The tenant fee ban: your questions answered!
The Government has shown it is dedicated to shaking up the property market and firmly in its sights is the private rental sector. Making things fairer for tenants is high on the agenda, with a ban on tenant fees one of the most dramatic changes for decades.
Viewber answers the most popular fee ban questions, discussing what is means for agents and how lettings professionals can recoup costs:-
What is the tenant fee ban?
The Government is making it illegal for landlords and letting agents to charge tenants for administrative tasks they undertake, such as creating tenancy agreements, checking references and conducting inventories. The Draft Tenant Fee Bill has already been read in Parliament and it is expected to become law in spring 2019. Agents who break the new rules can be fined up to £5,000 under civil law, although repeat offences will be classed as criminal and could lead to fines of up to £30,000.
How much do agents stand to lose?
Fees vary from agent-to-agent but research from the Generation Rent organisation has found agents request an average of £404 in total from tenants for every new tenancy, and £117 for tenancy renewals. After the ban, however, tenants can still be charged rent, deposit and contractual default penalties.
How will the fee ban affect letting agents?
The ban represents a reduction in income for agents. Research by Capital Economics shows that at outright ban on tenant fees will see agents losing £0.2 billion in turnover and landlords lose £0.3 billion in income.
Agents will themselves have to cover the cost of tenancy administration. Although some of the tasks are already carried out in house, many aspects – like inventories, credit checks and check outs – are skilled jobs that are conducted by third-parties for impartiality and to protect the interests of all involved.
Will the fee ban make renting cheaper for tenants?
In theory, yes but there is speculation that rents will rise as a result. In fact, Capital Economics quantified the potential hike for every tenant as £103 per annum. Why? Research from FixFlo found 90% of letting agents expect their increased costs to be passed on to landlords, who will then pass it on to tenants in the form of higher rents. Landlords who self manage, a large percentage of the total, may also raise the rent directly to cover their new administrative costs.
Is there a way to avoid passing on higher fees?
A knee jerk reaction to increase fees charged to landlords and tenants should be carefully considered – it will be unpopular and lose business. Improving in-house efficiencies is a more sensible way of recouping lost fees. Streamlining, cutting waste, working smarter and shopping around for cheaper, more efficient suppliers should all be tasks for today, not for when the fee ban takes effect. Even sourcing cheaper energy and phone deals will help balance the books. Look outside the box for innovative solutions.
How can staff help recoup costs?
Now is the time to examine what employees do with their day. Staff should be free of laborious tasks that take them away from their desks so they can focus on creating new business opportunities and earning income.
To do this agents and landlords should tap into the highly sophisticated lettings outsourcing market, of which Viewber is part. We complete time consuming property visits on behalf of agents so staff can concentrate on earning money. Let our Viewbers show potential tenants round properties, take landlords to possible new investments or let tradesmen in to complete maintenance.
How else can I save money?
Under-utilised resources will become a drain on finances, so think about switching to as many ‘pay as you go’ services as possible. It’s a set up agents are already enjoying when partnering with Viewber, as they only pay for the property visits they need. It’s efficient, just a scalable service that moves up or down in line with your own workload and lettings portfolio.
How can I delegate property visits and viewings?
Get in touch with Viewber and we can get the ball rolling instantly. There’s no joining fee or annual subscription, no minimum or maximum orders and no reason why you can’t pass over property visits within 48 hours.
Find out more about how Viewber can help you with a flexible, pay as you go approach to viewings for rental properties by seeing our page for Landlords & Lettings Agents.