letting fees ban
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Letting fees ban
It’s a done deal, says Jeremy Leaf, BSc FRICS FARLA but what will the new letting fees bill really mean for estate agents?
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Agents have at most 16 months to get ready for letting fees ban, says ARLA
The letting fees ban in England is expected to be introduced in April 2019 at the latest, the Association of Residential Letting Agents (ARLA) has confirmed, to give agents time to implement the looming Client Money Protection (CMP) regulations before the ban goes live. “Mandatory CMP needs to come into force before the letting fees ban does to prevent some more unscrupulous agents from propping up their businesses through their client funds when the ban comes into force,” ARLA’s Chief Executive David Cox told The Negotiator. He also revealed that ARLA is to tender to become one of the government’s approved CMP providers when the scheme goes live. Approved provider In its consultation document the government says it would prefer for CMP to be administered by an approved list of providers rather than civil servants running a centrally-run scheme, in the same way the deposits protection and redress schemes work. ARLA’s existing CMP scheme – members must have it in place to join – is the largest in the industry with £1.6 billion of the total £2.7 billion client funds held by the industry covered. “It’s all about creating a level playing field – people assume that the industry is regulated,…
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Generation Rent worries
Campaigning group Generation Rent is worried that Theresa May’s manifesto promise of a letting fees ban is likely to be ‘kicked into the long grass’ by the hung parliament and the pressures of Brexit negotiations.
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Consultation starts on Welsh letting fees ban
The government in Wales has launched its formal consultation on a Welsh letting fees ban in preparation for legislation, with a deadline for agents and landlords to respond of 27th September. Once the consultation process finishes, it expects to bring forward a Fees Charged to Tenants Bill, most likely next year. Wales has already gone several steps further than other parts of the UK in reforming the private rental market following its launch of Rent Smart Wales, its compulsory licensing system for landlords and agents. In its consultation document the Welsh government criticises agents for not supplying tenants with a breakdown of the services they charge for and instead charging flat fees. But although this makes it easier for tenants to compare costs between different agencies, “It lacks transparency” the document says. Welsh letting fees ban Its move to ban fees has been influenced by housing charity Shelter Cymru, which last year released a report on the Welsh private rental market called “Letting go: why it’s time for Wales to ban letting agents’ fees”. In it the charity said fees charged to tenants ranged from £39.99 to £480 and that a third of tenants in Wales pay £200 or more…
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Lettings fees ban WILL go ahead, says DCLG
The lettings fee ban is set to go ahead. The Government has announced its intention to introduce a total ban ands agents across the UK will not be able to charge any fees to tenants for their services, if the Government’s proposals are implemented. This isn’t a case of rattling cages to get the message through to agents that their fees may be disappearing, if they do not receive suitable responses from the consultation – today’s publication of the Consultation Paper leaves us in no doubt that there will be a total ban on lettings fees, as stated by Baroness Hayter (right) last week at the arla|propertymark Conference, it is just a matter of when and how it is implemented. Within the document, the Department for Communities and Local Government (DCLG) says, “DCLG officials undertook some market research of letting agent fees. We randomly chose 50 agents of differing sizes and models (i.e. franchises, independents and national branches) across the country and searched their website for a list of letting fees charged to tenants. This exercise reinforced how difficult it is for tenants to both find and compare agent fees since it was not always simple to either find the fees…
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CMA rejects industry forum’s call for letting fees ban review
The NALS-organised industry Fair Fees Forum has had its request for a letting fees ban review rejected by the Competition and Markets Authority (CMA), which says there is too little time to complete it. “Given the pivotal role played by the private rented sector, we feel this decision is a missed opportunity to review the way the sector works to deliver the best outcome for all concerned,” says Isobel Thompson (pictured, below), Chief Executive of the National Approved Letting Scheme (NALS). Irreparable damage The CMA decision not to get involved comes despite the Forum warning that great care must be taken not to cause “irreparable damage” to this part of the private rented sector by rushing through a ban without “fully considering the impact on the sector.” The news may surprise many in the industry who had been led to believe that after the soon-to-be published results of the consultation – and given both the pressures on parliamentary time and the need for primary legislations to impose a ban – it was unlikely that one would be introduced until next year. This would have given the CMA plenty of time to review the details of the ban. “This is disappointing news for the…
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62% of letting agents say ban will reduce rental property quality
The Association of Residential Letting Agents (ARLA) has come out fighting on the fees ban, saying it opposes a total ban and that fess should instead be spread out over the first six months of the tenancy. It also says a ban is likely to have shocking consequences for the industry, tenants, landlords and the wider economy. ARLA has also completed research that it says shows 42% of letting agents think their headcount will reduce following a total ban, while 62% of the 1008 agents it canvassed think a ban will prompt a reduction in rental property quality, and 61% believe property management standards will drop. The research also reveals that letting agents “overwhelmingly” believe that rents will rise if a total ban is introduced, as they will “need to recoup the costs it takes to undertake the important jobs that fees currently cover [and] pass these on to landlords”, the research says. Agents spend eight hours on average completing the tasks needed to prepare a tenancy agreement including completing credit checks and collecting references, ARLA says. ARLA also claims that spreading the cost of fees to tenants over six months would make tenancies more affordable, enable agents to maintain…
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