Introduction

The government is committed to building a strong private rented sector, which provides security and stability for both tenants and landlords. That means driving up standards and supporting good landlords and agents whilst striking the right balance on regulation.
 
The private rented sector is an important part of our housing market. It has almost doubled in size in the decade to 2014-15, housing 4.3 million households in England. The sector now represents 19% of all households, up from 11% in 2004-05. 

Letting agents are engaged by private landlords to let and manage rental accommodation on their behalf. Good agents provide a valuable service in ensuring that properties are safe, compliant and professionally managed; they help landlords comply with their legal responsibilities and help tenants secure safe and good quality homes. 

The duties of letting agents might include finding tenants, collecting rent, and responding to queries from tenants (for example, in relation to repairs). Landlords pay fees to letting agents for carrying out these duties on their behalf. Letting agents also charge fees to tenants for a variety of reasons, including seeking references, inventory services and contract negotiations.

Letting agent fees to tenants vary considerably and can run into hundreds of pounds. Tenants have little control over these fees because the agent is appointed by the landlord. It is also not simple for tenants to understand and compare agent fees since there is significant variation in the way that agents charge for their services.

The government announced at the 2016 Autumn Statement that it would consult on introducing a ban on letting agent fees paid by tenants, to improve competition in the private rental market and give renters greater clarity and control over what they will pay.

The ban will recognise the stronger market position of landlords. Landlords will be able to shop around for an agent that provides the quality of service they are seeking at a price they are willing to pay. The ban will sharpen and increase letting agents’ incentives to compete for landlords’ business, resulting in a better and more transparent service. 

Tenants will be able – at a glance – to see what a given property will cost them in the advertised rent level without any additional hidden costs; this should help to make entering and moving around in the private rented sector easier and less costly.

This consultation paper invites views and comments on how the ban on letting agent fees paid by tenants should be implemented and enforced. 

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