The Association of Residential Letting Agents is calling on the government to ban upfront letting agent fees at the start of a tenancy and instead spread the cost across the first six months of a rental agreement.
Research by ARLA founds that 42% of letting agents expect a ban would result in reduced staff numbers in the medium to long term, while 62% of agents think that it will cause the quality of rental properties to decline.
Chancellor Philip Hammond said in his first Autumn Statement that letting agent fees would be banned after spiralling to hundreds of pounds.
The move aims to help 4.3 million households currently in rented accommodation who are hit with an average of £337 in charges on top of what they pay in rent.
Critics have branded the move a draconian measure that could see landlords hike rents to recoup losses.
ARLA said that by spreading the cost of fees, letting agents will be able to maintain current service levels to tenants. This would also save jobs in the letting agency sector.
Spreading 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.
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.
David Cox, managing director of 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.”
According to figures from Shelter, the removal of letting fees in Scotland did not cause any spike in rents. The ONS index shows that private rents have inflated by 5% in Scotland since the law on fees was clarified in November 2012, and in England rents have risen by 9% over this period.
Lots of renters complain they are hit with extortionate fees from letting agents for unnecessary administration costs.
They often include costs such as processing documents, bank transactions or credit checks and many tenants find themselves being hit with them at the last minute.
Fees are usually higher in cities than anywhere else and many tenants often find themselves getting into debt to pay them.
