Time to end the rip off culture of landlord and agency fees

There are many things wrong with the private rental market in the UK. High rent rises, substandard accommodation and too few rights for renters: all these concerns feature high on the hit list of anyone who has rented or still is. However, the one thing guaranteed to be mentioned by anybody who has rented privately is the never ending litany of extortionate fees charged by agencies and landlords at the beginning of a new tenancy or in many cases the yearly renewal of an old one.

There are many examples of these, my own personal favourite is a charge I received when I was renting for “cleaning the property” when I moved out. When I queried this I was told, quite honestly by my letting agent, that it didn’t matter if I got a professional cleaner in when I left as I would be billed anyway as it was “a standard charge that people just have to pay.” This is by no means the worse example of this kind of charges but it is an example of the culture that thinks its acceptable to automatically rip people off because they rent privately. Even more problematic are the high deposits that many are forced to pay. These are often raided at the end of a tenancy for deductions that are often difficult to challenge.

This rip off culture was supposed to be ended by the Government’s new Tenants Fees Bill currently making its way through Parliament. This is long overdue, as the number of renters, especially long term renters is growing. In Lambeth, we are currently compiling research on the make up of our housing population, but we know that well over a third of people now rent privately. Unfortunately though, the current Bill is riddles with loopholes.

These are laid out in a letter sent to the government this week from Labour Housing Cabinet members calling for the Bill to be substantial tightened (see below). From a closer look at the current proposals, there are many ways for agencies to wiggle out of supposedly tougher regulations. The “clampdown” could result, as the letter shows, in fees simply being spread over a longer period during the tenancy, while little is done to stop landlords charging excessively high deposits. Even more worrying, is that rogue landlords could turn themselves into “membership club” where they can avoid all their obligations to their tenants.

As I wrote a few weeks ago, the government has already missed an opportunity to get to grips with the social housing crisis, it is now close to dropping the ball when it comes to the private rental market as well. There is no need for this, when there are good ideas and practice out there already as to how we give renters the rights they deserve. In the letter, Labour proposes a set of clear reforms, including fully banning tenancy fees and giving councils more powers to fine the worse offenders. In Lambeth, we have already introduced a tougher fining regime that this month saw a landlord fined £10,000 for failing to provide acceptable accommodation to his tenants and we will soon be consulting on a new private renters charter.

But we do need the government to play its part and ensure the current Bill going through Parliament is effective, and not riddled with loopholes.

Dear Minister,

London is home to 2.4 million private renters, many of whom are forced to not only pay extremely high rents, but also exorbitant deposits and fees each time they move home. The loss of a private tenancy also remains the single biggest cause of homelessness. Private renters, who we represent as Cabinet Members for Housing from across councils in London, cannot wait any longer for action on rip-off fees and for stronger rights.

The Tenant Fees Bill is an important opportunity to give security to private renters, by capping deposits and banning letting fees. However, we are concerned that the Bill as it is currently drafted creates loopholes that letting agents can exploit, and does not go far enough to protect private renters.

As you know, the draft Bill caps deposits at six weeks’ rent, ignoring calls by charities, renters’ groups and others for a lower cap to be introduced. We urge you to instead set this cap at three weeks’ rent, and holding deposits at one day’s rent, to reduce up-front costs for renters. This would reduce the risk of tenants struggling to manage their finances, but still give landlords and letting agents security.

We are also concerned that the draft Bill means private renters still face excessive letting fees. The Bill formalises letting agents’ ability to charge renters for basic services, which should be covered by the management fee already paid by landlords. Fees could therefore be spread across an entire tenancy, rather than charged up-front, and renters could in fact end up paying even more than before. This would be a betrayal of private renters and contradict the Government’s claims that fees would be banned.

London councils, along with the Mayor of London, have already been taking action against unscrupulous landlords and letting agents, including by imposing fines. We urge you to enable councils to further deter bad behaviour by increasing the penalties they can charge for illegal fees to £30,000, and by enabling tenants to directly claim back prohibited payments along with compensation worth up to three times the fee paid.

A number of London councils are seeing a rise in rogue letting agents switching to alternative business models, so they can avoid their obligations to tenants. In particular, these letting agents may identify as so-called membership clubs to avoid protecting deposits or request that tenants pay a ‘fee’ in place of rent. As the Bill is currently drafted, more letting agents may pose as membership clubs to maintain they are not charging illegal letting fees. We therefore urge you to amend the Bill to deter this unacceptable practice, by making it easier to identify and prosecute letting agents that seek to avoid their responsibilities to tenants in this way.

If the Tenant Fees Bill is agreed in its current form, it could in fact open private renters up to new forms of exploitation. We urge you to take this opportunity to make these much-needed changes to the draft Bill when it returns to Parliament in September.

We look forward to your response.

Yours sincerely,

Cllr Diarmaid Ward, Executive Member for Housing and Development, London Borough of Islington

Cllr Stephanie Cryan, Cabinet Member for Housing Management and Modernisation, London Borough of Southwark

Cllr Martin Whelton, Cabinet Member for Regeneration, Housing and Transport, London Borough of Merton

Cllr Sirajul Islam, Deputy Leader and Cabinet Member for Housing, London Borough of Tower Hamlets

Cllr Paul Bell, Cabinet Member for Housing, London Borough of Lewisham

Cllr Dino Lemonides, Cabinet Member for Housing, London Borough of Enfield

Cllr Cameron Geddes, Cabinet Member for Regeneration and Social Housing, London Borough of Barking and Dagenham

Cllr Phillip O’Dell, Housing Portfolio Holder, London Borough of Harrow

Cllr Emina Ibrahim, Deputy Leader and Cabinet Member for Housing and Estate Renewal, London Borough of Haringey

Cllr Meric Apak, Cabinet Member for Better Homes, London Borough of Camden

Cllr Rachel Blake, Deputy Mayor and Cabinet Member for Regeneration and Air Quality, London Borough of Tower Hamlets

Cllr Peter Mason, Cabinet Member for Housing, Planning and Transformation, London Borough of Ealing

Cllr Louise Mitchell, Cabinet Lead Member for Housing, London Borough of Waltham Forest

Cllr Paul Gadsby, Cabinet Member for Housing, London Borough of Lambeth

Cllr Farah Hussain, Cabinet Member for Housing and Homelessness, London Borough of Redbridge

Philip Glanville, Mayor, London Borough of Hackney

Cllr Chris Kirby, Cabinet Member for Housing, Royal Borough of Greenwich

Cllr Alison Butler, Cabinet Member for Homes and Gateway Services, London Borough of Croydon

Cllr Lily Bath, Deputy Leader and Cabinet Member for Housing and Social Inclusion, London Borough of Hounslow

Cllr Eleanor Southwood, Lead Member for Housing and Welfare Reform, London Borough of Brent

James Murray, Deputy Mayor for Housing and Residential Development, Greater London Authority