Letting agents experienced a surge in demand as tenants moved to secure new properties following the introduction of new rules banning letting agent fees on 1st June.
New regulations imposed on landlords and lettings agents mean that tenancy deposits are now capped at 5% and there is no opportunity to charge tenants unnecessary fees. In some cases, the fees ban will save tenants hundreds of pounds, which will have given many the impetus to move.
According to Rightmove, tenant demand is often low at this time of year, with peak demand usually coming in July. However, in May and June, the market saw tenancy demand seven times the norm outside of London, while in the capital there was a 13% increase in demand.
According to Melanie Howarth, branch manager at estate agency Northwood in Doncaster, they have “seen a massive increase in enquiries”.
“Every property is seeing double, maybe triple, the levels of interest that it would have received prior to the tenant fee ban being introduced as it’s now cheaper for tenants to move around from property to property.”
Richard Davies, head of lettings at London-based Chestertons, said: “We’ve seen a 17% increase in the number of tenants registering to view properties since the tenant fee ban came in on 1 June compared to the same time last year.
“This spike in demand from tenants has meant that there has been a lot more competition for rental properties, and tenants are often paying above asking price to secure their first-choice property.”
Rents increase to compensate for losses
However, despite the savings, tenants are facing increased rents as agents and landlords try to offset the losses that will result from the crackdown on fees.
During the second quarter of this year there was a marked rise in average rents; in London, the average rent was up 3%, and the average rent outside of London rose to an all-time high of £817 per month in the same period.
But according to Davies: “Paying over asking price for rental properties in the peak summer lettings season is not too unusual in London, but we have noticed that tenants are more prepared to do so since the fee ban came in, potentially because they feel they are saving money on additional fees so can afford to spend a little more on their monthly rent to secure the right property.”