Landlord association calls for agent fees to continue but spread out across tenancy
An association representing lettings agents across the UK is calling for agent letting fees to be spread across the first six months of a tenancy rather than being banned completely.
The Association of Residential Letting Agents (ARLA) believes that the proposed ban in letting fees in England and Wales, they are already banned in Scotland, will have much more of an impact than is being taken into account by policy makers.
ARLA points to its latest research which shows that 42% of letting agents expect that a full ban would result in reduced staff numbers in the medium to long term, while 62% of agents think that a full ban will cause the quality of rental properties to decline.
The research looked at the impact that a full ban will have on tenants, landlords, agents and the wider housing market and the purpose of letting agent fees which cover a huge range of tasks, checks and legal requirements such as credit checks and the collection of references which can take up to eight hours on average.
Letting agents expect the condition of properties to worsen and 61% also expect property management standards to drop. By spreading the cost of fees, rather than banning them entirely, letting agents will be able to maintain current service levels to tenants, according to ARLA.
The association points out that spreading the fees will also make tenancies more affordable to tenants as it means they will only need to find the deposit and the first month’s rent.
Also, under ARLA’s proposals, tenants would only pay for fees over the first six months of a tenancy, rather than subsequent years, meaning that there would be no additional cost for renewing a contract.
By keeping fees in place, ARLA believes that landlords will benefit significantly and will not face higher costs at a time when they are already facing much tighter levels of regulation and dramatic rises in tax.
Indeed, ARLA’s research shows that letting agents overwhelmingly expect rents to rise if a full ban comes into force, as agents, who need to recoup the costs it takes to undertake the important jobs that fees currently cover, pass these onto landlords.
Spreading the fees would mean that for the first time, landlords and letting agents would also share the risk of non-payment by tenants, creating a greater degree of comfort and security for landlords both in the rental market and those looking to join the sector.
ARLA also points out that such a proposal will mean that jobs in the letting agency sector will be saved, preventing a negative impact on the wider economy. Fees also provide a valuable source of revenue to the Exchequer in VAT receipts, which will be safeguarded by ARLA’s proposal.
‘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,’ said David Cox, ARLA managing director.
‘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,’ he explained.
‘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,’ Cox added.