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

Fed Up Landlord

13:32 PM, 24th November 2016, About 7 years ago

They are after the "middle ground" of disaffected labour voters so are appealing to the left wing anti landlord keyboard warriors. It's more political strategy than moral indignation. Landlords and agents are popular pariahs at the moment

Steve Wood

13:45 PM, 24th November 2016, About 7 years ago

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

absolutely right. May just be called Rent though!

TheMaluka

13:50 PM, 24th November 2016, About 7 years ago

I have been doing a bit of blue sky orthogonal thinking out of the box concerning prospective tenant committment. I have never charged my tenants anything at the start of the tenancy bar £20 for an electronic key to the building. I have had a great number of prospective tenants walk away having committed to a tenancy, even after signing a tenancy agreement, without ever taking up residence. So as an alternative to upfront fees I now ask any prospective tenant to complete a four page questionnaire, a task which takes a considerable time and requires the tenant to make some effort. You will be surprised how many this weeds out, people who cannot be bothered to make the effort, the very people I do not want. Many complain that they are too busy (watching Eastenders?), some cannot read, some just have no idea of even their current address, many have no bank account so cannot give details.

There is an alternative to fees to get some level of commitment from a prospective tenant although still not as good as real money.

Jonathan Clarke

15:24 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "David Price" at "24/11/2016 - 13:50":

Likewise for years I never charged fees. The material cost to me in time was negligible. I e mailed them an application form and paper sifted the replies. I would put a simple mark out of 10 against the one page application form when and if it came back. Anyone scoring under 8 out of 10 went into the out tray. Because of demand I never had the need to chase so the process would only take a few minutes out of my day.

Then a phone interview of 3 minutes to the top 3 scorers revealed if i wanted to let them view or not. Some were arrogant some were ignorant some were perfect. If they got through those 2 stages then more often than not the DD on my part had been done and first person would take it. I would build the personal rapport on site

The amount of people who were not prepared for the simplest of interview was extraordinary. If supply exceeded demand then the boot would be on the other foot and I would have to up my game and be prepared to impress. My life would then have to fit around theirs. But its not and its the reverse and prospective tenants need to be on the ball. Treat it like a job interview I always tell them. That establishes at the outset the tone of relationship between us. Good manners cost nothing as they say. And now with a ban on fees my old school motto will become even more important as the currency they need to be using...
Manners Maketh Man

Appalled Landlord

15:53 PM, 24th November 2016, About 7 years ago

Just as Osborne stole S 24 from the Green Party manifesto, Hammond has stolen this from another tiny party, the LibDems:

https://homelet.co.uk/letting-agents/news/article/what-is-the-renters-rights-bill

The Tories’ next move will be to change their name to the Nonconservative Party.

Whiteskifreak Surrey

15:53 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "David Price" at "24/11/2016 - 13:50":

Great ideas, David and Jonathan,
We manage everything ourselves, never charge tenant for anything, and also use tenants' questionnaire (2 pages only). We show our properties to all interested (who fill in the questionnaire in the first place), and generally people come extremely well prepared. Once we had a couple (PhD students) with all paperwork, references, salary confirmation and even deposit money on them - at 8 am on Saturday! Needless to say they got the flat - stayed 4 years on the same rent. One of the best tenants we ever had!
First impression counts considerably!
I just wonder what David puts on his 4 pages?
Ban on Letting Agency fees does not concern us at the moment. Will hopefully let us to stay competitive, although we will be affected by S24, as we are in employment.

TheMaluka

19:46 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "24/11/2016 - 15:53":

Amongst other things I ask them to go through their finances to show that they can afford the rent, specifically the top up. My form, which was downloaded from the internet, is based on the premise that if you ask a tenant to do a lot and he can't be bothered then you don't want him. Bear in mind that all my tenants are housing benefit claimants and have nothing to do all day (except the important task of watching Eastenders), so filling in a form is a therapeutic activity!

Whiteskifreak Surrey

19:53 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "David Price" at "24/11/2016 - 19:46":

Thank you David - we have different type of tenants (not sure if they are into Eastenders), but it is worth knowing that trick!

Chris @ Possession Friend

20:16 PM, 24th November 2016, About 7 years ago

Interested in where David got his form, i.e. which intranet site ( as in, who else is using it ? )
Chris

TheMaluka

23:50 PM, 24th November 2016, About 7 years ago

Reply to the comment left by "Chris Daniel" at "24/11/2016 - 20:16":

Sorry can't help as the source is lost in history and I cannot publish as I do not own the copyright. Part of the form is a declaration that they are not involved with excessive alcohol or illicit drugs. They all sign and then turn up drunk on the first evening !!!

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