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Ban on letting agent fees introduced as draft bill

The government will today introduce a draft bill to parliament to ban letting agents from charging tenants fees in England, as it pushes ahead with reforms in the private rented sector. The proposed ban, originally laid out in last November’s Autumn Statement[1], has now moved a step closer to being brought into law. It will form part of the draft Tenant Fees Bill, which the government claims will ‘help millions of renters by bringing an end to costly up-front payments’.

How would a letting fees ban work?

Under the legislation, letting agents would be prohibited from charging tenants a fee to rent a property.

Currently, the fees charged to tenants are ‘often not clearly or consistently explained’, the government said in a statement. The ban would also prevent agents ‘double-charging’ landlords and tenants for the same services. When the government consulted on the proposed ban, seven in ten tenants said letting agent fees currently affected their ability to move into a property.

The draft bill also proposes capping holding deposits at no more than one week’s rent and security deposits at no more than six weeks’ rent. It also aims to to set strict rules on how and when holding deposits should be returned to tenants.

Which? backs ban on letting agent fees

Responding to the government’s announcement, Alex Neill, Which? managing director of home products and services, said: ‘Navigating the rental market is stressful and expensive.

It’s right for the government to ban unfair fees, as this will help renters with the significant costs of moving home.’ ‘This new law must also be enforced so letting agents don’t abuse the system.’

Criticism of a proposed fee ban

While tenants are likely to welcome lower and more clearly-designated fees, questions remain about how the ban would work in practice. Letting agent association ARLA Propertymark has previously claimed that shifting letting costs to landlords may result in tenants paying higher rents.

A ban on letting fees for tenants was launched in Scotland in 2012, and the Welsh government has expressed an intention to follow suit. Currently, the Northern Irish government is considering its options regarding reforms to the sector.

Fee protection consultation launched

The government has also launched a consultation today on making membership of client money protection schemes mandatory for letting and managing agents. This move would add an extra layer of protection for landlords and tenants, and has long been called for by ARLA Propertymark.

The latest consultation comes hot on the heels of calls for evidence on leasehold issues,[2] managing agent fees[3], and reforming the home buying process[4].

References

  1. ^ last November’s Autumn Statement (www.which.co.uk)
  2. ^ leasehold issues, (www.which.co.uk)
  3. ^ managing agent fees (www.which.co.uk)
  4. ^ home buying process (www.which.co.uk)

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