What is it?
New legislation which will ban any upfront fees currently charged by letting agents or landlords from 1st June 2019. This includes administrative fees, credit check fees, tenancy renewal fees, referencing costs and many more. The legislation will also introduce a cap on deposits.
The only fees that landlords and agents can charge are;
· The agreed rent
· A refundable security deposit (maximum of 5 weeks rent)
· A refundable holding deposit (maximum of 1 week rent)
How will it affect me as a landlord?
The cap on deposits will affect landlords who traditionally have received 6 weeks worth of rent as a security deposit. Whilst not a vast difference, where there are rent arrears and deposit dilapidations - this could have an adverse affect. Where tenancies are being renewed, we will now have to refund any shortfall between the amount totalling 5 weeks of rent and what we are currently holding. Where previously we have been able to accept higher deposits in instances where tenants wish to have pets, or perhaps fall slightly short of the referencing criteria - this will no longer be the case.
The cap on holding deposits is also expected to have an affect - with a smaller investment put down as a deposit it's possible we may see tenants 'hedging their bets' on multiple properties, or feeling more capabale of walking away from one weeks rent shoudl their circumstances change. Because of this, completing references and contracts quicker than ever is going to be imperitive.
The expectation is that agencies will have to find a way to recoup their losses by charging higher fees and passing charges indirectly to landlords. You can rest assured that this is just expectation and not the reality at Paramount. Paramount has not charged tenants referencing fees since the beginning of 2017. If you do have properties with other agencies - then be prepared and ask them what their plan is. It might well be to increase fees in agencies where the loss will be most felt.
The only additional cost our landlords can expect to see, is the landlord having to cover the cost of the inventory check in and check out - as we are no longer able to charge half of this to the tenant. Whilst we are confident in the top-quality landlords we work with, we believe that a number of letting agencies will struggle to pass inventory costs fully onto their landlords, and that could mean a difficult time for all parties at the end of the tenancy when allocating deposit fund
If you have any further questions regarding the tenant fee ban, and how it could impact you then please feel free to contact us on lettings@paramount-properties.co.uk or you can read more about the tenant fee ban here: https://www.arla.co.uk/lobbying/letting-agent-fees/england/.
