Government bans letting agency fees
22 Nov 2016
The government will ban letting agency fees in the Autumn Statement. Shelter strongly welcomes the news as a bold step forward for renters.
Update: Renters have woken up to some rare and very welcome good news. The government is going to do the bold and just thing and ban letting agent fees to tenants.
Shelter has called for a ban on letting agent fees since 2013. We were moved to act after numerous people came to us outraged at the fees they had been charged. Every year seemed to bring an inventive new cost (how does a £50 fee for moving furniture sound?) and renters were angry.
Government figures show that tenants pay on average more than £200 in letting agency fees, on top of rent in advance and deposits. We found even higher average costs and that one in seven tenants have been charged more than £500. More worryingly, lower income tenants are charged higher fees on average.
Even if the headline cost of fees are made clear to tenants there is a lack of transparency about exactly what costs are being covered. We carried out mystery shopping and found inexplicably wide variations in pricing. Fees for reference checks ranged from just £30 to £220 and tenancy renewal could cost anything from £35 to £150.
Looking at the market in detail reveals quite why renters felt so aggrieved – and more importantly powerless. Landlords appoint agents to market and sometimes manage their property for them. Landlords can shop around for the best deal, so agents are incentivised to cut their costs to landlords to get as many properties as possible on their books. Have you ever been renting a flat and received a flyer through the door advertising “Zero fees to landlords”? Congratulations, you’re paying for that.
Tenants have no such power to seek a better deal. They shop around for properties, making choices based on size, location and rental costs. They are then stuck with whatever agent the landlord has appointed. Even if their fees are extortionate or their standards shoddy. The rental market has tenants over a barrel – and then charges them for the privilege.
We weren’t the only ones concerned by this unfair balance between renters, landlords and agents. The Office of Fair Trading drew attention to the unique tripartite nature of the market and raised concerns at the misaligned interests of renters and landlords and the potential for agents to hide their fees. Resolution Foundation and Citizens Advice followed suit, calling for a ban on fees to improve standards for lower income private renters.
Empowered no doubt by their postbag, politicians across the political spectrum began to call for action, most notably former Shelter grandee Baroness Olly Grender who’s been leading a private member’s bill to ban fees, backed by readers of the Debrief.
We are truly delighted the government is bringing forward a ban. This is an immediate expression of the prime minister’s promise to take on vested interests to help working class families. Because tenants have so little consumer power we have never believed transparency will be sufficient to end abuses. A ban on fees is the fairest, most transparent way to improve private renting for just managing families and we are delighted the government agrees.
PS please excuse the direct approach, but if you’re a fan of today’s news and want to help us do more to fix renting please consider donating to Shelter. We lost quite a lot of money in corporate sponsorship when we first came out against fees and hoped that it would be worth it in the end – it is.