Letting Agents will no longer be able to charge fees to tenants

by Mark Alexander

8:33 AM, 23rd November 2016
About 3 years ago

Letting Agents will no longer be able to charge fees to tenants

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Letting Agents will no longer be able to charge fees to tenants

Letting Agents will no longer be able to charge fees to tenants

HM Treasury has leaked an extract from the Chancellors Autumn statement which will announce that Letting Agents will no longer be able to charge fees to tenants

Whilst the Chancellors announcement will no doubt be treated by tenants as good news, industry bodies do not see it that way.

David Cox, Managing Director, Association of Residential Letting Agents (ARLA), said …

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.

“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”

Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA), said …….

“The new Chancellor is clearly aware of the pressures facing those living in the private-rented sector, but in attempting to improve affordability he has shown that, like his predecessor, he lacks an understanding of how the whole sector works.

“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long. Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.

“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents”.

Chris Sheldon. Managing Director of LettingSupermarket.com said ….

“It was only a matter of time before the legislation previously introduced in Scotland would filter into the rest of the UK so our business model was already prepared and ready for implementation. Our new fee scale to landlords will continue to be the most competitive in the Country offering full management for just 5% of rent (6% for properties inside the M25) and letting fees of just £100 per new tenant (£150 inside the M25). We will not charge for renewing tenancies for existing tenants”

Contact LettingSupermarket.com



Comments

Brendan Hindle

14:14 PM, 20th December 2016
About 3 years ago

I work for a letting and management agent and see the amount of work that goes into properly vetting tenants, as well as drawing up paperwork etc. When it's done properly, its a lot of man-hours. I find it simply staggering that this is expected to be done for "free".

Leaving aside the fact it seems like another way of 'taxing' landlords, all it will serve to do is drive rent prices up further as landlords and agents, quite rightly in some cases, look to recoup costs.

I would be the first to agree that costs need to be regulated. As a tenant myself I've been asked to pay £1000+ in fees from one agent, while paying only £400 elsewhere. If I'm being provided with a service I expect some cost to follow, but the wildly differing fees is what needs regulating, rather than ruling them out completely and restricting a 'free market' and a businesses earning potential.

I just hope the ruling out of fees doesn't lead to the cutting of corners when it comes to handling references etc.

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