Long-term tenants may be hit hardest by letting agent fee ban
Tenants who stay in properties the longest could be hit hardest by the government’s proposed ban on letting agent fees, according to ARLA (the Association of Residential Letting Agents).
In research conducted in partnership with Capital Economics, the results of which were published on 28 March, the trade organisation found that tenants could face extra costs of hundreds of pounds as a result of the ban.
ARLA stated, tenant letting agent fees account for around a fifth of letting agents’ revenues, if they are banned outright then agents will need to pass these costs on to landlords through higher agents’ fees.
Two in five landlords (41%) expect they will need to pass on a portion of the inflated cost to tenants, and the research finds they could push rents up by £103 on average per year. If landlords were to pass on the entire uplift in agents’ fees, tenants would be hit harder, typically seeing rent increases of £275 a year.
This could hit long-term tenants the hardest. Based on an average rent increase of £103, those in tenancies 10 years or more would lose out by £755, estimated ARLA.
However, those who move every six months could be better off by an average of £4,463 over a 10-year period.
David Cox, chief executive of ARLA, said: “For many tenants, buying a property simply isn’t an option, and they must depend on the private rented sector to provide security, good standards and fundamentally, a home.
“Our findings show that landlords are likely to raise rents as a result of the ban on fees. Those tenants who move least frequently, which tend to be lower income families, will be worst hit by rent rises. This is ironic and shows that there will be unintended consequences to what, in effect, is a crowd-pleasing, populist policy.”