Landlords need to plan for higher letting agents’ fees

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Letting Fees Ban:

Buy-to-let landlords who use letting agents and those others that charge their own fees need to think seriously about how they will deal with the inevitably higher letting fees, or lost income, when the tenant fees ban comes in, most likely next year.

The extra costs involved will put a strain on some landlords, as the tax changes begin to bite and if interest rates start to rise as predicted.

It is almost inevitable that most agents will raise their landlord fees in order to recoup some of their lost income when the lettings fee for tenants ban comes in.

The government has carried out its own impact assessment of the fees ban and has estimated that landlords will lose around £83m in the first year of the ban, and the caps on damage and holding deposits have been estimated at £1.3m in total.

Letting agents themselves could be hit even harder with an estimated loss of income in the region of £157m in year one.

Tax and other regulatory changes in the private rented sector mean that landlords and agents are already facing significant challenges ahead.

Not all of these extra costs are likely to get passed on in the form of higher rents, as tenants themselves are under financial pressures. Landlords and agents need to find other ways to reduce their costs and increase efficiency.

Some landlords will consider more self-management of tenancies, but anyone taking this on for the first time must be prepared to do their homework, to mug-up on the law and to take on some extra work, especially when it comes to tenancy change-overs.

What is involved with a Fees Ban

The fees ban will apply to landlords as well as letting agents but only in England, at least initially. Scotland already has the ban.

The ban will not apply to existing tenancies, though it will apply to new tenancies and renewals which includes when a tenancy becomes periodic, after the Tenant Fees Act comes into force.

All fees required as a condition of the “grant, continuance or renewal� of an assured shorthold tenancy (AST) or licence agreement are to be banned. Company lets and non-assured tenancies will be exempt.

Examples of banned fees include:

• Admin fees
• Credit checks
• Referencing
• Inventories
• Guarantor checks
• Cleaning services
• Professional cleaning
• Gardening services

There are some exemptions:

• Rent
• Holding deposits, capped at one week’s rent and limited to 15 days
• Damage / Security deposits capped at 6 weeks’ rent
• Reasonable charges for defaulting, breach of tenancy, reminder letters, interest on arrears etc.

Varying the rent, for example setting a higher rent to cover fees for a period of time before reverting to a lower rent will not be allowed, thought rent level setting is unrestricted, so long as it is applied consistently.

Penalties for non-compliance will be a fine of up to £5000 for a first offence. Any subsequent breaches will be classed as criminal offences, or alternatively the landlord may be fined up to £30,000 and will be subject to a banning order.

These requirements may be subject to change once the Tenant Fees Act comes into force.

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UK Landlords Campaigning To Save Tenants From Rent Hikes and Eviction

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Whoever thought we would see landlords funding a campaign to save tenants from rent hikes and eviction?

It’s happening though!

Bournemouth is the latest City to see the erection of Section 24 campaign billboards.

The first in Bournemouth is located just off 549 Wimbourne Road

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Evicting tenants who are keeping pets without permission

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The first question to ask is do you have a clause in your tenancy agreement prohibiting pet ownership at the property?

Why have a clause?

Landlords commonly will have a clause prohibiting pet ownership for the following reasons:

• Potential damage to the property
• Problems for future tenants due to pet allergies
• Noise and disturbances
• Fleas
• Unwanted odors and mess in the garden
• Fur

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Grenfell Tower: Hackitt Review published

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New building regulations will be but in place in the wake of the Grenfell Tower tragedy, with details released in the Government’s official report into the devastating blaze, published today. Seventy one people died in the tragedy on June 14th last year, with the Government’s Independent Review of Building Regulations and Fire Safety, led by Dame Judith Hackitt, […]

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Shelter want default fees banned

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In addition to the government lettings fee ban Shelter are calling for a ban or limit on what they term ‘backdoor’ or default fees.

Default fees are a charge written into the tenancy contract when an agreed term has been broken or a service has to be provided.

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Are private landlords going soft in their old age?

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Public perception of private landlords is often that they are a tight fisted bunch looking for any opportunity to hike up rents or make tenants homeless. However, a recent Just Giving campaign goes at least some way to dispelling this myth.

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The Lords is examining the Creditworthiness Assessment Bill

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Tenant Creditworthiness:

The Creditworthiness Assessment Bill, which is progressing through the House of Lords, and is looking increasingly like it will reach the statute book, has had its committee stage, a chance for the Lords to scrutinise it line by line, on Friday 11 May.

This is a private member’s bill brought by Lord Bird, founder of the homelessness publication, the Big Issue, to address the fact that at the moment rental payments by over 10m tenants in the UK do not count towards any sort of assessment of creditworthiness in the same way that other financial payments do.

A private member’s bill is a type of public bill (that affects the public). Private members’ bills must go through the same set of procedures as other public bills in Parliament.

For some time now there have been calls for the way tenants pay rent to be taken into account when creditworthiness assessments (credit checks to you and me) are carried out.

This bill if passed will require rent payment histories to be taken into account when assessing a borrower’s creditworthiness.

The Creditworthiness Assessment Bill, which has received widespread all-party support in the House of Lords, had its first reading June 2017 and its second reading, the key debate on the draft law’s purpose and principles, last November 2017. It has now got through its Committee Stage on Friday last.

There were fears that the bill would be stymied by amendments, but these fears proved unfounded as the amendments were withdrawn.

Lord Bird said:

“If there are any unintended consequences then it is our duty to look at legislation and not simply write-off 80 per cent of people in order to protect 20 when the best thing you can do to protect them is to find out who they are, get very close to them and embrace them. Those are the people I know, the people I work with and the people I come from and there is absolutely no way I would ever come close to grassing them up� he told peers on Friday.

Industry experts say that the practical difficulties of recording payment histories accurately when thousands of private landlords are involved, as opposed to major financial institutions, and big retailers, will be a severe test of this idea.

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£1.36 million in TPO awards

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The Property Ombudsman (TPO) has today released its 2017 annual report.

Property Ombudsman Katrine Sporle confirms the number of complaints received rose by 3% to 3,658.  TPO made financial awards to consumers in 2,408 instances which totaled £1.36 million

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Are Brokers the New Bankers?

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Long gone are the days when you could approach your bank manager and they would use their discretion regarding granting a loan.

Bank lending to small and medium-sized businesses has shrunk substantially since the financial crises. New regulations make it more difficult for banks to lend to companies

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Longer tenancy call during housing debate

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Calls for tax incentives for longer tenancies were made during the Government’s debate on housing and homes. MPs speaking in the re-arranged debate yesterday raised concerns about security for families with Sir Robert Syms, Conservative MP for Poole and Former Chair of the APPG for the PRS reiterating the RLA’s call for tax incentives for […]

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