Chancellor Philip Hammond has announced plans to ban letting agencies from charging fees to tenants “as soon as possible” in his Autumn Statement .
During his address to Parliament, the Conservative minister revealed the ban that will potentially see such costs transferred to landlords.
He said the move would save approximately 4.3million households hundreds of pounds.
Currently, tenants can be charged fees for a range of things including referencing, credit and immigration checks.
During his speech to Parliament, Mr Hammond said: “We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees.”
The announcement came despite warnings landlords would simply pass the costs back onto the tenants via rent.
The National Landlords Association’s chief executive Richard Lambert said the Chancellor “lacks an understanding of how the whole sector works”.
“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long,” he said.
“Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.
“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent.
“But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents.”
JLL head of agency Lucy Morton said there are agencies that abuse the fees, which she claims should be levied only to cover reasonable administration and referencing costs.
She said: “Reasonable charges including referencing costs may now be charged to landlords which in turn, could have a knock on effect on yields, so may then be added to the annual rent. It is essential that agents do not cut corners and fail to carry out stringent referencing checks.
“At JLL, we have always advocated complete transparency of all charges made by agents to both landlords and tenants.
“We have also historically campaigned for the Government to regulate letting agents which it still fails to address.”
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