Rents could rocket if tenants stop paying charges

Rents in the private sector could rise by as much as 15% if pressure to remove administrative charges from tenants is successful, warns the Association of Residential Letting Agents.

The charges currently borne by tenants include the shared costs of reference checks and a proportion of the cost of tenancy agreements and inventories.

Nearly 500 ARLA member offices responded to a survey carried out in November following renewed pressure from consumer groups to outlaw administrative charges in the recent Housing Bill.

More than a third (36%) believed there would be no change in rent levels if all costs were borne by landlords.

However, the same proportion said rents would have to rise by 5%.

A further two out of 10 said rents could rocket by as much as 15% if landlords were asked to bear all extraneous costs of letting.

There were significant regional differences of opinion. Half of all ARLA member letting offices in central London thought there would be no increases.

However, 38% of all agents in the South-East said rents would rise and a quarter of all letting agents questioned outside the Home Counties thought large rent increases were inevitable if tenants no longer contributed to these charges.

Adrian Turner, chief executive of ARLA, says: “There has been a lot of talk of administration being free to tenants.

“We have always thought it would be potentially damaging to tenants, the private rented sector and the economy as a whole if government fails to resist pressure to outlaw these charges.”

However, Turner says that with such a weight of professional opinion pointing out the inflationary impact of making landlords cover all costs for individual tenants, a change in the present system is unlikely.

Asked if landlords would be prepared to absorb these costs, 72% of the ARLA letting offices surveyed believed they would refuse.