A senior figure in the Scottish lettings industry has warned his colleagues in England what they might have to expect if there is blanket licensing, and lettings agents fees are banned.
Stuart White, of Century 21, which has several franchised offices in Scotland, said that licensing seemed little more than a ‘taxation exercise’ – which allows councils to ‘palm off’ their responsibilities regarding anti-social behaviour on to landlords and agents.
He said that currently, every Scottish landlord must register every rental property that they rent out, at the rate of £55 for the first, and £11 for each subsequent property. On top of that, all letting agents must pay a fee of £55 to every council in whose area the agent manages a rental property, regardless of whether there are one or several. All registrations run for three years.
White said: “We currently pay registration fees for 12 different local authorities in Scotland.”
He says that licensing has just two possible advantages. First, it is possible to track down who owns a property – which proved useful when tenants of a Century 21 flat were affected by burst water pipes in a vacant empty rental property above.
“The second benefit is that landlords understand that this is a properly regulated industry,” he said. “But having said that, I have never come across a single landlord whose application has been rejected. Nor have I come across a rogue landlord being expelled from the register. It predominantly seems like a money-making exercise.”
Of deep concern to White is that licensing makes landlords and agents responsible for the behaviour of their tenants.
He said: “It is absolutely outrageous the way this is abused by some councils, and they are simply making landlords and letting agents do their work for them.
“For example, we had a call from one council to say that their noise team had found a lot of noise coming from a property on a Saturday night, and discovered that we managed the property. But instead of simply knocking on the door to ask the tenants to turn down the noise at their party, they waited until Monday morning and wrote to us informing that we should deal with it..
“Had they knocked on the door, the tenants would have turned the sound down in all llikelihood.
“In a second incident, a tenant’s dog was alleggedly seen fouling a public space. Again, there was no attempt to approach the person. Instead, she was observed going into a rental property, and assumed she was the tenant, and once again, we were contacted and asked to deal with the problem and warn our tenant about dog fouling.”
Regarding the banning of fees to tenants in Scotland, with the ban affecting both agents and landlords, White hit out at Shelter’s campaign to achieve this.
He said: “I used to donate annually o Shelter, but I will never give them another penny while they remain on this path of attacking every single letting agent in the UK and I am sure other industry businesses will have the same opinion and have already re-routed their financial support to other causes.
“Millions of people would find themselves homeless were it not for the private rented sector, so to go to war with a whole industry is ill thought out. Surely, it is better to work with an industry to drive up standards.
“Following a recent ‘clarification’ the by the Scottish Government, it is said that nobody can charge anything apart from rent and a deposit for the setting up, maintaining or ending of a tenancy. Apart from the issue about reference fees, does this mean that no charge can be made for late rental payments? Damage to a property? Payments made by credit card? To name but a few instances where a tenant should legitimately be bearing the cost of their actions?
“Personally, I am astonished if the law really intended to state that a commercial business trying to cover its costs and losses for a landlord are acting illegally?”
He said different agents were adopting one of three solutions: some agents were telling prospective tenants to produce their own references, from a named supplier; the larger agents are, he claimed, adding to the first month’s rent and calling it ‘rent’ with lesser payments in months two to six. s Other agents are simply adding £25 to the monthly rent.
White said: “How has this helped tenants? Shelter should take a log hard look at what it is trying to achieve and might ultimately need to hang its head in shame if all it manages to achieve are higher rents being charged to tenants. Homelessness would rocket if just 5% of private landlords decided that had had enough of biased and aggressive policies, let alone the further financial burden of passing all costs on to a landlord, and left the sector.”
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Comments
"He said that currently, every Scottish landlord must register every rental property that they rent out, at the rate of £55 for the first, and £11 for each subsequent property. On top of that, all letting agents must pay a fee of £55 to every council in whose area the agent manages a rental property, regardless of whether there are one or several. All registrations run for three years."
not exactly accurate, registration is £55 per landlord per authority and £11 per property if register for more than 1 authority online you get a 50% discount
http://hansard.millbanksystems.com/commons/1988/mar/29/determining-a-rent-by-rent-assessment
Here is a link to the original parliamentry debate in 1988 when Scotland decided to continue with a ban on premiums and England decided to lift the ban following the end of rent control.
@Scotty Boy
Sorry that anon first added by post was me forgot to add a name.
This "it wasn't clear" is just a whingeing excuse trotted out in the main (and I do not include you here) by those who have been caught with their trousers down, or perhaps more correctly their hands in the till (or their tenants wallets). Since when has ignorance of any Law been an excuse for breaking it anyway?
The Law has been clear enough for me, a Taffy operating in the very South of England, to have known and been advising (warning) Scottish clients for well over 15 years that it was illegal in Scotland to charge a tenant anything in connection with the preparatrion or renewal of a lease.
I saw the trend increase and warned where it would end, though I didn't expect it to be quite so dramatic (or indeed quite as long until it did). But given the ludicrous charges some agents make to tenants all over the country this bubble was bound to burst, just as it eventually will do in E&W though probably without retrospective punishment.
I say probably because there is also little known legislation that applies in E&W as well though mainly in relation to leases proper (not short tenancies) - but who knows?
Now forgive me but if little old me not even operating in Scotland knew....................................
Shall I tell you what actually happened?
About 20 years ago some agent or other decided charging the tenant was a good idea - maybe because their Landlord wouldn't pay for the referencing etc any more. So they charged, and the sky didn't cave in. So they charged the next tenant and before long other agents started doing the same thing.
Agents HAVE NOT always charged tenants fees, and the practice only really started 10 to 15 years ago, since when I have been consistently warning that the sky would fall in, and now it has.
I have been advising E&W agents the same for the past 15 years too. Maybe soon they will start listening?
Scotty Boy like you with my views I agree with 90%+ of what you have posted. But the true position remains the true position. As I said the "clarification" was only needed to make sure all agents knew what they already should have done and that above all they now operate as they alweays shopuld have done.
I am sorry that many agents in Jock land seem now to be reaping a somewhat bitter harvest - sad also to say they brought it upon themselves.
and............Zoopla are supporting Shelter. Talk about biting the hand that feeds!
The banks screwed up our economy and now this Shelter lot are screwing it from another position. If the banks had not spoilt it all for us then there would not be the private rental sector giving people a home. Those are now unable to get a mortgage from said banks because banks have now got to get money in to provide a big cash balance so that if they bugger up again they can afford to pay it themselves and not rely on the government to pay for their errors.
Now now they want a sector of British business wiped off the face of the earth because they think we are all rogues. Astonishing!
"A senior figure in the Scottish lettings industry...." - who made that up, a nobody in the lettings industry...., talk about blowing your own trumpet! - may be this "A senior figure in the Scottish lettings industry" should disclose actually how many properties they manage, barely 3figures......
Anon -
Whilst I agree with 90% of your comments, I must take you to task on your comment "The Law always was clear". Absolutely not. If the law had been crystal then parliament would not have had to pass an amendment with the purpose of clarifying it.
Furthermore, the "premiums" law was never conceved to outlaw legitimate fees (referencing & credit check) it was originally put in place at a time when there was rent capping in Scotland. It was put in place to outlaw inflating rent through the back door. Now it appears to have created the oposite effect and rents are being inflated to pay for fees.
Furthrmore, everyone in Scotland who witnessed the Shelter (Scotland) campaign knows that they called for the clarification to the law based on a claim of "rip off fees". An outrageous claim which was pure fiction. 99.9% of landlords & agents charged a fair & honest fee structure.
Furthermore, one or two cases of landlords being struck off of landlord registry hardly qualifies the system in proportion to the number of registrations. The landlord registration scheme is wholey an unpoliced revenue spinner for local authorities.
Don't "senior figures in the Scottish Lettings Industry" Scottish agents keep up with their own Court decisions? This is the second time one has referred to their never having been an expulsion from the register. I'm about as far from Edinburgh as you can get without going to France but even I am aware of this July 2012 first for Scotland:-
http://www.edinburgh.gov.uk/news/article/933/edinburgh_landlord_struck_off_register
Yousef Mohammed was struck off the register last year.
Next read your tenancy agreement. They place clear responsibilities on Landlords (and agents) in terms of tenant behaviour not only at their own property, but neighbouring ones.
Mr White as you seem to be asking for clarification on some points or would find it useful I hope this is helpful:-
"does this mean that no charge can be made for late rental payments"
Ask the OFT assuming they operate in Scotland. But you won't like the answer (and don't try and compare with the fees banks charge)
"Damage to a property"
Why would that not be chargeable is it a fee then?
"Payments made by credit card"
Perfectly OK as that is tenant payment choice (unless agent only takes payments by credit card and offers no alternative payment method, then it would not be OK)
"larger agents are, he claimed, adding to the first month’s rent and calling it ‘rent’ with lesser payments in months two to six"
Call it rent if you like but the Statute will call this a depositso agents could be landing a Landlord with a legal claim against them in the cause of charguing their own fees
"Other agents are simply adding £25 to the monthly rent."
Hope they are paying it to their Landlords then. Either way they would need Landlord consent and awareness as the tenancy agreement will have to show the higher amount with the £25 added to make it payable by the tenant.
But smacks of charging a fee by the back door doesn't it? Professional? Legal even?
Odd how nothing in life is ever simple isn't it, especially when time is spent on contrivances and trying to get round the Law instead of just complying with it.
The Law always was clear, now it is even clearer (it only needed further clarification to empohasise the position to those flouting it) and is:-
You cannot charge any form of fee to a tenant for the preparation or renewal of a lease.