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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Recess confidential: Labour's liquid party

Sniffing out the best stories from Westminster, including Showsec, soames, and Smith-side splits.

If you are celebrating in a brewery, don’t ask Labour to provide the drinks. Because of the party’s continuing failure to secure a security contractor for its Liverpool conference, it is still uncertain whether the gathering will take place at all. Since boycotting G4S, the usual supplier, over its links with Israeli prisons, Labour has struggled to find an alternative. Of the five firms approached, only one – Showsec – offered its services. But the company’s non-union-recognition policy is inhibiting an agreement. The GMB, the firm’s antagonist, has threatened to picket the conference if Showsec is awarded the contract. In lieu of a breakthrough, sources suggest two alternatives: the police (at a cost of £59.65 per constable per hour), or the suspension of the G4S boycott. “We’ll soon find out which the Corbynites dislike the least,” an MP jested. Another feared that the Tories’ attack lines will write themselves: “How can Labour be trusted with national security if it can’t organise its own?”

Farewell, then, to Respect. The left-wing party founded in 2004 and joined by George Galloway after his expulsion from Labour has officially deregistered itself.

“We support Corbyn’s Labour Party,” the former MP explained, urging his 522,000 Facebook followers to sign up. “The Labour Party does not belong to one man,” replied Jess Phillips MP, who also pointed out in the same tweet that Respect had “massively failed”. Galloway, who won 1.4 per cent of the vote in this year’s London mayoral election, insists that he is not seeking to return to Labour. But he would surely be welcomed by Jeremy Corbyn’s director of communications, Seumas Milne, whom he once described as his “closest friend”. “We have spoken almost daily for 30 years,” Galloway boasted.

After Young Labour’s national committee voted to endorse Corbyn, its members were aggrieved to learn that they would not be permitted to promote his candidacy unless Owen Smith was given equal treatment. The leader’s supporters curse more “dirty tricks” from the Smith-sympathetic party machine.

Word reaches your mole of a Smith-side split between the ex-shadow cabinet ministers Lisa Nandy and Lucy Powell. The former is said to be encouraging the challenger’s left-wing platform, while the latter believes that he should make a more centrist pitch. If, as expected, Smith is beaten by Corbyn, it’s not only the divisions between the leader and his opponents that will be worth watching.

Nicholas Soames, the Tory grandee, has been slimming down – so much so, that he was congratulated by Tom Watson, Labour’s deputy leader, on his weight loss. “Soon I’ll be able to give you my old suits!” Soames told the similarly rotund Watson. 

Kevin Maguire is away

I'm a mole, innit.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser