Agents react to the Tenants’ Fees Bill
Many agents are asking the question, what was the point of the letting fee ban consolation when the decision had already been made?
The Queen’s speech has revealed that legislation will come into place over the next two years banning agents and landlords from charging tenants any fees with the exception of rent, a refundable security deposit of no more than one month’s rent, a holding deposit of no more than one week’s rent, and tenant default fees.
The new legislation will also allow tenants to recover unlawfully charged fees.
David Cox, managing director of the Association of Residential Letting Agents, commented on the ban: “It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed 12 working days ago on June 2nd”.
“It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account”.
He added: “a ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants”.
Captial Economics research, conducted earlier this year for ARLA Propertymark, revealed that on average it takes up to eight hours for referencing checks to be completed by agents.
“It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants. The research also showed that letting agents stand to lose around £200m in turnover, costing the sector 4,000 jobs. Landlords themselves would lose £300m meaning they may seek to cover their losses by increasing rents to tenants” insists Cox.
ARLA have said that rent costs could rise on average by £103 per tenant, per year, meaning tenants who move frequently will save on their overall costs. However, long term tenants, typically lower income families, will suffer a loss as their rents continue to rise year-on year.
The full draft of the Tenant’s Fees Bill is expected to be published later this year.
The Residential Landlord’s Association are also unahappy about the ban saying it will leave the rental sector in limbo.
According to the RLA: “rather than proceeding with draft plans that will be eclipsed by battles over Brexit, ministers could instead use powers they already have to introduce a fixed menu of fees which letting agents would have to publish. This would enable tenants to immediately understand fee structures, and enable them to more easily shop around”.
“While the ban will come as welcome news to renters, the fees allow landlords and agents to carry out a series of vigorous checks on prospective tenants before they let the property. Ultimately these costs have to be paid be somebody, and they’re likely to fall on the landlord. I suspect most landlords will end up increasing rents to recover these extra costs, meaning the ban will be simply moving costs around rather than reducing them.”
Full article available on LettingAgentTODAY: https://www.lettingagenttoday.co.uk/breaking-news/2017/6/agents-ask-why-did-we-even-bother-with-fee-ban-consultation