My letting agent just sent me a bill for 'renewal fees' for extending a tenancy agreement – is this even allowed anymore since the tenant fee ban in 2019, or are they trying to pull a fast one?
Quick Answer
Since the Tenant Fees Act 2019, tenants cannot be charged renewal fees. However, letting agents can charge landlords for renewal services, provided this was part of their agreed terms. Review your agency agreement carefully.
The Tenant Fees Act 2019 prohibits landlords and agents from charging tenants certain fees, including costs for renewing a tenancy. For landlords, understanding what fees your letting agent can charge you for their services is governed by your contract with them. From April 2025, councils can also charge significant premiums on second homes, adding another layer of cost to consider.
### What has changed with letting agent fees for tenancy renewals?
Since the Tenant Fees Act 2019 came into effect in England, it became unlawful for landlords or letting agents to charge tenants fees for renewing a tenancy agreement. This legislation was designed to reduce the upfront costs faced by renters. Landlords cannot pass on such charges to their tenants indirectly either.
However, the Act does not universally restrict what an agent can charge a landlord for their services. An agent is permitted to charge a landlord for administrative tasks associated with a tenancy renewal, such as drafting a new contract or conducting new referencing, provided these charges are explicitly detailed within the service agreement signed between the landlord and the letting agent. The legality of such a charge hinges entirely on the terms and conditions outlined in the agreement the landlord has with their agent, not on the Tenant Fees Act itself, as that act primarily concerns fees charged to tenants. For example, if your agreement stipulated a 10% fee for rent collection and a £150 fee for tenancy renewals, both are legitimate charges for the agent's services to you as the landlord.
### Does this restrict all agent charges to landlords?
No, the Tenant Fees Act 2019 specifically targets fees charged to tenants. It does not regulate the fees an agent can charge a landlord for services rendered. The key determinant for whether a letting agent can charge a landlord for a tenancy renewal is the terms of the agency agreement between them.
If the renewal fee was clearly stated in the agreement signed by the landlord, then it is a legitimate charge for the agent's services. If it was not, or if it was vaguely worded, then the landlord has grounds to dispute it. Instances where a landlord might encounter this include a standard BTL property generating £900/month rent where the agent charges a 10% management fee (£90/month) plus a £200 renewal fee. The £90/month is ongoing, and the £200 fee is a one-off charge upon renewal. Another scenario might be a landlord of a small portfolio, using a different agent for each property. One agent charges a flat £180 renewal fee, while another charges 5% of the first month's rent. Both could be valid if stated in their respective contracts.
### How do other regulatory changes impact property investor costs?
Beyond agent fees, landlords face other recent and upcoming regulatory changes that impact their costs. From April 2025, councils in England have the power to charge up to 100% Council Tax premium on furnished second homes. This means a property currently paying £1,800 in Council Tax could see that double to £3,600, significantly impacting holding costs if the property isn't let on an Assured Shorthold Tenancy (AST).
Additionally, Capital Gains Tax (CGT) on residential property for higher rate taxpayers is 24%, with the annual exempt amount reduced to £3,000 from April 2024. These changes mean investors need a clear understanding of all their costs, not just those related directly to letting agents. For instance, the 5% additional dwelling Stamp Duty Land Tax (SDLT) surcharge also adds to acquisition costs for investment properties, meaning a £250,000 investment property incurs £12,500 in SDLT surcharge alone.
### What are my options if I believe a fee is unwarranted?
Firstly, review your letting agent contract meticulously. Look for clauses detailing fees for tenancy renewals, administration, or re-letting. If the fee is explicitly stated and you agreed to it, it is likely valid. If there is no mention of such a fee, or if the wording is ambiguous, you have grounds to challenge it. You should start by writing to your agent, referencing the specific clauses (or lack thereof) in your agreement.
If the dispute remains unresolved, you can report concerns to their redress scheme (e.g., The Property Ombudsman or Property Redress Scheme). All letting agents are legally required to belong to one. Consulting with a legal professional specializing in landlord-agent disputes might be necessary if the sums involved are substantial or the dispute is complex. Your agreement might also specify clauses around early termination or changing agents, which are worth reviewing for flexibility in the future.
## Reviewing Your Letting Agent Agreements
* **Clear Fee Structures:** Ensure your **agency agreement explicitly details all charges**, including those for tenancy renewals, referencing, or property inspections. Ambiguity benefits neither party.
* **Performance-Based Charges:** Negotiate for charges that are **linked to agreed outcomes**, such as successful tenant placement or rent guarantee, rather than just administrative tasks.
* **Regular Review:** **Review your agent's charges annually** against market rates and services provided to ensure they remain competitive and justified. A renewal fee of £200-£300 might be standard for some agencies, but ensure it aligns with the service received.
## Pitfalls to Avoid with Letting Agent Fees
* **Passive Acceptance of Fees:** Do not assume all fees billed are legitimate without **cross-referencing against your signed contract**. Unspecified fees are disputable.
* **Neglecting Contract Review:** Failure to **thoroughly read the agent's terms and conditions** before signing can lead to unexpected costs later on.
* **Assuming Tenant Fee Ban Applies to You:** Remember the Tenant Fees Act 2019 protects *tenants*. **Landlords are still liable for agent fees** as per their agreement.
## Steve's Rule of Thumb
Always ensure your letting agent's contract clearly itemises every potential charge to you as a landlord; if it's not written down and agreed, it's not a legitimate charge.
## What This Means For You
Navigating agent fees and understanding your contractual obligations is fundamental to maintaining profitability in property investment. Most landlords incur unexpected costs, not because agents are inherently dishonest, but because they neglected to scrutinise their agency agreement. Knowing which fees are legitimate and which are not allows you to control your costs. For detailed guidance on dissecting property contracts and managing your investment portfolio efficiently, this is exactly what we unpack inside Property Legacy Education.
Steven's Take
The Tenant Fees Act 2019 was a significant change for tenants, but as a landlord, your primary focus must be on your contract with your letting agent. Many investors get caught out because they simply sign the agent's terms without truly understanding the granular detail of every charge. A 'renewal fee' for a landlord isn't automatically illegal; it depends entirely on what you agreed to. This highlights the importance of meticulous contract review. We've also seen councils using their new discretionary powers from April 2025 to apply council tax premiums on second homes, adding to the need for clear understanding of all outgoings.
What You Can Do Next
Review your letting agent's contract: Locate the specific signed agreement you have with your letting agent and carefully read the sections pertaining to fees, particularly for tenancy renewals or extensions. Highlight any clauses that mention such charges.
Compare with industry standards: Check what comparable letting agents in your area charge for tenancy renewals to understand if the fee is reasonable, even if contractually valid. Websites like the property mark (www.propertymark.co.uk) can provide general guidance on best practices.
Communicate with your agent: If the fee is not clearly specified in your contract, or if you believe it to be excessive, write to your agent outlining your concerns, quoting relevant sections (or lack thereof) from your agreement. Keep a record of all correspondence.
Contact a redress scheme: If your dispute cannot be resolved directly with the agent, identify which redress scheme (e.g., The Property Ombudsman at www.tpos.co.uk or Property Redress Scheme at www.theprs.co.uk) your agent belongs to and follow their complaints procedure. All agents must be part of one.
Seek legal advice: For complex disputes or significant sums, consult a solicitor specializing in landlord-agent contracts to understand your legal position and options. Search for 'property lawyer UK' or 'landlord solicitor' online.
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