Could this be the end of letting agency fees?

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Millions of renters could soon be better off if a bill to ban letting agency fees, put forward to the government today (Wednesday 1 November), is passed

Renters in the UK often face hefty agency fees to secure a home, with hidden charges often scuppering people’s chances of being able to afford the property.

But proposals submitted today look to end unfair letting agent fees and encourage greater competition in the rental sector in England.

Some 20% of England’s households – the equivalent of 4.5million – were renting privately in 2015-2016, according to the English Housing Survey report.

Unfair agency fees in the UK

The draft Tenant Fees Bill, which reflects responses from a public consultation also published today, will:

  • Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent as well as the requirements on landlords and agents to return the holding deposit to tenants
  • Rogue landlords and letting agents who ignore the fees ban will be committing a civil offence which will carry a £5,000 fine for an initial breach, followed by a criminal offence if they are fined or convicted of the same offence within the last 5 years. Or a £30,000 civil penalty can be issued as an alternative to prosecution
  • Trading Standards will enforce the ban and to make provisions for tenants to claim back unlawfully charged fees
  • The Consumer Rights Act 2015 will be updated to specify the letting agent transparency requirements will be applied to online property sites such as Rightmove and Zoopla The government received more than 4,700 responses to the consultation and seven out of 10 tenants responding said these fees affected their ability to move into a new rented property.

A report from the charity Shelter found nearly one in four people in England and Wales feel they have been charged unfair fees by a letting agent.

Fee levels vary considerably and the charity found one in seven tenants pay more than £500.

Communities Secretary Sajid Javid said: “This government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit.”

Landlord agency fees

And it’s not just tenants being hit with unfair fees; landlords are often subjected to dubious fees.

The paper aims to create a more transparent market place so landlords can easily shop around for an agent to provide the quality of service they want at a price they are willing to pay. This avoids double charging – where both tenants and landlords are handing over fees - and results in a better and more transparent service.

The consultation will run for six weeks from 1 November.

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