I
have written before about private rented housing and, specifically, about the
investigations and recommendations of the all-party communities and local
government select committee, which I chair[1].
The
housing crisis is pushing home ownership out of reach for many people. We are
building less than half the number of homes we need to keep up with demand. The
current coalition government has presided over the lowest level of
house-building in peacetime since the 1920s.
Since
its launch, I have been asking serious questions about the appropriateness of
George Osborne’s Help to Buy programme. Now, as I write, the Governor of
the Bank of England says the housing market has “deep, deep” problems
and is the “biggest risk” to Britain’s economic recovery sending a clear
message to the Bank’s new Financial Policy Committee (FPC) to consider early
intervention.
Meanwhile,
9 million people now rent privately including over 1.3 million families with
children. Nearly half of private rented households are over the age of
35. Many want the same security and stability they would have if they owned a
home or had rented from their council.
But
rules on private renting have not caught up with these changes, leaving people
struggling with the growing cost of renting and with the insecurity and
uncertainty built into the rental market. I shall write separately about rents
and tenancy terms, but want to concentrate here on the regulation of letting
agents.
The
cost of letting agents’ fees, which can be up to £500 every time someone moves
house, has added to the growing cost of renting. There are large numbers of
complaints about agents, almost all about fees and charges. It is not just that
there is one fee upfront for a tenancy agreement; there are also the charges
for inventories and for credit checks.
People
enter into a viewing not knowing what the ultimate charge will be. It is a
charge they have to find upfront as a prospective tenant; at the same time as
they are trying to find the deposit.
The process gets repeated to a degree every time people
renew their tenancy after six months or 12 months, and that militates against
having longer term contracts. Agents see this as an incentive not to let longer
term contracts because short-term contracts mean renewals and more fees for
them.
The Committee said there should be absolute transparency of fees upfront when a
property is advertised and it must be clear what the totality of charges to
tenants will be, and there should be no double charging. If there is
transparency, it will be harder for a letting agent to charge a tenant and a
landlord for the same thing, which happens at present.
We
did not then recommend a complete abolition of fees to tenants. What we said
was that it has been done in Scotland and that we should review the Scottish
experience. We will do that in the autumn.
We’ll
also consider whether banning charges to tenants means higher rents. If so,
there is a question as to whether tenants favour paying slightly more in rent
rather than being forced to pay massive fees upfront, often on a frequent basis.
