I congratulate the Conservative party on delivering yet another 2015 Labour election manifesto pledge. Page 62 of our 2015 election manifesto, which I stood on, pledged to ban unfair letting agent fees. I have some news for the Conservative Members, however, because we had a new manifesto in 2017, which was even more popular than our 2015 manifesto: it led to their losing seats and to our gaining them. The 2017 manifesto went even further:
“Labour will make new three-year tenancies the norm, with an inflation cap on rent rises... We will legislate to ban”— all—
“letting agency fees for tenants. We will also empower tenants to call time on bad landlords by giving renters new consumer rights.”
It was a little bit disappointing that this Bill did not go quite so far. However, if the Government wish to continue their work in implementing Labour manifesto pledges, I am sure that they will meet no resistance from Labour Members and that it will be met with a great deal of praise from those who are suffering in the private rented sector.
The scandal of letting agent fees has gone on for far too long, and an audit of the private rented sector in Brighton and Hove shows exactly how out of control the fees are. In Brighton, agents’ fees start at £500 just for a holding fee, which is of course, as we have heard, non-refundable. If someone decides not to go for the property, they will lose the money. In the house buying world, someone can put in a bid for a property, agree an offer and get very far through the negotiations, but they can drop out with no financial charge. That seems manifestly unfair: for the rich, or for homeowners, there is one rule; and for renters, there is another whereby, if someone decides to change their view at the last moment, for whatever reason, they are charged. Ending that is a great opportunity that has been missed in the Bill.
In Brighton, admin fees are also common, at £250 on average per tenant, tenant substitution fees are as high as £420, and guarantor fees are £190. All in all, it costs more than £1,000 and we have not got started on the deposit. We have heard the same story from many constituencies throughout the country, particularly those in the south-east. We also have check-in and check-out fees, which are as high as £270 per check-in or check-out.
How has it got this bad? There is, of course, a fundamental power imbalance in the landlord-renter market. Often, young and insecure workers have no choice but to take what they are given, pay the fees and, sometimes, to do it with a smile because otherwise they would be rejected by the landlord. That is, of course, why it has been necessary in Brighton to establish renters’ unions. There are renters’ unions in my constituency such as Acorn, and I applaud the work it has done to fight for renters who are being abused by agents. We have heard a lot of talk about this being about only a few agents, but I am afraid that in my city it is, I think, a large number of agents. I would even go so far as to say that the majority of agents use these dirty tactics. That is why the Bill is needed; it is not about a few rotten apples but a systemic failure in the market.
The Minister will have received the same advice as I and many others have about some of the things that need to change, particularly the loophole in paragraph 4 of schedule 1, which has been mentioned, regarding tenants who have to pay a default fee. Again, that takes me to the point about the equality of the sides in this argument. While we still have no-fault evictions, where a landlord can decide to evict a person with notice and there is no charge or fee against the agent or landlord and no reimbursement for the person losing their house a few months early, it seems to be totally unfair to have any default fee on the other side without the situation being equally balanced. If the Bill were to introduce an equal default fee for no-fault evictions, this would be a measure that I could probably come to support.
Of course, the Bill also fails to provide a comprehensive definition of default fees and creates the ability for fees to be reintroduced by any other means. Of course, we know that in a capitalist world capitalism will use those loopholes to its best advantage. It seems that the Government never learn that if they do not close down loopholes, the people who will be abused are our constituents. I guess that it will take a Labour Government to implement Labour manifesto policies properly, but I support this measure, even if it does not quite yet go far enough.