England’s letting agents will lose £157.1 million in revenue or nearly £10,000 per branch during the first year of the tenant fees ban, the government’s own assessment of the impact reveals.
But the overall cost of the tenant fees ban, taking in all business activities including agents, landlords and suppliers, is £340 million.
The figures reveal that each letting agency branch in the UK will lose on average £9,818 in lost fees in 2019/2020 when the ban is likely to go live, based on a total industry size of 16,000 letting agent branches.
The same document also reveals that the government expects lettings agents to close and that jobs will be lost, and that the ban will impact many industry service suppliers such as inventory clerks.
The only positives for the industry identified by the government is that the tenant fees ban will “drive out” the most inefficient lettings agents within the industry and that a more flexible, less expensive transactional market for tenants will increase demand for rented property.
Some 1.18 million people move home within the private rented sector every year at the moment, a figure the government expects to increase to 1.4 million by the time the ban is fully implemented in 2019/2020.
Increasing rents are factored into the calculations, which reduce the gain tenants will receive from the ban, the figures show, although tenants will pay £12 million a year less in deposits during the first year of the ban when they are capped to four weeks.
But the main trade bodies within the industry remain sceptical of the benefits the fees ban will bring.
“We do not believe the Bill will achieve its aims, as our own research last year demonstrated that tenants will end up worse off and banning fees will not result in a more affordable private rented sector,” says David Cox, Chief Executive of the Association of Residential Letting Agents (pictured).