Shelter said that rents will rise if fees are banned

With the clock ticking until the crucial Commons vote later today on letting agents’ fees, campaigners have hit out at the fact that Shelter itself warned that a ban could lead to higher rents.

Shelter has vociferously lobbied against fees charged by agents to tenants.

But in a report last year, the organisation warned: “If letting agencies do not absorb the costs they currently charge to tenants, landlords may be justified in increasing rents to reflect their additional costs.”

The warning is on page 17 of Shelter’s “Letting Agencies: the price you pay”. See the link at the end of this story.

The Residential Landlords Association this morning repeated Shelter’s warning, saying that if letting agents are banned from charging fees, it will result in raised rents.

Labour is today due to propose an amendment to the Consumers Rights Bill calling for an end to fees. Neither the Tories nor the Lib Dems have given any indication as to how they would vote.

The RLA warned that if all the fees charged by an agent are loaded on to the landlord, they will have to pass these on to the tenant through the rent.

The RLA says most landlords would want to recoup these extra costs in the first six months of a tenancy, and that a ban would leave many tenants worse off than if they were simply paying a one-off fee.

RLA chairman Alan Ward said: “There is a very real danger that political posturing is getting in the way of sound, evidence based policy.

“The reality is that today’s amendment would, if implemented, only increase costs for tenants – the direct opposite to what Labour is calling for. Tenants would continue to pay the additional charges throughout the length of tenancy.

“The only way to reduce the cost of living for tenants is to boost the supply of homes to rent, and yet all Labour’s policies will have the opposite effect by discouraging landlords from investing.”

http://england.shelter.org.uk/__data/assets/pdf_file/0006/671649/Letting_agencies_-_The_price_you_pay.pdf

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5 Comments

  1. DwellLeeds

    How ironic that Shelter are now warning against what they have (at least in part) created.

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    1. ampersat

      It isn't irony, they had enough evidence from Scotland to say this was going to happen, they are now campaigning against the inevitable consequences of a battle they have in the bag.
      Take the battle to them, rents will rise due to demand, do not allow yourselves to get tarred again with a brush that is not of your making.

      Rents are going up because there is a failure of provision. There is a failure to provide affordable housing for key workers, nurses teachers et all, . The balance of provision is wrong. Neither of these failures are the making of the PRS, it is a government failure. Shelter can not fight policy so are working with the policy makers to control what has to be shelled out in order to live in a democratic society

      There is enough accommodation for the best, working tenants, let government provide for the less capable tenants by reducing tenant fees to zero but raising the barriers to renting. Introduce an affordability test for renting as average rents currently outstrip average mortgage interest payment ( the equivalent of rent) by 6.21:1 (£1400/ annum against £8700/ annum average rent) it seems fitting that without the red herring of raising rents the PRS could suddenly become very selective who it will and won't consider accepting.

      Let Government and Shelter cater for those tenants whose interests they are so keen to protect at someone else’s expense.

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  2. ampersat

    Heads up all, this is the opening salvo in the next phase of the Shelter campaign.

    Do away with tenant fees? check

    Control rent? – an ochestrated campaign. Day 1 objective- State the obvious!

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  3. myriad1950

    I am amazed to read Shelter is now realising they are acting against tenants' best interest with fees etc. The fee ban on Scotland has been in place for quite some time and most agencies would report a rapidly shrinking availability of properties. Investment landlords are steering clear for a variety of reasons. Reluctant landlords who didn't want to let in the first place but couldn't sell are now biting the bullet and selling. Properties are in short supply whilst demand is greater than ever. It will be interesting to see how Shelter wriggles out of this now.

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  4. Eric Walker

    The fee paid by the tenant is a fixed, one off payment. If this cost is added to the rent, it will apply for the duration of the tenancy resulting in a potentially much higher cost to the tenant.

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