Letting fees to be banned from June - MSE News

ognum

I am a LL and I am quite happy with this. Neither I or my agent charge and other fees than currently the initial check fees.

I will happily cover these, this is not vast sums of money, my tenants tend to stay so it may be once a year that I have to cover these fees and I am sure prices for checking will reduce when LL have to foot the bill.

This will only make a difference to high turnover lets.

madvicker

Jumblebumble wrote: »

This is pretty unfair on landlords if tenants lie on the application form regarding CCJ's
The landlord would need to pay to find out that the tenant was being untruthful and this is only going to come from one source - increased rents
JumbleBumble

A one-off credit check costs about £20, plus maybe another £20 time spent calling references? - whereas tenants generally get charged about £50-£200 to get referenced. So now what's unfair? Also, the landlord is not legally required to check for CCJ's. That is a business decision by the landlord to ensure their tenant can afford the rent. So they don't 'need' to pay it to find out the information.

martinlewisjunior

Jumblebumble wrote: »

I take it you do not exist in an environment where you lose money because other people tell porkies.
Back in the real world it may well actually not be good news for tenants at all because it may well increase the number of letting agents who cannot operate profitably and leave the business therefore only leaving the dishonest who will not return the refundable deposits but go bust ect.
JumbleBumble

I understand your point but surely if you're going to lie you can recover those funds in the refundable deposit? as per my comment above.

martinlewisjunior wrote: »

A refundable holding deposit to reserve the property, capped at one week's rent.

I assume they can use this to refund a landlord if the potential tenant has lied?

Overall though £20 to a landlord compared to £200 charged to a tenant is much better.

Also if your business relies on being propped up with expensive fees and then you go under? Then really you shouldn't be on the high street.

tgroom57

I've been looking at what various agencies charge for fees as listed on rightmove in the property ad. One agency charges £70 to "read the tenancy agreement to the tenant". (Amongst other fees, obv.) The sooner this new law comes in the better.

System

madvicker wrote: »

A one-off credit check costs about £20, plus maybe another £20 time spent calling references? - whereas tenants generally get charged about £50-£200 to get referenced. So now what's unfair? Also, the landlord is not legally required to check for CCJ's. That is a business decision by the landlord to ensure their tenant can afford the rent. So they don't 'need' to pay it to find out the information.

Whilst I agree some agents just plain rip off tenants with various fees lets just remember the initial fee is an admin/reference fee.


Its not just about the cost of the referencing its also contributes to staff wages, premises running costs, rates, insurance, gas, water and electric plus whatever other cost the business has. Does it cost credit card companies 20% to lend money, no of course not but they need to make a profit and lets remember the retailers also pay a charge every time someone uses a card.


I think a cap would have been better as the cost to landlords will go up which will put rents ups and over an extended period the tenant will end up paying more plus the criteria will become stricter.

davidmcn

Jumblebumble wrote: »

I take it you do not exist in an environment where you lose money because other people tell porkies.
Back in the real world it may well actually not be good news for tenants at all because it may well increase the number of letting agents who cannot operate profitably and leave the business therefore only leaving the dishonest who will not return the refundable deposits but go bust ect.

If you want evidence of what adverse events occurred in a very similar environment when they banned fees, please look at Scotland (the answer is "not much").

madvicker

Simonr66 wrote: »

Whilst I agree some agents just plain rip off tenants with various fees lets just remember the initial fee is an admin/reference fee.


Its not just about the cost of the referencing its also contributes to staff wages, premises running costs, rates, insurance, gas, water and electric plus whatever other cost the business has. Does it cost credit card companies 20% to lend money, no of course not but they need to make a profit and lets remember the retailers also pay a charge every time someone uses a card.


I think a cap would have been better as the cost to landlords will go up which will put rents ups and over an extended period the tenant will end up paying more plus the criteria will become stricter.

You're talking about what it would cost an agent to provide the service. My costings are based on a landlord who owns 1 property and does not work from an office to support their property - so even in this scenario, the time spent chasing references is an economic cost, not an actual cash cost. The point is the tenant is paying for a service that the landlord is receiving i.e. checking that the potential tenant can afford the rent and has appropriate legal rights and references. The only legal requirement are to check the tenant has the right to live and work in the UK - everything else is a 'nice to have'.

marxdrive

Hi ognum, if you don't mind me asking, who is your letting agent?


Cheers!

Gwendo40

Dual agents (which most are) have been relying on lettings fees as their main source of income for the last decade or so, whilst commission from sales has just been the 'gravy'

I expect they'll now have to start getting a lot more realistic with their valuations and get back to the business of actually selling houses, rather than just indulging deluded vendors with their pie in the sky, fantasy figure asking prices.

Crashy_Time

Gwendo40 wrote: »

Dual agents (which most are) have been relying on lettings fees as their main source of income for the last decade or so, whilst commission from sales has just been the 'gravy'

I expect they'll now have to start getting a lot more realistic with their valuations and get back to the business of actually selling houses, rather than just indulging deluded vendors with their pie in the sky, fantasy figure asking prices.

End of FOM should really put pressure on their actual lettings as well.