The Tenants Fee Ban has arrived.
The much talked about and hotly debated tenant fee ban becomes law from 1st June 2019.
At Anglo American we’re actually very positive about it, our business model has never worked that way; we have never seen tenant fees as a source of revenue.
For too long now, many letting agents have been generating substantial revenue from the Tenant (one letting agent openly admitted 70% of their revenues came from tenants), often without the knowledge of the Landlord they are acting for.
We were therefore not shocked to read that many Letting agents are already telling landlords that their charges will increase in the coming months, even before a firm date was set for the tenant fees ban. Yes, letting agents that have built their model around charging tenants fees will have to change. But Landlords I speak to feel confused and worried about the coming change and it looks like some agents see no alternative to increasing the charges and fees to landlords, in a desperate attempt to replace lost revenue.
A message from an unnamed agent to a landlord said it was increasing management fees by 3.5% to compensate for lost income from the fees ban, and also suggests upping the tenants rent to cover the cost.
The note then offers to increase rates by only 1.5% to longer-term customers.
The message was revealed in a post on the housepricecrash.co.uk forum.
It didn’t reveal the name of the agent but said the fees ban will create a “massive loss of income” and proposes the new charging regime from December 2018??.
It said: “on average, other agents in the area are increasing their fees by up to 5%”.
“We are only looking to increase our overall management fees by 3.5% but I have spoken to x and as we have been managing your property for a while now, have a good relationship with you and value your custom, we are only going to increase yours by 1.5% so minimal impact.”
This is where we see a huge benefit to our Landlords, because the way our business model operates, we will not be increasing management charges. Our model already works the way it is and is already fully compliant with the pending legislation.
Saville’s predict that average rent over the next 5 years is going to increase by 13% and another source has claimed a rise of 22% will be seen.
So, the ban that is designed to help struggling tenants will not achieve its goals. It will remove many poorer letting agents from the market, but rents will rise, and landlords will start to feel the squeeze from the increased costs being levied by their agents
If you feel your agent isn’t meeting your needs in this rapidly changing market and would like to talk to an agent that has already prepared for legislation change, get in touch.
Looking after your homes and houses since 1999
Alex.