ARLA calls on members to oppose ‘draconian’ fees ban
ARLA Propertymark’s chief executive David Cox urged members to remind their MPs to keep up with the Draft Tenant Fees Bill as it moves through Parliament, at the ARLA annual conference.
He said the Tenant Fee Ban was coming but members must help oppose those who want to make it stricter. He said: “It remains vital that each and every MP understands the implications, issues and unintended consequences of this ban.
”He added that ARLA Propertymark had already secured some concessions in the legislation such as allowing change of sharer fees and holding deposits.
And he was pleased MPs are taking time to reflect and hoped that when changes do come in, they take note of ARLA’s recommendations.
Mr Cox said: “It is essential that during its passage through Parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies; including legal requirements such as Right to Rent checks.
“Now is the time for agents to see their MPs and explain the vital services they provide for the fees that they charge.
“The government said back in the 2016 Autumn Statement it would ban letting agents’ fees.
However, 18 months later the ban has not materialised, and the government says is not likely to appear until Spring 2019.
A draft tenant fees bill was introduced to parliament in November 2017, which included the letting fees ban.
An eight-week consultation seeking views on the detail of how a ban should be introduced elicited 4,724 responses from individuals and representative bodies.
Critics of the policy said it could mean rents are increased but the government continues to insist the risk is ‘low’.
The government’s proposals include:
- Ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy with the exception of the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees.
- Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent. (The draft bill also set out the proposed requirements on landlords and agents to return a holding deposit to a tenant).
- Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees, and create a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. (Civil penalties of up to £30,000 can be issued as an alternative to prosecution).
- Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
- Appoint a lead enforcement authority in the lettings sector.
- Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
Research shows that the average fee charged by an ARLA Propertymark Protected agent is £202 per tenant.
Mr Cox said: “We think is fair, reasonable and far from exploitative for the services tenants receive including completing various critical checks on tenants before letting a property.
“We believe that the ban on fees will involve passing the costs on to landlords. Who will then look to recoup these costs elsewhere; inevitably through higher rents.
“It will have a drastic impact on many people and businesses and to announce it without consultation or clarity is wrong.
“We do not support the banning of letting agents charging fees to tenants. We believe fees should be open, transparent and reasonable. They represent legitimate costs to the business that need to be covered.”
Further research shows that the residential lettings sector turns over around £4billion per year and employs some 58,000 workers. Fees charged to tenants generate around £700 million per year or approximately 20 per cent of the industry’s turnover.
Capital Economics predicts that in the event of an outright ban agents stand to lose £200 million in turnover and a staggering 3,000 jobs could be lost.