On 6th September a Westminster Hall debate took place on the proposed ban on letting agent fees to tenants in England. The debate was sponsored by Kevin Hollinrake MP and received a response from the Housing Minister.
There is no ‘result’ from the debate but it was an opportunity for MPs to express their opinions on the matter. MPs from across the political spectrum and geography of the UK attended, with a wide range of views and experiences shared.
Kevin Hollinrake MP opened the debate by saying he agreed with the Government’s position on banning lettings agent fees to tenants. However, he laid out his concerns surrounding any potential ban, stating that by banning agents from charging fees to tenants, letting agents would need to pass these costs onto landlords, who would in turn increase the rents payable to tenants.
The MP representing the North Yorkshire constituency of Thirsk and Malton praised the work of landlords and letting agents and stated that the vast majority of employees in the two sectors acted fairly and according to the wishes of both tenants and agents. He cited that a similar ban introduced by the Scottish Government in 2012 indicated that rental prices and unfair treatment of landlords could increase as a result.
The cost of references and checks provided a sticking point throughout the debate, as Kevin Hollinrake, as well as other Conservative MPs, talked about the amount of work that an average letting agent was required to undertake in order to complete these checks. This point was raised particularly by Sir Henry Bellingham MP (Conservative, Norfolk) who fought ARLA's corner on aspects of the proposed ban, frequently referring to the ARLA Briefing Paper.
Mr Hollinrake also argued that the ban could see a negative impact upon jobs and businesses in the Private Rental Sector as part of the ‘unintended consequences’ of the Government’s plans. Meanwhile, he also questioned the usefulness of a cap upon letting fees, stating that this could produce a ‘race to the top’ in terms of pricing, before speaking about the poor quality of housing in the Private Rental Sector across the country.
Failed credit checks, deposits and student lets
Julian Knight, Conservative MP for Solihull, stated that landlords could suffer unnecessarily if those with poor credit ratings were charged for failed credit checks and references at end of their lease.
Alok Sharma, Minister for Housing and Planning, concluded the debate by setting forth his commitment to introducing an overall ban, reaffirming his intention to “put homes first” and “help people now”. Mr Sharma argued, contrary to Mr Hollinrake, that a similar ban in Scotland had not yielded the potential “unintended consequences” that many MPs in the debate claimed would happen. The Minister outlined that Scottish rents increased by only 5% since 2012, compared with England’s rise of 9% in the same period.
Mr Sharma mentioned his approval of a potential ‘passport scheme’ for tenants, which would see renters gain a regularly updated credit rating and reference background. The Housing Minister finished off by claiming that rent rises were likely to be smaller than fees currently levied at tenants and promised to keep rent rises under review. He also noted that credit check costs should be covered by landlords and that the Government would introduce a ‘How-to-let’ guide, detailing advice for landlords on new rules and regulations surrounding letting fees and checks.
David Cox, Chief Executive of ARLA Propertymark, comments on today’s Westminster Hall debate on letting agent fees:
“We welcome this morning’s comments from Kevin Hollinrake MP around the unintended consequences of a total ban on letting agent fees, including higher rents for tenants as landlords seek to recoup their costs. This is something ARLA Propertymark has warned against for some time. We commissioned independent economic analysis earlier this year, which showed the average tenant will see their rents increase by £103 per year as a consequence of a full ban.
“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, Alok Sharma’s comments today declaring that the Government’s position remains that all fees will form part of the ban. As Kevin 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.”