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Broker fees on rentals are now banned in the U.K., but New Yorkers shouldn't bank on it

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A few months back, we wrote about a petition to ban so-called "letting fees," the U.K. equivalent of the broker fees many New Yorkers pay on rentals. After more than 250,000 people signed off on the petition, finance minister Phillip Hammond announced in a budget statement late last month that the fees will, indeed, become a thing of the past, as Reuters reports.

The ban will spell some relief for renters in Britain, who have to pay "anywhere from £80 to £500 or £600" in letting agent fees, according to Vicky Spratt, editor of The Debrief, the publication that first launched the campaign against the fees.

In a statement posted after the announcement, The Debrief's editors wrote:

There are now over 4 million households renting in England and this change will benefit all of them. It’s expected that by 2025 over half of the under 40s will be renting, unable to buy their own home, the success of our campaign demonstrates that government are finally listening to millennials. 

However, there’s still a lot of work to be done. There is no silver bullet for this country’s housing crisis. We need a safer, fairer and more secure private rental system which works for tenants, not just letting agents and landlords. 

Many landlords and brokers in Britain's real estate industry have warned that the cost of hiring brokers will simply be passed on to tenants in the form of higher rents, and the managing director of the Association of Residential Letting told Reuters, "This decision is a crowd-pleaser, which will not help renters in the long-term."

Either way, it will be interesting to see how the transition into a market without broker fees plays out. But don't hold your breath on something similar happening here: New York explicitly avoids regulating broker fees, so unless the market takes a dramatic turn or you manage to find a no-fee rental, if you're looking for a NYC rental, you'll likely still have to pony up and pay the broker.

 

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