Posts Tagged ‘Letting Agent Fees’

Like many Letting Agents this morning I want to scream out in frustration at the unhelpful and sensational news articles that the likes of the BBC are streaming.

Letting Agents fees have not been banned. Yet.

Letting Agents fees to tenants will continue until legislation is passed. There will be a consultation before this happens. This will take time.

The whole thing has come about in the first place because of greedy agents charging a fortune.

Once again the  unscrupulous actions of the few is having a disproportionate affect on the reputations of many.

I know locally a letting agent (no names mentioned but sounds like an unpopular scavenging animal at the start) who charged over £750 in upfront tenant fees for the agent and for the life of me I cant see how that is fair!  Yet most of us agents charge simply 50% of the cost of the tenancy agreement, the cost of the references and a small administration fee. Most reputable agency charge between £200 – £300 plus VAT to cover this.

It will hurt responsible letting agents to loose this fee. Why? Because the cost of referencing is a genuine cost, as is our time in drawing up tenancy agreements. The costs of running a company mean that this cost will have to be placed onto the Landlord and most landlords will put up the rental.

Phillip Hammond has confirmed plans (and note these are plans, not legislation implemented from today!) to ban letting agents’ fees to tenants in England. The details of this important announcement are still very unclear but the Department for Communities and Local Government (DCLG) will consult with ARLA and other associations ahead of bringing forward legislation.

This industry does not need a BAN – it needs a regulatory cap. 

“So now is the time to speak out” 

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Shadow minister for housing Emma Reynolds has written an open letter to letting agents calling on them to end fees to tenants.

The letter on the Labour party website says:

Private renting is now the norm for 9 million people, including 1.3 million families.
Many face unstable short-term lets and high letting agent fees every time they move. There is little transparency about what people are charged, with renters paying £350 on average. These charges are unfair on tenants and are for services for landlords that they are also charged for.
That’s why the next Labour government will introduce legislation to ban letting fees for tenants.
But a solution is open to us now. I’m asking you to help renters with the cost-of-living crisis: please stop charging tenants these unfair fees now.
Emma Reynolds


In response to the, our governing body ARLA’s representative, Ian Potter said: “Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.”

Under the likely proposed amendment, letting agents could only require tenants to pay a month’s rent upfront and a deposit. They would not be able to charge for services such as administration, referencing or check-in inventories.

It is the view of SurreyLets Director, Sally Asling that there is a case for legitimate, reasonable costs to tenants, although these should be clearly explained and, as per recent legislation, clearly visible from the outset. Sally Asling deems that it is not unreasonable to charge tenants a small administration cost,  nor is it unreasonable to expect them to pay 50% of the inventory check in or check out fees. However, these fees should be justified and not excessive.

The Landlords pay an agent a fee to find a tenant, included in this is the cost of advertising and marketing, viewings and the administration. However, I see nothing wrong in expecting a tenant to share the cost of the Tenancy Agreement, pay for their references and share the cost of the inventory.  Sally Asling comments “As agents we have a duty of care to our tenants. Therefore when we issue a draft tenancy agreement we encourage tenants to not only read it thoroughly but to ask questions and we frequently will make amendments and represent the tenant to the landlord in the negotiation stages. If an agent is working for you to ensure the tenancy is created in the best way possible, is that not worth paying for? If both Landlord and Tenants  are negotiating the agreement so that both parties are fully happy and comfortable, I do not see the harm in sharing this fee. In addition, the consumer across many industries are used to paying a fee to obtain a reference. If I want a bank reference I have to pay a fee, despite being a customer. It is not unreasonable to expect a tenant to pay for the cost of their reference. Finally, I do not deem it at all unreasonable for a Tenant to pay for either the check in or the check out of the tenancy. We have legislation in place to protect a tenants deposit, but organisations like the DPS will place importance on an inventory when collating evidence in a dispute at the end of tenancy. At SurreyLets the Landlords pay for the make of the inventory, which is by far the greatest cost, and they pay for their tenants to be checked in, however we charge tenants for the check out report as its in the tenants interest to be able to prove the condition they are leaving the property in to aid the return of their deposit. I am concerned if Ms Reynolds has her way, Landlords will not cover this cost and if tenants are not willing to pay but dispute the condition at check out where this will then lead to disputes that go to the DPS?


Sally Asling further states “There is a value to tenants using an ARLA licensed letting agent. A tenant can be sure we have client money protection so they know that monies handed over in good faith are safe. They can be certain we are using up to date, fair tenancy Agreements, they can be sure that we have a code of conduct to follow and that in the event of things going wrong there is organisations that we belong to like The Property Ombudsman where they can take their complaint. This is the value a letting agent offers a tenant over picking a Landlord out of the Free Ads paper and taking a chance. A tenant takes a chance on independent Landlords, they take a chance on where their money is going, they take a chance on there being no back up, or no one to represent them if and when things go wrong., they take a chance on who the property truly belongs to and if it meets safety requirements, all in all, they don’t know what they are really getting and if it all goes wrong, and the landlord is never seen again – there is no governing body to fall back on. All these things cost an agent money. It costs us to be a licensed letting agent, it costs us to protect clients money and have the right insurance, it costs us to belong to regulatory bodies, but us reputable letting agents do this, so that both landlords and tenants can feel safe and have some certainty. However if the Labour governments will is won, there will be a shortfall of income to letting Agents that will have to be passed onto landlords. I think it is unrealistic to then suggest rents won’t go up because I think long term they will. Either that or it will drive Landlords away from using Letting Agents which will take the industry back 10 plus years.   As a nation we have a housing shortage, we frequently hear in the news that we need more rented accommodation to meet the demand. This supply is going to come in part from Landlord investors who will need to realise a return on their investments. It is naïve and short-sighted to think that legislating against tenant fees will not impact this. It is naïve and short-sighted to make the Letting Agents the “bad guy”. Letting Agent’s have been calling for the government to legislate practice in the industry for as long as I can remember, yet it fails at the whims of the government time and time again.”

Tenant fees should be monitored. They shouldn’t exceed £300.00 plus VAT per letting. At SurreyLets our “fee” to the Tenant at the commencement of the tenancy is £300 plus VAT and this is for the Admin fee, the reference checking and part Tenancy Agreement fee.  A tenant shouldn’t have to pay any costs in finding a property, or in renewing a tenancy and most certainly not in anything further more than the three areas I’ve mentioned, namely a small administration fee, a reference fee and part cost of the inventory checking process. Tenants do have a choice whether to use an agency or not. They can take their chance with Landlord from the Free-Ads, or they can choose to use a licensed, ARLA Letting Agency. However, there should be an expectation to pay for a service when it offers the safety and security of a licensed agent.

Sally Asling, like many letting agents are calling for this proposal to be carefully considered. Clear assessment of the policy will establish that it is flawed. There are problems within the industry, usually the “big boys” with rip off charges  which just rings true that the  misguided actions of  the few will have a disproportionate effect on the reputations of many. However, there are many small business like SurreyLets who are fair and reasonable, striving to look after both Landlords and Tenants in the ever tightening constraints of more upon more legislation.



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