Renters across the country cheered when the Chancellor proposed to ban the fees that letting agents charge when arranging tenancy agreements. It’s a move that will hopefully give tenants a more transparent view of total rental costs. But before anyone gets too excited, it’s important to note that the government still needs to consult on this proposal before it actually happens – and for the time being how long that takes is anyone’s guess.
For the 22% of UK households that privately rent, it’s an acknowledgment of the crippling costs that tenants have to face even before they cross the threshold of their new home. At the moment, anyone that rents their home has to budget not just for a deposit and first month’s rent, but agents’ fees too.
Currently, letting agents can charge tenants fees for services such as drawing up the tenancy agreement, carrying out an inventory and collecting references. How much this all costs, depends on the agent – the average is £223 but some tenants have reported having to pay more than £500 and even £1,000 if they rent in London.
Of course, not everyone’s happy about the proposal, critics say that if the cost is passed back to the landlord then rents will just go up. But in Scotland, where a ban on agents fees has already gone through, rents weren’t shown to rise dramatically because of the ruling.
Rental charges in the UK are high because there’s a huge demand for housing, so landlords price their properties accordingly. Any disproportionate increases in rents by individual landlords, are likely to be quashed by local market pricing and overly high rentals simply won’t get let.
If the ruling is passed and made into law, then it’s likely that letting agents will have to be more competitive with their rates. Landlords can pick and choose who manages their rental property and if they don’t like what the agent is going to charge them in fees, then they can negotiate or go elsewhere.
We’ll have to wait and see what happens next but if the proposal becomes reality, it ultimately means that tenants will get a clearer picture of upfront rental fees which can only be a good thing because nobody likes surprise costs. It should hopefully also mean that tenants can budget and plan their finances with a little more certainty and perhaps even put that little extra bit by in a savings account or make some tax-free interest with a cash ISA.
And for any landlords out there – it means that potential tenants won’t be put off your rental because of agents’ fees – which is a good thing, (just make sure you’ve got your landlord insurance sorted) and tenants reading this, it might be worth considering your home contents insurance.