Tenant Fees Bill

Jo Stevens Excerpts

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

[James Brokenshire]

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 (Cardiff Central) (Lab)]

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]

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.

--- Later in debate ---

[Melanie Onn]

My hon. Friend makes a very important point and I will come on to trading standards shortly.

There is no definition of what a landlord can include as a loss. If this includes the use of agents and agents opt to charge for their time—to replace a key or make some phone calls—charges may amount to far more than Government ever intended them to. This is one of the issues that we have seen with the scandal around excessive charges to private leaseholders: without a specified cap, there is scope for the unscrupulous to run riot.

[Jo Stevens]

The Bill is obviously necessary because of the bad behaviour of some landlords and letting agents. Without the measures that my hon. Friend set out, bad behaviour by rogue landlords and letting agents will not be prevented. They will carry on doing it because there is no sanction and no enforcement to stop them.

[Melanie Onn]

My hon. Friend makes a really important point. There is absolutely no point in this House taking through legislation, as good as it is, if it cannot be enforced because it holds no weight in law.

The inclusion of a one-week refundable holding deposit, on top of a month’s rent and six weeks’ tenant’s deposit, is allegedly designed to minimise instances of tenants securing multiples of properties at the same time before finally settling on their preferred property. There has been very little, if any, evidence that this is a regular practice. Additionally, the Government say that there are a number of exceptions to that deposit having to be refunded, including when the tenant provides false or misleading information. Again, although on the face of it, that is a sensible measure, there are no additional protections for tenants if the incorrect information is not their fault. For example, a reference that does not exactly match a tenant’s claims should not immediately mean that they lose that holding deposit. There is scope to develop a mechanism to test inaccuracy and establish the reasons behind it before immediately assuming information has been deliberately misleading.

--- Later in debate ---

[Jo Stevens (Cardiff Central) (Lab)]

It is a pleasure to follow the hon. Member for Harrow East (Bob Blackman). Some Members may be wondering why I, a Welsh Member, am speaking in this debate, because housing is devolved to the National Assembly for Wales, and the Welsh Government will be bringing their own Bill before the Assembly this year to ban letting fees in the private rented sector. The Welsh Government consulted widely and the consultation’s findings have added to the ample evidence, a lot of which we have heard this evening, that action is needed to address the fees currently charged to tenants.

To highlight a few of the consultation’s findings, 56% of all respondents agreed with an outright ban on unnecessary fees, 62% of tenants said that fees had affected their ability to move into a rented property, 86% said that fees had affected their decision to use a letting agency and, astonishingly, 61% of landlords did not know what their tenants were being charged by their letting agent. I doubt that the experiences of tenants in Wales differ greatly from those in England, so I welcome the Welsh Bill and am pleased that introductory fees will be banned—hopefully throughout the UK.

My constituency has the fifth-highest proportion of privately rented accommodation of any constituency. That is largely, although not exclusively, because it has the third-highest proportion of full-time students of any constituency. Nearly 37% of my constituents live in private rented homes, and much of that number is made up of families. Like many Members, I see constituents in my advice surgery every single week who are living in expensive, cramped accommodation and for whom fees are a constant worry. Such fees are yet another worry to add to insecure employment, low pay, cuts to social security and housing benefits, a publicly funded legal advice desert—when rent arrears get to the point where eviction is imminent, no help is available—and, obviously, eye-watering levels of student debt. Banning letting agency and landlord fees is very welcome. It is a cash cow that has gone on for too long. Some agents are using it as a scam, and it needs to stop.

Other Members with university constituencies will no doubt recognise the picture I am about to paint. Some of the larger streets in my constituency are almost entirely made up of family homes that have been converted into student lets—streets of about 200 properties, each with eight or more students living in it. When I go down those streets and knock on doors to speak to constituents, I add up in my head the total paid every single year in letting agency fees by those residents. On one street in the Cathays ward of my constituency each resident will pay, on average, £200 in letting agency fees. Between them, on that one street, letting agencies are making a minimum of £320,000 every single year. Never mind Ponzi schemes or payment protection insurance scandals, this is a scandal that has lined the pockets of letting agents, some of whom are parasitic, greedy and unscrupulous, and it has gone on for far too long.

As we have heard, these fees, like so many other things, are based on an imbalance of power. Student tenants and low-income families have no power in this relationship. This is what one constituent wrote to me, having had a dreadful experience with a Cardiff letting agency:

“They are LEECHING people for all that they can, and there is nothing to stop them. They are brazen. They know they’re screwing you over, and they know that you know that they’re screwing you over, and THEY DON’T CARE. Because there are no consequences and they hold all the power.”

My experience of representing constituents living in the private rented sector is that the fees charged are almost always completely arbitrary and unjustifiable.

Here is another view from a constituent:

“Students and low earners are bled dry by these lizards, to the tune of hundreds of pounds a year all to live in rotting accommodation which can be dangerous to live in.”

As another example, one student said to me:

“In the small print of our contract it said the letting agency will take 65 pounds from each of us in our student house for ‘professional cleaning…regardless of the condition the house is left in.’ So I was then quite annoyed to find they hadn’t bothered with this ‘professional cleaning’ for us when we moved in. The kitchen was leaking and rotting. A ceiling collapsed within a week due to an upstairs leak. The bathrooms reeked and were mouldy. A microwave nearly caught fire and…exploded but we were told”

by the letting agency that

“it wasn’t their problem.”

The truth is that many of these fees are completely arbitrary. They mean nothing. At most, they constitute a few minutes of basic administration using tenancy agreement templates and the ability to cut and paste, yet at the moment agencies and landlords can just name their price, so I welcome the Bill.

This racket needs to end, all of it, and fast.