Renewed Efforts To Regulate Letting Agents and Ban Fees

Two Labour MPs have recently submitted separately tabled Bills calling for the regulation of letting agents and landlords, as well as seeking a ban on letting agents’ fees.

One was submitted by former Labour housing minister John Healey. Introduced under the ten minute rule motion, the Bill is called the Letting Agents (Competition, Choice and Standards) Bill 2013-14. It seeks “to establish a national mandatory licensing scheme for letting and managing agents, with established standards and redress for landlords, tenants and leaseholders, and prohibition of letting and management agent fees; to enable local authorities to administer and enforce the scheme; to require that tenants, landlords and leaseholders have written agreements; and to empower local authorities, either alone or in partnership, to trade as letting and managing agents.”

The other is from veteran Labour backbencher Sir Alan Meale. His is called The Private Landlords and Letting and Managing Agents (Regulation) Bill 2013-14. The objectives of the Bill are to “establish a mandatory national register of private landlords; to introduce regulation of private sector letting agents and managing agents; to establish a body to administer the national register and to monitor compliance with regulations applying to letting agents and managing agents; to require all tenancy agreements entered into with private landlords to take the form of written agreements.”

Healey has said of his Bill, “Politicians haven’t got to grips with the problems that private renting brings. There’s more consumer protection when we buy a fridge or hire a car than when we rent a home. And there’s a growing problem with housing market middlemen who answer to no-one – letting and managing agents.

“The Royal Institute of Chartered Surveyors has called this sector the property industry’s ‘wild west’.

“The majority of private tenancies are let through agencies, yet absolutely anyone can set up as a letting or managing agent. Unlike even estate agents, there is no system of licensing or standards, while tenants have no legal right to a written tenancy contract and are often hit by huge and hidden upfront fees.

“Landlords also report letting and managing agents failing to provide the services expected or hitting them with hidden and excessive charges. The worst drag down the reputation of the rest, which is why many of the legal changes I propose are backed by the associations that represent letting agents, managing agents and landlords as well as by MPs from all parties.

“So there’s a wide recognition that self-regulation has failed and legal regulation is required to improve choice, competition and standards. And people rightly now look to Parliament to make this market better for the millions who have no other option but a private rented home.”

The Bills are due to have their full hearing in October, though it is not likely that they will be successful. The Government has consistently shied away from regulation, not wanting to stifle one of the nation’s few vibrant and growing sectors.

Meanwhile, there were demonstrations over the weekend outside of London letting agents. The protesters called for an end to “rip-off” tenancy fees, with many believing that England should follow the example of Scotland, where fees charged to tenants are banned.

One demonstrator said, “The Government needs to recognise that in a city where demand for affordable housing far outstrips supply, regulation of letting agents is desperately needed to protect renters from the worst excesses of an overheated rental market.

“MPs must follow the example of Scotland by banning rip-off fees which are making the private rented sector inaccessible to people on low incomes who have nowhere else to go.”

The Government has also been clear that it does not support a blanket ban on letting agents’ fees. In an exchange in the House of Lords last week, Baroness Hanham responded to the Shelter report calling for the abolishment of letting agents’ fees. She said, “We welcome Shelter’s contribution to the debate. But remain unconvinced that increased regulation is the answer. So we do not support a blanket ban on fees to tenants, especially as this is likely to drive up the cost of rents.”

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