The government has announced plans to bring forward a ban on unfair letting agent fees.
The Draft Tenants’ Fees Bill outlined in the Queen’s speech will ban letting agents from charging tenants fees.
The Queen said: “It will promote fairness and transparency in the housing market and help ensure more houses are built.”
The plans were first announced by the Conservative party in its Autumn Statement.
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 decision a draconian measure that could see landlords hike rents to recoup losses.
David Cox, chief executive of ARLA Propertymark said the announcement of the Bill was “disappointing”.
“It’s unlikely the government had enough time to analyse all of the responses from the consultation. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account.
“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.”
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.
Cox said: “On average, rent costs will go up by £103 per tenant, per year, ultimately meaning tenants who move more frequently will reap savings on their overall costs but longer term tenants, who are usually lower income families, will see a loss as their rents rise year-on-year.
“The ban contradicts the government’s stated aim to encourage longer term tenancies, as tenants who stay in their homes for the long-term will end up shouldering the costs of those who move more frequently.”
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