Agency renewal fees paid by landlords should be banned says proptech firm
Hello Neighbour has made the comments as it launches a ‘Stop Renewal Fees’ campaign which it says will make the industry fairer for all.
Proptech lettings platform Hello Neighbour has launched a campaign to stop landlords who rent property through high street letting agents ‘wasting up to £1 billion a year’ paying ‘unfair renewal fees.
There are over one million rental properties in London, it says, and 760,000 of those properties are using high street letting agents.
RENEWAL FEES
But with the average tenant in London staying in their rental property for two years it’s estimated landlords are currently paying renewal fees on 380,000 properties each year.
Hello Neighbour says: “It’s literally money for nothing! That is just for the second year. If a landlord is lucky enough to keep the tenant for a third year the cost just keeps adding up.”
But it’s not just renewal fees that Hello Neighbour has in its sites. It says letting agents are increasingly encouraging 18-month or two-year tenancy agreements at the outset to provide long-term security for the landlord and to help the tenant to ‘beat the queue’.
But Hello Neighbour says what this actually means is that the agent can charge the highest letting fee – not one discounted for renewals – for the longer full period up-front, whilst still only finding one tenant and without even having to amend the contract.
Agents can then charge additional fees for the contract; references; inventory; holding the deposit and arranging safety certificates – all on top of the initial percentage and renewal fees.
TAKEN ADVANTAGE
Philip Shelley, Chairman of Hello Neighbour, says: “For too long, high street agents have taken advantage of landlords by charging fees for things that just aren’t fair – especially renewal fees.
“It’s crazy to think that landlords are handing over this kind of money every time their tenants simply choose to stay in their home for another year.”
He adds: “Punishing landlords for having a great property that people want to remain in is just absurd.
“Inevitably, these renewal fees get passed onto tenants through increased rents which many landlords need to do to make it viable for them.
“So in reality, both the landlords and tenants are the ones who suffer, while the letting agents’ revenues continue to soar.”
My company Rent Happily has never charged renewal fees to tenants or landlords.
These fees are unnecessary, create unrequested work, and most importantly, keep tenants in constant uncertainty about whether their tenancy is renewed or not.
Assured shorthold tenancies automatically roll into periodic tenancies after the fixed term, not a finger has to be lifted for this, not a penny spent.
It is obvious from the article the author has absolutely no idea what is involved in managing a renewal, the work involved or the costs associated with it. So how can they possibly be involved in any capacity a proptech provider.
Utterly astonishing
What people like this forget is renewals are not just about paying money for nothing. There can be rent negotiations, new agreement, tenancy changes, and most importantly keeping the tenancy compliant with the multitude of new legislation. Especially with landlords who manage their properties themselves who are not even aware of some legislation until the renewal comes up and we advise them. The renewal fee’s are a lot cheaper then the fines.
We had to start charging renewal fees 2 years after the ban on tenants fees as we were not covering all our costs. We have always charged fair lower fees to all, unlike the big boys. This again hits out at the good independent agents yet again. Costs and t legal requirements and training continue to increase but we cannot charge for our services!? Bloody ridiculous. We are still not able to pay our staff or ourselves what we should be earning for the work we do.