The government announced in the 2016 Autumn Statement that it would consult on introducing a ban on letting agent fees paid by tenants, “to improve competition in the private rental market and give renters greater clarity and control over what they will pay.”
This consultation process has now been announce and will be open to agents until the 2nd of June to respond, and invites views and comments “on how the ban on the fees currently paid by tenants in England should be implemented and enforced.”
To support the consultation process, the government has organised a series of workshops. Places will be allocated on a first come first served basis and the workshops will be tailored to different parts of the sector.
You can find out more details about how to respond online or attend the workshops and book your place here
The government says it is proposing measures to stop hidden charges being imposed by a minority of agents who double charge for the same service to both landlords and tenants. It says it wants to put an end to tenants being hit by high and often unjustified upfront payments that make it difficult for some tenants to afford.
Housing Minister Gavin Barwell says:
“We’re determined to make all types of housing more affordable and secure for ordinary working people. Tenants should only be required to pay their rent alongside a refundable deposit and not face hidden fees”
The Consultation Paper which can be viewed here says:
“The ban will recognise the stronger market position of landlords. Landlords will be able to shop around for an agent that provides the quality of service they are seeking at a price they are willing to pay. The ban will sharpen and increase letting agents’ incentives to compete for landlords’ business, resulting in a better and more transparent service.
“Tenants will be able – at a glance – to see what a given property will cost them in the advertised rent level without any additional hidden costs; this should help to make entering and moving around in the private rented sector easier and less costly.
“This consultation paper invites views and comments on how the ban on letting agent fees paid by tenants in England should be implemented and enforced.”
ARLA’s position on the proposals:
“Our research shows that the average fee charged by an ARLA Propertymark Protected agent is £202 per tenant. We think is fair, reasonable and far from exploitative for the services tenants receive including completing various critical checks on tenants before letting a property.
We believe that the ban on fees will involve passing the costs on to landlords. Who will then look to recoup these costs elsewhere; inevitably through higher rents.
It will have a drastic impact on many people and businesses and to announce it without consultation or clarity is wrong. We do not support the banning of letting agents charging fees to tenants. We believe fees should be open, transparent and reasonable. They represent legitimate costs to business that need to be covered. Read the ARLA proposal here
Commenting on the announcement ARLA Propertymark CEO, David Cox said:
“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.”
Client Money Protection
On the other hand, ARLA have supported a campaign to introduce Client Money Protection (CMP) for all agents: Client Money Protection (CMP) is a compensation scheme which recompenses landlords and tenants should an agent misappropriate their rent, deposit or other client funds. It is already a requirement for ARLA Propertymark members to have CMP.
On 28 March 2017 the Government announced that they intend to make Client Money Protection mandatory for all agents in England who handle client money.
A Working Group was set up in autumn 2016 to review the issue and the Government has decided to take on board the review’s findings and introduce compulsory client money protection.
ARLA Propertymark Chief Executive, David Cox commenting on our campaign success
“The Government has finally accepted ARLA Propertymark’s calls for mandatory CMP. This is an argument we have been making for some time alongside Baroness Hayter and Lord Palmer. Working together we have managed to convince the Government of the merit of compulsory CMP. It’s a campaign that’s taken over two years to come to fruition and is a clear step forward towards a more regulated industry; akin to others such as solicitors or travel agents. CMP safeguards landlords and tenants in the event that agents misappropriate their money. With the ban on letting agent fees on the horizon, this is more important than ever before, so we are very pleased the Government has agreed to take it forward.”
Tenants’ Fees ban for agents – consultation announced… https://t.co/dWBxspuAk4
— LandlordZONE (@LandlordZONE) April 10, 2017