As tomorrow’s crucial – and hasty – vote on letting agents’ fees draws closer, the industry is continuing to make its views clear.
But, with the news that Ed Miliband would attempt to force a vote being announced only last Thursday, concern is growing that agents were given so little notice – effectively, just three working days.
There is also concern that a number of letting agents still do not even know about tomorrow’s vote.
At Friday’s ESTA event, for example, it was apparent that non-Eye readers were completely unaware of this challenge to their livelihoods and business models.
As things stand, MPs will be asked to vote on banning fees charged by agents to tenants in an amendment to the Consumer Rights Bill.
The Bill will apply across the whole of the UK, including Scotland where the existing law banning fees to tenants was explicitly tightened up on November 30, 2012.
According to Thomas Ashdown, of Scottish lettings portal Citylets, 10% of letting agents in Edinburgh have disappeared since that date, and he estimates a similar number in Glasgow have gone.
He says rents across Scotland have risen from an average £677 per month to £699. While this rise may be marginal, those with knowledge of the Scottish lettings industry say it is an open secret that agents have found other ways to charge tenants fees.
Meanwhile, lobbying organisation Generation Rent has said that agents charge whatever they think they can get away with – typically £500, according to Miliband.
Alex Hilton, director of the campaign group – who was a Labour candidate for Kensington & Chelsea in the last election and used to be a campaign co-ordinator for the party – said: “Letting agents certainly do provide a service – for landlords. They don’t work for tenants, so they shouldn’t expect to be paid by tenants.
“For a tenant, £500 is a huge amount of money to spend when they’re moving house, but to a landlord bringing in many times that over a year it would be a drop in the ocean – especially as Paragon estimates that the annual return on buy-to-let is 16.3%.
“Moreover, the fees are only that high because that is what letting agents can get away with – printing out a tenancy agreement does not cost £100. In a cut-throat market for houses, tenants can’t shop around based on agent fees.”
But Lucy Morton, former ARLA president and director of lettings at WA Ellis in London, said if upfront fees were banned, they would simply be reassigned elsewhere.
She also said: “Some argue that purchasers are not charged any fees (unless, of course, they retain a finder) yet tenants are.
“What everyone is failing to recognise here is that purchasers instruct solicitors and surveyors: solicitors carry out their legal work while letting agents do the legal work on behalf of both parties and charge far less fees.”
Peter Grant, of software firm VTUK, said: “If prospective tenants have made no financial commitment and are free to apply for as many properties as they want and create administrational processes, then the balance of the transaction is corrupted, leaving the system open to financial abuse by applicants.
“Furthermore, verification is key at the outset of the contract for the protection of both the tenant and the landlord, with the agent delivering a hugely valuable service in ensuring the property is right and proper to be let, that compliance is met, and that the financial transactions are correctly administered.
“Clearly these services need to be paid for, and my belief is that if these were removed from agents and passed on to solicitors in a conveyancing model where both sides cover their own costs, then the tenant would be looking at a tenfold increase in their fees.”
Sarah Rushbrook, of property management firm Rushbrook and Rathbone, said politicians were expecting agents to act more like a charity than a business. “We could see agents cutting administrative corners, with disastrous repercussions,” she warned.
“The private rented sector is not a not-for-profit service.”
Eye has also heard from agents and industry suppliers, including a number who are lobbying their local MPs.
Most of you are giving very similar arguments: Miliband’s move is ill-thought out and could hit tenants through higher monthly rents. Politicians would do better to work towards regulating all letting agents, to raise minimum standards.
Among those who have contacted Eye are: Matthew Dabell, of Aspire, in London, Luke Gidney of LetLeeds, and Sanjay Gandhi, of Moss Properties, in Doncaster and Wakefield.
Please keep your views coming, both directly to us and, very importantly, in the comments section below this story.
We will keep you regularly updated on this important issue, and if there are any developments today, these will be reported promptly on this site.