UK letting agencies and their landlords got the news they were dreading last month. The Queen’s Speech on 21st June indicated the returning government’s commitment to ban tenant’s fees.
But what does this mean here in Northern Ireland? With Stormont still not operational and the pause button pressed for the summer, we are in legislative limbo. The Secretary of State may rule on a budget but that’s unlikely to be before the Autumn.
As housing is a devolved issue, it’s not clear how and when the fees ban will actually pass into law over here, but it seems increasingly likely that it will.
The political uncertainty notwithstanding, there has been a push by housing and tenants’ rights organisations over here to scrap the fees. These groups view the fees as unfair barriers to affordable rented property for many people.
They also put forward the case that in Northern Ireland, the charges even defy the law; citing Article 3 on Commissions of the Disposals of Land (Northern Ireland) Order 1986 which states:
“In addition, in relation to lettings of land, any stipulation which has the effect of obliging the tenant to pay commission due to an agent acting for the landlord in connection with rent reviews or rent renewals/extensions is void by virtue of this Order. Money paid by a person under a stipulation which is void by virtue of this Order, is recoverable by that person”
According to Housing Rights NI (the organisation behind Northern Ireland’s Private Tenant’s Forum), there is already a test case being heard in the courts. A QUB student is said to be arguing for the return of agency fees, citing the legal passage above.
It seems to me this law refers to the renting of land and not property and that “commission due to an agent” is an inaccurate description of tenant’s fees. Furthermore, there’s no mention of tenant’s fees in The Private Tenancies (Northern Ireland) Order 2006, however, the outcome of the case will nevertheless be interesting to hear.
My position on these fees will come as no surprise but they are simply this: proper checks on tenants and their guarantors cost money and somebody has to pay it - if it ain’t the tenant, guess who it’ll be? That’s right, sunshine – the bill’s with you now.
To make sure the rental property is still profitable, what will landlords be forced to do? Put up rent.
Dropping these vital checks from a tenancy applications process is a fool’s game – nothing short of the ultimate in false economy. Without these checks, you can look forward to an increased chance of nightmare tenants, late payers, defaulters and dodgy guarantors.
Tenants often ask for contracts to be changed, for example, to allow for a pet or a shorter lease period and we include those negotiations in their fees. Is it practical to ask them to bring that request to a solicitor instead?
What are tenant’s fees?
Tenant’s fees, also known as application fees, refer to money charged by an agency to people applying to rent one of the properties they manage for landlords. The fees cover the cost charged to the agency by other organisations, for things like credit, employer, previous landlord and background checks. It also includes any negotiations carried out on behalf of the tenant, like contract amendments.