Letting agents will have to publish fees on their websites, says Nick Clegg
Letting agents will have to publish their fees in full in a bid to promote greater transparency, the Deputy Prime Minister said today.
Nick Clegg said agents would have to set out their fees both on their websites and in their offices as greater disclosure should keep costs down for tenants.
But he warned that banning agents from charging fees to tenants could lead to higher rents.
His comments come as MPs are set to vote on a Labour amendment to the Consumer Rights Bill, calling for letting agents to be banned from charging fees for renting out properties, in addition to requiring a deposit and the first month’s rent upfront from tenants.
Speaking ahead of the vote, Emma Reynolds, Labour’s Shadow Housing Minister, said: “Homebuyers rightly don’t have to pay the estate agent who is working on behalf of the seller of the property.
“However, in contrast, renters have to pay to get the keys to their rental property.
“The average upfront fees are £350 but in high demand areas, these fees can be much more expensive.”
She added that around nine million people in the UK currently rent a property through a private sector landlord, a third of whom are families with children.
But letting agents have responded angrily to the proposal.
Paul Smith, chief executive at estate agent haart, branded the amendment an “empty political PR stunt”.
He said: “Tenants receive a very good service, mostly to protect them and their interests, both physical and financial, and to ensure they have security of tenancy.
“That service comes at a real cost to agents and if we are unable to charge as an industry, there is a real danger agents will cut corners and reduce the quality of administration.”
He added that the fees covered the cost of obtaining references for tenants to ensure they were who they said they were and that they could afford to rent the property, as well as drafting the tenancy agreement.
David Newnes, director of the largest network of letting agents in the UK including Your Move and Reeds Rains, owned by LSL Property Services, said:“It may seem that tenants would be better off if there were no up-front fees attached to arranging a proper legal tenancy.
“But unfortunately no Act of Parliament can magic this cost away – and in reality tenants could be far worse off.”
He pointed out that following a ban on tenancy fees in Scotland in November 2012, rents rose by 4 per cent in the space of just six months – 10 times the rate of rent rises in England and Wales over the same period.
The Consumer Rights Bill will have a third reading and be considered by the House of Lords before it becomes law.