Over the last few years, the Government has introduced a number of new rules and regulations that directly impact on landlords and buy to let properties. In most cases, these new rules have made owning rental property less profitable and more complicated.
Landlords are now required to pay higher rates of stamp duty when they buy a new property and the amount of tax relief they can claim on mortgage payments is being reduced year on year.
Another new rule coming into effect this year is the Tenant Fees Bill. Due to be enforced from June 1st, the bill could have a dramatic impact on landlords’ finances and the way they manage their properties. Keep reading to find out more.
What is the Tenant Fees Bill?
Up till now, estate agents and landlords have generally charged tenants set fees when a tenancy agreement is drawn up, an inventory made or changes to a rental contract are requested. These fees can often add up, with many tenants paying hundreds of pounds in admin costs every time they move home.
In an effort to curb these costs, the Government has developed the Tenant Fees Bill. Under the new rules and regulations, landlords, and agents will no longer be allowed to charge tenants for inventories, rental agreements or any other admin costs. They’ll also only be able to charge a maximum of five weeks deposit. What’s more, landlords will have to prove that damage has been done to a property if they’re going to retain any of this deposit when the tenant finally moves out.
How will this impact on landlords
Although tenants will no longer be paying estate agent fees and admin costs, these expenses still need to be met. It’s expected that most agents will pass the costs onto landlords, with buy to let owners forced to pay for rental contracts and other admin essentials out of their own pockets.
Although some agents may also swallow some of the costs themselves, landlords should expect to see the amount they’re charged by agents to go up sharply. According to @RLA_News, “It is estimated that the cost to landlords will be £82.9m whilst the cost to letting agents is estimated to be at £157.1m.”
How else will the Tenant Fees Bill affect your rental business?
Once the bill comes into effect, you’ll no longer be able to charge tenants for things like credit checks, guarantor checks, inventories, cleaning services, referencing and general admin charges. In fact, the only payments landlords will be able to take from tenants are rent and deposits. If you do charge your tenants any fees that are banned by the new bill, you could find yourself in hot water. It could even result in you being unable to keep all, or part, of the deposit paid even if damage has been done to your property.
Learn more about staying on the right side of the law and managing your rental properties by taking a look around our site today.
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Written by: Cambridge Web Marketing