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?

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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

Ian Narbeth

19:09 PM, 8th December 2019
About 4 months ago

Reply to the comment left by David Price at 07/12/2019 - 12:53
It's a good idea and we also have a holding deposit agreement under which the tenant makes representations as to the truth of various statements. That way if it turns out they have CCJs or are bankrupt it is easier to forfeit the holding deposit. I haven't had to use it in anger yet and forfeit a holding deposit post TFA coming into force.

L-Lewis

0:36 AM, 9th December 2019
About 4 months ago

While most tenants wouldn't mind paying 20 quid for a background check I saw most agencies charging far in excess of this. My brother for instance last year had to pay £500 for referencing and "check in" which was a generic company doing the reference which costs about £20 and turning up for 5 mins to throw a key in the door. Unfortunately when the Tories brought the legislation in they wanted to sound like they were being the party of the people and rather than setting a limit on charges they cut them completely! Regards to a 20 page or whatever application form asking for all the details you say, I hope you are being GDPR compliant as you wouldn't want the fines they slap on people

Marie

10:03 AM, 9th December 2019
About 4 months ago

Reply to the comment left by David Price at 07/12/2019 - 12:53David, I think your 10-page form is a really excellent idea. Weed out the time-wasters. Anyone can say they are interested in your property. But only those who are genuinely interested, and who are real contenders, will fill out a ten-page form!
I would like your advice on something David.
Say I approached you as a potential tenant, and I filled out your ten-page form correctly, and provided you with a copy of my Experian Credit Check, proving myself not to be bankrupt, and to have no CCJs or history of debt. I also offer you 3 months rent in advance as well as the deposit and full Rent Guarantee Insurance or company guarantor.
But I am in the following situation:
A). Annual net income of £23,660 comes from lifetime-awarded benefits which are legally guaranteed.
B). No landlord reference as I have lived with my mother for many years following the death of my father.
Would where my income comes from and having not rented for many years make me unhouseable?

The Forever Tenant

11:51 AM, 9th December 2019
About 4 months ago

I do wonder if you lose good applicants because of a 10 page application form. I do wonder what questions you have that would fill up all 10 pages.

If I was handed such an application form, I would probably not fill it in. Not because I am a timewaster and not because I have anything to hide. Simply because in my mind if a landlord is looking for that much personal information before I'm even renting their property, it gives me doubts on how much of a private life I would have in their property. Would I be allowed any freedom while in that property at all.

This has made me wonder something that goes along these lines. If a landlord took a holding deposit, then gave the tenant such an application form to which the tenant refused, I wonder if the landlord could legitimately keep the holding deposit.
Technically, its the tenant that has refused the tenancy but this is something untested in court.

David Price

13:11 PM, 9th December 2019
About 4 months ago

Reply to the comment left by Marie at 09/12/2019 - 10:03
You would be welcome in one of my properties. Every tenant is considered on their merits and the most important aspect is the personal interview. I have never taken deposits and would not take three months rent in advance.

David Price

13:23 PM, 9th December 2019
About 4 months ago

Reply to the comment left by The Forever Tenant at 09/12/2019 - 11:51
I do not take holding deposits, every tenant is informed that the property is available on a first come first served basis, however I have over 80 properties so there is always one available.
As to a tenant's private life, the law deals more than adequately with that.

Robert Mellors

13:31 PM, 9th December 2019
About 4 months ago

I don't have a 10 page application form like David, but I do have a 6 page application form. Although I do understand that this will put some potential tenants off applying (both good and bad tenants), it is better to have too much information than not enough, so long as all the questions are relevant to the decision making process or the management of the tenancy (or future recovery of debt).

David Price

14:15 PM, 9th December 2019
About 4 months ago

Reply to the comment left by Robert Mellors at 09/12/2019 - 13:31
One page of my application form is a General Data Protection Regulation (GDPR) statement which the tenant is asked to sign, kindly provided for me by iHowz, an association of which I am a member. Since this statement is for members only it is one of several reasons why I cannot publish my form.

Marie

18:27 PM, 9th December 2019
About 4 months ago

Reply to the comment left by David Price at 09/12/2019 - 13:11
Thank you David. Wow. I have contacted some landlords on Open Rent and Gumtree and been asked for six and twelve months rent in advance! Told that if I don’t have that I have no chance whatsoever of finding somewhere at all. That’s if they bother to reply in the first place. I have noticed that a few landlords on here do not take deposits. What do you do if a tenant causes damage to your property?

Michael Barnes

14:28 PM, 14th December 2019
About 4 months ago

Reply to the comment left by The Forever Tenant at 09/12/2019 - 11:51
"in my mind if a landlord is looking for that much personal information before I'm even renting their property"

That is the only time that a LL has the opportunity to find out about a stranger to whom he may be entrusting the care of a £100K+ asset.

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