4^th Jun 2019

The Tenant Fees Ban has now come into force (Sat 1st June) and the latest survey from a lettings agents association shows that in April the number of landlords selling up was the highest since May 2018.

Agents that took part in the survey said that April had the highest number of landlords quitting the market in April. In the same month 28% of tenants faced rent increases and the number of renters trying to renegotiate their monthly rent also fell.

Comparing number of tenants that had rent increases in April- 28% - against April 2017and April 2016 it was higher as they were 26% and 24% respectively.

The survey also included other data which showed that members' branches underwent a very slight fall in number of properties available to rent from 203 in March, whereas April had 202 per branch.

Prospective tenants numbers per branch also fell in April to 64 from March with an average of 67.

David Cox, chief executive of the association, said: “As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy-to-let properties.

“The Tenant Fees Act coupled with the proposed scrapping of Section 21 is forcing landlords to either increase rents or leave the market altogether.

“As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions.

“In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”

The Citizens Advice's Chief Executive, Gillian Guy , described Saturday June 1st when the Act was enforced as a “momentous day”.

The charity relentlessly campaigned for a ban for more than ten years working with MPs across all parties to ensure that out any potential loopholes in the Act were 'ironed' out.

Guy said: “The end of these uncompetitive and unfair letting fees is a real win for renters.

“The new law means families and other renters don’t have to hand over hundreds of pounds every time they move home.

She added: “We look forward to working with the government to further strengthen the hand of renters in a market where they have little bargaining power."

In the past twelve months Citizens Advice reports it had helped more than 190,000 people with housing issues, with 57,000 cases from the private rented sector.

Daniel Gibson, a property management consultant who runs an agency based in Newcastle, is far from enamoured by the Act, and sends out a stark warning that it could cause more problems for tenants rather than being a solution for their financial issues.

Gibson said: “Letting charges which would normally be split between the tenant and the landlord, now have to be completely paid by the landlord."

“And that means landlords will be looking at ways to recoup the money which will inevitably come back to the tenants,” he said.

The company which has 1,000 properties in the North East on its books, has already implemented its plans to offset the full negative effects of the Act upon their financial model. It has introduced a set of structures to reduce costs, however Gibson feels that many agents may not have introduced similar measures.

The company's latest research surveyed North East agencies and found that costs to landlords had doubled from 50% of a month's rent to 100%.

Gibson said: “Those agencies which have smaller increases in the let fee seem to be compensating by increasing their monthly management fee as well.”

The chief Executive of the agency association David Cox believes that the ban "sounds positive”, but ultimately will cost tenants far more long term.

Cox said: “Tenants will continue to pay the same level as before, but this will be passed onto them through increased rents, rather than upfront costs."

Capital Economics carried out research on behalf of the association found that on average, with the onset of the fees ban, tenants will have to pay around £103 more a year.

He explained: “While those who stay in tenancies for less than two and a half years will see savings, those in long-term tenancies, which tend to be lower income families, will suffer.

"Based on an average rent increase of £103, those in tenancies for 10 years or more will lose out by £755."



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