Agents can breathe a sigh of relief – but possibly only for the time being – after yesterday’s motion by Labour in the Commons to ban fees to tenants was defeated.
When it came to the vote at 7.30pm, 228 MPs voted to ban fees, but 281 voted against the proposed new clause – a margin of 53.
Just hours before the vote, the Government announced that it would be bringing forward its own amendment to the Consumer Rights Bill.
However, agents might have little more than 12 months’ before they face the same possibility of a ban on fees – and could face a new challenge as early as this autumn.
Speaking in yesterday evening’s debate, Clive Betts, chairman of the CLG committee, said that “further evidence” would be examined by the autumn.
He also dropped a heavy hint that CLG might not be entirely happy with letting agent fees.
Referring to the Foxtons website as it appeared yesterday morning, he said that fees appeared “in very small print … agents are going through the motions”.
Another Labour MP, Chris Williamson (Derby North), named one letting agent, Professional Properties of Derby, which he accused of levying “spurious charges”.
He accused letting agents of “exploiting very vulnerable groups in society”.
The new Government amendment itself is almost entirely lacking in detail. It has not yet been tabled, but will be proposed at a later stage of the Bill.
It will compel letting agents to publish a full tariff of all their fees – both on their websites and prominently in their offices.
The requirement goes further than the Advertising Standards Authority ruling which requires agents to show their upfront fees along with the rent when advertising properties.
Agents who do not comply with the proposed new amendment will face fines, as yet unspecified.
The Government also said it would monitor this new regime for a year, putting the industry on notice that it will be ready to consider further steps.
Announcing the new move, the Government said that it ensures “a fair deal for landlords and tenants, closing off the opportunity for a small minority of rogue agents to impose unreasonable, hidden charges. The common sense approach avoids excessive state regulation which would push up rents for tenants.
“Currently, the Advertising Standards Authority only requires letting agents to list compulsory charges to the tenant upfront in the process. Those letting agents who are found to have imposed hidden charges face little more than being named and shamed on the Advertising Standards Authority’s website.
“But the Government wants to go further than this.”
Housing minister Kris Hopkins said: “The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service.
“Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.
“Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door.
“Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.”
In yesterday’s debate, Stella Creasy, Labour’s shadow minister for competition and consumer affairs, rejected the idea that transparency of letting agent fees would address the issue of “extortionate” fees.
She said that transparency was “like someone being tied to the train tracks and being read the train timetable.”
In the debate, she accused letting agents of double charging both landlords and tenants, and said that tenants could face bills as high as £827.
* During the debate, Stella Creasy continued to use Twitter. She seemed particularly rattled by a comment on yesterday’s Eye story from a reader watching the debate which was tweeted out by Eye. The post said she had “demonstrated a complete lack of understanding and naivety”.
She re-tweeted the comment, saying: “oh no, you mean turkey’s [sic] accused me of promoting Christmas?!”
* Labour’s amendment to the Consumer Rights Bill would have made it an offence for an agent to demand or accept payment in connection with a letting contract.
It would also have outlawed renewal fees.
Agents would still have been able to accept deposits, including holding deposits.
However, a holding deposit would have been capped at two weeks’ rent and would have had to be credited towards the tenancy deposit or rent upon the tenancy being taken up.
Credit checking costs would also have had to have been reimbursed upon the signing of a tenancy agreement.
The full amendment – rejected yesterday, but likely to make a reappearance should Labour win next year’s general election – was headed: “Prohibition of fees in contracts for services: letting of residential accommodation.”
The full clause can be read here – scroll on to the section starting NC22:
http://linkis.com/parliament.uk/7uQ4m
* ARLA sent out a link to Maxine Fothergill’s petition on the Government’s website just hours before yesterday’s crucial debate on letting agent fees.
In an email sent out yesterday lunchtime labelled “URGENT COMMUNICATION – Tenants Fees – PETITION LINK – Sign here!”, two links were given.
The first was to a blog written by a member agent, Sally Lawson of Concentric Lettings.
The second was to Fothergill’s e-petition, which by last night had attracted over 3,400 signatures.
Fothergill thanked everyone who had signed her petition. She said the vote had been a close call, and added: ”
I have been a trainer for the London Landlord Accreditation Scheme since its onset in 2004 and in this time I have personally trained over 3000 landlords and agents. It never ceases to amaze me the amount of agents attending the course who have no concept of the landlord and tenant law!
“The Government would like self regulation to work but while this is fine for ARLA agents who have to comply with a code of conduct, it’s simply to easy for ANYONE to set up an agency without any knowledge or experience and there is currently no regulation to stop them.
“This in turn ends up with rogue traders who give our industry a bad name and ultimately we all get tarred with the same brush.
“In my opinion we need the government to help all good agents, via consultation with the industry, by bringing in regulation to include a requirement to belonging to a good trade body such as ARLA.”
Compared with Clive Betts understanding of the subject Stella Creasy is a member of Mensa.
Genuinely Mr Betts stands out as the single most ignorant, arrogant and rude characters I have ever had the misfortune of meeting. It is impossible to find a single iota of understanding of what is required to solve the problems of either the Social or Private rented sector in either DWP or CLG.
Even with Grenville Turner serving as a non exec to CLG there is still no coal face experience of the industry anywhere to be found in Westminster and it seems all civil service briefings are coming directly from lobbyist organisations like Shelter.
There is now short window of opportunity for those Agents who are able to simply pull the rug from under government and less professional agency by imposing a £50 cap on tenancy admin fees. Enough realistically to cover the costs of referencing and administration but not enough to make false agency viable. There is no need to pass increased charges onto the landlord and no need to wear the badge of unscrupulously hiking up rents that many would have us wear. Control the competition rather than suffer the consequences of it.
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Finally. A voice of reason.
What Ampersat said:
– Get ahead of the debate
– impose a £50 cap on tenant fees (which is reasonable)
– improve reputation of lettings agents in general
– make positive PR
– cripple **** agents who make more money off ripping off tenants because they offered a cheap deal to landlords
There are agents in my area, SW London, that charge large landlords 2% let fees and make up the difference from tenant fees. It shames us all.
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To Stella Creasy…you really DO have a complete lack of understanding and complete naively on this matter. God only knows what problems lie ahead after the next general election if Ed (the socialist) is in charge.
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I watched the debate on Parliament Live yesterday (yes, how sad) and the only MP standing up to defend letting agents was Anne Main, MP for St Albans. Well done her ! More ignorant clap-trap from the opposition benches whose members had obviously all been whipped to vote in favour of their amendment. But no-one mentioned that a loss of these fees would mean lost VAT to the Exchequer or that agents might be forced to lay off staff. And there I was thinking that employment and tax was important to parties of all colours…….
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Earth to Kris Hopkins, Earth to Kris Hopkins . .
'We are determined to tackle the minority of rogue agents who offer a poor service'?
Here's a cunning and radical plan, regulate agents!
You can have that one on me!
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I agree with Stela such a lack of understanding. What about banks and mortgage application fees and arrange me fees they offer the customer a lower interest rate and then add on an extortion arrangement fee !!!! The majority of us are small independent firms who create jobs pay our VAT and Taxes!!!
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Agents should take this opportunity to ensure that they are transparent in their charges and appreciate that if this motion had been successful the consequences would have been fatal for many small letting agencies . Many staff will be very relieved that they still have a Job
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I am glad this has been stopped, FOR NOW. I am a tenant and work in the industry, I cannot see how this would benefit me personally. In Scotland Rents have risen faster than ever before, the tenants are paying fees through higher rents. I do however think there is a need for regulation to stop rogue agents.
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The fundamental flaw from those who supported a ban was the failure to understand what our fees actually are. I have seen people include tenants deposits as fees, holding deposits which form part of the deposit upon move-in.
I wonder what the implications of the tenants proportion of the cost of the inventory would be? Imagine the ICE undertaking ADR ruled in favour of a Landlord. The tenant could claim that the inventory was not independent as it was commissioned by the Landlord.
References rarely fail unless the tenant has provided incorrect information. Few agents submit applications with having a **** good idea of the outcome and certainly don't risk a let with a tenant who may fail.
Generation Rents claim that Tenants incur a maintenance charge at the commencement of the tenancy is simply unrecognisable.
Nevertheless, the key issue remains that of policing. Generation Rent's Alex Hilton today claims that 30% of agents do not abide by the ASA ruling. I don't doubt he is correct, however the rules rely upon the tenant to police those who refuse to comply. Under ASA rules, the complainant is named.
No rules or regs have any traction if they aren't aggressively policed. Agents should have the option to report those competitors who refuse to play by the rules without fear of being identified as the complainant. This forms part of the concept of self regulation. It's unfair that some agents give the impression of being cheaper then spring hidden charges once an applicant has set their heart on a property they don't want to risk losing.
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I hope the MP Chris Williamson did his homework before he singled out an agent for direct criticism? Mr Williamson is vice chair of the Local Government Anti Poverty Forum. I wonder if Chris offers his services for no charge? He recently suggested all 650 MP's should be put up in a block of student flats opposite the House of Commons to avoid expenses scandals. Meanwhile Mr Williamson is busy claiming taxpayers money to pay hundreds of pounds towards heating costs at a second property and employs a family member (Margaret Amsbury) on an annual salary of £30k, again, at taxpayers expense. Perhaps you should have remained a bricklayer Mr Williamson. That profession would have provided you with a much better insight into the problems associated with poverty.
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An interesting point. MP's get paid to represent us – and some earn from directorships, lobbying etc – not to mention the expenses issue.
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So, I take it this reprieve will pave the way for the re-introduction of Fee's in Scotland again.
Or is this another case of "some are more equal than others"?
We all live under the rule of Westminster and the unified banner of the UK.
Fairs Fair Folks!
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