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Patrick Hanlon

Tenant Fee Ban, Is This Just A Short Term Fix?

The Tenant Fee ban has been implemented but what does the future hold?

Renters have been beneficiaries of uncertainty, which has had a slowing effect on the property market and forced many landlords to rein in rent increases. More than two years after the tenant fees bill was proposed by the chancellor, it is finally here. While it will only apply to tenancy agreements signed after the start of June, the savings for tenants will be immediate and substantial in the short term.


Landlords and their agents will be banned from charging tenants for credit checks, inventories and references. At an average cost of £272 per person, a huge expense especially since it often comes at the start of a tenancy, when tenants also must pay a deposit and their first month’s rent in advance.


While some fees provide reassurance to landlords, others – such as spurious charges for drawing up “cut and paste” tenancy agreements – merely to line the pockets of letting agents.


Take credit checks for example. Landlords, quite understandably, like to know a would-be tenant’s credit history. But letting agents like to charge applicants, rather than landlords, for the privilege. Running an online credit check can cost just a few pounds, yet many agents charge hundreds of pounds for basic referencing.


So good riddance to such ridiculous charges – it’s a shame that it has taken so long for the ban to come into force.


The new law is detailed and specific, banning many of the most common charges. But there are a couple of loopholes: agents will still be able to penalise tenants if they pay their rent late or lose their keys, so anyone who makes that mistake can expect to be hit hard.

At a time when the market is slowing and rent increases are at their lowest it is a particularly awkward time for this to take effect for agents with already small profit margins in the sector. That’s why the fees are so valuable. In an ironic twist, many were introduced by struggling agents a decade ago during the property crash; now, once again, they’re a crucial revenue stream.


Agents now face a tough choice either take the hit or charge landlords more. Neither is particularly attractive, as the sluggish market means there is intense competition for landlords’ business and raising fees more than competitors could lose agents valuable clients.


In the longer term, agents will have little choice but to find ways to recoup their lost income. Charging landlords, a higher commission to find tenants and manage properties is an obvious starting point, but they could also do to property owners what they did to renters a decade ago – introduce new admin fees.


With the prospect of additional fees to landlords the likely hood is that the landlords will in turn then increase rents to cover their costs. Although this bill has been received overwhelmingly well by tenants and has been a marketing tool for the government is this a very short-sighted solution and will it end up costing tenants more in the future through higher rents.

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