Cllr Diarmaid Ward, Executive Member for Housing and Development, explains why the Tenant Fees Bill is a missed opportunity for securing better rights for private renters.
As the number of people renting privately is rising, so too are rents, deposits and rip-off letting fees. Unfortunately, renters have seen no improvement in their rights or living standards as a result. With the loss of a private tenancy remaining the single biggest cause of homelessness, the Government cannot delay any longer on protecting private renters.
Only recently, the Government missed another opportunity to give private renters better rights. It failed to act on 19 Labour London Boroughs’ concerns about the Tenant Fees Bill, which in its draft form will fail to protect renters from extortionate letting fees and deposits. The Bill’s stated aim is to ban rip-off letting fees but it has been significantly watered down, after persistent lobbying by those with a vested interest in the status quo.
In its response to concerns raised by the Labour London Boroughs, the Government maintains that the Tenant Fees Bill will ban letting fees. However, renters could in fact end up paying more in fees than before, thanks to a loophole in the draft Bill that enables letting agents to charge for basic services across an entire tenancy, rather than up front. This could open renters up to an entirely new form of exploitation and make the situation even worse.
The Tenant Fees Bill also fails to protect renters from extortionate deposits. The Government originally promised that deposits would be capped at four week’s rent but this has since been extended to six weeks in the Bill. Ministers insist the cap strikes the right balance between giving landlords security and easing the financial burden for tenants. However, it is clear which party will be in the driving seat when landlords are merely ‘expected’ to consider deposits on a case-by-case basis.
Councils across London have taken action against rogue landlords and letting agents. In Islington, we have secured over £690,000 in fines from those who have exploited and let down private renters, as well as taken action against 600 landlords. However, local authorities could go further if the government increased the penalties they can charge for illegal letting fees to £30,000. The draft Bill allows these penalties to exceed £5,000 but not £30,000.
A higher fine for illegal letting fees would send a clear message to rogue letting agents, yet the Government argues the proposed fines are in line with other legislation. We can only give private renters better rights if we strengthen legislation, not produce more of the same.
A number of London councils are also seeing a rise in rogue letting agents identifying as so-called ‘membership clubs’ to avoid protecting deposits. Worryingly, more letting agents could switch to these dodgy alternative business models to avoid their responsibilities to tenants under the Tenant Fees Bill.
Analysis from the Labour Party shows that soaring rents are costing London families more than £300 extra a month compared with 2010. This means one million private renters are having to find an extra £3,600 a year for rent. Combined with exploitative landlords and letting agents, it’s no surprise that London Mayor Sadiq Khan branded the Tenant Fees Bill a ‘missed opportunity’.
The Government still has an opportunity to fix the Tenant Fees Bill so it genuinely bans letting fees and gives private renters better rights. For London’s 2.4 million renters and others across the country, we need action now, not just warm words.