The nitty-gritty details of the proposed ban on letting agent fees – words Al Woods
In April 2018, the average renting cost in the UK rose by around 1.5%, according to a study by HomeLet, in comparison to the rental rates for the same month in 2017.
Well, this rise is subjective to other factors like the number of bedrooms per apartment and the area where the rental is located. Although the ban on letting fees is yet to be applied, it promises those who would love to live in some of the best areas in London, among other cities, a smooth time when paying rent, and of course a more affordable lifestyle.
While chancellor Philip Hammond initially proposed the ban in the autumn of 2016, the queen briefly mentioned the proposed ban on letting agent fees on June 21st, 2017 in a speech addressing both houses of parliament. She mentioned that the ban was not only aimed at reducing the unfair rent fees but in also promoting transparency and fairness in the housing market. Here are some details on what the proposed ban entails:
What exactly are letting fees?
Whenever a landlord works with a letting agent, they have to pay some fees that are typically translated to the tenants. This simply means that the tenants have to pay high amounts of rent to cater for these fees. In fact, while the average tenant might pay £233 in fees, some of the tenants pay some few euros shy of £700. Since 14% of letting companies fail to display their letting fees on their website, some of the tenants might even end up paying more than these figures in rent. The letting fees typically include the tenancy reference fee, the agent’s admin fees, the inventory fees, and renewal fees.
What will be banned?
The ban is aimed at making the aspect of tenants catering for the letting fees illegal. Under this new regime, the tenants will only need to pay things like the rent deposit, contractual default penalties and the rent itself. Other costs such as the reference and inventory fees will simply fall on the side of the landlords and letting agencies. Additionally, the rental deposit is to be capped under no more than a month’s rent, meaning that landlords cannot increase the deposits to cater for the letting fees. As a result, tenants can enjoy a more favorable rental market. Combined with other ways to make savings on lifestyle expenses, the ban is set to have a positive impact.
Will the ban hike rent fees?
Although this question has been received with differing opinions, there is still a possibility that the increased operational costs might still be passed on to the tenants by the landlords with time. However, there’s a hindrance to that, as breaking the ban law will be treated as a civil offense whereby the involved landlords will have to pay a fine of up to £5000. A second offense, within the next half decade, will be deemed a criminal offense which will attract a penalty of up to £30,000. As a result, the ban will lead to buying-to-let investments looking less profitable, while those who do invest in them increase the costs of their rental properties steadily.
The proposed ban on letting fees is focused on promoting transparency when it comes to paying rent, while also easing lifestyle expenses. Although it is yet to be applied, it will ensure that tenants will not pay unfair rental fees. Whatever the outcome of the ban, the question of how it will affect you as a tenant will be a matter of “wait and see.”
The nitty-gritty details of the proposed ban on letting agent fees – words Al Woods
