Letting Agent Fees (Tenants)

Lord Bellingham Excerpts

Wednesday 6th September 2017 Westminster Hall

[Sir Henry Bellingham (North West Norfolk) (Con)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing this debate.

Hon. Members have given very good examples of the ways in which various agents exploit tenants. The hon. Members for Mitcham and Morden (Siobhain McDonagh) and for Dulwich and West Norwood (Helen Hayes) raised some dreadful examples. I do not doubt that there is a problem in some parts of the country—particularly London and the south-east—but no tenants have complained to me or other Norfolk MPs about letting fees in Norfolk, where we have a strong private rented market. Furthermore, contrary to what the hon. Member for Dulwich and West Norwood suggested is happening in London, since 2010 there have been 600 registered housing association starts in my constituency. A significant number of new housing association houses are coming on stream, which is due to the local council being very proactive.

I have had the chance to talk to a number of local agents, who are extremely responsible, care deeply about the work they do and take great pride in the houses they let. The average application fee in my constituency is £325, and the average renewal fee is £75. That is the situation in Norfolk. I visited a firm of estate agents in King’s Lynn called Brittons, which made it clear that the ban would have an impact on its business model and would undoubtedly lead to a loss of income and jobs. It believes that the ban would have a number of unintended consequences.

We should look at the amount of work that goes into referencing. I am told that, on average, it takes up to five hours to prepare for a tenancy, as agents have to look at all the different documentation, go through the reference requests, check the credit history and liaise with external referencing companies. I had a session with a couple of the agents in Brittons, and they told me about all the work that has to be done. They pointed out that the ban is a blunt instrument, and that it is being proposed to deal with a problem in one part of the country that is not a problem in East Anglia. I therefore ask the Minister, are there no other ways forward that could be looked at? Would a cap on fees not solve the problem? What about taking referencing fees outside the scope of the action the Government are taking?

My hon. Friend the Member for Broxbourne (Mr Walker) said that the landlord should pay the fees, but the potential tenant forms a relationship and signs a contract with the agent, who then carries out the referencing work on the tenant. The tenant then has the opportunity, through the agent, of bidding for various properties. I therefore suggest that, if the onus is put on the landlord, rents will go up, so there will be unintended consequences.

I am very concerned indeed that there could be a particular problem for tenants on low incomes—for example, those who have a particularly poor credit rating or a complex credit history. If an agent takes on the task of the referencing, it takes the onus off the tenant to some extent. If the tenant clears those hurdles, they will be in the position to have their name put forward for a property.

I entirely accept that there is a problem, and the Government are right to deal with it. They are responding to a great deal of pressure from the non-governmental organisation sector and people representing tenants and other organisations, but I believe they have to be very careful indeed that they do not do something that has unintended consequences. In parts of the country with a solid, well-performing market, they must not make changes that may disrupt the market and cause major problems for small businesses, such as the ones in my constituency.

[Albert Owen (in the Chair)]

If Mr Knight and Mr Stewart can share the remaining eight minutes between them, that would be very helpful. I will then call the Scottish National party spokesperson.