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Monday, November 28, 2016

Letting Agent Fees - how to avoid them?

Avoiding letting agent fees

Landlords are faced with legislation changes proposed in the Autumn Statement bringing changes that will result in landlords having to bear the full brunt of letting agent fees.  This follows from the Chancellors Philip Hammond's first Autumn statement 2016 in which the incoming Chancellor marked himself out as no friend of landlords and a hero of the tenanted classes.

His proposed ban on letting agent fees means  that in a single stroke 4.3 million renting households will be removed from the obligation of having to pay letting agents fees such as:

1. Production of a tenancy agreement
2. Set up fees
3. Guarantor application fees
4. Pet deposit
5. Registering deposit fees
6. Vetting tenants and credit checks

This follows a letting agent fee ban put in place in Scotland which were tightened in 2012.  But can landlords avoid having to pay for these additional costs when they use a letting agent to let their property?

What are the likely affects of the letting agent fee ban?

The reality is that letting agents still need to charge fees for many of the actions that they carry out in their duties.  It will continue be an expense in administrative time and effort to register tenants for tenancies and to carry out the required checks for landlords to be happy that the tenants is a reasonable credit and letting risk.  This means that many letting agents will just pass these charges on to the landlord or try to avoid doing the appropriate letting checks in the first place exposing landlords to additional risks of letting particularly if they inexperienced landlords unaware of the potential pitfalls.  The additional costs as you can see about if these letting agent fees are passed on to a landlord could amount to many hundreds of pounds to a landlord for each letting so can letting agency fees be avoided?

Letting agent fees - how to avoid them?

The reality is that all landlords can avoid letting agent fees simply by managing their own rental properties.   It really is entirely possible not to use a letting agent at all.  Now with online property marketing such as Lettingaproperty and similar marketing virtual letting agents and marketing websites a landlord can market their property to the whole world by getting their property on the likes of Rightmove and Zoopla giving them maximum marketing exposure.  Then having secured their marketing leads an individual landlord is free to do all the checks and essential letting administration that the letting process requires.  It's perfectly possible for a landlord to do the credit check on line for a few quid.  We have told landlords how they can do the vetting of a tenant far more effectively than any letting agent and save a fortune in the process.  Who needs a letting agent to prepare the inventory?  Landlords can manage their property  with our online software and avoid the fees that will now have to be paid to letting agents.  This legislation could be a game changer for many landlords determined to avoid unecessary letting costs.  Other landlords will just conclude that it is another necessary expense that they will try where possible to pass on to their tenants by raising the rent.  The experience from Scotland where the introduction of similar restrictions has been that the added costs have not been translated into inflated rents.

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