Coalition Votes Against Letting Agent Fee Ban
MPs have defeated an amendment to the Consumer Rights Bill that would have banned letting agents from charging fees to tenants.
Labour's amendment was defeated by a majority of 53, 281 to 228, with all but three Conservative and Liberal Democrat MPs present voting against it.
The coalition Government had earlier outlined its own amendment, which it says would see letting agents face fines if they fail to publish full details of fees charged to tenants.
Stella Creasy, Labour's Member for Walthamstow, tabled the opposition's motion in an effort to prevent agents charging fees to both landlords and tenants for the same transaction.
Speaking before the vote, she said: "It is a fundamentally anti-competitive corporate practice. We want to do something about it."
She told MPs during the debate: "You have to make a decision in this House on whether you are on the side of the consumer or on the side of business."
Ms Creasy says the practice of double-charging means letting agents do not have the best interest of either party at heart, and that it places a financial burden on consumers who find themselves moving properties frequently.
Business Minister Jenny Willott, a Liberal Democrat, announced the Government's amendment ahead of the vote, saying the transparency brought about by forcing agents to publish details of fees means they would have to justify the charges properly for the first time.
The Consumer Rights Bill, currently making its way through Parliament, is being revamped to empower consumers and clarify their rights in relation to a range of online and in-store transactions.
David Newnes, director of letting agents' network LSL Services, said: "It may seem that tenants would be better off if there were no up-front fees attached to arranging a proper legal tenancy.
"Unfortunately no Act of Parliament can magic this cost away and, in reality tenants, could be far worse off."
Mr Newnes claimed that if letting agents were prevented from charging these fees, they would be offset through higher rents.
"Tenants could very well end up paying a lot more, not less," he said.
Labour leader Ed Miliband said last week during a campaign visit to Greater Manchester that his party would be challenging the Conservatives and Liberal Democrats to back the measure.
David Cameron has indicated he was prepared to work with Labour on proposals for longer term tenancy agreements, but said he would not support towards old-style rent controls.