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Summary of responses to fees sheds more light on Government thinking

Friday 10 November 2017

The Department for Communities and Local Government have published a summary of responses and its response to the consultation on banning letting fees paid by tenants in England. The document summarises the comments received and sets out the Government’s approach and next steps.

On 7 April 2017, the Government launched an eight week consultation seeking views on the detail of how a ban should be introduced. The consultation closed on 2 June and 4,724 responses were received from a range of individuals and representative bodies. 50% of responses were from tenants, 32% were from letting agents, 10% were from landlords and 8% were from other interested stakeholders.

Part A – Existing regulation

Only 15% of tenants consider that letting agent fees are clearly and transparently displayed and a number of responses mentioned that letting agents are not displaying their fees on online portals and that there is no requirements for them to do so. However, 69% of landlords consider that letting agent fees charged to landlords are clearly and transparently displayed.

Given that a large number of tenants use these portals to find properties in the private rented sector, we intend to bring forward proposals to amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals.

Part B – Banning letting fees

A majority of tenants (96%) believed that the ban on letting fees should also include a ban on letting fees charged by landlords and third parties. This compares to 75% of landlords and 73% of agents did not agree.

Approximately 20% of landlords and agents said that the fee ban would lead to a reduction in supply of rented homes as landlords leave the market. More than one in ten agents expressed concern that landlords would choose to self-manage, rather than using a letting agent; letting agents and landlords thought that this could lead to deterioration in standards across the sector.

Part C – Capping deposits

There was broad support for capping tenancy deposits. Landlords’ preferred cap was 2 months’ rent but there was also support for a cap of 6 weeks’ or one month’s rent. Many large agents disagreed with the proposal to cap holding deposits, but stated that if a cap were to be introduced it should be at the level of 2 weeks’ rent.

Part D – Enforcement

A majority of both landlords and letting agents expressed opposition to Trading Standards enforcing the ban. ARLA Propertymark are referenced as arguing that Trading Standards are not sufficiently resourced to effectively enforce current regulations and that failure to increase resources would further punish compliant agents while rogue agents would enjoy a competitive advantage.

There was strong agreement across all groups for the introduction of a lead enforcement authority.

Letting agent regulation

The Government will consult on the detail ahead of bringing forward legislation to require letting agents to register with an appropriate organisation, satisfy minimum training requirements and comply with an industry code of conduct.

No to rent control

The Government outline that they do not believe that capping or seeking to control rent is an effective way to improve affordability for tenants. They say evidence shows that rent control can restrict investment, leading to fewer properties in the private rented market and higher rent as a result.

How to Let guide

The Government is also committed to continuing to work with the sector to promote good practice, to improve standards and to tackle rogue practices through non-legislative routes, including through an updated ‘How to Rent’ guide and a new ‘How to Let’ guide.

Summary of consultation responses and Government response

Important: Don't forget that the ban on fees is only a Bill at this point in time and has not yet been brought into law. The Bill will have to go through several readings in both houses before it receives Royal Ascent and gets passed into law. Amendments can still be tabled and discussed in Parliament if you lobby your MP to highlight the impact that the ban could have on your business and ultimately on your tenants. 

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