How Agents Can Recoup Losses from the Ban on Letting Agent Fees
14 September 2017 1552 Views
According to recent government figures, the average letting agent’s fee is £223 and 4.3 million householders pay this amount or thereabouts every year. The housing charity Shelter have also reported that some tenants have paid as much as £2,000 in letting agent fees in the capital.
In the Autumn Statement of 2016 the government responded to this growing dissatisfaction amongst property renters by announcing plans to scrap letting agent fees and during the general elections earlier this year, leaders of most major political parties including the PM voiced their support for the ban.
The Tenant Fees Bill
During the Queen’s Speech at the State Opening of Parliament, 2017, her majesty detailed developed plans regarding legislative reforms that will soon prevent letting agents from charging prospective tenants. Documents that accompanied this speech also promised that leasehold reform would be next on the government’s agenda in due course.
Now, after months of consultation the draft Tenants’ Fees Bill has arrived and states that as well as banning landlords and agents from charging tenants, there will also be adequate measures taken police the ban and recover fees that they have been unlawfully charged
The Repercussions of the Ban
It’s argued that their fees go towards checking credit, references and ascertaining a tenant’s immigration status.
The Association of Residential Letting Agents (ARLA) said that outlawing these fees would also result in 4,000 lost jobs and could cost landlords up to £300 million with their chief, David Cox, adding that “a ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants”.
However, in Scotland where a ban has already been implemented there have been no significant rises in rental prices, so how exactly can letting agents recoup losses from the ban on fees?
Expenses previously billed to tenants for things such as contracts, inventories, credit checks and references could be picked up by the proprietor and included in price they pay in landlord letting fees.
Expand Your Portfolio
Increasing the number of properties on an agent’s roster means that they are able to means that they will be able to collect a commission from more renters. Whereas letting fees are typically only charged once per tenancy, commission is collected on a monthly basis acting as a source of residual income and accumulating. By focusing more on business development and less on fees your business will survive in good stead.
Adding Extra Services
Letting agents can make deals with tradesmen and professional services such as property inventory reports and referencing to work on their entire property portfolio in exchange for a ’tradesman commission’ which is usually around 10% of the fee to the tradesman in exchange for sending work their way. An agent would bill the landlord direct for the service in house then outsource the work.
Letting agents are able to make agreements with insurance providers to include an entire property portfolio under a blanket insurance policy and receive insurance commission in return.
If you are looking to outsource any of your work then ensure you are employing an experienced company to work with you.
At Assist Inventories we understand the industry as well as providing meticulously detailed inventory reports. Talk to us about what we can do to help you recoup the losses following the ban on agent fees.
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