Landlords and property professionals get ready!
Thanks to the introduction of the Tenant Fees Act on 1st June, you’re likely to see an influx of tenants looking to benefit from this ban on tenant fees.
Recommendations from No Letting Go have recently been featured in the Property Reporter, exploring the impact of this upcoming ban on tenant activity and how landlords and property professionals can get prepared.
Read on to find out how to prepare for the tenant fees ban with our handy quiz and guide.
What is the Tenant Fees Act 2019?
The Act sets out new rules and standards for landlords and letting agents, banning several upfront fees.
This ban includes the following:
- Security deposits must not exceed the cost of five weeks rent
- Holding deposits must not exceed one weeks rent (and should be refundable to the tenant)
- The fee to change a tenancy will be capped at £50
Any breaches to these new standards could result in hefty financial penalties from the enforcement authorities, and landlords will be unable to seize possession of a property through section 21 notices until they have repaid these charges.
When is the Tenant Fee Ban Coming In?
The Tenant Fees Bill was first proposed by the government in 2017 with the aim of making renting more affordable for tenants.
The Tenant Fee Act comes into force on 1 June 2019 from which date landlords and lettings agents will no longer be allowed to charge fees as described above.
Tenant Fee Ban Update: Impact on Tenant Activity
Research from the Deposit Protection Service (DPS) identified a lull in rental activity during the first quarter of 2019 which they attribute to tenants delaying moving until this ban becomes law on 1st June.
According to Nick Lyons, No Letting Go’s CEO;
“It’s no surprise to see shrewd tenants delaying moves until after the fees ban and deposit caps are introduced on 1st June. The upfront cost of moving between rental homes can be high – particularly in London and the South East – so renters will do anything they can to keep costs down, even if that means putting their move on hold for a few months.”
The Impact on the Private Rented Sector
With potential tenants waiting to make their move, landlords and property professionals will need to prepare for a surge in activity after 1st June.
It’s likely that tenants have continued their property search over the last few months and will be ready to begin the rental process as soon as the ban is in place.
This swell in tenants could be an exciting time for landlords and property professionals, with lots of potential profits on the horizon. The better prepared you are as a landlord to take this on, the more you can benefit from this demand.
How to Prepare for the Tenant Fees Act
The first thing you can do as a landlord or property professional is to ensure you are fully aware of the details of the ban and which fees are prohibited payments.
The Tenant Fees Act Quiz
Here at No Letting Go, we’ve put together a useful quiz including all the important points you need to remember about the upcoming Act.
This short, multiple choice quiz consists of 15 questions encompassing everything from tenancy deposits to permitted payments.
Another way to stay ahead of the curve is to outsource important reporting and services to the experts.
The Importance of Professional Inventories
With deposits being capped at five weeks rent, landlords and letting agents will need to take extra precautions when it comes to protecting their rental properties.
If you own property in locations such as London or the South East, this change could make a difference to the amount of deposit you can ask tenants to pay. To compensate, having a comprehensive inventory in place can help when it comes to making deposit deductions.
No Letting Go provide independent inventory reports detailing the condition and contents of your property at the start and end of the tenancy. Using the latest software, the report contains extensive written and photographic evidence in addition to meter readings and safety compliance checks.
The benefit of investing in a professional inventory service is that an unbiased account can help prevent and resolve any conflicts that may arise.
For lettings agents, partnering with us could save time and money at what looks set to be a busy period this June. Outsourcing this administrative work will free up time to provide a personalised service to your clients.
Get Prepared with No Letting Go
To ensure you have everything in place before 1st June, it’s best to start preparing now. Once you’ve got clued up and taken our quiz, it’s time to think about streamlining your workload.
No Letting Go provides services encompassing everything from right to rent checks and house viewings to unbiased property inventory reports.
Browse our full list of services here to find out how we can help you navigate this transition.
There’s been lots of talk over the last few years around the possibility of abolishing letting agent management fees. Now, it seems, it’s come to fruition. On the 12th February, the Tenant Fees Act 2019 was passed and became law.
While good news for tenants, for lettings agents and landlords, this change requires careful planning. Whichever side of the fence you’re on, it’s helpful to have all of the facts.
That’s why we’ve rounded up all the information about the new letting agent fees ban and what it means for landlords, letting agents, property professionals and tenants.
What are Letting Agent Fees For?
Up until now, letting agents have been legally permitted to charge fees for admin, tenant reference checks and other costs.
The responsibilities of letting agents include sourcing tenants, collecting rent, and acting as a means of communication between tenants and landlords.
Typical letting agent fees for tenants should be around £200 to £300 per tenancy, however some groups argue that this figure has been greatly increased by some rogue agencies. For tenants paying higher costs, this ban comes as welcome relief. However, lettings agents who charge reasonable and necessary fees may think otherwise.
The Government Proposal
The effort to get letting agent fees abolished was driven by the government’s aim to make renting more stable for tenants. With 4.5 million households in England now renting, this market is growing rapidly.
While they accepted that many letting agents provide a legitimate and valuable service, the issue of varying admin fees from agency to agency needed to be addressed.
According to the government, banning agency fees will result in greater transparency for tenants, make moving more affordable and allow landlords to ‘shop around’ to find the best letting agent.
The Tenant Fees Act 2019
The proposal to ban letting fees has been in process for a number of years.
The ball started rolling in April 2017, when the government opened up a dialogue to work on the details of the ban. The aims of the ban were to make renting ‘fairer and easier’ for tenants by making costs more transparent and to improve competition in the rental market. This consultation received responses from tenants (50%), lettings agents (32%), landlords (10%) and other stakeholders (8%).
The Tenant Fees Bill draft was then announced in June during the Queen’s speech at the opening of parliament.
In May 2018, housing secretary James Brokenshire MP introduced the bill to parliament, which then passed through the House of Commons in September.
January of this year saw the ban being passed in parliament which was then cemented as law on the 12th of February as the Tenant Fees Act 2019.
What is the Tenant Fee Ban?
The act sets out the new rules and standards for the ban on letting fees;
- Security deposits cannot be more than the cost of five weeks of rent payments. (Unless rent exceeds £500,000 when it’s capped at six weeks)
- The ban includes capping holding deposits to one weeks rent and making them refundable to the tenant
- The fee to change a tenancy will be capped at £50
- If a landlord or letting agent breaches the requirements, a fine of £5000 is payable in the first instance. If a similar offence has been committed within the last five years, it could be deemed a criminal offence. Prosecution or fines of up to £30,000 could be issued
- The ban will be enforced by Trading Standards who will help tenants recover funds that were unlawfully charged
- Landlords will be unable to seize possession of property via Section 21 until they have repaid any unlawful charges
- Letting agent fee transparency should be extended to property sites such as Zoopla and Rightmove
What Can Landlords and Letting Agents Charge Under the New Act?
Under the new act, property agents will only be permitted to charge for the following;
- Early termination of a tenancy at the tenant’s request. This means the costs to the landlord or letting agent to find tenants will be covered
- Council tax, utilities and communication services
- Payment of damages in the case of breached agreements
- Late rent payment
- Replacing keys etc.
Can Letting Agents Still Charge Fees?
Currently, yes. The ban only comes into play on the 1st June 2019. Until the letting agent fees ban date, this practice is still legal.
However, if you’re a landlord or letting agent you might want to start thinking about this change and what plans to put in place.
The Impact of the Ban on Landlords and Agents
One issue that is being raised regarding the ban is the possible impact on landlords. Some are arguing that the ban will result in charges being passed on from letting agents to landlords.
This, they argue, is counterproductive as it means landlords may be forced to raise monthly rent collections in order to make up costs.
The Association of Residential Letting Agents (ARLA) for example, are against the ban and believe that instead of an outright abolishment, fees should be ‘open, transparent and reasonable’. In response to the Government ban, ARLA recommend that upfront fees should be banned, but letting agents should be allowed to spread these costs across the tenancy.
They believe that a blanket ban would ‘put additional pressures on landlords, with fewer tenant checks and a lower quality of service’ and that ‘spreading the cost of these services will allow letting agents to retain current service levels to tenants’.
The Impact on Inventory Management
One suggested outcome of the ban is that letting agents will start to take inventory services ‘in-house’. A guide has been created by TDS, Propertymark and the Association of Independant Inventory Clerks (AIIC) to provide information on avoiding disputes regarding poorly executed inventories and deposit deductions.
Speaking on the report, the AIIC encouraged unbiased, comprehensive reports to protect all parties involved. Similarly, Propertymark highlighted the importance of a thorough inventory and the need for an ‘evidence-based approach’ to protect investments for both landlords and tenants.
Be Prepared with No Letting Go
Whichever stance you take, it‘s best to prepare for the changes early.
If you’re a landlord or letting agent looking to get ahead and prepare for the changes, No Letting Go can help.
We offer reliable, professional property management services to help you stay on top of your responsibilities and protect your investment. From property inventory reports to appraisals and tenant checks, No Letting Go helps protect your property for the long term.
Browse our full range of services here to see how we can help.