Tenant fee ban will reduce deposit fees by £2.9bn a year

May 20, 2019

The latest research by property compliance specialists, VeriSmart, has revealed the huge sum of money currently tied up in the private rental market across England and how this will change with the introduction of the tenant fee ban on the 1st June.

VeriSmart analysed data from Gov.uk which shows that there are 4,530,000 tenants currently renting within the private rental sector. According to Citizens Advice, tenants are currently required to pay as much as two months’ rent as a deposit in order to secure a rental property, with this about to change.

With the average rent in England at £844 a month that’s a deposit of £1,688 per person, which means the private rental market is currently sitting on some £7.6bn in tenant deposits.

Under this new ban, the required changes mean that anyone paying annual rent over £50,000 will have their deposit capped at six week’s rent, while anyone paying under that threshold will only have to pay a maximum of five week’s rent. This change is intended to save the average tenant £600 on their initial deposit and reduce the total deposit amounts down to a little under £3bn.

However, a growing concern is that these latest changes will see more landlords exit the sector having already been hit with stamp duty and tax relief changes and now being squeezed with the bookends of a tenant fee ban one end, and the new Fitness for Habitation Act at the other.

The question for many landlords is whether they can remain in a market, which desperately needs more rental properties, but is limiting the profit on offer to those providing them.

Founder of VeriSmart, Jonathan Senior, commented:

“The introduction of the tenant fee ban will not only reduce the safety net charged by landlords in the form of a deposit, but it also means that they or their agents can no longer charge for other fees which have historically supported the market, fees such as for tenancy agreements, inventories and check-ins etc.

While it’s true that some bad apples have abused this system in order to increase monetary gain at the expense of the tenant, this simply isn’t the case for the vast majority. Many landlords will now have to foot a larger bill for services that were previously shared between parties or paid for wholly by the tenant, further denting their profits, which have already seen a decline due to new legislation around stamp duty and tax relief.”
Currently
After 1st June
Difference
Average Monthly Rent
£844
£844
N/A
Average Weekly Rent
£211
£211
Number of Private Renters
4,530,000
4,530,000
N/A
Individual Deposit Required*
£1,688
£1,055
£633
Total Deposit Tied Up**
£7,646,640,000
£4,779,150,000
£2,867,490,000

*Individual deposit is average weekly rent multiplied by 8 currently and five for after 1st June.

**Total deposits tied up in the market is the individual deposit required multiplied by the number of private renters in the market.

Properganda PR

National and local media coverage for property businesses. Journo quotes delivered in minutes.

You May Also Enjoy

Home and Living

Signs of Outdated Wiring in Older Tulsa-Area Homes

Tulsa has a lot of beautiful older homes. Brookside bungalows, Maple Ridge tudors, the postwar neighborhoods that fill out Midtown and East Tulsa. They were built well, but most were built before central air, before microwaves, before two-car households with two laptops and a dozen phone chargers. The electrical systems inside them were designed for…
Read More →
LIVING BY THE SEASIDE 2022
Breaking News

Britain’s seaside price hotspots revealed

New analysis from the UK’s largest property platform Rightmove reveals Britain’s seaside hotspots where prices are rising the fastest Bootle in Merseyside leads the way, with average asking prices up 11% year-on-year, followed by Crosby in Liverpool (+9%) and Penarth in South Glamorgan (+9%) Other coastal locations including Llantwit Major in South Glamorgan (+8%) and Llanelli, in Carmarthenshire (+7%) are also seeing strong price growth Average asking prices are currently 0.3% lower in Great Britain compared to last year, with some seaside hotspots outpacing the…
Read More →
Estate Agent Talk

Hertfordshire emerges as strongest performing London commuter county

New research from UK Property Development reveals that while London property prices fell by more than -3% in the past year, prices in some of the capital’s surrounding counties have enjoyed positive growth, none more so than the premium commuter county of Hertfordshire.   In the past year, London’s average house price has fallen by…
Read More →
Estate Agent Talk

Second homes losing appeal among the rich

New Survey Reveals Ongoing Maintenance Is the Biggest Barrier to Second Home Ownership   62% say upkeep and hassle would stop them from buying a second home, even if money were no object   A new survey conducted by luxury co-ownership platform Equity Residences has revealed that the practical realities of owning a second home…
Read More →
Letting Agent Talk

How to build a property portfolio with buy-to-let mortgages

One of the reasons property is such a popular asset choice for investors is that you don’t need to invest all the money yourself; you can leverage funds from the bank. Here’s a very simplistic example of how borrowing via a buy-to-let (BTL) mortgage allows you to multiply your returns versus owning a property all-cash:…
Read More →
Home and Living

2026’s Fastest-Growing Bathroom Trend Is the Wet Room

“Wet rooms have become one of the standout bathroom upgrades of 2026, moving from luxury extra to everyday renovation choice as more homeowners prioritise space, style and easy cleaning. The momentum is only building as spa‑style bathrooms stay in demand.” “Wet rooms used to be a niche request,” says Ant Langston, Marketing Manager at Heat…
Read More →