No fewer than eight MPs expressed concern about the default fees loophole, which provides for landlords to charge tenants uncapped fees for vague ‚Äòdefaults’ as long as these are written into the tenancy agreement. Previously, letting agents themselves told the select committee that they would exploit this loophole by charging excessive default fees to recoup the losses resulting from a ban on letting fees. Clive Betts, chair of the Housing, Communities and Local Government Committee, criticised the Government for failing to publish guidance what would considered reasonable for default fees while the Bill is in the House of Commons, so that MPs can make an informed decision on the default clause of the Bill. It looks like the guidance will only come through when the Bill is in the House of Lords. Generation Rent will keep pushing to ensure that default fees are tightened up, so that letting fees cannot continue to charge extortionate fees to renters simply by calling them something else.
MPs said that setting the deposit cap at six weeks’ rent in the Bill is too high. While one MP said that reducing the flexibility to charge higher deposits could result in landlords being less willing to take higher-risk tenants, another MP argued that women, BAME, and LGBT people will be disproportionately affected by setting the deposit cap as high as six weeks as these groups tend to be lower paid.
Sarah Jones, Labour’s new Shadow Housing Minister and MP for Croydon Central, noted that the Mayor of London is calling deposits to be capped at three weeks’ rent rather than six weeks as proposed in the Bill. In London deposits amounting to six weeks’ rent – or around £2,000 are already the norm – so the Bill would do little on this front to help millions of renters in the capital struggling at the sharp end of the housing crisis.
Generation Rent has called for the Bill to be strengthened on enforcement, including ensuring that local authorities are properly funded to help tenants recoup illegal fees. Conservative, Labour and Lib Dem MPs raised this issue, warning that Trading Standards have said that without central Government commitment to adequate resourcing they have serious concerns over their capacity to enforce the legislation. Diminished funding means that local authorities are already struggling to enforce current requirements on letting agents to transparently display their letting fees.
Generation Rent will continue work with MPs and seek amendments to the Bill which will address these concerns, and our Director Dan Wilson Craw gives evidence to the Public Bill Committee in early June.
These issues notwithstanding the Tenant Fees Bill passed to committee stage unanimously with MPs of all parties agreeing that it is vital to stop letting agents from charging both parties rather than fully charging a landlord as their contracted client, but also to address the fundamental imbalance of power between landlords and tenants. A few issues outside the scope of the Bill were raised during the debate, including rent control, security of tenure, and legal advice for housing, showing that Parliament really is feeling the pressure to improve the lot of private renters.
Can you help us fix the Fees Bill? Please share your experiences with us, or directly with the parliamentary committee.