Students to Face Even Higher Interest Rate Charges After RPI Increase
20th Apr 2018
The Chancellor's Autumn Statement taking place tomorrow is widely expected to announce measures to curtail upfront fees levied on tenants by letting agents in England. The Renters' Rights Bill - which embodies the Government's plans to ban letting agents from charging tenants for administrative services such as credit checks, tenancy preparations and inventories - has been steered through a committee stage in the House of Lords by the Bill's proposer, Lib Dem Baroness Olly Grender.
Critics of letting agents' upfront fees point at the lack of consumer protection afforded to 'Generation Rent', a cohort that has already struggled to recover from the recession following the 2008 financial crisis. The English Housing Survey, an annual government survey, found that tenants faced with letting agent fees paid an average of £223.
Whilst fees in the student sector are typically much lower than this, some student letting agents have pre-empted this legislation and voluntarily opted for a no-fees model. That said, most student letting agents are still reliant upon fees charged to tenants to subsidise income generated from landlords, particularly given the nuances of the sector, such as the requirement for guarantors (who also need to be credit checked or referenced) given students' lack of income.
However the National Landlords Association (NLA) instead argues for moderation rather than an outright ban, citing the need for tenant fees covering essentials such as reference checks, as these deter dishonest tenant applications. Richard Lambert, CEO of the NLA foresees a ban on fees only serving to inflate rents as landlords would be forced to shoulder these necessary costs in addition to other onerous tax changes coming into effect next year that will further squeeze the buy-to-let market.
The NALS Fair Fee Forum, launched in October 2016, has set up a working group to determine what constitutes reasonable letting agent fees in an attempt to placate those declaring a war on fees. The forum, which includes some of the UK's largest letting agent brands, have highlighted the need for greater transparency over fee structures and a need to better enforce existing legislation around the publication of fees.
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