Did you know that landlords and letting agents can no longer charge renters any fees other than the rent, deposit or a holding deposit following a recent change in the law?

When the new legislation went live in England on 1st June 2019 many campaigning social justice organisations including Shelter and Citizens Advice rejoiced.

Why? Because for millions of tenants every year the cost of moving home between rented properties will now be considerably cheaper.

Cost savings

The government claimed that it would save renters £223 every time they moved, or in total £192 million a year.

But the expense can be much higher. It was recently claimed that it can cost up to £550 in fees to move into a rented property, while ongoing costs can double that including contract renewal fees, check-out fees and cleaning charges.

Fees banned

The new law bans fees for all new tenancies started after June 1st although in a year’s time it will apply to all tenancies regardless of when they started.

There is a potential downside for renters. Although some people don’t like paying letting agents these high fees, or have struggled to pay them, several business organisations have claimed the fees ban will push up rents.

Lost income

But how? Many landlords rely on their letting agent to run their properties for them and, now that tenant fees are banned, the agents are asking their landlords to make up the ‘lost income’.

Landlords, on the other hand, don’t want to pay more money to have their properties managed, so many have decided to increase the rent they charge in order to recoup the extra cost of managing their properties.

Rising rents

The question is, has the ban increased rents? It’s early days and so far only one report has linked the tenant fees ban to rising rents.

Letting industry organisation ARLA Propertymark says the number of its members reporting rising rents increased significantly from a third of all agents two years ago to half of them this year (2019).

But your rent is unlikely to go up straight away. Most rent rises take place either when a new tenant moves into a property, or when an existing contract is renewed.

But England is not the only place where fees are banned. They have been outlawed in Scotland since 2012 and are due to be banned in Wales from 1st September, 2019.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.