Tenant Fees Bill

Matt Western Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 5th September 2018 Commons Chamber

The Bill should therefore create a virtuous circle, higher standards, more trust, better redress, lower costs and, ultimately, better homes for vulnerable tenants, with rogue landlords and agents gradually weeded out and the strong ones not just surviving, but thriving. Those are good aims, but they need good implementation and good review and scrutiny to deliver effectively for my constituents in Gloucester and elsewhere. However, that is the next stage. Today, it is good that Her Majesty’s loyal Opposition are supporting the Bill, and I urge all Members to do likewise.

[Matt Western (Warwick and Leamington) (Lab)]

I rise not only to endorse the changes made by the Government, but to support the amendments tabled by my hon. Friend the Member for Great Grimsby (Melanie Onn) and to welcome the Bill. The Housing, Communities and Local Government Committee heard wise evidence and counsel from various groups, including landlords’ organisations and local authorities, and it is quite clear that there has been a bit of a wild west for many years in certain parts of country. I am proud to say that I have some excellent, responsible agents in my constituency, but there are the less scrupulous exceptions for whom greater regulation is really needed, so the Bill is timely. I have lived and rented in France, where it was evident just how much tighter and more balanced the legislation was.

To echo the point made by my hon. Friend the Member for Great Grimsby, this is really about rebalancing the relationship between landlord, agent and tenant to make it much more transparent and much fairer. For many years tenants have felt disempowered in that relationship, and over the past 20 years we have seen significant growth in the proportion of people renting privately. That proportion has doubled, and in some parts of the country, such as the north-east, it has increased by 200%. It is important that we get to grips with this, and the Bill moves us a long way in doing that.

In the past week I spoke to a student in my constituency who is facing tenant fees of £595 for one year. In some cases we are witnessing extortion, particularly in sectors with high churn, typically with one-year tenancies. We could have gone further, but I welcome the main part of the Bill.

As has been said in the Chamber, and also by organisations such as Shelter, Citizens Advice and Which?, the default fees could have been more clearly and more extensively defined. As the hon. Member for Harrow East (Bob Blackman) said, what is reasonable is open to interpretation. We have seen extreme cases involving replacement key costs, for example. I support amendment 3, which was tabled by my hon. Friend the Member for Great Grimsby, in those circumstances.

The level of the deposit cap was widely raised with the Select Committee by landlords and others. I would have preferred a four-week maximum, but I understand how we got to where we are. Deposit caps are a particular issue for high-churn tenancies. The idea of passporting, as proposed by the Minister, is a welcome move.

[Tim Farron (Westmorland and Lonsdale) (LD)]

The hon. Gentleman makes a good point. Does he agree with the observation, which has also been made by bodies such as Shelter, that an impact of high deposits is increased homelessness? Homelessness has tripled in my area of the south lakes in the past year, despite our building more council houses. A six-week limit would mean an average deposit of £1,100, which would make a rental property unaffordable for many people.

[Matt Western]

The hon. Gentleman makes a valid and pertinent point. High deposits are very much part of the cause of homelessness in many areas, because people feel financially and socially excluded from the private rented sector. As I alluded to at the beginning of my speech, high deposits have made renting privately much more difficult. In the same period we have seen a 20% reduction in social rented properties, which are critical.

I will move on because of time. On the issue of compliance, the Select Committee heard how few authorities, whether it be because of less appetite or because they just do not have the enforcement officers, follow through on enforcement. As we have heard, 93% of authorities have not taken enforcement action against rogue landlords. Of course the shining exception is Newham, which, as the Select Committee heard, accounts for half those enforcement cases.

I urge the Minister to reconsider Labour amendments 1 and 2. If £30,000 is seen as too high a maximum, there should be flexibility for authorities to introduce a more appropriate figure, as my hon. Friend the Member for Great Grimsby said—the hon. Member for Harrow East mentioned that £5,000 is a cost of doing business. That is how this was all done in the past, and we have to break that for the future because of the growth and importance of the private rental sector.

I support and welcome the Bill, but I would just ask for tighter regulation of default fees.

[Daniel Kawczynski]

In the few minutes available to me, I wish to raise a few issues on behalf of my constituents who are involved in this sector, particularly those working for letting agencies. I thank the Minister for seeing me in the Department yesterday, along with the Secretary of State; he has been unfailingly courteous and very well informed. I thank him for listening to me, as he has to others, about some of the concerns I have shared with him on behalf of my constituents.

I had wanted to propose an amendment to cap the fees that letting agents could charge to £300 rather than abolishing these fees entirely, because this proposal directly contradicts the Conservative party’s long-held ethos of being a pro-business, pro-free market party. If these are the measures we are supporting, are we truly a pro-business party? Mr Paul Wallace-Tarry from Belvoir, a letting agents in Shrewsbury, certainly believes we are letting him down by implementing the Bill.

As someone who has rented a property in London for the past 13 years, I am acutely aware of the job that estate agents and letting agents perform. They carry out things ranging from the right-to-rent checks to negotiating contract changes, and from safety checks to organising the tenant move-in. Many times as a tenant I have called upon the agent for help. I believe it is very important to keep the equilibrium correct between the tenant, the landlord and the letting agent, and this Bill may be slightly tipping the balance in favour of the tenant, rather than the landlord.

The Government’s own findings revealed that the mean fee paid by tenants upon moving into their accommodation was £223. However, a ban on tenant fees will lead to rents increasing by around £103 per annum, so industry experts say. For a three-year lease, the tenant would therefore end up paying £309 in total, which is £86 more than the tenant fee. It has also been found that rents could increase by around £82.9 million as a result of the Bill. Clearly the services that the letting agents put in place are being implemented by professionals, and they have to be paid for in some way. The fear is that this will just go on to rents, which are less transparent and accountable than a clear, specific fee.

ARLA Propertymark has found that 90% of letting agents believe that a ban will lead to a rise in rents. Some 60% think that it will lead to lower property quality, and 40% think it will lead to a fall in employment in the medium to long term. If estate agents have to choose between their working relationships with tenants or with landlords, they will side with the landlords, given that there is no financial responsibility or duty of care between them and the tenant. This is what I want to see protected; I want that relationship to be very evenly matched.

I end by simply saying that if the Conservative party understands anything, it is the need to support small business. I feel passionately about the role that small businesses play in our constituencies. I never had the courage to set up my own business. I always worked for large-scale, multinational corporations, knowing that my mortgage would be paid at the end of the month and not having the responsibility of employing people. Many of the people we are talking about today did have the courage to set up their own business. They are entrepreneurs and they are employing professional people, and this is very important. I hope that the Minister will acknowledge the extraordinary amount of care and professionalism that many of these letting agencies in Shrewsbury implement on behalf of their constituents. The Conservative party must understand the need to support small business, with less regulation, less red tape and less taxation in order to empower entrepreneurship and empower people to create the wealth we need to fund our public services. This ban is in direct opposition to that.

As I have said already to the shadow Minister, when ARLA Propertymark conducted a survey of all Members of Parliament, a newly elected Labour Member—I would get into a lot of trouble if I named him—told ARLA that he was not interested because he wanted the whole private sector banned, leaving only owner occupiers or social housing. That is the sort of prejudice that we have to deal with, and it is important that the private sector is respected and supported.