Is the letting fees ban going ahead?
Letting agents are right to feel a little perplexed as to whether the fees ban is actually going ahead or not. This issue has been in the spotlight for some time now, so the team at Stride Let Protect thought it would be useful to set the record straight.
A consultation initiated
On 1 November, a draft Bill was introduced to Parliament, setting out the government’s approach to banning letting fees for tenants. The move, as the government’s website states, will ‘[help] millions of renters by bringing an end to costly upfront payments.’
Moreover, the government outlines that a fees ban would contribute to improving ‘transparency, affordability and competition in the private rental market.’
The draft Tenant Fees Bill, which was formed in response to a public consultation on the matter, includes measures such as:
- Capping holding deposits at no more than one week’s rent and security deposits at a maximum of six weeks’ rent.
- Creating a civil offence with a £5,000 fine for initial breaches of the fee ban and devising a criminal offence for people who have already been fined or convicted of the same offence within the past five years.
- Getting Trading Standards to enforce the ban, as well as make provision for tenants so they can recover unlawfully charged fees.
- Appointing a lead enforcement authority in the industry.
- Changing the Consumer Rights Act 2015 to state that agent transparency requirements should apply to online property platforms such as Zoopla and Rightmove.
The present consultation is running for six weeks, starting from 1 November, with the results published shortly thereafter.
Commenting on the draft Bill, ARLA Propertymark chief executive David Cox stressed that his firm had discussed the proposal to ban fees with government ministers multiple times since the move was announced during the Queen’s Speech in June.
“It is essential that during its passage through parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies; including legal requirements and right to rent checks,” he said.
ARLA previously commissioned evidence on the likely economic impact on a ban from consultancy group Capital Economics. The results showed that should the ban go ahead, agents would stand to lose £200 million in annual turnover, while 3,000 jobs could also be lost.
Recouping the costs
Many letting agents are concerned that scrapping fees could impact their bottom line, and that’s understandable. On the other hand, if the move brings greater fairness and transparency to the sector, this could help to bolster agent-tenant relationships.
However you view the change, it may be worthwhile considering how your business is going to recoup losses from the ban. A Letting Agent Today article discusses some of the options, which include:
- Increase landlord fees. Expenses previously picked up by tenants for things like inventories and credit checks could be included in the landlord’s letting fees instead. Some have suggested that this will result in landlords hiking up rental costs in return.
- Grow your portfolio. Adding more properties to your portfolio will naturally mean that you collect more commission from more tenants. As the article quite rightly suggests: ‘By focusing more on business development and less on fees your business will survive in good stead.’
- Pair with tradesmen. Team up with reputable tradesmen who are willing to give you a cut of their profits for sending clients their way.
- Offer additional services. Letting agents could consider offering extra services to landlords, such as gas safety checks, professional inventories, PAT testing or Energy Performance Certificate issuing.
Develop a new income stream with Stride Let Protect
If you want to take steps to bolster your profits today, why not develop a new income stream with Stride Let Protect? We will work as partners, setting you up with comprehensive cover you can offer to landlords and tenants.
Our flexible, no-subscription introducer service is proving extremely popular among letting agents wanting to offer high quality products, grow their business and improve their credibility. To talk through your options, get in touch with the team today.