As a property professional working in the lettings market, I feel that the moves to stamp out poor landlord practice and ensure that tenants are protected can only benefit the reputation of the rental industry.
However, the implementation of so many new regulations in a relatively short space of time does have implications for landlords and how they manage their property. With ever stricter guidelines and fines in place, whether you are renting out one property as a retirement investment, or a whole portfolio, landlords need to ensure that they are fully compliant.
The Tenant Fees Bill
After changes to stamp duty and tax relief on BTL, the latest initiative to impact landlords is the Tenant Fees Bill due to become law next year. The bill is the result of feedback from public consultation after the ban on letting fees was announced in 2016, as part of the Autumn Statement.
- A maximum deposit of six weeks’ rent
- Holding deposits to be capped at no more than one week’s rent
Plus, landlords will only be able to charge tenants fees associated with:
+ Change or early termination of a tenancy when requested by the tenant (charges for change of tenancy are capped at £50 unless the landlord can prove greater costs were incurred)
+ Utilities, communication services and Council Tax
+ Payments arising from a default by the tenant such as replacing a lost key
The deterrents are significant. Penalties include fines of £5,000 for an initial breach while repeat offenders could be charged up to £30,000 as an alternative to prosecution.
A time of change
Other recent changes implemented in the rental industry range from amending rules around charging for references, credit checks and contracts to fines of up to £5000 if a property falls short of new energy rating requirements.
While this is all good for the industry’s reputation, it can be difficult for landlords tostay up to date with the raft of changes and what they mean in practice. That’s why many landlords choose to use a letting agent.
Investing in an agent
Reputable agents have to keep up to date with changes in legislation and undergo training and examinations to ensure they have the right knowledge to advise landlords on a whole range of issues from health and safety to investing in the right BTL property.
Most letting agents will offer a varying level of service from charging a one off fee to find suitable tenants, collect references, carry out checks and set up tenancy agreements, to full management which includes of all aspects of managing a property including maintenance, rent collection and troubleshooting. This enables landlords to choose the level of service that best suits their needs - and their budget.
A false economy?
Of course, some landlords prefer to save their money and manage a property themselves, but in my experience, this is often a false economy. Most letting agents will have a good knowledge of the local market as well as a network of tenants and potential tenants. This enables them to offer sound advice and helps to ensure higher occupancy rates than the DIY approach.
In addition, letting agents have also had their fair share of industry scrutiny and it is now a legal requirement for all those operating in England and Wales to publicise their fees. There are also other obligations to be met including:
+ A legal obligation to be part of a redress scheme and give details of that scheme
+ Professional indemnity insurance offering protection against claims for negligence, bad advice or mishandling of data
These measures are all designed to protect tenants and landlords, offer peace of mind and help ensure industry compliancy.
Of course, as a property professional you’d expect me to advise using a letting agent but ultimately, it’s a case of landlords deciding how they want to manage their properties.
If they want to be proactive and feel confident that they can keep on top of all the industry changes, then my advice would be go for it.
However, for those who want to ensure their assets are well managed and protected, a good agency is well worth the investment.
Jill Griffiths is director of residential lettings at Andrew Granger & Co.