected, and there is time and financial cost to this: the young person is interviewed, references are taken up and an enhanced DBS police check is usually required before they can carry out a support role for a vulnerable older person, which can include shopping and therefore handling money. Home share is comparable to a befriending scheme for older people, where an enhanced DBS check is considered standard. Most schemes need to charge for these services.

Home share is based on a matching process. Both parties are introduced to each other, they then decide whether they are compatible and are supported to draw up an informal home sharing agreement, which outlines the expectations on both sides and usually includes the young person providing about 10 hours a week of practical help and often being in the house for a number of nights. Home share matches typically last about a year, but there is no formal contract stipulating the length of an arrangement, nor enforceable periods of notice. Home share has had a remarkably good safeguarding track record in the decades during which it has existed in the UK, based on careful selection and matching participants, clear expectations and building trusting relationships in which both parties take responsibility for the arrangement’s success, rather than resorting to law. Its relational nature makes it feel valuable and fulfilling to its participants, and marks it out from a more formal commercial arrangement. The young person has a licence to occupy their room, and the right which that implies, but they pay no rent to the older person. They usually contribute to the older person’s household bills.

One of the strengths of home share is that, unusually among preventive services which councils under the Care Act 2014 have a duty to develop, it does not require ongoing charitable or state funding. It is funded through both participants paying the home share agency to enable that agency to employ co-ordinators who find, recruit, prepare and match participants, and then continue to provide ongoing support and advice for them, stepping in if something goes wrong and also arranging new matches where a match comes to an end, such as when a young person moves on or an older person needs more formal care. Typically, the young person will pay an upfront fee to cover the costs of ascertaining that they will be able to support an older person. Then the older person will pay a monthly fee, with the younger person paying a larger monthly fee; £30 a week for an older person and £40 for a younger person is typical. The older person pays far less than they would for more formal support, and the younger person far less than if they were renting housing in the normal way. Some home share schemes are formally constituted as charities or community interest companies. All in the Shared Lives Plus Homeshare UK network have signed up to work within a good practice framework and continually evaluate themselves against a self-regulatory quality assurance programme, with Shared Lives Plus staff providing support and a community of practice.

Of the 23 home share schemes which are part of the Shared Lives Plus network, six now report that they are financially sustainable through this model, and the number of older people supported has risen from 250 in 2017 to 350 in 2018. In other European countries the figure is already in the thousands, and 17 other countries have home share programmes globally.

If home share schemes are considered to be letting agencies under the definition of the Bill, and if the fees they charge younger people are considered to be banned under its provisions, the home share model as it stands would have to alter in ways its practitioners consider would make it unsustainable. It is considered essential to the model that the younger person does not pay rent. This is not only because the model selects young people who want to support an older person, and older people who want companionship and help, but because it selects young people to give them a start in life, rather than people who want to engage in a commercial boarding arrangement. Often, older people do not have the confidence to let a room commercially. Younger people too report that they would not be able to provide the support an older person requires, especially those with early signs of dementia, without the specialised support of a home share agency.

For the home share sector to continue with its laudable aim of being self-sustaining, rather than reliant on charitable or council funding, the Bill could require the older person to begin charging rent to the younger person. Furthermore, this rent would then need to be collected in increased fees to the older person by the home share agency. This would be confusing to the older person in particular, and could require them to submit complex information about their income and outgoings to HMRC for taxation purposes, and could impact on their benefits status. This would add to the challenges of the sector’s aim of bringing home share to lower-income older people. It would lose its simplicity.

Home share is a no brainer. In the words of Dawn Austwick, Chief Executive of the Big Lottery Fund:

“Homeshare offers a new and sustainable model for people to live more independently and take control of their lives through supporting one another”.


I am sure none of us would wish to place barriers to its growth at a time when our health and care systems, and the older people they support, desperately need innovative solutions to the scourge of loneliness and to the shortage of good social support many older people experience. Low-level support and companionship at an early stage can reduce or delay the need for more formal and expensive crisis support later on. Home share clearly does not financially exploit younger people. It provides them with a valuable role, companionship at a time when younger people’s loneliness is also in the spotlight, and accommodation at lower cost than the traditional alternatives.

Obviously, it is important not to create any loopholes through which commercial letting agents could jump. However, could not genuine home share programmes be excluded from the provisions of the Bill by virtue of the fact that they act in a way that no commercial letting agents could imitate? In a genuine home share, the “landlord” is paid nothing for accommodation by the tenant or the co-ordinating organisation. No commercial letting agent could operate on the basis that a landlord would be paid nothing by either it or the tenants.

Furthermore, although home share involves accommodation, it is based around the provision of support and companionship, and its charges are primarily for arranging that support for a vulnerable adult safely and effectively. If the younger person ceased to pay the home share agency, they would not lose their accommodation, which is in the gift of the older person and not the home share organisation. Therefore, I would be grateful if the Minister could confirm that fees charged by a home share organisation to set up and facilitate the support provided by the younger person to the older person would not fall foul of the provisions of the Bill, providing it is clear in any agreement between the young person and the home share agency that their accommodation is not contingent on any such fees.

Good befriending schemes for older people always involve similar selection processes, interviews and enhanced DBS checks. Does my noble friend agree that home share schemes should also be able to carry out these processes and to pass on the costs of those as they need to, as the processes are required by virtue of the support offered to a vulnerable older person and not in order to arrange the accommodation?

Further, given the issues raised by the Bill for the nascent home share sector, might this not be an opportunity to define “home share” in law? This would help its growth as an invaluable source of support and companionship for older people and avoid any risk of unscrupulous commercial organisations misleading older people. I very much hope it will be possible for this admirable Bill to achieve its purpose without penalising the thousands of older and younger people who could benefit from home share if we create an enabling legislative framework.

17:22

[Baroness McDonagh (Lab)]

My Lords, I welcome the Tenant Fees Bill, as I welcome the Prime Minister’s announcement at the Conservative Party conference to lift the cap on housebuilding imposed by the previous Conservative Prime Minister in 2012. However, while welcoming the Bill, having read it, I see that it does not live up to its promise. It feels as though someone who understands the issues wrote the first half of the Bill and somebody else, who does not understand the issues, came along and put in so many exclusions that they negate what the Government are trying to achieve. I am therefore disappointed that, when we come to Committee, we will be in Grand Committee, which reduces our ability to amend—and this Bill needs amendment.

Let me give noble Lords a recent example of what tenants face. I appreciate that the tenants in this example would not be protected by such a Bill, as the actions involved are illegal. Two Sundays ago, the Member of Parliament for the community in which I live—here I declare an interest, as she is also my sister—was canvassing with her team. She received many complaints from local residents about the number of black bags on the streets. They identified the rubbish as coming from a commercial office block. The intrepid canvassers and said MP knocked on the door of the office block only to find that it was full of tenants: each office had a family in it. As there were no cookers in the offices, each office had a hotplate, and the families were using the ladies and gents toilets. These tenants did not have tenancy agreements but licences. I am very nervous about the number of landlords now creating licences, allowing them to subvert a lot of the regulations we are putting in place.

The families in that block were being charged £1,100 per month for each office space, completely unlawfully. But why did they take that accommodation? They took it because they were absolutely desperate. Having heard that story, if noble Lords reread the exclusions in the Bill, would those same tenants be able to argue their case? I understand the point made by the noble Lord, Lord Strasburger. Many hundreds of thousands of landlords in this country are perfectly reasonable and do a good job, and we are talking about hundreds of thousands—one in five people over 65 now own a second property that they rent out. The Bill is about rogue landlords. If you behave well, you have nothing to fear from it.

What sorts of things did I hope to find in the Bill? First, six weeks is too long for a deposit. I ask the Government to think again about that, particularly in London and the south-east. In the community where I live, a property that would house a mum, dad and two children would easily cost a minimum of £2,000 a month. People looking for that housing are largely on minimum-wage jobs. We are talking about a £3,000 deposit. I ask the Government to consider either reducing that to four weeks or putting a financial cap on the amount that can be charged.

Secondly, I would expect to see normal consumer protection. An example would be a cooling-off period for tenants. There is no provision for that in the Tenant Fees Bill. It is wrong that you have greater protection if you buy a telecommunications package, digital television or washing machine than a home.

When the Minister replies, I would like some clarification on some of these exclusions. Schedule 2(8) to the Bill states:

“The landlord is reasonably entitled to take into account the difference between the information provided by the tenant and the correct information in deciding whether to grant a tenancy to the tenant”.


If the landlord sees that those two pieces of information are different, they do not have to give back the holding deposit. How can the landlord be judge and jury of that?

[Lord Young of Cookham (Con)]

I gently draw the noble Baroness’s attention to what the Companion says. Any speaker in the gap is expected to be brief and speak for no longer than four minutes.

[Baroness McDonagh]

I apologise to the Minister. I will finish with those points about exclusion. Each exclusion clause is written in defence of the landlord, not of the tenant. There is no process for tenants to complain.

17:28

[Lord Shipley (LD)]

My Lords, this has been a helpful Second Reading debate. It has identified a number of issues that we will need to explore further in Committee. Indeed, the noble Baroness, Lady McDonagh, despite the limitations of time, has raised a number of issues that would be worthy of spending a little time on in Committee if that were felt by her to be appropriate. I remind the House that I am a vice-president of the Local Government Association.

I refer first to the contribution by the noble Baroness, Lady Jenkin of Kennington, which I found very helpful. One good thing about a Second Reading debate is that it enables us to identify things that may be a problem or an unintended consequence. She talked about the home-share model. I want to raise with the Minister another one that we need to be clearer about. It relates to local authority incentive payments to landlords which prevent homelessness. On the one hand, a landlord may claim that they do not require a payment; on the other hand, any agreement would reflect the fact that a payment was being made. It would appear, under the Bill as it is currently drafted, that that could well be illegal. When the Minister responds about the home-share model, I hope that he might be in a position to respond about local authority incentive payments to landlords which prevent homelessness.

I want to welcome the Bill and to pay tribute to the work of my noble friend Lady Grender who has campaigned for some time on this matter—it is good to see us in the position that we are—and to pay tribute to my noble friend Lord Palmer of Childs Hill and to the noble Baroness, Lady Hayter, for their work on the client money protection scheme. These are all part of a trend to remove rogue landlords and letting agents from the industry. There is no doubt that the Bill will bring transparency, as the Minister said, to the sector; it will provide protections for tenants and it will prevent double charging. It is good to see the proposed ban on letting fees and most other up-front fees paid by tenants, in particular the proposed cap on security deposits, the new duty on trading standards authorities, and the new penalties on any landlord or letting agent who contravenes them. As my noble friend Lord Strasburger reminded us, “most agents do a decent job”, and, in the words of the noble Lord, Lord Best, “this Bill will end the ‘here today, gone tomorrow’ letting agencies”. I think we need to pause and repeat that we are dealing here with those who do not abide by the system properly. The vast majority of letting agents and landlords operate in a caring and ethical manner, and represent the reputable part of the lettings industry.

One of the problems that we are dealing with is the impact of 4.7 million households in the private rented sector. The noble Lord, Lord Best, referred to the enormous growth which requires the Government to legislate more and more to keep up with the problems which have arisen as a consequence of that growth. Many people in the private rented sector are having to move more often because of the nature of the tenancies they have currently, and when they do, they are having to pay more than they otherwise would if they had longer tenancies. Of course, as the Minister will know, one of the solutions to this problem is to build more social housing. I am absolutely convinced that the problems we now have in relation to the private rented sector are caused by not having enough social homes for rent. There will be other opportunities for us to debate that in the coming weeks.

The Government are to give £500,000 to assist with setting up costs. I want to concur publicly and absolutely with the Minister’s view that this should be self-financing. I think it does need to be. There are other areas, particularly in the treatment of rogue landlords, where local authorities can make themselves cost-neutral in terms of their investment. However, setting this up does require £500,000. It would be helpful if the Minister explained why this figure was selected; it does sound like quite a lot of money. On the other hand, there are an awful lot of local authorities in the country, all of whom will want some of it, I imagine. My suggestion is that there does perhaps need to be sub-regional training and sub-regional structures. The Government need to be very careful about how that money is allocated because I do not think that simply divvying it out to every council would work.

There is a general need for publicity. Presumably, money for that will come out of the £500,000. Perhaps it will, perhaps not, but I think that it will. If so, we need to be careful about ensuring that there is enough publicity for those who need to understand that the law has changed: landlords and letting agents on the one hand and tenants on the other. It needs to be made much clearer to people what their legal rights and responsibilities are. I am very pleased to hear about the new role of the noble Lord, Lord Best, which will be hugely helpful in this respect. There has been a debate about the cap and the figure of six weeks’ rent. That may be right; we will need to explore it in Committee. A five-week figure may be better. I take my noble friend Lord Strasburger’s point about the problem with a four-week figure in months with five weeks and we need to look carefully into that.

The issue of default fees is becoming more important. They must not permit agencies to bring in hidden extras that cannot be challenged. When people sign a lease, they need to be clear about what they are committing themselves to. My noble friend Lady Grender asked why such fees are needed at all, which we will need to explore in Committee. Equally, we have had several briefings on the Bill, but I was particularly taken by what was said by Citizens Advice:

“The default fee clause has the potential to fundamentally undermine the Government’s aim to end tenant fees and prevent unfair practices … The Government must significantly tighten this clause with a clearer definition of when a default fee is legitimate. Leaving this to non-statutory guidance risks inconsistent outcomes for renters”.


That is true. We need to be very careful about that danger.

Will this measure result in higher fees? The evidence I have read from Scotland suggests that it will not, but it may. I was taken by two comments: first, that rents are set by the market, as was said by the noble Lord, Lord Best. That is an important consideration. The second was the comment made by my noble friend Lady Grender that many tenants would prefer to pay monthly if they had to pay a higher sum overall. Again, I hope that we will explore that further in Committee.

I will make two final points. First, it would help enormously if the draft regulations, given their importance, were made available to us prior to Committee stage, which I understand may be on Monday 5 November. I hope that this will not be one of those Bills where the draft regulations appear at or around Third Reading, or occasionally not at all. Our deliberations will be detailed so it would be helpful to have them made available. Secondly, the Minister said something about electrical safety checks; I am trying to recall his words. He rightly identified that this is part of an overall package of improving conditions in the private rental sector. He said that the legislation for electrical safety checks would be forthcoming, the parliamentary timetable permitting. Can he tell the House what might prevent that timetable undertaking something substantial that really matters? Overall, the Bill is welcome and I commend it on our behalf.

17:39

[Lord Beecham (Lab)]

My Lords, I refer to my interests in the register as a vice-president of the Local Government Association and a Newcastle City councillor. The ward I represent has a number of private rented properties, many of which were former council houses that were sold under the right to buy and now have people living in them paying considerably higher rents than would have been the case had they remained council properties.

However, this is a well-intentioned Bill that received broad support in the Commons and has been generally welcomed in this Second Reading debate. I was particularly interested in the contribution of the noble Baroness, Lady Jenkin. It was extremely informative and I have no doubt that she will talk to her ministerial colleague and friend. I hope that the Government will listen and see whether the points she made can be incorporated in the Bill as we proceed.

There are, in any event, a number of issues that need to be addressed or clarified, some of which, in addition to the noble Baroness’s point, have been identified today. One critical matter is funding, mentioned just now by the noble Lord, Lord Shipley. The Government’s commitment to provide £500,000 in the first year of the new regime to support enforcement activities is, of course, welcome, but the assumption that this will be sufficient to meet all of the costs of the new regime and that it will ultimately be self-financing is somewhat dubious. The responsibility now being imposed on local authorities is within the new burdens doctrine, under which the Government should meet the cost of responsibilities imposed on councils. Therefore, will the Government guarantee to meet the difference between the cost incurred and any sums recovered from landlords or agents?

The Bill bars additional charges to tenants except if they fall within a range of matters, including, for example, a variation of the terms of the tenancy or its renewal, many of which might be very simply achieved. It is unclear what the effect of that would be. Should there not be guidance about the size of such levies in those circumstances? Will the Government review the charging system after a time to ensure that the charges are reasonable? It is welcome that financial penalties might be imposed on landlords or managing agents for certain activities, but why should the failure to return a deposit, for example, not be treated as a criminal matter? The money will, effectively, have been stolen.

There are a number of questions about other provisions in the Bill. It lists a number of payments to landlords that are permitted. They include, oddly, payments to a local authority via the landlord of council tax. Could the Minister explain the rationale for this and for the inclusion of an alternative provision under which the landlord or agent could require the tenant to pay the council tax to the authority? Is it not the tenant’s obligation to pay the council tax anyway? There is also a provision that tenants could be required by the landlord or agent to pay for gas, electricity, fuel or water. Would this not be the normal position in any event, although I can understand that there might be difficulty for multiple occupants of a property? Could the Minister explain whether this provision will therefore apply to all tenancies, or is it designed for the situation where more than one tenancy is involved in a particular building? The same question arises relating to the landlord’s or agent’s requirement of a tenant to pay the BBC television licence or for telephones and the internet.

Paragraph 3 of Schedule 2 requires the holding deposit to be refunded if the parties do not enter into the tenancy agreements,

“for reasons, broadly, under the landlord or agent’s control”.

Will the Minister say how “broadly” is to be defined? Paragraph 7 of that schedule touches on the sensitive area of immigration, stipulating that the landlord or agent does not have to refund a holding deposit if a tenant does not have the right to rent property under the Immigration Act, provided that they, the landlord, were unaware of the problem. Given the appalling record of the Home Office in Windrush and other cases, is there not a real risk of injustice in that provision?

Clause 15 allows tenants to apply to the First-tier Tribunal for compensation from the landlord or agent if they have been required to make an improper payment or have been unable to recover a holding deposit that has been unlawfully withheld, but will legal advice and, if a hearing is required, legal aid be available for a tenant of limited means? Or is the provision in Clause 16 that provides that, “An enforcement authority may”—I emphasise “may”—help a tenant, a substitute for legal advice and/or aid? What criteria would be adopted to assist that enforcement authority in a decision as to whether or not to offer such advice and support?

The Bill places significant duties, under Clause 21, on what might be thought to be a somewhat curious choice of organisation, namely local weights and measures authorities, to enforce client money protection schemes. This vests the function in county councils and two-tier areas, in contrast to the unitary areas, where the local authority already has a significant role in housing. What steps do the Government propose to take to ensure the necessary liaison between the different county and district councils? What steps are planned to equip the officers at county and unitary council levels with the necessary skills—or indeed those district councils, as opposed to unitary councils, which may choose to exercise the role?

Clause 22 deals with the lead enforcement authority. Oddly, that title is defined as either,

“the Secretary of State, or … a person whom the Secretary of State has arranged”,

which is a curious word,

“to be the lead enforcement authority”.

In the latter case, what will be the criteria for an appointee and how will he or she be selected? Will local government have a role in the appointment process? The clause goes on to list a number of things that the Secretary of State may arrange or regulate, though in the latter case the type of secondary legislation is not identified. I assume it will not be in the affirmative mode, but in any event can the Minister say when these are likely to emerge, and whether the Local Government Association will be fully consulted, alongside other relevant bodies representing tenants, landlords and agents?

Clause 23 sets out the duties of the lead enforcement authority. Will the officeholder be required to consult with local authorities about the exercise of his or her duties? Will there be an annual report of the work undertaken and contemplated? In particular, will the duty of the officeholder,

“to keep under review and … advise the Secretary of State about … social and commercial developments in England and elsewhere”—

as the Bill says, somewhat curiously—relating to tenancies, agency work and related activities extend to include local government?

Clause 24 sets out in detail the way the lead enforcement authority is to work, and the relationship between the authority and the relevant local authorities. The key subsections (3), (4) and (5) require the enforcement authority to notify the relevant action it proposes to take. It is not clear whether “the relevant authority” to which notification should be given is the relevant housing authority or, in a two-tier area, the county council which provides the local weights and measures service. Should the housing authority, or the district council in two-tier areas, not at least be notified of the position? After all, they have the ultimate housing responsibilities.

The Local Government Association is concerned about the impact of the provision in Clause 3 that proscribes the payment to a landlord in order to secure a tenancy. This is absolutely legitimate in relation to ordinary lettings, but it has a potentially serious impact on the practice of some councils, as we heard from the noble Lord, Lord Shipley, to make incentive payments to secure the rehousing of homeless people. Councils have a duty, as housing authorities, to help the homeless to be housed, and the recent Homelessness Reduction Act and the homelessness code of guidance in February allow councils to provide support to applicants, financial or otherwise, to access private rented accommodation. The noble Lord identified that point and I hope the Minister can provide some satisfaction. The code explicitly refers to making small grants to property owners to facilitate housing these vulnerable people. I hope the Government will accept this and ensure that the Bill recognises this growing need.

Finally, I raise again the urgent need to facilitate selective licensing as a means of ensuring decent standards of housing and good housing management. There are too many people living in poorly managed properties, often in appalling conditions. This not only affects the residents of those properties but has a damaging effect on those who live either as owner-occupiers or tenants of well-maintained rented homes. I speak with experience of precisely that situation, which exists in the ward I represent and in some other wards in Newcastle. We have some selective licensing schemes but it is a very difficult and prolonged process to ensure that one can be given. The Government have undertaken a review of the issue and I invite the Minister to indicate when this will be concluded and whether, if action is recommended, the Government will look to implement it.

I join most of the noble Lords who have spoken in welcoming the Bill. Certainly, on these Benches we will seek to work with colleagues across the House to look at possible improvements and ensure that the Bill emerges fit for purpose, as undoubtedly the Government would wish.

17:50

[Lord Bourne of Aberystwyth]

My Lords, we have had a very valuable debate and I am grateful for noble Lords’ contributions, which have taken us round the circuit to look at the main provisions of the Bill, possible lacunae in the Bill and, in some cases, things that are extraneous to the Bill, which I will try to deal with. I will take the contributions in the order they were made and will try to provide answers. If I am unable to—some very technical issues were raised, quite rightly—I will ensure that a write-round letter goes to all Peers who participated in the debate and a copy is left in the Library.

I thank our partners who have helped in framing the legislation and discussing relevant issues. Again, I thank the noble Baroness, Lady Grender, for her role and—she should take a double bow here, really—in relation to Shelter, which has been valuable; I also thank Generation Rent, Citizens Advice and of course the LGA, which is close on much of the detail of this, as your Lordships would expect. I will try to pick that up as I go along.

First, I thank the noble Lord, Lord Kennedy, for his general support. I agree that—it was a recurring theme—most landlords and agents act appropriately and we are dealing with the exception. That does not make it any less important but it is vital that we indicate that the issues that need looking at are in relation to only a minority. The noble Lord raised issues about the level of deposit, which I appreciate is something we will want to look at ahead of Committee. I am happy to give a commitment to look at the issues that were raised. Comments were made by at least one Member about Committee stage being in Grand Committee. I understand from speaking to my Whips and Whips in other parties that it is not unusual for Committee stage to be taken in Grand Committee because votes in Committee are very rare; it would be more unusual, certainly, on Report. That is the point. This was done through the usual channels, as noble Lords will appreciate.

The noble Lord, Lord Kennedy, asked about the novation provisions in Schedule 1. Again, only reasonable costs can be covered in relation to that. That is true also in relation to the cost of default fees. As I said, that was added as an amendment in the other place. I appreciate from comments made by noble Lords that we will want to look at that ahead of Committee to see how we can improve it. The noble Lord also raised the interaction between district councils and trading standards, which is the relevant authority that has been designated. Regulations can be made, I believe, by the Secretary of State under Clause 7, which governs that issue.

The noble Lord, Lord Kennedy, asked about compensation in relation to recovery of a deposit that is improperly held. I think that would be unusual. This is somebody suing for a debt. If there is a loss that emanates from the lease under normal contractual principles, either the tenant or the landlord would be able to sue for that compensation. Compensation is only in relation to a loss. If it is a matter under the lease, that should be subject to normal contractual principles. The noble Lord asked, quite rightly, about transparency and for that to be given a prominent role in relation to the naming of the agent. I can confirm that the legislation requires this to be prominently displayed. This is something that we would want as well, so I thank him for raising that.

I thank also the noble Baroness, Lady Grender, for her supportive comments and for her work on this. I share with her the view that there is no evidence of rent increases in Scotland, where this is operational, being any different from the rest of the country. So far as one can see, they are broadly in line. I also share with her the need to keep the beneficiaries of the Bill much in mind. I agree that openrent.co.uk is a successful business model, which is worth looking at. It is also notable that most landlords support the legislation, which is reassuring. We will no doubt return to the issue of default fees.

The intention here, as I think all Peers appreciate, is to cover situations where something is taken up by the agency on behalf of a tenant: the key is the classic example and in normal circumstances, that would be paid for once the receipt is given. Nevertheless, there may be such cases and I do not want to damage a possible situation by outlawing them totally and then finding that that disturbs a perfectly good relationship, where it may be easier for the agent to recover it if the tenant is working away from home and unable to do that sort of thing. Let us come back to that ahead of Committee. I think we all want the same things; it is about ensuring that we have that.

The noble Baroness, Lady Grender, also asked about the percentage of deposits being reduced—I think that was the relevant phrase—and the evidence that the citizens advice bureaux brought forward. The figure we have from our impact assessment is of 14% of deposits being reduced rather than the CABs’ 8%, so we differ on that.

I also thank the noble Baroness, Lady Hayter, for the role that she has played in this general area. She talked about £240 million being taken out of the housing market overall. Of course, a lot of that will be in the reduction of charges paid for by tenants so it will be desirable to that extent. I understand her point but it is not as if this is not doing some good when it clearly is. I agree with her on one very telling phrase: one cannot owe a duty of care to two parties in a contractual relationship such as this. That point was well made and, while we do not always agree on everything, I certainly agree with her on the value of regulated markets. I do not need convincing of this and, as she rightly said, I am low down in the food chain so any support I can be given on that is certainly warmly welcomed by me. I thank her very much for her contribution.

The noble Lord, Lord Best, in declaring his interests, demonstrated why, when you want something doing, you ask a busy man or woman. I am very grateful that he is taking on the role that I outlined in the letter sent to Peers. It is welcome in relation to training for letting agents and generally ensuring that they are up to standard. I repeat: the majority are doing a good job. In his useful contribution, the noble Lord looked at the nature of the problem that we face and the possibility of side-effects. Again, I share the view that he put forward, which was also put forward by the noble Baroness, Lady Grender. I do not foresee side-effects—other than good ones, as it were.

My noble friend Lady Gardner of Parkes then made a contribution and I thank her for her general warm welcome for the legislation and her comments on it. I appreciate that she has particular issues in relation to short-term lettings. Many of these matters, if they are against the lease, should be taken up by the landlord. It sounded as if some other issues she referred to should certainly be taken up by the landlord. If, for example, there is a brothel, local authorities certainly have the power to act. No doubt we will continue the discussion on these issues.

The noble Lord, Lord Strasburger, perhaps came to it from a different direction with his experience in this area. I do not need telling that he is an ethical landlord; I am sure he is and I agree that a happy tenant is a good tenant—hence in many ways this legislation, which I am sure will help. But he is right to talk of the need to appreciate that we are trying to strike a balance between the interests of the landlord and the tenant regarding the deposit. That is something to focus on. I appreciate that there is a tendency to say that this is a particular problem for London and the south-east but the rents and the value of property are of course higher there, so in so far as we are trying to strike that balance, we need to do so throughout the country. The question is therefore about trying to get that right.

I thank my noble friend Lady Jenkin for highlighting the problem of home share and Shared Lives. I agree with her. We are aware of this issue and are engaging with Shared Lives to see how we can move forward on this. She underlined how important home share is and the great value of the work. That is something we should support in seeking to combat loneliness. That is happening on a global basis and is something we should applaud. She is right that it covers licensees. This point was also raised by the noble Baroness, Lady McDonagh. The Tenant Fees Bill applies not just to tenancies but to licences and student accommodation as well.

I shall flash forward to the point made by the noble Lord, Lord Beecham, about student accommodation. It may be the answer to some of those points about shared utilities, TV licences and so on. We will double check that and cover it in the letter, but I suspect that that may be the answer. We are trying to cover the relatively small percentage of incidents where this happens. Noble Lords will appreciate that starting off with an outright ban, which I think is the right thing, and making exceptions means that we would have to have a pretty exhaustive list of exceptions. So I will pick up those points in the write-round letter.

I thank the noble Baroness, Lady McDonagh, for her generally warm welcome for the legislation. I think I have dealt with the points on the Grand Committee and licences. I agree that there are issues to look at on the holding deposit, although the key point there is that there are only certain grounds on which it can be retained by the letting agent. We just need to nail that down. We can try to do that ahead of Committee, but I think that I will be able to give the reassurance sought that it is a very limited set of circumstances.

I once again thank the noble Lord, Lord Shipley, for his broad support and I agree with his comments and his point on bringing forward local authority incentive payments for preventing homelessness. That point was echoed by the noble Lord, Lord Beecham. We are aware of the issue and we are seeking to bring forward an amendment that we think is probably necessary to allow that. I hope that we can keep in touch on that issue.

The noble Lord, Lord Shipley, referred to the growth of the private rented sector. That is true. It presents fresh challenges, hence the increased need for this legislation. I thank him for his support on the general point about self-financing with the fines paying the costs of setting up this system. There is a set-up cost. I have been asked to justify it. I do not have the figures to hand so I will do that in a write-round letter. I take the point that we have to look closely to make sure that that is what is happening.

The noble Lord, Lord Beecham, asked what will happen if there is a shortfall. There may be a shortfall in one year and an excess in the next year, and we would not be claiming back the excess. I think he will appreciate that there has to be some sort of smoothing mechanism; you could not look at one year in isolation. I will look at that point and pick it up in the write-round letter. It will be a long letter. I am sure noble Lords will appreciate that it will be better than a short letter that does not cover the many points that have been raised.

On electrical safety checks, the noble Lord, Lord Shipley, asked about “when parliamentary time permits”. That is a saving provision. Any Government, including even the coalition Government, will always say that. The intention is to bring this forward as quickly as possible. If I can give more information on that I will certainly do so.

There were many detailed points from the noble Lord, Lord Beecham, who also has a lawyer’s eye. I do not have the answer to many of the points that he raised but I will certainly make sure that they are covered in the letter, and I am grateful for his acquiescence on that point.

This has been a very valuable debate. As noble Lords will know, I am very keen to take this forward as far as we can on a consensual basis, because I think we all want to kick in the same direction and achieve the same things—but there is work to be done on that. With that, I beg to move that the Bill be read a second time.

Bill read a second time and committed to a Grand Committee.