Agents should be fined up to £30,000 if they flout the impending ban on letting fees charged to tenants.
The call has come from the Chartered Institute of Environmental Health which has made public its submission to the Government’s consultation on the ban.
The organisation has also called for holding deposits to be included in the ban – the consultation had proposed that these be exempt.
However, the CIEH said holding deposits also pose an additional barrier for tenants wishing to move home as they increase the amount of money needed to secure a new tenancy.
If holding deposits are permitted, the CIEH says they should be registered under a mandatory Client Money Protection compensation scheme to avoid abuse. In addition, the CIEH says that agents should not be allowed to hold more than one tenant’s holding deposit per property, and that the deposit itself should be capped at 1.5 months’ rent.
The CIEH also said that the legal requirement for letting agents to display their fees is not working. It said not all agents are complying, and there is lack of enforcement.
CIEH policy manager Tamara Sandoul said: “The private rented sector is such an important part of the housing market, providing homes for people who otherwise cannot afford to buy their own, especially the vulnerable and those on low incomes.
“While the vast majority of letting agents are responsible, there are those who exploit tenants by charging them extortionately high fees.
“A comprehensive ban on letting agents’ fees is a very positive step forward. It will give tenants greater freedom to move out of properties that are hazardous and in poor condition, which in-turn should drive up standards and quality of rented housing.
“We do not expect to see higher rents because of the ban as the cost of referencing new tenants is likely to be small in comparison to the costs of maintaining a property to a good standard.
“At the moment, managing agents are charging both the landlord and the tenant fees, but this ban should help to increase competition between letting agents and help to drive the total costs down.”
The suggested fine of up to £30,000 would be in line with the civil penalty for agents who commit a banning order offence and would, the CIEH said, ensure that the biggest agents have a “strong incentive to comply fully with the new ban”.
However, it went on to say that the largest agents should also face the possibility of corporate responsibility and the disqualification of directors at senior level in cases of multiple offences.
The CIEH also called for a national register of letting agents and landlords.