Tenant Fees Bill

Maria Caulfield Excerpts

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

[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.

[Maria Caulfield (Lewes) (Con)]

Does the Secretary of State agree that this is very much a geographical issue? In London and the south-east, tenants have really suffered at the hands of lettings agents and their fees. Tenants can pay anything from £175 to £900 just in fees alone. My local citizens advice bureau in Lewes found that on average tenants are paying, for eight weeks’ deposit, nearly £4,000 in advance. This is a real problem for London and the south-east.

[James Brokenshire]

My hon. Friend highlights the issues that go to the heart of the Bill—that is why I hope that it will command broad support across the House.

The Bill places a duty on trading standards authorities to enforce the measures it contains. It also makes provision to enable tenants and other relevant people to recover unlawfully charged fees. It prevents landlords from recovering their property, via the section 21 of the Housing Act 1988 procedure, until they have repaid any unlawfully charged fees. A breach of the fees ban will usually be a civil offence, with a financial penalty of £5,000. However, if a further breach is committed within five years this will amount to a criminal offence. In such a case, local authorities will have discretion about whether to prosecute or impose a financial penalty. Guidance on that will be issued. They may impose a financial penalty of up to £30,000 as an alternative to prosecution. Local authorities will be able to retain funds raised through financial penalties, with the money reserved for future local housing enforcement.

Finally, the Bill makes provision for a lead enforcement authority to provide oversight, guidance and support, with the enforcement of requirements on letting agents. This includes the ban on letting fees and related provisions.

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[Maria Caulfield (Lewes) (Con)]

On 3 May 2016, I led an Adjournment debate in which I called for a cap on letting agents’ fees, because they were becoming such a big issue in my constituency. I therefore welcome the Bill, which goes even further.

This issue particularly affects London and the south-east. In my constituency, rent for an average property is close to £2,000 a month. I have worked closely with the citizens advice bureau in Lewes, and it has done a lot of work on this issue. It highlighted how letting agents fees in one of the four towns in my constituency can range from £175 to £922. Coupled with an eight-week deposit, which is standard in Lewes, that can leave tenants paying anything from £3,332 to £3,779. It is just not affordable for someone on the average wage. I was therefore pleased to see in schedule 1 that the deposit is going to be limited to six weeks.

I have two key concerns. The first is about the variety of fees listed in schedule 1. Although the Bill covers holding payments and deposits, several fees that letting agents have introduced will get around the legislation. Citizens advice in Lewes found that people can be charged around £450 to add a second tenant to a property. A reference check can cost £100, as can general admin. An “express move”—to move within 10 days—can cost around £200, and it can cost another £200 to keep a pet in a property. If a tenant moves out and someone takes over the lease, that costs £300 on average. Some Members have already mentioned the six-month tenancy. Tenants often want a longer lease, to which they are legally entitled, but are not allowed to contact the landlord to negotiate one, because it is in the letting agents’ interest to keep tenants on a rolling six-month tenancy, paying around £150 to £350 every time they renew their lease.

My other concern is enforcement and schedule 3. It is a legal requirement for letting agents to advertise their fees, but it just does not happen and is not enforced. Citizens advice looked at 25 letting agents in Lewes and Seaford. Only one currently advertises its fees. We have legislation and it is not being enforced. I am not clear from schedule 3 who is responsible for the enforcement of the legislation and what happens if they do not do it. I welcome the Bill, but I have those two concerns—the variety of fees not covered, and enforcement to ensure that the Bill works properly for tenants.