The Tenant Fee Act – Why this is actually Positive for Landlords
Picture this scene….it’s 2029, ten years have passed, but three things are surely certain; the wait for a second English World Cup since ‘66 continues, Brexit is still up in the air and becoming a landlord remains a profitable business. While YouRent hopes England bring home the football trophy and Brexit turns out to be a prosperous move for this little island, we know that owning and renting a property will always be a beneficial investment.
Property investment can be a lucrative and steady income when done right, mainly because there’s such a large demand on a yearly basis for renting a home. Whether you are a student, moving from abroad, a family, a retiring couple or a working professional, so many feel the need to rent due to not having enough income to afford their own property.
What has changed the industry and should alter the market for landlords forever is a certain date in the calendar. On June the 1st 2019, the government acted on years of unnecessary fees for tenants, introducing the Tenant Fee Actto create a fair playing field, preventing charges to tenants looking to leave a property and making it easier for those looking to let, whether short or long-term, by reducing costs. Now it is only possible for a landlord to charge forrent and a maximum five weeks deposit, as well as a few extra charges, which can be viewed in the document below on the official government website.
It might be a deterrent for a landlord (with estimates showing over 700 million a year come directly from tenant fees – 20% of the industries turnover), but think about it; now people looking to rent will know they will have greater funds to rent a property. The shackles have been removed from tenants who usually need to find extra cash to pay for the likes of inventory before leaving an apartment, a minor scratch on the wall or a dirty carpet. With more flexibility, tenants will feel safe and secure in the knowledge they have fewer fees to pay when signing the contract or moving elsewhere.
While it may appear like a financial inconvenience for landlords, who will have to foot the bill for a larger chunk of property maintenance, this should be expected as an investor anyway. You only get back what you put into your assets, and the financial rewards at the end should be the end game. Yes you may have to cover the price of fees you originally and unfairly charged (through estate agents or yourselves), but think of the wider selection of tenants you can choose from in the future.
So frustrated by Estate Agents who unfairly demanded hundreds of pounds in admin fees, tenants in the past would avoid renting purely because of this. Now, a happy tenant means repeat business and a greater chance of a consistent stream of income, making mortgage payments easier to manage from a large pool of prospective tenants. While it might be tricky to start with – because so much profit was made from excessive tenant fees – eventually the market should even itself out, with the likes of Scotland already passing a law similar to the Tenant Fees Act, demonstrating nothing major has changed in the industry.
Services like YouRent, which make it easier to advertise properties for a cheaper price – instead of directly through an Estate Agent – means you can still save money and make up the difference you will lose from the Tenant Fee Act. Now you can display your properties on multiple award-winning platforms, listing to thousands of tenants for a relatively low price, making sure you balance the books and turn a tidy profit still.