Letting Agents’ Fee Ban Could Lead to Tenant Referencing Decline

Changes to letting agents’ fees could lead to a decline in the quality of tenant referencing in the private rental sector, according to Endsleigh. This could ultimately lead to increased rent arrears and a higher rate of repossessions.

 The specialist insurance provider for landlords, letting agents and young professionals has voiced concern that agents might begin to source cheaper referencing alternatives in order to offset future income losses if banned from charging tenants’ fees.

Tenants can currently be charged fees for a range of administration, including reference, credit and immigration checks.  However, chancellor Philip Hammond announced plans last year to introduce a ban on letting agents’ fees to tenants ‘as soon as possible’.

However, in spite of this dramatic statement, four months have passed since the announcement and details of the proposal remain unclear. Endsleigh have argued that this has caused further confusion and complication in the private rental sector, as well as leading to more evictions. The latter impact has been attributed to a potential decline in the quality of referencing, which the firm argues that, along with insurance, is likely to be the key impact of the changes.

Head of Endsleigh Let, David Hadden, said: ‘The private rental sector is currently in limbo waiting for further details on the fee ban but the topic appears to have fallen off the agenda, causing confusion for both letting agents and tenants. As a partner to the sector, we’re keen for this discussion to move forward so that the letting industry can properly assess and address the likely impacts of these changes. Our letting customers have told us how concerned they are about these changes and what it means for the private rental sector. Poor quality referencing could lead to higher eviction numbers and longer void periods. This, in turn, could affect connected insurances such as rent guarantee, with the likelihood of claims to be perceived as increasing, premiums would surely follow suit.’

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