Fees ban latest: MP demands assurances that letting agents will not pass costs on to landlords

An MP has tabled a written question asking for reassurances that English letting agents will not pass costs on to landlords when the fees ban kicks in – or attempt to get round the ban in any way.

Similar concerns have been expressed in Wales where a ban is also under discussion, and where the Welsh Assembly has been told that if a ban is introduced, it must not result in rising rents.

Dr Andrew Murrison (Conservative, SW Wiltshire) asked what steps the Department for Communities and Local Government is taking to ensure that private letting agencies do not transfer costs to landlords or “redefine” tenant fees.

Meanwhile, ARLA has said that the Government has still failed to provide any detail on the substance of the ban or the likely timetable.

Yesterday, ARLA managing director David Cox said he has met DCLG twice since the announcement of the ban and is working on its response to the forthcoming consultation.

He urged letting agents to respond to an ARLA consultation, saying: “This is your livelihood, your business, your industry, so please make your voice heard.”

He added: “We don’t yet know enough about how the ban will operate and the substance of this is absolutely crucial. The most important tool at our disposal is tangible, credible evidence. Please contribute your views now.”

The ARLA consultation is https://www.opiniumresearch.com/R.aspx?a=9573&as=T7QJ42s6Ab

Cox also warned that a petition on the Parliament website trying to overturn the Chancellor’s decision could backfire on the industry.

In the Welsh Assembly a debate was initiated this week by UKIP which called on the National Assembly for Wales to bring forward legislation to ban renters fees, ensuring that costs cannot be passed on either to landlords or to tenants by way of artificially higher rents.

UKIP’s Gareth Bennett AM said: “ARLA has been critical of the proposed ban in England.

“They claim that the average charge is actually £202 per tenant and that this is broadly a fair fee to cover agents’ costs.

“The Residential Landlords Association says that it would have been better to improve the transparency of fees charged by agents by forcing them to publicise their charges and what the charges actually cover rather than have a blanket ban.

“The problem with this is that the Consumer Act legislation already did this, covering England and Wales, and Shelter Cymru’s evidence seemed to conclusively reveal that it had little effect on the commercial behaviour of many letting agents.”

Welsh housing minister Carl Sargeant told the Assembly that RentSmart Wales will improve the practices of letting agents.

He said that rather than rushing into legislation, the Welsh Assembly should look at the experience of Scotland and what is being proposed in England.

He said of UKIP’s motion that it “suggests that costs must not be passed on to tenants via rent increases.

“There is a separate discussion to be had about the desirability of comprehensive rent controls, but this goes way beyond the question of banning agents’ fees to tenants.”

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35 Comments

  1. sb007ck

    What a joke some MPs really are. Take away what is for many a genuine and justifiable source of income, and yes want us to guarantee that we wont look to replace that income. Can we respond by asking for MPs to to give us assurances that they wont falsify their expenses claims.

    And as for ARLA, well if they had done a bit more shouting earlier, maybe we wouldnt be in the situation

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    1. P-Daddy

      So that comments like this can be challenged, which is the only way to deal with pronouncements from kitchen table experts, here is his Twitter account and email for those with a view to challenge him directly @murrisonMP    andrew.murriosn.mp@parliament.uk

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    2. Woodentop

      I understand your point but would urge letting agents to consider the words they use, particular ARLA and NLA during any negotiations. Just about everyone knows that the people on the other side of the table have their own views, many influenced by the opinion that “Profit” and “Income” is a dirty word these days.

       

      We have slowly become a country of liberal ideas where cheap is all powerful consumer protection, no matter what the industry is. The days of paying for quality is forgotten and we are in danger as  a nation of self destruct on that subject. We all know of agents who have taken advantage of tenants with outrageous fee’s, but not all agents.

       

      We should be demanding the right, just as everyone has (the same consumers expect it from their employers) to charge a fair fee for work/service provided.

       

      As to stopping rent rises ….. that can only be done by rent capping, I mentioned last week ….. so is it on its way? That would have far reaching constitutional issues brining in big guns like lenders and insurers who would be at risk. If so (Trevor will love this one) it will fall within the framework of the state interfering with a private market,  price rigging, Anti-EU directive and illegal CATREL practice! It raises the spectre of the private rental market being singled out as no longer being a free market, something this country has always been proud to support. It seems that todays politicians shoot from the hip without thinking of the consequences … says a lot about MPs not fit for purpose, they can’t gets things right with current workload.

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  2. Robert May

    Isn’t it strange  how being elected as an MP suddenly bestows  an unlimited wisdom and experience of everything on anyone able to get  first past the post in an election?

    A ban on fees will not help those who need help most,  the least competitive tenants  won’t suddenly be  able to afford a tenancy  simply because fees are abolished; the tenants with more savings, better jobs etc will simply pay less when they secure the property.

    Banning fees is solving the wrong problem, until someone  in a position to affect change understands the whole picture free from bias, influence and lobbying a ban on fees will simply take money out of the economy.

    Using Mr Hammond’s own figures,  the average fees being £350 per tenancy.  £1.44 billion is removed straight away. Use the rule of 10 (£1 spent has £10 effect)  £14.4 billion is  being wiped off  the economy for the benefit of  about 4.1m tenancies.

    Start taking chunks of cash out of the economy like that and  you start to generate an inflationary pressure.

    About £2billion tax on rental income isn’t collected each year tax meaning that about £40 billion is still  due for collection by HMRC.  Doesn’t it make sense to get the basics right, fix the bits that are known to be broken  before messing about with things that will exacerbate problems not solve them?

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    1. NewsBoy

      You make perfect sense – again! Mind you we do having agents taking the Micky around here – charging nothing to the landlord and taking EVERYTHING off the tenants.

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      1. Robert May

        That’s fine  they are tenant’s agents, there’s no law against that.

        The more this goes on the more a single outcome is likely; tenants will have to employ an agent to reference , verify and warrant to the agent and the landlord they are a good tenant. No problem for the good tenants a problem for the marginal ones.

         

        Such an outcome will come with fees paid by the tenant to their agent, there will naturally be a risk that will be covered by an insurance policy that the tenants will pay.

         

        The arrears risk alone such an insurance policy  will  have to cater for is  £371 per tenancy per year, add administration costs and a bit of profit for the insurance company and there is an annual premium of £500 for every single tenancy every year.

        Then there is the tenants agents fee likely to be about £250 a time due to the duplication of  setting up and marketing a new industry.

         

        I think a whole bunch of turkeys  just lobbied government for compulsory Christmas.

         

         

         

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    2. lettingsguru

      I have said it before, and I’ll say it again; the Government have to decide why it is they want to ban these fees, and what they hope to achieve by it. When they can answer those two questions that industry and the Government can work together to find a happy medium. Until then, it is simply a policy for policies sake. And to then suggest that agents shouldn’t pass costs on to the Landlord is simply farcical, do PM’s think we simply serve no purpose what-so-ever?

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  3. James

    Are you kidding me?

    This persecution of hard working, law abiding, tax pay Agents has to stop right now!!!!!

    May I politely suggest Dr Murrison look a little closer to home if he wants Landlords not to be unfairly penalised.

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  4. AgentV

    Can we have a cast iron guarantee from all MP’s please that they will no longer hold other jobs or income earning posts in addition to what should be their exclusive role. Well can we Dr Morrison? How about tabling that question for all of us?

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  5. inthefield

    Incredible. Yet another example of politicians having a one sided view to win votes and then think about the consequences later. Overpaid, under qualified, lack of real world experience clowns.

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    1. AgentV

      A professional clown is undoubtably a more trusted profession!

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  6. smile please

    No problem allow us to have complete exemption from corporation tax, income tax and employers responsibilites and I am happy with that as a deal.

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  7. ajayjagota75

    As a sector that fails to self regulate which inevitably leads to politicians taking action which they rarely avoid the unintended consequesnces in any legislation – until the sector embraces change this political intervention will continue.

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    1. James

      Accountable regulation has to come though Government legislation.

      How about client money protection for starters? ….A legal requirement for an Agent to have CMP will go a long way in ‘cleaning up’ the property industry.

      Unfortunately this opens a can of worms for many in other industries as well as property ….and the self interest of Members of Parliament and The Houses of Lords is the single reason we have no for this regulation to date.

       

       

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      1. Robert May

        No it won’t, CMP without audit simply camouflages the crooks.  It is like asking burglars to take out thieving insurance for when they get caught.

        In a competitive industry the only effective way to clean up the industry is  starve the wrong doers out.  Policing legislation is ineffective and only stopped the honest rogues.

        The noose is tightening around the neck of those breaching CPR and BPR in sales very much to the disbelief  of most readers that it was possible.  Clamping down on the  rogues in lettings is far easier if only people would listen.

         

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  8. Eamonn

    the petition above is a good idea.  Not sure about the strength of the arguement,  being able to keep our company cars is something the government will not give too hoots about.

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  9. marcH

    Does this MP possibly have a property which he rents out ? If so, and if he manages it himself, he won’t be affected by the fees ban, will he? I think we should be told….

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    1. AgentV

      And told whether he has any other income earning jobs, posts or business interests on top of his MP’s salary.

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  10. RichardHill61

    ARLA really are a hapless bunch of fools who profess to look after members interests but do very little for their subscription..

    MP’ would be better off banning administration, referrening etc then they could just put a lot of people out of a job!

    It’s all getting to be rather ridiculous!

    Have a good weekend everyone!!

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    1. James

      Absolutely agree. I suggest ARLA members on mass pile massive pressure on them to speak louder and with greater authority.

      Coupled with a threat to withdraw membership by enough members, …they may then start earn their membership fees.

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      1. smile please

        I will also jump in and agree if that is okay.

        Its times like this with ARLA and similar with NAEA

        That show they are not fit for purpose.

        All they want to do is profit from members, be it by subscription, qualifications, Training, Gala Dinners.

        When the industry actually need them they are hiding in the corner of the room.

        Disgraceful.

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        1. new life

          Completely agree Smile Please which is why I left ARLA this year I don’t need them to tell me how competent I am as an agent , its them who needs to prove their competency and their not doing a very good job at the moment.

           

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  11. jackoTLG

    What an idiot MP. Moron. How is he proposing influencing what rent the landlord and agent agree to market at? He is more suited to work in politics in the USSR when it was in its glory.

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  12. seenitall

    hahahahahahahahahahahahahhahahahahahahahahhaahhahahahahahaha      this MP must be retarded.    The govt are already going to tell a private business what they can and cant charge to a tenant/client.     If this MP gets his way they will to cap/limit what we can charge our landlord/client.

    FFS why not go the whole hog and just tell agents they can not charge anything to anyone.

    Lets take it further how about capping all private buinesses in what they can charge a client?     Economics and freemarket ideas appear to be very lacking in this MP  – in fact if this is the logic of this MP then he is not fit to stand as an MP as he is too stupid.

    Will be directly writing to him just to highlight to him how stupid he is as clearly he cannot see the words “Stupid” that must be written on his forhead when he looks in the mirror each day and if not so written deserves to be tatooed so to act as a warning to others when they see him.

     

     

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  13. pierce

    Is anyone else ready to explode?

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  14. RealAgent

    So I increase my fee to Landlords to absorb all costs and the Landlord may feel he needs to hold out for a slightly higher rent.

    How exactly does Dr Murrison propose to legislate on the fee I can charge a landlord for my all inclusive services?

    I suppose of course he could intend to next table a motion to regulate what BT charge me for a phone call, what Waitrose charge for a can of baked beans and indeed what the taxi driver charges to take his mistress home from the House of Commons.

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    1. pierce

      🙂 🙂 🙂

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    2. Woodentop

      You missed out what his mistress charges!

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  15. Peter

    We all know they cannot stop passing tenant costs to landlords; there is no way to quantify and monitor it.

    The only way would be to go down the tried and trusted route of reducing rental stock; and in the process causing far more problems for all concerned, by introducing rent controls.

    Rent Controls – God help us if they brought that bad beast back!

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  16. smile please

    On a plus side,

    We can benefit from “Charity” status as that is what they want us to operate as.

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  17. SJEA

    I think that Dr Andrew Murrison (Conservative, SW Wiltshire) should give up his expenses account and start to absorb the costs…

    What gives MPs the right to interfere with business ?

    Tenant fees pay the staff for doing work needed, and more recently for checking tenant’s right to reside. I realise that there are agents out there that are making a great deal of money, but surely a cap would be more beneficial to ALL concerned, and in particular tenants !

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  18. gk1uk2001

    I’ll echo what a lot of other people are saying – what right does an MP/the government have to interfere and tell our industry (or any private business for that matter) what they can/can’t charge people? What about a free market, driven by supply and demand?

     

    Buffoons!

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  19. htsnom79

    All too subjective, who’s to say whether something is worth (eg) 900pcm as opposed 950pcm, place by place, street by street, area by area, region by region, how that £600 difference is funneled/reported/invoiced/factored is still there, that’s what it costs to do those things..

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  20. PLCO

    Lets roll the clocks back 30 years, to a  simpler letting industry with no inventories required, a two page tenancy agreement if you were lucky, no safety regulations to speak of, and a general free for all lettings business, even dentists opened up their own letting business. Ok they also went to prision at her majesties pleasure.  We must be the most Scrutinized and Regulated business on the high street, yet the powers that be just add more rules and regulations for us to absorb, master and action. So now we are supposed to help applicants, not tenants yet! – for free with no commitment on their part, and at no cost to them what so ever.  Some MPs think the agents fees are actually the rent and the deposit.  Have they not heard of the TDS schemes?

    So as far as the government, Shelter, Generation Rent and any other tenants rights organisations are concerned we do not need inventories and tenancy deposits, just 10 year fixed rent long terms tenancies and as long as we have checked the applicants Right to Rent (28 days prior if the are not from the EU/EEA and provided them with an EPC, Gas Certificate, How to Rent guide Feb 2016 edition and a million other bits of paper that they will never read, we are good to go!

    Forget profits being a dirty word, Landlords next year have new tax rules to wipe out profits completely, and for agents lets see what other form of expense we are too absorb to run our fair charitable business’s for tenants. After all we dont need any income to feed, clothe and shelter are own families!

     

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  21. Will

    I think these suggestions by MP’s seems to confirm the spending cuts on mental health are now coming to fruition and our MP’s are totally bonkers and need sectioning.  So the suggestion is that letting agents become a charity and should not be charging anyone for their work and service. No doubt they will be insisting that Rightmove Zoolpa etc allow landlord free access to their services and all referencing agents become free. Shame the greedy B’s keep taxing insurance more and more, introduce licensing, gas safety, electrical safety (coming to a property near you!), immigration check (government incapable to doing it themselves), legionella report, health and safety reports, fire reports, smoke alarms/fire alarms,  all on top of normal expenditure of sorting out condensation by tenantant who do not occupy the property properly and blame the poor landlord.

     

    I suggest the fat lazy game playing  money skimming, property flipping, expense fiddling MPs ban renting completely, return all property to the landlords and provide all the housing that is needed. Landlord can then sell up and have a better life in a country that does not falsely tarnish them.

     

    I conclude the only charity cases out there are the MP’s!

     

    Cricks I have become GENERATION RANT

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