What impact will the Draft Tenant Fees Bill have on the letting industry?

The Letting Fees Draft Bill has been published, and it’s clear that the impact on the letting industry will be changed greatly should the bill eventually pass into law.

The change in the law would mean that it’s only possible for renters to be asked for their rent and the deposit on the let. Other fees would be banned, and heavy fines would be levied against letting agencies and landlords that are found to have breached the government’s new rules. Here are some of the most important points to consider regarding the proposed changes to the law regarding letting fees.

Proposed Fines

The fines that have been put forward as part of the bill include £5,000 for agents found breaking the law beyond reasonable doubt. However, if there are two or more examples of an agent breaking the law within a space of five years, fines of anything up to £30,000 could be handed out. Alternatively, a criminal prosecution could be pursued. The proposed fines will be open to appeal at a first-tier tribunal. Some have argued that the size of the fines is excessive, and problems could be caused if they’re not handled fairly.

Rent Increases and the Impact on Tenants

One of the most worrying aspects of the changes is the impact it could have on tenants. Many argue that tenants will receive no long-term benefit from the changes, or would be highly unlikely to. It’s possible that some landlords will simply choose to pass on the extra cost to them by increasing rents. If that’s what happens, it will be tenants that suffer from the changes. There are no guidelines in place or proposals for how this could be prevented, leaving tenants open to higher living costs each month. It could compound the problem it seeks to solve.

Potential Job Losses

There is also the issue of job losses in the letting industry. This is a complex matter that’s hard to predict, but various senior industry figures have mentioned the potential for job losses numbering around 4,000. Admin work will become a major headache for people working in the letting industry, and it’s feared many could choose to leave for a different career entirely. The extra paperwork and red tape could make it hard to hire new employees too because, all of a sudden, the career will look less appealing to ambitious young professionals.

Landlords Are Already Being Hit by Tax Changes

Recent changes to tax relief laws are already hitting landlords in the wallet. These potential changes in the law, therefore, come at a time when landlords are already thinking about whether they should carrying on letting properties. It could lead to a shortage of rental accommodation. And many people who are already being asked to contribute more than they anticipated in tax could also have their income hit by these new rules. It’s a double hit on landlords, and many in the industry feel this could have knock-on consequences that cause more harm than good.