Hilary Benn, shadow secretary of state for communities and local government, says companies are charging widely differing fees
Labour is turning its fire on letting agencies that “rip off” landlords and tenants with excessive fees and charges, and will look at how to cap rising rents in the private sector, one of Ed Miliband’s key lieutenants has said.
In an interview Hilary Benn, the shadow secretary of state for communities and local government, said 3.6m homes were being rented in England and, next year, for the first time in half a century, more people would be living in private rented accommodation than in social housing.
Two-thirds of tenancies now involve a letting agent, an unregulated industry of 4,000 companies which he says are charging widely differing fees for managing relations between 1.4m landlords and their tenants.
The costs vary from £10 to £275 for checking references, while the charge for renewing a tenancy – where lettings agents send out an email and ask for it to be printed and returned – ranged from £12 to £220.
Benn said: “What is actually £220 of cost in terms of administration if you had just to send an email, open an envelope, stick it on file?
“That seems to me a rip-off. It’s a problem not just for tenants but also for landlords.”
Landlords’ and tenants’ groups backed the move. Ian Fletcher, director of policy at the British Property Federation, said: “Anyone can set themselves up as a letting agent, and then potentially abscond with hundreds of thousands of pounds of people’s cash.
“It is therefore counterintuitive that estate agents who handle relatively little cash are regulated, but letting agents who handle lots of cash are not.”
Benn admits that Labour made a mistake in office by not building enough “social homes”, thereby creating the conditions for the current housing market.
Nearly a third of all private rented sector households are families with children and young people increasingly renting because they can’t afford to get on the housing ladder.
With many on the left calling for rent controls to be imposed to stop rising rents – the average cost in England is now £160 a week – Benn was cautious, saying the last time such measures were tried in the 1970s landlords fled the market.
“We don’t want to return to that because [the rental sector] is meeting a demand for housing”.
But he said he would consider linking rentals to inflation “on an annual basis”.
The Leeds Central MP, an early backer of Ed Miliband as party leader, said as part of Labour’s policy review he would be looking to “regulate market failure” where “an old way of doing things has not worked, does people over and is a rip off for people who are hard pressed”.
He also said that he would be considering ways of securing longer lengths of tenancies for renters – who on average move every 12 months, at least seven times more than those in social homes – including paying housing benefit directly to landlords instead of to tenants, a move that would reverse current coalition plans.
“This is one possible way to provide an incentive for a longer tenancy.”