Queen’s Speech: A Bristol Letting Agents Reaction
So Wednesday was the Queen’s Speech. As it was Ascot week, the Queen had better things to do rather than turn up at parliament and so she was in dress down Friday mode, so no crown or robes just a nice dress and a hat.
But enough of the fashion commentary. What was in the Queen’s Speech for the letting industry? The high profile announcement was, as expected, a new Housing Bill which will include a provision to ban tenant fees.
The ban on letting agent fees will go ahead in the next Parliamentary Session which will cover the next two years with the 2018 Queen’s Speech being cancelled to allow the Government to concentrate on Brexit.
The speech says that the Government hopes that increased competition in the private rental sector will result in lower overall costs and a higher quality of service for renters.
The new law will ban landlords and agents from requiring tenants to pay letting fees as a condition of their tenancy. It will also include ways for tenants to recover unlawfully charged fees.
But we knew this was coming didn’t we?
Yes, most of this was expected, however the part where it gives tenants the right to recover unlawfully charged fees wasn’t and caused some confusion.
My take on it is that in Scotland where fees are already banned, some agents are using the reference companies to get their fees. Let me explain:
- A tenant sees a property and wants to rent it
- The agent says fine. There are no fees to pay, but you must pass our referencing process. Our referencing company will be in touch.
- The referencing company contacts the tenant, and says “We will reference you but there is a charge of £150 per person”.
- The tenant pays and the referencing company splits the £150 with the agency.
I am assuming that the government is looking to close this loophole by giving the tenants the right of redress if they suspect something like this is happening
Some people in the industry have been saying that this won’t happen, that the Tory party doesn’t have a majority and therefore can’t get contentious legislation through parliament. The problem is that banning tenant fees is not contentious, it is likely to get all party support and go through on the nod.
In the current climate bashing the property industry is a vote winner especially among the youth vote. So if you think this will get put on the back burner think again. When it will happen is anyone’s guess, Brexit could delay it, but my thoughts are that it will come on the statute books sometime in 2018, and so you need to be thinking about this and preparing for it NOW.
What are the implications for Landlords?
As a landlord you might be thinking, well it doesn’t affect me I’m not the tenant nor the agent. Well it will affect you, and not in a good way. Agents have used tenant fees to subsidise landlord fees for years and so it is inevitable that landlord fees will increase.
We are no different, approximately 25% of our income comes from tenant fees, we as a company cannot afford to lose that amount of income overnight.
What does it mean for you as one of our landlords?
We are aware that many of you have been long term clients of ours and have been very supportive of us over the years, we do not therefore want to damage our relationship by raising our prices on “a one size fits all” basis. We feel that this is an opportunity to reboot Accommodation Unlimited and the way it does business with our landlords.
We want to meet with you personally to discuss what you need from a letting agent. We will listen to what you need from us and then put together a proposal that we hope will meet those needs and only then agree a fee based on our proposals.
Once parliament starts the process of putting this into law, we will begin to arrange meetings with you to discuss how we can work together to get you the best tenants for your property, which after all is what we try to do first and foremost.
If you have any concerns in the meantime, I am always available and happy to discuss our service with you, just give me a call.