Consumer Rights Bill

Clive Betts Excerpts

Tuesday 13th May 2014 Commons Chamber

[Mr Speaker]

Order. Of course I am in colleagues’ hands, but I simply point out that anyone who speaks for longer than three minutes will knowingly be stopping another colleague contributing. I just put that in my usual gentle fashion.

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

I want to speak to new clause 22 about letting agents’ charges. When the Communities and Local Government Committee did a report on the private rented sector last year, we had more evidence and more complaints about letting agents’ charges than almost anything else. That was reflected by the OFT, which said that complaints to Consumer Direct about letting agents were almost all about fees and charges. It is not just that there is one fee up front for a tenancy agreement; there are also the charges for inventories and for credit checks, and people enter into a viewing not knowing what the ultimate charge will be. It is a charge they have to find up front as a prospective tenant, at the same time as they are trying to find the deposit, and often these are people on very low incomes.

The process gets repeated to a degree every time people renew their tenancy after six months or 12 months, and that militates against having longer term contracts. Agents see this as an incentive not to let longer term contracts because short-term contracts mean renewals and more fees for them. I have described letting agents as being a bit like football agents as they make their money out of transfers and renewals of contracts. We ought to be extremely wary of that.

Shelter said the average size of a fee to a tenant was £355. The Foxtons website gives its fees as £420 to a tenant to create a contract, £96 to renew it and £150 for an inventory check. Such charges are replicated by most letting agents.

The Committee responded that there should be absolute transparency of fees up front when a property is advertised and it must be clear what the totality of charges to tenants will be and there should be no double charging. If there is transparency, it will be harder for a letting agent to charge a tenant and a landlord for the same thing, which happens at present.

We want these changes to be put in a mandatory code of practice, but the Government have not agreed to do that. On transparency, all that has happened is the Advertising Standards Authority has given a ruling saying the fees that are compulsory should be shown up front as part of the price quoted. However, when we go on websites like that of Foxtons, we see those fees are in very small print, so, in practice, letting agents are going through the motions when it comes to the ASA ruling, but they are not sticking to the spirit of it.

We did not recommend a complete abolition of fees to tenants. What we said was that it has been done in Scotland and that we should review the Scottish experience. The Committee will come back in the autumn and look at the Scottish experience and consider whether banning charges to tenants means higher rents. If so, there is a question as to whether tenants favour paying a bit more in rent rather than having a massive fee up front. The Committee will also look at the fact that the contract is with the landlord, not the tenant. We will take further evidence on those matters in the autumn.

[Stephen McPartland (Stevenage) (Con)]

I wish to speak briefly to new clauses 18 to 21. I was a member of the Public Bill Committee and we had a long debate about ticket touts and the secondary ticketing market. I think there is cross-party support on this, and I pay tribute to my hon. Friend the Member for Hove (Mike Weatherley) and the hon. Member for Washington and Sunderland West (Mrs Hodgson) for the work they have done as chairs of the all-party group on ticket abuse of which I am proud to be a member. The report that has been produced is excellent and is close to my heart as Knebworth, which is in my constituency, is the largest outdoor music venue in the UK. I am therefore very keen to ensure that we eradicate ticket touting for all events. Having cross-party support to eradicate ticket touting is very welcome, and we need to push that forward.

In Committee I referred to an organisation called Twickets. It takes a photograph of the ticket in question and places it on its Twitter feed and it can then sell that ticket for the face value or less. That is the only way in which that ticket can be sold. That provides a good opportunity for someone to sell a ticket at face value or less to a third party whom they do not know.

One thing that disturbed me in Committee, and one of the reasons why I cannot add my name to new clauses 18 to 21, is that botnets are buying up huge amounts of tickets from the online retailers, and 90% of tickets in the UK are currently sold online. So one huge problem facing us is how to stop these botnets buying up the tickets. Consumer behaviour is in many ways driving the problem, because consumers are prepared to pay almost any price and so they accept the market; they pay the price and that allows ticket touts to flourish. We need to focus on how we can remove ticket touts from the UK and how we eradicate them as much as we can.