Also known as the Tenant Fees Bill which will come into force on 1st June, and means:
1. That security deposits can be no more than 5 weeks rent for annual rents up to £50,000.
2. Tenants can only be charged rent, security deposit and a holding deposit to secure a property, plus any damages.
3. Landlords must meet the full cost of managing any aspect of the tenancy from rent, rather than extra fees chargeable to tenants.
The baseline is that all fees historically paid tenants, including those at the changeover of tenants in a property, will no longer be chargeable to the tenant. Unfortunately, the work covered by these charges will still need to be carried out, so those costs will need to be met by the landlord. So what does this mean to you?
The good news is tenancies are getting longer, the current average is nearly 2 years, and with rent inflation and fees being tax deductible, we calculate most landlords will keep the same return in future. For your information, tenant fees were banned in Scotland in 2012 with the net result being a rise in rental prices, which contributed to the additional costs being incurred by landlords.
Since 2017 we have been looking at the costs and works associated with tenant changeover to ensure that we are as efficient as possible and establish how to handle this change. As a result, we have identified various ways for landlords to deal with this new legislation based on their needs and portfolio.
If you have any immediate concerns, we will be very happy to talk to you individually so that you can see any potential impact on your portfolio. In any event, we will be speaking to you when you next need to remarket your property, so we can go through everything in detail.
If you would like to talk now please give me a call on 01480 494939 so that we can book a time to talk through things.
In addition, we are holding a seminar on 28th February at the Marriott in Huntingdon to cover this and other aspects of recent lettings legislation. To book a space just register here.