Labour had drafted an amendment to the Consumer Rights Bill passing through Parliament to scrap the fees in England and Wales.
The charges are already outlawed in Scotland.
MPs voted 281 to 228 against the motion.
As a sop to tenants and campaigners rallying behind Labour and no doubt with a weather eye on the upcoming general election, Prime Minister David Cameron has indicated the coalition will tighten up the rules with their own amendment to the bill.
Cameron intends to order letting agents to publish a full list of fees for tenants in their offices and on web sites.
The aim is to help tenants see the true cost of renting a home rather than just the headline monthly rental.
This follows a ruling by the Advertising Standards Authority last year which declared letting agents should clearly state any fees involved in renting a home clear to tenants before they commit to a tenancy agreement.
Letting agents are lobbying against scrapping the fees ' they argue that lawyers would charge for drawing up agreements and leases and that their work should have a value as well.
?It is our job to protect the interests of landlords and tenants,' said Paul Weller, managing director of independent letting agents Leaders. 'We must make sure the property is safe and legally compliant, with the appropriate gas, electrical and fire safety checks and records in place, and protect our tenant?s rights by ensuring all documentation and legal paperwork signed by them is correct and meets their specific requirements.
?A significant number of tenants wish to make amendments to their tenancy agreement to suit their personal requirements and we are able to accommodate this because their fees cover the cost of the work and resources required.?
The issue certainly is not dead in the water. The Bill still has to go to the Lords and back to MPs and Miliband seems determined to make letting agent fees and tenant rights an election issue as the number of private rented homes increases.
Article courtesy of LandlordZONE