Thursday, 30 May 2019

All change for the lettings industry as the tenant fee ban looms

Perhaps the most significant changes to the lettings industry for 20+ years are upon us, as the Tenant Fees Act commences on the 1st June. What was initially set to be a change of law to ban tenants having to pay administration fees to letting agents and landlords has morphed into something far more impactful. 

And whilst the proposal was first announced in the Autumn Budget of 2016, the act was only officially confirmed in January of this year, with further details and guidance released in April, just two months before the act came into effect.

Not only has that not given letting agents and landlords much time to dissect, assess and change a heap of processes they need to undertake, but there is still some confusion and debate over certain parts of the guidance (which amounts to 59-pages). There has been a total lack of clarification from official sources as to the full ins and outs of how some of the most widely disputed elements should be interpreted and thus implemented. 

I find it rather frustrating therefore that a large number of my processes are now defunct - processes that had led to 100% of all rent being paid and 97 out of 97 online reviews from my landlords and tenants being five-star. It wasn’t broke…yet it’s been ‘fixed’ against my will.

And it might come as no surprise to those within the industry that the government also hasn’t updated their ‘How to Rent’ guide for tenants or ‘How to Let’ guide for landlords. Providing the How to Rent guide to all new tenants is a legal requirement…and yet this government-produced document was last updated in July 2018 and therefore still mentions tenant fees and other incorrect information.

Putting the poor implementation of the act to one side, I wrote in late 2016 how a tenant fee ban would have minimal effect on CRJ Lettings, as we charged just £100 per adult i.e. a couple would only ever pay us £200 for the duration of their stay. That was the cheapest tenant fee of any letting agent in Chichester, with the average being £454 (plus renewal fees thereafter). I actually saw this as an opportunity as it was widely perceived that letting agents would increase their fees to landlords to accommodate for this loss of income, which is exactly what has happened in most cases (whereas my fees remain unchanged for now).

Unfortunately, it is the ‘other stuff’ that has been bolted-on to the banning of fees that I believe will cause the biggest issues for letting agents and landlords. Falling foul of the new rules, even due to an innocent mistake, will result in a £5,000 fine - so make sure you’re aware and up to date with things, or get in touch with someone who is!

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