Tenant Fees Bill

Clive Betts Excerpts

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

[Mr Clive Betts (Sheffield South East) (Lab)]

First, I refer to my declaration in the Register of Members’ Financial Interests: I own one property which I let out.

The Select Committee carried out pre-legislative scrutiny, and we unanimously warmly welcomed the principle behind this Bill. The principle we accepted was that the contract is between a landlord and a letting agent, and therefore it is up to the landlord to pay the cost of that contract; that seems a very simple principle to adopt. Evidence was given to the Select Committee that considerable savings to tenants could materialise from this; there was talk about average fees charged to tenants of £100 or £200, but Shelter gave evidence that they could be as high as £300 or £400 in some cases, so there are significant savings for tenants here.

There could in some circumstances be an increase in rents to compensate, and that would be legitimate if done properly from the beginning, but again there was evidence that if tenants were asked to pay a bit more each month, rather than a lump sum fee, that would help them in most cases. Organisations representing tenants generally accepted that point.

The Select Committee looked at the Bill and recognised that the good letting agents would accept it and willingly comply. The Bill tries to deal with those letting agents that would try to find loopholes to get around the provisions. We concentrated to a degree on default fees and how letting agents might seek to recover money they can no longer charge through charging extra for things that happen during a tenancy such as a lost key. It is reasonable that a lost key should be charged for, but it ought to be a reasonable charge. Letting agents might also charge more if they could in the first month of a tenancy to disguise an upfront fee, or indeed try to recover money in that way at the end of a tenancy. These were the sorts of matters we considered and made recommendations on.

I will not go into all the areas where the Government accepted our recommendations, because there is quite a long list of them, but I think the Minister will accept that the Bill is better for the consideration of the Select Committee and its suggestions. For example, section 21 notices cannot be used where the letting agent has kept outstanding prohibitive fees; that was a Committee suggestion. I am however disappointed that the Government did not accept our suggestion that we should have a clause about retaliatory evictions not being allowed as a result of this legislation. Indeed, the Committee looked at the issue of retaliatory evictions in our recent report on the private rented sector in general, and I think the Government must now review the legislation on retaliatory evictions and the Deregulation Act 2015, as it is not working at present. The Government are going to come back with some more information on how many cases there have been where a retaliatory eviction has been stopped because of the current legislation. This point might also apply to the private Member’s Bill of my hon. Friend the Member for Westminster North (Ms Buck); I can see retaliatory evictions coming into that as well. Therefore, we must extend the scope not just in terms of this legislation, but in terms of other Bills as well.

We did a lot of work on default fees. We need some specific figures on this, and my understanding is that the Government have generally accepted that default fees should only be related to the cost incurred by the landlord, and that more information will be provided in the guidance the Government issue. The problem is that the guidance will not be available to this House as the Select Committee suggested; it will not be available until consideration in the House of Lords. We are therefore taking the Government’s word that they are going to toughen the default fees powers without seeing that in practice.

Another important issue is enforcement. The Government have accepted the principle of the Select Committee suggestion that a tenant charged prohibitive fees should be able to recover them from the first-tier tribunal. That is the best place to go because it is fairly user-friendly for tenants, although they will often still need some help from advice services or local authorities. The problem is that if a letting agent does not agree to the first-tier tribunal decision the tenant has to go to the county court for enforcement, and that is not a user-friendly place, which might deter tenants from going. We have suggested that the first-tier tribunal might be given powers of enforcement or at least might have to take the case on behalf of the tenant to the county court if its decision is not being complied with. Will the Government look at that? It would also be nice to have a bit more information about their idea of a housing court reform and generally having one place where tenants can go for a whole range of housing issues. That is a good suggestion, but we have not seen any details so far; it would be good if the Government were to come back with some.

On local authority enforcement, we suggested that paying the costs the local authority will incur through civil penalties was not sufficient and that local authorities need extra funding from Government. They have accepted that in principle, but have committed only to doing that for the first year that the scheme is in effect and have not given any idea of the amount of money. We will need to look at that in more detail.

Finally, we talked about the size of security deposits. We heard conflicting evidence: organisations representing tenants wanted deposits equivalent to four weeks’ rent; landlords and letting agents wanted six weeks. Both made compelling cases, so the Committee suggested five weeks. We also heard some interesting ideas about alternatives to security deposits. We were not convinced that any had been sufficiently thought through to recommend them, but we felt that many of them needed further thought. Will Ministers therefore commit to carrying out a review of the various alternatives to security deposits and report back to the House in due course?

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[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to wind up the debate and I thank the hon. Member for Croydon Central (Sarah Jones) for her constructive support for the principles of the Bill. I very much look forward to discussing the details with her in Committee.

At the outset, I pay tribute to the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for South Derbyshire (Mrs Wheeler), who could not be with us tonight. She deserves enormous praise for the way she has brought the Bill to the stage in which we are discussing it tonight, through her tireless engagement not only with colleagues across the House, but the sector at large, and extensively with the Housing, Communities and Local Government Committee. I thank her for all her work. She is the reason that we are talking about a Bill over which there is so much agreement.

I start by agreeing with my hon. Friend the Member for Carlisle (John Stevenson). Like him, I am a committed believer in the power of free markets and competition. I approach cases of caps and bans with some scepticism as well, so I am pleased to tell him that after careful consideration of the Bill’s provisions, I came to the same conclusion as my hon. Friend the Member for Gloucester (Richard Graham): what this Bill does is address a failure of competition and a failure of the free market, which Government Members believe so passionately in. There is an inherent unfairness in a situation where a potential tenant is faced with a monopoly provider of a letting agent, and it does not strike any of us as being right. That unfairness was highlighted by my hon. Friends the Members for Rugby (Mark Pawsey) and for Walsall North (Eddie Hughes) and is most clearly evidenced in the charging of double fees, where letting fees are charging fees on both sides of the transaction. This is evidence of the broader imbalance in the market that my hon. Friend the Member for Harrow East (Bob Blackman) highlighted, and the Bill seeks to redress the balance between landlords and tenants.

We have heard many helpful contributions from members of the Housing, Communities and Local Government Committee on both sides of the House. I pay tribute to its work and in particular, to the hon. Member for Sheffield South East (Mr Betts) and my hon. Friends the Members for Harrow East and for Northampton South (Andrew Lewer), as well as their colleagues. They did an excellent job. It is worth pointing out that I counted 19 separate recommendations of the Select Committee’s report and the Government were pleased to accept 15 of those. I hope that that speaks to the value that we place on pre-legislative scrutiny—[Interruption.] We should not dwell too much on the differences that separate us.

My hon. Friend the Member for Harrow East, the hon. Member for Sheffield South East and many other hon. Members asked about retaliatory evictions, and I am pleased to say that the Government are considering the Committee recommendations arising from its wider inquiry into the private rental sector, including on retaliatory evictions, and will reply in due course.

My hon. Friend the Member for Northampton South raised the issue of new burdens funding. I can tell him with my other hat on—as a local government Minister—that there is probably no more passionate defender of new burdens funding than me, so I will ensure that the funding is there for our local authorities to enforce the Bill properly.

That brings me to the comments by my hon. Friend the Member for Lewes (Maria Caulfield). She asked about enforcement and about the fees that would be charged and gave examples of exorbitant £200 or £300 fees charged when tenants want to add a second tenant to their contract or request permission for a pet. I am pleased to tell her that the Bill seeks to end that practice. Such fees will be capped at £50 or reasonable costs, which I hope gives her some comfort.

Enforcement is, of course, incredibly important. I am pleased to tell my hon. Friend and others that there are multiple avenues by which tenants can seek enforcement of their rights: first and foremost, through redress schemes, which the Government made mandatory for letting agents some years ago and are consulting on making mandatory for landlords today; secondly, through trading standards authorities and district councils where they are not the trading standards authorities; thirdly, on the advice of the Select Committee, through the first-tier tribunal; and, if none of that works, subsequently through the county court. The fines, starting at £5,000 and scaling up to potentially unlimited fines, are significant and will act as a deterrent to errant landlords.

[Mr Betts]

On enforcement, does the Minister accept that going to a county court is quite an experience for a tenant and would probably put them off, and does he therefore accept that the first-tier tribunal itself should take the matter of enforcement to the county court on behalf of tenants who have already won their case?

[Rishi Sunak]

We do not fully agree with the hon. Gentleman on that particular point, but I hope he takes comfort from our having accepted his recommendation that in the first instance the first-tier tribunal be available for tenants to take cases to and that this will serve as a benefit to them.

On fines, in criminal cases parties will be liable to potentially unlimited fines and banning orders. I think that the combination of all those things will serve as sufficient deterrent to errant landlords.

In conclusion, the Bill will save millions of tenants hundreds of millions of pounds and will deliver fairness. It is one of the many measures the Government are taking to fix the broken housing market, and I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Tenant Fees Bill

Clive Betts Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 5th September 2018 Commons Chamber

Finally, on the retention of holding deposits, I urge the Minister to clarify the situation whereby a landlord or an agent can retain a holding deposit if someone fails a reference. That is a cost to a landlord or an agent, and without the ability to retain a holding deposit, that landlord or agent may well discriminate against somebody who is likely to fail the reference. That would be a counterproductive outcome. In the main, though, I am fully supportive of the Bill and will certainly support it in the Lobby shortly.

[Mr Clive Betts (Sheffield South East) (Lab)]

I apologise for not being present at the beginning of the debate; I had a meeting on the private rented sector, believe it or not.

I wish to say briefly that there is agreement in principle across the House on this Bill. It was improved by the consideration of the Housing, Communities and Local Government Committee, and I thank the hon. Member for Harrow East (Bob Blackman) for chairing the meetings in which the Committee looked at the draft Bill. I agree with him strongly that this is an issue of a contract between the landlord and the letting agent. That is the principle and that is why tenants should not be charged the fees. I see that one Government amendment clearly spells out that if a tenant goes to a letting agent and says, “Please find me a property,” that contract would be between the tenant and the letting agent and therefore a different arrangement.

I welcome the amendment that means that an enforcement authority will be able to help a tenant who wants to recover a charge awarded to them by the first-tier tribunal. That is a good amendment and I welcome the Government’s tabling it, but it surely shows the need to move to a housing court system, which the Government have promised.

[Rishi Sunak]

May I briefly thank all Members from all parties for their contributions today, in Committee and in the Select Committee hearings? All those contributions have helped to get the legislation into the fine shape that we find it in today. I appreciate all the insights from everyone. I welcome the broad support for the Bill. If Government or Opposition Members still want to engage on the details, I am very open to having those conversations.

Let me briefly answer the specific questions asked by the hon. Member for Great Grimsby (Melanie Onn). On timing, I am obviously not in control of the parliamentary timetable, but there will be a short period of time after Royal Assent—perhaps we should call it an implementation period rather than a transition period—after which the Act will come into force. Within 12 months of that point, any existing and legacy contracts will be subject to the Act’s provisions.

On the hon. Lady’s question about right-to-rent checks and incorrect Home Office information, I can confirm that under clause 8(5) the landlord would not be held liable.

Let me try one last time to persuade the hon. Lady not to press to a vote amendment 1, on fines. Perhaps she is not aware that the maximum fine is £1,000 under similar legislation in Scotland and that the maximum fine is just £500 in Wales. The Bill contains an initial fine of £5,000; the hon. Lady’s proposed maximum fine of £30,000 would be 60 times that of her party’s Government in Wales. I am sure she would agree that that sounds slightly disproportionate and that it gives her something to digest.

Finally, I thank my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) for his passionate defence of the free market economy in free enterprise and competition, with which I wholeheartedly agree and to which I wholeheartedly subscribe. It has been a pleasure to engage with him on the details of the Bill, and I assure him that as a fellow champion of small business, I continue to ensure that nothing we do will jeopardise the health of that free enterprise economy. I appreciate his advocacy on behalf of small business and look forward to future conversations with him.

Question put and agreed to.

Government amendment 5 agreed to.

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

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

I thank Members on both sides of the House for their passionate and constructive contributions to the Bill’s passage through the House. We all agree that the Bill’s aim of making renting fairer, more transparent and more affordable for tenants is important. As such, it is a key part of the Government’s housing agenda. More people are renting, and they deserve help now, which is what the Bill is all about. We want to ensure that everyone, regardless of whether they own their home or rent, or whether they are in the social or private sector, has the security and dignity they need to build a better life.

The feedback and evidence we received recognised the challenges that tenants in the private sector face, especially regarding unfair fees and the need to rebalance the relationship between tenants, landlords and agents. Having listened, we introduced amendments on Report to ensure that the Bill better delivers on our commitment to create a system that works for everyone. I thank all those who have engaged with the process, from our initial consultation through to pre-legislative scrutiny and since the Bill’s introduction to the House. That includes members of the Housing, Communities and Local Government Committee, with their invaluable pre-legislative scrutiny of the Bill; those who provided written and oral evidence to the Committee; and the organisations that have engaged so constructively with my officials in drafting guidance for the Bill.

[Mr Betts]

I thank the Secretary of State for his kind words about the Select Committee. Does he think that there is a wider lesson to be learned—that it would be helpful if the Government more generally provided draft legislation for Select Committees to consider, rather than simply coming to the House with proposals that they have already determined without any consideration in Select Committee?

[James Brokenshire]

I recognise the important contribution that Select Committees, and Joint Committees of both Houses, make to pre-legislative scrutiny of draft Bills, and we can point to a number of examples. As I am sure the hon. Gentleman will appreciate, at other times the Government need to act quickly. The Bill has been a good example of the balance needed between ensuring consultation and engagement.

I also wish to pay special tribute to the Under-Secretary of State, my hon. Friend the Member for South Derbyshire (Mrs Wheeler), for all her efforts to develop the Bill and ensure its successful introduction. We all send her our heartfelt best wishes.

I also wish to thank the Under-Secretary of State, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), who has been instrumental in leading the Bill through the Commons and has been careful and conscientious in listening to the views of Members on both sides of the House.

We can all agree that the Bill has benefited from everyone’s input and, as a result, will be more effective in delivering on its promise to protect tenants from unfair charges. As we have heard, those charges can impose a significant burden on tenants, who often have little choice but to pay excessive and unjustified fees time and again for each property let or even just to renew an existing agreement. The Bill will put a stop to such unacceptable practices by banning unfair and hidden charges, making it easier for tenants to find a property at a price they are willing to pay and saving renters an estimated £240 million within the first year alone. The Bill will also help to introduce a level playing field for landlords and agents by protecting reputable players in the market from having their reputations tarnished by rogues.

I know that the changes have raised concerns in some parts of the letting market, but agents who offer good value and high quality services to landlords will continue to be in demand and play an important role in the sector. In addition, the Bill introduces a cap on tenancy deposits of six weeks’ rent, and we are not stopping there. We want to ensure improvements to how deposits are protected in the interests of both tenants and landlords, to reduce up-front costs to tenants. That is why we recently established a working group to look at the merits of innovative approaches to tenancy deposits, such as deposit passporting.

I am confident that the measures in the Bill will help to deliver the fairer, clearer and more affordable private rented sector that we all want to see—for tenants, yes, but also for decent, professional landlords and agents who are providing a vital service. I am happy to commend the Bill to the House.

--- Later in debate ---

[Mr Betts]

It is good to be here today supporting a Bill that has secured general agreement across the House and is a positive move to help tenants in particular circumstances. I hope that, as the Secretary of State said, the work of the Select Committee has assisted in that process. As I said, I think it would be better if more Bills went through such a process on a regular basis. It is good that the Government have been listening to the Select Committee and have reflected that in their amendments.

However, the Bill raises a number of issues about the need for wider reform in the private rented sector. While we were pleased with the Government’s response to this Bill, we are probably less pleased by their response to our report on the private rented sector in general, where we think they still have a way to go in delivering real change. We will be pushing them on that.

One of the issues across the sphere of issues in the private rented sector is housing courts. That issue applies to this Bill, as I said in the debate on the amendments. If we are properly to deal with the issue of enforcement and a place to go—not merely for tenants but for landlords—to sort out disputes in an easy way that all sides can afford, we need to reform the way in which that can be done through a new system of housing courts. The Select Committee is certainly going to press on that. I hope that the Government will be responsive. They have indicated their desire to do something in that regard, but we have not yet seen what they intend.

The Secretary of State rightly said that the Minister has been particularly assiduous in listening and responding to the Select Committee’s concerns, but the Bill began under the remit of the Under-Secretary of State, the hon. Member for South Derbyshire (Mrs Wheeler). I would like to put it on record that Labour Members recognise that the hon. Lady has been through an incredibly difficult personal time in the past few months. We offer her our best wishes and sympathy and say how good it is to see her back in her place in this House today.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Voyeurism (Offences) (No. 2) Bill (Business of the house)

Ordered,

That, at this day’s sitting, the following provisions shall apply to proceedings on the Voyeurism (Offences) (No. 2) Bill:

Timetable

(1) (a) Proceedings on Consideration and proceedings up to Third Reading shall (so far as not previously concluded) be brought to a conclusion two hours after commencement of proceedings on the Motion for this Order.

(b) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.

Timing of proceedings and Questions to be put

(2) If, following proceedings on Consideration of the Bill, a Legislative Grand Committee withholds consent to the Bill or any Clause or Schedule of the Bill or any amendment made to the Bill, the House shall proceed to Reconsideration of the Bill without any Question being put.

(3) If, following Reconsideration of the Bill—

(a) a Legislative Grand Committee withholds consent to any Clause or Schedule of the Bill or any amendment made to the Bill (but does not withhold consent to the whole Bill),

(b) the Bill is amended to remove any provisions which are not agreed to by the House and the Legislative Grand Committee, and

(c) a Minister of the Crown indicates his or her intention to move a minor or technical amendment to the Bill as so amended, the House shall proceed to consequential Consideration of the Bill without any Question being put.

(4) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph (1), the Speaker or Chairman shall forthwith put the following Questions (but no others) in the same order as they would fall to be put if this Order did not apply—

(a) any Question already proposed from the Chair;

(b) any Question necessary to bring to a decision a Question so proposed;

(c) any Question on any amendment, new Clause or new Schedule selected by the Speaker or Chairman for separate decision;

(d) the Question on any amendment moved or Motion made by a Minister of the Crown;

(e) any other Question necessary for the disposal of the business to be concluded.

(5) On a Motion so made for a new Clause or a new Schedule, the Speaker or Chairman shall put only the Question that the Clause or Schedule be added to the Bill.

(6) If two or more Questions would fall to be put under paragraph (4)(d) on successive amendments moved or Motions made by a Minister of the Crown, the Speaker or Chairman shall instead put a single Question in relation to those amendments or Motions.

(7) If two or more Questions would fall to be put under paragraph (4)(e) in relation to successive provisions of the Bill, the Speaker or Chairman shall instead put a single Question in relation to those provisions, except that the Question shall be put separately on any Clause of or Schedule to the Bill which a Minister of the Crown has signified an intention to leave out.

Miscellaneous

(8) Standing Order No. 15(1) (Exempted business) shall apply so far as necessary for the purposes of this Order.—(Lucy Frazer.)