Tenant Fees Ban – a two-edged sword?

Tenant Fees Ban – a two-edged sword?

“Is the Tenant Fees Ban a two-edged sword?”

Legislation now prevents Letting Agents from charging Tenants a fee to process their application to rent a property.

The Tenant Fees Ban was introduced by the Government on 1 June 2019.  Before this date, the requirement on many prospective Tenants to support their application with a payment (typically £100-£300) ensured that only the most committed, able and willing Tenants applied.  The cost to administer such an application was borne by the Tenant.  Now this has been removed, anyone can potentially “try their luck” in applying for a tenancy, irrespective of their credit status, because it costs them nothing.  Yet these Tenants still have to be credit checked and previous tenancy histories investigated, but this time at the cost of the Letting Agent, or, ultimately, the Landlord.

It could even be that cost-cutting Letting Agents might even let their referencing standards slip, with potentially dire consequences for unsuspecting Landlords.

However, the good news is that this is likely to lead to longer tenancies being established.  This is because if Letting Agents can no longer charge Tenants a processing fee, then they are more likely to want to minimise the costs associated with such applications.

Longer tenancies are win-win for all…

We have always prided ourselves on the duration of our tenancies.  Longer tenancies are good all round for the following reasons:

  • A Tenant who stays longer is likely to regard the property as their home, not just a temporary arrangement.  They’ll take more pride in it and are more likely to treat it well; they may even make improvements (with the Landlord’s prior consent).  They are also less likely to get into arrears.
  • Fewer Tenants moving in and out means less wear and tear on the property.  This means less redecoration/carpet cleaning etc with each new Tenant.
  • Renewal fees charged by Letting Agents are usually lower than a Tenant-Finding service so long-term tenancies cost Landlords less.

When Landlords are comparing letting/management companies, we’d advise doing some research and finding out the relative average length of tenure between agencies, as well as arrears and eviction rates, void periods and of course, average yield so that you can be sure your agent is maximising your investment.

Please feel free to ask us about our own impressive statistics on 01273-735237.