Agency claims some tenants think deposit and rent are ''agent fees'

A letting agency says the scale of confusion over letting agents’ fees is such that some tenants actually believe the deposit and first month’s rent are ‘up-front fees’ and could in theory be banned by the government.

In the Autumn Statement last week, Chancellor Phillip Hammond said he was banning letting agents’ fees levied on tenants in England, although this is subject to further clarification and a consultation process expected to start in the new year.

Mark Offer, managing director of Besley Hill Residential Lettings in Bristol, says he can see the need for more transparency in fees but says that the ban as set out is effectively the same as that put in Labour’s 2015 manifesto and represents a U-turn “as both Philip Hammond and Theresa May voted against the proposal in 2014.”

Offer says he is concerned at the lack of clarity.  

“It could easily be argued that immigration right to rent checks (which are a legal requirement), referencing and inventory costs should be met by the tenants. Will these be included in the ban? Or will it just be ‘tenancy arrangement fees’?” he asks. 

He says the consultation may be long enough to avoid the measure even being included in the next Queen’s Speech in May 2017 and even if it is set out in that, the slow parliamentary processes mean “it’s unlikely to come into effect until April/May 2018 at the earliest.”

Offer also says there is often confusion amongst tenants about the fees they pay. 

“Many think the deposit and first month’s rent are ‘tenant fees’ - hence some of the wild claims about extortionate fees” he says.

Offer also worries that a ban on such fees would put more onus on a prospective tenant to provide all the prerequisite information, including an employer’s reference, credit history check and bank reference.

“This would have to be verified by someone such as a solicitor. This would inevitably delay the application process, which may lead to ‘tenant gazumping’ and longer void times, which would in turn lead to increased rents as landlords strive to maintain their margins” he says.

“If a ban on upfront tenant fees came into force, there would be nothing to stop prospective tenants applying for multiple properties and dumping them at the last moment, again leading to longer void times and a reduction in the availability of properties apparently up for rental at any one time” he adds.