MPs argue over Letting Agent fees

Letting agents generally receive bad press due to the fact that many people feel it is unfair for them to charge tenants fees for finding them a home when they are already paid by landlords. At the moment, a large proportion of the population are struggling to afford rent for private rental properties due to the fact that they have inflated as a result of the housing crisis. This means that many tenants lament the fact that on top of saving money for a deposit, they also have to find enough money to cover letting agent fees before they even move into their new homes.

This is why the Labour party recently proposed for the Consumer Rights Bill to be amended so that letting agents would be banned from charging tenants fees. However, this proposal was defeated by a majority of 53 (281 to 228) with nearly all Conservative and Liberal Democrat MPs voting against it. Even though Labour lost the vote they are still adamant that the system needs to change when it comes to letting agents; Harriet Harman, for example, has claimed that we need to “move from one-year tenancies with unpredictable rents to three-year tenancies with predictable rents.

“Not least because of the difficulties of affording to buy a home, there are now nine million people renting, including 1.3 million families with children – security and continuity are particularly important for them. What we need to be sure is that letting agents do not rip tenants off by, as well as charging the landlords, charging the tenants.” However, Conservative MPs feel that banning letting agent fees to tenants could be harmful for the private rental sector. Carlisle MP John Stevenson said: “If the letting agency loses an income it will seek to get it from elsewhere, so it is likely to increase its charges to the landlord. The landlord will then seek to recover that money, and from whom will the landlord seek to recover it? From the tenant.”

However, even though Labour has failed to ban letting agents from charging tenants fees, Deputy Prime Minister and leader of the Liberal Democrats, Nick Clegg, has announced that they will now have to publish their fees in full. In response to Harriet Harman, Mr Clegg said: “On the charges raised by the agencies, whilst the problem she identifies is right, the solution she is suggesting may of course lead to higher rental costs. That is why we will be announcing today that we will be placing new obligations on agents to publish in full transparency what kind of fees they are charging so people can shop around and get the best deal available. The fundamental problem… is that we are simply not building enough affordable homes.”

Housing Minister and Conservative MP Kris Hopkins went into further detail about the government’s new policy, and said: “The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service. Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents. Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.”

Some letting agents have already voiced their support over publishing their fees, such as Simon Perkins, partner at PWR Lettings, who said: “I think that agents having to disclose all fees to prospective tenants is a good move. It ensures transparency for tenants, who can then shop around to see which agents they will consider. Indeed, there are a number of unregulated agents who seem to take advantage of tenants, charging them unjustifiable high fees for very little work.” Landlords could also benefit from knowing what fees letting agents would charge them as it means they can compare quotes like they do with landlord insurance policies. Furthermore, it means that they can trust their letting agent to treat their tenants fairly, as by knowing exactly what fees they have to pay and when, it is much less likely for them to fall into rent arrears and subsequently be evicted.

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