The Tenant Fees Bill was introduced into Parliament on Wednesday 2ndMay, by James Brokenshire, Secretary of State for Housing, Communities and Local Government. There was a second reading in Parliament yesterday, providing further detail into the changes that are to be brought about by the bill.
Alexandra Morris, Managing Director of online letting agent MakeUrMove, has provided the following response: “Whilst we welcome regulation to support tenants, it needs to be carefully thought through.
“The bill has a much wider impact than simply removing tenant fees and it’s likely to have many unintended consequences. We have carried out research and discussed this matter with our landlords and tenants alike to gauge their response, and whilst landlords are understandably nervous it’s clear tenants don’t appreciate the additional long term costs they are likely to face.
“Our fear is that, while the government’s intention was to make the private rental sector more affordable and fairer for tenants, they will likely end up worse off. Many landlords, particularly the smaller landlords who make up the biggest proportion of the private rental sector and often operate on very tight margins, will be forced to raise rents to cover the increased costs they will incur as a result of the bill.
“Landlords will face additional upfront costs including referencing, and because of their already tight margins they will need to recoup these during the initial tenancy period (often six months) to ensure renting their property remains financially viable.
“While some suggest that following the ban tenants will simply be able to shop around for properties with lower rents, this will not be the case. A majority of landlords will be forced to increase rents to recoup the additional costs letting agents will have to charge them, pushing up prices across the entire rental market and impacting the Government’s stated goals of increasing homeownership, by making saving for a deposit even more difficult.
“At MakeUrMove we currently only charge tenants for referencing. However, we have been working hard to develop new products that will allow us to remove tenant fees, remain viable as a business and meet the needs of the private landlords and tenants who rely on our online letting solution. This bill will impact the entire private rental sector and finding a way to get this challenging balance right will be vital for letting agents, landlords and tenants alike.”