Letby

Tenant fees ban – An update

Mooted since 2016, we now know that the Tenant Fees Bill, banning landlord and agents from charging fees to tenants has been given Royal Assent and will apply to all tenancies signed after June 1st 2019.

Now officially an Act of Parliamentthe bill prevents landlords and agents from charging: ‘Anything not exempted, that the tenant is required to pay as a condition of the ‘of the grant, renewal, continuance, variation, assignment, novation or termination of’ an assured shorthold tenancy, or licence agreement. This includes payments to third parties, either for services throughout the tenancy or for specific performance of a job and loans from third parties.

The bill will mean landlords will mostly be limited to taking payments for rent and deposits from tenants and there will be a much tighter grip on rules surrounding the size of the deposits and how they are dealt with. Deposits will be limited to five weeks where annual rent is below £50,000 with new, stricter rules on holding deposits.

Despite this, damages caused by the tenant’s breach of tenancy, such as the costs of cleaning the property after the tenancy ends, will still be deductible from the deposit. Landlords can also still charge for a change to the tenancy requested by the tenant, or if a tenant wants to leave early. Finally there are two other ‘default fees’ landlords/agents will be able to charge (albeit limited), if either:

  • the tenant loses their keys or
  • is late paying the rent.

Industry experts and bodies have been warning for some time that the ban was likely to be passed as law and have been urging letting agents to make changes to the way they do business in preparation.

We have spoken to many agents where income will be significantly impacted by the ban. Some have been proactive, taking action to look for the the best way to drive additional revenue without damaging their existing landlord relationships. Others were happy to ‘wait and see’, sceptical as to whether the law would actually be passed. Now that the enforcement of the bill is on the horizon, its time to take action.

2019 has been branded as a critical year for the letting industry. This year will provide a challenge to high street agents wrestling with the emergence of online competitors and the introduction of the fees ban which threatens to wipe out between 10-25% of their revenue.

Of course a big advantage for high street agents is the people factor. The letting industry has historically been known as a ‘people business’ and if agents can work smart and implement some key new strategies they can continue to shine. In a blog back in 2017 we discussed 5 ways to beat the ban – including streamlining operations to focus more time on business growth and finding ways of driving additional revenue by offering new products and services to landlords.

We are big supporters of agents and the key role that they play in the lettings market. We have worked with many professional landlords who are very comfortable and successfully navigating the many responsibilities of being a landlord, with many managing their properties themselves with great success. However, there are so many potential pitfalls for landlords to be wary of with countless legislations and compliance issues to handle in addition to headaches such as maintenance and importantly finding and keeping tenants. A good agent can provide all the help, support and protection needed. For more information on the benefits, check out our blog on the importance of letting agents.

Spire Landlord Solutions specialises in providing 24/7 Home Emergency Insurance and Landlord Legal Expenses/Rent Guarantee insurance for letting agents, housing associations and landlords with multiple properties. For further information on our services and how we can add value to your business click here.

 

Why landlords need to use letting agents

By Rose Jinks, Content Manager at Landlord News

There’s been a lot of news in the industry recently that may have put landlords off using letting agents to manage their properties. But property industry expert Landlord News believes that it’s imperative that they do…

Regulations and rules within the lettings sector are constantly changing, and some prospective new ones are set to hit letting agents hard.

The most significant upcoming legislation change that landlords and their letting agents must be aware of is the proposed lettings fee ban. If this law comes into force, it will prevent letting agents charging fees to tenants, which may mean that these costs are instead passed onto their landlord clients.

For this reason, some landlords may decide to ditch their letting agents and go it alone. But are letting agents worth the extra expense? Landlord News thinks so, here’s why:

Your legal responsibilities

Landlords now have a host of regulations to comply with, which means that running a rental property (or an entire portfolio) can be particularly time-consuming.

If you choose to go with a full service package with your letting agent, they should take care of all of your legal responsibilities, which removes the stress of trying to keep up with the law.

Finding tenants

Another worry for landlords is making sure that your properties are full at all times, in order to avoid costly void periods. Fortunately, letting agents have the tools to market your properties effectively and keep them full.

They will do all of the legwork for you, such as property viewings, to ensure that your investment is thriving.

Referencing

Once your agent has found prospective tenants, they can also vet them and carry out essential referencing checks that make sure you have reliable renters in your properties.

It’s vital that you only have tenants that will pay the rent on time and look after your investment, so letting agents are invaluable in completing all of the checks that give you the best chance of this.

Property market knowledge

Although the property market always seems to be in the news, some landlords simply don’t have time to keep up with what’s going on – especially if you’re a part-time investor.

Letting agents are completely aware of all the trends in their local areas, which enables you to set the right rent price for your property and target the tenants that are actively seeking a rental home like yours.

Arranging maintenance

Again, this does depend on the package that you choose, but it’s useful to have a letting agent on hand to arrange all the maintenance work your properties need.

If they’re in charge of organising this, you won’t have to worry about being woken up in the middle of the night by your tenants, or trying to arrange work at a short notice.

Chasing rent arrears and disputes

Rent arrears and disputes can be stressful and time-consuming for landlords, so having a letting agent to deal with this for you can be priceless.

Of course, we hope that you’ll never be in this situation, but, if you are, letting agents will have the procedures in place to deal with your tenants professionally and effectively.

Rose Jinks, of Landlord News, says: “Although new laws could make it more expensive for landlords to use a letting agent to manage their properties, the advice, support and guidance that an agent can offer you really is worth it.

“We recommend that all landlords who are unsure of their responsibilities or who require a little bit of additional support in dealing with tenants instruct an agent to help them manage their portfolio.”

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Gas Safety Week – The cost of cutting corners

This week we are supporting Gas Safety Week and we have taken time out to offer some guidance on gas safety and landlord responsibilities and also point out that cutting corners can not only put tenants and properties at risk but also hit landlords square in the pocket.

 

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Letting agents & the tenant fee ban – how do you beat it?

Over the last 10 to 15 years, letting agents have faced ongoing changes to legislation, new regulations and red tape. The latest proposed change, the tenant fee ban, has caused quite a stir in the industry and those who had hoped it may fall by the wayside will have been disappointed to see it outlined in the Queen’s speech on 21st June.

It has been estimated that between 10 to 25% of letting agents income could become wiped out if the bill was to be introduced, with ARLA’s Capital Economics Report ‘Letting the market down?’  unveiling that tenant fees currently make up around a fifth of an agent’s income.

So what does it mean for you as a letting agent? We have spoken to fellow letting agents, landlords and industry insiders from across the country, on how they are preparing for the proposed changes and suggestions for sourcing new ways of income. Here’s 5 of our top picks:

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Happy to chat:

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Spire Landlord Solutions is a trading name of JPM (Insurance Management) Limited which is registered in England at The Old Bank Chambers, 27, Lincoln Croft, Shenstone WS14 0ND with number 3867939. Authorised and Regulated by the Financial Conduct Authority. FCA Register number 305763. Our details can be checked by visiting the FCA's website or calling them on 0800 111 6768.

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