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Tenant Fees Bill – MPs unanimously vote through second reading

The legislation that will bring in the tenant fees ban next year sailed through its latest stage in the Commons with few MPs dissenting from the accepted line that the ban is a good idea.

Nigel Lewis

tenant fees bill

Letting agents hoping for a miracle defeat for the Tenant Fees Bill last night in the Commons during its second reading were disappointed when it was passed unanimously by MPs following a three-hour debate.

Although 123 MPs are landlords, only two pointed out any failings in the legislation that might have given letting agents hope.

tenant fees bill

These were Labour’s Andrew Lewer and Conservative Alex Chalk, both of whom asked that not all agents should be tarred with the same ‘rogue’ brush and that the bill could prompt higher rents.

“There are hard-working people in this sector and we shouldn’t punish the unscrupulous at the expense of the far more numerous hard-working ones,” said Lewer (pictured, right).

Default fees

But all of the dozen or more other speakers were in support of the bill’s aims, many on both sides of the political divide calling for it to be tightened up particularly in relation to ‘default fees’.

“Rogue letting agents have for too many years been able to profit from unsecure tenancies,” said Dr Paul Williams.

Default fees are one of the few fees agents will be able charge soon and will be permissible only when a tenant prompts work, for example if they ask for changes to a contract, leave a tenancy early or lose their keys.

Deposits

One other area of intense debate during the second reading was the six-week deposit ceiling; many speakers said it would persuade agents and landlords to ‘go to the max’ above the current average industry standard of four weeks.

Also, many of those involved in the debate worried that any ‘grey areas’ would be exploited by unscrupulous or rogue letting agent to generate replacement fees.

Free market

One sign of how far the Tory party has come on fees reform was free marketeer John Stevenson MP (right), who said that although he preferred markets to be unfettered, it was now the right time to introduce reform.

But he warned it should not prevent competition between agents – a point ARLA has often made.

Letting agents hoping that MPs would accept industry arguments that agents do a lot of work for tenants and should therefore charge them were dashed.

“The good letting agents will accept this legislation and comply with it,” said Clive Betts, who is also chair of the housing select committee.

He also called for the government to look into the growing provision of insurance-based deposits services such as Zero Deposit and others.

Brighton

The most contentious speech was made by Brighton MP Lloyd Russell-Moyle (pictured, right), who claimed “most” agents in his city are involved in ‘sharp practices’ and that all holding deposits in Brighton start at £500.

But one glimmer of hope for agents came from MP Richard Graham, who said he believed the legislation mirrored existing changes within the lettings industry.

“The role of agents is changing from one of intermediary in an analogue age to a landlord’s compliance department in the digital age,” he said.

Industry reaction so far

Mark Readings image“The tenant ban is a positive move by the government and removes unnecessary costs to tenants at a time where they are outlaying large costs” says Mark Readings, MD of online agent House Network (pictured, right).

“We do not charge tenants fees [and] if the majority of the industry follows suit, then it is the letting agents who suffer the revenue loss rather than the landlords, and as such, should not result in rent increases.

“Letting agents work in an extremely competitive marketplace and the tenant ban legislation will enable new business models to come into the market – the high street agents will have to overcome a revenue shortfall and this could boost the market share of online agents further.

“The government have admitted that it could cost letting agents between £1bn – £4bn over the first 10 years and as such could effect job losses within the industry – however, the most productive letting agents will overcome this change and the market will be a fairer place for the consumer, which we fully support.”

Read more about the Tenant Fees Bill.

Watch the debate in full.

May 21, 2018

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