Private renters in England have collectively saved an estimated £889,000,000 in letting agent fees since their use was made illegal by the 2019 Tenant Fees Act, research conducted by Generation Rent has found.
In the year before the ban came into force, 45% of the 1.05m tenants who moved home were charged fees, at an average of £269 per household.
Generation Rent calculated that, had the fees continued at this rate, tenants would collectively have been charged hundreds of millions of pounds more when they moved, every year.
After a successful Generation Rent campaign, the Tenant Fees Act was introduced to England on 1st June 2019, and ended or restricted a number of unfair charges, including non-refundable fees at the start, renewal and end of tenancies, and capping deposits at five weeks’ rent for most tenancies. Fees are permitted in only limited circumstances such as altering the terms of the tenancy, replacing lost keys or late payment of rent.
In the run-up to the Tenant Fees Act coming into force it was warned by some in the property industry that the banned fees would be added to rents. However, this did not appear to have happened. Rent inflation increased slightly in 2019, but only in line with wage growth, before falling in 2020
On this anniversary of the Tenant Fees Act, Generation Rent have also conducted research surrounding tribunal cases under the Act. There has been a total of 68 Tenant Fees Act tribunal cases since it came into force six years ago.
Almost three quarters (72%) returned a positive outcome for the tenant, meaning that at least some of the contested sum (or, in the case of 62% of all cases, all of it) was returned to the tenant.
The most common dispute involved in the Tenant Fee rent tribunal cases surrounded the failure of landlords or letting agents to return holding deposits, typically when the tenancy did not go ahead, which accounted for 65% of all cases.
This anniversary of the Tenant Fees Act comes as another piece of legislation, the Renters’ Rights Bill, is progressing through Parliament. As well as ending Section 21 ‘no fault’ evictions, the Bill will also bring in a number of changes to save renters money, such as banning multiple months of rent upfront, limiting the number of rent increases a landlord can impose on a tenant to once a year, and extending the amount of time a tenants can claim back rent in a Rent Repayment Order from one to two years.
Chief Executive of Generation Rent, Ben Twomey, said: “Before they were banned, fees gave letting agents a licence to print money, with some agents charging as much as £800 to start a tenancy. Renters had little option but to pay the fees, which also made it difficult to compare the true cost of renting a home.
“Since it came into force, the Tenant Fees Act has saved renters nearly a billion pounds, and simplified the process of finding a home. But there is still much more to do to make renting more affordable and reduce unwanted moves. We want to see more positives like the Tenant Fees Act, and are committed to fighting to rebalance the system, and get more money back into renters’ pockets – where it belongs.”
Notes
We have calculated the figures using government data from the English Housing Survey here.
Please find a summary of the Tribunal cases and admin fees figures here.
