Agency fees are being banned – but the government must not stop there

Ministers should be applauded for starting to take action on rip-off agencies. Now they should continue what they've started.

It’s the mark of a grown-up left to oppose what’s wrong, and support what’s right – whichever party is doing it. So progressives should be welcoming the fact that a new Bill is being introduced in Parliament today to do some good – by banning letting fees.

The Tenant Fees Bill will lay out how the government plan to do that, in a move that could help millions of renters by ending rip-off demands from agencies. It’s a big victory for housing groups like Shelter.

As we’ve reported, people are having to pay a hundred pounds or more just to have contracts ‘renewed’ – usually, printing off the old contract and changing the dates.

And much of the time tenants are in the black about how much they may be charged: many sign up to rent somewhere and are then lumped with a huge agency bill. If a market is based on information, this one is bust.

Consumer group Which? point out that the Bill will:

  • Cap holding deposits at no more than one week’s rent and security deposits at no more than six weeks’ rent.
  • Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution
  • Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees
  • Appoint a lead enforcement authority in the lettings sector
  • Make sure transparency requirements on any fees apply to websites like Rightmove and Zoopla

All this is an example of government intervention that’s good for tenants, transparency, and competition. Agencies are the parasites of the housing market, frequently double-charging both residents and landlords for the same things – so this Bill is a start.

But if the market as a whole is bust, tenants will be ripped off in other ways. Today the government has also launched a consultation on making membership of client money protection schemes mandatory for letting and managing agents that handle client money. That’s one step forward.

But the real information problem in the rental market is this: private rental tenants have almost no stability.

The dominance of one-year tenancies creates a year-round fear that tenants’ complaints or calls for improvements will result in eviction at the end of the period.

And if they can stay, there is little to prevent landlords whacking up the rent for the subsequent year. The mentality becomes – ‘if I raise this housing issue, will I get a rent hike or be kicked out in four months?’.

We need to move to three-year tenancies that offer both stability when it comes to rent and tenure.

This was an idea mooted under Ed Miliband – and which is now being picked up not only by Jeremy Corbyn but by the Conservatives. In August rumours emerged that Ministers will change planning laws to encourage these longer-term tenancies. But we have heard little since.

The government should be applauded for starting to take action on exploitative agencies. Now they should continue what they’ve started and offer real stability to tenants.

See also: Here’s the real squatters of the housing market: letting agents

Josiah Mortimer is Editor of Left Foot Forward. Follow him on Twitter

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