PRIVATE RENTED SECTOR “UNFIT FOR PURPOSE” – MP backs plans to ban letting agent fees to tenants.
The private rented sector is “entirely unfit for purpose” and in need of wholesale reform” says MP Helen Hayes.
The Dulwich and West Norwood MP says:
- The ending of a private tenancy is now the single biggest cause of new cases of homelessness.
- Increasing numbers of people are now living in the private rented sector for the medium to long term, including 1.5 million households with children—three times the number of a decade ago.
- Many tenants move every six to 12 months, so fees are not a one-off cost as they are when buying a home, but a recurring and unaffordable burden.”We urgently need wholesale reform of the private rented sector” she told fellow MPs.
“We need longer, more secure forms of tenure; intervention to curb spiralling rents; new requirements on the standard of accommodation to make every home fit for human habitation; and an end to the iniquitous practice of section 21 no-fault evictions.
“We have a private rented sector that is entirely unfit for purpose, in which tenants pay above the odds for lower levels of security and often lower quality accommodation. Private renters spend a higher proportion of their income on rent—41 per cent on average, compared with 19pc on average for people with a mortgage—leaving many unable to save and struggling to make ends meet.
“Councils in London are now seeing people who in the past would never have needed to ask the council for help with their housing being threatened with homelessness as a result of a combination of high rents, the coalition Government’s local housing allowance cap and insecure tenancies.
“Both my local councils, Southwark and Lambeth, tell me that the number of residents seeking help from the council because their tenancy has come to an end or they face an impossible increase in their rent has gone up by hundreds of cases every year.
“I see struggling tenants living in impossible circumstances in my surgeries every week.
“The situation is made much worse by the introduction by the coalition Government of the local housing allowance cap, which increasingly means that almost no private sector housing is affordable to people on low-to-average incomes in central London boroughs. “The pernicious right-to-rent regulations are increasing prejudice and discrimination in the private rented sector.”
Her comments came during a Westminster Hall debate on abolishing letting agent fees to tenants.
“In the context of the need for radical reform, the proposal to ban letting agents from charging fees to tenants is a vital first step.
“Those fees are presently completely unregulated, and the letting agents are chosen and appointed by landlords.
“Many tenants move every six to 12 months, so fees are not a one-off cost as they are when buying a home, but a recurring and unaffordable burden.
“A situation where tenants are spending more than 40pc of their income on rent makes it very difficult to save, and paying hefty fees to letting agents on a regular basis is simply another blow that prevents many people from adding to their savings either for a deposit or to create a bit more financial breathing space to cope with unexpected bills.
“Some concerns have been voiced by letting agents, but I am not convinced that they are supported by the evidence.
“The first thing to say is that there are letting agents, including at least one in my constituency, that already do not charge fees to tenants, so it is clear that a successful business model for letting agents can be achieved without the need to charge tenants.
“The regulation of fees should, in fact, benefit responsible and professional agents, since it is often the least scrupulous agents who charge the highest fees.
“Some have argued that tenants will face higher rents as landlords seek to pass any increased costs on to them. “I agree with Shelter on that point, which states that predictability beats up-front costs.
“Although it is to be hoped that landlords would not pass on additional costs to tenants who already pay high levels of rent, an increase of a few pounds a month is clearly preferable to having a small amount of savings obliterated every six to 12 months.
“Concerns have been raised that some agents would refuse to check references, resulting in an increase in the number of tenants facing discrimination. Discrimination is already common in the private rented sector.
“Again, I agree with Shelter: there are better methods, most notably a tenant passport scheme, that would allow checks to be undertaken in an efficient manner and refreshed periodically—rather than taken from scratch at the start of every tenancy—and that would safeguard the interests of both tenant and landlord, while enabling letting agents to operate more efficiently.
“Any passporting scheme should also apply to tenants’ deposits, which should be transferable from one tenancy to the next, to reduce further the burden of up-front costs.
“The Government must act urgently to address the housing crisis, to invest directly in genuinely affordable social housing and to bring forward low-cost homes for first-time buyers.
“For as long as they fail to do so, more and more people will be living in the private rented sector. “We need urgent comprehensive reform of the private rented sector to make it fit for purpose and to address the impact of housing insecurity and homelessness on families across the country.
“The proposed ban on letting agents’ fees is the minimum first step in that process. I urge the Government to follow through on their commitment.” (Source: TheyWorkForYou website Letting Agent Fees (Tenants) Westminster Hall 6th September 2017.)
Further reading: Eviction with a Section 21 notice (Shelter website)