Residential houses on January 2, 2012 in Bath. Photograph: Getty Images.
Show Hide image

Why a ban on letting agent fees is essential

In the many parts of the country where demand for housing exceeds supply, tenants are being exploited.

Today the House of Commons will vote on whether to ban letting agency fees to tenants in England, a measure already implemented in Scotland and progressing in Wales. This debate will be on an amendment Labour has tabled to the Consumer Rights Bill.

We’re not convinced this is a left or right-wing issue. There's a system that doesn't work and it needs fixing. This is a managerial issue and the system that isn't working is the lettings market. There are decent agents, and we hear from them all the time. But in the many parts of the country where demand for housing exceeds supply, usually because of the availability of jobs, agent behaviour degrades.

ComRes poll we commissioned this year showed that 30 per cent of tenants have experienced "surprise" fees in the course of a tenancy, something supposedly outlawed by the Advertising Standards Agency. And 10 per cent report they have been stung more than once.

As a private market, you expect the price of a product to be the result of supply and demand. But the headline cost of rent doesn't include the increasingly complex range of fees invented by agents to charge tenants, usually after they have gamed a tenant into commitment. One such game is an extensive and unnecessary "registration" process prior to viewing any homes to deter a renter from registering with multiple agencies. It has become the norm for agencies to engage in practices that are banned in similar fields such as recruitment consultancy or financial advice. This includes advertising properties that are not available and levying charges on someone who is not your customer.

Our position is simple. The landlord is the agent's customer and should be offered a service for a fee. This becomes a cost of business when the landlord sets the rent, giving the renter a transparent view of the true costs before they make a commitment. Normal market behaviour of landlords would create a downward pressure on agent costs and an upward pressure on quality of service. High quality agents would win business from poor quality operators, who could no longer undercut them by hiking up tenant fees.

At the moment agents push down fees to landlords but are free to charge multiple times this to the tenant, often without the landlord's knowledge but certainly without any landlord pressure to reduce those tenant fees. Furthermore there is anecdotal evidence that some agents encourage "churn" in tenancies because of the value of tenant fees. We're simply asking for a market where landlords buy an agency service knowing the true cost and that tenants can rent a home knowing the true cost.

Due to insecurity of tenure, and of course tenant choice, one third of renters move home each year. That's over three million people, meaning about a million people a year are being stung by hidden agent fees totalling hundreds of millions of pounds. 

There’s a guy in Hertfordshire who has insisted I can't identify him because he believes he'll get evicted and lose his deposit if I do so. Because he's on a low income the letting agent insisted he pay six months’ rent in advance and renew his tenancy every three months thereafter, each time paying three months’ rent in advance and a £100 fee. The agent refused to let him ask the landlord for a normal monthly rolling tenancy agreement and eventually lowered the “renewal” fee to £50 for one instance. He has now been living in this situation for three years.

In telling you this I'm trying to show how the most vulnerable renters are most exposed to the crass profiteering of the worst agents. In this context it's hard to conceive of a Consumer Rights Bill without a ban on agency fees.

Alex Hilton is director of Generation Rent

Photo: Getty
Show Hide image

PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

0800 7318496