A ban on letting agency fees charged to tenants in Wales would be a dangerous move, a landlords’ organisation has claimed.
The Welsh wing of the Association of Residential Landlords was responding to the Welsh Government consultation on the plans, which follow similar moves in Westminster.
In its consultation response, the RLA states that an outright ban, as is proposed in England, would be a dangerous move, with ripple effects throughout the sector.
With a major source of revenue eliminated, agents would have no choice but to pass on their overhead costs to landlords, who in turn would have no choice but to absorb this cost by raising rents.
Landlords are facing huge financial pressure due to new regulatory changes to mortgage interest relief, Stamp Duty, mandatory licensing in Wales, and the new EPC standards that will be enforced next spring.
The RLA is arguing that rather than a ban, there should be a capped fee, within which a set of services would be required.
These could include referencing, credit checks, and assistance with negotiating the terms of the tenancy with the landlord.
Additionally, the RLA is advocating a set menu of fees for services that might not apply to every tenancy, such as guarantor referencing or surcharges for lost keys.
Do you know that until the last week or so I would have said that a ban on lettings fees was a huge mistake.
Now, after the experience of a friend, I’m pretty sure I’d vote for a ban.
My friend is Greek, very well educated and qualified. He is obviously a foreigner because of the sound of his voice and the olive tone of his skin. His English is excellent, probably better than mine, but he sounds Greek.
He has put down “holding deposits” on 4 properties in the last two months and has only just now signed a contract and got the keys.
Fortunately the last one was worth paying, the one before that was refunded because the property was multi agency and the landlord chose a different tenant (for race reasons, but it’s not the agents fault). The very first one was refunded for more or less the same reason.
However, the middle one, an agent that appears to have a good reputation, they have kept his deposit on the basis that his previous landlord’s wife did not speak English so the landlord’s reference came back as a “?”. Instead of giving him time to sort it out, they told him that the landlord had rejected him, they had re-let the property and they were keeping his deposit.
Just a few hours would have been enough to sort it. They use a cheap online referencing agent and comprehensive computer software that creates all the documents (well I know the software can do it – if they’re not using it properly then that’s their lookout…)
Their total costs to the point where they said no should have been less than £40.
On that basis, I have to say that agents being able to keep £500 or more on a fraudulent basis is bad news.
I knew this kind of thing went on, but my friend’s experience has really opened my eyes to the problem.
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I’m not sure why you mention the guys Nationality as you will find that in a lot of areas now the vast majority of tenants being dealt with are foreign nationals. Like someone that judges people on race are you guilty of judging all agents by the behavior of one or two?
If an agent steals someones money in this way then you should be advising him to either: Take the firm to court, contact the local press about the firm, or alternatively have him and 5 friends carry out a placard waving sit in at their offices and invite the press along. Nothing you have said is relevant to decent agents charging legitimate fees for services.
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I absolutely think that tenants should pay for their references though.
HomeLet, Van Mildert and other referencing companies all charge £10, £15, £20 or something like that per person.
The government could ban all upfront fees, except for a basic referencing charge.
They would have to ban “kick backs” or commission payments from the referencing companies to the agent at the same time. Because the referencing fees would quadruple overnight and the agents would then be paid a referral fee…!
The problem is that agents would find a way around it in some way.
Which means a total fee ban is the only way forward.
Ouch, I think I’ve just been stripped of my Conservative credentials.
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Agreed – tenants should pay for their own referencing but there should be a cap on the fees paid. My Son and his partner recently rented. The Agents did sweet FA but charged over £600 in referencing and “admin” fees. Tenants had to do their own online referencing checks and I doubt very much that the reference company charged anything like the fees paid out to the Agents. The inventory was substandard and the agreement was about 10 years out of date. There were numerous clauses in the agreement that are no longer allowed. I was tempted to advise Son and partner to say something but then thought “why should I redraft their agreement”. I will simply wait to see if there is a problem down the line and then step in and advise that once the illegal terms are removed, the landlord will not have a leg to stand on in terms of enforcement. Not that I think there will be any problems anyway.
Some, not all, agents are charging way too much. I appreciate that some do take up employer and previous landlords references direct and do get actively involved in the referencing process but this particular agent did absolutely nothing and charged an obscene amount for the privilege.
I do believe, as stated above, that each tenant should pay for their reference check, let’s be honest, many don’t mention something that would prohibit you from even carrying out a check in the first place, such as bankruptcy (I have come across this) and for the landlord to waste money on such a check is wrong. The landlord should pay the cost of the initial agreement and any inventory but on renewal, if either party wants a new agreement rather than relying on a roll over, then that party should pay a fee to cover the cost of the new agreement (shouldn’t be too much as unless any terms have changed it will simply be a case of re-printing but then there is re-registration of the deposit etc).
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Anonymous coward:
did you report this agent? Many people experience what your friend experienced, chose to do nothing other beat everyone with the same stick. Unfortunately the bad spoil it for the good so unless complaints get made and followed through this will be a continuing trend and if the fee ban comes in then it’ll get worse as every penny counts and your friend will be one of many victims.
We need to push out the rogues and enforce legislation instead of banning fees.
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