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

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

8:33 AM, 23rd November 2016, About 8 years ago 111

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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


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Comments

Luke P

17:02 PM, 23rd November 2016, About 7 years ago

Reply to the comment left by "gary dave" at "23/11/2016 - 16:59":

Wow! No wonder HMG/tenants are annoyed. Here I am charging £100 'all in'. Minority spoiling it for the rest I see.

gary dave

17:10 PM, 23rd November 2016, About 7 years ago

Reply to the comment left by "Luke P" at "23/11/2016 - 17:02":

That's correct Luke, free market dynamics as I understand them certainly don't seem to operate in the city I currently live in which is in the north of England. There are hundreds of letting agents all charging 60% and non of them will negotiate on price! Explain that one?? How is it even possible?? Its a lot more members than OPEC to co-ordinate!

CazT

17:25 PM, 23rd November 2016, About 7 years ago

Hi I'm using an iPad Air 2 and IOS 10.1.1. Haven't got a clue how to look up my Safari version!?!

Michael Jones

17:39 PM, 23rd November 2016, About 7 years ago

Yes, 50% of the 1st month rent - charged to / paid by the landlord for finding the tenant , on the initial letting only - is the norm in South Wales too ( i.e. £325 on a 2 bed property renting at £650 pcm , plus monthly % commissions thereafter ). There should have been a ceiling price particularly as agent man.hours needed these days to find suitable tenants is so few. Letting agents are responsible for bringing unnecessary attention to this market.

Romain Garcin

18:05 PM, 23rd November 2016, About 7 years ago

One thing to remember is that agents can only charge tenants if they have the consent of landlords.

I also think that it is a very slippery slope to want to have price control on anything based on the perceived work it requires.

The issue is that competition amongst agents is usually low, and the recent new requirements only make it worse.

Then the real, key issue, is the lack of housing. As long as this continues tenants will pay one way or another.

Mark Alexander - Founder of Property118

18:19 PM, 23rd November 2016, About 7 years ago

Reply to the comment left by "gary dave" at "23/11/2016 - 16:59":

Hi Gary

Actually, that's standard here in Malta where I live. Both landlord and tenant each pay agent half a months rent up front. All agent does is tenant find.

Is somewhere in the UK charging that?
.

Trendo

19:59 PM, 23rd November 2016, About 7 years ago

Student house 9x £350 = £3150 pcm
Landlord fee 50% £1575 +vat

Tenant fee 9x £100 + £900 =vat

Nice work when you can get it !!!

Chris @ Possession Friend

21:02 PM, 23rd November 2016, About 7 years ago

Mark,
Whilst the 'legislation' isn't published yet, all that's been said is about " Letting Agents not charging " Some landlords who arrange their own tenancies already charge an Administration fee. - If the Govt / Chancellor's intention was to stop this, surely he would have said No Tenants fees to be charged ?
Ultimately, it will be rents that rise, - to such an extent that the only option left to the govt is stop - Limit rent increases ?
Chris

Trendo

0:15 AM, 24th November 2016, About 7 years ago

Reply to the comment left by "Chris Daniel" at "23/11/2016 - 21:02":

I charge an admin fee to process tenant apps .......... but i am struggling to see how that can continue if agents are not charging ?
It is generally a lot cheaper to go direct to LL or has been up until now , but how do you compete with £0 fees from agents ?

Tenants will soon need to provide "verified self referencing" from a Landlords list of approved ref agencies, those agencies will need to adapt quickly to these changes to facilitate tenant direct referencing at their own cost. My guess is that LL may get paid a refferal fee for providing clients to ref agencies ! ...

TheMaluka

6:20 AM, 24th November 2016, About 7 years ago

Reply to the comment left by "Chris Daniel" at "23/11/2016 - 21:02":

There is only one more effective way to destroy a city than rent control.

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