The Queen’s speech this week made it clear that letting agent’s fees were to be banned. At least, this was proposed by the Conservative government in last year’s autumn budget, and became a manifesto pledge for Theresa May in the general election this year. It’s possible that the ban could come sooner than is predicted. But what does that mean for landlords?
The ban in a nutshell
At the moment, “letting agent’s fees” refers to fees that are charged to both landlords and tenants when agents arrange a new tenancy in England or Wales. The fees should cover rigorous checks that the letting agents or landlord should take out before a new tenant moves in. The problem that tenants face is that there is no set amount for these fees, so letting agents tend to charge what they like. Letting agency fees in England are unregulated, and renters have no leverage. No comparison sites really exist for this kind of thing, so tenants have to like it or lump it, as what they’re being charged and the services offered rarely add up. As it turns out, tenants have been vocal for years about this situation and have now caught the government’s attention, who put pen to paper last year suggesting they were going to make in-roads to have these fees banned as soon as feasibly possible.
Where does this leave letting agents and landlords?
One of the main questions that landlords and letting agents will be asking is how the government will cover their future expenses, being that the fees cover important checks that need to be signed off before a new tenant comes in to the property, but because of this they have a certain legal value – which makes simply banning them ever trickier. Many landlords are worried the fees will solely pass to them, leaving them to foot the bill for the tenant. However, a ban should mean that some stability is added back into the housing market with renters knowing exactly how much they should be paying.
Will fees really disappear or just be ‘rebranded’?
According to the government, tenants may still be charged holding deposits to take a property off the market as reference and safety checks need to be sorted out. Tenants could also be expected to pay for management services to be carried out that are currently covered by the letting agent’s fees. The government has a great ambition to increase competition and quality of service in the private rented sector, but with renters set to hit the figure of 6 million next year, the cut in fees and increased competition can’t come fast enough for renters – after all, the fee cut was promised by every major party before the 2015’s general election and is in the government’s efforts to “promote fairness and transparency in the housing market”.
Still need clarification?
If you’re in need of some advice as a landlord, contact the iLet team today. Their years of expertise means they’re well equipped to handle any enquiry you may have.