There has been a lot of talk regarding banning tenant fees, but is this really the issue that should be a focus for reform or manifesto?
Claims that agents charge thousands of pounds in fees are simply wrong. Security deposits are not fees. A month’s advance rent is not a fee either.
In the last Property Ombudsman annual review, only 3% of issues reported related to fees and this figure included both landlords and tenants. It is also pertinent to note that not all of these complaints were upheld.
Then we see proposals for rent capping which will deter landlords and lenders from investing in new builds. Who will invest when their income is influenced by politicians? It’s hard enough for developers having to accommodate the ‘not fit for purpose’ Section 106 requirements.
Ultimately, the only way to reduce rents is to build more and increase supply. Three-year tenancies are welcomed by agents and professional landlords as they negate costly void periods. In my experience, it’s often tenants who want shorter contracts as they crave flexibility.
Make no mistake, the PRS can help the housing shortage and make rents more competitive. New pensions regulation give over 55’s an opportunity to invest and provide more homes so why are so many intent in making this wonderful opportunity look as unattractive as possible?
If any new government is serious about improving the industry then there is much that can be done which will be supported by most agents. Headline grabbing vote winning policies are not the answer.
Telling tenants they won’t have to pay fees and that rents will go down is a vote winner – but it will not improve standards and indeed may do the opposite. Starve landlords of income and repairs and redecoration will suffer.
When deposit protection was brought in by the Labour government, it declined to ensure monies were held in a custodial scheme. Most problems regarding unfair deductions from deposits are a direct result of this decision.
Further, neither Labour nor the coalition made Clients Money Protection insurance compulsory. Why? Thousands of agents want it and SAFEagent is all about showing the public which agents have CMP. But politicians will not legislate and refuse to explain their reasons.
Yes, there are rogue elements in the lettings industry as there are in every industry, but some credit should be given to the thousands of agents who voluntarily subscribe to a regulatory body and who comply with the increasing amount of red tape.
Further, the immense work undertaken by NALS, ARLA, RICS, UKALA and SAFEagent has been ignored and instead the entire industry has been pilloried.
Whilst I do not purport to represent the industry, I object to this unfair stereotype. We who comply with existing regulations are placed at a commercial disadvantage as such regulations are not policed nor enforced.
Citizens Advice has now called for tenant fees to be banned, saying that the 2013 Advertising Standards Authority ruling is being ignored by many and unenforced.
This was too early to be an April fool as the glaringly obvious flaw in this argument is who would police this new rule any more than the ASA one. Let’s be honest, it hasn’t gone well in Scotland for this very reason.
There are very real horror stories out there which disgust good agents as much as they do consumers, but a corrupt policeman doesn’t make a corrupt police force.
Politicians point fingers at the lettings industry and seem oblivious to the fact that only they can introduce legislation to change things. It’s like me complaining to a restaurant that I am overweight. The important thing all sides must achieve is consumer education. This will only be effective if we all work together and move away from the fractured partisan messages sent out by different groups for their own ends.
Some claim we double charge, yet no one objects to Sotheby’s seller’s commission and buyer’s premium.
Others claim we charge for doing nothing so clearly have never experienced how much work goes in to agreeing a tenancy. Conversely, perhaps the Government should pay us for all the work we do with immigrations checks, anti-money laundering and collection of taxes for HMRC.
Of course it is utterly unfair for hidden fees to be sprung on tenants at the eleventh hour or worse still after a tenancy has commenced. Some of these tenants are indeed captives of the lack of housing stock so don’t complain as they need a home.
I believe a simple amendment to Consumer Protection Regulations should be: “An agent cannot charge any fee which was not disclosed in writing prior to the commencement of the tenancy and any such fee demanded after this date will result in a fine up to x number of times the amount claimed.” This should appear prominently on the fee tariff soon to be introduced.
Agents are open minded and adaptable and I have heard many ideas. Perhaps a reference fee should be payable by the landlord as it is they who actually benefit from it and it wouldn’t penalise tenants who lose out to another tenant through another agent.
Maybe the government could cap tenant fees in the way they have credit and debit card charges. In any case, likening us to loan sharks is as unhelpful as it is untrue.
What we should be doing is working together for the good of the consumer, not using an important issue to gain votes at the expense of the facts.
Most agents with whom I speak want regulation, compulsory CMP and transparency applied to all and those who ignore the same get punished. Educate consumers not to use agents who don’t comply and starve the so called ‘rogue’ element of business. Money talks.
Finally, to end where I began, whilst I agree industry should not use tenant fees as a cash cow, not being paid for the work we do and the reasonable costs incurred is wholly unfair.
After all, MPs weren’t banned from claiming ALL expenses, were they?
Sensible and well thought out. Please everyone get behind this campaign.
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A good article, the points are well made. We work with around 1000 independent letting agents across the whole of the UK and speak to hundreds of tenants every day. Our discussions with tenants are at the most stressful point of the renting process for them, just following their application when they need to provide an acceptable reference. Very often we know exactly how much letting agents are charging tenants for application fees and references along with the advice that the agents provide relating to the proposed tenancy. The figures often quoted by Shelter, Generation Rent and other politically motivated groups are simply wrong. Having completed close to a million tenant references, complaints or even negative comments about fees are exceptionally rare. Fees are often quoted being around £100 to £200 and the vast majority of tenants have no issue with this; we have solid evidence that professional letting agents provide a quality service to tenants, along with value for money. The average earnings of tenants referenced is now £27,000.00 so a fee of £200.00 linked to such an important transaction is far from ‘rip-off’. Politicians, Shelter, Generation Rent and others should stop confusing the PRS with Social Housing.
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While I agree with Eric wholeheartedly, and support his aims, I don’t believe we will change the modern politicians mind one iota. Look at Stella Creasy as a prime example; she isn’t stupid, she is well informed and knows full well that the vast majority of letting agents are fair and honest people supplying a valuable and needed service during a housing crisis. But saying that won’t get her any votes – apart from maybe a few agents – so she has taken the other track to win votes from the tenants and tenant groups that oppose letting agents. She won’t care if rents go up or down, she won’t care whether agents charge fees or not, and she certainly won’t care when more tenants become homeless as the PRS shrinks under labour control. But what she will care about is winning enough votes to enable her to get her snout into the trough along with the majority of other mp’s.
Gone are the days when a politician got into politics to serve his fellow man to the best of their abilities; that age is sadly gone now.
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http://www.thetenantsvoice.co.uk/ agree with ‘fair’ tenant’s fees
We all know the work that goes into checking out a tenant and preparing all the paperwork. If fees are stopped this cost will be moved onto the rent. Long term tenants will suffer this way.
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Great article – lets hope Labour and Shelter read it and actually listen to it!
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I’ve emailed the link to this page to my Labour MP (who is also a whip) but somehow I doubt he will read it. I’m still waiting on a reply to an email I sent two months ago!
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Excellent article ! The good work of ARLA,RICS, NALS et al is mentioned but what are they doing to rally behind this campaign which is absolutely vital to win if Labour forms a government after 7 May? As tenant fees represent a sizeable chunk of lettings agents’ income, have the powers that be (or aspire to be) considered the other unmentioned repercussions of banning them: staff would probably be laid off to compensate and therefore would not be paying income tax, NIC etc to the Exchequer. Oh yes, and HMRC would not be getting the VAT on those lost fees either !
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“SAFEagent is all about showing the public which agents have CMP” and yet will not accept CMP if its through TPO which is ridiculous. Also, tenant fees are not a sizeable income in OUR business, its a fee to cover cost nothing more, nothing less and that’s how it should be, but we all know the agents in our our areas that do rip tenants off and some of them are corporate national agents.
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Excellent article. As above, lets hope the politicos & pressure groups start listening…..although I think that is somewhat of a forlorn hope
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Deposit legislation was complicated by the lettings industry with ARLA and the NLA making money from a shambolic system!! Sadly, you only have yourselves to blame when a future government press forward with more regulation and a banning of tenant fees.
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Sounds like very weak Government to me. The legislators can’t blame those who they intend to legislate for their own failings. If you knew the reason Labour backed off, you will appreciate that they were more worried about losing votes than doing the right thing. Tories refused for the same reason.
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