How can letting agents benefit out of the government’s recent ban on fees?

With the Chancellor of the Exchequer, Philip Hammond hinting at a proposed ban on letting agents’ fees, most agents are a worried lot. However, with the Chancellor insisting that it is merely a proposal that will ‘consult’ the possibilities of effecting a ban, there’s bound to be some delay in the implementation.

What with the government consulting with industry experts, consumer forums and others with a stake, it could be a while before the ban comes into force, and the same applies for up-front fees for tenants as well.  Most letting agents are notorious for charging helpless tenants costs of references; while others use different tactics like ramping up prices for services rendered on drawing up contracts and inventories.

It is such indiscriminate and unfair charges that the Chancellor is targeting and hoping to ban, giving the tenants and landlords a much needed reprieve. However, the ban is not right around the corner, though the possibility has caused mild tremors in the industry. According to informed sources from the Department of Communities and Local Government that handles such issues, talks will not take place for some more time.

Before the ban can come into force, the Department will certainly talk to the affected parties. They include landlords, tenants and letting agents, as well as leading consumer groups such as Citizens Advice who are the tenants’ representatives. While it is certain that there cannot be an outright ban, up-front fees may be banned altogether, which is a certain dampener for letting agents.  Or, utmost, there could be a cap on the fees that can be charged, so that letting agents are allowed to collect some sum to cover the costs suffered.

However, letting agents are going to have a field and continue collecting their fees until the consultations get over and the final picture is revealed. The consultations could drag on for another three to four months. Even after the consultations are concluded, the parliament has to pass a law, which could take some more time.

A letting agent charges anywhere between £300 to £400 for renting a home, and that’s what most of the tenants in London are paying currently. There is dissent amongst tenants and complaints galore that letting agents are ramping up prices, and what is passed on as fees is far more than actuals. For instance a credit check that costs a mere £3 is charged at £50, with letting agents pocketing the difference. Hence, it is still raining money for letting agents.