"Providing a simpler path to professional advice and a stronger education process for landlords and tenants will ultimately help the private rented sector become a more sustainable one"
It also served to limit the levels of security and holding deposits – with most security deposits capped at five weeks’ rent and holding deposits at one week’s rent. This move represented one of the biggest modifications to happen to the lettings industry for quite some time, with research suggesting that this Act was likely to cost landlords somewhere in the region of £83 million in the first year alone.
So, we are now almost eight months down the line from this announcement and the question remains how much of an impact has this had on tenants, landlords and the market in general?
Tenants
It was previously the case that England's five million private tenants faced various unavoidable fees every time they moved or renewed a tenancy. As such, these changes were widely lauded as a victory for tenants and following the implementation of the Act on the 1 June 2019 there was a slight surge in tenant demand. This demand has steadily increased over the rest of the summer months, through autumn and into the winter months.
Landlords
There is no getting away from the extra burden this act placed on landlords and the knock-on effect on rents. According to research from Just Landlords, almost a quarter (24%) of landlords surveyed believe that the Tenant Fees Act 2019 will continue to have the greatest impact on the market in 2020. In addition, 27% said they might not even be a landlord by 2021 and almost a third of landlords (31%) reported that they have more worries than they did 12 months ago, with 28% claiming that owning a rental property is “very stressful”.
Rent increases
When commenting on ARLA Propertymark’s latest Private Rented Sector report – which highlighted that the number of agents witnessing rent increases remained at 32% in December – David Cox, chief executive at ARLA Propertymark, said: “Since the tenant fees ban came into effect, our data shows that rents reached an all-time high last year.
“While we have seen a slight drop in the number of agents witnessing landlords increasing rents since then, overall rents remain high and now it seems that tenants are finding it harder than ever to negotiate a reduction in rent.”
Having a private rented sector which is attractive for both tenants and landlords remains a tough ask. This needs a collective approach which has to begin at the highest government level and filter right through to tenants who are assessing their property-related futures – via a good, professional advice process.
Let’s also remember that there are landlords out there who are still blissfully unaware of how recent regulatory and tax reforms are affecting them and their portfolios. Meaning that providing a simpler path to professional advice and a stronger education process for landlords and tenants will ultimately help the private rented sector become a more sustainable one for all links in this chain.
