The government has announced plans for a new obligation on letting agents to publish their fees. This represents a much vaguer proposition than that put forward by Labour, who wanted letting agent fees for tenants to be banned absolutely. Labour yesterday tried to add this proposed ban into the Consumer Rights Bill, but the amendment fell by 281 votes to 228.
Rentify believes that the government has chosen the weaker and worse option. We are disappointed that tenants can still be charged fees as we believe it contributes to the widespread culture of overcharging and gives bad agents greater opportunity to hide their fees. It is hard to see how the requirement to publish fees will make a difference as agents will easily find ways to shift charges around into various categories which the majority of tenants and landlords won’t question.
There is an understandable belief that if letting agent fees for tenants were banned then the agents would simply increase their fees for landlords, leading to higher initial rents. We are far from convinced by this argument. There are good agents (such as Rentify!) who already keep fees away from the tenant while still saving landlords money on a full range of letting services and property management. Banning fees for tenants should encourage landlords to assess their agent and promote competition amongst good agents to attract landlords. It would soon become clear how much overcharging had been going on in the past.
Labour’s Stella Creasy pointed to a similar ban in Scotland where ‘the experience has been an increase in the number of letting agents and no effect on the rents’. This is open for debate, as some outlets reported immediate rent increases. But while that is an understandable short term effect, as the market adjusts to the changes, the long-term effects should be cheaper letting agent fees and steadier rents due to the increased competition.