Thursday, 15 May 2014

Government to order letting agents to publish details on fees

Letting agents will be required to publish full details of the fees they charge, under plans announced by the government today.

Ministers have said that the move will ensure a fair deal for landlords and tenants, and will prevent a "small minority" of rogue agents from imposing unreasonable, hidden charges.

Currently, the Advertising Standards Authority only requires letting agents to list compulsory charges to the tenant upfront in the process.

Agents found to have imposed hidden charges face little more than being 'named and shamed' on the ASA’s website.

However, the government wants to make it a requirement that all letting agents publish a full tariff of their fees – both on their websites and prominently in their offices.

Anyone who does not comply with the new rules will face a fine.

The plans will be covered in an amendment to the Consumer Rights Bill.

Housing Minister Kris Hopkins said: “The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service. Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.

“Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.”

The move has been welcomed by the Residential Landlords Association. RLA policy director Richard Jones said: “The RLA has been calling for greater transparency of the kind announced today and we welcome the government’s decision to amend legislation accordingly.

“Labour’s plans would have only served to increase tenant rents as many landlords would in all likelihood have passed the extra costs of having to shoulder all charges levied by letting agents onto tenants.

“Today’s announcement will prove good for tenants and landlords alike and we look forward to working constructively to see its full and successful implementation.”

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Tuesday, 13 May 2014

Commons vote on letting agent fees

The letting agent fees row will hit the Commons this week after the Labour party forced a vote on the issue.

The opposition wants to see a ban on letting agents charging fees to tenants when they rent a property.

The proposal will be tabled as an amendment to the Consumer Rights Bill in the Commons tomorrow (Tuesday).

Party leader Ed Miliband told reporters during a campaign visit to Greater Manchester that Labour would be challenging Conservatives and Liberal Democrats to back the measure.But Paul Smith, CEO at estate agent haart, dismissed the vote as “nothing but an empty political PR stunt”.

“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, which is exactly opposite what we believe is right; tenants deserve to be protected, but have to understand that comes at a small cost.

“Tenants’ fees include the cost of referencing – employment and previous landlord, ensuring that the prospective tenant is actually who they say they are and that they can afford to make rental payments and drafting the tenancy agreement. If the tenant doesn’t pay for this service upfront it will not simply disappear – instead it will become part of the monthly rent if the costs are transferred to the landlord. Will the Labour Party also seek to implement this ban on lettings for commercial lets too?”

Thursday, 8 May 2014

Labour to call Commons vote on letting agent fee ban

Labour are to call a vote in the Commons in an attempt to ban letting agents from charging fees to tenants.

Party leader Ed Miliband said people who buy a house are not charged fees by agents, but people who rent are.

He said Labour was "determined to stand up for generation rent" and deliver an "immediate financial benefit" to people who do rent.

The Association of Residential Letting Agents said it was "deeply concerned" by Labour's proposals.

Labour will table its proposal as an amendment to the Consumer Rights Bill in the Commons on Tuesday.

Under the party's plans estate agents would no longer be able to charge a letting fee for renting out properties in addition to requiring a deposit and the first month's rent upfront.

Mr Miliband said: "If the Conservatives and Liberal Democrats support us on Tuesday we can make this happen now. That could be implemented straight away."

During exchanges at Prime Minister's Questions on Wednesday, David Cameron indicated that he would be prepared to work with Labour on its other proposals for longer term tenancy agreements, although he rejected blanket rent controls.

Mr Miliband said: "David Cameron seemed to be warming to Labour's policy on rents. Now he has a chance to actually vote for it."

Earlier this month the Labour leader, while unveiling his party's new slogan "Hardworking Britain better off", outlined further his party's plans to fight for a "fairer deal" for tenants who rent.

He said Labour wanted to see a cap on rent increases in the private sector as well as scrapping agent fees.

But Ian Potter, managing director of the Association of Residential Letting Agents, said Labour's plans could have an "adverse affect on tenants".

He said: "The challenge we have today is an unregulated market and a worrying lack of supply.

"Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.

"Political posturing on an issue that has such a great impact on people's lives is unfair."

The prime minister's official spokesman has declined to comment on Mr Miliband's recent comments.

Following Tuesday's vote, the Consumer Rights Bill will still need to go through a third reading in the Commons, after which it will be considered by the House of Lords before being enacted as law.

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Thursday, 1 May 2014

Annual rent-increase cap is focus of Labour launch

A future Labour government would cap rent increases in the private sector and scrap letting fees to estate agents to give a "fairer deal" to tenants.

Ed Miliband pledged to end "excessive" rent rises when he launched his party's campaign for local council and European elections.

An "upper limit" on rises will be put in place based on average market rates.

The Labour leader also called for longer, securer tenancies and rental charges of up to £500 to be axed.

But the Conservatives said evidence from other countries suggested rent controls lead to "poorer quality accommodation, fewer homes being rented and ultimately higher rents".

Speaking in Redbridge in London, Mr Miliband said a "cost-of-living crisis" affecting millions of families would be at the centre of Labour's four-week campaign before the polls on 22 May.

A generation of people have been unable to get on the housing ladder due to spiralling prices and yet the needs of long-term tenants have too often been neglected, he argued.

"Generation rent is a generation that has been left ignored for too long - not under a Labour government," he said.

"Nine million people are living in rented homes today - over a million families. They need a fairer deal."

Too many tenants, Mr Miliband argued, were vulnerable to being asked to leave their properties at short notice under current rules - sometimes because a landlord wants to put the rent up.

Citing figures suggesting rents have risen by 13% on average since 2010, equivalent to £1,020 a year, Mr Miliband said tenants need greater protection and predictability regarding their monthly outgoings.

Under Labour's plans, landlords and tenants would agree initial rents based on "market value" and, thereafter, a review could only be conducted once a year.

While landlords would still be able to increase what they are charging following changes in market conditions, there would be an "upper ceiling" to prevent rent hikes out of step with the overall market.

The threshold would be based on an industry benchmark of average rent rises. The Royal Institute of Chartered Surveyors is currently considering what an appropriate figure would be, Labour says.

Estate agents would also no longer be able to charge a letting fee for renting out properties in addition to requiring a deposit and the first month's rent upfront.

Although fees vary widely at the moment, Labour said tenants were having to pay an average of £355 each time they moved into a new property.

Rules on tenancy agreements would also be changed to give more certainty to tenants wanting to remain in their properties for an extended period.

As now, a tenant would be able to terminate a tenancy after the first six months, with one month's notice.

But a landlord could only do so with two months' notice and if certain conditions were met, such as the tenant failing to meet their rental payments, engaging in anti-social behaviour or breaching their contract in other ways.

After the six-month probationary period, contracts would automatically run for a further 29 months.

During this period, landlords could only ask tenants to leave for a breach of contract, or if they wanted to sell the property or needed it for their own use, not as a way of raising the rent.

Students and business people on flexible contracts would still be able to request shorter tenancies while existing contracts for buy-to-let properties agreed before the changes took place would be honoured.

Under current rules, tenants already have the right to challenge "excessive" charges and to be protected from "unfair eviction and unfair rent".

Conservative Party chairman Grant Shapps said the Labour plan was a "short-term gimmick" and accused the opposition of "political tampering".

"The only way to raise people's living standards is to grow the economy, cut people's taxes and create more jobs. We have a long-term economic plan to do that, Ed Miliband doesn't."

Housing charity Shelter welcomed any move towards more "modern, stable rental contracts" but the Institute of Economic Affairs said rent controls would distort the market and create "perverse incentives" for landlords in areas where market rents rise quickly.

On Europe, Mr Miliband claimed that Labour's priority will be to change the way the European Union works rather than seeking to leave.

Labour has promised an in-out referendum on the UK's membership of the EU if further powers are transferred from London to Brussels, but admits this is "unlikely" during the next Parliament.

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