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Tenant fee ban could see many landlords ‘opt to do without agents’

The next few months are likely to be challenging for letting agents as they adjust to an outright ban on letting agents’ fees to tenants.

The government’s decision to ban tenant fees is clearly designed to shift the costs to landlords, but many landlords will naturally look to avoid incurring extra charges by simply not instructing a letting agent moving forward, especially if they start refusing to provide post-tenancy references, which is something that many of them currently charge for.

The National Landlords Association (NLA) is concerned the Tenant Fees Act 2019, which comes into effect on 1 June, may limit access to rented property for tenants in areas with selective licensing.


Most selective licensing schemes require landlords to complete reference checks. If tenants are unable to satisfy these checks, landlords will be unable to let to them without breaching the conditions of their selective licensing.

Richard Lambert, CEO of the NLA, commented: “Tenants are at risk of losing out on the chance to find a home because letting agents are doing everything they can to minimise workloads to cut down on costs.

“While landlords who self-manage their portfolios will be covering many increased in costs, letting agents are looking at any way they can limit what they have to do on behalf of tenants, now that the costs cannot be directly recovered.

“The smooth running of the housing market requires a little give-and-take and, unfortunately, the reaction of some letting agents to the ban on most charges looks set to throw-up more barriers to moving from one tenancy to another.”

A significant number of buy-to-let landlords currently do not use letting agents to find or manage properties, and it has been suggested that many more could consider doing the same.

Lambert added: “Just like private landlords, letting agency businesses are being put under increasing pressure by government regulation. However, they must realise that penalising outgoing tenants by refusing to provide references will ultimately cost them more than just the price of a reference as landlords opt to do without agents altogether.”

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Poll: Would you consider letting your property without an agent?


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    ok so your Specialist subject: the bleeding obvious. And the tenants that will feel the pain the most the lower class, those on Dss U/v credit . we are removing the Dss one at a time and taking no more.so you landlords get a new tenacy use your membership to the RLA or NLA, there is a year change over so get your good tenants on a new tenacy before the end of the month .

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    With the online referencing agencies such as Openrent and pass the keys , I can see many landlords moving over to this one stop service.

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    As a responsible landlord I pay various fees to our letting agencies. Don't like it but pay them. Tenants are not charged other than for rent. What I do get is rental protection, a property repair service and proper legal checks and prompt follow ups if rent is late. Living distant from the properties I would not want to do all that myself. Things can go wrong of course. But have not those landlords who appear on such TV programmes as "Can't Pay, We'll take it away" cut some corners regarding agencies ? DIY is too risky nowadays ?

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    Never understood why Lettings Agents have imposed fees on tenants. They get paid by their clients the landlords, after all. Which should cover their time in dealing with tenants plus give them profit.
    (After all, estate agents do not charge buyers of properties for their time in dealing with them, just their clients the sellers.)

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    As a privare landlord managing my properties by myself, does the law allow me to charge reference fees of less than £100?


    I thought that after the Tenant Fee Ban legislation comes into force, you can't charge them, but I would like to know if I am incorrect in that assumption?

    Matt Williams

    Hi Bayo. As of the 1st June 2019 you are not allowed to charge tenants anything at all to cover referencing.

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    I self manage 70 using open rent so to fees ban doesn’t affect me I got loads of tenants not wanting to pay agent fees. There is going to be a lot of agents going out of business I think another nail in the PRS coffin

    Matt Williams

    I'm not sure we'll see agents going out of business due to the fee ban as fee generate approx 15% of profit. What we have seen is smaller agents cashing in and selling up to the larger agents.


    To be fair I’m not fully clued up in the business models of letting agents

    NW Soc

    We all know of one huge corporate that makes approx 20% of there OP from fees, with equates to a few million a year. Their current reported profits are less then these fees. So either close or massively increase LL fees, which won't be accepted. Our local agents have increased fees by 1% & introduced a minimum of £65 per MTH. LL have accepted as they are aware of the hundreds of new legislations Agents & they now have to comply with. So as predicted the LL will increase rents to cover this 1%. So a policy that was 100% politically motivated will hurt those less able to cope.


    Now that agents can't charge fees you as a landlord will probably see less tenants as they will start to use all of the options again.


    I will also add that in my experience the only reason some tenants go directly to a landlord is that they are well known to all the agents in town. And not in a good way.

  • Matt Williams

    As the owner of a letting Agent, the tenant fee ban has been a very positive step in the right direction. It has made us look at every corner of our business and tighten up. The majority of agents have never charged high fees in the first place, more a minority of greedy southern agents. They may take a small hit to profits but they have known about this for so long and have had ample time to make improvements and replace that income. Since we have been preparing for the ban for a few years we are now a more efficient business and looking forward to providing a first class value based service.

  • NW Soc

    Once it becomes compulsory for all Landlords to join a redress scheme, they will need PI insurance which won't be cheap as insurance companies will see self managed as a higher risk than a well trained agency. Plus as they will be taking tenants details, they will need to sign up to and invest in a GDPR policy, plus join the IOC. All added to together, much better value to let a GOOD Agent take the strain

    • 29 May 2019 11:40 AM

    There will be millions of homeless tenants if LL are required by insurers to be compliant.
    What about all those LL letting to HB tenants in breach of lender conditions etc etc!?
    Insurers will require to see CTL etc.
    Correct insurance
    Overnight the millions of fraudulent tenancies that exist won't be covered as none of them will be acceptable to the insurer.
    This could cause a property crash as millions of rental properties can't be let out anymore.
    There are not enough non-HB tenants out there.
    Very few LL would be able to obtain PI insurance
    LL redress scheme could be the most destructive force for the PRS.

  • NW Soc

    Hi Paul

    Totally agree. Government have been made totally aware of the implications, but as we currently get a new Housing Secretary every six months, no-one is around long enough to understand the ramifications.

    Also as stated earlier, this was politically motivated as more and more Tory voters lived in rental properties and by saying we're going to ban fees to help the almost making do generation, it looked like a great headline. But unfortunately not everyone looks beyond that.

    LL and Agents are being hit from every direction, profit appears to be an ugly word. But we aren't social housing and unfortunately supply and demand is a fact of life. I welcome the day a solicitor isn't allowed to charge for advice or for pulling together a contract.

    I believe that southern based agents didn't control themselves or act responsible when it came to fees and a fixed fee of £150 would be sufficient for our business to pay all the associated costs involved in giving advice, credit checking, pulling together a contract, paying wages etc. But no a complete ban and more legislation for LL, Is coming and we'll see the home numbers continuing to increase.

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    • 29 May 2019 13:32 PM

    I don't know why Govt just doesn't go the whole hog and introduce a National LL licensing scheme which would include redress etc.
    Of course as discussed we know why Govt won't as there would be mass homelessness and LL bankruptcies and then a banking crash will bring about a CC in the UK.
    Govt must surely understand that a substantial part of the PRS is based on FRAUD albeit very minor fraud but fraud still the same.
    I doubt many LL who let to HB tenants in breach of their lender conditions consider themselves criminal fraudsters but that is what they technically are.
    I doubt any other person would consider the LL is committing fraud.
    But lender conditions must be adhered to or the lender could call the loan in and add a marker to the National Hunter system which would record the LL using a BTL mortgage in contravention of conditions.
    For that LL to then subsequently be able to obtain another BTL mortgage would be highly doubtful.


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