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Landlords and agents hit as chancellor aims to shift charges away from tenants

Landlords and agents hit as chancellor aims to shift charges away from tenants

In his Autumn Statement, Chancellor Philip Hammond said that he wants to ban the charges that letting agents can levy on tenants for services such as administration and referencing. The government believes that such a ban (which is to be brought in “as soon as possible” following a period of consultation), will help millions of households in private rented housing.

Until now, letting agencies have been able to charge both tenants and landlords for checking references, preparing a tenancy agreement, renewing a tenancy and ending a contract. In England and Wales since last year, lettings and managing agents have been legally obliged to clearly publicise their charges. In Scotland, lettings agency charges to tenants have already been banned.

Charges vary widely, with costs in some big cities much higher than elsewhere. 

If a ban does come into force, letting agents would either need to pass more of those charges on to landlords, or to absorb some or all of the costs themselves. The move could also spur competition as landlords, unlike tenants, can shop around for the cheapest agent.

Consumer and tenant groups have welcomed the news after attacking the level of charges but Richard Lambert, chief executive of the National Landlords Association, said agents would be forced to shift fees on to landlords. He added: “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.”

Landlord groups have said some charges, such as reference checks, should not be passed on to landlords, since they prevent dishonest applications. The NLA has argued for greater transparency in charging, rather than a complete ban on tenant fees.

It remains unclear when any nationwide ban might come into force but if and when it does, Close Thornton Estate Agents will not be seeking to pass these administration fees on to hard-pressed tenants. 

If you would like further help or advice about letting or renting a property please contact John Chipchase on 01325 466461 or email john.chipchase@close-thornton.co.uk

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