Autumn Statement 2016: New era for Landlords as Lettings agent fees to be banned | Discuss

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Autumn Statement 2016: New era for Landlords as Lettings agent fees to be banned
23/11/2016
9:53 am
News @ Tenant Referencing
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Lettings agents are set to be banned from charging fees to tenants under plans to be announced by the chancellor in his Autumn Statement, from 12:30pm today.

Tenants can be charged fees for a range of administration, including reference, credit and immigration checks.

Philip Hammond is expected to say that shifting the cost to landlords will save 4.3 million households hundreds of pounds.

The move could spur competition as landlords, unlike tenants, can shop around for the cheapest agent.

In Scotland, lettings agency fees to tenants have already been banned.

In England and Wales lettings and managing agents have been legally obliged to clearly publicise their fees since last year. So as a landlord in England, Wales or Northern Ireland you will know all about the fees your tenants have to pay when they sign a rental contract with a letting agent.

This means that tenants can be charged anything to check-in or check-out when moving, which is why Scotland were the first to abolish these fees and now the government is following suit.

The question now is whether letting agents will seek to pass costs onto landlords, which coupled with various tax changes, including the scrapping of mortgage interest relief from April 2017, would make it even harder for buy-to-let investors to make a profit.

Many news sources are reporting this as ‘bad new for landlords’, however we believe there is a positive spin on this. Primarily, this is the perfect opportunity for landlords to become accredited and learn how to efficiently self-manage their properties to keep their costs (and rents) down.

So £124 (+ VAT – special TR Group Christmas offer for 2016) to advertise and let rented property, reference and even insure rent and legal costs are covered is an amazing deal for all UK landlords, wouldn’t you agree?

Advertise, reference and protect yourself for just £100 by clicking here now.

At the TR Group it has been our mission to create the best products at the best price over the years, to help our member landlords meet their costs as well as their legal obligations.

So landlords, if you’re looking to give your tenants the best deal and prepare for another drastic change to the private rented sector join LandlordReferencing.co.uk today for all your Referencing & Insurance needs.

 

Related topics:

Innovative lettings ‘Passport’ enables councils to house more and save more

80% of private renting tenants prefer to use online letting agents

Citizens Advice reports rise in problems between tenants and letting agents

23/11/2016
10:37 am
SirRonald
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Estate Agents need to stay away from the lettings sector; from personal experience they know nothing
about proper tenant referencing or how to keep a good agent/tenant relationship.

23/11/2016
10:42 am
RentPie
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Landlords and agents in Scotland have adapted, rents didn’t go through the roof and the best part is that
rogue agents and landlords have been much more easily exposed because of it. I agree that this is a positive step for the PRS as a whole, but we all know that the newspapers thrive on bad news ..!Yell

23/11/2016
10:52 am
Lil-Land
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‘A little learning is a dangerous thing’, as they say. Landlords will have to shop around for the best
deals or man up and learn how to do the job properly!

23/11/2016
1:10 pm
Amy
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Does this mean that private landlords who do their own referencing . (Me) cannot charge to cover the costs of referencing and the time spent trying to get the right info off the tenants?

Before i charged a fee , i have had,  too many times  found out the tenant had given me wrong addresses etc, before i did the credit check and then it had to be done again with the right details.

I have to thoroughly double check all tenants details now before i proceed

This is because some  tenants do not understand the correct information required from them. Once its sorted they usually turn out to be good tenants . But it takes time. Some tenants have been worried that there credit check will fail,  to find out that actually they have a good credit record. I have to teach them how to provide the right info and how to do their own credit check in future.  

23/11/2016
2:06 pm
ffs101
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no change to buy to let tax or stamp duty then Confused

23/11/2016
2:36 pm
elvisLives
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The question now is whether letting agents will seek to pass costs onto landlords, which coupled with various tax changes, including the scrapping of mortgage interest relief from April 2017, would make it even harder for buy-to-let investors to make a profit.

— Yes they will, but they’ll find us in a lot better bargaining position than tenants, and tougher negotiators to boot!

Ultimately it will mean landlords have to push up rents a little (again) to offset costs, but I suspect that’s better from a tenant point of view than getting stung £300 for some trivial service from a lettings agent

24/11/2016
11:31 am
Owen
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Yes, I do all my own referencing via here already – and all I charge the T is that fee plus a nominal amount for my time – but I don’t want to waste even more time / money on checking up on T that fail a reference check.

So I’m thinking what we need is a “pre-pack” reference.

So I say to T – get your reference sorted and send it to me.

T comes here (or some other reputable provider) and gets reference sorted (at their expense)

then when it’s ready I get sent a link to it.

T can send this to as many LL as they apply to – but they need to update it every 1-2 months to ensure the credit history etc is still valid.

how does that sounds as a product you can add Paul ?

24/11/2016
3:34 pm
Amy
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Being a small LL I do most of my own referencing.

I have already paid and used TR Lettings to do referencing just recently and in the past for tenants that have complications. 

I stopped taking deposits. So i will have to go back to that.

Waiting…… To see some bright spark come up with a good idea.

Rent has to go up i think.

24/11/2016
3:40 pm
amy
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Owen said
Yes, I do all my own referencing via here already – and all I charge the T is that fee plus a nominal amount for my time – but I don’t want to waste even more time / money on checking up on T that fail a reference check.

So I’m thinking what we need is a “pre-pack” reference.

So I say to T – get your reference sorted and send it to me.

T comes here (or some other reputable provider) and gets reference sorted (at their expense)

then when it’s ready I get sent a link to it.

T can send this to as many LL as they apply to – but they need to update it every 1-2 months to ensure the credit history etc is still valid.

how does that sounds as a product you can add Paul ?

I think (reputable provider) is the operative word here

25/11/2016
4:41 pm
Owen
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Re: deposit – small print on many RGI policies is that you have to take a deposit > 1 months rent.
(but less than 2 otherwise you fall foul of some other law regarding grant of premium on a lease)

26/11/2016
8:31 am
David Price
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Amy said

Waiting…… To see some bright spark come up with a good idea.

Rent has to go up i think.

Can’t say that I am a particularly bright spark but I do have a scheme that partially works.  I give prospective tenants a five page form to complete, purloined from various sources, including landlord referencing.  An astute person would take about ten minutes to complete but some of my tenants take many hours and come back with a largely blank form (they are rejected).  The whole point is to make the tenant invest some of his time since money is to be forbidden.  Bad tenants are lazy and cannot be bothered (too busy with important tasks, watching Eastenders).  It is surprising how many are eliminated at this first hurdle, many never get as far as writing their name and address.

As to deposits please avoid them like the plague, there are too many ‘no win no fee’ lawyers willing to try to trap you for the most minor ALLEGED error.  I recently assisted a colleague at one of these cases and it was not a pleasant experience, fortunately with a positive outcome.

I have already increased my rents by 15% to cover the losses already incurred by changes in government policies (loss of wear and tear and UC losses) and intend to now increase annually.

26/11/2016
11:49 am
PaulBarrett
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Dave 

Any chance of putting out your extensive checklist application form for the benefit of other LL!?

You have been in the game far longer than many of us and clearly have been able to formulate an informed application form.

With many LL being forced to manage things themselves as they will ZNOT pay LA anymore in fees such LL will need all the help they can get..Your application form could form an excellent gaye to stop wrongun trying to obtain rental property.

This is exactly what a LL needs.

We need to stop all the wronguns before we bother referencing them with LRS!

So as a bit of altruism on your part it would I’m sure be very useful to those of us less experienced LL 

Perhaps you would require such LL to become LRS members before you are prepared to allow a pdf of your application form.

It is clear many LL will abandon LA due to the financial circumstance of LA fees bans.

Therefore the good offices of LRS and its members will be needed by the hundreds of thousands of LL who will abandon LA.

This can only be good news for good LL and good tenants, which will hopefully mean good LL only have good tenants.

If bad or incompetent LL choose not to use LRS that is their lookout.

26/11/2016
5:17 pm
Owen
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NLA have a comprehensive application form in their document library (although it’s curiously missing a box for NI number)

27/11/2016
12:28 am
David Price
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PaulBarrett said
Dave 

Any chance of putting out your extensive checklist application form for the benefit of other LL!?

I am normally willing to share anything that would be to our mutual advantage but unfortunately I do not own the copyright of this form.  If I have time I will rewrite the whole thing and publish, without any copyright, but it will take many weeks.

27/11/2016
8:42 pm
rigsby
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RentPie said
Landlords and agents in Scotland have adapted, rents didn’t go through the roof and the best part is that
rogue agents and landlords have been much more easily exposed because of it. I agree that this is a positive step for the PRS as a whole, but we all know that the newspapers thrive on bad news ..!Yell

Not so sure about that read below:

LETTING AGENTS – WHY ARE SHELTER QUOTING OUT OF DATE RESEARCH TO BACK UP THEIR FLAWED ARGUMENT ON FUTURE RENTAL RISES

Scotland banned Letting Fees in 2012. The charity Shelter have been a big voice in persuading and lobbying the Government since it managed to persuade the Scottish Parliament ban fees in 2012.
On all the TV and radio shows at the moment, they keep talking about their Independent Research which backs up their argument that rents didn’t rise.which they say was published in 2014.

A researcher for Shelter in Scotland published these comments yesterday,

“renters, landlords and the industry as a whole had benefited from banning fees to renters in Scotland. It found that any negative side-effects of clarifying the ban on fees to renters in Scotland have been minimal for letting agencies, landlords and renters, and the sector remains healthy.”

Going on,

“Many industry insiders had predicted that abolishing fees would impact on rents for tenants, but our research show that this hasn’t been the case. The evidence showed that landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK. It found that where rents had risen more in Scotland than in other comparable parts of the UK in 2013, it was explained by economic factors and not related to the clarification of the law on letting fees”

The report Shelter mentioned was published in December 2013  (only 12 months after the ban).

How can Shelter quote a report today, in late 2016, when that report they use as proof  that rents havent risen was published in Dec 2013, only 12 months  after the ban (and you think about it, these reports take a few months’ to compile), so the report was only based on figures say six to nine months after the ban came into action (FYI – The ban was Q4 2012)

What really happened to rents in Scotland

I have carried out my research up to the end of Q3 2016, and that tells a different story

In Scotland, rents have risen according the CityLets Index by 15.3% between 2012 and today (CityLets being the equivalent of Rightmove North of the Border – so they know their onions). When I compared the same time frame, using Office of National Statistics figures for the English Regions between 2012 and 2016, this is what has happened to rents

  • North East 2.17% increase
  • North West 2.43% increase
  • Yorkshire and The Humber 3.21% increase
  • East Midlands 5.92% increase
  • West Midlands 5.52% increase
  • East of England 7.07% increase
  • South West 5.82% increase
  • South East 8.26% increase
  • London 10.55% increase

..and let me remind you of Scotland … 15.3% increase.

See the graph below ..

15094287_10154679132654590_4158838222615935824_nImage Enlarger

Conclusion

Are you really telling me the Scottish economy has outstripped London’s over the last 4 years? Are really telling me wages and the Scottish Economy have boomed to such an extent in Scotland in the last 4 years they are now the Powerhouse of the UK .. because if they had, Wee-Nicky Sturgeon would have driven down the A1 with a blink of an eye, not even stopping at FerryBridge (M62/A1) Service station for a Bacon Bap and Black Coffee to demand immediate Independence

Rents will increase as the fees will be passed onto Landlords in the coming few years. Not immediately .. but they will

27/11/2016
8:47 pm
PaulBarrett
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What about publishing it on Google docs and allow sharing so it could be adjusted, amended etc?

Clearly many LL of extensive experience such as yourself will have ideas as to the best application form to wheed out wrongun tenants

Many LL will be abandoning LA to self manage due the fact that most LA will try to pass on the costs of the fee ban to the LL

Most LL I reckon will refuse to pay increased fees and for those that can, self management makes sense

As you suggest before a LL wastes £150 on a LRS RGI referencing check they will want to know that the tenant applicant has a 95% chance of passing or the LL will lose out and have to pay for more expensive referencing.

The key to preventing this would be your form

It is even something you could put online as part of your marketing

Essentially advising that if a tenant applicant cannot satisfactorily complete the form then don’t even bother!

This should result in tenants that will meet your requirements

The big problem for many LL is that the LA fee ban will expose them to how dodgy their business model is based on mostly duff tenants

Few LL understand the risks they take with tenants who can’t qualify for RGI

It just proves that being a LL is actually quite a risky game especially if there is a mortgage to service

A recent issue I have come across is that tenant sharers have changed their jobs since they applied and became my tenants!

In fact they they on their 3rd and 2nd jobs and they have only been tenants for 1 month!!

They are managing to pay the rent with a bit of forbearance from me, but it does make a bit of a mockery of their employment details they first gave to obtain the tenancy as sharers

I have noticed tenants are looking to share a property rather than take on the commitment of a whole property, and I have noticed this on the roommate sites where tenants are actively looking to buddy up as sharers

This gives them the chance to save at the expense of their privacy

They could afford the whole property but then have nothing remaining

I have been watching Victorian Slum and it seems we are returning to those rental days when it was common to share rental properties

So after 100 odd years we have returned to domestic housing situations that existed all that time ago!

We haven’t come very far have we!?

It would be very interesting to have a latter day Charles Booth carry out a similar housing survey that he carried out over 150 years ago

I reckon the level of shared and overcrowding would be far more than back then as there hadn’t been 3 million immigrants hit our shores in a 10 year period

With S24 about to devastate the PRS I reckon many more tenants will be forced to share properties with other tenants due to affordability and property availability problems

LL will need to ensure that they carry out as much due diligence as they can before spending money on expensive referencing

Perhaps if more LL use LRS then prices could be reduced to a point that such costs could he reduced to negligible amounts so LL could take a chance without the hit being too much in the event of tenant failure

I’m sure LL will start to look for more cost effective methods to source tenants

Your form could greatly assist those LL

29/11/2016
2:09 pm
drvn1
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I’m not entirely clear on what our standing is on letting fees now.

Agents can no longer do so, but as private landlords, can WE still charge ‘letting’ fees? 

If not, then the only way forward would seem to be to raise rents.ConfusedAfter all, we do as much as the agents do and more!

29/11/2016
2:43 pm
irishRose
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I don’t think anyone has anything to worry about. This’ll never happen; the Tories have done more U-turns than a dodgy plumber! Cool

29/11/2016
3:04 pm
PaulBarrett
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So

irishRose said
I don’t think anyone has anything to worry about. This’ll never happen; the Tories have done more U-turns than a dodgy plumber! Cool

rry to say, but you are wrong in your contention.

S24 will proceed

Govt is simply not bothered with forcing 440000 LL out of business nor making homeless 2.1 million tenants.

As long as they can facilitate transferring the business of mortgaged sole trader LL to their corporate buddy Tory party donors they will be satisfied.

To remain a sole trader LL is to sign your own death warrant.

S24 will go ahead

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