The proposal – to ban agents from charging fees to tenants – was first made by Chancellor Philip Hammond in the Autumn Statement last November, with the draft Tenants’ Fees Bill announced earlier in the summer.
The move was met with criticism from some corners of the market with Richard Lambert, chief executive officer at the National Landlords Association, claiming: “Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents.”
Yesterday a House of Commons debate on the subject was held with Sharma (pictured) admitting this could be the case.
He said: “While there may be increases in rents, they would be significantly smaller than the fees tenants are currently being charged. We will keep the impact on rents under review.”
Ying Tan, managing director of the Buy to Let Business, said: “In a strange way it’s good to hear Alok Sharma admit landlords may be forced to raise rents when the letting fee ban comes into play, as agents recoup their losses by hiking landlord fees. It shows that for the first time in a long while the government is starting to understand the market. The problem is this acknowledgement is too late. As I and many others have said all along, the industry should be consulted long before such proposals are announced.
“Unfair lettings fees should certainly be scrapped – and unscrupulous agents stopped – but an outright ban with no proposed alternative is likely to do more harm than good.”
During the debate it was revealed holding deposits will be exempt from the ban in order to deter tenants from registering in multiple or unsuitable properties.