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Government Begins Consultations of Lettings Fee Ban

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The Government has finally published its consultation paper on the banning of tenant lettings fees in England.

Announced during the Chancellor’s Autumn Statement, the details of the ban have been long awaited. In the document the Government proposes:

• Banning agents from charging tenants any fees, premiums or charges that meet the general definition of facilitating the granting, renewal or continuance of a tenancy.

• Banning any letting fees charged to tenants by landlords and any other third parties to ensure that letting agent fees are not paid by tenants through other routes. Tenants should only be required to pay their rent and a refundable deposit.

• Examining the option of capping the amount of deposit that can be requested, or looking at alternative models to reduce or remove the need to request deposits.

One of the purposes of the ban is to continue to make fees more transparent for tenants. The government hopes that, “Tenants will be able – at a glance – to see what a given property will cost them in the advertised rent level without any additional hidden costs; this should help to make entering and moving around in the private rented sector easier and less costly.” There will be some exceptions to the ban on tenants’ fees. Agents will be permitted to charge:

• Holding deposits (to take a property off the market while reference checks are undertaken).

• In-tenancy property management service charges (arising because of the action of the tenant).

The government recognizes that this action may result in tenants paying slightly higher rents, but believes that spreading the cost throughout a tenancy is fairer than requiring them to find large sums of money up front.

According to the consultation, once the ban is introduced it would be enforced by local authorities. Civil penalties of up to £5,000, industry bans or criminal prosecutions would be punishments for those found in breach of the new legislation.

Earlier this year, the Department for Communities and Local Government (DCLG) carried out market research on 50 randomly selected lettings agents. The following table illustrates just how varied tenants’ fees currently are:

Image of various tenants' fees.

The government’s consultation period will close on 2 June 2017.

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