Home Landlords Tenant Fees Act leads to rent increase

Tenant Fees Act leads to rent increase

by Joe Green

The Tenant Fees Act, introduced earlier this year, restricts the amount of fees a tenant can be charged during the letting process. Applicable to all new tenancies or renewed tenancies signed on or after the 1st June 2019. It sets out the extent of what can be charged to tenants legally. In essence, it bans most letting fees and caps tenancy deposits for renters in England.

Permitted payments now only include:

  • Rent
  • Tenancy and Holding Deposits – although these are now capped.
  • Payments associated with early termination of the tenancy – when requested by the tenant.
  • Payment on variation, assignment or novation of a tenancy – capped at £50 or reasonably incurred costs.
  • Payments for council tax, utilities, TV and communication services.
  • Default payment for late payment of rent or lost key. 

Anything other than this is now prohibited.

The effect on landlords and agents

This move will significantly reduce the income of some letting agents and landlords who had previously charged tenants admin fees, referencing fees and check-in fees, among others.   Because of this, it was feared that the cost would simply be passed on to landlords or result in higher rental rates for tenants. It is calculated that landlords face an additional cost of £275 per tenancy due to the Tenant Fees Act.

A recent report appears to confirm this theory, as the Royal Institute of Chartered Surveyors (RICS) found that in May 2019, the month before the ban came into effect, rents across the UK increased. Data shows that in the months leading up to May 2019, rent increased by 0.9%, the highest annual growth since 2017.  It is forecast that landlords will on average increase rents by £103 per year in order to mitigate increased costs they are responsible for.

The Act in effect increases the costs of replacing tenants. It is clear that the majority of landlords will experience a drop in income, either through increased letting agent costs, or from not being able to charge tenancy fees to cover the time investment it takes to begin and end a tenancy.

The effect on student landlords and agents

Student landlords may be hit most of all, as tenants in their properties change most regularly. It is therefore possible that more landlords will choose to self manage to avoid the increasing costs from letting agents and to try and minimise their potential losses. It is vital that student landlords maximise the performance of their properties, by ensuring they are let at an appropriate level and that void periods are minimised.


The Guardian. 2019. Accessed 4th November, 2019, from https://www.theguardian.com/money/2019/jun/01/rip-off-letting-fees-are-finally-banned-what-will-happen-now

Simply Business. 2019. Accessed 4th November, 2019, from https://www.simplybusiness.co.uk/knowledge/articles/2019/06/tenant-fees-ban-will-see-rent-increase/ 

Simply Business. 2019. Accessed 4th November, 2019, from https://www.simplybusiness.co.uk/knowledge/articles/2019/06/how-tenant-fees-ban-affects-rents-for-uk-landlords/

Gov.uk. 2019. Accessed 4th November, 2019, from https://www.gov.uk/government/collections/tenant-fees-act

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