The lettings fee ban will happen but legislation has been introduced in draft so it can be properly scrutinised by all parties, the housing minister has said.
In one of his first appearances discussing housing and agent issues in the House of Commons, Alok Sharma said the lettings fee ban consultation had received more than 4,700 responses so had to be property scrutinised.
Speaking at a Westminster Hall debate yesterday on the fee ban, called by Conservative MP and Hunters co-founder Kevin Hollinrake, Sharma said: “The lettings fee ban will deliver a more competitive, affordable and transparent lettings market.
“A good lettings agent provides a valuable service – the problem is they are chosen by the landlord.
“It is important to ensure the fee ban is carefully considered.”
He failed to give a date on when the draft tenant fee bill would be introduced despite concerns from MPs over how long it is taking, merely saying it would come “soon”.
Hollinrake used the debate to back the ban but warned of “unintended consequences” such as costs being passed on to landlords and rents rising or agents rejecting tenants with poor or complicated credit if they have to bear the cost of referencing them.
He also said enforcement needed to be better and called for penalties for landlords and agents flouting rules to be increased to £30,000, something Sharma appeared to suggest he would consider.
Sharma rejected claims that rents would rise as a result of the ban, claiming that many fees charged were already unnecessary and excessive, adding: “We will keep the impact of the ban under review.”
Most MPs during the debate backed the ban and raised issues with the state of rental accommodation and level of rents charged.
Siobhain McDonagh, Labour MP for Mitcham and Morden, said tenants were “lost in the housing crisis” and warned that councils don’t have sufficient funds to enforce rules on rogue agents and landlords.
Charles Walker, Tory MP for Broxbourne, raised another issue of self-letting landlords being able to use insured schemes to hold on to a tenant deposit at the end of the tenancy and leaving the tenant to challenge it with a dispute service.
He later clashed with Sharma over whether this was the case and the housing minister promised a meeting on this subject.
In a rare show of support for agents, Norfolk MP Sir Henry Bellingham said he had heard no complaints about fees in his constituency and warned against creating a “blunt instrument” based on issues in big cities such as London.
Commenting on the debate, David Cox, chief executive of ARLA Propertymark, was disappointed to see Sharma holding firm on the ban.
Cox said: “It’s important that the Government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation.
“We are therefore disappointed in the housing minister’s comments declaring that the Government’s position remains that all fees will form part of the ban.
“As Kevin Hollinrake acknowledges, the ban on fees for referencing checks will cause problems. Agents are required to carry out these checks by law, and they invest both time and resources to ensure this work is carried out properly. The Government must now consider exempting referencing checks from the ban as well.”
The National Approved Lettings Scheme (NALS) was equally critical, warning that a fee ban would not make a market competitive.
Outlining its opposition to the fee ban in a briefing note, NALS warned “the small minority who overcharge are held up as the norm – this is erroneous.”
The group warns that the reduced income will lead to a reduction in skilled agency staff.
It said: “Agents will be unable to maintain investment in training and development of staff. Many agents have staff capable of preparing legal documentation with support from a landlord and tenant specialist solicitor.
“If agents are no longer able to provide this service, this will definitely disadvantage tenants. With no upfront financial commitment, prospective tenants are likely to increase their options by making offers on multiple properties without any financial commitment. This will result in increased costs for landlords and agents, through abortive and additional work.”
NALS warns that the greatest danger is in the execution of a proposed total ban and increased activity of rogue agents, adding: “The implementation of a fee ban will only serve to drive the charging of fees underground, with rogue agents no longer displaying charging rates in their offices or on their website.
“This will make the work of enforcement officers even more difficult. Tenants who are being charged by unscrupulous agents would be unlikely to complain if it meant the difference between securing a property or not.”