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.”