The website putting together a test case against letting agent fees, using Foxtons, has spoken out on our site.
After our story yesterday, on the case which could have ramifications for the whole industry, we had a lengthy post.
As this was later in the day, and some of you may have missed it, here it is:
“Quick intro: I’m Joe and I work at CaseHub. Great to see all of your interest in this story. I thought I’d post a quick response to some of your comments.
First – on the issue of whether or not there’s an issue with letting agent fees right now:
The reaction here seems to be ‘well business is business’, ‘letting agents are not a charity’ etc. I think everyone appreciates that but there’s a big difference from a business making money out of selling its core product (ie a property) versus in the terms, fees and traps that it sets around them.
That’s the problem with the letting agent industry right now.
People have no objection to letting agents making money by taking a portion of rent paid.
The problem are the fees levied on top of already high rent to the side of the market which is most vulnerable (ie tenants rather than landlords).
It’s also often the way these fees are presented (lacking transparency), the timing (drip feeding them), double charging (same fees to landlords and tenants) and, yes, the mark-up on them versus the actual service provided.
As some have pointed out – obviously not all letting agents are equally guilty. Some are worse than others. But the practice is highly pervasive.
There’s a great report by shelter available on the practice: https://england.shelter.org.uk/__data/assets/pdf_file/0006/671649/Letting_agencies_-_The_price_you_pay.pdf
The UK government has made clear they have no desire to legislate on the matter and so a legal case like CaseHub’s is the only way forward for millions of renters who feel they have been taken advantage of.
As for CaseHub’s motives/profit from running this case: CaseHub acts as a sort of private regulator.
We take large scale consumer grievances and work with real legal experts (literally the top consumer barristers) to work out whether there is a case to be brought.
Right now it’s near impossible for a consumer to do this alone (mainly due to huge costs).
CaseHub combines the claims of many individuals and fights on their behalf with zero risk to them – the consumer pays us nothing to do this, and in the event of losing the case they are no worse off than now.
All cases are funded entirely with private capital so we take a percent of the upside as a return for our litigation investors if we win.
Some upthread have made comparisons to claims management companies (CMCs)/’ambulance chasing’. What CaseHub does is very very distinct from this. Claims management companies sit and take a cut with near no work by doing minimal paperwork enforcing law which has already been made clear (think of what CMCs do as just like what letting agents do with admin fees – charge to put a name in a contract which has already been written).
CaseHub has to go out and actually fight the legal battle to make the law clear in the first place which could easily cost millions of pounds and take years.
Feel free to get in touch if you have any other questions.”
Personally I would have no objection to a ‘fair’ fee being set for all agents to charge tenants. Government would have to decide what this is in discussion with appropriate stakeholders. The cost of what agents do in setting-up tenancies are broadly the same throughout the country, so I see no need for regional variations.
I don’t agree with zero fees for tenants because they want the tenancy to take place just as much as the landlord and therefore the reasonable costs and profit of the agent in setting it up should be shared between the two.
What doesn’t make sense from CaseHub is that the letting industry should be picked out among all other industries as supposedly making too much profit.
All businesses charge more than it costs to do the work or they wouldn’t stay in business.
Who is to say exactly what is acceptable profit and what is too much? The Government maybe but certainly not publicity seeking companies like CaseHub.
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Hi Steve,
Fairer fees would be a step in the right direction. Like you say – there’s crazy amounts of regional variation right now which makes no sense at all.
But how about just taking a % of the rent which actually covers your costs and makes the profit you need to make? At least then the level of ‘fees’ that you take in that case would be set competitively in the marketplace. Right now the system is setup such that the level of the fees aren’t competed on – it’s awful for consumers. This is what letting agents have to do in Scotland and it works just fine.
In terms of picking on letting agents – we’re not! We’re going after lots of industries but we have to start somewhere 🙂 We’ve also recently launched a couple of cases against airlines.
Again – I’d emphasise how this is not about ‘businesses charging more than it costs to do the work’. Like you say – that’s business! The problem is when businesses are making more from extra ‘fees’, ‘charges’ and ‘terms’ (ie small print and the practices some agents use to make people agree to them) rather than from their core business activity – the actual rent from homes!
Joe
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there’s crazy amounts of regional variation right now which makes no sense at all
Because of course you pay exactly the same staffing costs, rents, rates in London as you do in Lincoln?! To be fair though the cost of paper and staples is probably about the same!
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Wow!
I hope this article doesn’t spoil the general ‘feel good’ factor in the Country right now…
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Hi Joe,
I own an agency where applicants are made aware of fees at the point of viewing a property and again at the point of an offer, we do not double charge for administration and our fees are lower than 95% of our 93 local competitors. Some fees include the supplier charge and all fees include a ‘time’ charge. That is the time it takes to create and or administer. I have yet to come across a Tenancy Agreement that takes 5 minutes to create but I have read it many times so it must be true!
If you are successful my letting business with a modern approach will likely fail and I think I speak for a large number of agents here who try to do things correctly and fairly that at the very least it will affect the overall service to Tenants.
Much like Osborne’s reduction on tax relied I am not sure this is being very well thought out as it will end up harming those you are seeking to protect.
I would also be interested in when you are going to investigate mortgage fees, train fares, digital parking ticket admin fees, builders, car sales, England footballer’s wages….
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Hi Billy,
I’m glad to hear you’re transparent with all of your fees and make everyone aware of them at multiple points during the process. It’s also great to hear that you’re competing on your fees. Sadly you’re in the minority 🙁
We’ve love to hear a cost breakdown on how many direct costs you incur on your admin fee. We’ve estimated that it could cost up to £65 to setup a tenancy agreement for a single person tenancy but happy to hear more about your cost burden.
Given what you’re saying about your practices – the case that we’re running will likely only help you. Your competitors who are ripping people off with high fees and unfair practices will suffer by having to pay out refunds and legal costs. People like you who are trying their best will be even more competitive. As for consumers – the letting agent market in Scotland survived and rent didn’t go up for as a result of fees being banned there.
In regards to other areas for us to go after: we’re certainly looking at lots of different cases. Again – hopefully you see how trying to make sure that people aren’t getting ripped off with fees which are missold as costs/double charged/hidden in small print is NOT the same as trying to regulate the price the market sets on England footballer’s wages (even if they do seem high given yesterday’s performance!!)
Joe
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From the above article:
Some upthread have made comparisons to… ’ambulance chasing’.
From the response above to ‘steve cass’:
In terms of picking on letting agents – we’re not! We’re going after lots of industries… We’ve also recently launched a couple of cases against airlines.
I see a correction is therefore required to our original view of this outfit.
Multiple ambulance chasers, it is.
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Awwww… you no likee?
Diddums.
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This guy is a complete joke, no understanding of the industry looking to tap into peoples insecurities and bias thoughts to earn himself a few quid.
If a class action will be backed and won (which it will not be). Then tenants will be shooting themselves in the foot. They can say goodbye to free viewings, goodbye to free conversations before sign up. And they will find rents go even higher as we need to recoup the fees from somewhere.
How many tenants are taxied around free of charge?
Some people are SO thick it makes my blood boil.
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Totally agree. I think the general idea is that neither the landlord nor the agent should actually make money from Letting a property, but if they really must make something, then firms like case hub feel they should be able to tell you what that should be.
Of course I am certain that they absolutely only bring these so called “class actions” because there are so many unrepresented people in the world and nothing of course to do with the fact that they hope that a firm will “settle” as opposed to go to court.
Their fees are obviously no more than the Citizens Advice Bureau would charge and of course they wouldn’t be charging any more than it actually costs them.
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