Tenant Fees Bill

Matt Rodda Excerpts

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

[Matt Rodda (Reading East) (Lab)]

I am grateful to be able to speak on Second Reading and to discuss an issue that is relevant at both national and local level. It is also my pleasure to follow the hon. Member for Lewes (Maria Caulfield).

I welcome the Bill, which has long been delayed—the issue was raised by Labour in 2013 and adopted in our 2015 manifesto. Rising house prices in my constituency mean that the rental market is growing rapidly. Since 2009, median house prices in Reading East have risen spectacularly by 175%, from £197,000 to £344,000. Increasing numbers of young families as well as single people are entering the rental market.

Some renters are satisfied with their properties, but in my experience far too many find themselves footing bills for housing that is in poor condition, or for tenancies without any long-term certainty. Nationally, 1.6 million families with children are renting privately, with their long-term plans depending on the reliability of landlords who can evict them with one month’s notice. Meanwhile, letting fees, burgeoning rents, and high deposits present an affordability challenge for tenants. It is therefore in the vital interests of all my constituents that the rental market be maintained as affordable, transparent and accessible. I welcome the Bill as a first step towards establishing that fair and reliable rental market.

The Bill will have a positive impact in abolishing up-front fees to enhance clarity and control for tenants. Letting-agency fees restrict the mobility of renters, thereby removing one of the prime incentives of renting a property. On average, tenants pay £272 per person in fees with each move, on top of rent in advance and deposits. Alarmingly, one in seven tenants are charged more than £500 to enter rented accommodation. Over the past five years, renters have racked up a staggering bill of £678 million in agency fees.

Moreover, there is a lack of consistency in setting those costs. Research by Shelter has found broad variations across letting agents—reference-check fees range from £30 to £220, and tenancy renewals cost between £35 and £150. I welcome the premise of the Bill—the measure was initially promised in the 2015 Labour manifesto—but I note that both the Prime Minister and the Chancellor of the Exchequer have previously voted against a motion abolishing letting fees. I am delighted that the Government have decided to change their mind.

Default fees are chargeable if an agent or landlord incurs costs due to a tenant’s actions. They have been described by agents as a back-door route to reclaiming lost income. Agents have admitted openly to the Housing, Communities and Local Government Committee that they will charge disproportionate default fees to make up for loss of revenue, which is an extraordinary admission from the industry about its intentions to exploit loopholes in the Bill. I am concerned that there will be cases of a brush coming with an associated charge of £45, or of £130 being charged for a missing TV remote. These default fees are set at the discretion of the agent or landlord, and there is no cap in the Bill on the cost to tenants. There is an urgent need to strengthen this legislation to provide limits on what can be charged for and to ensure that any charge made is reasonable. If relevant additions are made to the Bill to resolve this flaw, the legislation’s good intentions will be preserved.

The second aspect of the Bill that I would like to discuss concerns tenancy deposits. Although I am glad that the Government have decided to issue a cap on tenancy deposits, I am disappointed that the Select Committee’s recommendation to cap deposits at five weeks’ rent has been rejected, as the hon. Member for Harrow East (Bob Blackman) mentioned. The Government have opted for a six-week cap, which means that renters in the south-east of England will still have to find an average of £1,800 to place a deposit. This is at a time when the majority of landlords already take deposits for six weeks or less. As such, the Bill will not change the realities of access to housing for renters, particularly in an area such as mine.

Thirdly, I voice my support for robust enforcement. I am glad that tenants will be given access to a first-tier tribunal to enforce the regulation, and I am pleased to see penalties being put in place for breaches of the rules. However, sufficient funding must be released to allow for the enforcement of the ban on letting agent fees. Without proper resourcing, the measures in the Bill are likely to fall short.

In general, the Bill has the potential to make significant savings for tenants in—and enhance the transparency of—the private rental sector. I am pleased that the Government have listened to calls to make private renting fairer and more affordable. In fact, as I mentioned, the Labour party has been campaigning for these measures for a long time. Indeed, my right hon. Friend the Member for Wentworth and Dearne (John Healey) first recommended them in the Letting Agents (Competition, Choice and Standards) Bill in 2013. The Bill requires further scrutiny in several important areas—most obviously, the provisions on default fees. I ask the Government to provide further protections against the exploitation of tenants in this regard.

With proper amendments, the Bill can present a good first step towards balancing the rental market. I urge the Government to listen to these points.