24/04/17

The End of Tenants Abuse?

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

 

24/04/17