Committee seeks feedback as Tenant Fees Bill approved
Letting agents - and anyone with ‘relevant expertise and experience or a special interest’ - have been invited to comment on the Tenant Fees Bill as it moves through Parliament.
On Monday MPs debated, and approved without a vote, the Tenant Fees Bill - which aims to outlaw upfront fees charged to tenants as well as capping security and holding deposits - at second reading.
The Public Bill Committee is now able to receive written evidence from interested parties and will review any submissions, considering them for any potential amendments.
The group is expected to meet on Tuesday June 5 for oral evidence sessions and the Committee Stage must conclude by 5pm on Tuesday June 12.
It can, however, conclude before the June 12 deadline and at this point it will no longer be able to receive any further written evidence.
A statement posted on the government website reads: "The sooner you send in your submission, the more time the Committee will have to take it into consideration and possibly reflect it in an amendment.”
Written evidence and views can be submitted to firstname.lastname@example.org.
Since Monday, the national charity Citizens Advice has urged the government to review the default charges clause which it says could be used as a loophole by agents and landlords who want to continue to charge tenants once the ban becomes effective.
Opening the debate, the Housing Secretary, James Brokenshire MP, said the Bill takes forward ‘essential measures to promote fairness in the private lettings market’.
He said: “It is a Bill that we should all welcome.
“The Bill will make the market more transparent, yes, but it also has the potential to save tenants—especially young people and families—hundreds of pounds."
On the decision to cap deposits at six week’s rents, the Secretary of State noted that this was an “upper limit and not a recommendation.”
He added: “We expect landlords to find an appropriate level on a case-by-case basis and we will provide guidance to that effect.
“A cap of six weeks’ rent, in our judgment, offers a balance of greater protection to tenants while giving landlords the flexibility to accept higher-risk tenants.
“It will also give landlords adequate financial security, and we believe that is necessary to maintain investment and supply in the sector.”
He added: “The Bill is not an attack on good agents and landlords. We value the important services that they provide, but it will ensure a fair playing field for reputable agents by making it harder for rogues to operate.
“Letting agents and landlords who represent good value for money will continue to thrive, while those who rely on charging unfair and unjustifiable fees will have to reconsider their business models.”
The Shadow Minister for the PRS, Melanie Onn MP said: “We know that the majority of landlords are good landlords, or strive to be, and understand the expectations upon them before they embark on becoming a landlord.
“However, a number of rogue landlords and letting agents give the sector a bad name, undermine the good work of quality agents and landlords, and they have squeezed tenants for cash in unfair ways, with disproportionate charges for unjustifiable reasons.”
On the issue of ‘default fees’ she told the House that these are “to be capped at the level of the landlord’s loss.”
She said: “A landlord should not be required to pay for a banking or other fine due to a tenant making a payment late or the replacement of a lost key or entry fob.
“However, the Minister must be aware of the scope for this to become a nice little earner for agents or landlords who would seek to unfairly penalise their tenants for minor errors.”
On the issue of holding deposits and reference fees, Kevin Hollinrake Conservative MP for Thirsk and Malton and member of the HCLG Select Committee said: “It is a reasonable concern that if we do not allow a letting agent or landlord to hold back a reasonable amount for referencing, they might be more likely to pick a better-off tenant than some of the lower-income tenants she is seeking, quite rightly, to protect.”
Chair of the HCLG Select Committee, Clive Betts MP, said: “There could in some circumstances be an increase in rents to compensate, and that would be legitimate if done properly from the beginning, but again there was evidence that if tenants were asked to pay a bit more each month, rather than a lump sum fee, that would help them in most cases.
Bob Blackman MP, Conservative, Harrow East – Member of the HCLG Committee said: “It cannot be right for an agent to work for both the landlord and the tenant, and for fees to be charged in both directions.
“The principle has to be that the letting agent acts on behalf of the landlord and that the landlord therefore pays the costs of the agent.
Earlier this year RLA policy director David Smith warned the CLG Select Committee that landlords are likely to be left with increased bills when tenants’ fees are banned and said treating the whole of the PRS the same way is a mistake.
And earlier this month it was revealed that the ban will cost landlords £82.9million in the first year, with letting agents paying £157.1m.
Following the Committee Stage, the Tenant Fees Bill will have to pass through a Report Stage and third reading in the House of Commons.
It will then make its way through the House of Lords and an amendments stage before being granted Royal Assent which is when it formally becomes law.
The Tenant Fee Ban will hit in 2019, and it’s going to have a big impact on Letting Agents and landlords alike.