James Brokenshire contributions to the Tenant Fees Act 2019

Wed 5th September 2018 Tenant Fees Bill (Commons Chamber)
3rd reading: House of Commons
Report stage: House of Commons
5 interactions (707 words)
Mon 21st May 2018 Tenant Fees Bill (Commons Chamber)
2nd reading: House of Commons
21 interactions (1,736 words)

Tenant Fees Bill

(3rd reading: House of Commons)
(Report stage: House of Commons)
James Brokenshire Excerpts
Wednesday 5th September 2018

(2 years ago)

Commons Chamber
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Ministry of Housing, Communities and Local Government
Dame Rosie Winterton Portrait The Second Deputy Chairman - Hansard
5 Sep 2018, 3:34 p.m.

The hon. Gentleman may take in part in the deliberations but, as I have said, he may not vote, make any motion or move any amendment.

As the knife has fallen, there can be no debate. I call the Minister to move the consent motion.

Motion made, and Question put forthwith (Standing Order No. 83M(5)),

That the Committee consents to the Tenant Fees Bill.—(Rishi Sunak).

Question agreed to.

The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)).

The Deputy Speaker resumed the Chair; decision reported.

Third Reading

Queen’s consent signified.

James Brokenshire Portrait The Secretary of State for Housing, Communities and Local Government (James Brokenshire) - Hansard

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 Clive Betts Portrait Mr Betts - Hansard

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 Portrait James Brokenshire - Hansard
5 Sep 2018, 5:19 p.m.

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.

Melanie Onn Hansard
5 Sep 2018, 5:39 p.m.

I thank the Secretary of State for his words and my colleagues who have taken part in the debates and assisted in Committee. The conversations that we have had have been very helpful, and were certainly heard to some degree by the Minister, and I thank him for that. I am pleased that the Bill is leaving the House in a better state than when it was introduced, after pressure from Labour to improve specific elements of it. But there is still more that the Bill needs to include to stop this being a missed opportunity for 4.7 million tenants in England. Those tenants often end up in the private rented sector not by choice but because of the lack of social housing, especially in high-demand areas.

The Government need to consider further the impact of their policy, which allows default fees to continue to be open to abuse. More than half of tenants do not see their tenancy agreement before putting money down for a tenancy. Much emphasis is still placed on the ability of a tenancy agreement to signify a mutually understood and fair relationship, but that is very often not the reality for tenants. The Bill continues to place reliance on guidance, so much so that the Chair of the Delegated Powers and Regulatory Reform Committee, Lord Blencathra, has said that, since the guidance will play such an important part in the functioning of this Bill, it should be subject to parliamentary scrutiny, but we are yet to see even a hint of a first draft. I hope that the Government reconsider the current provision regarding default fees and bring in regulations to tie down tenants’ rights. If they remain steadfast against that idea, will they at least follow the advice of Lord Blencathra?

Members on both sides of the House have raised continuing issues regarding deposits and enforcement. However, Labour fundamentally supports the Bill because it will tackle many of the unfair fees that tenants face when they rent a property, and will help to build a more professional, transparent and fairer private rented sector across England. I am pleased that years of Labour pressure have finally twisted the Government’s arm on this issue and brought forward a Bill that starts to do genuine good for tenants. But the battle to create a private rented sector that works for the 4.7 million renters in this country is far from complete.

The most recent English housing survey made for hard reading for many of England’s private renters. The rental marker is affecting more and more people from a wider variety of groups. The proportion of families in our rental market is going up, with 20% more families in the private rental sector since 2010. More and more children—not just young adults and students—are growing up in rental accommodation. Although the short-term nature of rental accommodation offers flexibility for some, it can have a devastating effect on others. Families in rental accommodation are nine times more likely to move than those who own a house, incurring repeated deposits and fees. Despite today’s efforts, rental regulation in this country still leaves a lot to be desired, and tenants need far more long-term security when they rent a house.

We had hoped that this Bill would be broadened to make longer tenancies a reality, and to ensure that families do not face yearly moves and get hit with repeat fees and costs. However, despite the Prime Minister’s protests at Prime Minister’s questions today, there were reports last night that suggested that the Government are afraid to take that measure to further help millions of renters around the country.

As this Bill moves to the other place, there remain issues that could be explored further to improve rights and access to rights for renters, and to ensure that suitable deterrents and enforcement are in place to improve the private rental sector in the UK. I trust that genuine issues raised by Members today will be given closer consideration to reflect the hopes of those in the private rented sector.

Tenant Fees Bill

(2nd reading: House of Commons)
James Brokenshire Excerpts
Monday 21st May 2018

(2 years, 4 months ago)

Commons Chamber
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Ministry of Housing, Communities and Local Government

Second Reading

James Brokenshire Portrait The Secretary of State for Housing, Communities and Local Government (James Brokenshire) - Parliament Live - Hansard
21 May 2018, 7:44 p.m.

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 Portrait Caroline Lucas (Brighton, Pavilion) (Green) - Hansard
21 May 2018, 7:46 p.m.

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 Portrait James Brokenshire - Hansard
21 May 2018, 7:46 p.m.

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.

Debbie Abrahams (Oldham East and Saddleworth) (Lab) - Hansard
21 May 2018, 7:48 p.m.

I congratulate the Secretary of State on his appointment. Will he explain why the impact assessment did not assess the pass-through effects on tenants? With the reduction in fees and so on, how can we guarantee that the costs will not be passed through into rents for tenants?

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:50 p.m.

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) Parliament Live - Hansard
21 May 2018, 7:50 p.m.

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 Portrait James Brokenshire - Hansard
21 May 2018, 7:50 p.m.

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.

Marsha De Cordova Portrait Marsha De Cordova (Battersea) (Lab) - Hansard
21 May 2018, 7:51 p.m.

The Secretary of State is capping deposits at six weeks’ rent. Does he not agree with me and many of the voluntary organisations that have provided evidence and information that it would be right to consider reducing the cap to four weeks?

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:52 p.m.

The issue was considered by the Select Committee, and we have considered it carefully. We believe that six weeks’ rent as an upper limit strikes the right balance between providing tenants with greater affordability while ensuring that landlords have adequate financial security for their assets.

Rebecca Pow Portrait Rebecca Pow (Taunton Deane) (Con) - Hansard
21 May 2018, 7:52 p.m.

I welcome the Bill. It is crucial that we have a vibrant tenant sector and that we aid it in every way possible, but the Bill must not deter landlords or agents who are acting well, assiduously and industriously. We must ensure that the Bill increases transparency and the competitiveness of the market, while still having a viable and vibrant market.

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:54 p.m.

My hon. Friend makes an important point. Let me be clear: the Bill is not an attack on good agents and landlords. We value the important services that they provide, but it will ensure a fair playing field for reputable agents by making it harder for rogues to operate. Letting agents and landlords who represent good value for money will continue to thrive, while those who rely on charging unfair and unjustifiable fees will have to reconsider their business models. We have also committed to regulation to prevent reputable agents from being undercut or undermined by rogues.

My hon. Friend makes her point very sincerely. The interesting point about some of the experience in Scotland is that the number of letting agents in Scotland, according to Companies House, has increased since 2012, when the ban on tenant fees was clarified there. That demonstrates that innovative and good agents can continue to thrive.

Mr Jim Cunningham (Coventry South) (Lab) Hansard
21 May 2018, 7:54 p.m.

I welcome some of the measures that the Secretary of State is taking. Nobody wants to attack good landlords. We still have bad landlords and that is who the Bill is directed at. There is a problem with commitments that landlords make, then break. I have had cases where they have refused to carry out repairs or said, “Take me to court” and that sort of thing. The Secretary of State and I know that ordinary individuals, mainly young people in rented accommodation, cannot always afford to do that. How does the Bill deal with those sorts of issues?

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:55 p.m.

The Bill seeks to address the application of unfair fees by, in essence, banning all of them unless they are then reapplied back by the terms of the Bill itself. This is an important step to provide reassurance and to deal with the rogue practices that the hon. Gentleman highlights. In that context it is important to stress some of the other steps that have already been taken in relation to rogue landlords and the abuses in the sector that need to be tackled. This is a further measure to address them.

Turning to the key provisions of the Bill, which apply to assured shorthold tenancies, tenancies of student accommodation, and licences to occupy, these will ban landlords and their agents from requiring tenants and licensees of privately rented housing in England, and persons acting on their behalf or guaranteeing their rent, to make any payments in connection with a tenancy, with some key exceptions: the rent; a refundable tenancy deposit capped at six weeks’ rent; a refundable holding deposit to reserve a property, capped at one week’s rent; a capped payment for changing a tenancy agreement when requested by the tenant; payments associated with early termination of the tenancy, when requested by the tenant; payments in respect of utilities and council tax; and payments in the event of a default by the tenant, such as replacing a lost key or late rent payment fine, capped at the level of the landlord’s loss.

In the Bill, the term “in connection” with a tenancy refers to any payments required by the landlord or agent throughout a tenancy. This is an important point, as we want to ensure that landlords and agents do not just transfer their fees to another stage of the tenancy, such as exit. The proposed legislation will also prevent tenants from being required to contract the services of a third party.

Jo Stevens Portrait Jo Stevens (Cardiff Central) (Lab) - Hansard
21 May 2018, 7:56 p.m.

There are a lot of references in the Bill to upper limits and caps. Does the Secretary of State recognise that the temptation, and I suspect the practice, will be that agents and landlords will put deposits at the top end of the cap? They will not put them further down—they will be right at the top end.

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:57 p.m.

We intend to provide guidance on those issues. I do not accept that that would automatically be the situation. It is why we have taken the steps that we have in considering what the right action should be in setting a number of these issues. It is important to recognise that the Bill proposes a number of enforcement measures that offer a strong deterrent to irresponsible agents and landlords, and in doing so protects tenants.

Maria Caulfield Portrait Maria Caulfield (Lewes) (Con) - Hansard
21 May 2018, 7:57 p.m.

Does the Secretary of State agree that this is very much a geographical issue? In London and the south-east, tenants have really suffered at the hands of lettings agents and their fees. Tenants can pay anything from £175 to £900 just in fees alone. My local citizens advice bureau in Lewes found that on average tenants are paying, for eight weeks’ deposit, nearly £4,000 in advance. This is a real problem for London and the south-east.

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 7:58 p.m.

My hon. Friend highlights the issues that go to the heart of the Bill—that is why I hope that it will command broad support across the House.

The Bill places a duty on trading standards authorities to enforce the measures it contains. It also makes provision to enable tenants and other relevant people to recover unlawfully charged fees. It prevents landlords from recovering their property, via the section 21 of the Housing Act 1988 procedure, until they have repaid any unlawfully charged fees. A breach of the fees ban will usually be a civil offence, with a financial penalty of £5,000. However, if a further breach is committed within five years this will amount to a criminal offence. In such a case, local authorities will have discretion about whether to prosecute or impose a financial penalty. Guidance on that will be issued. They may impose a financial penalty of up to £30,000 as an alternative to prosecution. Local authorities will be able to retain funds raised through financial penalties, with the money reserved for future local housing enforcement.

Finally, the Bill makes provision for a lead enforcement authority to provide oversight, guidance and support, with the enforcement of requirements on letting agents. This includes the ban on letting fees and related provisions.

Mark Pawsey Portrait Mark Pawsey (Rugby) (Con) - Hansard
21 May 2018, 7:59 p.m.

In respect of fees charged by letting agents, does the Secretary of State agree that there is something fundamentally wrong when a letting agent takes a fee from both parties in the transaction—the tenant and the landlord? That is just not right.

James Brokenshire Portrait James Brokenshire - Hansard
21 May 2018, 8 p.m.

I understand. In many ways, that lies at the heart of the Bill—the way in which, effectively, there can be charges in two different directions. That underlines why these measures are important and why, to take my hon. Friend’s point, they are intended to promote fairness.

The Government will always stand on the side of people who are being ripped off and exploited and support them. We are taking this action to address inequalities in the lettings market and to create a market that is fair for consumers. By banning fees for tenants and capping deposits, we are delivering on our commitment to make renting fairer and more affordable. The Bill will make a real and meaningful difference to millions of tenants right across the country, especially for young people and families, and I commend it to the House.

Melanie Onn (Great Grimsby) (Lab) Parliament Live - Hansard
21 May 2018, 8 p.m.

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”.