Housing Minister leaves open possibility of scrapping tenant fees ban after Government review

Housing minister Heather Wheeler has not ruled out the tenant fees ban in England being scrapped in the future if it was shown to have increased rents.

Speaking at the ARLA Propertymark conference, Wheeler defended Government policy on landlords and letting agents amid a swathe of questions over the tenant fees ban, tax changes and Right to Rent.

Asked if the Government would scrap the ban when it comes to review its impact if rents had risen as a result of the legislation, Wheeler said: “Let us see where the evidence takes us.

“In Scotland – where fees are already banned – rents are going up a bit but there are now more agents, it is about making sure you offer the best service you can.”

Wheeler rejected claims that the Government was pushing out private landlords.

She said: “We only want to push the rogues out, we want you to make money.

“I appreciate the tax changes coming with these regulations is a little bit of a double whammy, but things did need to change.

“This is a business that is for the long term, you should carry on investing in it.”

She said the Home Office was looking at reviewing the recent court ruling against Right to Rent, adding: “We will get guidance and regulations out as soon as possible so you are on the right side.”

Wheeler also highlighted several documents to be released in the coming months that she said would “level the playing field for landlords, agents and tenants”.

She said a Government response to a consultation on three-year tenancies, which has had more than 8,000 responses, will be published in “another month or so”.

Wheeler also said a report on the impact of selective licensing will be released in the Spring, while Lord Best’s review of professional standards in the agency sector will report in July.

This video, an interview by Property Tribes with ARLA chief executive David Cox, was done at yesterday’s ARLA conference:

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40 Comments

  1. Gromit

    HW promising even more Government meddling in the PRS.

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    1. Bless You

      Cap tenant fees at £250 . Done.

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      1. The_Maluka

        Too sensible and too easy for a politician to contemplate.

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      2. CountryLass

        I’d be happy if they capped it at £200 for a couple, and allowed us to still make Tenants get carpets cleaned if they have pets. Doesn’t have to be a professional clean, just a proper clean with a decent machine.

         

        I think the vast majority of (decent) Agents were happy with a fee cap, mainly as we weren’t the ones holding the Tenants over a barrel!

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  2. Letting agent 101

    I will be increasing all rents by £50 pcm.   It would cost tenants around £300 per year, pre property, in fees previously in my agency.    Therefore tenants are now out of pocket.

    And the government will do sweet fa about it even though it is blatantly obvious that tenants will be the fall guys.

    Clueless

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    1. gardenflat

      This will only work if everyone does the same, your properties will look £50 more expensive than others with similar.

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      1. Letting agent 101

        Understand where you are coming from but in my area there is a vast range of prices through various agents so I think we will be ok.  
         
        Sad thing is this didnt need to happen if the decision makers had a brain cell between them

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    2. Estate Agent W1

      Letting Agent 101, excuse me for pointing out the obvious but your landlord will be better off by £600 per year at £50 per month, you will only get your percentage of this amount- not sure who the clueless one is!!

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      1. Letting agent 101

        Apologies, I should have provided you with my whole business plan……

        Obviously I will be charging landlords for my lost fees, which has already been agreed, so I will not be losing out at all.   So my landlords will be slightly better off, I wont be losing out and tenants will be worse off.

        I hope this explains things a little better for you.

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  3. Woodentop

    If they only wanted to cut out the rogues, all they had to do was set fee limits.

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  4. JMK

    The old joke comes to mind…

    How do you tell when a politician is lying???

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    1. Will2

      Would that be wooden heads with ever growing noses?

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    2. Woodentop

      Careful now Will2 ,,, lol.
       
      When they claim their expenses.

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  5. Will2

    “Levelling the playing field”. More like building a downhill ski slope for landlords to encourage them to slide out of the market!

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  6. Deltic2130

    Ludicrous statement from HW. So, fees ban ‘might’ be reviewed if rents rise from it, but SDLT and the ludicrous Section 24 presumably have so little impact that they seem not to be even mentioned, let alone ‘up for review’?!?! By Christ, this govt, the media and the charities are DEFINITELY in cahoots and/or total denial.

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  7. Will2

    “”This is a business for the long term you should carry on investing in it”.  Is this politician stupid? The cons have been landlord bashing for years with more on the way and corbyn wants to kill it completely. Warning Politicians can seriously damage you wealth.

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  8. landadvice28

    If the objective is to root out rogue agents, then why not focus on making enforcement more pro-active ?

    You can bring in as many laws as you wish, but until there is someone there to enforce them it is a useless exercise. The rogues continue to flourish with their “FULL MANAGEMENT” at 4% ( only to disapper months later with all the cash)

     

    Tenant Fees Ban will lead to rent increases.

     

    The Guidance on the Tenant Fees Ban issued yesterday is expecting Agents to work for nothing when the tenant leaves a place trashed, so organising workmen, traipsing around shops or perusing catalogues to replace broken items – you do that for nothing ? Not in my world.

    Evict a tenant through the courts but pick up the bill yourself ? Not in my world.

     

    Dave Absalom

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  9. Property Poke In The Eye

    Which ever way you look at it, every agent will be affected in the short term and some will close shop and call it a day.

    Those agents who are looking to call it a day are the ones who will not register for the CMP and will be gone with landlords rent and tenants deposits as they have probably de-registered from the deposit protection schemes.

    So for example if a agent rent collects on 100 properties average rent £1000pm could potentially walk away with about £200,000 plus.

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  10. SJEA

    With the increased tax liability for Landlords and the expectation that Agents are supposed to do work for ‘free’, the tenant fee ban can only result in a rise in rents.

    How else are Landlords supposed to keep their heads above water as they absorb the costs of tenant referencing ?

     

     

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    1. Woodentop

      Not forgeting that now a tenant can make mulitple applications and drop out at anytime. Who’s time and expense!!!!!!!!!!!!!!!!!!!
       
      What is there to stop the tenant from hell disrupting everybodies business.

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      1. CountryLass

        If a Tenant pulls out then they lose their holding deposit.

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  11. Mark Walker 2

    CEOs up and down the country screaming “INCREASE ALL THE RENTS” in their morning meetings.

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  12. IWONDER36

    When rents do rise, and they will, the benefit system will be under even more strain as HB payments increase, homelessness will also increase due to affordability, coupled with the lack of available rental properties.

    Children will go hungry as parents on the lowest wages struggle to keep a roof over their head, fuel poverty will increase, loan sharks will take advantage of the desperate, redundancies will increase, not just across the lettings sector, but among all the trades and affiliate businesses which rely on them.

    Properties will fall into disrepair, not just because the landlord can not afford maintenance costs, but because there won’t be good agents to manage them.

    Vulnerable tenants may fall into arrears, or be taken advantage of as freeloaders move themselves into their property under the guise of friendship without the support of good agents to prevent it.

    Parliament on both sides is dead set on an Orwellian future, without taking into account the social implications of a world without good agents.

    You want to know who the rogue agents and landlords are, ask the tenants?

    Let them be the barometer by which sweeping changes are made, please be our guest to start with ours, and when you’ve finished ask our landlords too.

    At the very least ask someone with a modicum of experience of the PRS, instead of fame hungry, vote winning Charlatans who would argue that piano keys are blue if it meant opposing their political rivals.

    All this on top of Brexit is just to much…..

    Newsflash, if the housing market crashes, the economy crashes, get a bl**dy grip!

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    1. gardenflat

      The world will not end, yet!

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  13. MK

     

    Q. Can I charge for my time in replacing a key or security device?

    Generally, we do not consider it necessary for landlords or agents to charge for their time in replacing a lost key or security device.

    page 53

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    1. Woodentop

      Yes but you have to set out the charge in your tenancy agreement and be able to justify it is a resonable cost.

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    2. Will2

      It will not be worth it.  I will tell the tenant to call a locksmith and provide me with a key.  So it will be more expensive for tenant. Well thought out hm gov.

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  14. JamesB

    There is no way they would unravel the tenant fee ban and risk the generation rent vote.. that’s why it’s put in anyway

     

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  15. Scottish_Mist42

    As an agent operating in Scotland who experienced the fee ban at first hand I dont believe it’s as simply as ‘raise the rent’

    Market supply and demand will always dictate rental prices, not if the landlords expenses have gone up (whether that’s a tenant fee ban, or increased mortgage repayments, more tax to pay etc etc).

    Scotland rent rises are always mentioned when trying to support the case against the fee ban.  However if you speak to a landlord or agent in Aberdeen for example, they would love to increase rents but due to market conditions they’ve suffered over 25% reductions.  This was due to decreased activity in the oil industry resulting in far more supply than demand meaning lower rents and increased voids.

    Edinburgh and Glasgow in comparision have seen the opposite supply/demand effect although this rental growth is now slowing.

    If rents are below market value then of course there is scope to increase, but simply increasing rent because of a change of legislation – hmm I don’t think so.

    We passed all costs onto the landlord – were they happy?  Not really, but the alternative to them not paying was not to carry out reference checks or inventories for tenancies – they’re not legally obliged to do these things but not doing them would undoubtably cost them more in the long run.  Once they realised this they accepted it was an unwelcome but necessary cost.

    Some agents did try and absorb the costs, but not many of them are still in operation.

    Of course, this legislation may result in some landlords deciding it is the straw that breaks the camel back and sell up.  But most in my opinion will take a step back and realise the additional expenditure will work out in the region of £20 – £40 per month.  Perhaps not enough to pay a few thousand pounds to sell up.

    If this does happen and supply reduces, then of course this may result in higher rents – but it will be market driven.

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    1. Michael

      Its great to see a response from an agent in Scotland where the ban has been in place for a while now, I wish we had more such info. I very much appreciate your comments especially about passing on fees to landlords.

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    2. Woodentop

      How do you cope with tenants making multiple applications with other agents?
       
      Have you seen an increase in tenants pulling out?
       
      Have you seen an increase in rougue tenant applications that would have been scared off if they had to put their money upfront, to loose? 

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      1. Scottish_Mist42

        It does happen and we have had landlords paying for references for applicants that did not end up becoming tenants for whatever reason (pulled out, failed credit check for example).  We do make it clear to landlords prior to them agreeing to proceed with references of the risk of this happening.  The pressure is then on us and our referencing partner to turn it around asap to enable us to secure the deal.  Dependent on the details of the legislation (I haven’t seen it) you may be permitted to ask for a refundable payment to account?  Although it is refundable, it may be enough to disuade some those looking to apply for multiple properties – no guarantee however.

        To be honest, no significant change – however I go back to processing the application/referencing asap

        Again, no noticable change to this either, but check if you would be allowed to request a refundable payment at the time of the application.

         

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  16. Rent Rebel

    You poor things. You’re like the jilted lovers who won’t stop pleading. Still suggesting fee caps in the comments, too. The industry had ample opportunity to do the right thing and never did. Typical gangster chat in the comments but Scottish_Mist42 has it right. https://www.

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    1. Woodentop

      Actually most of the industry never did need do anything, it was only the few but big totally money orintated players that ruined it for the industry, which the looney left manipulated for their own ends and in doing so shot the tenants in the foot by having to pay more and for the duration of the tenancy. A fee cap would have worked for all concerned.

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      1. Rent Rebel

        LOL. Where were these ‘good guys’ calling for fee caps before this ban came in? No-one stepped up cos they liked things just the way they were and their pockets lined.

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        1. Gloslet

          Actually there were plenty of agents suggesting fee caps as a fairer way forward but these were drowned out by the likes of vote hungry MP’s, shelter and tenants who did not appreciate the longer term implications. I’ve had to serve 2 section 21 notices this week on (perfectly decent) tenants where the landlords are selling up. Countless other tenants will be receiving rent increase notices in the next few weeks – in many instances from landlords who have not routinely increased rents during the term of the tenancies.

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  17. JohnGell

    We’re based in Inverness and have never charged tenant fees as these have been unlawful in Scotland since the 1988 Act.  My view is that it’s indefensible to seek to charge tenant fees.  An agent is just that, agent for the landlord and it’s the landlord who is his client.  The tenant is his client’s customer and the services provided by the agent to the tenant are provided on behalf of the landlord, who appropriately pays all the fees charged by the agent.

    Tenant fees can all too easily lead to substandard service, since they enable agents to compete for business on the basis of low fees to landlords subsidised by charges to tenants, in a market where landlord business has to be won competitively while tenants are effectively captive once they’ve become focussed on a property .  It’s not possible to run a professional business model on low fee rates and so service standards suffer.

    As Scotch_Mist42 writes, rents can’t simply be increased because costs have risen, as it’s the market that governs rental value.  Some agents and landlords may increase sitting tenant rents hoping that the tenants will absorb the increase rather than take on the hassle of relocating but, if market evidence doesn’t justify that then that’s unethical and just wrong.

    Scrapping the fee ban would be ill-judged. Government should strive to foster professional standards and encourage a climate where agents provide high service standards in return for appropriate fee rates.

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    1. Mark Walker 2

      What’s your plan for the better off tenants applying for properties across the board and being cherry-picked by landlords, leaving the worst off struggling to find accommodation?

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    2. Tcos

      I appreciate you and Scottish Mist talking about the market dictating the rent but do you know what the market is like across the country? I am in the South East where the market is tight on stock and high on demand. The stock is getting tighter as more and more legislation is forcing landlords out and making the market unattractive to new investors. This means rents can and will go up so the government have potentially shot tenants in the foot. Simple fact is it is a natural reaction a landlord who is being pummeled to recoup costs somewhere. Also with all due respect Scotland had the fee ban on its own. England has seen the fee ban introduced amongst a myriad of other laws and tax changes which combined has had huge financial impact on the landlord. Rents will be going up.

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  18. Realitycheck97

    @Tcos. Finally, after 39 responses, the point is made. No-one, absolutely no-one, and especially not government, is assessing the CUMULATIVE impact of all changes delivered and proposed. In isolation the tenant fees ban is “a thing”; it’s doable and survivable so get over it. But when added to all the other measures, the impact is ratcheting up. Here’s how it goes…

    In areas of high demand, landlords can jack the rents not just to new tenants but then existing ones. Now remove s21 and make 3 year tenancies mandatory and watch more landlords leave. (Watch the influential build-to-rent sector tell gov 3 year tenancies are good, because it is in their interests to have reduced PRS supply/upward rent pressure and it suits their business model)

    Higher rents will drive up the H Benefit bill. Now roll the clock forward as the renters age into retirement. Today, many retired folk own their own home; less so in the future. So the H Ben bill will rocket. It’s like another pensions time bomb.

    What do you think gov will do then? Cap payments or cap rents? The former will massively increase distress on aging voters. The latter will kill supply as per 77 Rent Act.

    Choose your poison. Meantime those ‘just about managing’ will increasingly be driven from their homes into smaller, poorly maintained, poorly located homes that will find desperate tenants. Or the streets. And the weak suffer what they must.

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