Why the ban on letting fees is a good thing
Of course it’s a good thing. With such a shortage of housing supply, tenants have little power in the market and can find themselves in situations where they’re being taken advantage of. Any changes to increase fairness for tenants are welcome, and removing unnecessary letting fees is a step in the right direction.
At Property Partner, we only use letting agents who charge fair fees to tenants, so this ban will have little impact. We have even removed an agent in the past (who was already acting for the previous landlord), after discovering that they would be charging unfair fees.
Keeping tenants happy is not only the moral obligation of a landlord, it’s also a good investment. Being fair and keeping tenants happy means that they stay longer. This leads to lower costs (when trying to replace tenants), and fewer void periods. So for Property Partner, this means a steady, stable yield for our investors.
So, let’s look at the potential impact of this ban…
Will it increase rent for tenants?
The actual cost of registering a tenant is minimal, as little as £50. There is no reason for rents to rise. Some letting agents took advantage of desperate tenants, and their profits will be rightly cut. Letting fees for tenants were banned in Scotland in 2012, and there is no evidence that rent has risen beyond the expected levels.
So, will the extra costs be passed on to Landlords?
Again, there should be no huge impact for Landlords who used responsible agents, charging fair fees. Absorbing a cost of £50 will not have a meaningful impact on our business.
Will this push more BTL landlords out of the market?
Again this is unlikely, as the cost should be minimal for responsible landlords using responsible agents. More relevant to this are the recent tax and regulatory changes that have hit individual buy-to-let investors, making it harder for new landlords to enter the market. This is bad news for the supply of rental stock, and could push up prices.
However, the government has now made moves to counter this. Hammond’s commitment to invest in housing across a ‘wider range’ of stock could be a significant boost to the rental sector in the longer term. There will also be a call on professional and institutional landlords, such as Property Partner, to fill this gap.
Ultimately, building more homes will target the root cause of the problem and ensure there’s no room for those looking to take advantage of tenants.
The future of the rental market?
We’ve already discussed the moral and monetary advantages of treating tenants well, offering fair rent and professional management services. However, the story goes further. At Property Partner, all tenants have the opportunity to invest in the homes they rent. They can own a little piece of the place they call home, and effectively earn cash back from the rent they pay, as well as benefitting from property price movements. Some of our tenants already do – and you can do the same. Take a look at the properties on our marketplace, and increase your ownership of the UK rental market: