Tenant Fees Bill

Caroline Lucas Excerpts

2nd reading: House of Commons
Monday 21st May 2018 Commons Chamber

[The Secretary of State for Housing, Communities and Local Government (James Brokenshire)]

I beg to move, That the Bill be now read a Second time.

This Bill takes forward essential measures to promote fairness in the private lettings market by banning unfair fees charged to tenants, as promised in the Government’s manifesto. It is a Bill that we should all welcome. The Bill will make the market more transparent, yes, but it also has the potential to save tenants—especially young people and families—hundreds of pounds. It caps tenancy deposits, further protecting tenants from high up-front costs when renting a home. It also introduces a lead enforcement authority for the lettings sector to support local authorities in their enforcement activities.

These measures have been informed by consultation with the sector and by the scrutiny of the Housing, Communities and Local Government Committee. I am grateful to the members of the Committee for the constructive and positive way in which they have contributed to the Bill. We have accepted the majority of the recommendations, which have helped to improve the final Bill.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Secretary of State is talking about the benefits of the Bill, and it certainly has some, but it would have an awful lot more if he had listened to the complaints about the setting of the deposit at six weeks rather than four. Can he explain why he has gone for a figure that means that only about 8% of renters will benefit and that many others will see their rents go up as a result?

[James Brokenshire]

The hon. Lady has intervened early, and that is a point that I will come on to. I would say that that is a maximum level, but I will deal with the specific issue in my remarks.

I am pleased that the Tenant Fees Bill was introduced to Parliament soon after my appointment. It is the latest step in our work to create a housing market that is fit for the future. I have been greatly encouraged by the broad support for banning unfair fees—something that has come through very clearly in our consultation. We have listened and we are taking action. This Government are making sure that everyone, whether they rent or own their home, has a safe, secure and affordable place to call their own.

I am confident that the Government’s ambitious house-building programme will transform the sector in the years to come, but it is also important that we help people now. The Tenant Fees Bill will enable us do this. It will ensure that tenants will no longer be stung by hidden costs. In the first year alone, we believe this could collectively save tenants as much as £240 million a year.

--- Later in debate ---

[Melanie Onn (Great Grimsby) (Lab)]

I congratulate the Secretary of State on his appointment and welcome my hon. Friend the Member for Croydon Central (Sarah Jones) to our housing team. This tenant fees legislation is very welcome. We know that the majority of landlords are good landlords, or strive to be, and understand the expectations upon them before they embark on becoming a landlord. However, a number of rogue landlords and letting agents give the sector a bad name, undermine the good work of quality agents and landlords, and they have squeezed tenants for cash in unfair ways, with disproportionate charges for unjustifiable reasons. It is right that the Government are acting to change this unfair system and Labour welcomes that, but it would be remiss of me to fail to remind the House that we first suggested a move to ban letting fees back in 2013. After five years, it is good that the Government are finally acting on this issue. If we get the Bill right, it will have a positive impact on people’s lives on a day-to-day basis.

The overriding purpose of the legislation is to help to shift the balance of power from unscrupulous agents and landlords towards decent tenants—to make renting fairer, more affordable and more transparent and to give tenants greater clarity and control over what they pay. We will all have heard horror stories of agents or landlords charging people excessive fees to secure properties, or throughout tenancies, imposing additional charges with excessively high administration fees. With fewer social properties available, this places great difficulties on those with low incomes, or those who are renting alone or simply cannot afford thousands of pounds in up-front fees. In an increasingly competitive market, that has led to the UK’s nearly 5 million private renters sometimes feeling that they are an easy target from which to extract unnecessarily large sums of money. That is on top of the £50 billion a year paid in private rents.

As the number of private renters is predicted to rise to 5.6 million people by 2021, we should be aiming for a gold standard of contract of understanding between renters and landlords, or their agents. As it stands, there is an inherent tension between landlords who view their property as an asset or investment and a tenant who sees it as their home. We have to take steps to bring those two positions closer together.

Increasingly there are larger, more professional companies recognising the importance of peoples’ home life and striving to provide properties in high-demand areas. They do not use agents, seek to develop a sense of community and aim to retain tenants for as long as possible and keep rents affordable in line with local incomes—in places such as Argo Apartments—and stand in stark contrast to the enormous billboard I saw from Wentworth Estates, boasting that it could guarantee rents for between one and five years for landlords, would provide three months’ rent in advance and could offer “free evictions”.

[Caroline Lucas]

Does the hon. Lady agree that another way the Government could follow both Labour and Green party policy would be to tackle extortionate rents? The elephant in the room is the need for some kind of rent controls, including rent caps, because although what is in the Bill is a welcome step forward, until we tackle the size of rent increases, we will not be able to provide the homes for the people who need them.

[Melanie Onn]

Labour absolutely recognises the—[Interruption.] Before the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Rossendale and Darwen (Jake Berry) leaps on me—before I am able to make myself clear—Labour absolutely recognises the issue of the amount that people are paying in rent and recognises that there could be restrictions on the percentage of increases in rent, not a rent cap.

The pressure in the housing market is rapidly producing new forms of exploitation. For example, an alternative letting agency-cum-landlord service called Lifestyle Club London markets itself as a membership club. Tenants or members pay an annual fee instead of rent. Club staff are entitled to inspect rooms unannounced at any time and fines can be given for anything even as minor as dirty dishes. This is a fast-moving area. We can see that there are wildly differing practices in the world of private rental and that tenants have had difficulty in getting the treatment that they deserve, which is why groups such as Generation Rent and Marks Out of Tenancy have emerged to give a collective voice to private renters on matters of not only policy but practice.

Although the Bill is satisfactory in many respects, it still provides the opportunity for the continuation of an exploitative approach. For example, clauses 1 and 2 detail the prohibitions on landlords and agents applying fees in many circumstances. The cap of £50 for any of those charges is very welcome, but the explanatory notes go on to say

“or reasonable costs incurred if higher”.

That is a clear opportunity for a coach and horses to be driven through this otherwise very good Bill. We know that some letting agencies and landlords will push these grey areas, and without directly spelling out what charges are permissible and what “reasonable costs” are, there is undeniably room for incorrect interpretation.

The Government have so far given an indication that they will provide guidance on these and other issues, but how can that be enforced? If I speak to Shelter about how a renter can take a case against a banned fee being levied against them, the question then becomes a test of reasonableness. Whether or not such charges are reasonable, I know that it will say that if the Government want to genuinely give tenants additional powers, regulation is required to ensure that they are enforceable and meaningful.

The same goes for default fees, which are to be capped at the level of the landlord’s loss. At first glance, this seems eminently reasonable. A landlord should not be required to pay for a banking or other fine due to a tenant making a payment late or the replacement of a lost key or entry fob. However, the Minister must be aware of the scope for this to become a nice little earner for agents or landlords who would seek to unfairly penalise their tenants for minor errors.