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Government could curb deposits as well as impose outright ban on tenant fees

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The Government has received widespread criticism following the long-awaited release of its consultation paper on banning tenant fees.

The much-anticipated document was finally released on Friday and immediately drew industry concern as it appeared to try to go further by suggesting measures beyond just banning tenant fees.

The document shows that the Government intends to legislate that no agent will be able to charge tenants any fees, premiums or charges that meet the general definition of facilitating the granting, renewal or continuance of a tenancy.

But the consultation also goes further, suggesting the Government is considering introducing caps on deposits or the way they are paid.

ARLA Propertymark has vowed to launch a campaign providing agents with the resources to have their voice heard on the lettings fee ban consultation.

The group messaged members to encourage them to respond to the consultation before the June 2 deadline. Members are also being advised to attend workshops being run by the Government in London, Birmingham, Manchester and Bristol.

David Cox, chief executive of ARLA Propertymark, described the Government’s housing policy as shambolic.

He said: “The consultation contradicts the Government’s already stated aim to encourage longer-term tenancies.

“Independent analysis launched at ARLA Propertymark’s annual conference revealed that if an outright ban was introduced, rents will increase by £103 per year which will only serve to financially punish long-term tenants.

“We urge the Government to use this process to think again to ensure that consumers, and the wider economy, are not penalised by contradictory government policies.”

His views were echoed by Richard Price, executive director of UKALA (the UK Association of Letting Agents), who said: “While we’re pleased the Government listened to our suggestion to exclude holding deposits and in-tenancy charges from the scope of this ban, the fact cannot be ignored that it will seriously affect our members’ ability to run their businesses.

“Small agents in this market are drowning in constant policy interventions. The publication of this consultation in isolation, at a time when we’re awaiting further proposals on requirements for all agents to hold client money protection insurance, is proof that this Government does not have a clear vision for the future of the sector.

“If they really want to completely regulate letting agents, then why waste time by constantly moving the goal posts?”

The National Approved Lettings Scheme (NALS) was equally scathing.

Isobel Thomson, chief executive of NALS, said: “The proposals are an unwarranted attack on good landlords and professional lettings businesses.

“We want to see a fair, stable private rental sector for all, but this is not the way to achieve it.

“The measures are a misguided attempt to help tenants which will only serve to hit the most vulnerable and make their access to the private rented sector even less attainable.

“We believe the implementation of a fee ban will drive the charging of fees underground which inevitably weak enforcement will fail to pick up.

“NALS has very real concerns that this will place intolerable pressure on smaller agents. There are no winners in this proposed move by Government.

She urged all agents to contribute their views and said NALS would continue to engage with the Government through the Fair Fees Forum.

Landlord groups appeared just as angry as the lettings agent bodies.

Chris Norris, head of policy at the National Landlords Association, said: “Yet again the Government has published plans to tackle a particular element of the letting agency market, whilst at the same time suggesting other areas that they ‘might’ like to look at in the future.

“It is about time that landlords and agents were given some certainty about the market’s regulatory future – which could be easily achieved by agreeing an over-arching system of regulation for letting agents once and for all.

“We’re particularly concerned that the scope of this consultation appears to have drifted to include tenancy deposits, with suggestions that a ‘cap’ may now be necessary.

“This looks like yet another attempt to affix a sticking plaster to a perceived problem without really understanding what is driving behaviour in the real world.”

Watch our 60 second guide to the lettings fee consultation

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