Warnings about the consequences of the Tenant Fees Act, which comes into force a second after midnight tonight, continue to pour in.
ARLA chief executive David Cox said: “For renters, the ban on tenant fees, which takes effect this weekend, will sound positive. However it won’t save them money in the long run.
“Tenants will continue to pay the same level as before, but this will be passed on to them through increased rents, rather than upfront costs.
“Research we conducted with Capital Economics revealed the fees ban will increase the average rent for tenants by approximately £103 per year.
“While those who stay in tenancies for less than two and a half years will see savings, those in long-term tenancies, which tend to be lower income families, will suffer.
“Based on an average rent increase of £103, those in tenancies for ten years or more will lose out by £755.”
A number of agents have issued similar warnings.
Daniel Gibson, of Daniel Craig Residential, which has over 1,000 properties across the north-east, said that some agents in the region are re-packaging their charges into higher rents.
He had spoken to one tenant who currently pays £615 a month in rent to another agent.
The tenant said she had recently taken a call from her landlord who said that instead of paying an annual renewal fee of £50, the agent was instead raising her rent by £25 a month.
The tenant said that her landlord would not be receiving any of this extra money.
Gibson said his own company had taken steps to offset the loss of income, including moving to a cheaper office.
Glynis Frew, CEO of Hunters, said: “A recurring theme seems to have emerged over the last few years when it comes to government housing policy – good intentions bringing undesirable consequences.
“It’s frustrating because the industry and Government are actually joined up in their desire to ensure that tenants get a fair and honest deal.
“A small number of rogue agents or landlords have charged mind-boggling fees over the years. That’s a sad reality, but that’s not a fair reflection of the industry as a whole.
“Agents and landlords proposed and would have embraced fee caps, but the Government chose to reject those calls.
“It now needs to ask itself if this legislation is going to do the job it is intended to do.
“Will this really benefit tenants? Market forces will take their natural course and rent increases are likely to follow in many locations, especially where tenant demand is strongly outstripping supply.”
She added: “In a period of four prime ministers, there have been 17 different housing ministers spanning 20 years.
“Maybe if we had a housing minster that stayed long enough to understand the housing industry and the market, we would all do so much better. Housing should not be a vote-winning political football.”
Comments (9)
Shamboilc organisation from MHCLG – ARLA sent out an email yesterday saying there should be a new How to Rent Guide for June 1st, yet at midday the day before there is nothing to see on their website. How can you give tenants the correct guide when it;s not even published?
It was published sometime after midday yesterday (31st May 2019).
There are some positives to take from the ban. For me personally it has been an opportunity to really tighten up our services. Since it was announced in 2016 we have been improving things and bringing services in house offering more value to landlords. So when it came to increasing their fee a little they all understood. However I would say about 90% of my clients have said they will put the rent up at the next renewal and increase the rent when the property comes back to market. It does seem tenants will suffer for it in the long run.
What really frustrates me is the arrogance of some recent applicants. They swan into my office and treat my staff like dirt and throw out comments like its about time and good riddance etc. Since when do we deserve that? Why should an industry not be allowed to generate money and why is profit a dirty word? We have been ethical and fair at all times and as the tenant paid a fee we have offered them a service too whereby we would run out with keys if they locked themselves out or help out with a bit of paperwork free of charge etc etc.
I had an applicant come in yesterday and asked me what the charges were, I said just the deposit and rent and he said what no fees? I explained the law and he said so my rent is going to go up then. Even tenants expect that to happen and to be honest the few that I have had reasonable chats with about it are not happy about the law themselves.
Wait for the one to come in claiming the pet (it is not a pet?) be allowed, as it is medical therapy!!!!!!!!!!!!!!!!!!!
Explain that proof that it is an assistance animal is a requirement before an application can be considered or a holding deposit taken. (obviously a seeing-eye dog is different as that is a ‘visible’ disability whereas epilepsy etc are not).
And as all of my properties that accept pets are going to have their rent increased as a matter of course when they are re-advertised, they will end up paying more than the £150 extra deposit we take at the moment!
agree to an extent, although demand and supply will dictate how much rents increase (if at all)
and for me, the TFA only relates to new tenancies, so a current tenant is going to be unfairly penalised if you increase the rent
what fees if any, do you get from a current tenancy? unless you were charging extortionate fees for a renewal.
For even good agents to survive, the loss of income from tenants will clearly need to be passed on to Landlords.
Many of the larger corporate agents will probably suffer more as they appear locally to charge such high fees where simply they could not be justified, simply a profit making exercise.
I have always tried to charge a reasonable fee to provide a high level of service – but we are not a charity. We need to ensure our fees are paid for providing this service, and these costs will be technically passed on to the Landlords.
I think that the consequences of the fee ban have yet to be felt !
Landlords will start to refuse any type of higher risk tenants due to the caps on deposits including pets, students, credit problems etc. Very few applicants have guarantors to support them, this leading to a greater strain on local authorities.
As Agents realise that higher rents can be charged for higher risks, the tenant will ultimately be paying CONSIDERABLY more over the tenancy.
Eg. We asked for a pet bond of £150, which would be returned at the end of the tenancy if all is good, net cost to tenant – £0. The average 18 month tenancy with an increased rent of £20 per month ? Net cost to tenant £360 !! Even at £10 per month, this is still £180 more than the pet bonds !
Who is to blame for this mess – we all are – minority of over-charging agents, campaigners like Shelter, poor Government law makers who did not listen to the industry and Politicians aiming for voting renters.
As far as tenants go, some winners, some losers.
Some agents were also charging tenants & landlords for the same thing. I think the legislation is a good thing.
Also, I can’t see all of the costs being passed on in rent, the market will dictate and affordability will be an issue.
Why do you not mention some agents didn’t? Some agents provided excellent service. I see you are now a self-proclaimed expert on lettings.