New Tenant Fees laws = new problems for landlords?

by Readers Question

9:37 AM, 6th December 2019
About 4 months ago

New Tenant Fees laws = new problems for landlords?

Make Text Bigger
New Tenant Fees laws = new problems for landlords?

Something has come up and I am a tad worried about it, as I am not sure that I have correctly complied with the new laws.

Prior to the new legislation, I always asked the tenant to pay the small fee (only £20) for their reference checks, making it clear that I wouldn’t entertain renting to them without them being fully reference checked (i.e. their choice). I would of course sell this to them by rightly saying that it not only protected me, but the tenant too, since its an HMO and its a way of trying to ensure that all the tenants are more likely not to be a problem to each other. This seemed to work well and I never really had any complaints, as most reasonable people understood that it was them that needed to be checked out.

I decided to have a break with no tenants for a while as I was doing work upgrading the property so my last tenant left a couple of months before the new law came into force. I read up about the law as much as I could at the time it came in, and I thought that it was reasonably straight forward, that in future I would not be able to ask for the £20 upfront to reference check them. No problem I thought I will just ask them to get the references explaining that I was no longer able to do this on their behalf. Well that is what I thought!

I have had a situation recently, whereby someone paid a deposit and despite many requests for them to get references done and sent to me, they simply ignored me. After a month I have just been asked for the deposit back, despite it being partly for reserving a particular room that they wanted, and since having to tell other possible tenants that it had been reserved. I have since read up a little more on this because I wanted to know if I was able to make deductions for basically being messed around and having potentially losing out on other tenants who also wanted that particular room. It turns out, apart from the maximum 5 weeks deposit (mine was much less than that) the maximum holding deposit is now ONLY 1 weeks rent, in this case just £75. The deposit paid was £200, which I feel is fairly low and I only ask for it to give myself minimum protection, more of a good will gesture by the tenant to show willing and that they are serious about taking up a tenancy. Had this person come forward with satisfactory references I would have simply made it a normal deposit and as I am a resident landlord banked it, as you don’t need to do the government deposit scheme in such circumstances.

My concern is that I asked this person (who I now believe to have something to hide hence no references supplied) to apply to my normal referencing company for the references, believing that as I am not taking any money from them that is was fine. However, I have now read a guide (produced since the law came into effect) on their website which states ‘This means you will no longer be allowed to ask tenants to cover the cost of their own referencing. You also won’t be able to charge check-in, inventory or admin fees’. Obviously this was news to me and I have asked them to obtain references and referred them to the website.

It’s a real mess and another kick in the teeth for landlords. What am I supposed to say to them, I want references but cannot in any way tell you how to obtain them, but here is the list? It’s ridiculous. Like any landlord I don’t see why I should be lumbered with paying out for reference checks to make sure they are a good tenant, if you had 4 people going for one room are you supposed to shell out £80? I only ever ask for a reference after meeting them face to face and getting a good gut feeling about them (albeit I obviously got it wrong with this last one!).

So, has anyone else come across this problem and what are you all doing? Personally there is no way I would ever let anyone into my property without being fully reference checked as I made this mistake many years ago, similar to this latest one, she paid a deposit and avoided being checked out and the only money I received was the deposit, it took me 6 months to get her out, thankfully the house wasn’t too bad and I never let it again, I sold it due to the bad experience.

Obviously I learned a hard lesson, but I am now concerned about how to actually ask for a reference! I cannot even say look on the internet because there might be an inference that you are pushing them towards referencing companies. I am really not sure what to do for the next person who comes to view and starts asking me questions, other than to send them an email and say this is what I need, up to you how you go about getting it! These stupid politicians who decide on these laws have no idea the problems that they cause!

Anyway, I hope I have helped make Landlords aware of this problem and look forward to your experiences and suggestions.

All the best…Tony



Comments

ferdmartin

22:22 PM, 6th December 2019
About 4 months ago

The truth is; The tenants are being tricked into thinking that the government is giving them a favour by banning agents fee, whereas the true reason is the government want to collect more tax from the landlord and the only way the landlord can comply is to raise up the rents.

Michael Barnes

0:20 AM, 7th December 2019
About 4 months ago

Reply to the comment left by AroundTheClock at 06/12/2019 - 11:36
You cannot just say "if you fail a reference check..." because the prospective tenant has no idea what is required to pass.

You must state what criteria they will be required to meet, e.g.
- no CCJs
- Current and previous LL says no arrears and no outstanding debt.
- Employer confirms salary is at least X.

Rodneyt1p1

2:32 AM, 7th December 2019
About 4 months ago

If you're renting your property for the average amount, which equates to approximately £20k a year, then it's fair enough that us landlords take the small fee for referencing. You really aren't doing any one favours by squabbling over such a minor amount

David Price

9:35 AM, 7th December 2019
About 4 months ago

Ask the tenant for his Experian credit check, that is free. I am very surprised that I am the first one to mention this.

First obstacle, get the prospective tenant to fill in an application form, mine is ten pages long, so that they have to invest some of their time in making the application.

60% of my prospective tenants fail at this first obstacle with many not even putting pen to paper.

Second obstacle ask for the Experian credit report.

You will not be left with many prospective tenants but those that remain will probably be at the better end of the market.

Tenant fees have been banned, tenant time has not.

The Forever Tenant

9:41 AM, 7th December 2019
About 4 months ago

I don't think you can even ask a prospective tenant to go and get their credit report. It would require them to sign up with a third party even though it's free. I'm pretty sure that is also a breach of the TFA.

Graham Bowcock

12:00 PM, 7th December 2019
About 4 months ago

I am staggered that a landlord has a ten page form for a tenancy application. What on earth is being asked? I'm not surprised many tenants fail at this stage - they probably see it as wholly inappropriate and intrusive. I don't think I've done a ten page application for a mortgage, never mind a tenancy.

I would never accept information that a tenant provides. I always do my own checks.

As regards the collection of information though, I hope that all landlords are registered with the Information Commissioner's Office (ICO) as now required by law under GDPR. Coincidentally I have had a letter this morning from the ICO advising that one of my property businesses is not registered. The letter specifically makes references to tenants' information. The ICO is therefore clearly aware that not all landlord (possibly the majority?) are not registered. This is serious as the fine for non-compliance is £5,000.

David Price

12:53 PM, 7th December 2019
About 4 months ago

Reply to the comment left by Graham Bowcock at 07/12/2019 - 12:00
Graham, I think you have missed the point. A landlord cannot charge any fees which was a good filter to eliminate the time wasters. So I have introduced a form which requires the tenant to invest some of his time in an effort to eliminate time wasters. The questions asked are simple such as 'Name' (I have even had an applicant who stumbled over this one), 'Address', 'Bank account number'; amongst other things it requires a declaration that they are not involved in alcohol or drug abuse, they of course lie but it is a good ground for eviction if needed. It has proved to be a very effective filter, I do not need to say "No DSS" (specifically those whose sole income is from benefits) as they are generally too lazy to complete the form and hence self eliminating.

As to being registered with the ICO, yes it is essential BUT when I reported a serious and ongoing data breach (in a non letting company) the ICO did nothing. The main reason a company is required to register is so that HMRC can check it is paying the correct tax. When you look at the criteria for registration there are very few companies which are exempt, a nice little earner for ICO and a nice source of active companies for HMRC.

Michael Barnes

15:19 PM, 7th December 2019
About 4 months ago

Reply to the comment left by Rodneyt1p1 at 07/12/2019 - 02:32
£20K a year?

My top property grosses £8.5K

Robert M

16:37 PM, 7th December 2019
About 4 months ago

Off topic but here is a consequence of TFA:
Cost of lock out after hours now - £25
Lock out after hours in future - no service
https://apyork.com/tenant_info/tenant_fees.pdf

David Price

16:51 PM, 7th December 2019
About 4 months ago

Reply to the comment left by Robert at 07/12/2019 - 16:37
I guess this is what Generation Rent and Shelter wanted when they campaigned for the abolition of ALL tenant fees.

1 2 3 4

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Meet Mark Smith (Barrister-At-Law) Landlord tax planning strategies - Online

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More