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Housing

Queen's Speech: Government to ban "unfair" letting fees

The Tenants’ Fees Bill – which will see agency fees scrapped and deposits capped – has been welcomed as a "huge leap forward for the lettings market"

Rent debt and eviction bans need tackling during the Covid-19 pandemic

Credit: iStock / Getty / oversnap

Brexit may have formed the core of today’s Queen’s Speech in Parliament, but there are some measures to address some of Britain’s housing woes.

The government’s two-year legislative plan includes a Tenants’ Fees Bill, which Downing Street says will help “fix the dysfunctional housing market.”

The aim of the bill is to stop landlords and their agents demanding letting fees, and would enable tenants to recover fees unlawfully charged.

A complete ban on such fees would be very welcome to private renters, who are often charged hundreds of pounds by landlords each time they move.

The lettings market has been double dipping and making profits from both tenants and landlords simultaneously for too long

According to The English Housing Survey, the average letting fee for a tenancy is £223. But a recent Shelter report found one in seven tenants pay more than £500 in letting fees before moving into a new property.

“The new Tenant’s Fees Bill is a huge leap forward for the lettings market – an industry that has been double dipping and making profits from both tenants and landlords simultaneously for too long,” said Calum Brannan, chief executive of No Agent.

“With approximately five million households privately renting, a quarter of these being families with children, it’s clear the benefits of this Bill could be felt by a lot of people.”

The Queen’s Speech also gave more detail on how the government plans to deal with the Grenfell Tower fire. There was a pledge to make sure people homeless by the fire should be rehoused “as close as practically possible” to the area.

“There is a strong domestic agenda – housing was at the forefront the Queen’s Speech,” said Tory backbencher Jacob Rees-Mogg.

However, the news has not been welcomed by all.

“The decision to cap tenancy deposits at no more than one month’s rent smacks of a political gesture from a government desperate to court the voters who supported their opponents at the last general election,” said Richard Lambert, CEO at the National Landlords Association (NLA).

“We estimate that around 40 per cent of deposits exceed one month’s rent. Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged.

“Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place”.

David Cox, chief executive of ARLA Propertymark, added: “A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.”

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