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Proposed Ban on Lettings Fees to Tenants

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Thu 24 Nov 2016

Proposed Ban on Lettings Fees to Tenants

 

Chancellor announces plans to ban letting agent fees to tenants in England

As part of today’s Autumn Statement the Chancellor of the Exchequer, Phillip Hammond, confirmed plans to ban letting agents' fees to tenants in England. The details of this important announcement are still very unclear but the Department for Communities and Local Government (DCLG) will consult ahead of bringing forward legislation.

Since the announcement ARLA MD, David Cox has spoken with DCLG who have confirmed that a consultation on banning letting agents’ fees will be launched in the New Year.  Details of what the consultation will contain have not been finalised and the Government has asked for ARLA to bring forward the industry's views. DCLG also confirmed that this will require primary legislation through an Act of Parliament. This will give agents time to plan for the ban to come into force; in whatever form it takes.

ARLA is extremely disappointed that this announcement has been made without a strong basis of evidence. We’re asking the Chancellor and the Housing Minister for a meeting at the earliest opportunity in order to ensure that they fully understand the damage that this will cause to housing standards and the impact it will have on the cost of renting.

We need the Government to explain why measures have been brought forward without prior consultation which undermine the work that we and other partners are doing as part of the DCLG Affordability and Security Working Group.

We do not believe that these measures will tackle rogue landlords who will continue to operate outside the existing boundaries of housing legislation.

On news of this announcement there are a significant number of common concerns - most notably the loss of income to support the vital services that Letting Agents provide. This includes the increased legislation, the burden of which has grown significantly over the last 18 months, with little to no investment in policing these new laws.

Commenting on the decision to ban letting fees to tenants ARLA Managing Director, David Cox said:

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.

“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”

We are telling our members to continue with business as usual. When the consultation is launched, the industry must present a united voice and all agents need to work with ARLA to make our collective views heard at the very highest levels of government.