Consumer Rights Bill

Lord Harris of Haringey Excerpts

Monday 24th November 2014 Lords Chamber

[Baroness Neville-Rolfe]

I am grateful to my noble friend for that factoid, of which I was not aware. Of course, our proposed regime provides for routine inspections and then, where there is a potential problem, for immediate inspections when they would be more appropriate. That difference is entirely justified, for the reasons that I have explained. Having worked in business, I know that when you have routine inspections you want to make sure that the people who understand all the rules and how the systems work—and have all the necessary paperwork—are available, because otherwise you often end up with a second visit. That is what we are trying to avoid, because that costs both parties.

We have clarified where notice needs to be given by adding to the Bill reference to what a routine inspection is. To offer further reassurance—

[Lord Harris of Haringey (Lab)]

In the Minister’s amendment, the only definition given is that it is not one of those things that are exempt. In which case, what value does “routine” add?

[Baroness Neville-Rolfe]

We felt that it helped to clarify that there was not a gap. In Committee, we went through a number of examples about which individual noble Lords were very concerned. Having checked through the examples, we are able to show to people’s satisfaction that the thing would be clear. Doing it this way in the Bill achieves that effect. However, I want to add a further reassurance. I am today committing the Government to reviewing the practical effect of the notice requirement within two years of commencement of this part of the Bill. I have listened to what has been said and we have made changes to try to clarify this. We want to have a good enforcement regime—

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[Baroness Neville-Rolfe]

My Lords, I am grateful to the noble Baroness, Lady Hayter, for her comments and to my noble friend Lady Bakewell of Hardington-Mandeville for sharing her experiences.

The Government have already taken the opportunity of this Bill to increase transparency in the lettings market—an important change. In addition, a letting agent is already required to be a member of an independent complaints scheme. Now is not the right time to introduce yet further regulation on lettings, which will introduce greater costs into the sector. Instead, we have agreed to review these measures a year after introduction. That is the time to see whether the changes are working and whether further measures are required.

I turn to Amendments 44ZA and 44D. While I share the concerns expressed about the practice of charging both parties for a transaction by estate agents and lettings agents, I do not believe that regulation is the right way to tackle this issue. Many letting agents do share the cost of providing a service between tenants and landlords where both benefit from the service. This is consistent with standard practice in other industries—for example, auction houses—and is not considered to be double charging.

Letting agents are commercial operations and it is important that they are able to set their own terms and conditions without interference from government. Restricting these terms and conditions risks perverse consequences, such as increased fees for one party or an increase in fees for other services, such as property management and property searches. Mandating transparency, as we propose, will enable landlords and tenants to shop around, encouraging competition between agents on fee levels. Agents with the best-value services will prevail in the market, and that is what is best for tenants and landlords.

Turning to the possible prohibition of fees to tenants proposed in Amendment 44D, we see this as yet another example of a demand for blanket regulation which will only introduce costs, put off new providers, and ultimately reduce choice for tenants and deter lettings. Banning letting agents from charging fees to tenants is not necessary; transparency is a low-cost measure which will promote competition on fees. Transparency encourages agents to be competitive on their fees, and ensures that tenants and landlords are able to make informed choices.

Amendments 44ZA and 44D, concern a different strand of business but with some similarities. In fact, the local estate agent in my village has just sold her lettings business. The noble Baroness, Lady Hayter, expressed concern that estate agents are not covered by our amendments. I think she feels that they do not have to be transparent about their fees. I can assure the House that this is not the case. Under existing legislation, including the Consumer Protection from Unfair Trading Regulations 2008, estate agents must make fees and charges clear. She also talked about unethical agents but, in addition to the 2008 regulations, estate agents are regulated by the Estate Agents Act and they have their own industry standards.

Since concerns were raised in Committee about charging buyers as well as sellers, I am glad to say that we have continued to work with the Property Ombudsman, who has confirmed that updated guidance will be in place early in December. This guidance will address concerns raised by noble Lords at that time in relation to charging by estate agents and the need to avoid conflicts of interest. It will ensure that agents understand their obligations to make charging arrangements clear and avoid such a conflict.

In Committee, noble Lords also raised concerns that this non-legislative solution does not go far enough. However, estate agents must belong to a redress scheme. If they are removed from a scheme for breach of the code, including a breach of this new guidance, they would effectively not be able to work as an estate agent. That puts a considerable bite behind the obligations set out by these schemes. I would be happy to update noble Lords when the guidance is published.

As regards Amendment 50E, I agree that retaliatory eviction is a problem within the private rented sector. As the noble Baroness said, we have given support to action in the other place. I was very pleased to hear from my noble friend Lord Cathcart that as a landlord he is completely against the practice. He expressed concern and pointed out the circumstances in which tenancies normally end, bringing his experience of the sector to our proceedings. On 11 September, the Government announced their support, in principle, for the Tenancies (Reform) Bill, a Private Member’s Bill, which is designed to outlaw retaliatory action. As has been said, that Bill is due to have its Second Reading on 28 November. Our support is subject to the proviso that safeguards are put in place to ensure that the reforms do not bring in excessive red tape and so make it harder for landlords to evict tenants who should be evicted, for example, for non-payment of rent in circumstances as described by the noble Lord, and that the legislation does not impose unfair burdens on good landlords because of spurious or unfounded complaints.

We will produce a guide for tenants to help them understand how to identify health and safety hazards in the home.

[Lord Harris of Haringey]

If the Government are in support of this Private Member’s Bill in the Commons, which may or may not pass, why are they not prepared to see similar provisions written on the face of this Bill, in legislation that will get through Parliament?

[Baroness Neville-Rolfe]

I thank the noble Lord for his intervention and I will come to that point.

Perhaps I may pick up on the point about health and safety, which I know is another concern that I share with the noble Lord. There will be a guide for tenants to help them understand how to identify health and safety hazards in the home and what to do if the landlord does not take action to make the necessary repairs. Furthermore, our How to Rent guide, which was published in June, makes it clear to tenants that if a property is in an unsafe condition and the landlord will not repair it, they should contact their local authority, which can make the landlord deal with serious health and safety hazards.

We agree with the need to tackle the problem of retaliatory eviction, but we do not think that this amendment will add anything further to the guidance that is already available and which we have committed to. I am aware that some are concerned that the Tenancies (Reform) Bill is unnecessary as existing consumer law already provides protections. I have listened to the comments of my noble friend Lord Cathcart and his description of good practice, but the Government are clear that legislation is necessary: hence our support, in principle, for tackling this problem through the Tenancies (Reform) Bill. The noble Lord, Lord Harris, asked why we could not simply write this into the Consumer Rights Bill before us today. I have explained our attitude to the Private Member’s Bill. There are certain aspects of it that need to be debated and we are not happy simply to write it into the legislation as it is. We would like to see it debated in Parliament and we will obviously give it our support.

In the circumstances, I ask the noble Baroness to withdraw her amendment, and I look forward to her party’s support for the Tenancies (Reform) Bill.