* Fees paid for checking references, contract-signing
* 4.3 million households to benefit -government
* Move comes after more tax, regulation on small landlords
* Landlords say costs could be passed on in higher rents (Recasts, adds details, quotes)
By Kate Holton and Costas Pitas
LONDON, Nov 23 (Reuters) - Shares in leading estate agentstumbled on Wednesday after Britain said it would ban one-offtenant fees to try to bring down the cost of renting, the latestmove to hit landlords.
Rising housing costs have become a major political issue inBritain as successive governments have failed to build enoughhomes to meet demand. Many younger people now rent for longer orstay with their parents to save up a deposit to buy.
The ban will be welcomed by millions of households who havehad to absorb rises in private rents at more than double therate of inflation over the past two years.
Tenant fees, which go towards the cost of conductingviewings, verifying references and drawing up contracts, havebecome an increasingly important money-earner for the industry,averaging 337 pounds ($417), according to independent groupCitizens Advice.
"We're delighted with the government's decision to banthem," said Campbell Robb, the Chief Executive of charityShelter, which helps people struggling with bad housing andhomelessness.
"This will make a huge difference to all those scraping byin our expensive, unstable renting market," he said.
But some landlords have suggested the cost of this move,which already applies in Scotland, could be passed on to tenantsas higher rents.
The ban, to be announced by finance minister Philip Hammondin his budget statement later on Wednesday, would be the latestmeasure to try to cool the rental market after a property taxhike in April on houses bought by buy-to-let landlords.
The government has already said it would give the Bank ofEngland the power to regulate buy-to-let mortgages and that itwill limit the amount of tax relief available to landlords.
Shares in Foxtons, a symbol of London's boomingproperty market known for its chain of coffee shop-style outletsand fleet of Mini cars, plunged 11 percent in early trading. Countrywide shares fell 7 percent and shares in onlineagent Purplebricks were down more than 4 percent.
Foxtons said earlier this year that its full-year earningswould fall as sales revenues were hit by the Brexit vote but ithas continued to benefit from strong lettings revenue which rosemodestly in the third quarter.
A Foxtons' spokesman said the ban was unexpected and itwould now review the impact on its business.
Other industry representatives suggested that the loss ofthe fees would be recovered through rent increases.
"This decision is a crowd-pleaser, which will not helprenters in the long-term," Managing Director of the Associationof Residential Letting Agents David Cox said.
"If fees are banned, these costs will be passed ontolandlords, who will need to recoup the costs elsewhere,inevitably through higher rents," he said. ($1 = 0.8083 pounds) (Editing by Paul Sandle. Editing by Jane Merriman)