ARLA Propertymark react to Westminster Hall debate on proposed fee ban

News at Jubb & Co | 12/09/2017

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. Mr Hollinrake did, along with all voices represented at the meeting, howl at the affordability of the housing market for those on low incomes and stated that letting agents operated in a “closed market”.


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. 


Cost of references, cap on fees, and housing quality


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). 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.


Regional differences


Kevin Hollinrake also stated that the effects of the ban would be different in different regions of the UK, as tenants in London face a particular problem surrounding demand, while other parts of England, in particular, are more concerned with the length of tenancy and quality of housing. He placed special emphasis on the role of the free market in regulating costs, and encouraged the government to consider this in its legislation program. He also took time to reject previous suggestions that landlords should only hold deposits equal to one month’s rent.


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. Charles Walker, Conservative MP for Broxbourne,declared that ‘check in/check out’ inventories should be completed by independent bodies, free of ‘self-interest’. Mr Walker reiterated this point while asserting that tenants should be required to confirm and consult the pricing. He also complained that landlords dealing with student property were withholding deposits in personal bank accounts and “challenging tenants to claim this” at the end of their lease.


Current requirement to publish fees


Helen Hayes, the Labour MP for Dulwich and West Norwood, said that the Government’s proposals are a ‘minimum first step’ to improve the private rented sector. However, she also stated that much more action was necessary from the Government to tackle the country’s housing crisis. Siobhain Mcdonagh, Labour spokesperson on Housing and MP for Mitcham and Morden, added that letting agents should do more to publish their fees and stated that despite their legal requirement to do so, 12% of agents failed this measure in the past year. Other contributions from various MPs addressed the wide variation in letting fees, which can range from £6 to £325.


Sharma concludes


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 on average 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.”