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Last year after a lengthy fight by housing activists in the UK, the government pledged that letting agent fees paid by tenants in England would be banned. Public consultation has now begun on the prospective details and consequences of such a ban. In keeping with our commitment to worldwide fair and affordable housing for all people and aware of the damaging costs of letting fees to tenants, Citizen State has submitted the following recommendations to the government which outline our position that letting fees, in their current form, must be eliminated.
1. It is our experience that whilst many letting agents are abiding by the Consumer Rights Act 2015 in displaying their fees in their offices, this does not extend to the online space, where much of the letting process occurs. A requirement to disclose letting fees at the point of advertisement, both physically and virtually, should be made a priority in an effort to increase competition and give greater choice to prospective tenants.
2. The current letting fee structure allows for too much interpretation as to what the said fees are designated for, regardless of the officially stated reason, leading to a possible unwarranted inflation of those fees. Therefore, landlords and third parties should be prevented from charging all fees until such a time as their transparency is improved to a level where letting fees cannot be used for purposes other than those officially stated by landlords and third parties.
3. We believe that all letting fees, premiums and charges to tenants that meet the general definition of facilitating the granting, renewal or continuance of a tenancy should be banned with the exception of:
a. The rent;
b. A refundable deposit;
c. A holding deposit to take the property off the market whilst reference checks are undertaken; and
d. In-tenancy property management service charges that directly relate to an action or service carried out at the request of the tenant or as a result of the tenant’s actions.
4. Refundable deposits, payable at the outset of a tenancy, should be capped at the amount of one month’s rent.
5. Allowing for the payment of the tenant’s deposit in installments over a reasonable amount of time would go far to reducing the initial financial burden placed on tenants. However, capping of the deposit, as outlined above, would be more intuitive.
6. Holding deposits should be capped at a reasonable amount to prevent their abuse by unscrupulous individuals and companies. A reasonable amount would be in the range of £100 or thereabouts.
7. There are certain premium parts of the property market that may indeed entail higher or different letting fees, which tenants partaking in that part of the market may be more than happy to pay. However, the emphasis should be the itemisation of these fees so that tenants know beforehand what they will need to pay and what that payment will go towards.
8. Primarily, a ban on letting fees would allow tenants to be less financially burdened during their property search. Unfortunately, such bans and caps may lead those letting properties to increase their rental prices accordingly to make up for the shortfall usually collected in letting fees. Such a move would need to be robustly combatted through separate legislation and incentives.
9. The ban on letting fees should be enforced by Trading Standards.
10. We would support greater data sharing on rogue agents and landlords across organisations in the letting sector.
11. We would support the introduction of a lead enforcement authority for letting agents to develop advice, standards and guidance and to share information. Such an organisation would unify currently disparate standards within the sector and provide greater tenant confidence to deal with issues as they arose.
12. Acceptable penalties for non-compliance include:
a. A civil penalty of up to £5,000 in line with the penalty for non-compliance with the requirement to belong to a government-approved redress scheme or non-compliance with the transparency requirements of the Consumer Rights Act 2015.
b. A civil penalty of up to £30,000 in line with the civil penalty for committing a banning order offence.
c. A banning order offence under the Housing and Planning Act.
a. A civil penalty of up to £5,000 in line with the penalty for non-compliance with the requirement to belong to a government-approved redress scheme or non-compliance with the transparency requirements of the Consumer Rights Act 2015.
b. A civil penalty of up to £30,000 in line with the civil penalty for committing a banning order offence.
c. A banning order offence under the Housing and Planning Act.
The penalty for non-compliance should be commensurate with the seriousness of the offence. Therefore, all the above options should be available. In addition, incentives should be created for those who do comply and whose behaviour is exemplary over a long period.
13. In addition to the ban on letting fees, the entire sector must be brought to account for substandard habitations that exist throughout the country. A set of habitation standards should be developed, covering such key issues as bathrooms per occupant, space per occupant, bathroom to bedroom ratios and more serious issues such as disrepair. These standards in turn must be enforceable and a task force established to investigate violations.
If you are a UK resident and would like to comment on this public consultation, we encourage you to do so here.