The tenant fee ban

Naomi Soanes

It has been confirmed in the Autumn Statement 2016 that letting agents and landlords in England will now be banned from charging fees to tenants for their rental properties.

This follows a long line of legislative amendments for the Private Rental Sector in 2016, including (but not limited to) ’right to rent’, rising stamp duties and new rules for serving section 21 notices to tenants.

Currently, the upfront costs facing tenants when renting a property can reach the thousands when you factor in a deposit, agent fees and a month’s rent in advance – all of which are common charges. Letting agent fees can be charged for a multitude of tasks, from drawing up tenancy agreements to tenant referencing. However this will no longer be acceptable under the new legislation, and Letting agents and landlords will now need to find new income streams to bolster their earnings.

Although it has not yet been confirmed when these changes will take place, agents and landlords across the country are already preparing for this financial impact.

So what could the potential outcomes of the changes be?

  • There are concerns that there could be a potential rise in rental amounts across England to offset landlord and letting agent losses following the ban, a theory that is supported by the Residential Landlords Association.
  • However, we’ve already seen in Scotland (where there has been a ban on tenant fees since 2012) that rises in rents were small and fleeting. The implication here is that the administrative fees involved with renting a property are more likely to now be passed onto landlords.
  • It is likely to cause a more competitive market, as landlords start to shop around for the lowest fees. However, this in turn may cause service standards to slip as agents attempt to protect their top-line growth.

How can Endsleigh help?

Now that the market is likely to become increasingly competitive for letting agents, as they try to help landlords save costs, agents will be looking for new revenue streams to help pull back some of these losses.

Here at Endsleigh, we already offer our letting agent partners the opportunity to earn additional income via insurance commissions for Tenant’s insurance, Landlords insurance, and other products.

If you are an existing partner and would like information and support to grow this income, please contact your Account Manager.

If you are a Letting agent and would like additional information on becoming a partner of Endsleigh, please contact our Lettings team on 01242 866909.

Naomi Soanes

Naomi Soanes is a Digital Engagement Executive in our marketing team.

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