The Proposed Ban On Letting Agent Fee

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  • #35259

    Simon Bradbury
    Member

    The BBC  are reporting that the government looks likely to announce a ban on letting agent fees to tenants today and I wondered how industry colleagues are looking to deal with this.

    Have our Scottish colleagues learnt anything that they could share from their recent experience of this?

    #35301

    Benartylass80
    Member

    Hello, I am Scottish and have a rental property, which I manage myself.  I’ve done so for the past 14 + years.  To get tenants, I always use the credit check facility on Landlord Zone (Tenant Verify).  I print off the forms, give it to my applicant tenants to complete/sign and then I fill in the information online and THEY PAY DIRECTLY for the service.  I do not handle their money at all and I advise them that when the report is through, it will be given to them as it is theirs and they have paid for it.  They can use it in the future, if need be.  I am totally upfront with them: I tell them that legally, I cannot charge them for a credit check but that unless they provide one, they will not be considered.  I find that really does weed the serious and professional applicants from those that just want somewhere to live and may prove to be unreliable.  Of course, it doesn’t always work but it’s much better than not credit referencing at all.  I take the view that once a tenant is in the property, I want them to be happy, for the neighbours to be happy and for them to stay as long as they want to limit void periods and the hassles of change overs.  I need to know who is potentially going to be in my property.  The only way to find that out is to credit check.  (To that end, I would always advise Landlords to not only check the most recent landlord but also the one before that and the one before that, if there is one.  I was once told that the most recent Landlord might be trying to get rid of an unsuitable tenant, so will always be positive; a previous landlord is more likely to be honest.)  I also take the view that if Iapply for, say, a new bank account with a new bank, I have to jump through several hoops to be considered.  Why should tenants not have to comply, too?  The other side of the coin is that my husband also has a rental property but he uses a Letting Agent.  When looking for new tenants, they will take an applicant to view the property and then give them an applicatoin form.  The tenant gives that to the Letting Agent, presumably with a fee and then my husband is charged for the tenant check!  In the meantime, the property is still available for viewing and another application may be made, though this would not be taken forward unless the first one fell through.  So, with every potential tenant, my husband has to pay for the tenant check, which may or may not be successful.  He has paid for tenant checks that have been unsuccessful, which is a compete waste of his money.  Also, the tenant has to pay the Letting Agent fee, but they dont’ know if their application will be successful or not and I don’t know if they are given a copy of the report to use in the future.  The situation is far from ideal, both for landlords and tenants.  I think the Scottish sytem needs reformed so that tenants pay for their credit checks as I think it is reasonable that tenants should do so.  Tenants are also too protected in Scotland and there are numerous checks that protect someone that is a tenant over someone that is a homeowner.  I think that in England, you don’t want to get into the situation that we have.  Rents, by the way, do not necessarily go up but the costs to the landlord do.  Of course, with the tax changes due to come in for 2020/21 tax year, any tax benefit for all costs, of which tenant checks will be one, will be reduced to 20% of those costs as allowable expenses, so the financial impact only worsens.  It feels like Landlords have been specifically targeted by the Government in recent times and if its aim is to get Landlords to sell, then it’s definitely going about it the right way.

    #35334

    smile please
    Member

    My immediate thought is start charging for viewings and telephone calls.

    Then i remember most agents are naive when it comes to business (sad but true).

    Which means we will probably slightly increase the fee to Landlord, maybe 50 quid, tack a few quid onto gas safety, epc, blah blah blah and swallow the costs ourselves.

    Maybe the really clever agents (not many sadly) will give the option of the landlord paying the tenants fee upfront or split the cost over the lifetime of the initial let. i.e. if its usually £250 you will £41.66 per month on top of the management charge.

    All that will happen is rents will rise to cover it. Robbing Peter to pay Paul.

    All i know is i am fuming we are seen as a bloody charity. Profit is not a dirty word.

    #35379

    Officerdibble10
    Member

    In my heart of hearts I know that tenancy fees are just plain wrong. Sometimes we just have to suck it up. It happens!

    #40413

    Nora18
    Member

    Hi, i’m an agent from Scotland,  we increase the rent by £50,  review the rent and increase 5% each year, or on lease renewal date, charge tenant £25 on missed appointment i.e. property mgt. visit, contractor’s appt, etc., charge twice i.e. £10 on lost keys, charge on lost key fobs, charge tenant £25 for landlord/agent reference, required to move to other property, split check out charge of £50 between the landlord and tenant. explain to tenant this is on their best of interest to safeguard deposit, etc. this does not always work, and if tenant argues, landlord pays check out charges. You can charge more, if you wish.

    Every business and even most gov’t agencies charge admin fees, including the NHS,  etc.  Till now I still couldn’t understand why  letting agents are not allowed to charge fees for services provided to tenants?  I agree with you “smile please”, we are running a business, not a charity. We are NOT running a business for the benefit of the tenants, or the gov’t., or the staff. The main reason we are in business is to make  “money”,  “profit”. Businesses are taxpayers, helping the economy. Running a country, is like running a business, but we seem to have “anti-business” gov’t., probably they will never understand business people.

    Hope this helps. Thank you.

    #40757

    FromTheHip64
    Member

    SMILE PLEASE……You’re right profit is not a dirty word. Con is. And that’s exactly what letting agents have been doing for years…..refusing to charge their client for the service (the landlord is your client, in case you weren’t sure). In sales we charge the seller…our client. Not the purchaser. Welcome to the real business world lettings………it’s time to smell the coffee. Happy days

    #40763

    smile please
    Member

    From the hip,

    I think you are sadly showing how naive you are when it comes to lettings. It is VERY different to sales.

    A good letting agent acts for both the landlord and tenant.

    In fact most calls my lettings team take are from the tenants NOT landlords.

    Let me give you a real life example.

    Tenant calls up as the reception on his TV is poor and cannot get the channels he wants.

    – The landlord says (rightly) their was no mention of a working TV aerial giving him X amount of channels. In fact its only my job to provide a safe and habitable home.

    The landlord is 100% right he in no way has to sort out a TV areal. BUT maybe he should?

    We got him to agree to put a new digital aerial up, tenant happy.

     

    I can tell you now, we get dozens of these “issues” every week. And we try our best to help all parties. I will also tell you, when a ban on fees comes in and we are indeed only working for the landlord the tenants can expect a whole new approach as well as an increase in rent.

    As an owner with sales and lettings – it is incredibly different.

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