My Lords, I regret that answer, particularly on client money protection. The only case made against the amendment seems to be that it would cost the industry money. It is not clear which industry—the only industry that it would cost money is bad letting agents, because good letting agents do it. Landlords support compulsory client money protection, tenants’ groups support it, estate agents support it, the British Property Federation supports it; and I have not read out—because I was trying to save time earlier—a submission from SAFEagent, to which the Minister referred. It stated that it supported the amendment and that it was excellent to see so many organisations supporting what it has been campaigning for over several years; that is, protection of consumer money through a requirement for all letting agents to be part of a client money protection scheme. Therefore, even those who used to support the Minister’s case are now saying, “No, this needs to be written in law”.
I think that the Minister also said that the amendment would in some way discourage landlords from entering the market, but it is exactly the fear of letting agents walking off with their rent that may discourage them. The amendment is the security that a landlord needs, particularly if they are raising money to enter the market. Anyone who has tried to raise money to put into property knows that a bank will ask, “What is the security of your income?”. If you can say, “Well, I know it’s secure because it’ll be coming through a letting agent and that money has been secured by law and an insurance service”, you are more likely to get a bank loan to be able to become a landlord and a slightly cheaper rate of interest for it. This amendment is therefore good for the housing market and I hope that, before we come to Report—because it is an amendment that we will re-table—the Minister will think about this.
On banning letting agents from charging tenants fees other than for security checks, the Minister’s figures on Scotland and what has happened since it banned fees to agents are very different from those that I have seen. Two independent reports were done, one by Rettie & Co, the property specialists, and one by BDRC Continental, which is another independent specialist, looking at the impact of clarification of letting agent fees in Scotland. On the impact of the 2012 change in Scotland, they state:
“Any negative side-effects … have been minimal for letting agencies, landlords and renters, and the sector remains healthy … landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK … Renters in Scotland were no more likely to report a recent increase in their rent than those in other comparable parts of the UK … Less than one in five … letting agency managers said they had increased fees to landlords”.
They went on to say that 70% of landlords had not noticed any increase. Our figures from Scotland are therefore clearly rather different, and those were from independent reports.
One of the arguments advanced is that transparency of fees is very good for driving competition, but, in the case of estate agents, the people who pick agents are the sellers of houses and, in the case of letting agents, they are the landlords. In both cases, the buyer of the property cannot shop around for an estate agent, nor can a tenant shop around for a letting agent. They have to go to the one who is handling the property they need. Transparency does nothing to drive the market. If our amendments are refused, two lots of people will be affected: buyers who are being charged by somebody who is already charging the vendor; and tenants who are being charged by the landlord. Neither of those groups is in any position to argue about the fees because they are not the people going to the agencies.
I hope that the Government will look at this again. We are clearly going to bring it back. The client money protection is widely supported. As for taking fees from both sides, the Minister herself said that she has serious concerns. I hope that she does something to deal with this issue.
6.30 pm