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Letting Agents Fees to Be Banned. Thoughts?

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I agree they should be banned, one letting agents were trying to charge me 300 for application fees as well as another 150 for taking the house of the market. Never heard of any such ridiculous things in my whole time of renting

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We understand you didn't like the £300 application fee, and why.

 

If that £300 fee had been transferred to the Landlord instead, would you be OK with the Landlord then recouping that money, and more, from you throughout the tenancy?

 

If you had stayed there 5 years and the Landlord had increased the rent by £25 per month at the very beginning, to cover this additional outlay within 1 year (hedging their bets), you would have paid £1,500.

 

The Agents will still get paid. Is that preferable?

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You could be missing the point about Tenants being likely to actually pay out more over the term of an average tenancy (which is around 18 months, I gather).

Not missing it, I just don't think it will happen.

If the rental market could put prices at all, it already would. The Scottish evidence suggests that agents won't pass it on to landlords and landlords won't have anything to pass on to tenants.

 

---------- Post added 30-11-2016 at 07:23 ----------

 

As a Landlord... it'd be for you to absorb the costs. But I doubt you'll be able to on a simple Tenant Find engagement. What's in it for you, really? I know people can accuse an Agent of getting paid by both sides in the transaction, but I am unable to see how you can rationalise £500 + £500 (example) down to £500 in your business model.

 

You doubt they could on a mere 15% of £600 a month for doing basically nothing... £1000 a year, and the average contact rate for agent to tenant is what, 0.5 times a year? That will depend on the quality of the property perhaps.

Maybe there will need to be a new fee for the landlord for each time the agent has to actually deal with an issue, boiler broken down, £50 admin charge.

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I've been repeatedly clear that I'm talking about Tenant Find, you are changing the scenario to ongoing Full Management because it suits your purposes. Please stop that.

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If you had stayed there 5 years and the Landlord had increased the rent by £25 per month at the very beginning, to cover this additional outlay within 1 year (hedging their bets), you would have paid £1,500.

 

The Agents will still get paid. Is that preferable?

 

And you repeatedly fail to reply to comments arguing that rents cannot simply be increased to absord the cost. I am a student landlord. My last rent change was downwards, to prevent a void in this academic year. There is simply no way i will be able to increase rents next year as my return is already maximised currently. There is plenty of evidence to show this to be the case in Scotland. Furthermore, the huge drops in share price of London based E A Foxtons suggest that nobody expects a rent increase to cover loss of income in even the most buoyant of markets. Why do you not see this.

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My situation is far removed from yours, I feel.

 

I have not decreased rents once, I have not had to. My properties are desirable, 3 are new builds, 2 were complete renovations of older properties. There are multiple applicants and I don't suffer long void periods (although I always like to have some gap, and I plan for that, so I can go in and do repairs and improvements).

 

There's bountiful evidence that a modest (I want to stress modest - something to just absorb any extra costs, but over a timeline) kicker to rents will be easily absorbed. If you're unable to raise the rent, and indeed are lowering it, then you're going about it all in entirely the wrong way, sorry.

 

Foxtons! You're having a laugh, right?

 

I have 1 property let to a family in receipt of LHA. LHA even increased a modicum - the rent was then increased by, a token, £10 per month. It was absorbed by the Tenant. I am providing good products that people want... not hovels in a race to the bottom. If your last rent change was downwards, maybe you're firmly caught in that race?

 

P.S. - the question wasn't to you, it was to spyan - I was curious about what he'd prefer out of paying a one-off upfront (but quite large) fee, or seeing the rent increase by a modest amount over time, and for the duration of the tenancy.

Edited by Hippogriff
Added P.S.

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My situation is far removed from yours, I feel.

 

I have not decreased rents once, I have not had to. My properties are desirable, 3 are new builds, 2 were complete renovations of older properties. There are multiple applicants and I don't suffer long void periods (although I always like to have some gap, and I plan for that, so I can go in and do repairs and improvements).

 

There's bountiful evidence that a modest (I want to stress modest - something to just absorb any extra costs, but over a timeline) kicker to rents will be easily absorbed. If you're unable to raise the rent, and indeed are lowering it, then you're going about it all in entirely the wrong way, sorry.

 

Foxtons! You're having a laugh, right?

 

I have 1 property let to a family in receipt of LHA. LHA even increased a modicum - the rent was then increased by, a token, £10 per month. It was absorbed by the Tenant. I am providing good products that people want... not hovels in a race to the bottom. If your last rent change was downwards, maybe you're firmly caught in that race?

 

P.S. - the question wasn't to you, it was to spyan - I was curious about what he'd prefer out of paying a one-off upfront (but quite large) fee, or seeing the rent increase by a modest amount over time, and for the duration of the tenancy.

 

Fair enough, your position is different. And, to be fair, you're opinion is in keeping with most other landlords, ARLA, etc. (vested interests desperate to force the govt. to backtrack by saying the renters will pay). Whereas my opinion is based on the evidence put forward by others, global markets, researchers of known data ( Evidence from Scotland). People paid to look after other peoples money who are well aware that estate agents are going to be hit hard by this precisely because they cannot simply pass the charge on to the renter.

Most landlords will accept this whilst trying to deny it. And In reality this blow to their business model is chicken feed for most when compared to the hammer blow of losing tax relief on btl mortgages starting in April next year. And if anyone thinks the govt. will stop there then they really have got their head in the sand.

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I agree that the impact here is small compared to the tax relief issue, but that is for Landlords who are likely on interest-only mortgages and banking solely on capital appreciation over the years as their "out". I have always called that "sailing close to the wind". ;)

 

I would add a comment that I've had several viewings happen with properties before and then someone has called to make a deal, I've liked them so I've agreed that deal, then another viewer has called-in and been disappointed it has already gone... they have offered more than the asking price to try and get it, but I have always rejected that. The price a property goes for is what it goes for... but it's clear to me, from my own personal experience - not reports or studies, that good places can take a little more.

 

Throughout this thread I have been focused on the Tenant Find scenario where an Agent charges a Tenant to apply and a Landlord to process. Is it obvious that the new rules will mean an Agent will not be able to charge a Tenant for things like renewals, inventories, check-outs etc.? I assume so.

 

This is a big part of the income stream for an Agent. So if those fees are also passed onto the Landlord (which is my assumption) we could be talking about recurring fees of hundreds of Pounds. Normal people don't like money being lifted out of their pockets... Landlords (being normal people too) are just the same.

 

---------- Post added 30-11-2016 at 09:37 ----------

 

Any Landlord on interest-only mortgages, who is not preparing for the loss of tax relief ramping-up to 2020, and is not busy paying down the debt right now, is likely one with their head in the sand.

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What I will be doing even more than I do today is selecting Tenants (as I do often have more than 1 offer on the table) who at least give the impression they are there for the longer term.

 

I will be stressing the fact that this is important to me and assessing the responses back.

 

Then I will increase the rent modestly as appropriate - by such a little amount that it will not be a great concern to the Tenant, but so that I don't lose out massively if the tenancy runs for, say, 1 year (I would not calculate that hit over 6 months). If it runs for more than 1 year then I will be winning. For the Agent it is likely to be the same.

 

As I say, it's really the tyre-kicking aspect I have some concerns about. I need to have a strategy for that which I'm happy with.

 

Wouldn't offering a longer fixed term help in getting tenants who want to stay longer? I don't know what fixed term you offer but I'd be interested to know your thoughts.

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My approach is a 6 month fixed term. I've done 12 months when specifically requested and I had a good vibe about the people. But, usually, new Tenants are too much of an unknown quantity, so 6 months is preferred. 6 months offers both sides flexibility and I'm not going to be evicting anyone who wants to stay beyond the fixed term, and pays the rent.

 

The risk there, for Tenants, is with amateur Landlords whose circumstances may change and who find they need to move back into the property.

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Lettings Agents Fees To Be Banned

 

Lettings agents in England will be banned from charging fees to tenants "as soon as possible" under plans announced in the Autumn Statement.

 

Mr Hammond said he would take aim at the charges letting agents can levy on tenants for services such as administration and referencing. The government believes the ban – to be brought in “as soon as possible” following a consultation – will help millions of households in private rented housing by sparing them what can amount to “hundreds of pounds in fees”

 

We have seen these fees spiral, often to hundreds of pounds,” Mr Hammond said. “This is wrong. Landlords appoint letting agents and landlords should meet their fees.”

 

But how will this affect Landlords and tenants moving forward?

 

If the costs are levied at landlords, will rents increase therefore tenants could well end up footing the bill anyway?

 

Will it drive up competition from potential tenants there the demand could be higher and rents may increase?

Should be caps on rent...

 

ideally all rented housing should be nationalised and given over to the district councils...

its legalised corruption..

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1. Some rents will rise to cover costs and some tenants will pay them.

2. Some Landlords will see the true cost of letting out a house and do it themselves or find a cheaper estate agent (possibly online).

3. Some landlords will be forced to do nothing as there is no way to increase rents and still have the flat let.

 

I think this is a great idea by the government. It is great because at the moment the renter is forced to pay the fees as otherwise they won't get the home, fees are not listed in most adverts so they are difficult to compare. When the fees are charged to the landlord they can haggle the fees down if they are ridiculous, or take there business elsewhere. This competition should drive down prices and increase service offerings.

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