What will happen to Open rents £20 referencing fee per tennant once this new legislation is in place?
Examples of banned fees then would be:
I don’t know what will happen. But I don’t relish having to pay for applicants credit checks, especially as I have had two fail with poor credit previously. I would have been £40 out of pocket. Perhaps applicants could show a print out of their credit score which is free on many sites before I proceed to a full check.
I believe that fees that are actual costs of the process (e.g. obtaining a credit report isn’t free to the landlord or Open Rent), then they would be acceptable. I am under the impression it’s more a ban on Agents and Landlords charging silly “£180 per applicant” fees and such…
However I could be wrong and hope someone from Open Rent confirms on here soon!
Hi,
Currently, the only cost to tenants using the OpenRent platform is £20 per reference. As you say, once The Tenant Fees Ban comes into force on 01/06/19, the cost of referencing - amongst other things - can’t be passed on to tenants.
Rest assured, we’re very much aware of this and are exploring options to account for this change in legislation. It’s worth signing up to our newsletter to ensure you’re kept in the loop in the months leading up to the fee ban.
George
Where do we sign up for the newsletter?
The way I see it the onus seems to be on the landlord to do everything for the applicant. I believe that the tenant should pay for their own referencing and will not pay for that. Its up to them to give me a current credit check or lose the property. We invest a lot of time sweat and and a boatload money into our properties making them something I would be happy to live in land I expect fair, sensible and respectful tenants in return. The government and Shelter go too far in putting all the costs on good landlords offering quality housing and ignoring bad tenants behaviour. It isn’t the cost its the principle and someone out there needs to fight our corner for a change.
Thanks for confirming George
Hey Christine, yes it was a shame that the Tenant Fees Act did not allow a (very) small charge for tenants to cover the cost of referencing. As you know, this is the only fee a tenant ever faces on OpenRent.
We think it’s important because without it, there is no disincentive for tenants to apply to many properties simultaneously, which would inevitably lead to some landlords being let down when the tenants application breaks down.
But if that’s the price to pay to end the practice of charging tenants £300 on average, then we think the ban is definitely an improvement and much preferable to the ripoff fees that some agents have been charging for years!
We are a specialist EOT cleaning company, been doing it for 14 years working with many letting agents in Surrey. The overall impression we get is that agents are looking to increase charges ‘elsewhere’ to make up the ‘shortfall’ in loss of fee income
My understanding is that Landlords and agents aren’t allowed to charge fees. However in an area where there is high competition, can a tenant voluntarily get their own reference done and pass this to the agent/landlord to demonstrate their affordability during the application process.
I think this would benefit both the landlord and gives a potential tenant an advantage if they are competing against other possible enquiries.
Hi Saagar, yeah a tenant could do that. It would be very easy for a tenant to fake a referencing report though. Part of the reason that, in the current system, tenant references are trusted is that the landlord instructs a company to perform them, and then the company send the report directly to the landlord. It would be trivial for a tenant to print out an edited copy of a referencing form and hand it to a landlord!
@Simon5 I think this was true in the Bill’s original form, but Lib Dem peers introduced a series of amendments that tightened up these loopholes, making it very hard for agents to charge tenants fees. There’s nothing to stop them charging landlords more money, however. Nothing, that is, except the threat of driving those landlords to using low-fee companies like OpenRent!
This is how I get round it then. i will increase the rent to cover 3 references hopefully 1 out of 3 will not fail but i will be asking a lot of intrusive questions before going down that route. Lets face it we have no choice now but to cover ourselves against all the losses due to government landlord bashing. I am an excellent landlord as my tenants will testify but at the end of the day I am not in it for the love of it I am doing it to stay off benefits myself and hopefully out of debt.
Hey Christine,
We expect the average fee for referencing to go waaaaay down now that landlords (not tenants) will be paying for it. Landlords can shop around where tenants couldn’t. That means that even if you build 3 x tenant referencing fees into the rent, then the monthly rent might only be going up a couple of pounds a month 
Sam
I am very confused with all i read herein, May i just say;
If one takes a None-Returnable Holding Deposit of say; £200.00 only returnable in full thereafter the AST has been signed, hence if the Tenant does not qualify from the Credit Check and/or messes a Landlord around pre-AST then the Holding Deposit is retained.
There doesn’t seem to be any rules governing doing this hence worse case basis a Landlords only cost is the said Credit Check/s which can be earned back from the rent by just an extra £2 p/m over a 12month period say.
_Please can someone of higher knowledge confirm if doing this is a good work around from potentially being messed around by us Landlords doing loads of Credit Checks on time-wasting Window Shoppers???
And/Or could a Landlord perhaps charge for doing a Right to Rent Check, lets say a similar amount as to which a Credit Check may cost for instance?
Andrew8 the current holding deposit rules will only allow a Landlord to retain the deposit if the applicant or the Landlord pulls out. Simply failing the referencing process does not entitle the Landlord to keep the holding deposit, even though the property would have been withdrawn from the market. Therefore, losing the Landlord several days and (potentially) several prospective applicants/tenants.
Yes Clive, exactly.
@Andrew8, you are right to point this out - landlords are at some risk of wasting time and money having to reference tenants who would never be able to afford to rent the property, and then not being able to cover those costs due to the Tenant Fees Act.
This is a point we made to the Tenant Fees Bill Select Committee, but to no avail.
We’re very aware of this problem, which will affect the whole market, and are looking at solutions that will solve the issue for OpenRent users.
You won’t be able to charge for e.g. a right to rent check, as that will be a prohibited payment, on OpenRent now and for everyone from 1st June.
Sam
i think it’s fairly clear that the fees ban includes landlords not just letting agents so we won’t be able to charge for all the items in the list.
I wrote to my MP about all of it and received a predictable response from a minister dismissing my concerns about having to pay for pet deinfestation, referencing etc which are the only things I charge for
However one comment from the minister got me thinking about referencing costs
She said that ‘of course tenants would be allowed to pay for their own services’
I have asked for clarification on this but have not yet received a reply
If it means that a landlord can ask a tenant to order and pay for their own reference (thus avoiding ‘a fee’ as such) then this would be acceptable except that the landlord would then lose control over which referencing agency was used and hence the RG insurance
However since openrent referencing is probably the cheapest on the market hopefully tenants would chose to use them anyway although the regs may not allow landlords to recommend an specific agent
Sorry I realise this doesn’t really answer any questions but I will post again if I hear more
Cleaning, which would encompass pet deinfestation, would be a deductible expenses from a tenant’s deposit (assuming the property was deinfested at the start of the tenacy).
Clive
thanks clive
yes that is understood but it does not really help if the property has not been previously occupied by a pet and then deinfested
I heard back from the minister on the issue of referencing and it seems the usuall contradictory gobbledegook applies ie the tenant can procure their own reference but landlords will not be allowed to require a tenant to do so as a condition of offereing them the tenancy.
the only protection for the landlord is being able to charge a limited holding deposit to deter tenants from cancelling their applicaton. To minimise my losses I am therefore tempted in future to offer a tenancy only to an applicant who can show they have sufficient income to pass the affordability test, which will sadly exclude many applicants.
It does not matter whether the property was previously occupied by a pet or not. You are legitimately entitled to accept the property back in the same condition as it was when the tenancy commenced, fair wear and tear excepted. As per OR’s AST agreement clause 8.6
Clive