There are 4,000 jobs at risk if an outright ban comes into force on letting agents’ fees according to new research released by industry body ARLA Propertymark.
In a report presented to the organisation’s annual conference today, ARLA says its research with business consultancy Capital Economics reveals that the proposed ban - announced in the government’s November Autumn Statement but still not opened for formal consultation - could cost tenants thousands of pounds.
The research says letting agent fees account for around a fifth of letting agents’ revenues, and fund the cost of vital checks required to set up a tenancy agreement.
If they are banned outright when the government publishes its consultation, agents will need to pass the costs on to landlords through higher agents’ fees.
The research indicates that two in five landlords (41 per cent) expect they will need to pass on a portion of the inflated cost to tenants, and the research finds they will most likely push rents up by £103 on average per year.
If landlords were to pass on the entire uplift in agents’ fees, tenants would be hit harder, typically seeing rent increases of £275 a year.
There would be a huge impact on the lettings sector as a whole, which employs around 58,000 people across the country.
“If letting agents take the full hit of the letting agent fee ban, 16,000 jobs will be at risk. It’s more likely however agents will pass on 75 per cent of the costs to landlords, which would result in job losses of around 4,000” says the report.
Some of the side effects of the ban will be around 27 per cent of landlords not buying any more rental properties, 20 per cent selling some of their stock, and eight per cent fewer landlords using letting agencies - property maintenance will also suffer, with seven per cent of landlords likely to cut back.
The ARLA report says that in Scotland, letting agent fees were banned in 1984 and officially clarified in the Private Rented Housing Act of 2011.
“This meant that tenants were only accountable for the rent and deposit, and everything else would be charged to the landlord. However, this has resulted in many agents carrying out less of the tasks they were doing previously. Worryingly, one in four said they no longer do credit checks as standard” says the report.