Have agents played a part in the ban on fees by putting profits before reputations?

Unlike most government housing policy, with its return to prefabs and right to buy, the business of lettings has most certainly not gone full circle. It has gone straight down.

There was a time when letting agents were seen as the cream of the residential property sector. Probity and attention to detail were the watchwords of the lettings business, and being pilloried by no less than the Chancellor of the day was totally inconceivable.

Until deregulation of the PRS with the 1988 Housing Act and the advent of buy-to-let, lettings was largely run by women who, often, were looked down upon by estate agents as merely working for pin money. In fact, a great number of these “pin-money ladies” were hugely successful and highly influential, particularly as lettings burgeoned during the nineties.

It is also worth pointing out that they were successful at a far more complex business than estate agency. Unlike sales agents, not only did they have to achieve a deal, they were totally responsible for legally binding agreements, rents, deposits and client’s money. They did not need to hand over such sensitive and often complicated issues to solicitors.

But then, in the first half of the nineties, estate agents, having scorned lettings or only allowed small lettings departments in their back rooms on sufferance, began to take an interest. This was not surprising. Not only was the lettings industry growing but sales were crashing.

This led to large chains being formed, combining sales with lettings to cover the downturn and provide employment for legions of shiny-suited middle managers and accountants.

And as the ethos of letting homes to people and the concept of personal care began to wane, the original pillars of the lettings scene became disillusioned or were sidelined.

This led to a lack of committed agents who could see rental properties as homes for people, who read inventory reports and tenancy agreements with care, who considered all of this as part of the job and were content to take their commissions in return rather than look for profit centres in everything they did for their clients.

Instead, mark-ups on everything, once the provenance of banks and City solicitors, became the norm, while the value of the work actually dropped. Credit referencing by superficial box-ticking became acceptable.

Gimlet eyes no longer double-checked inventories (at the expense of both landlord and tenant) and tenancy agreements were no longer written for the circumstances of the property, the landlord and the tenant.

Cheap credit referencing means virtually nothing now. Inventories, too, are often tick-box exercises, while tenancy agreements are a ‘one size fits all’. All of this makes it difficult to have pride in the job or to fight off the rapacity of the line manager looking to meet targets.

What is certain is that the astonishing level of the mark-ups in a tick-box culture does not produce the same level of service.

While this observation certainly does not apply to all letting agents, it is little wonder that the pressure groups campaigned so successfully against “fees to tenants” even though they were not describing fees but on-costs. But, of course, on-costs that cost the tenant dear.

What is surprising is that the professional bodies so significantly failed over the last few years to counter that these items are on-costs not fees, and also that their members should not remain members if they continued to allow these profit centres simply to be cash cows.

As a result of this failure, the souring of the reputation of letting agents – once the cream of the property market – is now complete.

They have made it to the Chancellor’s Autumn Statement. The Autumn Statement! Anything less venal would have been the subject of far less draconian regulation by a housing minister at most.

* Malcolm Harrison is a former spokesperson for ARLA


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  1. The Outsider

    Excellent article.

  2. Robert May

    Sorry but this is is not correct; up until NFoPP people aspired to be ARLA members.  With NFoPP came the two for one deal that diluted standards beyond repair.

    As an FNAEA I suddenly received notification that I could  become ARLA. Without any check on relevant experience or qualification  I could join an organisation that up till then took real commitment and standards to join. At that point there, NFOPP and its  grab the cash attitude destroyed all that was worthwhile.

    Resisting  or blocking anything that wasn’t ARLA centric hasn’t helped either

    1. Eamonn

      I don’t always agree with Bobby but he is 100% spot on here.


      1. AgencyInsider

        I agree too. ARLA membership once really stood for something worthwhile. NFOPP was a huge mistake that should never have been allowed to happen.

        1. Chri Wood

          NFoPP was a good idea but which made some bad decisions. Watering down standards was one of them.

  3. Votta583

    The answer to the title of this for me is No.

    Tenant fees we obtain contribute towards business costs. The word BUSINESS and not CHARITY is important here.

    The average wage for a letting agent for the hours worked are circling around the minimum wage area. Everyone wants a great service but not everyone is willing to pay for it. If the overheads weren’t so high then the referencing fees wouldn’t be so high.

    if I’m to co-ordinate a move in that involves paying an external inventory clerk near on £100 then I charge a tenant whatever that costs me then we make no money in doing so, if we make no money then how do we run a BUSINESS?

    Its like saying a cinema isn’t allowed to sell refreshments because you can get the same sweets and popcorn from the newsagents for a fraction of the price. Take that away and the. Inema make £0

    1. agent orange

      lets take that analogy and run with it. I went to the cinema recently and ended up shelling out more in popcorn and drinks than the cost of the tickets! a bag of popcorn cost me nearly a tenner whereas i can get the same from my local supermarket for a pound. How can they charge so much you ask? I tell you why – because its a free market and they are allowed to charge whatever they like, its up to me whether i decide to pay it.

      In a free market principle, if a letting agent wants to charge £1000 for tenant fees, they can – its up to the tenant to say “no” thats too much. in my town there are numerous companies offering letting and we charged too much we wouldn’t get any business as tenant would go else where. Its self regulating and we don’t need the government to step in with their cotton wool mittens.

      here’s a thought, apparently its  not ok for a letting agent to charge any kind of fee whatsoever for work done, but its ok to raise stamp duty for doing nothing……..


      1. Tim Hall

        The analogy does not work.

        If a tenant wants to rent a property it HAS to pay the fee the agent is charging to rent that property. It is very rare for a property to be listed by more than one agent, and supply and demand at the moment is such that the tenant has little choice in which property they can take.

        You don’t have to watch a film, but if you do you don’t have to buy popcorn.

        Furthermore if you don’t want to pay one cinema’s price for popcorn you can go to another one showing the same film but who might charge less for popcorn or even allow you to take your own in.

        Or you do what I do and wait for the film to come out on video, and then decide you didn’t really want to watch it in any case!


      2. Votta583

        agent orange I agree whole heartedly

    2. FromTheHip64

      “The average wage for a letting agent for the hours worked are circling around the minimum wage area. Everyone wants a great service but not everyone is willing to pay for it. If the overheads weren’t so high then the referencing fees wouldn’t be so high.”

      THEN PASS THE COST TO YOUR CLIENT!!! The one who pays you….the one who employs you to do a job. Yes!!! the landlord.

      Honestly, such biased blinkered toot on her.

      1. Votta583



        THE CLIENT WONT PAY IT!!! And go elsewhere cheaper!!! It’s hard enough to get them to agree to a fee as it is let alone passing further charges on to them.

      2. A_J42

        I see what you’re saying here, FromTheHip, but the concern is that in putting more costs on landlords will lead to landlords wanting higher rents to cover those costs, which means the tenant ends up paying them anyway – and potentially paying a whole lot more if it’s coming out of their bank account every month.

        I believe there are countries where this is already the system – that landlords pay the agents’ costs, not the tenant -, but there is a different culture there, a different societal attitude. I’m working for an agent, and I can see the logic of a landlord paying, even for referencing tenants, but I’m not sure I know any landlords here currently that would be very happy about having to do that.

        Attitudes have to change if rules of this magnitude are going to be put in. Unfortunately, I’m not sure how that sort of process is to be put in motion.

        A starting point might be the move towards transparency – agents listing their fees upfront, as the law requires them to. The Ombudsman has sent out letters to my local area, asking for proof that our fees are listed, and a quick look at even some of the bigger local agents’ websites shows they are not compliant. Not sure what will come of that. But that’s probably leaning off topic.

      3. Votta583


        Have you ever tried to pass a charge onto a landlord before? I’m guessing by your comments the answer is no!?

        I can tell you the answer

        “oh, joe bloggs down the road doesn’t charge that, I’ll go to them”

        joe bloggs also doesn’t have client money protection, accreditation, redress scheme, code of conduct or knows the defective premises act of 1972 to the occupiers liability act 1985 to which the client knows no different and   Based their decision purely on cost. Then you see them on rogue landlords, nightmare tenants.

        Vicious cycle!!! You’d know that if you were experienced

        1. agent orange

          well said!

  4. Headache

    More laws against every part of the industry but No enforcement therein lies the problem.

  5. Hillofwad71

    The “value” of CWD is based on that mythical beast -“goodwill” At least Foxtons chose to grow organically and incrementally unlike  CWD who have spent great  lumps gobbling up other businesses under some misguided idea that they would blend and synergise Next minute she is closing down offices .They have now amassed  a great heap of dough unlikley to be eroded The company lenders  must be nervous  as the prices paid for expansion  look distinctly over egged They certainly need some heavyweight property professionals on the Board . Looking across the current crew it it coud be Next plc

  6. MemyselfandI

    Spot on, well written.

  7. Tim Hall

    I think your glasses may have got a little bit of a red shade to them remembering the “good old days” prior to 1988!

    That aside, you are correct – Letting Agents are their own worst enemy.

    Instead of proposing and promoting a single, reasonable, capped fee, which tenants would have considered fair (believe it or not, the majority never have minded paying something, just not being ripped off), we went along with the stupid idea of just displaying our fees, as if this would make any difference at all.

    All we did was make it abundantly clear to anyone who wanted the evidence that the majority of agents were overcharging (and for some of the fees, overcharging is understating by quite a margin!). We also made it so much easier to collect this evidence.

    ARLA has not helped by pandering to it’s members, but of course it is the members who have continually tried to argue that the fees they charge ARE fair, when quite blatantly they are not.

    I sympathise to a certain extent because ARLA could not insist on it’s agents alone capping their fees – that would have given too much of an advantage to those agents who are not ARLA registered.

    It was clear however that Agents could not be trusted to set their own house in order – we certainly only have ourselves to blame.

    I for one am pleased about the announcement – it means the local agents who have been reducing their commission rates to 5% or lower will have to put them back up and I will again be able to compete.

    My only concern is that, if all fees are banned, will this include charges for breach of contract?

    if there is no financial penalty for a tenant breaching their contract, will there be a change in the law so that Ground 12 will become mandatory?

  8. Woodentop

    The article is of the past. How about the future? We live in a society that is now driven by profit by companies, which was intensified by big corporates in the 1990’s and consumer today ingrained with buying on the cheap. Companies need to review their strategy and communication with the consumer if they overcharge. The consumer needs to recall you pay for quality, nothing is free and cheap is a recipe for disaster.

  9. TheGreyAgent

    Very good article, I remember those years well in the late 80’s/early 90’s and the pricing increases as soon as estate agents started getting involved en masse with lettings when the sales market fell through the floor. We immediately saw the difference between services offered by’us and them’ and  being undercut on price from every side.  Sadly we had to follow the path of least resistance to stay in business; slowly eroding our levels of service to maintain a business and reduce our costs.


    I think our industry is probably unique in the way that the people working in it just don’t trust anyone else enough to get together to do what’s right. The few that do just don’t have a loud enough voice.

    1. Robert May

      the voices are loud enough but the litigators come armed with gags

    2. Anonymous Coward

      And it gets called a cartel…

  10. Property Paddy

    As our industry no longer has a professional body to represent them in the either parliament or the house of lords……………. Yes I know we have the property ombudsman and something called ARLA. But lets be honest we don’t have anyone’s ear. Do we ?

    Our industry doesn’t get the respect it should. Letting fee’s pushed down. Sales Fees falling away too. The reason is partly because anyone can become an “estate agent” or own one.

    Are we the victims of our own success ? We have proliferated exponentially. The general public have caught on so now we dance for peanuts.

    I retire in 5 or so years. Technology will probably out perform us soon enough. I just hope I can make it to retirement before the government force me out of a job !!!

  11. Votta583

    For the ones who encourage banning fees Read this!!!!




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