Tenant Fees Bill

Lord Shipley Excerpts

2nd reading (Hansard): House of Lords
Wednesday 10th October 2018 Lords Chamber

[Lord Shipley (LD)]

My Lords, this has been a helpful Second Reading debate. It has identified a number of issues that we will need to explore further in Committee. Indeed, the noble Baroness, Lady McDonagh, despite the limitations of time, has raised a number of issues that would be worthy of spending a little time on in Committee if that were felt by her to be appropriate. I remind the House that I am a vice-president of the Local Government Association.

I refer first to the contribution by the noble Baroness, Lady Jenkin of Kennington, which I found very helpful. One good thing about a Second Reading debate is that it enables us to identify things that may be a problem or an unintended consequence. She talked about the home-share model. I want to raise with the Minister another one that we need to be clearer about. It relates to local authority incentive payments to landlords which prevent homelessness. On the one hand, a landlord may claim that they do not require a payment; on the other hand, any agreement would reflect the fact that a payment was being made. It would appear, under the Bill as it is currently drafted, that that could well be illegal. When the Minister responds about the home-share model, I hope that he might be in a position to respond about local authority incentive payments to landlords which prevent homelessness.

I want to welcome the Bill and to pay tribute to the work of my noble friend Lady Grender who has campaigned for some time on this matter—it is good to see us in the position that we are—and to pay tribute to my noble friend Lord Palmer of Childs Hill and to the noble Baroness, Lady Hayter, for their work on the client money protection scheme. These are all part of a trend to remove rogue landlords and letting agents from the industry. There is no doubt that the Bill will bring transparency, as the Minister said, to the sector; it will provide protections for tenants and it will prevent double charging. It is good to see the proposed ban on letting fees and most other up-front fees paid by tenants, in particular the proposed cap on security deposits, the new duty on trading standards authorities, and the new penalties on any landlord or letting agent who contravenes them. As my noble friend Lord Strasburger reminded us, “most agents do a decent job”, and, in the words of the noble Lord, Lord Best, “this Bill will end the ‘here today, gone tomorrow’ letting agencies”. I think we need to pause and repeat that we are dealing here with those who do not abide by the system properly. The vast majority of letting agents and landlords operate in a caring and ethical manner, and represent the reputable part of the lettings industry.

One of the problems that we are dealing with is the impact of 4.7 million households in the private rented sector. The noble Lord, Lord Best, referred to the enormous growth which requires the Government to legislate more and more to keep up with the problems which have arisen as a consequence of that growth. Many people in the private rented sector are having to move more often because of the nature of the tenancies they have currently, and when they do, they are having to pay more than they otherwise would if they had longer tenancies. Of course, as the Minister will know, one of the solutions to this problem is to build more social housing. I am absolutely convinced that the problems we now have in relation to the private rented sector are caused by not having enough social homes for rent. There will be other opportunities for us to debate that in the coming weeks.

The Government are to give £500,000 to assist with setting up costs. I want to concur publicly and absolutely with the Minister’s view that this should be self-financing. I think it does need to be. There are other areas, particularly in the treatment of rogue landlords, where local authorities can make themselves cost-neutral in terms of their investment. However, setting this up does require £500,000. It would be helpful if the Minister explained why this figure was selected; it does sound like quite a lot of money. On the other hand, there are an awful lot of local authorities in the country, all of whom will want some of it, I imagine. My suggestion is that there does perhaps need to be sub-regional training and sub-regional structures. The Government need to be very careful about how that money is allocated because I do not think that simply divvying it out to every council would work.

There is a general need for publicity. Presumably, money for that will come out of the £500,000. Perhaps it will, perhaps not, but I think that it will. If so, we need to be careful about ensuring that there is enough publicity for those who need to understand that the law has changed: landlords and letting agents on the one hand and tenants on the other. It needs to be made much clearer to people what their legal rights and responsibilities are. I am very pleased to hear about the new role of the noble Lord, Lord Best, which will be hugely helpful in this respect. There has been a debate about the cap and the figure of six weeks’ rent. That may be right; we will need to explore it in Committee. A five-week figure may be better. I take my noble friend Lord Strasburger’s point about the problem with a four-week figure in months with five weeks and we need to look carefully into that.

The issue of default fees is becoming more important. They must not permit agencies to bring in hidden extras that cannot be challenged. When people sign a lease, they need to be clear about what they are committing themselves to. My noble friend Lady Grender asked why such fees are needed at all, which we will need to explore in Committee. Equally, we have had several briefings on the Bill, but I was particularly taken by what was said by Citizens Advice:

“The default fee clause has the potential to fundamentally undermine the Government’s aim to end tenant fees and prevent unfair practices … The Government must significantly tighten this clause with a clearer definition of when a default fee is legitimate. Leaving this to non-statutory guidance risks inconsistent outcomes for renters”.


That is true. We need to be very careful about that danger.

Will this measure result in higher fees? The evidence I have read from Scotland suggests that it will not, but it may. I was taken by two comments: first, that rents are set by the market, as was said by the noble Lord, Lord Best. That is an important consideration. The second was the comment made by my noble friend Lady Grender that many tenants would prefer to pay monthly if they had to pay a higher sum overall. Again, I hope that we will explore that further in Committee.

I will make two final points. First, it would help enormously if the draft regulations, given their importance, were made available to us prior to Committee stage, which I understand may be on Monday 5 November. I hope that this will not be one of those Bills where the draft regulations appear at or around Third Reading, or occasionally not at all. Our deliberations will be detailed so it would be helpful to have them made available. Secondly, the Minister said something about electrical safety checks; I am trying to recall his words. He rightly identified that this is part of an overall package of improving conditions in the private rental sector. He said that the legislation for electrical safety checks would be forthcoming, the parliamentary timetable permitting. Can he tell the House what might prevent that timetable undertaking something substantial that really matters? Overall, the Bill is welcome and I commend it on our behalf.