Home » News » COMMENT
Regulation & Law

COMMENT

Beat the politicians: tackle letting fees before they’re banned, says Nigel Lewis, formerly Head of Content at Zoopla, now working with PROPERTYdrum.

nigel_lewis_propertydrumed_milibandThis year a bright and harsh light has been shone onto the letting industry. Agents now face compulsory redress scheme registration and there’s a voluntary code for property management. And model tenancies are in the pipeline too.

These all pale into insignificance compared to lettings fees. Agents, of course, have been charging registration and application fees for decades and most feel that they are a legitimate charge for the paperwork, reference checks and deposit chasing that tenancies require.

But in recent months a well co-ordinated campaign to abolish these fees has been underway, led by housing charity Shelter, which has persuaded Labour to pledge to abolish lettings fees for tenants in the private rented sector if it forms a government after the next election.

Unless the industry comes up with a solution the criticism will not go away.”

It is not difficult to see why Ed Milliband wants to join in. Campaign organisations such as Generation Rent have painted a national picture of low paid tenants, high rents and young tenants being ‘ripped off’ by landlords and agents – all natural territory for Labour.

The response of the industry thus far has been defence and it’s been a successful tactic so far. For example, a recent but failed attempt by Labour to amend the Consumer Rights Bill to include a lettings fee ban attracted a deluge of criticism including the lettings industry body, ARLA, who described it as “ill-thought out.”

But it’s just the start. To shut down the debate in the long term, it’s essential that agents are clearer about their fees, revealing a full list of charges much earlier in the process. This would counter criticism, increase competition within the industry and offer tenants a fairer deal. It would also help counter the impression among many that the industry is trying to hide a ‘dirty secret’.

It is the largely unintended vagueness of many letting agents that causes the problem. Too many tenants are not told about the fees they will pay or details are not stated clearly at the outset – something a Which? investigation last year highlighted when mystery shoppers were sent into Foxtons, Barnard Marcus, Martin & Co and Your Move.

But I am not here to argue whether these fees are justified, necessary or value for money. Rather, being more upfront about them would mitigate many of the criticisms – the lack of transparency is an ongoing own goal for the industry.

FIND A SOLUTION

One way to illustrate this is to compare the lettings industry with another industry. Let’s pick hotels. I recently tried to book a room in Brighton at the last moment but only one was available, at The Grand. It was £450 for the night (too much for me!) but the price on the website I tried to find it through was the price the hotel was charging – and no extra charges other than the mini-bar
variety were to be added, I was assured.

But what if The Grand charged a substantial extra fee for securing the booking, or billed me £6 for processing my credit card payment (not uncommon in lettings) or asked for extra funds to have some new keys cut? It wouldn’t make the hotel industry look good.

I am aware that it’s not fair to compare two such different industries, but unless the letting industry comes up with a solution, the criticism will not die away as more and more people rent rather than buy their homes.

One solution would be to highlight the charges in the listings. So something like “£600 PCM + arrangement fees of £300” would be transparent and fairer. It would then give agents a price difference to compete against each other with.

But, if the industry doesn’t make the move first transparency will be forced on it by a future government. Or even worse, a bureaucratic and pointless fudge deal will be struck – anyone remember HIPs?

March 9, 2015

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.