Labour plan to ban letting fees to tenants

Thousands of letting agents have voiced their anger and frustration at Labour’s plans to force a Commons vote through next Tuesday on banning letting fees to tenants – and made clear their determination to fight every inch of the way.

The large majority of letting agents believe the move will have an adverse effect on tenants rather than, as is assumed, any perceived benefits. They believe that a ban on tenant fees would simply result in having to charge landlords more, while landlords in turn would pass costs on to tenants in the form of raised rents.

Here are some of the comments we have received so far from industry leaders:

Christopher Hamer, The Property Ombudsman: “There are certain costs that have to be incurred in setting up a tenancy and these will have to be borne by either tenant or landlord.

“If the landlord pays, it is inevitable that the cost will be rolled up into the rent and so is hidden from view. Better in my view that full disclosure of non-optional fees chargeable to a tenant applies. That is in accordance with the ASA ruling and makes the actual cost to the tenant transparent.

“Some research has suggested that landlords would not add the cost to the rent but seek out a cheaper agent. I have said previously that selecting an agent purely on price is a risk.”

Isobel Thomson, chief executive of the National Approved Letting Scheme: “NALS is very concerned about Labour’s call for a vote on the abolition of agents’ fees.

“It’s clear that at present there is a basic lack of understanding about how – and why – letting agents charge fees with an assumption that these charges are unfair.

“Anyone working within the industry on the other hand will know that time and manpower goes into tasks such as drawing up inventories, checking references and administration.

“These practices, when done properly, are valuable for all parties and the commercial reality is that they simply cannot be done for free. If all of the costs are transferred to the landlord this will ultimately mean that rents go up. We would encourage Labour to focus their attentions on making it a mandatory requirement for agents to be part of a Client Money Protection scheme.”

Andrew Bulmer, UK residential director, RICS: “There needs to be given careful consideration to any impact that this proposal may have on the property market, as it may lead to increased rents being passed onto consumers and result in landlords exiting the market, thereby potentially further limiting the supply of properties on the market.

“It’s vital that there is absolute clarity around consumer costs, with reasonably priced, upfront fees explained fully. However, fees from this type of work are important to chartered surveyors, particularly the smaller, independent, letting agencies which are already bearing the cost of regulations.”

Susan Cope, MD Professional Properties : “From the reputable agents, tenants receive a very good service. This service is designed to protect the tenant and their interests and to ensure they have security of tenancy. Obviously such services come at a price and if agents are unable to charge, there is a risk that service will suffer and the quality of administration processes will diminish. Tenants need to be protected but have to understand it comes at a cost to the agent. 

“If the ban is goes through and the tenant doesn't have to pay, it will become part of the monthly rent if the costs are transferred to the landlord as the landlord still has to make a return on his investment."