Letting agent fees are questioned in House of Lords

Letting agents’ fees charged to tenants continue to come under intense scrutiny at the highest levels.

Meanwhile, questions have been raised as to whether there are sufficient ‘ombudsman’ type schemes for letting agents to belong to, as will be required by law. Currently, the two sole contenders appear to be The Property Ombudsman, and Ombudsman Services.

In the House of Lords, questions were asked by LibDem peer Lord Greaves on fees, including renewals. The Government replied that it did not wish to ban fees for fear of “disproportionate regulation” driving up rents.

The Government response also said that all letting and management agents will have to belong to an approved redress scheme.

It appears that this will be next year at the earliest, with the Government saying it needs to be satisfied as to whether there is a sufficient number of redress schemes available.

Earlier, CLG minister Baroness Hanham said, in a written reply to Baroness Hayter, that Parliament would have the opportunity to “fully debate the detail”. Two orders are to be made. One, to be laid this autumn, will set out the criteria and process for approving redress schemes.

The second order, requiring letting agents to belong to a scheme, will be laid “as soon as we are satisfied that there are sufficient approved schemes. We expect that to be early in 2014.”

Here is the latest exchange:

Lord Greaves: To ask Her Majesty’s Government what assessment they have made of the practice of some letting agents in charging a letting fee for the routine renewal of an assured shorthold or similar tenancy; and whether they are considering proposals to ban or regulate such activity.[HL1300]

To ask Her Majesty’s Government what assessment they have made of the level of letting fees charged by letting agents for private housing tenancies; and whether they have plans to introduce regulation for such fees, for instance by relating them to the rent charged for a property.[HL1325]

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): We recognise that a minority of agents offer a poor service and engage in unacceptable practices, which is why we are already changing the law to require all letting and managing agents to belong to an approved redress scheme. This will give tenants an effective way to address complaints.

However, we are unconvinced that regulating or banning specific fees is necessary because whilst landlords and letting agents are free to set their own charges they are prohibited from setting unfair terms or fees under existing consumer protection legislation. Where a consumer believes that agents are in breach of this legislation, it is open to them to draw this to the attention of their local trading standards officer.

Disproportionate regulation will just drive up rents and reduce the choice of accommodation on offer to tenants.

See also today’s blog.