How will the Tenant Fee Ban affect Landlords?
The Tenant Fee Ban is the legislation that everyone is talking about for 2019, set to shake up the rental market in England and put an end to unregulated fees and charging of tenants.
Whilst many agents are uncertain of the implications of the Act, as independent letting specialists with over 25 years of experience we have been planning and preparing for the fee ban for the past few years and are promoting it as a time of great opportunity for Landlords.
Here are Parks’ top 5 predictions on how the Tenant Fees Ban could change the rental market and how Landlords might actually benefit from these changes in legislation:
1. Less Stock = Higher Rents.
Rightmove statistics show that the rental market stock levels have dropped 9% from this time last year and 19% within London alone. As a reaction to there being fewer properties on the market we are expecting to see a 3-4% increase on rents, meaning Landlords will see a greater return on their buy-to-let investments.
With this potential increase in rental revenue, we predict some existing Landlords may look to expand their portfolio. For advice on expanding your buy-to-let portfolio without the hassle, please speak to our Lettings Director Antony Rummins about our acquisition service.
2. More Valuable Tenants.
Hand in hand with less stock on the market comes a higher volume of tenants actively seeking property in the marketplace. This will enable Landlords greater choice in being able to secure the right tenant for their property and will work to reduce void periods.
Ensuring reliable tenants are happy is going to be more important than ever as there is now no fee as a deterrent for them to change properties. Dedicated property managers who form long standing relationships with Tenants are so important in ensuring reliable tenants settle in properties for long term lets avoiding vacant periods and new tenancy start up costs.
3. More Families.
Families are the biggest growing market of renters with 1 in 5 households now choosing to raise their families in a rental property. In general families tend to be more valuable tenants as they treat properties as their own and are more inclined to stay in a property for a long time. We predict that the frequency of family renters will increase further with the fee ban coming into effect and less families being able to afford to buy properties.
4. Introduction of Tenant Service Landlords at Risk.
Along with agents, Landlords who use an introduction of tenant service will need to adhere to Client Money Protection and all the new legislation coming into force on June 1st or will be at risk of sky high penalty fines and possible prosecution. There is a lot of value in seeking a reliable, progressive ARLA Propertymark regulated agent who are ahead of the curve and can ensure full legal compliance with this complete shake up of legislation.
5. Scrutinizing Agents.
Whilst at Parks we are not raising our Landlord commissions, many agents will look to Landlords to absorb the loss of income from Tenant fees. We predict that this will lead to Landlords scrutinizing the services they are getting and going back into the marketplace to see if they can get a better service for the same price. With this huge change in legislation it is so important for a Landlord to have full trust that their agent is the right one to ensure full legal compliance and maximisation of their property investment.
Overall we predict this could be a time of great opportunity for Landlords to thrive and expand their portfolios. At Parks we have been regularly attending conferences, digesting all the government advice on the fee ban and working to streamline our processes and services. For any information on our services or to consult an expert how the fee ban could affect you, please contact Antony Rummins or Graham Jasper on 01273 202089.