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MAY 31, 2018 | BY A & S Property

Landlords advised to prepare for letting fees ban

Buy-to-let landlords are being urged to prepare for the introduction of the letting fees ban, which will make it illegal to charge tenants for things like references or inventories.

The Tenant Fees Bill, which will also introduce limits on how much deposit landlords can take, as well as a series of new fines for breaking the rules, reaches the committee stage in the House of Commons next Tuesday, and is likely to be law by the spring of next year.

The government has estimated a loss of £240m a year in administration fees for landlords and letting agents in England and Wales, and D J Alexander, which manages thousands of properties for clients, warns that landlords should be braced for big changes.

David Alexander, managing director of D J Alexander, commented: “This bill has been introduced to regulate what was a largely unregulated and potentially problematic area of letting.

“Some landlords and agents have been charging substantial fees to tenants with little explanation why these charges applied other than for “administration”.

“This has been an area of complaint for tenants who believe that unscrupulous landlords and agencies were using these fees as a means of increasing their income rather than improving service for the tenants.

“The loss of these fees may prove problematic for some but should be looked upon as an opportunity to ensure that tenants have a transparent, honest, and understandable agreement with their landlord or agent.

“Landlords and agents cannot ignore this change which is inevitably coming so must put in place appropriate measures to deal with any loss of income and ensure their business is operating in a legally appropriate way.”


In addition to the loss of agency fees the Tenants Fees Bill legislation will also cap holding deposits at a maximum of six weeks rent; cap the amount that can be charged for a change to tenancy at £50; introduce financial penalties for landlords who persistently breach regulations; bring in Trading standards to enforce these regulations; and amend the Consumer Rights Act 2015 to specify that letting agent transparency requirements also apply to online property portals.

Alexander continued: “Similar changes were implemented in Scotland in 2012 which ended agency fees and cleared up deposit holding by landlords and agents and generally most have coped well with this.

“The bulk of the fee loss is likely to be absorbed by landlords, but they will be creating a more trusting and attractive environment for their tenants which generally results in greater demand and consequently increased rental returns.”

Alexander accepts that this is currently a difficult time for landlords as the financial incentives for property ownership are being reduced through a series of regulatory and legislative changes. However, he firmly believes that for the professional landlord this is an opportunity to generate a “transparent, open, and honest relationship with their tenants” which generally leads to “longer term tenancies, greater trust, and increased revenues in the long term”.

“Setting the highest standards for letting is something that everyone in the sector should aspire to and achieve,” he added.

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