It was announced that upfront fees for tenants would be banned across England way back in the 2016 Autumn Statement. The ban on fees charged by letting agents and landlords with regards to tenancy agreements is now estimated to be rolled out in April 2019 by the government. Under the new legislation, the only fees renters can be charged are: the rent, a refundable security deposit, a refundable holding deposit and what will be known as ‘default fees’.
At the moment, tenants are charged a fee for the work required in order to set up their tenancy agreement including credit checks, referencing and inventories. As these checks will still be required this is likely to mean that agent’s fees to Landlords will be increased as these costs have historically been discounted and offset by the fees from the tenants. Increasing agent’s fees to landlords in this way will enable agents to offer the same service level as currently supplied.
It is believed that whilst some landlords may decide to ‘go it alone’ agents have warned that becoming a DIY landlord will require investors to educate themselves about the rental market and the increasing laws and legislation they need to comply with. Failure to comply with strict regulations can result in hefty fines and appointing an experienced agent pays dividends in the long run. In a recent survey conducted by property maintenance software company Fixflo, 70% of those polled said that they plan to keep their property portfolios and the majority of those landlords, 63%, said they do, and will continue to use agents for their properties, citing rent collection and legislative compliance handling as being the most important factors.
Simon Westwell Lettings Director at local agents Petty’s said: “ It has undoubtedly been an uncertain time for landlords with recent tax relief changes and now the tenant fee ban due to come into force. However it is not all negative news as rents will rise were possible to try and accommodate extra expenditure .No one is yet sure what the knock on effect will be but our advice is to stay calm and ensure that you always use a reputable letting agent that is a member of the Association of Residential Letting Agents (ARLA). This means that the agent is fully regulated and has to maintain the highest professional and legal standards and will ensure you are given the correct advice and up to date with regulations.