Government warned that lettings fee ban may lead to time-wasting tenants

Landlords and agents are urging the Government to ensure the lettings fee ban doesn’t unnecessarily increase workloads.

The National Landlords Association (NLA) has warned that a referencing fee currently deters tenants from providing false information or bidding on multiple properties, but if all fees are banned there is nothing to stop them potentially wasting time looking at several homes with a number of agents.

EYE has also sought clarification on whether tenant referencing would harm a renter’s credit score, and it transpires it won’t, meaning that with no fee to pay, they could apply for multiple properties with as many agents as they like.

James Jones, of credit reference agency Experian, told EYE: “Searches created by applications for credit can impact your credit score, but this does not include tenant checks.

“Other types of searches leave footprints that are visible to consumers but they are not used to calculate credit scores.”

Chris Norris, head of policy at the NLA, warned that the Government’s “unflinching approach” to the ban presented landlords or their agents with substantial extra risks and workloads, saying: “It takes away any simple means to determine that a tenant is genuinely interested in securing a property and that, above all, there are no red flags next to their name when it comes to their ability to meet the rental commitment.

“Currently the ability to charge a reasonable fee for referencing acts as a barrier to applicants deliberately providing false information in order to obtain a tenancy or bidding on multiple properties, but it is a lack of transparency and consistency in charging these fees that has led to the Government’s intervention on this issue.

“As part of the consultation process both the NLA and the UK Association of Letting Agents will be making the case for any future system to provide a clear commitment from all parties involved, which might mean landlords or agents sharing the relevant, legitimate, costs with tenants where necessary.”

Aaron Cambden, owner at Fairview Estates, shared similar concerns.

He said: “To date, we have not been given any details from the Government apart from ‘fees will be banned’ and it’s difficult to say exactly how this will affect us until the law is in place.

“A ban on letting fees could mean tenants applying for a property whilst still looking and deciding to move elsewhere. Or applying for two properties and then making their mind up. It also means a tenant can apply for a property with no consequences, i.e. they know they have bad credit but give it a go and if they don’t pass, no risk.

“This means the landlord will have longer void periods due to having to take a property off the market and then putting it back on.

“As it stands, we’re hoping that we will be able to take a deposit off the tenants upon their application for a property which can be taken off the balance when they move into the property. This would hopefully reduce our workload and deter time-wasters.”

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3 Comments

  1. Beano

    It might deter ‘time wasters’ putting down £200 as a deposit, but it wont deter those with poor credit etc. You are unable to take the money as a fee, so would no doubt have to return it when their application inevitably fails.

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  2. SJEA

    We currently only process one application at a time as the rental applicants have made a financial commitment when they apply.

    After the fee ban, we will be disappointing a number of rental applicants by:

    1.We will take multiple applications with no assurances to the applicant that the property is secured for them.

    2.We will move towards our online system doing as much of the work as possible with as little input from our staff as able to ensure our workload is minimised and certainly not increased. This may result in more ‘declines’ as there is no underwriter able to assess the information.

    3.We will not remove the property from the market until contracts are signed, again leading to more disappointed applicants.

    Either way, this will lead to an increase in costs to Landlords, and possibly in turn an increase in rent – possibly over the term of the contract or a greatly increased firstly monthly rental payment to the tenants.

    Who else in the business world works for nothing – the MPs making these decisions certainly do not ?

    I personally would welcome a fees cap as we charge considerably less than our competitors in what I feel is due compensation for our time and effort. You pay a fee when you apply for a mortgage – why should this be any different ?

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  3. Woodentop

    I told you so, I don’t know how long ago. Now they only wake up! Unless they cap rents, cost will be hidden in rent rises meaning the tenant will pay more in the long term. Labour have made it clear for years they want to cap rents and harder to evict.

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