Tenant Fees Bill

Debate between Lord Best and Baroness Gardner of Parkes

Monday 5th November 2018 Grand Committee

[Lord Best (CB)]

My Lords, I declare my interests as set out in the register, in particular that with my wife I am the owner of rental property managed by letting agents. I thoroughly commended the Bill at Second Reading because it is an excellent piece of work. If we can improve it, that will be all to the good, but even if we leave it as it is I am sure it will be an extremely useful legislative measure.

Three separate issues are at stake in the amendments we have before us. Two directly concern holding deposits and one is about putting material into regulations rather than into guidance. On holding deposits, there is the question of when one would lose one’s holding deposit. I have come across circumstances in which it is quite difficult to determine exactly what is fair and reasonable. When four people are sharing a property, they will all contribute to the rather large holding deposit. If one turns out to have given misinformation about their circumstances, that will enable the agent to say quite properly that all four will be rejected as a group. Will they lose the contribution that each has made to the single large deposit that has been placed, especially if they had no idea that one of the sharers was in that circumstance? Difficult decisions will have to be taken, on which firm guidance will be needed.

The second point concerns the period that can be covered by a holding deposit being three days instead of seven. Again, a blanket figure of one week somewhat needs finessing in the guidance that will follow. A week in the north-east for a single person occupying small premises might be £50, while for four sharers in Fulham a week might be £1,000. Very different sums of money are involved in different parts of the country. The point about finessing elements of the Bill in later guidance is well made by all.

That brings me to whether guidance that ultimately is not in the Bill or in secondary legislation is strong enough. It may be that having regulations that follow through a statutory instrument would be a better way of dealing with the tricky issue of holding deposits, along with other measures that will come before us as we work our way through the Bill. I should like the Minister to explain the down sides to using regulation in the form of a statutory instrument to cover the issue rather than guidance, which, I suspect, could be open to dispute and disagreement. I fully understand that one clear disadvantage of going down the route of using regulations is that if we are to have secondary legislation, it needs to follow the enactment of the Bill before we can get going on the practicalities. That would put back the moment when the very good things in the Bill would begin, so I see that there might be a delay. However, that might be a price worth paying if the Bill is improved in this way. Could the Minister let us know what kind of delay we are talking about and whether there are other down sides to the use of secondary legislation and regulations in place of guidance, which, as I say, may be subject to a good deal of dispute?

[Baroness Gardner of Parkes (Con)]

My Lords, I declare an interest as a landlord. I think one’s week rent is fairly good and clear as a deposit. For some years I have found that some tenants deliberately withhold their final rent so that you do not have a fair amount money at hand to cover whatever damage they have done to the property. Often, the work that has to be done takes every bit of the deposit and more, although sometimes of course it does not—some tenants keep the place beautifully, pay their rent properly and are the tenants everyone wants. However, until tenants are in occupation, you just do not know whether they are good or bad, and I do not think that this provision in the Bill should cut the period to three days. That will leave landlords in a real quandary when people do not pay their last month’s rent—they usually pay monthly rent. It would be a worry if people did not make the last payment. I agree with everything else that other people have said.

--- Later in debate ---

[Lord Best]

I support the amendment on transferable deposits. It is an absolutely commendable concept. How can people possibly find a second fat deposit when they have not had the first one back? This proposal would be a really helpful move, and I hope the Minister will take it very seriously and look at it in some depth.

On the question of a six-week, five-week, four-week or eight-week period, I was impressed by the Citizens Advice survey, which indicated that only a very small percentage of tenants—2%, I think—did not pay their last month’s rent, the deposit being absorbed or used for that purpose. However, I asked Citizens Advice about its survey and discovered that it was exclusively of tenants. I suspect that the percentage might have been different if it had been a survey of landlords or agents. This is bad news for landlords but I am told by agents that, naughty as it is, a lot of students will not pay the last four weeks’ rent because they fear that there will be a big dispute about their deposit at the end. Especially if the student has come from overseas and is returning, they will have no trouble over the deposit because they will instead have withheld their last month’s rent. I suspect that landlords would always be very hostile to the idea of a limit of just four weeks’ rent when students behave like that.

[Baroness Gardner of Parkes]

My Lords, the question of how much deposit you can pay back immediately to a tenant is a difficult one. Very often a lot of people are required to check exactly what damage has been done, particularly in cases of very heavy damage. I have mentioned before the block where we have a right to manage. A person owing a large service charge has recently had herself certified under the Mental Health Act. Someone has now been appointed to take over and the four flats in her name are being handed over. One flat in the basement was being used illegally as a brothel and the people who vacated it smashed the whole place to pieces—the windows, the walls and pretty well everything else, as far as I understand.

The legitimate tenant is perfectly entitled to think that they should have as much of their deposit back as possible, but where someone does what they did in that flat—as yet, we have not seen the other three that have been recovered from illegal lettings—it is quite worrying if you do not have any deposit to go towards repairing the damage. Therefore, the situation is more complicated than people realise.

--- Later in debate ---

[Baroness Gardner of Parkes]

My Lords, as the Minister knows, I am very concerned that people are letting their flats for short lets, which is strictly prohibited under the terms of their tenancy. Is there anywhere in the Bill that this matter could be rectified, perhaps by placing an obligation on the tenant to inform people that it is not a legal letting or by the new tenant themselves confirming that what they are taking on is not a legal letting? There is a big loophole in the law here.

[Lord Best]

I would like to offer a word of support for the intent behind this proposed new clause. Perhaps the best organisations to get the message out to tenants and prospective tenants are the new websites—or not so new anymore—such as Zoopla and Rightmove. So many people looking for somewhere to rent now do so online. Those agencies have the power to reach nearly everybody with the important information contained in this provision.