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Letting fees crackdown will not deter landlords from using agents

The government’s plan to ban letting agents in England from charging fees to tenants will not deter the vast majority of landlords from using an agent to rent out their property, fresh research shows.

Tenants can currently be charged fees for a range of administration, including reference, credit and immigration checks, as well as the drawing up of tenancy agreements, with fees varying widely. But 79% of landlords in England and Wales surveyed by the UK Association of Letting Agents (UKALA) believe that if tenant fees are banned, these costs will simply be passed on to landlords.

However, only 9% of the respondents questioned said that they would ditch the agent if their fees rise.

Perhaps the reason why so few landlords would stop using agents is because many - 40% - are planning to pass increased costs on to tenants through higher rents.

Some 22% of landlords said they would look to shop around for a better deal, 13% would attempt to negotiate or refuse to pay, 9% would pay the additional fees while 9% would leave their agent and 7% are currently unsure about what they would do.

The findings contrast with recent research from UKALA which showed that almost half of landlords - 47% - would forego the services of their letting agent if their profits fall following the changes to landlord taxation from next month.

Both sets of research were undertaken by UKALA in conjunction with the National Landlords Association (NLA), in order to better understand the impact that recent government policy decisions will have on the professional letting sector.

“UKALA agents strive to provide a premium service which represents excellent value for money, but the ban on tenant fees could leave hundreds of professional businesses with no other option than to increase fees for their landlord clients,” said Richard Price, executive director of UKALA.

But he did accept that the tax and tenant fee changes coming into play leaves “a tricky path ahead to navigate for agents”.

“They’ll need to balance out the need to cover their costs in the wake of a ban on tenant fees without alienating their primary customers and source of income,” he added.

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