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Tenant fees ban will see rents increase £103 a year

2-minute read

Mollie Millman

10 June 2019

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The tenant fees ban will see rents increase by £103 a year on average, ARLA Propertymark have suggested.

The rent increases will occur as landlords look to recoup some of the extra costs placed on them by the fees ban.

The ban means tenants can no longer be charged for items such as carrying out an inventory or referencing.

But these services still need to be paid for. Landlords will pass these extra costs onto their tenants, according to industry expert David Cox, chief executive of ARLA Propertymark.

Costs passed onto tenants

Mr Cox said: “For renters, the ban on tenants fees will be passed onto them through increased rents rather than upfront costs.”

He suggested that those in long-term tenancies – which tend to be lower income families – will suffer the most.

Based on an average rent increase of £103, those in tenancies for 10 years or more will lose out by £755, according to the ARLA Propertymark research.

Tenant Fees Bill: what can you charge for?

The Tenant Fees Bill came into force at the beginning of this month. It means tenants will only be required to pay their rent and deposit.

While most other types of fee will be banned, landlords will still be able to charge fees to replace lost keys or for late rent.

The research found that landlords face £275 worth of additional costs due to the Tenants Fee Bill. This is based on landlords losing £0.3 billion as a result of the regulatory changes.

However, ARLA Propertymark argued that landlords would not pass the entirety of these costs onto tenants.

Instead, it said a more plausible outcome would be for landlords to pass on £103 a year on average.

Are tenants negotiating rent?

This comes as separate research by ARLA Propertymark found that the number of tenants successfully negotiating rent reductions fell from 2.9 per cent in March to 1.9 per cent in April.

It’s the lowest seen since May 2016, when it stood at the same figure.

Meanwhile, the number of tenants experiencing rent rises increased in April, with 33 per cent of lettings agents saying landlords had increased them – up from 30 per cent in March.

The figures suggest there may be room for landlords to maintain and increase rents. Tenants appear to be willing to pay the rent asked for to secure their preferred properties.

Mr Cox added: “In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”

How are you coping with the tenant fees ban? Let us know in the comments below.

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