Tenant fees ARE a rip-off, says letting agent that welcomes Government ban | Personal Finance | Finance

Hefty charges on renters will soon be banned in a bid to relieve the pressure on people who don’t own their home, it was confirmed in the Queen’s Speech.

Many agents currently charge hundreds of pounds for referencing services, which tenants are obliged to pay for.

Landlords and letting agents said a ban on the fees will result in higher rents and job losses across the industry.

The Association for Residential Letting Agents (ARLA) this week said landlords stand to lose £300million from the Government’s ban, which is likely to be recouped from tenants.

David Cox, chief executive, ARLA Propertymark said: “A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.

“Research conducted by Capital Economics for ARLA Propertymark earlier this year shows that referencing checks undertaken by agents take, on average, eight hours to complete.

“It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants. The research also showed that letting agents stand to lose around £200 million in turnover, costing the sector 4,000 jobs.

“Landlords themselves would lose £300 million, meaning they may seek to cover their losses by increasing rents to tenants.

“On average, rent costs will go up by £103 per tenant, per year, ultimately meaning tenants who move more frequently will reap savings on their overall costs but longer term tenants, who are usually lower income families, will see a loss as their rents rise year-on-year.”

But lettings agency OpenRent has disputed the claims.

It has never charged tenant fees and argues that the real cost of referencing renters is just £15.

A spokesman for the OpenRent said: “The real cost of referencing tenants is around £15.

“This year the Government released data showing the average tenant fee is £318, with many agents charging over £700.

“We don’t think fees at the current level…

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