What will proposed ban on fees for tenants mean?

New year, new rules for letting agents. In this month's column, Liz Rowen (pictured), takes a closer look at the proposed ban on fees for tenants.

Friday, 13th January 2017, 07:00 am
Updated Wednesday, 11th January 2017, 03:20 am
Liz Rowen of Taylor&Emmett

Back in November, it was announced in the Chancellor’s autumn statement that the government was to ban letting agents’ fees for tenants as soon as possible.

At present, you can be charged wildly varying amounts for any or all of the elements that form the process of applying to rent a property, including drawing up the tenancy agreement, carrying out an inventory, credit checks and administration costs, such as telephone calls, postage, etc.

Letting firms are obliged to publish fees charged to landlords and tenants in their offices and online, to comply with the Consumer Rights Act 2015. However, the government appears to be suggesting it will go one step further and ban the costs imposed on tenants by agents altogether, if you decide to apply for a property.

Such sanctions already exist in Scotland, but as yet, it is unclear if the new rules will apply to Wales.

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This month sees the start of a consultation exercise setting out exactly what form the ban on applicant fees will take. On the face of it, the new rules seem ideal for tenants, reducing the costs of moving into a new property. Currently, you almost always have to find money for the deposit and the first month’s rent, in addition to any costs imposed by the letting agent.

The concern is any losses incurred as a result of the new rules will be passed onto landlords, in respect of the commission agents charge for managing properties. And it has been suggested these increased fees will be ultimately passed back to tenants in the form of increased rent.

We will soon know more about the nature and extent of the government’s ban on letting fees, but how this will impact long term on tenants and subsequent rent levels remains to be seen.

Liz Rowen is a specialist in property litigation at Sheffield’s Taylor&Emmet LLP, call 0114 218 4000.