This is about something very close to my heart – the banning of letting agent fees paid by tenants.
A consultation paper has been released by the Government this week and we have until 2nd June 2017 to respond. After that, it’ll be decision time, and whatever comes out of the consultation will affect England only. Other areas of the country are subject to other legislation.
I don’t want to talk about politics and nail my colours to any particular colour of mast, but I do want to say we at RentalStep are 100% behind the plan.
But first I have to say I’m in agreement with the potential ban for lots of reasons.
- For a start, fees have gone up by 60% between 2009 and 2015 according to the consultation paper
- Letting agents can charge tenants, and landlords, whatever they like.
- It’s impossible to compare fees between agents too as they all set their own levels and have different ways of charging for services.
- Sometimes there’s confusion over who’s paying particular fees to the agent between landlords and tenants.
The Government is hoping that banning fees imposed on tenants by letting agents will bring some much-needed competitiveness to the market, and give those paying rent a level of control over what they’ll pay. Tenants will also be to work out what they’ll need to pay every month without having to add sometimes crippling agents’ fees on top, which can often be as much as two months’ rent in advance, plus a hefty deposit.
It’s also hoped that tenants will be offered longer tenancy periods as there’ll be less incentive on agents to earn ‘churn’ fees charged at the beginning and end of a letting period. Tenants love stability too. If they find a great property with a great landlord, they’ll want to stay there and think of the property as a home rather than just somewhere to live.
‘…tenants choosing to undertake their own reference checks and obtain a ‘tenant passport’ that enables them to demonstrate that they are financially and legally able to meet the terms of their tenancy.’
One of the most interesting points (to us anyway) is no 76 on the paper. It talks about ‘tenants choosing to undertake their own reference checks and obtain a ‘tenant passport’ that enables them to demonstrate that they are financially and legally able to meet the terms of their tenancy.’
If you’re not familiar with the concept of our TenantPassport, it’s where a tenant can show a future landlord how they’ve paid their rent at previous properties, as well as showing their employer reference and right to rent. Rent payments don’t appear on your credit reference like mortgage payments do, so it’s often impossible to assess how well a tenant’s paid in the past. They have to rely on references and goodwill.
Our TenantPassport boosts a tenant’s credit rating because as they pay their rent on time we report this to Experian who use it just like a mortgage payment. Our partnership with Experian also allows us to verify tenants and landlords quickly and free for both parties which brings an added layer of trust. Which means we don’t charge for referencing or credit scoring.
Tenants and landlords also benefit from free Tenancy Agreements, digitally signed and securely stored so both can access them anywhere, anytime.
Let’s hope the Government consultation does what it sets out to do, and the rental market changes for the better. It might take a while for any ban to come into force, but we say better late than never.
Founder & CEO