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.”