Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

BREAKING – In a pre-Autumn Statement leak the Government seems set on banning letting agent fees following similar moves in Scotland and Wales.

The controversial “Renters’ Rights Bill” currently going through Parliament has introduced the same theme with the aim of reducing the ability of letting agents to levy charges on tenants and instead shift them to landlords. It will now go on to the Report Stage on a date to be announced.

This is a Private Members’ Bill which was started in the House of Lords. The Bill is making progress and had its Second Reading debate on 10 June, where all aspects of the Bill were discussed, and a line by line examination of the Bill took place during committee stage on 18 November 2016. Amendments discussed covered clauses 1, 2 and 3 of the Bill.

The Renters’ Rights Bill proposes:

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  • Tenants’ access to the database of rogue landlords and property agents
  • Ending of certain lettings fees for tenants
  • Mandatory electrical safety checks
  • Prevention of rogue landlords from obtaining an HMO licence
  • The Act will affect England only.

So, plans to ban letting agent fees paid by tenants are expected to be announced today.

But, According to Housing Minister Gavin Barwell, speaking recently, this will simply increase market rents.

Gavin Barwell MP said in September in a tweet responding to a call for a ban:

Bad idea – landlords would pass costs on to tenants via rent. We’re looking at other ways to cut upfront costs & raise standards.

Just last week, the Communities and Local Government Minister, Lord Bourne, also expressed reservations about such a policy warning that:

we must be mindful of the potential impact on rents from banning fees paid by tenants.

Responding to this, Alan Ward, Chairman of the Residential Landlords Association says:

“This will not help tenants, especially those who are ‘just managing’.

“Agents’ fees have to be paid by somebody. If any extra fees are passed on to landlords, tenants will end up paying them forever as market rents will increase.

“It would have been much better for the Government to have taken steps to improve the transparency of fees charged by agents by forcing them to publicise what the fees actually cover.”

Nick Leeming, Chairman at Jackson-Stops & Staff, comments on the abolishment of lettings agents fees:

“While the announcement of the abolishment of lettings fees appears to be good news for renters, experience shows that any savings to the tenant will likely be passed on to the landlord who in turn could then pass them back on to the tenant through increased rent as they seek to cover their costs. This legislation is short sighted and is yet a further challenge to landlords who have faced a barrage of increased costs over recent months, including the additional 3% SDLT levied when they purchase a rental property and also the abolishment of mortgage interest rate relief which is set to commence in April next year.

“While the ban on lettings fees still requires a Government consultation before it is implemented, its impact on the UK housing market could be far reaching. Affordability issues which surround purchasing homes means that for many, the only option is to rent. We’ve seen a consistent reduction in the number of landlords buying investment properties since April this year which means that fewer rental properties are now coming on to the market to serve the growing rental population.

“A better solution would have been to create a more competitive fee environment and ensuring that landlords are not further discouraged from the market.”

  • The RLA represents 48,000 private sector residential landlords in England and Wales.
  • The tweet from the Housing Minister, Gavin Barwell MP, can be found here
  • The comments by CLG Minister, Lord Bourne, can be accessed here

Jackson-Stops & Staff has more than a century of experience in the prime property market with 45 offices nationwide, from houses and apartments in London’s smartest districts, to country houses, farms and estates and listed buildings, from residential development and new homes sales to professional services. Its directors and staff combine a first-class understanding of residential property with the very highest standards of services for clients.

Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

1 COMMENT

  1. Rents in Edinburgh have sky rocketed since the ban on agents fees.

    I feel sorry for tenants in England and Wales that they are being led down the garden path by a couple of loony lefty organisations and a government that is playing to the crowd.

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