The Government has confirmed that it will introduce a new law to ban letting agents charging tenants fees.
Currently tenants are often forced to pay a myriad of fees to rent a property, including for:
- The tenancy agreement itself
- An inventory
- Credit checks
- References
- Immigration checks
According to the campaign group, Generation Rent, tenants in England are paying an average of £404 every time they move home. While figures from Citizen’s Advice show that 42% of tenants have to borrow money to pay the fees.
Furthermore, some tenants are also forced to pay when they renew their lease at an average cost of £117.
There seems little doubt that the Government’s proposals will become law as they seem to have cross-party support.
Tenants
The news will be welcomed by tenants, although some will be wary of possible rent increases as landlords look to recoup additional costs which may land at their door as a result of the ban.
Rents to rise?
Some people have predicted that letting agents will simply transfer these fees to landlords, who in turn will try and push up rents.
Whether this happens and hard-pushed renters can afford higher rents, remains to be seen, although David Cox, Chief Executive of the Association of Residential Letting Agents, had this warning: “Research commissioned by ARLA Propertymark carried out by Capital Economics demonstrated that if a full ban comes into force, two tenants will end up paying an extra £206 per year in rent. Therefore, rather than making savings, this policy will end up costing tenants more the longer they live in their home.”
The news comes after previous blows to Buy to Let investors. Last year, new rules came in to force restricting the amount of tax which investors could offset against their rental income. While additional purchases of investment properties now attract an additional 3% Stamp Duty charge.
Only time will tell how the market will react; for now though, tenants will count the Government’s announcement as a small victory.