Landlords shocked to be told their costs will rise because of tenancy fees ban

With just over a month to go, some landlords are apparently only just waking up to the price of the tenancy fees ban.

In this link to Property Tribes, one landlord says how his letting agent has just told him “what they are going to do to ensure that they can still drive their big flash cars”.

Rents charged to tenants will go up; charges to the landlord will go up by 1%; and the tenant find fee will rise from £150 to £350.

“A kick in the teeth for loyalty,” complains the landlord.

Another landlord says that they too have been notified of new fees, including a £225 compliance and reference charge at the start of each new tenancy; check-out fee of £60; inventory £60; and deposit management fee of £12.

Vanessa Warwick, EYE contributor and co-founder of Property Tribes, says: “I wonder how tenants will react when they hear the news that the rent is being increased due to the tenant fees ban?

“This is the perfect example of unintended consequences when the Government tinkers around the edges of the PRS, pulling various different levers without understanding the knock-on effect.”

https://www.propertytribes.com/1st-evidence-that-tenant-fee-ban-rent-rise-t-127639995.html

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39 Comments

  1. Robert May

    Err 1% of the average rent is about £9.50-  £114 extra a year for 8760 hours management out of £11,400 rent and about £8730 capital growth. I think the landlord might benefit from thinking things through before complaining too loudly, especially as the agent’s fee is a  claimable expense.

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    1. Property Money Tree

      “Management” of 8760 hours?  Lol.  Why would a landlord’s capital appreciation (real, expected or imagined) be of any concern or consideration to a letting agent?  Or is it a “they are a making money, so we deserve some of that pie too because we at least once did stand in the same room as the landlord”?

      No one in their right mind will balk at paying a fair price for a necessary good service.  Fact

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      1. Robert May

        A full managed service doesn’t turn off at 5:30, at the weekends or on bank holidays.

        I was making the point that a landlord who is achieving   low risk  yields and capital growth really ought to put the cost of keeping their agent in business. A tenant won’t  stop calling up at 2:30 AM on a Sunday morning because they’re not paying   fees, but if there are no agents those calls will have no option than go to the landlord

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        1. Property Money Tree

          Robert, I take your point, but how many agents actually take that call at 2.30am on a Sunday morning?  If you know any, please point me in their direction :).  In my experience, a voicemail is invited, and that, IMO, is not managing the property at the said 2.30am.

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  2. David Clark

    Well know fact that 92.6% of people don’t understand percentages!

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  3. ArthurHouse02

    Big flash cars, when has anyone seen a letting agent with anything other than a branded small hatchback?

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    1. JMK

      Seeing as you ask, one that I use has a very large flash Merc and good luck to him.  He does a very good job at a low percentage.  So with that in mind, if he can achieve it then why can’t others?

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      1. Jay2Oh61

        More fake news. I’m afraid you’re in cloud cuckoo land if you think you can charge cheap fees  whilst offering a fully compliant, regulated and insured lettings and management business. Merc, or no Merc… This person has other business interests no doubt.

        Landlords have made millions over the last 20 years, whilst at the same time driving down their fees to the detriment of the Tenant. Times are changing and Landlords will now have to pay a proper fee for a proper service.

         

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        1. JMK

          Your assertion is extremely wide of the mark.  It’s one of the franchised high street brands he operates.  You can therefore take it that he is fully compliant.  His father is a sleeping partner and he does have other interests.  So what?

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          1. DarrelKwong43

            being part of a large franchise does not mean you are fully compliant IMHO.
            You have zero recourse from the franchisor if the franchisee does X, Y or Z wrong or disappears from the face of the planet. 
            as a landlord, I would always advise to check the knowledge and compliance of an agent you use.  In the first instance, check deposit compliance, ask for copies of terms of engagement with any contractors they use, ask for copies of their professional indeminity insurance and copies of attendance certificates for training courses they have been on.  It will be suprsiring what is missing, even for the well known high street brands/franchisees. 
             

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            1. JMK

              Thanks Darren, most of that I have actually done as I keep my own records too.  Your input is much appreciated.

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              1. DarrelKwong43

                Honestly, thats good to see, I think you would fall into the 1% of landlords who I have ever met, who have checked the credentials/knowledge/competency of their letting agent. 
                If more landlords did such, then we would clean up our industry in a heartbeat. 

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  4. jeremy1960

    Big flash cars? The only agents in our town that drive flash cars are the estate agents! Apart from the pb guy on a bike!

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  5. Eyereaderturnedposter12

    “what they are going to do to ensure that they can still drive their big flash cars”.
    It doesn’t seem an unreasonable argument… after all, Agents are probably going to need somewhere to sleep after this current Govt. finishes it’s work on the PRS…

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    1. JMK

      😀  VW campers with Foxtons ads.  Love the idea.

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      1. LetItGo

        If for a moment you compare selling a house with renting….same amount of work to advertise, same amount of viewings but vastly different fees. Take a £200k property with a fee of just 1% and compare that with the additional checks, paperwork and so on for a fee of almost half that. Landlords need to wise up and see that they have been getting a great deal and now are being asked to pay nearer the full cost plus profit, we are still allowed to make one!

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        1. JMK

          I don’t deny it and it’s one of the many reasons I chose not to be an agent for other people’s properties.  I absolutely agree that I am getting a good deal.  I self manage some propertie/tenants but that is for historic reasons.  Handing over the rest was the best decision I ever made.  
          I have sympathy of course for agents but the whole sector is under attack.  As a landlord I have decided that enough is enough and I’m starting to exit.  Some agents will be forced to do likewise and I commiserate.  If they impose higher fees on their landlords because they have to then so be it.  They’ll lose some, others will understand but you may lose them too as they sell up.  It’s a tough time for all of us.  
          However as we all know the people who will suffer the most from it are the tenants.  Pity our Government is so clueless.

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  6. Highstreetblues

    Bless em. It proves how little some appreciate a good agent who alleviates “the hassle factor” for them.

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  7. EAMD172

    I’m not in Lettings but didn’t it used to be 15% fully managed and 10% tenant find? Then along came tenant fees and the balance started to swing toward the tenant. Take away tenant fees and it’s just rebablancing to the people who are making the profit from it. Where the government are actually causing the biggest problem is removing the cost of mortgage payments from reclaimable expense against tax. That starts to squeeze everyone.

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  8. Andyjames

    My ability to drive a “big flash car” is born from 30 years of hard work!

    i have never signed on or taken anything from the state! We as a business have been transparent in our fee charges (we do not load works invoices etc) but this legislation is negating a huge income stream that we will struggle to cope with. I get a fee cap but you tell me what other contract you can walk away from for £50???? I don’t know 1! An inventory is there to protect a tenant more so than a landlord so why shouldn’t they pay for the protection? Can I insure my property at the expense of someone else?

    landlords need to understand this is an unprecedented financial attack on the industry and fee increases are not about profiteering but about sustainability

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    1. JMK

      Most of us will Andy though it will still mean that some landlords will exit.  The attack is not just financial of course, though there are financial implications from all the increased legislation.

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    2. LetItGo

      A inventory is only to prove the tenants liability. The DPS ensures that they are inocent until proven guilty, without an inventory ‘it was like that when they moved in’

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  9. DASH94

    It might not be justified, but it’s an understandable response if agents are just now whacking all their lost fees onto their landlords.

    We’ve all known this was coming for 2 years so the inevitable impact to landlords (which with forward planning needn’t account for all the lost fees), should have been drip fed since then.

     

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    1. Andyjames

      I get that
      But what if you as an agent are maximising what you feel are viable and ethical income streams? It’s all well and good fantasising over new income streams but there are few that a sustainable when keeping within (in my opinion) the ethical/legal constraints we are are bound by

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      1. DASH94

        It’s not easy for sure.   Small rent increases for the past 24 months  and increasing the number of properties on the books without too  many extra overheads would have helped amortise a fair proportion,

        A lot does depend on the proportion of the agencies income that comes from tenant fees – if it’s over 20% it’s clearly a big loss in one chunk

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  10. DarrelKwong43

    An agent around here drives a flash £60k range rover, his company are up in court soon, for charges under unfair consumer practices

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    1. PossessionFriendUK39

      Interesting Darrel,   would you care to email me the details please ?

      enquiries@PossessionFriend.uk

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  11. seenitall

    Im sorry but I may have had a number of flash cars –  3x Pork 911 turbos  1x Aston DB9    Lots of super fast Mercs AMG’s and BMWs M5’s etc   – If a prospective landlord made a comment about our commission rate perhaps being high due to my cars  my comment would be  to highlight that we only get paid when they as landlords are successful, we work very hard to do everything possible to make sure the letting of our landlords property is safe and successful and have been doing this job for more then 20 years.   I don’t get paid if you are not successful and you wont come back to me if we don’t do a good job.    They then can see my passion for lettings and making sure the landlord letting is successful which in turn pays for my cars. Tenant fee ban – yep  – discussed with our owners – discussed about rent increase to tenants so that in the first year its cost neutral to the tenant and also increased fees to LL in the first year so its also cost neutral to them.      Not an issue as our fees are already more competitive then the big boys and franchises and we are still more competitive even after the ban and increase whilst still offering a better service in my view against our local competitiors.
    The big boys are already charging to the max to Landlords, dont have any further to go and are going to get whacked by the smaller fish. We specialise just in lettings by the way.  🙂          

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    1. Eyereaderturnedposter12

       

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      1. seenitall

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        1. Eyereaderturnedposter12

          Good sport … 😉
          Have a successful day!

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  12. RadPropertyDude

    I have an e-bike.

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  13. Mark Walker 2

    I don’t own a car!

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  14. Tcos

    I’m not sure why there is such a panic on charging all your landlords instantly from 1st June. Fees on current tenancies are still valid until end of May 2020 so you can drip feed this over the next year. Why blast your current landlords in one go now!? We are calling each individual landlord as and when their properties come up for re-let and informing them of the changes to their fee structure which overall is being kept at a fair rate and lower than what some our our local competitors are doing. Any new landlords are straight onto the new fee structure so no issue there.

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    1. LetItGo

      Totally agree, LL’s should only be charged more when their currents tenants leave to replace the loss ij revenue form the TFB of thier new tenant. The accross the board ramping of management fees is a sledgehammer.

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  15. kathytaylor

    How many of us pay the same for a basket of shopping as they did 5 or even 10 years ago? Agents costs have increased massively therefore, regardless of the tenant fee ban, in a lot of cases where commissions have reduced over the years (partly due to sales agents entering the lettings market to prop up their businesses during the housing crash), it is about time Landlords paid a realistic price for the service they are receiving.  A quality fully managed service cannot be delivered for 5%! In the area that I cover, based on the average rent and average commission, a 1% increase amounts to £2.38 per week……. I’m not a Landlord myself but if I was I certainly wouldn’t lose sleep over this!

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  16. Woodentop

    The tenant fee ban was to make the landlord responsible for their costs … and now they complain!

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  17. KByfield04

    Fundamentally it’s about educating landlords & hopefully with time for them to digest the info. We notified all landlords of the TFB back in December and set out exactly what this would mean to them in additional costs. If you’re just telling landlords now, just a month before implementation, do t be surprised if they have a knee jerk reaction to a change in fee structure.

    However this is also a chance to educate your landlords on everything they get for those fees- make sure they know an agents duties are a world apart from that 15 years ago and the value they now get is staggering.

    The greatest challenges are often the greatest opportunities.

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  18. RichardHill61

    Stupid article!

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