Renters could save £300 from fee ban but this loophole could hike other costs UP
As revealed by The Sun yesterday MPs recommended that deposits be capped at five weeks - but campaigners expressed concern that fees could still be slapped on through the back door
RENTERS could save £300 each when the Government finally bans letting fees, MPs have said, but loopholes could mean other costs could be slapped on through the back door.
Members of the influential Housing Committee said today some tenants had to pay extortionate fees of up to £1,000 in order to move house.
Ministers estimated that the average household will benefit by up to £50 per year as a result of the ban, but MPs said that it could save renters as much as £300 on average.
New research from Shelter which is out today shows that the average cost of fees has risen to £272 per person, and renters have been hit with a whopping £678million in extra costs in the last five years.
The housing charity has welcomed the fees ban but have warned that renters could still be open to being charged "default fees" - such as when tenant loses a key or breaches their contract.
And the ban isn't set to come in for another year at least - with Citizens Advice claiming that £200million in rip-off fees has been forked out since ministers first announced the ban in November 2016.
The scrunity of the Draft Tenant Fees Bill notes two lettings agencies - Northwood and 106 Regal Lettings - as saying that fees would "be increased severely as the loss is attempted to be made up elsewhere".
Citizen's Advice shared their concerns, arguing that "default fees" could be written into contracts instead to get around the new law, and tenants had "weak bargaining power" to stop this from happening.
MPs said that ministers should issue "guidance" to agencies and renters on what default fees are and when they can be charged, but there's no guarantee ordinary Brits would take heed and know what is unreasonable.
"Provisions as drafted are open to abuse," they said.
Greg Beales, Director of Policy and Campaigns at Shelter, said: "It’s good to see the ban moving forward, but today’s proposals would leave the back door open for agents to continue charging tenants in different ways and let down the renters it was supposed to help.
"We need this government to continue standing up for renters by following through on its pledge to fully ban letting fees once and for all."
Gillian Guy, Chief Executive of Citizens Advice, said: "The Government's pledge to ban fees risks being fundamentally undermined by a loophole that could be used by unscrupulous landlords and agents to charge tenants fees through the backdoor.
"The committee recognises that default fees are open to abuse, but their solutions do not go far enough.
"The Government must act quickly and commit to removing this default fees clause, creating a Bill that will achieve its aim of a fairer and more affordable lettings market."
A spokesperson for OpenRent, an online agency which doesn't charge any fees for tenants, said: "As long as landlords and agents are able to cover any inefficiencies in their work by simply charging a tenant more money, they will have no incentive to embrace modernising technology within the housing sector.
"Banning all tenant fees will finally give the outdated lettings industry the impetus to take on new, more efficient and secure ways of operating."
The report from MPs, as revealed yesterday by The Sun, also said:
- There is a low risk that rents will rise as a result of scrapping fees
- Ministers should tweak legislation to stop landlords and agencies from hiking rents at the start of an agreement to make up for lost fees
- Security deposits should be capped at five weeks' rent
- Landlords shouldn't be allowed to keep the whole of a holding deposit if a tenant fails a credit check - unless they knowingly withheld information about their credit history
- The Government should give Trading Standards the power and money to enforce "reasonable default fees"
- Fees to exit a tenancy should also be scrapped
Tenant Nick Wiseman, who yesterday told The Sun of his battle to get his holding fee back after he failed a credit check, welcomed the news that landlords might be banned from keeping the whole deposit in future - even if tenants never move into the property at all.
The 24-year-old and his friends are £1,400 out of pocket after their lettings agency, Hunters, refused to give them back their money - even though they proved it was their old housemates who paid the rent late, not them.
MOST READ IN POLITICS
"If it does come in it gives me a leg to stand on," Nick said last night. "It's something that would be welcomed among potential tenants, so then it doesn't leave people like me in the lurch."
But ARLA lettings agency said the move would mean agents would only select the very best tenants to avoid incurring costs through tenants failing referencing.
David Cox, Chief Executive of ARLA Propertymark said: "Ultimately, this will reduce the availability of property for vulnerable tenants and families. The very people that the Government are trying to help most with this Bill are those who stand to lose the most."