Citizens Advice on top of Shelter wade in on Default fees

10:09 AM, 23rd May 2018, About 7 years ago 4

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Citizens Advice are calling the government to tighten the default fees clause which is part of the Tenant Fees Bill passing through through Parliament.

The Tenant Fees Bill unanimously passed after a three-hour debate its second reading in the House of Commons.

David Cox, chief executive of ARLA Propertymark, said: “There is clearly overwhelming support in Parliament for the ban, however tonight’s debate makes clear MPs do not understand what is meant by default fees and the implications of reducing tenancy deposits.

“As the Bill goes to committee stage it is more important than ever that agents go and see their MPs to make the case for why these fees remain vital even after the ban comes into force.”

Default fees could include such things as a charge if a tenant loses their keys to replace them.

The Citizens Advice Press Release is below:

A government pledge to ban tenants fees in England and prevent unfair practices risks being fundamentally undermined by a bill allowing “default fees”, Citizens Advice warns.

Unscrupulous landlords and letting agents could still hit renters with unfair charges by exploiting a loophole clause in the Tenant Fees Bill, which is set to be debated in Parliament today.

The default fees clause was included to allow landlords to charge for tenancy breaches, such as late rent or to replace lost keys, but currently there are no restrictions on what a default could be.

The government has said it will issue guidance on when and how a default fee can be charged, but this would not be legally enforceable.

Citizens Advice wants the government to close the loophole by including a clearer definition of when a default fee is legitimate and writing this into law.

This will also benefit landlords by providing a clearer steer on the rules and stop rogue landlords and agents who are prepared to abuse the clause from gaining an advantage.

The national charity also wants the bill to be amended so that security deposits are capped at four-weeks rent, rather than the planned six weeks.

Renters have paid £235 million in unfair and uncompetitive fees since the government promised to ban them in November 2016 – a rate of £13 million a month.

Gillian Guy, Chief Executive of Citizens Advice, said:

“The government’s pledge to ban fees will be fundamentally undermined unless the clause on default fees is significantly tightened.

“The loophole leaves tenants vulnerable to rogue landlords and agents looking to continue charging unfair fees.

“The government must tighten this clause and issue a clearer definition of what a default fee is. Leaving this just to guidance risks poor outcomes for both renters and landlords.”

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Comments

Ian Narbeth

10:26 AM, 23rd May 2018, About 7 years ago

"Renters have paid £235 million in unfair and uncompetitive fees". Evidence and examples please. What is meant by "uncompetitive fees"? Take key replacement. We charge a fixed sum. The suited keys we use are more expensive than standard Yale-type keys. Are we supposed to "shop around" and see if we can save 50p or £1? What about the time taken for the landlord or his agent to deal with the issue, the time to go to the shop to collect the key and to deliver it to the tenant? What about transport costs? Sure, sometimes several errands can be combined in one trip but a fixed fee avoids the need for arguments and the time-wasters' tactic of making the innocent party (the landlord) spend an inordinate amount of time justifying every element of a small bill.
If so-called default fees are banned or restricted we create a new problem of moral hazard. If there are no consequences for breach of contract or bad behaviour then some tenants will take advantage. If I have a tenant who loses keys two or three times in quick succession, I have to start thinking about changing locks which is much more expensive and disruptive.
As for: “The government must tighten this clause and issue a clearer definition of what a default fee is. Leaving this just to guidance risks poor outcomes for both renters and landlords.” one size does not fit all. Take the example of keys again. Landlord A may have Yale type keys which are easily and cheaply replaced. Landlord B may have a much more secure system with expensive keys. Why is Government interfering?

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Old Mrs Landlord

12:44 PM, 23rd May 2018, About 7 years ago

The answer to your final question, Ian, is because they want the votes of the generation who rent and must therefore be perceived as being on the side of tenants. Perception is everything and this ill-thought-through, 'one size fits all' Bill is just part of the window dressing.

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moneymanager

20:06 PM, 24th May 2018, About 7 years ago

Reply to the comment left by Ian Narbeth at 23/05/2018 - 10:26
"If I have a tenant who loses keys two or three times in quick succession, I have to start thinking about changing locks which is much more expensive and disruptive."
Do you, really. You provided the tenant keys and unlike the provision of heatingi don't think there s an ongoing statutory obligation to facilitate acces inhibted by the tenant's own failings.

Anyway, the same tenant DOES have a statutory right to change the locks, which he could exercise and pay for.

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Badger

8:13 AM, 26th May 2018, About 7 years ago

Reply to the comment left by at 24/05/2018 - 20:06
Indeed, but facilitating this directly rather than letting the tenant do it eliminates the chance of nasty door damaging bodges as a result of the tenant organising thinks for themselves.

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