Agents and tenants’ groups clash over fees

An impassioned debate took place on Friday over tenant fees in the private rented sector, with agents telling tenants’ representatives, “if they don’t like our fees, they can go elsewhere”.

EYE joined agents, Generation Rent, Renters Rights and Ombudsman representatives for the round table on Friday at L’Escargot in Greek Street in central London.

While Generation Rent and Renters Rights called for tenants’ fees to be scrapped altogether, agents countered by saying they were businesses which needed to make money like any other, and that such a move would also lead to landlords recouping the money through increased rents.

Rosie Walker, from Renters Rights (London), said: “Now more tenants are aware that they need to be told what the fees are up-front. But we say tenants should not be paying any fees at all.”

Peter Grant, managing director of property software company VTUK, which hosted the lunch, said recent research by his company showed that based on a letting agency branch that had 50 landlords and 75 managed properties, the average fee profit margin was just £159 per tenancy.

Mark Rowe, managing director of Rowe Property Services, an independent letting agent in Hampshire, argued that a free market allowed tenants a choice.

He said: We are a business; you have an option but we have to make money. I am not forcing the money out of you. If you want to go for one of my properties, that is what I charge. If you want something from someone, you pay for it, surely we are not in a generation now where things are free of charge. I know (campaign groups) say tenants shouldn’t be charged at all, but if we are doing the work, then we should be paid.”

The debate saw a number of topics discussed, including how do agents justify their fees to tenants and landlords, what would happen to rents if agents were unable to charge fees to tenants, and is there sufficient transparency over the fees that agents charge.

The event was filmed by TV crews from Fuser TV and EYE will have a fuller report, including video, later this week.

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23 Comments

  1. Neilw

    “He said: We are a business; you have an option but we have to make money. I am not forcing the money out of you. If you want to go for one of my properties, that is what I charge”

    Firstly they are not YOUR properties they are your Landlords and are they happy at you turning away a good tenant because you do not get your cut?

    Secondly the tenant does not have a choice ….. all agents charge tenants fees!!

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    1. MarkRowe

      Hi @Neilw,

      Your first point about them not being ‘our’ properties is fully correct, so apologies that I made this error during the debate….

      However, my point was, that they are made available through my agency. The landlord has instructed me to make it available and attract a tenant.

      You ask if my Landlord is “happy at you turning away a good tenant because you do not get your cut?” …. I’m not sure I’ve heard a more ridiculous statement….

      How on earth can YOU quantify the amount of tenants we lose purely because we charge a fee and how would YOU know if they are good tenants??

      Your second point. “the tenant does not have a choice ….. all agents charge tenants fees!!” Tenants do have choice to rent privately, Gumtree etc. Although this isn’t an advertising medium that the majority of landlords use, it’s still a choice.

      Remember, landlords aren’t obliged to go and buy loads of properties to help ease the supply and demand issue in the UK. They don’t have an obligation to rent them privately (without the use of an agent). Talk to the government about this.

      My question to you would be:

      Where on earth do you think the lost income from Tenant admin fees would go to should they be banned…?

       

      Businesses look to make up lost revenue, so the Landlord would incur the cost. Landlords would then claw this back through rent increases.

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    2. smile please

      Sorry have i missed something?

      Are letting agents now a charity?

      Of course they charge fees they are a business.

      How about when a tenant loses a key, or calls up for a number of issues which are not the agents or landlords responsibility. They are not charged a fee.

      As Mark points out gumtree and alike caters for private ads.

      I see people asking all the time for “Private landlords” most of these people ask because they do not want to be comprehensive referenced as they have something to hide and they know it is less likely a landlord will find it.

      The fees are really not that large, apart from first months rent in advance and a deposit the fees are a few hundred pounds. A lot cheaper than buying and a lot more flexble!

      And as Mark points out if fees were abolished it would be the landlord that pays and guess what …… Rents will rise.

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  2. Gump

    Are there any other businesses that have had meetings to get them to do their work for free?

    I might speak to Rentshield, Inventory Clerks, EPC assessors, Rightmove, Zoopla, OTM, Metropix, IT, and our printer company and arrange a meeting with them as I don’t much like paying any of them.

    I will let everyone know how that works out for me.

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    1. Gump

      UPDATE

      I have spoken to three of them (legit)

      One suggested I google Business to get a better grasp of how they work

      One simply laughed

      The last ones reply was a lot shorter than the first ones.

       

       

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      1. mat109

        But the customer in these cases is you – you are buying from suppliers who are providing you with a service directly. None of those involve an agent.

        The landlord is the customer, not the tenant.
        Do you charge a buyer for buying a home? Why not?

        When your printer’s outsourced contractor turns up to fix the thing, do you expect to have to pay them as well as the printer company?

        When you book a holiday through a travel agent, or lastminute.com, do you pay them for their time directly?

        When a football club sends an agent out to procure them a talent, does the footballer pay anything?

        When a recruiter finds someone to fill that new Chief Exec role, does he ask the new CEO to pay his fee too?

        You see, someone always pays somewhere.

        The problem for me as a tenant is that I am paying someone who isn’t working in my interest. Yes, having a home is the benefit for them. I am “procured” for the landlord on behalf of a customer who pays. Business works like that in a lot of consumer situations.

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        1. Gump

          A reasonable argument, but we do provide you as a tenant with a service and we do work in your interest.

          We will ‘present’ you to the landlord with a full armament of references, although you would be able to do those yourself trying to convince someone that you don’t know that they are entirely accurate will be quite a challenge.

          As Agents we would have met you, liked you and would explain this to our landlord and then backed this up with our references. That is our initial service to you.

          Plus as a tenant would it not be more preferable to rent through an agent rather than directly? I would of thought so from a peace of mind point of view.

          Then there is our ongoing service to you, issues, renewals and legalities. All of which we deal with on behalf of you and our landlord for the entire length of your tenancy with no additional charges to you as a tenant.

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          1. observer

            You talk about the referencing but you charge for that.

            You then charge “admin fees, additional tenant fees” etc etc.

            These are the fees that tenants are complaining about not the referencing fees.

            Renewals – you charge for these so that isn’t the admin fee.

            Issues – you charge the landlord for these.

            I have used a local agent to rent property and couldn’t believe what they charged tenants when I was also paying 6% of my rent to the agent.

            Just staggering.

            Where is the peace of mind exactly for a tenant? Agents are just another layer and if things get difficult all they do is refer tenants to the correct legislation.

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            1. Gump

              i will address one by one.

              1. Yes we do, it cost us to reference

              2. No, referencing 2 people is included in the admin fee. Yes we charge additional for extra persons, again it costs us more.

              3. No, we don’t charge renewals. Even as an Agent I can’t justify a renewal fee for a copy and paste job.

               

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              1. Gump

                ooops not finished yet.

                4. Yes we do, at cost. No charge for the tenant.

                5. Change Agent

                6. Change Agent

                7. That hopefully explains peace of mind for the tenant, we don’t just side with our landlords, both are equally important.

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  3. seenitall

    supply and demand.   Free market comrade.    If we dont let properties landlords dont give them to us to let.   It works both ways.

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  4. mat109

    If rents were to go up to cover the lack of fees, what is the problem?

    Tenants hate fees because if the landlord decides to sell up after six months and they get evicted, they get to pay the same fees again. Renewal fees in particular are grinding as they seem to be getting very little in return.

    Spreading the cost over a longer period of time seems much fairer – and the choice thing is important. Call me a communist all you like, but tenants look for properties, not agents. As a result, it really isn’t a free market. Charge them to the landlord, and suddenly it is a free market as landlords compare fees across agents.

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    1. PeeBee

      You just don’t get it.  Or do you?

      You talk about ‘spreading the cost’.  A landlord will want to recover the cost within the first six months as an absolute minimum to ensure they are not out of pocket.  If the fee is, say, £600, then the rent will need to be increased by a minimum of £100pcm.

      So if a tenant stays in the property for MORE than six months, they will pay more as a result.

      Winner?  The landlord, using your cunning plan.

      Are you a landlord, mat109?

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      1. mat109

        Certainly not a landlord – I’m a tenant.

        I’d expect a higher percent management fee, not a flat fee that reflects average tenancy length.

        Landlords choose agents. If you wanted to charge them a lot more upfront, then they might look elsewhere to someone who didn’t. Their choice.

        At the same time tenants choose properties based on rent. For a start, without fees, it’s easier to compare like for like. Which letting agent is providing a place is rarely a consideration, although I’d think twice about going for one managed by one of the more aggressive london agents… 😉

        And of course – it’s happened in Scotland and the sky hasn’t fallen down there. The evidence is mixed but there’s nothing that suggests a steep rise in rent:
        http://www.publications.parliament.uk/pa/cm201415/cmselect/cmcomloc/964/96405.htm

        Indeed, many landlords/agents surveyed haven’t even passed on the cost according to a survey by the “SCOTTISH ASSOCIATION OF LANDLORDS AND THE COUNCIL OF LETTING AGENTS” in that publication.

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  5. James Morris

    The problem here and always has been is that some letting agents take the pee with their fees. Yes we are here to make money because we are businesses but I would love to see the breakdown of a £270 + VAT single applicant fee.

    How an agent can charge that is beyond me.

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    1. smile please

      Between £15 – £20 per reference

      circa £50 for the time showing the property

      circa £50 drawing up the agreement, keeping on top of legislation and getting it signed.

      circa £50 check in

      circa £30 chasing everybody.

      So probably makes about £80 per let on a property. Not too excessive at all.

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      1. James Morris

        – Surely the time showing a prospective tenant around a property is included in what the agent charges the landlord for letting their property?

        – Copy, pasting an amending an inventory takes 5 minutes. Not sure that’s worth £50 myself.

        – We don’t charge for a check in, again we believe that’s part of the charge to our landlords

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        1. Gump

          “Copy, pasting an amending an inventory takes 5 minutes”

          Lol, funniest thing I’ve read all day!

           

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        2. James Morris

          meant agreement, not inventory.

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          1. Gump

            Phew! 😀 (Got to add this bit as comment was to short)

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        3. smile please

          Yes landlord pays a fee as well,

          Who do you charge if the viewing does not turn up? Do you charge for every telephone call?

          I am guessing the answer is no, you need to add some profit to the process to make worth while all the time wasters which use you for free.

          I don’t offer lettings often thought about it but the hassle vs reward is not worth it for me.

          I would want to charge close to £500 for tenant and similar to Landlord on top of a monthly fee, i know the market where i am based would not accept this so see little point offering it.

          If you dont mind me asking James is it just you at the office or do you have staff?

          I find it hard to believe if you are charging less than £270 you can recruit and retain good staff?

          It maybe viable if just yourself.

          You must have seen latest legislation re fire alarms how do you propose to implement this in your portfolio? Will you be charging an admin fee or is this another “Free” service you will include in a very modest admin fee?

          I am not knocking you James but i think you owe yourself a better living, lettings is hard work and you should be rewarded appropriate. Not saying fleece tenants or landlords but you should not feel guilty earning a decent wage.

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          1. MarkRowe

            I second this.

            We are a service industry. We have to make profit as a business. We require staff to provide the service, this requires a charge for our service.

            Of course, tenants and landlords could always share the cost of a solicitor to draw up the rental agreement? They could share the cost of keeping up with legislation too? The list goes on. But we do this at a much cheaper fee and at a greater conviniance to all.

            This goes deeper than simply dropping tenant fees. There’s implications for irradicating them and the majority who believe they should be dropped would do well to investigate the industry further and look at any implications this will have if they are stopped.

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  6. Tuf Luv

    Dude you have to figure that when a reference comes back sh*tty the landlords heading for the nearest exit. If they want the reference and not the tenant then maybe bill the guy who actually asks for it. I hear what Gump’s saying and man I wish I thought of it first but a meet & greet aint a service we can charge for. Think of the refunds buddy.

    Ok so rents will rise but reasonable fees are 25 bucks a month over the year (do the math), anymore and I’m questioning/copying/franchising your motives. Its about diversity dude. I love diversity. Like instead of finding out your dad’s g*y you could have found out he was a Scientologist. Or a woman. Figure it out, we’re still getting paid but its just gets here differently.

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