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A ban on letting agents fees - good news for some?

In his first Autumn Statement, Philip Hammond announced a ban on the charging of letting agents' fees to tenants, in an attempt to give renters greater clarity and control over the cost of taking a new tenancy. This follows a campaign started by Vicky Spratt, a young Londoner who claims to have spent thousands of pounds over the years on these fees, with the support of Shelter, which resulted in a petition signed by over 250,000 people. However, whilst some letting agents' fees do seem to be disproportionate to the service provided, a fee for referencing, for example, seems perfectly reasonable, particularly with the administrative burden of the recently introduced Right to Rent checks.

Although this policy decision has clearly been made with tenants' interests at heart, there are clear risks for tenants. Passing letting fees on to landlords is likely to mean higher rents, as landlords will still be looking to achieve the same profit levels. The ban may also mean more landlords taking the management back; a move which could lead to increasing breaches of statutory regulation, if those landlords lack the necessary knowledge and resourcing to meet the many technical requirements.

Legislation to bring this ban into force will only happen following a consultation by the DCLG and it is important that this consultation focusses on exactly what is being banned. A crack down on bad practice and over-charging is understandable and indeed necessary, but a fee for referencing and dealing with returnable deposits, set at a standard level, would be difficult to argue with. We will watch the consultation process with interest.

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DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

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