Student Developments Driving Out Coventry's Businesses
20th Jul 2018
One month after it was announced in the Queen's Speech that a ban on agent and letting fees will come into force, more misery is being piled onto letting agents with news that card surcharges charged to consumers will be banned in 2018.
Officially dubbed the second Payment Services Directive (PSDII), the legislation is being introduced to "create a more integrated and efficient European payments market, encourage innovation, and protect consumers by making payments safer and more secure."
According to Government sources, the blanket ban on card surcharges for all retail payments will be easier to enforce, rather than the current system whereby merchants are able to pass on costs, with the consumer having no way of assessing what these are.
Research carried out by the HM Treasury in 2011 highlighted the scale of these charges levied on consumers. In total the value of card payment surcharges for debit and credit cards in 2010 across the UK, was £473 million.
The new rules will come into force from 13th January 2018, but the Government has already recognised through its impact assessment that merchants would likely make up for lost revenues through a change in their pricing structure. In most instances, this could involve retailers increasing their headline prices, adding additional administration fees, or charging non-payment related fees. However, with the banning of letting fees also looming, the most likely scenario for the rental sector is that these costs are recovered through inflated rental prices.
The Government is currently analysing feedback from an eight-week consultation on the banning of letting fees, with responses being used to inform the draft bill.
Although the bill hasn't been published yet, the legislation looks likely to ban letting fees charged to tenants as a condition of their tenancy. It also appears the Government will enforce the ban with a provision for tenants to be able to recover unlawfully charged fees.
With tensions within letting agent circles already high following the announcement of a ban on agent fees, this latest news will add to concerns that many agents will need to fundamentally restructure their business model or face an uncertain future.
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