On 23 November 2016 the Chancellor of the Exchequer announced that the Government would ban letting agent’s fees to tenants in England. The details of this announcement are still unclear but the Department for Communities and Local Government (DCLG) will consult ahead of bringing forward legislation.
We're a member of the Government’s Working Group that was set up to explore options to reduce costs for tenants who access and move within the sector. Before the announcement the Government did not engage with this group or the wider industry to get our views.
On 7 April 2017 the Department for Communities and Local Government (DCLG) released a public consultation paper on banning letting fees paid to tenants that closes on 2 June 2017. It states:
We are leading the campaign to ensure that the Government focuses legislation to ban fees more effectively to meet the objectives of a better deal for tenants and better housing standards.
Agents need to get involved, have a dialogue with their constituency MP as well as making an individual response to the consultation. MPs should not make decisions about the future of property management without knowing all of the facts.
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Our research shows that the average fee charged by an ARLA Propertymark Protected agent is £202 per tenant. We think is fair, reasonable and far from exploitative for the services tenants receive including completing various critical checks on tenants before letting a property.
We believe that the ban on fees will involve passing the costs on to landlords. Who will then look to recoup these costs elsewhere; inevitably through higher rents.
It will have a drastic impact on many people and businesses and to announce it without consultation or clarity is wrong. We do not support the banning of letting agents charging fees to tenants. We believe fees should be open, transparent and reasonable. They represent legitimate costs to business that need to be covered. Read our proposal...
Commenting on the announcement ARLA Propertymark CEO, David Cox 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.”
As part of ARLA Propertymark's Tenant Fees campaign we commissioned evidence on the likely economic impact of the ban from leading consultancy Capital Economics.
The research shows that the residential lettings sector turns over around £4billion per year and employs some 58,000 workers. Fees charged to tenants generate around £700 million per year or approximately 20% of the industry's turnover.
Capital Economics predict that in the event of an outright ban agents stand to lose £200 million in turnover and a staggering 3,000 jobs could be lost.
After the announcement ARLA Propertymark CEO, David Cox spoke to the media to make sure members' point of view was being heard. On the day of the announcement he held six national news interviews including BBC Radio 4’s Today programme and BBC 5 Live.
We have written to the Chancellor and the Housing Minister explaining the the importance talking in person, as soon as possible to discuss how the ban will impact the industry.
We've also written to the First Minister in Wales requesting a meeting to ensure that the Welsh Government understand the evidence around fees after Assembly Members called for a ban in December.
In January, the First Minister replied saying that the Welsh Government is yet to make a decision on banning letting agent fees. However, they will review the evidence that is currently available including assessing the impact of the ban in Scotland and look at the results of the consultation in England. We are continuing to engage with representatives from the Welsh Government.
Following the announcement we asked for members feedback. Since then we have received hundreds of emails from members giving their views on how the ban will affect the industry.
Then as part of our monthly survey we gathered actual facts and figures from members to reinforce the anecdotal evidence we have received by email. To read a copy of our findings please check our housing research page.
This evidence is crucial to forming a comprehensive argument for the industry.
Behind the scenes we are making every effort to inform and influence politicians and officials at the Department for Communities and Local Government on the impact of the ban. It is essential we educate that government to the full range of practical implications that a ban would have.
We will be keep our members informed every step of the way through our website news and emails to members.
We are leading a campaign to make the Government think again on its proposals, but we will need your help. We'll soon be launching our campaign hub with a number of resources that will help you join the campaign.