Housing and Planning Bill
Debate between Lord Palmer of Childs Hill and Lord Bichard
The Deputy Speaker (Lord Bichard) (CB)
My Lords, given the length of today’s manuscript amendments, I propose that the House dispense with the usual requirement to read it out in its entirety, unless any noble Lord objects.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Deputy Speaker for not reading out the amendment; I have read it so many times that I really feel that I know it by heart. I thank the noble Baroness, Lady Hayter, for working with me on this, as it has been very helpful. I particularly thank the Ministers here and in the Commons for constructive dialogue, and accepting the problems that we were trying to highlight, which have been brought to our attention by the lettings industry—tenants, landlords and, indeed, letting agents. The noble Baroness thanked a lot of people. I add just one other person to that: the parliamentary draftsman who ended up with the amendments in front of us. When I saw the amendment, I thought that it was what it should have said when we did it in the beginning. It says it very well. I think that the noble Baroness and I would have liked it to be slightly firmer in saying that it will happen, but we took the Ministers’ intention—which I hope this Minister will repeat in the debate—that this is something that they want to do and intend to happen.
I shall not make a long speech about this, because we have had much debate in earlier sittings, but I shall raise one or two points again. Some 80% of the lettings agency sector—these are the figures used by the Minister—have client money protection. The new amendment and the original amendment are for the 20% who put tenants and landlords at risk. If a letting agent goes bust or goes walkabout in a liquidation, tenants’ money held and the rights of landlords and tenants are at the bottom of the creditors’ queue in a liquidation or bankruptcy. Client money protection will be mandatory in Wales from November. I am sure many noble Lords will say that Wales leads, and under its new Rent Smart initiative, it certainly does. All letting agents will be required to apply for a licence and part of the application process is showing that they have professional indemnity insurance and client money protection insurance and are a member of a redress scheme. If the Welsh can do it, I am glad to see that the English are following.
Perhaps the best way of illustrating the need for this amendment is by telling horror stories, of which there are many. This month, it was reported that a company called Whitefield Properties took rental money due to landlords and tenants’ deposits over a four-year period. The money was paid into the firm’s bank account and was, perhaps carelessly, not protected. It was reported that £123,000 of customers’ money went missing. The Staffordshire firm, with branches in Milton, Leek and Crewe, went into administration in 2014. If we were still arguing for this amendment, I would give many more examples to try to make my case.
A lot of the 20% not-covered agents target vulnerable groups. As they are vulnerable, they do not satisfy credit checks, so they cannot give the guarantees that banks would often offer. Agents, generally in the 20% section, often ask for something like a full year’s rent in advance because the person is not trusted. The person probably borrows the money to get that year’s rent in advance. History shows that a lot of these large sums of rent in advance go into the agent’s bank account, and even if it is in an account that may internally be called a client account, if it is not recognised as such by the bank, those moneys can, and often are, used by the agent for one or purpose or another, very often because the agent is overtrading, spending more money than it should and using that money.
A law making client money protection insurance mandatory for all letting agents is long overdue. I thank the Minister and her colleague in the Commons, and I hope that when she replies she will promise that “may” will be made firmer so that it will be “shall”, as I want. Like the noble Baroness, Lady Hayter, I conceded that the intent was there, but I hope the intent is reported when the Minister stands.