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 7 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

Jonathan Clarke

11:17 AM, 24th November 2016, About 7 years ago

Reply to the comment left by "Luke P" at "24/11/2016 - 10:38":

I agree. I bust a gut to comply. Enforcement is weak enough as it is. We live in a country which still largely polices by consent. But the more governments unfairly push their people the more they will rebel. If they squeeze us too hard people revert to cash in brown paper envelopes with no receipts and no paper trail. Enforcement becomes even more troublesome .

Many industries thrive happily on cash in hand. Letting agents may now join them. As demand continues to exceed supply they will be urged on by tenants desperate to secure a property which they have been searching for months and who will turn a blind eye in the manic race to get the keys in their own mitts

Fed Up Landlord

11:24 AM, 24th November 2016, About 7 years ago

Jonathan this will happen. Less than scrupulous agents will be saying they have a number of applicants and I can see requests being made for a "voluntary contribution" towards costs. I just hope this stupid government stops kicking the **** out of agents and landlords - because as you say rebellion in one way or form will come. Landlords will stop using agents as the fees to landlords will go up. Compliance and service delivery will go down with landlords who either do not want to comply, or do not know how to. Lettings is now a very complicated field and its not something you pick up in 5 minutes with a WH Smith tenancy agreement or a dodgy downloaded one off the internet.

Mark Alexander - Founder of Property118

11:47 AM, 24th November 2016, About 7 years ago

Reply to the comment left by "Luke P" at "24/11/2016 - 10:38":

Hi Luke

I suspect tenants would report charging of fees to Trading Standards and it would be up to them to enforce.

The "workaround" that some of the larger agents are secretly discussing discussing is to set up referencing companies and only to deal with prospective tenants who will use their company. Meanwhile, existing referencing companies are putting together packages for their agents to get commission for using them.
.

TheMaluka

12:00 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "Mark Alexander" at "24/11/2016 - 11:47":

Are letting agents going to be allowed to charge for referencing?

Fed Up Landlord

12:12 PM, 24th November 2016, About 7 years ago

David if its the same as Scotland then no.

Luke P

12:12 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "Mark Alexander" at "24/11/2016 - 11:47":

I will use a 'workaround' but even if I didn't, I know my local TS don't have the resources as they can't even chase the agents that aren't redress scheme members when they are reported (they didn't even know what I was talking about or that it was their duty to enforce).

Fed Up Landlord

12:25 PM, 24th November 2016, About 7 years ago

I can see the tenants fee being charged to the landlord. Then the landlord or agent will show the following on a monthly statement:

Rent: £500
Repayment of tenants referencing fee paid for by landlord:
£180 over 6 months@ £30 per month.
Total £530
And to go even further...
"Government Tenant Tax Levy"
£50 per month
(Contact your local MP for more details at yourmp.gov.uk)

This may be tongue in cheek..but...

TheMaluka

12:36 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "Gary Nock" at "24/11/2016 - 12:25":

Gary surely you omitted a digit?
“Government Tenant Tax Levy”
£250 per month"

Fed Up Landlord

13:10 PM, 24th November 2016, About 7 years ago

Sorry David your'e right!

Steve Wood

13:29 PM, 24th November 2016, About 7 years ago

why must they go to such extremes? Can't they have a complaint system to clamp down on excessive charges or propose a fair scale for charges?

Once again the thinking is, well, lacking in thinking!

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