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Ban on letting agent fees – the industry reacts

letting agent fees
Sally Walmsley
Written by Sally Walmsley

Lettings Agent associations have joined the RLA in condemning the Government’s decision to ban letting agent fees.

David Cox, managing director, Association of Residential Letting Agents (ARLA) has branded the move draconian.

He 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 licensed 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.”

The National Approved Letting Scheme (NALS) said the chancellor’s decision had taken the industry by surprise – and that it would continue its work to investigate alternatives to an outright ban.

Chief Executive, Isobel Thomson said: “Given the rhetoric around excessive letting agent fees, today’s announcement is perhaps of little surprise. We don’t believe banning fees is the answer. The majority of letting agents fees are fair and reasonable and charged for the service they provide.

“Unfortunately, by banning, many of these fees will still be passed on, but in other ways. It will not give give renters ‘greater clarity and control over what they will pay’ as suggested by the Chancellor.

“While others have been burying their head in the sand, NALS has been working with the lettings industry to create a solution on upfront letting agent fees through the Fair Fees Forum. We are offering the expertise of the Forum to Government as they consult on bringing forward legislation.”

In contrast homeless charity Shelter has welcomed the announcement, which it says will make a huge difference to people struggling to afford fees.

Chief Executive Campbell Robb said: “Millions of renters in England have felt the financial strain of unfair letting agent fees for far too long, so we’re delighted with the government’s decision to ban them. We’ve long been campaigning on this issue and it’s great to see that the government has taken note.

“Our recent survey found that nearly half of renters had been asked to pay fees that they thought were too high, with many having to borrow money every time they move, so this will make a huge difference to all those scraping by in our expensive, unstable renting market.”

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and award-winning Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

5 Comments

  • Not that many years ago a Lettings agent charged a fee to the Landlord to find a tenant. This fee was usually a % of the annual rent, and varied depending on whether there was any management involved too. Lettings agents then got greedy and started charging fees to prospective tenants too, for credit checks, admin fees and contract fees. They did not reduce the fee to the Landlord as a result! They saw it as a way to make more money, effectively charging both the tenant and the Landlord for the same service. I stopped using agents at that point and have never looked back. If they try to charge Landlords more now as a result of this ruling, vote with your feet!

    • I agree some letting agents have got greedy, however letting agents have Costs too Property portals, property ombudsman, money protection scheme, people not turning up for viewings, insurance, wages, the list goes on. This doesn’t get away from the fact that yet another cost will be passed onto the landlord.

  • Let me tell you something I am a landlord and a letting agent business owner and I am very upset I don’t charge landlords much at all so then I can negotiate the best price for the tenant so I charge a minimal price for referencing to cover paperwork and that’s not the end tenants never stop emailing and calling me my lines are open 24/7 if the fees are banned my level of service will 100% drop and I will make sure my landlords charge a higher 1st month rent to make up for the loss and that might mean less let’s because of the high price but we have to cover our costs we are a business not a charity.
    Maybe politicians should try a day working in this industry they may learn something

  • This chancellor is a criminal – he avoids paying tax. How can we honestly allow a fraud like him to make such drastic draconian changes without first consulting the industry. This chancellor needs to be fired. Clearly being a millionaire makes him short sighted and from a story book child’s reading class of not understanding the business. How can this country and its voters stand by and let this hideous man destroy the lives and businesses of the letting industry.

    It’s a bit like telling Tesco it can’t sell milk for more than it buys it from the farmer- it’s unfair on the farmer. Or telling a restaurant that it makes too much money on the food and must therefore give the drinks away for free. Or the fish and chip shops being forced to give away chips with every fish they sell because they make too much money?

  • I work in an estate agent north of England where there is a large amount of tenants that claim DSS. They need a copy of there tenancy agreement to take to the housing to start there claim.. they should pay for this at least otherwise without this they wouldn’t get there housing paid for.
    Also if tenants are not sure if there credit is good or whether there landlord is going to give them a good reference, they will take a chance and waste are time because it isn’t costing them a penny!!! VOTE CAP FEES NOT BAN!!!

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