Tenant Fees Bill

David Drew Excerpts

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

[James Brokenshire]

If the hon. Lady looks at the impact assessment, she will see that it has been calculated as a straight transfer through. I know that there will be a lot to discuss in Committee. It covers that pass through—the costs do not represent increased expenditure by letting agents and landlords, but the value of time spent reading guidance and reconsidering business models is also reflected in the net present value in the impact assessment. The hon. Lady will no doubt want to scrutinise this in further detail as the Bill proceeds through Committee.

The costs include unfair letting fees, with tenants facing bills for hundreds of pounds for simple things, such as reference checks, which on the market are often free, or £30 at most. Our consultation has found that tenants have to pay an average of £137 for a reference check. Then they are hit by fees for drawing up a tenancy agreement, for inventory checks and even for just picking up keys for their property. This, I should underline, is all alongside their deposit and the first month’s rent up front. That is just at the start. There are fees on renewal, and fees when they leave the property. Often people are not just paying the fees once; they are put through the same process every single time they have to move home. These are often young people who would rather put that money towards a home of their own, but they have no control over that. Tenants have no power to negotiate, as agents are appointed by landlords. Some use tenant fees to compensate for artificially low rates for landlords. This is simply not fair and we must now move to protect consumers.

[Dr David Drew (Stroud) (Lab/Co-op)]

The Bill is greatly welcome, but will the Secretary of State do more to bolster the consumer rights of tenants so that they are able to challenge both the landlord and, in some cases, the estate agent, and to make sure that their rights are secured in law?

[James Brokenshire]

I am grateful to the hon. Gentleman for highlighting that point. He will know that clauses 18 to 20 contain amendments to the Consumer Rights Act 2015, so changes have been put in place in a number of different ways.

The Bill protects tenants from paying unreasonably high deposits. Coming on to the point made by the hon. Member for Brighton, Pavilion (Caroline Lucas), we are capping deposits at six weeks’ rent. I stress that this is an upper limit and not a recommendation. We expect landlords to find an appropriate level on a case-by-case basis and we will provide guidance to that effect. In Scotland, tenancy deposits are capped at eight weeks’ rent. A cap of six weeks’ rent, in our judgment, offers a balance of greater protection to tenants while giving landlords the flexibility to accept higher-risk tenants. It will also give landlords adequate financial security, and we believe that is necessary to maintain investment and supply in the sector.