Letting fee ban could 'push up rents' for tenants by more than £100 a year

Letting fee ban could 'push up rents' for tenants by more than £100 a year

The Tenancy Fee Bill is finally due to take effect from June 1, but one industry expert is warning renters not to get too excited.

The new rules will stop letting and estate agents charging renters around £432 when taking on a new agreement – one letting agency even charged tenants £300 to view a property.

Figures from Arla Propertymark estimate that the estate agency industry will loose around £200million from tenant fees, which could cause them to hike costs for landlords to plug the gap.

The ban, combined with new tax laws, will squeeze landlords who may be forced to pass these onto tenants by raising rents by an average of £103 a year.

This figure could rise to £275 a year if landlords pass on the full inflated costs of agents managing their properties.

Ban on letting agent fees

Housing charity Shelter says tenants shell out an average of £272 in fees, so this will save people a pretty penny.

But experts have warned that renters could still be open to being charged "default fees" – such as when they lose their key or breach their contract.

Under the rules, agents and landlords will still be allowed tenants fees associated with:

  • a change or early termination of a tenancy requested by the tenant – but this will be capped at £50 unless the landlord or agent can demonstrate that greater costs were incurred
  • utilities, communication services and council tax
  • payments arising from a default by the tenant, such as replacing a lost key.

Landlords and estate agents will also only be able to recover "reasonable costs".

For example, they won't be able to charge tenants hundreds of pounds for a damaged item that actually only costs a few pounds to replace.

David Cox from the firm told The Sun that "it's only a matter of time" before we see rent prices go up.

He said: "Tenants who regularly move homes like students will probably see a saving but tenants who tend to live in properties longer, like families, those on low-income and disabled tenants will see their overall costs increase.

"It's not going to make too much of a difference – you'll no longer be paying fees upfront but the costs will be spread out over your tenancy."

He also points out that renters still face forking out thousands of pounds in upfront costs when taking out a new agreement, including a deposit and the first month's rent.

Even though the Bill will cap deposits at six weeks' rent, tenants will still face hefty upfront costs of more than a thousand pounds.

Shelter says the average weekly private rent is £192 a week, but six week's worth of rent will still come out at £1,152 – and that's without the first week's rent in advance.

The Tenant Fee Bill pass the final hurdle in Parliament last week and it now waiting to receive Royal Assent before it's passed into law.

It's welcome news for renters who've been waiting for it to be implemented since it was first announced three years ago.

Landlords pockets will also be hit by new tax rules which means they will now have to pay a rate based on their income rather than just their profits.

David added: "As we've said repeatedly, landlords have faced continued regulatory change and increasing costs over the last few years, and the tenant fees ban will only add to this burden, meaning many will either have to start increasing rents for tenants or exit the market."

Renters are expected to spend a combined £154MILLION on tenant fees ahead of the ban.

That's why we've spoke to the experts to put together a guide on how to drive down the costs if you have to move before the ban comes into play.

How to haggle with your landlord and bring down your rent

To increase your rent your landlord must send you a section 13 notice which gives you a month's notice in writing telling you how much your rent will be increased by and the date when your rent will go up.

At this stage you should try to talk to your landlord and come to a fair agreement on how much rent you should pay.

Your landlord can only raise your rent if you agree to the increased price.

Matt Hutchinson, communications director for flatsharing website SpareRoom.com said that if you are a good tenant then you've got bargaining power.

"The first thing to bear in mind is that demand is lower at the moment than over the past couple of years.

"That means you’ve got a bit more bargaining power, especially if you’ve been a good tenant, as your landlord won’t want the expense and hassle of having to find another tenant and even potentially face a period with the property empty.

"Failing that, it’s worth seeing if you can get anything thrown in with a rent increase, such as minor bits of redecorating or any bills."

Landbay have a free rent check service to see how much rent you should be paying in your area.

You can find the rent check service here.

Find out more about how to haggle with your landlord to bring your rent down here.


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