Bring it on: why scrapping unfair tenants' fees could be a win for landlords, too

A new ban will stop letting agents slapping tenants with fees but will cost landlords up to £83 million. 'Bring it on,' says one... 
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The soon-to-be-introduced ban on tenants’ fees will reportedly cost landlords like me nearly £83 million in total in its first year. Well, as far as I’m concerned, the ban can’t come soon enough.

When it becomes law, hopefully no later than next year, the Tenant Fees Bill that’s just been published will prevent both landlords and letting agents from charging tenants any fees, unless there are exceptional circumstances. I don’t think the ban itself will harm landlords because, according to a Government study on the potential impact, most of us don’t charge tenants fees and those who do typically charge £25-£107.

However, letting agents are expected to lose about £157 million in the first year of the ban and the Government has acknowledged that agents will try to claw this back by increasing the commission they charge landlords, which is why it could cost us in the long run. But still I say, bring it on.

It’s beyond cheeky that letting agents charge my tenants hundreds of pounds for services for which they’re also charging me. And as the mother of a university student, I’m appalled that she and six of her friends had to hand over £1,400 to a letting agent to secure a house for next term. All the agent had to do was spend 15 minutes showing the girls round the house, so she earned the equivalent of £5,600 an hour.

I’m also annoyed that the charge wasn’t properly explained to my daughter and her friends, who thought they were handing over a holding deposit, not a fee. When I called the agent on the girls’ behalf for clarification, she tried her best not to admit that it was a non-refundable fee, describing it instead as “a payment to guarantee them the property”. Only when pushed did she say: “Yes it’s a fee, if you want to call it that.” To be fair, the agent did state in the small print on her website that she charges tenants “a simple 35 per cent of a month’s rent”. Agents have been able to get away with such sky-high fees because tenants have no real choice over which ones they use.

Letting agents aren’t happy with the ban and David Cox, chief executive of letting agent body Arla, claims tenants will end up worse off. I’m not sure how he’s worked that out. My daughter and her mates would’ve been £1,400 better off with the ban.

The threat is that agents will try to pass on all of the tenants’ fees to landlords, so landlords will increase rents. But at least tenants will be able to see from the start what they are being charged and they will be able to compare property prices more easily.

However, I think it’s unlikely agents will increase their fees significantly as landlords can easily take their business elsewhere. In fact, I think one of the reasons letting agents have been charging tenants so much is to compensate for a fall in commissions over the past few years.

Of course, some landlords might be happy to pay their letting agents more if they think they’re doing a good job, but those of us who aren’t can always shop around. Unlike our tenants.

  • Victoria Whitlock lets four properties in south London. To contact Victoria with your ideas or views, tweet @vicwhitlock

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