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Tenant fees ban could leave landlords facing lengthy void periods

Changes to letting agent fees could lead to increased rent arrears and higher repossessions as a consequence of a potential reduction in the quality of tenant referencing in the private rented sector, according to Endsleigh.

The specialist insurance provider for landlords, letting agents and young professionals fears that if letting agents in England are banned from charging fees to tenants, the quality of tenant references could fall as agents source cheaper referencing alternatives to mitigate any future income losses.

At the moment, tenants can be charged fees for a range of administration, including reference, credit and immigration checks. But that looks set to change after the chancellor Philip Hammond last year announced plans to introduce an outright ban on letting agents’ fees to tenants “as soon as possible”.

More than four months on since the announcement was made during the Autumn Statement, and the details of the proposed ban are still very unclear, and Endsleigh is concerned that this has created unnecessary confusion in the private rented sector.

David Hadden, head of Endsleigh Let, said: “The private rental sector is currently in limbo waiting for further details on the fee ban but the topic appears to have fallen off the agenda, causing confusion for both letting agents and tenants.

“As a partner to the sector, we’re keen for this discussion to move forward so that the letting industry can properly assess and address the likely impacts of these changes.”

Referencing and insurance are two areas likely to be impacted by the changes, Hadden said, but the exact scale of this is unclear while the government decides how to implement the ban.

He added: “Our letting customers have told us how concerned they are about these changes and what it means for the private rental sector.

“Poor quality referencing could lead to higher eviction numbers and longer void periods. This, in turn, could affect connected insurances such as rent guarantee, with the likelihood of claims to be perceived as increasing, premiums would surely follow suit.”

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