Tenant fees ban branded 'draconian' by Letting Agent lead
ARLA Propertymark's chief executive David Cox urged members to remind their MPs to keep up with the Draft Tenant Fees Bill as it moves through Parliament, at the ARLA annual conference last month.
He said the Tenant Fee Ban was coming but it was up to Letting Agents and landlords to help oppose those who want to make it stricter. He said: “It remains vital that each and every MP understands the implications, issues and unintended consequences of this ban.”
He added that ARLA Propertymark had already secured some concessions in the legislation such as allowing change of sharer fees and holding deposits.
Mr Cox said: "It is essential that during its passage through Parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies; including legal requirements such as Right to Rent checks.
"Now is the time for agents to see their MPs and explain the vital services they provide for the fees that they charge."
The government said back in the 2016 Autumn Statement it would ban letting agents’ fees – and while that might sound like good news for tenants, the fear is that the costs will be passed on to landlords, forcing up rents, and ultimately hurting the tenant anyway.
Yet the government continues to insist the risk to rents is ‘low’.
Their proposals include:
- Ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy with the exception of the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees.
- Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent. (The draft bill also set out the proposed requirements on landlords and agents to return a holding deposit to a tenant).
- Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees, and create a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. (Civil penalties of up to £30,000 can be issued as an alternative to prosecution).
- Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
- Appoint a lead enforcement authority in the lettings sector.
- Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
Mr Cox said: "We believe that the ban on fees will involve passing the costs on to landlords. Who will then look to recoup these costs elsewhere; inevitably through higher rents.
"We do not support the banning of letting agents charging fees to tenants. We believe fees should be open, transparent and reasonable. They represent legitimate costs to the business that need to be covered."
Capital Economics predicts that in the event of an outright ban agents stand to lose £200 million in turnover and a staggering 3,000 jobs could be lost.
Richard Truman, Head of Operations at Simple Landlords Insurance added: “The Fee Ban legislation is something landlords need to be aware of – and we’d very much like to know what LANDLORDS think Letting Agents should be doing to mitigate its impact. That’s why we’ve put together a short survey for landlords, so they can let us know how any cost increases will affect their relationship with both agents and tenants.”