Changes in the letting industry, including a ban on fees in England, should not be viewed onerously with the details outlined in the Government’s draft bill regarded as creating clarity and transparency.
The industry has reacted positively to the draft which is now out to consultation but the issue of a cap on security deposits is still causing niggles. Landlord organisations had campaigned against the cap which will go ahead.
Initially the cap on security deposits was to be set at no more than four weeks’ rent. However, the Government now proposes in the draft bill to extend the cap to six weeks’ rent after concerted lobbying from landlord groups.
The National Landlords Association (NLA) had argued that an arbitrary cap of four weeks’ rent would be damaging to certain groups of prospective tenants and could have the counter-productive effect of making it harder for some households to secure suitable accommodation in the sector.
‘Since the plans were announced we have been lobbying the Government and we met with the Minister of State for Housing and Planning, Alok Sharma, in September in order to press him to rethink his plans for a cap, taking into account the needs of those living and working in the private rented sector,’ said Chris Norris, NLA head of policy.
‘The NLA is happy that the Government has listened to the evidence we presented on behalf of our members. Whilst we remain disappointed that the Government continues to believe a cap is necessary, extending it to six weeks rent will reduce those households and landlords disadvantaged by the policy significantly,’ he added.
David Cox, chief Executive of the Association of Residential Lettings Association (ARLA), also lobbied on behalf of its members. ‘We are very pleased to see that the Government has listened to our call and increased maximum security deposits from four to six weeks and are encouraged that it appears those tenants who wish to break their contract will have to cover the legitimate costs of finding a new tenant,’ he said.
He revealed that ARLA has discussed the proposal to ban letting agents fees with Government ministers and officials many times. ‘Having now seen the draft bill, it is essential that during its passage through Parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies, including legal requirements such as Right to Rent checks,’ he added.
The Residential Landlords Association (RLA) is also pleased that the cap on security deposits has been extended. ‘It is welcome that greater clarity is being provided to the sector and that Ministers have clearly listened on a number of important points. Most notably, proposing to cap security deposits at six weeks rather than one month recognises concerns about the need to ensure protections against tenants’ default on rent payment and damage to property,’ said Alan Ward, RLA chairman.
‘Ultimately though, cutting costs for tenants means boosting the supply of homes for rent. Whilst we recognise the Government’s objectives, this would best be achieved by using the Budget to encourage good landlords to build more homes,’ he added.
According to Russell Quirk, chief executive officer of eMoov, the bill levels the playing field between letting agent and tenant. ‘The rental sector can be a minefield of unforeseen costs and a ban on letting fees should make the whole process a lot more transparent and consumer friendly,’ he said.
‘There is, of course, a danger that these agents will now try and recoup their losses through alternative means such charging higher fees to the landlord themselves. This would be an around the houses way of bypassing the ban on letting fees, as any additional cost to the landlord is likely to be passed down the line in higher rents. The only upside is that at least this won’t be payable upfront and will go some way in reducing the initial barrier to entering the rental market as a tenant,’ he pointed out.
Any improvements to the wider lettings industry should be embraced, not least of all because it will help to highlight those operators who currently fall way below what consumers deserve, according to Alison Nunez, managing director of Andrews Letting & Management.
‘The reality is, however, that there are some players within the sector for whom a telephone number, website and email address are deemed to be the only tools needed to trade. Whilst many of these will operate honourably, it is our belief that being able to demonstrate that customer service is paramount and that adherence to new legislation is recognised, is not an onerous demand on the industry,’ she explained.
