Much like Brexit, we have known for sometime that the tenant fee ban was on the horizon with significantly less media coverage. The difference between the tenant fee ban being implemented and the aforementioned news saturated topic happening is that it arrives and comes into force a lot earlier, 1st June 2019.
As of this date, England follows the same path that Scotland has already taken.
It would be fair to say letting agents initial main concern was the decrease of income the ban is going to have. In light of this, businesses have already instigated staff cut backs and in more severe cases branch closures as a genuine affect the tenant fee ban will have, not just a knee jerk reaction.
As agents, no matter our own view and opinion on the ban, we aren’t going to change anything; it will be here very soon.
Behind the scenes agents have been looking at ways to mitigate the loss of income the ban will bring. In these early days there doesn’t seem to be any clear cut outcome or reasonable plan implemented on how agents will move forward in this regard. In addition to the ban, we have also seen an increase in legislative requirements recently which means we have needed to work harder in order to keep our Landlords safe and compliant.
So, what can a landlord and we as agents do?
The only way to look at it is – business as usual – work within the new environment that the ban creates.
As a Landlord, instructing a letting agent who is totally compliant in this and all aspects of the ever changing lettings industry will be paramount to ensure that your investment or portfolio is in the best possible hands, attracting the right tenant and most importantly keeping you safe and legal as a landlord.
Tenant movement may well become more fluid, knowing that there aren’t referencing fees to pay.
Make sure your agent still acquires all three main references. These should be a credit check to confirm the tenant’s financial performance and history, a current employer’s reference to confirm the length of their latest employment and that the position is permanent and a current landlord’s reference if they are renting the existing property they live in. The landlord’s reference should advise if the tenants have looked after the property, if they have paid the rent on time with no arrears and if that landlord would rent to them again. As you are no doubt aware as of 1st February 2016 checking a tenant’s right to rent is also required. If this is not carried out and kept up to date prior to expiry, by law fines can be imposed.
It will also be vital that your agent clearly sets out the requirements of the tenancy to the tenant upon their application to rent a property and that all required payments are clearly shown.
An agent will need to have the resources to cope and survive with this change in the process.
The other part of the process which the tenant fee ban affects is the actual amount of security deposit which can be requested. The deposit is registered with a deposit protection scheme and under the tenant fee ban can now only be 5 weeks and not 6, as it was previously in most cases.
Instructing the ‘right agent’ can also safeguard this as TuckerGardner is an appointed agent of Zero Deposits.The long and short of this is Zero Deposits is basically an insurance policy the tenants pay for. The advantages to the landlord is that the amount of cover ‘held’ as the deposit for any dilapidations is the equivalent of 6 weeks that is accounted for.
The other big plus to a landlord, if they would consider a tenant using the Zero Deposit scheme, is they will benefit from enhanced marketing and reach the widest market possible. Call us now and we can discuss in more detail exactly how Zero Deposit works.
In summary, the tenant fee ban will become ‘the norm’ and we as agents would have adjusted to this and still be letting properties long after it ceases to be front page news. Tenants may move more freely, new opportunities like Zero Deposits will present themselves and bring new conditions to the ever changing market. Longer tenancies at the outset may become a factor.
In short are we really going to be affected by the ban?
I think the answer to that is no.
A landlord needs to choose ‘the right agent’. One who can survive the change and not one who is going to be weakened, whether that be by staff cut backs, office closures or a decrease in the level of service they provide by lost revenue.
Richard Elby – Lettings Branch Manager, Great Shelford