During her speech on 21st June 2017, the Queen confirmed Phillip Hammond’s announcement earlier in the year that this autumn the draft Tenants Fees Bill will come into effect.
The Queen’s speech detailed the following bans:
- A full ban on administration fees charged by agents for the initiation or renewal of tenancies:
- - Drawing up a tenancy agreement
- - Credit/Reference checks
- - Ensuring a tenant has the ‘Right To Rent’
- - Drawing up and carrying out an inventory
- - Renewal and exit fees
- A cap on holding deposits at no more than one week’s rent and security deposits at no more than one month’s rent.
As information on the ban on fees continues to surface, two likely scenarios are emerging:
- Letting agents absorb the cost
- The fees the tenant historically had to pay are passed on to the landlord
If letting agents absorb the cost the impact may mean closures of offices and thus loss of jobs.
If fees are passed to the landlord to pay – these are then likely to be passed on to the tenant in the increase of rent. CRBE has found however that “this partly depends on the level of costs. Given a scenario of average fees of £223, this could quite feasibly be spread out over a year, adding just £18.60 per month, or 2%, to rents.”
ARLA has some key statistics:
- Residential lettings activity undertaken by agents turns over around £4 billion each year and adds £2 billion to the economy
- Residential lettings activity provides 58,000 jobs, which generate employee taxes in the order of £400 million for the exchequer each year
- Activity is spread across the country, with at least 2,000 jobs supported in every region of the United Kingdom
- The spending of agents on suppliers supports a further 17,000 jobs while the spending of employees within the sector supports 20,000
There is a lot of information to take in with the introduction of the Tenants Fees Bill and time will tell what happens in the autumn/
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Sources: ARLA, CBRE, GOV.uk – The Queens Speech