Written by Michael J Moore, 21st June 2017

There was confirmation today in the Queen’s speech that Government is moving forward with legislation to ban tenant’s letting fees. Designed to improve transparency, affordability and competition in the private rented market, Government expects landlords letting agents to absorb the costs of referencing tenants. This would be in line with the provision of finance for house and car purchases where the lender undertakes their own due diligence, at their own expense, with no charge to the borrower.

The announcement wasn’t a surprise. Estate agents have been debating this with their trade bodies (PropertyMark, NALS, etc) for a number of months but it would appear that as the last consultation ended only 12 days ago, estate agents and their trade bodies have virtually been ignored, with the legislation now in an accelerated situation.

The estate agency world has concerns on a number of levels. As one would expect, estate agents will suffer a reduction in income from tenants as a consequence of the banning order. Some agents charge ludicrously high fees to tenants and this will have a significant impact on these unscrupulous agents. But in many instances agents charge reasonable sums to cover their expenses only. An outright ban is likely to lead to an increase in the level of rents to tenants, as landlords seek to cover the cost of obtaining references. The trade bodies have been calling for a cap on charges to cover reasonable expenses, but it now looks as if this is not going to happen.

The trade bodies have vowed to continue their work with Government on how to sensibly implement this legislation so that it will benefit all parties over the long-term, but with so much legislation in the pipeline with Brexit, we may see this legislation pushed through with little thought or consideration on the consequences to those who can afford to see rent rises the least. We hope this is not another ‘Poll Tax’ fiasco.