The government will today announce that it is banning letting agents’ fees levied on tenants - meaning the fees will instead fall on landlords who will recoup them in higher rent anyway.
The measure will come as part of the Autumn Statement; it will apply to some 4.3m private rental sector tenants in England, saving an estimate of £337 in fees for each tenant.
The decision will prove an interesting one for housing minister Gavin Barwell who has on a number of occasions voiced his opposition to a ban on agents’ fees levied on tenants.
In September Barwell, in a question-and-answer session on social media, told another industry publication - Inside Housing - that a ban was “Bad idea - landlords would pass cost to tenants via rent. We’re looking at other ways to cut upfront costs and raise standards.”
Prime Minister Theresa May has also voted against such a ban, twice, in the Commons.
There is also embarrassment for local government minister Marcus Jones, who six months ago said in a Commons debate: “Banning or capping fees would not make renting any cheaper for tenants - tenants would still end up paying, but through higher rents.”
That’s certainly the view of the National Landlords’ Association.
“The new Chancellor is clearly aware of the pressures facing those living in the private-rented sector, but in attempting to improve affordability he has shown that, like his predecessor, he lacks an understanding of how the whole sector works” claims chief executive Richard Lambert.
“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long. Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.
“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents”.
Today’s news will render a private members bill in the Lords redundant.
Currently Baroness Olly Grender, a Liberal Democrat, is proposing the measure which seeks to ban agents’ fees on tenants.
She told peers last week: “There are good lettings agents out there who are members of government-accredited redress schemes and pursue best practice. They should continue to charge a fee for the work that they do but the fee should be from the landlord, who can shop around and choose which lettings agency to use. Landlords can decide to use the decent, regulated ones.”