New Tenant Fees ban laws - New problems for landlords!

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    New Tenant Fees ban laws - New problems for landlords!

    Hi all.

    Something has come up and I am a tad worried about it, as I am not sure that I have correctly complied with the new laws.

    Prior to the new legislation, I always asked the tenant to pay the small fee (only £20) for their reference checks, making it clear that I wouldn't entertain renting to them without them being fully reference checked (i.e. their choice). I would of course sell this to them by rightly saying that it not only protected me but the tenant too, since its an HMO and its a way of trying to ensure that all the tenants are more likely not to be a problem to each other. This seemed to work well and I never really had any complaints, as most reasonable people understood that it was them that needed to be checked out.

    I decided to have a break with no tenants for a while as I was doing work upgrading the property so my last tenant left a couple of months before the new law came into force. I read up about the law as much as I could at the time it came in, and I thought that it was reasonably straight forward, that in future I would not be able to ask for the £20 upfront to reference check them. No problem I thought I will just ask them to get the references explaining that I was no longer able to do this on their behalf. Well that is what I thought!

    I have had a situation recently, whereby someone paid a deposit and despite many requests for them to get references done and sent to me, they simply ignored me. After a month I have just been asked for the deposit back, despite it being partly for reserving a particular room that they wanted, and since having to tell other possible tenants that it had been reserved. I have since read up a little more on this because I wanted to know if I was able to make deductions for basically being messed around and having potentially losing out on other tenants who also wanted that particular room. It turns out, apart from the maximum 5 weeks deposit (mine was much less than that) the maximum holding deposit is now ONLY 1 weeks rent, in this case just £75. The deposit paid was £200, which I feel is fairly low and I only ask for it to give myself minimum protection, more of a good will gesture by the tenant to show willing and that they are serious about taking up a tenancy. Had this person come forward with satisfactory references I would have simply made it a normal deposit and as I am a resident landlord banked it, as you don't need to do the government deposit scheme in such circumstances. My concern is that I asked this person (who I now believe to have something to hide hence no references supplied) to apply to my normal referencing company for the references, believing that as I am not taking any money from them that is was fine. However, I have now read a guide (produced since the law came into effect) on their website which states 'This means you will no longer be allowed to ask tenants to cover the cost of their own referencing. You also won’t be able to charge check-in, inventory or admin fees'. Obviously this was news to me and I have asked them to obtain references and referred them to the website.

    It’s a real mess and another kick in the teeth for landlords. What am I supposed to say to them, I want references but cannot in any way tell you how to obtain them, but here is the list? It's ridiculous. Like any landlord I don't see why I should be lumbered with paying out for reference checks to make sure they are a good tenant, if you had 4 people going for one room are you supposed to shell out £80? I only ever ask for a reference after meeting them face to face and getting a good gut feeling about them (albeit I obviously got it wrong with this last one!).

    So, has anyone else come across this problem and what are you all doing? Personally there is no way I would ever let anyone into my property without being fully reference checked as I made this mistake many years ago, similar to this latest one, she paid a deposit and avoided being checked out and the only money I received was the deposit, it took me 6 months to get her out, thankfully the house wasn't too bad and I never let it again, I sold it due to the bad experience. Obviously I learned a hard lesson, but I am now concerned about how to actually ask for a reference! I cannot even say look on the internet because there might be an inference that you are pushing them towards referencing companies. I am really not sure what to do for the next person who comes to view and starts asking me questions, other than to send them an email and say this is what I need, up to you how you go about getting it! These stupid politicians who decide on these laws have no idea the problems that they cause!

    Anyway, I hope I have helped make Landlords aware of this problem and look forward to your experiences and suggestions.

    All the best...Tony

    #2
    You can't charge tenants for your referencing and you (probably/almost certainly) can't make them do them themselves either.
    Tenant referencing is a cost to your business (allowable against income for tax purposes).

    You're not only limited to 1 weeks rent as a holding deposit but have to return it if you go ahead or fail to go ahead after 15 days.
    You can agree a different number of days that 15, but the tenant has to agree to that.

    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      What you say you were doing sounds fair enough.
      But others were abusing the system and making profits by charging potential tenants more than their referencing, and other, costs.
      Blame them for the changes in the law.

      That's why the laws on tenent fees were brought in, to stop greedy and unscruplous LL's/agents who were making a profit out of referencing, and other, fees.
      (Of course it won't, the definition of a criminal is that they don't obey the law).

      I don't see why I should be lumbered with paying out for reference checks
      Basically because it's something that you want, for good reasons yes, - but it's not something that is required by law.
      I want references
      Fair enough get references, but get them yourself. (I'm sure you'll get correct ones, a potential tenant might not).
      Pay for them and then write the cost off against tax, just as you would with any other business expense.

      Had this person come forward with satisfactory references I would have simply made it a normal deposit
      So you have also applied an extra deposit (fee, penalty?) because the tenant hadn't done something that he didn't have to do anyway.

      On a personal comment; I always find it interesting that those shouting 'the law is wrong' have usually broken it in some way, maybe inadvertantly but still broken it.

      Comment


        #4
        I don't have a problem with the legislation at all. I recently had to screen about twenty tenants in a two week period for a new tenancy. Of those, about five made it past the phone screening to the point where we thought it worth our while them viewing the property. One bailed on us and of the four who viewed the property, there was only one who we did not want to take refs up with because we had already decided as they walked out the door that we didn't want to let to them.

        of the remaining three, we simply went on a priority basis and carried out credit checks on the best applicant. It cost £8.50 via the NLA website (big deal) and she passed. I contacted a former landlord and her employer myself for refs and had responses back (for free!) within 24 hours. We offered her the tenancy and she dithered and then turned it down. We then moved to the second applicant and repeated the process and she passed too and took the tenancy.

        So, we spent a whopping total of £17 because we firstly had a strong screening process, did refs ourselves and only paid for a credit check when it was the last item needed to offer the applicant the tenancy.

        Comment

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