Home Residential PropertyBuy-To-Let Enforcing the letting agent fee ban proves challenging

Enforcing the letting agent fee ban proves challenging

by LLP Reporter
26th Nov 18 1:38 pm

As part of the government’s plans to enforce the upcoming ban on letting agent fees, a new lead enforcement authority will be established for the lettings sector.

According to the draft Tenant Fees Bill currently moving through the House of Lords, Trading Standards will be responsible for enforcing the ban, while local authorities will be able to retain money raised through fines for non-compliance.

But new laws are only as good as their enforcement, so what are the challenges and opportunities for enforcing the fees ban?

The challenges for fees ban enforcement

With thousands of agents operating across the country, it may be difficult for the authorities to fully enforce the fees ban and make sure all companies are compliant.

Enforcement of previous legislation, such as the requirement for agents to disclose all their fees under the Deregulation Act of 2015, has been at times problematic.

According to 2017 research by the National Approved Letting Scheme (NALS), 93% of local councils had failed to issue a financial penalty for non-compliance with compulsory fee disclosure rules.

Almost two thirds of councils surveyed at the time admitted they did not consider displaying letting agent fees a high priority. What’s more, a third of councils said they hadn’t allocated staffing resources to this work in 2016/17.

At the same time, 64% of councils said they were yet to assess the impact the fees ban could have on enforcement.

“The extra resource of a lead enforcement authority is welcome but policing the fees ban will continue to be a challenge,” says Neil Cobbold, chief operating officer of PayProp UK.

“Consumer awareness will be a key factor. More informed tenants and landlords would be highly likely to notify the relevant authority when agents continue to charge upfront fees or do not cap tenancy deposits.”

Signs of enforcement being taken seriously

In September, it was revealed that funding for the National Trading Standards Estate Agency Team (NTSEAT) has been doubled. The team, which aims to protect consumers from ‘rogue estate agents’, has had its funding raised to £500,000 a year.

Cobbold says increased funds for regulating the sales sector may be a sign that more money could be made available to enforce the letting fees ban over the next few years.

When might the fees ban be introduced?

It has been stated by the government that the fees ban will be introduced in ‘spring 2019 at the earliest’, but since its introduction to Parliament in May 2018, there have been no further announcements regarding the date of implementation.

“This has led people to assume an April start date,” Cobbold says.

“Bearing in mind that there are still several steps for the draft Bill to pass through – including a report stage, third reading and amendments stage, we need to keep an eye on the movement of the Bill.”

“However, the fact that there has been no opposition and that currently there are no legal instruments required once the bill becomes an Act, the Secretary of State could look to sign the Act into law as soon as the process is due to complete at the end of the year.”

“It has always been advised that the CMP legislation would be implemented first (April 1 2019) so the fee ban being introduced at some point in April 2019 still seems the most likely outcome.”

“At this stage, agents should continue to monitor the news for government announcements and prepare their businesses accordingly. Companies that take a positive approach to the fees ban and look to benefit from a more efficient business model are likely to thrive in the years to come,” he concludes.

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