Some readers will know that the Consumer Rights Bill is currently going through Parliament, with a number of amendments tabled by the House of Lords just before Christmas.

All in all it’s a decent piece of legislation that helps bring the complicated and outdated existing body of consumer protection law into the 21st century. However any hopes that the Bill would be used to address consumer issues in the private rental market were dashed when amendments proposed to tackle housing problems were rejected.

Unfair letting fees

The two issues that were debated were revenge evictions and unfair letting fees for tenants. Both of these problems are well-documented amongst Generation Rent. The issue of revenge evictions certainly does not require any further discussion here and, admittedly, is subject to its own private members bill tabled by exiled former Lib Dem Minister, Sarah Teather.

Unfair tenant letting fees is perhaps less widely discussed, but is a particular bugbear of mine. It is well known that estate agents act in the commercial interests of their paying clients, the landlords, yet tenants are commonly charged for the work the agent does for the landlord in setting up the tenancy. These letting fees sometimes take the form of generic "handling fees" or "agreement fees", but are also often combined with fees for other specific services that are in the landlord's interest, such as credit, reference and inventory checks. The tenant is the consumer in this context and shouldn't be expected to pay for costs the landlord incurs in running his or her commercial enterprise. Nevertheless, this unfair practice occurs because bright spark estate agents have worked out that desperate tenants will more often than not acquiesce to the unfair charges.

Shelter estimates that 1 in 4 people in England and Wales have paid unfair letting fees, with 1 in 7 paying £500 or more. This practice has already been banned in principle in Scotland since 1984, apparently without resulting in higher rents, so there is no reason why the amendment couldn't have slotted into the Consumer Rights Bill.

Flawed market logic

The reason given for rejecting provisions outlawing unfair letting fees highlights not just the ignorance towards Generation Rent within the present Government, but also the flawed logic that is rife amongst neo-liberal politicians.

In classic Tory parlance, Conservative peer and Business Minister Baroness Neville-Rolfe said that she "did not believe that regulation was the right way to tackle this issue".

In a particularly bizarre statement, when discussing the problem of unfair letting fees, the Minister said the way to tackle the problem was by encouraging competition between estate agents. She said "greater transparency would encourage competition between agents on fee levels." This, she said, would "ensure that agents with the best-value services prevail in the market."

Reading this nonsense I'm inclined to suspect the Baroness has never rented before. Anyone with knowledge of the current lettings market would recognise that the idea the market is going to magically intervene to allow "best-value services to prevail" is nothing more than a bizarre fantasy that only a free market ideologue could entertain.

Market competition is all well and good when it works for consumers, but Ministers need to know how competitive dynamics work in the private rental sector. There is indeed competition between estate agents on fee levels, but that competition is directed exclusively towards their clients (i.e. landlords), not renters. It is precisely because the competitive dynamics work so much in favour of residential landlords that agents started charging renters in the first place. By passing their costs onto desperate tenants, the agents can keep fees for their landlord clients as low as possible.

Renters have no option but to pay unfair letting fees, which add to the burden of already high rents and deposits. If the renter discovers an agent intends to hit them with a massive rental fee, the renter is not in a position to bargain or shop around. Their options are to pay the fee or find somewhere else. If all agents have the same charging policies, what do you have to gain from walking away?

Making Generation Rent a priority

The comments of the Baroness, and the 156 peers who voted against the amendments, shows the general lack of willingness within an out-of-touch legislature to engage with the issues facing Generation Rent (9 million in England alone according to recent Shelter estimates).

The logic put forward in rejecting the amendment also reveals how utterly wedded conservative politicians are to the economics of the free market, even when it is abundantly clear that market forces are working against ordinary consumers.

Lawmakers must understand that the rental market is seriously flawed and legislation is badly needed to restore the balance so that consumers are adequately protected. More transparency and greater competition amongst agents will do nothing for renters.

Business interests in the private rental sector do not need protection. According to research published this week by Savills, landlords have made £177bn profit from capital growth over the past five years. The same research found the total value of privately rented housing in Britain has grown 57% since the financial crisis to more than £1 trillion.

On the other hand renters spend on average of 40% of their income on rent and live in the poorest quality housing, according to English Housing Survey.

Broad ranging policies are needed in the immediate term to address these problems and they must feature in bold, black letters in all parties' manifestos.