A busy rental market combined with unsettled economic conditions, unfortunately, increases the possibility of some letting agents charging tenants prohibited fees, according to PayProp.
The rental payment automation platform says agents must do everything they can to comply with the Tenant Fees Act – which was extended to cover all tenancies in June – while warning tenants to familiarise themselves with the legislation.
Charging of banned fees could become a bigger issue
While the majority of letting agencies will continue to comply, a record run on rented homes could see unscrupulous operators make up for the financial impact of the pandemic by charging tenants illegal fees.
Agents should be aware that the issue is likely to be on the radar of the National Trading Standards Estate and Letting Agency Team (NTSELAT) – and that businesses found guilty of breaching the Tenant Fees Act could face significant financial penalties.
For the honest majority, though, the current uncertain circumstances are a chance to shine.
Neil Cobbold, Chief Sales Officer at PayProp said, “Letting agencies have an opportunity to educate tenants about the fees ban so consumers aren’t taken advantage of by any firms attempting to charge prohibited payments. During this challenging period for many people, it’s crucial that agents support tenants to help protect the long-term future of the rental sector for all parties.
“Taking this approach will further improve the public perception of letting agents and landlords, which is vital at a time when the industry is moving towards greater self-regulation.”
Tenants reminded of their responsibilities
Cobbold says it’s also vital for renters to ensure they are up to speed with the rules set out by the Tenant Fees Act, as well as the redress options available to them.
Cobbold added, “Although industry-wide compliance with the fees ban continues to be very high, tenants should not assume all agencies are operating on a level playing field.
“If renters are aware of which fees they can and cannot be charged, as well as the maximum values of security and holding deposits, they can flag any issues early on to reduce the chances of being left out of pocket later.”
He adds that while experienced tenants are likely to be aware of the ban on fees, those new or returning to the private rental sector could end up paying prohibited fees or higher deposits due to a lack of education.
Agents, landlords and tenants must work together
Although the rental market has bounced back impressively following the easing of lockdown restrictions, the medium and long-term outlook remains uncertain, according to Cobbold.
He explains: “Many agents and landlords will still be dealing with the financial effects of the pandemic, while the workload for many agencies will have increased significantly in recent weeks. Many renters across the country will have found it more difficult to pay rent in recent months and the winding down of the furlough scheme is likely to cause further uncertainty in the employment market.
“However, property professionals should be aware that there are effective, legal and fair ways to ensure continued rental income during this period of lockdown easing, including automated invoice generation and arrears reminders.”
Cobbold concludes: “Two-way communication is also vital, while transparency and understanding from agents can help tenants to feel secure in their rental properties as we move towards 2021.”