There have been some big changes in the letting industry this year. It is important that landlords realise how these changes may affect them.
- The tenant fee ban – this means that letting agents and landlords can no longer charge an admin fee to a tenant when they apply to rent a property. Before now, landlords have, in effect had their lettings agent fees subsidized by the tenants. Now the full cost of letting a property will be met by the landlord themselves. Its important that landlords consider this when budgeting for all their likely costs.
- Deposit rules – Until now, landlords have been able to pretty much set their own deposit levels. We have seen those levels range from less than ones months rent as a deposit all the way up to 6 months rent in some extreme cases. higher deposits have traditionally been used as a way for a landlord to protect themselves against a tenant causing excessive damage or not paying their rent. In turn this has meant that tenants with adverse credit or perhaps pets have been able to offer a landlord that security and improve their chances of getting the property they want.
The new rules say that the maximum deposit that can be taken from now is only 5 weeks rent. This is designed to reduce the up front costs for tenants but it may ultimately just make it harder for some tenants to secure a property.
Expect to see tenants with pets, self-employed tenants or tenant with poor credit ratings to be hardest hit by this.
End of section 21 (no reason evictions) – It is likely at some point in the next 1-2 years we will see the end of section 21. This is the type of notice that a landlord can service currently to end a tenancy agreement without having to give a specific reason and currently is the most widely used method of evicting a tenant as if the paperwork is done correctly is a guaranteed eviction.
It is very important that landlords keep abreast of all the changes in regulation as otherwise they risk a fine for non compliance. The fine for changes a non compliant fee can be up to £30,000!
If you need any help understanding the new rules, please get in touch with James Cornish, Henry Rose Lettings & Sales