The Tenant Fee Bill - 5 things you haven’t thought about!
Thursday 09 May 2019
As I am sure you are all now aware the ‘Tenant Fee’ bill is now an act of parliament and comes into effect next month.
I'm sure by now that you have read enough about this topic, but it struck me that - as with most things reported that affect landlords - all the focus seems to be on the negative aspects of the new rules.
With that in mind, I wanted to take a different stance and explore how landlords can make the most of this new bill, and highlight just a few positive changes that you could make to your property business.
Here are five suggestions that you can implement to make the most of the Tenant Fee bill:
Start taking holding deposits of no more than one weeks rent.
Many landlords don’t do this but it’s now imperative that you do. Why? Well two reasons really, firstly if you don’t then tenants may flippantly start applying for your properties without any serious intention to proceed. Secondly, if you take a security deposit and the tenancy does NOT proceed, then there are a number of scenarios in which the deposit can then be retained by the landlord.
Update your tenancy agreements.
Whilst most fees have been banned, certain tenancy default fees have been retained. You can still raise charges on your tenant for replacing keys or security devices, and for the cost of chasing rent (providing the rent is more than 14 days overdue). Make sure you have clear terms for this in your tenancy agreements and if you are charging interest then it must be capped at 3% above the base rate.
Increase your security deposit.
Security Deposits have now been capped at 5 weeks rent, this provides the opportunity for some landlords to increase their typical security deposit amount. Don’t forget any holding deposit taken should go towards the security deposit.
Check out Reposit and other solutions.
The tenant fee ban has pushed the industry to look for new solutions and landlords can now offer their tenants the option of a traditional deposit or an insurance based solution - equivalent to the cost of just one weeks’ rent for the tenant. Check out Reposit or flatfair for just two examples. These schemes provide landlords with less cumbersome alternatives to the traditional deposit, more cover, no referencing costs, no deposit protection fees and no need to produce paperwork! Well worth a look!
Check in with your council.
Don’t forget that even though you can no longer charge a potential tenant for referencing, that doesn’t mean you can’t still carry out the checks. There are a number of low cost solutions now being offered and if you make enquiries with your local authority, then you may find that they offer such services as tenant passport schemes or their own version of a reference.
Just a few ideas there, I hope you found it useful. Let me know via @simplelandlordsinsurance if you have any questions.
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