The clock ticks down: Fees ban will apply to all tenancies signed after June 1

| Marc Shoffman

Fees charged to tenants are to be outlawed on all new tenancies signed after June 1.

The long-awaited announcement of a date for introduction of the ban was made by Lord Bourne of Aberystwyth, the Government’s housing spokesperson in the House of Lords, during the Tenant Fees Bill’s Third Reading yesterday.

He said: “Implementation is subject to the parliamentary timetables and amendments need to be considered in the other place [the House of Commons].

“We need to enable agents and landlords following Royal Assent to become compliant but we intend for the provisions to come into force on June 1, 2019.

“This would mean the ban on lettings fees would apply to all tenancies signed after this date.”

Isobel Thomson, chief executive of the National Approved Lettings Scheme, said: “At last agents have clarity on the date of implementation of the fee ban which the Government has laid great store by in terms of improving the lot of tenants.

“Only time will tell whether that is the case or whether tenants will end up paying more through increased rent.

“We believe that good, professional agents will be able to meet the challenges facing their businesses as a result of the ban but it is vital that enforcement is ramped up to ensure that all agents comply with the requirement and those who flout it are dealt with appropriately.”

David Cox, chief executive of ARLA Propertymark, said: “This now gives agents the legal certainty they need to prepare for a post-tenant fees ban world.

“To learn about the intricacies of the legislation, we encourage agents to come to our regional meetings over the next few weeks and of course our annual conference, where ARLA Propertymark will be doing everything it can to help agents plan and prepare for the introduction of the Bill.”

Agents can also look north of the border where tenant fees have been banned in Scotland since 2012.

David Alexander, managing director of agency software provider apropos, who also runs a lettings agent in Scotland, said: “Some agents have been charging substantial fees to tenants with little explanation why these charges applied other than for ‘administration’ which has been an area of complaint for tenants.

“This Bill will resolve many of these issues. The relatively quick implementation of the Bill could pose substantial problems for some agents, but it was clear that this legislation was coming, and the sector should have been preparing for its arrival.

“Similar changes were implemented in Scotland in 2012 which ended agency fees and cleared up deposit holding by landlords and agents, and in general most coped well with this.

“The bulk of the fee loss from the implementation of this Bill is likely to be absorbed by landlords, but the long-term benefits will be in creating a more trusting and attractive environment for tenants which, in turn, results in greater demand and, ultimately, increased rental returns.”

Some agents have questioned the timing though, wondering why the ban cannot come sooner.

Simon Gerrard, managing director of north London agent Martyn Gerrard, said: “This delay is very little to do with letting agents being ready.

“The Government are clearly putting off having to implement the ban during the heat of Brexit, and are also likely keen to avoid the inevitable jump in rents that will occur.

“At Martyn Gerrard, we have been ready since they announced the ban, as we already don’t charge the admin fees they’re getting rid of.

“Those agents who have relied on tenant admin fees to survive and prosper, rather than charge landlords transparent fees, have had plenty of time to prepare and should be ready by now.

“This is simply prolonging the waiting period and giving them more excuses not to get their house in order.”

There is also still some debate over whether the ban will result in charges being passed onto landlords.

Michael Bennett, head of lettings for Best Gapp, said: “Our view is that providing a bespoke lettings service to landlords and tenants with timely execution in all aspects of the lettings business, coupled with a keen focus on keeping our landlord fees to a minimum without compromising the integrity of the service is paramount in the event of a change to legislation.

“We are able to remain competitive and offset the loss in tenant related fees when the ban comes into force by offering our landlords special fee packages designed to add value to the tenant experience and to ensure that our landlords retain their competitive edge on pricing of their prime property portfolios.

“We do not advocate increasing landlord fees or to consider employing other measures which would compromise the integrity of the service we offer to landlords and tenants.”

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22 Comments

  1. Property Poke In The Eye
    January 16, 2019 at 07:03

    We may have to stop all free tea and coffee to employees to survive this ban.  We may even need to clean our own windows to stay open.   Hard times ahead.

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    1. Baggiefan
      January 16, 2019 at 14:51

      Allready doing that 🙂

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  2. Light
    January 16, 2019 at 07:54

    “Implementation is subject to…” , oh, never mind then, move along people.

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  3. DASH94
    January 16, 2019 at 09:25

    “This would mean the ban on lettings fees would apply to all tenancies signed after this date.”

    Foresee a lot of tenancies starting on May 31st or we’d have to refund application fees taken during April and May.

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    1. jackoTLG
      January 19, 2019 at 08:36

      They can start on 1st June or after as long as tenancy is signed on 31st may

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  4. Benfield
    January 16, 2019 at 09:25

    Being in Belgravia, London with your high rents and all the other divisions of your business, I don’t suppose its a big deal to you Best Gapp. Try being based in Brighton dealing with the student market. 20% off our income disappearing.

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    1. DarrelKwong43
      January 16, 2019 at 09:38

      I know a few agents in Bournemouth, who don’t charge a penny to the landlord for a student let, all the fees are charged to the students….

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      1. drasperger
        January 16, 2019 at 10:23

        Bits of the Bristol market used to be like that too…….. But what about CW what are their plans for mitigating the loss of 25% of lettings income?

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        1. surrey1
          January 16, 2019 at 11:18

          Closing down.

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        2. Peter
          January 16, 2019 at 14:09

          They could double their contractor intro fee!

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  5. Woodentop
    January 16, 2019 at 10:42

    This is a disgrace. Government have pursued a policy because of rogue lettings agents (often the big corporates) who I agree needed to be rained in but a total ban is far more damaging than the short sighted, stop it and the problem goes away. It should have been capped, to cover the costs that bonafide agents do incur and should be entitled to recover. All they have done is open the flood gates to unscrupulous tenants who are damn good at milking the system and any agent who is not street wise to overcome this decision are going to struggle and be on the receiving end of many a landlord who will complain. It never ceases to amaze me that by filling in a form and doing a paper trail is adequate referencing and the way the industry is being pushed with insurance policies (no commitment from tenants and fire fighting after the horse has bolted) …. it is not. Many an agent is happy to kick out a tenant sooner than later to earn fees on replacement, so you can pretty much guarantee the next step, already muted 3yrs, is protected tenancies and abolish Sec 21.

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    1. CountryLass
      January 16, 2019 at 15:10

      It isn’t just the initial fee that is the problem, at the moment for a pet I charge £150 extra deposit, and the tenant HAS to get the carpets cleaned at the end, and they are responsible for getting it de-flea’d if needed. Apparently I can’t charge this from June, in which case there are going to be a lot of homeless people with dogs, or the shelters are going to be bursting…

       

      Deposits are NOTHING to do with fees, it is a safeguard against damage. If someone wants to do something that is going to potentially damage the property (smells, scratches, stains) etc, then a higher deposit is to be expected.

       

      And I fully agree, a cap was what I expected, and welcomed to be honest, one place I worked for changed the price depending on the applicant!

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      1. Mothers Ruin
        January 16, 2019 at 18:23

        I’ve responded to every survey, given factual feedback and I’ve contacted my MP about a cap on tenant referencing fees and the pet situation. The very best landlords who only re-let decent clean houses and re-decorate every few years simply won’t accept pets any more. For a tenancy to be deemed fair the expectation is that a tenant should be able to live as anyone else would i.e. put up picture hooks, have pets if suitable (consent not unreasonably withheld and all that). As I’ve continued to say this is all about the political agendas of all of those concerned in this change and not much to do with tenants. Over the period of consultation we’ve managed to reduce tenant fees to 10% of our income (they were never comparably high anyway) and increase the rest of our income by 5% from other sources so we now need to make up the difference from rent increases (where these are below market value) and small increases to landlord fees with added value to them. We will also have to charge landlords for such as rent reviews which we don’t currently do. We’ll be fine but I do wonder about the likes of Reeds Rains & CW as their fees are three times greater than ours. Wonder what plan the big Corporates really have? in any event their staff won’t be happy.

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        1. Woodentop
          January 16, 2019 at 21:22

          Its the landlord that is at risk, the agent loosing income unless they sign up to an insurance policy with a referral fee …. oh that has always been the behaviour of the two you mentioned and an excuse to get more. A bit like yesterdays story of Harrt getting rid of the deposits it makes no money on, to switch to referral paying insurance?

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  6. whatdoiknow58
    January 16, 2019 at 11:15

    Looks like one of the big guys Lead*rs are getting in early by slipping in a £600 payment if you don’t instruct them to sell after the end of the tenancy agreement if the Landlord decides not to re-let. Just had a very unhappy Landlord call into the Office and showed me the new lease he had been asked to sign and this was not mentioned at all when he gave approval to re-let after the previous Tenant gave notice so will be cancelling the contract. Here it starts!

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    1. DarrelKwong43
      January 16, 2019 at 11:42

      that must be an unfair term, plain and simple.

      Leaders are being employed as a letting agent not an estate agent

       

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  7. kathytaylor
    January 16, 2019 at 11:42

    Those agents who are still offering an Introduction Only service to Landlords for £250 inc vat are really going to need to think again!!

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  8. Simonr6608
    January 16, 2019 at 11:54

    This Fee ban has been going back an forth for a couple of years now so all agents have had an opportunity to facilitate change where needed. My business was never built around tenant fees, yes we have some but they are a very small percentage compared to the landlord fees.

    I’m looking forward to extra business when the El Cheapo landlord fee agents try and justify the increased fees against service to their clients, I’m sure many will want to change agents.

    you reap what you sow and the biggest culprits have been the large corporates,/franchises and the likes.

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  9. Will2
    January 16, 2019 at 16:47

    I am sure many landlords will go “self let”. Lawyers will make a killing when the mistakes come to light and shelter will think themselves clever chaps/chapeses until the supply of property dwindles and adversely impacts on their own clients.  I personally intend to pre assess tenants before formal referencing so I don’t waste money on the rogue tenants that lie and cheat.  Tenants will now have to meet a much higher standards if they want one of my properties.  It will probably treble the time for a tenant to move in but so be it. I also have in mind how to deal with Shelter’s nonsense on who I let to. Who will be the losers?  Well tenants I  guess.  Well done Shelter. Well done loony left corbynites and radical right mad May followers – They are all just rogue politicians full of their own self importance.

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    1. Woodentop
      January 16, 2019 at 21:28

      I forsee more guarantors, less DIY landlords and refusal of DSS which I understand has been deminishing in recent years brought about by the seemingly constant agression towards landlords and regulations.

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      1. Will2
        January 16, 2019 at 22:17

        certainly agree more guarantors and less risk taking on benefits tenants. I guess interesting times but brits are renowned for being innovative and will work around these irritations.

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  10. TheLettingsHub
    January 17, 2019 at 15:07

    With the clock ticking on a 19-week countdown it’s clear this is going to be a massive turning point for the industry. No surprise it’s generating a wide breadth of views and comments. Focusing on the future, we do now at least have clarity on the timeline. With the fee ban expected to result in a 10-30% loss of turnover for letting agents, businesses that want to thrive need to use the certainty on timescales to focus on their plans and act.

    We’re finding that the letting agents we’re working with, are telling us they want practical, hands-on help with the implementation of new products and processes to adapt their businesses ready for the changes.130 days isn’t a long time, but it’s long enough with the right vision and plan, and there is still time to prepare for the fee ban and be ready for the challenge.

    I don’t believe, in a market as diverse as ours, there can ever be a ‘one-size fits all’ solution, but I do believe we can develop into an industry that isn’t dependent on tenant fees and where we can offer a great value proposition to landlords and tenants whilst still making money! Only time will tell what affect this legislation has on the landscape of the UK rental market, but that sentiment doesn’t have to apply to individual businesses and profit lines. What will affect that is how well we plan and prepare our businesses to face the challenge. A vision without a plan is just a dream as they say!

     

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