There have been a lot of forecasts on what will happen to tenants when the ban on letting fees comes into force.

The forecasts differ from each other in a number of ways. The reason for that is: no one can really be certain what is going to happen. At the root of the suggested reactions is the fact that letting fees are there to cover costs. The costs will still be there when the fees are gone, and the money will have to be recouped in some other way. There is a flaw in the argument, and we’ll come to that, but before we do, here are some of the effects being suggested, together with our views on them.

Fewer repairs will be done

We can’t see this happening. Certainly, our recommendation to any of our clients will be that repairs, refurbishment and renovation of rental properties are all essential to protect the landlord’s interests. Why? Because there is an ideal tenant – someone who values the property as much as the landlord does, takes care of it, and remains in the property for the whole length of the contracted tenancy. What kind of property is likely to be valued as highly by the tenant as by the landlord? One that is kept in the best possible condition. It’s unlikely repairs will suffer on any property that you would want to sign a lease on, or we would want to put you into.

The practice of charging a high rent in month one will increase

Yes, this is a possibility. Some of those costs (see below) do need to be recovered, and this is one way of doing that.

Rents in general will increase

While this may seem a natural response to the removal of letting fees, we are not so sure. We often hear ‘look what happened in Scotland’, but that is not as helpful as it may seem, because there are two versions of the Scottish story. Letting fees for tenants were banned there in 2012. All a Scottish landlord can ask for is the rent and deposit, and the landlord is responsible for paying for everything else. Shelter maintains there was no increase in rents. Scottish letting agents say there was. A select committee of the House of Commons studied the matter and said the evidence was inconclusive one way or the other.

In reality, there is a limit on rents and the limit is set by a combination of:

  • What other landlords are charging for similar properties
  • What tenants can afford to pay – there is a maximum figure.

Letting agents will stop carrying out individual viewings accompanied by an agent and start taking potential tenants round the property a few at a time

All we can say about this suggestion is that it must have been made by someone who doesn’t understand the basics of marketing. You take the prospective tenant round the property at a time that is convenient both for you and for the prospective tenant – but it is the prospective tenant whose needs come first. No one in the customer service business sets out to make life more difficult for the potential customer than it needs to be.

Tenants will have to pay the costs of taking references and credit checks themselves

The problem with this would be that it is wide open to fraud from unscrupulous tenants. We can’t see it happening.

We mentioned a flaw in the argument, and it is this: that some fees are reasonable, and some are not. The reason for letting fees is supposed to be to cover the costs of: 

  • Taking credit checks
  • Taking references
  • Administrative charges for the rental contract
  • Check-in charges
  • Guaranteed charges

There are also other charges. What any prospective tenant would need to ask would be: if the average fees total is £350, how is it possible that some people are being asked to pay £800 or more? Is it conceivable that some of these charges are inflated? This is possible with a small minority of agents, so the ban is being implemented partly as a way to increase transparency.

It is possible there will be a small increase in rents, because the landlord will still have genuine costs and they will need to be covered. But what the letting fees ban will actually mean for tenants is, almost certainly, that they will receive precisely the same service at a lower cost.

And, for those of us who care about service to the customer, that can only be a good thing.

If you’d like to hear more about our service to the customer, or are looking for property to rent or buy in Islington, Stoke Newington, Highbury, or Newington Green, please get in touch. Let’s discuss your needs. We know the areas in which we operate.