Cap fees

If fees are not charged to the tenant, there is no financial commitment from them to indicate their genuine intention for taking a property. If fees are capped, it provides clarity and consistency for tenants.

Examples of set fees could be:
- an agency fee is capped at £30 per tenant/applicant/guarantor for referencing
- renewing a tenancy agreement is capped at £45
- amending an exisiting tenancy is capped at £35
- an inventory is up to £70 (depending on size of property)
- checkout is capped at £25
Fees have to be subject to VAT if service providers are so registered.

Why the contribution is important

There is a principle at stake of securing a fee of recognising a service that is costly and time consuming. A fee has the benefit of showing commitment to a legal process that is not always easy and has many pitfalls. It gives the prospective tenant a contractual and right based stake in that process on an equal basis to the housing provider namely the landlord.

The absence of fees can adversely affect their stake and their responsbility to the process. If fees are not charged to the tenant, there is no financial commitment from them to indicate their genuine intention for taking a property. This can lead to long unecessary void periods and expenses and leave other committed tenants unable to view properties that are 'taken'.
If a prospective tenant is not expected to make a financial committment for a property, they could commit themselves to a number of properties and then withdraw from them at the last minute.


Agents costs are continually rising, therefore if fees are not charged to the tenant, they will ineviabely be charged to the landlrod and ultimately this will likely result in rent increases or a decision to leave the rented sector which can have an adverse impact on supply.

There are increasing pressures on agents and housing providers (such as landlords) to vet prospective tenants for immigration and money laundering pursposes. This places additional costs and obligations on such providers in relation to potential fines and litigations by government bodies.

Therefore costs for entering into a formal tenancy should be shared between tenants and landlords as it benefits both parties. However it should be recognised that there is a limit to these costs, and therefore a cap on the fees charged should be implemented.

 

by FfionPaschalis on September 05, 2018 at 03:43PM

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