If you’re a landlord or agent, you may be aware of recent changes to the laws on tenancy agreements – but how exactly do these affect you and your business?
In June this year, the government introduced new legislation banning most tenancy fees and creating a new set of five charges that can be enforced in certain situations, for example late payment of rent. According to research undertaken by lettings platform Goodlord, this could cause a decrease in agent revenue of up to 30%, with most agents likely to combat these losses by increasing management fees or widening their management portfolios.
What Are the Regulations?
One of the most notable changes brought by the government is the scrapping of Section 21, a form that landlords have previously used to evict private renters without needing to give a reason.
This is likely to have a huge impact on the renting industry, with prospective landlords less willing to invest in property if they perceive there to be a risk of being unable to remove problematic tenants without the need for expensive legal wrangling.
It is also sure to have a knock-on effect on tenants; 90% of letting agents expect to see a decrease in annual revenue, with almost a third admitting they would need to recoup their losses via increased management fees.
With Section 21 scrapped, landlords will be forced to administer a Section 8 ‘notice to quit’ if they wish to evict a tenant – but there are strict regulations regarding when this is allowed, and you must have a good reason. Grounds for eviction under Section 8 include failure to pay rent, neglect of a property, anti-social or illegal behaviour and breaching the terms of the tenancy agreement.
The Tenant Fees Act 2019, active as of 1 June 2019, also bans letting fees for tenants. The act states that tenancy deposits must not exceed five weeks’ rent and holding deposits cannot exceed one week’s rent, while the maximum charge for a change to a tenancy is £50 unless the landlord can prove that costs exceeding this value were incurred. All other fees have been banned, with the exception of:
- Early termination or changing of a tenancy charge
- Council tax
- Communication services
- Replacement of keys and security devices
- Charges for late payment of rent
The Importance of Regular Payments
With these changes in mind, it’s never been more important for landlords and letting agents to have a quick and simple method of taking payment, both for monthly rent and additional charges where incurred. London & Zurich’s tailored Direct Debit service offers an efficient, streamlined method of collecting payments, proven to improve your cash flow. With agent revenue likely to fall by up to a third in light of the new legislation, steady cash flow is an essential part of your business strategy.
If you work in the housing market and require a cost-effective and reliable Direct Debit service to take payments from private renters, contact London & Zurich today – our dedicated team will be happy to help.