Loyal tenants could be worst hit by ban on agent fees

A new report from ARLA Propertymark has revealed that loyal tenants could be hit hardest by the proposed ban on letting agent fees.

The research was conducted with leading research consultancy Capital Economics to see just how much an impact the ban on fees could have on rental costs, the sector and the overall economy.

Rising Rents

Letting agent fees amount to roughly one-fifth of agents’ revenues and cover imperative checks. Should they be banned, landlords will be passed on these costs through higher fees.

41% of landlords questioned feel that they will be left with little alternative but to pass these costs onto their tenants, at an average of £103 more in rent each year.

Sadly, this will hit long-term tenants the most. Based on typical rises of £103 per year, those in tenancies of ten years or more could lose out on over £750.

Agents and Landlords

The lettings sector employees around 58,000 people across the UK. Should agents take the full impact of the letting agent fee ban, 16,000 jobs could be lost. More likely, agents will pass on 75% of these costs to landlords, which could see 4,000 losses.

With landlords attempting to recoup costs passed on through agent fees, the responses were interesting:

  • 27% said they would not add to their portfolio
  • 20% would sell some properties
  • 8% would reduce the use of letting agents
  • 7% would spend less on maintenance

It is feared that worsening of landlords financial standing will lead to less investment. This is worrying given the fact that the rental market is already under massive pressure to deliver more housing stock to appease spiralling demand.

Loyal tenants could be worst hit by ban on agent fees

Loyal tenants could be worst hit by ban on agent fees


At present, the Exchequer receives £400m in employee taxes from letting agents, which of course will be at risk should there be a hit to employment in the sector.

In addition, letting agents support a wide-range of jobs, such as with maintenance and legal firms, which could all face pressures.

David Cox, Chief Executive of ARLA Propertymark, said on the findings: ‘The lettings sector is worth about £4 billion and employs around 58,000 people all over the country. The Government’s Autumn Statement announcement that it plans to ban letting agent fees was the third big blow in as many years for agents, and exacerbate the threat to the private rented sector; an increasingly important tenure on which millions of people rely.’[1]

‘For many tenants, buying a property simply isn’t an option, and they must depend on the private rented sector to provide security, good standards and fundamentally, a home. Our findings show that landlords are likely to raise rents as a result of the ban on fees. Those tenants who move least frequently, which tend to be lower income families, will be worst hit by rent rises. This is ironic and shows that there will be unintended consequences to what, in effect, is a crowd-pleasing, populist policy,’ he added.[1]




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