The Chartered Trading Standards Institute will be among a number of bodies expected to share their views on the Draft Tenants’ Fees Bill later this morning.
Alison Farrar, lead officer for the Chartered Trading Standards Institute, will appear before MPs on the Communities and Local Government Committee from 9.30am.
The select committee is analysing the private rental sector and also providing pre-legislative scrutiny of the Draft Tenants’ Fees Bill.
Also taking part will be:
- Andy Fisher, head of housing, health and communities, Boston Borough Council
- Cllr Robert Lawton, portfolio holder for housing, Bournemouth Borough Council
- Cllr Clare Salier, cabinet member for housing, London Borough of Wandsworth
- Melanie Rees, head of policy, Chartered Institute of Housing
- Tamara Sandoul, policy manager, Chartered Institute of Environmental Health
Generation Rent and Shelter, key campaigners for the ban, have already appeared, along with the Residential Landlords Association and National Landlords Association.
At the end of last month, David Cox, chief executive of ARLA Propertymark, and Isobel Thomson, chief executive of the National Approved Lettings Scheme, warned the Committee of the unintended consequences of the Draft Tenants’ Fees Bill.
Cox, who repeated warnings that the ban would result in a loss of income for agents and subsequently lost jobs, demanded more clarity on the issue of whether or not agents could charge tenants default fees.
It’s already been decided!
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The Government has responded to the petition you signed – “Reverse A Proposed Ban On Letting Agents Charging Fees To Tenants”.
Government responded:
Government is committed to banning tenant fees to deliver a fairer lettings market where tenants have greater clarity over what they pay and the landlord is the primary customer of the agent.
The Government recognises the valuable service that good letting agents provide to both landlords and tenants in ensuring that properties are safe, compliant and professionally managed. We are keen to see all tenants receiving a good and affordable service. A ban on letting fees paid by tenants will improve transparency and affordability for renters – letting fees are currently not clearly or consistently explained with the result that many tenants are unaware of the true costs of renting a property.
The Government published the draft Tenant Fees Bill on 1 November (https://www.gov.uk/government/publications/draft-tenants-fees-bill), which sets out the detailed approach to banning letting fees to tenants in England, helping millions of renters by bringing an end to costly upfront payments and renewal fees.
The draft Tenant Fees Bill reflects feedback from the eight week public consultation (April – June 2017), which received over 4,700 responses. More than 9 out of 10 tenants who responded to the consultation backed the action to ban letting fees. We are ensuring that tenants will only be required to pay rent alongside a refundable deposit.
Many letting agents and landlords acknowledge that fees charged to tenants are currently not at a level that is justifiable and agree that intervention is necessary. The Government does not believe that a cap would be effective and is likely to lead to a race to the top in terms of fees charged. A ban is easier to understand and enforce.
We believe that tenants will see a net saving as a result of the ban. Tenants will be able to see what a given property will cost them in the advertised rent level without any additional hidden costs. This will help to make entering and moving around in the private rented sector easier and less costly.
We recognise that agents will need to consider their business models. The time of, and services provided by, letting agents should be reimbursed but this should be by landlords rather than tenants. Landlords are better able to shop around for the agent offering the service that they are seeking at the price they want to pay. It is also worth noting that landlords, unlike tenants, can claim tax relief on letting agent fees.
Good letting agents, providing services that represent value for money to landlords, will continue to play an important role in the market. Furthermore, such letting agents will be on a fairer footing to compete for landlords’ business since it will be much harder for rogue agents to exploit their position between landlords and tenants.
Publishing a bill in draft enables scrutiny of our proposals to ban letting fees by Parliament and stakeholders ahead of introducing legislation. The Communities and Local Government Select Committee is currently holding a public inquiry into the draft Bill. We welcome Parliamentary scrutiny on whether the draft Bill achieves its aim of delivering a fairer, more competitive, and more affordable lettings market where tenants have greater clarity and control over what they will pay and where the landlord is the primary customer of the letting agent. The Government will then seek to introduce the Bill formally to Parliament at the earliest opportunity. We will do this as soon as parliamentary time allows. We do not expect implementation to be before April 2019. This will allow letting agents time to prepare and re-negotiate their contracts.
Ministry of Housing, Communities and Local Government
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“This will allow letting agents time to prepare and re- negotiate their contracts”. It’s a done deal with agents left in the dark as to what the legislation is that .they have to negotiate. Muppets all of them!
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A big problem with the Scottish model is that the Courts get the final say. S.21 takes away the Judge’s jurisdiction. As we all know, get your arrears under the 8-week ‘minimum’ and you’re going nowhere. My house, my rules or I’m taking my ball home (selling the property) and nobody gets to play (have a rental property in the marketplace)…except I still have the ball to play with at home (the money from the sale of the property to invest elsewhere!
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I got the same email, it’s the same ******** letter I got from the then housing minister when the whole thing kicked off and again from the current housing minister when I wrote to him about all the downsides of a ban and the upsides of capping. The words done up like a kipper spring to mind!
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I can see the Government’s point that there are a lot of unfair tenant fees out there. We all know that and I don’t think that any of us would argue that there are greedy g*ts out there who will fleece everyone for everything they can.
But this is the same as banning a whole class having a break as one or two kids wouldn’t sit quietly. Yes, a fee cap would be harder to police, but if all tenants are aware that they wont pay more than £250 (plus rent and deposit) for a tenancy, then Greedy McRipoff Agents next door will go out of business if they try to charge £400 as no-one will pay it, and Landlords will go to another Agent.
And lets face it. We cant charge the Tenant, so Landlords fees will increase. They will then increase the monthly rent. Lets say the rent before was £450pcm. The Landlord puts that up to £475 per month to cover his cost, over a 6 month tenancy that is £150. If the Tenant is happy to stay for longer, then eventually the cost will mount up, especially with rent reviews.
So lets work the hypothetical math, shall we? Tenants no longer pay £250 fee for referencing etc. Landlord puts £25 on rent, over a 12 month tenancy the Tenant pays £300 extra. After 12 months, the Landlord increases the rent by 5% and the rent goes up to £498.75. and so on.
These figures are just hypothetical obviously, but it shows that this is not going to save tenants money! Oh, but lets not forget, the managing agent pays VAT on what they charge the Landlord! so if we say they charge 10% plus VAT, the government will be getting £3 extra, per property, per month… is this possibly a consideration in their plans…?
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Countrylass, lets do the math.
”And lets face it. We cant charge the Tenant, so Landlords fees will increase. They will then increase the monthly rent.”
So in a post fee ban world, you’re now increasing landlord fees so you’re not out of pocket here. Now the Landlord puts up rent and you maintain you management fee % (10%) your now making £2.50 more per proerty per month for doing nothing more, and then more everyyear after.
You’ll be quids in so cheer up!
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I was meaning the fee a Landlord is charged to set up the tenancy, not that the management fee increase would cover it. If a landlord was being charged, say, £400 + VAT to start a tenancy, some agents would shove the whole tenant fee on to that, so possibly a landlord would be paying £800 +VAT.
Where is the Landlord going to try and recoup his money? Either by cutting corners on maintenance etc or by increasing rent.
In all honesty, I can’t see this ban doing anything but costing tenants money.
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There seems to a general misconception that it’s the independents that charge the rip-off fees. Totally the opposite in the areas we operate in. In fact we regularly check our competitors charges to both landlord and tenant (where published) and it is the case that large chains charge more, and by some considerable margin.
Greed made them as big as they are and now they feel untouchable as they mop up the small independents who are too afraid to carry on at fear of going under.
Keep going, soon customers will have the same two or three agents in every town all charging the same and getting away with it because price fixing doesn’t exist, “Does it”
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