The Government’s consultation on banning letting fees in England is likely to be launched soon but research suggests that there is already confusion and speedy process is needed.
Housing Minister Gavin Barwell confirmed that the consultation will launch in the spring and said that the proposed ban is part of building a strong and safe private rented sector, which provides security and stability for both tenants and landlords.
However, new research suggests that letting agents and tenants are confused over the planned ban and clarity is needed sooner rather than later along with support for those affected to make sure the change has a minimum impact.
According to the research from Endsleigh, a specialist insurance provider for letting agents and landlords, the private rental sector will suffer all those involved in the industry don’t work together to end confusion.
The firm says that the fee ban is likely to have a significant impact on letting agents, landlords and tenants, and could lead to increased costs in other areas and that referencing and insurance are two areas likely to be impacted by the changes.
‘The private rental sector is currently in limbo waiting for further details on the fee ban. As a partner to the sector, we’re keen for this discussion to move forward so that the lettings industry can properly assess and address the likely impacts of these changes,’ said David Hadden, head of Endsleigh Let.
Hadden said that in the short term, one possible impact was that the quality of references could fall as agents source cheaper referencing alternatives to mitigate any future income losses.
‘Our lettings customers have told us how concerned they are about these changes and what it means for the private rental sector. Poor quality referencing could lead to higher eviction numbers and longer void periods,’ he explained.
‘This, in turn, could affect connected insurances such as rent guarantee, with the likelihood of claims to be perceived as increasing, premiums would surely follow suit,’ he added.
However, a ban on letting fees has been in place in Scotland since 2012 which could be regarded as a blueprint on how it will operate in England. In Scotland letting agents appear to have generally absorbed the costs.
There was no sudden or major rise in rents. Indeed, research carried out by housing charity Shelter a year after the ban found that just 2% of landlords had increased rents specifically because of the fees ban.
The Shelter research also said that banning fees for agents in Scotland has led to a greater focus on improving professionalism and standards in the private rented sector and that any negative side effects were minimal for letting agencies, landlords and renters.