Letting agents will soon have to check all their existing tenancy agreements to ensure they do not refer to fees that will soon be illegal when the ban goes live on June 1st this year, a leading national estate agency has warned.
Strutt & Parker has made the claim within its advice to landlords ahead of the ban, which highlights the enormous contract review task that many agents will soon face but that landlords will have to pay for, presumably.
The company is also keen to remind landlords that they may face extra costs after the ban.
“One of the most significant changes is prohibiting the charging of payments for reference checking and inventories to tenants,” the advice says. “In the future, agents or landlords will have to pay for these costs.”
The company also suggests that landlords may want to pass on these higher costs as increased rents, which it points out “is possible as the Act does not contain any controls on rents”.
“In the consultation responses [to the legislation] tenants said that they preferred an increase in rent rather than having to pay substantial upfront costs,” the company says.
Kate Eales, National Head of Lettings at Strutt & Parker, said: “As a business we are not heavily reliant on fees from tenants as a source of income so the Act will not change our business model significantly; however, we are in the process of looking at our fees and charges and ensuring they are fair to landlords.
“One of the most significant changes is prohibiting the charging of payments for reference checking and inventories to tenants. In the future, agents or landlords will have to pay for these costs, and there may be some digital solutions which do these checks to a high standard and appropriate cost.
“Once fees are banned, more tenants may move home as the costs of doing so are lower. Landlords can pre-empt this to avoid losing good tenants by checking that they are happy with their homes and trying to address any concerns which the tenants may have.”