My sister and I co-own three properties: two residential and one commercial. We have a managing agent who finds new tenants and handles leases and rents.
The recent Tenant Fee Ban has obviously affected the managing agent but they are now trying to pass off what is essentially a 3% rent increase as a Tenant Admin Fee. Isn’t that illegal? They claim it is cost-neutral to us but I don’t see how. It seems cost-neutral to the agent, not the landlord.
I have cut-and-pasted below an edited version of an email we received from the agent about it.
I’d appreciate any advice about what other landlords have done when faced with this situation. Thank you.
"Currently we charge tenants a fee to cover the initial administration at the start of the tenancy…
It is completely unrealistic to expect agents to simply pass on these costs to their landlords without increasing rents.
"Our proposal to accommodate the pending ban is to implement a fee into the monthly rent of each property. This will show on your statement as a tenant administration fee separate to your management fee so it is clear what the fee is for.
“Your rent will be increased by 3% at the same time as a 3% (inclusive of VAT) fee is implemented therefore it will be cost neutral to you. We will be staging this in two increments to soften the blow to tenants, the first increase of 3% will happen on the next tenancy renewal due after 01/04/2018 and the second will happen on the next renewal due after 01/04/2019.”