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 5 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


by Simon Griffith

7:56 AM, 24th November 2016, About 5 years ago

We seem to be following the Scottish lead now. First the Green Party now SNP - shame on the Tories. I note that in the back end of 2015 Sturgeon was chuntering about a bill to introduce rent controls and also effectively stop the ability to get possession via the equivalent of a s21 route. I can't find what the up to date position is here but bearing in mind the sustained attacks if someone does know what is happening up there it would be useful. Personally I do think rent controls are almost inevitable and for those insisting on not yet increasing rents it should provide a prompt. In the words of JR Ewing (for those who can remember) 'no more Mr Nice guy'. Charitably subsidising the tenants lifestyle by offering below market rents is a luxury no landlord can afford. The increase in rent levels will be the only trigger to the end of this nonsense. There's going to be a big storm but the sooner we enter it the sooner we can leave it. Batten down the hatches !

by Gary Nock

8:41 AM, 24th November 2016, About 5 years ago

A pity that the same zeal has not been applied to excessive service charges on leasehold properties. Can we ban those too and pass the costs onto the landlord?

by Mark Alexander

8:47 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Gary Nock" at "24/11/2016 - 08:41":

I wonder whether the ban will extend to freehold management companies not being able to charge consent to let fees to their long leasehold tenants?

by Gary Nock

9:09 AM, 24th November 2016, About 5 years ago

Is this another path to take with the Axe The Tenant Tax? Many landlords pay excessive service charges on flats. Attempts to reduce them via Right To Manage and Tribunal are frustrated by Freeholders legal muscle. Landlords pass these onto tenants in the form of higher rents. Leaseholders have no choice in what managing agent or freeholder they use. Fees are charged " up front" - sound familiar....sauce for the goose etc etc...

by Rod Adams

9:14 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Simon Griffith" at "24/11/2016 - 07:56":

The new legislation has been passed by the Scottish parliament and is awaiting royal assent. I think it comes into play next year sometime.
There will be no facility to terminate a lease with no cause but there are grounds which cover most eventualities so I don't see that as the worst part of the legislation.
The rent control element has been watered down a bit to only allow for restriction on rent increases. A local authority has to apply for a 'Rent restriction zone' where they think there are cirmcumstances in the local market which justify it. There is then a formula which applies to maximum rent increases. Although in practice if one of these areas is introduced all rents will be increased by this formula (as per the minimum wage effect).
The most worrying part of the new legislation is that a tenant can give 42 days notice to quit regardless of the length of the tenancy. The Greens introduced this to protect an invidual in an abusive relationship so that they can get out of a tenancy and not have to stay with the abusive partner. And no, I didn't just make up that last bit!



by Mark Alexander

9:17 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Gary Nock" at "24/11/2016 - 09:09":

What Freeholder do has nothing to do with the TanantTax campaign but it is something The Landlords Union could take on when resources allow.

by Mark Alexander

9:21 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Rod Adams" at "24/11/2016 - 09:14":

Hi Rod

If there was a referendum on whether to apply all Scots Law affecting housing in the UK I would vote for it as it seems to be very logical to me.

If you think I am wrong please tell me why, it could make for a very interesting debate.

My opening point is that it would stop gamumping.

by Rod Adams

9:37 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Mark Alexander" at "24/11/2016 - 09:21":

Hi Mark,

I would agree whole heartedly regarding the law surrounding the purchase of property. The system here seems to work well and you don't hear the horror stories about gazumping etc. which you get down south. We also have no concept of 'lease holder', which can only be a good thing. The single survey approach has also been a huge improvement despite initial reservations.

However on the tenancy side I would be more undecided. The new legislation swings things firmly in favour of the tenants, especially with the 42 day notice a tenant can give at any time. I also dont like the rent restriction elements, but that has been watered down. As we are seeing in Aberdeen at the moment, supply and demand are the best regulators of rent. Only time will tell how the new legislation with its standard tenancy will work in practice.

There are some good elements in the current legislation which (if applied and policed) should weed out the less reputable landlords who don't maintain properties to a tolerable standard.

So its a 'Maybe aye, maybe naw' from me.



by Mark Alexander

9:47 AM, 24th November 2016, About 5 years ago

Reply to the comment left by "Rod Adams" at "24/11/2016 - 09:37":

..... and there I was looking forward to a good debate 🙁 LOL

As you may know, my wife and I reside in Malta but our rental portfolio is predominantly based in England, save for a few in Russia and USA.

Here in Malta a tenant can give 30 days notice at any time, regardless of the lease term remaining, subject to forfeiture of the rental deposit. It seems to work well. Naturally there are always exception to the rule caused by bad tenants but if they decide to wreck a place and vanish without notice that's always going to be a problem, regardless of what the law says.

What I also like about Malta is that a landlord can evict a non-Maltese tenant, without a Court order, if ba rent payment is more than 7 days late. If the matter is disputed it is up to the tenant to litigate based on proof that payments were no more than 7 days in arrears.

I think English property law is an over complicated mess. I'd prefer Scots law any day, and if a few bits of law from Malta could be thrown into the mix that would be Utopia so far as I'm concerned.

by Luke P

10:38 AM, 24th November 2016, About 5 years ago

Who is going to police the ban of fees? Obviously if an agent tries to charge fees, the prospective tenants will be the first to know, but who will they report it to?

During an office discussion yesterday about what we could set up as an alternative to fees, 'ignoring the rules' was one suggestion. A suggestion I would ordinarily dismiss, but then I thought that for the past 10 years we have been bombarded by a steady stream of legislation that I have always tried to ensure is followed to the letter of the law, yet I know of (and have reported) a number of local agents for not being a member of the PRS, landlords who have not protected deposits, failed to complete gas safety checks, some have even physically evicted their tenants but nothing is done. Literally nothing. Would anyone follow up claims of an agent charging fees?

Rules are only any good if they're enforced.

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