Advocate pushes for landlord fee reform in Tenants' Leasing Legislation
The UK government is taking significant strides to address the issue of high landlord fees and their impact on the rental market, particularly in London, through the Renters' Rights Bill. This legislation aims to introduce measures that will cap upfront payments, reform excessive landlord fees, improve fairness in the rental market, and build upon previous legislation.
One of the key aspects of the Bill is the cap on upfront payments, preventing landlords from demanding more than a single month's rent in advance. This move is expected to reduce the immediate financial burden on tenants and limit hidden costs associated with renting.
Another critical focus of the Bill is the reform of excessive landlord fees, particularly in London. According to analysis by Trust for London, landlords in London face around £2 billion in excessive fees annually, including exit fees and restrictive contracts with estate agents. Some letting agents charge landlords up to 20% of annual rent in combined management and letting fees, with renewal charges and restrictive long-term contracts that lock landlords in with steep exit fees.
Rogue landlords and poor standards in the private rented sector are also targeted by the Bill, aiming to contribute to a more balanced market where fees and rents are fair and transparent. The Tenant Fees Act 2019 already limits fees landlords and letting agents can charge tenants directly. However, high fees charged to landlords by letting agents remain a concern, and the Renters' Rights Bill is seen as a next step to specifically address these landlord fees and restrictive contracts.
Hello Neighbour, a lettings and property management agent, has requested the government to allow owners to terminate agency contracts without incurring punitive fees or unreasonable notice. They believe that by accommodating these reforms, the government can create a fairer, more dynamic rental market that benefits all parties.
Rents in London have risen by more than a third since 2020, partly due to a lack of supply. Restrictive contract clauses, particularly from larger firms, lock landlords into long-term agreements with steep exit fees or extended notice periods. Renewal charges are routinely applied even when tenants remain in place, with some agents reporting average revenues of over £5,000 per transaction.
The MHCLG (Ministry of Housing, Communities and Local Government) spokesperson stated that landlords who work with letting agents are free to negotiate the fees they pay them. However, Hello Neighbour has expressed concern about the £39bn pledged in the Spending Review for affordable housing over the next decade, stating that the government must also address the underlying market structures that suppress supply and inflate costs.
In summary, while previous legislation focused on tenant fees, the Renters' Rights Bill seeks to reform landlord fees and restrictive contracts that have been largely unchecked. By placing limits on excessive charges landlords face, the Bill can help reduce upward pressure on rents and improve rental market stability and affordability, especially in high-cost areas such as London.
- The Renters' Rights Bill, in addition to capping upfront payments, aims to reform excessive landlord fees, particularly in London, where they face around £2 billion in fees annually, including exit fees and restrictive contracts with estate agents.
- Hello Neighbour, a lettings and property management agent, has requested the government to allow owners to terminate agency contracts without incurring punitive fees or unreasonable notice, believing that these reforms can create a fairer, more dynamic rental market that benefits all parties.
- The Renters' Rights Bill, by placing limits on excessive charges landlords face, can help reduce upward pressure on rents and improve rental market stability and affordability, especially in high-cost areas such as London, where rents have risen by more than a third since 2020, partly due to a lack of supply and restrictive contract clauses.
