By Simon Lambert of

Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential future villains in the ban on tenant fees.

The theory on the news that Chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises.

In practice, there are a few problems with this.

Firstly, landlords have as much right to be angry as tenants over letting agency fees.

Many pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for.

A check with their agent on the level of double-charging going on, would leave a landlord as grumpy as their tenant.

Secondly, landlords don’t profit from these tenant fees – they go to the agent. Agents will be keen to maintain their revenues, but an attempt to simply claw back lost earnings by lumping extra costs on to landlords will be a high risk strategy.

Those landlords, already facing a tax and mortgage squeeze, are likely to see any big hikes as a catalyst to move elsewhere.

The lettings business is a crowded market. Take a stroll down most high streets and you will see plenty of options of agents who can let your property.

Away from there, you have the option of a more bespoke service, where the agent will really look after you, your property and your tenants. (I’ll declare an interest here, my mum has run such a business for the past three decades.)

Hot on the heels of traditional letting agents, you have the option of saving an awful lot of money by choosing one of the new breed of online agents, who will let your home (and crucially get it listed on Rightmove and Zoopla) for a fraction of the cost.

To me this doesn’t look like a market ripe for letting agents getting away with shovelling fees from one side of the deal to the other.

It looks like one that has pricing power when it comes to tenants – who if they want a home must use that agent – but not landlords, who have plenty of choice of people to let their home.

Ask any long-term landlord and they will tell you that the difficulty is in finding a good letting agent, who takes all the worry of sorting any problems for you off your hands. They will have a network including plumbers, electricians, and handymen or women, who can get things fixed asap, do essential maintenance swiftly and at a fair cost and keep your tenants happy.

Happy tenants are the key to buy-to-let success, as unless you are in a hot property area such as London where places rent instantly, its vital to avoid rental voids. Even one month of your property sitting unlet but your mortgage and other bills needing paying, proves expensive.

Yet many landlords stick with letting agents who don’t do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees.

It seems a fair guess that the not so good agents will be the ones who respond to the tenant fees ban by lumping lots of extra charges onto landlords. If your agent can’t explain exactly what the charge is for and justify the cost and why you aren’t already paying for this, leave.

There are lots of other options out there and this is a great opportunity for good and fair letting agents to win business. As a landlord ask them the right questions about their service (and remember that cheapest isn’t always best).

Amid all the comments rushed out on this yesterday, there were two things that stood out.

First was this pithy summary of the situation from Jeremy Leaf, a north London estate agent and former Royal Institution of Chartered Surveyors residential chairman.

He said: ‘The problem with fees charged by letting agents to tenants is that landlords have a choice as to which agent they use whereas tenants generally don’t. Landlords can go to another agent so the agents will have to absorb the cost and get it from somewhere else.’

The second was what happened to the share prices of estate agents seen to be coining it in on tenants fees, for example, Foxtons shares dropped 14 per cent. (They bounced 7 per cent this morning but remain down on the news).

The stock market is often described as a weighing machine, although it’s one that regularly goes kaput. In this instance, I think it’s got it about right.

It would be daft to suggest letting agents won’t try to pass on any of these fees they can’t charge tenants, but they won’t be able to do so to the extent that rents will simply rise to equal all those lost rip-off charges.

It’s possible rents may rise ever so slightly, and it’s unfortunate that reputable letting agents will be stopped from passing on costs fairly, but putting a swift end to the cottage industry in ripping off tenants is no great shame.

Click here to view the original article ‘It’s easy for landlords to avoid becoming villains in the tenants fee ban’

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