Although the banning of letting fees brought a collective cheer among the tenant group, there was a lurking worry that the rent would shoulder the brunt. Well, turns out the fear was founded and sooner than everyone expected.

On the 1st of June this year, tenants can no longer be charged with admin fees like credit checks, tenancy renewal fees, and referencing fees. To make up for this loss of income, letting agents forewarned an increase in rental fees.

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Guardian Money discloses that not long after the ban was imposed, a prominent letting agent has sent a letter advising his member landlords to raise their rent by £20 a month in order to counterbalance their expenses and avoid losses. One landlord however countermands that such an act is “not in the spirit of the law” and declares to hold out against the plan to raise the rent. Furthermore, this landlord states that “there is little transparency on how much letting agents actually pay for credit checks, referencing, etc.” and would rather shoulder the cost for the charges.

In the letter, if the agent is “to continue to fully reference and credit check prospective new tenants” if and when the property becomes available, then “an additional admin charge of £200 plus VAT known as a ‘tenancy set-up fee’ will be levied” on the landlord on top of the existing letting fees and extra charges to manage the let. The agent goes further to say that “We are very aware this is a cost which you perhaps have not accounted for and therefore what we propose is a small increase in the monthly rental figure to absorb the effects of this charge. This means increasing your rent by £20 per month, and this is something we will do before we list the property ‘to let’.

The increase in rental fees of course is a direct consequence of the tenant fees ban and agents have warned of the effects beforehand. The £20 increase is an attempt to cover for the losses incurred by the ban, but whether or not it becomes possible remains to be seen.

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