Loyal tenants in the UK are likely to be hit the hardest by the UK government’s proposal to ban the letting agent’s fee, a study conducted jointly by the ARLA Propertymark (Association of Residential Letting Agents) and Capital Economics has revealed.

The letting agent fees account for around a fifth of letting agents’ revenues, and cover the cost of vital checks required to set up a tenancy agreement. “If they are banned outright when the Government publishes its consultation, agents will need to pass the costs on to landlords through higher agents’ fees. Two in five landlords (41 per cent) expect they will need to pass on a portion of the inflated cost to tenants, and the research finds they will most likely push rents up by £103 on average per year. If landlords were to pass on the entire uplift in agents’ fees, tenants would be hit harder, typically seeing rent increases of £275 a year,” ARLA said in a statement.

ARLA contended that the fees charged by UK letting agents are lower, compared to other major economies. In France, higher-end agency fees are at 12 Euros per square meter, or £416 for a 40 square metre Parisian apartment, and in the USA, fees equate to a month’s rent – $1,404 or £1,132 on average.

“The lettings sector is worth about £4 billion and employs around 58,000 people all over the country. The Government’s Autumn Statement announcement that it plans to ban letting agent fees was the third big blow in as many years for agents, and exacerbate the threat to the private rented sector; an increasingly important tenure on which millions of people rely,” said David Cox, Chief Executive, ARLA Propertymark.

The lettings sector employees around 58,000 people across the country. If letting agents take the full hit of the letting agent fee ban, 16,000 jobs will be at risk. It’s more likely however agents will pass on 75 per cent of the costs to landlords, which would result in job losses of around 4,000.