Ban on letting fees to cost single-office business £85,000 a year, claim

[nome]

Has there been any further progress made on this proposal since it was first announced?

 

Personally I'm convinced it's going to be quietly dropped or at the very least severely watered down.

[Funn3r]

37 minutes ago, spyguy said:

Not quite.

I think you go to the regulator.

They then fine the LL 3 times the rent.

The house cannot be relet or sold until the debt is resolved.

Not paying your rent is dumb. You are in breach of your contract.

You can only be in breach of your contract if you have a contract, which I didn't. I am talking here about a bunch of HMO-leasing scrotes who just ignore AST, deposit protection, court orders, being fined 3x, etc. Who do you think is going to enforce your list of remedies? It was a lot easier to not pay them 1K than to join the queue trying to get 1K back

[Exiled Canadian]

8 hours ago, spyguy said:

Its not a business. Its a made up scam, thats why.

 

Indeed - if there was a real need for this service, and the prices charged were a fair reflection of the underlying vaiue then the landlord would stump up.  The fact agents believe that landlords won't pay shows that they don't believe in the value proposition of the service themselves.

[Sancho Panza]

3 hours ago, spyguy said:

Not quite.

I think you go to the regulator.

They then fine the LL 3 times the rent.

The house cannot be relet or sold until the debt is resolved.

Not paying your rent is dumb. You are in breach of your contract.

Not paying your rent is only dumb if a court won't just set off the rental loss with money held on deposit.Not paying your rent so as to net off a loss of the deposit is actually a sensible route to go down if you think your LL won't be fair in terms of the deposit.

2 hours ago, Funn3r said:

You can only be in breach of your contract if you have a contract, which I didn't. I am talking here about a bunch of HMO-leasing scrotes who just ignore AST, deposit protection, court orders, being fined 3x, etc. Who do you think is going to enforce your list of remedies? It was a lot easier to not pay them 1K than to join the queue trying to get 1K back

If you don't have a contract then the following applies

http://www.landlordlawblog.co.uk/2013/06/05/what-happens-if-you-dont-have-a-tenancy-agreement/

'You can’t prevent a tenant from having a tenancy just by not giving them a written tenancy agreement.  As soon as they go in and start paying rent, a tenancy will be created under s54(2) of the Law of Property Act 1925 (which sets out the circumstances under which a tenancy agreement is not needed for short lets).

However such a tenancy is inadvisable as it will be harder for you to prove what the terms are.  If you have a written tenancy agreement which says the tenant is paying £900 per month rent – there can be no argument.  But if there is NO written document you may find it hard to  prove that the agreed rent is not something else.

(Note that there may be some situations where a tenancy is not created – eg with some family arrangements)

Landlords are still bound by their statutory duties

In particular landlords are bound by their repairing obligations from s11 of the Landlord & Tenant Act 1985.

Landlords are also bound by the Protection from Eviction Act 1977 which says that they can only evict a tenant if a possession order has been obtained first.

All the landlord and tenant related regulations will also apply – for example

• The Gas Regulations
• The Furniture and Furnishings regulations
• The various consumer safety regulations

Local Authorities will still retain all their powers, for example under the Housing Act 2004 in relation to HMOs and the Housing Health and Safety Rating System.

Landlords will be unable to make deductions from tenancy deposits

A tenancy deposit is money which belongs to the tenant.  So for a landlord to be able to make  deductions from it – this needs to be authorised by a signed agreement, the tenancy agreement.

If there is no tenancy agreement therefore, then there is no authority for the landlord to make any deductions from the tenancy deposit – no matter how dreadful the condition of the property when the tenant moves out.

If he tries to make any deductions, any challenge made by the tenant will succeed at adjudication.

Landlords will be unable to use the Accelerated procedure for possession

This is the more convenient court procedure used for section 21 claims.

However, as it is a paper based procedure it can only be used if the proper paperwork is available.

If there is no tenancy agreement, the landlord will have to use the standard court procedure and attend a hearing so they can explain to the Judge why there is no written agreement.

Tenants will still have obligations

There are a few specific statutory obligations:

• They should allow landlords inspection rights under s11(6) of the Landlord & Tenant Act 1985
• They will not be able to assign or sublet the property without the landlord’s consent (s15 Housing Act 1988)
• They will not be entitled to carry out any improvements or alterations to the property without the landlord’s written consent (s81 Housing Act 1980), and

In  addition, tenants will be under a general duty to act in a ‘tenant like manner’ (as described by Lord Denning decision in the 1954 case of Warren v. Keen).

Conclusion

Although as you can see, there will be a tenancy and the parties will still have rights and obligations – it is not a satisfactory situation.

The main disadvantages are for the landlord, although tenants will experience problems if they want to claim housing benefit.

Landlords should be careful therefore NEVER to allow tenants into a property until they have a tenancy agreement signed by all the tenants.'

 

 

If you get a court judgement against these parasites,you can put a charge on their property.It's not that hard a process,it just seems daunting.

Finally,if you have any problems,the rental sub forum on here has some great people there giving advice.

 

 

 

Edited March 21, 2017 by Sancho Panza

[PropertyMania]

Don't get too excited about the fee ban..

Short term: No rent change; benefits new tenants at expense of landlords as market can't tolerate rent rise
Medium - long term: Rents rise by equivalent amount; benefits short term tenants at cost to longer term tenants 

Good news though is that fee ban may incentivise landlords to create longer term contracts to recoup costs. 

[spyguy]

12 minutes ago, PropertyMania said:

Don't get too excited about the fee ban..

Short term: No rent change; benefits new tenants at expense of landlords as market can't tolerate rent rise
Medium - long term: Rents rise by equivalent amount; benefits short term tenants at cost to longer term tenants 

Good news though is that fee ban may incentivise landlords to create longer term contracts to recoup costs. 

No.

Rents rise according to the market, not the cost.

Rents are linked to wages. Actually, they are linked more to LHA.

 

[rollover]

Estate Agents Aren’t Having a Great Time in Britain

Britain’s largest property brokers are cutting jobs, closing branches and raising capital. While some companies have blamed Brexit and tax hikes for a drop in transactions, high values have put off many other buyers. Demand for housing dropped to a six-month low in February, according to the Royal Institution of Chartered Surveyors. The widening gap between home values and wages means brokers including Countrywide Plc and Foxtons Group Plc are closing fewer deals while being undercut on fees by online companies.

“It’s handy to blame this downturn on Brexit and property tax changes, but prices were overstretched relative to incomes prior to these changes.” “The main reason estate agents are having a hard time is due to a shortage of stock to sell,” while “the sellers’ price expectations are unrealistic.”

Home sales across England declined 21 percent in November from a year earlier, according to Land Registry data published Tuesday. Bloomberg

[Funn3r]

2 hours ago, Sancho Panza said:

Not paying your rent is only dumb if a court won't just set off the rental loss with money held on deposit.Not paying your rent so as to net off a loss of the deposit is actually a sensible route to go down if you think your LL won't be fair in terms of the deposit.

If you don't have a contract then the following applies

http://www.landlordlawblog.co.uk/2013/06/05/what-happens-if-you-dont-have-a-tenancy-agreement/

'You can’t prevent a tenant from having a tenancy just by not giving them a written tenancy agreement.  As soon as they go in and start paying rent, a tenancy will be created under s54(2) of the Law of Property Act 1925 (which sets out the circumstances under which a tenancy agreement is not needed for short lets).

However such a tenancy is inadvisable as it will be harder for you to prove what the terms are.  If you have a written tenancy agreement which says the tenant is paying £900 per month rent – there can be no argument.  But if there is NO written document you may find it hard to  prove that the agreed rent is not something else.

(Note that there may be some situations where a tenancy is not created – eg with some family arrangements)

Landlords are still bound by their statutory duties

In particular landlords are bound by their repairing obligations from s11 of the Landlord & Tenant Act 1985.

Landlords are also bound by the Protection from Eviction Act 1977 which says that they can only evict a tenant if a possession order has been obtained first.

All the landlord and tenant related regulations will also apply – for example

• The Gas Regulations
• The Furniture and Furnishings regulations
• The various consumer safety regulations

Local Authorities will still retain all their powers, for example under the Housing Act 2004 in relation to HMOs and the Housing Health and Safety Rating System.

Landlords will be unable to make deductions from tenancy deposits

A tenancy deposit is money which belongs to the tenant.  So for a landlord to be able to make  deductions from it – this needs to be authorised by a signed agreement, the tenancy agreement.

If there is no tenancy agreement therefore, then there is no authority for the landlord to make any deductions from the tenancy deposit – no matter how dreadful the condition of the property when the tenant moves out.

If he tries to make any deductions, any challenge made by the tenant will succeed at adjudication.

Landlords will be unable to use the Accelerated procedure for possession

This is the more convenient court procedure used for section 21 claims.

However, as it is a paper based procedure it can only be used if the proper paperwork is available.

If there is no tenancy agreement, the landlord will have to use the standard court procedure and attend a hearing so they can explain to the Judge why there is no written agreement.

Tenants will still have obligations

There are a few specific statutory obligations:

• They should allow landlords inspection rights under s11(6) of the Landlord & Tenant Act 1985
• They will not be able to assign or sublet the property without the landlord’s consent (s15 Housing Act 1988)
• They will not be entitled to carry out any improvements or alterations to the property without the landlord’s written consent (s81 Housing Act 1980), and

In  addition, tenants will be under a general duty to act in a ‘tenant like manner’ (as described by Lord Denning decision in the 1954 case of Warren v. Keen).

Conclusion

Although as you can see, there will be a tenancy and the parties will still have rights and obligations – it is not a satisfactory situation.

The main disadvantages are for the landlord, although tenants will experience problems if they want to claim housing benefit.

Landlords should be careful therefore NEVER to allow tenants into a property until they have a tenancy agreement signed by all the tenants.'

 

 

If you get a court judgement against these parasites,you can put a charge on their property.It's not that hard a process,it just seems daunting.

Finally,if you have any problems,the rental sub forum on here has some great people there giving advice.

 

 

 

I appreciate everyone's concern but I got out with the cash they owed me and I'm actively trying to forget about it. 

I'm not one for long Internet arguments but I thought I would respond to this in case someone with a similar problem finds it via search engine in the future. 

It's of no consequence whether or not the law supports you. Scumbags are scumbags but they are not stupid. They count on most victims not pursuing them and they are good at putting obstacles in people's way. No matter how successful you are at overcoming this then no amount of court judgement in your favour and bailiffs at your fingertips will survive them going out of business. The people I had to deal with could and several times did liquidate Scumbag Apartments Ltd and get reborn as Scumbag Flats Ltd and there is very little you can do. 

[spyguy]

35 minutes ago, rollover said:

Estate Agents Aren’t Having a Great Time in Britain

Britain’s largest property brokers are cutting jobs, closing branches and raising capital. While some companies have blamed Brexit and tax hikes for a drop in transactions, high values have put off many other buyers. Demand for housing dropped to a six-month low in February, according to the Royal Institution of Chartered Surveyors. The widening gap between home values and wages means brokers including Countrywide Plc and Foxtons Group Plc are closing fewer deals while being undercut on fees by online companies.

“It’s handy to blame this downturn on Brexit and property tax changes, but prices were overstretched relative to incomes prior to these changes.” “The main reason estate agents are having a hard time is due to a shortage of stock to sell,” while “the sellers’ price expectations are unrealistic.”

Home sales across England declined 21 percent in November from a year earlier, according to Land Registry data published Tuesday. Bloomberg

Hold on, the flyers Im getting thru the door every day tell me they selling loads.

 

[mrtickle]

On 21/03/2017 at 8:48 PM, Funn3r said:

I appreciate everyone's concern but I got out with the cash they owed me and I'm actively trying to forget about it. 

I'm not one for long Internet arguments but I thought I would respond to this in case someone with a similar problem finds it via search engine in the future. 

It's of no consequence whether or not the law supports you. Scumbags are scumbags but they are not stupid. They count on most victims not pursuing them and they are good at putting obstacles in people's way. No matter how successful you are at overcoming this then no amount of court judgement in your favour and bailiffs at your fingertips will survive them going out of business. The people I had to deal with could and several times did liquidate Scumbag Apartments Ltd and get reborn as Scumbag Flats Ltd and there is very little you can do. 

Yes but one of the "very little" things you can do - and I remember reading a brilliant thread about it on here - is to put a charge on the landlord's house. This was mentioned above. IIRC It means the landlord can't sell his house without first settling his debt to your (the amount of your deposit). The thread in question was a fantastic read, and immensely satisfying to see Scumbag landlord squirming when he realised he was utterly screwed - I hope someone else remembers where it was.

 

[Ah-so]

On 21/03/2017 at 7:48 PM, PropertyMania said:

Don't get too excited about the fee ban..

Short term: No rent change; benefits new tenants at expense of landlords as market can't tolerate rent rise
Medium - long term: Rents rise by equivalent amount; benefits short term tenants at cost to longer term tenants 

Good news though is that fee ban may incentivise landlords to create longer term contracts to recoup costs. 

Nonsense. Letting fees have been banned in Scotland for some years and there has not been an identifiable link between the ban and rising rents. 

I have not rented for over a decade, but never paid any letting fees on any of the 4 properties I rented over a 6-year period. Since the introduction of fees I have not seen evidence that landlords' savings have been passed on in lower rents, so hardly see that the inverse would be true. 

Letting agents identified a group that could be exploited (tenants) to make super-normal profits. The letting fee ban will bring this to an end and with it the ability to over-charge to generate super-normal profits. 

Certain costs will be passed on in part to landlords, but only the cost element of it. Most of the charges are pure profit that a landlord would refuse to pay. 

The agents will need to go back to making the kind of profit that a business requiring semi-skilled labour and a generic product would expect to make. 

[Sancho Panza]

On 23/03/2017 at 7:25 AM, Ah-so said:

Nonsense. Letting fees have been banned in Scotland for some years and there has not been an identifiable link between the ban and rising rents. 

I have not rented for over a decade, but never paid any letting fees on any of the 4 properties I rented over a 6-year period. Since the introduction of fees I have not seen evidence that landlords' savings have been passed on in lower rents, so hardly see that the inverse would be true. 

Letting agents identified a group that could be exploited (tenants) to make super-normal profits. The letting fee ban will bring this to an end and with it the ability to over-charge to generate super-normal profits. 

Certain costs will be passed on in part to landlords, but only the cost element of it. Most of the charges are pure profit that a landlord would refuse to pay. 

The agents will need to go back to making the kind of profit that a business requiring semi-skilled labour and a generic product would expect to make. 

Excellent post.I do rent and I resent paying £360 for the LA printing a standard AST off the PC and posting it for me and Mrs P to sign.

[Funn3r]

I got into my problematic rental via Haart EA and yesterday got an email from them, first for almost a year. To serve me better they are consolidating their PM (think it's Property Management) in Colchester instead of the local office in Bracknell so would I please note the change of phone number. 

I have not had chance to go and look at their office yet but I think it means they are closing it down, which is great news!

[Lavalas]

On 22/03/2017 at 11:33 PM, mrtickle said:

Yes but one of the "very little" things you can do - and I remember reading a brilliant thread about it on here - is to put a charge on the landlord's house. This was mentioned above. IIRC It means the landlord can't sell his house without first settling his debt to your (the amount of your deposit). The thread in question was a fantastic read, and immensely satisfying to see Scumbag landlord squirming when he realised he was utterly screwed - I hope someone else remembers where it was.

 

Here it is...

 

[Venger]

24 minutes ago, Lavalas said:

Here it is...

Great memory and link recall @Lavalas

On 7/13/2011 at 9:06 PM, DabHand said:

You certainly are in space monkey territory here! Great read.

 

On 7/25/2011 at 9:26 AM, kaladorm said:

This has finally prompted the landlords into paying the full amount of the 3x deposit penalty plus all our court fees in pursuing the case

 

[AvoidDebt]

“If letting agents take the full hit of the letting agent fee ban, 16,000 jobs will be at risk. It’s more likely however agents will pass on 75 per cent of the costs to landlords, which would result in job losses of around 4,000” says the report.

Some of the side effects of the ban will be around 27 per cent of landlords not buying any more rental properties, 20 per cent selling some of their stock, and eight per cent fewer landlords using letting agencies - property maintenance will also suffer, with seven per cent of landlords likely to cut back. 

https://www.lettingagenttoday.co.uk/breaking-news/2017/3/4-000-letting-agency-jobs-at-risk-if-fees-ban-happens-warns-arla

[Longtermrenter]

Just seen a house we would like to rent. Stopped looking when I saw the fees:

The Initial Money consists of:

• First month's rent in advance
• Security Deposit
• Administration Fee £50 per tenant
• Referencing Fee £75 per tenant
• Check-in fee - minimum of £72.00 (There may be instances where applicants pay for check-outs instead. Contact your local branch for more information)
• Tenancy Agreement £300 (if supplied by us)

If there are any guarantors to the tenancy:

• Guarantor Referencing Fee £100 per guarantor
• Agreement of Guarantee £75

And if the tenant is a company:

• Company Referencing Fee £175

Other Charges:

• Change of Sharer £300
• Extension Agreements £125
• Outgoing reference fee £24

Optional extras if agreed:

• Saturday Move-In £60

 

For us that's a minimum of £622 fees - crazy - no way I am paying that. Plus I noticed its 300 ards from the M20 - noise and fumes - they can F off.

Lets say that 4000 agents are made redundant with an average, lets say 30K cost per agent to each business when employers NI is taken into account. Thats £120 million pounds of tenant fees propping up 4000 agents who obviously aren't needed as theer will still be properties to rent - they must think we are stupid.

 

 

[tygar2]

Anyone know what date the ban actually starts? I cannot seem to find that bit of info when I google....

 

[Lavalas]

6 minutes ago, tygar2 said:

Anyone know what date the ban actually starts? I cannot seem to find that bit of info when I google....

 

Not for a while yet. Apparently they are going to consult on the details this spring (so very soon, you would think) and I've seen the back end of this year mentioned for implementation. The government do seem pretty set on it to be fair but I'll believe it when I see it.

[Bland Unsight]

On 21/03/2017 at 7:48 PM, PropertyMania said:

Don't get too excited about the fee ban..

Short term: No rent change; benefits new tenants at expense of landlords as market can't tolerate rent rise
Medium - long term: Rents rise by equivalent amount; benefits short term tenants at cost to longer term tenants 

Good news though is that fee ban may incentivise landlords to create longer term contracts to recoup costs. 

It goes without saying that one should always get appropriately excited and then stop there. Getting too excited is obviously an error.

However, just like section 24 and the Bank of England's SS13/16 rules on buy-to-let underwriting, the proposed ban is evidence of an intention to interfere with the present structure of the market. The leveraged private rented sector and 1988 Housing Act ASTs that made it possible are linked consequences of the ideological commitments of the Thatcher government. That ideology was embraced by Blair/Brown, and indeed by the 2010 coalition, so for over thirty years you have an almost unbroken thread of policy regarding the private rented sector; government should get out of the way and let the market sort it out.

Until we see something a bit more solid regarding the final form of any planned ban on letting agent fees its significance rests on the fact that it is evidence that the tide of policy is changing against landlords in favour of tenants and that the government is willing to be seen to be interfering in the market.

[InvestmentByker]

On ‎21‎/‎03‎/‎2017 at 8:02 PM, spyguy said:

No.

Rents rise according to the market, not the cost.

Rents are linked to wages. Actually, they are linked more to LHA.

 

Only partially, the game changer is the fact that the cost of change will be reduced significantly for the Tenant but remain (or even increase) for the Landlord.  Cost of change is the primary mechanism for an incumbent supplier (Landlord) to maintain pricing power. The higher the cost of change, the less likely that an efficient market can operate. When the cost of change disappears - customers can ruthlessly shop around to drive down prices and increase service levels. Anyone in IT knows how important this principle is :-)

Where I live in Reading, moving house costs £700+ (Landlord Fees) plus a removal van (£50). Whenever I got an incremental rent rise of £50 the cost of change was too high for to justify this relatively small increase in cost. The same would apply whenever I saw a slightly cheaper or better house advertised in the neighbourhood

Although moving house is inconvenient, for the vast majority of renters it is only a weekends worth of work and a removal van.

Landlords might have real difficulty in even maintaining rent levels if this passes.

[hi5lo5]

4 hours ago, InvestmentByker said:

Only partially, the game changer is the fact that the cost of change will be reduced significantly for the Tenant but remain (or even increase) for the Landlord.  Cost of change is the primary mechanism for an incumbent supplier (Landlord) to maintain pricing power. The higher the cost of change, the less likely that an efficient market can operate. When the cost of change disappears - customers can ruthlessly shop around to drive down prices and increase service levels. Anyone in IT knows how important this principle is :-)

Where I live in Reading, moving house costs £700+ (Landlord Fees) plus a removal van (£50). Whenever I got an incremental rent rise of £50 the cost of change was too high for to justify this relatively small increase in cost. The same would apply whenever I saw a slightly cheaper or better house advertised in the neighbourhood

Although moving house is inconvenient, for the vast majority of renters it is only a weekends worth of work and a removal van.

Landlords might have real difficulty in even maintaining rent levels if this passes.

I concur, Reading EAs are rip off agents Romans, Haslams and Parkers are involved in price fixing. However I see a lots of properties for sale with tenants in situ.

 

[Sancho Panza]

6 hours ago, InvestmentByker said:

Only partially, the game changer is the fact that the cost of change will be reduced significantly for the Tenant but remain (or even increase) for the Landlord.  Cost of change is the primary mechanism for an incumbent supplier (Landlord) to maintain pricing power. The higher the cost of change, the less likely that an efficient market can operate. When the cost of change disappears - customers can ruthlessly shop around to drive down prices and increase service levels. Anyone in IT knows how important this principle is :-)

Where I live in Reading, moving house costs £700+ (Landlord Fees) plus a removal van (£50). Whenever I got an incremental rent rise of £50 the cost of change was too high for to justify this relatively small increase in cost. The same would apply whenever I saw a slightly cheaper or better house advertised in the neighbourhood

Although moving house is inconvenient, for the vast majority of renters it is only a weekends worth of work and a removal van.

Landlords might have real difficulty in even maintaining rent levels if this passes.

Excellent point.It could even rise for the LL if voids lengthen.

 

[Bear Hug]

7 hours ago, InvestmentByker said:

Only partially, the game changer is the fact that the cost of change will be reduced significantly for the Tenant but remain (or even increase) for the Landlord.  Cost of change is the primary mechanism for an incumbent supplier (Landlord) to maintain pricing power. The higher the cost of change, the less likely that an efficient market can operate. When the cost of change disappears - customers can ruthlessly shop around to drive down prices and increase service levels. Anyone in IT knows how important this principle is :-)

Where I live in Reading, moving house costs £700+ (Landlord Fees) plus a removal van (£50). Whenever I got an incremental rent rise of £50 the cost of change was too high for to justify this relatively small increase in cost. The same would apply whenever I saw a slightly cheaper or better house advertised in the neighbourhood

Although moving house is inconvenient, for the vast majority of renters it is only a weekends worth of work and a removal van.

Landlords might have real difficulty in even maintaining rent levels if this passes.

I am also in Reading and agree with all your comments.  However, I'd say that cost of move well over £1000 for me. 

In addition to extortionate fee, there is

- One or two days off work. Even if everything is moved in 1 day, there is always additional shopping, disposal of furniture etc

- There is always some more shopping to do, eg moved from double to king bed - need new bedding, new decorations etc

- Unless one goes really upmarket or accommodation is new, I always needed to paint a room (or all!).  Default state of Reading lettings is pretty poor. And even if landlords agree to pay for materials, my time is not free

- Moving a lot takes a hit on the credit score

So I assess that now and then, and always think that it's not worth moving unless my rent will be £100-200 pcm less, or I get a much better place for the same price.

If I didn't have to pay massive fees, I would have moved again by now.

 

 

 

Edited April 3, 2017 by Bear Hug