Renters will no longer have to pay letting agent fees under new plans in the Autumn Statement 2016. The ban, planned for "as soon as possible", could mark the end of tenant charges for administration such as reference and credit checks.
The Chancellor Philip Hammond said that up to 4.3 million households will save money as a result of this ban. There is already a ban on letting agency fees for tenants in Scotland. There aren’t any clear-cut plans yet, but we’re taking you through what a ban on letting agent fees could mean for you.
Letting agent fees
Letting agent fees are supposed to cover the upfront costs landlords face. These include inventory checks and credit referencing. You have to pay these before signing up to a rental contract as well as a non-refundable holding deposit.
A recent English Housing Survey found that fees are typically around £233. However, the charity Citizens Advice puts the average at a higher cost at £337. And Shelter says that fees can be as much as £500 for some potential renters.
One of the main criticisms of the fees is that renters have no choice over the agent they deal with after finding a property. In comparison, landlords are able to choose the agency they want to represent them. As competition for rental properties is high, tenants often see these fees as just another hoop to jump through.
Charities such as Generation Rent and Shelter have supported a ban on letting agent fees for some time now. But groups that represent landlords and letting agencies have been quick to condemn the proposals.
The rental industry argues that landlords will still have to cover administration costs. Instead, it’s suggested that fees should be more regulated, not banned.
What does this mean for me?
The banning of letting agent fees should mean that it’s cheaper to rent a new property. However, some landlord and letting agency groups suggest that rents could actually rise.
This is because the agents might instead shift the cost of fees onto landlords, and they’ll then put up the rent. With that said, Scotland has not seen an increase in rents since the ban took place there.
In a move to get more of "generation rent" buying, the Chancellor also announced plans to increase the construction of affordable homes. He’s ring-fenced up to £3.7bn for new housing projects in England – £2.3bn on infrastructure related to housing developments such as roads and £1.4bn on affordable housing.
The Local Government Association estimates that at least four million people of working age in England would need affordable housing by 2024.
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