Tenant Fees Bill (Second sitting)

Maria Caulfield Excerpts

Committee Debate: 2nd sitting: House of Commons
Thursday 7th June 2018 Public Bill Committees

[Sarah Jones]

Q For my final question I just want to change the subject. We will look today at the deposit element of this proposed legislation. There has been quite a debate on what level of deposit is fair, in terms of what people can afford and what is fair for the landlord to be able to hold. Do you have any views on what that level should be, whether it should be three, four, five or six weeks’ rent, or something else?

Alex McKeown: I certainly think the maximum should be six weeks, which it is at the moment. That has been the norm within the industry. I know that Citizens Advice—the CAB—and others that have given evidence want it brought down to at least five weeks. I understand some of their arguments for that, but to be honest with you, that has not been my main focus.

Councillor Blackburn: I do not have a view.

[Maria Caulfield (Lewes) (Con)]

Q I want to touch on the point you made about the requirement in the Bill of proof to a criminal standard and how difficult that will be. Do you have any suggestions for how the Bill could be formed to allow enforcement to happen relatively easily and effectively?

Alex McKeown: I think it needs to be more similar to the redress scheme for letting agents and property managers in the Consumer Rights Act, because that is a fairly simple process. You get the evidence, you issue the notice of intent, they make representations, you then issue a final notice and it goes to the tribunal. That process has worked very well. We obviously get some random judgments coming out of the tribunals, but that is a better way of doing it.

The only issue we have found is that you will get a large fine against a company—such as the £30,000 fine—and they will then fold their company and phoenix. That is where we may need to look at holding the directors themselves liable. That will assist trading standards in getting the money back.

[Maria Caulfield]

Q That is very helpful. In terms of the bands having clear and unambiguous definitions, particularly around the default fees, are you saying that in the Bill itself and its schedules, there is not enough detail to be able to uphold that?

Alex McKeown: On the default fees?

[Maria Caulfield]

Yes.

Alex McKeown: Yes. I have not looked closely at that, but I know that, again, the CAB has written an amendment on the default fees aspect, to try to make that clearer. At the moment it is quite vague. That does need to be tightened up.

[Maria Caulfield]

Q As a trading standards officer, as the Bill stands would that be difficult to—

Alex McKeown: To prove beyond all reasonable doubt? Yes, I think so.

[Daniel Zeichner (Cambridge) (Lab)]

Q I want to pick up on the point in the evidence from the CTSI about the rise of alternative business models—certainly in my city, and I also did some work with my hon. Friend the Member for Blackpool South (Gordon Marsden) in Blackpool on this issue. I just wonder whether you feel that the Bill as it is currently framed would deal with some of those issues, or whether there is a danger that people might move to using some of those platforms to evade the focus of the Bill.

Alex McKeown: The alternative business model is often rogue agents trying to avoid protecting deposits, to avoid giving legal agreements and, in time, to charge the tenant fees. That is also why I feel the burden of proof needs to be back down to the civil burden of proof. It will be difficult to prove beyond all reasonable doubt that somebody is a letting agent and not a membership club. You can see the evidence we need to prove it from the legislation that relates to the membership clubs, and from some of the legal precedents about what constitutes an assured shorthold tenancy.

To give an example, the London Borough of Tower Hamlets took a letting agent to court that said, “We don’t have to join a redress scheme, because we’re not a letting agent, because we only issue a licence to occupy.” The London Borough of Tower Hamlets then had to go into housing law and ask, “Is this tenancy a licence to occupy or an assured shorthold tenancy?” The judge in that tribunal case said, “On the balance of probability, you are a letting agent and should be a member of a scheme.”

That is what we need for the alternative business models. We need to able to prove that, on the balance of probability, they are not membership clubs, the agreements they are giving out are tenancies, and the fees they are charging will be prohibited fees.