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Letting agents’ fees ban – is the balance changing in favour of tenants?

Recent research from Fixflo shows that nearly 42% of all agents in the UK believe the looming letting fees ban will be the biggest challenge to their business this year. This is no surprise considering there is a real fear that the letting fee ban willlead to job cuts and will significantly reduce letting agents’ income.

So is the future bleak for letting agents and is this ban good news for tenants?

Letting agents make significant profits on every new tenancy.  According to Open Rent, letting agents are making 473% profit on some fees. It found that the real cost of referencing a tenant is £15 and yet recent government research indicates that on average, it costs £86. There is also a huge profit on the average cost of a tenancy renewal which is £85, but by using a calculated cost based on it taking ten minutes to check a renewal contract and an average negotiator salary of £20,000, the real cost is £4.


These costs represent significant profits for letting agents and it looks like they will be wiped out when the ban comes into force. This appears to be a victory for Shelter, who has been calling for a ban on letting agent fees since 2013. Government figures show that tenants pay on average more than £200 in letting agency fees, on top of rent in advance and deposits. Shelter found even higher average costs and that one in seven tenants have been charged more than £500.

There have been numerous media reports on the implications of the forthcoming ban, but what is  inevitable is that the costs will still have to be paid by the tenant in one form or another.

In reality, landlords would only need to raise rents by £41.66 per month to cover the letting agents’ fees over 12 months, based on an average of £500.  If a tenant stayed in a property for two years, the landlord would receive an additional £500 a year in rent and the tenant would be paying double the fees.  Over a five year tenancy, tenants would be paying £2,000 for the fees.  How is this helping tenants?  In the long run, tenants could be paying much more.

If the lettings market was regulated, there would be no need for a lettings fees ban,.The government could set caps for all the costs such as references, inventories, ID checks etc. This would ensure tenants were charged fairly. Shelter and the government could also concentrate on removing the unscrupulous accommodation providers.

It is naïve for Shelter and the government to think banning letting agents’ fees is in the interests of the tenant.  Letting agents provide a valuable service to landlords and tenants and this has to be funded. 

Terry Mason is director of Housing Hand

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    'A calculated cost based on it taking ten minutes to check a renewal contract'
    This is after spending weeks trying to contact certain tenants who do not respond to calls and emails after already having a lengthy discussion with the landlord regarding the renewal.
    Get the facts right rather than give another biased misrepresentation of what actually happens.

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    Its a shame that you took the £4 base cost for a contract renewal from this blog, the aim was to show the value and necessity of agents. Secondly that enforcing a fee ban will undoubtedly cost the tenant more, just as it did in Scotland.
    Regulation and capping make seance, banning fees does not.

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    get a lawyer to do it for £4?

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    Great idea just add a few £ 00's, or maybe Shelter can add them to the fee ban!!!

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    a cap on fees would be the best and fairest way for agents, landlords and tenants, the out come will be ,as said in this article, more expense for tenants as the end user always pays .


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