The new ban on letting fees was introduced to parliament yesterday, with letting agents liable for fines of up to £30,000 if they breach the ruling.
The measures have been published in a draft bill that was introduced to parliament yesterday. The bill aims to protect tenants by prohibiting the costly upfront payments often introduced by agents.
Estate agents will be issued with a £5,000 fine for an initial breach of the ban on letting agent fees, and prosecution or fine of up to £30,000 for a repeat offence within a five-year period.
A government consultation on the move found that nine out of ten tenants backed the decision to ban letting agent fees. Seven out of ten said that the fees affected their ability to move into a new rental property.
However, there has been some backlash against the measures, with concerns raised that costs will simply be offset onto landlords. This will then lead to a rise in rents as investors attempt to recuperate the fees.
The Residential Landlords Association (RLA) took out a consultation on the ban, and warned that ‘any ban on fees paid by tenants will be passed back to landlords,’ many of whom are struggling under increasing tax and regulation.
Communities secretary Sajid Javid said: ‘This government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit. We’re delivering on our promise to ban letting agent fees, alongside other measures to make renting fairer and increase protection for renters.’
RLA chairman Alan Ward praised the greater clarity provided by the government and the proposal to cap security deposits at six weeks’ rather than one month’s rent.
He commented: ‘Ultimately though, cutting costs for tenants means boosting the supply of homes for rent.’