Support, Advice and Experience within the Property Market

Research Highlights Impact of Tenant Fee Ban – Robert Ulph

From admin on February 17, 2017

Following the surprise announcement in the Chancellor’s Autumn Statement on the proposed ban on tenants’ fees, the Association of Residential Letting Agents (ARLA) has since conducted research looking into the implications of what an outright ban would mean. The report highlights the impact a full ban would have on tenants, landlords, letting agents and the wider housing market.

The research, which ARLA carried out with over a thousand letting agents, reveals that 62 per cent of agents think that a full ban will cause the quality of rental properties to decline. Three in five (61 per cent) also expect property management standards to drop.

The results are interesting and the conclusion ARLA reaches from the study is to end upfront fees and spread the fees out over the first six months of the tenancy.

By spreading the cost of fees, rather than banning them entirely, letting agents will be able to maintain current service levels to tenants and landlords. In one of my recent articles I wrote about the work that has to be carried out before a tenant moves in to a property and the legislation involved. There are serious processes to be completed which need professional attention and the consequences of not doing everything correctly can mean hefty fines of thousands of pounds and with the Immigration Act 2016 now in force could mean a prison sentence for misdemeanours.

ARLA’s research also shows that letting agents overwhelmingly expect rents to rise if a full ban comes into force, as agents, who need to cover the costs it takes to undertake the hours of work that fees currently cover, could pass these onto landlords. By keeping fees in place, landlords benefit and will not face higher costs at a time when they are already facing much tighter levels of regulation and changes in tax.

The spreading of fees will also make tenancies more affordable to those looking to rent, as it means they will only need to find the deposit and the first month’s rent.

David Cox, Managing Director, ARLA said: “We believe that ARLA’s proposal to spread the cost of the fees across the first six months of the tenancy will guard against the numerous unintended consequences of a full ban, while also finding a solution that works best for the consumer.”

At Pennington we have six licenced members of ARLA which means we are able to do the necessary work in-house, thereby keeping costs to a minimum. We do not profit from these fees, but these costs enable us to carry out everything that is required.

The Government has announced that the ban on tenant fees won’t come in before Spring 2018 and I will be working with ARLA to ensure that the implications are fully understood in the forthcoming consultation. I will keep you updated, but do contact me if you would like any further discussion on this or anything else on the local property market.