Letting agents face accusations of introducing new landlord charges following the implementation of the Renters’ Rights Act.
The Telegraph reports that some agencies now charge separately for services they previously included within their fees.
These include compliance work, financial statements and administration linked to rent increases.
The changes come as agents adapt to the additional workload created by the new regulatory regime.
At the same time, the reforms have affected established sources of agency income.
For example, the move away from fixed-term tenancies has reduced opportunities to earn traditional renewal fees and commissions.
According to The Telegraph, KFH now charges landlords £12 plus VAT for additional financial statements. Some agencies also reportedly charge up to £300 for compliance audits.
Agents have also introduced separate fees for completing paperwork when landlords increase rents.
The British Landlords Association has urged landlords to check their agency agreements carefully.
It acknowledged that the reforms have increased administration for agents. However, it warned against introducing unexpected charges.
A spokesman said: “Trying to recover increased operating costs through unexpected or questionable add-on fees risks damaging the trust between landlords and their agents.”
Chris Norris, of the National Residential Landlords Association, said some businesses could benefit from landlords’ compliance concerns.
“Lots of landlords at the moment are fairly concerned because there are quite big, chunky sanctions attached to getting some of this stuff wrong,” he told The Telegraph.
“They rely on their letting agent in many cases to make sure that they are compliant and they’re doing everything properly – and some will be cashing in on a lot of concern and confusion.”
Norris added that some landlords could regard the practice as “underhand”. Others may see additional fees as part of the cost of doing business.
The issue also appears to extend beyond isolated cases.
Nearly a quarter of landlords surveyed by Goodlord reported higher agency fees since the Renters’ Rights Act took effect.
However, agents have defended charging for additional work created by the reforms.
“Both agents and landlords are expected to do more paperwork to be compliant,” said Greg Tsuman, managing director of lettings at Martyn Gerrard. “If a landlord would like to outsource that, I think it’s perfectly reasonable that the agent charges appropriately.”
He added that landlords face the additional costs while their profit margins are already under pressure.
EYE has approached KFH for comment.
Comments (10)
In what other industry would a company be expected to absorb a huge increase in workload, increased costs, legislation risk and more, yet not pass on a cost? We personally absorbed a lot of these costs over the years but sooner or later something has to give.
I suspect agents have taken more and more on over recent years without having applying a charge (R2R, EICRs, smoke alarm testing, financial sanctions checks etc) and the RRA is the straw that broke the camel’s back. Suddenly agents are charging for things they’ve always done for nothing.
Of course landlords will not increase rents because of licencing, either selective or landlords register, will they?
I work for a small agency and I guarantee that despite having statements, at least two landlords will ask for copies because they “cannot find” the ones we sent. We do not charge for additional statements since it is only a couple of minutes work, but if they ask for more than that we would. The same applies to rent increases. Until the RRA we would negotiate with the tenants and agree a figure. Now, since we have to prove the increase and go through formal Section 13, we will make a charge to cover the increased costs.
Of course they will, seasoned investors anyhow. When costs add up they recoup where they can as its a business.
Fees are determined by market conditions, if you dont like an agents fees then simply use another agent? Am I missing something here?
Why doesn’t the article mention that agents are no longer charging renewal fees?
Its a crazy world when agents are expected to work harder to comply with legislation changes but not charge accordingly. Imagine asking a solicitor to do the same!
And guess what, landlords then ask for a rental increase when they may not have done so previously. And the very people the government are supposed to be helping end up losing out because rents increase!
We never charged renewal fees because we let them run in as periodic.
The media need to understand that the government cannot continue introducing layer upon layer of legislation without recognising that every additional compliance requirement takes time, expertise and resources to administer.
In any other industry, an increase in regulation and workload would inevitably lead to an increase in costs. Why should letting agents be treated any differently?
Of course, all charges should be transparent, proportionate and clearly communicated to landlords. Unexpected fees are not good practice. However, there is an important distinction between questionable add-ons and properly run businesses charging appropriately for genuine additional services created by new legislation.
Professional agents invest heavily in trained staff, technology, compliance processes and ongoing legal guidance to protect their landlords and tenants, particularly when the consequences of getting something wrong can be severe. That work cannot simply be absorbed indefinitely while agency income is simultaneously reduced elsewhere.
The continued bashing of reputable letting agents for charging properly for the services they provide must stop. If expertise, compliance and good service are expected to cost nothing, we will simply encourage a race to the bottom, driving responsible businesses out of the sector and leaving landlords and tenants with less protection, not more.
The comments on the article are a terrible read for agents, secrets commissions-everyone knows it goes on and DIY etc.
Do LL’s expect us to work for free? The workload has tripled this year and they moan about an annual rent review fee…The renters rights act is not about “tenants rights” (that was the Government gaslighting phrase), it was about more regulation, compliance and enforcement.