Letting Agents will no longer be able to charge fees to tenants

by Mark Alexander

8:33 AM, 23rd November 2016
About 4 years ago

Letting Agents will no longer be able to charge fees to tenants

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Letting Agents will no longer be able to charge fees to tenants

Letting Agents will no longer be able to charge fees to tenants

HM Treasury has leaked an extract from the Chancellors Autumn statement which will announce that Letting Agents will no longer be able to charge fees to tenants

Whilst the Chancellors announcement will no doubt be treated by tenants as good news, industry bodies do not see it that way.

David Cox, Managing Director, Association of Residential Letting Agents (ARLA), said …

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.

“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”

Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA), said …….

“The new Chancellor is clearly aware of the pressures facing those living in the private-rented sector, but in attempting to improve affordability he has shown that, like his predecessor, he lacks an understanding of how the whole sector works.

“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long. Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.

“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents”.

Chris Sheldon. Managing Director of LettingSupermarket.com said ….

“It was only a matter of time before the legislation previously introduced in Scotland would filter into the rest of the UK so our business model was already prepared and ready for implementation. Our new fee scale to landlords will continue to be the most competitive in the Country offering full management for just 5% of rent (6% for properties inside the M25) and letting fees of just £100 per new tenant (£150 inside the M25). We will not charge for renewing tenancies for existing tenants”

Contact LettingSupermarket.com


Michael Jones

12:38 PM, 23rd November 2016
About 4 years ago

Would the Chancellor's decision be the cause of inflation in the property rental market ?

Perhaps the letting agent would look to charge the landlord a fee, instead of the incoming tenant.
One leading to higher rents , to ensure no change in net landlord income .

Inflation !

Rod Adams

13:09 PM, 23rd November 2016
About 4 years ago

As has been mentioned, this has been the case in Scotland for many years. The sun is still rising in the morning and the rental market is alive and kicking. This really is just minor noise in the general scheme of things. Landlords and agents will adapt their ways of working to put the onus on the tenant to provide any referencing material required thus minimising the effort (and therefore cost) for the landlord/agent.

One thing I find strange is the view that landlords will have to put up rents to accommodate this. In my experience the market sets the rent, not the landlord. Most landlords will take as much rent as they can get for a property in the prevailing market, so to challenge this on the basis that rents will rise seems a bit disingenuous.



Luke P

13:23 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Mark Alexander" at "23/11/2016 - 11:47":

Barely any tenants in my neck of the woods would pass traditional referencing, certainly not RGI referencing.

Whiteskifreak Surrey

13:36 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Michael Jones" at "23/11/2016 - 12:38":

The next step surely will be making letting agent fees not tax-deductable.
Why not make all LLs with a mortgage criminals by law and treat them accordingly?

Gary Nock

13:38 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Rod Adams" at "23/11/2016 - 13:09":

Yes the market sets the rent...but many landlords let at the market rate and then do not bother to increase it. In many cases for several years. The combined effect of Section 24, stamp duty changes, capital gains changes, and now the imposition of letting agent fees on landlords will and already has led to rent increases. Someone has to pay for services. If the landlord pays for it all then he will set his rents at the market rate and keep updating them to cover the additional costs.

Gary Nock

13:42 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "23/11/2016 - 13:36":

Jolly good idea. Lets criminalise all landlords as they are guilty of property theft. If it wasn't for them every tenant would be able to save a deposit and afford a home.

Sorry just been listening to the Shadow Chancellor..

Mandy Thomson

13:50 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Mark Alexander" at "23/11/2016 - 11:47":

Good points, Mark but even with a really good reference provider, you don't know just how thorough that reference is. Someone sitting in an office who is expected to get through a certain (probably high) quota of references each day who is not going to have to bear the consequences of a bad tenant is likely to take short cuts and risks.

By doing my own references (albeit facilitated through a reliable provider) I can check any leads I find, and investigate any possible anomalies.

Where RGI is concerned, although I wouldn't be without it, it must be remembered that this is self certified, which means the insurer will ASSUME the tenant meets their criteria and if they don't, this will only come to light in the event of a claim, as this landlord found to his cost.

Michael Jones

13:51 PM, 23rd November 2016
About 4 years ago

Do tenant references provide any surety ?

My last experience - October 2016 , after successful referencing - was where the tenant's ex-boyfriend had located her and able to take control of the rented property. Police advised the tenant to leave the property.

So what was being paid for through the letting agent fee ?

Traditional tenant referencing does not provide surety.

Good that it has been removed !

Gary Nock

14:02 PM, 23rd November 2016
About 4 years ago

Reply to the comment left by "Mandy Thomson" at "23/11/2016 - 13:50":

Mandy with any RGI there will be terms and conditions. The trick is to ensure that your referencing process and tenancy paperwork is compliant to satisfy those terms and conditions. And boring as it may seem my processes are aligned with the terms and conditions so I know if a claim is made then despite the attempts of the office junior in the underwriters office to throw a claim out - then they can't. I create a checklist based on the Ts and Cs and include it on my lettings checklists. Sometimes the underwriter will try and sneak a "new" T or C in - and then I ask where it is, in what version, and when did it come in. Silence normally prevails.

Mark Alexander

14:03 PM, 23rd November 2016
About 4 years ago


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