Department for Communities and Local Government
Fees transparency to ensure a fair deal for landlords and tenants
Letting agents will be required to publish full details of the fees they charge under plans announced by government ministers today (13 May 2014). The move ensures a fair deal for landlords and tenants, closing off the opportunity for a small minority of rogue agents to impose unreasonable, hidden charges. The common sense approach avoids excessive state regulation which would push up rents for tenants.
Currently, the Advertising Standards Authority only requires letting agents to list compulsory charges to the tenant upfront in the process. Those letting agents who are found to have imposed hidden charges face little more than being “named and shamed” on the Advertising Standards Authority’s website.
But the government wants to go further than this, and will require all letting agents to publish a full tariff of their fees - both on their websites and prominently in their offices. Anyone who does not comply with these new rules will face a fine – a much stricter penalty than currently exists.
Today’s plans add to the work the government is already doing to offer stronger protections for landlords and tenants in the private rented sector, whilst avoiding excessive regulation which would force up rents and reduce choice.
Housing Minister, Kris Hopkins, said:
The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service. Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.
Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.
The government’s amendment to the Consumer Rights Bill will be made at a future stage of the bill. The government will review the requirement for greater transparency after 12 months of operation to confirm it is delivering the expected benefits, and review whether any further steps are needed.
Trade bodies have said any blanket ban on all fees would just increase rents.
The government has already introduced new legislation which will require all letting and managing agents in England to belong to an approved redress scheme. Last month, Housing Minister Kris Hopkins approved 3 redress schemes that all letting and property management agents will be required to join later this year - ensuring tenants and leaseholders have a straightforward option to hold their agents to account.
The 3 compulsory schemes - the Property Ombudsman, Ombudsman Services Property and the Property Redress Scheme - will offer independent investigation of complaints about hidden fees or poor service. Where a complaint is upheld, tenants and leaseholders could face compensation.
Other measures in the pipeline include:
- a new code to set standards for the management of property in the private rented sector - with a view to making it statutory
- a new “how to rent” guide, which will help tenants understand what they should expect from their rental deal
- the introduction of a voluntary, model tenancy agreement, which landlords and tenants can use for longer tenancies, which will provide extra security and stability for families
- extra guidance for local councils on tackling rogue landlords, protecting tenants from illegal evictions and how best to push for harsher penalties before magistrates for housing offences.
The government is also increasing investment in house building, as well as increasing institutional investment in new private rented sector accommodation. The new £1 billion Build to Rent fund will provide development phase finance to large-scale private rented sector developments, building up to 10,000 new homes for private rent and demonstrating the viability of developing and investing in large-scale private rented sector projects. The government’s housing guarantee scheme is also supporting up to £10 billion worth of investment finance in large-scale private rented projects and additional affordable housing.
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