UK Politics

Letting agents 'will have to publish their fees in full'

Nick Clegg

The government has said letting agents in England face a new obligation to display full details of their fees both on their websites and in their offices.

At Deputy PM Nick Clegg's Commons question session, the Lib Dem leader faced calls from Labour's Harriet Harman to back her party's bid to ban agents from charging fees to tenants.

He said there were "virtues" in the opposition's push for longer tenancies.

But he warned that the fee ban could increase rents in the long run.

He said more transparency would help to keep costs down for tenants - an argument that was dismissed by Ms Harman as "not good enough".

Labour has put a pitch towards "generation rent" at the centre of its campaign ahead of local and European elections on 22 May.

Party leader Ed Miliband vowed to end "excessive" rent rises, said three-year tenancy agreements should become the norm, and pledged to axe charges of up to £500 letting agents currently impose on tenants.

'Security'

In response to Labour's May Day campaign launch, the Conservatives said evidence from other countries suggested rent controls lead to "poorer quality accommodation, fewer homes being rented and ultimately higher rents".

But Prime Minister David Cameron has since indicated that he would be prepared to work with Labour on its proposals for longer-term tenancy agreements.

Ms Harman told MPs: "Not least because of the difficulties of affording to buy a home, there are now nine million people renting, including 1.3 million families with children - security and continuity are particularly important for them."

She argued it was time to "move from one-year tenancies with unpredictable rents to three-year tenancies with predictable rents".

Ms Harman said: "What we need to be sure is that letting agents do not rip tenants off by, as well as charging the landlords, charging the tenants."

Labour tried to add its proposed ban on fees for tenants into the Consumer Rights Bill, but the amendment - which would have applied to England only - fell by 281 votes to 228, a majority of 53.

During debate on the amendment, Labour's Stella Creasy pointed out that a similar ban had already been introduced in Scotland.

"The experience there has been an increase in the number of letting agents and no effect on the rents people are paying," she told MPs.

But some Conservatives were sceptical.

Carlisle MP John Stevenson said: "If the letting agency loses an income it will seek to get it from elsewhere, so it is likely to increase its charges to the landlord.

"The landlord will then seek to recover that money, and from whom will the landlord seek to recover it? From the tenant."

'Short-term gimmicks'

Mr Clegg had said Labour was making "an important point about the virtues of longer-term tenancies".

The government was working on a "model agreement", aiming to "support tenants and families who wish to seek a longer fixed-term tenancy", which is due to be published in the summer, he said.

"On the charges raised by the agencies, whilst the problem she identifies is right, the solution she is suggesting may of course lead to higher rental costs," Mr Clegg continued.

"That is why we will be announcing today that we will be placing new obligations on agents to publish in full transparency what kind of fees they are charging so people can shop around and get the best deal available."

Mr Clegg concluded: "The fundamental problem… is that we are simply not building enough affordable homes."

More details on the government's policy were subsequently provided in a statement from Housing Minister and Conservative MP Kris Hopkins.

"The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service," Mr Hopkins said.

"Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.

"Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent."

The government said its own amendment to the Consumer Rights Bill would be brought forward at a later stage in the legislation's passage through Parliament.

Ministers also propose to review how well the measures were working after they had been operating for a year.

Related Topics

More on this story