As we look forward to 2018 every estate and letting agent has at the forefront of their minds the issue of the tenant fee ban that is due to be enforced. The draft bill proposes that tenants in England will no longer have to pay anything other than rent and a refundable deposit. As yet there is no set date, but agents must prepare to manage the impact on their businesses and mitigate their loss of revenue.
The aim of the draft bill is to improve transparency for tenants when looking to rent a property, as some agents and landlords add hidden costs which make the process more financially challenging for tenants than they first expected. The chancellor, Philip Hammond, estimates that 4.3 million households pay an average of £223 each every year in tenant fees, which are paid for arranging tenancy agreements, references, credit checks and right to rent confirmations.
The Consumer Protection Act 2015 already imposes several obligations on letting agents and landlords which require them to display all fees on their websites and in branches with detailed explanations of what these fees cover.
In 2012 Scotland began to enforce their existing ban on tenant letting fees which forced agents to find a way of making up their lost income for services they were still legally obliged to provide. One option was to increase their landlord fees, which in turn meant that some landlords had to increase their rent in order to meet the demands of their mortgage. Some unscrupulous agents continue to charge fees to their tenants in order to make their rents look more competitive. Finally many agents took the decision to lower the quality of service that they provide their landlords and tenants in order to maintain their cashflow.
Small agencies may struggle to survive because the revenue they generate from tenant fees forms a pivotal part of their business model. So-called 'accidental landlords' and those relatively novice property investors who have tight profit margins may find that any increase in fees could make their venture seem less attractive. The lack of profit could force these smaller-scale landlords to sell, whilst those landlords with larger portfolios may have enough leeway in their finances to absorb the increase in fees and continue their business.
At Thorgills we have spent the last ten years building a business based on high quality service that is convenient and consistently outstanding. Having carefully considered our options over the last year since the tenancy fee ban was first mooted in Parliament, we have concluded that we do not want to decrease the value of service that we provide our tenants and landlords, nor do we want to increase fees in other areas of the business to compensate. Thorgills provides a premium product which puts landlords, as our clients, first and we seek to deliver the very best customer service possible to our tenants, as they become our neighbours. We are able to offer these services at the rate of fees we currently charge and we are fiercely protective of the level of customer service that our teams supply. As a result, depending on the exact content and restrictions of the final bill, at Thorgills we will maintain the quality of service for which we are known.
Average marketing prices for October (based on Zoopla data)
|Sales||1 Bed||2 Bed||3 Bed||4 Bed||5 Bed|
|Chiswick||£ 445,830 (-1%)||£ 649,557 (-3%)||£ 911,249 (-1%)||£ 1,428,832 (-2%)||£ 1,743,697 (-3%)|
|Ealing||£ 429,063 (-2%)||£ 595,479 (-)||£ 775,022 (-2%)||£ 1,054,751 (+2%)||£ 1,375,375 (-2%)|
|Brentford||£ 358,393 (-1%)||£ 536,866 (-)||£ 741,585 (-1%)||£ 764,994 (-3%)||£ 885,475 (+10%)|
|Hammersmith||£ 611,568 (-2%)||£ 1,010,507 (-)||£ 1,616,064 (-)||£ 1,184,372 (+7%)||£ 1,808,333 (-3%)|
|Isleworth||£ 330,479 (+2%)||£ 430,588 (-1%)||£ 602,569 (-1%)||£ 787,550 (-6%)||£ 1,434,770 (+7%)|
|Lettings (pcm)||1 Bed||2 Bed||3 Bed||4 Bed||5 Bed|
|Chiswick||£ 1,577 (+1%)||£ 2,077 (+2%)||£ 2,739 (-2%)||£ 3,998 (-)||£ 4,672 (-3%)td>|
|Ealing||£ 1,280 (+1%)||£ 1,871 (+1)||£ 2,361 (-)||£ 2,713 (+2%)||£ 3,905 (-2%)|
|Brentford||£ 1,439 (-3%)||£ 1,903 (-2%)||£ 2,781 (-3%)||£ 4,136 (-38%)||£ 3,395 (-)|
|Hammersmith||£ 2,211 (+8%)||£ 3,507 (+12%)||£ 5,217 (+9%)||£ 3,475 (-2%)||£ 3,607 (+3%)|
|Isleworth||£ 1,000 (-2%)||£ 1,362 (-1%)||£ 1,742 (-3%)||£ 2,041 (+1%)||£ 3,351 (-)|