English letting agencies stand to lose over £60,000 each after the Tenant Fee Ban was finally passed following a ‘meaningful vote’ in Parliament.
The government has announced that the Tenant Fees Act will come into force on the 1st of June 2019 after the House of Lords this week voted to approve the bill.
The bill will receive royal assent within weeks.
New research from leading deposit free renting firm Dlighted shows that the Tenant Fee ban will cost the average letting agency over £60,000 over the next two years.
The government estimates that tenants are currently being charged £337 in fees on average. With figures from trade body ARLA showing that the average agency currently rents out an average of 183 properties, and major agent Your Move setting the average tenancy at 20 months, an average agency stands to lose £61,671 between now and February 2021.
The act bans tenants from being required to all but a small amount of exempted fees as a condition of the ‘grant, continuance, assignment, termination or renewal’ of an assured shorthold tenancy or licence agreement.
Examples of banned fees include: Credit checks, inventories, cleaning services, referencing, administration charges and gardening.
Ajay Jagota, Managing Director of zero deposit renting solution Dlighted and head of the #ditchthedeposit campaign, responded to the Tenant Fee Ban’s approval.
“All eyes have been on Parliament’s meaningful vote on Brexit this week, but an arguably even more meaningful vote for landlords and letting agents has taken place too – and this time the government won
“The figures are stark and the implications are huge. On current figures, an average agency is going to lose £60,000 as a result of this ban. For many, this will mean the difference between staying open and closing for good.
“There’s also the issue of deposits. Not only will financial challenge of this scale make the illegal use of tenancy deposits irresistible to many struggling agencies, but how often have we seen deposits vanish altogether when firms go under?
“Deposit free renting doesn’t just make it faster and easier to find and keep good tenants, it slashes agency overheads too – and that’s something the Tenant Fee Ban is going to make unavoidable for all but the biggest agencies.”
Dlighted uses a low cost insurance policy to protect landlords against hundreds of thousands of pounds of property damage, unpaid rent and legal costs, while allowing them to find tenants faster by allowing customers to rent with zero deposit.
The #ditchthedeposith campaign with seeks government encouragement for landlords and letting agents replacing traditional tenancy deposits with deposit replacement insurance, allowing the £4.5bn of renter’s cash held in deposits to be transformed into Help to Buy ISAs for first-time buyers and eliminating deposit theft.