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How much will agents lose when letting agent fees ban kicks in?

Government reveals its own research into likely impact for letting agents in lost revenue.

Nigel Lewis

rent payment letting agent fees It’s a figure much discussed within the consultation document published on Friday setting out the Department of Communities and Local Government (DCLG’s) plans to introduced a letting agent fees ban.

If the DCLG’s plans are implemented as they stand following the consultation period, then neither landlords nor agents will be able to charge tenants any “fees, premium or charges to facilitate the granting, renewal or continuance of a tenancy”.

“The Government also proposes to ban any letting fees charged to tenants by landlords and any other third parties to ensure that letting agent fees are not paid by tenants through other routes. Tenants should only be required to pay their rent and a refundable deposit,” the consultation says.

Average fee

Within the document’s detail, the DCLG says the average fee taken by agents is between £200-300, based on the 2014-15 English Housing Survey, while the National Approved Letting Scheme (NALS) is reported to have indicated an average fee of £172 with a range of between £30 and £500.

Campaigning group Generation Rent told DCLG that the average for a couple renting a home is £400 within range of between £40 and £780, while homelessness charity Shelter believes one in seven renters pay £500 or more in fees.

But the DCLG conducted its own research into a letting agent fees ban among 50 randomly-chosen agents of different sizes including franchisees, independents and corporates across the country, based on information published on their website.

“This exercise reinforced how difficult it is for tenants to both find and compare agent fees since it was not always simple to either find the fees on the agent’s website or to understand exactly what was included in them,” the consultation document says.

Following its research, the DCLG discovered that the median set-up fee charged was £180 while reference checks were £75; tenancy agreement fees £185; guarantor checks £62.50; tenancy renewal fees £75; and tenancy amendment fees £100.

The highest of these fees included a set-up fee of £420, reference checks costing £240, tenancy agreements at £300, guarantor checks at £378, a tenancy renewal fee of £150 and tenancy amendment cost of £432.

“The findings above demonstrate that the fees charged to tenants vary considerably amongst agents, even though the services provided are broadly similar, and that in some instances the fees charged can be significant,” the consultation document says.

April 10, 2017

One comment

  1. The folk at DCLG must have very dark glasses on if they can’t see that ‘lost’ fees will inevitably be recouped in higher rents. Any agents have any other ideas of how to replace lost income… and stay in business?

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