The Government’s consultation on letting fee ban revealed

The Government has finally unveiled its consultation on the proposal to stop letting agents charging fees to tenants in England.

The report illustrates the Government’s intentions to prevent agents charging tenants any fees, premiums or charges that facilitate the granting, renewal or continuance of a tenancy.

The ban also includes any fees charged by landlords or any other third parties, ensuring letting fees are not paid by tenants through any other route.  Tenants will only be required to pay rent and a refundable deposit.

Several exemptions to the ban were included in the report such as; holding deposits taken to remove the property from the market while tenant referencing is carried out, and in-tenancy property maintenance or service charges arising from tenant actions for instance replacement keys or deliberate damage.

The Government are aware that rents may rise if increased costs are passed onto landlords and said: “We would not expect the full level of tenant fees that are charged currently by letting agents to be passed on to landlords since there is evidence that a number of agents are charging excessive fees and that some agents are double charging landlords and tenants.

“Under the ban, all agents will need to be efficient and fair with their fees in order to secure landlords’ business and therefore the fees charged should be a fair reflection of the services provided.

The changes will allow tenants to compare properties based solely on rental figures rather than on additional letting fee costs.

The consultation also revealed that the Government are considering the option of capping the amount of deposit that landlords can request from tenants.  However affordability pressures will still remain even with a capped deposit. They must therefore explore other ways to reduce the financial burden on tenants.

The report says: “Not all landlords currently take deposits and we are keen to understand what alternative models there are to remove the need or reduce the scale of a deposit at the outset of a tenancy, and what role the Government might be able to play in supporting and facilitating the growth and development of such models to increase choice in the marketplace.”

The document does suggest the option of allowing tenants to pay their deposit in monthly instalments over the first few months of the tenancy or where an agreed deposit is blocked on a tenant’s credit card for the duration of the tenancy.

Commenting on the Government’s consultation, housing minister Gavin Barwell said: “We’re determined to make all types of housing more affordable and secure for ordinary working people”.

David Cox, Chief executive of ARLA Propertymark, responded to the Government’s proposals saying: “The Government’s housing policy is shambolic and today’s consultation contradicts its already stated aim to encourage longer term tenancies. Independent analysis launched at ARLA Propertymark’s annual conference last week revealed that if an outright ban was introduced, rents will increase by £103 per year which will only serve to financially punish long term tenants”.

He added: “The decision is a short-term crowd pleaser and we are disappointed the Department for Communities and Local Government has not considered our proposals in today’s consultation”

The Government will be running workshops to discuss the consultation and the letting fee ban in London, Manchester, Bristol and Birmingham.

Full article available on Property Industry EYE:

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