A new blog from Hamilton Fraser’s and buy to let expert, Paul Shamplina offers his view on the Chancellor’s Autumn Statement and banning letting agents from taking admin fees from tenants.
Click here to make sure you also download his five free top tips on how to minimise the impact of the banned tenant fees.
Tenant Fee Ban – The Latest Guidance
In 2015, new rules were introduced requiring all lettings agents to display their fees on their websites and in their offices, with a £5000 fine from Trading Standards for non-compliance. This was designed to encourage greater transparency and make it easier for tenants and landlords to shop around. However, since tenants are forced to use the agent the property is listed with, many have felt they are “held to ransom” by unfair fees.
It is believed the average admin fee for drafting a tenancy agreement, referencing, inventory fees etc. is between £200-£300, but this can vary greatly from agent to agent and region to region. With rising rents in many areas, and particularly London, the Government clearly wants to give tenants a further helping hand by introducing a complete ban.
So what now?
This is going to leave a black hole in letting agents’ profits. The details of the announcement are still very unclear but the Department for Communities and Local Government (DCLG) will consult ahead of bringing forward legislation. It could even take a couple of years to come into force, who knows? Either way, agents need to start preparing now.
Agents now need to focus on how they can better service their landlord clients, especially those on a let-only basis, rather than full management. Some agents may look to swallow the loss of these admin fees in a bid to remain competitive, but the majority may now look to the landlord to fill the void, which could push up rents in some cases.
There is now an even bigger challenge for agents. Not only are they competing with other agents to sign up new landlords, they also have to focus on retaining their existing landlord clients who are encountering the most challenging times ever experienced in the PRS. In just one year, landlords have been hit with multiple changes to legislation, increases in stamp duty and even worse, cuts to mortgage interest tax relief.
Using my 25 years of experience in the industry, I’ve compiled my top tips and best advice to help you tackle the changes head on – download the guide for free here.