The government’s proposed ban on letting agent fees will cost tenants who stay in properties the longest potentially hundreds of pounds, according to research by ARLA Propertymark and Capital Economics.
Letting agent fees account for around a fifth of letting agents’ revenue. And they could be banned outright when the government publishes its consultation on the matter meaning that agents will need to pass the costs onto landlords through higher agents’ fees.
David Cox, chief executive of ARLA Propertymark, said: “The government’s Autumn Statement announcement that it plans to ban letting agent fees was the third big blow in as many years for agents.
“Our findings show that landlords are likely to raise rents as a result of the ban on fees. Those tenants who move least frequently, which tend to be lower income families, will be worst hit by rent rises.”
The research outlines that two in five landlords (41%) expect they will need to pass on a portion of the inflated costs to tenants.
Long-term tenants will reportedly be hit the hardest as those with tenancies of 10 years or more will lose out by £755, as opposed to those who move every six months who will gain £4,463 over a decade.
Cox added: “This is ironic and shows that there will be unintended consequences to what, in effect, is a crowd-pleasing, populist policy.”
The research also highlights job losses, with an estimated 16,000 jobs being at risk if letting agents take the full hit of the letting agent fee ban.
Some coping mechanisms landlords would take include not buying anymore rental properties (27%) selling some rental properties (20%) according to the study.