Letting Agent Fees (Tenants)

Debate between Albert Owen and Helen Hayes

Wednesday 6th September 2017 Westminster Hall

[Helen Hayes (Dulwich and West Norwood) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Owen. I commend the hon. Member for Thirsk and Malton (Kevin Hollinrake) for securing this debate and welcome his support for the ban, drawing on his extensive experience in the industry.

The UK has a housing crisis that is unprecedented since the end of the second world war. By the Government’s own admission, the housing market is broken and they are failing to repair it. The number of new homes being built in the UK is well below the 300,000 homes a year that need to be built to address the shortfall, and the number of genuinely affordable social homes being built with Government funding has atrophied, dropping by a staggering 95% since 2010.

The crisis is manifest in the thousands of people on the waiting list for a secure social tenancy and the thousands who are unable to afford to purchase a home. The number of people renting privately while they wait for a secure social tenancy or try to save to purchase a home has grown enormously in recent years, and increasing numbers of people are living in the private rented sector for the medium to long term, including 1.5 million households with children—three times the number of a decade ago.

We have a private rented sector that is entirely unfit for purpose, in which tenants pay above the odds for lower levels of security and often lower quality accommodation. Private renters spend a higher proportion of their income on rent—41% on average, compared with 19% on average for people with a mortgage—leaving many unable to save and struggling to make ends meet. The ending of a private tenancy is now the single biggest cause of new cases of homelessness. Both my local councils, Lambeth and Southwark, tell me that the number of residents seeking help from the council because their tenancy has come to an end or they face an impossible increase in their rent has gone up by hundreds of cases every year, and I see struggling tenants living in impossible circumstances in my surgeries every week.

The situation is made much worse by the introduction by the coalition Government of the local housing allowance cap, which increasingly means that almost no private sector housing is affordable to people on low-to-average incomes in central London boroughs. The pernicious right-to-rent regulations are increasing prejudice and discrimination in the private rented sector. Councils in London are now seeing people who in the past would never have needed to ask the council for help with their housing being threatened with homelessness as a result of a combination of high rents, the coalition Government’s local housing allowance cap and insecure tenancies.

We urgently need wholesale reform of the private rented sector. We need longer, more secure forms of tenure; intervention to curb spiralling rents; new requirements on the standard of accommodation to make every home fit for human habitation; and an end to the iniquitous practice of section 21 no-fault evictions. Tenants, of course, have contractual obligations to pay rent and keep their rental property in good order, but the balance of power between landlords and tenants in the UK is completely unjust. It needs to be reformed to provide security and stability for the many thousands of residents who are forced to rely on it.

In the context of the need for radical reform, the proposal to ban letting agents from charging fees to tenants is a vital first step. Those fees are presently completely unregulated, and the letting agents are chosen and appointed by landlords. The majority of the services they provide are on behalf of landlords. In the purchase of a home, estate agents—often the same agents who provide lettings services—charge only the vendor. Many tenants move every six to 12 months, so fees are not a one-off cost as they are when buying a home, but a recurring and unaffordable burden. A situation where tenants are spending more than 40% of their income on rent makes it very difficult to save, and paying hefty fees to letting agents on a regular basis is simply another blow that prevents many people from adding to their savings either for a deposit or to create a bit more financial breathing space to cope with unexpected bills.

Some concerns have been voiced by letting agents, but I am not convinced that they are supported by the evidence. The first thing to say is that there are letting agents, including at least one in my constituency, that already do not charge fees to tenants, so it is clear that a successful business model for letting agents can be achieved without the need to charge tenants. The regulation of fees should, in fact, benefit responsible and professional agents, since it is often the least scrupulous agents who charge the highest fees.

Some have argued that tenants will face higher rents as landlords seek to pass any increased costs on to them. I agree with Shelter on that point, which states that predictability beats up-front costs. Although it is to be hoped that landlords would not pass on additional costs to tenants who already pay high levels of rent, an increase of a few pounds a month is clearly preferable to having a small amount of savings obliterated every six to 12 months.

Concerns have been raised that some agents would refuse to check references, resulting in an increase in the number of tenants facing discrimination. Discrimination is already common in the private rented sector. Again, I agree with Shelter: there are better methods, most notably a tenant passport scheme, that would allow checks to be undertaken in an efficient manner and refreshed periodically—rather than taken from scratch at the start of every tenancy—and that would safeguard the interests of both tenant and landlord, while enabling letting agents to operate more efficiently. Any passporting scheme should also apply to tenants’ deposits, which should be transferable from one tenancy to the next, to reduce further the burden of up-front costs.

The Government must act urgently to address the housing crisis, to invest directly in genuinely affordable social housing and to bring forward low-cost homes for first-time buyers. For as long as they fail to do so, more and more people will be living in the private rented sector. We need urgent comprehensive reform of the private rented sector to make it fit for purpose and to address the impact of housing insecurity and homelessness on families across the country. The proposed ban on letting agents’ fees is the minimum first step in that process. I urge the Government to follow through on their commitment.

[Albert Owen (in the Chair)]

I ask Members to be a bit more disciplined. I call Derek Thomas.

Court Closures

Debate between Albert Owen and Helen Hayes

Thursday 24th March 2016 Commons Chamber

[Helen Hayes]

My hon. Friend makes valid points about both the additional burden on courts that will have to absorb the workload of courts that are closing, and the very important issue of travel times, particularly for many vulnerable constituents. I will come on to talk about those things.

I do not have a court or tribunal in my constituency of Dulwich and West Norwood, but my constituents will be very much affected by the planned closure of Lambeth county court. Almost half the postcode areas covered by Lambeth county court fall within my constituency. I am grateful to the Minister for taking the time to meet me during the consultation process, and subsequently for taking part in a Westminster Hall debate about Lambeth county court, but despite that engagement, my concerns remain. In justifying the closures, the Minister refers a great deal to the modernisation of the justice system and the use of new technology, but there is great concern that the closure plans appear to put the cart before the horse—closing courts and tribunals without a clear plan for replacing the capacity that will be lost with new technology.

The Government should have brought to the House a comprehensive strategy for modernising our courts and tribunals to make them fit for the 21st century. We need a plan that sets out clearly what new technology can deliver for our justice system, the investment that must be made to deliver it and the savings that can be made in physical infrastructure as a consequence of the introduction of technology. But there is no such plan. What the Government have announced is a very significant closure programme with a promise that, after courts and tribunals have closed, pilots will take place and investment will be made to introduce new technology. This is a very risky way to treat our justice system.

Access to justice is a vital principle in the UK’s unwritten constitution. It was argued by Lord Bingham of Cornhill, when he was the senior Lord of Appeal in Ordinary, that access to justice is one of the eight sub-rules that make up the rule of law. He said:

“My fifth sub-rule is that means must be provided for resolving, without prohibitive cost or inordinate delay, bona fide civil disputes which the parties themselves are unable to resolve…What it does is to recognise the right of unimpeded access to a court as a basic right, protected by our own domestic law, and in my view comprised within the principle of the rule of law.”

He went on to explain that the common law right of access to justice is composed of three rights, one of which is the right of access to a court. Lord Justice Laws has said:

“Access to the courts is a constitutional right”.

In relation to the planned courts and tribunals closure programme, the Government argued that

“effective access to justice does not…necessarily mean providing physical access to a building or require us to have a purpose-built court or tribunal in every local area.”

My contention is that this statement can only possibly be valid if the Government demonstrate that access is provided in a fail-safe way by other means, and that they simply cannot do that without setting out a clear strategy for how it will be delivered.

The Minister has spoken about various things, some of which are indeed already happening in some locations, that may be possible—video links for witnesses to provide evidence, facilities for filing court papers online, making a plea by mobile phone—but there is no national standard and no plan for delivery. No assessment has been made of which court and tribunal services and facilities should be available to everyone in every area, which of these can reasonably be provided digitally and which should be provided in dedicated facilities. Although I do not think there is much disagreement about the kinds of things that might be done, it is impossible to make an assessment of the extent to which access to justice will be provided at an appropriate level with the help of digital technology until the Government lay out a comprehensive plan.

[Albert Owen (Ynys Môn) (Lab)]

In addition to the plan for which my hon. Friend is calling, we also need a plan to extend mobile coverage to many areas. We just do not have that coverage in some of the rural areas where closures are planned.

[Helen Hayes]

My hon. Friend makes a valuable point. It reinforces my argument that without a plan—a proven and tested plan—the Government simply cannot rely on advances in technology to substitute for the closure of physical facilities.