A consortium of independent letting agents has suggested to the Government a radical alternative to an outright ban on fees.
It is calling instead for a cap on fees charged to tenants as the equivalent of one week’s rent.
In addition it is proposing a mandatory levy – effectively a tax – on every new tenancy transaction.
The group of 11 firms, including Linley & Simpson, Morgans and Angus Roberts, suggests this would be between £15 and £25 on every transaction, paid by every agent across England.
The money would go into a central fund which the consortium of independent agents across Yorkshire believes would generate between £30m and £50m annually.
It suggests that the fund would be administered by existing tenancy deposit schemes, which would collect the money.
The money itself would go towards helping various homeless charities, and health and social care agencies, plus regulation of the lettings industry.
It names Shelter – a fierce opponent of letting agent fees charged to tenants – as a specific likely beneficiary.
The fund could also “make a significant financial contribution to ensuring the lettings industry is robustly regulated” and would pay for the infrastructure to ensure enforcement.
The group, making public its response to the consultation on the fees ban which closed on Friday, says that a fee ban would drive “certain market sectors further underground”.
The group warns that there would be an explosive growth of rogue agents, while ill-equipped landlords would attempt to self-manage their properties and tenancies.
This would result in a “wild west” crisis scenario, adversely affecting tenants.
The group also warns of “wide-scale redundancies” as letting and managing agents are “forced to make major cutbacks to survive”.
The consortium also says that a levy is not a new idea, citing several other schemes including the Community Infrastructure Levy which is paid by developers.
A spokesperson for the agents behind the idea said: “We believe it makes a compelling case for considering a different and better approach.
“We are interested in hearing the views of others in the sector and other sectors, as we drill down on the detail and the practicalities in due course.”
I think there needs to be a fee tenants pay Letting agents are a business and should be able to charge something which is reasonable. The other fee suggested sounds similar to VAT every transaction! this will just get increased year on year like the insurance premuim. The government just seems to want to shut down the independant letting market ready for the BTR .
I do not think shelter should get a penny they already rec millions from government and what exactly do they do?? Push all the proproganda the government dictates to them and just attack the landlords instead of working with the landlords to better the sector.
Give it to Crisis. but it just seems mad that the government bring in policies that have created massive homelessness and will continue to do so. Then they tax the businesses which provide the homes to generate money to then give to the homeless charities.
Time for a fresh party the Tories and Labour both are a disgrace.
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As a Landlord, just at retirement age and with a disabled step son (whose benefits have to be appealled every time to the Courts Service). Traditionally I would have voted tory but I can no longer vote Tory. They are political opportunitists with their policy towards landlords and attacking the PRS constantly, Who now want to attack those in retirement (who have worked jolly hard throughout their lives) and have actively made the most vulnerable in society more vulnerable with savage financial attacks on the disabled. I cannot vote labour as I have seen the effects of rent control in the 1970’s and the impact on housing. Corbyn might convince the new political virgin voters with convincing sounding promises of utopia but it just does not wash in reality. It leaves me a limited choice but I will use my vote as a duty to the country but it cannot be labour or conservative! It is not just about agents fees its about the massive assault on housing resulting from their wholesale failures and incompetence from Thatcher to today which they have turned to make out their failed policies are caused by others -namely the PRS.
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Hi Will
I honestly believe it goes back further than Thatcher.
In 1968 a block of flats in Newham, East London, called Ronan Point partly collapsed less than 10 weeks after the building was completed (https://en.wikipedia.org/wiki/Ronan_Point). This brought about huge changes in building practices and all but stopped the government’s Post War building programme.
We have had half a century (almost) of complete mismanagement of the residential property market by successive governments.
At the same time, our leadership has gone on to make this country super attractive to anyone living in another country – whilst we rarely have the very best of any one thing (think NHS, transport, etcetera) the overall package of low taxes, plenty of opportunity to earn money and a good quality of life if you are prepared to work for it is one of the best in the world.
Looking at it now, with the benefit of hindsight, it is absolutely obvious that this was going to happen.
However, I’ve been an estate agent for 25 years in the South East and North & South London – everyone has been obsessed with how much house prices have gone up.
The value of property has increased by about 8% per annum each year (averaged annual price rise from the Nationwide Price Index). I have not accounted for Decimalisation.
Over 50 years that means that a property that cost £10,000 in 1968 would be worth just under £470,000.
Rental prices will have gone up accordingly too – that same property would have rented for about £85 per month back then, it would now be £2,000 per month (assuming an expected yield of 10% in the 1960’s and 5% today).
If we worked with the old yield calculations (10% when the BoE base rate was 7.5%) then that monthly rent would need to be £4,000 to make it viable for a landlord to own a property and rent it out – the only reason that it works today is because of the ridiculously low BoE base rate because of the credit crunch.
If interest rates go back to their more usual range of 4.5% to 6.5% then we’re going to be in REAL trouble, because the Private Rented Sector is based on two year fixed low rates that will vanish.
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“Woe is me” from a baby boomer, what ever next?
Bruce Gubney called baby boomers: “a generation of sociopaths” and that their “reckless self-indulgence” set the bad example that millenials have ploughed into.
Tom Wolfe called baby boomers the “me generation”
Seems like you are firmly living up to those titles and descriptions.
Just in case you hadn’t noticed, real wages have been down since 2008.
In the south east you are looking at house prices 10-20x median earnings.
But yeah, it’s tough being a landlord – invest in something else then.
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Are thees guy’s of their heads? I would agree and like to see the fees caped to a maximum of £150, as i know agents don’t have much in the way of cost. However, as for paying a levy, why the hell should the agent have to pay because a tenant wants to rent a property.
The agent has to do all the work in drawing up a tenancy, doing an inventory, paying all their overheads and they want them to pay for the privilege of doing so?
As for paying into a pot and going to charity, do they not realize that the reason central government are hitting on the is because thees charities are swaying them to do so and the monies will only be eaten up in their wages anyway.
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My first reaction was – are they mad?
Deleted my first post. My more considered one is along the lines of – interesting – its bribing Shelter etc to go gentle and back off of letting agents, look at all the money raised for good causes by LA and let them charge a bit to get this. To get them on side.
Would any govenment go for this? Hmmmm I wouldnt – but then Im not the govenment who we all knows work in wierd and wonderful ways and just look at getting elected/their own skin and not the real business of running the country.
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some agents starting to sound rather desperate
I know its not easy, but embrace the change, look at your fees and start making changes where possible
for all those who started their agencies in the 90’s’ like me, will know that you can have a successful agency without tenants fee.
i dont really understand the explosion of “rogue agents” attitude. Actually banning tenants fees, will probably stop the rogue agents, because they will not be able to tempt landlords with 5% full management any more IMHO.
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Question 1: if you don’t charge a referencing fee is it because you reference them yourself and don’t use a professional company?
Question 2: again if you don’t charge a tenant a fee, how do you earn an income?
And in relation to you saying that agent’s charge fees so they can offer 5% is utter rubbish; we only charge £60 for referencing which is one of the lowest on the market, unlike some agents who £?00.00 or £?000.00 of pounds and don’t offer 5%.
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Answer one: In house – Takes about an hour.
Answer two: included within the landlord set up of £300. It is for the benefit of the landlord and me to have a referenced tenant. – If the landlord does not want to pay, then I dont want them as a landlord.
Last statement – great for you, however does not mean its utter tosh. Seen lots of online/ working from home agents set up, on the basis that they can charge low commission to the landlord and high fees to the tenant.
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Answer one: In house – Takes about an hour.
Does it now! Done properly after paper shuffling takes another one hour at least plus costs out of the office.
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Answer one: In house – Takes about an hour. Answer two: included within the landlord set up of £300. It is for the benefit of the landlord and me to have a referenced tenant. – If the landlord does not want to pay, then I don’t want them as a landlord.
Answer 1: point 1; done in house is not professional and will not normally be able to get insurance with it adding a risk to your landlords property. Point 2; how much do you pay your staff or yourself, none of which are free and by self admission you are adding it to your landlords fee “wonder if your landlord knows that”
Answer 2: Do you explain to your landlord that the fee for tenants is included with his/her cost and tell them that if they don’t like it you don’t want them! I bet not.
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Point 1 – Paying someone indpendantly does not mean it has been done professionally. – I could set up a referencing company 2morrow, does that mean I am professional? Not one landlord has complained about the detail of my referencing
Point 2 – Landlord is fully aware that we do not charge tenants any fees upfront for referencing, set up tenancies, or renewals. We charge the tenants for certain items, such a tenant swaps or where their actions have caused us additonal work such as late payment or missed appointments.
Point 3 – there are plenty of agents doing cheaper deals and who probably have better marekting. However some landlords choose us, and if I am being honest, I have been lucky to have only disinstructed one landlord in 20 years. Not bad considering other agents I speak to at events and forums.
I have no issue with the tenant fee ban, and if you are worried, then IMHO you are doing something wrong.
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Nothing at all to be worried about, in fact everything to be proud of including keeping our fees low for both landlords and tenants.
We have an excellent record and great feedback on both sides.
Thanks
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A reference only costs in the region of £5 not £60 as charged to tenant. Remember the landord is your CUSTOMER the tenant is your CLIENT; you charge your Customer the LANDLORD !!!!!
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Why should a referencing fee be related to the amount of rent ? In many cases the most difficult people to get references for are renting the lowest value properties ?
Funding a more effective political lobbying group, i.e. Shelter, could be either madness or genius, I’m undecided.
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Oh please. This is rubbish. Cap fees. End of.
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Why should I have to give a % of my fee to a charity? If I want to support a good cause I will, but I don’t agree with being forced to.
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The way Government are going shelter and generation rant will be welcome to have a % of no fee that is just about what they are worth to landlords and agents!
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Yet again someone has forgotten WHY referencing is done in the first place. Then add in all the immigration, local licensing, laws etc. and you want to add a levey? NUTS.
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I think its a dam good idea! Bravo!
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