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Harringay, Haringey - So Good they Spelt it Twice!

Apparently the Chancellor's Autumn statement will include the outright banning of letting fees. Given what they are used for, to buy insurance to cover rental payments, I think that estate agents should consider themselves lucky there is not some PPI style claw back as there was with high street banks doing the same.

Tags for Forum Posts: letting, letting fees

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It's a brilliant move,

We just just need to ban mortgage product fee's and every other slight of hand add on.

Because the government charges the buyers stamp duty then mortgage companies feel that they can dip their hands in the buyer's purse too. Also, with interest rates being so low, they're struggling to make money out of the loans in the short term which affects their cashflow.

Hahaha, banks struggling to make money, that's the best one I've heard for a while!

It's a brilliant move.  Estate agents will instead increase the fees charged to landlords, who will increase rents to cover the additional costs so they're not out of pocket. 

I think that's fine as the cost of this insurance will then come out of the landlord's income. Making someone pay to insure their own payments to you is really, really illegal. So bad that the government forced the last bunch of people doing it to pay customers back the premiums (PPI). The more I think about it the more I think that landlords and estate agents will have to very carefully show that they're not using the tenants money to finance this insurance. I appreciate that it just pays for the credit check but, no credit check means no insurance so it's definitely part of the premium (e.g. what if the insurer paid for the reference check!?).

Paying your first month's rent in advance, your deposit (which is usually 6 weeks rent), the cost of moving/storage (£300?) and another £400 or so on top, right at the beginning of a new tenancy, every 12 months, is blimmin hard work. In the 90s that was all you needed for a deposit to buy the bloody thing. Oh and there are plenty of tales of people who paid the £400 and then were told that they failed the reference checks: "soz!", academics from Europe new to the country for a start.

But to really properly address your point, £400 spread over 12 months is £30 a month, this is something you can show your employer as your cost of living and not some background check you had to pay for on your naughty, profligate, zero hours, self.

"this is something you can show your employer as your cost of living" - to what ends?  What employer ever asks for this kind of information?  Bank or loan company maybe but what business is it of your employer what you spend your pay on?

The fee is to cover admin, reference checking, and whatever else the agent fancies.  I've never been asked to pay a fee that covers rental payment insurance.  According to the last agent I rented through, the fees were to cover production of the rental agreement, reference checks, ID checks, and the Inventory at check-in. 

The main cost is the reference check so that they can buy the rental payment insurance. If you can't see that this has been decided by the government to be illegal (compulsorily and opaquely charging people to insure themselves) then I give up. The other stuff is there to hide the NEW part of renting (since landlords were not allowed to just keep the deposits), which is this insurance. The same people selling the insurance are even selling the reference checks. They were doing inventories and "admin" before the tenancy deposit protection came in, what is different since? There never used to be these costs and when did it change that the tenant was supposed to bear the administration costs of a contract but have NO say in it?

You can definitely tell your employer that you can no longer afford to work for them given your rental costs. You can also seek housing support for your RENT but not your "tenancy fee".

The Government is doing this for the same reason they're changing the rules on Universal Credit and raising the NLW - to appeal to 'JAMs'. 

You can't prove that the admin fee is used to pay for insurance for the landlord - why would the agent be taking out insurance on behalf of the landlord?  The tenant pays for reference checks to prove that they are reliable and haven't spent a lifetime dodging rent payments, the landlord can use those checks to get rental payment insurance, but they don't have to get that insurance.  This is nothing like PPI, which wasn't illegal, income protection insurance is legal.  The issue with PPI was that financial institutions were mis-selling it, making it obligatory or selling a product that wouldn't pay out etc. 

You can definitely tell your employer that, but to what ends?  They'll just hire someone else instead. 

As a landlord I use Openrent which gives you the first week free and then charges a modest fee. No fee to tenant. They advertise on all the same sites as the pricey estate agents. Landords can do all the managing themselves or opt for cheap and cheerful credit checking agencies etc. My beef is with the governments change to income tax. Previously landlords could get a 10% of gross rent tax break but now have to account for every penny spent. Thus real rental income is reduced, so the government is responsible for rental increases to cover this.

They had decided that landlords were getting rich (based upon the expansion of the buy-to-let market and the fees that banks charged for buy-to-let mortgages. IT contractors had a 10% tax increase in the last budget too. Rather than limit rents (which is not very Tory) they decided to grab some of the "profits".

I don't quite understand this. I don't get I tax breaks on my income. Why was the profit from charging rent treated differently?

Landlords are treated differently because they are a business, not an employee. Employees pay National Insurance and PAYE. They used to get a 10% allowance on their rental income to offset against tax for expenses. Now they have to provide proof of expenses (invoices/receipts) just like everyone else.

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