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The End of Tenants Abuse?

Posted on April 24th 2017 by

The Government announced in the 2016 Autumn Statement that it intended to hold a consultation on introducing a ban on letting agents charging residential tenants a fee for finding accommodation. This consultation is due to end on 2nd June 2017. The consultation relates to England. Scotland, with its usual more enlightened approach to such matters, has already banned such fees. The position is under review in Northern Ireland and Wales. It is anticipated that the ban will lead to a “better and more transparent service” and increase competition between agents. It is also intended that it will prevent a tenant from being stung by hidden costs.

Tenants  may be required to pay the landlords agent a fee for any number of services, ranging from collecting “references”, for “inventory services” , “contract negotiations”, or the suitably vague “admin fee”. Such fees, particularly in the South East have been used by agents to take advantage of desperate tenants who have little choice other than pay for the various specious services landlords agents purport to supply. Banning fees will hopefully prevent agents from charging the tenant and the landlord for the same service, and generally reduce the scope for abuse of market power.

Currently a letting agent is required to publicise a full tariff of their fees and they must make it clear whether they are a member of a Client Money Protection Scheme (CMPS). This must be prominently displayed on the website and in their offices, failure to do so could result in a fine of £5000. The Government is keen to protect both landlords and tenants and the CMPS requires that client money is held separately and ensures they will be reimbursed if the agent stops trading. The CMPS is not mandatory. Making CMPS mandatory is something the Government has promised it will consult upon in the future. Needless to say as with many voluntary schemes, there is very little take up. Unless such schemes are made mandatory, current market conditions will not force agents to be transparent in their charging, nor indeed become more tenant friendly!

Tenants, landlords, agents and other interested parties can take part in the consultation. Full information is on the Government website https://www.gov.uk/government/consultations/banning-letting-agent-fees-paid-by-tenants

 

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Alex

Alex says: April 24th, 2017 at 9:55 am

This consultation will definitely be beneficial for tenants due to the increased transparency between landlord and tenant. The last thing you would want are hidden costs when moving into a new property. This was a very interesting read, thanks for sharing this article.
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Lee Merry

Lee Merry says: May 2nd, 2017 at 1:09 am

Thats great news. There are too many that profit from 'hidden costs', landlords, local car garages etc. Most families have very little disposable income and therefore have to plan their finances carefully. These hidden costs can at times cause families to go into debt which really isn't fair. Thanks for posting guys.
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