Landlords will be affected by the Tenant Fee Bill – but there are ways to avoid the squeeze

The Tenant Fees Bill, which will ban letting agency fees in England, passed its second reading on 21 May and will most likely be applied early next year, within the lifetime of many existing tenancies. Surprisingly, many landlords are still unaware of the change and its full implications.

The ban means that it becomes illegal to charge tenants for anything except rent, a tenancy deposit limited to 6 weeks’ rent, and a holding deposit limited to one week’s rent.

Tenant fees account for approximately 19% of a letting agent’s income, with some agencies reporting as much as 30% of their annual income from tenant fees alone. On average, a tenant will pay £318 to move into a new property, but 1 in 7 tenants will pay over £700, and some people paid over £2000 for renting one property.

Most agents said they will look to recover their losses by increasing the fees they charge landlords.

Effects on Landlords

The government’s impact assessment of the fees ban estimates that the collective cost to landlords in the first year will be £82.9m, while the caps on security and holding deposits will cost landlords a further £1.3m.

Other likely outcomes for landlords could be:
● They might face longer void periods because they will have to increase rents to cover their costs
● Cut back on making improvements, which will see them unable to raise rents or attract better quality tenants
● Decide to ‘self-manage’ their properties rather than use an agent, which will see many landlords struggling to stay abreast property rules.

Smarter solutions for landlords

Some landlords might choose to forego letting agents and take on finding tenants and self-managing their properties themselves, the choice might prove very complicated.

The past 5 years alone have been over 145 new pieces of legislation impacting landlords or the lettings market, and managing property while staying compliant with ever changing legislation can easily become another full-time job

Instead, savvier landlords are starting to look around for alternatives to traditional letting agents.

The property management service No Agent combines smart technology with a team of qualified property professionals to provide a more honest and affordable solution for both landlords and tenants.

For one fixed fee of £55pm inc.VAT in London and £35pm inc.VAT anywhere else in England, No Agent provide a 360* property management service that covers everything from finding tenants to rent collection, repairs management and inspections.

The company has never charged any fees from their tenants, so the Tenants Fees Bill will not affect their business model and fees. Landlords are not charged for advertising their property on portals, for referencing and credit checks, arranging viewings or drafting and renewing contracts. In fact, landlords don’t pay a thing until after their tenants have moved in.

Once the tenancy starts, the company will collect rent, do regular inspections, manage repairs, offer 24/7 support to both landlords and tenants and a free legal helpline for tenants – all within the fee. Additional services such as EPCs and Gas certificates can be added if needed.

Exclusively for Property Forum members, No Agent offers 2 months FREE property management – when you pay the first year upfront. For the price of £350 outside of London (anywhere in England) or £550 inside of London, they will manage the full lifecycle of your property (from tenant finding to contract renewals) for a whole year. You can still cancel at any time and you will be refunded the difference. To claim the offer, sign up on this link or quote ‘Property Forum discount’ when you talk to their team.

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