With current tax hikes placed on landlord income, and the tenant fee ban coming into force next year, many landlords will now be wondering if having a letting agent is a false economy.
Landlord News: by Madalena Penny
Of course there are many pros and cons to using a property management company to look after stand alone properties or portfolios, but what will be the cost to the everyday landlord once the new legislation arrives?
According to a government impact assessment the ‘tenant fee ban’ is estimated to cost landlords in the region of £82.9 million in the first year and £157.1 million for letting agents, but could be as high as £273.9million.
The Impact Assessment suggests that the losses incurred by the ban could see letting agents passing these costs onto their landlords. But with landlords already paying through the nose due to the tax increases levied on them, can they afford to pay more?
The Impact Assessment cites: “We expect that landlords using letting agents will see their fees rise by an amount equivalent to 50% of what their letting agent was charging their tenant.”
Obviously, the other side of the coin, could see rents rise dramatically. Instead of paying a tenant fee once, tenants could now face ongoing rent rises to cover the losses.
Under the new ‘Tenant Fee ban’ due to be rolled out next spring, landlords and letting agents would face a fine of £5000 for their first offence if they charge a tenant any fee. If a further offence is committed within five-years of the first – landlords and agents could see themselves being charged £30,000 or be looking at a criminal conviction.
It’s understandable that many landlords are now probably asking themselves if it’s worth using a letting agent, or would it be better to manage their properties themselves.
So How Do You Find A Reputable Letting Agent that’s cost effective?
- Ask about their fees – some agents offer a low rate on rent fees but will absorb the loss of tenant fees through their other services, such as inventories, inspections, tenancy set-up;
- Is the Letting Agent offering a full tenant reference service or just a tenant credit check?
- Is the Letting Agent up-to-date with current housing practices and legislation?
- Is the Agent accredited with a national body such as ARLA or UKALA?
- Are they a member of the Property Redress Scheme?
At Penny Joseph, all our ancillary services such as inspections and inventories, tenancy set-up are free. We can even offer landlords Free insurance against tenant damage. We don’t charge tenant fees and our rates are just 10% of rents collected.
For more information on our property management services call: 01704 531541 or visit us here to know more.