Tenant Fee Act comes into force

With landlords and letting agents in England and Wales about to lose an estimated £240m per year in administration fees when the Tenants Fees Bill comes into force on 1stJune 2019 the sector could do worse than look to Scotland as an example of how to deal with these changes. Scotland is far ahead of the rest of the UK in improving the status and security of tenants, and it is the existing Scottish model which is now being replicated and implemented in these legislative changes. 

The Tenants Fees Bill is aimed at clearing up ambiguous and vague administrative charges and, while some of these were legitimate, many agents used them as a source of income sometimes accounting for 30% of annual revenue.

The resultant storm of complaints from agents and landlords in the private sector claims that are being financially squeezed fails to acknowledge or understand that these regulations were introduced in Scotland in 2012 without the world collapsing and without any obvious harm to the private rented sector (PRS).

Therefore, the property market across the rest of the UK could benefit by looking at the way the PRS works in Scotland where there has been a determined effort over the last few years to improve the relationship between landlord and tenant through improvements in the security of tenure, the length of leases, and reduce the confrontational element in the landlord and tenant relationship which the original 1988 Housing Act embedded.

Scotland has also led the way in ending no fault evictions, in abolishing short term tenancy agreements of six months and introducing indefinite tenancies. 

These changes reflect the reality of the changing provision of housing across the UK. Whilst property owning remains the largest sector at 63% of the total, private renting is now the second biggest property sector (20%) ahead of social housing (17%). 

But more important than changing the legislation is the need to change the mindset of so many landlords and agents who have often viewed the tenant as simply a cash cow. These legislative changes should be regarded as an opportunity to create a better, fairer, and more equitable private rented sector which produces a mutually beneficial system for all concerned. The 1stJune is merely the start of change, and Scotland is continuing to lead the way and provided a sound model for the operation of the PRS in the future.