Tenant fees ban to cost between £77m and £274mMake Text Bigger
It has now been announced that the Tenants’ Fees Bill is now formally starting its progress through Parliament and is due to be implement in Spring 2019.
An impact assessment of this ban on charging tenants fees has estimated it will cost letting agents between £77 and £274 million in the first year and lead to job losses in the industry. Click here to see the full impact assessment.
Along with Section 24 mortgage interest relief restrictions the government find it politically advantages to tell the electorate that this will cost landlords more without ever admitting it will increase rental costs for tenants.
David Smith, RLA policy director commented: “Rather than pressing ahead with plans for more legislation in the sector that will take time to be considered by Parliament and enacted, ministers could achieve a greater and earlier impact by using the powers they already have to improve the transparency of fees charged by agents.
“With warnings that the policy could lead to rent rises, there is a very real danger that whilst the cutting the upfront cost of renting, tenants will find themselves paying them through higher rents on a permanent basis.
“Instead of using scarce Parliamentary time to make changes to letting fees much of which could be done by regulation and better enforcement, the Government could do more to reform the deposit system to deal with the need for most tenants to fund two deposits, one for the property they are leaving and one for the property they are going too. This cost is much higher and a much more substantial barrier to tenant mobility than agency fees.”
David Cox, chief executive of ARLA Propertymark, said: “We do not believe the Bill will achieve its aims, as our own research last year demonstrated that tenants will end up worse off and banning fees will not result in a more affordable private rented sector.
“ARLA Propertymark has worked hard over the last 18 months to explain the unintended consequences of the ban to government, and we’re pleased they have listened and allowed Change of Sharer, Surrender of Tenancy, holding deposits, exempted the Green Deal Charge, and capped security deposits at six weeks, rather than the MHCLG Select committee’s proposed five week cap. Now that we have greater clarity on what the ban will entail, agents must start preparing for when it comes into force.”
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