Tenant Fees Ban – Measures affecting Landlords and Agents

Hello Louise and best wishes. Being a stay at home mum is an important job and in an ideal world, no woman should feel forced to have to work or to have to stay at home against her will, when she has small children to nurture. I am not a great fan of fees as they place tenants under additional financial strain at a stressful time. I especially don't agree with agents and landlords making a profit from fees, and some agents have even been double charging landlords and tenants for the same service.
I don't usually use agents in any case. The tenancy agreement and other admin is all part of the service as far as I am concerned.
Where I differ with the changes though, is over references. I usually pass on the full cost of referencing (about £27) to working tenants, as it affirms that they are genuine about wanting the property. I charge benefits claimants half price, and they usually fail the affordability check; but that's not the point. I want to know that they are basically honest with no criminal or debtor record and have a good report from their previous landlord. I can't see the latter type of tenant coming along with such references in their hand, and I would be suspicious about any reference that was supplied by the tenant in any case.
Under this change I have to take a punt and reference the tenant out of my own pocket, knowing that they have no incentive to stop looking for other properties or to change their mind. It is only going to make life harder for tenants in the long run as landlords are forced to raise rents to cover for this risk.

"I would be suspicious about any reference that was supplied by the tenant in any case."

Clearly you'd verify the references with the previous landlords but it is a good sign they are responsible.

Reply to the comment left by Monty Bodkin at 08/05/2018 - 14:45
I have had some very good references supplied by tenants. Not all have checked out when I independently verified the landlord.
I now prefer to ask tenants to supply phone and email contact details for the current and previous landlords with tenancy details which I can then verify alongside other details.

Personally i take any Landlord reference with a pinch of salt !! having been asked by referencing agencies about my tenants when they have moved on i was amazed at the lack of proof asked of me who i am ?? ( i might as well have been the tenants mate from the pub! ) i was only asked was the rent paid in full & on time and was the property handed back in good order. There is also the flip side of a Landlord quite happy for a problem tenant to be leaving and give the most glowing reference ( bitter experience of that one )
Both myself and my wife generally do our viewings, we put our referencing application forms in a top kitchen cupboard if alarm bells start ringing i will not offer a form, if my wife is not sure she will stand in front of the cupboard, we then add them to a call back list and tell them they will be contacted within 7 days if successful, If after a private chat we feel someone on the call back list may be suitable but we are not 100% i then offer to drop the referencing paperwork round if they are local for them to read through (then a story of an applicant i am currently referencing needs a guarantor and they are next on the list !!) I invite myself in to run through the form, this has nothing to do with the form but i am looking at how they live and the condition of their current property all this helps with the bigger picture especially when you state no pets and you have two big Rottweilers staring at you !!!!

I'm fascinated how many would be glad to see the back of agents and watching their demise due to this ill conceived bill. Agents departure from the housing market certainly would cause a Tsunami within the housing sector as a significant proportion of landlords would be completely unable to manage their lettings and sadly many have only a limited grip of the legalities and nuances of making a tenancy run properly. It would not be high fees to worry about but basics such as gas certs, smoke alarm cheques, Right to Rent, How To Rent...... etc etc let alone the upcoming 5 yr electrical safety checks and new CO requirements.
Responsible agents are being challenged nearly as much as the greedy and it is bizarre how they expect a business to run without making a profit. I do not hear of hairdressers or solicitors, butchers or electricians being asked not to charge profit making fees to cover their business costs but letting agents are being legislated to do just that. A properly established tenancy takes many man hours to prepare and this has to be paid for. If an agency cannot employ the right number of staff and train and retain them to carry out an effective and responsible job then there will be massive unforeseen consequences that messes with whole swathes of society - If landlords cannot let properties effectively there will be a dramatic fall in available properties, if these properties are then off loaded into the sales market it will destabilise that too. It could be a real mess!
Cap / restrict fees to a degree I can agree with but I'm not at all certain that this will not end up as a complete fiasco with huge numbers of families ending up in the crossfire and casualties of a real mess.

Reply to the comment left by Tim Wragby at 08/05/2018 - 22:31
The only logic I can apply to what the Government is doing to the PRS and other industries is that they are looking to create domestic inflation to inflate the UK out of a major dent and earnings to asset price ratio crisis.

I read the draft legislation.

You are not able to reduce the rent without the reduction rippling back.

There does not appear to be any provision to explicitly permit a rent holiday and I am left guessing that this would be considered a reduction. See first point.

Reply to the comment left by Barry Fitzpatrick at 07/05/2018 - 14:00
Barry,
This clause in the legislation preventing a higher first month's rent also, logically, prevents future rent reductions.
To me it also and implicitly prevents rent holidays.
Hamish

Reply to the comment left by Tim Wragby at 08/05/2018 - 22:31
The government are only outlawing fees to tenants, not all fees. Philip Hammond's budget announcement made it clear that 'tenant find' is seen as a service to landlords so they should be the ones paying for it. Obviously, it is in fact equally a service to tenants, but tenants are the ones whose votes are being courted while landlords are the government's current whipping boy for the prevailing (mainly London) disparity between earnings and housing costs. Work and time are involved in sourcing and referencing tenants and need to be paid for and it is recognised that shifting this burden to landlords must necessarily result in an increase in rent. Agents are not being asked to work for nothing, merely to bill landlords rather than tenants. Without doubt some agents have been charging far more than cost plus a modest profit and a cap on charges would have been a much more sensible way of dealing with that. In the event, as usual we have yet more ill-considered measures with negative knock-on effects which will in the final analysis penalise the poorest as has been demonstrated by earlier posts on this thread and inevitably cause loss of jobs in the lettings agencies in the process.

My reading of the Bill is that you can take a holding deposit and if you do not go ahead because of differences in what the prospective tenant tells you and reality, then you do not have to return the holding deposit.

So, what one needs to do before referencing a prospective tenant is:
1. Ask them everything to which an appropriate answer would cause you not to grant the tenancy;
2. Tell them that you will be using a referencing agency to verify their answers;

And only if you are happy with their answers proceed to:
3. Take a holding deposit.