Attention ALL Landlords and Lettings Agents - The Tenants Fees Ban is NOW HERE!!! with Matthew Justice
The Property Nomads Podcast · Rob Smallbone & Aaron Devoy
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Show Notes
This week, Rob is joined by residential lettings manager, Matt Justice BSc, to discuss the Tenant Fee Ban which is being introduced into England on June 1st, 2019. Their discussion covers everything from its positive aspects to its negative attributes, and the wider implications of what promises to be one of the most controversial pieces of legislation to hit the rental market in decades.
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KEY TAKEAWAYS
- The premise behind the ban was to do away with fees charged to tenants by agents for things such as referencing, inventory costs, deposit registration, replacement keys etc. The ban aims to do away with all these costs for tenants. When it comes into force, tenants will only be liable for the rent, a holding deposit, and a security deposit. An overview of the Tenants Fee Ban:
- Tenancy deposits must not exceed the equivalent of five weeks rent unless that rent exceeds £50,000.
- Holding deposits will be capped at no more than one week’s rent.
- The capped fee for changes to the tenancy agreement is to be no more than £50, unless the landlord can demonstrate that higher costs were incurred to do so.
- The Consumer Rights Act 2015 is amended to specify that the letting agent transparency requirements should apply to third party websites so that renters are aware of any fees from the very first instant.
- As Matt points out, the deposit situation is different for HMOs, and must be understood completely by landlords, as charging the wrong amount will result in hefty fines.
- If a tenant has incurred bills or fees from utilities during their tenancy, then the landlord is entitled to settle such bills using funds taken from their security deposits.
- Matt believes that the ban has been introduced because of areas like London, where tenants have been subjected to exorbitant fees. In some cases, application fees alone have been greater than the first month’s rent.
- The problem with the ban is that some of the agent’s fees are completely justified, and the only way to really recoup these costs is for the rents to increase.
- Sometimes legislation seems to be in reaction to a sensationalised, and somewhat singular case of a landlord or lettings agent abusing their position. In Rob’s opinion, more research should be done about the broader picture before legislation is introduced, ensuring that it is warranted, wise and active instead of reactive.
- One way of circumventing the referencing fee issue is to offer optional referencing. Passing on the entire search fee, or a percentage of the cost to do so, may be necessary to ensure that the landlord still gets a reliable tenant, and the lettings agent still covers the cost of the search.
- If rents are increased due to the Tenant Fee Ban, then it will cost the tenant far more in the long run, especially for long-term lets. If these higher rents cannot be met, then it will cause massive social problems
BEST MOMENTS
- ‘It’s going to be an eye-opener’
- ‘Sometimes when the government do a blanket ban on things, they don’t always specify what they mean’
- ‘If the costs have got to be covered, naturally where’s it got to go?’
- ‘Think about people kicking off at the cost of Freddos!’
- ‘I don’t want to say that it’ll be catastrophic, but it could potentially be catastrophic’
- ‘We don’t want to lose landlords, and hopefully landlords still have use for lettings agents!’
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ABOUT THE HOST
Rob Smallbone and Matt McSherry, the hosts of The Property Nomads Podcast, are on a global mission to guide your success. Success can happen in many ways, shapes and forms. Think about what success means to you. More properties? More clients? Financial freedom? Time freedom?
Rob & Matt are just two guys who want to make a huge difference to people around the world. They are here to guide your success in property, business and life and to inspire you to achieve your goals, dreams and visions. They’ve travelled, explored, and invested. And they’re not planning on stopping these activities anytime soon.
Buckle up, sit tight and enjoy the ride that is life.
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