Is a Government Ban on Letting Fees Good or Bad?


Wayne Beecham, Director of Progressive Property, the UK’s biggest property education and investment company below gives Finance Monthly his reaction to the Queen’s speech’ plans to ban landlord’s charging letting fees.

“Following the Queen’s speech we once again receive confirmation that a tenancy fee cap/ban is on the cards in the future, this has been a headline subject in the industry and I have heard many landlords, property professionals and property companies/ agencies groan at the thought of an outright ban on fees, in many ways I agree as an out-right ban tends to undermine the work and effort put into to the processes of renting properties and the hard work applied by a good quality agent who understands the importance of these fees to support the work required for a harmonious tenancy cycle. Though many people forget that the lettings industry has continued to fall short when it comes to regulations and change over the time and in some ways the landslide of changes we have been encountering over the last 10 – 15 years has been a result of the industry trying to catch up with the limited changes and regulations applied to the private rental sector and we should see these changes as a positive step forward to a better regulated, safer and fairer industry for all involved.

“I agree that an outright ban would not be a positive move forward for the industry and will encourage more agents and landlords to cut corners to try and achieve the outcome they require, a simple fee cap would be adequate to ensure consistency and fairness across the industry as well as acknowledging the works required to protect all parties in the private rental sector. Following conversations with referencing agencies a fee ban would merely promote more creative strategies to be implemented to the industry which would fundamentally cost tenants more money and completely undermine the purpose of a fee ban, as referencing agencies may look to increase their fees to tenants who require referencing for the purpose of renting a property and look to share this fee with letting agents the tenants will ultimately end up paying more to support essentially two fees. I agree any good agent is happy to promote more regulations within the industry which would ensure less bad practices and unscrupulous landlords who look to cut corners and potentially risk lives for their own personal gain, but we also need to ensure we are promoting becoming a property investor to ensure supply of good quality properties continues into the market place to keep up with demand and the shortage of housing we currently face.

“We have already seen a number of regulation changes which have failed to live up to their original objectives, this is clearly seen in the introduction of the protection of deposits and the choice of two different schemes. One scheme has met the objectives set and has a positive impact on the sector by holding the funds and therefore ensuring the purpose of the scheme to protect the tenants monies from any wrong doing or foul play, whilst the other has made little change and following personal experiences of bad practice by an agent the tenants and there deposits which were meant to be safeguarded where unfortunately left in the same situation they would have been if the scheme did not exist at all. We have also seen this with local councils and the eviction process as councils now inform tenants to stay even when legal notices have been served and even worse after county courts have instructed the tenants to leave, this short sighted advice has left many tenants in an even worse situation and delayed the inevitable outcome that they require alternative accommodations, following this advice they are now left in emergency housing or a hostel with a CCJ against their name and therefore narrowing their options for housing going forward and in many cases leaving them with the option of council housing which is already in short supply. By introducing a fee structure within the industry we would ensure consistency and transparency and therefore achieving the outcome required, if any agent or landlord was seen to be ignoring this structure a simple fine process would be enough discouragement.”

In addition, Finance Monthly heard from Adrian McClinton, Associate Solictor at law firm Coffin Mew, on the Tenant’s Fees Bill:

“Will the banning of letting agent’s fees help tenants?  In my view probably not as much as hoped. 

“Many of those renting do not want to be renting, but they cannot afford to buy because properties where people want/need to live are too expensive.  On the flipside, landlords have seen their margins fall and therefore will understandably want to maintain already slim margins whilst still using the valuable services of letting agents.  We have also seen an increase in competition within the letting agent market, recently joined by online providers.

“I think that landlords will stand firm and we will see the cost of this proposed ban being partly shouldered by letting agents, by reducing their prices and internal cost cutting, and by tenants, through an increase in rents, which is possible because of the huge demand for housing.”