LANDLORD’S, The tenant fee ban – will it hit your pocket?

A Personal, bespoke estate agency based in Essex

LANDLORD’S, The tenant fee ban – will it hit your pocket?

The tenant fee ban. How will it affect you as a landlord?

So, the Government are on a mission when it comes to lettings at the moment, they have now put into force a ‘tenant fee ban’ bill which comes into force on the 1st June 2019.

So how is this going to affect landlords?

We currently, tenant fees make up approximately 240 million of income according to government figures.

The surprising thing is, there hasn’t been much publicity about it, as a result I have found several landlords asking me lately what is happening with it.

In the past, it is common practice for the Letting Agent or Estate Agent to ask renters to pay a fee before, during and at the end of their tenancy.

This is referencing fees, change of tenancy fees, missed appointment fees, end of tenancy fees, renewal fees and more.

In the past renters/tenants often have to find (often £100’s) for everything from the initial referencing and credit checks through to inventory costs, key cutting with no cap or law on how much can or can not be charged… so providing they “display their fees in the office and on the website” they can pretty much charge what they like.

These fees do differ dramatically depending on the location and particular agent in question, I have heard commonly anything around the £500-600 mark around Essex however last year housing and homelessness charity Shelter discovered a renter in London was charged…. £700!!!!! To top it off this way just an administration fee, of which they were not provided a correct tenancy agreement.



SO, it was clear, agents can charge what they like, so something needed to change.

Under the tenant fee act, landlords and letting agents will only be allowed to charge tenants for

  1. Rent
  2. A refundable holding deposits up to the value of one weeks rent.
  3. A refundable tenancy deposit of up to six weeks rent
  4. £50 for a change/early termination of a tenancy unless you can prove that more costs were incurred.
  5. Utility bills and council tax
  6. The replacement of keys or similar incidents of default by the tenant.

So pretty much everything that was chargeable before, minus anything which had a massive “profit”.

Here are some of the questions ive been asked recently.

Q – Can I charge my tenant for professional cleaning?

A- No, if the tenant damaged the property during their tenancy you may be able to claim some money back from the deposit for this, however you cannot make payments to third parties such as professional services and pass it onto the tenant.

Q – If I charge my tenant after the ban is in place, nothing happens surely, no body will find out?

A – The fee ban is enforced by Trading standard, should you breach the bank then penalties of up to £5,000 could be payable, do it again within a 5-year period and you could find yourself with up to a £30,000 bill OR evening criminal prosecution. To top it off, should you need to repossess the property, you will not be able to until the fees are repaid to the tenant.

So far, it seems to be benefiting tenants/renters, right?… but why is this a problem for landlords?

Well, for years Estate and Letting agents have been profiting massively from these fees (according to Generation rent, on average £404 per tenancy), so if a company rents on average 100 properties a year, that’s £40,000+ of income lost. Which is going to massively effect their profits.

Without correct planning this could mean the agent needs to make redundancies and cut backs which ultimately will affect the level of service they can deliver, OR they find the same incomes elsewhere…. The landlord.


So, landlords are facing being charged more from their agent, that’s on top of the 2016 stamp duty hike, and the withdrawal of mortgage interest tax relief!

This being said, agents will have to work harder to prove their worth to landlords, and landlords naturally are going to be forced to start shopping around to find the best possible deal.

Hopefully their current agent has planned correctly for this ban coming in and will not be passing the loss onto the landlords. However, those more unprepared with only have that one option.

Here were a couple of questions from landlords.

Q – is the fee ban going to apply for all current tenancies.
A – The answer is no, it will only apply to tenancy renewals or new tenancies signed after the tenant fee act is made law. However, after a year the bank will apply to pre-existing tenancies and any tenancy agreement clauses charging fees will become ineffective.

Q – Can’t I just increase the rent to cover the higher fee for the letting agent.

A – Yes, this is an obvious way to go, however hiking up the rent may put tenants off renewing their tenancies and deter new ones as you could outprice your property.

Q – how can I minimise the risk of losing out?
A – the first thing I would do is discuss with your current agent how they plan on countering the fee ban, and what costs are going to be passed onto you. I would then ask for a “fixed” period of management from the agent and lock them into a contract meaning they can increase that cost. One agent that we are aware of is saying they will not increase the rent when the bank comes into force, which is true. But they do aim to increase it 3 months later. Which also means their original statement is true, they are not doing it when the fee comes into place, they plan on it 3 months later. Lock them contracts in.

I would find a more prepared again which is willing to commit to you as much as you can commit to them.

Q – is there any other ways to get my fees cheaper?

A – some agents offer a 12 monthly payment rather than monthly management, and as a result are willing to offer a discount if the fees are paid in the 12-month bundle. If your agent isn’t willing to commit to a fixed period, then they may do if you offer to pay 12 months upfront.

Q – if I want to switch agent, what do I need to do?

A – it should be simple, providing your not fixed into a contract, give notice to your current agent. Find a new one and your new one should then deal with the transition by collecting all paperwork, keys and contact information from your previous agent meaning you shouldn’t need to do anything.


Overall, all the loss of income is most likely going to have to be sourced somewhere, and with landlords being attached regularly and income being targeting, agents will be looking here to make the difference.

A prepared agent will be willing to maintain their service meanwhile locking a fix period which no increase giving you peace of mind of no rises in fees for a period.

An unprepared one with either make cut backs effecting the level of service they can offer, OR they will try and pass the loss onto you, it may not be immediate, but it will be in the foreseeable.

Check the terms of your current agreement with your agent and shop around, if you are not in a fixed period with them it would be worth shopping around to seeing what other offers are around for the service.



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