Lobbying organisation Shelter is calling on the Government make sure that the forthcoming ban on letting agent fees is outright, comprehensive and unequivocal.
Shelter says it is vital that are no loopholes for agents to exploit.
Any exemptions, it says, would make the ban meaningless.
In a new blog on its site, Shelter says: “While sensible agents will act to get ahead of the ban, we expect many to attempt to lobby for it to be watered down, drawing obtuse distinctions between unfair fees and nebulous ‘charges’.
“From behind the scenes activity, we know some seem stuck in denial and are persisting in their defence of rip-off fees to tenants.
“The experience of Scotland shows why the Government will set itself up to fail if it goes for anything other than a clear cut ban on all upfront fees to set up or renew a tenancy.
“Scotland is sometimes mistakenly described as having ‘banned’ letting agent fees to tenants in 2012. In fact, so-called ‘premiums’ had been illegal since 1984.
“But the law was widely flouted, with agents charging for things like reference checks, inventory fees and check-in costs.
“Following a Shelter Scotland campaign, the Scottish Government was forced to clarify the law in 2012, setting out that all such up-front charges to tenants were illegal.
“Even with the clarification and resultant publicity, awareness and compliance in Scotland is still less than perfect – allowing a minority of agents to continue to rip off tenants.”
The blog continues: “Given that even the unequivocal ban in Scotland has been met with compliance problems, we would expect any attempt to carve out exemptions in England to make a ban here positively meaningless.
“Compliance will hinge on renters knowing their rights and feeling confident in challenging rogue agents. It will be incredibly hard for them to do so if some fees and changes are left out of scope by the legislation.
“Picture a tenant desperate to secure a flat and attempting to negotiate with an agent who insists that they are a professional and their particular fees are legitimate. If the Government really wants to fulfil its pledge to ban unfair fees, then it must do so in black and white and not legislate for harmful grey areas.”
Seems to me to be a good idea not to let in the private rented sector but go over to Airbnb/holiday lettings.
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Such a short sighted decision to be making.
Compliance will be an issue in England to.
When progressing a tenants Application through to signature stage can take up to 20 hours, if not more in complex cases, why shouldn’t a fee be charged for this?
Let’s turn the industry upside down instead of fixing it which is what this fee Ban will do. Just put a cap on it
Will shelter be lobbying to ban fees for estate agents as well and mortgage brokers and insurance companies ???
Shelter state that agents should prepare for the ban, how do shelter suggest this is done by shutting up shop and allowing everything to go online?
Then what happens is we have an era of online agents and if you thought compliance was bad now poor tenants are in for a world of hurt
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Would this be the same shelter that received c £40 million last year according to the accounts and paid out c £37 million in staff costs paid a CEO c £134,000 & directors c £775,000?
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Banning letting agent fees, the truth, the whole truth and nothing but the truth
Should you want to hear it…..
There’s been huge speculation and mass debating over whether this is right or wrong so It’s important that everyone sees it for what it is, you’ve heard of the butterfly effect right? Therefore sit back have a cup of tea and chillax whilst I’ll take you on a journey that will blow your mind.
Below this article is a spider diagram that gives you the outcome of banning letting agent fees. For those of you that want to know in some depth I shall go into greater detail now.
Social media and the general consensus is that the banning of agent fees is a positive and well overdue move from the chancellor off the back of greedy, money grabbing letting agents. Letting agents that have for several years tried to exploit the poor and working class tenants as they have no choice but to pay fees. Let’s not forget that many tenants do not wish to have a mortgage but the flexibility of renting so they can up sticks and leave as and when/where their employment takes them. Or just simply want the lifestyle of a swanky property without even having to maintain or repair it and live to and beyond their means. Others however are struggling to make ends meet and forced to rent as they cannot get on the property ladder because saving for a deposit can take 20 years on average without help from parents, inheritance or a nice lottery win.
The pressing issue here is that agents fees are too extortionate for tenants to keep paying whenever they wanted to move and felt they were getting very little value for money, coupled with many not understanding the purpose of charging such fees. How did this decision come about? A minority of of the rented sector have called for this with the backing of certain biased organisations (not naming names)
This is a knee jerk decision to protect and support tenants in the private rented sector however the negative consequences will cause a catastrophic ripple effect for the very people this ban was set out to protect who will in turn become far worse off.
Why will they become far worse off? Keep reading I’ll get to that don’t you worry.
Why do agents charge these fees in the first place? Here’s a simplified generic formula that cuts straight to the jugular, don’t question it, read it and digest it. A standard letting agency branch has business overheads of roughly £20,000 per month (very generic example) with a profit of around £3000-£4000. If you base this on 12 properties being let meaning 12-18 sets of referencing fees being taken which averages around £360 per property. £360 X 12 lets = £4,320 which is the profit made by the letting agent. Take that profit away then you no longer have a business and a business really should make profit if they are to continue running.
Now, many say “pass that cost to the landlord, they are the client” or “why should tenants pay in the first place?” That’s all well and good as the agent (if they are of any quality) will require that profit to re-invest into the business and develop the staff so they can deliver a good service as well as necessary legal training so they are keeping their landlords and properties compliant coupled with the ultimate importance of safeguarding the lives of the tenants.
The general publics opinion and perception of letting agents is a poor one as they are seen as slick haired, flash car driving liars. Many base their opinions on their experience and rightly so if it’s been nothing but negative but ask yourself what made you choose that agent in the first place? Are they all the same? Do the big wigs of their companies sit around drinking coffee and twiddling their moustaches hatching plans to where they can prey on the vulnerable and make more and more profit so they can pay for their private jet to Amsterdam for their quarterly jaunt? Unfortunately the bad spoil it for the good agents out there and trust me there are plenty of good agents out there. Instead of putting so much effort into the banning of fees, why hasn’t that energy been put into regulating and monitoring EVERY agent, ensuring they’re compliant and then introducing a cap on fees so businesses can still function and tenants aren’t hurting in their pockets as well as ensuring agents are delivering a value for money service.
Still not convinced? We’ll let’s just dig a little deeper in this rabbit hole shall we?
Here’s a little bit of history for you. Since the banning of agent fees in Scotland in 2012 not only has there been an increase in rent due to this (yes despite surveys and falsified stats they have risen due the ban) how do we know this and who’s best to give us those facts? The UK’s largest tenant referencing company who reference more tenants and look at more rents than anyone else in the UK, now they are stats we should be hearing about, as opposed to a minority short sighted survey. Scotland hadn’t been regulated for some time and is of course a different market, however certain agents in Scotland are charging illegal fees on the side and it’s still happening now. Let me give you an example, it’s free for a tenant to be referenced, the agent will do one open house event because the demand has been increased but the supply hasn’t due to lack of new houses being built and landlords being taxed even further, so less rental property available. Then the agent will receive multiple offers from tenants and then say to the prospective tenants “ok mr and mrs smith you slip me £200 in cash and I’ll see the property goes to you”boom there you go, an agent who was usually a straight down the line kind of guy has gone rogue to put food on the table for his family, the tenant doesn’t care because they’ve secured their future home at a small cost. YES THIS IS ACTUALLY HAPPENING!!!!!
So that’s one minor negative to whet your beaks a little, here comes some more….
The fee that will undoubtably get passed to the landlord will naturally want to be RE-couped by said landlord that no longer is profiting from renting their dead mothers house or their retirement fund, whatever that building means to them. Therefore not only will that saving of an average £360 or £450 as an initial payment from the tenant be added on to the rent by the landlord at £50 a month meaning the tenant pays in excess of £600 over the course of one year not to mention the proceeding years they continue with renting that property. Therefore instead of paying the initial letting agents admin/set up fees (which many businesses do charge a set up fee) the tenant will suffer hundreds of pounds more year on year. Kind of defeats the purpose of the ban right? That’s if the landlord chooses to use an agent that requires those necessary fees, they may just go to an unregulated, un-compliant online or bucket shop agent that wouldn’t recognise compliance if it jumped up and bit them on the buttocks. Then what happens? “Yes mr landlord, no mr landlord, three bags full mr landlord” they’ll be so frightened of telling the landlord they need to get their property in order through the worry of losing them to another agent that they won’t tell them (or they won’t have the skill to advise safety in the first place) and then a property gets rented to a tenant that isn’t fit for purpose. Then what happens? The gas safety certificate fails to get renewed one year and the tenants baby suffers carbon monoxide poisoning, off to court that landlord goes, manslaughter and a fine for the landlord and a distraught family that want blood. Then landlord sues the agent for negligence. Then the government and certain organisations will then want to see agents fully regulated and monitored. Sound extreme? Let me give you another example then. The landlord puts decking out that doesn’t have balustrades or hand rails, their tenant steps off the decking and fractures their ankle so severely their career as a ballroom dancer is over because the agent failed to inform the landlord of the safety aspects of the property and the landlords obligation. I know what your thinking “REALLY?!?” That is an actual real life example that I know of as so many agents out there aren’t advising or misadvising landlords left right and centre and this will increase as part of the ripple effect of banning fees. In addition to that, landlords will be more reluctant to do maintenance because what’s the point? it costs money, yes it can be tax deductible but sod it as the landlord they are being taxed left right and centre so let the tenant get so fed up that they pay for it themselves. Although many tenants will adopt the philosophy of “why should I repair the property when its the landlords obligation?”rightly so, therefore the tenant will withhold rent until the work is done. This is when another cycle of bad relationship between landlord and tenant arises. Landlords opinions of tenants will continue to be “okay that will do for a tenant” and the tenant’s opinion of landlords will be “my landlord is getting his mortgage paid so I will do nothing” The misunderstanding and hatred for one another grows exponentially. Landlords then come together and share the same philosophy that all tenants are problematic and all letting agents are terrible. We need to break this cycle and in order to do so we need support and understanding to promote professionalism throughout the industry not a draconian measure of banning fees thinking that’s the answer to every tenants prayers.
If a tenant isn’t paying a fee then the agent doesn’t really care about that tenant, right or wrong? It happens already, some tenants are seen as bottom feeders, which isn’t right, they are customers that make the world go round and without tenants we wouldn’t have a private rented sector. That being said they aren’t paying a fee and don’t deserve a service, (this will be the philosophy adopted by these already rubbish agents), treated like mushrooms throughout their applications, fed poop and kept in the dark. At the drop of a hat the agent could say “actually I don’t like that tenant let’s go with one of the other several applications” there’s no commitment from the agent so it doesn’t matter who moves in where anymore it becomes a numbers and income game, leaving the tenants in limbo and who cares who really needs the home because hey ho they aren’t paying for it. Tenants won’t be called back about the property they fell in love with because the agents have become so stretched with this large loss of income they won’t make any money picking up the phone and telling someone their application was unsuccessful. That being said every business will adopt their own effective method but the point is they just won’t care. There are agents out there that currently operate in this way and we shall see a significant rise in this mentality so if the general public thought they had a bad experience with agents already it only stands to get worse just like when people complain about the NHS. Stretch people and the service dwindles and no-one cares anymore.
The agent won’t hold on for that all important working professional tenant that wants to view on Saturday as its their only day off, the agent wants to get it let Monday and out the way because the advertising is costing money. plus going to the same property twice means fuel costs when they could be in the office letting another house and making money because after all it is a sales industry and commission is how agents live. Therefore that agent needs save money as and where possible, sod customer service, You get what you pay for and as a tenant if you pay nothing you get nothing.
Any tenant with below average credit (and let’s face it there’s a load out there) will get completely overlooked because the agent will be covering the cost of the referencing from the outset so why take a risk with anyone that even hints a bit of bad credit? They’d pass with a guarantor or payment in advance but the agent doesn’t want that kind of business they want an easier life whereas before if someone needed a guarantor then that’s an extra £120 in referencing fees for the business although a considerable amount of admin to go along with it but money is money isn’t it? Now the agent will take no chances and not look at any personal circumstance it’s all about a black and white tick box and if you don’t fit into that box then you don’t get that property you love.
Without fees any tenant can offer on multiple properties through multiple agents and try their luck at whichever one they can get because let’s face it, it’s free to do a viewing and it’s free to rent so what have they got to lose? Not a sausage! Landlords will receive multiple offers and then could end up with no-one for a longer period of time than necessary extending their void which loses them money which will frustrate them to the point of not using an agent anymore. The landlord would then adopt the philosophy of why not stick the property on social media and see what happens, or they’ve just seen another six agents pop up out of nowhere why not try one of those? which would be like jumping out of an airplane without a parachute. Why? Because there will be no referencing background checks and no rent and legal protection for the landlord who ends up letting to a friend of a friend who’s actually a convicted criminal that has found a back door into renting property which happens to be right next door to you in your lovely neighbourhood and makes your life hell. They’re there all day, loud music, revving engines, disrepair on the property which is causing damage to your own property, encroaching on your boundaries, using threatening and antisocial behaviour and the landlord has no rent and legal cover so either has to pay out of savings, remortgage or get repossessed, all of which will make the surrounding neighbours lives hell. We’ve all seen the programmes and we are all grateful for good neighbours aren’t we? It could seriously raise the chances of it happening to you. This could single-handedly contribute to a worse type of tenant entering into the private rented sector when the industry is slowly trying to regulate and sweep up the rubbish, we again take one step forward and two steps back in losing sight of what the real issues facing housing are.
Landlords will be more meticulous on keeping more and more deposit money as they are getting pinched left right and centre as well as carrying the costs of more fees so they’ll come down harder on tenants for wear and tear etc. Tenants will just give in and hand over vast sums of money as they have no guidance other than local authority or charity’s to advise them and let’s face it the advice they usually give tenants circles around “wait for a court order” or “withhold rent until the works are done” TERRIBLE.
Even if landlords don’t have to carry the additional fees then the ones that do will push rents up and the landlord Mr smith will say “my neighbour Bob down the road let his place out for £50 more a month than this one and mine has an extra window upstairs so it’s got to be worth more than his”, YES LANDLORDS ACTUALLY SAY THINGS AS RIDICULOUS AS THAT AND BELIEVE IT. which will catch on causing a ripple of inflated rents that tenants will naturally pay as they do already.
Why is there a constant flow of properties and moving unhappy tenants? Property recycling, certain agents promise tenants the earth and upon moving in the property is substandard and over the course of the tenancy the landlord will be unaware or refuse to get works done. Then the tenant gets highly frustrated and vacates to find somewhere that will look after them which won’t happen. PERHAPS THEY’ll with old some rent as they know the agent they’ve used doesn’t care about regulation or rent and legal etc… The agent then remarkets, gets a whole other set of fees and the process and vicious cycle continues. What’s the answer? Not only use a proper agent in the first place but the government need to give more power to regulatory bodies to ensure ALL letting agents are regulated, giving the correct service and follow the ombudsman code of practice to the letter. If that were done then tenants wouldn’t begrudge paying fees as they will feel the value for money when they walk into their gorgeous immaculate home that’s ready for them to move straight in. They will open their welcome to your new home card and box of essentials provided by the agent in a fit for purpose property that they are happy to move into and stay. That way it will be a better and brighter future for the private rented sector.
Some have the philosophy that tenants live beyond their means and aren’t the best at managing finances. How many tenants out there have the latest smart phone or a 52 inch plasma HD 4K TV screen, driving nice cars? Or how many smoke, paying £10 a packet x 2 packets a week = £20 a week = £80 a month so smoking tenants will have to give up to cover the cost of the inflated rent wouldn’t they, when the ban is introduced? Or simply not pay rent? I’ve deviated somewhat but the point I’m making is when I purchased my house, a house that I fell in love with and saw potential in as my family home for the future it was £3000 more than I could afford and I didn’t exactly have a money tree at the bottom of my mums garden. What did I do? Beg, borrow and sacrificed a lot as well as held out buying any furniture for some time just so I could secure my home. I had an agent, a solicitor and a sales progressor as well as a mortgage broker that I paid fees to and ended up progressing my own sale. I was at that time of the philosophy of “why did I pay any fees!!!??” The fact of the matter is I did it once, I felt a little exploited at the time because the service I got was poor in comparison to what I paid, however we all have an expectation on service that isn’t always met so should we ban fees from every company as the consumer or should I just take that on the chin and accept it? If the government actually enforced professionalism and agents having to meet a certain standard as ARLA agents do then that may not have happened? Who knows? Maybe banning fees on everything should be the way forward?
I hate paying an excess on my car insurance when I pay to insure my car anyway, let’s ban excess.
I hate paying a fee for parking my car in a car park when I pay road tax, ban parking tickets!
I hate paying more for my diesel compared with what the oil companies pay, ban it and give it to us at cost price.
I hate paying interest on my mortgage as it’s half the amount of the capital, ban interest on mortgages.
I could go on and on…….
I know there are probably a great deal of things many of you are considering right now but these are the cold hard facts from someone on the frontline that eats, drinks, sleeps and repeats residential lettings day in day out and watches all of this unfold. The frustration for me is I want to change the world when it comes to lettings because I have helped so many people over the years and because I’ve exceeded their expectations through my passion and commitment to giving a great service, the fee has never been questioned and hope that the government do not ban fees and regulate far better but I fear we are too late. The gauntlet has been thrown down, the wheels are in motion and anarchy is about to unfold.
Let’s employ people to actually have the power to enforce professionalism and strict penalties, sift out the rogue agents, landlords and tenants and cap fees instead of abolishing them altogether.
Thank you for reading…..
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Thanks for the effort in posting Votta
I have been a letting agent for 21 years now, and in 1996 when I first started, we never charged a single bean to the tenant.
The only reason tenant fees creep in was because the new entrants to the market wanted to attract landlords with low fees and they felt they could get about 30 – 40% of income via tenants fees.
I have run my own agency for 10 years, and admit I have charged tenants fees, albeit low in comparison to most others. I have changed my the way my business works since the proposed ban, and I no longer charge tenant fees. In addition I have not charged my landlord any more commission, nor will I introduced uplifts to contractors invoices which has been suggested by some colleagues. I will work smarter, more streamlined and take this as an opportunity to differentiate myself from the competition even further.
The agents who need to worry, are the ones who have been ripping off the tenants and making a bad name for the industry!!
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I try an be professional and fair in my posting’s an not emotive but I am going to break with that on this post.
F**k off Shelter, go have a wash and grow up. You do not have a clue what you are talking about. You are not a charity you a s**ding pressure group. You are actually making things worse for renters. Oh and if you had not worked it out agents are businesses not charities and do a he’ll of a lot for free for some of the stupidist and demanding members of society.
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Smile please
you made me smile with your post and I agree wholeheartedly
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🙂 I feel your pain smile! I think you could have left it at the first three words though, spent too much precious time on them there.
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If shelter want to help the homeless go build some homes and rent them for free. That way you will do some good and give value to the people that give you money instead of spending peoples generous donation paying expensive employees and CEO!
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I will certainly go back and read properly the generous posting earlier (!!!) but quickly: surely the loony-lefties at Shelter won’t be able to do anything about landlords putting up just the first month’s rent to cover the ‘lost’ fees that agents will pass on to them, will they ? How on earth could they monitor this ?
And what does Shelter plan to do about private landlords charging tenants fees ?
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In Fairness their not looney left but typical far right.
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The problem Shelter seem to overlook is that when you remove any financial responsibility from the tenants you also remove the demonstration to landlords that they in fact are able to pay. It then becomes harder for tenants to secure a tenancy not easier and the very socially disadvantaged that Shelter supposedly represent become even more disadvantaged.
Shelter really are the epitome of cosmopolitan socialism!!
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RealAgent – if you take this a little further, and an applicant doesn’t have to pay a fee at application stage, not only do you remove the “demonstration to landlords that they are in fact able to pay”, but you also remove responsibility from the landlord to “play fair”.
In fact what reason would there be for a landlord (agent) to remove a property from the market before the tenancy agreement is signed? What will stop another applicant coming along and offering 10/20/30% more rent for a longer term to “gazump” the existing applicant, who may well have incurred costs related to their move (removal costs etc), as well as having given notice on their existing rental. Only to now discover their current Landlord wants 15% more rent as they can let it for more on the open market. (Not to mention the duplication of work burdened on the agent).
I accept that all regions are different, and all properties are different, but remove the financial commitment from an applicant and you remove the ethics of playing fair!
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is there no reason, if tenant likes a property and referencing can be done quite quickly, that the tenancy cannot be signed within 24 hours and ALL the monies paid? surely that is a financial commitment from the tenant and the landlord has committed by signing the tenancy. (obviously if there is a tenant in situ, that can be agreed subject to vacant possession being received)
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Ding Dong, I accept that, but I think what I am trying to demonstrate is that there is yet another level of hassle being created. We all know no two tenancy transactions are alike, and there is already a lot to do with references, right to rent, safety, inventories, proceeds of crime etc etc etc, I for one would be might cheesed off if a landlord bailed in favour of a better offer from another applicant, through another agent for example……
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I agree that in theory yes it can be done Ding Dong, but in reality is that likely to happen in 9 out of 10 cases? The strain on a busy lettings business to be able to turn around a tenancy in 24 hours just isn’t sustainable for any more than the exception of tenancies, which means that tenants are going to be at risk of simply not knowing they’ve secured a property to move into until they have physically signed the contract and paid over the money. All those tenants waiting for deposits back from previous tenancies? Well they may as well forget arguing dilaps as they will have no chance of getting their deposit out quick enough to get into somewhere else!
I agree with Lettingsguru I think gazzumping will be another unintended consequence of all this and I genuinely believe that tenants are going to suffer not out of malice from Landlords or Agents but simply because a huge level of responsibility and protection currently offered to tenants, because of their financial involvement in the transaction, would have been removed.
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How will the Government recoup all the lost revenue? Letting Agents must pay hundreds of thousands of pounds every year to HMRC in tax on tenant fees and what about the lost VAT revenue on those same fees?
Banning Letting Agent fees to Tenants is actually a stealth tax because the Government will need to recover the lost revenue and therefore add a tax elsewhere which the whole country ends up paying somehow – including all those ‘poor’ tenants!
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The economic answer is that those who are in the demographic of renting, will spend the money on other products and services, so the HMRC will receive the money in some shape or form. The money not spent on fees will not just disappear into savings accounts, but more likely be spent on everyday items where VAT is payable.
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I’m sorry to say but the VAT loss, whilst a big number to a lot of people, when you look at the net VAT receipted by the treasury will be inconsequential.
Personally, I wouldn’t buy a big red bus and splatter the treasury loss down the side, asking how are you going to fund the NHS now, for example!
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Well said Easylet. When the subject first came up I submitted the very question of lost VAT to the Chancellor’s office – but, you got it, I’m still waiting for an answer………….
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The white paper states very clearly that the proposal is to ban unfair fees, not fees per se. I see no reason why referencing fees should be included in this, as there is nothing unfair about needing to formally qualify a tenant’s suitability and affordability.
If a blanket ban ever comes into force agents need to collectively agree on a strategy to disrupt this issue. For example, in Votta’s post above, refusing to even consider a tenant who needs a guarantor, refusing tenants with any bad credit and stating that all properties will be marketed until the day of move-in in the hope that another tenant is willing to pay more. When they complain about such [probably necessary] practices agents should give them a copy of a leaflet – made available to all agents across the country (hello ARLA?) – explaining why this has become necessary – and giving them the full names and contact details of the appropriate staff members at Shelter for them to vent their anger at.
Shelter needs to split into two entities – one for charitable work, and the other for lobbying/pressure. Sadly, at present, their main activities position them as a pressure group. They have lost their way and become the fat cats they so despise.
It’s interesting that the pretty picture showing expenditure breakdown in Shelter’s annual report makes no mention of staff costs, but when you look at what each section relates to it is clear that most (60-80%) are staff costs – £2.8 million in pension payments alone! Assuming the c. £40 million mentioned by another poster is correct then approx 7% of their income goes on staff pensions. I don’t remember seeing this is any of the publicity.
ARLA/NAEA – You should be ashamed of yourselves. Standing there with your hands in your pockets, watching your members’ livelihoods crumble around you with issues such as this and the #conmisery advertising scandal. Start doing your jobs – it’s not just about holding jolly member conferences. Prepare responses before they become issues and have bullet-proof answers for any of the objections that mis-informed idiots such as Shelter put forward. Get in the press, get on the news, get on Question Time to put the real facts and options forward. No? Thought not. Enjoy your conference.
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Well posted RedRooster and I would love someone from the NAEA or ARLA to come on here, a publication we KNOW they read, and actually start saying how forceful a case they are making about this and to whom!
All I have heard from them so far is the limp argument that rents might go up, well threats similar to that were the arguments that lost the campaign to remain, the Brexit vote, the points mentioned here so far today are in my opinion the real consequence of a Lettings fee ban and its about time tenants actually knew what else they were likely to now be encountering!
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Wow I thought I wrote long comments! Reality is, whatever shape it comes in at, agents that need that income to survive will have to charge it to the Landlord who will cover this with rent. Shelter can scream ‘no loop holes’ but there is nothing they can do. What it will hopefully eliminate is agents who are already comprehensively rewarded for their work charging unnecessary fees simply to boost profits because they can. As always, taking a single viewpoint on a national industry is nuts- how can you compare the challenges faced by a London agent earning £2-3k for a let to a regional agent earning aroudn £400 for the same workload?
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Hello Shelter, I very much doubt that I will receive a response but let’s hope so.
Firstly my letting agency is only very small in the grand scheme of things and by no means as powerful and influential as Shelter! However, from day one of opening we agreed to pay a small percentage of our profits to a local homeless charity. In my mind, we were helping in a small way the people that were not on any registers/systems and therefore would not be illegible to rent any of our properties.
Now, this is not me being holier than thou, but I do resent being told that the fees we charge are unjust and unfair! I have four wonderful staff to pay and I consider them to be friends and they all have families. They are real people with real lives. Let us say I only pay the minimum wage well then that’s £60,000 a year in wages! I then have tax, vat, rents, gas, electric and much more to pay before I make a profit and I eventually earn some money!! so lets round all that up to around £100Kpa in costs. So where does that £100K come from? It comes from management fees that we charge our landlords and it comes from the fees we charge potential tenants for referencing, financial checks, the right to reside checks and for showing them around a property. Do we make money on this? Well yes, we do if it’s a nice property and we get a clean application from the first viewer and all is squeaky clean. Life is never that simple though is it? As we all know many prospective tenants are not straightforward. they often have issues: credit, CCJ’s, bad landlords reference, previous partner issues and much more. And more often than not, none of the above is their fault. It is my staffs’ job to show compassion to listen and not judge our tenants, to dig a little deeper to spend that little bit of time with them and often that means making a judgement call and presenting a case to the landlord. Do we make money on the upfront fees we charge this client? No, we probably dont after the time taken!
So Mr Shelter, here is my question, which member of the staff do I lose? Which family tonight, sit down and worry about paying their mortgage? Now that might seem dramatic but as I said we are talking real people with real issues.
As Shelter advises do I start getting ready now for next year, well I do so I’m about to cancel my standing order to the homeless shelter.
The next potential tenant that comes in that has had issues in the past do we waste one minute on them? No, I don’t think we do anymore. After all, they are not paying for a service, we, therefore, dismiss them without listening to their story. we simply move on to the quickest and easiest potential tenant.
What’s the alternative? we charge the landlord to check a potential tenant? well if so the above still applies in many cases. Does the landlord pay for this out of kindness and therefore reduce his profits? Does he take a risk on someone with a story? No, he does not, he simply increases his rent to cover his potential costs! As does every landlord across the country so we just have a status quo. So who suffers in the long run? Well, its the tenants as they pay more per month throughout the term of the tenancy and the only way they stop paying higher rents is to buy. So no help at all to good loyal tenants. So who benefitted from the change? Well, it pains me to say but it’s probably the bad tenant the ones that get their rents paid for by the DSS. The ones that move around every six months. The ones that leave a trail of debt behind them. The ones that hope a landlord won’t pay for proper checks on them! Why wouldn’t they move, as there are no upfront costs for them, they don’t need to save a deposit, they don’t even pay the rent. therefore, is it not the taxpayer covering the increase?
So what would be my solution? Firstly a central tenants register, one that we the agents can access and leave feedback on regarding bad tenants and quickly check out potential new tenants before costing landlords/tenants money before a more in depth check. However, I am guessing data protection would stop this.
Cap agent fees! I would not be opposed to this idea in the slightest, fees should be justifiable and proportionate. And if work carried out non-refundable. We have a minimum wage imposed on us by the government, so what wrong with a maximum fee?
Now that wasn’t too difficult, was it?
I look forward to your reply Mr Shelter? By the way keep up your good work, in the main I truly believe you are a worthwhile charity with worthwhile employees that justify their wages every day. As do mine!
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We need to appreciate the government’s long term strategy. Having read the recent white paper and considering the tax changes on individuals for mortgage relief and stamp duty, it is pretty clear. They don’t want a PRS with individual landlords, all the incentives are for companies to build to rent or own/run private rentals instead of people using housing for profit or pension. They want individual landlords to sell. They believe higher standards will come from corporates or investment firms and will steady supply this way. Plus the houses in the PRS that people sell due to the changes will go to home owner occupiers. The Tory and English dream of security in home ownership is what they want. We, as agents, need to adapt and start to see our customers as these investment firm in the long term and start looking for blocks to manage where we also let the flats.
Im not saying I agree with their plan / policies but smell the coffee, we don’t have a voice as MPs just seat us away, so let’s adapt
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I’m not a legal expert as some, but surely there is a case for a Judicial Review of any law that is passed. It would appear to me that any law that discriminates against a particular section of society, as in Landlords and their Agents can be challenged. I don’t see them changing the law in relation to Auction houses who charge both the seller and the buyer even though they are appointed by the seller. Logically therefore it must be discriminatory?
Perhaps ARLA, RLA and RICS shoulds be looking at this now ready for when it comes in.
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You are not saying Shelter is running an anti-company campaign? I start to see another tribunal where lawyers will spend millions of pounds to discuss what they already know but can’t make the right decision without being politically correct and going through the motions. Shelter is out of order, is going out of it remit of a charitable status and needs to remember landlords and agents will find a way around any rule, put the fee’s up if there is a cost to be recovered. I note it says because of rip off fee’s, so what about those that are reasonable, why ban them? I note they come up with no justification on that subject.
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