An analysis of 30,000 tenancies by PropTech firm Goodlord suggests that the upcoming ban on tenants’ fees could impact most on the poorest areas of the country.
Goodlord, a London-based property technology company, analysed the tenancies processed through its software platform for letting agents so far this year.
It found that tenants moving home were required to have on average £3,039 available per property.
This includes the first month’s rent (£1,092), security deposit (£1442), tenant fees (£209) and a refundable holding deposit (£296).
Goodlord found tenants in London needed the highest amount upfront per property at £4,347, whereas areas outside of London required tenants to pay on average £2,324.
In 2019, tenants will no longer be required to pay the average £209 in fees for any administration tasks letting agents carry out to facilitate their move as part of the proposed bill.
However, tenants will still face normal annual rent increases of approximately 1.7 per cent, meaning the average rent will likely increase to £1,111 per month.
If the Bill is passed and the ban takes effect, Goodlord calculates that the average maximum security deposit could be £1,534 and refundable holding deposit £256.
This means the total potential amount of money a tenant would need to move home in 2019 would be £2,942 - only £97 less than in 2018.
But most startling of all, Goodlord found London tenants could save the most - an average of £183 per property while tenants in the North could pay an extra £100.
“Our industry needs regulation that doesn’t penalise good letting agents, promotes sustainable rents for tenants and gives landlords peace of mind” says Goodlord chief operating officer Tom Mundy.
“Current government legislation is making it harder for this to be the case and in some cases the proposed tenant fee ban is making it even more costly for the people it’s trying to protect” he adds.
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Everybody implies that tenants have to find deposits every time they move. They only need deposits once when they first start renting. They may have to add a bit more when they move to get in step with inflation but that is it. They only ever loose their deposit if they fail to pay rent or thoroughly foul up the property they live in.
I have to keep a cash float float my own house. Functionally, what is the difference?
The issues is your average person is unable to save another deposit as their current income is used for rent and bills with little to nothing to put aside and as you know the deposit is payable before the old one is released so needing a spare £1442 yes you could put it on a credit card but again in most situations people may not be able to get a credit card with a 0% facility on it. Look at this way if the current average bond is £1442 this equates to £120 a month for some people this is all they have left at the end of the month for food. I do agree people should take more responsibly on themselves and to be able to cash flow their move but for most its just not possible. The best solution for the entire argument about agency fees is to cap the level of fees that are payable, for example an agency fee is to be no more than 20% of the monthly rent. This is then fair for everyone from tenants to the agent as the agent keeps their income and keep fees lower for landlord which in turn reduces the risk of increasing rents and the tenant knows exactly what they have to pay when moving.
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