Posts with tag: letting agents

Will the Fees Ban Help Letting Agents Stay on the High Street?

Published On: February 5, 2019 at 10:33 am

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Categories: Lettings News,Tenant Fees Ban

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The upcoming ban on lettings fees charged to tenants, which is due to come into force on 1st June 2019, could help traditional letting agents to stay on the high street, according to proptech provider PayProp.

Although the ban will affect the revenue that agents can generate, it could reduce competition from companies who have been subsidising rock-bottom management fees with earnings from tenant fees, the firm believes.

This will remove a major differentiator for these agencies, putting all companies on a more equal footing with regard to the total fees that they charge.

Level playing field

In recent months, there has been a trend of agency branches closing, as businesses look to cut costs and consolidate. According to figures from the Local Data Company, 211 agency branch offices closed in the first half of 2018.

However, this needn’t be the fate that befalls high street letting agents, insists Neil Cobbold, the Chief Operating Officer of PayProp UK.

He says: “The ban on fees – while representing a clear bump in the road for letting agencies – could indirectly help businesses to stand firm on the high street.

“With many agencies expected to increase management fees as a consequence of the ban, those charging the lowest fees will have to raise their prices, reducing the gap between the top and bottom end of the market.”

Cobbold believes: “With a more level playing field in terms of management fees, high street letting agents providing first-class property management will be able to thrive.”

Pay for quality

As average management costs are likely to rise following the fees ban, landlords will be on the lookout for the best service, and will be increasingly prepared to pay for quality.

“As costs rise and value for money becomes more important, a letting agency which is on top of crucial issues, such as payments, rent arrears and property maintenance, will become more indispensable than ever to landlords,” Cobbold explains.

Ready for change

Despite the June start date for the fees ban only recently being announced, the top-performing letting agents will have been prepared for this market shift for some time now.

Cobbold says: “Of course, agents need to cut costs accordingly to replace lost revenue, but that doesn’t mean they necessarily have to reconsider their high street presence.”

He adds: “The landscape of the rental sector will change considerably this year, but there remains a whole host of opportunities for savvy high street letting agents to remain profitable and grow their businesses.”

Most Landlords Don’t Use Letting Agents to Manage their Properties

Published On: February 4, 2019 at 9:55 am

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Categories: Landlord News

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The majority of landlords in England don’t use letting agents to manage their rental properties, according to the latest English Private Landlord Survey, covering 2018.

The Government report found that more than half (52%) of landlords did not use a letting agent to let or manage their properties in 2018. A third (34%) used an agent for lettings services, while one in ten (9%) used an agent for both letting and management services.

The remaining 5% only used an agent for management services.

These figures arrive ahead of the introduction of the Tenant Fees Bill this year, which the industry believes will reduce the number of landlords that use letting agents.

Under the new law, letting agents (and landlords) will be prohibited from charging upfront fees to tenants. As a result, it is believed that letting agents will increase their charges for landlords, in order to recoup some lost income.

The Government research found that landlords that entered the sector more recently were less likely to use a letting agent than longer standing landlords. A third (32%) of those who had been a landlord for three years or less were using an agent, while that proportion increased to almost half (46%) amongst those that had been landlords for between four and ten years.

More than half (53%) of landlords who had been in the sector for 11 or more years used an agent.

Comparing this to the Government’s previous data, in 2010, 43% of landlords stated that they had, at some point, used a letting agent to undertake the lettings and management of their property portfolios.

It will be interesting to see how these figures change once the ban is introduced, and its effects felt across the industry.

At the same time, landlords were asked whether they currently or previously belonged to one or more of the main private rental property professional organisations. The majority of landlords (75%) had no current or previous membership of any group.

13% reported current or previous membership of the National Landlords Association (NLA), while 9% were part of the Residential Landlords Association (RLA). 5% reported current or previous membership of another professional organisation.

We remind all landlords of how valuable the services of both letting agents and professional organisations can be in operating a successful and compliant lettings business.

Scotland should be the Model for Lettings across the UK, Agent Believes

Published On: February 1, 2019 at 9:00 am

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Categories: Lettings News

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Scotland should be used as a model for lettings across the rest of the UK, according to a letting agent based north of the border.

DJ Alexander Ltd, one of the largest family-run property management businesses in Scotland, believes that the Government’s upcoming ban on lettings fees is good for business, and will strengthen the relationships between landlords and tenants.

The firm insists that charging tenants administration fees is both unnecessary and bad for business.

DJ Alexander Ltd, headed up by brothers David and John Alexander, argues that the lettings experience in the Scottish private rental sector should be the model for the rest of the UK.

The regulations included in the Tenant Fees Bill in England and Wales have been in place in Scotland since 2012. Additionally, Section 21 eviction notices no longer exist north of the border, while the Scottish Government recently introduced much greater security for private tenants.

Scotland should be the Model for Lettings across the UK, Agent Believes

David Alexander, the Joint Managing Director of Apropos by DJ Alexander Ltd, says: “In many ways, Scotland has led the way in improving the rights of tenants, and changing the relationship between landlord and tenant. Too often, this relationship has been confrontational and divisive, with each side pitted against the other. Rather than resolve any disputes or problems, the attitudes and the regulations seem to be established to dispose of any complaint by a tenant, rather than address it.

“The Tenants Fees Bill simply rights a flawed piece of legislation that allowed unwarranted and unfair charges to develop under the camouflage of administration expenses, often with little or no explanation of what these were for or why they were being applied. With many letting agents operating a business model where such charges account for a quarter to a third of income, it is clear that they were not motivated to end these charges, reduce their levels, or to have them examined in too much detail.”

John Alexander believes that the ban on fees will result in higher charges for landlords, which will concern many investors.

He explains what happened in Scotland: “When these charges were ended in 2012, and they were never as substantial a part of the Scottish market as they have been in England and Wales, there were doom-mongers who predicted the end of the lettings market. But this did not happen; the market adapted, landlords were charged more, but the best agents and the best landlords adapted and realised that this was fairer for the tenant, and, in the long-term, created a better relationship between the two.

“Equally, the ending of the no faults ground for eviction notices and introducing much greater security of tenure for tenants was feared by some in the property market as a sign of them losing control. On the contrary, it gives agents, landlords and tenants the opportunity to develop a relationship built on trust, on fairness and on developing a long-term relationship to their mutual benefit.”

Do you agree that Scotland’s lettings model would work across the rest of the UK?

Tenants to Spend £154m on Fees Before Ban Comes In

Published On: January 29, 2019 at 9:41 am

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Categories: Tenant Fees Ban,Tenant News

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A message sent from an unnamed landlord said it was increasing management fees, in order to compensate for predicted upcoming losses.

Private renters in England are expected to spend a total of £154m on tenant fees before the ban comes into force on 1st June 2019, according to analysis by lobby group Generation Rent, on behalf of The Sun.

However, renters must be aware that tenant fees vary hugely across the country, with some letting agencies charging significantly higher prices for their services than others.

Letting agents can currently charge tenants for services such as referencing, viewing a property and processing fees, but, under the new rules, they will only be able to charge for tenant damages, if the tenant loses their keys and for late rent payment.

Following its passage through the House of Commons last week, the start date of the tenant fees ban has been set for 1st June 2019. This means that any private tenants who sign contracts after this date in England won’t have to pay any upfront fees.

However, up until that date, tenants are still liable to pay fees. Generation Rent, on behalf of The Sun, has calculated that renters will spend roughly £154m on fees before the ban comes into force.

This was based on the average household of two adults paying £404 in lettings fees when moving home. Renewals typically cost £117, while check-out fees average £121.

There are currently around 4.7m private renter households in the UK, with 25% of these moving home in 2016/17, according to the latest English Housing Survey.

Tenants in the UK face a lottery when it comes to the fees that they’ll be charged once they choose a property that they like, with Kinleigh Folkard & Hayward found to be the most expensive – the smallest of the 20 biggest agencies in the country.

Included in its fees are charges of £360 to set up a tenancy, another £300 if tenants need to move out early and change the name on the contract, or another £300 if they’d like to renew their tenancy.

Meanwhile, other agencies charge £90 to renew a contract.

Foxtons, which used to be among the four most expensive agencies, has dropped to eighth place, after reducing its tenancy set-up fees from £420 to £250 per person.

The Sun looked into the 20 biggest agencies in the UK, based on the number of available properties to let in October last year.

Online agent Purplebricks had the most – 21,000 properties – but was also the cheapest.

At present, all letting agents are legally required to publish their fees both online and in their offices.

Housing Court Could be Essential to Property Redress System

Published On: January 22, 2019 at 10:59 am

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Categories: Law News

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A housing court could be essential to the property redress system, believes Neil Cobbold, the COO of PayProp UK.

As the Government prepares to end its call for evidence on the need for a dedicated housing court today (22nd January 2019), a range of industry experts have had their say on the proposal.

The call for evidence was launched in November last year, and has been seeking views on whether a specialist housing court would benefit landlords, tenants and the industry as a whole.

The proposed court would deal with property-related disputes, including those regarding property repossessions and substandard rental housing.

It would replace the current system, which requires consumers to pursue their cases through the county courts, magistrates’ courts, High Court or First-tier Tribunal.

Property possession for landlords

One of the key criticisms of the existing system is that it can be difficult for landlords to regain possession of their properties if tenants are failing to pay the rent.

Landlord trade bodies have suggested that this is a barrier to landlords offering long-term tenancies – something that the Government is keen to introduce as a three-year minimum industry standard.

Official figures estimate that the average time taken between a private landlord’s county court claim to possession by a bailiff is over 16 weeks.

“A dedicated housing court could make it easier and quicker for landlords to regain possession of a property via the legal system,” says Cobbold. “What’s more, a simplified system could also make the process easier for landlords to navigate without costly professional legal support.”

Challenging rogue landlords

Another aim of the call for evidence is to determine whether a housing court would make it easier for tenants to seek justice against landlords providing substandard accommodation.

Cobbold explains: “Many renters may not be fully aware of the current course of action they need to take to pursue a dispute with their landlord through the courts.

“A housing court could be more accessible and provide people with a single route for redress. The Government has previously pledged to ensure all landlords are part of an approved redress scheme.”

He adds: “While this legislation is yet to be introduced, a housing court could provide tenants with greater protection and opportunity to challenge potentially criminal landlords.”

Effective redress

A dedicated housing court could provide a range of benefits for letting agents, if disputes between landlords and tenants are resolved quicker.

It could also tie in effectively with the Government’s ongoing plans to introduce a single housing ombudsman for the sector.

Cobbold concludes: “A less complicated redress system, which is solely designed to deal with housing disputes, is in the interests of everyone in the industry.

“We now await the results of the call for evidence, and the subsequent Government suggestions and analysis.”

Tenant Fees Bill to Come into Force on 1st June 2019

Published On: January 16, 2019 at 10:57 am

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Categories: Law News,Tenant Fees Ban

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The Tenant Fees Bill will come into force on 1st June 2019 for all tenancies signed on or after that date, Lord Bourne of Aberystwyth announced at the third reading of the Bill in the House of Lords yesterday.

The third and final stage of the Bill’s passage through Parliament comes after controversial amendments in the report stage, which lowered the cap on security deposits from six weeks to five weeks’ rent on properties earning an annual rent of less than £50,000. This will likely affect some tenants’ abilities to find a home, especially if they have pets or poor credit history, warns the National Landlords Association (NLA).

In regard to contractual damages, Lord Bourne also provided further reassurance to the House, arguing that there is plenty of case law in place that already deals with damages, which will ensure that they are not used as a back door to default fees.

The Ministry of Housing, Communities and Local Government states: “We believe these amendments strike a fair balance between improving affordability for tenants, whilst ensuring that landlords and agents have the financial security they need.”

Tenant Fees Bill to Come into Force on 1st June 2019

Key points of the Bill include:

  • Default fees will be limited to charges for replacement keys or a respective security device and late rent payments only
  • Holding deposits will be capped at no more than one week’s rent, applying to a maximum of one property only
  • A civil offence with a fine of £5,000 for a first offence will be created, alongside civil penalties of up to £30,000
  • The Consumer Rights Act 2015 will be amended to specify that the letting agent transparency requirements should apply to property portals, such as Rightmove and Zoopla
  • Local authorities will be able to retain the money raised through financial penalties, with this money reserved for future local housing enforcement

Alongside rent and deposits, landlords and letting agents will only be permitted to charge tenants fees associated with:

  • A change or early termination of a tenancy, when requested by the tenant
  • Utilities, communication services and Council Tax
  • Payments arising from a default by the tenant, such as replacing lost keys

Now that the Bill has left the House of Lords, it will return to the House of Commons, after which it will receive royal assent and become law.

David Cox, the Chief Executive of ARLA Propertymark (the Association of Residential Letting Agents), comments on the news: “With the Tenant Fees Bill completing its passage through the House of Lords this afternoon, it appears the tenant fees ban will come into force on 1st June 2019; subject to Parliamentary scrutiny in the House of Commons.

“This now gives agents the legal certainty they need to prepare for a post-tenant fees ban world. To learn about the intricacies of the legislation, we encourage agents to come to our regional meetings over the next few weeks and, of course, our annual conference, where ARLA Propertymark will be doing everything it can to help agents plan and prepare for the introduction of the Bill.”

Jon Notley, the CEO of Zero Deposit, also says: “The passing of the Tenant Fees Bill is a watershed moment in the UK’s rental economy, but one that brings with it a sense of both optimism and caution. On the one hand, we welcome any proposed changes to legislation that enable tenants to move more freely – improving rental affordability is both clear and necessary, while the new regulations should improve practices and standards across the board.

“However, it is vital these changes do not overexpose landlords to risk or unnecessarily burden agencies with time-consuming admin that could be better invested elsewhere. The barometer of the success of this Bill will be a rental market that works for everyone.”