Bill to Abolish Letting Agent Fees Unopposed in House of Lords

A new bill that seeks to abolish letting agent fees charged to tenants had an unopposed second reading in the House of Lords on Friday.

The Renters’ Rights Bill, supported by Labour and introduced by a Liberal Democrat peer, would amend the Landlord and Tenant Act 1985 by stopping letting agents charging tenants or prospective tenants the following fees for: registration, admin, inventories, reference checks, renewals or exits.

The new bill also proposes an amendment to the new Housing and Planning Act 2016, by opening up the register of rogue landlords and letting agents to tenants and prospective renters.

The register, which is not yet in operation, is currently only intended to be available to local authorities and the Government.

The new bill also proposes that any landlord or agent on the rogue database would not be granted a House in Multiple Occupation (HMO) license.

The private member’s bill would apply in England only and has been introduced by Baroness Grender, a former director of communications for housing charity Shelter. Labour has offered its full support.

Bill to Abolish Letting Agent Fees Unopposed in House of Lords

While the bill would normally be considered unlikely to become law without Government backing, a petition to the Housing Minister, Brandon Lewis, to ban letting agent fees, has now achieved over 250,000 signatures.

Grender claims that private tenants are being failed by a housing market that is stacked against them.

She said: “Unlike purchasers of high street goods or services who are generally covered by well-developed consumer rights, consumers of private sector housing lack the protections they need. They are often at the mercy of landlords and lettings agents, and have little recourse to take action in the case of poor quality or rip-off housing.

“A case in point is letting fees that agents charge tenants: Registration fees, credit check fees, reference check fees, renewal fees, name change fees, admin fees, exit fees… the list goes on. Almost all of them are arbitrary and disproportionate to the service provided.”

However, she added: “Yet tenants are powerless to do much about it, in a market where demand for homes relentlessly grows and options are limited. It is time for Government intervention to address this imbalance of power and build up the consumer rights of renters.

“Letting agents should not be able to get away with double charging fees – imposing them on both tenants and landlords – when in fact it is only the landlord that is the client, and therefore the one that should be paying.

“Tenants are charged fees because agents know they can get away with it. These fees are already banned in many countries, including Scotland and the US, because the pro-consumer case for doing so is clear.”¹

The Government spokesperson, Viscount Younger of Leckie, responded: “The Government is clear that the vast majority of letting agents do provide a good service to tenants and landlords, and that most fees charged do reflect genuine business costs.

“I note [Lady Grender] did acknowledge this briefly in her comments. I do not believe a blanket ban on letting agent fees is the answer to tackling the small minority of rogue letting agents who exploit their customers by imposing inflated fees for their service.”

He pointed out existing laws prohibiting landlords and letting agents from “unfair terms or fees”¹, adding that letting agents must publicise their fees.

¹ http://www.theyworkforyou.com/lords/?id=2016-06-10a.972.0