Welcome to the Friday roundup.
Can rent and deposit be taken before the tenancy is signed?
ARLA Propertymark says not – as reported in this article.
David Cox, ARLA Propertymark Chief Executive said:
It’s all about the way the Tenant Fees Act is drafted. It means that anything you take before an agreement, any money taken in advance, is treated as a holding deposit.
In the past, some agents would wait for the funds to clear but that won’t be possible now.
This sounds pretty serious to me. Who wants to take on a tenant before they have ‘proved themselves’ by paying the deposit and first months rent? How do you know that they won’t just move in, refuse to pay anything meaning you have to pay to evict them and the tenants get some six months free accommodation?
Not everyone agrees with this viewpoint but it is very concerning.
For example, will tenants, later down the line, be able to defend a section 21 claim (if we still have s21) by saying that the landlord took a prohibited payment when they took the rent and deposit up front before the tenancy was signed?
I think we need clarity on this.
Agents management fees
The same article has David Cox reporting that agents are now starting to put up their management fees.
Paul Shamplina of Landlord Action goes further saying that more agents will also ask for their management fees upfront rather than charging monthly, adding
I think many agents will also begin to charge landlords renewal fees and also charge admin fees for additional services, rather than including in these in their overall management agreement.
Landlords can, of course, avoid agents fees by using my Landlord Law service. You can find out if this would be a good option for you here.
Adverts and chimneys
An interesting article here quotes David Cox talking about property adverts saying that they will need to give more detail of services provided in the rent in order for services to be charged that otherwise are prohibited by the Tenant Fees Act.
For example, we’re having lots of questions being asked about chimney sweeping,” he says.
It may sound odd, but if a chimney needs to be swept once or twice a year then the advert would have to make it clear that the rent included that service because it can’t be charged for separately.
It’s just one example of a piece of legislation that looks simple on the surface but when you start getting into it is ludicrously complicated.
Airbnb and tenant fees?
Unsurprisingly Eye reports that ARLA are calling on the government to clarify the position of Airbnb and other online platforms.
At a recent seminar Timothy Douglas, senior policy and campaigns officer for ARLA Propertymark, said the Government needs to define Airbnb’s role.
Is it hospitality or is it part of the private rental sector?
That is a challenge they don’t want to go into.
They need to define it – the longer they leave it the worse the problem could get.
At the moment it is a local authority issue and a planning matter. I would certainly engage with local authorities and MPs and make them aware of what is going on.
It certainly seems unfair for agents to have to comply with all the complexities of the tenant fees act but not Airbnb which deals with so many rented properties nowadays.
The latest cartel case
As reported here, the Competition and Markets Authority has announced that four top Berkshire based agents, Michael Hardy, Prospect, Richard Worth and Romans, have provisionally been found guilty of breaking competition law.
The full CMA statement says:
[They] broke competition law by taking part in a price-fixing cartel where members set minimum levels of commission fees for the sale of residential properties. The alleged cartel took place in the Berkshire area from at least September 2008 and lasted for almost seven years.
The result of such price-fixing is that homeowners may be denied the chance of securing the best possible deal when selling their properties, as they are unable to shop around all of their local agents for better rates.
In a Statement of Objections issued today, the CMA has provisionally found that the four estate agents:
- agreed that they would all apply minimum commission rates for residential property sales
- exchanged confidential pricing information
- held meetings and colluded to make sure that they were all enforcing and maintaining the agreed minimum commission rates.
Richard Worth Ltd are already, apparently, in provisional administration. You can read the sorry tale here.
All agents are likely to receive stonking fines – in a previous case, it was £375,000.
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