Can You Afford An Extra £103 Per Year in Rent?

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Stepped Terrace Property Link Terrace House

The average cost of rent is expected to increase by £103 per year and up to £480 per year in some regions excluding London, including Leicester. This is a result of the tenant fee ban which is currently passing through parliament and expected to come into force in May 2019.

The tenant fee ban has been hailed as a very progressive move by the likes of Shelter and The Tenants Voice. It will mean that tenants won’t have to fork out upwards of £125 to move into a new property which covers the cost of tenant referencing whilst agents and landlords will have to recuperate these legitimate business expenses elsewhere, most likely in the form of increased rents. Rents in Leicester will be increased further if Leicester City Council moves ahead with their Planned Licensing Scheme for landlords which is identical to Nottingham’s selective licensing scheme and pushed up further with the government’s plans to release minimum bedroom sizes (which will force the lowest income earners onto the streets as they fail to cover the cost of a larger property they neither need nor want).

Currently, tenants pay for referencing and background checks to deter tenants who know they’ll fail to reference process from applying for properties with the sole intention of “getting lucky” and passing the background check or otherwise lie about their circumstances to enable them to move into the property. If a reference comes back and says that information provided was false, the tenant will not be able to move into the property and the agent or landlord has to pay the bill for this fraudulent individual.

Shelter and other housing charities believe this to be a positive move in the right direction but estate agent Harry Albert Lettings & Estates fails to see how this makes any difference, in fact, in the long term, it will make tenants worse off.



“The government are proposing three-year minimum tenancies”, Harry Albert Lettings & Estates told us, “and if tenant fees are banned, landlords will recover the increased fees they would have to pay via increased rents. If tenant fees are £125 to cover the cost of referencing, which ours is, and rents increase by £12.50 per month to recover the cost over a ten month period, it will leave tenants paying an extra £25 on a one year fixed term tenancy than what they would have been had the tenant fees not been banned and an extra £450 over the lifetime of their tenancy if the government move ahead with their proposed three-year tenancy.”

They go on to say;

The tenant fee ban is intended, by the government, to affect the lowest income earners in the most deprived areas the most. I do not believe they have anticipated the fallout this will cause and the amount of stress this will place on the social housing sector which is already at bursting point with years-long waiting lists.

By removing the tenant fees at the start of the tenancy, tenants will still need to find a deposit (which is expected to be capped at 5 weeks rent) and, likelier than ever due to decreased afforability resulting from increased rents, a guarantor to guarantee the payment of rent due before they move into the property and tenant fees will be recovered in alternative ways which, as mentioned by Leicester’s leading online letting agent, will see tenants worse off over time than had they paid the upfront fees.



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