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Tenant Fees Bill Committee: Increased costs to landlords will hit vulnerable tenants

Article Posted - 7th June 2018

Earlier this week, NLA CEO Richard Lambert gave evidence in Parliament to the MPs' Tenant Fees Bill Committee on the impact of the proposed bill on landlords.

Richard strongly dismissed the suggestion of a further reduction to the six week deposit cap – which we successfully campaigned on – and raised concerns about the Bill's weak enforcement measures, emphasising that while the majority of tenants will be better informed, vulnerable tenants would continue to be at risk without effective enforcement.

Enforcement fines

The Shadow Housing Minister, Melanie Onn MP, asked whether the £5,000 fine for non-compliance outlined in the Bill was a sufficient deterrent for rogue landlords.

Richard responded that for those who wilfully break the law, fines without enforcement are toothless, stating that:

“…the level of penalty is a deterrent to the law-abiding because it ensures that they will not slide into error, but for the people who are breaking the law and who factor it in as part of the cost of business, it will not matter at all, because the lack of enforcement means that they will assume that most of the time they can get away with it, and on the occasions that they cannot, it is simply a cost of doing business.”

Tenants' knowledge of rights

When further questioned by Maria Caulfield MP (Con) on the effect of the Bill on tenants' ability to protect themselves from unlawful fees, Richard argued:

“…there is a level of lack of understanding amongst many tenants… If an agent is exploiting the opportunity, inevitably tenants will fall into that. We do still find that many people who go looking for rented property simply are not aware of the legislation and the protections that they already have.

“…We, as an organisation, have actively gone to local authorities and said, ‘We have walked down the high street and counted up the number of agents who are not displaying their fees. We think that you could probably collect enough fines over a space of two hours to fund your activity enforcing this regulation for the rest of the year'.”

However, he continued, local authorities cite lack of resource as preventing them from undertaking this work.

Local authority enforcement

Following this thread, Sarah Jones MP (Lab) asked what further support local authorities need in order to be able to enforce the regulations.

Richard stated that the NLA would ask that the Ministry of Housing, Communities and Local Government emphasise to local authorities that enforcement is a priority, and advocate to the Treasury that the local authority support grant provide the resources necessary for this.

Cap for security deposits and terms for holding deposits

The Bill proposes holding deposits are capped at one week's rent and security deposits at six weeks. Proposed requirements on landlords and agents returning a holding deposit to a tenant are also set out in the Bill. If false information is provided, part of that holding deposit may be withheld.

Rishi Sunak MP, the Minister for Local Government, asked for clarification of the NLA's position on the appropriate level for the security deposit cap.

Richard stated that: ‘We would prefer not to have a cap at all. If the Government are determined to bring one in, six weeks is something that we think we can work with'.

Earlier in the proceedings, he had emphasised that the NLA advice to landlords is to charge a six week deposit, so that tenants do not see the deposit as their last month's rent.

On holding deposits, Richard said: ‘We believe that the tenant has to have some kind of financial stake in securing the tenancy… we would have preferred the situation where the landlord could have charged directly for the reference fee, because we think that is clearer and more transparent'.

The Committee has heard further evidence today and will complete its considerations on Tuesday 12 June.

Read the full transcript of evidence here

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