Tenants’ fees ban will hit poorest areas hardest
Wednesday 07 November 2018
The upcoming ban on tenants’ fees could impact most on the poorest areas of the country, a new analysis of 30,000 tenancies by PropTech firm Goodlord suggests.
The London-based property technology company studied the tenancies processed through its software platform for letting agents so far this year and found that tenants moving home were required to have on average £3,039 available per property.
This includes the first month’s rent (£1,092), security deposit (£1442), tenant fees (£209) and a refundable holding deposit (£296).
Tenants in London needed the highest amount upfront per property at £4,347, whereas areas outside of London required tenants to pay on average £2,324.
In 2019, tenants will no longer be required to pay the average £209 in fees for any administration tasks letting agents carry out to facilitate their move as part of the proposed bill.
However, tenants will still face normal annual rent increases of approximately 1.7 per cent, meaning the average rent will likely increase to £1,111 per month.
If the Bill is passed and the ban takes effect, Goodlord calculates that the average maximum security deposit could be £1,534 and refundable holding deposit £256 – meaning the total potential amount a tenant would need to move home next year would be £2,942 - only £97 less than in 2018.
Goodlord also found London tenants could save the most - an average of £183 per property while tenants in the North could pay an extra £100.
Goodlord CEO Tom Mundy said: “Our industry needs regulation that doesn’t penalise good letting agents, promotes sustainable rents for tenants and gives landlords peace of mind.
“Current government legislation is making it harder for this to be the case and in some cases the proposed tenant fee ban is making it even more costly for the people it’s trying to protect.”
The Tenant Fees Bill that will ban most charges set by landlords and letting agents to tenants in England reached the committee stage in the House of Lords this week.
The Bill was scrutinised at the Lords grand committee, as part of the process of introducing a ban on letting fees and the majority of other upfront fees payable by tenants to rent a property in England.
The proposed new law will also lead to a cap on the amount of refundable security deposit a tenant would be required to pay to the value of six weeks’ rent and cap the amount of holding deposit a tenant could be required to put down to secure a property to the value of one week’s rent.