Tenant Fees Bill

Bob Blackman Excerpts

2nd reading: House of Commons
Monday 21st May 2018 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts). For part of his absence, I had to chair the Committee as we carried out some of the pre-legislative scrutiny of the Bill and agreed the final report that the Committee published. I am pleased that the Government have seen fit to adopt many of our recommendations, which were agreed on a unanimous all-party basis. This is one of the areas that the Government should learn from, across the Departments. Submitting draft Bills to Select Committees and asking them to carry out pre-legislative scrutiny improves the legislation before it comes before the House, and many other Departments could learn from this and use the same method to improve their legislation. I should also like to draw the House’s attention to my entry in the Register of Members’ Financial Interests, in that I am a vice-president of the Local Government Association and I have a small portfolio of properties that are rented out.

A key area is the need to strike a balance between landlords and tenants and the agents that they utilise between them. I agree with other Members that it cannot be right for an agent to work for both the landlord and the tenant, and for fees to be charged in both directions. The principle has to be that the letting agent acts on behalf of the landlord and that the landlord therefore pays the costs of the agent. Tenants should not be charged for the purposes of identifying a tenancy. As we in this country increase our dependency on the private rented sector, this is becoming an ever greater problem and it needs to be addressed.

I warmly welcome the Government’s decision to bring forward this legislation, and I am delighted that they have accepted so many of the Committee’s recommendations. However, I want to deal with some of the recommendations that they did not accept, as they are the ones that form the nub of the debate. First, I should like to be just a bit critical about the process of deciding whether there should be an assessment of impact or an impact assessment. The Committee thought that the Government should have carried out a proper impact assessment on publication of the draft Bill before it came to us for pre-legislative scrutiny. They chose not to do that, and instead decided to carry out an assessment of impact and subsequently do an impact assessment. I will not go into all the technicalities involved, but this was one of our key concerns.

We also considered in some detail the question of whether a deposit should be based on four, five or six weeks’ rent. Clearly, landlords would like as large a deposit as possible and tenants would like to pay as little as possible. Our concern over limiting the deposit to four weeks’ rent was that most tenancies involve paying rent monthly and that at the end of a tenancy, the tenant might simply skip without paying the last month’s rent. At that point, the landlord would have to enforce and retain the deposit. Similarly, we felt that six weeks would be too long, and that it would be a barrier to many tenants seeking to rent. We therefore struck a balance and recommended five weeks, on the basis that both parties would have something to lose if the deposit had to be relied upon. That is why we arrived at that compromise arrangement, and I am disappointed that the Government did not accept our strong arguments in favour of that compromise. I believe that once a maximum figure is set, it is almost inevitable that all landlords and letting agents will go straight to that maximum level. That has a severe impact and would be an unfair charge for people on relatively low incomes.

The Government have partly accepted the Select Committee’s position on whether fees such as holding deposits can be considered reasonable. If someone goes into a letting agency wanting a tenancy, appropriate fees for reference checks, which are of the order of £20 to £50, are reasonable costs for them to incur, but it is unreasonable for the landlord to pay if someone fails a reference check. The Committee also recommended that if a prospective tenant gives deliberately misleading information, they should lose the holding deposit, which should be retained by the landlord. That suggestion has not been in accepted in full by the Government, and it needs to be considered in detail again.

Another of the Committee’s concerns was that if the first month’s rent is artificially high and then the rent decreases over time, that hidden fee is unfair on the tenant. However, we want it recognised that rents can go down as well as up. The Bill essentially presumes that the cost of a tenancy will always increase and that the rent will increase when a tenancy is renewed. However, the market could determine that rents will come down, so there should be a provision that allows for rents to fall, particularly over the course of a longer tenancy.

I completely agree with what the Chair of the Select Committee had to say about retaliatory evictions, and we must review the whole process in law. We cannot necessarily do all that in this legislation, but the position could be corrected through provisions in this Bill. Tenants must feel able to complain to trading standards, the housing court or whatever organisation we choose, without running the risk of being evicted. Such evictions cannot be right, and we must draw a firm line under them.

In conclusion, I agree with the current draft of the Bill, but there are some changes that would improve the legislation for all concerned and strike a much better balance between tenants and landlords.

Tenant Fees Bill

Bob Blackman Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 5th September 2018 Commons Chamber

[John Stevenson (Carlisle) (Con)]

Will the Minister give way?

[Bob Blackman (Harrow East) (Con)]

Will the Minister give way?

[Rishi Sunak]

I am happy to give way to my constituency neighbour.

--- Later in debate ---

[Rishi Sunak]

That is the crux of what we will come on to later. The Government’s approach has been not narrowly to specify the specific things that could qualify as default fees. There has indeed been discussion of this topic. The Government’s point of view, which I will explain later, will I hope provide some clarity on that point.

If I may return to the—

[Bob Blackman]

Will the Minister give way?

[Rishi Sunak]

Ah—I give way to my hon. Friend.

[Bob Blackman]

A lot of the Government proposals are formed around what is reasonable, and one of the key tests in law relates to what is reasonable. I gently ask him to set out for the House what he considers to be reasonable. To give an example, he has mentioned the loss of keys. The loss of a normal household door key may be relatively cheap, but security keys provided by only one manufacturer can be very expensive. Is it reasonable for a tenant to be charged should he or she lose such a key? If so, that would mean a default charge of quite a considerable sum of money, even if it was specified in the original contract—the lease or rental agreement. Would that need to be specified in that way, or would it be classified as a reasonable default charge if the key was lost?

[Rishi Sunak]

I again thank my hon. Friend for all his work on the Select Committee in helping us to improve this legislation. I know that he has given great thought to the matters we are discussing today, and we have just heard another example. I can tell him that the word “reasonable” has been chosen very deliberately, because it is a commonly accepted legal term that is widely used in various pieces of legislation and is open to interpretation in a consistent way by the courts. Indeed, the Opposition have chosen the same term in amendment 3.

--- Later in debate ---

[Rishi Sunak]

My right hon. Friend is right. He made the same points in Committee, and I appreciate his raising them again today.

The Government have listened to concerns that some agents and landlords see the £5,000 initial fines as a cost of business and thus repeatedly refuse to comply. That is why the legislation makes landlords and agents liable for a financial penalty for each individual breach of the ban that they commit. In addition, setting financial penalty at up to £30,000 for a second or further breach of the ban will act as a serious deterrent for prolific offenders. It is worth pointing out that further breaches will leave the landlord or agent liable to prosecution and an unlimited fine and, indeed, qualify as a banning-order offence. The Government believe that, taken together, this set of sanctions forms a serious deterrent to poor behaviour. To accept the Opposition amendment would be disproportionate and excessive in respect of the cases we are discussing.

[Bob Blackman]

There is a specific issue in relation to very corrupt landlords who exploit vulnerable people. The concern that I think many Members who have investigated the background to this issue will have had, particularly in parts of London, is that a fine of merely £5,000 will be seen as just the cost of doing business. These people are exploiting vulnerable people to the tune of hundreds of thousands of pounds, so for them even a fine of £30,000 would be nothing. I therefore urge my hon. Friend to consider this matter further as the Bill makes its way through the other place. Will he look at what can be done to take on these people? They are not landlords, but rogues and crooks. They need to be brought to account for the damage they are doing to the rental market and for the exploitation of very vulnerable people who have no choice in where they live.

[Rishi Sunak]

I thank my hon. Friend for that powerful intervention. He knows first hand, from the excellent work he does with his constituents to tackle this issue, the scale of the problem in particular cases. He will be reassured to know that, while existing legislation allows local authorities to levy a £30,000 fine for a second breach, if they choose not to do so, they can go down the prosecution route. For the cases he mentions, that would probably be more appropriate. The sanctions in that case are an unlimited fine and a banning order, which, for the specific landlords he mentions, would be appropriate. I think that he would agree that being banned from being able to rent any property for 12 months or longer, or an unlimited fine, would serve as a very significant sanction to the core behaviour in such cases. With that final assurance, I commend the Government’s amendments.

--- Later in debate ---

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I am pleased that the Government have finally accepted the need to ban tenant fees, for which my party has called for for no fewer than five years—I have personally campaigned for the ban for four years. I support the Labour Front-Bench amendments, because the Bill does not go far enough. We need further specification of the fee regime to make it more user-friendly, and we need to increase penalties for those landlords and letting agencies that flout the new legislation.

Few places in the country are in more need of this legislation than Oxford. Only 39% of people in the city own their own home or have shared ownership—that is well below the national average. Nearly half—49%—rent privately, and that figure has risen by more than a fifth since 2001. Private renting is not just a stopgap in the city; it is the only option for huge numbers of people.

The cost of setting up and maintaining a tenancy in the private rented sector is a huge problem in the city. The sharpest end of that is seen with the exponential growth in rough sleeping in Oxford. On some nights in the 2000s, nobody would be recorded as sleeping on the street, but nowadays having 60 people rough sleeping is the new normal. That is relevant to this debate because the core reason why people in Oxford become homeless has changed. It used to be relationship or family breakdown, but that is no longer the case. The key reason for homelessness now is landlords ceasing tenancies, often because of non-payment of fees.

There are many excellent landlords and letting agents in Oxford, and I find some of the mischaracterisations of the Opposition’s approach in this area bizarre. We all know excellent landlords and letting agents in our constituencies, but a small number bring the rest of the sector down and pollute its reputation, because they do not act in a responsible manner. A significant proportion of my postbag is taken up with tenants who have been asked for unreasonable fees, as well as people who are simply unable even to rent. In fact, I have a meeting in a couple of days with someone who is trying to move into Oxford but cannot afford the different costs associated with getting into a tenancy, and that is even with the private rented sector deposit guarantee scheme operated by the local authority. People are not able to move into Oxford’s private rented sector anymore.

Labour’s amendments would ensure that the new regime that the Bill will rightly introduce would be sufficiently watertight. I welcome some of the changes that the Minister specified, but we need the fee regime to be upfront in the manner specified by my hon. Friend the Member for Great Grimsby. We need a user-friendly regime that tenants can easily understand, and that is not presently the case under the Bill.

We also need to make sure that the fees are sufficient. Oxford has one of the strictest regulatory regimes for landlords, operated by the local authority. Many landlords support it because they see that it squeezes out the rogue operators, and that it has removed many of the most unsafe and unhealthy properties from the housing market in Oxford. The regime pays for itself, and it is important that the regime under the Bill pays for itself, too. That means that those fees have to be sufficient. We have already had a lot of discussion about the cuts that have been made to trading standards, but it might also be helpful to look at how those fees—the Minister asserted that they would be sufficiently deterrent—compare with some of the profits obtained by landlords in areas such as my own.

The average property rent in Oxford is currently £1,919 per calendar month, so £5,000 is very obviously less than three months’ rent—we can all do the maths. Now, I appreciate that not all that rent will be profit, because of course there are associated costs. However, estate agents encouraging people to come into the buy-to-let market in my city inform those people that they will have an average annual return on their investment of 18%. When we talk about whether a fee is deterrent and whether a £5,000 fine is sufficient, we should reflect on that figure.

Comments have been made about the role of central Government and local authorities. Yes, it is absolutely right, as the hon. Member for Christchurch (Sir Christopher Chope) said, that there are local authorities that do not fulfil their responsibilities. There are others that want to go further but have been able to do so only at the behest of central Government. Please can we get to a situation in which local authorities that want to have more stringent regimes do not have to wait to get the okay from central Government? We need more local control.

[Bob Blackman]

It is a pleasure to follow the hon. Member for Oxford East (Anneliese Dodds) and the passionate view of her constituents. May I draw the attention of the House to my entry in the Register of Members’ Financial Interests?

In the absence of the Chair of the Housing, Communities and Local Government Committee, I had the honour of chairing the Select Committee pre-inquiry into this legislation. We looked at a lot of the evidence that is now coming forward. I am delighted that the Minister has seen fit to make some changes during the passage of the Bill and to accept many of the Select Committee’s recommendations.

The hon. Member for Great Grimsby (Melanie Onn) raised the matter of how many weeks’ rent a deposit should be. It is a shame that she has not tabled an amendment to that issue on Report, because I think several Conservative Members would feel very sympathetic towards restoring what the Select Committee recommended, which was a compromise. There was an argument for four weeks and an argument for six weeks, and we took the view that five weeks was the appropriate compromise for two reasons. First, if the limit is four weeks’ rent, there is a risk that the tenant will just refuse to pay the last month’s rent at the end of a tenancy. Secondly, a deposit of six weeks’ rent would almost certainly become the norm for most landlords, and would therefore be inflationary on the amount of deposit that would be charged.

I gently remind the Minister that in the last Budget the Chancellor allocated some £20 million towards a national rental deposit scheme, following representations from me and several other colleagues to set one up. The Department has not yet set up that scheme, but by saying that the limit will now be six weeks, instead of four or five, the Minister is going to reduce straightaway the number of families that can be assisted under the national rental deposit scheme when the Department finally does bring it forward. I ask him to look at this figure again, because it will limit the number of people who could be assisted through this programme.

On the issue of enforcement, I welcome the changes proposed by the Minister. Many of the changes, which are very clear, go above and beyond those proposed by the Opposition. Having looked at the evidence in relation to this legislation, many of us will share concerns about the difference between what I would classify as true costs, and charges. In answer to my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), the key question is, who does the letting agent work for? The letting agent works for the landlord, not the tenant. It is the responsibility of the letting agent to acquire tenants on behalf of their employer—namely, the landlord—and therefore there should not be two charges incurred. The letting agent should charge the landlord for their fees, not charge the tenant for acquiring.

However, there are costs associated with acquiring a tenant—for example, when there is a requirement for a credit check. If a prospective tenant were to fail that test, there is a cost that someone has to collect. If an applicant makes a request through a letting agent and a credit check is then undertaken that is failed by the prospective tenant, it is reasonable that the cost should be passed on to that individual, particularly if they were going to knowingly fail the credit check in the first place. That is an example of a true cost as opposed to a fee charge. My hon. Friend has set out a set of areas and then a limit on the charges that a letting agent may charge a tenant. I trust that he will not press his amendment to a vote, because that goes completely against the spirit of this Bill and what we are proposing.

[Kevin Hollinrake]

My hon. Friend is making an important point on referencing. Does he agree that it might be beneficial if the Bill were clarified so that everybody was clear about circumstances in which some of the holding deposit might be retained by the landlord or the agent in the case of somebody failing a reference check? If that were not the case, people on low incomes, for example, could be discriminated against when they apply to rent a property.

[Bob Blackman]

I thank my hon. Friend for that intervention. We clearly need to be more specific. I accept the principle set out by my hon. Friend the Minister that we should not put this in the Bill, but it should be put in regulations, because we can change regulations rather more easily and add things to them at an appropriate time without having to go through primary legislation once again. This is a question of detail that I ask my hon. Friend the Minister to look at again.

The other issue is charges for, for example, lost keys, cleaning or damage that may be done to a property. Those are reasonable costs that a tenant should incur. If that has to be set out in the tenancy agreement, it must be made crystal clear in what we lay out in regulations and guidance to landlords what is allowed and what is not allowed. In particular, things that are not allowed must be specified as being completely outwith the potential of the Bill, as opposed to being in the Bill.

I thank the Minister and his team for looking at and reflecting many of the recommendations that the Select Committee made on the draft Bill. With a few more tweaks, this can be an excellent Bill that we can all be very proud of.

[Bim Afolami (Hitchin and Harpenden) (Con)]

I rise in support of this Bill and my hon. Friend the Minister. During the Bill’s passage, he has conducted himself, as I think everybody in all parts of this House has already recognised, with the utmost sincerity and courtesy to all parties, both inside and outside the House.

I served on the Bill Committee—entirely voluntarily, of course, Madam Deputy Speaker. Having listened to the exchanges in Committee and today, it strikes me that there are a couple of points where there is complete agreement in all parts of the House. There is agreement that the average letting agent fees have gone up by 60% over the past six or seven years, and that there is a growing problem of tenants feeling that they are less empowered in relation to their tenancies and letting in the private sector market.

--- Later in debate ---

[Dr Allin-Khan]

Will the hon. Gentleman give way?

[Bob Blackman]

Will my hon. Friend give way?

[Sir Christopher Chope]

No, I will not give way, because I want to allow hon. Members who have not yet spoken to get in.

Why are we preventing letting agents from charging for credit reference searches, identity and passport checks, and all the rest? When one looks at the evidence in support of the Bill, it is quite clear that if the existing laws were properly enforced, the need for the Bill would not have arisen. I am extremely sceptical about the Government’s assertion that enforcement will be a lot more effective. If they really believe that, why do they not place a duty on local authorities to enforce the legislation, rather than leaving it as a mere power?

The legislation will have a lot of unintended consequences. It is already difficult enough for tenants to obtain rented accommodation if they have pets. It is very difficult for tenants on housing benefit to obtain accommodation. It is very difficult for tenants who do not have clear British citizenship to get rented accommodation. All those things will become a lot more difficult as a result of this additional burden on the private rented sector.

Some 30 years ago, I was a junior Housing Minister. I was much associated with deregulating the sector—introducing shortholds, getting rid of controlled tenancies and enabling the growth that has taken place in the private rented sector. I am disappointed to see my Government working in the opposite direction. I signed amendment 4, which was tabled by my hon. Friend the Member for Shrewsbury and Atcham. I understand that he has been bought off by the Government, so I will not press the matter to a vote. However, I think that there is too much crowd-pleasing on the part of the Government and not enough sensible regulation and recognition of the important work done by those in the private rented sector.

Tenant Fees Bill

Bob Blackman Excerpts

Ping Pong: House of Commons
Wednesday 23rd January 2019 Commons Chamber

[Mrs Wheeler]

Indeed—well said.

[Bob Blackman (Harrow East) (Con)]

I think my hon. Friend is coming to the conclusion of her contribution. She mentioned when these measures will come into force for new tenancies. Could she clarify that the Bill will apply to not only brand new tenancies, where a tenant moves into a property, but also existing tenancies that are renewed by being rolled over or where the tenant remains in situ and enters into a new tenancy agreement?

[Mrs Wheeler]

I thank my hon. Friend, who has been assiduous in his time on the Housing, Communities and Local Government Committee. The intention is for the Bill to apply to all new tenancies signed after 1 June. As he said—he must have better eyesight than anyone—I am close to concluding.

The exception to the 1 June date is the client money protection provisions in the Bill, which, as I have said, come into force on 1 April 2019. Ahead of that, we will continue to work closely with key stakeholders to support implementation of the ban. We will work with industry groups to ensure that the ban is properly communicated, and we continue to work with local authorities to ensure that they are ready to enforce it. I have already shared the draft consumer and enforcement guidance with Members, and it is now being updated to reflect the Lords amendments.

--- Later in debate ---

[Melanie Onn]

I have already given way generously.

The first point that our amendments seek to address is the financial staggering for the cap level that landlords are allowed to impose. I have sympathy with the Government’s aim of prioritising a reduction of the deposit burden on those at the cheaper end of the market, but the specific provisions in Lords amendment 36 could mean that those in joint tenancies end up being subject to the higher cap, despite individually paying significantly less in rent than is used as a threshold in the amendment. It is counterintuitive to create a cap that allows deposits to be relatively higher for someone paying £5,000 a year in rent in a 10-bed large house in multiple occupation than for someone paying £45,000 in an individual rent, so I would welcome reassurance that joint tenants will not be short-changed by the differential cap. If they will be, I would welcome an explanation of the logic behind the decision to allow those in joint tenancies to be charged relatively more.

Regardless of the functioning of the differential cap, the Lords amendment will do little for the majority of tenants in this country. The cap will have a negligible effect on the majority of deposits in the country and will allow the current system to function virtually unchanged. For the graduate who cannot afford the up-front costs to move to a city for a new job, or for the family given just two months to save enough money to find a new flat and avoid homelessness following a section 21 notice, the system is simply not fit for purpose and needs urgent change.

According to the English housing survey, a five-week rental deposit will set new tenants back an average of almost £1,000 across the country, and over a staggering £1,500 in London. For many in society who are living pay cheque to pay cheque, saving that sort of money would take an enormous amount of time, and certainly far longer than the two months that tenants are given when they are served with section 21 notices. That means that many struggle to access the flexibility that renting should offer. They fear being served notice to vacate because that could result in homelessness. That is simply not how the private rented sector should function.

Our amendments would change that. Lords amendment 36 introduces an ill-thought-through staggering system. Amendment (a) in lieu would reduce the cap on deposits from five or six weeks to three, and our amendments together will reduce deposits to three weeks for all, closing the loophole that could be opened by Lords amendment 36.

I was interested to hear the Minister’s announcement of the enactment date. A written statement is due today, which I look forward to reading. I was also interested to hear her comments in response to my hon. Friend the Member for Manchester, Withington (Jeff Smith), who is no longer in his place, on enforcement and trading standards. She said that the consumer money protection measures in the Bill would be in place before enactment. I would appreciate clarity on whether she meant enactment on 1 June 2019, which is rapidly approaching, or whether she was referring to the commencement date of April next year.

Labour’s amendments would give private rented sector tenants a very welcome helping hand at a very expensive time. If passed, the amendments would reduce the deposit barrier by almost £400 across the country, and by over £600 in London, offering significant change to tenants from all backgrounds and building a better private rented sector for the many.

[Bob Blackman]

I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

It is a pleasure to follow the hon. Member for Great Grimsby (Melanie Onn). I had the opportunity to chair—and the challenge of chairing—the Housing, Communities and Local Government Committee during pre-legislative scrutiny in the absence of the elected Chairman of the Committee, the hon. Member for Sheffield South East (Mr Betts), who unfortunately was undergoing health treatment at the time. I take absolutely the praise that the hon. Lady pours on me for reaching the judgment of Solomon—[Interruption.] It was possibly unintended at the time. From the outset of our pre-legislative scrutiny, on an all-party basis, we sought to balance good landlords and tenants, who are the overwhelming majority, with the small minority who are rogue landlords and rogue tenants. The risk here is the balance that is struck.

I do not intend to go over all aspects of the Bill but, clearly, I am absolutely delighted that the Government have seen fit to endorse all the Select Committee’s recommendations, especially the reduction of deposits from six to five weeks’ rent. I will again set out why we came to that conclusion. As Members might recall, we had a long discussion about it in Committee. Some promoted the concept of a six-week deposit and some a four-week deposit. No one but no one on the Select Committee promoted less than four weeks, for very good reasons.

Our view was that a six-week deposit was clearly too onerous for tenants. I accept what the hon. Member for Great Grimsby says about the cost to tenants of a six-week contribution, but there is also a clear risk with only a four-week deposit—or, worse still, her proposed three-week deposit—because we might get to a position in which, in the last month before the end of a six-month assured shorthold tenancy, a tenant has no incentive whatever to pay their last month’s rent. Tenants could just skip, and the landlord would then have to pursue them through the courts, bearing incredible costs unreasonably.

The issue for us was that four weeks would lead to a position whereby the tenant had an incentive to say, “Okay, I won’t pay the last month’s rent—just take it out of the deposit,” and then if the landlord could reasonably wish to claim money from the deposit because of damage or other reasons, they would have to pursue court action to recover it. That would be grossly unfair on good landlords, who are the vast majority in this country. Other members of the Committee promoted six weeks, so we ended up with the view that five weeks struck a balance between giving tenants an incentive to pay their last month’s rent, in the knowledge that they would get back their deposit had they been good tenants, and landlords being forced to go through a proper claim process to recover moneys as a result of damage by a tenant.

[Richard Graham]

I am afraid that the Opposition spokesperson, the hon. Member for Great Grimsby (Melanie Onn), will not give way on this matter because she is making a purely political point by wishing to appear to be helping tenants more, but the interesting silence in the debate so far has been from Scottish National party Members, because of course there is an eight-week deposit in Scotland. What does my hon. Friend think about that?

[Bob Blackman]

Clearly we are not talking about the position in Scotland, but I suspect—I might be wrong—that rental levels in Scotland are very much lower than elsewhere in our urban conurbations, and certainly in London. Scotland also perhaps has a lot more social housing than England—

[Angela Crawley (Lanark and Hamilton East) (SNP)]

indicated assent.

[Bob Blackman]

I see the hon. Lady nodding about that point. Those two things are equally important.

Another consideration, which has not yet come out in the debate, is the economic impact of what happens with deposits. If we lowered deposits, I suggest that landlords would likely increase the rent over the period and—this is the key point—tenants would end up far worse off as a direct result, because landlords would have inflated the rent in order to recover the moneys due.

[Mrs Wheeler]

Let me clarify something about the ban applying to all new tenancies from 1 June. There will be a 12-month transition for tenancies signed before 1 June during which tenants can be charged. After 1 June 2020, no tenants can be charged fees banned under the Bill, which gives a clear date for when the provisions of the Bill will apply to all tenancies.

[Bob Blackman]

I thank the Minister for that helpful intervention, which clarified her earlier remarks and what was said when I intervened on her speech.

It is reasonable to set a position whereby we are abundantly clear in the Bill—I hope it will soon become an Act—that letting agents, estate agents or whoever are working on behalf of landlords, not tenants. I therefore warmly welcome the Lords amendment on holding deposits that was wisely tabled by the Government. What happens at the moment is an absolute outrage: some unscrupulous letting agents take a variety of competing holding deposits to inflate rents by almost having an auction for rental properties. That is grossly unfair on prospective tenants who are just looking for a property, so I warmly welcome that decision. It will be a welcome change for tenants throughout the country.

I am glad about the clarity of the Lords amendments that ensure that we are clear about the charges a landlord can make, what their purposes are and what the standards of evidence must be so that tenants do not bear a ridiculous price for, say, a lost key. Any charge will have to be evidence-based—the cost of replacing keys or other such security devices will be set out—and any cost will be reasonable, not inflated. One of the problems has been that certain unscrupulous individuals have been getting away with ripping off tenants with such charges in a grossly unfair way.

I warmly welcome the Lords amendments. The whole Select Committee welcomes the fact that the Government have finally got to where we were in the first place on deposits. I trust that we will reject the spurious Opposition amendments and ensure that the Bill, which has been warmly welcomed throughout the country, rapidly becomes law so that we can implement a process that is fair for tenants.

One thing that we desperately need to introduce is a national rental deposit scheme. My hon. Friend the Member for Colchester (Will Quince) and I managed to convince the Chancellor to do that at the time of not the most recent Budget, but the one before, and money was allocated to the Department to make that happen. When the Minister sums up, I would welcome her assuring us that we will speed up the process of introducing such a scheme so that those for whom the deposit is the key issue in getting a tenancy can be funded by public money, thus protecting them and giving them the opportunity to get a tenancy and a home of their own.

[Angela Crawley]

As the lonely Member on the SNP Benches, and given that the Bill applies solely to England, I will endeavour to keep my comments brief. The Government’s Bill is, however, welcome.

This Government are playing catch-up with the Scottish Government, who abolished tenant fees in 2011. The Scottish reforms gave tenants longer notice periods, indefinite security of tenure and limited rent rises, so it is most welcome that this Government are making changes here now. In Scotland, in many instances, money has gone back into the pockets of Scottish renters, but renters in England are currently losing out due to this Government’s inaction and failure to offer the same protections.

The Government have maintained the right-to-buy policy, but they must recognise that to give people the greatest choice and flexibility, they have to ensure that the opportunity of the right to buy is matched with an increase in home building and access to socially affordable housing. I am afraid the Government have not quite hit the mark on that yet, and people are simply being driven into the private rented sector, which limits their options and opportunities.

The Bill is very welcome. As we heard from Conservative Members, there remains the fear that this policy will mean that the costs of the abolished fees will be passed on to tenants in an underhand way, but that concern is unfounded. It has not happened in Scotland, where there has not been a significant spike in rents since the ban on fees, so I hope that the Government will take heed of that fact. Independent research commissioned by Shelter found that since 2012 landlords in Scotland had been no more likely to increase rents than landlords in other parts of the UK. Between 2012 and 2016, rents increased by 5% in Scotland, compared with 9% in England, so the abolition of tenant fees does not appear to have had a significant impact on costs.

That said, although such a policy has been shown to work in tenants’ favour, we must be vigilant about rent prices, so I hope that the Minister will outline how the Government will ensure that their policy puts tenants first. Landlords in Scotland can only increase rents with three months’ notice and no more than once a year, and tenants can contact a rent officer if they think that a rent increase is too high. I would be interested to know whether the Minister envisages similar protections and criteria for the policy in England. In Scotland, other than rent and a refundable deposit, which is capped at no more than two months’ rent, landlords cannot levy any additional charges, which means no holding deposits, administration fees, premiums or additional charges, whether refundable or not.

Tenants are secure when landlords can end a tenancy only on strict eviction grounds. The Scottish National party commends the work of charities and campaigners who secured additional renters’ rights from the Government in the House of Lords, and both Shelter UK and Generation Rent are happy for the Bill to pass with the Lords amendments. These rights include a short definitive list limiting default fees to charges for chasing late rents and for replacing lost keys or equivalent security devices. I noted the comments made by the hon. Member for Thirsk and Malton (Kevin Hollinrake) and I hope he is reassured that welcome mechanisms are in place. The provision closes the default fee loophole so that landlords will no longer be able to charge for a whole host of spurious defaults. It is also clear to landlords that they can continue to recover damages as they do now.

I welcomed the comments of the hon. Member for Harrow East (Bob Blackman), who, when comparing the position with the cap set in Scotland, rightly mentioned the greater availability of social housing in Scotland. He observed that a five-week cap was welcome, especially given that rents in England and Wales can be two to three times higher than those in Scotland. A five-week deposit cap is reasonable and will help renters to meet the initial fees needed to secure a home. Although Shelter originally argued for a lower cap, even it has said that it is

“pleased that the government didn’t stick at 6 weeks and we believe the 5-week cap will be a big improvement”.

That takes heed of the fact that costs are substantially higher in England, meaning that a five-week cap is much more reasonable.

Holding deposits are now illegal in Scotland, and that ought to be the case in England as well. Under the Lords amendments, if a tenancy does not go ahead, landlords or letting agents will be required to set out in writing the reasons why—they will also be required to give reasons for withholding some of a deposit—and they will have to do so within seven days of the decision not to progress with the tenancy. That will give tenants some clarity on exactly what happened to their money and ensure that there is a paper trail, which will make challenging unfair practices easier. Ultimately, both the landlord and the tenant will have more protection.

The ban on tenants fees in Scotland has made the rental sector fairer and easier to access. While I congratulate the Government on taking this positive step in the interests of people in rented accommodation, I urge the Minister to consider my points about abolishing tenant fees, while balancing protections for landlords with the rights of renters. The Bill will protect renters, many of whom do not have the luxury of owning their own home, and that ultimately is what we all want.

[Kevin Hollinrake]

I will try to keep my comments brief—apparently time is pressing—although there is much I would like to say about the Bill. I draw the House’s attention yet again to my entry in the Register of Members’ Financial Interests.

I am in principle and in practice very supportive of the Bill—I have been right from the start—despite my business interests and despite the extreme consternation within the industry at my support. It is absolutely right that there be a firewall around a tenant’s ability to shop around when they have found a house or flat they want to rent. We are right to believe in free and competitive markets. This was not a free and competitive market, and it is right that we act in this area. It is right that landlords pay for their own tenancy agreements, inventories and referencing. I support all those things. I also want to put on the record my support for the Minister. She has done a great job on the Bill and engaged with me and other colleagues who have had concerns about some of its provisions.

I would like to touch on two things: deposits and default fees. I will begin with Lords amendments 36 and 37. To say that three weeks would be an appropriate deposit length, as the hon. Member for Great Grimsby (Melanie Onn) has done, shows a complete misunderstanding of the issues. She is absolutely right to want to protect tenants—everyone in this place wants to protect tenants—but to do that we must be fair to landlords as well. She asked how a longer deposit period would help tenants. It would not help tenants not to be able to find properties to rent. If we deterred landlords from entering the marketplace, as a three-week cap would do, that would not help tenants.

I speak as somebody who has been in this business for 30 years. When I started, the only thing I could find in the marketplace was a shabby, damp, dark terraced house in the middle of York. It was not like today’s marketplace; tenants now have a breadth of choice, and that is because landlords have invested because they are treated fairly. The hon. Lady wants to treat tenants fairly, as I do, but we would not be treating them fairly if our policies resulted in their being refused tenancies by landlords worried about not getting their rent, not regaining possession of a property that had had significant damage done to it or not having enough deposit left for the remedial work. Her proposals would potentially put landlords in that situation, given that many tenants use their deposit as the last month’s rent, meaning there would be nothing left.

I still have concerns about restricting the deposit length to five weeks. As we know, it is eight weeks in Scotland. The average deposit in London is five and a half to six weeks, and in the rest of England it is not far below that, so the Bill will mean a change for many landlords, and we will have to keep this under review to make sure it does not have adverse consequences for tenants—that is the principle. Landlords are happy as long as they keep their properties well maintained and the rent is paid. If that is not the case, landlords will exit the market, which is not good for the tenants the hon. Lady looks to protect.

[Bob Blackman]

Does my hon. Friend recall that, during the Select Committee process, one of our considerations was that, if we set a six-week deposit limit, every landlord would rapidly move to six weeks from the current UK average of between four and a half and five and a half weeks?

[Kevin Hollinrake]

No, I do not agree with that because at the moment we have some flexibility. Under the Bill, we have no flexibility above five weeks. The trouble with that is this. I could charge a tenant five weeks, but what if they have a pet or certain other circumstances that make me less likely to want to rent it to them? I, as a landlord, will be less likely to rent to that person, under this measure, whereas with six weeks I would have some flexibility. We must make sure that this does not deter landlords from renting properties to people with pets. We do not want that, but it could happen. The Minister has promised to keep this measure under review, and I am absolutely sure that she will.

I want to touch on default fees and amendments 42 to 47. I welcome the clarification from the Minister in the letter she sent me a couple of days ago. She assured me that landlords and agents would still be able to charge for things above and beyond their existing obligations, and that is absolutely right, but the Bill itself only makes a couple of provisions on default fees, and one of those is for the replacement of keys. It sounds like a simple process, but it is possible to spend hours and hours chasing the tenant, chasing the keys, and then chasing the tenant to come and collect the keys. Someone has to pay for that work. It is not a question of the keys themselves; it is a question of the time and labour involved in their delivery.