Tenant Admin Fees Guide for Tenants

Estate Agents fees need to be transparent

Letting Agents Need to Ensure Their Tenant Admin Fees are Transparent

Tenant Admin Fees are a Fair Way to Do Business

Housing Charity Shelter would like to see letting agents fees outlawed in England and Wales having already persuaded the Scottish Parliament to scrap tenants’ fees. We want to explain why this could be a bad thing for tenants.

The job of a letting agent is quite time-consuming and, as we know, time is money. It is expensive to rent property to tenants. There are many costs involved in setting up tenancies, and obviously the majority of these costs are borne by the landlord. However there are costs that link directly to a tenant including references, legal documents, and the time spent with tenants finding just the right property for them. All of these are legitimate reasons that the tenant should bear some of the costs of renting property, and are often charged as tenant admin fees, but perhaps the most relevant one is to ensure that the tenant is fully committed to the process.

Where a tenant does not pay any fees but decides to take a rental property the landlord often suspends marketing the property while the agent takes out references. (Even where marketing continues the agent is accruing costs by keeping that property on the market in terms of advertising and conducting viewings). There is nothing holding that tenant to the property and so in the meantime he finds another property that suits him just a bit better and so off he goes leaving the first landlord and agent high and dry.

Rising Costs Mean Rising Rents

Who should bear the costs of referencing the tenant, and any other legal and administrative work that has been undertaken by the agent? If it is the landlord then he will put his rent up, if it is the agent he will put his fees up, then landlord will then put the rent up.

With no fees charged to them the tenant could switch properties several times before committing himself, with no financial penalty at all. Most landlords will have experienced this problem even where the tenant has had to lose a couple of hundred pounds to move on to another property, so imagine how much worse this will get if there is no financial commitment on his part.

There is a myth that all landlords are rich, that all agents are rolling in money, and that all tenants are honourable people who are taken advantage of by sharks.

Most people are reasonably honest and respectable, and I include landlords, agents and tenants in this generalisation, but of course there is a measure of self-interest driving all of us, so if there is no concrete commitment in place there will be more timewasters costing the industry money, and so overall prices will rise, and this will mean that rents will rise.

In our opinion the only way to deal fairly with this situation is for agents to charge a reasonable fee for the work they do; to be open and transparent with their fees; and for everyone to keep to their side of the bargain.

Guide for tenants

  • Ask your Letting Agent what fees they charge before you view a property.
  • When you have found a property, ask for a written break-down of how much you will pay for the specific property you want to rent.
  • Check if the Agents charge for renewals, check out fees, and any other miscellaneous fees.
  • Make it clear to the Letting Agent that you will not pay for any charges that they do not detail in this initial exchange.
  • Ask for confirmation from the Agent, in writing, of all monies that you will be expected to pay including the rent up front and deposit so you are absolutely clear in your own mind what you will need to pay for.
  • Don’t commit to renting a property unless you intend to move into it.

It will be interesting to see how the Scottish system works out over a period of time, and whether in fact tenants are any better off due to this change in legislation north of the border.

If you want to find out more about becoming a tenant, and avoiding tenancy pitfalls check out the Top 10 things tenants should know, when renting a property on DIY Doctor’s project pages.

You can read more about Protecting yourself from Rogue Agents if you are thinking of renting a property.

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Does Your Estate Agent Offer Tenant Screening Services?

Visas and Passports

Private Landlords, Letting Agents and Estate Agents Should Check Passports and Visas to Stay Within New UK Immigration Control Legislation

UK Private Landlords to be Responsible for Border Controls

New legislation announced in the Queens speech last month outlined an immigration control measure which obliges Landlords to ensure that their tenants are legally entitled to be in the country.

Most landlords will be carefully checking their tenant already. Including ensuring that their tenant is in employment, that they are who they say they are, and that they have good references from previous landlords, to protect their own interests in terms of getting the best tenant for their property.

However what is not clear is how much responsibility the Government is going to expect the average landlord to take, when checking the legal status of tenants and their rights to be in the country.

As a responsible Letting and Estate Agent Riley Marshall is already checking that they only deal with legitimate tenants. We have used our insider knowledge to put together these guidelines to help you stay within the law when it enters the statute books. To help you we examine what is best practice when finding and vetting tenants for your property.

If you are not using an estate agent how are you getting references for your tenant?

An agent will often use a specialist reference agency to provide a rounded profile of the tenants background and credit history which should also include checking their status in terms of their right to be in the country and to work legitimately. You can find out more about how a good estate agent will help you with references and other rental processes of finding and vetting tenants who will be right for your property, in our series ‘What your Agent Does for You’.

So what documents should landlords be checking?

Ask to see a passport

  • Check the photo and the dates appear to be legitimately linked to the person you have in front of you,
  • Take a copy and file it safely.

Check for a work Visa

  • If the person is moving here from abroad they may need a work Visa – Using their passport to identify their nationality check on the UK Border Agency Website to see what documentation they need.
  • Most citizens of EU Countries do not need a Visa or Permit to work in the UK but Bulgarian and Romanian citizens do need authorisation at the moment – this is likely to change though so it is best to check the website.
  • People coming into Britain from the European Economic Area and Switzerland do not need permits or Visas to live or work here (except for Bulgaria and Romania as mentioned above). This area covers most EU countries but includes some that are not in the EU and excludes some who are – Iceland, Norway, Finland, Sweden, Ireland, United Kingdom, Denmark, Germany, Netherlands, Belgium, Luxembourg, Austria, Portugal, Spain, France, Italy, Greece, Liechtenstein, Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, Slovakia, Bulgaria, and Romania.

Check the status of all tenants

  • If one tenant is coming over to work and their family is joining them ask for their passports too.
  • Check with the Border Agency website what rules will apply to them when they are in the country.

Ask to see proof of previous addresses in the UK

  • This is not a fail-safe measure of being legal in the country but it helps build up a picture of whether they are legitimate or not.
  • A recent Council Tax or Utility Bill will prove that this tenant has been a resident in the country prior to moving into your property.

Ask for previous Landlords References

If there is any doubt about how legitimate a previous landlords reference is then you can always ask for earlier landlords references. This can be useful because they have no axe to grind in terms of being totally transparent about their dealings with a tenant.

However if your tenant has just moved here from abroad this may prove difficult in terms of being able to contact the landlord and verify who they are.

One Final Note of Caution

Employers are already expected to check these conditions before employing overseas workers, but just as they are not allowed to discriminate between workers because of where they come from, there is little doubt there will be similar expectations of Landlords when this legislation becomes concrete.
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Court Ruling is Good News for landlords and tenants

Landlords of rental properties to let can feel secure in taking rent in advance

Court ruling allows landlords to feel secure about letting to overseas tenants

The latest ruling in the case of Johnson vs Old clarifies the distinction between rent paid in advance and security Deposits held in case of loss or damage to the property.

You will probably have been aware of the ongoing case between Johnson and Old, which questioned whether money taken in advance for rent was in fact a Deposit in the eyes of the law – and as such should be protected by the landlord in an approved scheme.

For those not in the know, in this case the tenant could not prove a reliable credit history before letting the property. So she was asked to pay the first 6 months in advance. After renewing a couple of times (paying six months rent in advance each time)  the tenancy finally became a periodic tenancy, and the tenant simply paid each month in advance. Later the tenant fell into arrears and when the landlord served a Section 21 notice the tenant argued that it was invalid, because the initial 6 months rent paid in advance was a ‘deposit‘, and so it should have been protected. In the initial case the judge agreed with the tenant and ruled that it was a deposit. As it had not been protected the landlord would then have to return the whole 6 months rent and may have been liable for an amount up to three times that initial amount.

This is good news for everyone involved in letting, the landlord, agent and the tenant all benefit from the decision of the court of appeal.

Paying six months rent in advance where tenants who do not fit into strict financial guidelines is common practice in the industry. It allows them to secure property if there are credit issues; where tenants are coming in from abroad; or have just started work etc. to be able to rent a property when they don’t tick all the boxes in terms of financial references. This money is never meant as a tenant’s deposit it is simply to ensure rent is paid during the fixed term of the contract, where it is harder for a landlord to accelerate a Notice for Possession through the courts if it is necessary because of non-payment of rent.

If landlords felt that this was not a secure and simple option for them they would be unlikely to rent property to tenants in this position, which would be bad for the rental sector, as one of the reasons people are renting is because they have financial irregularities or they are in a job which moves them around the globe regularly. This would reduce the market for Landlords and their agents to be able to let to, and it would reduce the stock of properties available to tenants.

We can now all get back to the business of renting property

We recognise the need to secure tenants deposits at the beginning of the tenancy, and to disburse them appropriately and transparently at the end of the tenancy, and we always ensure this is done at Riley Marshall. We welcome this sensible ruling on a cynical suit, brought by a tenant who could not meet her financial commitments, and so turned on her landlord to shift the blame.

If you want to find out more about deposits and the procedures for protecting them please go to our blog ‘How secure is your deposit?’. We are always happy to answer questions about the letting process, renting property, deposits or references. We rent and sell property around South West London. So if you are a landlord or a prospective tenant please call us on 020 7394 1160.

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Lettings Market remains self-governing – so tenants should know how to protect themselves from rogue agents

Wordle: LETTING AGENT

The government have decided not to regulate the Letting market despite concerns over unscrupulous landlords and agents

A government paper released yesterday confirms the current government will not impose regulation on the Lettings industry. There is currently no legal requirement for letting agents to belong to a trade association, although many letting and managing agents do submit to voluntary regulation.

Estate agents who deal with property sales do have to comply with basic levels of regulation, including registration with the Office of Fair Trading and having access to an Ombudsman scheme for dissatisfied customers. It was thought that the Government would impose similar regulations on the letting market this year.

In response to this news, there was a report on unfair letting agents fees this morning, on the BBC Radio 4 Today Program. Ian Potter, from ARLA (the Association of Residential Letting Agencies). ARLA was asked to comment on the decision. They have been instrumental in lobbying successive governments for more regulation of letting agents.

“We want regulation of the letting agents market. It is the cowboys who get the bad reputation for the sector. There are many agents around the country who are doing things properly and who do not charge these extortionate fees.” Ian Potter – ARLA

The previous Government had proposed full and mandatory regulation of private sector letting and managing agents. However the current Government claims it is mindful of not imposing too much ‘red tape’ on the industry. This seems plausible while so many have to rent, because it is increasingly difficult for first-time buyers to get on the property ladder.

In August last year the Scottish Government decided to ban agents from charging any fees to tenants. However the problem is that fees are related to genuine costs incurred by the agents, which then have to be passed to the landlord. The effect has been a national increase in rents of some 6% since the law was introduced. To our mind it seems better to be transparent and upfront about costs rather than to load everything onto rents.

What can you do as a tenant?

If the market is going to be self-regulating then it relies on tenants being well-informed about industry practices.So as a tenant, or prospective tenant, you need to know what to look for when you are shopping around.

Avoiding unfair fees

  1. Do not agree to pay a fee for registering or to be taken on a viewing
  2. Ask for a full break-down of fees in writing before agreeing a tenancy
  3. Ask what is included in the fees and if there are any ‘extra’ fees that could be added later, typical charges include:
  • Referencing
  • Credit check
  • Tenancy Agreement
  • Inventory
  • Check in fees
  • Renewal fees if you stay
  • Check out fees if you leave

Points to Remember

  1. Not all agents will charge these fees, or if they do they may include elements in a one off fee rather than broken down individually. What you are trying to ascertain is the total charges so you can compare like-with-like.
  2. It is illegal for an agent to charge you fees for registering with them, or viewing properties.
  3. The amount of money required for a deposit varies, and must be held in trust throughout the tenancy in a government approved scheme. Ask about the amount payable, when and how it needs to be paid, and how it will be returned.
  4. You may be asked to pay a ‘holding deposit’ while the agent or landlord takes up your references. This is usually deducted from the first month rent when you move into the property, but may be non-refundable if you do not to go ahead with the tenancy. You should check exactly what the terms are before you pay.
  5. It is worth bearing in mind that the agent is acting on behalf of the landlord, not the tenants. The agent has a duty of care to their tenants in the same way as the landlord does if he is not using an agent, but the agent should always be acting in the landlord’s interests, and on their instructions.
  6. Even if you really like the property you should not proceed with a let if you are sure the landlord or agent are not reliable.

Here at Riley Marshall we always treat our tenants with respect, taking their wishes into consideration where possible, and we communicate with them and our landlord clients in a timely and courteous manner. We furnish tenants with the details of everything they will need to provide to comply with regulation, with the landlord wishes and with our professional practices, including any fees that they will incur. This has to be the fairest way to do business. If the tenant then wants to shop around they are free to do so.

We believe in acting in an open and honest way for good business reasons as well as ethical ones. It makes good financial sense to keep everyone advised of what the charges are to avoid misunderstanding or losing a deal later in the relationship.

We are mindful (like most agents) keep our fees within a competitive range in the knowledge that landlords and tenants are looking for value for money, not necessarily just the cheapest deal, but the best deal for them. As we all know you get what you pay for and if your agent slashes his fees well below the norm within the industry then there is a reason for that and it is likely to be inexperience over true cost, or a willingness to cut corners in a way that will be detrimental to Tenants and Landlords.

If you are looking for property to rent be assured that we are members of The Property Ombudsman (TPO) for your protection . Please do visit our main Riley Marshall website to search for property and you can contact us if you have any questions.

New licencing requirements for landlords in Newham

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Licencing of rental properties Newham could start a trend in the rental sector

Newham Landlords who rent out properties privately are the first in the country to face mandatory licensing which came into effect on the 1 January 2013.

Following a 10-week consultation on proposals to introduce a licensing scheme for all private landlords in the East London Borough, the scheme was approved by Councillors  making it a requirement for private landlords in Newham to show that they are “fit and proper persons”.

Landlords are now required to fill in an application form which allows the council to check the credit background of landlords as well as requiring them to provide proof of safety checks. Follow this link for more information from Newham Council, including a link to the form for licencing.

Newham Council ran a pilot scheme for 18 months prior to the Olympics charging £500 for a licence, or £300 for early applications.
The aim of the council is to improve the quality of private rented housing in the borough and eradicate so called ‘rogue landlords’ who do not take their obligations seriously. The discounted fee has been extended from the 1st January to the 31st January 2013 but it is unlikely to be further extended.

Newham mayor, Sir Robin Wales (above), said: “We want to ensure that private sector rented properties are well managed and meet a good standard.” He added “We also want to deal with the crime and anti-social behaviour that is sometimes associated with bad private sector rented housing,”

A national regulatory scheme to protect tenants was proposed by the previous Labour government after the Rugg Review, a reported on the private rented sector. The then government proposed plans to establish a national register of landlords, make written tenancy agreements compulsory and regulate letting and managing agents.

However, Coalition government housing minister Grant Shapps rejected the regulations as he believes the majority of England’s three million private tenants are happy with the conditions of their housing.

In 2010 he announced to landlord: “I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.” Going on to promise “the government has no plans to create any burdensome red tape and bureaucracy.”

We would advise landlords who run their rental property as a business with the rights and responsibilities that incurs are unlikely to have any problems getting licenced by Newham or any other borough. Riley Marshall have noticed a marked increase in demand for new property in the rental sector over the last twelve months which is obviously good news for property developers, and investors. New properties are not likely to have any problems with licencing if it does come into effect more widely, but as long as your property is well maintained there is no reason you should have a problem even if it is an older building.

The Riley Marshall Blog intends to keep you up to date with property matters – why not check out our series on what you agent does for you click here to go to part 1 – Marketing.

New Council Tax Ruling is a ‘tax on Landlords’

Council tax relief may end on rental property depending on the local council

How will the new Council Tax regulations affect the Rental Market?

Rented property as Second Home 
If you own property that is rented you officially have a second home. If this property is furnished and empty for a period between tenancies, Local Councils have been obliged to offer discounts of between 10-50% on Council Tax, although in practice most councils only allowed a 10% reduction in fees.

This situation was already biased against the rental sector when you consider that a single occupier of a property can apply for a 25% reduction, but a Landlord could only get 10% relief.

Previous Legislation on Rented property and Council Tax
Previously if a rental property was empty and unfurnished there was no Council Tax due for six months, and after that period it could also qualify for up to 50% discount, as per the furnished property detailed above.

Second homes have long been controversial because owner non-occupiers have been accused of tying-up available living space while effectively draining the economy, by not being fully involved in the local community. However we argue that Landlords do not fall into this category. In fact they may be the only ones providing affordable housing in some areas of the country.

New Council Tax rates
New Government regulations announced last week, give responsibility to Local Councils for setting Council Tax discounts on second homes. As each Council comes under growing financial pressure it becomes increasingly likely that Councils will scrap any relief on Council Tax on second homes, and rental property.

While property undergoing major repair work or structural changes remains exempt from Council Tax bills for up to 12 months, each Local Council will chose what constitutes ‘major work’. It is unlikely to include upgrading heating systems, replacing windows, or redecorating – all of which responsible landlords will do periodically to protect their investment and to keep up the standard of housing.

No incentive for landlords to refurbish property
In a week where a landlord in Plymouth is in danger of getting an ASBO because of the condition of his properties, does this send out the right message to responsible landlords?

This new legislation does not take into consideration the financial pressures on private landlords who are often working on tight margins or indeed could be subsidising their investment now to gain long term benefits as ‘pension plans’ for the future. In effect they are being penalised for being fiscally responsible.

The Council housing sector is not able to place all the people who need to rent property, so if Councils put more pressure on private landlords they may decide to sell up and put their money elsewhere. After all being a landlord is not ‘easy money’.

Riley Marshall are Sales and Rental sector agents. Our blogs are intended to inform, and we welcome debate, please feel free to comment on this page or visit our Facebook page.

Gas Safety in rental property – What your agent does for you Part 6

Landlords: If you have gas appliances in your rental property they must be checked every year, and an annual Gas Safety Certificate issued by a Gas Safe engineer. We explore why you should use a letting/management agent?

Gas appliances must be checked by a Gas Safe Engineer

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How does your letting agent help?
Any gas installation and appliances in rented property should be safe. In the UK it is a legal requirement for landlords to have gas appliances checked by a Gas Safe engineer annually. Your Letting or Estate agent can arrange these inspections on your behalf. This can benefit you by finding the most competitive rates. They will liaise with tenants to get access to the property for workmen. Once the work is done the bills can typically be paid from the rent collected. Perhaps the most important role your managing agent plays is the keeping records of due dates and certification.

Letting and managing agents build up good relations with reputable local tradesmen and this often leads to these engineers giving priority to their agents when there is an emergency or urgent job to deal with. It is in their interests to make sure a bigger client like a letting/estate agent is happy in circumstances where they might keep an individual waiting.

Tenants are often not as patient as homeowners when it comes to repairs so this can be beneficial to landlords who value hanging onto their good tenants.

CORGI replaced by Gas Safe
The old approved registration for Gas installers was called CORGI, and many people still refer to it even though it been replaced by the Gas Safe Register. Any gas fitter in the UK, Guernsey, and Isle of Man must be on the register to work legally on gas installations and gas appliances. Any reputable agent will only allow any gas related work at your rental property to be carried out by a Gas Safe engineer. If your agent does not comply with this basic standard then they put you and themelves at risk of prosecution, in which case you should get yourself a new managing agent.

The engineer will test that the appliance is working safely and write a report on their findings. This will include any mandatory work, any recommended work, and an any notes for the future. If you are arranging an engineer yourself it is worth checking that they are Gas Safe registered (and not just claiming to be) you can check their credentials on the Gas Safe Register site here.

When to get your Gas Safety Certificate
Your letting agent should arrange your Gas Safety Certificate to be issued before you let your property. Do not leave it until the tenants move in. We understand this means you incur costs before the property is let but moving tenants into a potentially unsafe environment has legal implications for you as landlord and for your letting/management agent. You may have a valid Landlords Gas Safety Certificate already in place from a previous tenancy and this is perfectly acceptable. Your letting agent should have a copy for their own records. You do not need to have a gas safety inspection carried out at the beginning or end of each tenancy – just on an annual basis.

Renewing your Gas Safety Certificate when appliances are serviced saves you money
If you are not sure when to have appliances serviced and maintained, it is worth noting that although anniversaries of renewal are likely to be dictated by the first tenancy, it is actually a good idea to have gas appliances tested, serviced, and maintained in the spring and summer. That way if there are problems to be addressed the tenant will be less inconvenienced. Finding a reliable GasSafe engineer, with time to make repairs, will be much easier in the summer too. There is no problem with having two Landlords Gas Safety Certificates issued within a year if you decide to make your dates coincide, just don’t wait for longer than 12 months t have your safety certificate issued.

Remedial works – your agents role
If the engineer finds a gas appliance or installation is not safe he is obliged to disconnect it and place a warning sticker on it (like the one below), so the tenant cannot use it, until it is repaired. This can upset tenants and so it may be helpful for you to have a letting agent as a middleman to deal with their concerns.

One of the best ways to prevent this inconvenience to your tenant is to have the appliance serviced when you have it tested. This is most appropriate for gas boilers and fires. Many landlords assume that their appliance will be serviced as part of the fee, but actually it is more like a car MOT – the engineer is simply testing performance and not carrying out any maintenance work. Your managing agent can arrange to have the appliance serviced at the same time as the annual gas safety check, and it is often cheaper to have this done together, rather than on two separate visits.

Remedial works are tax deductible and any good managing agent will receive the bill on your behalf, deduct the amount from rent paid by the tenant and pay the contractor for you. Your letting agent will keep records and issue statements which you can use to fill in tax returns.

About Riley Marshall Limited
Riley Marshall are Estate agents who specialist in letting and management of properties in South East London. If you would like us to come out to discuss managing your property around Greenwich, Shad Thames, Bermondsey, Rotherhithe, Deptford, Lewisham or New Cross areas then please do contact us for a free valuation. For other blogs on matters relating to property please visit our main blog page.