Queen’s Speech: Plan to bring English letting fees in line with Scotland

generation rentA move to introduce a Scottish-style ban on letting agent fees in England was included in the Queen’s Speech yesterday.

The UK government proposal to remove the fees paid by tenants in the private rented sector will be published as a draft bill for further scrutiny.

The commitment to introduce the ban, which is already in place in Scotland, was announced by the Conservatives in the 2016 Autumn Statement.

The new bill will also allow tenants to recover any fees that have been charged unlawfully.

Liberal Democrat peer Olly Grender, who introduced a Private Members’ Bill last year calling for the ban on letting fees, said: “I am absolutely delighted that a ban on unfair letting fees is now finally being proposed as law.

“We saw from the tragedy at Grenfell Tower that tenants’ rights have been ignored for far too long.

“It’s time we made them a much greater priority, including by introducing a public register of rogue landlords.”

CIH chief executive, Terrie Alafat CBE, added: “CIH has been calling for a ban on letting agent fees so it’s good to see draft legislation being brought forward to tackle this issue.”

However the Residential Landlords Association (RLA) said he draft tenant fee ban leaves the rental market in a “state of limbo”.

RLA chairman Alan Ward said: “A Draft Bill serves neither tenants nor landlords, and leaves the market in a state of unhelpful limbo.

“Rather than proceeding with draft plans that will be eclipsed by battles over Brexit, Ministers could instead use powers they already have to introduce a fixed menu of fees which letting agents would have to publish. This would enable tenants to immediately understand fee structures, and enable them to more easily shop around.”

ARLA Propertymark, which represents letting agents, said the new rules would cost 4,000 jobs.

Chief executive David Cox, added: “The announcement of the draft Tenants’ Fees Bill was disappointing.

“It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed 12 working days ago, on the 2nd June.

“It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account.

“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.

“Research conducted by Capital Economics for ARLA Propertymark earlier this year shows that referencing checks undertaken by agents take, on average, eight hours to complete.

“It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants.

“The research also showed that letting agents stand to lose around £200 million in turnover, costing the sector 4,000 jobs.

“Landlords themselves would lose £300m, meaning they may seek to cover their losses by increasing rents to tenants.

“On average, rent costs will go up by £103 per tenant, per year, ultimately meaning tenants who move more frequently will reap savings on their overall costs but longer term tenants, who are usually lower income families, will see a loss as their rents rise year-on-year.

“The ban contradicts the government’s stated aim to encourage longer term tenancies, as tenants who stay in their homes for the long-term will end up shouldering the costs of those who move more frequently.”

Responding to the rest of the Queen’s Speech, Terrie Alafat said: “We need an ambitious, long-term plan to tackle our housing crisis so it is encouraging to hear the government’s commitment to get more homes built and to bring forward the measures outlined in its housing white paper.

“But it’s not just about building more homes, it’s about building more affordable homes for people on lower incomes. We believe more investment is urgently needed in genuinely affordable homes to rent. Figures released this week revealed that the number of homes for social rent built with government funding dropped by 51 per cent in 2016/17. One of the new government’s priorities should be rebalancing the housing budget – affordable housing currently accounts for just 16 per cent of total direct investment.”

Terrie Alafat said the continuing uncertainty over the future funding of supported housing risks undermining government moves to provide appropriate services for our ageing population.

She added: “We are still waiting for the consultation on the government’s proposal to extend the Local Housing Allowance cap to supported housing, which is designed for people who need extra support, such as older people or people with a mental or physical disability. It’s absolutely vital that the government moves quickly on this issue. Supported housing schemes provide homes for some of the most vulnerable people in our society, and our ageing population means that demand is only increasing. We know that many supported housing providers will have put sites on hold while we wait for a decision on future funding and continuing uncertainty could be very damaging.”

David Orr, chief executive at the National Housing Federation, said: “We are pleased to see that the government remains committed to building new homes and look forward to working in partnership to deliver these homes.

“For the time being, our priority as a sector is to work with government on responding to the tragic fire at Grenfell Tower. Housing associations are providing DCLG with information about their buildings. London-based housing associations have also been quick to offer emergency accommodation, supplies and voluntary help from experienced staff.”

Homelessness charity Crisis said the UK government needs to act on manifesto promise to end rough sleeping.

Chief executive Jon Sparkes said: “We welcome proposals to build more homes and ban unfair tenant fees, but if the government is to fulfil its manifesto promise to end rough sleeping, then we’ll need to see serious, concerted action.

“We’ve yet to hear how the government plans to do this, but we’ll continue to hold them to their promise, and we call on both Labour and the Liberal Democrats to remember their own manifesto pledges.

“For the first time, we have a political consensus on ending rough sleeping, and we won’t allow that momentum to be lost. Homeless people need action, not promises.
“We stand ready to work with ministers and across all parties to help bring the scandal of rough sleeping to an end.”