Ban on letting agent fees for tenants one step closer – but could it PUSH up rents?
Letting agent fees vary wildly with some people being charged as much as £700 to rent a property - but that could soon change
LETTING AGENTS are to be banned from charging unfair fees under government plans.
Today, Housing Minister Gavin Barwell unveiled plans designed to protect millions of tenants.
The new move will stop agents double charging by billing both tenants and landlords for the same service.
What fees do letting agents charge renters?
Agent fees have risen to unaffordable levels over the past few years, according to Citizens Advice.
In September, it said that fees had gone up from an average of £125 in 2009/10 to £200 in 2014/15 - although sometimes they were as much as £700 per person.
According to the government's consultation, fees have risen to as high as £747 per person.
The average charges levied on renters is around £300 to £318.
These fees vary between letting agents but typically they will charge fees for administration, references, changing contract, inventory checking, contract renewals and chasing of late payments.
At the moment letting agents are able to levy fees on tenants, on top of anything they pay in rent and as a deposit.
Under rules introduced in May 2015 they must publish these in full on their websites, as well as displaying them in their offices and making the charges clear to renters.
The graphic above shows how fees vary between four of the biggest agents to give you an idea of how complex it is for tenants to compare fees.
Since the ban on fees was announced by the Chancellor Philip Hammond in the Autumn Statement last year, there has been little change.
How will a ban on letting fees work?
That is still being worked out. A consultation on the crackdown was launched this morning and is set to last for eight weeks.
Housing Minister Gavin Barwell said: “We’re determined to make all types of housing more affordable and secure for ordinary working people. Tenants should only be required to pay their rent alongside a refundable deposit and not face hidden fees.”
Will the new rules push up rents?
Agents argue that a ban will push up rents as landlords will be forced to pass costs on to tenants.
These costs would would be spread over the duration of the rental contracts rather than as an up-front cost, however.
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Research by the Association of Residential Letting Agents claims long-terms tenants will be hit the hardest - with rents being pushed up by £103 a year on average.
David Cox, managing director of the ARLA told The Sun Online: “For many tenants, buying a property simply isn’t an option, and they must depend on the private rented sector to provide security, good standards and fundamentally, a home.
“Our findings show that landlords are likely to raise rents as a result of the ban on fees. Those tenants who move least frequently, which tend to be lower income families, will be worst hit by rent rises.”
Last year, even the Housing Minister Gavin Barwell said that rents could push up prices.
He said in a tweet: "Bad idea - landlords would pass cost to tenants via rent. We're looking at other ways to cut upfront costs & raise standards.”
But a ban on fees didn’t increase rent in Scotland
Letting fees are illegal in Scotland since a ruling in 2012 which ordered that tenants should pay for the deposit and rent, with any other charges being footed by the landlord.
The charity Shelter claims that rents in Scotland have not risen more that any other comparable part of the UK, since the ruling.
Its research found 59 per cent of agents reported no change, while one landlord in 120 said they noticed an increase in fees.
Another point to note is that the government consultation concluded agents have been double charging fees - to both landlords and tenants.
Vicky Spratt, deputy editor of The Debrief, who ran a campaign to end letting agent fees, told The Sun Online: "The argument that renting costs will go up after the fee ban seems nonsensical at best and wilfully misleading at worst to me. The fees are unjustified and unnecessary, that's why they're being banned.
"The market dictates rent costs - supply and demand - not the dodgy fees agents have been whacking on top in the name of pure profit."
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