Letting agents in Scotland made up the shortfall in fees lost when its tenant fees ban came in four years ago by persuading landlords to include the additional costs in rent increases, it has been claimed.
The comments by Jeremy Robson (below), Group Chief Executive of renting guarantor scheme Helping Hand, come despite complaints in Scotland last year that the tenant fees ban had led to lost jobs and agency closures.
Conversely, Robson says the Scots experienced should be heeded by English agents thinking of selling up their portfolios rather than thinking they have to ‘struggle on’ following the fees ban.
“At the moment you’ve got the likes of LSL, Connells, Leaders and loads of big agencies out there approaching the smaller independent companies and enticing them to sell up their portfolios,” he says.
“But our experience has been that our Scots clients were able to persuade their landlords to add the extra costs to their rent, and therefore the letting agents made more money in the long run because 10% of the rent as a management fee, for example, is 10% of more rent.”
Helping Hand provides a rent guarantor scheme that’s not based on an insurance policy via some 4,000 letting agents in the UK and currently has rent under guarantee worth £77 million and processes 10,000 tenancies a year.
Tenant Fees Act
Robson, who has been working in the lettings business for 20 years, says his company has been facing its own challenges after it became illegal for letting agents to require tenants to take out a rental guarantor policy before renting a property, under the Tenant Fees Act.
“We haven’t seen a drop-off in demand for our product because if a tenant doesn’t have parents with the financial background to be guarantors, or the ability to pay the rent in advance, then they really have to use us or one of our insurance-based competitors in order to rent in the UK,” says Robson.