Landlords to stand by agents in wake of tenant fees ban

"This research is reassuring for agents in some ways as it shows the majority of landlords will retain their services even if they have to pay more"

The research, from UKALA, shows that eight in ten landlords (79 per cent) think their letting agent will increase their fees as a result of the proposal to ban charges to tenants, as announced in the Chancellor’s Autumn Statement last year. However, just nine per cent of landlords say they will part ways with their agent if their premiums rise.

The ban is criticised by UKALA who argue that affordability in the private-rented sector cannot be addressed by preventing agents from charging for legitimate business services, and that the costs will eventually be passed on to tenants in the long-term.

In response to a potential increase in agent fees following a ban, the research shows:

    40% of landlords said they would increase rents to cover the cost
    22% said they would look to shop around for a better deal
    13% would attempt to negotiate or refuse to pay
      9% would pay the additional fees
      9% would leave their agent
      7% were unsure

The findings contrast with recent research from UKALA which showed that almost half of landlords (47 per cent) would forego the services of their letting agent if their profits fall following the changes to landlord taxation from April (2017).

Both sets of research were undertaken by UKALA in conjunction with the National Landlords Association (NLA), in order to better understand the impact that recent government policy decisions will have on the professional lettings sector.

Richard Price, Executive Director of UKALA, said: “UKALA agents strive to provide a premium service which represents excellent value for money, but the ban on tenant fees could leave hundreds of professional businesses with no other option than to increase fees for their landlord clients.

This research is reassuring for agents in some ways as it shows the majority of landlords will retain their services even if they have to pay more – which is testament to the essential role that agents play. However, one in ten landlords say they will turn their back on their agents if fees are passed on, and our previous research shows that a significant number will do the same if the impending tax changes take hold and erode their profits.

It leaves a tricky path ahead to navigate for agents as they’ll need to balance out the need to cover their costs in the wake of a ban on tenant fees without alienating their primary customers and source of income”.