Letting agents could soon be banned from charging tenants fees under new Government plans.
A draft bill, introduced to Parliament on Wednesday, sets out plans to get rid of upfront payments charged by agents.
The Government said the level of fees that estate agents are currently charging is “not clearly or consistently explained”, leaving tenants confused and unaware of the true cost of renting a property.
Charges are often levied on renters for administrative costs on top of deposit and rent, amounting to hundreds of pounds.
According to charity Citizens Advice, one in five households spend between £250 and £499 on letting agent fees and nearly one in ten are spending £1,000 or more.
It also estimated that renters in private accommodation are spending over £13m on letting agent fees in total each month.
Gillian Guy, chief executive of Citizens Advice, welcomed the Government's move to ban letting agency fees but stressed that the ban "covers all fees".
“However, choosing to set the cap for deposits at a high bar of six weeks is a missed opportunity to alleviate the financial pressure many private renters are under", she said.
"We’re now calling on the government to reduce the deposit cap to a maximum of three weeks to help make the private rented sector more affordable”.
The Government said it is also seeking views on proposals to make it mandatory for letting agents to sign up to a money protection scheme in England, protecting rent payments, repair and maintenance payments.
It says membership of a protection scheme will cost an agent between £300 and £500 a year. The consultation will be open to the public until 13 December.
“Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit”, communities secretary, Sajid Javid, said.
David Cox, chief executive of the Association of Residential Letting Agents, said new measures for a mandatory protection scheme “will ensure that all letting agents are operating on a level playing field”, protecting consumers “regardless of the agent they choose”.
“Having now seen the draft bill, it is essential that during its passage through Parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies; including legal requirements such as Right to Rent checks”, he added.
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