During the Autumn statement, Philip Hammond declared that Letting Agents would no longer be able to charge tenants fees for renting a property out. On the surface, this may seem like a good idea as charges range from reasonable to ridiculous.

The question now is how will letting agents approach landlords to broach the subject. Landlords typically would negotiate in my experience, probably a bit harder than tenants would regarding fees.

I think letting agents will start to do one of the following going forward, certainly for new instructions:

  1. Absorb the cost
  2. Charge landlords an admin for any new tenant.
  3. Charge landlords a higher management fee to look after their tenants
  4. Charge both an admin fee and higher management charges (albeit, both at reduced amounts)

If Option 1 happens then this will result in some agents potentially dropping quality of service or offering a reduced service. For other agents it may just mean being realistic about their own costs.

Options 2-4 will result in some form of negotiation between agents and landlords. Landlords typically would negotiate for better deals as it is their business, whereas tenants may not feel as comfortable or be aware that they could argue costs. In other cases competition for property may result in a take it or leave approach by letting agents, giving tenants no option.

The good news for landlords is that there are enough agents out there to be competitive, so even if the agent you are currently working with is being unreasonable, you can always go elsewhere or even do it yourself and save even more.

The reality is that I think a compromise will be met where letting agents will look to recoup some of their costs, but not at the same level, especially for those that were expensive to start with.

If this is the case then landlords should be able to reduce the impact of rent increases, resulting in a possibly a better deal for tenants.

I would certainly welcome a discussion on this either via this post or contact me via the request a specialist button.