Last week it was confirmed that the Tenant Fees Bill will come into force in England on 1st June 2019. Whilst this now gives letting agents and landlords the legal certainty to prepare for a post tenant fees world, is this actually good news for tenants?
Consider that CRJ Lettings charge the lowest tenant fees of any letting agent in Chichester - £200 is all a couple will ever pay me for my work. Unfortunately, I found the average tenant fee (for a couple) in Chichester is £454 and the highest £760! That ludicrous sum is made up of a £300 admin fee, £300 to produce a tenancy agreement, £60 towards the inventory and a £100 check-out fee, which is payable at the start of the tenancy. If you feel like staying with this particular agent they’ll charge you a £100 renewal fee to do so. They’ll even charge you £30 after you leave should you need a reference for your next property!
It seems that some letting agents’ inability to self-regulate has caused the discontent amongst the growing number of tenants that has led to government intervention. On the face of it then it seems a no brainer that tenants will be better off. Unfortunately, I believe it is a government policy that has yet again been hastily thought out for the benefit of political popularity rather than the electorate’s best interests.
You see, letting agent fees to tenants were banned in Scotland in 2012 to much fanfare. Unfortunately, whilst many advocates of the ban in England claim rents haven’t risen in Scotland as a result (from agents passing the costs to landlords), that simply isn’t true.
In fact, according to the CityLets Index, rents in Scotland rose 15.3% between 2012 and 2016. In England the average increase in that timeframe was 8.5% (according to the Office of National Statistics), whilst here in the South-East rents rose 8.3%.
And the crux of it is this; in the past few years landlords have been hit with additional safety legislation, a 3% stamp duty surcharge and troublesome tax changes; all of which will cost them money. I know many letting agents’ response has already been to increase their fees to landlords to cover what has been reported as an average loss in income of £60,000 per agency over the next two years.
And like any business (and being a landlord is a business), if costs go up so will prices. I believe the letting fees ban will lead to rents rising; meaning any short-term savings for tenants will be more than offset by the monthly increase in rent. Perversely this will penalise those tenants wanting to create a long-term home the most, which is something I thought the government was in favour of?
The ban could potentially be a positive for CRJ Lettings though. My low tenant fees mean I’m somewhat shielded from the loss of income and as landlords see other letting agents increase prices, they may take another look around at the competition and spot the high level of service and good value CRJ Lettings offers.
(This article was featured in the Chichester Observer's property section on January 24, 2019)
Clive Janes, CRJ Lettings
If you are looking for an agent that is well established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.
E-mail me on clive@crjlettings.co.uk or call 01243 624 599.
Don't forget to visit the links below to view my previous buy-to-let deals and Chichester Property News articles:
c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP
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