Plans to ban fees paid by tenants to both landlords and letting agents will leave the market in limbo, according to the RLA.
The Queen’s Speech revealed the plans, first announced by the chancellor in November, will now be published as a Draft Bill for further scrutiny.
This comes after a consultation on the proposed ban closed on June 2.
The Draft Tenants’ Fees Bill will include:
- Measures to ban landlords and agents from requiring tenants to pay letting fees as a condition of their tenancy.
- Measures to enforce the ban with provision for tenants to be able to recover unlawfully charged fees.
- A cap on security deposits at one month’s rent and a week’s rent for holding deposits.
Evidence shows most RLA landlords either charge nothing at all or a minimal fee of around £25 for necessary checks.
However the association is extremely concerned about plans to cap deposits, which it believes will reduce flexibility within the sector. It believes that landlords will be less likely to take a chance on tenants who are not obviously financially secure as, under the new plans they will have no ability to mitigate the risks.
Plans to cap deposits cames as a surprise when they appeared in the government’s consultation documents, as they had not been part of any earlier discussions. The decision to set out details of the proposed cap so soon in the process is deemed even more worrying.
The RLA believes the government could make a measurable improvement now, without legislation, by bringing in a fixed range of fees for agents.
RLA Chairman, Alan Ward said: “A Draft Bill serves neither tenants nor landlords, and leaves the market in a state of unhelpful limbo.
“Rather than proceeding with draft plans that will be eclipsed by battles over Brexit, Ministers could instead use powers they already have to introduce a fixed menu of fees which letting agents would have to publish.”
In its official response to the fees consultation submitted earlier this month the RLA said it feared landlords would be left to pick up the bill if the government introduced a blanket ban.
It warned that with some agents picking up as much as 30% of their income through tenants’ fees it was inevitable that these would pass them on to landlords.
The impact of this when combined with pressures such as tax changes and licensing fees would mean costs would be likely to filter down to tenants, through increased rents.