A landlords’ membership body is warning that the tenant fees ban could stop tenants from renting properties in areas of selective licensing.
The National Landlords Association says it is concerned the Tenant Fees Act 2019 may limit access to rented property for tenants in such areas because agents will no longer produce references.
The Act, which comes into effect on Saturday, limits the fees landlords and letting agents can charge tenants.
The NLA claims that because of this, “many” agents have signalled they are unlikely to provide post-tenancy references, something they currently charge for.
However, most selective licensing schemes require landlords to complete reference checks.
The NLA says that if tenants are unable to satisfy these checks, landlords will be unable to let to them without breaching the conditions of their selective licensing.
Richard Lambert, CEO of the NLA, said: “Tenants are at risk of losing out on the chance to find a home because letting agents are doing everything they can to minimise workloads to cut down on costs.
“While landlords who self-manage their portfolios will be covering many increases in costs, letting agents are looking at any way they can limit what they have to do on behalf of tenants, now that the costs cannot be directly recovered.
“The smooth running of the housing market requires a little give and take and, unfortunately, the reaction of some letting agents to the ban on most charges looks set to throw up more barriers to moving from one tenancy to another.
“Just like private landlords, letting agency businesses are being put under increasing pressure by government regulation.
“However, they must realise that penalising outgoing tenants by refusing to provide references will ultimately cost them more than just the price of a reference as landlords opt to do without agents altogether.”
David Cox, chief executive of ARLA, last night said: “There is the possibility that agents will refuse to provide references for outgoing tenants once the tenant fees can comes into force on Saturday.
“If they do, it will make it very difficult for tenants in selective licensing areas to find suitable alternative accommodation as Section 2, Schedule 4 of the Housing Act 2004 requires landlords to “demand references” from prospective tenants.
“We warned the Government that this could be an unintended consequence of the Tenant Fees Act.
“However, agents will still be able to charge the new landlord or agent for providing a reference on an outgoing tenant.
“Only time will tell how the industry reacts to this change but my view is that it may well cost more in staff time and the administration involved in invoicing and processing these payments than agent will be able to charge.
“Having spoken in front of thousands of agents at ARLA Propertymark regional meetings, our tenant fees act roadshows and various webinars over the last few months, the sentiments expressed by the industry seem to echo this opinion.”
Comments (15)
You would have to be a lazy and unprofessional letting agent to not take up references, fee ban or not.
Simple the out going agent charges the incoming landlord/agent for their time, if that is what they want to do. We all go to work to be paid. If they must have a reference for selective licencing schemes, that is the incoming landlords cost, is it not? The fee ban is about stopping charging tenants fees, not landlords/agents overheads.
One area missed by government is the issue where the previous managing agent charges for a reference. No one will want to pick up the tab so tenants who rented through such agents may be adversely affected. I have raised this with MHCLG but appreciate that it’s a source of income an increasing number of agents may turn to. MHCLG seem to view it as a commercial issue and expect the landlord to pay for such a reference.
how many agents charged for a reference pre TFB? The ones probably charging way in excess of the average.
if an agent starts charging other agents/landlords for a reference, they should be put on a *naughty* list
I’m a huge industry influencer because I can raise issues with organisations that have huge acronyms. Hopefully one day one of them will realise how important I am.
I remember the old days before we all became addicted to charging substantial fees to tenants. Under agency law, the landlord is your client principal and you have an absolute obligation to conduct proper referencing checks on any applicants who you intend to introduce as a tenant into their property. If you have doubts about the applicants then you must decline them. I learned a hard lesson very early on when I had some dubious applicants but my client was keen to proceed. When the tenants subsequently caused damage and failed to pay the rent, my client successfully sued me despite signing a “waiver” that he accepted the deficient references. The reason was that I the “professional” should have stopped the letting. So full references are “not optional”.
I’d be interested to hear more about this. Surely the LL (being his property and all) can override you. Especially signing a waiver, how could you be held accountable??
Sender: Create a template with tick boxes and a field for comments if you haven’t already got one. (That might take five mins and some thought) Send e-mail.
Recipient:
Receive the e-mail.
Check tenancy records, tick some boxes, maybe write a few words in the available field, press return.
Any agent that wants to charge for this and refuses to return references on this basis then you really shouldn’t be in business. It’s a service industry and that should be factored into your fees to Landlords.
Tenants dont reply to emails……
hahaha….tenants and the government want it both ways! Its a consumer led industry.
2 mins ? but how long and how much has it cost the agent to get to that position? Its a bit like a plumber hitting a broken widget and making it work charging £50 but the owner says I could have hit it there for free ? – yes said the plumber you could have but you didn’t and are paying for my ability to know where and how hard to hit it. Gardenflat – you don’t look at bank statements already? seriously? We always ask for bank statements so we can see the wages in rent out as well as current/past landlords references.
My ref provider has always taken bank statements but I’m going to get a little more hands on from here in.
I know my portfolio very well, I can already answer most questions without even looking at my database. Sure I need to double check a few dates but if you’ve got good systems in place it really doesn’t take that long.
We should all be helping each other by not charging stupid fees.
Our referencing agency look at the bank statements on our behalf
Get a grip, it takes two mins to complete, tenants should never have been charged a fee for this in the first place.
If another agent charges me for a few questions then I’ll simply ask for bank statements from the applicant showing rent has been paid on time.
I agree. We’ve never charged for references – it’s in all our interests to exchange information about tenants Overall, the value of a landlord reference is small and you have to take it with a pinch of salt anyway – if someone wants rid of a tenant, they’re unlikely to give them a completely rubbish reference). It’s always seem a bit off to me that an agency can charge up to £50 to a tenant to provide a reference and then give them a bad one.
We mostly go on bank statements and the credit references, and if there’s any doubt we ask to visit them at their current premises. We don’t always go,but you can get a lot from the reaction to that question.