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Impact of the Tenant Fees Act

Some 4 weeks after the Act came into force the private rental market is already seeing the negative consequences of the legislation.

The Act came into force on 1 June 2019 but prior to this the industry warned that the consequences would have a negative impact on the rental market. ARLA amongst others warned earlier in the year that rents would rise as agents and landlords sought to recoup their losses on the introduction of this legislation.

The Act sees a ban on fees applied to tenants who are seeking a new tenancy or a renewal of their current tenancy. This of course means that fees that were previously applied to tenants are now being applied to landlords seeking the assistance of a letting agent to secure a tenant.

This of course also means that letting agents are now in a highly competitive market and are looking to limit the impact of the Act on their clients. It has been reported that this includes advising landlords to consider increasing rents to absorb the effects of the charges landlords are being asked to pay which were previously settled by tenants and in some cases increasing rents without asking landlords at all.

It is very early days of course but the fact that rents are rising, in part as a consequence of the Act, (Brexit is also said to be a factor) is not likely to be to tenant’s benefit. It is possible that this is only the short-term impact of the Act and a sharp rise now will be offset by a slowdown later but this remains to be seen.

Published 27 June 2019

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