Tenant Fees, How Will a Ban Impact the Market?
20 Apr, 2017
Like every other letting agent, we currently charge an administration fee to incoming tenants which covers the significant cost of referencing, preparation of documents, credit checks and everything else required before a tenant moves in.
As part of the recent White Paper whose aim it was to rebalance the housing market, the Government is proposing to ban the tenant fee, possibly as soon as November 17, putting all of the liability on landlords to cover everything.
Many see this as a good thing, those wealthy landlords should have to pay more, or the letting agent should take the hit. In simple terms it makes sense. We fear that in reality things will be quite different.
Letting property is an expensive business and if the ban comes in many agents will go under, unless they increase their fees. And will landlords be happy with this? Unlikely. So they will do one of two things; either increase the rent to cover it, or take it away from the agent and let it themselves. There are dozens, perhaps a hundred legal requirements when letting a property – we fear that a possible massive increase in DIY letting could lead to errors and even safety issues not being addressed properly.
What is more, if rents increase as we suspect come November, tenants who remain longer term in their property will be obliged to pay more without benefiting from savings on admin fees made by those who move around every six months.
Landlords and indirectly agents have already been hit with increased Stamp Duty and decreased tax relief in the last year or two. In our view, this fee ban is ill conceived and in trying to manipulate a free market, it is a step too far.