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Ban of Letting Agent Fees Charged to Tenants

Today’s Autumn Statement has imposed a ban on letting agent fees charged to tenants in England. The ban is to come in “as soon as possible”. Crucial details are yet to be revealed

Earlier, ARLA reacted with outright dismay.

David Cox, ARLA’s managing director, 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.”

So will rents rise as a result?

Groups representing landlords and lettings agencies insist this will be the case.

Richard Lambert, Chief Executive of the National Landlords Association said: “Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.

“Agents will have no other option than to shift the fees on to landlords. But adding to landlords’ costs will only push more towards increasing rents”.

Richard Price, director of the UK Association of Letting Agents, said: “Arbitrary bans sound appealing.

“A ban on agent fees may prevent tenants from receiving a bill at the start of the tenancy, but the unavoidable outcome will be an increase in the proportion of costs which will be met by landlords, which in turn will be passed on through higher rents.”