Agents ask: Why did we even bother with fee ban consu...

ARLA has led a call by many letting agents on hearing the Queen’s Speech - what was the point of a formal consultation into a fee ban if the decision had already been made?

This follows news that legislation at some point in the next two years will ban agents and landlords from seeking tenants to pay any charge as a condition of their tenancy with the exception of the rent, a refundable security deposit of no more than one month’s rent, and a holding deposit no more than one week’s rent, and tenant default fees. The measure will also allow tenants to recover unlawfully charged fees.

“It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed 12 working days ago, on June 2” says David Cox, managing director of the Association of Residential Letting Agents, referring to the consultation process required as part of implementing a ban.

“It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account” he adds.

“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants” he adds.

Research conducted by Capital Economics for ARLA Propertymark earlier this year shows that referencing checks undertaken by agents take, on average, eight hours to complete.

“It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants. The research also showed that letting agents stand to lose around £200m in turnover, costing the sector 4,000 jobs. Landlords themselves would lose £300m meaning they may seek to cover their losses by increasing rents to tenants” he insists.

ARLA says that on average rent costs will go up £103 per tenant, per year, ultimately meaning tenants who move more frequently will reap savings on their overall costs - but longer term tenants, who are usually lower income families, will see a loss as their rents rise year-on-year.

The government says the full draft of the Tenants’ Fees Bill will be published later this year.

The Residential Landlords’ Association was also unhappy at the measure, confirmed in the Queen’s Speech, saying it left the rental sector in limbo.

“Rather than proceeding with draft plans that will be eclipsed by battles over Brexit, ministers could instead use powers they already have to introduce a fixed menu of fees which letting agents would have to publish. This would enable tenants to immediately understand fee structures, and enable them to more easily shop around” according to the association.