The proposed ban on any letting fees charged to tenants by landlords and letting agents is widely viewed as a draconian measure within the letting industry which will have an adverse impact on the rental market.
Many experts fear that if the fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents.
However, there can be no denying that the some letting agents have overcharged tenants for their financial gain, and so the fact that the government has now acted and proposed to ban agents from making these charges has been welcomed by some industry figures.
Alex Harrington, group letting managing director at Dexters, commented: “Dexters supports the ban on tenants fees being brought forward and the limiting of any additional charges to tenants.
“We have always kept any charges to tenants as low as possible, making sure any financial contribution from a tenant has been transparent before they consider renting through us and that it is wholly relevant to the work carried out on their behalf.”
Charlie Woods, senior lettings director at Russell Simpson, has also “welcomed the government’s plans to cut tenants fees”.
He said: “From our point of view it’s business as usual, for quite a while now we haven’t charged the standard administration fee, because we simply don’t see the need. We also don’t charge the landlord their portion as they are paying us a fee already so we’ve always felt it was unjustified to ask for anything else on top.
“There has been talk of some agents pushing the fees onto the landlord, who could subsequently increase the rent to cover the additional costs. However, I feel this is unlikely, as with the sales market, overly high prices in the rental market stand out and the properties will simply not let, so all-in-all this will be a very positive move for tenants.”
The abolishment of fees in the rental market “couldn’t come soon enough,” according to Lizzie Stevens, director of Folio London.
She said: “At Folio we stopped this practice several years ago; there is no need for tenants to be struck with a hefty upfront payment when moving home is an expensive time as it is.
“Corporate landlords like ourselves are ahead of the game and this will not affect our business – but it will shake up the private landlord sector and give a better name all round to the word landlord.”
Calum Brannan, CEO of No Agent, perceives the new Tenant’s Fees Bill as a “huge leap forward for the letting market – an industry that has been double dipping and making profits from both tenants and landlords simultaneously for too long”.
“With the Tenants Fee Bill now firmly on the horizon, agents will be under increasing pressure to deliver exceptional service in tougher conditions”, said Tim Wright, product director at KeyAGENT.
Ultimately, the highly anticipated announcement to ban agents from charging letting fees to tenants is a decision that most agents has been expecting, and the main issue now is how they best prepare for it.