Letting agents’ fees are likely to be scrapped next year when the Tenant Fees Bill comes into operation. This means agents will not be able to charge anything except rent from tenants, a deposit which is limited to a maximum of six weeks’ rent and a separate holding deposit which is limited to one week’s rent. They cannot charge a fee for finding properties for renters. However, many landlords are seemingly unaware of the changes and what they could mean for them. At present, letting agents make about 19% of their income from tenant fees, with some making as much as 30% from the fees. The average fee that tenants have to pay is £318 to move into a rental property. However, one in seven pays more than £700, and some have paid more than £2,000 in fees.
As this is such an important part of their income, many agents have said they will have to increase their landlords’ fees to make up the difference. This could mean landlords having to collectively pay an extra £82.9 million to agents to make up the shortfall. The limits set on security and holding deposits are expected to cost landlords another £1.3 million. It has also been suggested that landlords could be facing longer void periods, as they will need to put up rents to cover these increased costs. They may also put off carrying out any improvements or manage properties themselves rather than rely on agents.
Whilst cutting out the middleman may seem the best way to save money, there are complications. Landlords will need to be on top of all the paperwork and market their own properties. They will also need to carry out checks on tenants and make sure their properties meet all the legal requirements, including licences and certificates where necessary. One report says that more than 145 new pieces of legislation have been introduced in the past five years which affect landlords or the rental market. So looking after property and staying within the law can be a full-time job.
Instead, landlords can find alternatives to the traditional high street letting agents. Smart technology is one way forward. Landlords can use an app which can be their letting agent and their administrative assistant for them. Software can keep all the paperwork online and in one place, so it is easy to access for the landlord and any staff. It can set reminders for payments, rents, renewals and any appointments. Check-ins, check-outs and inventories can be done via the app, with photographs or videos to keep evidence of the state of repair of fixtures and fittings. Marketing property is also easier online. Some online portals are available where you can put your property along with videos or 360º tours so would-be tenants can view the property from their own home. They don’t need to actually visit it before deciding to rent it. Other online rental portals will do the viewings for the tenants. With the property description, there is a video and commentary from someone who has checked over the property to ensure it matches the description.
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