Private Landlords and Letting and Managing Agents (Regulation) Bill

Debate between Peter Bottomley and Alan Meale

Friday 25th October 2013 Commons Chamber

[Sir Alan Meale]

I will deal with that point later.

On people’s inability to pay rent, last weekend The Observer revealed that rents are at an all-time high, with the average private sector tenant now paying £757 a month. I outline that because the situation is likely to worsen considerably. According to the Office for National Statistics, property prices up to August 2013 rose on average by 3.8%, with the average UK home now costing £247,000. For young people with families who need a 5% deposit, that equates to around £12,350—more than some of them earn.

As we know, most people dream of owning their own home, and like Members across the Chamber, I want people to realise that dream. Today, however, more people are finding themselves in the private rented sector for longer than in years gone by. I want a strong and thriving private sector, but evidence shows that too many tenants are being ripped off by unscrupulous letting agents, and hit by extra rip-off fees that they did not know they would face and cannot afford. People are plagued by rogue landlords and poor standards.

My Bill proposes, first, to tackle those problems head on by establishing a mandatory national register of private landlords. Secondly, it would liberalise selective licensing schemes so that local councils do not have to go through so much red tape if they see the need for such a scheme in their area. Thirdly, it would introduce greater regulation of private sector letting and management agents, and fourthly it would require all tenancy agreements entered into with private landlords to take the form of a written agreement.

My Bill seeks those things because at the moment the private rented sector is not the market it should be or needs to be. What is wrong with the current lettings market? Evidence shows that too many tenants are being ripped off by unscrupulous letting agents who fail to protect them, while also charging exorbitant and opaque fees. As evidence from the House of Commons Library shows, and as the Government have admitted, there is currently no overarching statutory regulation of private sector letting or management agencies in England, or any legal requirement for them to belong to a trade association.

[Sir Peter Bottomley (Worthing West) (Con)]

We are grateful to the Government for last year producing the guide to dealing with rogue managing agents. Will the hon. Gentleman join me in asking the Government, local government and the Ministry of Justice to get together with experts on the Leasehold Valuation Tribunal—the Property Chamber—to look at the way lawyers effectively tie up tenants and leaseholders in red tape, and prevent them from getting access to determination in disputes and to the kind of information he is talking about?

[Sir Alan Meale]

The hon. Gentleman will find that the concluding part of my speech considers precisely that issue. Having said that, lawyers—soliciting is the oldest profession in the world—make a lot of money out of everything they can. We should always be guided by such traits in the open market.

Unfortunately, the Government have recently stated that they do not intend to introduce regulation in this sector, pointing to the use of myriad ineffective consumer protection laws which, as I will show, have proved wholly inadequate at protecting either tenants or landlords. I feel obliged to say that the Government have recently moved slightly in that direction, after tabling an amendment to the Enterprise and Regulatory Reform Act 2013 that requires agents to sign up to a redress scheme. The amendment was tabled following pressure from the Labour Front Bench and the other place, particularly Baroness Hayter. Nevertheless I welcome that U-turn, which as I said at the time must be the first step and not the last word on the matter. Redress will allow tenants to seek help only after the fact, and will not prevent the unscrupulous actions of lettings and management agents in the first place.

There is much evidence of bad practice in this area. A report by Citizens Advice found that 73% of tenants are dissatisfied with the service provided by their letting agent, and reported that significant numbers of people have difficulty contacting agents and suffer delays in getting repairs to their property. Furthermore, a report by Which?, “Renting roulette”, shows that, shockingly, letting agencies are ranked second from bottom across 50 separate consumer markets. Indeed, there are many cases of agencies, even large and well-established businesses, running into difficulty because there is no client money protection, with the money of landlords and tenants being lost. Scandalously, in some instances that has not prevented the owners of companies which have gone out of business while holding their clients’ money from resuming their activities soon after the collapse, expressing a “no blame, no shame” culture. No safeguards are currently in place to protect tenants, landlords or reputable agents from being undercut by their unscrupulous counterparts.

To understand the scale of the problem on the high street we should consider the figures. It is estimated that in England alone there are more than 4,000 managing and letting agents who are entirely unregulated. It is still possible to set up a letting or management agency with no qualifications whatsoever. There is no need for them to conform to any requirements as to their conduct, or to provide mandatory safeguards for their customers, as no such formula or regulations exist. In other words, letting agents operate in the property market’s “wild west”, as the Royal Institution of Chartered Surveyors recently described it.

The problem is not only one of useless agents, as there are real problems across the industry, with rip-off and opaque fees charged by unscrupulous letting and management agents. A recent national survey found that 94% of agents imposed additional charges on top of the tenancy deposit and rent, or rent in advance.