Posts with tag: letting agents

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

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

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?

Failure to Conduct Right to Rent Checks Becomes Criminal Offence

Published On: December 1, 2016 at 9:42 am

Author: Em Morley

Categories: Landlord News

Tags: Immigration Act 2016,immigration checks,landlord law,letting agents,Right to Rent

From today, 1^st December 2016, failure to conduct Right to Rent checks becomes a criminal offence under the Immigration Act 2016.

Landlords and letting agents that fail to carry out immigration status checks on their prospective tenants may now face a criminal sentence of five years’ imprisonment.

Failure to Conduct Right to Rent Checks Becomes Criminal Offence

With concerns that more than half of landlords don’t understand their obligations under the Right to Rent scheme, Hamilton Fraser has launched a free audio podcast.

The Immigration Act 2016 was designed to “further crack down on illegal migration” by making it more difficult for illegal immigrants to work, rent and receive support in the UK. The new criminal sanctions put even more pressure on private landlords to make sure that potential tenants have the right to rent.

The Right to Rent scheme came into force from 1^st February 2016. Although the new act does not change these responsibilities, it does increase the penalties that landlords and letting agents face.

Landlords and agents will continue to be liable for fines of up to £3,000 per tenant if they do not conduct Right to Rent checks. However, the new law carries criminal fines, up to five years in prison, or both.

The CEO of Hamilton Fraser, Eddie Hooker, comments: “Whilst the toughest sanctions will likely be reserved for unscrupulous landlords and agents who deliberately and repeatedly fail to follow the rules, with so many changes for landlords in the last 12 months, we have genuine concern that even the most diligent landlords could trip up and end up facing a fine if they fail to carry out proper checks. As a result, we are investing in improving landlord resources and producing easy to understand, educational material.”

Despite the new sanctions, the Immigration Act 2016 does make it easier for landlords to evict illegal migrant tenants, sometimes without a court order.

In his role as a brand ambassador for Hamilton Fraser, tenant eviction specialist Paul Shamplina has been appointed to host a special podcast. He says: “To have a defence, landlords must be able to prove that they complied with the Right to Rent scheme. Even some of the most experienced landlords and agents are struggling to understand the complexities of this new legislation, and we hope that an easy to listen podcast might help to raise awareness.”

The podcast can be found on the Hamilton Fraser group sites, including MyDeposits: https://www.mydeposits.co.uk/blogcat/right-rent-need-know/

The Managing Director of the Association of Residential Letting Agents (ARLA), David Cox, also reacts to the new penalties: “New Immigration Act offences for landlords and agents will only be welcome if they achieve the central aim of prosecuting and fining criminal landlords who are supplying substandard accommodation at inflated rents on the peripheries of society’s radar.

“Enforcement is absolutely fundamental to this, and sufficient resource must be devoted to following up applications to the landlord checking service which are refused, and ensuring that properties occupied by over stayers can be made available again as soon as possible.”

Landlords, remember the importance of sticking to the law on Right to Rent so that you avoid facing these new sanctions.

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

Will Lettings Fee Ban Force Landlords Out of the Sector?

Published On: November 24, 2016 at 11:32 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,letting agent fee ban,letting agent fees,letting agents

Following yesterday’s Autumn Statement announcement, the industry fears that the lettings fee ban may force landlords out of the private rental sector.

Will Lettings Fee Ban Force Landlords Out of the Sector?

In his first Autumn Statement, Chancellor Philip Hammond revealed plans to ban lettings fees “as soon as possible”. He believes the ban will save the country’s 4.3m private tenants hundreds of pounds.

But the lettings fee ban may have a detrimental effect on how many landlords still make a profit from renting out homes, believes Paul Shamplina, the Founder of Landlord Action.

“Although there had been some whisperings, confirmation of this announcement will be a big shock to the industry,” he believes. “It is realistic to assume that the ban on letting agent fees to tenants, which will leave a black hole in agents’ profits, will need to be partly recuperated through letting and management fees.”

He explains how this will affect landlords: “At the end of what has already been a tough year for landlords, and with uncertain times ahead, agents hiking up fees could be the final straw for some landlords and see them exit the private rented sector. Those that wish to hold onto their rental properties will have to increase rents in order to cover their costs. We could even see a surge of landlords opting to self-let and manage, which I believe will have a detrimental effect on rental property standards.”

He advises letting agents: “Agents will need to be forward thinking about how they can absorb some of this cost and the loss through other areas of their business. It has never been more vital for agents to educate less experienced landlords on the importance and benefits of a managed service, making sure they are compliant with industry legislation and preventing them from exiting the private rental sector altogether.”

But could the lettings fee ban be a good thing?

Simon Thompson, the Director of AccommodationForStudents.com, says: “With a recent report revealing the housing shortage in some university cities has driven rents up by as much as 10%, the scrapping of agent fees will be welcome news to students. Until now, students had no choice but to pay varying fees in order to secure the accommodation they want.”

But he is also wary of landlords choosing to self-let: “However, this could also have a negative effect on the rental market in the long term. It is likely that agents will be forced to increase landlord fees to cover their losses, which in turn will see landlords increase rents even further, negating any saving made to tenants in the first place.

“Those landlords that typically choose to appoint an agent to manage their properties are usually either less experienced than self-managed landlords, or do not have the time to manage their properties. If more landlords choose to self-manage to save on letting agent fees, this could lead to a rise in poorly managed and maintained properties.”

How will the lettings fee ban affect your investment in the sector?