Letting Agent Fees (Tenants)

Angela Crawley Excerpts

Wednesday 6th September 2017 Westminster Hall

[Angela Crawley (Lanark and Hamilton East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Owen.

I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate, and I give credit where credit is due, because this issue affects so many people’s lives and raising it in this place is absolutely necessary. I also congratulate the Government on taking a positive step for people in rented accommodation.

The policy will bring England into line with Scotland, where the ban on tenant fees has helped to make the private rental sector fairer and easier to access. In Scotland, it is illegal for letting agencies to apply conditional charges to renters. For example, they cannot charge for registration or providing a list of properties, and they cannot ask for a deposit before having found a property for the renter. Any charges beyond the deposit and rent are unlawful, including for administrative work or credit checks.

Such measures have made the private rented sector in Scotland more transparent and fairer for tenants. However, I take the opportunity to recognise the comments of the hon. Member for Thirsk and Malton about outcomes and possible unintended consequences, and there are of course nuances in this debate. The hon. Member for Mitcham and Morden (Siobhain McDonagh) highlighted the alarming statistics and the huge impact on individuals’ lives, including the taking out of loans and people having to cut back in order to afford the cost of letting fees. Other hon. Members spoke about deposit schemes, the broken housing market and how it has affected vulnerable families and those on low incomes.

Any charges beyond the deposit are unlawful in Scotland. An estimated 4.8 million renting households in England are expected to benefit from the proposals for the tenants fees Bill, saving them between £200 and £700 per household per move. Letting agents in England are at present able to charge for things such as tenancy reference checks, mandatory inventory fees, renewal fees and administrative fees.

Those costs come on top of a security deposit and the rent, and can therefore be difficult to cover. Research by Citizens Advice found that 42% of renters had to borrow money just to pay fees on entering new accommodation. If the new policy is able to help people avoid needlessly increasing their debt, it is a good one. It will make private renting fairer for low-income families, who are often priced out of the sector by excessive hidden fees. Members will recognise that the policy has the potential to help their constituents who are struggling with social housing lists. By widening access to the private rented sector, it might become easier for many constituents to find accommodation suitable to their circumstances and budgets more easily.

The policy is to be welcomed, but we must ensure that no loopholes allow costs to be passed on to tenants in an underhand manner. A fear covered by many Members in the debate is that landlords and letting agents will increase rents as a result of the ban on tenant fees in order to recoup the lost fees. However, research by Shelter in Scotland in 2013 found that only 2% of landlords increased rents because of the fee ban, so while such a policy can work in tenants’ favour, we must be vigilant about rent prices.

The Government’s statement on the policy reads that it will stop

“tenants having to pay fees through the back door by other routes.”

How will the Minister ensure that fees are absorbed by agencies rather than being passed on to tenants, especially in urban areas such as London and other parts of England where the private rental market is already competitive? Will the Government commit to ensuring that the policy puts tenants first?