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.
A small patch of grass in central London has made its owner more money than most people in Britain earn in a year after being snapped up at auction.
The lawn – measuring just 55ft by 40ft – in Chelsea was reportedly bought by a foreign owner this week for £84,000.
It last changed hands in the autumn of last year for £53,000, an increase of £31,000 in just nine months.
And this is despite the area having no planning permission for development.
Christopher Coleman-Smith, director of national auctions at estate agents Savills, which is handling the sale, said: “The new owner can do what he likes with it. I suppose he could put up a marquee when the flower show comes around.
He went to tell Zoopla: “Little bits of London, such as this, are in scarce supply and people want to get their hands on their own little piece of Chelsea.
“City environments can easily change and so this could be a very long term investment bought with grandchildren and inheritance in mind – who knows what it might be possible to do with it in 20 years time.”
Properties for sale in Chelsea for less than £250,000:
1. Leasehold garage for £8,500
2. Commercial property, suitable for redevelopment for £225,000
3. Two bedroom motor yacht, currently lying at Chelsea Harbour marina with moorings available to the buyer for £165,000
House prices soared by £1,200 during April to stand at a new record high, figures showed today.
The average cost of a home in England and Wales rose by 0.5 per cent during the month to reach £263,113 – £54,000 above the low point reached in April 2009 during the housing market correction.
It was the tenth month in a row that property values have set a new record, according to LSL Property Services and Acadata.
The typical home is now worth 7.3 per cent or £17,877 more than it was a year earlier.
Sales activity was also buoyant during April, with an estimated 72,000 transactions carried out, 40 per cent more than during the same month of 2013.
David Newnes, director of Reeds Rains and Your Move estate agents, owned by LSL Property Services, said: “As the floods and bad weather at the start of the year become a distant memory, sales in April have returned to more normal levels.
“Activity is largely being fuelled by increasing numbers of purchases by first-time buyers and buy-to-let landlords, as consumer confidence sweeps the country. “Low inflation and healthy wage growth are energising household finances, and infusing aspiring buyers with greater optimism.”
London continued to outperform other regional housing markets, with house prices in the capital rising by 13.2 per cent during the past year.
But growth is rippling out across the rest of the country, with South East posting gains of 6.1 per cent in the past 12 months, while in the East Midlands house prices are 5.3 per cent higher than they were a year ago.
Meanwhile, East Anglia followed London and the South East to become the third region in which property values have surpassed their pre-crisis peak.
Overall, house prices have risen in 89 per cent of unitary authorities during the past 12 months.
But LSL warned that it was important that the supply of properties being put up for sale kept pace with demand.
Newnes said: “Constrained supply in the capital has already moderated total London sales over the past 12 months.
“Demand shows no sign of slowing. More house building is imperative to keep the momentum going, and to ensure that price rises are sustainable, in particular for first-time buyers – who remain the key ingredient at the lower end of the market, oiling the cogs of growth.”
Today’s figures come the day after Halifax said annual house price growth eased slightly to 8.5 per cent during April.
But the Royal Institution of Chartered Surveyors said it expected house prices to continue their upward march, as the mismatch between supply and demand intensified.
The group said estate agents sold the highest number of properties during the three months to the end of April since February 2008.
But the number of new homes being put up for sale fell for the fourth consecutive month, putting further upward pressure on prices.