There are testing times ahead for letting agents across the country with the anticipated ‘Tenant Fee’ ban coming in around June of this year. This new government measure will prevent agents charging prospective tenants a referencing or contract fee. Each agent will have to adapt to this financial blow in their own way and as part of this adjustment we fully expect all agents to increase their fees. The natural knock on effect will be for landlords to increase rental levels to the respective tenants. However, this adjustment, in many cases, will only soften the blow and agents are still expecting to take a substantial financial loss.
Why does this news affect me?
Well you will expect to see your management and/or finders fees being increased by your appointed agent and this is only reasonable as references and contracts still need to be taken and produced. As indicated many landlords will simply pass on any increased costs to the tenant(s). This is not however the warning we have for landlords. The warning is to check with your agent, if you have a managed service, the following: -
1. Is your agent a member of UKALA?
2. Do they have client money protection insurance in place?
If your agent has these measures in place and you can see that this is the case, then all should be well. However, if they do not and they get into financial difficulty your money is at risk.
If your agent is a member of UKALA or ARLA they will have separate client and office accounts, client money insurance and the required levels of professional indemnity. All these measures can give you some peace of mind.
It’s happened already in Swansea
There has already been a prominent letting agent in Mansel Street, Swansea that has hit financial problems with its clients being informed they are unable to pay rents on time and perhaps not at all. This apparent early break up of what appeared to be a stable agency is a warning that agents without the above financial securities in place can be a high-risk place for a landlord and his/her money.
This news we had first hand as many of the affected clients flocked to our doors to have their business transferred to us as they recognise our UKALA status and general performance standing in the letting market.
In summary, check out your current agent and ask them the above questions. If they do not have these securities, you must ask yourself why? Could they obtain them even if they tried? If you even suspect the answer is ‘No’ then I suggest you move your property now. If you delay and problems strike it can be too late. If you have any questions on this subject, please just email me at email@example.com and I will be pleased to help.
Article by Matthew Wiggall for Fresh Estate & Letting Agents
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