Are You a Letting Agent? Do You Charge Fees?
The recent Autumn Statement has announced that letting agents in England will be banned from charging fees to tenants in the very near future. At the moment, tenants can be charged fees for administration such as reference and credit checks. When a fixed term ends, letting agents tend to charge tenants a nominal amount to produce the same tenancy agreement the with details amended to reflect the new tenancy agreement.
The current availability of charging fees makes it very expensive for tenants, especially those who have not previously rented. Many letting agents charge a non-refundable deposit to tenants before signing any agreement.
The reason behind the potential ban on fees is to shift the cost to landlords saving tenants hundreds of pounds. The average fees for a standard check and non-refundable deposit for a new tenant can be around £500.00. In London upfront fees can be as high as £1,500 before setting foot in the new property.
It is likely that this change could spur competition between letting agents as landlords would be able to ‘shop around’ for the cheapest agent. As it stands, tenants are unable to ‘shop around’ and are confined to the letting agent of the landlords choice.
There is a worry that the extra costs faced by landlords will lead to higher rents. Many landlords claim that they do not make substantial profit on their rented properties as overheads include service charges, insurance, mortgages and the introduction of the new tax law means that if the administration fees revert to the landlord they may have to increase the rent just to cover their costs.
If you need any advice relating to a housing matter please do get in touch.