Tenant Fees Act ‘a success’ by saving renters £400 per tenancy
The 2019 legislation has reduced the average cost of a new tenancy significantly, new research claims.
The ‘prophets of doom’ who predicted dire consequences when the Tenant Fees Act was introduced have been proven wrong, it has been claimed.
When the legislation was introduced during 2019 some property industry experts warned rents would rise and jobs would be lost.
But new research suggests the policy has been a success by restricting some agents from charging excessive fees. Researchers from Warwick University and Bocconi University in Italy found that agent fees were reduced by an average of £400 per tenancy.
Charge landlords
“Before the 2019 act came into force, this prompted some commentators to worry that agents would instead charge landlords more, who would then pass on the cost to their tenants with higher rents,” the researchers said in an article published by The Conversation.
Capital Economics predicted that either rents would increase by an average £103 per year, or 16,000 agency jobs would be lost, they said.
Our five years of research show that the policy did not lead to higher rents.”
“In fact, our five years of research show that the policy did not lead to higher rents.
“Some letting agents increased the fees they charged to landlords, passing on some 25% of their reduction in revenues. This led to some landlords switching letting agent, but far less than you would expect in a competitive market.”
They found no evidence of landlords leaving the market, or of agencies closing down, they said
The reform has been a success.”
“The main effect of capping agent fees has been to save renters an average of £400 per tenancy. In other words, the reform has been a success.”
And the policy does not seem to have limited supply of rental properties.
Recently, London estate agency Home London Ltd successfully overturned a £5,000 fine imposed by a council for allegedly breaching the Tenant Fees Act.
Barnet Council had claimed Home London broke the law by only paying back £350 out of a £500 deposit.
This article completely misses the mark. Over the past five years, we’ve witnessed a mass exodus of landlords from the PRS, driving rents to unprecedented and unsustainable levels. The failure of policymakers – regardless of whether they sit on the Conservative or Labour benches – to address the root causes of this crisis is staggering. It’s clear that those in Parliament lack a proper understanding of the challenges faced by both landlords and tenants, and their half-baked policies are doing more harm than good!
Absolutely, costs have gone up on landlords and this has been passed onto the tenants by permanent rent rises. An average saving of £400 to the tenant per tenancy – £33 a month over 12 months, of course rents went up in excess of £33 a month.
Far from saving tenants money my experience is that it is costing them a considerable amount of money. We used to charge £240 inc vat so we were left with £200. All our landlords without exception accepted we transfer that fee to our tenant find/change fee. Then again without exception they increased rents by on average £15 pcm. Our tenancies are long here with an average of well over 48 months so to save £240 the tenants now pay around £720 another great success from that building in Westminster. A tenancy of 10 years is not uncommon here so those tenants will have paid £1800 to save £240 I just wish those who know nowt would keep out of it.
Success? Increasing rents by a whopping £1000 per year?
We all charge as much as we can now, cause we don’t know what is coming next.