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Are letting agent fees out of control?

MPs believe that property listings should detail full tenant fees, Shelter want the charges scrapped altogether. What do members of the property industry think?


When local residents recently marched through the streets of Hackney in east London to demonstrate against high rents and what they referred to as “rip-off” letting fees charged by letting agents, one could be forgiven for thinking that this was an isolated incident in an up and coming part of the capital where rents have soared in recent years.

But the reality is that many tenants across the country feel aggrieved at the amounts of money that they are often required to pay in tenant fees – and so do some politicians. Labour MP and former Housing Minister John Healey has put forward a Private Member’s Bill calling for a ban on tenant fees, which average around £350, according to Shelter.

Healey described his decision to introduce a Bill to control the property market’s “Wild West” by licensing letting agents and banning rip-off fees for renters, as “unfinished business”.

Bill has cross-party support

“There is a silent crisis in the private rented sector,” said Healey. “Tenants are often hit by huge and hidden upfront fees. Multiple charges for administration, inventories, references, credit checks, deposit handling, contract preparation and tenancy renewal are common.”

Shelter is also campaigning to have letting fees to tenants banned in England and Wales, after similar fees were outlawed in Scotland last year.

The housing charity claims that 25 per cent of tenants who have rented a home through a letting agency in the last three years have had to borrow money to cover the charges, with one in six stating that they had cut down on food and heating to pay the fees.

“When tenants have to find hundreds of pounds in fees each time they move – on top of deposits and rent in advance – it’s not surprising that fees are causing real financial hardship, and in some cases preventing people from moving at all,” said Campbell Robb, Chief Executive of Shelter.

A recent report from the Communities and Local Government Committee also called for action to tackle “sharp practice and abuse by letting agents”, by bringing regulation for letting agents up to the level of that for estate agents. This would give the Office of Fair Trading the power to ban agents and bring in new rules to ensure the safety of landlords’ and tenants’ money.

Clive Betts MP, Chair of the Communities and Local Government Committee, said, “This lack of regulation is giving rise to sharp practice and abuse. We were told that the letting sector was the property industry’s ‘Wild West’. ‘Cowboy’ agents who rip off landlords and tenants have to be stopped. They need to play by new rules or get out of the sector.”

The report also suggests that fees and charges imposed by letting agents should be made clear before prospective tenants start the letting process. Additionally, all property listings and advertisements should list the fees a tenant would have to pay.

What do members of the property industry think?

caroline-kenny-ukalaCaroline Kenny (left) of the UK Association of Letting Agents (UKALA) commented: “Unfortunately, there are unscrupulous agents operating within the industry who are overcharging tenants and damaging the industry with their dishonest practices.”

Richard Patterson, Director of My Online Estate Agent, said, “It is, in my opinion wrong to outlaw all fees… it does not seem unreasonable for an estate agent to charge fees for tenant referencing so long as these are reasonable and not excessive.”

marc_von_grundherr_benham_rMarc von Grundherr, (right)Lettings Director at Benham & Reeves, commented, “I think it naive for Shelter to say fees to tenants are unfair as there are clearly costs involved. If these fees are banned then the costs will be piled onto the landlord which means they will need to charge more rent and this will affect tenants at the end of the day.”

george_spencer_rentifyGeorge Spencer, (left) CEO of Rentify, said, “Agent fees are a by-product of an industry which is suffering from an outdated economic model.”

sarah-rushbrook-rushbrook-aSarah Rushbrook, (right) MD of Rushbrook & Rathbone, commented, “We believe that in most cases fees reflect market growth and the subsequent legislation which agents must adhere to.”

rob-clifford-century-21Rob Clifford, (left) Chief Executive of Century 21 UK, said, “Consumers are definitely at risk and excessive fees need reigning in. Clearly in a sector not regulated by statute, there will always be firms using sharp practice to maximise profit until enough consumers vote with their feet or cry foul.”

jonathan_monjack_the_happy_Jonathan Monjack, (right) CEO of The Happy Tenant Company, commented, “Landlords and tenants are milked by a plethora of charges, many of which are hidden.”

chris_norris_nlaChris Norris, (left) Head of Policy at the National Landlords Association, said, “It is appropriate that the applicant contributes towards the cost of this early verification as it provides a safeguard against speculative attempts to rent property and attempts at deception.”

September 17, 2013

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