Waking up to the Chancellor’s Autumn Statement announcing that Letting Agents fees will be banned took us all by surprise.
“Should we be surprised though? Probably not,” suggests James Tiller, Head of Berkeleys Lettings in Dorset, “The prospect of banning letting agents fees to tenants has been on the horizon for a while and even in June this year a bill was introduced to Parliament with the prospect of banning fees but was rejected by the house.”
The private rented property sector has taken a beating on several issues over the last few years, with a number of changes (not all bad) having had to be adapted to by agents and landlords. This is just the next in line.
With all the talk about what tenants actually pay for it may be worth explaining what actually goes into a ‘Lettings Agents’ fee as these are often quite misunderstood. Contrary to what most people think, ‘credit checks’ only form part of what a tenant pays for, good agents will also carry out employment and previous landlord checks, these do not just happen, an agent may need to spend considerable time processing these checks, so that they can present an applicant to a potential landlord whilst trying to minimise any risk in renting to a high risk tenant. It is all part of the due diligence process.
Negotiating an agreement, whether it is a term or a rent reduction is something that can benefit both parties, this is also a big part of what we do, and what the tenant is paying the agent to do. Similarly the tenants’ contribution towards the cost of preparing the tenancy paperwork.
Also, the fees paid act as a commitment from the tenant to rent a property, without that commitment from a tenant they could in theory walk away from a deal at the last minute leaving an unnecessary void period, which could cost the potential landlord a couple of weeks of high value rent at the minimum.
It became a legal requirement for agents to clearly display what their fees are both online and in their premises and you will find that good agents having been doing this without question since this became a requirement in May 2015. It shows the tenant (and landlord) what they are paying for in an open and transparent way.
So, you can see that a lot of work goes into setting up a deal to let a premium property to a trustworthy tenant, and it is important that these high standards are maintained. Here are just some of the luxury lifestyle lettings we have negotiated and secured for our clients in 2016.
At Berkeleys, several of our lettings team are ARLA members, and we will therefore be following the consultation period with keen interest, and will look to update all of our customers about how this may affect them when information becomes available. This will not be immediate and it may cause a period of ‘holding out’ for the time being as we await news. This in turn could also cause unpredictability as to how the market may change in the coming months.
Until we know a definitive date as to when these changes will happen, it will be difficult to know how exactly matters will pan out, however one thing for sure: here at Berkeleys, it will be business as usual, and when the changes do come in we will be prepared and we will continue to offer a premium quality lettings service to all of our customers, both landlords or tenants.