I have given a lot of thought to the whole issue of banning tenant fees. After all, I am the co-founder, Chairman and principal shareholder in a lettings and estate agency business with over 200 offices nationwide. So, if the Government does ban the fees, my company stands to lose out. However, as an MP, you have to put your constituents before your own self-interest.
I led a Westminster Hall debate on this complex issue in which I agreed with the ban, with some practical reservations. Letting agents can – and some do – charge what they like because when a tenant has finally found the property they want, they give in to the exorbitant fees out of sheer exhaustion. Of course, I am not saying that all agents are like that. My business is not, for a start. But some do take advantage, because they can.
So, I support the ban. However, I do so in the knowledge that an outright ban might create other problems. For example, as in the case in Scotland, it may mean some agents have to become more efficient, make staff redundant and increase charges to landlords who pass this on to the tenant. And whilst the tenant could once again be the loser, the system is at least transparent.
There are some other unintended consequences too. Who, for example, should pay for such expenses as references, credit checks and income verification which do cost agents money. Currently, this is covered by the fee, but if this is banned, it would fall to the agent or landlord. They might take a cautious approach and favour better off tenants (following preliminary enquiries) over the less-well off or those on housing benefit.
Legislation without effective enforcement is next to pointless. Local authorities’ record on enforcing the existing rules is dismal. Whilst the consultation proposes that the ban should extend, quite rightly, to the 57% of landlords who don’t use agents, there is not a register of landlords in the UK, so it would be very difficult to enforce.
In England, all estate agents and letting agents are required to join an independent redress scheme. A solution to the enforcement challenge may lie in giving oversight of the regulations to the redress schemes with the introduction a simple requirement for landlords to also join these schemes leading to an effective, light touch way to protect tenants, tackle and police unfair charges whilst providing a vehicle to improve rental standards.