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CMA says it cannot review letting agent fees because of ‘insufficient time before ban’

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The Competition and Markets Authority has rejected calls for a review of the lettings industry market, including the fees charged by agents, saying there is no time.

Meanwhile, Citizens Advice has called on the Government to “enact a complete ban on any fees to tenants as soon as possible”.

In its response to the Fair Fees Forum which requested the review, the CMA said that it does not believe there is sufficient time, “given the speed with which the Government wishes to move on the fee ban”.

The response suggests that there is a timetable, but as of yesterday, we have been unable to find one.

The Government has so far only said that it will launch a consultation in March/April, meaning that it could be somewhere between imminent and six weeks away – with next Wednesday, March 29, the day when Article 50 is triggered, being the favourite among cynics.

Consultations should then normally last 12 weeks, according to the Government’s own guidelines.

Earlier this year the Fair Fees Forum – an industry initiative led by NALS – called on the CMA to conduct the review.

Yesterday, the Forum said it was disappointed that its request had been turned down.

It said: “The Forum strongly believes a CMA review would provide much-needed analysis on fees and charges and the wider operation of the market.

“Such impartial, independent analysis would help inform the legislation the Government intends to bring forward.”

However, the Forum said that the CMA had “left the door open”.

Forum chair Sheila Drew Smith said that the CMA could review the consultation when it was published, to “consider the potential for unintended consequences on competition”.

She said that the CMA had also agreed to take into account an evidence paper submitted by the Forum.

The Forum urged the Government to publish the consultation on its proposed ban “without delay”.

Isobel Thomson, chief executive of NALS, which acts as secretariat for the Forum, said: “Given the pivotal role played by the PRS, we feel this decision is a missed opportunity to review the way the sector works to deliver the best outcome for all concerned.

“However, it is clear from the CMA response that it feels there is not enough time for a review before the Government legislates.

“That being the case, the consultation must now be published in order to begin the process of discussions. We will come back to the CMA again once the consultation document is published.”

Citizens Advice said that the ban should be put into the statute books as soon as possible.

It said: “For every month the ban is delayed, renters pay in excess of £13m in unfair and uncompetitive fees.

“It also needs to be a complete ban, legislated using crystal-clear wording. This is the only way to ensure that tenants can understand and uphold their rights, and that breaches of the law are enforced.”

* Most landlords (71%) who use a letting agent will continue to do so even if they see their premiums rise following a ban on tenant fees.

Landlords are far more likely to stop using an agent if their own profits fall following tax changes, due to be phased in from next month. Almost half (47%) of landlords in that scenario would forego the services of a letting agent.

The research, from the National Landlords Association in conjunction with spin-off organisation the UK Association of Letting Agents, shows that eight in ten landlords (79%) think their letting agent will increase their fees as a result of the ban.

However, just 9% of landlords say they will part ways with their agent if their fees rise.

  • 40% of landlords said they would increase rents to cover the cost
  • 22% said they would look to shop around for a better deal
  • 13% would attempt to negotiate or refuse to pay
  • 9% would pay the additional fees
  • 9% would leave their agent
  • 7% were unsure

UKALA and the NLA actually did the research in the final quarter of last year, but re-released the results yesterday, as it upped the ante.

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Source:: CMA says it cannot review letting agent fees because of ‘insufficient time before ban’