Industry is ‘sleep-walking’ into outright ban on letting agent fees, warning

The National Approved Letting Scheme has warned that the industry could be sleep-walking into a ban on letting agent fees.

Isobel Thomson, chief executive of NALS, called for the industry to work together.

Speaking after Citizens Advice repeated its calls for a ban, which is also being sought by Shelter, she said: “Efforts to explain to the media and Government the reasons why upfront letting agent fees are fair are hampered by sensationalist headlines based on often spurious research.

“It is fair for letting agents to charge reasonable fees to tenants for the work they do at the start of a tenancy.

“But we believe a cap is an appropriate way of curbing any excessive fees – which the majority of agents do not charge – and offering protection to the consumer.

“It is time to act before an outright ban becomes a real option for the Government.

“We need to speak with one voice.

“By offering a cap calculated and enforced at a local level, we still allow agents to be paid for the work they do in setting up a tenancy, while also ensuring a fair, set rate for tenants.

“We’re urging all industry bodies to come together to offer Government this proper solution to an all-out ban.”

A private member’s Bill which is currently in the Lords, which has the full support of Labour, seeks to ban letting agent fees. Baroness Grender’s Renters Rights Bill is due its next reading shortly.

It is understood that a proposal put forward by ARLA for tenants to be able to spread payment of fees over three months was rejected by Shelter.

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22 Comments

  1. Chri Wood

    Surely agents coming together and agreeing a cap could be construed as any-competitive and, be interpreted as collusion between agents?

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    1. MagneticBullet35

      It would all come down to the detail on how any cap is worked out but there are a lot of ways for this to be in the clear legally.

      The law, like running a business or a country, is an art, not a science and this can easily be argued as not collusion but the industry responsibly reining in the fee spivs and snides.

      Something needs to be done before the Citizens Advice Bureau, Shelter and the House of Lords (!) start winning ears in parliament for a full ban. It would be good for the response to spivvy fees to come from the industry rather than outside.

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  2. Will

    This will be self inflicted wounds caused by the rip off agents. Like a war it will be the innocent majority that will suffer.

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  3. Woodentop

    The biggest losers will be the tenants, rents will go up as cost still have to be covered and agents/landlords will make more money. Nonsense labour policy for an all out ban.

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    1. MagneticBullet35

      I think you’re right but you’re missing the argument here. Its about fees not being clear to the tenant. If fees were banned, yep they’d be added on to rents (I’d do it immediately) but then its easy for tenants to compare rents between properties and means they’re paying the fees over the term, not upfront. NALS is saying a cap is a way to kill the ban. Let’s see the industry get its act together on this.

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  4. paul-ch

    A cap would not affect the innocent agent nor the majority as they are already charging reasonable fees. It will be the few that will be brought in line and prevent the media, campaign groups and political parties using the greed of a few to warp the view of  general public.

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  5. Ding Dong

    The Housing Minister tweeted this a few days ago in response to tenants fees being banned:

    @insidehousing Bad idea – landlords would pass cost to tenants via rent. We’re looking at other ways to cut upfront costs & raise standards

    Do not see them banned with the tories in charge and seeing Labour will re confirm Corbyn as leader on Saturday, I cannot see a Labour Government in my working lifetime and I am 41 !!

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  6. Mark Walker

    The Bill will not be passed.

    However, the narrative will remain.

    Anything to hide the actual problem of supply v demand.

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  7. pierce

    Was about to say the same Ding Dong, I wonder if NALS saw this on twitter?

    https://scontent-lhr3-1.xx.fbcdn.net/v/t1.0-9/14322505_10154313774409017_2945717629141436920_n.jpg?oh=3e780f218d15b5b531a2a0ac79335562&oe=58667011

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  8. pierce

    I have also setup a scheme/website in consultation with other agents from a group that I run on Facebook, which I hope will go some way to leveling the playing field. the idea is for agents to sign up and get the “Window Sticker” to show they are charging a fair fee for their services.

    So far I have received good support but at the moment it is not fully live.

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    1. Ding Dong

      sounds a good idea

      I appreciate you may not have settled on a “fair” definition but would that be costs plus 25%, or a mandatory ceiling and will there be geographical variations?

      Personally, when I speak to agents, I advise to have one fee rather than 20 separate ones. (just makes life easier and more transparent)

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      1. pierce

        I have worked out a ceiling which depends on the rent and over what period the tenancy is. The reason why I have based it on rent is because of the geographical variations especially London. The site will then produce one fee to be charged across the term of the tenancy, either up front or on an event, for example a tenancy renewal.

        Hope that answers your question? 🙂

         

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    2. greg

      Sounds like a good idea. What is a “fair fee” though? Surely this depends on regional variations where one firms overheads will be higher than another.

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      1. pierce

        See above Greg 😉

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  9. James

    It isn’t rocket science to work out that banning tenant fees will only serve to increase rents. The increased costs to Landlords for compliance, along with recent increased  tax burden, has created very tight margins for many. Let’s not forget that these Landlords are trying to secure their own future given the pension debacle this country finds itself in. Banning Tenant fees will raise Landlord costs which will mean higher rents.

    So I say to the  CAB and Shelter…who pays in the end?? Your arguments are poorly conceived and ill thought out. It may not be PC to say this but give people services for free and they will abuse that same service. A factual recent example – a Tenant fails referencing because they have lied on their application form; who pays for my abortive costs for mine and my staff’s time?…The Landlord?.. Example number 2 – Tenant pulling out a day before they were due to move in as they have applications in for more than property? … Expecting no formal financial commitment from a Tenant applicant is not living in the real world and is totally unacceptable.

    NALS & ARLA…stop saying we are sleep walking in to this ban and do something about it!!!! Reputable agents will all agree on a cap, so talk with the government, CAB Shelter etc and sort it out!

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    1. Woodentop

      So right James. If anyone is sleep walking its those organisations that are saying it. ARLA & NLAS represent such a large number of letting agents they are best placed to take on CAB & Shelter …. rather than  keep talk the talk, they need to walk the walk.

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  10. Beano

    So how much is fair? Maximum total across all fees charged (from start to finish) – London £400 Southeast £350 elsewhere £300?

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  11. htsnom79

    Sheesh, moving anywhere anytime IS expensive, it’s just one of those things, I think we charge a whisker over £300 for an application with two references which, in the grand scheme of things, should be doable for somebody(s) who wants to take a contract out on somebody else’s bricks and mortar , pretty much correlates with the cost of the searches alone for a buyer lucky enough to qualify for a mortgage.

    I have some experience of being a reluctant tenant, what I found most disorientating was the knowledge that life could only be predicted in 6 and 12 month chunks, that at any time and particularly towards the end of an AST I might receive a letter telling me that for whatever reason the landlord had decided to sell/move back in themselves/terminate to rent to a relative or whatnot, clock starts ticking on the slow motion car crash that is vacate within 2 months, what else is out there? ( not much ) how much competition for it? ( plenty ) to what degree can/will I compromise? ( depends how desperate things get ) let alone the strain it puts on partners and children, double down if you’ve got a pet. Hated it more for that reason than any other, by the time I got to coughing for references it felt like the price for the return of personal sanity.

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  12. Traditionalist

    We could start with enforcing the requirement for all agents to list their fees.  Prospective tenants and Landlords should be able to quickly and easily check fees before interacting with a letting agent.  As it stands at the moment, many agents still don’t list their fees and some that do, make it very difficult to actually find them on their websites. It seems that since this requirement came in, it has made charging fees to tenants acceptable and they have escalated to extortionate levels.  It isn’t just the wriggly watch/white sock brigade either who are ripping people off, the so called ‘high end’ agents have seriously exploited the situation.

    Make it compulsory for every agent to clearly list the total amount of fees payable for each property advertised, this will allow tenants  to to be fully informed before they even make a phone call, instead of being hit with the figures once they have put in their offer.  It must however be rigorously enforced with big fines for those who refuse to comply. This could start with the portals insisting on this – i.e. 3 bed flat SW3 £3800 per month plus a total of £xxxx agents fees payable by tenant.  I think we will see fees coming down quite drastically and very quickly.

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    1. Woodentop

      It is already mandatory and being policed at a snails pace. Again another piece of legislation that some ignore and get away with. Not surprising that some don’t want to let on how expensive they are. Bring back self regulation — history proved that in the main it worked very effectively, the current regimes are under resourced and not fit for purpose.

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      1. Traditionalist

        So if the portals refuse to list any property that doesn’t have the full, total amount of fees payable by the tenant right next to the rent figure – how long do you think some agents will be able to keep charging £500, £600 and £700 plus for ‘admin and referencing’? It is pure business sense, you don’t need these flimsy bits of toothless legislation.  Like any other customer – you can take it, or leave it.  It would be of great interest to many landlords as well to see some agents are double charging. That would instantly root out the rogues.

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        1. Woodentop

          As you will know, fees are required to be disclosed in advertising and not that there are fees. Web portals will never agree to voluntary police, it is not in their interest …. however if they were held liable for aiding and abetting a breach of regulation that would be a different matter and that is where the powers that be are so short sighted.

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