Posts with tag: letting agent fees

Housing Minister Expresses Support for Letting Agent Fee Ban

Published On: December 16, 2016 at 11:47 am

Tags: homelessness,letting agent fee ban,letting agent fees,lettings fees,private rental sector

The Housing Minister, Gavin Barwell, has expressed his support for the forthcoming letting agent fee ban, which was announced during the Autumn Statement.

During a debate in the House of Commons on homelessness, MPs expressed concerns over the high cost of renting.

Barwell, who called homelessness a “moral stain”, said the Government is attempting to “deal with the up-front cost of accessing the private rented sector”.

Housing Minister Expresses Support for Letting Agent Fee Ban

He continued: “In terms of dealing with statutory homelessness, access to the private rented sector is key. That is why the Chancellor’s announcement in the Autumn Statement about letting agent fees – I am sure the opposition welcome that announcement – is an important step.”

However, back in September this year, he rejected the idea of a letting agent fee ban, saying it was a bad idea: “Landlords would pass costs to tenants via rent. We’re looking at other ways to cut upfront costs and raise standards.”

The Shadow Secretary of State for Housing, John Healey, who was the last housing minister under Labour, moved this week’s debate.

He pointed out that a record number of homeless people are now sleeping rough, and over 10,000 children will spend Christmas Day in temporary accommodation. Remember that if you want to help fight homelessness, you can join in Just Landlords’ Christmas competition in association with Shelter: https://www.justlandlords.co.uk/news/enter-christmas-competition-help-shelter/

Healey said there was a lack of action to help private tenants, “while eviction or default from a private tenancy is now the biggest single cause of homelessness”.

During the debate, the private rental sector was repeatedly mentioned.

The Conservative MP for Colchester, Will Quince, believes the private rental sector is part of the problem: “We know that the largest cause of homelessness is the ending of a tenancy, largely via a section 21 notice.

“The system – whereby an individual comes to their council for assistance at the earliest possible opportunity when they get into trouble, and the council turns them away and says: ‘Come back when the bailiffs are knocking on your door’, at which point, the person has arrears and a County Court Judgement against their name, and will never again be able to rent in the private rented sector – is failing those individuals and it has to stop.”

Quince insists that the Government should introduce Help to Rent schemes, similar to its Help to Buy initiatives.

The former shadow housing minister, Jack Dromey, spoke of a “rapidly growing private rented sector, characterised by soaring rents, with the average tenant paying £2,000 more over the past five years, insecurity, and often poor accommodation.”

Conservative MP Bob Blackman also called for a national scheme where prospective tenants could get deposits, while the Shadow Housing Minister, Andy Slaughter, said the Government has a “responsibility” to legislate for longer tenancies and rent controls.

What do you think of the proposed measures, particularly the letting agent fee ban?

Landlords and Agents Should Get Behind Fee Cap Plan, Insists AIIC

Published On: December 15, 2016 at 9:33 am

Author: Em Morley

Categories: Landlord News

Tags: letting agent fees,letting agent fees ban,letting agents,lettings fees,property industry,tenants

Landlords and letting agents should get behind a proposed fee cap plan, insists the Association of Independent Inventory Clerks (AIIC).

Following the announcement in the Autumn Statement that letting agents in England will no longer be able to charge fees to tenants, the AIIC urges all landlords and agents to come together to campaign for a fee cap rather than an outright ban.

Many industry experts believe that banning fees will only push rents up, as agents will simply pass the additional costs onto landlords.

Landlords and Agents Should Get Behind Fee Cap Plan, Insists AIIC

Research recently compiled by Spicerhaart predicts that tenants paying a monthly rent of £1,000 could end up being charged an additional £900 over the course of an average tenancy if landlords put rents up by just 3%.

The Fair Fees Forum has been created to bring landlords and letting agents together to campaign for a fee cap.

Lead by the National Approved Letting Scheme (NALS), the Fair Fees Forum is seeking to have an active role in the Government’s consultation on the lettings fee ban, as well as organising a meeting with the Housing Minister, Gavin Barwell.

The AIIC agrees that a fee cap would be a fairer way of limiting agents’ fees charged to tenants.

“We’re obviously extremely disappointed with the outcome of the recent Autumn Statement, especially at a time when the rental sector has come under such frequent attack from the Government,” says Patricia Barber, the Chair of the AIIC.

“However, now is not the time to feel sorry for ourselves and shy away; we must stand up, be counted and engage in constructive dialogue with the stakeholders that matter.”

Barber praises the work being conducted by the Fair Fees Forum, and is urging all landlords and letting agents to be as vocal and engaged as possible.

It is expected that a ban on fees will be introduced within the next 12-18 months, following a Government consultation period in the New Year.

Barber explains: “The next few weeks and months are set to be an extremely crucial period in the make up of this proposed ban.

“Rather than complaining about what we consider to be a gross injustice, it will be far more productive if the industry clubs together to explain possible solutions to this problem, the benefits of a cap and possible implications of a blanket ban.”

She adds: “Here at the AIIC, we find it hard to understand why tenants should be serviced with hours of letting agents’ time while benefitting from referencing and inventories – all for free.

“Hopefully, with the aid of some thoughtful lobbying by the property industry, the Government will think carefully about its next move regarding letting agents’ fees.”

Do you support the fee cap plan?

Lettings Fee Ban will Provide Boost to Online Agents, Believes StudentTenant.com

Published On: December 2, 2016 at 11:19 am

Author: Em Morley

Categories: Property News

Tags: letting agent fees,letting agents,lettings fee ban,online letting agents

The lettings fee ban to tenants, announced in last week’s Autumn Statement, will provide a boost to online agents, believes StudentTenant.com.

Lettings Fee Ban will Provide Boost to Online Agents, Believes StudentTenant.com

The student rental platform has found that almost every single letting agent charges their tenants a fee. This ranges from a whopping £420 admin fee with a series of additional fees on top, to around £75 at the cheaper end of the scale.

StudentTenant.com, which is free for landlords, believes the lettings fee ban will cause the high street rental sector to diminish, with online agents excelling as a result. It plans to expand its operation to cater to this demand.

The firm’s Managing Director, Danielle Cullen, explains: “High street agents claim they have local knowledge and more people on the ground offering enhanced services in order to justify their extortionate fees. Here at StudentTenant.com, we really struggle to see that being the case. There is absolutely no justification for such exploitation and the rise of the online property sector, along with this latest Government announcement, will leave these agents exposed.”

Of course there is some work and cost involved in sourcing and securing tenants, but StudentTenant.com insists that high street agents will find creative ways to pass over the fees, as was seen in Scotland when it banned lettings fees, to pass all or a proportion of the tenant fees to the landlord, which will push up rents.

With the explosion of online estate agents in the sales sector, StudentTenant.com says it is clear that online letting agents are the future, and the lettings fee ban will only accelerate this.

The immediate impact of the ban has already been felt across the industry, with many high street agents starting a petition to remove the ban and introduce a cap.

Cullen continues: “As we see it, the traditional letting agents, with their high costs, won’t be able to compete with the online alternatives and their transparent proposition. It’s yet another industry that technology is disrupting. Smaller high street agents will be tightly bound by charging higher fees, due to their expensive and unnecessary overheads.

“With all of this in mind and the current opportunity that has been presented, StudentTenant.com will be launching ClickTenant.com at the start of next year to offer a fairer proposition for all landlords – not just those in the student sector – and we expect to compete with the high street letting agents in the residential market, if not overtake them.”

Are you more inclined to use online agents following the lettings fee ban?

Scottish letting agent offers his view on agent fees ban

Published On: November 29, 2016 at 12:27 pm

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,buy-to-let landlords,landlords,letting agent fees,letting agents

It is still less than a week since the Chancellor announced that letting agent fees are to be banned, but the debate on the overall impact on the sector continues to rumble on.

Now, the managing director of one of the leading letting agencies in Edinburgh and Glasgow has aired his opinion on how Scotland has adapted to the changes. Letting agent fees have been banned north of the border since 2012.

Ban on fees

The ban of agent fees in England is still subject to further clarification, with a consultation process expected early in 2017.

David Alexander, of Alexander Lettings, noted: ‘As is the case in England just now, established Scottish agents were initially strongly opposed to the change. Most took the view that fees were fair and reasonable and that the problem lay with a relatively small minority within the industry who charged tenants more than was necessary.’[1]

He noted that many reputable agencies simply got on with it and complied with the new law.

‘Individual agencies, of course, adapted in different ways. In our own case, with circa 5,000 properties under management in Edinburgh and Glasgow and with a substantial number of tenants coming from the corporate sector, we were able to pursue various alternative revenue options. Indeed, the need for change opened a number of new doors and led to an overall increase in the efficiency of the company,’ he continued.[1]

Scottish letting agent offers his view on agent fees ban

Buoyant

Concluding, Mr Alexander said: ‘Four years on, the markets in Scotland’s two biggest cities are buoyant but with supply and demand reasonably balanced, to the general benefit of both landlords and tenants. And established bona fide letting agents, who learned to live with the legislation, are continuing to thrive.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/advice-from-a-letting-agent-where-fees-are-already-banned

Rents to Rise if Letting Agent Fees are Passed to Landlords

Published On: November 29, 2016 at 11:39 am

Author: Em Morley

Categories: Landlord News,Tenant Fees Ban

Tags: letting agent fee ban,letting agent fees,letting agents,Scotland,tenant fees

Rents would rise by 2-3% next year across the UK if letting agent fees currently charged to tenants are passed on to landlords, according to a forecast from a City analyst.

James Fletcher, of Cenkos Securities, yesterday gave a buy rating to The Property Franchise Company – formerly Martin & Co.

Rents to Rise if Letting Agent Fees are Passed to Landlords

He says: “Should landlords decide not to pass these costs back to tenants through higher rents, we do not believe this change would materially affect a landlord’s decision to let a new property or renew an existing tenancy.

“However, combined with upcoming changes to mortgage interest offset and the already imposed buy-to-let Stamp Duty this year, political interferences are making life as a landlord increasingly a less attractive proposition.”

Fletcher reports that, for franchisees, tenant fees account for 16-18% of annual lettings income, and 11% of total income.

The entire Property Franchise Company network is expected to earn £57.1m in lettings revenue this year, with tenant fees accounting for £9.1m-£10.3m of this.

In Scotland, the letting agent fee ban has had a positive effect on the firm’s franchisees, claims Fletcher.

He explains that overall, the ban led to higher income returns for landlords and higher landlord fees for agents. The latter more than offset the removal of tenant fees, which were almost completely offset in the first year following the ban.

Scottish franchisees saw their total lettings income rise by 4% overall in the year following the ban. While this growth was attributed to higher instruction numbers (a 5% increase), the ban only affected underlying fee income by 1% in the first year.

Set up fees for landlords rose from around £200 at the start of the ban to £400 currently, reports Fletcher.

Most startling, he notes, was that franchisees’ monthly management commissions increased by 11% of total lettings income in the first year after the ban. Over half of this growth was attributed to higher rents, which resulted from passed-on tenant charges. The remaining growth was from franchisees winning more instructions.

Fletcher insists that the ban in England and Wales will not write-off letting agents’ income stream, but will simply change who pays the fees.

Will the ban on letting agent fees force you to put your rents up?

Are landlords set to shun letting agents?

Published On: November 28, 2016 at 10:24 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,buy-to-let landlords,letting agent fees,letting agents

Buy-to-let landlords are once again under scrutiny, following last week’s decision in the Autumn Statement that letting agent fees will be banned.

Many peers feel that rents will rise as a result of the changes, with landlords looking to raise extra funds to cover their extended outgoings.

Rip-off agents

An industry peer has suggested many landlords should consider ditching letting agents as a result, particularly those that charge ‘rip-off’ fees.

Simon Lambert, editor of This is Money, observed: ‘Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential villains in the ban on tenant fees.’[1]

‘The theory on the news that Chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises,’ he continued.[1]

Anger

Continuing, Lambert said that buy-to-let landlords have a right to be, ‘as angry as tenants over letting agency fees.’[1]

‘Many landlords pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for. A check with their agent on the level of double-charging going on would leave a landlord as grumpy as their tenant,’ Lambert observed.[1]

Are landlords set to shun letting agents?

Lack of service

Mr Lambert also highlighted the fact that many landlords are sticking with letting agents who do not deliver a sufficient service.

He said: ‘Ask any long-term landlord and they will tell you that the difficulty is in finding a good letting agent, who takes all the worry of sorting any problems for you off your hands. They will have a network including plumbers, electricians, and handymen or women, who can get things fixed ASAP, do essential maintenance swiftly and at a fair cost and keep your tenants happy.’[1]

‘Happy tenants are the key to buy-to-let success, as unless you are in a hot property area such as London where places rent instantly, its vital to avoid rental voids. Even one month of your property sitting unlet but your mortgage and other bills needing paying, proves expensive. Yet many landlords stick with letting agents who don’t do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees.’[1]

Concluding, Lambert told landlords: ‘If your agent can’t explain exactly what the charge is for and justify the cost and why you aren’t already paying for this, leave.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/are-more-landlords-about-to-ditch-letting-agents-and-go-it-alone