Concerns over unintended consequences of fees ban in Commons debate

by Property 118

2 weeks ago

Concerns over unintended consequences of fees ban in Commons debate

Make Text Bigger
Concerns over unintended consequences of fees ban in Commons debate

The House of Commons debate held this morning was organised by Kevin Hollinrake, MP for Thirsk and Malton, and co-founder of Hunters Estate Agency was to look at the proposed lettings fees ban.

The proposed bill also includes capping security deposits at one month’s rent and holding deposits at one week’s rent.

The majority of MPs that took part in the debate did at least acknowledge concerns over the unintended consequences of a total fees ban for small businesses and low income or non UK tenants along with potential for rising rents and job losses.

However, Housing Minister, Alok Sharma, confirmed that holding deposits will be excluded from the legislation.

Mr Sharma said that the problem with fees is that the agent is chosen by the landlord giving the tenant little opportunity to negotiate or opt out of these fees. “A landlord is better placed to pay reference and credit check fees and anyway it is they who ask for the checks to be completed, not the tenant.”

Henry Bellingham, MP for North West Norfolk said he had received no complaints from tenants about letting agent fees with the average application fee being £325 and the average renewal fee £75.

Mr Sharma confirmed the government’s response to the fees ban consultation would be published very shortly and acknowledged that the ‘broken’ housing market remains one of the greatest barriers to progress in Britain and he felt capping fees would be largely ineffective as it would be harder to understand and enforce.

David Cox, chief executive of ARLA Propertymark, commented on the debate saying: “We welcome this morning’s comments from Kevin Hollinrake MP around the unintended consequences of a total ban on letting agent fees.”

“It’s important that the government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation.”

“We are therefore disappointed in Alok Sharma’s comments today declaring that the government’s position remains that all fees will form part of the ban.”

“As Kevin acknowledges, the ban on fees for referencing checks will cause problems. Agents are required to carry out these checks by law, and they invest both time and resources to ensure this work is carried out properly.”

“The government must now consider exempting referencing checks from the ban as well.”

National Approved Letting Scheme (NALS) CEO, Isobel Thomson, replied: “NALS welcomed the cross party debate on the fee ban and confirmation that the Minister has adopted a common sense approach on holding deposits with his announcement that they will be exempt from the ban, but he gave no clear indication of when legislation might come forward.

“We were encouraged that MPs quite rightly expressed concern about the implications of rent increases as a result of the ban and the impact on those least likely to afford them. Of real interest was the Minister’s commitment to consider the ban on tenant fees in the context of wider work in the private rented sector, something NALS called for earlier this year. This is positive news and an indication that he has listened to the call for an end to piecemeal legislation. His clear reference to regulation was welcome as well as his willingness to explore options for what a regulatory framework might look like.”

 

Comments

Rob Crawford

2 weeks ago

Some common sense in this cross party debate on the banning of tenant fees. The debate informed us that deposit capping will be removed from the bill. We now need to pursue acceptance to charge tenants for referencing & right-to-rent fees. But how will they manage agents that over-charge for this service? This will be difficult, as such I suspect it will remain as a non chargeable service for tenants on the basis that landlords are better positioned to negotiate the price.

J lied03

2 weeks ago

I am most concerned about the risk of landlords not carrying out the right checks if forced to pay the fees themselves. Letting Agents won't work for nothing and so will pass the charges onto Landlords. If tenants wish to apply for renting a property which shouldn't they pay their fair share for the service provided by the lettings agent? The landlord already has to pay the lettings agents finding/management fee plus inventory and contract fee why is the landlord constantly being battered for satisfying demand in the most part with good housing which the council couldn't come close to satisfying should private landlords decide to sell up and leave the marketplace altogether.
I also deeply concerned about a cap on security deposits having had a tenant who gave notice to leave and then simply didn't pay their last months rent but said we could use the security deposit to cover it. This left us with a deficit and no security deposit to speak of had they caused damage to the property. Most landlord insurances wont cover you for only one months lost rent and which small landlord starts litigation to recover one months rent with the costs involved in doing so?
I

Old Mrs Landlord

2 weeks ago

Reply to the comment left by Rob Crawford at 08/09/2017 - 12:54
Rob, are you sure the removal from the Bill of deposit capping refers to security deposits as well as holding deposits? From my reading it appears to refer only to holding deposits.

Romain Garcin

2 weeks ago

I'd like to see landlords associations more vocal on this.

The debate has been framed in terms of "letting agents fees" but there are not such things.

A letting agent is indeed just an agent of the landlord and is not entitled to charge tenants anything. That's the law as it stands. When they charge tenants they do so on behalf of the landlord who has authorised it.

They want to ban landlords charging tenants.

Arnie Newington

2 weeks ago

They banned letting agent fees in Scotland and rents in Edinburgh soared. As all the tenants had extra money and were competing against each other for the same flats then it just pushed up rents.
The correct policy is to cap letting agent fees and to make them transparent.

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Leaseholder Landlords and the Law