Landlords and agents in Scotland are being warned that time is running out to protect tenancy deposits.
The deadline of November 13 requires all deposits received between March 7, 2011, and October 2 this year to be physically transferred to one of the approved custodial schemes – a move that could see a number of agents go to the wall.
Deposits received before March 7, 2011, where a tenancy has renewed or will renew on or after October 2 and before April 2 next year, must be transferred to a scheme within 30 days of renewal.
Landlords and agents who have accumulated interest on tenancy deposit money are being advised to give this to the tenant before transferring the deposit.
The new regime is causing anxiety, says SafeDeposits, a spin-off of the TDS. It is suggesting that landlords and agents simply protect all the deposits that they currently hold by November 13.
The impact of the new legislation is thought likely to be major, as its implementation is coinciding with a tightening of the law which bans agents and landlords from taking money off tenants unless it is either rent or deposits.
The explicit banning of fees comes about as a result of a Shelter campaign, which is also persuading tenants to reclaim money they have previously handed over.
Unlike in England and Wales, tenancy deposit money cannot be protected with insurance, but must be physically put into a custodial scheme.
It is widely predicted that the double whammy of the ban on fees and the need to hand over deposit money will see a number of agents go out of business by the end of this year.
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Comments
Criticising agents for the price of their fees appears to be flavour of the month at the moment.
Whilst £180 may appear to be excessive to some (and there are a lot of agents that charge less), comparing it to £25 for the credit checking fee isn't really an appropriate, relevant or accurate argument.
All industries charge more than the cost price of a service as they have to cover their costs in providing the service to the end customer such as staff, utilities, office space, insurance, rates and so on. (Oh, and the apparently abhorrent concept for a letting agent to even consider: profit.)
The laws of supply and demand of any market will ensure that firms that overcharge will struggle. If, as a customer, you don't want to pay the price, don't buy the service.
Please can we stop jumping on the "Bash the Agents" bandwagon.
Don't just assume that all agents are out to rip off landlords and/or tenants. Some of us actually charge appropriate fees to cover the cost of providing the service that we do and that does include some profit, but also includes a lot of other costs as well.
I agree with your point that landlords are not a charity, however rents will increase regardless of any law.
The point of the law is to prevent letting agents rip off both the landlord with extortionate fees and prospective tenants - i.e. myself.
Its offputting for a prospective tenant to find that an agent wants to charge me £180 for admin and credit checks for myself and my partner, a credit check costs at most £25, why should I have to pay that?
Then there is an inventory fee of £90, for what? In my mind its in the landlords interest to check out the property before listing and simply ask the tenant to confirm the inventory in the event of any loss or damage.
This should be part of a letting agents service as it is in both their interest and the landlords to get a tenant placed as soon as possible. A 6 year old could tell you that half the prospective tenants are put off as soon as they find out the cost of these charges. And the majority of these agents wont disclose the costs until you view a property.
The average property is likely to stay empty for upto two months before a tenant occupies it, probably due in part to these ridiculous add on perks. Whats that? about £1000+ lost on an average property for not much return. Very clever, they still make their money and the landlord gets screwed over..again.
Until letting agents are properly regulated they will keep ripping off landlords and tenants with made up fees. Its about time they brought this law to the UK. Most are not even registered to known professional lists.
I will be looking for a letting agent who has a flat agreeable fee of at most £100, anything more than that is a rip off, even the £100 is a rip off but there isnt much choice...yet!
".........law which bans agents and landlords from taking money off tenants unless it is either rent or deposits.....".
Landlords are not a charity and as a direct result of this rents will almost certainly rise in 2013.
Shelter are very good at telling others what is right or wrong. I suggest they open a rental agency themselves to really get to know what the real world is like!