The 1st June 2019 is now not far away, measuring in days, it will mark the day that the tenant fee ban comes into life for the industry, for the better or worse depending on your point of view.
Overall, it will mark an almost three-year journey for the Government from when it was first announced.
There are obviously “many” sides to this particular introduction and the journey the Government has been on to get it implemented. But, ultimately many will be decide their views simply on their position within the housing market, whether that be tenant, landlord or letting agent.
If we go back the almost 3 years since the announcement was made many tenants were simply looking for more transparent renting terms. Ultimately the changes are targeting reducing costs upfront for those looking to rent.
Equally in many other areas letting agents and landlords have been found at least by the Government of acting unfairly towards tenants taking money from deposits and other areas.
Therefore, let us look at both sides of the equation when it comes to fees being banned from June.
Looking at the reasons the bill was introduced for tenants:
• Increasing amounts of people are now renting due to affordability of actually purchasing homes and the increasing number of landlords that snapped up BTL properties.
• Many fees were introduced in the previous property crash and became a critical revenue stream for the industry
• Perceived lack of fairness in the way upfront and ongoing fees were charged for things that in relative terms actually cost a very small amount to carryout.
• Rogue landlords and letting agents operating improperly likely to make the Government to act on the issues in this area
The impact on the landlords and letting agents is clearly in a number of areas:
• Potential for smaller letting agents to face closure
• Larger agents will be likely to face pressure from shareholders on how they are planning to protect profits within the business
• Online agents are likely to face less problems than high street operations, but they currently face a number of other issues that are not for this blog
• Slowdown in the market with rent increases slowing alongside less activity in general in the market
• Greater competition in the market in general potentially making each less competitive depending on where the market attempts ways to recover lost profits, but it could be possible that some agents will introduce charges for landlords instead of tenants and in the long term is probably going to be a solution used by more and more agents to recover some of the lost monies that tenants would have paid
• Many rental prices are likely to increase to help cover the costs ultimately wherever it comes from landlords or letting agents, which recently have shown a 2% increase on last year.
Furthermore, and something that has frustrated many people in the industry alongside many of the professional industry bodies is the Government’s ignorance towards their concerns and issues of banning fees entirely for tenants as opposed to imposing fair limits of what can be requested for various stages within the process.
Overall the banning of letting fees only applies to tenants and there is significant opportunity for the industry to recover these fees from other sources and furthermore chances are that rental prices will increase in the short and longer term to make up some of the difference in profits. More than likely for different ultimate reasons – larger companies because of shareholders and smaller agencies because they have a need to avoid closing.