Landlord Products / Services
It happened. And no one should be surprised. It was a certainty.
After the Tenant Fees Act 2019 was introduced, letting agents, predictably, didn’t waste any time redirecting their hefty Tenant Referencing Fees onto landlords. A fee traditionally (and forcefully) rammed down the throats of tenants.
So who will it impact? Almost every landlord in England, and every Landlord in the UK that uses an Online Letting Agent. Your tenant acquisition costs will soar; you’ll shout, you’ll weep, and you’ll wonder why something so tragic is happening to someone so beautiful.
But fear not, I’ve got a money-saving tip that will even make Martin Lewis cream his knickers.
Before I go any further, I should clarify, this blog post is most likely going to be most insightful for self-managing landlords that use online agents to find tenants. For everyone else, while the chances of walking away with saving a buck is slimmer, there’s definitely food for thought on offer, so you may as well loiter.
Online Letting Agents & Tenant Referencing Services
As many of you already know, I work with a lot of [the best] Online Letting Agents, so as soon as the ‘tenant fee ban‘ came into force, I quickly became aware of the movers and shakers; almost all online agents reshuffled their products and fees to comply with the new Act. They needed to recoup their losses from somewhere.
For those of you who use Online Letting Agents to find tenants, I don’t know how transparent your preferred supplier has been with you about their updates, but I suspect they didn’t invite you into their HQ to give you a feature length presentation on how their prices were on the verge of rocketing, so there’s a good chance you’ve been blissfully unaware of the changes.
Either way, not to worry, because the purpose of this blog post is to share the changes I’ve been notified of, which I hope you’ll find not only intriguing, but also useful information for when making future decisions.
On a side note, there’s a very good chance this will rub some of my affiliate partners the wrong way. I hope it doesn’t, but it might! In my defence, I’ve never hidden the fact that my allegiance is to my readers/subscribers, first and foremost.
| Online Letting Agent | Before | After | Package / Notes | Tenant-find package + Referencing Cost | Price Increase (%) |
|---|---|---|---|---|---|
Letting a Property | Pre Tenant Fee Ban Act £0 | Post Tenant Fee Ban Act £49Per tenant | Find a Tenant package | Tenant-find Package + Referencing Cost £198 | Price Increase (%) 32% |
Visum | Pre Tenant Fee Ban Act £0 | Post Tenant Fee Ban Act £20Per tenant | Plus package*based on available £15 discount code. | Tenant-find Package + Referencing Cost *£84 | Price Increase (%) 27% |
99Home | Pre Tenant Fee Ban Act £0 | Post Tenant Fee Ban Act £10Per tenant | Express package | Tenant-find Package + Referencing Cost £59 | Price Increase (%) 20% |
OpenRent | Pre Tenant Fee Ban Act £20Per tenant | Post Tenant Fee Ban Act £20Per tenant | Free Trial PackageOpenRent used to give the option for landlords to pass the £20 cost onto tenants, but that has now been removed. *5 day free trial, then option of continuing service for 3 months – which is £24 (Inc VAT) for new customers, and £29 (Inc VAT) for returning customers! So you’ll need to add an additional £20 for referencing if you continue after the trial. | Tenant-find Package + Referencing Cost *£20 | Price Increase (%) 0% |
I Am The Agent | Pre Tenant Fee Ban Act £71.25Per tenant | Post Tenant Fee Ban Act £71.25Per tenant | IATA Essential package*based on available 5% discount code. | Tenant-find Package + Referencing Cost *£165.3 | Price Increase (%) 0% |
Once again: all promos/discount codes available from the main online letting agent blog post. All the suckers’ that aren’t subscribers of this blog will have to dig deeper and pay the non-discounted sucker price :)
What you should note about the changes…
- While the ‘Tenant Fee ban’ only applied to landlords and letting agents in England, this WILL impact all UK Landlords that use online letting agents. The agents have made wholesale changes to their fees and packages, which apply across the board to every customer, regardless of their BTLs location. Basically, it’s become a standard for landlords to cover the referencing fees, not an exception.
- In almost all cases, tenant referencing has now become an optional “add-on”, whereas before, it was part of the core Tenant-Find package.
Ultimately, many of the agents have ever so quietly snatched away “Tenant referencing” from the feature-list of their tenant-find packages, which previously came included as standard.
The fact it’s now an ‘add-on’ feature is significant, which I’ll explain in more detail shortly.
- Referencing costs now accounts for quite a big percentage – in some cases the BIGGEST – of the overall cost for finding a new tenant.
Referencing is now a relatively expensive cost.
- Fair play to ‘I Am The Agent’, they’re the only agent that have always charged landlords with the referencing fees (from what I’m aware of, anyways). Their packages didn’t need to adapt to the new legal requirements.
Tenant Referencing just became expensive (potentially)
So, here’s the dilemma.
Referencing has become a potentially expensive game, simply because it’s perfectly normal for landlords to conduct multiple references for a single tenancy, which can include referencing a short-list of applicants (i.e. prospective tenants that passed the preliminary checks), or referencing more tenants than originally anticipated due to deal’s collapsing. Standard stuff.
But that means we may end up having to purchase several tenant referencing checks in order to successfully fulfil a single tenancy.
I know, I know! How the fuck am I meant to feed my family with those expenses burning a hole in my pocket, let alone turn a profit?
It seems backwards that referencing has become more expensive than the actual marketing costs – listing your rental on Rightmove & Zoopla.
I guess one solution is to be more rigorous with your short-listing protocol so you limit the amount of referencing required to one or two. But in real practise, I can’t see that being sustainable for every tenancy. If only the process of finding a good tenant was so forgiving.
Standalone Tenant Referencing Services – The Solution!
It sticks out like a sore thumb, so you probably noticed the big discrepancy between the referencing prices. For example, OpenRent charge £20 per tenant, while I Am The Agent charge £71.25.
I’m not going to get weighed down by the difference in service; I Am The Agent may or may not provide more for their service, justifying the significantly higher price-point. However, from my experience, referencing services generally return the same information by running the same searches, and the differences are typically either negligible or subjective.
Most importantly, I’m not here to tell you which online agent to use. I have no donkey in this race. We all have our favourites, and I’m not asking you to switch based on referencing fees. Although, I wouldn’t blame anyone for jumping ship for that reason. That’s a perfectly reasonable step to take given the circumstances.
In light of the pricing hikes, I just want to cover an alternative route that you may want to consider, which could potentially save you a small fortune on referencing fees.
If you have a preferred online agent which has stabbed you in the heart by introducing hefty referencing fees to their menu – but you’re still reluctant to let it go, despite the abuse – you could always continue using their core service (i.e. Rightmove/Zoopla marketing services) in conjunction with a significantly cheaper third-party referencing service. Remember, referencing has become an optional extra (in all the cases I’ve seen), so it means we’re not obligated to use the referencing service supplied by our agent.
For example, some of you might be I Am The Agent loyalists. I get it.
But fuck £71.25 per reference! My dick-pills and dick-ointments don’t pay for themselves! A couple of references will set me back 150 nuggets. That seems is excessive.
Given that you may share my sentiments, you might feel compelled to give I Am The Agent’s referencing service the big middle finger (or any other agent that is providing referencing services for at a comparatively expensive rate), and opt for a standalone referencing service from another supplier, to complement I Am The Agent’s core service.
OpenRent provides standalone Tenant Referencing Services at very reasonable rates. I’ve been sharing their referencing services long before the Tenant Fee Act was introduced, mainly for the rebellious sect of landlords that don’t use any form of letting agent. For example, landlords that use classified websites like Gumtree and Craigslist, or those that still rely on localised marketing etc. Prehistoric methods, but apparently they remain to be effective classics… in villages that have a population of 10, where everyone is cousins.
However, with the introduction of the tenant fee ban and the impact it’s had, the standalone referencing options have become a lot more useful for the mainstream landlord, so here are a couple of delightful options offered by OpenRent (I’m personally a satisfied customer and I’ve also received positive feedback from many other self-managing landlords, so I happily recommend them):
| Supplier | Notes | Price | |
|---|---|---|---|
Supplier | Notes / IncludesSpeedy Reference
| Price £20 Inc VAT | More Info |
| Supplier | Notes / IncludesComprehensive Reference
| Price £20 Inc VAT | More Info |
Please note, I try my best to keep the information of each service up-to-date, but you should read the T&C's from their website for the most up-to-date and accurate information.
I don’t need to do the maths for you (I’ll probably dick it up, anyways); it’s easy to see how it’s possible to save a small fortune in certain scenarios.
You can even mix ‘n match referencing services. For example, you can drag a handful of promising prospective tenants through the £5 ‘Fast Credit Check’ offered by TheHouseShop instead of splashing out on the more premium solutions for every prospect. Based on those results, you can then run the more comprehensive referencing solutions on the final short-list.
You get my point, right?
Before anyone jumps on my hairy back and starts screaming, “what about [insert referencing service]”, I’m going to hopefully STOP you in your tracks! I’m sure there are many, many more wonderful referencing services, I’m not questioning that. My objective is to simply highlight the concept of using a standalone referencing service in order to make relatively big savings. You can pick-up the ball and run in any direction. Hell, I’ll even try and get you a discount code if you let me know which service you wish to use.
To avoid any backlash, I think it’s also important that I re-emphasise want I previously said in my original “Tenant Fees Act 2019” post, where I anticipated the impact: the diversion of referencing fees really shouldn’t sink any ships or trigger any massive financial implications! Yes, referencing is now relatively expensive when using an Online Agent, but we’re not talking crazy money in the grand scheme of things. No one should need to sell a kidney. I don’t want us to lose perspective.
What about High-street Letting Agents?
*dunno*
High-street agents in England will have also redirected their referencing fees onto landlords, but I suspect most of them won’t give you the option of using third-party referencing services. Or if they do, I doubt they’ll openly advertise it.
I really don’t have any facts or figures to hand, but if we allow history to dictate, I can’t see this panning out nicely for landlords that rely on high-street agents.
If you are faithful to the high-street agent – and there’s nothing wrong with that – then I highly recommend finding out what their fees and policies are on tenant referencing before making any finalised arrangements. It might be worth enquiring if you can conduct your own referencing to keep the costs down.
Since I am an unstable betting man, I won’t hesitate with betting your Nan’s left-bollock on the fact their referencing fees are ripping more new assholes in Landlords than I ever care to imagine.
Don’t worry, it’s a safe bet, your Nan’s bollock will be safe as houses.
One thing is for sure, Online Letting Agents are still a bargain post “Tenant Fees Act 2019”, no matter which way you dice it up.
Complete Guide on Tenant Referencing
Hopefully I shouldn’t need to say this.
But I will anyways.
Because you are my everything.
Using a tenant referencing service, whether it be directly through your agent or a third-party, should only be ONE aspect that contributes to an overall referencing strategy. More details available in my complete guide on referencing tenants.
I hope this has been useful, or at the very least, prepared you for price increases that you’re most likely going to face that you weren’t necessarily aware of. If this hasn’t been helpful…
*throws dick-ointment in your face*
Ungrateful little sod. Take that.
Love & Peace everyone xoxo
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Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
I am no longer a Landlord as I have sold up my modest portfolio of 2 flats because I am off to Australia but... your blog and emails are still by far the best in class in terms of legislation, rights and wrongs and your humour.
I will be getting into the rental market in Australia but there are some significant differences, mainly because they still favour the Landlord. As a for instance : properties are religiously physically checked every 10 weeks, by the letting agents. They enforce cleanliness
and looking after the property, even down to oil marks on the drive or dirty brickwork. Handing a property back is a full on slog of cleaning, making good and they can insist on professional carpet cleaning etc. In short, letting agents have to earn their considerable income rather than wringing their hands and doing little or nothing , like here in the U.K..
More power to your blog and keep up the good work.