WHAT DOES THE NEW BAN OF TENANTS’ LETTING FEES MEAN?
20 December 2016
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At the moment, the one thing we know for certain is that no one actually knows how this issue is going to pan out!
Following months of speculation in the industry, the Chancellor finally announced in his Autumn Statement that tenants’ letting fees are to be banned. As members of ARLA (the Association of Residential Letting Agents), we are committed to regulation within the private rental sector in order to rid the industry of those elements that clearly are just around to make a quick buck. Nevertheless, while we applaud the Chancellor’s motives in looking to safeguard tenants, we believe there needs to be some balance, transparency and fairness in the process.
We strongly believe that tenants’ fees should be regulated, with - if necessary - a cap put in place. This would effectively discourage the minority of lettings agencies who charge excessive fees, but without any knock-on effects. The trouble with an outright ban, on the other hand, is the simple fact that the same amount of work will still need to be done to commence a tenancy – and if tenants are no longer going to be charged for that work, then landlords will have to pay for it. This in turn would leave them with two choices: either to increase rents in order to offset the extra costs, or to pull out of the private rental sector altogether - thereby further limiting supply, with the inevitable effect once again on rents.
What everybody involved in this issue - tenants, landlords and agents - needs is more detail. As things currently stand, the proposal for a ban is going out for consultation with all interested parties at the beginning of 2017, and it is our understanding that primary legislation will also have to be put in place - so this is unlikely to happen anytime soon.
Meanwhile, it goes without saying that we will track developments very closely and continue look to help all our customers, both landlords and tenants, in any way we can.