In what many see as a far-reaching decision, the Scottish government has decided that landlords and letting agents will soon no longer be able to charge extra fees for a variety of routine things such as checking references, credit histories and drawing up inventories—all procedures that cost money.
Why has this decision been taken?
Housing charities in Scotland have been campaigning for a long time about the aggressive over-charging of fees by many letting agents and landlords. Obviously checking the credit history of a new tenant and engaging someone else to do a property inventory has a cost implication, but because the Scottish Rent Act [1984] is very vague about what constitutes a fee, in some cases excessive premiums were being charged to unsuspecting tenants. To try and address this problem, the Scottish government undertook a public consultation, the end result of which is a total ban on the charging of fees to tenants. It is believed that the definition of “fees” will be clarified and defined in law by November of this year.
How will this decision affect landlords?
In order to absorb the extra overheads, letting agents are likely to have to pass on the increase to their landlords. And landlords will need to do the same, which means rents will have to go up—probably by around 5%. This is bad news for everyone as there are already many tenants struggling to pay their rents at month end, so some will inevitably fall into arrears if their rents increase, which is of course not good for landlords.
