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By Marc Da Silva

Features Editor, EAT and LAT


Impact of the Tenant Fees Act - how can agents cover their costs?

It has been a long time coming, but the tenant fees ban, which forbids landlords and letting agents in England from charging tenants letting fees, will finally come into force from June 1.

The Tenant Fees Bill, first mooted in November 2016, when Chancellor Philip Hammond announced plans to introduce the new rules, as part of his Autumn Statement, is widely viewed as a draconian measure within the letting industry.

The new law does not just mean a ban on letting fees, but also the majority of other upfront fees payable by tenants to rent a property in England.


There will also be a cap on the amount of refundable security deposit a tenant would be required to pay to the value of five weeks’ rent, as well as a cap on the amount of holding deposit a tenant will be required to put down to secure a property to the value of one week’s rent.

Under the terms of the new Act, the maximum amount that can be charged for a change to a tenancy is £50. Any landlord breaching the ban for the first time will be hit with a £5,000 fine.

The government believes that the Bill will make renting properties in England fairer and more affordable for tenants by reducing the costs at the outset of a tenancy, at the same time as improving transparency and competition in the private rental market.

“Tenants across the country should not be stung by unexpected costs from agents or landlords,” said the Secretary of State for Housing, James Brokenshire.

The ban on letting fees in England and a cap on tenancy deposits is set to save renters at least £240 million a year, or up to £70 per household, according to the Ministry of Housing.

Becky O’Connor, personal finance specialist at Royal London, is among those that have welcomed the fees ban.

“Many face a lifetime of renting, so this protection from unscrupulous, unfair and unpredictable fees from landlords and letting agents will make a difference,” she said.

But while agents are aware that the new legislation will drastically alter the existing charging structure, a key question is how will the costs of setting up a tenancy be covered?

A number of agents are still asking that question, while others simply assume that any additional fees will simply be passed on to landlords, which in turn will raise rents to balance their books, and there is evidence that is already happening.

Rental growth

According to the latest data from HomeLet’s Rental Index, UK rents for new tenancies have begun to rise at a rate not seen in the market for more than two years.

Rental values have increased by 3.3% in the last 12 months, which is a rate above inflation, to hit an average of £942 per calendar month.

Martin Totty, chief executive of HomeLet, said: “With the Tenant Fees Act due to take effect from 1 June, the acceleration we’re seeing in agreed rental values will come as no surprise to anyone.”

“Whilst the aim of the Tenant Fees Act is to reduce the costs that tenants can face, landlords still need to cover the costs that are incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs will be passed back to tenants through higher rents, particularly for new tenancies.”

Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property.

Recent growth in rents points to a resilient private rented sector in contrast to a subdued sales market. But what happens when the contrasting fortunes of the two main segments of the housing market are reversed and rents start to fall?

Adam Feather of Robert Anthony Property commented: “We all know that tenant fees have long enabled agents to carry out various critical checks on tenants before letting a property, but when the ban comes into play, landlords and agents are going to have to recoup the costs elsewhere, which can’t always be done through higher rents.”

Many agents can reap the financial benefit from various revenue opportunities, including earning referral fees, but what alternative revenues streams and products are available to help agents recoup lost revenue?


Specialist lettings provider Rent4sure is among a whole host of firms that offers letting agents the opportunity to earn extra revenue.

Looking ahead, Rent4sure took the decision 18 months ago to establish additional on-going and reliable sources of income designed and tailored to their customers’ specific needs.

The company, which completes more than 30,000 references a month in partnership with thousands of agents, has built a dedicated add-on service that can provide tenants with market-leading tailored packages covering broadband, media and utility services.

Luke Burton, COO at Rent4sure, said: “This innovation, along with generous rebates from our range of ‘Rent Protection’ products, will help every customer earn extra revenue to replace the lost tenant fee income.”

“We’re using our expertise and experience to invest in real life solutions that work for agents, enabling them to earn generous rebates and increase the service they offer their landlords and tenants.”


A number of tenancy deposit replacement insurance schemes have been launched as an alternative to a traditional tenancy deposit in recent months that provide agents with a new revenue stream, and the latest product has been introduced by Goodlord.

Through the new offering, agents can provide landlords with eight weeks of protection -  more than a traditional tenancy deposit, which will be capped at five or six weeks (dependant on annual rent) under the Tenant Fees Act.

Goodlord’s CEO, William Reeve, said: “Offering deposit replacement insurance is just one of the ways we’re working to provide the best renting experience in the world, by helping letting agencies to create new revenue streams while giving renters a better way to get into their new home.”

Goodlord’s insurance-backed deposit replacement scheme has been white labelled, which means letting agencies can ensure complete alignment with their own brands.

Reeve added: “After a successful testing period with a select group of our customers, we’re excited to now offer deposit replacement insurance to all the agencies we work with.”

“This will help to put agents in a good financial position ahead of June’s tenant fee ban, enabling them to offer landlords significantly more protection than a traditional tenancy deposit, and making moving home easier for their tenants.”

Tenant Shop

Tenant Shop also offers a tenancy deposit alternative, as part of its technology platform SULU, having recently entered into a new partnership with Reposit.

Tenant Shop provides agents with several services through notifications, dedicated account management, a unique void solution and utility, media and insurance services, including rent protection.

Letting agents are able to use Reposit via direct introduction from Tenant Shop, enabling tenants to access the security deposit alternative for a fee equivalent to a single week’s rent.

The product also includes eight weeks rent as cover, while Reposit will deal with all collections of owed money from the tenant via their platform.

Glenn Seddington, managing director, Tenant Shop, said: “We are delighted to add Reposit to our portfolio. We select our partners very carefully taking great pride in offering our agents best in class solutions.

“We did a significant amount of due diligence to find the right security deposit alternative and we feel that Reposit offers the best product on the market.”

Spark Energy 

Spark Energy – the specialist multi-utility supplier to the UK letting sector – is built exclusively around the needs of private tenants.

The firm’s core products have long been gas and electricity, but it has diversified into other areas to develop a utilities solution that is offered to all its customers and letting agent partners, whether that is phone, broadband or Sky TV deals in a tenant-focused package, or something else.

Chris Gauld, CEO of Spark, part of OVO Group, said: “We’ve been working with the property industry for over 10 years and we understand the challenges our partners are facing from issues like the tenant fees ban and the limitations which GDPR puts on our partners for earning revenue by selling add-on products.”

“That’s why we’ve been busy investing in a PropTech platform that adds real value to our partners’ business and complements their great customer service.”

He added: “Spark remains the only specialist utility company for the rental market, managing supplies of property portfolios for landlords, agents and lettings firms – adopting supply during void periods and handling all administration.”

Virgin Media 

More than 1,000 sales and letting agents nationally currently partner with Virgin Media, enabling them to earn extra revenue by referring new customers to the company.

The aim of the scheme from a tenants or home buyer’s perspective is to ensure they can get their Virgin Media services installed as close to their move in date as possible, with Virgin fibre broadband, TV and home phone packages currently available. 

“For every successful referral that leads to a customer install, we pay commission to the partner and, we also reward the employee who submits the lead too,” said Mike Gardner at Virgin Media Home Connect, and the tools Virgin use, are GDPR-complaint which means that they do not just offer customers a top-quality service, but also generate incremental revenue for its business partners.

“Signing up as a partner with Virgin Media Home Connect is simple and easy, and the process of referring customers is very straightforward,” said Gardner. 

He added: “Once an agent has registered their interest with us, we will set up a meeting with them to talk through how the partnership works, and once the partnership is agreed, we will arrange training with their employees on our personalised online referral portal so they can get started straight away.” 


SSE, which supplies energy, phone, broadband and boiler cover to UK homes, aims to ensure that energy provisions are up and running as soon as tenants move into their new property by offering a void energy solution to letting agents when their rental properties become vacant.

“The process is simple. Setting up SSE as the incumbent supplier when agents’ properties become vacant streamlines the administration of utility provisions that letting agents have to do when their properties are void, removing the hassle and allowing agents to focus on what matters to them,” said Danny Wyrwoll, channels sales manager at SSE. 

A number of agents, including a couple of big national firms, currently benefit from SSE’s void energy offering by earning referral fees. 

“SSE is now far more active in the letting sector, and our proposition has great benefits for our agency partners. We offer revenue opportunities for every supply transferred to SSE which is negotiated on a case by case basis depending on the individual circumstances," he added. 


- Rent4sure 
- Goodlord 
- Tenant Shop  
- Virgin Media 
- Spark Energy  
- SSE 
- HomeLet 
- Robert Anthony Property 
- Royal London 

*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor and Editor of Landlord Today. You can follow him on Twitter @propertyjourno


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