Concerns over unintended consequences of fees ban in Commons debate

The House of Commons debate held this morning was organised by Kevin Hollinrake, MP for Thirsk and Malton, and co-founder of Hunters Estate Agency was to look at the proposed lettings fees ban.

The proposed bill also includes capping security deposits at one month’s rent and holding deposits at one week’s rent.

The majority of MPs that took part in the debate did at least acknowledge concerns over the unintended consequences of a total fees ban for small businesses and low income or non UK tenants along with potential for rising rents and job losses.

However, Housing Minister, Alok Sharma, confirmed that holding deposits will be excluded from the legislation.

Mr Sharma said that the problem with fees is that the agent is chosen by the landlord giving the tenant little opportunity to negotiate or opt out of these fees. “A landlord is better placed to pay reference and credit check fees and anyway it is they who ask for the checks to be completed, not the tenant.”

Henry Bellingham, MP for North West Norfolk said he had received no complaints from tenants about letting agent fees with the average application fee being £325 and the average renewal fee £75.

Mr Sharma confirmed the government’s response to the fees ban consultation would be published very shortly and acknowledged that the ‘broken’ housing market remains one of the greatest barriers to progress in Britain and he felt capping fees would be largely ineffective as it would be harder to understand and enforce.

David Cox, chief executive of ARLA Propertymark, commented on the debate saying: “We welcome this morning’s comments from Kevin Hollinrake MP around the unintended consequences of a total ban on letting agent fees.”

“It’s important that the government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation.”

“We are therefore disappointed in Alok Sharma’s comments today declaring that the government’s position remains that all fees will form part of the ban.”

“As Kevin acknowledges, the ban on fees for referencing checks will cause problems. Agents are required to carry out these checks by law, and they invest both time and resources to ensure this work is carried out properly.”

“The government must now consider exempting referencing checks from the ban as well.”

National Approved Letting Scheme (NALS) CEO, Isobel Thomson, replied: “NALS welcomed the cross party debate on the fee ban and confirmation that the Minister has adopted a common sense approach on holding deposits with his announcement that they will be exempt from the ban, but he gave no clear indication of when legislation might come forward.

“We were encouraged that MPs quite rightly expressed concern about the implications of rent increases as a result of the ban and the impact on those least likely to afford them. Of real interest was the Minister’s commitment to consider the ban on tenant fees in the context of wider work in the private rented sector, something NALS called for earlier this year. This is positive news and an indication that he has listened to the call for an end to piecemeal legislation. His clear reference to regulation was welcome as well as his willingness to explore options for what a regulatory framework might look like.”

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