More Details Emerge On Government Demand For Transparency Over Letting Agent Fees

More Details Emerge On Government Demand For Transparency Over Letting Agent Fees

More Details Emerge From Government
On Letting Agent Fees Debate

The Government have declared that all UK letting agents and property management agents must display full details of all fees charged to tenants on websites and in offices.

Deputy Prime Minister, Nick Clegg faced a tough grilling at his House Of Commons session from Labour MP Harriet Harman, who wanted the Government to back the ban on letting agents charging fees to tenants.

Ms Harman told MPs: “Not least because of the difficulties of affording to buy a home, there are now 9 million people renting, including 1.3 million families with children – security and continuity are particularly important for them. It is time to move from one-year tenancies with unpredictable rents to three-year tenancies with predictable rents. What we need to be sure is that letting agents do not rip tenants off by charging fees to the tenants, as well as charging the landlords.”Mr Clegg argued that whilst the Labour party were making an important point about the virtues of longer-term tenancies, the ban on lettings fees could increase private sector rents in the long term but he agreed that more transparency would help to keep costs down for tenants, stating: “On the charges raised by the agencies, whilst the problem she [Harriet Harman] identifies is right, the solution she is suggesting may of course lead to higher rental costs. That is why we will be announcing that we are 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.”

Labour MP Harriet Harman

Labour MP Harriet Harman

Ms Harman dismissed the response as “not good enough”.

Labour want to influence the vote of generation rent ahead of local and European elections on May 22nd, with Labour leader Ed Miliband promising generation rent that his party intend to end excessive rent rises and want three-year tenancy agreements to become accepted practice, and they also want to axe all charges currently imposed on tenants by letting agents.

Labour tried to add its proposed ban on fees for tenants into the Consumer Rights Bill last week, but the amendment failed by a majority of 53 with 281 votes against the proposal to 228 in favour.

During the heated debate on the proposed amendment to the Consumer Rights Bill, Labour’s Stella Creasy pointed out that a similar ban had already been introduced in Scotland, telling MPs: “The experience there has been an increase in the number of letting agents and no effect on the rents people are paying.”

But some Conservatives remained highly sceptical with Carlisle MP John Stevenson stating: “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 from the tenant. The government are working on a model agreement, that aims to support tenants and families who wish to seek a longer fixed-term tenancies, with a report due to be published in the summer.”

The Conservatives cite evidence from other European countries that appears to suggest that rent controls can lead to poorer quality rental accommodation, with fewer properties actually being let and tenants being charged much higher rents.

Housing Minister, Kris Hopkins

Housing Minister, Kris Hopkins

More details on the Government’s policy were provided in a statement from Housing Minister Kris Hopkins, who said; “The vast majority of letting agents provide a good service to tenants and landlords. But Government 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.”

The Government will attempt to make their own amendments to the Consumer Rights Bill during the legislation’s passage through Parliament, with MPs proposing to review the effectiveness of the measures after they have been operating for a year and Prime Minister David Cameron has already indicated that he is prepared to work with Labour on proposals for longer-term tenancy agreements.

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