Tenant Fees Are Banned – Bad News for Tamworth landlords??

Well another day at the office and another blow for landlords. Yesterday’s Autumn Statement by the government includes putting a ban on letting agents fees to tenants!

 
Whenever you switch the television on, there seems to be another hard done by tenant  claiming  “I’ve paid thousands to move in to a property, I’ve been robbed” 
 
For those who don’t understand what the money is being paid for, it may appear as though the agent or landlord is feathering their nest, however, it is normal to pay a deposit (normally 6 weeks rent) this covers damages etc at the end of the tenancy. A month’s rent in advance is normally paid and then a fee to the agent to sort out all the paperwork, not as much goes to the agent as some assume.
 
So in Tamworth where the average rent is £750ish this would break down as £1125 deposit, £750 upfront rent and then say £350 for the agent, total £2225. All of this money isn’t for the agent!!!
 
After banning fees in Scotland the Government were obviously pleased with the outcome and decided that England should follow suit. Scottish tenants praised the government for banning these fees, English tenants have been heard today, “praise be to the government”. Do the Scottish tenants realise the fees were passed on to the landlords, who passed them onto their tenants through higher rent. 
 
Generation Rent genuinely think this is a victory on their part, any attack on fat cat landlords and their agent counterparts is, of course, a move they fully support. Shelter commissioned a study, which was quoted in a newspaper claiming that rents didn’t go up much, if at all. The article claimed the fee ban in Scotland has made no difference to rents, yet fail to reference where the data is on which they base this statement. The research was commissioned by Shelter, so how fair is the data? 
 
Campbell Robb, Shelter’s chief executive, said banning fees was a welcome move:  “Millions of renters in England have felt the financial strain of unfair letting agent fees for far too long, so we are delighted with the government’s decision to ban them. We have long been campaigning on this issue and it is great to see that the government has taken note,” I totally disagree with Campbell Robb’s comments.
 
My thoughts – Nothing is free in our society, If you don’t want to pay an agency fee then don’t move house. Agency fees are subject to the supply and demand in the market. If they are too expensive customers will go elsewhere and find an agent with cheaper fees, it’s as simple as that!
 
I am not alone in thinking this is a terrible move for renters. David Cox, MD of the Association of Residential Letting Agents (ARLA) has already warned that “a ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market.” I think we can agree on the fact that the tenant will end up paying for this. 
 
In Scotland, rents have risen according the CityLets Index by 15.3% between Q2 2012 and today… interesting when you compare the same time frame (using ONS figures which don’t cover Scotland) between 2012 and 2016
North East 2.17% increase
North West 2.43% increase
Yorkshire and The Humber 3.21% increase
East Midlands 5.92% increase
West Midlands 5.52% increase
East of England 7.07% increase
London 10.55% increase
South East 8.26% increase
South West 5.82% increase
..and again Scotland at 15.3% increase.
I truly believe this will be a great way for landlords to increase their rents. Many landlords have never increased their tenants rent since the day they moved in, I can now see landlords levying a yearly rent increase. Poor victory for the “Generation rent”! 
Along with the Tenant Tax which will come into effect tax year 2017-2018, this is certain to make rents rise by double digit figures in Tamworth come summer of 2019 compared to the year prior. I predict that once landlords start paying those Self-Assessment tax demands due by Jan 31st 2019 landlords will realise just what these taxes are costing and implement rent rises. I can foresee this will be carried out en masse, so tenants will be hard up to find value for money in the summer of 2019, will the local council’s housing waiting list become even longer.
 
So what am I going to do? Well I’m not going to panic, I’ll sit tight and see how the bigger High Street Tamworth agencies react to this news, I trust the rest of the country will follow. I will adapt and adopt and ensure I get my house in order before these changes are implemented and I will flourish, I am not worried.

Will letting a property through an agency cost the landlord more? will the unemployment figure in Tamworth increase as agencies let staff go? Will Shelter be there for us poor agents?????
 
What I do know is that the tenant will end up paying for it in the end! I’m hoping that investors will see a ban on arrangement fees from mortgage companies, solicitor fees for conveyancing, doctors letters, a ban on being charged to get your passport verified and a ban on hospital parking charges, my list is endless. As I stated earlier – You don’t get something for nothing in this society.

 
If you are thinking of getting into the property rental market and don’t know where to start, If you are interested in learning more about growing your investments then get in touch. I am a property professional and love helping landlord investors build profitable portfolios. Call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk
Don’t forget to visit the links below to view back dated deals and Tamworth Property www.tamworthpropertyblog.co.uk
 

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