Tenant Fees Bill

Debate between Lord Shipley and Baroness Grender

Monday 5th November 2018 Grand Committee

[Baroness Grender (LD)]

In moving Amendment 1, I shall speak also to Amendment 17. First, I thank the Minister and his officials for the discussions held so far and the time spent in advance of Committee. As noble Lords know, the Bill is very welcome and the sooner it is on the statute book the better, but there are a few wrinkles to iron out first. The most substantive change I want to explore will come when we look at default fees in a later group.

Amendment 1 would allow the Secretary of State to make regulations regarding holding deposits to make the process more transparent. This is an attempt to adopt the welcome changes introduced by the Government on Report in the Commons regarding transparency, or greater transparency, on default fees, although more about that—and how we do not need default fees—later. The model, however, is still useful and applies in this respect to holding deposits. There should be a transparency requirement for landlords and agents to set out in writing to a tenant why they have not returned a holding deposit. There is ongoing confusion and a lack of clarity around the circumstances in which landlords or agents may and may not return a holding deposit. The confusion was highlighted at Third Reading in the House of Commons and Members on the government side called for greater clarity at that point.

We would like to see something that explains how landlords and agents will treat a holding deposit and, if they are not returning it, their reasons for this, including any information they believe to have been false or misleading. This will make it possible for tenants to challenge if their holding deposit is withheld unfairly. Equally, understanding exactly why a holding deposit has been withheld should help to prevent tenants applying for properties and repeatedly losing numerous holding deposits for the same reason.

The Minister is already aware of the excellent work done in this area by the noble Lord, Lord Bird, on creditworthiness, but until that change comes into force—or is adopted by the market, as I believe it will be—people with thin files on their financial viability and little evidence to offer of regular payment of rent or council tax are not included and become the most vulnerable to the less scrupulous agents or landlords in terms of holding deposits.

Generation Rent has recently spoken to four privately renting friends who each put down a £180 holding deposit on a property in Bristol with the letting agent Be Streets Ahead. During the week that the holding deposit was down, one of the tenants found that he had a brain tumour that had grown in size and had to move back to his family for hospital treatment. The remaining three tenants were unable to find another sharer to pay the deposit and rent with just a couple of days’ notice and had to withdraw from the tenancy. The letting agent has ignored repeated requests for a refund of the holding deposit on these health grounds. Such health grounds could be included in any secondary legislation, providing grounds for tenants to walk away from the tenancy without losing a holding deposit.

What I have just described is a clear case for regulating the transparency around holding deposits. If anything, this will get worse before the Bill is enacted. Generation Rent believes that letting agencies are worrying about future admin fees and being—shall we say?—more assertive in their use of current rules than previously to make up for any future losses they anticipate. When I met the Minister before the summer, I expressed concerns about the danger of the delay on one of these issues. I wondered if there was any way of offering an incentive—a carrot, perhaps—for the industry to adopt these measures before it came through Parliament. I would still ask him, at this late stage, to consider that, given the scenario I have just described to him. Generation Rent is absolutely convinced, in this case, that the concern about admin fees being lost at a later stage has led to a slightly harsher judgment.

Amendment 17 is of a different nature. It simply poses the question, which I raised with the Minister in advance, as to why tenants are prohibited, or strongly discouraged, from paying multiple deposits by the cap at one week’s rent. I am aware—and have only just managed to read most of it over the weekend, for which many thanks in advance—that there is some guidance about what needs to happen. But we believe it is very unlikely that this guidance will be pursued, unless there is more transparency on what happens with holding deposits. I have read the relevant part of the guidance, but I still think we need something with a little more bite.

I support the other amendments in this group. I would like, in particular, to advance Amendments 1 and 17. While I understand, from meetings with officials, that this is on the issue of tenants from abroad, I am still unable to see why we cannot have more of a level playing field between the tenant putting down the holding deposit and the landlord or agency holding one deposit. I would still like to explore that, and that is why I am proposing these amendments. I beg to move.

[Lord Shipley (LD)]

My Lords, I shall speak to Amendment 18. I remind your Lordships that I am a vice-president of the Local Government Association. I want to say at the outset that, like the Government, our aim is to make renting a home fairer and more affordable. I repeat our support for the Bill in its aim of reducing up-front costs for those seeking to rent a home. We should also remember that the Bill is about protecting tenants from bad landlords, but also about protecting good landlords from bad tenants. Our job in Committee is to assess, line by line, whether the Bill will achieve those objectives and whether it can be improved. The amendments in my name and those of colleagues seek to do that.

Amendment 18 is about whether the figure of seven days for a holding deposit is justified. There is a tendency to draft Bills with round numbers based on weeks, but such a decision requires clear justification that the amount to be paid by a tenant, and received by a landlord, be counted in weeks rather than days. There is a strong case for saying that the costs to the landlord are what should be reimbursed. There is evidence to suggest that such costs would be recouped with a three-day rent payment. I have received advice—as, I guess, other noble Lords have—from Citizens Advice, which supports the three-day period. Its justification is that 14% of tenants are currently charged a returnable holding deposit, at an average cost of £250. Some tenants, however, are paying much more than that. A cap of three days’ rent would help to prevent that.

We also need to recognise that a tenant’s circumstances or budget can change unexpectedly, and they might need to withdraw from renting a property that they originally and genuinely intended to take. This could be for reasons that prove beyond a tenant’s control. For example, there may be an unexpected failure of a credit or reference check. This can cause severe financial hardship for tenants and prevent them being able to access the private rented sector at all. Smaller holding deposits would still have the effect of deterring tenants from taking a large number of properties off the market, while avoiding hitting tenants’ finances unnecessarily. I am grateful to Citizens Advice for its briefing, from which I have quoted.

The question for the Minister is: can the Government explain why the figure of one week appears in the Bill, as opposed to a set number of days? As I said, it is very easy to talk in round numbers, but for some tenants trying to take up a tenancy, how much they will have to pay in cash is very relevant. I very much hope that, as we consider the Bill in Committee, the Minister might be able to explain the basis for one week, as opposed to three days.

Budget Statement: Social Housing

Debate between Lord Shipley and Baroness Grender

Thursday 21st December 2017 Lords Chamber

[Lord Shipley]

To ask Her Majesty’s Government what is their estimate of the number of social homes that will be built as a consequence of the Budget Statement.

[Baroness Grender (LD)]

My Lords, on behalf of my noble friend Lord Shipley, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.