The 2019 Tenant Fees Act has been in force for five years now and, contrary to what market experts predicted at the time, it’s been a success.
The act prevented letting agents and landlords from adding fees to arrange a tenancy. In some cases, these fees totalled £1,000 but the 2019 act means that landlords and agents can only add fees of up to £50, which saves the average renter £400 per tenancy.
Two academics say the Tenant Fees Act is a success
Economists Professor Jan David Bakker of Milan’s Bocconi University and Asst Professor Nikhill Datta of Warwick University said that some agents have, as predicted, passed on the fees to landlords rather than tenants.
Despite this, they say that the act is a success as it shields renters from excessive fees and that the numbers of agents passing on fees to landlords is still quite small. Not as many landlords switched agents in search of lower fees as feared and there was no mass failing of property companies.
Fears of rent rises and job losses
The two professors say that doom-laden predictions in 2019, of rents rising by £108 a year and up to 16,000 agents losing their jobs, were somewhat overstated.
Three reasons for the 2019 act’s success
There are three reasons for the act’s success, say Bakker and Datta:
- Tenants don’t pay attention to or notice fees when they choose a property, often because they can be a bit opaque or hidden away in the small print until the deal is done
- Tenants are more influenced by the actual rent itself so if they were to see their monthly rent go up as a result of fees being passed on, they’ll take a pass on the property
- Any agents choosing to pass on a significant proportion of their losses would find very stiff competition from the wider market
Bakker and Datta’s research proves, they say, that so-called “meddling” in competitive markets doesn’t damage the markets as is so often claimed by free-market proponents.
