Posts with tag: letting agent fee ban

Tenant Referencing Must be Exempt from Lettings Fee Ban, Insists ARLA

Published On: May 3, 2017 at 9:32 am

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ARLA Propertymark insists that tenant referencing must be exempt from the Government’s planned lettings fee ban.

Tenant Referencing Must be Exempt from Lettings Fee Ban, Insists ARLA

Tenant Referencing Must be Exempt from Lettings Fee Ban, Insists ARLA

In a message to member agents yesterday, the organisation’s Chief Executive, David Cox, urged: “Tenant referencing must be exempt from the ban. The reasons for this are manifold. Referencing ensures that tenants do not take on financial commitment which is unsustainable. Referencing reduces the risk of tenants falling into rent arrears, which often results in them being evicted and subject to County Court Judgements.

“This can lead to a drop in credit rating and difficulty sourcing other rental properties or making successful mortgage applications, along with difficulty sourcing low-cost credit from mainstream suppliers.”

He continued: “Quality referencing helps to reduce homelessness.

“While it is frequently said that referencing is available for a few pounds, this is not accurate. Our primary research has shown that agents list referencing as one of the single most time-consuming aspects of the role.

“Referencing is not simply a case of sending a form to a third part; it is frequently a complex process which is in part required by law (Right to Rent checks).”

Cox explained: “Referencing involves ensuring forms are completed properly, making requests to referees and guarantors, checking a tenant’s credit history, liaising with an external referencing company, collecting employment evidence and information from previous landlords, checking passports or other documentation, storing copies securely, and scheduling and carrying out follow-up checks where legally required.”

ARLA Propertymark’s research shows that letting agents take an average of eight hours to complete tenant referencing checks.

The organisation is continuing to press for an extension or suspension of the Government consultation into the proposed lettings fee ban.

It is inviting its members to give their input into the consultation response that will be submitted.

On Friday, during an interview on BBC Radio 4’s Today programme, the Housing Minister, Gavin Barwell, made it clear that the ban would go ahead.

Lettings Fee Ban Consultation Should be Extended or Suspended, Insists ARLA

Published On: April 26, 2017 at 9:39 am

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The lettings fee ban consultation should either be extended or suspended until after 8th June’s General Election, insists ARLA Propertymark.

The organisation believes that the consultation period for the proposed ban on letting agent fees charged to tenants should either be extended or suspended until after the vote.

Lettings Fee Ban Consultation Should be Extended or Suspended, Insists ARLA

Lettings Fee Ban Consultation Should be Extended or Suspended, Insists ARLA

ARLA Propertymark’s Chief Exectuive, David Cox, sent a letter to the Secretary of State for Communities and Local Government , Sajid Javid, yesterday, also requesting that workshops on the lettings fee ban be reintroduced as part of the consultation process.

The full letter is here:

“Dear Secretary of State,

As the UK’s largest professional body for the lettings industry with over 9,000 members, ARLA Propertymark requests that you extend the time limit for the consultation to ban letting agent fees in light of the recently announced General Election.

We were pleased that a key part of this consultation process, as set out by DCLG [the Department for Communities and Local Government], was to engage the sector and host a number of workshops throughout the country to discuss the implementation of the fee ban and proposals in the consultation. This was most welcome, as it would have allowed agents to gain clarity from officials on some of the points raised in the document and share their views on the proposals. However, as it is likely the fee ban will become a manifesto pledge in the coming weeks, and therefore a political issue, this work cannot properly take place during purdah; when civil servants will need to take extra care to remain impartial and objective. General Election guidance also makes clear that statements which refer to future intentions of the Government should not be handled by a Department.

Therefore, ARLA Propertymark asks that the Government either extends the consultation for a further period beyond the election, or suspends it until a new Government is in place.

Either way, we request that the consultation does not close until the now cancelled workshops have taken place; as the Department originally committed to do as part of the consultation process.

I look forward to hearing from you in due course.

Yours sincerely,

David Cox

ARLA Propertymark Chief Executive”

Do you agree with Cox’s calls?

In addition, ARLA Propertymark has recently released its Private Rented Sector report for March: /tenants-lower-rents-lettings-fee-ban/

Tenants Securing Lower Rents Ahead of Lettings Fee Ban

Published On: April 26, 2017 at 9:22 am

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Tenants are getting savvier, by securing lower rents ahead of the lettings fee ban, according to a study of letting agents by ARLA Propertymark.

In the March Private Rented Sector report from the organisation, 3.6% of letting agents had seen rents drop, compared with 2.2% in February. There were still increases, however, with 25% of agents reporting that landlords had put their rents up, down from 32% last year.

Tenants Securing Lower Rents Ahead of Lettings Fee Ban

Tenants Securing Lower Rents Ahead of Lettings Fee Ban

Worryingly, however, letting agents also reported an increasing number of landlords selling their rental properties during March. An average of four landlords per letting agent branch had announced plans to sell up last month.

No reason was given for the decision, but it does coincide with the reduction in mortgage interest tax relief and forthcoming letting agent fee ban.

The last time the number of landlords selling their properties rose above three per branch was in November last year, when the fee ban was announced.

David Cox, the Chief Executive of ARLA Propertymark, believes that this shows that tenants are already being affected by the Government’s buy-to-let tax changes.

It is believed that rent prices will go up following the lettings fee ban, as landlords will instead be forced to foot the charges.

Meanwhile, the supply of rental stock remained flat, at an average of 183, but was 8% higher than March 2016.

Letting agents also had a higher number of tenants registered, at 36 per branch, up from 34 in February.

Cox comments on the report: “It’s concerning that, despite supply increasing over last year, stock failed to return to the market after dipping in February.

“When we also consider that this is coupled with a rise in the number of landlords selling their properties, this is bad news for those searching for a rental property.

“The introduction of mortgage interest relief means the market is becoming less and less attractive to investors, and it appears some landlords are, as we predicted, choosing to exit the market rather than pay the higher taxes.”

He continues: “What’s more, two thirds of our members are concerned the Government will introduce even more landlord taxes in 2017, which will only further dampen supply.

“Following the announcement of the ban on letting agent fees, we expect the situation to only get worse for tenants when, inevitably, the costs are passed on to tenants through higher rents.

“However, it’s positive that more tenants are taking action and negotiating rent reductions before the consultation ends and they see their rents increase.”

Have your tenants been requesting lower rents recently?

Government Aware that Letting Agent Fee Ban will Increase Rents

Published On: April 10, 2017 at 9:23 am

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Government Aware that Letting Agent Fee Ban will Increase Rents

Government Aware that Letting Agent Fee Ban will Increase Rents

As the Government releases its consultation paper on banning letting agent fees charged to tenants, the document confirms that ministers are aware the ban will increase rents.

On Friday, the Government launched the consultation, with a request for feedback. The ban will prohibit letting agents from charging fees to tenants.

The document also confirmed that landlords would be banned from charging tenants any form of letting fee, to ensure that they do not pass on the costs.

As it is believed that the fees will instead be charged to landlords, many fear that they will be forced to increase rents to accommodate the higher costs.

The Managing Director of StudentTenant.com, Danielle Cullen, is frustrated that the consultation acknowledges that rents will be pushed up.

She reacts to the announcement: “So here we have it, the release of the consultation for the ban on letting fees, and it’s brutal for agents.

“Oh how foolish the Government is to think it is going to help tenants to save money. The contradiction in the paper is incredible; after pages relating to the fairness of fees, later there is a part called Increase in Rents! It is clearly acknowledged that landlords will be increasing their rent to account for the additional costs they will have to pay. But this is okay because tenants are able to pick the rental bracket that suits them better? Surely tenants will end up in sub-standard properties, or homeless because they can’t afford the increased rent, in a market that is already going crazy.”

She continues: “Tenants will end up paying more over the course of the year as rental prices hike and landlords can comfortably increase their rents – probably higher than the cost of the additional fees they will have to pay. All this does is increase the monthly cost for tenants, and this is going to hit students hard. Students struggle as it is to pay their rent and keep up with their bills whilst studying, and now they will be faced with increased costs every month, instead of being able to pay one lump sum and get it out of the way. I completely agree that something needed to be done about agent fees that were spiralling out of control – I was shocked to uncover the extortionate fees charged by some after some research following the announcement last year. However, the Tories just seem to be going about it in completely the wrong way.”

Do you think you will have to increase rents to accommodate the higher costs? Or will you stop using your letting agent altogether?

Letting Agent Fee Campaign Enters Second Stage

Published On: March 28, 2017 at 8:47 am

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Letting Agent Fee Campaign Enters Second Stage

Letting Agent Fee Campaign Enters Second Stage

Around 180 letting agents in parts of Berkshire and Hampshire are being targeted as part of a letting agent fee campaign to find out if agents are displaying their fees correctly.

It is the second stage of the letting agent fee campaign being jointly conducted by The Property Ombudsman (TPO) and the Chartered Trading Standards Institute. As of yesterday, 179 letting agents in and around Basingstoke and Reading are being targeted.

They are being asked to provide photographic evidence of their compliance with the law, which requires fees to be displayed in the branch and on the company’s website.

The second stage follows on from the end of the first phase, where 99% of 266 TPO letting agents in Swansea and Dorset were found to be compliant.

All had been asked for similar photographic evidence.

Agents found to be displaying the required information incorrectly were given the chance to amend it and re-submit their evidence.

The campaign found that just two agents failed to comply, either by not responding or not addressing inaccuracies that had been flagged up.

Both will now be referred to TPO’s disciplinary and standards committee for further investigation.

This committee is independent, and has the power to fine, suspend or expel an agent from TPO, plus refer it to Trading Standards officers, who can impose fines of up to £4,000.

Letting agents are required to display fees, along with their redress scheme membership details and Client Money Protection (CMP) scheme.

The Property Ombudsman, Katrine Sporle, says: “TPO has seen an increase in the number of enquiries about fees from tenants in recent weeks. It is essential that agents provide clarity and transparency about what fees are being charged for what service, so that all parties understand the commitments they are entering into.”

The campaign will continue while details of a consultation on the letting agent fee ban have yet to be announced.

Letting agents, make sure you comply with the law!

Landlords will Still use Letting Agents in Wake of Fee Ban, Shows Study

Published On: March 21, 2017 at 9:23 am

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The majority of landlords (71%) that use letting agents to manage their properties will continue to do so in the wake of the proposed tenant fee ban, according to a new study.

The research, by UKALA (the UK Association of Letting Agents), shows that eight in ten landlords (79%) think their letting agents will increase their fees as a result of the ban on charging tenants fees, as announced in the Chancellor’s Autumn Statement last year.

However, just 9% of landlords say they will part ways with their agent if their premiums rise.

Landlords will Still use Letting Agents in Wake of Fee Ban, Shows Study

Landlords will Still use Letting Agents in Wake of Fee Ban, Shows Study

The fee ban has been criticised by UKALA, which argues that affordability in the private rental sector cannot be addressed by preventing agents from charging for legitimate business services, and that the costs will eventually be passed onto tenants in the long-term.

In response to a potential increase in agent fees following the ban, the landlords surveyed said:

  • 40% would increase rents to cover the costs.
  • 22% would look to shop around for a better deal.
  • 13% would attempt to negotiate or refuse to pay.
  • 9% would pay the additional fees.
  • 9% would leave their agent.
  • 7% were unsure.

The findings contrast with other research from UKALA, which shows that almost half of landlords (47%) would forego the services of their letting agent if their profits drop following the forthcoming changes to landlord taxes.

Both studies were undertaken by UKALA in conjunction with the National Landlords Association (NLA), in order to better understand the impact that recent Government policy decisions will have on the professional lettings sector.

The Executive Director of UKALA, Richard Price, says: “UKALA agents strive to provide a premium service which represents excellent value for money, but the ban on tenant fees could leave hundreds of professional businesses with no other option than to increase fees for their landlord clients.

“This research is reassuring for agents in some ways, as it shows the majority of landlords will retain their services even if they have to pay more, which is testament to the essential role that agents play.”

He adds: “However, one in ten landlords say they will turn their back on their agents if fees are passed on, and our previous research shows that a significant number will do the same if the impending tax changes take hold and erode their profits.

“It leaves a tricky path ahead to navigate for agents, as they’ll need to balance out the need to cover their costs in the wake of a ban on tenant fees, without alienating their primary customers and source of income.”

Landlords, would you be discouraged from using your letting agent if the fee ban is introduced?