The Government is aiming to introduce the tenant fee ban early next year but it is unlikely to be before April 2019, an official has revealed.
Speaking at the ARLA Propetymark annual conference, Anne Frost, lead for the private rented sector policy at the Ministry of Housing, Communities and Local Government, said the Government still needs to respond to the recent select committee report on the Draft Tenant Fees Bill before it is introduced in Parliament, debated by the House of Commons and the Lords and receives Royal Assent.
She said: “Our aim is to introduce the ban early next year: we are currently saying not before April 2019 but will keep people informed.
“There is still quite a long process to go through before we are there.”
Frost added that not all issues had been settled yet but that the ban was definitely coming.
Heather Wheeler, parliamentary under secretary of state and minister, also told delegates that the Government was considering the recent recommendations from MPs on the Communities and Local Government committee on the Draft Tenant Fees Bill and said it would respond in due course.
She said: “It will be happening quickly in parliamentary terms.”
Wheeler also told the conference that the Government would review the working of its blacklist of rogue landlords after 12 months and could then consider making it public.
She said this would require primary legislation, for which there was little time in the Parliamentary timetable due to Brexit.
But then in a strange gaffe, she seemed to suggest that letting agents could already search the newly launched register despite it only being available to local and central Government.
I would love to know how letting agents see this affecting them & renters.
We have been looking at ways that we can pick up some of the burden.
Thoughts?
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My view is that rents are going to increase. If we can’t charge the Tenants for a portion of the work, then we will have to charge the Landlord, who will need to recoup his losses by increasing the rent.
As and example, a Tenancy I signed up last week, a breakdown of the fees.
Tenant – £200 including VAT (£166.67 +VAT). For this, I did referencing and credit checks, and included a contribution towards the Inventory and the administration of the tenancy.
Landlord – 50% rent plus VAT (£362.50 + VAT) This included board, newspaper and online advertising, accompanied viewings, arranging for a carpet to be changed and a contribution to the inventory and administration.
The inventory took about 2 hours of my time (not counting the time spent trying to get the heating to work to check it). Viewings in total, about an hour and a half? So for my time on site, the board, adverts and referencing we are looking about £140. So that’s £389 to cover overheads such as Rightmove, office rent, my time in the office doing the AST, transferring utilities and setting up the file, plus the hour for a check in…
For this example, the Landlord would now be charged the full £530 + VAT on a rental of £725. £636 of his first month, gone. And that’s a managed one, I currently charge unmanaged Landlords a months rent + VAT, so that will have to increase as well, probably to a month and a half + VAT.
It’s ridiculous. A Fee Cap would have been a much better and fairer idea, to stop the Agents who charge £300 for referencing, £200 for guarantor and £200 for inventory etc. THAT is outrageous. Hopefully those Agents will either leave the market straight away, or be priced out when they try to increase their Landlord fees too high.
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Thank you for the feedback! Super useful.
We are starting to get in the room with Agents to talk about how we can help to smooth the transition.
See where this ends….
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Had agents not overmilked it with excessive fees and re-sign fees, charging several possible renters fees on the same property etc, etc, then maybe this over the board ban would not be coming in to force, talk about killing the goose that laid the golden egg.
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Your absolutely right Malcolm, which is why some sort of cap on fees would have been sensible, Agents ( and Landlords & their Tenants ) shouldn’t be financially penalised because of the actions of a few.
A part of the ‘problem’ is government can’t, or won’t see that costs to Landlords are a ‘business cost’ that gets passed on, just as in any business, to the customer.
This isn’t the first time the Government has thought of treating renting as distinct from other business rules – I refer of course to legitimate expenses ( Sec 24 Finance Act, – Mortgage Interest.
Rents are rising, not by as much as the true costs to businesses – yes Landlords are absorbing some but inevitably, the states campaign against Landlords ( contrary to their Rhetoric of Most landlords provide a good service ) is adversely affecting Tenants.
A recent example of this is the Housing Act justification for Councils to print money to supplement their ailing central funding, making Landlords pay for a ‘piece of paper’ ( license ) to continue their business.
There is most definitely a chronic Housing shortage, caused by the Council House sale policies of the !970’s, exacerbated by increased demand in Housing, – see Dominic Raab’s (brave) comments in the Sunday Times.
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I think it’s an absolute disgrace that as a decent letting agent with substantial overheads the fact that the government had put zero clarity on what is happening after all this time.
In the first instance Theresa May said a fees ban will NOT be introduced. She then changed her mind and said it WILL be introduced. We have no idea of timescales, merely working on speculation, no idea if it’s a full ban or a fee cap, no idea if it will include ALL FEES or some fees.
We now have staff becoming twitchy because they’ve done the maths and are scared for their future careers and as a director I’ve lost any respect for this government. How am I supposed to run a business with a huge cloud hanging over it constantly until Theresa May pulls her finger out and decides what she is doing. It’s clear to see that the clown politicians that are running this country would be totally incapable of running a business of their own particularly if the government in charge at the time were as incompetent as this one.
My guess is that when the fee ban comes in we will probably have about 5 minutes notice just like the smoke alarm fiasco!
this really ought to be a FEE CAP which will allow decent agents to continue to do a decent job and charge a FAIR rate for the service they offer. It will stop the cowboys from overcharging and maintain standards within the industry. If fees are scrapped there can only be 2 outcomes:
1. Service standards will drop dranatically
2. Rents will increase to ‘counteract’ the fee ban.
the end.
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