CHESTERTONS' RESPONSE TO THE PROPOSED BAN ON LETTINGS FEES FOR TENANTS
In his first and last Autumn Statement speech today, the Chancellor pledged to ban lettings agents from charging tenants upfront fees "as soon as possible". He quoted letting agents' ability to charge unregulated fees, and the spiralling cost of these fees, as the reason behind this move.
Consultation will begin in the New Year but currently, it is unclear what will be classed as an 'up-front fee' and whether the ban will include costs for referencing and inventories or just focus on agents' tenancy arrangement fee.
Consultation with key stakeholders, including agents, will take at least a couple of months and we expect the bill to be announced in the Queen's Speech in May next year. However, given the fact that the bill will need to be passed by the House of Commons and House of Lords, we don't anticipate the ban becoming law until Spring 2018 at the earliest.
Richard Davies, Chestertons' Head of Lettings, comments "We charge our tenants a tenancy agreement fee – which has remained unchanged for over 3 years – to cover the work required to negotiate and draft tenancy agreements that often include unique and complex clauses inserted at the tenant's request for their protection.
We are supportive of any regulation that prevents a small number of rogue agents from charging tenants extortionate fees, but we also believe that passing the fee onto landlords will simply see those landlords increasing their rents in response, therefore making no real difference to tenants."
Chestertons recently surveyed its tenants and found that 91% believed that paying a tenancy arrangement fee is fair. The actual charge they believed to be 'fair and reasonable' varied dramatically from nothing to £500, but the average was £147.
Davies adds: "Our survey also found that there was a huge amount of confusion over what actually constituted a 'tenant fee', with 31% of respondents believing that the tenancy deposit counted as part of the Tenants Fees and 17% thinking that the first month's rent did. In light of this, we welcome any move by the government to help improve the transparency of tenants fees."