Letting agents in England are planning to increase their rental stock or hike their management charges to make up for lost revenue from the tenant fees ban.
A survey of agents by lettings platform Goodlord found that 90% are predicting a dip in annual revenue following the ban, with most expecting to lose up to 30%.
Almost half (46%) said they would aim to make up the losses by increasing their managed portfolio and 29% would increase their management fees.
Just 12% said they would increase rent and 10% would seek other commission-generating services.
Despite the revenue hit, 60% of agents said they were either ‘very optimistic’ or ‘extremely optimistic’ about the future of the agency they worked for.
The research assessed the use of Section 21 notices amid proposals to scrap them and instead boost the grounds for Section 8.
The survey found 85% of agents have served a Section 21 notice in the past 12 months, while 51% have used a Section 8 notice.
Tom Mundy, co-founder of Goodlord, said: “Our report shines a light on the real impact new laws and property trends are having on the market.
“The optimism of letting agents despite the Tenant Fees Act 2019 and proposed repeal of Section 21 may come as a surprise to some, but the lettings industry has always been agile, able to adapt to legislative change and industry shifts.
“Indeed, the figures we recorded, combined with the qualitative feedback received, shows a sector eager to embrace the opportunities of the future.”
All those millions that won’t now be fleeced from hard working tenants’ pockets through totally unjustified “fees”.
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As with all businesses, any loss of income has to be recovered. Where the costs which were attributed to tenants previously have now had to be covered by landlords, landlords have reacted by increasing rents.
Increased rent affect new and existing tenants. On average so far we have seen landlords increase their rents by £25 – £30 a month, this equals £300 – £360 in the first year for tenants to find. Many of these tenants have been in the properties for years with little or no rent increases. Are tenants saving money? No, clearly not, they are, over 3 or 4 years probably paying 3 or 4 times more than fees paid previously. That coupled with many tenancies running periodic as landlords worry about section 21 changes is leading to worry and insecurity amongst tenants.
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……and don’t forget those tenants with a pet now having to pay more rent because of the so called reforms. At least before if they left the property in a good condition they got their bond back! Ridiculous state of affairs for landlords and tenants alike.
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“……and don’t forget those tenants with a pet now having to pay more rent because of the so called reforms.” – No estate I’ve had would allow the privilege of having a pet. Most slam down on it immediately as they fear the damages.
“At least before if they left the property in a good condition they got their bond back!” – I left my previous flat in perfect condition and the estate agent slammed me £100 for an “exit check” agency fee, on top of a £50 click of a button contract renewal, and £250 for a credit check that costs a few quid. I notice all the, presumably, agents on here desperately trying to pretend agency fees were in some way good, but they were fabricated to rip people off.
You must now deal with the backlash. I’m pushing legal action against a former estate agent to get the money back they stole from me. This is what happens when you cheat people.
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Over a third of the properties we manage have pets. Your experience is not true of many agents. We have never in 20 years charged tenants any kind of exit fees. Sadly some agents give the rest of us a bad name and those kind of fees you were charged are the reason for the TFB.
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“As with all businesses, any loss of income has to be recovered.” – Except agency fees were fabricated to con tenants out of money as the industry exploited the housing crisis. So what you’re saying is another way to con people out of money has to be dreamt up. This is why people just love estate agents!
“Where the costs which were attributed to tenants previously have now had to be covered by landlords, landlords have reacted by increasing rents.” – Not all of them, in fact I’ve seen quite a lot resist the requests from estate agents to stick the rent prices up. Additionally, many landlords also didn’t know that the estate agents they used were even ripping off their tenants.
“Increased rent affect new and existing tenants. On average so far we have seen landlords increase their rents by £25 – £30 a month, this equals £300 – £360 in the first year for tenants to find.” – My rent hasn’t gone up. If they try I’ll move somewhere cheaper as I now don’t have to pay agency fees. Then that’s the loss of a good tenant and the cost of finding a replacement. :o)
“Are tenants saving money? No, clearly not, they are, over 3 or 4 years probably paying 3 or 4 times more than fees paid previously.” – Again, at present I’ll be saving money as I won’t be cheated out of money my immoral estate agents driven be arrogance and greed.
Just a note as well, this is from a recent Guardian article – rent increases are: “Branded by one landlord as ‘not in the spirit of the law'” – Landlords can also find agents that aren’t rip off agents, as it’s easier for tenants to shop around now without being conned by immoral estate agents.
The industry has fabricated “charges” to con people out of money and must now deal with the backlash.
Deal with it. Further attempts to greed their way into more money will result in more campaigns to ban them. Estate agents will not win. :o)
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Hello James the tenant! Suck it up buttercup, you’ll pay twice as much when the rent is increased.
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And we wonder why we are disliked as an industry…
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Yeah, I had a similar response from an old estate agent when I challenged them about the rip off, thieving practices that have been in use. Intemperate attitudes appear to be the industry norm. “you’ll pay twice as much when the rent is increased.” – The reality is more complex. Not all landlords will agree to rent increases. Additionally, tenants have more flexibility. If anyone tries to shift my rent up I’m moving out to somewhere cheaper. Simple. Enjoy funding getting someone else in!Additionally, in Scotland and Ireland after their tenants fees came into effect thieving estate agents had to offer full refunds. I’ll be pursuing that vigorously in the UK to force agents into handing the money they’ve conned out of people back. Suck it up, buttercup, as the saying goes. Plunging profits, a struggling industry, post-Brexit economic slumps to look forward to. Estate agents can try to squirm their way out of accountability on this one, but there will be a further backlash to any more thieving antics. Have a nice day. :o)
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I hear pizza express won’t charge tenants for food Any more. It doesn’t cost anything to make pizza and pay rent either apparently .
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Hi James
We used to charge tenants £120 and a £30 renewal fee totalling £150
We have increased all rents by a minimum of £50 per month totalling £600 to compensate for the fee ban
Shall I continue the maths or can you now see how tenants are considerably more out of pocket.
My landlords are happy as they earn more and I have increased my charges slightly so im covered.
****** idiots keep harping on about tenants being better off have no idea on how hard we work for them and yet they will be the ones who are paying more
Don’t let the door hit you on the **** on the way out of your rental property James xx
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“We used to charge tenants £120 and a £30 renewal fee totalling £150” – No, estate agents conned them out of that money. Ripped them off. Cheated them out of money due to arrogance and greed. That’s why the practices are now banned. The estate/letting agent industry exploited the housing crisis to slam people who can’t afford a home so you could pocket more funds. That is vile behaviour. “****** idiots keep harping on about tenants being better off have no idea on how hard we work for them and yet they will be the ones who are paying more” – I wouldn’t count ripping tenants off as “working hard for them”. For years the industry got away with stealing peoples’ money and even lobbied against the tenants fee ban to delay it, such was the desperation to continue doing so. The estate agent I had charged me £50 for a “contract renewal”, the click of a button. I fail to see how that’s working hard. Neither is the £250 I was slammed for on a credit check that costs a few quid. This situation has come about due to a lack of morals and the corrupting nature of greed. But tenants are better off. I can now move flat without getting slammed with £300+ in rip off fees. If anyone tries to shift my rent up, I’ll move somewhere cheaper. Not all landlords will agree to stick rental prices up, too. It’s also with great delight I read this news story and see your industry is struggling. Great news. You’ve brought this on yourselves. Good luck with that. :o)
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“The optimism of letting agents despite the Tenant Fees Act 2019 and proposed repeal of Section 21 may come as a surprise to some, but the lettings industry has always been agile, able to adapt to legislative change and industry shifts.”
No, it’s always demonstrated an ability to be immoral, highlighted over the last few years with agency fees that were designed to exploit the housing crisis and cheat tenants out of their money. That has further exacerbated the decade of austerity and poverty crises the nation currently labours under, driving more people into homelessness and ensuring more and more people have to battle poverty.
The industry is vile and deserves every hit it gets.
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