Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

Proposals by the Labour Party to end letting agent fees paid by tenants will only increase rents for many tenants.

The Opposition will today (13th May) propose an amendment to the Consumers Rights Bill calling for an end to the fees charged to tenants by letting agents.

Despite Labour’s claim that this would cut costs for tenants, the Residential Landlords Association is warning that it would actually increase them.

Currently, in England, letting agents share the costs of providing their services including, marketing, contract preparation and credit checking between the landlord and the tenants. If all the fees are loaded onto the landlord, they will have to pass these on to the tenant through the rent.

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Given that landlords would want to recoup these extra costs in the first six months of a tenancy, there is a danger that they would set a higher rent level which would then continue for the whole of the contract. For tenants remaining longer than say six months, this will mean they continue to pay more for their tenancy.

Simply put, such a policy would in fact leave many tenants far worse off than they are at present from paying a one-off fee to letting agents. This has been acknowledged by Shelter who said in a report last year:

“If letting agencies do not absorb the costs they currently charge to tenants, landlords may be justified in increasing rents to reflect their additional costs.”

The RLA is calling for letting agents to provide tenants and landlords with a breakdown of what is covered by the fees they charge. Such transparency would enable tenants and landlords to shop around for agents them to offer competitive fees.

Commenting ahead of today’s debate, RLA Chairman, Alan Ward said:

“There is a very real danger that political posturing is getting in the way of sound, evidence based policy.

“The reality is that today’s amendment would, if implemented, only increase costs for tenants – the direct opposite to what Labour is calling for. Tenants will continue to pay the additional charges throughout the length of tenancy.

“The only way to reduce the cost of living for tenants is to boost the supply of homes to rent and yet all Labour’s policies will have the opposite effect by discouraging landlords from investing.”

In June 2013, Shelter published a report “Letting Agencies: the price you pay”. This can be accessed at http://england.shelter.org.uk/__data/assets/pdf_file/0006/671649/Letting_agencies_-_The_price_you_pay.pdf . Page 17 says of the proposal:

“If letting agencies do not absorb the costs they currently charge to tenants, landlords may be justified in increasing rents to reflect their additional costs.”

The RLA represents over 20,000 private sector residential landlords in England and Wales.

Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.
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