An outright ban on letting agent fees charged to tenants would harm the entire market, result in higher rents for tenants and lead to the closure of some businesses, a meeting of influential agents has said.
The NALS Fair Fees Forum met for the first time this week, in London, to discuss the issue of upfront letting agents’ fees, and possible alternatives to the outright ban in England for which the likes of Shelter, Citizens Advice and Generation Rent are lobbying, and which Labour will ban if it gets into power.
The event brought both industry and tenant groups together in the first forum of its kind about this controversial issue.
The morning session was for agents only and included delegates from major letting agent and property management firms including Belvoir, Chestertons, Foxtons, Hunters, Leaders, Northwood, Portico, Savills, Society, Spicerhaart, Touchstone and Winkworth.
The group exchanged information on fee levels and models. Members agreed unanimously on the absolute need for fair, justifiable and transparent fees, and said that excessive fees should be curbed.
The agents also agreed that in preparing the rental contract and as part of the rental relationship, they provide a service for the tenant for which agents should be able to charge reasonably.
The agents agreed an outright ban would negatively affect the market, and discussed the law of unintended consequences, such as higher fees, fees being hidden or passed on to the consumer in another form, a drop in standards and/or the closure of some agencies.
Consensus was reached that the industry needs to speak with one voice and that it should be proactive.
The afternoon session was a larger gathering including representatives from British Property Federation (BPF); Shelter; Crisis; Residential Landlords Association (RLA); Greater London Authority; Ombudsman Services: Property; and Property Redress Scheme.
The Department for Communities and Local Government was also represented, but listened rather than participated in the discussion.
Robust viewpoints were discussed ranging from support for an outright ban through to a potential cap on upfront fees.
There was a clear consensus that further work needed to be undertaken, not least with regard to the current lack of enforcement for those letting agents who do not explain their fee structure clearly or adhere to the requirement to display fees.
The forum agreed to the creation of the Fair Fees Working Group, to bring forward workable alternatives to an outright ban on all fees.
NALS – the National Approved Letting Scheme – will provide the secretariat for the working group and DCLG will attend meetings in ‘listening mode’.
The first session of the new working group will meet within 18 days to explore:
- Transparency – how to provide further clarity on fees to tenants and the service the agent is providing
- Enforcement
- What is ‘reasonable’ regarding fees?
- Affordability for vulnerable tenants
- The outcome of the ban on fees in Scotland
I might not be currently active in letting and management software as a service supplier, that doesn’t mean I haven’t got a fair and equitable solution developed and waiting to be switched on. (No its not a profiteering system that will make me rich) someone needs to listen and understand.
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Go onnnnnn.
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I won’t share it openly, it is a system for good for Nals to implement rather than a system for protecting unwarranted profits.
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1. Some of the industries biggest offenders are on the committee.
2. In regards to a fee cap people will do well to remember what happened to university fees when they brought in a cap. It did not bring in a cap so much it made the industry raise its fees across the board to a minimum level competition was gone. All universities charge the maximum they can. (Think that again was labour’s idea – well done!)
3. I wish the likes of generation rent and shelter will remember letting agents are not charaties.
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3. I wish the likes of generation rent and shelter will remember letting agents are not charities.
That is precisely what they are doing. They are rotten to the core, their pro-tenant and anti-landlord doctrine has been around for decades. As a charity Shelter should remain independent, but never do and are implicit in defrauding many landlords.
As for Generation Rent quote: Two thirds of private rented properties have no mortgage, and thus have significantly lower costs and capacity to absorb new regulatory requirements. For many landlords if not all, buying a property, maintaining it is an investment and just like any business makes a return. Without that return (yield) a business will cease. That is the nature of commerce all over the world and yet, landlords are treated as not being a business in the UK under labour proposed policy and Generation Rent ideology and yet they for the purpose of regulations and tax.
Landlords should be allowed to charge tenants for work done. To allow no fees will be a complete disaster for the lettings industry. The tenant from hell costs more than many a landlord can ever recoup. Charging tenants for Referencing sorts out a lot of the chaff and list of poor tenants should become mandatory. They are all so keen to make a list of bad landlords! Who is going to pay for the referencing of bogus tenants? If they go down this line of NO FEE then it will have major implications with any industry that charges an application fee!
If they ban fees, rents will rise, arrears will rise = less landlords and less properties …. out on the street. Shot themselves in the foot with their far left wing ideology.
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Let me also put this out to the pressure groups (They are not charities)
How much should an individual earn with 5 years experience in their field working 5 days a week 8.30am – 6.30pm in a high pressure, customer demanding environment?
Can we agree at least 25k but ideally 30k would be a fair wage?
Now add on the cost to the company, processing applications, Training of staff, recruitment, advertising, Processing of monthly payments, insurances, dealing with tenants complaints, arranging works for owner, dealing with problem tenants, dealing with problem landlords, Keeping up with regulations, attending court when needed, processing insurance claims, arranging workmen, Mid term inspections. Corporation tax, VAT, Accountants fees, software fees ……. I am sure i have missed many out!
Average rent in UK i would estimate at £800 fully managed fees are (depending where you are in uk) typically 5 – 10 % lets take 8% as an average. The average fully managed property will bring in an income of £64.00
So is charging circa £250.00 to a tenant to set up a legally compliant property which has all the safety certificates and gets our time for free in viewings and ongoing communication really that excessive?
Oh and by the way would be nice for the owner to get a profit out of his business!
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