Thursday, 1 December 2016

How will a ban on fees impact Chichester’s tenants?

I’m sure you’ll have heard plenty of commentary and discussion about the big property news in last week’s Autumn Statement - the ban on letting agents’ charging tenant administration fees (all details still to be confirmed).

CRJ Lettings charge the lowest tenant fees of all letting agents in Chichester - £200 is all a couple will ever pay. Queried by some applicants in the past for being low, this is the actual cost to process the administration (excluding my time; the landlords’ fees pay for that), so it seems right that is what I charge.

Unfortunately I found the average tenant fee (for a couple) in Chichester is £454 and the highest £760! That ludicrous sum is made up of a £300 admin fee, £300 to produce a tenancy agreement, £60 towards the inventory and a £100 check-out fee, which is payable at the start of the tenancy. If you feel like staying with this particular agent they’ll charge you a £100 renewal fee to do so. They’ll even charge you £30 after you leave should you need a letting agent reference for your next property!

It seems that some letting agents’ inability to self-regulate has caused the discontent amongst the growing number of tenants that has led to government intervention.

Unfortunately it is government intervention that I believe has yet again been hastily thought out for the benefit of their own political popularity rather than their electorate’s best interests.

You see, letting agent fees to tenants were banned in Scotland in 2012 to much fanfare. Unfortunately, whilst many advocates of the ban in England claim rents haven’t risen in Scotland as a result (from agents passing the costs to landlords), that simply isn’t true.

In fact, according to the CityLets Index, rents in Scotland have risen 15.3% since 2012.

Rent increase graph

In England the average increase has been 8.5% (according to the Office of National Statistics). Here in the South-East, rents have risen 8.3% since 2012 and even in London the rise is ‘only’ 10.6%.

And that is the crux of it. In the past year landlords have been hit with additional safety legislation…which will cost them money. They have been hit with an additional 3% stamp duty charge…which will cost them money. There are impending tax changes towards landlords…which will cost them money.

And like any business (and being a landlord is a business), if costs go up so will prices. Rents will unfortunately rise, meaning any short-term savings for tenants will be more than offset by the monthly increase in rent. This will particularly penalise those tenants wanting to create a long-term home (something I thought the government was in favour of?)

I personally believe a cap on tenant fees would have been the correct action rather than a draconian ban. This penalises the worst offenders yet takes into account that there is a cost involved in the application process and it would stop prospective tenants applying for multiple properties at no cost to themselves.

Chichester Observer Property headline

(This article was featured in the Chichester Observer's property section on 1st December 2016)

Clive Janes, CRJ Lettings.


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