About three in ten landlords are not aware of the effects that the proposed ban on letting agent fees could have. Property management platform, No Agent, conducted research which showed that 30 per cent of UK landlords are totally oblivious to the proposed ban and its knock-on effects. This is despite the fact that it was announced during the Chancellor’s autumn statement, last year. If it comes about, then letting agents would not be able to charge fees to tenants in England. Fears are that the fee will shift to landlords, who will need to recoup the costs elsewhere, leading to rent rises. This would mean tenants would still, ultimately, be paying the costs of the letting agents.
The plan is that tenants in England will only have to pay their rent and their refundable deposit. Any other charges will be picked up by their landlords. It has been argued that the government’s intention to help tenants could backfire, because the landlords will pass on the costs to them by putting up rents. The government also argues that the ban will force agents to up their game, as they will need to be more competitive and provide a better service for the landlords, who will now be paying for those services. More than a third of landlords – 35 per cent – agree with this argument.
It could be that the time is right for agents to look at ways of being more efficient and more transparent. They may adopt new technology and processes of working to save money. This could involve automating many of their back-office processes and investing in software to take care of accounts, invoices, contracts, appointments and other property management services they provide.
The agent is chosen by the landlord, not the tenant, and so the person paying for the fees has little opportunity to either negotiate or opt out of the fees. Housing minister, Alok Sharma, said that it is the landlord who asks for the reference and credit checks to be completed and so is better placed to pay for them, not the tenant. However, the landlord has to carry out these referencing checks by law, while agents need to invest time and resources to carry out this work effectively. It looks as though further debate is still necessary before any proposal is finalised, as well as finding ways to make sure that all landlords and letting agents are aware of the changes when they come into effect.