3rd
May 2017
An association has predicted that the intended banning of tenants' fees by letting agents across England, may not start until the last quarter of 2018.
The government's consultation process on the ban will still be accepting responses from concerned parties up till June 2nd, this is despite its recent announcement of a snap General Election.
The association’s policy director, said: “The ban will need primary legislation and so the actual implementation date is not clear but is unlikely to be before late 2018.”
The association has found that there a number of legal issues in the government's consultation document which is available.
The policy director is critical about the government's assumption that there are the common trade standard fees and that tenants are not in any position to choose which agent they can deal with, whereas landlords are able to do so.
He states: “The government is guilty here of assuming that the entire agency market is the same. In some areas landlords have difficulty shopping around as well as there are relatively few agents in the area. In busier areas where properties are frequently listed with more than one agent (such as London) there is evidence that tenants do shop around and compare agent fees.”
The actual structures of the ban he feels is 'confused', as the government does not want to see the end result of the agent ban being replaced by landlords charging tenant fees, therefore the correct wording to achieve this is fraught with danger, and said : “This may end up being a very grey area with a lot more items being presented as options for the tenant to select and incur a fee for."
He is very certain that as agents lose fees from tenants then they will charge landlords higher management fees: “With landlords already being pressed by tax changes they may well look to increase rent to cover these new costs although there will be a cap on what the market will bear in some areas”.
The government's intention to cap the size of tenancy deposits may end up as being the same model as Scotland, where it is illegal to demand a tenancy deposit that is more than three months rent. The situation may change whereby agents will ask for a higher amount of rent in advance than is the current norm. The policy director predicts there will be a myriad of problems created by the government imposing a control of fees and deposits' enforcement.
He said: “The fee transparency regime under the Consumer Rights Act is largely unenforced with only a small handful of local authorities talking any formal action. The government highlighted a Generation Rent survey that showed 12 per cent of agents still not displaying fees. Personally, I suspect that it is worse than this in some areas and I certainly regularly encounter agencies which have no fees displayed”.
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