This Commons Library briefing paper outlines the current law and responses to the Government's proposal to ban letting agent fees in England. The paper includes information on current practice in Scotland, Wales and Northern Ireland. On 6th September 2017, there will be a Westminster Hall debate between 9 - 11am on the proposed ban on letting agency fees in England. This debate has been sponsored by Kevin Hollinrake MP.Jump to full report >>
There is currently no cap on the level of fees that letting agents can charge in England although consumer protection legislation might apply in certain circumstances. Since 27 May 2015 agents have been required to display a tariff of fees.
As part of the Autumn Statement 2016 the Conservative Government announced an intention to abolish letting agent fees. Consultation on this proposal opened on 7 April and closed on 2 June 2017.
The consultation paper proposed that “no agent will be able to charge tenants any fees, premiums or charges that meet the general definition of facilitating the granting, renewal or continuance of a tenancy.” It also proposed that landlords and “any other third parties” will be prevented from charging letting fees.
The Government argues that a ban on letting agent fees will:
…recognise the stronger market position of landlords and recognise that agent services are primarily provided on their behalf; landlords will choose the agent that provides the quality of service that they are seeking at a price that they are willing to pay. This will sharpen letting agents’ incentives to compete for landlords’ business resulting in lower overall fee levels and a good quality of service.
Agents will need to be upfront and clear with the costs that are being charged in order to secure landlords’ business thus improving transparency. Letting agents that provide services that represent good value for money to landlords will continue to play an important role in the market due to the support they provide in the letting process.
On the tenant side, the ban will ensure that tenants can – at a glance – see what a given property will cost them in the advertised rent level and compare properties for their suitability and affordability on that basis. Tenants therefore will be better able to shop around for a property that fits their budget, improving competition and transparency on that side of the market as well.
The Conservative Party’s 2017 Manifesto said “we… will shortly ban letting agent fees”.
During the Queen’s Speech 2017, the Government announced an intention to bring forward a Draft Tenants’ Fees Bill to tackle “unfair fees on tenants” and “make the private rental market more affordable and competitive”.
In 2012 the Scottish Government clarified the law so that since 30 November 2012 all tenant charges, other than rent and a refundable deposit, have been illegal. In Northern Ireland the Department for Communities has said that a ban on letting agent fees will be introduced. The Welsh Government is currently consulting on proposals for a ban on agency fees in Wales. The consultation process will close on 27 September 2017.