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Draft Tenant Fees Bill - concerns over no impact assessment

Friday 19 January 2018

On Monday 8 January 2018 the Communities and Local Government Committee had its first evidence session examining the Draft Tenant Fees Bill where leading housing expert Dr Julie Rugg said that policy makers need to understand how letting agents work before knowing what the impact will be.

During the exchanges with MPs, Dr Rugg who is Senior Research Fellow at the Centre for Housing Policy, The University of York said the Draft Tenant Fees Bill, “is a piece of legislation that has decided that there is a particular issue and it has targeted it in a very, very piecemeal way. On one level, yes, it is an issue that needs to be dealt with, but it is being dealt with in an unstrategic way.”

She explained to the Committee of politicians, “We are not asking what we want letting agents to be doing in the market — what do we want letting agents to do? We are just pinpointing what we don’t like them doing, without necessarily saying - Actually, what we want letting agents to be doing is effectively to create bits of the market that we’re quite confident about.”

She went on to say, “We want them to be letting at good quality and we want the rents to go up in a reasonable, staged way, where everybody knows what’s going on. These are the things we want letting agents to be doing — to be professionalising on behalf of landlords — but the legislation that comes through is very bitty and is not necessarily addressing that wider strategy.”

No impact assessment
Dr Rugg, who produced an independent Review of the Private Rented Sector in 2008, expressed her concern to MPs about the lack of impact assessment as a result of a ban on letting agent fees to tenants. She said, “We do not really understand the letting agent industry particularly well in terms of the range of particular types of letting agent that are out there. The very high-end, franchised letting agents operate quite professionally. Some estate agents might also be doing letting on the side, but there are some landlords who are letting property on behalf of somebody else on an informal basis.”

She added, “The impacts will spread across that activity, and that is why there is concern to see the impact assessment. You would hope that that demonstrates a good understanding of how the industry works. Unless we understand how the industry works, we will not really understand what the impact will be.”

Service levels are likely to change
Showing an acute understanding of the sector she told MPs, “It is naïve to say, 'We are going to take some money out of this and nobody is going to feel it. Nothing is going to happen and everything is going to be fine.' What do these models look like and how are they accommodating that decrease in income? They have to accommodate it one way or another, and we have to understand how they are accommodating it.”

Looking forward she warned, “It might be things such as people not doing as many inspections of a property as they might have done in the past, so that there is a cut in service rather than a cut in rent. That is quite an interesting thing to think about. They might not be training their staff in a way that you would want them to.”

Importantly she told MPs, “All these other things could be a consequence of the fees going down, and we might not see them immediately, but in the long run those things might have an impact on how that market works as a good professional market.”

The Committees second evidence session takes place on Monday 22 January 2018 and David Cox, Chief Executive of ARLA Propertymark will be giving evidence on Monday 29 January 2018.

Follow and read about proceedings