Plans to ban letting agents from charging fees to tenants have moved a step closer with the government launching an industry consultation on the move.
Chancellor Phillip Hammond first announced these plans during the 2016 Autumn Statement after many lettings agents were shown to have been charging exploitative fees to tenants.
Under the proposals, agents will not be able to charge tenants any fees for signing or renewing a tenancy agreement.
This ban will apply to England only. Fees are already banned in Scotland and a similar move is also being considered in Northern Ireland. There are no such rules governing letting agents in Wales.
Research by housing charity Shelter shows that one-in-seven renters are forced to pay more than £500 in fees when they sign a new tenancy agreement. The government feels this is making it more difficult for people to save for a mortgage deposit.
It also proposes that tenants cannot be charged fees directly by landlords or third parties, in order to prevent fees being charged by other means.
In addition, the consultation highlights rising rental deposit costs as a problem and asks for industry feedback on whether a deposit cap would work.
For landlords, these changes will prevent “double charging” taking place. This occurs when a letting agent charges a landlord for a service – such as a reference check or inventory – while also billing the tenant for the same thing. These changes should give landlords a greater incentive to shop around and increase competition in the sector.
Housing minister Gavin Barwell says: “We’re determined to make all types of housing more affordable and secure for ordinary working people. Tenants should only be required to pay their rent alongside a refundable deposit and not face hidden fees.”
The consultation period runs until 2 June 2017 and consumers are encouraged to take part. The government will then look at responses from the industry and tenants to decide how to implement these changes in law.