The Tenant Fee Ban & What does it mean for U.K. Property Landlords?

Dear Landlords and lettings agents,

Just in case we gave the opinion that we cared we thought you should know that we don't and we're going to ban tenant fees from 1st June 2019.

Yours,

The Government


Partisanship aside this tenant fee ban has wide ranging implications for everybody in the property industry - that's everyone that lives anywhere.

The government decided to punish all landlords and lettings agents for the actions of a few, akin to keeping the whole class back for lunch because of one disruptive person.

It's a double hit, alongside the Section 24 issues, the government is squeezing the rental market right now. 

Click here to read our article on section 24.

There are landlords on public forums that I am a member of who are being advised by specialists that they would no longer be able to take a referencing fee.

Others who have been told they wouldn't be able to charge extra for tenants with pets such as dogs.

The list goes on.

This is where it gets difficult, as a landlord I want to reference my tenants, if I have to pay for it then surely I'm going to have to increase my rents.

If a tenant has dogs I'm going to want increased security against having to clean up the house at the end of the tenancy, what am I going to do now?  Increase the rents for every tenant in every property incase some have animals?

Can I increase the rents and remain competitive?

Can I not increase the rents and remain profitable?

21 point property assessment checklist:

Get instant access to our property checklist that ensures a great property every time...

Landlord protection against bad tenants will be reduced by the tenant fee ban.

It is my prediction that the rent values will increase due to the upcoming tenant fee ban.

This in turn will cause less people to be able to afford private rentals and drive up LHA and social housing.

The demand reduction will force more private landlords onto these types of tenants which will in turn make many decide to leave the industry (if they haven't already).

At the same time it will make buying a home rather than renting a much more viable option for tenants due to the increased rent costs and thus raise demand for homes for sale.

Therefore all prices will rise after an initial dip as landlords and agents cope with these new rules.

Or will they?

Brexit and other world pressures are pushing the other way at the moment which makes it an interesting time with multiple factors at play.

Should I invest now?

Unequivocally yes.

Firstly you may have properties that no longer make sense that you need to sell to counteract the new legislative environment that we live in.

But then, if you're savvy, educated and on top of the legislative issues now is a time that you can clean up.

We are almost certainly entering a period of volatility which does not mean you will be able to buy low and sell high, after stamp duty, agents fees, surveys, conveyancing and more you'd need a huge profit percentage to make this work.

But...

It does mean that you will be able to buy as long as your property flows cash every month and meets all the requirements of our 21 point property sourcing checklist which you can download here.

Over time the value of property assets rises, in the graph below you will see that referenced from Nationwide Building Society Data each crash from the 70's through the 90s was now so small they barely register and the 2007 crash is well cleared.

As long as you're setup right in terms of tax (hint - buy as a company not a person due to section 24), and you are flowing cash now, right now is probably one of the best times there is to buy property.

If you want properties that cash flow strongly and give great R.O.C.E then click through to our shop to see our latest deals.

The trend is clear for property in the UK. Source - Nationwide House Price Data

Keep Informed

Stay up to date and informed with our latest property news, blogs and exciting opportunities here.

Contact Us

To speak with a member if Key Properties UK about your next investment, sourcing, property development or management, contact us on the button below.

About the Author Martin Howard

Hi, I'm Martin Howard and I authored this article. I lead up the Key Properties group, we are a sourcing, development, estate and letting agents that operates mostly in South Wales. We typically over achieve on our projects and deliver great returns to our investors. Email me: martin@keypropertiesuk.co.uk if you want to chat or WhatsApp, call or message 07851 873995. Thank you for reading 😀😀

Leave a Comment: