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Tenant Fees ban: landlords will absorb extra costs

The tenant fees ban is great news for tenants, but how will the costs of setting up a tenancy be covered?

The Negotiator

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The Tenant Fee ban is great news for tenants. Housing Minister, Heather Wheeler MP, said that, “The new measures in our Tenant Fees Bill will save renters around £240 million a year by banning unfair letting fees and capping tenancy deposits.” That’s a considerable sum of money.

The question many agents are still asking is how will the costs of setting up a tenancy be covered? Most assume that landlords will raise rents to balance their books.

Lisa Simon - Carter Jonas - imageHowever, Lisa Simon, Head of Residential, Carter Jonas, tells The Negotiator, “With a start date for the tenant fee ban now in place, questions have inevitably resurfaced as to how this imminent change in legislation will impact both landlords and tenants.

“Relieving tenants of some of the upfront costs associated with the start of a tenancy will mean that charges such as referencing will, inevitably, divert to landlords. Having said that, the long wait for news of when the ban will come into force has allowed landlords time to reflect and prepare for any absorption of costs.

“The initial concerns around the ban was that landlords would offset their increased costs by upping rents. However, having spoken with some of our longstanding clients, many are prepared to absorb the initial costs. To that end, rather than demanding that tenants offset landlord costs through rents, any rent increases will only be introduced in line with market performance which, over the next year, will be used to help finance their outlays.

“The general consensus among landlords now is that market performance will help balance their books and, although they may not see a rise in profits for the first year, they’re not likely to experience a fall either. Ultimately, should rents continue to rise, these diverted fees will have a smaller impact on a landlord’s income year on year.

“This change in mindset is hugely beneficial for tenants, who once expressed concerns about seeing their rents shoot up to recuperate the losses faced by their landlords.”

January 18, 2019


  1. The government has obviously not listened to anything ARLA and all the professional letting agents have been telling them. If letting agents are expected to absorb the costs usually paid for by the tenants this will wipe out virtually their operating profits leaving many to consider their futures and will inevitably lead to many offices closing. This will then leave tenants at the mercy of the rogue landlords and on line agents who do not give the landlords and tenants the same level of care. All the comments reported in favour of the ban in the media are from the tenants who are obviously going to be delighted at this decision. It WILL lead to raised rents as landlords are there to make a profit the same as any other business so why is it seen as such a crime? As the previous post stated…when is the government going to clamp down on banks charging extortionate fees for arranging mortgages and bank loans for their ‘admin’ fees. Are we as a profession not worthy of being paid for our time dealing with these issues ?

  2. There is not one mention of Letting Agents in that article. We know the ban is all because the corporate agents try and extract as much money as they can from prospective tenants who they deal with just once, and pander to the landlords who are their real perpetual clients. If there had been any sense of course there should be a minimal fixed fee of around £100 to cover referencing and credit checking fees that Agents have to pay out for on every rental, but as we see from Brexit, politicians are not interested in common sense suggestions. .

  3. Firstly Kit Malthouse is the Housing Minister, Heather Wheeler is the Under Minister.
    Combine this ban with mortgage tax changes and of course landlords will continue to bail out. It’s not just application fees is it, it’s in tenancy fees too, even for breaches so clearly the UK Gov expects letting agents to work for free or landlords to pay all bills, even if the tenant is a bad one?

    How anyone thinks this is not going to backfire in rent rises and service levels is mad. Meanwhile, there is no talk of banning the £1000 mortgage application fees for first time buyers is there? as if Gov ministers would suggest that to their banker chums.

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