Generation Rent promised protection from rogue letting agents
Government consultation suggests banning fees, capping deposits and better enforcement. Generation Rent is set to receive greater protection from unfair or hidden charges at the hands of letting agents and landlords under plans outlined by the government.
Details of a proposed ban on letting agents being able to charge fees to tenants have also recommended a cap on rental deposits, a new central enforcement body and making non-compliance a criminal offence.
Ministers on Friday launched an eight-week consultation on the ban, designed to “provide a fairer deal for tenants by banning unfair letting agent fees and encouraging greater competition in the rental sector”.
The measures, which apply to England only, are aimed at stopping agents who exploit their position between landlord and tenant, ending unfair charges and the practice of double charging by rogue agents.
Gavin Barwell, housing minister, said: “We’re determined to make all types of housing more affordable and secure for ordinary working people. Tenants should only be required to pay their rent alongside a refundable deposit and not face hidden fees.”
Letting agents reacted with dismay to the extent of the proposed ban, which dashed their hopes that certain services such as credit reference checks on tenants might be excluded.
David Cox, chief executive of Arla Propertymark, which represents letting agents, condemned the decision as a “short-term crowd pleaser”. He said research commissioned by Arla suggested landlords would compensate by raising rents by an average £103 a year, hitting the people it was intended to help.
“The government’s housing policy is shambolic and today’s consultation contradicts its already-stated aim to encourage longer-term tenancies,” he said.
The government excluded holding deposits and in-tenancy charges from the ban, so agents would be able to charge tenants for services incurred during their tenancy, such as replacing lost keys, repairing damage carried out deliberately or charges for late rent. Agents would also be able to keep a holding deposit from the tenant while referencing checks are carried out.
Dan Wilson Craw, director of tenant group Generation Rent, said agents had been able to charge “whatever fees they want” to a “captive market of renters”. “The government’s new proposals to end this racketeering would finally give renters some consumer power, for example by making it cheaper to move out of an unsuitable property,” he said.
The government analysed charges at 50 letting agencies and found total fees during the letting process ranged from £120 to £747, with a median of £300.
Along with the measures put out for consultation, the government said it was “keen to explore” the idea of a cap on rental deposits to help tenants when moving. Chris Norris, head of policy at the National Landlords Association, said agents needed more certainty over future regulations.
“We’re particularly concerned that the scope of this consultation appears to have drifted to include tenancy deposits, with suggestions that a ‘cap’ may now be necessary. This looks like yet another attempt to affix a sticking plaster to a perceived problem without really understanding what is driving behaviour in the real world.”
The government said it would consider whether not complying with the new rules would be a civil or criminal offence. The latter would allow non-compliant agents to be banned from operating and placed on a “rogue agent” blacklist.
The proposals name trading standards officers at local authorities as primary enforcers of the measures. However the consultation also raises the possibility of the creation of a central enforcement authority, which the government said could help to ensure the regulations are enforced consistently across the country as well as offering guidance to tenants and landlords.