ARLA Propertymark is calling for referencing to be exempt from the letting agents’ fees ban.
In a note to member agents yesterday, chief executive David Cox said: “Tenant referencing must be exempt from the ban.
“The reasons for this are manifold. Referencing ensures that tenants do not take on a financial commitment which is unsustainable. Referencing reduces the risk of tenants falling into rent arrears which often results in them being evicted and subject to County Court Judgments.
“This can lead to a drop in credit rating and difficulty sourcing other rental properties or making successful mortgage applications, along with difficulty sourcing low-cost credit from mainstream suppliers.
“Quality referencing helps to reduce homelessness.
“While it is frequently said that referencing is available for a few pounds, this is not accurate. Our primary research has shown that agents list referencing as one of the single most time-consuming aspects of the role.
“Referencing is not simply a case of sending a form to a third party – it is frequently a complex process which is in part required by law (Right to Rent checks).
“Referencing involves ensuring forms are completed properly, making requests to referees and guarantors, checking a tenant’s credit history, liaising with an external referencing company, collecting employment evidence and information from previous landlords, checking passports or other documentation, storing copies securely and scheduling and carrying out follow-up checks where legally required.”
ARLA Propertymark says that its research shows that agents take an average of eight hours to complete referencing checks.
The organisation is continuing to press for an extension or suspension of the Government consultation into the proposed ban.
ARLA Propertymark is also, “in light of the frustrating context created by the Government”, inviting members to give their input into the consultation response that will be submitted.
On Friday, during an interview on BBC Radio 4’s Today programme, housing minister Gavin Barwell made it clear that the ban would go ahead.
* Separately, and further to our story yesterday, TPO says that tenants will still be able to seek redress when the ban on fees charged to tenants comes into force. There has been speculation that because tenants will no longer be agents’ customers, they would forfeit their right.
However, ombudsman Katrine Sporle told EYE: “There will only be a gap in redress if landlords cease to use agents and decide to self-manage their properties. Where there continues to be a contract between the landlord and the agent, tenants can continue to raise complaints, where the agent has not carried out their contractual duties.”
Sporle also said that the issue is being raised with DCLG as part of the consultation exercise.
It should be that private landlords have to come under redress as be it agent or landlord direct. Why should redress be stronger if under an agent compared to a landlord direct.
By pushing commercials away from landlords to use agents, consumer tenants will lose a safety wall.
There appears to have been a 10 year plan to push much rental stock back into the sales and primary ownership sector by government for the last 10 years.
Even the most modest of Lettings Agents will soon need an ongoing law degree.
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How can an agent breach their contractual duty to a tenant when the fee ban comes into force, if no money has been exchanged between tenant and agents for services rendered? Doesn’t there have to be consideration for a contract to be in force, and the rent belongs to the Landlord?
So this ban is diluting everything that has been put into place to protect Landlords, Tenants, and Agents over the last 30 years.
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Genuine question:
If a tenant signs a contract that stipulates they can move into a property on a particular date and that does not happen because of the Agent/Landlord, – whether they paid a fee or not – couldn’t the tenant look to be compensated for any financial loss?
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I would say YES….exactly the same as the tenant not moving in on the agreed date.
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Thanks Ding Dong. I thought maybe I was missing something.
Could one of the (~11) users that thumbs-up’d lettingsguru’s comment please advise if they know better?
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Not if it’s subject to contract no
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When will we all realise that consultation means to only accept comments (and then ignore them). It will then be a Government dictate that the fee ban will take place. End of! Ignore the Government, innovate and find other schemes to get around their ban – use your imaginations. What we see nowadays is that you cannot negotiate with dictators. Gavin Barwell has already stated the Government has made its decision.
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In 4 weeks time Barfly will disappear into another government department such as dept of b******t never to be heard of again and another clueless muppet will get the job having relinquished a position in the dept of jobs for the boys seeking a larger pension contribution.
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What a load of complete nonsense.
The last agency I worked for that had letting (never again) charged £50 for referencing, sent an email to the referencing company and then waited for a reply. The tenant did the forms online and the company collated all the relevant references etc. This was neither time consuming or expensive. Yes, letting agents should charge for referencing…but only referencing and only what it what the referencing agency charges them. Plus maybe a few pounds for their troubles.
Letting agents have been milking the tenant cow for too long now. Time to charge your client. Don’t be scared of them (the landlord) They’ve come to you just like a vendor comes to a selling agent and asked for you to provide a service. Stop making excuses for the landlord not wanting to then pay for that service. The only fee a letting agent needs to charge is the referencing fee. Nothing else. Letting agents are only sore because the tenant was a dead easy target. Now earn your money and start charging the right person.
Have agood day!
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Have to agree with FromTheHip64. Far too many agents are offering ridiculously cheap fees to landlords just to gain the instruction and then loading the Tenant with costs.
Time to stand up to the Landlords who want something for nothing. If all the agents did, and had a little more foresight, then we wouldnt be in the situation we are now.
I write as a small independent who will be certainly be affected by the Tenant fees ban, but I`m starting to come round to the idea that it will hurt the poor agents far more than the good ones.
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James, you have rather hit the nail on the head, and that is, a lot (not all) of agents have discounted and dicounted fees charged to landlords only to have them subsidised by the applicant / tenant. The problem now is pushing the fees back up and getting the landlord to pay for them when the tenant doesn’t.
What is rather being overlooked in all this, is that all tenant fees will be banned, and as such all agents will have to do something different to survive, which probably means charging the landlord more, which won’t be that difficult to achieve, as all agents will be in the same boat. Landlords aren’t simply going to exit the market en-masse.
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Fromthehip:
” The last agent that I work for that had letting charged £50″
goodness me!!! when was that 50 years ago? Go and sit in a lettings office now, progress an application from viewing to move in and see if you still feel this way. I’m sure you’re an expert on the 150+ law surrounding residential lettings.
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ask a landlord, whether or not, he wishes to have a referenced tenant, and you will see the party who should be liable to pay the fee
referencing charges bear no resemblance to the fee charged to the tenant
if ARLA want to be transparent, then the only cost which should be charged is the fee from the referencing company (and not their current idea of it being charged at £60 and the agent still given a back hander)
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its not quite a back hander if they are covering overheads is it?
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BAN ON AGENTS FEES?
Surely it would] make good sense to CAP fees to tenants rather than ban them completely?
This would stop the big agents charging tenants excessive fees as all agents would be charging similar fees!
Michael Wilson
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“Referencing is not simply a case of sending a form to a third party – it is frequently a complex process”
haha. No, it really is a simple case of sending a link on email to an applicant which then gets sent to a third party for processing.
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You are assuming that all applicants have access to the internet and are capable of filling in the form without advice.
If only that were the case.
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Whilst no doubt many Estate Agents rely solely upon a referencing agency form when checking-out a prospective tenant, we have found that in many cases this is insufficient to be as certain as one ever can be, that the Applicant is going to be a responsible well-behaved Tenant. As other respondents have commented, many applicants require assistance when filling in forms, particularly but not only, when dealing with HB applicants. This takes time and can be exceptionally time-consuming when helping an applicant whose first language is not English.
Furthermore, we have found, over the years, that it pays to carry out a brief ‘home visit’ to the applicants current accommodation where possible as this has saved us from a number of potential ‘nightmare tenants’ in the past (whose paper references were generally deemed ok). It is also the case that referencing agency forms do not seek information as regards ‘personal character references’ etc which can occasionally be useful, even if only as a future point of contact, and which sometimes helps in forming a fuller picture of the character of the applicant. This incurs professional time-costs.
Overall, and having regard to the obligation to carry out Right to Rent checks as well, the letting agent can spend a considerable amount of time dealing with an Applicant. This has to be paid for somehow. A further point to consider is that where a potential Tenant cannot afford even a moderate application fee, they are hardly likely to be able to afford the rent. It never ceases to amaze me how some Applicants allegedly had the application monies (and sometimes the deposit) ‘put by’ but suddenly find some other ‘priority’ such as a holiday which they’ve decided to spend the money on and then wonder why they can’t progress an application. The something for nothing mentality is still alive and well in some people and letting agents are going to be landed with multiple applicants who have nothing to lose by applying for several houses/flats with various agencies and then ‘cherry-picking’ a property at the last minute and leaving a trail of problems behind them at other agencies, at no cost to themselves.
Whilst I have no sympathy for Agents who charge extortionate application fees from multiple applicants, I do not believe that this practice extends to the majority of good local letting agencies and could easily be dealt with, as has been previously stated by others, by a simple cap on charges. However,I also suspect that the government has already, in reality, caved-in to the likes of Shelter etc as a vote-winning ploy and are not willing to listen to reason, unfortunately. Perhaps the next step will be to ban application charges to mortgage applicants (joke!) or booking-fees for holidays, and the myriad other things which cost us fees in modern life. The nub of the matter is that , in general, property is expensive whether buying or renting. The only realistic way to change this is to massively increase the supply or to cut down on immigration numbers who all require housing and other public services and utilities. We all know that this is unlikely to happen, certainly in the short/medium term.
Why penalise the responsible letting agents when a few simple changes could stop the ‘greedy’ few?
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Equally you are assuming that all agents want to use third parties for the job of ensuring their landlords best interests are looked after. Never. All referencing in house, thank you.
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We agree that people often have the idea that a tenant reference is a simple matter of a quick check, but as your article details, it should always be much more than that. The protection of tenant’s interests is frequently overlooked, but we shouldn’t ever forget that a landlord is entrusting a significant investment, his own income and financial security to a virtual stranger. It’s in the landlord’s interests to secure a thorough appraisal of the tenant’s situation and credentials. Any fees ban that drives the industry towards cheap, superficial references cannot be in the best interests of any party – landlord, tenant or agent.
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Inventory and schedule of condition is not a fee so this surely won’t be banned. I can see the costs of inventories going up with percentage paid to agent to bypass tenancy fee ban.
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