New ban on letting agents charging fees to tenants
In his Autumn statement, the UK Chancellor of the Exchequer Philip Hammond announced a ban on letting agents charging fees to tenants. Letting fees – which are already banned in Scotland – are supposed to cover a range of administration, including reference, credit, and immigration checks.
Mr. Hammond said shifting the cost to landlords will save 4.8 million households hundreds of pounds. The move could encourage competition as landlords will be able to shop around for the cheapest agent. In the Autumn statement lettings agents in England will be banned from charging fees to tenants “as soon as possible”.
David Cox, managing director of the Association of Residential Letting Agents (Arla), said:
“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.”
However, this change will potentially help households who now rent from a private landlords. According to the Association of Residential Letting Agents, the average letting agent fee averages £202. Citizens Advice, the charity, puts the average higher at £337 and reckons they have risen 60% in five years. Shelter says such fees can reach £500 in some cases.
“We have seen these fees spiral, often to hundreds of pounds,”
Mr. Hammond said.
“Letting agents are currently able to charge unregulated fees to tenants. We’ve seen these fees spiral, despite attempts to regulate them, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet those fees. ”
Mr. Hammond also announced plans to increase the construction of affordable homes. According to the Local Government Association, It is estimated that at least 4 million people of working age in England will require affordable housing by 2024.
Hammond promised that £1.4bn will be provided to target the building of new affordable homes, and a £2.3bn housing infrastructure fund will be provided to deliver infrastructure for new homes. This investment is expected to help build 40,000 new homes and would allow providers more flexibility to offer people lower rents.