After it was announced in the 2016 Autumn Statement, landlords have been waiting to hear whether the ban on letting agents billing tenants would be written into law.
And now there’s an answer. During her speech at the State Opening of Parliament, the Queen announced the Tenants’ Fees Bill. If it passes, the bill will ban landlords and agents from requiring tenants to pay letting fees as a condition of their tenancy.
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Could the Tenants’ Fees Bill cost landlords millions?
David Cox, chief executive of the Association of Residential Letting Agents (ARLA) Propertymark, said the bill would cause the loss of 4,000 jobs across the industry and could cost landlords in the UK as much as £300 million.
He added that this additional cost for landlords could mean they would increase rent to tenants. Given the bill was proposed in order to make renting a property less costly for tenants, its introduction could have the opposite effect.
However, in Scotland, where the ban on letting agents fees has been in place since 2012, there has been no significant rise in rental prices.
Are online letting agents the way forward?
While traditional letting agents are alarmed by proposals, it appears the same is not true for their online counterparts.
James Davis, CEO and founder of online lettings agency, Upad.co.uk, welcomed the move. He accused traditional letting agents of raising their fees annually ‘purely to increase their profits’ rather than to cover costs in line with inflation.
At the moment, tenants have little choice when it comes to letting agents - if the property they are interested in is let by an agent with high fees, either they accept the fees or find a different property. Landlords, on the other hand, have the option to choose a new letting agent if they feel fees are unreasonable.
While PropTech is still an emerging sector, it’s grown massively in the last year by providing innovative solutions to long-standing property headaches. Once the draft of the Tenants’ Fees Bill is published later this year, landlord may find themselves shopping around for a new type of letting agent.