Private Rented Sector

Julian Huppert Excerpts

Wednesday 12th March 2014 Commons Chamber

[Dr Julian Huppert (Cambridge) (LD)]

I beg to move,

That leave be given to bring in a Bill to prevent the charging by letting agents of above-cost fees; to provide that the Consumers, Estate Agents and Redress Act 2007 and Estate Agents Act 1979 apply to letting agencies; to facilitate the establishment by councils of landlord and property accreditation schemes; to establish a housing ombudsman service for tenants in the private rented sector; to require the Secretary of State to undertake a review of the legislation applying to the private rented sector; and for connected purposes.

Two of my constituents recently came to see me at my surgery. They had rented a property in Cambridge. They cleaned up very carefully when they left, but they forgot to fill in three small holes where there had been picture hooks. They were told that some of the deposit would be withheld to cover the damage—fair enough—but the sum charged for three bits of Polyfilla and a lick of paint was £600. They, quite reasonably, refused to pay so much, but were almost immediately offered a deal of half as much. They have now taken the matter to arbitration, but during that time they will not get back the £600.

The letting agency will also not get that money until the deal is settled—such days have gone—but given that many people use the deposit from one place to pay for the deposit on the next, many simply cannot afford to wait to go to arbitration and have to accept whatever deal they are offered. That creates an incentive for letting agents simply to pitch for as much as they can get away with, knowing that some people will just pay it or take whatever they are offered, but that very few will challenge it all the way, regardless of the merits of the case. That is a particular problem in areas of high demand, such as mine, where all the power lies with letting agents rather than with tenants.

There is a similar issue with fees. Letting agents can and do charge exorbitant amounts for credit checks, to put prospective tenants on a register, to extend contracts and to make many other small changes. Shelter, which has run an excellent campaign on this issue, has found that one in seven renters who use letting agents paid more than £500 in fees. That is outrageous, because agents are already paid by the landlord.

Fees bear no relation to the costs. Last night, I looked at one Cambridge site that charges £50 for a credit check and £16 to send any e-mail or letter, which is somewhat above the cost. It also charges £250 to change a name on a tenancy. That is a big problem for houses in multiple occupation, of which we have many, where the people change regularly.

The Bill I seek to introduce would help those in the private rented sector by tackling those problems. It would prevent exorbitant fees being charged, extend to letting agents the controls that apply to estate agents, strengthen local government’s powers to highlight good landlords, extend the existing housing ombudsman to cover the private rented sector as well as the social housing sector, and ensure a thorough Government review of all legislation applying to the private rented sector, as recommended by the Communities and Local Government Committee. The Government are already doing some consultation work.

Of course, many landlords and letting agencies are decent and honest, and do not try to make a living by ripping off their tenants. I was always fortunate to have such an experience. Those good people should have nothing to fear from the controls. Indeed, they will probably benefit as the rogues sharpen up their act or go out of business.

Demand in the private rented sector has continued to rise through changing living patterns and people struggling to pull together the money for a deposit. Shelter’s latest estimate is that about 9 million people in England rent their home, about a third of whom are families. There have been substantial changes in how this business is run, with more and more power in the hands of letting agents.

High fees, especially when they are hidden and people do not know that they are coming, have a huge effect on people’s lives. Many people rent because they cannot yet afford to buy, so they do not have much spare cash. Research has revealed that 27% of those who have used a letting agency in the past three years had to borrow or use a loan to pay fees, and that 17% had to cut spending on heating or food to cover costs. That cannot be right, and it must end.

The Bill strives to give more security and better conditions to those in the private rented sector. There is a housing ombudsman for people in the social sector, as well as for private sector landlords who choose to be covered by it, but why should it cover only the good landlords, who are probably less likely to have problems in the first place? Why should other tenants not have such protection?

We should not choke the sector in red tape, which would of course reduce investment, restrict choice and ultimately drive up costs for tenants, but we can and should do much more. The Government have already done some work in this area. I particularly welcome the £6.7 million given to local authorities to help to tackle rogue landlord activity by the very worst of the worst slum landlords. However, there is more to do to empower tenants by ensuring that they know their rights, know what they are getting and know how to complain if things go wrong.

That is why I propose that councils should be encouraged to run accreditation schemes, as has been done so well in my constituency. Lib Dem-run Cambridge city council’s landlord and property accreditation scheme has been effective. It has helped landlords and tenants, and has driven up safety and sustainability standards. There are far fewer complaints about accredited properties. In fact, there has been only one complaint about an accredited property so far, compared with roughly 250 a year about non-accredited properties. Universities up and down the country know that. They give students the information that they need to know about landlords in the area, such as who is good and who is less good.

Accreditation allows us to tackle issues of safety and sustainability. Safety is a key issue. Privately rented homes are the most likely to contain the worst hazards—category 1 hazards—according to the English housing survey. There is a mismatch in the regime. There is a mandatory requirement to check the gas safety of a privately rented home, but not to check its electrical safety. Given that electricity kills at least one person a week in the home and injures about 1,000 people every day, and that private tenants are affected disproportionately, we should actively seek a solution.

There are similar issues with sustainability. There will always be less of an incentive for landlords to insulate properties that are privately rented, because they do not pay the bills. Cambridge has used its accreditation process to encourage landlords to uprate the energy standards in their properties. I hope that we will see that across the country, because it would help to reduce our reliance on gas, which may come from risky territories.

We should also consider making changes because people are renting for different periods. Tenancy patterns are changing for a number of reasons. People do not always want a six-month or one-year approach. We should look at new forms of tenancy and at expanding the options. There should be appropriate rolling clauses so that people can get what they want. Six-month and one-year tenancies are very insecure for families who want to put down roots and connect with the community in which they live. We should normalise longer-term leases in the private sector and educate landlords about the advantages to them of stable, longer rents. They should do better out of them.

I hope that the House will support the motion and support the millions of families and individuals who rent. The changes that I have outlined are simple, but, if implemented, will not only help to create a fairer and more stable private sector, but improve quality and investment for everybody.

Question put and agreed to.

Ordered,

That Dr Julian Huppert, Caroline Lucas, Tim Farron, Sarah Teather, Lorraine Fullbrook, Mr Adrian Sanders, Greg Mulholland, Annette Brooke, Martin Horwood, Teresa Pearce, Mr John Leech and Jim Shannon present the Bill.

Dr Julian Huppert accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 6 June, and to be printed (Bill 182).