Ban on letting fees to cost single-office business £85,000 a year, claim

A ban on letting agent fees charged to tenants will result in a loss of income of £85,000 for a single-office business and over £850,000 for a multi-branch network, it has been claimed.

Agents representing firms from across the country discussed the proposed ban at a round table debate hosted by software provider Eurolink.

The agents also forecast redundancies.

Round table guests suggested that lobbying MPs and bodies such as ARLA and Shelter would be more effective than relying on a single industry voice to take on the Government ahead of its consultation, which is expected to be launched by the end of April.

Nigel Poole, managing director at Eurolink, said: “The Government’s lack of clarification around what the ban will entail is making it incredibly difficult for letting agents to plan for the year ahead and work out how best to position their businesses to offset any negative impact.

“Perhaps the best solution is for agents to focus on the opportunities that a ban will create.

“Using their own client data to generate substantial new revenue streams from third party providers is a case in point – an approach that we have been working on with many of our clients for some time.”


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  1. Eric Walker

    I am not sure these numbers tell the true story. Averages are seldom indicative of the extremes they represent. It’s fair to say that agents which have charged tenants the most will be the biggest losers as will those who used tenant fees to effectively subsidise commissions to landlords to win instructions by undercutting competitors. I have little sympathy. To a degree, these agents have fueled the sanction as have those who refused to display fees transparently.

    For those agents who charge a fair fee for a great service to tenants by offering help and support not just in setting up the tenancy, but throughout the term, I feel very sad. The claims we just print a few documents are ridiculous. Ensuring tenants are treated properly and that landlords meet statutory obligations is crucial.

    From what we have seen from acquisition opportunities, few agents will lose less than 8% of income, some as much as 22%. Contrary to popular misconceptions, most agents don’t make huge margins and this ban will wipe out profits. Now is the time to take stock, calculate the effect and plan accordingly. The ban is going to happen.

    Those who don’t plan wont simply let their businesses go under. They may cut staff, cut corners and even feel tempted to dip in to client’s accounts. This Government policy is still unclear as we still don’t know whether the ban will include reference fees, inventories, maybe even the cost of a lost key.

    Whatever the outcome of the consultation, now is the time to look closely at how you will deal with this change. Our acquisitions team has never been so busy and its suprising that some agents we speak with still think the ban may not happen. 

    And to those who think that enforcement will be an issue as it has been with so many other regulations, this will be policed by the biggest enforcement team around: Tenants themselves. 

  2. Simon Chan

    £85k per year on fees? Nonsense.

    1. Bless You

      Probably is in London and thats all Mp’s and the Daily Mail see. They have to charge that much to pay for the RATES…Govt is an absolute joke. If they sorted googles tax affairs out,  the whole country could have free rates and a chance to compete against online corner cutters. 


      maybe learning about Luddites was some weird mind bending propaganda in school, so that honest businesses would always feel guilty for trying to do the right thing for jobs and skills. 

      It was the start of globalisation..which ultimatly has only rewarded the richest 1% in the world. 

  3. eltell

    No Simon it’s not nonsense. Our fees are the ARLA industry average and 85k is about ehat we calculate a total tenants fee ban will cost our business. We are still keen to hear from any Scottish agents out there as to how they replaced lost revenue.

    1. Ding Dong

      It is absolute non sense unless the “single” office is charging 2 or 3 times the national average in tenant fees,
      what is the average of properties under management for a single office?  200 I would hazard as a guess. 
      That means if every single property was let each year, then the average tenant fee would equate to £425. 
      For a 200 property office, I would suggest you are probably only letting about 50-60 per year maximum therefore unless you are charging ricdulous renewal fees, then £85k in tenant fees is IMHO a “scare mongering claim”.  
      In terms of loss income, strangley when I first worked in lettings, we charged all the fees to the landlord and zero to the tenant.  Maybe try that. 

      1. Gloslet

        Why do you think that a single office can only manage 200 properties and why on earth do you think that the office would only be letting managed properties or indeed only amounting to ‘about 50-60 per year maximum’ ?

        1. Ding Dong

          Just guessing Gloslet from my experience
          tell me your experience? 

          1. eltell

            Not if you manage a little over 1000 properties with 16 experienced staff it’s not. I could make 2 or 3 redundant but who would do their work which still has to be done!

            1. Ding Dong

              fair play, i cannot imagine many single branches managing 1000 properties

    2. mrharvey

      I spoke to one and he pretty much said “get on with it. There’s still loads of business out there and the bad agents will get found out so you can just get their customers.”
      In short – do prep work to minimise disruption and build up the pipeline before everything goes live.

  4. RichardHill61

    If we hadn’t sold our 2 branch business we’d have been looking at a revenue loss of £200k per annum from the ban!

    I don’t think it’s possible to re-coup the full loss from landlords or other income streams. Why would landlords pay more im such a competitive market.

    The problem is the admin work still needs doing & the phones need answering so making redundancies won’t be that straightforward! It’s not like letting agents are over staffed for the sake of it!

    I imagine sales & lettings staff will need to be more multi skilled and some small business may call it a day!

    Stupid government!

    1. Bless You

      The only thing that kept me going when dealing with tenants was the thought they were paying to waste my time…not sure how agents will stay motivated in such a negative , soul drenching industry. I would charge them to view houses instead…£100 per hour,,will reduce time wasers thats for sure.
      Good Luck guys. 

  5. gardenflat

    If you’re losing £85k per year as a single office then karma has come around.

  6. Ding Dong

    This was a meeting of agents in London, although I understand there were a small number from elsewhere i.e. leeds and bristol

    If I am being honest, it is the London agents in general who have caused this problem in the first place

  7. NewsBoy

    £85,000 a year???  That is exactly why this ban is coming in place.  We turnover over £1,000,000 a year in management and lettings and charge far less than that to our tenants. It is agents like you who have been exploiting the system and precisely why this ban is coming into force.  Time to jump off the gravy train – or hit the buffers.

    1. RichardHill61

      Post your fees or a link to your websiteif you charge so little!

      1. NewsBoy

        We do. We charge our landlords!

        1. RichardHill61

          Your article states you charge tenants but omits to say how much! I imagine you do charge them!

  8. jonJames43

    This is madness. Agents are their own worst enemies! If agents are going to lose 85k per year they are charging far too much. The situation in Scotland was very different in that tenant fees were banned many years ago. All that happened was that the law was clarified. Most agents did charge a fee albeit relatively small. The good agents embraced the change and have replaced the income by increasing all fees to landlords, by small amounts.

    I totally agree with Erics comments above, he is talking sense!!!

    1. smile please

      They also now get kick backs from the referencing companies.
      The referencing company charges X and rebates the letting agent Y for the introduction and the letting agent will look more favourably on the tenant that agrees to use their referencing company. 

      1. Ding Dong

        If you read the scottish legislation, it does NOT allow anyone to charge a fee in relation to the granting, renewal or continuation of a tenancy.  Therefore if you require referening as part of granting a tenancy, NO person can charge for that service. 

  9. nicolaspencer91

    A small agency will “make” enough from the fees to cover one person’s salary to be able to do the job properly. If an agency is not fully regulated or licensed they will just cut corners and take more risks. Banning fees all together is a massively backward step, in my opinion, and capping the fees would be a much more appropriate answer to stop the high fees that are completely inappropriate. An administrative fee should be acceptable as long as it is reasonable, our industry is being more closely regulated with such as changes in money laundering regulation, how are we supposed to cover the extra administration? I don’t want to hide it in my landlord fees, or in the rent! That makes a mockery of the whole transparency of it!

  10. JSSoxted58

    £85K a year for a single office????  This equates to £7k per month in tenants fees alone which equates to approximately £1400 pcm just in tenants fees – they are either charging a hefty tenants fee (in which case they really should be looking to justify such large costs) or they are very busy (in which case they should look to open another office!)…. either way, the loss of the tenants fees would not be a reason for redundancy in a pro active company, there are other ways to make up loss of income from this new regulation if and when it is actually brought in – this sounds like a poor excuse for getting rid of someone!

  11. RichardHill61

    Some agents just do 30+ deals a month per branch and charge fair and reasonable fees!

    Some commentators should just get over themselves…


  12. Giarc29

    I can’t see the problem. Ask month ONE at a higher price ie £1100, then remaining 5 months etc at £600 pcm. Tenant fees are replaced by increasing the first month’s rent and letting agents charges will be deducted from this (ie now from the landlord). It just requires drawing up a new AST to confirm the above.

  13. agentx

    So when i pick up another 500k property post ban – Will the prospective tenant be allowed to secure it with bottle tops and i simply have to hope they turn up to sign a tenancy maybe a month later?? The days of sending staff to the property to help them move in will be over? here are your keys – goodbye. email the inventory with a disclaimer etc Sort your own utilities and work out the CH system for yourself. Tenants need not bother contacting me again, my time is money and i owe them nothing if they didnt pay for a service level – if they have an issue they can contact their friends at Shelter who im sure will be glad to help.

  14. pierce

    The proposed legislation suggests it may not be as bad as you think – I suspect there will be things we can charge for at set rates so I don’t believe it will be a total ban.

  15. ScotlandProperty

    In Scotland – and with hindsight – I think that the timing was better, in that it ran in line with the TDS requirements coming into play as well.

    Tenant fees, although a fair income stream for most agents, were generally not too high either – probably between £100 and £200 per let.

    When the new Deposit legislation was introduced, best practice was for a proper photographic ‘Schedule of Condition’ and not just a basic inventory. This allowed for justifiable, and meaningful, increases to the costs incurred by the landlord.

    Other revenue streams/recuperation explored (which many may already do) were things like tenant move in packs, forging B2B referral income, renegotiated contractor commissions and rates, offering additional industry related services, employing apprentices, focusing on fully managed new instructions and converting your let only landlords.

    Apologies, I feel like I’m stating the obvious to some very successful business minds.

    Although some agents tried to directly pass part cost onto the landlord, this didn’t work. If you already run a reputable business, it is very hard to demonstrate an improved level of service, if your standards are high as a matter of principle and not circumstance.

    I would also suggest that you check your tenancy agreements. There are some fees that you can still charge tenants for, but they must be in the TA and they must be reasonable – a worthwhile exercise.

    All in all, it’s fair to say that the profit margins across the industry are not what they used to be – business analysis and adaptation accordingly are the only way to try and maintain the stakes invested.


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