Tenant Fees Bill

Written evidence submitted by David Westgate, Chief Executive, Andrews Property Group (TFB27)

Dear Committee

As a Property Agent and active member of ARLA Propertymark, the UK’s foremost professional body for the lettings industry, I am writing to you about the Government’s intention to ban tenant fees. This directly contradicts both the Government’s previous stance on the issue and its stated aim of encouraging long term tenancies.

The Government has now released a public consultation in which it intends to bring forward a full ban on fees charged by letting agencies to tenants. This would have a profoundly negative impact on landlords, tenants and agents. Economic research commissioned by ARLA Propertymark shows:

· Landlords are likely to pass on their increased costs to tenants in the form of higher rents. As a result tenants will pay an extra £103 per year

· This means those tenants who move more frequently will receive savings on overall costs but longer term tenants, who are likely to be lower income families, will see a loss

· As a result, the proposed ban contradicts the Government’s stated aim to encourage longer term tenancies.

The economic research proves that fees cover real work which must be undertaken, and these costs need to be recovered. Tenant referencing and mandatory Right to Rent checks take up to eight hours on average to complete and I believe this should be excluded from the ban. In addition, it is reported that already that some 46,000 private Landlords have exited the sector over the last 18 months since the punitive taxes have been applied to the sector. There will be a significant unintended consequence of further legislation in the sector, reducing supply and choice for consumers. Rents will continue to increase as demand far outstrips supply which inevitably means that tenants will be substantially worse off.

I would greatly appreciate that consideration is given by the Government to desist from further penalising the sector and allows the market to function unimpeded. Quality Letting Agents and Landlords would be supportive of licensing in the sector, which would support an improved service to tenants. If the tenant fee ban proceeds, it is very likely that we will see substantially fewer letting agents and several thousand redundancies as a result. It is always the unintended consequences of such legislative proposals that need to be seriously thought through and on this occasion, I don’t believe that they have.

The residential lettings sector adds £13 billion share added value to the UK economy supporting some 240,000 jobs. Proceeding with the legislation will substantially damage the sector and the contribution it makes. A simple solution to this would be cap the amount charged by an agent to a tenant and consider mandatory licensing across the UK. You may find the link below to report by capital economies helpful in providing a statistical analysis.

http://www.arla.co.uk/media/1045728/letting-the-market-down-assessing-the-economic-impacts-of-the-proposed-ban-on-letting-agents-fees.pdf

Should the opportunity arise, I would be pleased to meet and discuss this.

Yours sincerely,

David Westgate FRICS

Chief Executive

Andrews Property Group

May 2018

 

Prepared 4th June 2018