Ban on Tenant Letting Fees to go Ahead

[Haggisman]

I wonder how this will all shake down.
Assuming its all tenant fees being excluded, then landlords will start to get a bit pissy if they are charged fees for poor tenants who fail vetting.

Personally i think the tenants should be charged, but restrict by law the fees to actual costs plus a fixed amount for providing the service.
Its not a lot at the end of the day, mainly just checking some figures, writing a few letters, running a credit check. Maybe something like actual costs plus £75, £100 in London.
Actual costs being limited to outside specialists, so credit check fees is about all I could see they actually incur.

What actually are they doing to justify the £75?

There are plenty of organisations which do all of the checking themselves, income/references/credit check etc. who charge a lot less than that.

I agree the tenant should potentially pay for those checks - purely to avoid them wasting the time/money of the landlord/agent when it's obvious they aren't going to get the property, but I don't see why the agency should get a penny from the potential tenant, for essentially just acting as a referral for the referencing agency.

The landlord pays the agency for marketing and to get a tenant in, by charging the tenant as well they are basically getting paid twice for the same "work".

 

[Shoza]

Not true. If you look what happened in Scotland rents did not rise at all.

https://www.theguardian.com/money/2016/nov/26/banning-letting-fees-higher-rents-tenants-ask-experts

Funnily enough during the 'campaign' for this (that link is old), the only people to say it will lead to rent rises on that page were two estate agents, the Residential Landlords Association and the now-no-longer-Housing-Minister MP Gavin Barwell. Go figure.

This is a very positive step. Landlords are the agent's customers and they are the ones who should pay for the service.

Landlords already pay significantly for letting properties - of those that I deal with all agents charge the landlord 2-3 times more than the tenant for letting the property. An example - 2 people renting charged £200 total for all checks and vetting and the landlord charged £650 which is common practice, despite most people thinking landlords pass this cost onto tenants...

 

[Roar87]

Glad we were lucky enough to be able to get a mortgage, tenants are treated like complete crap in this country. Regular inspections, lists of rules about what you can and can't do in a property where you're essentially paying the landlords mortgage, deposits which can be taken off you over nothing, and nothing to show for your money at the end of it. I'm a fairly pro free market kind of guy, but houses should be regulated, we can't just go out and build a load more when demand is higher than supply, houses are very different and should be regulated as such.

 

[Kemik]

Well if you read the article it explains that landlords will have to pay it instead. Which of course means they'll just put the rent up to cover it.

Which is the right way to do it. Landlords can pick the estate agents. Tenants can't.

 

[Rids]

Can only see this as a positive step. I've never dealt with an estate agent that charged extortionate fees, but I'm aware of plenty of people that have. At least with the fees being passed on to Landlords they are in a position to choose to deal with a different agency if they find the fees unreasonable.

 

[thenewoc]

Having rented for a number of years I've experienced a range of agencies some that abused the current system and some of the worst culprits were national letting agent chains. This should make things more transparent and bad agencies I think will loose landlords which they will be far more bothered about than loosing a potential tenant. Yes it probably will push rents up a bit but landlords will still have to be mindful of what their property is worth in the market. Before an agency could take numerous admin fees for a property without any care as to whether the applicant would be successful or not and the landlord would most likely not know. If they try that scam in future the landlord will know how good an agency is at getting things right rather than trying to churn out admin fees as such agencies will get a bad reputation among landlords.

 

[Freddie1980]

Not true. If you look what happened in Scotland rents did not rise at all.

https://www.theguardian.com/money/2016/nov/26/banning-letting-fees-higher-rents-tenants-ask-experts

Funnily enough during the 'campaign' for this (that link is old), the only people to say it will lead to rent rises on that page were two estate agents, the Residential Landlords Association and the now-no-longer-Housing-Minister MP Gavin Barwell. Go figure.

This is a very positive step. Landlords are the agent's customers and they are the ones who should pay for the service.

Landlords who use Agents can pay anything between 10% to 15% of the rent + VAT on top in agents fees each month if they have a service agreement with them. If they just use them to find a tenant it's normally 1 months rent.

My Dad is a landlord and he is guilty of using the same agent of years and years, if costs are past onto the Landlord then hopefully it will encourage him to shop around and find a better deal, the whole letting agent market needs a good shake up and hopefully some of the pond life that occupy it will fall away. Better yet more Landlords will manage their own properties and cut out the middleman.

 

[Scam]

(snip)
You wont know they aren't capable of getting the let (say salary is too low) until you do the checks and the agent has incurred the fees.

Oh noes!! A letting agent actually has to take into account some business expenses like the rest of the world! Whatever will they do?

Landlords already pay significantly for letting properties - of those that I deal with all agents charge the landlord 2-3 times more than the tenant for letting the property. (snip)

Shows perfectly well that the agents are profiteering from this practice then

Which is the right way to do it. Landlords can pick the estate agents. Tenants can't.

Exactly. If a landlord wants to let a 2 bed flat in London, let's say the going rate is £1500pm. If agent A charges the landlord £1000 sign-on and £550 every time they want to re-sign a tenant or do anything, and agent B charges £600 sign-on and £350 any time they want to do something... Well the landlord will either accept the higher charges if he likes agent A or he will more than likely go with agent B. And you know what, with everybody flocking to agent B you'll probably find that when agent A realises their prices are out of wack with the market -- they'll reduce them. It's not like there's a shortage of letting agents is there?

What the landlord won't do -- is go with agent A and try to charge £1600pm to cover his costs; because the price of that flat is up for negotiation with the customer (i.e. the tenant) and if it's only really worth £1500 they simply won't accept £1600 and will go elsewhere.

See how nicely this has levelled the playing field for everyone involved?

 

[Felon]

A few years ago, a letting agency once tried to charge me £15 to change my debit card number on their system, just so I could pay the £90 contract renewal fee.. I totally lost my temper on the phone with them and they caved and let it go, but Jesus Christ..

The problem for me, is that I personally - wouldn't really complain if I had to pay £20-30 in fees for a contract, but with estate agents like Foxtons in London - it approaches £500, they got too greedy, everything got silly, so it all got totally banned to **** and rightly so imo.

 

[MooMoo444]

It'll be fantastic to not have to lump up fees at the start but I expect the rent will rise to stop the landlord being out of pocket. Which is fair.. but it still means tenants pay it :/

 

[thenewoc]

The problem with this I think is landlords will price low to get people in and then use the clause in the agreement to raise rent in x number of months time.

 

[Tosno]

Great news, I bet that landlords who ruined this country for the working class families are mad

 

[Scam]

It'll be fantastic to not have to lump up fees at the start but I expect the rent will rise to stop the landlord being out of pocket. Which is fair.. but it still means tenants pay it :/

To play devils advocate for a moment.. Even if rents do rise a bit because of it (I still don't think they will) it's still a better position for the tenants because that cost is then carried across a longer period. For example, friends of mine live in a 2 bedroom flat in SE London. They really like the flat but the landlord is a total tool. Has put their rent up by at least £50 per month, every year, has done shoddy DIY like fitting a smoke alarm in the middle of their lounge ceiling and running horrendous cable trunking to it -- right across the ceiling

They like the flat but would probably move if they found something better. They've had the conversation every year when he's put the rent up but at the end of the day they would lose so much more by moving -- due to having to pay another deposit, moving costs and of course a huge amount of letting agents fees. Take the fees away and it makes moving a lot more palatable, especially if deposits are capped as promised.

So what's the other advantage that situation would have on rent prices? ****** landlords like him won't be able to put rents up every year and create a false economy to trapped tenants -- because tenants will be a lot more free to move on a whim, like they should be. This my friends will help keep rents down

 

[Mercenary Keyboard Warrior]

Oh noes!! A letting agent actually has to take into account some business expenses like the rest of the world! Whatever will they do?

Taking that one line your kind of misrepresenting, but I will bite anyway

What they will do is what i wrote above, pass the fees to the landlord for time wasters who couldn't afford the rent, or were DSS when landlord only accepts private etc.
Who will probably over time look to pass that fee onto tenants, they may be different tenants but tenants in general.

What they should be doing is what I wrote before, regulating the fees. Bit like a car MOT, regulate to a sensible amount for the level of work required.

If they don't regulate the fees then you have a few scenarios
- estate agents go into a bidding war, possible but unlikely from my dealings with them, or they drop fees again unlikely, I don't see estate agents coming in worse off from all this
- landlords suck up the fees and don't change rents, again unlikely as most are looking for return, so they will if logical look to return to the same position. with limited supply your far more likely to see this than if supply was in excess.
- tenants end up paying slightly higher rates to recompense landlords for the fees. Most likely scenario as they are the weakest party of the three. Not as a group but individually weak.

You may well see a contraction in the market as small landlords look to manage themselves, although if rents go up to generally cover the fees then they may not bother.

The game changer would be a back office function working on lower margins and costs like purple bricks is to high street agencies. If landlords could use an internet based low cost solution to renting then that could reduce the fees charged dramatically.

Oh and to specifically reply to your post, the answer is put up their fees if they are having their time wasted by non chargeable people.

 

[MooMoo444]

To play devils advocate for a moment.. Even if rents do rise a bit because of it (I still don't think they will) it's still a better position for the tenants because that cost is then carried across a longer period. For example, friends of mine live in a 2 bedroom flat in SE London. They really like the flat but the landlord is a total tool. Has put their rent up by at least £50 per month, every year, has done shoddy DIY like fitting a smoke alarm in the middle of their lounge ceiling and running horrendous cable trunking to it -- right across the ceiling

They like the flat but would probably move if they found something better. They've had the conversation every year when he's put the rent up but at the end of the day they would lose so much more by moving -- due to having to pay another deposit, moving costs and of course a huge amount of letting agents fees. Take the fees away and it makes moving a lot more palatable, especially if deposits are capped as promised.

So what's the other advantage that situation would have on rent prices? ****** landlords like him won't be able to put rents up every year and create a false economy to trapped tenants -- because tenants will be a lot more free to move on a whim, like they should be. This my friends will help keep rents down

As a renter, I hope you're right

 

[Mercenary Keyboard Warrior]

To play devils advocate for a moment.. Even if rents do rise a bit because of it (I still don't think they will) it's still a better position for the tenants because that cost is then carried across a longer period. For example, friends of mine live in a 2 bedroom flat in SE London. They really like the flat but the landlord is a total tool. Has put their rent up by at least £50 per month, every year, has done shoddy DIY like fitting a smoke alarm in the middle of their lounge ceiling and running horrendous cable trunking to it -- right across the ceiling

They like the flat but would probably move if they found something better. They've had the conversation every year when he's put the rent up but at the end of the day they would lose so much more by moving -- due to having to pay another deposit, moving costs and of course a huge amount of letting agents fees. Take the fees away and it makes moving a lot more palatable, especially if deposits are capped as promised.

So what's the other advantage that situation would have on rent prices? ****** landlords like him won't be able to put rents up every year and create a false economy to trapped tenants -- because tenants will be a lot more free to move on a whim, like they should be. This my friends will help keep rents down

I hadn't heard of a proposal to cap deposits. Is this a government proposal or something else?

To be honest when I was renting I found the deposit the biggest challenge. The fees were annoying but when changing properties finding 1.5 months rent to put down the deposit whilst waiting for/praying for the return from the last property was painful.

 

[Steeps]

If I was a landlord I would expect my letting agent to tell me they have someone suitable for the property and their references check out, total cost is £x including search fees.

If my letting agent calls up and says "we had 3 families interested in your property but 2 of them failed credit checks, you owe us £x *3 to go ahead" I'd be telling them to get stuffed. I would expect landlords would get charged a single search fee and the ones who fail checks would be paid for out of an increase in the regular monthly fee.

 

[dowie]

Well if you read the article it explains that landlords will have to pay it instead. Which of course means they'll just put the rent up to cover it.

not necessarily, rent is mostly influenced by the market, the agents already take a cut of the rent in most cases - they could have already chose to structure their business so that they only profit from a % of the rent paid (and therefore are incentivised to find good, long term tenants). If they've chosen to include extra fees in their business model then clearly there is additional money to be made - now with the landlords having to pay these there will be some downwards pressure on them as landlords are already giving up a portion of the rent

basically I wouldn't assume that these will necessarily be directly replaced by increased rent - landlords and agents could easily end up covering a bit of these too

 

[Scam]

Taking that one line your kind of misrepresenting, but I will bite anyway

Admitting to being a letting agent on here is pretty brave. Well admitting that anywhere is pretty brave (If that's what you mean)

Who will probably over time look to pass that fee onto tenants, they may be different tenants but tenants in general.

The problem is that as I wrote above, why would a landlords first instinct be to pass on the costs? That's not the way business works. If your supplier (i.e. the letting agent) is charging you too much or suddenly raises your rates, most people wouldn't accept that and pass it onto their customer. That's business suicide. You go back to your supplier and either threaten to leave unless they lower their rates, or just simply leave. Like I said, we're not exactly short of letting agents so the easiest solution for a landlord is to change agent or strong-arm them into lower their fees. It's obvious. Nobody with any common sense will just willy-nilly pass business costs onto their customers.

 

[FoxEye]

Glad we were lucky enough to be able to get a mortgage, tenants are treated like complete crap in this country. Regular inspections, lists of rules about what you can and can't do in a property where you're essentially paying the landlords mortgage, deposits which can be taken off you over nothing, and nothing to show for your money at the end of it. I'm a fairly pro free market kind of guy, but houses should be regulated, we can't just go out and build a load more when demand is higher than supply, houses are very different and should be regulated as such.

It's not a free market tho.

The government have done much to keep the bubble inflated and growing.

"Right to buy" social housing at well below market value.
"Help to buy" to keep house prices growing, and keep people in debt for longer.
Planning permission process which is costly, lengthy and unhelpful. Local councils being at odds with national govt on what should be built. Lack of coherent strategy.
Insufficient regulation on rental market.
Insufficient deterrents on speculating on property and keeping it empty.

The whole housing situation is this country is ******, and yet the government has no interest in fixing it, because of the political fallout from doing so. House prices will continue to rise, as will rents, and even a Labour government I doubt would have the fortitude to take the necessary action to reverse this course.

Moving abroad is going to be the only way to have a decent quality of life for many of us. Society in this country is rigged to keep the cash (and wealth) flowing to the top, and the rate at which it does so is actually increasing year by year. **** this country and its self-serving government(s).