Letting Agent Fees (Tenants)

Jim Shannon Excerpts

Wednesday 6th September 2017 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing this debate. Although it is clearly about England and Wales, there is a Northern Ireland perspective. The concerns that Members have expressed are concerns that I have as well. There are people on the waiting list who will never be housed, and that is the reason that the housing benefit system for people who need help to live independently is available for private rental households. The difference between renting from the Northern Ireland Housing Executive and a private landlord is not only the protection that is offered, but the cost.

Since the Government’s decision to pay tenants housing benefit instead of paying it directly to landlords, many more landlords have made the decision to work through letting agencies in order to have less hassle. However, that also means that tenants are swallowing the cost increase.

I thank the Library for the evidence in the background information, which notes that 93% of local authorities have failed to issue a single penalty for non-compliance by letting agents. Only three penalty notices have been issued and only one has resulted in the full costs being repaid. We can see clearly where the issues are.

The fact is that when the Government bring in legislation to give protection, the cost ends up resting mostly with the tenants, many of whom can ill afford it. Although a £25 per month increase may not seem much to many people, it would be very hard for a constituent of mine who works 16 hours, lives with her young daughter and has had no help from her husband, who left her, to pay an extra £25, upwards to £100. It would not be paid by housing benefit; it would be paid by her. Although we need more protection, we also need to ensure that the cost is accepted by those it was intended for.

Single parent families are struggling. They are receiving less tax credits, face having their housing benefit reduced depending on the number of rooms in the house, and are unable to work full-time hours and still be a loving single parent. I hate the thought that we are not protecting that type of family unit to the extent that we can and should be.

I again thank the Library for its background briefing, and I make a brief comment on the Northern Ireland perspective. Housing Rights carried out a mystery shopping exercise and went to 40 different letting agents, looking at administration costs, credit checks, tenancy renewal fees and inventory charges. The need for tighter regulation of letting agents’ fees was also raised by several Assembly Members in a debate in June 2016. Housing Rights called for greater regulation of letting agents’ practices, including a requirement for letting agencies to present all fees on their websites, advertisements and promotional material. In Northern Ireland, we recognise the need for that.

I read a guide to the changes, which referred to the mandatory inventory fee, the tenancy fee, the renewal fee and the agencies’ own administration fee. The average tenant pays £233 in fees, and some people pay a huge £700. Some hon. Members referred to the figure of £500, but it can be as much as £700. Citizens Advice found that 42% of renters have to borrow money just to pay the fees, which is not acceptable.

I will finish on this point. It is clear that, although landlords need to cover their costs and many are still paying for the mortgage on their property, we need to ensure that a pricing increase is not met with an increase to the tenant. How does the Minister believe that can most effectively be carried out?