With only a few weeks to go before the Tenant Fees Act comes into practice on June 1st, Residential People spoke exclusively with the leading West Midlands estate and letting agency James Laurence, to hear their thoughts on the upcoming Tenant Fees Act and life as an agent in a post tenant fee world.
Established in 2004, James Laurence is one of the leading agencies in Birmingham, Edgbaston and the surrounding areas; consistently delivering expert residential property services to the local property market.
James Laurence’s Associate Director Andy McHugo is our first special guest for a series of exclusive interviews in our Tenant Fee Act series, following the upcoming ban on tenant fees and what it means for some agencies throughout the market.
Residential People: Since being founded in 2004, is the tenant fee act one of the most dramatic developments that James Laurence has faced?
- Andy McHugo: Absolutely. Not only for landlords and the market itself but secondly for us as an estate agency. However, I believe that in the main, we are ready for it.
RP: What are some of the concerns landlords have had regarding the tenant fee ban?
- AM: The biggest question that has arisen from landlords so far is regarding whether their costs will increase. Overall landlords that are aware of the changes are worried by the upcoming Tenant Fee Act, with the bulk of concerns regarding whether our referencing checks will change.
RP: What steps have you taken to ensure your agencies viability in a post-tenant-fee world?
- AM: We’ve looked at the cost-effectiveness of the business, not simply thinking ‘are we upping [landlords] costs’ but, asking ourselves if the price we’re paying for things necessary? Things like our stance on rental warranties have changed, whereby we used to include this as free, it is something we have not had to activate regularly duty to the efficiency of finding the desirable demographic of the tenant so now going to be an optional cost for an owner. Overall, the business model as a whole has been re-evaluated leading into 2019 in readiness.
RP: Do you foresee the ban having a negative or a positive effect on the market, and why?
- AM: I perceive it to be a negative overall for landlords as there will inevitably be increased costs to them, while it will be perceived as positive for tenants-but how long before landlords put up the rent to accommodate higher agency fees? I think once you throw agencies in the middle, it will be seen as a huge negative for income and maybe general standards.
RP: Do you think the Tenant Fee Act will help to rid the market of ‘rogue’ agents?
- AM: Yes, it’s more or less going to separate the good/thorough agents from the bad and ill-prepared. My biggest nervousness comes from whether other agents are going to reference check tenants or cut corners & costs by leaving this out. I think it’s paramount that referencing is always done and the feedback from landlords is that references are essential. The worry you could have is tenants might be attempting to reserve a couple of properties at once or get away without being reference checked. There are already those with CCJ’s, insufficient incomes and bad landlord checks or not being up to date with their payments that we filter out at the point of application. Long-term, it might make smaller agents fall by the wayside, but should separate those who do it in the interest of customers and those who do not.
RP: Do you agree with ARLA’s statement that the costs for tenants have become excessive?
- AM: By the sounds of it, across the country (and particularly down South) the costs have been getting rather excessive. For instance, I have heard of things such as a pet reference – which I believe reflects badly upon the rest of us who don’t do such practices. At James Laurence, our prices have always been competitive within our area, and as a result, we rarely get them questioned. For better or for worse, the market is going to move to tenants having more control over things, and I think that is one aspect where the government haven’t really thought this through as much as ARLA would like, particularly when you throw in the suggested Section 21 changes.
RP: With the Tenant Fee Act effectively lowering the costs of moving, how do you think this will affect the market?
- AM: Tenants that are putting off their moves because of the costs of moving, will face more competition as more people will move from properties that they’re not over keen on due to the lower costs of moving house.
RP: And finally, for our readers who don’t live in the region, could you give me an idea of the pricing structure in Birmingham?
- AM: Within the city centre of Birmingham it’s fairly competitive. I don’t think there are any extortionately priced properties, but [the price] depends on your needs. In the city centre, a one bedroom is on average £700pcm – £850 range and two bedroom apartments upwards from £900pcm. Figures show that prices in the West Midlands have gone up by an average of 3% in the last year. There is a lot of availability in Birmingham at the moment, with several new builds contributing to a supply that outweighs the current demand; however, I do expect this to change in the summer when more people move homes.