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What the abolition of tenancy fees means for landlords

In the 2016 Autumn Budget, ( it was announced that the government would be making a move towards the abolition of the fees imposed on tenants when moving into a rental property.

While it’s thought that this ban won’t come into effect until Spring 2019, it’s likely to have left landlords up and down the country wondering what this means for them. While there has been a lot of negative publicity surrounding the ban from a landlord and estate agent point of view, there are a number of reasons why it may actually be beneficial.

Below we weigh up the pros and cons of the ban of letting agent fees.

The bad newsshutterstock_73634071

 The ban means that landlords and estate agents will no longer be able to charge tenants for anything other than rent, the deposit and certain necessary costs which may include:

  • early termination of tenancy as requested by the tenant
  • utilities, communication services and council tax
  • a default by the tenant, such as replacing a lost key

Those in breach of the ban could face a fine of £5,000 for a first offence, with further offences within five years resulting in either penalties of up to £30,000 or prosecution.

Although the legislation isn’t expected to be enforced until next year, earlier this month, Government figures revealed that the ban on tenant fees could see landlords accruing costs of more than £80 million in the first year alone. Letting agents are set to face an even greater cost which is estimated to be £157.1 million over the same period of time.

While the expense of renting does of course add up for the tenant, the costs they’re subjected to do cover a number of necessities including referencing, the preparation of tenancy paperwork, compliance, eligibility, credit checks and the check-out process.

It’s also important that estate agents thoroughly investigate that people are who they say they are. If a couple claims to be married but they’re not for example, this turns the property into a house of multiple occupation (HMO).

Because these processes are a crucial part of securing reliable tenants, it means that once this legislation come into effect, it’s a cost that’s likely to be passed down to landlords.

                                                                                      The good news
Being hit with huge costs is of course a huge downfall for landlords and while this may seem like a lose-lose situation for them, there are a number of ways that the ban can actually be used to their advantage.

  • With reduced move-in fees, it will attract higher volumes of tenants and provide a larger selection pool for landlords. This means that properties are less likely to sit empty for as long and landlords will have more of a choice when it comes to selecting who lives in their property
  • While landlords will incur a cost from estate agents, this can be made up in other areas. Many tenants have expressed that they would happily pay higher rent if they didn’t have to pay such high fees upfront

If you’re a landlord and would like to know more about the tenant fees ban, visit the Government website – – for further details. You can also visit a reputable estate agent like Prospect Estate Agents in Reading ( who will be able to discuss these changes with you in more detail.