UK Landlord Forum / Life

So, detail on this new policy is light at the moment, but I'd probably expect it will closely mimic the situation that exists in Scotland today.

The premise is that prospective Tenants don't get to choose the Agent they go with, whereas the Landlord does, so the Landlord must pay their fees.

Now, this is interesting, as my own experience is that the Letting Agent would usually get "double-bubble" anyway, with both the prospective Tenant and the Landlord paying them for their services in a Tenant Find capacity.

I pay the Letting Agent I work with £300 (£250 + VAT) for their Tenant Find service - this is bespoke and just includes what I want - possibly take some photos and get a description, then get it on the portals, handle the initial approaches and arrange the viewing - which is with myself.

When Tenants apply they pay the Letting Agent a reasonable application fee and a separate amount for referencing. I presume the Letting Agent would not want to get less money for the same job, so all that cost will likely be transferred to me - and I will, in turn, pass that onto the Tenants. I should be able to, the properties I let out are desirable.

So... pointless merry-go-round of money, really.

What interests me is what happens if the situation arises where more than 1 prospective Tenant ends up going some way through the application process. Up to now, my fee to the Letting Agent has been static. Maybe now there'll be a static portion and a portion that changes with the number of Tenants we need to progress through application (as there's always chance some will fail or even lose interest).

On the face of it, it's no bad thing: landlords are in a much better position to drive these costs down than tenants are. At the moment, agents can charge the tenants whatever they think they can get away with and, as far as the landlord's concerned, as long they end up with decent tenants, it's no skin off their nose what the agent's stiffing the tenants for.

Having said that, I'd have preferred to see a cap of, say £50-£100, enough to cover a basic credit check and discourage tyre-kickers. As it is, we may see landlords being reluctant to look at anyone who doesn't seem like a model tenant and, on the other hand, prospective tenants may start putting in multiple applications on different properties at the same time, if there's no real cost to them.

It's the latter point you make that worries me somewhat. The prospective Tenant putting their money where their mouth is was a useful thing.. for confidence.

I don't know the actual economics of running a lettings agency service, but obviously any business has to generate sufficient income or cease trading. I'm a landlord not an agent. 

The banning of agents fees is already history, however the recent trend in letting agents fees has been to compete for lettings instructions by offering lower % of monthly rent collected for prospective landlords and to balance this by charging reference fees from applicant tenants. Personally I can't see this senario continuing and expect agents to re-jig their fee structure on to the landlord. Basically, fees and/or the fee % will increase - we will still want the proper checks done on prospective tenants to protect our position, and now the landlord will have to pay for it completely. Yet again another imposed financial penalty for the landlord to add to increase in stamp duty and removal of finance costs offset.

If government was actively seeking to discourage investors providing housing for rent, they're doing a damn good job

Last thought - presumably this fees ban applies only to agents and not landlords. So if like me, you arrange all the lettings without the services of a lettings agency, I can continue to charge the prospective tenant a fee for referencing. As I said, I'm a landlord and not a lettings agent.       

It will all become clear in due course... I wouldn't presume anything. If you want to understand the finer details better, now, then taking a proper look at the Scottish system might benefit you - but, then again, it could be very different.

I am not dead-set against the idea... I am just thinking, idly, about whether I need to introduce holding deposits to discourage tyre-kicking, or take the first month of rent and deposit prior to referencing and acceptance, which - surely - is unworkable?

The Tenant not putting any money where their mouth is as the application process progresses is what worries me. The time between viewing(s), negotiation, referencing, acceptance, payment of rent and deposit then Check-In can be quite some time. In the current order of things the prospective Tenant puts up their money (to the Agent who performs Tenant Find for me) just before the referencing stage (so quite early on).

I'd want something there then, too... but not a mere £30 for referencing, I think, something with more meat on the bone that says - "we're serious".