Landlords: tenant fee ban may discourage use of letting agents

Landlords: tenant fee ban may discourage use of letting agents

Paragon has wanted that 30% of landlords may be discouraged from letting property via an agent or third party if landlord fees were to increase as a result of a ban on tenant fees.

The lender’s latest Private Rented Sector (PRS) Trends report, based on interviews with a panel of over 200 experienced landlords, found that 73% of landlords currently use an agent or third party to let some or all of their properties. Of those, 12% said they would ‘definitely’ be discouraged from doing so if landlord fees were to increase as a result of a ban on tenant fees, with 18% answering ‘probably’.

The majority of landlords (46% – 16% ‘definitely’, 30% ‘probably’) who use an agent or third party said they would not be discouraged from doing so.

The report also revealed 27% of landlords do not use an agent or third party to let any of their properties. Of those, 84% do not charge any tenant fees, whilst just 16% do.

The most common fees charged by landlords when letting a property without the involvement of an agent or third party are: credit check (60% of landlords), inventory (55%), referencing (54%) and tenancy agreement (42%), with 33% of landlords charging for other, unspecified fees.

Asked what they believe is a reasonable cap on rental deposits, 68% of landlords said up to two months’ rent was reasonable. Of those, 46% said two months, with 22% indicating one month.

14% of landlords said three months was reasonable, whilst just 7% of landlords believe rental deposits should not be capped at all.

John Heron, managing director – mortgages at Paragon, said: “In the midst of ongoing turbulence in the Private Rented Sector, landlords have already had to navigate through challenging policy changes, and rethink their strategies accordingly.

“An increase in landlord costs as a result of a ban on tenant fees would be the latest in a succession of challenges and it’s unsurprising to learn that a substantial number of landlords might consider altering their approach to letting out their properties in that circumstance.”