Housing Minister Reaffirms Commitment to Banning Letting Fees

Housing Minister Reaffirms Commitment to Banning Letting Fees

Parliament returned from its summer break this week and one of the first things up on the agenda was a debate on the upcoming letting fees ban.

The debate was secured by Kevin Hollinrake, Conservative MP for Thirsk & Malton and co-founder of Hunters estate agency, who began proceedings by setting out his reasons for supporting an all-out ban on fees to tenants.

You can watch the debate in full here, or read a transcript here.

Importantly, this debate gave us an opportunity to hear from the (relatively) new Housing Minister, Alok Sharma MP, as he set out the Government’s position on not just the letting fees ban but also wider private rented sector regulation.

What did we learn?

First and foremost, the Government remains committed to banning letting fees outright for tenants and there is no indication that these proposals will be watered down.

The Minister rejected quite firmly the suggestion of imposing a cap on fees rather than a ban:

“I simply do not believe that a cap would be effective.”

A number of MPs raised the issue of unintended consequences, primarily that rents would rise as a result. However, the Minister believes that this was not a reason in itself to continue to allow fees to be charged:

“The Government do not accept that rent levels will necessarily rise as a result of the fee ban, as there is evidence that some agents are charging excessive fees.

Indeed, studies have been done on the potential impact on rents, and all of them show that while there may be increases in rents, they would be significantly smaller than the fees tenants are currently being charged. We will keep the impact on rents under review.”

In some good news, the Minister roundly rejected Labour’s call for rent controls to be imposed at the same time as the banning of fees:

“I think the evidence, from the UK and around the world, shows that rent controls lead to fewer properties on the market, and higher rents as a result.”

He also kept the door open for possibly dropping the suggested cap on security deposits, which the NLA has previously argued to be an unnecessary policy with damaging consequences for tenants.

However, the Minister was less keen to change his mind on allowing tenants to be charged a reasonable fee to cover reference/credit checks, which the NLA called for in our consultation response:

“There was discussion during the debate of whether certain fees for tenants should be allowed. Our view is clear: all fees on tenants need to be banned.”

Closing the debate, the Minister also signalled that his department could introduce further regulations for the private rented sector, over and above the ban on fees:

“The ban on tenant fees will be considered in the context of a strategic approach to the private rented sector, and there is scope to introduce wider regulation of letting agents and landlords.”

So what next?

The results of the recent consultation on the issue, along with the draft Tenants’ Fees Bill announced at the Queen’s Speech, will both be published “shortly”. This week’s debate made clear that the Government will still be actively seeking input after their publications:

“[W]e said that we would first publish the Bill in draft, to enable scrutiny of our proposals by Parliament and stakeholders before introducing the legislation.​”

The NLA will at the very least be pressing the Government to drop the proposed cap on security deposits and to also enable a reasonable referencing/credit check fee to be charged.

Our CEO Richard Lambert will be meeting with the Housing Minister on 19th September to discuss these, and other pressing issues for the PRS and our members.

7 thoughts on “Housing Minister Reaffirms Commitment to Banning Letting Fees

  1. https://polldaddy.com/js/rating/rating.jsWhen will this government realise that responsible landlords are doing their job for them. We stick our necks on the block by borrowing money to purchase properties, doing them up to a high standard and providing good quality housing. We should be given tax breaks as an incentive rather than being penalized at every turn!

  2. I have had complaints from tenants about punitive letting fees, so asked the various agents I use for a breakdown of their fees, and now go to an agent that splits the fee between the landlord and tenant. It is my view that the agent is offering a service to both sides and therefore both sides should pay.
    In terms of unintended consequences, the market dictates rents in this area, where there is a slight oversupply of rented property, the most likely consequence is that more landlords will do their own lettings, which could easily mean that agreements and checks, move away from the standards that they now have, and become more ad hoc, as before the AST came in.

  3. This is about rip of agents!!!
    Not about what landlords do or dont do.
    And its about time rip of agents were controlled

  4. I am happy to pay the £25-£75 tenant check fees involved for checking tenants (plus
    sometimes a guarantor) who actually takes the tenancy!!! What I am not happy to pay is for is the same fees for every person who views, and says they want to rent, then changes their mind! We are currently letting a property for which we have had more than 15 (to date) applicants, who suddenly back out when they find they have to pay £25 each, AND THAT CCJ’s, outstanding rent arrears, etc, which we HAD previously mentioned, will not be tolerated! Why should honest Landlords suffer because of dishonest Agents?

  5. The government have got themselves into a corner, they have sold off all of the council properties, and failed to build the number of houses they promised. So now they are putting the squeeze on private landlords trying to force us to sell up thus producing a glut of properties and reducing prices. We need to fight back, when will they realise that not everyone wants to own their own home, and some people will never be in the position to do so.
    We are providing a service at our own expense, and believe me when it goes wrong it is very expensive.

  6. Why cant some of these comments actually relate to what the subject is about and that is Agents who (rip Off) charge huge fees for doing simple tasks, Credit Check max £10, Employers Ref max £5. Landlords Ref max £5.Tenancy Agreement £5, Guarantor details and check £10. 1 tenant to sign a TA £10, 2 tenants to sign same amount and within £10. It is clear that as they dont control themselves the government has to do it for them.
    What us LL do is another subject!! Why should an agent charge another £30/£40/£50 even £100 for a tenant (s) to sign up for a further period. Put your tenants on a Statuatory Periodic Tenancy, NO CHARGE, happy tenant. Why should an Agent charge for a Check Out????

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