Abolition of tenancy fees charged by agents gets another step closer: But can ban get more draconian?

The second reading of the Tenant Fees Bill took place in the House of Commons yesterday evening. It was passed unanimously after a three-hour debate, and with MPs not having to enter a lobby to vote.

Last-minute campaigning centred on moves to ensure that MPs understood the unintended consequences of a ban, which will cost letting agents up to an estimated 24% of income, and, say critics, push people out of jobs and raise rents. However, none of these arguments appeared to hit home.

One MP, Lloyd Russell-Moyle, said that “most agents” in his Brighton constituency were involved in sharp practices. Many of the MPs at last night’s debate called for a further tightening up of the law, particularly in relation to ‘default’ fees which agents will still be able to charge – for example, if a tenant loses their keys.

Last night ARLA boss David Cox sounded despairing, as he told EYE: “This really is a done deal. It is only a question as to how much more draconian it gets.”

He said ARLA would continue to fight, in particular raising awareness as to how MPs might be persuaded to understand the difference between default fees and deductions from tenants’ deposits.

Cox said: “There is clearly overwhelming support in Parliament for the ban.

“However tonight’s debate makes clear MPs do not understand what is meant by default fees and the implications of reducing tenancy deposits. As the Bill goes to committee stage it is more important than ever that agents go and see their MPs to make the case for why these fees remain vital even after the ban comes into force.”

Isobel Thomson posted on the NALS website earlier yesterday: “It is important that MPs fully understand the implication of the fee ban for their constituents who rely on the Private Rented Sector (PRS) and who will be affected by the ban.

“There will be inevitable increases in rent for tenants and increased costs for landlords, but there will also be a huge impact on agents operating small businesses in their local areas.

“We are urging MPs to use this time to fully assess the impact of the Bill.

“It is crucial that Government looks again at the proposals and consider tenant fees in a broader, coherent framework of regulation planned for the PRS.”

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17 Comments

  1. ArthurHouse02

    It really is unfortunate that MPs use their position to slag off estate agents, especially when they have such a chequered histroy themselves. I wonder what expenses Mr Russell-Moyle has claimed for over the years.

    As for ARLA moaning, its too late mate, you should have pressed the case harder when Shelter etc where ramming stories down MPs throats

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    1. Peter

      I do not blame ARLA, there are too many agents charging excessive fees; the fee ban is self inflicted.

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      1. Budgie boy

        Certain greedy agents have brought this on and spoils it for everyone. This industry needs regulating and it’s always the  greed of some, that brings regulation.

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        1. gardenflat

          It will be the certain greedy agents that will be hit the hardest. Their fees are already higher than average for landlords, trying to bridge that gap is going to price them out. Student lets will be hit harder too, how do you make up the difference for 8 applications on one house?

          Those that have either been competitive or reasonable will be able to ride this out quite easily with minor adjustments.

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    2. Thomas Flowers

      So MP’s are extremely well paid to create legislation whilst agents shall soon be unpaid to enforce this raft of legislation?

      MP’s are able to claim expenses to do their job properly so why not agents?

      Has anyone worked out if likely rent increases shall cost tenants more, thereby, defeating the point of this vote gaining legislation?

      Tenants are staying longer at properties, should agents tell them that upon renewal of contract the reason why their rent is rising is a consequence of Government intervention?

      Should those tenants who have had to move out as their landlord has decided to sell as a consequence of Government tax changes be told the reason why their landlord is selling?

      Not so vote winning now?

       

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    3. Votta583

      Arthurhouse02

      ARLA have been lobbying against this for years. Why do you think the fight has only just began? Is it because it hasn’t been publicised enough? I’m curious

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  2. International

    Indeed ARLA should have done more, but the industry has itself to blame for this current hiatus, caused by splitting their income streams between landlords and tenants in order to appear more competitive on fees charged to landlords.

    There is no doubt that agents will now need to ‘fill the hole’ left by the denial of tenant’s fees and the only way to survive and make a profit will be to revert to charging a proper fee to the landlord: 10% for letting only and 15 or 17.5% as was the norm for fully managed, before the markets became over-competitive.

    Sales agency will end up the same way (if indeed some have not already done so) because by continuing to reduce fees will merely lead to going out of business.

    The industry is in self-destruct mode and the sooner everyone wakes up the better!

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  3. Will

    Everyone seems to assume MP’s can comprehend the impact.  However, my understanding is fees can still be charged for duck houses as they do not fall into the category of human residential accommodation and no doubt MP’s will continue to invest in the sector from suspect income.

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  4. Paul Boswell

    As an agent in ‘Greater Brighton’ as they now call us in the sticks, and having met Lloyd, I’m surprised by his comment. I would have thought he’d be more considered. No doubt in every town there are some guilty of ‘sharp practice’, but most? Come on Lloyd, think first, speak later.

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    1. Will

      Politicians speak with fork tongue.  They are all expert in telling people what they want to hear – its how they get their votes!

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  5. smile please

    One MP, Lloyd Russell-Moyle, said that “most agents” in his Brighton constituency were involved in sharp practices. 

     

    I would call this libel, what if anything is this being based on?

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  6. lee10c

    It should have been a fee cap.  Why shouldn’t agents charge a ‘reasonable’ contribution towards referencing and also mandatory ‘Right to rent checks’

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  7. PhilJ31

    As an Agency owner, you might expect me to receive this news badly.. but first it’s not news, we were first notified in 2016, second we will be better for it in the long run.

    It will harm agencies who think it’s ok to get 24% of your revenue from tenants.

    It needs to be seen in light of tightening legislation in our sector which will benefit us as a profession. If that’s what we are and how we want to be seen.

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  8. TOZ4

    Couldn’t agree more with International’s comment. Agents are great at cutting their own throats. Landlord’s will just have to start paying proper agency fees like they used to.

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  9. jeremy1960

    We had 5 tenant enquiries today all looking for 3 bedroom houses, when asked reason for moving all quoted “our landlord is selling the house we live in now”.1 tenant who lives in a modest 2 bedroom flat gave notice, he had his 3 bedroom house let to a family and chose to move into a smaller property, he’s just done his tax return and finds with loss of mortgage relief and the fact that his rental income has pushed him into higher tax bracket it is no longer viable.

    So in the space of 8 hours we learn of 6 3 bedroom houses being taken out of the rental market in a small town!

    If this continues rents will rise because of lack of supply let alone other costs.

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  10. Property Poke In The Eye

    I agree with the fee ban.  Agents should either charge the landlord or the tenant, not both.

    Some of the admin fees being charged are an absolute joke.

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  11. Neill30

    As with ‘Property  Poke’ in The Eye, and ‘PhilJ31’, I agree with the proposed ban of tenant fees etc. The fact that the majority of MPs do support the move does say a lot.  And compare that the some of the comments on here that do show a non objective approach by some contributors. Tenant Fees are unjust, they hit many lower income people unfairly, and very frequently, due to the insecurity of tenure. If rented properties are taken off the market, that is good for house buyers, and especially first time buyers. How the market should be progressing. I speak as a property professional, home owner, and experience of three years of renting, with three sections 21s issued during that time. Each time the cost was over £1,000 with fees, and removal costs, and two weeks each time out of my work schedule to view properties and to move. There is a massive moral and social issue at play, and yes the PRS can play a vital role, but not for a significant part of the housing stock. The best role is that of purpose built flats, with longer tenancies, and good services. As I have said before, my experience of renting as a consumer is very poor, and is a factor that I take into account with a personal relationship. That relationship is poor, but if I leave, I will have to rent. And due to my previous experience, I refuse to rent. That is how the PRS has failed me as a consumer. And, I am sure that there will be many other people in my situation. If a retail outlet failed many of it’s consumers in that way, then they would fail, and indeed many have. The PRS sector has to wake up, to rationalise with fewer and more target orientated properties, and to charge fairly. All customer facing businesses change over time, and some in the PRS resist change, but change can be embraced, and some will benefit. As in all commerce, there are losers and winners.

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