Tenant Fees Bill (Second sitting)

Richard Graham Excerpts

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

[James Frith]

Q But they should be refunded pronto.

Katie Martin: Absolutely, yes.

[Richard Graham (Gloucester) (Con)]

Q Katie Martin, I will ask you a question I wanted to ask our previous witnesses about who the best people are to try to work with tenants when there are issues effectively of breaking the law. We heard from previous witnesses that they had real doubts about vulnerable tenants turning to people such as trading standards and so on for help.

In my experience, quite a lot of tenants will turn to housing departments with questions, particularly on environmental health issues. For example, I have noticed a huge increase in the number of young mothers who go to the city council complaining about mould or damp properties. It is true that those tend to be more for housing associations than for private tenancies, where maybe the tenants feel more secure. However, do you think that if second-tier councils’ housing departments had responsibility for enforcing the measures in this Bill, tenants would be more likely to raise issues with them?

Katie Martin: I think you have hit the nail on the head about people in social housing feeling much more secure. Tenants in the private rented sector hesitate to come forward with complaints because there is a huge fear of retaliation, which is one of the reasons why we think that all of these problems should be pre-empted in the legislation rather than having to be picked up later. People do not feel like they are empowered. They are very worried about what action the landlord might take, such as not renewing their tenancy and all kinds of different things. That is definitely problematic for renters.

[Richard Graham]

Q Do you happen to know whether it is mandatory at the moment for an agent, or a landlord if it is a direct tenancy, to provide tenants with a bit of paper that spells out what tenants’ rights are on things such as environmental health and up-front fees? If that is the case and it was clearly marked, “If you see evidence of any of these issues, contact your second-tier council housing team on this telephone number”, would that help make people more aware of their rights?

Katie Martin: I will turn to Rhea on what is currently provided.

Rhea Newman: Landlords and agents do now have to provide a document that the Government produced, the “How to rent” guide, which includes lots of information about the roles and responsibilities of landlords and tenants. The Department has worked closely on that and engaged with a lot of stakeholders to try to make things clearer, but there is a challenge. Providing it is one thing; ensuring that tenants can actually engage with it and understand their rights is another. Sometimes people do not look at things until a problem occurs.

[Richard Graham]

Q Do you think a part of that is about effective media communication from local councils when landlords are fined? For example, on illegal tobacco, I have noticed from the number of cases that since trading standards gave publicity to the fines of people who had been selling illegal tobacco, that has raised awareness of the issue hugely. Do you think the same thing would be effective on some of the up-front fees?

Rhea Newman: Communications are really key to that. When the ban comes into force it will be really important in the lead-up to that to make sure that there are clear communications at a national and local level to try to reach all landlords, agents and tenants to make sure they are clear about what they should and should not pay. The clarity of the Bill helps to make sure those communications can then be clear.

[Richard Graham]

Q Rhea, you mentioned earlier that you were worried about the business of multiple deposits for people moving tenancies. Does the concept of passporting the deposit from one landlord to another deal with the issue?

Rhea Newman: We think passporting could have a key role to play in dealing with such issues. There are real challenges for people when they cannot get one deposit back and they are trying to put a deposit on a new tenancy, so there is certainly merit in exploring deposit passporting. We would be keen to work with MHCLG and organisations such as Generation Rent on that.

[Richard Graham]

Q Dan Wilson Craw, is there anything you would like to add on either of those questions?

Dan Wilson Craw: On the question of communication, council websites are really important. Tenants are supposed to get their heads around the guide, but it is a national document and they need to be able to find local information easily. Unfortunately, in our experience, a lot of councils do not really have much information on their websites for private renters. A lot of the time, if someone has a problem with their landlord, they phone up their council—this is an example that I came across—and get put through to the housing department. They are simply told, “This is how you apply for a council house”, and it is left at that, even though they have the right to have an environmental health officer come out and inspect the property.

[Richard Graham]

Q Do you agree that the environmental health officers are the right people in the council housing team? If you have a housing team that also has responsibility for following up on this, that is a more logical link.

Dan Wilson Craw: I think each council will have to work out exactly how to communicate the letting fees ban under their existing responsibilities and the best way of communicating it. Obviously it depends on whether it is a two-tier council. as well.

[Richard Graham]

Q Do you agree that that tends to be where the expertise is? People in council housing teams often have a strong feel for who is a good landlord and who is likely not to be, and of course a better awareness of the tenants.

Dan Wilson Craw: Sorry, I don’t quite understand.

[Richard Graham]

Q Within the Bill there are different options for who will have responsibility for enforcement. It could easily be at the first-tier level—the county council—but on the whole they do not have any direct experience of dealing with housing issues, whereas the housing teams in the second-tier councils do. They have environmental health officers and they deal with people who are looking for tenancies, so they know the customer very well.

Dan Wilson Craw: Absolutely. What the Bill appears to do—we support this—is to allow second-tier councils to take on the responsibility for enforcement.

[Richard Graham]

Q It does. My question was whether you support that and think it is a good idea. Is that a yes?

Dan Wilson Craw: Yes, it is.

Rhea Newman: In their responsibilities for enforcing across the private rented sector, it is really important that trading standards and environmental health officers work together. That joint work is fundamental. They obviously have resource challenges at the moment, which need to be addressed. We have always supported having one responsible authority—trading standards—in the Bill, but if they can work with their district councils, that is really important.

[Rishi Sunak]

Q Thank you to all of you for joining us today. You have all been working with the Department extensively in helping formulate the legislation, not least by providing input into the guidance that is currently being formulated. I really appreciate your help there, and I guess congratulations are in order. You have all campaigned for a long time on this issue, so I am sure you are delighted to see it come into practice. Thank you for your broad support for the aims of the Bill.

I have a very quick question about the principle of a holding deposit. Obviously, there is some debate about that. The argument that has been put forward—we heard it again the other day—is that having a holding deposit is sensible because it does two things: it ensures that tenants have a financial stake in the process and that they are not speculating on multiple properties, and it protects landlords, so they do not cherry-pick among tenants. If there were not a holding deposit, landlords might be inclined to pick safer tenants. I understand that you might have some different views about the detail of how it is implemented, but first I would love to hear whether you agree with the principle of a holding deposit. Katie, do you want to start?

Katie Martin: Yes. As I said, we do not object in principle to holding deposits. We think they should be measured to ensure prospective tenants are not taken advantage of. We also think it is really important that the legislation ensures that the landlords or letting agents cannot retain the holding deposit following a failed credit check or reference check. They should do that only if tenants have provided misleading information. The circumstances under which holding deposits are withheld should be closely looked at, but we do not object to them in principle.

Rhea Newman: We also do not object in principle. We think they can play a role. We are not sure, in practice, how much tenants speculate on multiple properties at the same time—in highly competitive markets, tenants often feel lucky to find one property that meets their needs—but we accept the principle of a holding deposit. We have always argued for a lower cap of about two days’ rent, because one week’s rent—I think the average is £192 across England—is a lot to lose if your circumstances change. Our main priority is to ensure the terms for refunding holding deposits are really clear. We think there needs to be a paper trail around what information is taken before holding deposits are given. Landlords and agents should tell tenants how it will be treated, and if they do not refund it they should provide evidence for why they are doing that. We think that, at the moment, the terms are not clear enough.

Dan Wilson Craw: I agree. We think holding deposits serve a function in a market in which it takes a while to get a reference from the tenant. If technology and the market were to develop post the fees ban, and a tenant could be referenced instantly, you would potentially not need a holding deposit.

We have a couple of concerns. Having this Bill to formalise the process of taking a holding deposit is really important. Under the Bill, a landlord or a letting agent could still take holding deposits from several tenants and ultimately give the tenancy to only one tenant. What it would do for tenants who had put down a holding deposit and did not get the tenancy is to put their flat hunting on hold for 15 days. We would quite like to see the Bill tightened up in that respect. Also, as was mentioned before—