The Ban on Letting Agent Fees

On 23 November 2016 the Chancellor of the Exchequer announced that the Government would ban letting agent’s fees to tenants in England. We're a member of the Government’s Working Group exploring options to reduce costs for tenants within the sector and the Government did not engage with this group or the wider industry before the announcement.

On 21 June 2017 the draft Tenants’ Fees Bill was announced as part of the Queen’s Speech, only 12 working days after the consultation paper on banning letting fees paid by tenants had closed.

The Queen's Speech states:

Tackling unfair fees on tenants will make the private rental market more affordable and competitive. The draft Bill will bring forward proposals to:

  • ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy with the exception of the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees
  • cap holding deposits at no more than one week’s rent and security deposits at no more than one month’s rent

While we wait for the Bill to be published we expect any provision for tenants to recover unlawfully charged fees to relate to agents who charge fees beyond the date that the legislation passes into law. It would be totally unprecedented if fees that were charged prior to the passing of the law could be recovered.

The fees that you currently charge tenants remain completely lawful as long as they are clearly displayed in branches and online.

Support Our Campaign

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 MP before the debate and vote on the issue. MPs should not make decisions about the future of property management without knowing all of the facts.

Visit the campaign page 

Our Position

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 the 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.”

Assessing the Economic Impact of the Proposed Ban on Letting Agents Fees

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.

Read more

Boards

The Consultation

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 closed on 2 June 2017. It stated:

  • That it intends to bring forward a full ban on upfront fees charged by letting agency fees. Fees associated with ongoing services, such as providing replacement keys, carrying out repairs as a result of deliberate damage or breaches of the tenancy agreement, or late rent payment charges will not be banned.
  • That it will examine whether holding deposits collected by agents at the start of a tenancy should also be capped.

Read our consultation response

Getting Members' Views Heard

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 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.     

What Are We Doing for Members?

Gathering evidence

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.

Challenging Government

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.

Keeping members informed

We will keep our members informed every step of the way through our website news and emails to members.