The Tenant Fee Ban is Coming!

The Tenant Fee Ban is Coming!

Tenant Fees are Going

The Tenant Fee Ban is Coming!


There are some genuinely significant changes coming to the way in which rental properties are managed by landlords and agents this year.  The changes have resulted from a raft of new legislation which has been forced through by the Government to improve the quality and affordability of rental properties across the UK.  The effects of the legislation will change the landscape for landlords for ever.

 Why Change? 

Our landlords and investors will be aware that there is already a great deal changing in Residential Lettings; looking back, it all seemed so much simpler 10 years ago!

The intention behind recent legislation has been to:

 a.         Improve the safety, quality and energy efficiency of rental property.

b.         Provide tenants with greater security of tenure.

c.         Provide tenants with easier mobility.

d.         To provide a fairer environment for tenants.

e.         To control the number of rental properties in an area.

f.          To increase landlord accountability.

g.         To tax the industry more.

What do the Changes Really Mean?

In the short-term, the changes are likely to achieve the benefits hoped for by tenants.  Whilst much of this may seem to be initially detrimental for landlords, the long term effects are likely to be very much more complex.  

Graham Jolliffe, Director of Maher Ross commented:  We expect our customers to be commercially minded.  Short-term, these changes will provide some challenges for our investors and landlords but if we think a little longer term, it is certainly not all bad news.  We are encouraging the Island’s landlords to embrace the changes and to think ahead”. 

Supply and Demand

The law of Supply and Demand rules on the Isle of Wight because there is simply not enough property to house the Island’s growing population.  The flow of new rental properties coming onto the market has reduced.  Right or wrong, the end result is that there is significant pressure for existing rents to increase.

Team Maher Ross

One of the most important roles for the Maher Ross team is to keep their landlords fully up to speed with the coming changes.  We consider that with careful planning, we can work together with our landlords and investors to minimise the financial impact on them.

What’s Changing? 

Assuming that most landlords will already have felt the effects of the changes in Stamp Duty, will know about the reduction in the Mortgage Interest Tax Relief  and  are aware of the ‘Fitness for Habitation’ bill, the largest change to affect the industry in 2019 is the “Tenant Fee Ban

The Tenant Fee Ban

 A ban on charging tenant fees was introduced in Scotland in 2012 because tenant fees were considered to be detrimental for tenants.   Whilst everything these days seems to be ‘Brexit Dependent’, the tenant Fee ban is scheduled for introduction into England in  April 2019 and this is now less than 3 months away.

Some of our landlords may not be aware that we currently charge Maher Ross tenants a contribution towards the costs of preparing and moving them into a property.  We generally charge £250 for a couple and a further £50 for guarantor fees (if required) but no further charges.  This represents roughly 10% of Maher Ross income. 

The industry standard is very different; tenant fees are thought to represent 22% of all English letting agent’s income and significantly higher than this amongst some of the well known multi-agencies.

The Bill will ban tenants from being charged for virtually any fees - including an accompanied viewing, receiving an inventory, signing a contract, or renewing a tenancy.  It allows letting agents and landlords to charge fees that only relate to rent, security deposits, holding deposits, or when a tenant breaches a contract.

There is no denying that the loss of this income will be significant to Maher Ross and like every agent in the country, we are in the process of exploring a number of options. 

The most likely outcome is that we will have to ask our landlords to initially shoulder some of the burden before rents inevitably increase to reach a state of equilibrium.

It is significant to note that the highest rental increases have occurred in Scotland over the past year - with rents for 2 bedroom properties rising up to *36.4% in areas such as Glasgow during the past 5 years.  In comparison, rental values of 2 bedroom homes in the Isle of Wight have risen 13.3% in the last 5 years.

* Data from Rightmove Little Blue Book 2018/19.

Maher Ross forecast that the ban on tenant fees will inevitably see rents increase slowly but steadily across the Island.  The initial benefit for tenants is likely to be quickly eroded by an increase in their rent and the benefit of an increased rental income for landlords is likely to be offset by higher agency fees; in short, the balance will remain.

Director Chris Maher was upbeat about the changes, “Whilst the balance between rent and fees will eventually iron itself out, the ban on tenant fees will mean it is easier for tenants to move to a property that’s right for them - long term, this makes for happier tenants!


It’s a tough environment for landlords - particularly those that still manage their own properties.  Maher Ross have seen an enormous growth in demand from individual landlords who struggle to deal with the regulation, administration, knowledge and effort that is now required to manage a property effectively.  The benefits of remaining with a proactive, well-informed agent remain clear.

For further information on this article please contact Graham Jolliffe on 01983 563000.

©Maher Ross Ltd.