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London Labour Housing Leads demand end to letting fees and extortionate deposits



Housing cabinet members from 19 London boroughs have joined forces to call for an end to letting fees and extortionate deposits that private renters are currently forced to pay. Councillor Sirajul Islam signed the letter on behalf of Tower Hamlets Council.

The councillors have echoed the Mayor of London’s calls for the Government to strengthen the Tenant Fees Bill, which is due to come back to Parliament in September, and protect London’s 2.4 million private renters.

In 2016, the Government announced that it would introduce a Tenant Fees Bill that capped deposits and banned letting fees. However, Labour councillors are concerned that the draft Bill has been watered down and will fail to protect private renters from extortionate letting fees and deposits, unless it is amended.

19 Labour Housing Leads of London Boroughs, along with James Murray, Deputy Mayor for Housing and Residential Development, have written to the Housing Minister Kit Malthouse MP, urging him to set the cap for deposits at three weeks’ rent. The Government previously said the cap would be set at four weeks but it has extended to six weeks in the draft Bill, a move that is not supported by any organisation representing private renters.

The letter also sets out concerns that private renters could in fact end up paying more letting fees than before. A loophole in the draft Bill enables letting agents to charge renters for basic services across an entire tenancy, rather than charge them up front. This could open renters to an entirely new form of exploitation.

Tower Hamlets Council has introduced a number of measures to drive up standards for private renters’, including a Private Renters’ Charter and contributing to the Mayor of London’s rogue landlord checker.

Mayor John Biggs and Councillor Sirajul Islam have also called on the Government to grant Tower Hamlets Council the power to extend its landlord licensing scheme across the whole borough, not just the three wards it is currently limited to.

Councillor Sirajul Islam, Statutory Deputy Mayor & Cabinet Member for Housing, said: “Many private tenants in Tower Hamlets struggle with extortionate deposits and fees every time they want to move home, and this comes on top of very high rents.

“In Tower Hamlets we’ve brought in a range of measures to drive up standards in the private rented sector, but we need the Government to back us up and make sure that the Government’s Tenant Fees Bill genuinely protects tenants.”

Mayor of Tower Hamlets John Biggs said: “The Tenant Fees Bill is an opportunity to protect private tenants from rip-off fees and deposits but we’re concerned that the Government is watering down the plans and may even end up costing tenants greater fees.

“As a council we’ve cracked down on rogue landlords and we’re focussed on improving standards, but there’s more to be done and we’ve called on the Government to give us stronger powers to tackle the problem.”

A spokesperson from London Renters Union, says: “The Tenant Fees Bill does nothing to change the hard realities of the private rental market, where millions of people are stuck paying exorbitant rent, fees and deposits they cannot afford. It’s unacceptable that an increasing number of Londoners are facing eviction and homelessness because they cannot keep up with extortionate rent and fees.

“Renters across the capital have had enough. We’re standing together against exploitative landlords and agents to give our housing system the reboot it needs. We need renters’ rights and stronger protections, not dodgy loopholes for letting agents to charge us even more.”

The letter also urges the Housing Minister to increase the penalties that local councils can charge for illegal fees to £30,000. Labour councils in London have been working hard to take action against rogue letting agents and landlords, including by issuing fines.

In June, Tower Hamlets Council revealed it had fined 27 organisations a total of £150,000, as part of its crackdown on rogue landlords and letting agents.

In a further move to strengthen renters’ rights, the councillors have called for tenants to be able to directly claim back illegal letting fees along with compensation worth up to three times the amount that they paid.

The Labour Party has pledged to legislate to ban letting agency fees for tenants, give renters new consumer rights and implement controls on rents.

Analysis from the Labour Party shows that soaring rents are costing London families more than £300 extra a month compared with 2010. This means one million private renters are having to find £3,600 a year more for rent.

The Tenants Fees Bill returns to the House of Commons for debate on Wednesday 5th September.

Letter to the Minister

Dear Minister,

London is home to 2.4 million private renters, many of whom are forced to not only pay extremely high rents, but also exorbitant deposits and fees each time they move home. The loss of a private tenancy also remains the single biggest cause of homelessness. Private renters, who we represent as Cabinet Members for Housing from across councils in London, cannot wait any longer for action on rip-off fees and for stronger rights.

The Tenant Fees Bill is an important opportunity to give security to private renters, by capping deposits and banning letting fees. However, we are concerned that the Bill as it is currently drafted creates loopholes that letting agents can exploit, and does not go far enough to protect private renters.

As you know, the draft Bill caps deposits at six weeks’ rent, ignoring calls by charities, renters’ groups and others for a lower cap to be introduced.  We urge you to instead set this cap at three weeks’ rent, and holding deposits at one day’s rent, to reduce up-front costs for renters. This would reduce the risk of tenants struggling to manage their finances, but still give landlords and letting agents security.

We are also concerned that the draft Bill means private renters still face excessive letting fees. The Bill formalises letting agents’ ability to charge renters for basic services, which should be covered by the management fee already paid by landlords. Fees could therefore be spread across an entire tenancy, rather than charged up-front, and renters could in fact end up paying even more than before. This would be a betrayal of private renters and contradict the Government’s claims that fees would be banned.

London councils, along with the Mayor of London, have already been taking action against unscrupulous landlords and letting agents, including by imposing fines. We urge you to enable councils to further deter bad behaviour by increasing the penalties they can charge for illegal fees to £30,000, and by enabling tenants to directly claim back prohibited payments along with compensation worth up to three times the fee paid.

A number of London councils are seeing a rise in rogue letting agents switching to alternative business models, so they can avoid their obligations to tenants. In particular, these letting agents may identify as so-called membership clubs to avoid protecting deposits or request that tenants pay a ‘fee’ in place of rent. As the Bill is currently drafted, more letting agents may pose as membership clubs to maintain they are not charging illegal letting fees. We therefore urge you to amend the Bill to deter this unacceptable practice, by making it easier to identify and prosecute letting agents that seek to avoid their responsibilities to tenants in this way.

If the Tenant Fees Bill is agreed in its current form, it could in fact open private renters up to new forms of exploitation. We urge you to take this opportunity to make these much-needed changes to the draft Bill when it returns to Parliament in September.

We look forward to your response.

Yours sincerely,

Cllr Diarmaid Ward, Executive Member for Housing and Development, London Borough of Islington

Cllr Stephanie Cryan, Cabinet Member for Housing Management and Modernisation, London Borough of Southwark

Cllr Martin Whelton, Cabinet Member for Regeneration, Housing and Transport, London Borough of Merton

Cllr Sirajul Islam, Deputy Leader and Cabinet Member for Housing, London Borough of Tower Hamlets

Cllr Paul Bell, Cabinet Member for Housing, London Borough of Lewisham

Cllr Dino Lemonides, Cabinet Member for Housing, London Borough of Enfield

Cllr Cameron Geddes, Cabinet Member for Regeneration and Social Housing, London Borough of Barking and Dagenham

Cllr Phillip O’Dell, Housing Portfolio Holder, London Borough of Harrow

Cllr Emina Ibrahim, Deputy Leader and Cabinet Member for Housing and Estate Renewal, London Borough of Haringey

Cllr Meric Apak, Cabinet Member for Better Homes, London Borough of Camden

Cllr Rachel Blake, Deputy Mayor and Cabinet Member for Regeneration and Air Quality, London Borough of Tower Hamlets

Cllr Peter Mason, Cabinet Member for Housing, Planning and Transformation, London Borough of Ealing

Cllr Louise Mitchell, Cabinet Lead Member for Housing, London Borough of Waltham Forest

Cllr Paul Gadsby, Cabinet Member for Housing, London Borough of Lambeth

Cllr Farah Hussain, Cabinet Member for Housing and Homelessness, London Borough of Redbridge

Philip Glanville, Mayor, London Borough of Hackney

Cllr Chris Kirby, Cabinet Member for Housing, Royal Borough of Greenwich

Cllr Alison Butler, Cabinet Member for Homes and Gateway Services, London Borough of Croydon

Cllr Lily Bath, Deputy Leader and Cabinet Member for Housing and Social Inclusion, London Borough of Hounslow

Cllr Eleanor Southwood, Lead Member for Housing and Welfare Reform, London Borough of Brent

James Murray, Deputy Mayor for Housing and Residential Development, Greater London Authority