Almost one third of landlords may stop using letting agents if the proposed ban on tenant fees goes ahead, according to new research from Paragon.
Paragon’s latest Private Rented Sector Trends report shows there is widespread concern that a ban on tenant fees will result in an increase in landlord fees.
The Q3 report showed almost three-quarters of landlords (73 per cent) use a letting agent or third party to let some or all of their property. However, 30 per cent of these property investors said they would be discouraged from doing so if the landlords fees were to increase.
In November, last year the government announced plans to ban letting agents fees paid by tenants. But 12 months on there is still no date for when this new legislation will come into effect, creating further uncertainty in the sector.
Paragon’s managing director of mortgages, John Heron says: “In the midst of ongoing turbulence in the private rented sector, landlords have already had to navigate through challenging policy changes, and rethink their strategies accordingly.
“An increase in landlord costs as a result of a ban on tenant fees would be the latest in a succession of challenges and it is unsurprising to learn that a substantial number of landlords might consider altering their approach to letting out their properties in that circumstance.”
The report – which was based on interviews with a panel of over 200 experienced landlords – looked at the fees charged by landlords who do not use a third party to let their property. Of the 27 per cent of landlords who let directly, eight out of 10 (84 per cent) do not charge any tenant fee.
Of those that do the most common are for credit checks, compiling an inventory, and references.
The report also asked about rental deposits. More than two out of three landlords (68 per cent) said that up to two months’ rent was reasonable. Of these half (46 per cent) said two months rent with 22 per cent taking just one month’s rent as a deposit.