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ARLA calls for end to up front fees

Tuesday 31 January 2017

PRESS RELEASE: ARLA opposes full fee ban and calls for fees to be spread over first six months of the tenancy. After new ARLA research highlights the impact a full ban will have on tenants, letting agents and the wider housing market

The Association of Residential Letting Agents (ARLA) is today reiterating its call to Government to ban upfront letting agent fees at the start of a tenancy and instead spread the cost across the first six months of a rental agreement.

New research released by ARLA, alongside a new policy paper, reveals that more than four out of ten (42 per cent) letting agents expect that a full ban would result in reduced staff numbers in the medium to long term, while 62 per cent of agents think that a full ban will cause the quality of rental properties to decline.

The research, completed by 1008 letting agents, explored the impact that a full ban will have on tenants, landlords, agents and the wider housing market. The analysis also looked at the purpose of letting agent fees, which cover a huge range of tasks, checks and legal requirements; such as conducting credit checks and collecting references which can take up to eight hours on average.

What are the benefits of spreading the cost of fees over a year?

Letting agents expect the condition of properties to worsen, and three in five (61 per cent) also expect property management standards to drop. By spreading the cost of fees, rather than banning them entirely, letting agents will be able to maintain current service levels to tenants.

The spreading of fees will also make tenancies more affordable to tenants, as it means they will only need to find the deposit and the first month’s rent.

Crucially, under ARLA’s proposals, tenants would only pay for fees over the first six months of a tenancy, rather than subsequent years, meaning that there would be no additional cost for renewing a contract.

Keeping costs down for landlords

By keeping fees in place, landlords will also benefit significantly and will not face higher costs at a time when they are already facing much tighter levels of regulation and dramatic rises in tax. ARLA’s research shows that letting agents overwhelmingly expect rents to rise if a full ban comes into force, as agents, who need to recoup the costs it takes to undertake the important jobs that fees currently cover, pass these onto landlords.

For the first time, landlords and letting agents would also share the risk of non-payment by tenants, creating a greater degree of comfort and security for landlords both in the rental market and those looking to join the sector.

Impact on jobs

Finally, ARLA’s research found that letting agents believe that over four in ten (42 per cent) agents think that a full ban will mean that staff numbers will reduce in the medium to long term as a result. By spreading fees, jobs in the letting agency sector will be saved, preventing a negative impact on the wider economy. Fees also provide a valuable source of revenue to the Exchequer in VAT receipts, which will be safeguarded by ARLA’s proposal.

David Cox, Managing Director, Association of Residential Letting Agents (ARLA) said: “When the Chancellor announced a full ban on letting agent fees in the Autumn Statement, we called the measure draconian and a crowd-pleaser. We stand by that. Nonetheless, we believe that ARLA’s proposal to spread the cost of the fees across the first six months of the tenancy will guard against the numerous unintended consequences of a full ban while also finding a solution that works best for the consumer. 

“Over the coming weeks and months, ARLA will be campaigning for a balanced legislative solution. Our research supports our previous calls that a full ban on letting agent fees will have a profoundly negative impact on the rental market, and do little to help cash-poor renters save enough to get on the housing ladder.”

View the report

ENDS

For further information contact:

ARLA Press Office
Tel: 020 7566 9777
E-mail: propertyprofessionals@lansons.com

1 Opinium Research carried out an online survey among 1,008 ARLA agents between 1st-21st  December 2016. ARLA Licensed letting agents were surveyed on a number of key rental sector issues including supply and demand, the management of BTL properties, and monthly rent prices. www.opinium.co.uk

 

About ARLA

ARLA is the UK’s foremost professional and regulatory body for letting agents; representing over 8,500 members. Our members operate to professional standards far higher than the law demands and we campaign for greater regulation in this growing and increasingly important sector of the property market. By using an ARLA Licensed agent, consumers have the peace of mind their agent will provide a professional service and their money is safeguarded by a Client Money Protection scheme.