Landlords Ease Impact of Tenant Fee Ban by Raising Rents
Buy-to-let rents are going up so landlords can cover letting agent costs when a tenant fee ban started in 2019, claims a property expert.
Tenants have seen rents rise at the fastest rate for three years - from an average of 3.3% to an average of £942 a month in the year to the end of March 2019. The figures are distorted by London rents, which increased by 2.8% in the year to an average of £1,613 a month.
Rents for the rest of the UK, excluding those in the capital, are an average of £782 a month, according to tenant referencing firm Homelet, which monitors and reports monthly rent changes.
“The acceleration we’re seeing in agreed rental values comes as no surprise,” said chief executive Martin Totty.
“While the Tenant Fees Act aims to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.
“Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property.”
A new law in England stops landlords and letting agents from charging upfront fees when a tenancy starts or renews. Scotland already has a similar ban, and one is expected to be in Wales in the autumn.
“Landlords may recover the additional cost burden they face by edging up rents,” said Totty.
“This will require current high levels of employment and real wage growth being sustained. Tenants and landlords could get what they want – tenants are relieved of the one-time up-front burden of fees and landlords meet these costs and recover them over time via gradual increases to monthly rents.”
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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.