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  • Buy-to-Let

    Tenant Fee Ban could increase tenant mobility



    I am starting another thread based on this comment by David Slater on a discussion about lettings agents putting up rents ahead of the Tenant Fee Ban.  I thought the comment worthy of its own thread as it identifies a possible "butterfly effect" of the Tenant Fee Ban that landlords may need to have on their radar.

    david slater 1 hours ago

    I am seeing a different impact from the ban which could point towards more frequent tenant changeovers, leading to increasing costs and potentially voids:

    The tenants in one of my properties located in Bicester, Oxfordshire have this week handed in their notice to terminate the tenancy in June 2019 after 2 years.  I am not overly surprised that the couple have decided to move as it is a one-bedroom house, which is quite small for two people to live in and I assumed at some point they would look for somewhere bigger.

    What was more interesting is when questioning the Agent who manages this property on my behalf as to why they have looked to terminate the tenancy.   I was told that there are a string of tenants on their books who have decided to terminate their tenancies from around June this year, linked in their opinion, to the fact that they will no longer have to pay fees with the introduction of the ban on tenant fees from 1 June 19.

    On the one hand I think it is great that people are provided with the means to move at their choice without the burden of large fees.  However as a Landlord this new mobility could be viewed as a threat and could make it more likely that a tenant will choose to move on if the property or service provided is not to their liking leading to increased changeovers and potentially voids.

    Going forward I can potentially see an even greater requirement for Landlords to offer high quality property and excellent customer service or face greater risk from increasing tenant  mobility, which has been facilitated by this new government regulation.

    I would be interested to hear if anyone else has experienced tenants deciding to move around June or has considered this potential second order effect from the fee ban?

    P.S in this case I don’t think service or property condition was the issue, the couple were simply looking for a bigger place but there may be tenants out there who see this as the perfect opportunity to move…

    SEE ALSO  -          An end to tenant fees

    UP NEXT -              1st evidence that Tenant Fee Ban = rent rise?

    DON'T MISS -          What is your rent increase strategy?

    NOW WATCH:

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    I had the exact thought that this scenario could play out. I have a single tenant in a small 3 bed house. She moved in with her husband but separated within weeks; fortunately she worked, he didn't. She is now on periodic but did wonder if the lack of fees come June might prompt her to downsize.

    The only saving grace is she has 2 cats and 2 dogs so decent rentals are harder to find. I'm keeping my fingers crossed the hassle of moving is too great.

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    Letting fees aside - elsewhere in media tenants are flagging that it costs thousands overall each time they move to a new rental - removal costs alone can be £1500/£2000 for a 3 bed house - though furnished lets could see higher turnover after June.

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    As a letting agent, we have noticed a sharp decline in enquiries leading up to the fee ban in June. It’s going to be interesting to see how things unravel going forward.

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    I have a city centre apartment for rent at present and my agent says the market has gone quiet.

    He thinks it’s tenants waiting for the fee ban .

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    I am waiting to see how the RLA revise their standard agreement, and to obtain some authoritative guidance as to how contract law can be applied to enforce reasonable costs on tenants.

    eg Can I write an enforcible agreement that identifies cleaning costs for flea infestations from dogs as a reasonsable cost, plus management time, with an arbitration scheme as an alternative to court action to  recover costs? Can I put in a clause stating that the cost for a lost key relates to a lock-replacement, not a new-key that allows Jonny Burglar to get in with the old one?

    The legislative guidance is full of ill-defined "we consider x to be the max reasonable amount", without specifying "we".

    The Tenancy Deposit scheme has now been pithed of usefulness as the 5 weeks max in the Act was in full recognition that there is often damage above this level, and Labour's Shadow Housing Minister (Former Shelter Head of Campaigns) wanted to set it at THREE weeks; truly these people are useless.

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    If I told you that the ARLA AST recently released isn't even correct should tell you something about the difficulties of interpretation.  Waiting for even the industry bodies is simply not enough, you must read the guidance and the AST and see if it is in fact covering you to meet the obligations of the act.

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    What with the tenant Fee ban and Zero Deposits tenants can very easily move around

    even if they are well looked after in the property.

    Most certainly another nail in the coffin I reckon .

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    I think as in Scotland they will get a nasty shock as increased general overheads lead to increased rents to cover the work that is still having to be done.

    Although presumably it will be a civil-criminal offience to identify the increased components of the rent, as it would then be a "fee" - which is banned.

    Effectively, as in Scotland, I would say that transparency and information in the marketplace for fees are being banned. That's a faceplant if ever I saw one.

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    I have found that a lot of tenants are still unaware of this but those that are are certainly waiting. My sister-in law is waiting for June as well but I don't think her Landlord has any idea.

    Most amateur landlords who don't use agents themselves aren't thinking about this either. They always get tenants as they don't charge fees but they don't realise how much choice their tenants will now have.

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    Give it a year or two though - and most landlords will have factored those fees in to rents - and of course any current tenant (eg your sister) needs to be aware of the level of market rents in her chosen location - esp if her present rent is lagging behind and maybe not increased for some time.

    Tenant cash flow remains an issue when moving as they need around 2 months rent upfront incl security deposit - and the DPS typically do not refund current deposit for a month after cessation of tenancy. Plus the physical removal costs of around £1500/£2000 for a move from a 3 bed house which was let unfurnished.

    Poorer tenants also may fail to meet referencing standard to avail landlord of RGI - esp those on benefits (some 1.5 million claim LHA per DWP).

    With some 5 million PRS units across UK and average tenancy duration over 4 yrs we can crudely estimate that some 1.25 million rentals become available each year across whole of UK - but population is constantly increasing hence ongoing demand.

    With the possible removal of S.21 some landlords having a void may choose the opportunity to sell up - we are told that 153,000 units have been lost to PRS in that way.



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