Parliament returned from its summer break this week and one of the first things up on the agenda was a debate on the upcoming letting fees ban.
The debate was secured by Kevin Hollinrake, Conservative MP for Thirsk & Malton and co-founder of Hunters estate agency, who began proceedings by setting out his reasons for supporting an all-out ban on fees to tenants.
Importantly, this debate gave us an opportunity to hear from the (relatively) new Housing Minister, Alok Sharma MP, as he set out the Government’s position on not just the letting fees ban but also wider private rented sector regulation.
What did we learn?
First and foremost, the Government remains committed to banning letting fees outright for tenants and there is no indication that these proposals will be watered down.
The Minister rejected quite firmly the suggestion of imposing a cap on fees rather than a ban:
“I simply do not believe that a cap would be effective.”
A number of MPs raised the issue of unintended consequences, primarily that rents would rise as a result. However, the Minister believes that this was not a reason in itself to continue to allow fees to be charged:
“The Government do not accept that rent levels will necessarily rise as a result of the fee ban, as there is evidence that some agents are charging excessive fees.
Indeed, studies have been done on the potential impact on rents, and all of them show that while there may be increases in rents, they would be significantly smaller than the fees tenants are currently being charged. We will keep the impact on rents under review.”
In some good news, the Minister roundly rejected Labour’s call for rent controls to be imposed at the same time as the banning of fees:
“I think the evidence, from the UK and around the world, shows that rent controls lead to fewer properties on the market, and higher rents as a result.”
He also kept the door open for possibly dropping the suggested cap on security deposits, which the NLA has previously argued to be an unnecessary policy with damaging consequences for tenants.
However, the Minister was less keen to change his mind on allowing tenants to be charged a reasonable fee to cover reference/credit checks, which the NLA called for in our consultation response:
“There was discussion during the debate of whether certain fees for tenants should be allowed. Our view is clear: all fees on tenants need to be banned.”
Closing the debate, the Minister also signalled that his department could introduce further regulations for the private rented sector, over and above the ban on fees:
“The ban on tenant fees will be considered in the context of a strategic approach to the private rented sector, and there is scope to introduce wider regulation of letting agents and landlords.”
So what next?
The results of the recent consultation on the issue, along with the draft Tenants’ Fees Bill announced at the Queen’s Speech, will both be published “shortly”. This week’s debate made clear that the Government will still be actively seeking input after their publications:
“[W]e said that we would first publish the Bill in draft, to enable scrutiny of our proposals by Parliament and stakeholders before introducing the legislation.”
The NLA will at the very least be pressing the Government to drop the proposed cap on security deposits and to also enable a reasonable referencing/credit check fee to be charged.
Our CEO Richard Lambert will be meeting with the Housing Minister on 19th September to discuss these, and other pressing issues for the PRS and our members.