Landlords and tenants in the St Neots area: How will the upcoming ban on tenant fees affect you?

Wed 12 Jul 2017

•Tenant fees ban confirmed in Queens Speech. 

•Scheduled to be banned within next 12 to 18 months

•Rents predicted to rise as those fees passed to Landlords

•Landlords won’t be worse off – and neither will tenants or agents

The Government used the recent Queens Speech to confirm its intention to introduce a ban on fees that tenants pay when applying for a rental property.This therefore begs the question ‘What does this actually mean for our landlords and local tenants’?

The private rented sector in St Neots forms a large part of the local housing market and recent Government intervention shows this to be the case nationally, and that it deserves greater attention than it has received in the past. We have been in support of the regulation of lettings agents for many years now, in order to bring about better practice across the industry and support growing professionalism within the sector. Nevertheless we do feel that the industry as a whole would have been better served with a fees cap, as opposed to a total ban.

But what do tenant fees actually cover? Isn’t it just photocopying some paper?

As a responsible letting agent, I need to run our business professionally – and this includes covering our costs. According to ARLA research undertaken earlier this year (Association of Residential Letting Agents) it takes an average of 17 hours work by a letting agent, to move a tenant into a property, from initial viewing to collecting the keys. This includes a host of checks prescribed by the Government; including …

•A Right to Rent check (checking legality of being allowed to reside in the UK)

•Anti Money Laundering checks

•Gas Safety checks

•Tenant affordability checks

•Tenant credit checks,

•Smoke alarm / carbon monoxide checks

•Ensuring compliance with the Landlord and Tenant Act,

•Registering the deposit so that the tenants deposit is safe and ring-fenced

•Carry out references detailing tenants employment and accommodation histories

•Undertaking inventory reports, detailing the condition of the property at the start of the tenancy, so the tenant can leave it in a similar state

In addition to the above list, tenant fees can also act as a commitment from the applicant that they do wish to proceed with the reservation of a property. Without this, applicants could feasibly go from agent to agent, reserving a handful of properties without ever proceeding with any of them.

As you would expect, we know all of these details inside out and take our responsibilities very seriously. This is what separates us from the small group of ‘cowboy’ agents that, as with most professions, spoil it for everyone else! 

Unfortunately, we aren’t able to work for free – we run a business and need to turn a profit in order to provide the service that we do. Therefore we feel charging fees for the above list of tasks (and more) is not unreasonable.

So, good news for local tenants?

A ban on tenant fees – this is surely great news for them, right? Well, possibly not.

Short term, this looks like a win-win situation for tenants, however if we look further ahead, this may not be the case.

Firstly it is predicted to take between 12 and 18 months for the legislation to come into being, as an Act of Parliament will be required to implement the change. Secondly, the costs involved in preparing tenancies will need to be met, most likely to be met by landlords, which in turn will be passed back onto tenants through increased rents.

Scotland banned tenant fees in 2012 – what’s happened there?

If you speak to the institutions lobbying for this ban, such as Shelter, they will tell you that the impact on has been minimal. Indeed a blog on the Shelter website states 

“On the whole, the move has been a positive success for Scottish private renters. Independent research conducted for Shelter in 2014 showed that renters, landlords and the industry as a whole has benefited from banning fees to renters in Scotland. It found that any negative side-effects of clarifying the ban on fees to renters in Scotland have been minimal for letting agencies, landlords and renters, and the sector remains healthy. It found that where rents had risen more in Scotland than in other comparable parts of the UK in 2013, it was explained by economic factors and not related to the clarification of the law on letting fees”

But what REALLY happened to rents in Scotland?

However the devil really is in the detail. If you look now, 5 years on (as opposed to just 12 months on), you will see it paints a completely different picture.

According to the CityLets Index (the home of Scottish letting -, rents have risen by 15.3% between Q4 2012 and Q3 2016

If you compare this to ONS figures for the same period in England, you’ll see a marked difference:

•North East 2.17% increase

•North West 2.43% increase

•Yorkshire and The Humber 3.21% increase

•East Midlands 5.92% increase

•West Midlands 5.52% increase

•East of England 7.07% increase

•South West 5.82% increase

•South East 8.26% increase

•London 10.55% increase

Quite a contrast to Scotland, with a 15.3% increase. Indeed in Glasgow this figure stands at 20%, and Edinburgh 28% ( – more than double that of London!

Short term / Long term outlook

With this in mind, we are confident that in the short term, rents in the St Neots and surrounding areas will stay much the same. However longer-term, rents will undoubtedly rise as tenant fees will be passed onto landlords, and subsequently then onto rents. 

So what does all this mean going forward?

The current application fee we charge tenants for a single person is £185, or £370 per couple. Looking at our 2016 figures, the average fee received per property was £243. With average tenancy lengths currently sitting at 2 years, we therefore need to find a way to recoup this £243 – which equates to approximately £10 a month.

Along with all our competitors in the local area, Lovett Sales & Lettings will have to consider one option being to pass some of this cost onto landlords once the ban takes place. Whilst Landlords can offset some charges against tax, we wouldn’t want them to be unreasonably out of pocket. As such, we are keen to engage with our Landlords on this matter and gain their input on this issue, whilst looking at a range of options.

We are going to be holding a landlords forum in the coming months, which will provide our clients with the opportunity to have their say. If you are a Landlord of ours, you’ll receive an e-invitation in the near future. 

To conclude, in the light of the announcement in the Queen’s speech what does the future look like? Well, for agents that charged astronomically high tenant fees, they will undoubtedly have a problem. However at Lovett Sales & Lettings we believe we will be able to offer our valued customers, both landlords and tenants, the same high level of service as we have previously.

"Very good agents to work with, have been dealing with them since 1998 and have always received very good service."
Gulbarg Mann

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