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Lettings fee ban not likely in England until 2019

Landlords in England are being urged to continue planning for the letting fees ban even although it has been confirmed it won’t be introduced until 2019.

The Ministry of Housing, Communities and Local Government (MHCLG ) does not expect the letting fees ban to come into force until Spring 2019, it has confirmed in written evidence to the Communities and Local Government Select Committee in Parliament.

It will be a least 15 months before the ban can be implemented to allow pre-legislative scrutiny of the draft Tenant Fees Bill which paves the wave for the ban.

MPs on the committee were told by experts from Shelter and the University of York’s Centre for Housing Policy that a letting fees ban could easily lead to higher rents as banned fees were added by landlords to the rent over the length of each tenancy.

They also argued it could reduce the quality of rented accommodation as landlords tightened their purse strings but since letting fees were introduced in Scotland in 2012 there has not been a huge rise in rents.

Even Shelter Scotland admitted that a slight rise in rents was due to tax changes rather than the fee ban. Research carried out by the charity in 2013 found that just 2% of landlords increased rents specifically because of the fee ban.

The Scottish Government said the ban had helped tenants, and figures published in November 2016 showed that rents in Scotland increased by just 1% in the 12 months to the end of September 2016, the smallest annual increase since 2010.

Landlords need to be ready for the ban, according to James Davis, founder of online letting agent Upad, especially as there is now a likely date. Davis, who is himself a portfolio landlord, pointed out that some within the industry still believe it’s likely to come in to effect before the end of this year.

‘Landlords, simply can’t afford to not be prepared for what lies ahead. In my experience, there’s a certain amount of head in the sand mentality around the impact that this ban could have, both amongst letting agents and landlords,’ he said.

‘Unfortunately, many headlines focus on how rents will increase once this legislation is implemented but the reality for landlords is that this needn’t be the case. Most private landlords don’t, in fact, charge excessive upfront costs and by simply taking the time now to consider how else they can manage their costs, they’ll be assured of being prepared for the fees ban, whether that happens, this year, next year or indeed at all,’ he added.

The National Approved Letting Scheme (NALS) welcomed the greater clarity on the timetable for implementation of the ban. ‘It is much needed for our industry and something NALS has long called for,’ said Isobel Thomson, NALS chief executive officer.

‘The Government is currently carrying out pre-legislative scrutiny of the proposed bill ahead of presenting the bill to parliament,’ she pointed out but added that while the bill aims to create a fairer and safer private rented sector for all, NALS is concerned that it may not deliver what the government aspires to and risks doing real damage.

‘NALS urges the Government to use this time to fully assess the impact of the bill. It is crucial that Government looks again at the proposals and consider tenant fees in a broader, coherent framework of regulation for the PRS,’ she concluded.