The government has blocked a Labour proposal to stop agents overcharging new renters. But the party has other plans to increase security for tenants.
MPs have rejected plans to ban letting agents from charging rip-off fees to tenants.
Labour wanted an amendment added to the Consumer Rights Bill currently making its way through parliament.
This would have forced agents to scrap the wide range of charges faced by renters at the start of a tenancy and also when their agreement is renewed.
Letting agent fees can top £500
But the proposal was defeated by 281 votes to 228 in the House of Commons last week.
One in every seven firms charge new tenants more than £500 for the likes of credit checks, administration fees and even for changing a name on the tenancy agreement.
This is according to research carried out by the housing and homelessness charity Shelter.
And these charges are on top of the cost of a deposit as well as rent in advance.
The government says, however, that it wants agents to publish details of all its fees upfront. Those which fail to do so face potential fines.
Letting fee ban could mean higher rents
Housing minister Kris Hopkins said: "Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents."
The government thinks that outlawing fees would lead to higher rents as agents' charges are passed on to landlords.
Hopkins added: "Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door."
But Alex Hilton from tenants' campaign group Generation Rent said: "The banning of letting agent fees to tenants is a long overdue measure.
'Renters could harm election prospects'
"Millions of pounds a year are chiselled out of renters' pockets by an industry that has so far shown no limits to its willingness to exploit people."
He added: "The government commitment to beefing up regulations against hidden fees will be extraordinarily expensive for the taxpayer to implement if it is to be effective, while a ban on fees to tenants would cost almost nothing."
Hilton warned the MPs who voted against Labour's proposal that the growing number of renters could harm their prospects at next year's general election.
He pointed out that 43 of the coalition MPs who opposed the ban represented constituencies in which private tenants outweighed their current majority by more than three to one.
Labour propose longer tenancies
Hilton said: "Generation Rent is bringing together renters in these 43 constituencies.
"They are organised, spreading the word, and ready to vote only for those ready to stand up against exploitative letting agents and landlords."
Last month, Labour leader Ed Miliband announced proposals to give renters more security by introducing three-year tenancies.
This would stop landlords imposing rent increases every year, and would also reduce the impact of initial fees if tenants moved home less frequently.
Miliband said: "Many tenancies last just six months with families at risk of being thrown out after that with just two months' notice with no reason.
'Short tenancies breed instability'
"Some are told to accept huge rent rises or face eviction. It breeds instability and that is bad for tenants, bad for families, bad for landlords, and bad for our society."
Hilton said that longer-term tenancies would also make it easier for renters to assert their rights and ask landlords to make repairs without fear of being evicted.
A study carried out by Shelter earlier this year found that 8% of renters had refrained from asking their landlord to make repairs for this reason.
If longer tenancies are introduced, Hilton added, "renters will finally be able to make the building they live in their home and the street they live in their community, which will radically change how it feels to rent privately".
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