The Proposed Changes – What Are They?
At the moment when it comes to a tenant wanting to rent a property, there are tenant fees involved which covers the costs of the various checks these include their referencing, that of a guarantor (if required) and an administration charge.
The proposed changes are being labelled as a letting agent fee ban, which means that instead of the tenant paying or covering these costs, it would be down to the letting agent or landlord to pay for these checks. This is not five minute process, it checks their credit rating, employment status, can they afford the property, previous landlord reference (if appropriate) and their eligibility to rent and reside in the UK.
What Does This Mean For Landlords?
As we discussed above, the key element in the proposed consultation and changes will be the need for the lettings agents or landlord to cover the costs of these checks, rather than the tenants.
At this moment in time, these are only proposals rather than approved regulation changes, but this is a concise version of the changes that are being proposed, as we simply do not have the in-depth information yet. Potentially this cost maybe pasted onto the landlord, which ultimately may result in a rent increase. Whilst the savings for the tenant are of course obvious, at this stage, we have no confirmed information of what will be “banned” or the costs that will be passed on to letting agents and landlords. In more recent publications there has been mentioned that the “tenant” fee should be capped.
When Will This Happen?
Although many industry professionals were expecting this change to come into play in 2017, a report on Property Industry Eye revealed that if the changes do happen, it will not be until 2018 at the earliest, with a full consultation meeting scheduled for the early new year.
Rachael Williamson, from the Department for Communities and Local Government said: “The ban will need primary legislation it can’t happen automatically.
It is quite clear to see that although nothing is imminent, the changes are not likely to even come into place for a year or so, and at this stage it is unlikely that it will even be considered until early 2017, so there is still a lot of consulting to be done!
The Next Steps
Until we have the legislation passed through Government, at this stage, these are simply proposals rather then core changes to the whole letting agent fee system, and only when we are fully informed with more information can we really suggest next steps that we, as a letting agent in Gloucester, will be taking.
We will keep you updated when we have got something to work on….