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Fees ban - the unintended consequences

Written by: Mary-Anne Bowring 02/09/2020
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Tenant Fees Act: Questions Arise as New Legislation Takes Effect

The Tenant Fees Act came into effect in England on Saturday, and big question marks are already hanging over the new legislation. The government and the lettings industry want to make renting fair for tenants, but agents are still determining if the new Act will work as intended.

What's the impact?

Glynis Frew, the CEO of letting agent Hunters, said this week that good intentions could easily result in unintended consequences. We agree that a few rogue agents and landlords have charged what she describes as mind-boggling. Fees, but this isn't representative of the industry as a whole. Instead of the government opting to cap fees, they have been scrapped altogether. The likely results are rent increases, landlords leaving the sector in even greater numbers than they are already, and letting agents shutting up shop. This, as well as reducing consumer choice, also hurts our beleaguered high streets. We believe the Act will mean agents looking closely at their all-inclusive management fees and having to pass on disbursements such as deposit registration costs to landlords. The industry will be looking to push extra products, such as insurance, on which agents can take commissions to cover the shortfall in income.

New fines for 'prohibited' payments

Local authorities, charged with enforcing the legislation, can fine landlords and agents up to £5,000 for levying a payment that is now prohibited (see yesterday's blog at https://blog.planetrent.co.uk/tenant-fees-act-now-in-force/) for a list of allowable fees) and they can prosecute or impose a fine of up to £30,000 if an Offence Under the Act has been committed. This is where a landlord or agent has been fined or convicted for a breach within the last five years and commits a further breach. Being a landlord has never been more precarious. Reducing deposits from 6 weeks to 5 is no absolute protection against tenants not paying their last month's rent, and the Deposit Alternative products that are now springing up may offer landlords more protection but are, of course, optional and cannot be forced on tenants. Flexibility regarding how tenants make payments is also diminishing as many landlords refuse to take rent or deposit payments by credit card as they understandably don't want to pay the fees.

Ensuring Compliance and Value: The Future of Landlord-Agent Relationships

Future challenge: The challenge for agents will be to ensure they are providing an added-value service to landlords by having effective tenant referencing and contractual and deposit systems in place and ensuring compliance with the new Act.

Tenant Fees Act: Unintended Consequences and Future Challenges for the Industry

The Tenant Fees Act, which came into effect in England, aims to make renting fairer for tenants by scrapping fees charged by agents and landlords. However, concerns have arisen that the Act could lead to higher rents, fewer landlords, and less choice for tenants, while letting agents may push additional products to cover income losses. Local authorities can impose heavy fines for prohibited payments, creating more risks for landlords, and the industry faces challenges in ensuring compliance while maintaining value in landlord-agent relationships.



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