New Legislation


In April of this year, the Tenant Fee Ban will come into effect. This means that landlords and agencies will no longer be able to charge for items including charging for a guarantor, inventories, cleaning services, references, admin and more. It will not affect holding deposits, rent, deposits and charges for defaulting on the contract.

There will also be a ban on setting rent at a higher level for the first portion of the tenancy and then lowering it afterwards. This is to prevent landlords or agents trying to offset the ban on fees by increasing the rent for the initial period to make up the costs.

The Residential Landlords Association also warns of stiff penalties for anyone found to be deducting fees, stating, ‘where a breach has occurred and a banned fee or payment is taken, tenants will be able to get any money wrongly paid back via the county court. Local Trading Standards are supposed to assist tenants with this in some fashion once it comes into force. In addition, local trading standards will be required to enforce this legislation and will issue a fine of up to £5000 for a first offence. Subsequent breaches are criminal offences or alternatively, the landlord can be fined up to £30,000 as a civil penalty and be subject to a banning order.’

Rental platform, Goodlord, estimates some losses for the industry. ‘When the Tenant Fee Ban comes into effect in April 2019, the cost to letting agents is estimated to be £157.1m in the first year - or about 22% of an agency’s annual revenue.’

A survey carried out by Goodlord revealed that 58% of agents surveyed stated they were either concerned or very concerned with the medium to long-term future of the lettings industry, with 29% of those surveyed seeing it as a serious challenge. So what’s to be done?

While the legislation may lead to some initial drops in income, it’s important to remember that the rental market is healthy, and will likely continue to grow for a number of reasons. According to Goodlord,‘by 2025, it’s predicted that half of those in the 20-39 year old age group will rent within the UK for a variety of reasons, including rising housing prices, lack of housing supply and a desire for more mobility.’

Which means you still have a great opportunity to generate income on your property, but it may be a more competitive market, with more power in the hands of the tenant. However, by creating a great product and service (your property, and the way you manage it) will be a great differentiator and put you in a position ahead of your competitors. Goodlord’s survey of lettings agents revealed that the greater the service, the greater the success in finding high-quality tenants, ‘84% surveyed said that providing tenants with a positive experience was extremely important - compared to 93% saying the same about their landlords.’