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What the plans to ban letting agent fees could mean for you

Published 12 April 2017 by

Chancellor Philip Hammond announced plans to ban letting agent fees in the Autumn Statement 2016. Letting agent fees are administrative charges to tenants for things like contacting referees and performing credit checks.

The plans come after concerns about the costs of letting agent fees were exposed. The charity Shelter found that one in seven tenants pay more than £500 to agents. Also, one in four people in England and Wales feel as though a letting agent has unfairly charged them. 

The Government are running a consultation for eight weeks to review these fees. To make sure you're in the know, we explain what the proposals are.

The proposals

The Government are consulting on the following.

• No admin fees from letting agents for signing, renewing or continuing a tenancy.

• No admin fees from landlords or third parties.

• A possible cap on deposit sizes.

• Support for alternative schemes to asking tenants for upfront deposits (e.g. paying in monthly instalments).

These proposals will stop hidden charges and put an end to tenants paying upfront costs, the Government says. Analysis suggests that renters could save around £300 in fees every time they move, if the Government introduces an outright ban on tenant fees.

However, it's important to remember that there are certain charges you could still face. For example, you could pay a letting agent a holding deposit to take a property off the market or for a management service that you request, such as to replace your keys.

This ban will only apply to England. There's already a ban on these fees in Scotland and a similar move could happen in Northern Ireland. There's currently no ban on letting agent fees in Wales.

What does this mean for me?

The proposed ban could mean that you face less charges if you're a tenant as you'll only need to pay your rent and a refundable deposit every time you move. You should be able to claim your rental deposit back as well.

As a result of this potential ban, you'll be able to budget for your rental costs without worrying about any unexpected charges. Be aware though that you could still face charges as a result of your actions or anything that you request.

It's uncertain whether your rent will rise if an outright ban comes into force, as it's at the discretion of your landlord. If landlords see their costs rise as a result of this ban though, they might pass some of the cost onto their tenants – meaning that your monthly rent could rise.  

Analysis from ARLA Propertymark's annual conference claims that if the Government introduce an outright ban, rents will rise by £103 per year for the average tenant. Find out your rights if your landlord increases your rent.

The consultation period on this proposal will run from 7 April 2017 until 2 June 2017. It might be worth listening to the news around this time to see what potential changes the Government are bringing in.

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