Letting agents in England have lost almost £900m since agency fees charged to tenants were scrapped six years ago, fresh research shows.
Prior to the introduction of letting-agent fees in 2019, almost half – 45% – of tenants were charged fees when renting a new property, at an average of £269 per household.
Generation Rent estimated that if the fees had continued at this rate, new tenants would have been collectively charged £889m.
Since the introduction of the Act, non-refundable fees at the start of a tenancy have been abolished, along with renewal and end of tenancies, and capping deposits at five weeks’ rent for most tenancies.
Generation Rent also looked into tribunal cases under the Act, and found there had been 68 cases since it came into force six years ago, with 72% providing a positive outcome for the tenant, meaning at least some of the contested sum was returned. In 62% of cases, tenants received the full amount back.
Some 65% of cases were linked to the failure of landlords or letting agents to return holding deposits, typically when the tenancy did not go ahead.
Ben Twomey, chief executive, Generation Rent, said: “Before they were banned, fees gave letting agents a licence to print money, with some agents charging as much as £800 to start a tenancy.
“Renters had little option but to pay the fees, which also made it difficult to compare the true cost of renting a home.
“Since it came into force, the Tenant Fees Act has saved renters nearly a billion pounds, and simplified the process of finding a home. But there is still much more to do to make renting more affordable and reduce unwanted moves.
“We want to see more positives like the Tenant Fees Act, and are committed to fighting to rebalance the system, and get more money back into renters’ pockets — where it belongs.”
The naivety of Generation Rent does their “audience” no favours.
I shouldn’t think letting agents have “lost” any money since the introduction of the Tenant Fee Act. They have simply rebuilt their business models.
Yes, tenant fees have stopped being paid directly by tenants, but these costs have simply, and in the main, been switched to landlords and, in turn have been more than passed on to tenants in the vicious circle of increasing rents and shortage of supply.
Plans under the The Renter’s Rights Bill (note Renter’s Rights not Landlords Rights) will undoubtedly do similarly.
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Spot on Michael. Meddling Generation Rent (and Shelter) have caused more harm than good in the private rental sector. Clearly they’re proud of the outcome. Increased rents and shortage of supply.
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There again with Landlords exiting the market coupled with competition amongst agents offering incentives or cheaper fees daresay an agents income likely to be further reduced.
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And luckily for them, rent hasn’t risen at all to compensate. Top work guys 10/10
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I’m concerned about his maths… One minute its £900million and then its nearly £1billion?
There should never have been a ban on the fees at the start of a tenancy, a CAP, certainly, I think any halfway-moral Agent would agree that charging £800 on top of the rent and deposit was grossly unfair, but as referencing companies don’t provide their services for free, they need to be paid! £50 per adult for referencing would have been fine, and an Inventory is part of the service for the Landlord anyway so no need to charge for that.
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When the fees were paid by the tenant it stopped tenants from applying for property they knew they could never afford and were honest regarding their rental background. The deposits were necessary and someone has to pay. Of course, eventually this cost will be passed to the successful tenant.
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And that’s why I said a cap was better than a ban. The applicants still had to make a financial stake in the transaction, but £800 with no guarantee you wouldn’t have to pay it again in 6 months? No, that was grossly unfair.
I’ve had some people question getting their holding deposit back when I have found rent arrears or CCJ’s that they claimed either a) were wrong but couldn’t prove or b) they didn’t know about…
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