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

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Hannan Fodder: This week, Daniel Hannan gets his excuses in early

I didn't do it. 

Since Daniel Hannan, a formerly obscure MEP, has emerged as the anointed intellectual of the Brexit elite, The Staggers is charting his ascendancy...

When I started this column, there were some nay-sayers talking Britain down by doubting that I was seriously going to write about Daniel Hannan every week. Surely no one could be that obsessed with the activities of one obscure MEP? And surely no politician could say enough ludicrous things to be worthy of such an obsession?

They were wrong, on both counts. Daniel and I are as one on this: Leave and Remain, working hand in glove to deliver on our shared national mission. There’s a lesson there for my fellow Remoaners, I’m sure.

Anyway. It’s week three, and just as I was worrying what I might write this week, Dan has ridden to the rescue by writing not one but two columns making the same argument – using, indeed, many of the exact same phrases (“not a club, but a protection racket”). Like all the most effective political campaigns, Dan has a message of the week.

First up, on Monday, there was this headline, in the conservative American journal, the Washington Examiner:

“Why Brexit should work out for everyone”

And yesterday, there was his column on Conservative Home:

“We will get a good deal – because rational self-interest will overcome the Eurocrats’ fury”

The message of the two columns is straightforward: cooler heads will prevail. Britain wants an amicable separation. The EU needs Britain’s military strength and budget contributions, and both sides want to keep the single market intact.

The Con Home piece makes the further argument that it’s only the Eurocrats who want to be hardline about this. National governments – who have to answer to actual electorates – will be more willing to negotiate.

And so, for all the bluster now, Theresa May and Donald Tusk will be skipping through a meadow, arm in arm, before the year is out.

Before we go any further, I have a confession: I found myself nodding along with some of this. Yes, of course it’s in nobody’s interests to create unnecessary enmity between Britain and the continent. Of course no one will want to crash the economy. Of course.

I’ve been told by friends on the centre-right that Hannan has a compelling, faintly hypnotic quality when he speaks and, in retrospect, this brief moment of finding myself half-agreeing with him scares the living shit out of me. So from this point on, I’d like everyone to keep an eye on me in case I start going weird, and to give me a sharp whack round the back of the head if you ever catch me starting a tweet with the word, “Friends-”.

Anyway. Shortly after reading things, reality began to dawn for me in a way it apparently hasn’t for Daniel Hannan, and I began cataloguing the ways in which his argument is stupid.

Problem number one: Remarkably for a man who’s been in the European Parliament for nearly two decades, he’s misunderstood the EU. He notes that “deeper integration can be more like a religious dogma than a political creed”, but entirely misses the reason for this. For many Europeans, especially those from countries which didn’t have as much fun in the Second World War as Britain did, the EU, for all its myriad flaws, is something to which they feel an emotional attachment: not their country, but not something entirely separate from it either.

Consequently, it’s neither a club, nor a “protection racket”: it’s more akin to a family. A rational and sensible Brexit will be difficult for the exact same reasons that so few divorcing couples rationally agree not to bother wasting money on lawyers: because the very act of leaving feels like a betrayal.

Or, to put it more concisely, courtesy of Buzzfeed’s Marie Le Conte:

Problem number two: even if everyone was to negotiate purely in terms of rational interest, our interests are not the same. The over-riding goal of German policy for decades has been to hold the EU together, even if that creates other problems. (Exhibit A: Greece.) So there’s at least a chance that the German leadership will genuinely see deterring more departures as more important than mutual prosperity or a good relationship with Britain.

And France, whose presidential candidates are lining up to give Britain a kicking, is mysteriously not mentioned anywhere in either of Daniel’s columns, presumably because doing so would undermine his argument.

So – the list of priorities Hannan describes may look rational from a British perspective. Unfortunately, though, the people on the other side of the negotiating table won’t have a British perspective.

Problem number three is this line from the Con Home piece:

“Might it truly be more interested in deterring states from leaving than in promoting the welfare of its peoples? If so, there surely can be no further doubt that we were right to opt out.”

If there any rhetorical technique more skin-crawlingly horrible, than, “Your response to my behaviour justifies my behaviour”?

I could go on, about how there’s no reason to think that Daniel’s relatively gentle vision of Brexit is shared by Nigel Farage, UKIP, or a significant number of those who voted Leave. Or about the polls which show that, far from the EU’s response to the referendum pushing more European nations towards the door, support for the union has actually spiked since the referendum – that Britain has become not a beacon of hope but a cautionary tale.

But I’m running out of words, and there’ll be other chances to explore such things. So instead I’m going to end on this:

Hannan’s argument – that only an irrational Europe would not deliver a good Brexit – is remarkably, parodically self-serving. It allows him to believe that, if Brexit goes horribly wrong, well, it must all be the fault of those inflexible Eurocrats, mustn’t it? It can’t possibly be because Brexit was a bad idea in the first place, or because liberal Leavers used nasty, populist ones to achieve their goals.

Read today, there are elements of Hannan’s columns that are compelling, even persuasive. From the perspective of 2020, I fear, they might simply read like one long explanation of why nothing that has happened since will have been his fault.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.