In June 2019, the Tenants Fee Act came into effect. In short, this legislation made it illegal to charge unfair additional fees, including administration charges, to the tenant(s) when moving into a new property or renewing a contract. As Barnes-based letting agents, we heard ranging opinions relating to the matter. Now the dust has settled, we are revisiting the subject to see how the ban has benefited both landlords and tenants.
An array of factors affect the rental market. It’s difficult to pinpoint a single regulatory change and claim with confidence how it has impacted the relevant parties.
However, in this blog, we look at the wider context of the tenant fee ban, analysing from a neutral position.
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Support for the tenant fee ban grew for many years before the legislation came into effect, so it didn’t come as a surprise. The calls for such action came from groups that supported tenants. Naturally, as a result, the tenants themselves have seen benefits from the new regulations.
Be it in Barnes or any other location, renters had to pay fees whether they stayed put and renewed or moved into a new home. Over only a few years, tenants were paying thousands of pounds for referencing, inventory checks and other administrative tasks.
As any letting agents will confirm, one of the most beneficial aspects of the Tenants Fee Act from a renter’s perspective has been the capping of security and holding deposits.
New information released in January 2020 outlined that being a tenant is now more affordable. Since 2016, the proportion of income spent by tenants on rent has decreased. To compare, in 2016, the average tenant spent 32.64% of their earnings on rent. In 2019, it fell to 30.64%. The most cited causes include lower property deposits and higher wages.
In reality, rents in Barnes, London and across the UK have actually risen over the last decade. It’s other changes that helped to make them more affordable.
Some letting agents and industry experts predicted that landlords might raise rents in direct response to the deposit cap and tenant fee ban. However, these predictions haven’t come true.
This is where further nuances of the argument appear. Yes, tenants are paying a smaller proportion of wages on rent but, overall, rents continue to rise. In this respect, then, the change still benefits landlords.
Letting agents in Barnes, across London and throughout the UK heard concerns from landlords ahead of the ban. These worries primarily focused on reduced profits because of the changes, something that would lead many to reassess their involvement in the rental market.
Rents were already at an all-time high, and this hasn’t changed. While there has been a small drop in the amount of landlords raising rents, it’s also more difficult than ever to negotiate a reduction.
At Trust Milo, our letting agents in Barnes and the surrounding areas share the belief of many other professionals in the industry: each landlord and tenant should establish a positive relationship in their own right. In the wider context, legislative changes in the future will hopefully prove equally attractive for both landlords and tenants.
Our team works closely with landlords and tenants throughout South West London, so we are always happy to help with any rental market requirements.