Letting fees crackdown will have a ‘negative impact’ on the rental market

The Association of Residential Letting Agents (ARLA) has reiterated its call for the government to reconsider banning letting agents in England from charging fees to tenants, as it believes that it is a “draconian measure” that will have a “profoundly negative impact on the rental market”.  

Tenants can currently be charged fees for a range of administration, including reference, credit and immigration checks, as well as the drawing up of tenancy agreements, with fees varying widely.

But while ARLA is happy to accept a ban on upfront letting agent fees at the start of a tenancy, it wants agents to be permitted to spread the cost across the first six months of a rental agreement.

While a ban on agent fees may prevent tenants from receiving a bill at the start of the tenancy, many agents believe that the unavoidable outcome will be an increase in the proportion of costs which will be met by landlords, which in turn will be passed on to tenants through higher rents.

ARLA’s research shows that letting agents overwhelmingly expect rents to rise if a full ban comes into force, as agents, who want to recoup the costs it takes to undertake the jobs that fees currently cover, pass these onto landlords.

David Cox, managing director at ARLA, said: “When the chancellor announced a full ban on letting agent fees in the Autumn Statement, we called the measure draconian and a crowd-pleaser. We stand by that. Nonetheless, we believe that ARLA’s proposal to spread the cost of the fees across the first six months of the tenancy will guard against the numerous unintended consequences of a full ban while also finding a solution that works best for the consumer. 

“Over the coming weeks and months, ARLA will be campaigning for a balanced legislative solution. Our research supports our previous calls that a full ban on letting agent fees will have a profoundly negative impact on the rental market, and do little to help cash-poor renters save enough to get on the housing ladder.”

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