Rayner urged to reform landlord fees in Renters’ Rights Bill
Deputy Prime Minister Angela Rayner has been urged to reform high landlords’ fees in the upcoming Renters’ Rights Bill to help balance the market.
In a letter to the Housing Secretary, lettings and property management agent Hello Neighbour said that landlords were being charged £2bn in London alone in “excessive fees”.
These fees are related to exit fees and restrictive contracts with estate agents, Hello Neighbour said, with many letting agents charging owners up to 20 per cent of annual rent in combined
management and letting fees.
“Renewal charges are routinely applied even when tenants remain in place, and some agents now report average revenues of over £5,000 per transaction, driven not by better service, but by rent inflation.
“More damaging still are restrictive contract clauses, particularly from larger firms, that lock
landlords into long-term agreements with steep exit fees or extended notice periods,” the platform said.
It argued that high fees have driven up rents and encouraged landlords to sell their properties.
Landlords exit market
London’s rental crisis is acute: Landlords, who have already seen their margins dwindle over the past decade due to the end of tax-deductible mortgage payments, have increasingly decided to exit the market.
According to analysis by Trust for London, 45,000 landlords sold a home between April 2021 and December 2023, equating to a 4.3 per cent net loss of housing. Rents have risen by more than a third since 2020, partly due to a lack of supply.
The National Residential Landlords Association has said that uncertainty over proposed tax and regulatory changes is leading many landlords to “consider leaving the market”.
This includes changes in the Renter’s Rights Bill, with laws designed to protect tenants heaping pressure on landlords.
Hello Neighbour urged the government to implement “complementary reforms”, alongside the current tenant reforms, that introduce “fairness and flexibility” for landlords.
Primarily, it requested that the government permit owners to terminate agency contracts without incurring punitive fees or unreasonable notice.
“By accommodating these reforms in the Renters’ Rights Bill or through other relevant measures, the government can unlock a fairer, more dynamic rental market that benefits tenants, landlords, and the wider economy,” Hello Neighbour said.
“While we welcome the £39bn pledged in the Spending Review to support affordable housing over the next decade… we believe the government must also address the underlying market structures that suppress supply and inflate costs for both landlords and tenants,” it added.
An MHCLG spokesperson said: “Landlords who work with letting agents are free to negotiate the fees they pay them.
“Our landmark Renters’ Rights Bill will bring long overdue fairness to the market, levelling the playing field between landlords and tenants.”