Landlord asking for referencing fees?

Hi all,

So me and a friend have found a property to rent on here, we gave the deposit and are going through the reference checks.

The landlord has then messaged us saying she requires payment of £100 for referencing fees. I read online that these type of fees are banned now so we contacted her saying it’s illegal and she’s gave us back the £100

But now she’s said she’s gonna add that £100 to our rent so that means we’re having to pay an extra £8 a month on top of what was advertised to us.

I just wanna ask is she allowed to do this? As in change the rent price after we’ve sent the deposit for the original rent price shown?

Reference fee not allowed upfront, technically yes they can charge more for rent. You can choose to take the deal or walk away with deposit if you have paid one.

Government harebrain idea banning fees and screwing landlords generally. Part of the reason rents are high. Labour govt would be far worse!

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Think she’s made it blatant by her response that is a charge, by the manner in which she has communicated with you.

The fact that she asked for this money at all doesn’t bode well as to what sort of landlady she will be.

I would look for a better landlord, but obviously it’s cost you time and demand for property is high at present.

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If she is running after £100 which legally she has to pay ( I disagree that decision of government by the way but law is law) and asking you to pay ( i.e. not knowing rules) , she will probably give you hard time later in the tenancy. Think twice!

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Not sure why so many people on here are complaining about referencing costs. They don’t exactly break the bank anyway & I do mine through my landlords association, so it gets claimed back as an allowable expense through my tax return, as well. It’s literally free to Landlord & tenant, but some LLs aren’t happy unless they’re screwing every penny from their tenants, I guess.

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@Vijay If done through an agent, as many landlords do, referencing a couple can cost a few hundred pounds. They may need to reference multiple tenants if the first fail so can easily cost a significant sum.

So this new cost ends up being passed onto the tenant in the form of a permanent increased rent rather than what was once a one off fee.

No reference fees for tenants also encourages the ones with a chequered history to make multiple applications as they have nothing to lose, costing the landlord.

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@Mark10 Agents fees are also allowable expenses - literally one of the examples given on gov.uk:

You should be claiming them back from HMRC in your tax return, and so having it done for free!

how do you mean “having it done for free”?

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You misunderstand how this works. It will be an allowable cost, meaning that you will not be taxed on this.

I think you think the whole amount is wiped off your tax bill!

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that is why I asked the question

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I’m well aware how it works - You should deduct expenses from the rental income when you work out your taxable rental profit. So, as I said, not exactly bank breaking.

Landlord pays say £200 to agent to conduct referencing on 2 tenants.

So this means it will effectively cost him £166 if he’s on the 20% tax bracket.

How is this free??

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Well, my tenants stay an average of about 3 years & the rent is currently around £700/month, bringing their total rental income to £25,200. So £160 is something like 0.006% of the total rental income the tennant is bringing in. I’d say that was virtually free.

It’s either free or it isn’t. There’s no virtually.

It costs £166, or if 4 tenants that’s over £300.

Not free!

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Regardless of relative figures, to many landlords this is a new cost and will be factored into rent, understandably. Some landlords make very little profit, if any.

I do my own referencing and it’s cheap.

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Ummm. Say I’m a 20% tax payer. I pay £100 for referencing, I claim a tax deduction so save £20 in tax. So, it costs me £80. Which bit of that is free???

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God forbid there should be some minimal cost to doing business. The figure you’re quoting is less than a month’s rent on the one bed flat I rent out. If it’s enough to severely wound your bottom line enough that it causes you to increase rent, you’re either bad at business or a greedy rentier.

I pride myself that I’ve never kept a penny in deposit & that I’ve never raised rents on a tenant, only in between tenancies. My tenants are assets that I invest time, money and effort in because they’re looking after my six figure investment & my real profit, which is my equity. You seem to treat your tenants as liabilities.

What are you talking about?
Polish that halo why don’t you.

Figures are figures.

You should consider the wider picture and from different perspectives before spouting your ignorance.

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Yes, the figures are that it it caused me a 0.006% rise in the cost of doing business. If you can’t eat a 0.006% rise in expenses (on your numbers, far less on mine) you should probably sell up now, as interest rates are about to put you right out of business

You are very ignorant if you think landlord don’t push costs onto tenants.

As I’ve said I pay peanuts to reference a tenant so doesn’t affect me. I know those who it does. Anyway, I’m done with this.

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