What Affect Has The Tenancy Fees Act Had Over The Past Year?
Posted on 12th May 2020 at 17:19
What Is The Tenant Fees Act 2019?
The tenant fees act 2019 is now an Act of Parliament. The Tenant Fees Act outlines the Government's approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits. The ban on tenant fees came into force on 1 June 2019. It's now illegal for landlords and agents to charge fees, we are however allowed to charge tenants for the following:
Specific Defaults on new tenancy agreements signed on or after 1 June 2019
Deposits have been limited to 5 weeks rent and 6 weeks rent where the annual rent is £50,000+. How Does It Affect The Private Rented Sector? This has caused rents to rise as agents fees were passed on to tenants, before the act came into play this was a warning also given by four previous housing ministers. 57% of landlords also planned to increase rents to cover the removal of tenant fees ahead of the ban. Concerns were also raised in terms of the impact on quality of the private rented sector. Fees would have given landlords a bigger budget to invest in home improvements, with this gone landlords may reduce the budget for home improvements therefore reducing the quality of the private rented sector.
What Has The Impact Been On Landlords The National Residential Landlords Associations figures reveal that more than 53% of all landlords in England who use agents have seen an increase in fees as a direct result of the act. This has resulted in more landlords self-managing their properties as opposed to keeping it with an agent. The figures from the NRLA in the last quarter of 2019 was up to 43% from 36% in the previous quarter. A typical landlord also spent around £3,221 on letting and management fees in the final 3 months of 2019, that figure is up by 59% from the previous year which is an increase of £1,195. What Has The Impact Been On Agents Not all letting agents in England have seen an impact on their revenues from the act, however here are the results from a recent survey performed by proptech company - Goodlord.
10% reported losses of more than 30%
17% of agents said that revenue was down between 21% and 30%
30% said they had lost between 10% and 20%
28% said they had lost up to 10%
15% said that they remain unaffected
There is no denying that this act has affected a big percentage of letting agents.
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