English letting agencies could lose over £60,000 each in the next two years alone as a result of the Tenant Fees ban coming into effect in June.
That’s the claim from deposit free renting firm Dlighted, led by campaigning letting agent Ajay Jagota.
He uses the government’s own figures to come up with the £60,000 calculation.
He says Whitehall estimates that tenants are currently being charged £337 in fees on average.
With figures from trade body ARLA showing that the average agency currently rents out an average of 183 properties, and major agent Your Move setting the average tenancy at 20 months that means - Jagota claims - an average agency stands to lose £61,671 between now and February 2021.
The new law bans tenants from being required to pay any but a small amount of exempted fees as a condition of the 'grant, continuance, assignment, termination or renewal' of an assured shorthold tenancy or licence agreement.
The examples of banned fees include: Credit checks, inventories, cleaning services, referencing, administration charges and gardening.
Now Jagota, managing director zero deposit company Dlighted and head of the #ditchthedeposit campaign, says: “The figures are stark and the implications are huge. On current figures, an average agency is going to lose £60,000 as a result of this ban. For many, this will mean the difference between staying open and closing for good.
“There’s also the issue of deposits. Not only will financial challenge of this scale make the illegal use of tenancy deposits irresistible to many struggling agencies, but how often have we seen deposits vanish altogether when firms go under?
“Deposit free renting doesn’t just make it faster and easier to find and keep good tenants, it slashes agency overheads too – and that’s something the Tenant Fee Ban is going to make unavoidable for all but the biggest agencies.”
The #ditchthedeposit campaign seeks government support for landlords and letting agents replacing traditional tenancy deposits with deposit replacement insurance, allowing the £4.5 billion of renter’s cash held in deposits to be transformed into Help to Buy ISAs for first-time buyers and eliminating deposit theft.