Have you heard of the Tenant Fees Bill?
Having now received Royal Assent, the Tenant Fees Bill comes into force in England on 1st June 2019. This new piece of legislation has been on the cards for some time and, whilst the final content is yet to be confirmed, this will mean that a total ban on the letting fees charged to tenants will apply to all tenancies signed after this date.
The ban will cover pretty much any fee imaginable and the Bill has also made changes relating to holding and security deposits. Some very weighty financial penalties have also been put in place for any agent or landlord found to be flouting this new legislation, which suggests that the government is very serious about ensuring that the industry sits up and takes notice.
To some degree, the rented sector has brought this upon itself with a number of agents and landlords being guilty of overcharging for basic services or creating a menu of highly dubious fees. That said, there are legitimate costs involved in the setting up of tenancies and some costs which it is only fair that tenants should have to contribute towards in a proportionate manner.
Instead of taking a sensible approach to the issue and standardising and capping the fees charged to tenants, this blanket ban will see these costs having to be met by either the landlords or the agents. The government has already estimated that the fees ban is likely to cost landlords just over £80 million during its first 12 months and lettings agents around £155 million.
So, whilst this Bill has been championed by campaigners as a triumph for tenants in helping protect them from the unexpected costs thrown at them by landlords and agents, there is concern that it could simply lead to higher rents as landlords and agents attempt to recoup their losses.
It has been reported that some agents were generating as much as 20% of their turnover from tenant fees, so as agents across the country now plan and prepare for the implementation of this Bill, many landlords can expect to see their fees increase. Locally, we are aware of an estate agent who has already informed their landlord clients that their monthly management fees will be increasing by 2%.
At Eden Estates we have always operated a very fair tenant fee structure, having never looked at it as a revenue generator. This approach means that we are well prepared to absorb the financial impact of this new legislation and it is certainly not our intention to suddenly increase all of our landlord fees as a result.
If you would like to know more about the Tenant Fees Bill and how it may impact upon you and your situation please contact us via our website, give us a call on 01299 402392 or pop in and see us at our office in Bewdley.