RLA Policy Director David Smith gave evidence at a MPs Select Committee at the first sitting of the Tenants Fee Bill yesterday.
During the evidence session, he set out the RLA’s proposed amended to the six week cap on deposits that is outlined in the Bill, as well as discussing issues with enforcement by local authorities.
Speaking at the Select Committee evidence session, Dr Smith took a question from Maria Caulfield MP, about enforcement.
The MP for Lewes acknowledged that the current local authority enforcement system ‘is not working’- a belief the RLA shares.
Dr Smith said the RLA believes the Tenants Fees Bill will not achieve anything, because there are no resources to enforce it.
Indeed, figures published last year by the National Approved Letting Scheme (NALS) found two years after laws regarding fees transparency were brought in, 93 per cent of councils had failed to issue a single financial penalty to a letting agent for breaching the law.
Maria Caulfield then asked the question: “Is it not right that if fees are banned, tenants will be able to self-enforce, because they will be aware that no fees should be charged? Do you not recognise that this would give more power to tenants in the process, given that currently they are not able to make those decisions”.
Dr Smith replied that there is no mechanism within this Bill for tenants to self-enforce, because they are still reliant on the local authority taking up ‘cudgels’ on their behalf, which evidence shows that at the moment they do not do.
He continued to say that most tenants are ‘grossly unaware of their rights’ and when asked whether the Bill would improve the current situation for tenants, Dr Smith replied by saying that it would be the ‘weakest and most vulnerable tenants’ being exploited by the agents.
Concern over deposits
Under the Tenant Fees Bill, it has been proposed that holding deposits will be capped at no more than 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.
While Dr Smith acknowledged that if such a cap were to be put on deposits, the RLA will work with it, he went on to highlight that the RLA would prefer to have some more scope within the Bill.
Concerns for tenants with pets
This includes an amendment that the RLA has proposed to the Bill, in that it should allow landlords to charge a higher deposit where there is a particular set of risk factors to consider, including a pet or someone who is unable to provide evidence of their income.
Dr Smith told the committee that if there is no scope for this, then the RLA believe that landlords will simply not rent to these people.
He mentioned research from the RLA, conducted last year, that showed around 50% of landlords said they would not rent to tenants with pets, if the deposit was capped in a way that they did not feel would allow them to recover the potential cost of that.
Sarah Jones MP commented that some people have suggested that the majority of landlords charge four weeks’ rent, and that if this piece of legislation goes through as it is, they would automatically put it up to six weeks.
In response, Dr Smith said that while it is possible some people will do this, in his view he doesn’t think landlords will, and he reiterated the concern that the RLA has around pets in properties.
On the subject of holding deposits, Rishi Sunak, the MP for Richmond, pointed out that the Bill permits a holding deposit to be taken by a landlord, while references are being conducted. The Bill as it is at the moment allows part of that to be withheld, if false information is provided. Mr Smith was asked if this provision provides an appropriate protection for landlords.
Dr Smith replied by saying that the market has tended to move away from holding deposits in the last few years, and has simply charged a fixed fee, which ideally should have been linked to referencing , but on some occasions has been linked to a figure made up by the agent.
Dr Smith added that is his view, what will happen is that a lot of landlords and agents will not charge holding deposits, especially in London, and they will simply run it tournament-style, so whichever tenant gets there the fastest, with the most money, will get it.
- A full transcript of the evidence session can be accessed here.