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News | Published May 19 2019

The tenancy fees ban could result in higher costs for landlords

The tenancy fees ban could result in higher costs for landlords UK Finance research found last week.

Experts have warned the ban could make the property sector less attractive for investors.

The ban comes into force on June 1 and the latest statistics show new home purchases by landlords were down 7.7 per cent in February.

In advance of the ban, director of John Hilton Estates Marius Foster said: "Agency fees represent a large source of all letting agents’ income and, if wiped out overnight, would be a big hole to fill.

"I agree that the government needs to act to protect tenants against unscrupulous and greedy letting agents, but to impose a total ban will certainly create casualties within the property industry."

Agents have confirmed that they will be forced to charge landlords more for their services because of the ban on billing tenants for administrative fees that can reach up to £200.

UK Finance also expect to see a rise in rents as a result.

Mr Foster added: "If costs are passed on to landlords (who are already bearing financial pressures as mentioned above), the risk is that this could force landlords to unwillingly self-manage their properties, which could lead to much wider implications.

"The sensible and fair policy in our view would be for the government to introduce a cap on tenant fees based on expenses, rather than a total ban."

The Letting Game founder and Managing Director Jack Head said: “The tenant fee ban is nearly upon us and as a business we are reacting to it positively.

"While in the short term it will certainly have a negative effect on our income, in the mid to long term we are viewing the change as an opportunity, as we expect to see some of our less resilient competitors leave the market while entry to the market will become more challenging.

"We do have concerns about the potential longer term financial impact on tenants; many industry experts are predicting rents are expected to rise in response to the tenant fee ban, as landlords look to increase rents to cover the higher fees letting agents will seek to charge them in order for them to remain profitable.”


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Authored by

William Winter
Contributor
@theparlreview
May 19 2019

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