Sun 27 Nov 2016
In his first Autumn Statement last month, Chancellor Philip Hammond pledged to ban letting agents from charging tenants upfront fees “as soon as possible”. He quoted the ability of letting agents to be able to charge unregulated and unacceptably high fees to tenants as the reason behind this move.
Consultation will begin in the New Year but currently it is unclear what will be classed as an ‘up-front fee’ and whether the ban will include the costs for taking up referencing and preparing inventories, or just focus on agents’ tenancy arrangement fee.
Consultation with key stakeholders, including agents, will take place in the New Year and it is thought the bill will be announced in the Queen’s Speech in May next year. However, given the fact that the bill will need to be passed by the House of Commons and House of Lords, we don’t anticipate the ban becoming law until Spring 2018 at the earliest.
Our Lettings Director, Anthony Charters, commented “We currently charge prospective tenants an administration fee which has remained consistently, and relatively low over the years. The fee covers the costs for taking up referencing, preparing an inventory and the drawing up a legal Assured Shorthold Tenancy agreement - in addition to undertaking new 'Right to Rent' checks on behalf of the government. We are supportive of any regulation that prevents the small number of high profile, mainly London based agents, from charging unacceptably high fees to tenants, but we also believe that passing the costs onto landlords as suggested by the Chancellor will simply see those landlords increasing their rents in response”.
He added “Much of the media, and possibly the Chancellor’s advisors, appear to misunderstand what actually constitutes a ‘tenant fee’, with many believing that the tenancy deposit counted as part of the Tenant Fee and some thinking that the first month’s rent did too. In light of this, we welcome any move by the government to help improve the transparency surrounding tenant’s fees, however banning fees completely is a retrograde step which will ultimately rebound on tenants, the very people the government are seeking to help.”
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