Mike Hedges AM welcomes news that Letting Agents Fees are set to be abolished but asks for escalating fines for repeat offenders who continue to charge these Fees

Mike Hedges AM welcomes news that Letting Agents Fees are set to be abolished but asks for escalating fines for repeat offenders who continue to charge these Fees.

Speaking after the Senedd debate, Mike Hedges AM said…. ‘This is great news for people who have to get accommodation in the Private Rented Sector. I have long campaigned for the abolition of these Fees as they make it really difficult to access to private rented accommodation and often have to be paid by the people least well placed to afford them.

I have asked the Minister if the Fixed Penalty fine for imposing these charges could be an escalator fine so that if people are convicted several times of the same offence then the fine will increase with each conviction. We need to ensure that the fine does not become an occupational hazard for those who might repeatedly seek to break the law.’
Mike Hedges AM – I very much welcome the Government’s statement today. It always surprises me the number of people—especially younger people—who have ended up moving into the private rented market who, one generation, two generations or three generations ago, would quite naturally have moved into house purchase. I think that’s a change in society that is not necessarily for the better.184
Like many colleagues here, I have been calling for the ending of letting fees for several years. There are not many things that could unite Gareth Bennett, Bethan Sayed, Jenny Rathbone and me, but this is one of them. I think that that really does show the breadth of opposition to letting agent fees within this Assembly. They are unfair, unjust and paid by those often least able to afford the cost. I fully support the proposal to end letting agent fees and make it an offence to charge them. 185
I’m very pleased that the Government have given up what I considered their ludicrous, economically illiterate objection, voiced last year, that ending letting fees would increase rents and it has now stopped being put forward. Of course it won’t increase them. Yes, there have been increases in Scotland, as David Melding said, but I think that Bethan Sayed summed it up quite well: there have been increases in London, in England, and in Wales as well. House rents go up every year. It’s nothing to do with whether you have letting fees or not letting fees; they go up because of the shortage of housing that exists. And that is where the problem is: that there is a shortage of housing.186
But if people really believe that letting agent fees are the solution to decreased rents, why don’t they support that when you’re buying a house, you pay the estate agent’s fees? That’ll move the prices of houses down, wouldn’t it? If that logic follows, then, obviously, the estate agent’s fees should be paid by the buyer not the seller. But, no, people aren’t going to suggest that, because the people who are buying houses would not buy. People who are selling would be unable to sell. Unfortunately, in the private rented sector, people have to pay, otherwise they end up homeless.187
So, I really welcome the provision for enforcement arrangements via local authorities and the fixed-penalty fine. I have one question: has the Government considered a fine escalator for those who continually breach the law? Because one of the things that I’m afraid of is that some people will see this as a price worth paying. It’ll happen only occasionally. It’s a bit like those people who park where they shouldn’t and accept a parking fine as part of the cost of parking where they shouldn’t. People do break lots of laws when they don’t get caught very often and they don’t get fined very much, and when you balance out the cost, it may well be economically advantageous to do it. So, can we have an escalator on there? So, it may well be one price for the first time they’re caught, but if we double it the second and then double it the third, a bit like they do with people who fly-tip, and they get a fine, but if they keep on going back, they keep on getting a fine escalator, and whereas the first fine may not be very much, by the time they get to the third or fourth, they realise that fly-tipping is exceptionally expensive. So, can we have an escalator?188
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Rebecca Evans – Thank you very much for those comments and for the question as well. 189
I thought the comparison with asking house buyers to pay the estate agent’s fees was quite an illuminating kind of comparison. Certainly, it puts it into perspective as well. And, as Mike Hedges perfectly correctly points out, these tenants’ fees are fees that are paid by those who are usually least able to pay. And, as others have said, the private rented sector is going to become increasingly important in terms of meeting housing need, but also in terms of reducing the severe pressure that is also on our social rented sector as well.190
In terms of that enforcement action, it has been modelled in line with the arrangements that are currently in place for non-compliance with licensing requirements under Part 1 of the Housing (Wales) Act 2014, and, to date, there have been relatively few breaches of licensing arrangements resulting in penalties. So, that does suggest that there is a sensible balance that has been struck in our approach so far. And it’s well worth recognising as well that the vast majority of landlords do work within the spirit and the letter of the law, and almost all agents and landlords are now registered under Rent Smart Wales. So, once the Bill comes into force, we would expect similarly high levels of compliance.191
We consider that there will be a significant impact, not just from the financial penalties in the Bill, but the consequences for an agent or a landlord if they are convicted of an offence. Convictions for breaches of housing or landlord and tenant law are included in the criteria for Rent Smart Wales as the licensing authority, designated under section 3(1) of the 2014 Act, and that’s something that must be taken into account when considering whether a person is a fit-and-proper person to be licensed under Part 1 of the Act. So, that is a really, really strong deterrent in terms of contravening the Bill. However, I’m sure that the committee will be giving close scrutiny to the level at which we have set that fine within the legislation, and I’ll be interested to hear committee recommendations in terms of any escalator of fines.