RLA policy director David Smith has warned the CLG Select Committee that landlords are likely to be left with increased bills when tenants’ fees are banned.
Mr Smith was giving evidence to the CLG Select Committee inquiries into the PRS and the Draft Tenant Fees’ Bill.
He warned that treating the whole of the PRS the same way is a mistake.
He pointed out that some agents get 5% of their turnover out of fees, but also agents who get 30%.
He said: “If you take 30% of turnover from fees and fees are banned you have two choices, to go out of business or to pass that cost on to someone else.
“The RLA believes that fees are employed in different ways around the country in order to deal with different issues, and banning all fees will not change that economic structure.
“The money has to go from somewhere, and it will come from landlords or from loopholing in the Bill.”
He also shared evidence on other topics, ranging from the Draft Tenants Fees Bill, HHSRS and property standards, and the effectiveness of selective licensing schemes.
Lack of enforcement
On the issue of ineffective enforcement, Mr Smith pointed out that only about five or six local authorities are actively enforcing and of those the only two making a real mark are Newham and Barking and Dagenhem.
When their figures are taken out of the equation, only one in two HHSRS complaints are picked up.
In the case of local authorities that have blanket licensing schemes, the situation is worse, with only one in three HHSRS complaints being picked up.
He said the RLA believes that enforcement does not target the very worst landlords (criminal) landlords, but more usually those landlords who are only committing very minor housing offences.
Karen Buck’s Bill
The RLA supports The Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill, which has been proposed by Karen Buck. Last week, following the second reading of the Bill, the government confirmed that it would progress the Bill to the Committee stage.
Questioned about what could be done to improve this Bill, Mr Smith said its main ask would be for a specialist housing court.
A Housing Court was one of the RLA’s main asks ahead of last year’s election, with plans announced in last year’s Autumn Budget 2017, with RLA is calling for it to be modeled along the lines of the existing first tier tribunal.
Mr Smith said tenants have a fear of going to court, and the first tier tribunal model is a cost free due restriction, so it removes the fear of losing costs.
It also has its own in-built specialist, and the RLA believes that this would go a long way to making sure that the system works better for tenants.
Questioning focuses greatly on the effectiveness of licensing schemes he stressed that while the RLA supports target specific licensing, it does not support blanket local authority licensing, because there is some evidence that exists to suggest that targeted specific licensing in ‘hot spots’ is effective in part as it tends to break up so called ‘tenant ghettos’
Banning orders are due to come into force from April 2018, and Mr Smith said that banning certain people from becoming landlords is a big step to improving the sector.
The RLA has proposed a scheme whereby the private sector does more of the work, in the same sense that tenancy deposit schemes are private sector schemes, albeit with contract departments.
Such a scheme would enable local authorities to have a licensing scheme, but landlords would join an independent, ‘co-accreditation’ scheme, that would be run by the private sector.
He told the scheme the select committee would be set up in the same way as the deposit schemes, as not for profit companies, and it would help make the paperwork more efficient, as it could be done on a larger scale.
The scheme would provide alternative dispute resolution, and would be responsible for making sure that tenants know about their rights, and that they know who their landlord is.
The scheme would provide a first port of call for dispute resolution, in a similar way that tenancy deposits schemes do.
Crucially, this would leave the local authorities to focus on the very worst landlords in the sector, and it would mean that local authorities would still gain money from a much lower licensing fee, and landlords would pay a lower fee over all.
Make changes to deposits
Mr Smith said the RLA believes the Draft Tenants Fee Bill is not an effective use of parliamentary time, and it would much rather see something done about the current deposit situation.
Instead is calling for existing tenancy deposit schemes to hold deposits for the tenants, instead of the landlords.
It is also calling for a insurance scheme that covers the transition period, to try to deal with issues such as non-payment of last months rent due to a tenant needing to gather the money for a deposit on a new home.
Find out more
- To watch the evidence session, see here