Is The Government About To Water Down The Letting Fee Ban?

Today the Housing Communities and Local Government Committee have published their long-awaited report on the draft Tenant Fees Billwhich outlines how the Government plans to make renting fairer.

Since the announcement *The Debrief *campaigned for a complete ban on letting fees as part of our Make Renting Fair campaign there has been a long debate between politicians, housing charities, landlords and lettings agencies about how this should happen. This report reveals the outcome of that 18-month long conversation.

One of the main things to take away from the report is that the Committee thinks that tenants’ security deposits should be capped at 5 weeks of rent because larger sums, which so many renters have been asked to pay, can cause serious financial strain. Indeed, studies have found that many are forced into debt to pay these upfront costs.

With more and more people in this country renting because they can’t afford a home of their own, the reforms which this bill will bring into force are crucial. As things stand, the system benefits landlords and letting agents, not tenants.

However, the report is not all good news. As you’d expect, the National Landlords Association (NLA) are doing their best to argue for the interests of, well, landlords. When the draft legislation was first proposed, the Government was in favour of even more stringent regulations on landlords and wanted to cap deposits at four weeks-worth of rent. The NLA have argued that this would work against renters because, for example, it might discourage landlords to allow pets in case of damage. Sure…

As always, the devil really is in the detail and if you look closely at this report what it suggests is that the letting fee ban is at serious risk of being watered down. What could have been glass bottled Coca Cola is potentially about to become a Wetherspoons pint of post mix.

Why? Well, put simply, it’s because the Government are planning to permit what they’re calling ‘default fees’which would still allow agents to charge tenants indiscriminately. A default fee could cover something like losing your key which, if letting agency referencing costs are anything to go by, would probably cost around £120. On page 20 of the report, agents who have given evidence to the committee have said explicitly that they will exploit the default fees loophole to make up for the income they lose through charging admin fees at present.

It reads:

‘This is of particular concern given some evidence we received from the lettings industry suggesting that letting agents may seek to charge disproportionate default fees in order to recoup revenue lost as a result of the legislation. Northwood considered that “fees for any breach of the tenancy agreement, such as late payment, will increase and be applied more rigorously”.106 Regal Lettings supported this view by stating that “the fees that agencies would be allowed to charge tenants, i.e. default fees, would be increased severely as the loss is attempted to be made up elsewhere”.’

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If we know anything about the lettings industry, sadly, it’s that it is prone to exploitative behaviour. For years they have been told to clean up their act and stop charging extortionate fees, so what have they done since the ban that followed Make Renting Fair was announced back in 2016? They’ve put their fees up! New research from Shelter show that in the last few years fees have risen by £272 per person.

Speaking about the report, Greg Beales, Director of Policy and Campaigns at Shelter said ‘this ban was wildly popular with renters, which is why it’s so important that it does exactly what it says on the tin by completely scrapping rip-off letting agent fees’. However, he emphasised that the proposals ‘would leave the back door open for agents to continue charging tenants in different ways and let down the renters it was supposed to help’.

The Committee say that they want renting to be more affordable but the letting fee ban is either a ban, or it isn’t. If there is a loophole there can be no doubt that agents will exploit it and while the report recommends extra funds for enforcing these new regulations, including default fees feels like a missed opportunity to finally rule in favour of the growing number of people who rely on renting which, unlike owning your own home, is often unstable and unaffordable.

The last election saw more than half of this country’s growing army of renters vote Labour. There can be no doubt that they are a political force to be reckoned with. It is in the government’s interests to get this right and show whose side they are actually on – the ‘haves’ or ‘the have nots’.

The Tenant Fee Bill is the Government’s chance to show where they stand.

Follow Vicky on Twitter @Victoria_Spratt

This article originally appeared on The Debrief.