Tenant Fees Bill

Written evidence submitted by Phil Watson, Managing Director, Martin & Co (TFB08)

Dear sir / madam,

As a qualified member of ARLA since 2006 I am horrified by the prospect of a tenant fee ban.

My company operates from one office and would be deemed a medium sized Letting Agency, employs six people, manages 300 properties and I am terrified of what the Tenant Fee Bill will bring.

The consequence to my business, my staff, my landlords and ultimately our tenants will be catastrophic.

By not being able to change a tenant for basic items such as

1. Application Fee £90 inc VAT per initial tenancy

2. Referencing Fee £75 inc VAT per person

3. Assured Shorthold Tenancy Renewal Fee £60 inc VAT per tenancy

4. Substitution of a tenant fee £180 inc VAT per tenancy

5. Replacement of lost keys Fee £30 inc VAT

6. Onward Reference Fee £42 inc VAT

Will create a loss of circa £50,000 per annum in revenue and a loss to the treasury of circa £10,000 in VAT receipts

I simply cannot afford to lose such a huge amount of my revenue at a time when costs are on the up, wages, fuel, pensions, subscriptions, insurance, regulation etc and so the consequence of the above could very easily be

1. Closure of my business

2. Staff redundancies

3. Cost cutting measures such less training, reduced marketing spend (I do not have a great deal I can reduce to be fair)

4. Increase the tenancy set up fee for Landlords and or management fee to compensate – but this will only then be passed on to the tenant via in an increase in rent via a Section 13 notice, at renewal of the tenants fixed term tenancy or at relet.

Despite MP’s and Shelters best intentions, the reality is that someone has to pay.

If they wish to continue in business, agents will pass the loss of income to landlords, landlords will pass the cost to tenants, the government will look to recoup lost tax revenues elsewhere and in the end no one will win.

I’m all for populist policies, but only if the end result justifies the means and at present it doesn’t.

Wouldn’t it be great if everything was free? No mortgage application fees, no conveyancing fees etc. But it doesn’t work like that in business – we need to make a profit and I can assure you for the work, time, risk and effort I and my staff have put in over the last 12 years the returns are modest.

To be specific, if this helps… on annual revenue of £306,000 my profit was £64,685. Take away £50,000 of revenue / profit (tenant fees) and what is the point? I might as well work in a 9-5 job and have done with it.

I appreciate the easiest option is just implement a total ban, but my suggestion would be to put in place an application fee cap of say £250.

A typical application for two adults at my office would be

£90 + £150 = £240 inc VAT

Deposit £500 held within the Deposit Protection Service (to protect the landlord against rent arrears, damage and dilapidations)

1st months rent £500

Total £1240

However, if you were to encourage and regulate deposit insurance schemes which could be a little as £100 (paid for by the tenant) then the cost could be a little as

£240 application fee

£100 deposit insurance fee

£500 1st months rent in advance

Total  £840

The additional benefit of an insurance backed deposit scheme is that the tenant doesn’t then have to wait for their deposit to be returned from their current property, as this obviously cannot be released until after the leave… (passporting of deposits wouldn’t work for this exact point – if small deductions were required, and they often are (damage, cleaning etc), then the transferred deposit would be less for the new landlord / his property)

My point is there is more than one way to crack a nut without having to decimate an industry.

Thank you for reading my email, should you require further clarification please do not hesitate to contact me.

Best regards,


May 2018


Prepared 4th June 2018