Ban on letting agents fees paid by tenants.
The Government’s long awaited consultation paper on banning tenant fees in England was published on 7th April 2017 and comments are invited by 2nd June 2017.The proposals, first raised by the Chancellor in his Autumn Statement if November 2016 outline the controversial measures stopping lettings agents charging fees to tenants. The ban on lettings fees was introduced in Scotland in November 2012.The document shows that the Government intends to legislate that no agent will be permitted to charge tenants any fees, premiums or charges that meet the general definition of facilitating the granting, renewal or continuance of a tenancy.The ban would also include any letting fees charged to tenants by landlords and any other third parties to ensure that letting agents are not paid by tenants through other routes. Tenants should be required to pay their rent and a refundable deposit only.There are some exemptions proposed, such as holding deposits to take the property off the market while reference checks are undertaken, and in-tenancy property management service charges arising because of the action of the tenant such as replacement keys or for deliberate damage.The consultation recognises lettings agents should still be reimbursed for their work but claims in many cases they have already been charging landlords.The document recognises rents may rise if increased costs are passed on to landlords.It states: “We would not expect the full level of tenant fees that are charged at present 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 fees in order to secure landlords’ business and therefore the fees charged should be a fair reflection of the services provided.“Like any other supplier, landlords will need to set a rent that takes into account their costs whilst still being attractive to prospective tenants. Some landlords may absorb some or all of the increased fees charged, however others may choose to reflect the increase in the headline price for the property.”The Government claims the changes mean tenants will be able to compare properties based on rental level rather than other fees.Once introduced, the ban would be enforced primarily by the local Trading Standards office with civil penalties of up to £5,000, industry bans or criminal prosecutions all possible.As if the fee ban wasn’t enough upheaval, the consultation also shows the Government is considering different ways for deposits to be paid to reduce the financial burden on the tenant at the start of a tenancy.One suggestion in the document is for tenants to pay their deposit in instalments over the first few months of the tenancy or using a line of credit where an agreed deposit amount is blocked on a tenant’s credit card.As can be seen the ramifications of a ban are potentially far reaching for landlords, tenants and letting agents. The effects could include a combination of less profit for landlords, higher rents for tenants and possible reduction in staff numbers within letting agencies. For a copy of the Government’s consultation paper please use the link:https://www.gov.uk/government/consultations/banning-letting-agent-fees-paid-by-tenants If you wish to object to the proposals raised within the consultation paper then please use the link:https://www.surveymonkey.co.uk/r/dclglet or alternatively contact your local MP setting out your views.For example, Jo Churchill MP using:firstname.lastname@example.org