What will take longer, banning letting agent fees or Brexit?

Published: by Rhea Newman

The ban on letting agent fees is now unlikely to come into force until Spring 2019 at the earliest. This is according to the latest update from the Ministry for Housing, Communities and Local Government.

Spring 2019 will be nearly two and a half years since the government announced its intention to ban fees. This also, somewhat surprisingly, means it will have taken longer to design and implement the ban on letting agent fees, than for the government to negotiate a deal to exit the European Union.

The cost of delay

The delay in implementing the ban does not come without a price. Some opportunistic agents have been hiking fees in anticipation of the ban and, as a result, many tenants are currently facing even higher upfront costs than before the ban was announced.

The average letting fee (amongst those who paid fees) appears to have risen significantly over the last two years. A survey of private renters in 2017 showed the average letting fee was £246 [1], which is a significant rise from the average fee of £182 in 2015 [2].

The government’s commitment to making private renting fairer and more affordable is very welcome. However, it needs to recognise the price that people who rent are paying whilst waiting for these policies to be put into practice.

The latest on the ban

The draft Bill banning letting agent fees is being scrutinised by the Communities and Local Government Select Committee. As highlighted in our recent blog, we have submitted written evidence to the committee and appeared at an evidence session to make recommendations about the Bill.

The scrutiny process understandably takes time. There are clearly some aspects of the bill which need to be tightened, otherwise there is a risk that some unscrupulous agents will find loopholes through which they can continue to charge unfair fees.

Learnings from the banning of letting agent fees in Scotland highlight how creative agents can be in finding loopholes. For example, some agents are still managing to make people who rent pay for referencing by offering them a ‘choice’ between providing a vast amount of detailed information themselves or paying a referencing company.

We are concerned similar loopholes could be exploited in the current draft Bill and are keen to work with the committee and the government to ensure these loopholes are removed. In particular, we would like to see the clause on default fees taken out and the Bill tightened to ensure agents cannot add in exit fees for when a tenant leaves a property. We’ll keep you posted on how this develops.

Agents should be ready

Hopefully, the detailed pre-legislative scrutiny will mean the Bill has a smooth passage through parliament and once the bill has been given Royal Assent, we don’t see any reason why the ban can’t come into force straight away.

The lettings industry has known this ban is coming for a long time and forward-thinking agents will have already started to adapt their business models.

And if anyone is arguing that agents need longer…. then remember that agents have had longer to prepare for this ban than the government has to negotiate a Brexit deal. The clock is ticking.

[1] YouGov survey of 3,978 private renters in England, online, weighted, July-August 2017

[2] You Gov survey of 3792 private renters in England, online, weighted, July 2015